How are Loan Originators doing with the SAFE Act Testing to be Licensed?

On July 30, 2008 President Bush signed into law the Secure And Fair Enforcement for Mortgage Licensing Act (SAFE).  The first time Loan Originators (LO) have been required to be licensed at the federal level.

The act is meant to enhance consumer protection and reduce mortgage fraud.

The act requires states to license Loan Originators by:

• Passing a written qualified test
• Complete pre-licensure educational courses
• Take annual continuing education courses
• Having LO’s allow their credit to be checked
• Submitting LO fingerprints to the NMLS for criminal background checks via the FBI

The licensing and registration started in 2009.

So how are loan officers doing with the required testing?

NMLS released the following statistics as of June 30, 2010:

What stands out is that 71% of LO’s so far pass the national component part of the test on their first try and 80% pass the state component.  That’s a pretty good number.

On the other hand, only 44% of those that retake the test pass the national component.  That’s horrible! 

What’s this mean? 

Well if you take into account that the test really doesn’t change that much on the subsequent retakes it could mean any of the following:

• those retaking the test do poorly with tests
• they’re not very good at studying
• they have no idea what they’re doing to begin with

It’s estimated that the NMLS requirements have led to over half the LO’s to leave the mortgage business in the past year.

Of course, the economy has played a large role in that also.

MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY