How do You Become a Mortgage Broker?
There is a well-defined path to becoming a mortgage broker. All real estate professionals who are considered to be mortgage loan originators (MLO) are required to pass both a national and state exam as well as meet educational and bonding requirements. Despite the fact that no college-level degree is required, most mortgage brokers have at least a two-year degree related to law, sales, accounting, financial analysis and government.
Meet the Education Requirements
The SAFE Act of 2008, or Secure and Fair Enforcement for Mortgage Licensing Act, mandates that state-approved mortgage brokers meet pre-licensure education requirements. In order to meet these standards, aspiring mortgage brokers must show they have completed 20 hours of approved educational courses. Unlicensed mortgage brokers will need to take three hours of classes related to Federal law and regulations and three hours of ethics training that covers fraud, consumer protection and fair lending standards. Two hours of coursework related to lending standards of non-traditional mortgage market and at least 12 hours of elective classes related to mortgages are also required. It is the state’s individual laws that will determine any additional education.
Take the SAFE Mortgage Loan Originator Test
Anyone who wants to become a mortgage broker must pass the SAFE Mortgage Loan Originator Test, which includes both state and national sections. All brokers take the same national test, but the state portion differs based on the state that the individual intends to work in when licensed.
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These exams can be taken throughout the nation at different testing centers. The exam is administered by the National Mortgage Licensure System (NMLS). While they are not a license-granting authority, they digitally track and store all mortgage broker licenses. The latter exam will contain questions that are exclusive to the target state, but the bulk of the questions will concern national regulations.
Meet the Continuing Education Requirements
The SAFE Act mandates that state-licensed mortgage professionals must meet annual continuing education standards. The national minimum is eight hours of NMLS sanctioned education credits. This includes one hour of elective mortgage instruction, two hours of non-traditional mortgage lending standards, two hours covering ethics and three hours covering Federal law and regulations. Every state how their own continuing education requirements for mortgage brokers to maintain their state licensure. Most states require one to two hours of continuing education credits related to state mortgage laws and lending regulations. Some states have centralized registration databases that mortgage brokers and real estate salespeople must notify if they change employment or are terminated. The best way to meet the continuing education requirements while developing professional competency is through pursuing a bachelor’s degree.
The final step in becoming a mortgage broker is to secure a surety bond. Almost all states require that every mortgage broker license be attached to a mortgage broker bond, which provides consumer protection to future homeowners. Mortgage brokers found guilty of fraudulent business practices may be sued by clients for the total bond amount. Some states set the standard at $25,000, but others go up to $100,000. The full amount isn’t required, so mortgage brokers simply pay annual premiums.