What is the SAFE Act?
What is it?
You may have heard of the SAFE Act, but since you’re on this page you’re probably wondering, what is the SAFE Act? The SAFE Act was enacted by the United States Congress on July 30, 2008, as a response to the housing market crash and subsequent financial crisis that began in 2007. It was designed to enhance consumer protection and reduce fraud in the mortgage industry by establishing minimum standards for the licensing and registration of mortgage loan originators (MLOs).
Under the SAFE Act, MLOs are required to register with the Nationwide Mortgage Licensing System and Registry (NMLS), which is a centralized database operated by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). The NMLS provides a platform for MLOs to apply for and maintain their licenses, as well as to track their employment history and disciplinary actions.
Primary Objectives of the SAFE Act
Licensing and Registration: The SAFE Act requires MLOs to be licensed or registered at federal and state levels. This ensures they meet competency and character standards before engaging in mortgage origination.
Minimum Requirements: The Act establishes minimum requirements that MLOs must meet to obtain and maintain their licenses. These requirements typically include pre-licensing education, passing a written examination, undergoing a criminal background check, and completing annual continuing education courses.
Consumer Protection: The SAFE Act aims to protect consumers by requiring MLOs to provide accurate and truthful information to borrowers, maintain ethical and professional conduct, and act in the best interests of their clients. It also includes provisions to prevent fraudulent activities such as identity theft and mortgage fraud.
Uniformity and Consistency: The SAFE Act promotes uniformity and consistency in licensing standards across different states. While each state has the authority to set its own licensing requirements, the Act encourages states to adopt uniform standards and reciprocity agreements to facilitate the movement of MLOs across state lines.
What has it done?
The SAFE Act raised professionalism and accountability among MLOs. It improved transparency and reduced fraud. Consumers now have greater confidence when dealing with mortgage professionals.
How Hard is the Course and Exam?
Completing the required course material is easy, but the national exam is challenging. That is why choosing the right provider is so important. Ensure your NMLS approved course provider prepares you to pass the exam and offers support even after the class ends.
What Jobs Require a License?
Mortgage Loan Originators, Mortgage Loan Officers, and Mortgage Brokers require a license. Mortgage Loan Modifiers may also need a license. In some cases, Mortgage Processors and Underwriters may need a license too.
How Do I Get My Mortgage License?
Getting a mortgage license can be complex, but it doesn't have to be. Many resources can assist you. Start with the NMLS' helpful Getting Started Guide! Put simply, you must take the 20 hour course, pass the National Exam and apply for the license through a sponsored employer.
Course Options to Meet the Pre-Licensing Education Requirement
Firstly, the NMLS approved list includes over 100 providers, but only a few of them can serve you Nationwide. Additionally, there are three different delivery methods available for taking the course. Among these, finding live classroom instruction is likely to be tough.
In fact, out of the three methods, the two most popular ways to take the pre-licensing course are Live Webinar and Online Instructor-Led.
Webinar
If your current schedule allows, the webinar presents the best way to learn the industry. It spans over 3 straight days and features a live instructor guiding you from the comfort of your own home or office. For participation, a webcam is also required.
Online Instructor-Led
The Online Instructor-Led option delivers the course over a 7-day window, offering more flexibility for individuals who cannot dedicate 3 consecutive days to a webinar. You can find more information about this delivery option at the link below.