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Is the Light Worth the Candle?

Paul Donohue
Nov 24, 2010

Shockingly, there have been more than 72,000 failed SAFE test attempts according to reports from the Nationwide Mortgage Licensing System (NMLS). If one of the objectives of SAFE was to raise the bar of entry into the industry and thereby protect consumers from originators who don’t test well, then mission accomplished. Here’s a question we should ask, “Is the light of protections worth the candle of energy, time and cost?” The latest data indicates more than 28,700 people have given up and/or have failed out of the licensing process altogether. A pattern has emerged that once a person fails their initial test attempt, there is a less than 45 percent chance of passing on the next attempt. We should wonder if these people are now migrating to the banks. If the SAFE Test is a mechanism for consumer protection, then who will be protecting the future borrowers of these originators? Cost of the candle The figures indicate only 65 percent of total national test attempts are successful. It’s better on the state tests at 79 percent. When calculating test retakes, the costs exceed $3.6 million. This does not include the 28,700 people who have quit trying and the money they have spent on education and testing. My conservative estimates for these losses are approximately $6.73 million. None of these figures take into consideration the cost of travel, hotel expenses, study materials or test prep tools. There is also no way to account for the heartache of failing or the anxiety of the licensing process in general. If you were to look at the total cost for education, testing and licensing of the approximately 111,000 mortgage loan originators who are SAFE Act compliant thus far, the figures go above $80 million. These costs will surely soar past $100 million by the Dec. 31 deadlines. Is it worth the light? Every shop is bearing the cost. Many companies are spending millions of dollars on education and licensing. No one can calculate the cost of lost production, frustration and disruption to its organization, or the costs of examination and enforcement that has just begun. The question remains, what is all this energy, time and dollars being spent for? Will this massive effort result in a better industry? We hope the SAFE Act has built a brand new stadium with a higher playing field on which to work. You will no longer be competing against shortsighted amateurs, dishonest fraudsters or those that lack the ability or commitment to learn this business. The candle of licensure is meant to illuminate a new profession where knowledgeable loan originators have chosen to compete. SAFE brand You are paying a high price for your license. Frame it proudly knowing you have earned it, when not everyone could. Use it to differentiate yourself. Think about it; if you were borrowing $350,000 and you could choose between an unlicensed or a licensed professional originator, which would you choose? My guess is you’re going with the SAFE brand. It will be up to you, to make the “Light Worth the Candle.” Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.  
Nov 24, 2010