Are you interested in learning about how to become a mortgage officer? Known in the industry as a mortgage loan originator, or MLO, these professionals play a key part in the process of helping buyers find homes that are right for them — typically, they are the primary contact person when a borrower completes a mortgage transaction.
More specifically, they help buyers find home loans that are right for them — mortgages that fit their budget and will allow them to stay in the homes they purchase for the long term.
Not only do MLOs support homebuyers, they serve a vital function in the real estate industry. With responsible MLOs, mortgage fraud and foreclosures drop significantly. Great MLOs are on the front lines in maintaining a stable home-buying market.
Many people find this to be an attractive career path. Mortgage loan officer is listed #14 in U.S. News & World Reports rankings for business jobs. The median salary for the position is $64,660 and it doesnt require any graduate-level education.
Have you ever thought about becoming a licensed mortgage loan officer? It can be an exciting and rewarding career helping homebuyers achieve their dreams of homeownership. As a mortgage loan officer, you get to meet people from all walks of life and guide them through one of the biggest financial decisions of their lives – buying a home
In this comprehensive guide, I’ll walk you through the step-by-step process of how to become a licensed mortgage loan officer
What Does a Mortgage Loan Officer Do?
A mortgage loan officer, also known as a mortgage broker or mortgage originator helps customers find the right home loan product to fit their financial needs. As a loan officer you’ll meet with prospective homebuyers, collect financial documents, initiate loan applications, and communicate with underwriters. Your role is to educate clients on their financing options, guide them through the mortgage process, and help them get approved for a home loan.
Some key responsibilities of mortgage loan officers include:
- Explaining different loan programs and mortgage products to borrowers
- Advising customers on programs and options best suited to their financial situation
- Collecting documentation and financial records from applicants
- Initiating loan applications on behalf of borrowers
- Submitting completed applications to lenders and mortgage processors
- Communicating with underwriters to move loans through the approval process
- Coordinating with real estate agents, attorneys, and other professionals throughout the home buying process
Mortgage Loan Officer Skills and Qualifications
To be a successful mortgage loan officer requires certain skills and qualifications beyond just mortgage product knowledge. Here are some of the key skills needed:
- Strong communication and customer service – you’ll need to explain complex information clearly and converse with diverse clients
- Analytical skills – analyzing financial records and credit reports are a big part of the job
- Sales and marketing abilities – from lead generation to closing loans, sales skills are invaluable
- Attention to detail – mortgage applications involve lots of documentation and paperwork
- Time management and organization – you’ll juggle multiple client cases and deadlines simultaneously
In terms of qualifications, here is what you’ll need to become a licensed mortgage loan officer:
- High school diploma or equivalent
- Completed pre-licensing education courses
- Passed national and state-level MLO licensing exams
- Clean background check and fingerprinting
- Sponsored by a mortgage lender or brokerage
Now let’s look at how to fulfill these prerequisites.
Step 1: Complete Mortgage Loan Officer Pre-Licensing Education
The first step is to complete comprehensive pre-licensing education courses covering topics like ethics, regulations, mortgage products, underwriting, and more.
Nationwide, mortgage loan officers must complete 20 hours of NMLS-approved education. Some states require additional coursework beyond the national minimum.
You can complete pre-licensing education through various delivery channels – online, in-person classroom settings, or a blend of online and in-person. Shop around to find the pre-licensing provider and format that best fits your learning needs.
Step 2: Pass the SAFE Mortgage Loan Originator Test
After finishing your pre-licensing education, the next requirement is passing the SAFE Mortgage Loan Originator Test.
The SAFE exam is a national licensing test developed by NMLS to ensure minimum competence across states. It consists of 125 multiple choice questions covering topics like ethics, federal laws, mortgage products, underwriting, and more.
You must score at least 75% to pass the SAFE exam. If you don’t pass on the first attempt, you must wait at least 30 days before re-taking the test.
Be sure to give yourself adequate study time using SAFE test prep materials and practice exams. Passing this test is crucial to becoming a licensed MLO.
Step 3: Submit Fingerprints and Pass a Background Check
To fulfill licensing requirements, mortgage loan originators must submit fingerprints and pass an FBI criminal background check through NMLS.
You’ll get fingerprinted at an authorized location, usually for a small processing fee. The prints get run through national and state-level databases to check for any potentially disqualifying criminal history.
Most violations older than 7-10 years are not automatic disqualifiers for an MLO license. Disclosures may be required in some cases.
Step 4: Complete State-Specific MLO Licensing Requirements
While the SAFE Act established national standards for MLOs, individual states still have jurisdiction in issuing mortgage licenses.
This means meeting your state regulator’s specific requirements for licensing and testing. Some common state-level requirements include:
- Additional pre-licensing education hours covering state mortgage and consumer lending laws
- Passing a state law exam in addition to the national SAFE test
- Specific paperwork like affidavits, license requests, and/or fees
Reach out to your state regulator or use NMLS to learn your state’s particular MLO licensing requirements.
