Just spent the past 2 days completing the 20 hours of education required by the SAFE Mortgage Licensing Act.
For those unfamiliar with the SAFE Act, here is a nutshell version. Part of the Housing and Recovery Act (HERA), the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act was passed in July of 2008. Again this is the nutshell version (I encourage you to click on the link above to see HUD's summary which is much more detailed): the purpose of the Act was to create national standards for mortgage licensing which includes mandatory education and testing requirements for loan originators.
The SAFE act also created a national database called the National Mortgage Licensing System (NMLS) that is good in a number of ways, but primarily for centralizing the data so it's easily accessible by consumers, prospective employers, regulators, etc.
In my opinion, like much of the regulations we've seen arise over the past couple of years, the idea here is to protect consumers, get rid of the bad apples in the mortgage business, and create more knowledgeable loan originators.
By and large, this is a good thing. I've been complaining for years that there were no education requirements for loan originators here in Tennessee. When I got into this business in 2003 they didn't even require licensing for all loan originators, we were allowed to operate under the managing partner's license. That changed back in 2006 for all of us except for those working under a federal depository institutions charter (FDIC). They're still allowed to originate under their employer's charter without obtaining individual licensing. These individuals are required now to register with the NMLS, but aren't required to complete the education or testing as these are only requirements for obtaining individual licensing.
But I digress... getting back to my original topic, I just spent the past 2 days sitting in a small classroom completing my initial 20 hour education portion of the requirement in 2 10 hour sessions. Here's what we reviewed in all that time:
- All Federal and State (Tennessee) legislation which apply to the mortgage business (old and new)
- A brief overview of the mortgage business, primary and secondary markets, and recent developments that have impacted our business.
- The Mortgage Lending Process
- Conventional Financing
- Government -Sponsored loan programs
- Non-Traditional mortgage products (which now seems to apply to everything other than the 30 year fixed rate loans)
- Understanding Appraisals (& HVCC)
- Ethics in the Mortgage Lending profession.
With all of the changes we've seen over the past two years, I've had to build reading into my daily schedule, just to stay on top of all of these things (I realize that probably puts me in a minority). I'll be honest, 20 hours going over material I was largely familiar with was tedious, but I would have benefited greatly from a class like this when I first got into the industry. Overall, I believe that education and testing with mandatory minimum score requirements for all loan originators is good for our business.
Tennessee won't release the state test until next week (2/22), but I'm planning to take the national test at my earliest opportunity, so wish me luck. 75% is the minimum passing score. I'll let you know how it goes.
OVERDUE UPDATE: I've taken the National exam and scored an 88%. There were 100 multiple choice questions. Honestly, a handful of them left me scratching my head wondering what they were asking. I suppose that's "standard" for standardized testing. Next week the state exam.