Information on congressional SAFE ACT and NMLS requirements for mortgage professionals.

1. David Reinholtz is an active participant in every aspect of the mortgage and real estate industry. His twenty five years of top production, business development, training, and public speaking along with an earnest delivery makes David an authentic leader who impresses every audience. David is a sales and marketing expert who speaks and trains professionals in every industry. trained tens of thousands of loan officers, mortgage brokers, real estate agents and others through The Close More University Seminar Series, LoanOfficerSchool.com Classes, Correspondence and On Line Learning, and countless private engagements and David has personally training events throughout the country. David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems' (NMLS) required pre-licensing education and continuing education .

3. Let’s Cover the Facts • Starting August 1, 2009, any individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a Mortgage Loan Originator • The S.A.F.E. Act requires a system of licensure to be in place by August 1, 2009 in all states. • Transitioning existing loan originators onto this system will be implemented at a different timeframe beginning August 1, 2009

5. APPLIES TO: – ALL residential mortgage loan originators – Depository institutions’ employees will be Registered – Non-depository companies’ employees and contractors will be licensed – NO exemptions or exceptions have been identified at this time WHO?

6. Definition of MLO “ State-licensed Loan Originator” A State-licensed Loan Originator is loan originator who is not an employee of a depository institution, subsidiary owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.

7. Definitions of Loan Originator “ Registered Loan Originator” A Registered Loan Originator is an individual who meets the outlined requirements and definition of a loan originator, and is an employee of a depository institution or a depository institution regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.

8. Registered Loan Originator The S.A.F.E. Act requires the Agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of Agency regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions, and certain of their subsidiaries.

9. State Licensed or Registered

11. 6. Complete 20 Hours of Pre-License Education (PE) (State may require additional PE) 7. Successfully pass Federal and State tests with minimum 75% passing grade 8. Complete Federal requirement of 8 Hours of Annual Continuing Education (CE) 9. Each mortgage licensee must submit to NMLSR a Report of Condition 10. State-licensed MLOs must meet any additional state licensing requirements State-licensed Loan Originator

13. Minimum Standards Standards for licensing or registration: Applicant must never have had a Loan Originator license revoked in ANY jurisdiction. Applicant has not been convicted of, pled guilty or no contest to a felony in a domestic, foreign or military court (1) during the 7 years prior to application (2) at ANY TIME preceding application date if felony involved an act of fraud, dishonesty or a breach of trust or money laundering.

14. State-Licensed Loan Originators An individual MAY NOT engage in the business of being a loan originator WITHOUT FIRST: * obtaining, and maintaining annually * a license and registration as a State licensed loan originator * obtaining a unique identifier This includes CONTRACT PROCESSORS and CONTRACT UNDERWRITERS including those who work for temp agencies

17. State-Licensed Loan Originators Mortgage Call Reports Each mortgage licensee must submit to NMLSR a Report of Condition Annually Report of Condition – criteria of this report has yet to be developed by NMSLR.

18. 20 Hours of Pre-Licensure Education is Required for ONLY State-Licensed Loan Originators Requirements

19. State-Licensed Loan Originators Pre-Licensing Education *Must complete a minimum of at least 20 hours of education to include: * 3 hours Federal law & regulations *3 hours ethics, to include fraud, consumer protection and fair lending issues; and *2 hours training regarding non-traditional loan products. * All courses will be reviewed and approved by NMLSR *Several States have elected for additional PE requirements

20. State-Licensed Loan Originators Section Standards for State License * Originator must continue to meet minimum standards *Continuing Education required to be completed each year by December 31st: * 3 hours Federal law & regulations * 2 hours ethics, to include fraud, consumer protection and fair lending issues; and * 2 hours training on non-traditional loan products.

21. State-Licensed Loan Originators Testing of Loan Originators Test will be written and in two (2) parts – Federal and State Everyone will take the same Federal portion Each State will develop State portion. If you originate in different States, you must take the specific State portion for EACH State. If you originate in 50 states you must take 50 separate exams.

22. State-Licensed Loan Originators Minimum Competence - Passing score – not less than a 75% - Initial Retests – can retake exam up to 3 consecutive times with at least 30 days between each test. - If you don’t pass after the 3rd retest, must wait 6 months before taking again. -If license is not maintained for 5+ years, must retake the exam. -Do not take the 20 hours pre-license education before exam.

23. Who is Overseeing All of This? Conference of State Bank Supervisors “ CSBS” The nationwide organization for state banking. American Association of Residential Mortgage Regulators “ AARMR” The national organization representing state residential mortgage regulators.

