Becoming a licensed Mortgage Loan Originator (MLO) allows you to enter the mortgage industry and secure high-paying income. The job role of an MLO is financially and emotionally rewarding. The average salary offered is $168,822 a year and on top of that, you can earn commissions based on the number of loans you close while helping individuals purchase their dream home.
To become a licensed Mortgage Loan Originator (MLO), applicants must meet the requirements established by the Nationwide Multistate Licensing System (NMLS). A key step is completing a 20-hour NMLS-approved mortgage license course, which fulfills the SAFE Act pre-licensure education requirement and helps prepare candidates for the SAFE MLO Test. After completing the required mortgage license course and passing the SAFE MLO Test, applicants must also meet any additional federal and state licensing requirements, which may vary by jurisdiction.
Key NMLS Licensing Requirements
A career as a Mortgage Loan Originator (MLO) comes with significant responsibilities. Guiding individuals through the appropriate financing options of owning a house is an important task.
Homeownership comes with various challenges, such as overcoming the confusion between building a house and buying a house. This is where an MLO steps in. These professionals guide individuals about the financing possibilities for both options and act as a bridge between the lender and the borrower.
If the job role of an MLO excites you, here is everything you need to know about the NMLS requirements for an MLO license.
1. Create an NMLS Account
The first step toward becoming licensed is to create an individual account in the Nationwide Multistate Licensing System & Registry. Every applicant must obtain a unique NMLS identification number, which is used throughout the licensing process and while practicing as a mortgage loan originator. After creating the account, applicants can enroll in pre-licensing education courses, register for the SAFE MLO test, and submit license applications.
2. Complete the Pre-Licensing Education
The SAFE Act requires prospective MLOs to complete a minimum of 20 hours of NMLS-approved pre-licensing education before the candidate can apply for an MLO license.
The pre-licensing education must include the following:
- 3 hours of federal mortgage laws and regulations
- 3 hours of ethics, including fraud prevention and consumer protection
- 2 hours of non-traditional mortgage lending
- 12 hours of mortgage origination instructions
Depending on the state, you may also need to take additional coursework beyond the federal minimum. According to the Office of the Comptroller of the Currency, federal laws establish important consumer protections in mortgage lending that every MLO must understand. When enrolling in pre-licensing coursework, be sure to check the state-specific requirements.
4. Pass the SAFE MLO Test
After the candidate has completed the pre-licensing coursework, they need to appear for the SAFE MLO test. Candidates require a minimum of 75% to pass the examination. Here are some key exam facts that every candidate must be aware of:
- Passing mark for the examination is a minimum of 75% or higher
- There are a total of 120 questions, out of which 115 are scored
- Total time limit is 190 minutes
- It is a national exam with Uniform State Content
- Total cost of appearing for the examination is $110
Here is a detailed structure of the examination:
- Federal mortgage-related laws: 24%
- Uniform state content: 11%
- General mortgage knowledge: 20%
- Mortgage loan origination activities: 27%
- Ethics: 18%
5. Complete a Criminal Background Check
As a part of the licensing process, applicants must authorize a criminal background check through NMLS. State regulators review criminal history to determine whether an applicant meets the character and fitness standards required for licensure.
6. Submit Fingerprints
Applicants must submit fingerprints as a part of the background screening process. The fingerprints are used to conduct federal and state criminal history checks.
7. Authorize a Credit Report
State regulators also review an applicant’s financial responsibility through a credit report authorization submitted via NMLS. While poor credit doesn’t automatically prevent licensure, regulators do examine outstanding tax liens and financial mismanagement.
8. Submit Your License Application
Once applicants complete their education, testing, and background requirements, they can submit their state license application through NMLS.
State regulators review the application and determine whether the applicant satisfied all licensing requirements.
9. Sponsorship
To activate the MLO license, applicants require sponsorship. After completing the licensing procedure, applicants activate the MLO license by obtaining employment with a mortgage lender or brokerage firm.
Conclusion
Understanding the NMLS MLO license requirement is essential for every applicant. By completing each requirement and maintaining compliance with the rules established by state and federal regulators, MLOs can build a strong foundation for long-term success in the mortgage industry.
