SAFE Act forces Florida mortgage brokers into test centers and classrooms

May 3, 2010 - PRLog -- Big changes are taking place in the mortgage loan origination industry today as a result of the ‘mortgage meltdown’ and the Federal SAFE Act of 2008. New requirements -- including licensing, registration, education, examination, fingerprinting and credit checks-- are coming up soon. These changes will affect not only who can remain in the business but, maybe even more importantly, who will be forced to leave the mortgage industry. In addition, those looking to begin in the business will be facing more stringent regulation and oversight than in the past.

So, what are the changes and how do they affect the mortgage industry?

In 2008, Congress passed the SAFE Mortgage Licensing Act. This Act created the Nationwide Mortgage Licensing System, or NMLS, and Registry for the residential mortgage industry. The Act sets forth procedures, requirements (including education and testing), and standards for mandatory registration and state licensing of Mortgage Loan Originators, or MLOs. It also requires the federal banking regulators to develop and maintain a system for registering depository institution employees as Registered Loan Originators with the Registry.

Florida Office of Financial Regulation (FLOFR)

As the residential mortgage industry has taken its lumps for its perceived role in the real estate boom and subsequent bust, the public has pushed for changes in loan origination oversight. That’s where the 2008 SAFE Act came in and created regulation and oversight for an industry hammered by fraud and deceit.

By requiring all MLOs to meet a national education and examination requirement, as well as required credit checks, it is the goal of Congress to weed out the non-professionals and license those who have conducted business honestly. The more stringent guidelines also ensure that individuals just entering the business will be held to higher standards of professionalism and consumer protection.

While more than 40,000 Florida mortgage brokers have left the business in the past 3 years, those who remain are licensed and regulated by the Florida Office of Financial Regulation. Licensing requirements have included pre-licensing education, testing, filing of an application, paying initial license and renewal fees, and biennial completion of state-approved continuing education.

National Mortgage Licensing System (NMLS)

All Florida mortgage brokers will need to meet the new NMLS requirements beginning October 1, 2010. Florida mortgage brokers will need to re-apply with the Office of Financial Regulation and register with NMLS. In order to do so, they will need to comply with SAFE Act guidelines that require 1) completion of at least 20-hours of approved mortgage education; 2) pass a 100-question SAFE Act National Exam; 3) pass a 50-question SAFE Act State Exam; 4) be fingerprinted; 5) submit to a credit check; 6) be approved for NMLS registration by obtaining a license from FLOFR; 7) pay hundreds more in licensing and registration fees; 8) attend annual continuing education; and 9) renew the license and registration annually.

Transition period

Because of the expected 30,000+ new applications, the State of Florida will allow currently licensed mortgage brokers to continue working while waiting for their new license to be issued and their NMLS registration to be completed. FLOFR has indicated that the initial licensing and registration process may not be completed until sometime in 2011. Previously-exempt loan originators working in Florida as employees under licensed mortgage lenders or correspondent mortgage lenders have been advised by FLOFR to obtain a Florida mortgage broker license before August 1, 2010 to be allowed to operate during the lengthy licensing process. Failure to do so will force these individuals to leave the business on October 1, 2010 or risk penalties authorized under Florida Statutes.

Rick Larson, co-founder and manager of Larson Educational Services, a Florida Mortgage Business School and NMLS Approved Course Provider in Fort Myers, Florida, sums it up this way. “If you are in the Florida mortgage loan origination business and do not have a Florida mortgage broker license, it is highly recommended you get one as soon as possible so you can continue working while your Florida loan originator application is in the approval process. Otherwise, you’ll be out of business until the state issues your license. That could be well into 2011.”

What to do if you already have a Florida mortgage broker license

Even though you cannot apply for the new MLO license until October 1, 2010, you can begin part of the approval process by completing Steps 1 – 3:

Step 1: Create an account with NMLS
Go to http://www.stateregulatoryregistry.org/NMLS to obtain your own NMLS ID, also known as your Unique NMLS Identification Number.

Step 2: Register for the SAFE Mortgage Loan Originator Test -- National Component
By creating an account, you will be allowed to then enroll for the NMLS National Exam. This exam is available to you right now and you can schedule to take it after creating your account and paying the testing fee of $92 through the NMLS website. You will be given access to schedule the exam with one of the testing providers, either PearsonVUE or Prometric. Testing centers are available throughout the country and the testing provider you use will be dependent on the city in which you choose to take your exam.

Step 3: Study and PASS the National Exam
Larson, who has prepared more than 100,000 students nationwide for professional examinations, says “There is no correlation between industry expertise and test-taking expertise. I have seen thousands of top-producing professionals seek help because they’ve struggled to pass the exam. The saddest part about failing once is that the second time through is usually even harder because the test-taker is left to second-guess decisions made on the first exam. The key is proper preparation the first time.”

Larson continues, “That’s why I wrote a home study manual with key notes, sample questions and two 100 question Sample Exams very similar to the real one. Any prospective loan originator in the United States will benefit from this course before sitting for the National Component exam. We’re also offering the course face-to-face throughout our home state of Florida.”

A word about “grandfathering”

Each state falling under the SAFE Act requirement has the choice of “certifying” their existing pre-license education as meeting the new 20 Hour SAFE Comprehensive education requirement. This means that each state can choose whether or not they will require their existing mortgage license holders to take the 20 Hour Course. Some states have decided to accept previous education. Other states have decided not to. Florida has decided that all currently licensed Florida mortgage brokers will not need to complete any additional education.

Also, if the applicant has passed the Florida mortgage broker exam as of January 1, 2004, they are exempt and will not be required to take the NMLS Florida State Component exam.

Get started now

Finally, Larson summarizes, “There will be confusion, myth and rumor during this transition period, but the changes are happening and the new requirements must be met. If you’re affected by these changes, my advice is to get going now. Create an account at NMLS; register for the National Exam; prepare, practice and pass.”

For the most current licensing and testing information go to http://www.LarsonEd.com/mortgageloanoriginator/nmls/. There you will find helpful explanations, links to NMLS, and application instructions. You will also find exam preparation materials and live course schedules. Information is also available by contacting Larson Educational Services experts at (239) 344-7510.

Read more about Larson Educational Services at http://www.LarsonEd.com/about/

# # #

Utilizing 30 years of real estate training and professional education experience, Larson Educational Services is the premier provider of Florida real estate licensing, exam preparation, post-licensing, real estate broker licensing, Florida CAM licensing and Florida mortgage licensing and continuing education in Southwest Florida. We are also an NMLS provider for mortgage loan originators. Classes are available in Fort Myers, Naples, Port Charlotte and online.