NMLS Testing & Education

1. NMLS Testing & Education SAFE Mortgage Loan Originator Professional Requirements VMBA Presentation November/December 2009 Thanks to Strategic Information Resources/SIR for providing the Webinar for us Thanks to NMLS for permission to use Excerpts from the presentation to State Associations on October 27& 28, 2009

2. Presenting Today • Sue Clark - Regulatory & Consumer Affairs Director, BISHCA • Sue.Clark@state.vt.us 802-828-4878 • Diane Smith – Executive Director, VMBA • diane@vermontmba.org 866-680-8622

3. ConferenceCallLogistics • The call will be moderated. • You may enter your questions in the Question Box at anytime. Your identity will be confidential • Your questions will be read to the group by Diane at the end of the presentation portion, without disclosing your name or company. • You may also “Raise your Hand” to verbally ask a question. I’ll unmute your line during the Q&A time if you have raised your hand to indicate you want to speak. Questions will be answered following the presentation.

4. Agenda • Overview: SAFE Professional Requirements • Testing and Education Presentation • VMBA Education • Wrap-up: Q&A

5. Overview: Professional Requirements • Title V, S.A.F.E. Mortgage Licensing Act • Professional Requirements • Complete Pre-licensing (and Continuing Education) • Pass MLO National Test • Pass MLO State Component Test • Pass a Federal Background Check • Authorize Credit Report & Credit Score Pull

6. Vermont Requirements • Individuals that are employed by a VT licensed lender or mortgage broker on or before March 31, 2010 have until July 1, 2010 to obtain MLO license. • Any new individual after April 1, 2010, must have MLO license to engage in mortgage loan origination. • Individuals whose PE credits are certified in 2010, will not need CE credits to renew for 2011. • 2011 and thereafter – VT Requires 8 Hrs CE prior to 12/1 annually

7. MLOs who Work for Depositories This presentation is targeted to those who MUST meet the SAFE Act Requirements - But for MLOs who work for Depositories: • You are NOT required to take the Tests • You are NOT required to take PE or CE courses • You MAY take classes and have your credits tracked • You MAY take the SAFE MLO tests • You MAY get a VT MLO License and keep it inactive – ready if you do change employers.

8. Testing Requirements • The SAFE MLO Test consists of: • The National Test Component • Unique State Test Components (one for each state or agency) • All state-licensed MLOs must take and pass the National Test Component • MLOs must take and pass the State Component for each state* in which they seek licensure (*except those included in certification process)

9. Test Design and Construction • National Test Component • 100 questions = (90 scored +10 unscored) • 180 minutes for appt; 150 minutes for testing • State Test Components • 55-65 questions = (45-55 scored +10 unscored) • 120 minutes for appt; 90 minutes for testing • Passing score = 75% • National Component = 68 correct answers • State Components = 34 – 42 correct answers

10. States with Early Test Deadlines The following three states each have testing and education deadlines of December 31, 2009 • New Hampshire • Pennsylvania • Rhode Island

11. Preparing to Take the Test

12. MLO Testing Handbook Everything you need to know about testing

13. Live Links • http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx • Go to Popular Links (Right hand side) • Testing (Professional Requirements) • Select 24 Page MLO Testing Handbook

14. Content Outlines

15. Content Outlines • Each test has its own outline • national component • all state specific components • Outlines provide: • specific test contents and • question distribution (weightings)

16. Content Outlines content outlines

17. Here’s what they look like… Live Link: National Live Link: Vermont

18. And we should also mention… • Content outlines are an overview of what will be on the test. • They can be utilized as a study tool for test takers. No additional study guides or study materials will be developed or endorsed by NMLS.

19. Federal Mortgage Law • VMBA Links OnLine www.Vermontmba.org • Next Slide and posted on our News & Links page and our Education page • Not An Official Source! Helping Each Other • Audience – any others to share?

