New National LO Exam Pass Rate 69%
The pass rate of the new national LO exam is 69%. Between July 30, 2009 and November 30, 2009:
10,421 national exams were taken and 7,219 passed the exam. The report PDF is available here.
This means the new national exam is too easy, like I surmised back in June. Or is it?
What would be more helpful to see in future reports from the NMLS is the number of years experience of the test candidates. For example, if the LOs who took the new national exam during this first reporting period had 5 to 10 years of experience originating loans, then a 69% pass rate is actually quite dismal, especially since many states have enacted mandatory testing and education over the past few years. I’d expect it to be higher based on the easy sample test questions NMLS gives us in the candidate handbook.
10,000 exams taken seems high to me, given the number of LOs who have left the industry. But divide 50 states by 10,000 and I can easily see 200 people in each state needing to pass that test. If the candidates who took the test were newer to mortgage lending, then a 69% pass rate seems too high.
Hi Jeremy,
There were many reasons for the meltdown. So then why is the federal government targeting loan originator compensation ...
This article makes no sense. As with any sales profession loan originators are compensated based on their skill and knowledge. ...
1st payment for September 1st but is included in the $6523.My 2nd payment will be due on October 1st. Im ...
Comment by Rhonda Porter on 28 December 2009:
Jillayne, I’m thinking that most of the mortgage originators still standing are those who tend to be more proactive and serious about their trade… even the new ones have to be a step of from the vintages of the early 2000’s…or at least I’d like to think so.
Comment by Jason Brock on 29 December 2009:
New National LO Exam pass rate:
I consider myself an educated individual. My livelihood and my profession I take very seriously. I believe it is up to every one of us who call ourselves lending professionals to hold our selves to a high educational standard. The national LO exam is just a formality and should be able to be passed by simply being diligent in studying for that exam. It is not too easy.
Comment by Arash Fiuzi on 30 December 2009:
Most of the guys that are in the business have been around for more than 5 years. Thats because the others went back to selling cars, waiting tables or doing whatever they were doing. Too bad all these fly by nighters that are gone gave brokers such a bad name. To tell you the truth, the average bank loan officer is not very knowledgeable.
Comment by Todd Morgan on 30 December 2009:
When I started it was early 2004 and anyone who could answer the phone could originate a loan. When they started opening guidelines and values started climbing it set the stage for a lot of unsavory characters jumping in and giving us a bad name due to the lure of easy money. I have to agree with everyone else thus far, the LO’s and brokers still standing are the real deal. Whether we’ve been doing it for 5 or more years or recently started we have a demonstrated ability to operate within complex and conitinually changing compliance environment. They keep changing the rules on us. Not that this is bad but it is more complicated and it’s all being done in the name of protecting our clients. Personally, I was big fan of state licensing requirements because it instantly got rid of anyone who had commited past financial crimes or fraud and required an actual knowledge of the laws and ethics regarding real estate finance. Can’t really complain about this one at all because everyone still in business is doing things by the book or they wouldn’t be in business.
Comment by Kelly Fiscus on 30 December 2009:
Test percentages are just percentages. Some people are really great test takers and some aren’t. Yes you must have a certain amount of information to pass a test, however test anxiety can cause the most experience person to fail. Is the test to easy?? Only time will tell, and yes it would be nice to know how much experience on average the test takers had.
Comment by Chris Yanke on 30 December 2009:
The test is not too easy and I found it to be a challenge even after 12 years of being in this industry. In terms of process though it seems like a natural step in the “weeding out” process to formalize our industry. Before 2006 in Washington you needed only a pulse to start in this industry. Now there are measures (albeit basic and slightly ineffective) that require background knowledge of candidates and moves the term “money motivated” a lot further to the back of the hiring process.
Comment by Kelly Fiscus on 30 December 2009:
It is nice to read that someone thought the test not too easy. Again I think time will tell how hard the tests are, after all it was a short time period.
Comment by Harold Burton on 31 December 2009:
As a professional I would like to assure myself that my counterparts are profesional as well. Unless I’m missing the grading curve 31% of the professional’s that take the test failed.
I think it is great that all my fellow mortgage professional have a national standard to measured with.
I would also think that with the high unemployment rate professionals would take this test seriously and study. Which on the other hand would account for the high pass rate.
Anyone like to calculate a 5/1 arm on a HP 12C?(-: Those where the days.
