Passing the Nationwide Licensing Mortgage System (NMLS) test is not easy—that’s why it’s good to be prepared. Here’s everything you need to know
When looking for a home loan, prospective homeowners want to ensure the mortgage loan officer has the proper training and can provide sound advice. One way that clients can be sure of this is by looking up the loan officer’s NMLS number.
But what exactly is an NMLS number? What is the NMLS and how do you get an NMLS license? In this article, we will answer these questions and more.
Here is everything you need to know about an NMLS license.
What is NMLS?
NMLS stands for Nationwide Mortgage Licensing System, which is a centralized online database used by finance and mortgage regulatory agencies to ensure state licensing programs are maintained.
Why is this important? It is because a licensed mortgage loan originator (MLO) is someone who has successfully finished the professional certification needed to originate mortgages and gives home loan advice, at least in one state. Both individual mortgage loan originators and mortgage lending companies must remain in regulatory compliance. This includes renewing their state licenses every year.
State agencies have a few requirements before MLOs are eligible to practice in their state:
- finishing 20 hours of educational courses prior to licensing
- passing a national mortgage test
- giving state agencies access to their credit report and their findings of an FBI criminal background check through NMLS
This is all a part of the licensing review process. Mortgage loan officers also must finish eight hours of continuing education every year to maintain their state license. If you’re interested in pursuing this career path, read our guide on how to become a mortgage loan officer in 10 steps.
NMLS license: a brief history
As a centralized repository for licensing in state mortgage industries, the NMLS started operations in January 2008. In July of that same year—when Congress passed the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, otherwise called the SAFE Act—the NMLS took on the role as we know it now.
After the SAFE Act was passed, states were required to pass legislation mandating that mortgage loan offices be licensed. The SAFE Act also required that agencies in all states participate in—and share—licensing information through the NMLS.
How do I get my NMLS license in CA?
To become a licensed mortgage loan originator in the state of California, you are required to complete six steps. The steps to getting your NMLS license in CA include the following:
- Apply for NMLS account and ID number
- Complete NMLS pre-license education
- Pass NMLS mortgage licensing exam
- Apply for CA MLO license
- Complete background checks and pay fees
- Associate your NMLS account with employer
Let’s break down each step to give you a clearer idea of what it takes to get your NMLS license in California:
1. Apply for NMLS account and ID number
The NMLS processes MLO licensing requests for all 50 states, not just California. Creating an account is a simple process that takes just a few minutes to finish.
Here is what you will need to do to complete this process:
- Visit the NMLS registration portal and request an account
- Choose the individual option
- Provide the information required and submit the application
2. Complete NMLS pre-license education
Becoming a licensed MLO in California requires you to finish the 20-hour SAFE pre-licensing course, as well as additional course work required by either of the California state licensing agencies. These include the California Department of Financial Protection and Innovation (DFPI) or the California Department of Real Estate (DRE), which was formerly known as the California Bureau of Real Estate (BRE).
NMLS SAFE mortgage license training
Every state requires 20 hours of mortgage education from an NMLS-approved mortgage school. If you want a new mortgage license, you will want to enroll in the 20-hour SAFE course in addition to the requirements that are specific to your state.
CA-DFPI license overview
A CA-DFPI license is a requirement for any MLO employed by a DFPI-licensed broker or lender. That applies to any mortgage lender governed by the California Residential Mortgage Lending Act (CRMLA) or California Finance Law (CFL). Additional details include:
- The CA-DFPI must also license your employer
- It is an easier license to get
- Negotiate the terms of residential mortgages or process residential mortgage applications
- It requires a sponsorship from a DFPI-licensed employer
DRE license overview
The DRE issues mortgage loan originator endorsements to licensed real estate agents. While this will provide you with the most flexibility in your career, you will have to finish and maintain the real estate education requirements, which includes:
- Valid California real estate license
- Additional real estate education
- A sponsorship from a DRE-licensed employer
Read more: Do you need a real estate license to be a mortgage broker in California?
3. Pass NMLS mortgage licensing exam
You will then have to take the National Test Component with uniform state content (USC), which you can do through your NMLS account. The SAFE MLO exam covers federal mortgage-related ethics, laws, mortgage loan originator activities, and more generalized mortgage knowledge.
The USC part of the exam covers the following:
- Regulatory limitations, authority, and responsibility
- Documents and definitions
- License regulation and law
- Compliance
4. Apply for CA MLO license
The next step is to apply for your MLO license on the NMLS website. To apply, you will need to do the following:
- Login to your account
- Choose the filing tap at the top of the screen
- If applying as an individual, choose “Individual”
- Click Request New/Update
- Click Add to apply for your CA license
- Choose the appropriate California license, click Next
- Choose the California Mortgage Loan Originator License, click Next
- Ensure the information is correct, click Next
- Carefully review the last page; if the information is correct, click Finish
5. Complete background checks and pay fees
To receive your California MLO certification, you will have to provide the following information and pay the associated fees:
|
Request |
Fee |
Required |
|---|---|---|
|
NMLS processing |
$30 |
Yes |
|
FBI CBC |
$36.25 |
Yes |
|
Credit report |
$15 |
Yes |
|
Application |
$300 |
Yes |
6. Associate your NMLS account with employer
The last step is to ensure your NMLS ID is sponsored by a state licensed employer, which indicates to governing agencies that your employer will supervise your individual license. You can submit your sponsorship through your NMLS identification.
After this part of the process, you will be ready to do business as an MLO in California.
What percentage of people pass the NMLS test for the first time?
Passing the NMLS test for the first time is not easy. In fact, the first-time pass rate is just over half at 54% and just 46.7% for subsequent attempts, according to the NMLS SAFE test passing rate.
Read our guide to the 10 tips to help you pass the NMLS test on your first take.
Before taking the exam and meeting the requirements, it is important to be prepared. Remember: the NMLS is used to maintain licensing information and allow mortgage lenders and clients to check that information for loan officers they work with. It is therefore of the utmost importance that the process of getting your NMLS license runs as smoothly as possible.
If you're truly interested in becoming a mortgage loan officer, take the time to look at the mortgage professionals we highlight in our Best of Mortgage section. Here you will find the top performing mortgage professionals, including mortgage loan officers, across the USA.
Have experience in getting your NMLS license? Let us know in the comment section below.
