Berri Leslie worked for the state of Washington Department of Financial Institutions during their Nationwide Mortgage Licensing System (NMLS) transition and is currently working for the Oregon Department of Finance & Corporate Securities helping them implement the Secure and Fair Enforcement (SAFE) Act. Having worked in both Oregon and Washington, Berri has a unique perspective with NMLS and SAFE Act issues. Berri has agreed to answer some of our burning questions regarding the Nationwide Mortgage Licensing System. The following information is provided to help you understand the requirements, when they will be required, and what will be involved.
What is the Secure and Fair Enforcement (SAFE) Act?
SAFE is the Secure and Fair Enforcement Act passed as part of HR 3221—it was signed by President Bush on July 30, 2008.
How does SAFE affect lenders and loan originators?
SAFE requires all mortgage loan originators to be either state-licensed or federally-registered. All loan originators must be licensed or registered using the Nationwide Mortgage Licensing System (NMLS), an expanded version of NMLS.
When was the NMLS first developed?
State regulatory agencies recognized early on that the rapid expansion and evolution of the mortgage industry demanded a more robust regulatory framework that was efficient and effective. In 2003, a nationwide task force of state regulators began developing a uniform licensing registry, similar to what has been done by state agencies in the securities and investment advisor industries. State regulators developed the NMLS in order to: Increase consumer protection, enhance supervision and streamline the licensing process.
How does the NMLS relate to the SAFE Act?
The NMLS establishes protocols for issuing unique identifiers for all loan originators. NMLS processes criminal background checks, approves pre-licensure and continuing education courses, and is responsible to develop a qualified test.
Who has to register within the NMLS?
All mortgage loan originators must be either state-licensed or federally-registered.
What type of education does SAFE require?
SAFE requires 20 hours of pre-licensure education and eight hours of annual continuing education. States may require hours beyond this threshold.
How many states are currently using NMLS?
Twenty-seven states are currently using NMLS.
By what date will most states be using the NMLS?
Most states will be on the NMLS by April 2010.
Do bank, mortgage bank and credit union employees need to be registered? Do their originators need to take the tests?
Federal agencies are developing procedures to register employees of federally-insured depositories and subsidiaries with NMLS. Registered loan officers must complete a criminal background check and submit employment history and experience. They will also coordinate with NMLS to assign registered loan originators a unique identifier.
Under SAFE, who is responsible to approve loan originator education?
The SAFE Act requires that the NMLS review and approve all pre-licensure and continuing education courses that are to be offered to state-licensed mortgage loan originators and are intended to satisfy the 20 hours of pre-licensure education and/or eight hours of annual continuing education. In order to meet its mandate as required by the SAFE Act, the NMLS requires that those individuals/organizations who desire to have their pre-licensure or continuing education courses approved by the NMLS must first register and be granted approval to become an “NMLS-Approved” course provider. Upon becoming NMLS-approved, course providers can then submit to have their courses approved by NMLS.
What is the Web address for NMLS?
NMLS may be found on the Web by clicking here.
How often will renewals occur?
The licensing period is January-December, and renewals occur annually in November and December.
What is the best way for loan originators to stay informed about all of these changes?
Since each state has specific requirements and differing implementation plans, the best way to stay informed is to read all announcements and communications that come from your state licensing agency. Once you are on the NMLS system, the system itself will also send you announcements and updates. Make sure to be regularly checking your state’s Web site and the NMLS Resource Center.
When you worked on the NMLS and Registry transition in Washington, what was the most frustrating issue?
Loan originators and companies waiting until the end of our “transition deadlines” was frustrating. Washington sent out many letters, e-mails and even offered to provide on-site training for companies about the NMLS, but some folks still waited until the last minute!
What is the chief complaint you hear from loan originators about all these new changes?
The biggest complaint is that the system is difficult and confusing. I don’t think the system is really that difficult, but rather, it’s new and most new technologies are challenging at first. Folks who start early, participate in the many training courses offered and stay informed, won’t have any trouble!
Linda’s comments are shown below after researching several issues on the NMLS:
We, the National Academy of Financial Literacy, recently sponsored a free Webinar that was offered to and sponsored by National Association of Professional Mortgage Women (NAPMW) members exclusively. Berri Leslie was our guest speaker and she provided an overview of NMLS and Registry, and gave us a demonstration of the NMLS Web site. During the recent Webinar, one of the topics of discussion was requirements and testing for banker originators, bank originators and credit union originators. The system information changes almost daily, as planning and rules go into effect; however, it was noted that these originator requirements have not been announced as of yet.
This link provides a list of states that are integrated and/or transitioning into NMLS. Note that each state listed provides a link to the state Web site.
This link provides originator information:
The following language is from the NMLS Web site, and can be found in the “Educator Provider” section of the Web site:
NMLS has set the following fees for Test Administration and Education Services. These fees will be in effect for 2009 and are subject to change.
Test administration
1. SAFE Mortgage Loan Originator Test
● National component: $92 100 items (appointment time, three hours)
● Each unique state component: $69 45-55 items (appointment time, two hours)
Each mortgage loan originator (MLO) is required to pass a test which will consist of at least two components: A National Component and a Unique State Component. Fees are payable by an individual who is registering to take the SAFE Mortgage Act test components or by the company which may be enrolling its MLOs for the test components. Please feel free to e-mail me at
[email protected] if you have questions or comments on the contents of this article.
Linda Moore MacCoy is the executive director of the National Academy of Financial Literacy. She has 35 years of experience in mortgage lending, having worked for a bank, a savings and loan, and several mortgage companies. Linda has been originating loans since 1974. Her experience in lending extends to 12 years of selling mortgage automation with Contour Software, Mortgage Company Management, and 25 years training and educating mortgage professionals and real estate agents. She teaches lending law, state and federal; lending automation, and personal lending and origination skills. Additionally, she has served as a consultant to mortgage professionals for many years and has been writing for various publications over the years. She may be reached by phone at (503) 639-5500.