24. Nationwide Mortgage Licensing System Registry A mortgage licensing system developed and maintained by the Conference of State Bank Supervisors for the State licensing and regulation of State-licensed loan originators and the registration of registered loan originators. NMLSR

25. Both a “Registered Loan Originator” and a “ State-licensed Loan Originator” require registration as a loan originator as well as maintenance of a unique identifier through the Nationwide Mortgage Licensing System and Registry. Required Registration

29. Both National and State Components – All new licensees: July 31, 2010 – All existing licensees: December 31, 2010 – Several states have elected to have earlier deadlines SAFE Deadlines for Testing

30. Content Outline Federal mortgage-related laws (35%) General mortgage knowledge (25%) Mortgage loan origination activities (25%) Ethics (15%) PLUS THE STATE TEST What will the Test Cover?

38. A. RESPA B. Gramm-Leach-Bliley Act C. Truth-in-Lending Act D. Equal Credit Opportunity Act E. Appraisal F. Fraud detection, reporting, and prevention G. Ethical behavior Ethics (15%) 1. Consumers 2. Appraisers 3. Underwriters 4. Investors 5. Warehouse lenders 6. Real estate licensees 7. Closing agents 8. Employers

39. Written by subject matter experts Reviewed, edited, and approved by committees Created from content outline categories and subcategories Supported by reference materials How Are Test Questions Created?

40. Test Question Format No trick questions No questions with multiple correct answers No questions without a correct answer No strong wrong answers All questions are 4-option multiple choice No short answer, fill in the blank or t/f questions Only one correct answer and 3 incorrect options No “All of the above” or “None of the above”

41. Why are some questions not scored? Un-scored questions are being “sampled.” The goal is to put only questions that meet high quality standards.

42. They do not affect a candidate’s score They are not marked in any visible way to the test-taker They are scattered randomly throughout the test Un-Scored Questions:

43. The national test has 90 scored and 10 un-scored questions. Every versions of the test has the same number of questions. For fairness, different forms of the national test are all of equal difficulty. Questions appear in random, on your testing terminal for each user. Test Forms

44. Enrolling for the Test

45. A candidate does not have to complete education prior to enrolling or taking a test. Before enrolling, a candidate must have a unique NMLS ID number (must either already have made a filing or created a base record). A candidate must request and pay for an enrollment in NMLS before scheduling a test session Each enrollment period is open for 180 days that the candidate must schedule to take the test. Test Enrollment Basics

46. Next Step: Scheduling a Test 2009 Fee Schedule National Component - $92 Each Unique State Component - $69 Scheduling a Test

47. To schedule, must have an NMLS ID number 500 test centers for candidates to choose from After selecting a state on “Find a Test Center” page, a list of all test centers in that state will appear Schedule online or over the phone Basics of Test Scheduling

48. All tests are available at all test centers (i.e. candidate may take FL test component in CA) • Group appointments available (That’s pressure!) Basics of Test Scheduling

49. Test Center Entering the Test Center • Arrive 30 minutes prior to test time • Must bring a current, government-issued ID with candidate’s photo and signature. • Will be photographed; finger or palm print may be taken • Candidate may not bring anything into testing room (may be asked to show empty pockets) • All belongings such as notes, cell phones, watches, wallets must be placed in locker • Basic calculator (not financial calculator) and scratch paper are provided • Must read and agree to the Rules of Conduct

50. National Component 2.5 hours test time (150 minutes) 15 minutes allotted for tutorial (before test) 15 minutes allotted for optional survey (after test) Total seat time = 3 hours 100 questions in 150 min. = 1.5 min. per question Test Time

51. State Test Components 1.5 hours test time (90 minutes) 15 minutes allotted for tutorial (before test) 15 minutes allotted for survey (after test) Total seat time = 2 hours Approx. 60 questions in 90 min. = 1.5 min. per question State test lengths vary from 55 to 65 total questions Test Time

52. At the end of the test session, candidates will: See test scores on computer screens Receive a paper copy of score report These scores do not become official until they are entered in NMLS Within 48 hours of completing a test, candidates will receive an email informing them that their official scores are now ready to be viewed in NMLS Score Reports

53. Must wait 30 days between each test taking attempt May create an enrollment and schedule an appointment, but can’t take the test prior to the end of prescribed wait time After every fourth failed attempt, a 180 day wait time is instituted What if I Fail the Test?

54. Immediate Test Score

55. Some states that had valid tests prior to the passage of the SAFE Act may elect to certify their state tests In these cases, candidates who previously passed that state’s test may not be required to take the SAFE state test component Candidates must check with their state regulators All candidates, however, must take and pass the national component State Test

58. Example website and report card

59. Our certificate displayed on your website Never fill out a broker application again LO license and status tracking Growing number of lenders charging an application fee – You save $$ Never lose another loan because of a LACK OF CONFIDENCE AT THE POINT OF SALE What are the benefits of membership?

61. Please Visit LoanOfficerSchool.com for our NMLS testing study guide and sample test question manual. 866.623.1250