You will need to become licensed if you want to work in the residential mortgage industry and originate mortgages for new homeowners. The Nationwide Licensing Mortgage System (NMLS) is where you can access licensing requirements and applications. This guide walks you through becoming a licensed mortgage loan officer.
Determine Your Eligibility
Defining your eligibility is a good idea before working toward the licensing requirements to become a mortgage loan officer. To become a licensed MLO, you must meet particular training, background checks, and employment requirements.
Basic Mortgage Loan Officer Requirements
NMLS requires loan officers to meet specific licensing requirements based on the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). These include a minimum of 20 hours of NMLS-approved education and successful completion of the NMLS licensing exam.
Most states also require a background check when applying for a mortgage license. This includes a fingerprint check and criminal background check. Application for licensure also requires applicants to be at least 18 years of age and have no felonies on record for the last seven years or ever if charges involved fraud, dishonesty, breach of trust, or money laundering.
State-Specific Rules
It’s important to note that different states may have varying licensing requirements. For example, some states may require mortgage loan officers to complete more than 20 hours of pre-licensing education. You can learn more about state-specific requirements by accessing the NMLS mortgage database.
Create an NMLS Account and Get Your ID
The first step toward licensing to become a mortgage loan originator is creating a Nationwide Multistate Licensing System (NMLS) account and getting an ID number. Create an NMLS account with the following steps:
- Visit the Request an Account website.
- Click ‘Individual Account’.
- Complete the required security captcha.
- Input your information (name, date of birth, phone number, email address, etc).
- Click ‘Submit’ to create your account.
- Save your information so you can easily access it later.
The Value of Your NMLS ID
After creating an NMLS account, you’ll be given an ID. This ID is required for pre-license education and when applying for your exam and license. This unique NMLS number will follow your MLO career, including continuing education and license renewal. All mortgage origination officers must have an NMLS account.
Complete Pre-Licensing Education
To obtain your mortgage loan originator license, you must complete a minimum of 20 hours of SAFE Act education-approved courses. The 20-hour pre-license education includes:
- Federal law: 3 hours
- Ethics: 3 hours
- Non-traditional mortgage lending: 2 hours
- Electives: 12 hours
While there are many pre-licensing education opportunities, it’s important to choose one that is SAFE and NMLS-approved.
Additional pre-licensing education requirements vary by state. Many states also require ongoing education to maintain your mortgage license. If your state requires additional education, you must complete those hours before scheduling your state license exam. Some MLOs may complete the national MLO license requirements before moving on to the state-specific requirements.
Pass the NMLS Exam for Mortgage Loan Officers
After completing your NMLS pre-license education requirements, you can enroll in and take the mortgage licensing exam. You can schedule your NMLS license exam through your account.
Click on the ‘MLO Testing & Education’ tab within your account. Create a new test enrollment window and click on the ‘National Test with Uniform State content’ tab. Add the ‘SAFE Mortgage Loan Originator Test- – National Component’ to your cart. Review the agreement and click ‘I Accept.’ You must then pay a $110 NMLS exam fee to process the scheduling.
After payment, you can schedule your exam by clicking ‘Manage Test Appointments’ and completing your registration.
The exam is made up of four components:
- Regulatory authority, responsibility, and limitations
- Definitions and documents
- License law and regulation
- Compliance
The individual license exam includes 120 multiple-choice questions. You have three hours and 10 minutes to complete the MLO license exam, and a minimum of 75% is required.
You can schedule your mortgage loan originator test in your NMLS account. The NMLS exam must be taken at a Prometric testing center, but online testing for your NMLS license is also available in some states.
Resources for Preparation
The first-time pass rate for an NMLS mortgage license is low. Only a little over 50% of test-takers pass the loan officer exam on the first attempt. Studying beyond pre-licensing courses is usually required to obtain your license on the first try. Prepare for your mortgage loan originator exam using NMLS-approved study guides and practice tests.
Submitting Your Mortgage Loan Originator Application Through NMLS
After successfully completing your mortgage licensing exam, you can submit your application using the nationwide mortgage licensing system. Study smarter by joining local or online study groups.
The MU4 Form
Complete the MU4 form in the system to apply for an individual license. This form is the Uniform Individual Mortgage License/Registration & Consent Form. You can fill out the MU4 form in your NMLS account with the following steps:
- Log in to your NMLS account using your unique ID number
- Choose the ‘Filing’ tab
- Select ‘Individual’ to apply for an individual license
- Select ‘Request New/Update’
- Pay the required fees
- Click ‘Add’ to apply for your state’s mortgage loan officer license
- Verify that your information is accurate
- Click ‘Finish’
Background Check and Fingerprints
Aspiring mortgage loan officers must also agree to a background check and fingerprinting. Complete background checks include an FBI criminal background check, fingerprint check, and credit report.
You can agree to all testing in the NMLS system. Visit your account and click the ‘Criminal Background Check’ tab. Click ‘Attest’ to authorize the request.
You must schedule an appointment at a nearby testing center to complete the fingerprint requirement. Click ‘Criminal Background Requests’ and ‘Fieldprint’ to schedule your fingerprint check.
To become a licensed MLO, you must also agree to a credit check.
Paying Fees
The SAFE Mortgage Licensing Act requires mortgage officers to undergo a criminal background check to become licensed MLOs, which is $36.25. NMLS also charges a $30 processing fee and a $15 credit check charge.
These associated fees only cover national licensing. Individual application fees vary between $300 to $1,000 depending on the state. You can pay fees using the NMLS system.
Working with a Sponsoring Company
Most states require licensed mortgage professionals to receive sponsorship from an employer. This employer sponsorship means the company will oversee and supervise the individual license holder. You can submit your employer sponsoring information within your NMLS account.
Finding a sponsor for your NMLS license means securing employment with a mortgage lender or broker. You must have a sponsored broker before receiving your MLO license or originating loans. Your employer needs to add their information to the system.
Apply for jobs and find an employer willing to sponsor your license. Listing potential employers before beginning the NMLS test process can speed up this timeline.
Ongoing Education and License Maintenance
To maintain your mortgage loan officer license, you must complete continuing education requirements. These requirements ensure mortgage loan originators know the most recent laws and regulations. The requirements vary from state to state but are usually around eight hours.
Mortgage License Renewal
Most mortgage licenses expire at the end of the year and require renewal. However, if you receive your MLO license between November 1 and December 31, it will be valid until the following end of the year. If you receive your license prior to November 1, you will be required to renew it in that same year.
Renewal requires the completion of an eight-hour NMLS-approved continuing education course. Individual state licensure may also require specific ongoing educational requirements. After completing all continuing education requirements, you must apply or renew using the NMLS number in your account.
Summary
Originating residential mortgage loans requires a license. To get an NMLS license, you must successfully complete the SAFE MLO test, which requires pre-registration and pre-licensing education. Then, you must register a sponsoring employer to hold your license.
After completing all the requirements, you will receive your official license, and you’re ready to begin helping homeowners achieve their dreams.
Searching for a sponsoring broker? F5 Mortgage is a leading mortgage company that helps buyers obtain competitive interest rates and offers excellent customer service. We mentor our loan officers, helping them transition to a successful career. Contact us today at (888) 459-0483.