Step 5: Submit Your MLO License Application through NMLS
After fulfilling the above requirements, you are ready to submit your official Mortgage Loan Originator license application through the NMLS system.
As part of this process you will have to:
- Complete an Individual (MU4) form requesting a new MLO license
- Pay required license fee(s)
- Complete any supplementary state forms
NMLS reviews application materials and officially issues approved MLO licenses on behalf of state regulators. Most states issue licenses electronically through the NMLS system.
Step 6: Get Sponsored by a Mortgage Lending Company
The final requirement is getting sponsored by a mortgage lender, bank, or brokerage firm. Being employed and supervised by a mortgage provider is mandatory for holding an active MLO license.
During sponsorship, your employer confirms your employment through NMLS. Your license will show as approved and active within 1-2 business days after sponsorship.
Now you’re ready to start originating mortgages as a licensed loan officer!
How Long Does It Take to Become a Licensed Mortgage Loan Officer?
If you’re dedicated, expect the licensing process to take 1-3 months depending on your state requirements. Here’s a quick timeline:
- Pre-Licensing Education: 2-4 weeks
- SAFE Exam: Schedule within 1-2 weeks of finishing education
- Background Checks: 1 week
- State Requirements/Testing: Varies by state; could be 1-8 weeks
- NMLS License Application: 1 week processing time
- Sponsorship: Final step; license active within 1-2 days
Some states like California and Florida have more stringent requirements that may extend the timeline by several weeks. But in most states, you can finish the full licensing process within 6-12 weeks with focus and hard work.
Mistakes to Avoid When Becoming a Mortgage Loan Officer
As you work towards getting licensed, beware of some common missteps:
- Taking the SAFE exam before properly preparing – give yourself time to study
- Forgetting to renew licenses on time – stay organized
- Accepting compensation before being licensed – 100% illegal
- Working unsponsored – you must have an approved sponsor
- Taking state requirements lightly – each regulator is strict
Avoid these mistakes upfront and you’ll be in great shape.
Finding Work as a Licensed Mortgage Loan Officer
Once licensed, you can either join an existing mortgage company or brokerage as a loan officer employee. Another option is starting your own mortgage brokerage business and originating loans under your own brand.
Either way, there are great resources to help connect licensed MLOs with job opportunities or starting a brokerage. The NAMB and Scotsman Guide have job boards specific to the mortgage industry. LinkedIn is another good source of mortgage sales jobs. Or you can check directly with lenders and banks that interest you.
For starting your own shop, NAMB and other sites offer extensive guides on launching a brokerage. There are also franchising opportunities with larger mortgage brands.
Becoming a licensed mortgage loan officer requires an investment of time and effort upfront. But once licensed, it opens up an exciting career helping homebuyers and earning solid commissions on closed loans.
If you have strong communication skills and enjoy complex problem solving, being a mortgage loan officer can be extremely rewarding. Use this guide to help chart your course and avoid pitfalls as you work towards MLO licensing.
After You Get Licensure
Once you receive your license, you can begin work as a home loan originator. Some MLOs work independently, but newbies often prefer to begin with an established business that has an existing client base, such as a bank, mortgage lending institution, or credit union.
With all the bureaucracy involved in the licensure process, it is important to keep your focus on the goal you had in mind when you first started looking into how to become a loan officer — helping people move into their dream homes.
Buying property can be a complicated and stressful process for your average person, but a qualified and supportive MLO can make the experience easier, allowing homebuyers to enjoy their investment with the knowledge they have secured the best home loan possible.
The work doesnt end here, though. It is important that MLOs keep up with professional development to keep their license and stay current with mortgage lending practices.
Once you have a license, you must meet requirements to maintain active licensure status. An active status shows you meet all requirements of the federal registration process. You will need to renew your license annually, take continuing education courses, and keep all information filed with the NMLS up to date.
For example, if you plan to switch and work for a new company, you have to inform the NMLS of this move. The NMLS website includes helpful resources for licensure renewal, including handbooks, checklists, and information on fees, deadlines, and other requirements.
MLOs are required to complete eight hours of NMLS-approved continuing education annually to qualify for license renewal. It is the MLOs responsibility to complete this education and the renewal process. If you fail to do so, you could end up losing your license.
Continuing education is required to include:
- Three hours of federal law and regulations
- Two hours of ethics instruction on fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product market
- One hour of undefined instruction on mortgage origination, which may be fulfilled by completing a state-specific course depending on the states requirements
Before You Get Licensure
If you want to become a mortgage loan officer, you probably have a number of questions about what the position entails.
Lets go over everything you need to think about before you close your first loan.
In terms of personal qualities, MLOs need to be detail-oriented people.
As an MLO, you will be collecting a range of information from potential borrowers and submitting this information to lenders. This information needs to be handled carefully and presented accurately. Staying organized is critical because the clients you work with will often be making the most important buying decision of their lives.
