NMLS National LO Exam

New SAFE MLO Test with Uniform State Component Plus More LO Pre-Education to Start April 1

Washington State has adopted the new uniform SAFE loan originator licensing exam and our state will begin delivering this new exam April 1, 2013.  Read more here.

This means loan originator candidates will take just one exam instead of a federal exam and then another Wa State specific exam.

In moving to the Uniform State Exam, Washington State Dept of Financial Institution has adopted new rules to increase the number of pre-licensing hours of education for new loan originators.

The way it is today:
20 Hours of Pre-Licensing Education (to prepare you for the National Exam)
2 of which are Wa State Law (to prepare you for the Wa State Exam)
OR
some course providers offer the 20 hour class plus a separate 2 hour class on Wa Law.

The way it will be April 1, 2013 for Wa State LO candidates:
22 hours of Pre-Licensing Education (to prepare you for the National, Uniform State Exam)
4 of those hours on Wa State Law
OR
some course providers will offer the 20 hour class plus a separate 4 hour class on Wa Law.

How I will do it:
I have a stand alone 20 Hour Pre-Licensing class which is approved for all 50 states.
I have a stand alone 2 Hour Pre-Licensing Wa Law class.
I will write a separate 4 hour course on Wa State Law for new LO students who will be able to take this course as of April 1st to meet the new requirement.

The national exam will be tougher than it is today and we should always expect standards for licensing, pre-education, continuing education, and exams to continue to rise.

I sent detailed feedback to Wa DFI with my recommendations for even more classroom time needed for people who are brand new to the industry, and I also recommend less classroom time for people who currently work for a depository bank and just need to take the class and pass the test to make a switch to a non-bank lender or mortgage broker.  But I don’t get to make the rules.

At the present time I teach a 2 day class. In 2010 I taught the pre-licensing class as a 3-day class and had many, many requests to squeeze it all into 2 days.  Two, 10-hour days and soon, Two, 11-hour days is just plain nuts for a brand new person yet most new people do not want to take 3 days off from their existing job/life to take the course.  Arguably expenses for a trainer are higher with a 3 day course. Think room rental fees and lost opportunities to make money elsewhere on that third day.  So I will keep the class as a 2-day class for now but it is definitely a LOT of info to cover in 2 days.

Recommended reading:

SAFE 20-Hour Pre-Licensing and Exam Prep
—
Why some loan originators are not passing the national exam
—
FAQ about the pre-licensing class
—

 

 

 

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.

Will Currently Licensed LOs Have to Take the New National LO Exam?

The National Mortgage Licensing System (NMLS) will be taking over licensing at the end of July 2009.  The old LO exam will phase out and new LOs will also take a new state exam with new test questions on WA State laws.  NMLS chose the same test vendor, Promissor, recently purchased by Pearson Vue.  The national exam will contain 100 questions and LOs must pass with a 75%.  In addition, the WA State component of the exam will be around 50 to 60 additional questions.

Will existing licensed LOs (LOs licensed under a broker) have to take the new national exam?  It depends.  If your score on the existing state exam was not 75% or higher the answer is yes.  When you left the testing center, your Promissor form didn’t give you your score.  However, DFI DOES know your score. At one of the spring commission meetings, the commission was talking about doing some outreach phone calling to LOs so that LOs will know whether or not they will need to take that new exam.  But you will have until Dec 31, 2010 before you have to take the new exam.  Likewise, you will have until that same date to make sure that your continuing ed credits equal 20 hours.  Here’s more about the exam from NMLS: