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Who regulates mortgage brokers and loan officers and what is their contact information?
The Texas Department of Savings and Mortgage Lending regulates mortgage brokers and loan officers. Their website is www.sml.state.tx.us. You can contact them by email at licensing@sml.state.tx.us, by phone at (512) 475-1335 or (877) 276-5550.
What are the education and experience requirements?
Mortgage brokers and loan officers have varied education and experience requirements. For detailed information on requirements visit our License Requirement's page.
What are the testing requirements?
Mortgage brokers and loan officers must pass a computerized exam prior to licensure. The Texas Loan officer and Mortgage Broker Examination is administered by computer by appointment only with Pearson Vue. Pearson Vue has locations throughout Texas. For a list of locations and directions, click here.
Can loan officer applicants apply for a new license or renew an existing license without a sponsoring mortgage broker?
An individual applying for a loan officer license or renewing a loan officer license can submit an application without a sponsoring mortgage broker and be approved as a inactive licensee. An inactive license is good for the full two year term. An inactive loan officer can not conduct loan origination or perform any other service requiring a license.
Should I get any additional books on the subject?
Sure, reading as much as you can about succeeding as a new mortgage broker is a wise strategy. ProSchools offers an array of books in our online bookstore.
What are the continuing education and testing requirements?
Both mortgage brokers and loan officers are required to take during the term of the license 15 hours of education, including at least 8 hours of Core training. Core content focuses on RESPA, TILA, ECOA, the Mortgage Broker License Act & regulation, compliance issues, loan origination related to math, predatory lending, and deceptive trade practices. All of ProSchools courses are approved in Core content.
Do inactive licensees still need to comply with the continuing education requirements and renew the license?
Yes. Inactive licensees must comply with the continuing education requirements and renew the license prior to the expiration date.
Can I carry over continuing education hours from renewal
to the next?
No, continuing education hours can not be carried over between periods.
What is the SAFE Mortgage Licensing Act?
SAFE stands for Secure and Fair Enforcement for Mortgage Licensing Act of 2008. The law went into effect July 2008. It is Title V of a 700-page piece of legislation entitled the Housing and Economic Recovery act of 2008. The Act is designed to protect consumers by requiring states to use uniform standards for licensing individuals wanting to serve as loan originators. Uniform standards include registry in a national database of loan originators, education and testing requirements, and screening individuals with background checks for past felonies and demonstrated financial responsibility.
Who does the SAFE Mortgage Act impact?
The SAFE Mortgage Licensing Act applies to all loan originators. A loan originator is anyone who is compensated to take a residential mortgage loan application and offer or negotiate terms of a residential mortgage loan.
What is the NMLS or NMLSR?
NMLS is the Nationwide Mortgage Licensing System and Registry. Each applicant is required to submit applicant information, including fingerprints, personal history and experience. This information is stored in a national database of mortgage originators, developed and maintained by the Conference of State Bank Supervisors.
What information will be in the NMLS database?
The database will contain licensing information, enforcement actions and background data for every state-licensed mortgage broker, loan originator and lender. Those individuals operating in states without licensing requirements will have the opportunity to submit information voluntarily.
What type of application form is used to get a mortgage originator's license?
The NMLS has four application forms: MU1, MU2, MU3, and MU4.
Mortgage originators use the Form MU4, which is the Uniform Individual Mortgage License/Registration and Consent form. It is submitted to the jurisdiction where the applicant is filing. A mortgage originator must be affiliated with an employer for the form to be submitted. Certain employing brokers submit this form in behalf of their loan originators.
Form MU1 is the Uniform Mortgage Lender/Mortgage Broker form that is required to be completed and submitted by companies and sole proprietorships. Each MU1 form must be accompanied by at least MU2 form that identifies the firm's key persons in control. Finally, the MU2 form is used to sign up a branch office with the NMLS.
What exactly is an NLMS "unique identifier"?
