When you are shopping for a mortgage, no matter how you find a loan officer to work with, it is about to get easier to do your homework on their credentials thanks to the SAFE Act and the new Nationwide Mortgage Licensing System Consumer Access system.

The SAFE Act

We are soon approaching on the two-year anniversary of the signing into law of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) and many states are still scrambling to establish the framework needed to license and supervise their loan officers under the new program.  All states are required to enact a SAFE-compliant law.

The purpose of the SAFE Act was to

• Provide increased accountability and tracking of loan originators,
• Enhance consumer protections and support anti-fraud measures,
• Provide consumers with free information about a loan originator’s employment history and public disciplinary and enforcement actions,
• Establish a means by which residential mortgage loan originators would be required to act in the best interests of the consumer,
• Facilitate the collection and disbursement of consumer complaints,
• Provide uniform license applications and reporting requirements for state licensed-loan originators.

As a result, all residential mortgage loan originators must be state-licensed or federally registered (for the big banks).  If a loan officer works for a mortgage banker or broker that is regulated at the state level, he must submit his last 10-year work history and pass a background check that confirms that they have never had a previous license revoked or that they have never have been convicted of a felony involving fraud, dishonesty, breach of trust, or money laundering or and other felony within the past 7 years.  In addition, he must complete at least 20 hours of approved prelicensing education and pass a national licensing exam.

To date, approximately 10,000 mortgage originators have tested and according to data from the Conference of State Bank Supervisors, 30% loan originators who have taken the national exam required under the SAFE Act have failed.

NMLS Consumer Access Launches

With the launch of the new NMLS Consumer Access site, you can easily do your homework on your loan officer seeing things like whether or not the loan officer is licensed, what company they are licensed with, the branch of the company they work in and where they have worked in the last 10 years.  It is now also possible to see all aliases or other names that your loan officer has used since they were 18.

Is this a good thing?

I don’t see why not.

In fact, I think that many of the loan officers who have taken the time (and incurred the expense) to get licensed would be proud to be part of the licensing system. True, there may be a few who don’t want some part of their past exposed - but I suspect that those who fall into the “oh no” boat will probably not take the time to even get licensed - thereby weeding out many of the “bad apples” right out of the gate.

Remember, the NMLS Consumer Access site is separate from NMLS — which is the official system where regulators can keep track of every loan that a loan officer originates in their career and the NMLS Consumer access is really just a reporting tool, not a license granting organization.

But if you are a consumer and you are looking to get more information on your loan officer, the NMLS Consumer Access is the place that you want to start.

Note: Special thanks to Steve Lines at BestFHALender.com for helping me with the details of this post — Steve is a certified instructor locally here in the Phoenix, AZ market and is my go-to resource for all things relating to the NMLS.