Mortgage Career

SAFE MLO Exam 101 – Introduction, Origin, Structure & Fees

The SAFE MLO Exam or SAFE Mortgage Loan Originator Exam is a required exam in all US jurisdictions and States to comply with the SAFE Act. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 was enacted into law on July 30, 2008 with one primary objective: establish minimum standards for individual States to license and register mortgage loan originators.

Passage of the S.A.F.E. Act
The Housing and Economic Recovery Act of 2008 (HERA) constitutes a housing law that is designed to assist with housing recovery. Likewise, the SAFE Act was created to bolster consumer protection and minimize fraud by concretizing minimum standards for licensure and registration of mortgage loan originators, The law also provides provision for creation and maintenance of a nationwide mortgage licensing system and registry for the residential mortgage industry.

The new standards are intended to increase integrity in the residential mortgage loan market and to create a system of accountability that previous was deficient and unreliable.

Origin of Exam

The SAFE MLO Exam administered by NMLS is the authority for the licensing requirement as detailed by the SAFE Act and HERA, created by HUD, after the 2008 Housing Crisis.

NMLS is the system of record for non-depository, financial services licensing, or registration in participating state agencies, including the District of Columbia and U.S. territories of Puerto Rico, the U.S. Virgin Islands, and Guam.

The exam is intended to help avoid a future crisis within the housing industry as happened in 2008 due to mortgage loans that were initiated and granted to people with insufficient net worth, revenue, and capital.

Structure of Exam
The SAFE MLO Test questions consist of 125 computer-generated, multiple-choice questions across these five categories:

  • Federal mortgage-related laws (23%)
  • General mortgage knowledge (23%)
  • Mortgage loan origination activities (25%)
  • Ethics (16%)
  • Uniform state content (13%)

The SAFE MLO Exam questions must be all be completed within three hours. Only 75 percent or better is passing and the US national average is most recently 57 percent.

It is important to note that many state agencies have adopted the Uniform State Test (UST). For those states which have not adopted the UST, applicants are required to take the Uniform State Content and the State Test Component(s). These States include: Minnesota, South Carolina, Utah, and West Virginia.

Associated Fees and Filing
As of November 23, 2016 the total cost for the NMLS Mortgage Loan Originator License is $330 US dollars. Additionally a $15 US dollar fee is required for a current credit report and an additional $36.25 US dollars for a required criminal background check, if opted for at the time of application.