S-A-F-E Mortgage Licensing Act – What Does it Mean For You?

If you are in the mortgage industry, you have probably heard about the S.A.F.E. Act, or more formally known as the Secure and Fair Enforcement Licensing Act. Do you know what it is, if it applies to you and how to comply with this new federal law? Read on for a general, but informative overview and figure out what you need to do next.

What is the S.A.F.E. Act?

In July 2008, the Housing and Economic Recovery Act was signed by former President Bush. This act set a variety of precedents that changed the way industries like real estate and mortgage are able to conduct business by implementing stricter laws and regulations. And the S.A.F.E. Mortgage Licensing Act is a major component of the Recovery Act, which requires all mortgage loan originators to register with a Nationwide Licensing System (NMLS) and Registry, satisfy pre-licensing education and more.

How do I get S.A.F.E. compliant?

There a various steps involved Meet S.A.F.E. standards. Check out the steps below for an overview of what’s involved:

1. Register with the NMLS. All mortgage loan originators will need to receive a unique identifier number, which is received upon registering with the NMLS. The purpose of the unique identifier number is to track your MLO business activity, examination status and pre-licensing education reporting.

2. Complete 20-hours of NMLS approved pre-licensing education. This is a requirement of the S.A.F.E. national component. You must complete your education with approved provider, however, you have flexible options available like online courses that will better accommodate your schedule – focus on leads and income first, satisfy your 20-hours in your free time.

3. Pass the National Exam. All MLOs must pass a 100-question national exam.

4. Pass state exams for the states you conduct MLO activity in. Do you conduct MLO activity in California, New Jersey and Pennsylvania? Then you will need to pass an exam for each state. And each state has its own unique exam and set of regulations. For example, some states may require you to complete pre-licensing education, while in other states, all you need to do is pass the exam. Either way, consider a small investment in exam prep materials, pass the exams the first time and only pay the exam fee (per state) once.

5. Submit fingerprints to the NMLS for a criminal background check.

6. Submit your authorization for the NMLS to obtain your credit report.

7.Complete annual continuing education courses

How do I know if S.A.F.E. regulations apply to me?

Any individual involved with MLO activity such as taking a residential mortgage loan application and/or negotiating loan terms will need to comply with S.A.F.E. This includes real estate salespeople who are involved with these activities on behalf of their clients. On the other hand, if an individual or entity is involved with MLO activity strictly in an administrative capacity, the S.A.F.E. law does not currently apply to you. For the most up-to-date information, the NMLS Web site is an excellent source. Also, review your state’s laws to ensure you cover all of your bases.

Do I need to comply with the new S.A.F.E. standards if I work for a bank?

No, if you work for a bank, you do not currently need to satisfy S.A.F.E. MLO licensing standards. According to the NMLS, MLOs who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered. All other MLOS must be licenses by state.

Where can I learn more about S.A.F.E. regulations, including finding a NMLS approved education?

For the most recent information concerning the S.A.F.E. act, visit the NMLS Web site. There you can learn more about this federal law, find regulations by state, important deadlines, helpful how-to tutorials and a directory of approved education providers.