Comment by Pauline Martin Ferber on 31 December 2009:
I did not find the test too easy. Anyone who spent time studying should have been able to pass the test. Professionals who are proafessionals are going to be the best in the business because they care how and what they do for their customers and others in the business.
Comment by Kimberly Petersn on 31 December 2009:
I thought the test was average, not too hard not too easy. Just takes some studying which is good for everyone. I too think that the state requirements are good so that it eliminates the fly by nights that jumped in to make a quick buck.
Comment by Kip Drake on 14 January 2010:
I’m so glad someone finally published this information. I’ve been searching for it for weeks! This % makes a lot of us feel better. Our company is having the majority of it’s employees take the test. Some of us are struggling with it since we are just out of college and are not loan originators. Trying to pass is very tough. The majority of us didn’t pass on the first attempt. If you’re a loan originator you should be able to pass it in a couple of tries.
Our company alone has probably done over 200 tests when you count loan originator’s, assistant loan originator’s, and then all the rest of us just working for the company who are taking it, and then re-taking it 2 or 3 times. Personally I think 70% should be needed to pass, 75% is not a walk in the park. It’s 100 questions, but they randomly throw out 10 questions. So you need 68 out of 90 correct.
If you read the sample questions on NMLS they are very basic and simplified. The actual exam is very wordy, and very tricky. You really have to know your material inside and out to pass. We’ve all had to study countless hours to try and pass it. Good luck to those who still have to take it!
Comment by Jillayne Schlicke on 14 January 2010:
Hi Kip,
Thanks for stopping by NAMF.
NAMF also offers exam prep study materials! Watch this site in the weeks to come:
http://www.loanoriginatorexamprep.com
The SAFE required 20 Hour Prelicensing course can definitely also work as an exam prep course. You’re not required to take the 20 hour course before you try to pass the test….however, I highly recommend taking the course first. Especially if you’re right out of college with no experience.
The federal law was put in place to mandate education BEFORE you start originating so have your fellow LO trainees be sure to take the pre-licensing class first. Their test scores on the first try should be much higher.
Comment by Kip Drake on 19 January 2010:
I have a quick question for you. Is there an online test prep course offered? I have already done the required 20 hours but want a test prep course before I take the exam. Just let me know when you get a chance.
Thanks!
Comment by Stephanie Kessler on 21 January 2010:
I am a loan officer with a large Financial Corporation. I have done mortgages for 7 years but we strictly do fixed rate 1st or 2nd. We do not do subprime loans or offer anything to where we had to know any of this information. Our company set our guidelines for us to follow. We are going to have a very hard time because we have no experience with this type of industry. Also, I have already done an online test prep course but I am looking for a study book or guide that has the info that I can just read and re-read daily to get the information. Can you make a recommendation?
Comment by amy on 10 February 2010:
I wish the nmls sample test questions were what was on the test. I would have made a 100. I made an 86 and believe me it was difficult. I am glad they are finally testing our industry but their needs to be some kind of study guide out there. I took my 20 hour course and made a 98 on the test. The nmls test in know way mirrored that test.
Comment by Jillayne Schlicke on 10 February 2010:
Hi Amy,
In a way, that’s good because we should have a decent barrier to entry. NMLS says they’re not publishing any study guides and instead want LOs to seek out prep materials from course providers…like me!
Most of the students in the 20 hour Pre-licensing class are highly focused on wanting to know how to pass the test so we run the class like a pre-licensing/exam prep course.
The students who are having trouble passing tend to be brand new students who know nothing about the industry. They will need to do more studying beyond just their 20 hour course.
Comment by Rick Cyngier on 18 February 2010:
I think keeping the felons out of our business was a good start, but some of this licensing mill production is questionable. Some of the questions on the state exam that I took years ago asked questions not related to the knowledge and skill level of a loan officer. Just another attempt by the government to make more fee income from many of us trying to etch out a living. More disconcerting are the exemptions of some in our profession who are not required to take the continuing Ed, or have to be licensed. If this NMLS raises the bar of skill level for most loan officers, it will be a surprise. I do believe it will weed out those who look at this profession as part time or inconsequential to how it affects our mortgage clients.