20. VMBA Federal Law Links • RESPA http://www.vermontmba.org/files/MBA_Key_Points_in_RESPA_Rule_11-14-08.pdfhttp://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm • Equal Credit Opportunity Act – Reg B http://www.federalreserve.gov/boarddocs/supmanual/cch/200601/fair_lend_reg_b.pdf • Truth-in-Lending Act – Reg Z & HOEPA http://www.thefederalregister.com/d.p/2009-08-12-E9-19254 • SAFE Act http://www.hud.gov/offices/hsg/ramh/safe/smlicact.cfm • HMDA Home Mortgage Disclosure Act http://www.ffiec.gov/hmda/ • Fair Credit Reporting Act http://www.ftc.gov/os/statutes/031224fcra.pdf • Privacy Protection/Do Not Call http://www.fcc.gov/cgb/policy/TCPA-Rules.pdf • FTC Red Flag Rules (FACTA) http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm • Gramm-Leach-Bliley Act http://www.ftc.gov/privacy/privacyinitiatives/glbact.html

21. Vermont Mortgage Law Links • Vermont Statutes Annotated Title 8, Chapter 73, Licensed Lenders Act Title 8, Chapter 200, Consumer Protection Title 9, Chapter 4, Interest • Banking Division Regulations B-82-1 (Revised) Hearings B-96-1 Mortgage Brokers B-98-1 Commitment Letters B-98-2 High Rate, High Point Notice B-2001-01 Financial Privacy

22. Vermont Mortgage Law Links • Banking Division Bulletins B-7 Loans vs. Commitments B-11 Charges on Subordinate Lien Mortgages B-17 (Revised) Home Loan Escrow Accounts B-19 Permitted Charges on Mortgages B-24 Funded Settlements B-26 Mortgage Issues B-27 Mobile Home Contract Disclosures B-29 Guidance on Non-traditional Mortgage Products B-31 Property Insurance B-32 Statement on Sub-prime Mortgage Lending

23. Enrolling: Step-by-Step Instructions

24. Test Enrollment Basics • 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 (*enrollment fees are non-refundable– listed on testing page). • Each enrollment window is open for 180 days, during which the candidate must schedule to take the test.

25. Test Enrollment Fees • The National Test Component: $92 • Each State Test Component: $69

26. “After candidates create enrollments, how do they schedule test appointments?”

27. Next Step: Scheduling a Test

28. Basics of Test Scheduling • To schedule, must have an NMLS ID number • 500 test centers for candidates to choose from (Pearson and Prometric) TWO Centers in VT – Pearson Professional Centers Prometric Testing Center 30 Kimball Avenue Suite 202 600 Blair Park Road, Suite 326 South Burlington, VT Williston, VT 802-657-3535 802-872-0251 • OK to use NH, MA, NY sites – closest to YOU • Scheduling– online or over the phone

29. Basics of Test Scheduling– More Info • All tests are available at all test centers (i.e. candidate may take AZ test component in PA) • A company can request a group appointment (see Prometric or Pearson web sites for more info) *Special accommodations requests may also be made if necessary.

30. The Test Center

31. 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 (Next Slide)

32. Test Rules of Conduct* • Prohibition Against Assistance or the Use of Study Materials • The purpose of this form is to make sure that you understand and acknowledge • the rules of conduct you must follow in completing this session. You must • read and agree to this before you will be permitted to start your session. • I understand that: • 1. I am attesting that I am the person I represent to be for this session. • 2. I must not take any personal items such as notes, formulas, study materials, or • electronic devices into the testing room. I will place all personal belongings in • the locker provided by the testing vendor prior to entering the testing room. • 3. I must not receive any form of assistance during the test or restroom breaks. • 4. I must not give any form of assistance during the test or restroom breaks. • 5. I am not permitted to use a telephone, cellular phone, pager, hand held • computer or other communication device, electronic or otherwise, during • the test or during restroom breaks. • 6. During restroom breaks, I must not leave the premises and may go only • to the restroom. • 7. I must not remove any written, printed, or recorded materials from the • test center other than the score report provided by the center staff. • The test materials remain the property of NMLS and/or • developing organization(s), and I shall maintain the confidentiality • of the materials, including the questions and my answers to them. • 8. If I violate any of these rules, I will be advised of the violation and the test center representatives will report the violation to NMLS. I UNDERSTAND THAT NMLS MAY REPORT THE VIOLATION TO THE STATE(S) IN WHICH I AM SEEKING LICENSURE AND THE VIOLATION MAY SUBJECT ME TO DISCIPLINARY ACTION BY THE STATE(S), INCLUDING DENIAL OR REVOCATION OF MY LICENSE(S). • *Subject to change