It is also beneficial if you are an outgoing person. You will be working with a wide range of people, and referrals tend to make up a large portion of your business. Making a good impression is key.
Knowledge of the real estate industry — or at least willingness to learn — is another important quality. MLOs need to stay up to date on how mortgage lending is evolving. New products, innovations, and regulations are always part of the mix.
If you are the kind of person who is always learning something new, you may want to become a mortgage loan originator.
MLOs deal with potential homebuyers sensitive financial information every day. They also act as a liaison between lending institutions and potential borrowers. Lenders need to have loans repaid; borrowers need to stay in their homes — and the MLO is a cornerstone to ensuring that both are in the best situation possible.
For anyone who wants to become a loan originator, it is a career that requires you to have financial character and stability. This is to prevent bad actors from becoming involved in the industry, which was one of the main problems that led to the 2008 financial collapse.
This means you need to meet certain financial requirements and have a clean criminal history. Any of the following scenarios are likely to result in licensure rejection:
- Criminal conviction related to fraud
- Poor credit history
- History of foreclosure or other significant unpaid debts
- Previously revoked licensure in other states
It is always best to disclose as much as possible on your application. There are instances where regulators will accept an applicant even though they have potential red flags. For example, many states have legal exceptions for applicants with unpaid medical debt. A criminal conviction unrelated to fraud, such as a DUI, also might not result in licensure rejection.
At this point, you might be asking the question: how long does it take to become a loan officer? The answer is that it all depends on how you approach it, but rest assured if you begin investing time and money in the process, you will want to complete it.
Doing your research before diving into pre-licensure courses is important.
The National Mortgage Licensing Service (NMLS) is the main regulatory body for MLOs and has a wealth of useful information, including state-specific requirements for licensure. Here at The Coop, we have information on everything from Online CE and Live CE to a community of professionals tackling a range of questions and a list of resources for MLOs. Taking the time to understand exactly how to become a mortgage loan originator in the first place will mean you are confident going into training.
One piece of good news is that you dont need a specific degree to become involved in this field. MLOs typically come from a background in business, banking, economics, or finance, but it isnt required. Instead, MLOs must obtain licensure through passing a test, taking pre-licensure education courses, and submitting information for approval by the NMLS.
Lets say you have decided mortgage loan origination is the career path for you. What are your next steps?
The first and most important step is obtaining a valid mortgage origination license. It is illegal to practice mortgage loan origination without a state-issued license. The following will detail the steps you need to take for licensure.
One thing to remember is that each state has specific guidelines that apply to MLO licensure, and state agencies are the ones to actually issue licenses.
But there are a number of requirements listed in federal legislation that are applicable across the board. It is worthwhile to become familiar with the federal Secure and Fair Enforcement Act for Mortgage Licensing of 2008 (i.e. SAFE Act), a major bill passed by Congress in the wake of the mortgage lending crisis.
Per the SAFE ACT and the NMLS, MLOs are required to:
- Obtain licensing from their respective states
- Register with the NMLS
- Provide authorization to obtain a credit report
- Provide a variety of identifying information
- Provide fingerprints for a criminal background check
- Provide a financial services employment history for the past 10 years
- Disclose any financial regulatory body charges against them
- Attest to the completeness and accuracy of the information provided
One key step in how to become a mortgage originator is to complete courses as required by the NMLS. Applicants are required to take 20 hours of pre-licensure education courses, including the following:
- Three hours of Federal law and regulations
- Three hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product market
- Twelve hours of undefined instruction on mortgage origination
In addition to this, each state has specific requirements for education, typically on state-specific topics. This can range from education on alternative lending products like reverse mortgages, to how to spot red flags on a mortgage application.
Applicants should refer to their respective states guidelines on how to become a licensed loan officer.
Applicants for MLO licensure are required to pass the SAFE MLO test with a score of at least 75%. The test evaluates candidates on their knowledge of state and federal mortgage lending law. Many states have adopted the Uniform State Test, which applicants only need to take once. This makes it easier for licensees to apply for licensure in other states.
Per SAFE Act requirements, there is a waiting period between retaking the SAFE MLO test. On the first and second failures, applicants must wait 30 days each between test retakes. If an individual fails the test three times, they must wait 180 days before taking the test again.
Some other NMLS requirements include:
- Sponsorship: An individuals MLO activities must be sponsored and supervised by their employer. State regulators must approve sponsorships.
- NMLS Unique Identifier: An NMLS Unique Identifier is a number permanently assigned to each company, branch, and individual with an NMLS account. This system was designed for the purpose of better tracking each company and licensee, and is required to appear in all advertisements for mortgage origination services.
- Payment of fees: Applicants are required to pay fees in order to obtain licensure. The amount of these fees varies by state.
Getting Licensed as a Mortgage Loan Originator (MLO) | What to Expect, 2024
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