General Overview of SAFE Mortgage Loan Originator Test
If you are interested in earning your mortgage loan originator license, you are probably wondering how the recently passed SAFE Mortgage Licensing Act affects your mortgage education, testing, and licensing. Likewise, if you already possess your mortgage loan originator license, you are probably speculating how the SAFE Act affects your career as an already licensed mortgage loan originator. Whether you are in the pre-licensing stages or you have already earned your license, it is important for you to know that all mortgage loan originators must pass the SAFE Mortgage Loan Originator Test in order to earn or maintain their mortgage loan originator license.

The SAFE Mortgage Loan Originator Test was created by the Nationwide Mortgage Licensing System and Registry (NMLSR). Pre-licensees and licensees will be tested on their understanding of ethics, federal law and regulation, state law and regulation, and federal and state law and regulation (such as fraud, consumer safeguards, fair lending concerns, and the modern mortgage market). In order to pass the loan originator test, you must answer at least 75% of the questions correctly. If you fail the test, you can retake it no less than 30 days after the first test. If you fail the test three times consecutively, you must wait no less than six months before taking it again.

Those seeking a mortgage loan originator license must successfully pass the test between July 31, 2009 and July 31, 2010 and also within a specific timeframe set by their state’s mortgage licensee regulator. Those who already possess a mortgage loan originator license must successfully pass the test between July 31, 2009 and January 1, 2011 in order to maintain their license. They must also pass the test on a date specified within this timeframe by their state mortgage licensee regulator. In addition, if you are a licensed mortgage loan originator and your license has not been valid for five or more years, you must retake the mortgage loan originator test.

National Portion Composition and Topics
The national section of the SAFE Mortgage Loan Originator Test is composed of four segments of essential information the licensee must know and understand. There are 90 questions that are scored, and 10 questions that are not scored so that NMLSR can test the effectiveness of new trial questions. The first section, Federal mortgage-related laws, makes up 35% of the national section. Topics in this section include RESPA the Equal Credit Opportunity Act (Regulation B), the Truth-in-Lending Act (Regulation Z and HOEPA), the SAFE Act, and other important federal laws. The second section, which comprises 25% of the national portion, tests student knowledge of general mortgage details. These details include mortgage programs, loan products, and terms. The third section also makes up 25% of the national section and consists of mortgage loan origination activities, such as application information and requirements, processing and underwriting for qualification, specific program guidelines, closing details, and financial calculations. The last section, which makes up 15% of the national component, tests the students’ knowledge of ethics. Mortgage ethics include RESPA, the Gramm-Leach-Bliley Act, the Truth-in-Lending Act, and the Equal Credit Opportunity Act. Additionally, the ethics section also tests knowledge of appraisal, fraud prevention, and ethical behavior.

State Portion Composition and Topics
The state component of the SAFE Mortgage Loan Originator Test is divided into six sections and consists of 44 to 55 questions that are scored, and 5 to 10 questions that are unscored trial questions. The first section, which makes up 5% of the state section, covers information about your specific state’s Department of Financial Institutions or Mortgage Regulatory Commission. Students should have knowledge of their state’s regulatory authority, structure, responsibilities, and limits. The second section covers the topic of state law and regulation definitions, and makes up 10-15% of the test. The third section, which constitutes 15-20% of the test, examines the students’ understanding of license law and regulation. In order to understand license law and regulation, students should know persons who must be licensed, licensee credentials and the steps in the application process, the reasons for rejecting a license, and how to maintain a license. The fourth section covers 50-60% of the state section of the SAFE Mortgage Loan Originator Test. This important segment covers multiple aspects of compliance, including forbidden actions and practices, mandatory actions, fees and costs, disclosures and agreements, and advertising. The fifth section, which makes up 10-15% of the state segment, involves knowledge of disciplinary actions, including: notifications, hearings, and appeals; suspension, revocation, and rescission of licenses; penalties and fines; civil and criminal liability. The last segment of the state portion of the SAFE Mortgage Loan Originator Test makes up 0-15% of the test and concerns knowledge of unique state test areas.

If you are in the pre-licensing stages and you need to find a school to help you prepare for the SAFE Mortgage Loan Originator Test and your career in the mortgage industry, click here to check out Hondros Learning’s mortgage classes and educational materials. Good luck on the SAFE Mortgage Loan Originator Test and best wishes for a successful career in the mortgage industry!