33. Completing the Test: Score Reports At the end of the test session, candidates will: • see their test scores on their computer screens • receive a paper copy of their 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.

34. “What happens if a candidate fails?” The pass rate for the National Component of the test as of October 31, 2009 was 71%

35. Retake Policy

36. Retake Policy • 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 *After passing a test component, a test taker will not be allowed to retake that particular test component.

37. Testing Summary • Get your NMLS ID Number • Take the National Component ASAP • Take the State Component(s) when available

38. Education Requirements • State Licensed MLOs must complete: • 20 hours of pre-licensure education • (once licensed, 8 hours of continuing education) • The courses must be approved by NMLS • CE is not required in the year in which PE requirements have been completed.

39. Education Subject Requirements - PE Pre-Licensure Education • 3 hrs Federal • 3 hrs Ethics • 2 hrs Non-trad, consumer protection • 12 hrs Elective • 20 hrs Total States may require more than 20 hrs and/or require state content be included in the Elective hours Vermont imposed NO Specific Educational requirements above the 20 Hours

40. Education Subject Requirements - CE Continuing Education • 3 hrs Federal • 2 hrs Ethics • 2 hrs Non-trad, consumer protection • 1 hrs Elective • 8 hrs Total States may require more than 8 hrs and/or require state content be included in the Elective hours Vermont imposed NO Specific Educational requirements above the 8 Hours

41. Certification Certification is a process by which states/agencies may recognize or “certify” the education completed or the state tests passed by an MLO, which will allow that MLO to satisfy the Pre-licensure education requirement or the state test component of the SAFE Act. NOT APPLICABLE FOR VT

42. Education Course Formats Pre-Licensure Education Formats • Classroom • Classroom equivalent • Instructor-led online Continuing Education Formats • Classroom • Classroom equivalent • Instructor-led online • Self-paced online

43. Education Availability Courses are available from 120 NMLS Approved Course Providers Currently there are 166 approved PE courses

44. VMBA – An Approved Provider Associations – NMLS Approved Course Providers • Alabama MBA • Connecticut MBA • Florida AMB • Michigan Assoc of MP • Mortgage Bankers Assoc • NAMB • Mortgage Ed Foundation (IL) • NE Mort Education Council 9. New York Assoc of MB 10. North Carolina Assoc of MP 11. Rhode Island MBA • Texas MBA • Vermont MBA

45. VMBA Approved Courses • 3 Hour Federal Law – RESPA (offered 9/9) • 4 Hr Non-Traditional – Reverse Mtg (10/13) • 4 Hr Elective – VT Mtg Law 101 (10/13) • 4 Hr Ethics – FHA/Fair Lending/Fair Credit (11/4) • Plans for next 3 – 4 months: • Reoffer Reverse Mtg, VT Mtg Law, Ethics • New classes – Electives – Self-Employed, Appraisal, Credit Reports, Closing issues • Look for Federal Law program

46. Tips and Reminders • • To pass the test, a candidate must achieve a score of at least 75%. • Review the Content Outlines • Study! • Review sample questions and information at the NMLS Resource section of their website • Don’t Delay too long! Good Luck!

47. Questions about Testing or Education