Before You Start
Being that you are interested in working in the financial industry or desiring to become a loan officer, it is important that you look at your credit and background. You will want to pull a credit report, preferably from TransUnion (that is the credit bureau of choice for NMLS). If you have any credit infractions, you will probably want to start clearing them up. Also, if you’ve had a bankruptcy or foreclosure within the past 10 years, get your documents in order as you will have to provide them to NMLS. If you have committed a felony, please refer to the state you’re applying for and their regulations. If you have something on your criminal record, be sure to have all your court documents and so forth prior to applying for a license.
Education
Prior to getting initially licensed, you need to complete 20 hours of education. You can look in the resource center of NMLS to see who has been approved to provide education. In your 20-hour class you will learn Federal laws, ethics, and lending principles. You will also learn about major regulations such as the Real Estate Settlement Act, the Truth in Lending Act, the Equal Credit Opportunity Act, and the Secure and Fair Enforcement for Mortgage Licensing Act. Thankfully most providers have several options for completing your 20 hours such as webinars and one-week and two-week online courses. It is very important to not only get through the 20 hours but comprehend what you are learning. It will not only serve you well on the exam but also in your career to remain as compliant as possible.
In addition, you will need to complete any state-specific education hours. For instance, in Texas you are required to take 3 hours of Texas law in addition to the 20 hours. Not all states require additional education, you can refer to the NMLS resource center or state regulations to find out if your state requires more education.
Exam Preparation
In 2018 there was a shift from a national exam and state tests to one uniform state exam called the Uniform State Test (UST). This streamlined the process of getting licensed to allow for just one exam. However, the UST is designed to only allow the best to pass. To that end, you will want to enroll in a test prep course. It is important to find one that is comprehensive and gives you several ways to study such as flash cards, pre-tests and post-tests, and subject focused study. It has been my rule of thumb that when you are making an 80-90% consistently on the practice tests you are likely ready to take your exam. Many education providers will give you an exam prep course with your 20 hours, just make sure it’s one that allows you to learn in different ways.
The National UST Exam
As mentioned previously, you will be required to take the Uniform State Test (UST). The exam consists of 120 multiple choice questions. The questions are spread out among 5 content areas. This is demonstrated by the table below:
You pay for the exam through NMLS and then you schedule it through Prometric. Prometric now offers two options for completing your exam. You can either take your exam at a testing center or online. Thanks to the Pandemic, Prometric developed an online proctored exam. It is important to note that, with no exceptions, tests must be rescheduled 48 hours prior to the exam. If you try and reschedule or cancel within 48 hours of the exam you will lose the money you paid for it and it’s non-refundable.
To pass the exam, you must score 75% and because of that, you are probably worried about failing. If you have no previous mortgage experience, you may not pass the first time. If you don’t pass, don’t give up, in 30 days you will be able to re-test. Because you will have prior knowledge of how the exam works and what it looks like, it’s likely you will pass the second time. The test retake cycle is below:
Applying for your license
You’ve finished your education and passed your exam, now it’s time to file your license. Each state, in the NMLS Resource Center, has a checklist. It is very important to review the checklist for the state you’re applying, as they each have requirements that may differ from each other.
Once you’ve applied for your license you will need your company to sponsor your license. Most licenses will become inactive if not sponsored and some rare states won’t approve your license without a sponsor. I would check with your company prior to paying for your license to be sure they will sponsor your license after you apply.
The hardest part of this step is to be patient. Each state has different turn times depending on how long it will take to get an approval. It’s fine to follow up with a state after you have applied but I would wait a couple of weeks so as not to overwhelm your state regulator. You can also ask your Licensing/Compliance department to follow up as many of these employees have developed good working relationships with the regulators.
Temporary Authority
Congress, on March 15, 2018, passed the Economic Growth, Regulatory Relief and Consumer Protection Act. This Act was a new provision under the SAFE Act of 2008.The provision is known as Temporary Authority to Operate. This allows Loan Officers, who have worked for a bank and have been federally registered for more than 365 days, to go to a non-depository institution (such as mortgage company) and retain the ability to originate while seeking licensure.
If you want to seek Temporary Authority, you apply for your license prior to taking your education and exam, and if the state agrees, you can continue to originate while you finish the steps to getting licensed. This relieves the burden of moving from a bank to a mortgage company.
Temporary Authority also applies to Loan Officers seeking licenses in another state. However, this does not apply to those who have not been previously licensed and have not worked for a bank for more than a year.