Each loan originator registered in the NMLS, National Registry, will be permanently assigned a number that will help electronically track them. A loan originator's unique identifier will not change as her or she moves from state to state. In fact, the process of being licensed in additional states is streamlined by just adding the new state's license to the current record.
What is the difference between being a "State-licensed loan originator" and a "registered loan originator"?
Both types of loan originators take applications and negotiate residential mortgage loan terms. However, "registered" loan originators are employed by a bank (depository institution) or credit union, while "State-licensed" loan originators are not.
What are the prelicense education requirements for State-licensed mortgage originators as a result of the SAFE Act?
20 hours of prelicensing education are required; 3 hours of which must be related to Federal laws and regulations, 3 hours of ethics, and 2 hours of training on nontraditional mortgage products (i.e., any product that is not a 30-year fixed rate mortgage). All courses must be approved by the Nationwide Mortgage Licensing System; however the approval system isn't expected to be developed until the latter part of 2009.
What are the testing and exam requirements for mortgage originators?
Applicants must take and pass with of score of not less than 75% a written test. The test measures the applicant's knowledge of mortgage lending ethics, federal and state laws and rules, including consumer protection, nontraditional mortgage products and fair lending issues.
What will be on the test?
The test will have a national component and a state component. The federal component will likely cover licensing and education rules, investigation and examination requirements, and prohibited practices. In fact, the Model State Legislation developed by the Conference of State Bank Supervisors includes 14 prohibited practices. The state portion will be specific to each states laws and rules.
What are the SAFE Act continuing education requirements?
On an annual calendar-year basis, licensees must complete 8 hours of continuing education to renew a license. The hours must include at least 3 hours of federal laws and rules; 3 hours of ethics, including fraud, consumer protection, and fair lending issues; and 2 hours of training relating to lending standards for nontraditional mortgage products, i.e., any product that is not a 30-year fixed rate mortgage.
Licenses do not need to take continuing education in the same year they take their 20 hours of prelicense education.
What are the minimum state license standards as a result of the SAFE Act?
SAFE Act requires that any system developed by a state to license individuals to serve in a mortgage lending capacity must have at least the following 8 features:
- Screen individuals for no felonies in the last 7 years (certain felonies, like fraud, dishonesty, breach of trust, or money laundering NEVER)
- Screen individuals for no previous license revocations
- Require proof of financial responsibility using a credit report
- Require prelicense testing and education
- Require continuing education
- Provide for license renewals on an annual basis
- Include a bond, net worth or recovery fund
What this means is that states will require background checks, including fingerprinting, and credit checks of individuals seeking licensure. In addition, prelicense education and testing systems and continuing education requirements will be developed and monitored.
Does this mean that current state requirements go away?
No. In fact, the federal law is considered to be the minimum. States may mandate additional licensing or education requirements beyond those required by the SAFE Act.
What authority does the state agency retain with this new federal NMLS system?
Each state agency retains authority to approve, deny, suspend, or revoke mortgage originator licenses. The NMLS is only an electronic repository of applications and renewals.
Who will create the education and testing requirements?
The Board of Managers of the state Regulatory Registry announced it has selected the Financial Industry Regulatory Authority, Inc. (FINRA) and its sub-contractor Pearson VUE to implement the testing and education requirements. The first SAFE tests are expected to be developed and delivered by July 30, 2009.
What are the overall timelines associated with mortgage originator education, testing, and licensing?
There are two different categories of individuals with two different compliance timeframes:
- Licensed mortgage loan originators- those who were licensed before July 31, 2009 must take the education, exam and be licensed on the NMLS system between July 31, 2009 and January 1, 2001 in order to be compliant. However, if they already have taken 20 hours of prelicense education under an existing requirement, they do not need to repeat that training.
- Non-licensed mortgage loan originators- those who did not hold a license as of July 31, 2009 must take the education, and exam and be licensed on the NMLS system between July 31, 2009 and July 31, 2010.
For more details on becoming a licensed mortgage broker or loan officer, click here.
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