General Information about the SAFE Mortgage Licensing Act
If you are a mortgage professional or you are in the process of becoming a mortgage professional, you are probably wondering what exactly the SAFE Mortgage Licensing Act is and how it affects your career. SAFE means the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which was developed in order to protect both mortgage professionals and the consumers they assist.
The SAFE Act is a part of the Housing and Economic Recovery Act of 2008, also known as Public Law 110-289 or HERA. HERA was passed in order to regenerate the American residential housing marketplace. HERA works to avert foreclosures as much as possible, update the Federal Housing Administration, and improve safeguards for consumers. The SAFE Act is a crucial addition to HERA and it improves HERA’s consumer safeguard standards and aids in preventing fraud. The SAFE Act will ensure that these new standards are met by instituting minimum requirements for the registration and licensing of:
- Mortgage loan originators licensed by states.
- The Conference of State Bank Supervisors (CSBS).
- The American Association of Residential Mortgage Regulators (AARMR).
As a result of instituting these minimum requirements, a national mortgage licensing structure will be in place. This structure will provide needed positive regulation and standardization of the residential mortgage industry. In more detail, the regulatory intentions of the SAFE Act include:
- Creating standardized license applications and reporting conditions for loan originators (licensed by state), as well as an all-inclusive database for licensing and regulation.
- Fostering excellent communication between regulators by creating a cooperative exchange of information.
- Monitoring and checking the responsibility of loan originators.
- Updating the licensing process in order to improve functionality and make regulation more effective.
- Implementing more effective consumer safeguards against fraud.
- Offering clients free information, attained electronically, about loan originators’ past employment and any penalizing actions enacted against them.
- Instituting a system that ensures residential mortgage loan originators strive to provide the best service for their clients.
- Supplying regulated instruction, training, and examination requirements for subprime mortgage lenders, and ensuring respectable performance and conduct in the subprime mortgage market.
- Collecting and distributing consumer grievances in an efficient and productive manner.
Why are these new rules and implementations so important? Determined adherence to these standards will redeem the truthfulness of the residential mortgage loan market, minimize and potentially eliminate fraud, and above all, protect the consumer.
In order to ensure that the SAFE Act standards are being upheld, the individual states are persuaded to partake in the Nationwide Mortgage Licensing System and Registry (NMLSR), which is monitored by CSBS and AARMR. Each state must also meet the licensing requirements of sections 1505, 1506, and 1508(d) of the SAFE Act by July 31, 2009 (if the state legislature convenes annually) or July 31, 2010 (if the state legislature convenes biennially). As long as the state is assuredly trying to conform to the new SAFE Act standards and meets the basic requirements, the time limit can be lengthened (by no more than 24 months) by HUD.
The SAFE Mortgage Licensing Act and Education
So what does the SAFE Act mean for you and your education? Whether you are just starting your career in the mortgage industry or you have been active in the industry for years, all mortgage loan originators must take 20 hours of pre-licensing mortgage education classes. No matter what, if you are in the process of becoming a mortgage loan originator, you must complete these 20 hours of pre-licensing education and they must be completed by July 31, 2010. If you are already practicing, you must complete the same requirements unless you have previously taken pre-licensing classes or continuing education classes in order to earn your license in your state. However, your state’s mortgage license agency must verify that you have fulfilled these educational requirements.
If you have already passed the pre-licensing education and are seeking a successive mortgage license, you do not have to complete the NMLSR approved pre-licensing education. However, every mortgage loan originator must take eight hours of mortgage education each year, approved by NMLSR Continuing education for mortgage loan originators does not have to be completed in the first year of licensure (in which the pre-licensing education was completed). If your state already has pre-licensing or continuing education classes in place, these classes can be taken into 2009 and 2010 as long as they meet the NMLSR requirements.
The Nationwide Mortgage Licensing System and Registry (NMLSR) approves the pre-licensing and continuing education. The NMLSR also provides a national mortgage loan originator test, which includes a federal section and a state section. You must complete the federal section of the test only once. However, if you do not possess a license for five or more years, you must take the federal section again. If you wish to attain a mortgage loan originator license in another state that you are not currently practicing in, you must take that specific state’s section of the national exam. With the passage of the SAFE Act, all mortgage loan originators have to successfully complete this national exam, despite their previous originating experience or other testing. If you are in the process of earning your mortgage loan originator license, you must follow your state’s guidelines and complete the SAFE Mortgage Loan Originators Test within the timeframe of July 31, 2009 to January 1, 2011. If you already have your mortgage loan originator license, you still have to successfully complete the SAFE Mortgage Loan Originators Test so that you may keep your license.
Subjects for both the pre-licensing national exam and the continuing education national exam include variances on federal law and regulations, ethics, and lending principles. For both pre-licensing and continuing education, these topics only make up eight of the 20 required hours required by the SAFE Act. The extra 12 hours can be used to learn about other mortgage topics, depending on the state in which you are earning your licensure. You must earn a 75% or more on the exam in order to pass it, and if you fail, you may take the exam within 30 days of completing the previous attempt. You may retake the exam three times successively, but if you fail each time, you must wait six months before retaking it once again.
Your head may be spinning from all of the new requirements, but do not worry. Since the SAFE Act is fairly recent, those pursuing or in possession of a mortgage loan originator license must continue to comply with their state’s requirements until the new national requirements are set firmly in place. In other words, compliance with these new educational rules does not have to be met until July 31, 2010. So relax, breathe, and take your time easing into these new requirements. Just think of how prepared you will be, getting such a great head start!
|
|
