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The SAFE Act

Learn More About The SAFE Act

What is the SAFE Act?

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) established requirements for the licensing and registration of all Mortgage Loan Originators (MLOs). MLOs who work for an insured depository or its owned or controlled subsidiary are not required to take the education or exams. All other MLOs need to be licensed by the state, complete the education requirements, and pass the state and national SAFE exams.

The SAFE Act requires that state-licensed Mortgage Loan Originators (MLOs) pass a written qualified test with a score of 75% or better, complete at least 20 hours of pre-licensing education courses, and take eight hours of annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the NMLS for submission to the FBI for a criminal background check. State-licensed MLOs will provide authorization for NMLS to obtain an independent credit report.

The NMLS is a secure Internet-based learning system for the residential mortgage industry. It is designed to be a centralized and standardized system that will streamline the licensing process for both regulatory agencies and the mortgage industry. The NMLS initiative was begun by state mortgage regulators in 2004 in response to the increased volume and variety of residential mortgage originators and the need to address these changes with modern tools and authorities. Specifically, NMLS was created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). It is owned and operated by the State Regulatory Registry LLC (SRR), a wholly owned subsidiary of CSBS. The system has been built and maintained by the Financial Industry Regulatory Authority (FINRA), who operates similar systems in the securities industry.

What is the SAFE Exam?

After students complete the minimum 20 hours* of prelicensing education, they can register for the SAFE Exam. The SAFE Mortgage Loan Originator Exam is divided into two sections: the national component and the state-specific component.
The national component of the SAFE Mortgage Loan Originator Exam consists of 125 test questions: 115 scored and 10 not scored, with a test time of 190 minutes.

Each state-specific component of the SAFE Mortgage Loan Originator Exam consists of 45 to 55 operational questions (scored) with an additional 10 pre-test (not scored) questions. The exact number of scored test questions for each state exam is listed in the state’s test content outline. The exam time is 90 minutes with an additional 30 minutes available for completion of an optional candidate survey and tutorial.

A new component to the SAFE Exam is the Uniform State Test (UST). This portion includes 25 questions, which brings the length of the National Test Component with Uniform State Content to 125 questions. Of these, 115 are scored, and 10 unscored. The UST replaces the state-specific test components for ONLY the states that adopt it.
Learn more about the exam.

Mortgage Licensing and Continuing Education Requirements:

In order to meet the pre-licensing education requirements, state-licensed Mortgage Loan Originators (MLOs) must complete 20 hours of NMLS approved education.

20-Hour Example*:

  • 3 hours of federal law and regulations
  • 3 hours of ethics, which includes instruction on fraud, consumer protection, and fair lending issues
  • 2 hours of training related to lending standards for the nontraditional mortgage product marketplace
  • 12 hours of undefined instruction on mortgage origination

For annual continuing education, the SAFE Act requires* state-licensed MLOs to complete the following:

  • 3 hours of federal law and regulation
  • 2 hours of ethics, which includes instruction on fraud, consumer protection, and fair lending issues
  • 2 hours of training related to lending standards for the nontraditional mortgage product market
  • 1 hour of undefined instruction on mortgage origination

*some states vary on the hour requirements.

Learn more about the NMLS