On July 30, 2008, President Bush signed into law the Housing and Economic Recovery Act of 2008, a significant component of mortgage reform. This comprehensive act addresses many topics, however, I'd like to highlight one particular section of Title V of this act, called the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (also known as the S.A.F.E. Mortgage Licensing Act of 2008). The S.A.F.E. Mortgage Licensing Act establishes national minimum standards for mortgage training – both pre-licensing and continuing education. 

Frequently Asked Questions About S.A.F.E. Mortgage Licensing Act of 2008

1. What are the Minimum Education Standards Required through S.A.F.E.?
The S.A.F.E. Mortgage Licensing Act establishes the minimum standards of at least 20 hours of pre-licensing education and at least 8 hours of continuing education annually for loan originators. These federal minimums are just that – federal minimum standards. States are still responsible for deciding whether to go beyond these standards. Therefore, the impact of this law is largely still state specific.

2. For Pre-Licensing Training, Only Eight Hours Are Mandated. What About the Other 12 Hours?

Eight topic hours are mandated by the S.A.F.E. Act and the other 12 can be any other topics, almost treated like electives. This could vary by state, especially for states that have already met or exceeded the 20 hour requirement currently.

3. Do TrainingPro's Courses Meet the Requirements Set Forth in S.A.F.E.?
Yes. TrainingPro's course curriculum is currently aligned with the requirements set forth in S.A.F.E. We have been providing instruction on all of these topics for almost a decade.

4. When Must the States Be Ready to Comply with This New Education Requirement?
States that currently do not meet these minimum standards or do not currently require pre-licensing education have one year from the date of enactment (July 30, 2008) to develop their plan for meeting this requirement. States whose legislatures meet biennially, will have two years to meet this requirement.

5. Are Loan Originators Required to Take a S.A.F.E. Course Now?
Students are not required to complete a federal S.A.F.E. course package at this time. Students should continue meeting the requirements set forth by each individual state. The federal course submission and approval process has not yet been determined, and the timeline for such a process is uncertain.

6. Are Any Education Providers Approved Through These New Federal Standards?

No education providers have been approved to provide a federally-endorsed course. The approving bodies are not established as of yet, as well as the approval process. The Conference of State Bank Supervisors (CSBS) and individual states will likely have approving authority over course material.

7. What are the Details About the Required Exam?
The S.A.F.E. Mortgage Licensing Act also requires all loan originator applicants to take an exam prior to licensure. Exam participants must pass with a 75% or higher. The test will be written by the Nationwide Mortgage Licensing System and Registry and administered by an approved test provider. An individual may retake a test three consecutive times with each consecutive taking occurring at least 30 days after the preceding test. After failing three consecutive tests, an individual shall wait at least six months before taking the test again. It is our understanding that an exam content outline will be available as soon as the test bank is completed. As it stands now, the federal exam will cover the mandated topics and electives. TrainingPro is pursuing the possibility of becoming a part of the exam preparation team.

8. Does TrainingPro Have Courses To Help Students Pass the Exam?
TrainingPro currently has an exam prep series, which, based on our extensive knowledge of federal and state laws, we believe will be aligned with topics addressed on the exam.

9. Is Online Training Allowed to Meet the S.A.F.E. Requirement?
Acceptable formats (live, online and home study) for the required training have not yet been established. This is one of the items the rule-making group will tackle. The majority of the states that currently require pre-licensing education require it to be conducted in a live class format. TrainingPro will do its best to inform federal committees of the benefits and advantages of online training.

10. The Federal Law Seems Vague. Will We Get More Information?
In general, these new laws affecting the education and licensing of mortgage loan originators are vague. The specific rules to support the law are currently in development. Once these rules are finalized, TrainingPro will be fully able to guide its clients through complying with these new rules. At this point, any specific details not currently found in the legislation (and provided by other education providers) are purely speculation.

11. Who is in Charge of Establishing the Rules to Implement this Federal Law?
The rule-making committee is currently made up of the vice president of education for CSBS and five state regulators. TrainingPro is urging structured participation from key industry players, such as ourselves, who have the background and experience to contribute valuable insight.

12. Will the New SAFE Mortgage Licensing Act of 2008 Replace All of the Education Needed in Each State or In Other Words Will We Need to be Licensed at the State Level as well as the Federal Level or Will This New Act Take Care of Everything for All States?
No, the SAFE Act will serve as the minimum standard for each state. States can continue to create their own laws and regulations that go above the minimum standards set forth by the SAFE Act. However, for those states that chose not to create their own education requirements within one year after the enacted date of the SAFE Act, HUD will step in and become responsible for creating the education requirements. The SAFE Act does not mention anything about the federal government licensing mortgage professionals at the Federal level. However, it does call for the states to join NMLSR ("National Registry") for the review of the pre-licensing education. It seems that the states have the primary responsibility to grant, approve or reject individual licensing, not the Federal government. View the Full Content of the S.A.