Comment by Steve Harkness on 20 February 2010:
Dear Rick, and Jillayne please correct me on this if I am wrong, but it was my understanding that this new test under the SAFE act was a requirement for everybody. I know the Mortgage Bankers PAC has been trying to poke holes in this legislation with the best lobbyist money can buy. If they have been successful in castrating this legislation, Rick is right and why bother to continue to fight? The banks will of won and 17 years of my life, doing the best I could to ethically help the consumer, are essentially, down the drain, and meaningless.
I would love to hear comments
Comment by Jillayne Schlicke on 21 February 2010:
Hi Steve and Rick,
Yes, LOs who work for a depository institution AND are regulated at the federal level are exempt from education and testing.
However…they are NOT exempt from registering into the NMLS system.
They will be referred to as “registered LOs” and you will be referred to as “licensed LOs.”
It’s just a matter of time before they are brought underneath the same requirements as you. Patience.
Comment by Daniel Mulvehill on 26 February 2010:
Safe Act well its now all about passing an exam to appease the or what jurisdiction??? As my experience tells me you didn’t need a license to perform mortgage and I mean perform mortgages?? Not originate to make a bundle of money , well I certainly should know what a million dollars is to earn over 40 years in the profession but license what is the true value, if you committ an offense they suspend the license wow why dosen’t the attorney generals of each state defend the customers personally, instead of paying NMLS there slice of what pie lets the states keep the money California is laying off good people why, but NMLS is growing like the abnd and doing the police work of each state whom are all hurting, NMLS I don’t think will be here for a long time it will eventually go back to each state, I wish I were in the position to be a Governor I would show and demonstrate what it would take to make income for my State and show the unprofessional licensees be ware you will go to jail and loose all of those big housed and hummers in the driveway etc, with no lack of unproffessioalism it has it’s place but can be better restructured within each state.
Comment by Ken Cook on 14 April 2010:
I did find it interesting there were some bank recruiters calling around in the Atlanta area asking loan officers how they did on their tests and if they would be interested in bringing their business to the bank if they failed the test(s). Equal licensing for all.
The tests are not that difficult for anyone who has paid attention.
Comment by Wendy Mueller on 19 April 2010:
I am going to use my license to my advantage, The banks such as Wells, B of A and Chase all the LO’s in there do not have to do this at all. So advertise yourself as the best in the business and who you gonna trust a licensed LO or an unlicensed LO…….Use it
Comment by Eric on 21 April 2010:
I’m glad I found this site. I’m a wholesale rep and I used to own a brokerage/correspondent business during the boom. I think LO’s should like the fact that we need to put some barriers to entry to our industry. As a wholesale rep, only 30% of my LO’s are technically savvy enough to provide the borrowers with a full picture of what they are getting themselves into. I think it’s a shame that the banks are not required to have their LO’s pass the test as well. On top of that, California is not doing anythign different with their licensing of MLO’s either. The dept of corporation and DRE are a joke when it comes to testing MLO’s. MLO’s should embrace this for the future of our business.
Comment by Sue Carlson on 29 April 2010:
I am looking for a study guide specific to the State of CA test – there are plenty out there for the National, but how do we study for the state exam?
Comment by Jillayne Schlicke on 29 April 2010:
Hi Sue,
I recommend the School of Mortgage Lending. Click on Calif and scroll down to see her state prep course:
http://schoolofmortgagelending.com/
Comment by Joe Adamaitis on 14 June 2010:
Taking the test today and feel it is about time that we have a formal designation related to our licesnes that carries some clout. As for the bankers who are exempt, the politicians just keep protecting them. No differnet than whebn Wall St and the big banks were exempt from crimminal charges. They ruined our industry and they continue to find ways around being held accountable. By the way, how many of you loan officers came up with the brilliant idea of never asking for a pay-stub or W-2? Sure wasn’t my idea!
Comment by Dora on 23 June 2010:
I like Joe’s comment. It is time to get some payback to brokers and loan originators at brokers who have put in the extra time, effort and especially money. We should be singled out as the best of the best, while anyone can go work at a bank. I’ll spend the time and money, but danged if I want it to advertised as because we are all crooks.
Joe is especially correct about Wall Street! Washington keeps telling everyone it was the broker that broke the housing market; most of us know it was rating firms and Cuomo piled on with HVCC. Politics for you. Most of those guys in Washington have no idea of what they are voting on. They just do what the banks want them to do. No matter what party they are they are too clueless.