MLO License Endorsement Information
- Steps for Existing Real Estate Licensees-Obtaining a MLO License Endorsement (Updated 1/5/11)
- Mortgage Loan Originator (MLO) Definition
- Mortgage Loan Activity Reporting Requirement (Updated 1/4/11)
- Pre-License Education Requirement (Updated 1/5/11)
- Examination Requirement (Updated 5/5/11)
- NMLS Application and Fee Requirement (Updated 11/15/11)
- Fingerprint/Background Requirement (New 3/1/10)
- Financial Responsibility/Credit Report Requirement (Updated 10/28/10)
- Call Report Requirement
- MLO License Endorsement Renewal Requirement (Updated 9/18/12)
- Maintenance of DRE license
- Out of State Applicants
- Frequently Asked Questions (Updated 3/29/13)
Effective January 1, 2011, all licensees who perform residential mortgage loan originator MLO activities must obtain an MLO license endorsement. MLO license endorsement applications must be submitted through the Nationwide Mortgage Licensing System and Registry (NMLS) system and the individual must complete the following requirements:
- Successfully complete the National and California State specific examination.
- Submit a MLO licensee endorsement application filing through the NMLS.
- Submit fingerprints to the NMLS during the license endorsement application process.
- Satisfy the 20 hour pre-license education requirement.
- Submit authorization for the NMLS to obtain a credit report.
A MLO license endorsement will carry a nationwide identification number known as a "unique identifier" which will be assigned by the NMLS. The term and license identification number of the "base" real estate license will not change. Real estate licensees will continue to be responsible for filing the necessary renewal and record update requirements to maintain their four year real estate license separate from the MLO Endorsement.
Failure to submit to obtain the required MLO endorsement can result in the assessment of penalty fees of fifty dollars ($50) per day for the first 30 days the MLO license endorsement is not issued, and one hundred dollars ($100) per day for every day thereafter not to exceed a maximum of $10,000.
Last Updated - 1/5/11
Title V of Public Law 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act"), was passed on July 30, 2008. The new federal law gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Mortgage Licensing System and Registry (NMLS). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan originators.
The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) created, and will maintain the NMLS as the basis for state licensing. The NMLS will contain a single license record for each mortgage loan lender, broker, branch and mortgage loan originator (MLO) that can be used to apply for, amend, and renew a license in any state.
The SAFE Act requires state-licensed Mortgage Loan Originators (MLOs) to pass a written qualified test which covers federal and state law, to complete pre-licensure education courses, and to take annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the NMLS for submission to the FBI for a criminal background check, and authorization for the NMLS to obtain an independent credit report.
Senate Bill 36 (SB 36), which was signed into law in October 2009, was enacted in order to bring California into compliance with the SAFE Act. SB 36 requires all DRE real estate licensees who conduct residential MLO activities, as outlined in the SAFE Act, to meet specific requirements to qualify for a MLO real estate license endorsement by January 1, 2011.
Last Updated - 12/31/09
For individuals licensed by the Department of Real Estate, a mortgage loan originator means:
- An individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain. An individual real estate licensee acting within the meaning of Section 10131 (d) or Section 10131.1(b)(1)(c) of the Business and Professions Code (B&P) is a mortgage loan originator with respect to activities involving residential mortgage loans.
The definition of a mortgage loan originator does not include any of the following:
- An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator, except as otherwise provided in subdivision Section 10166.03 (c) B&P. The term "administrative or clerical tasks" means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan.
- An individual that only performs real estate brokerage services, as defined in Section 10131 (a) or (b) B&P, unless that person is compensated by a lender, other mortgage loan originator, or by any agent of any lender or other mortgage loan originator.
- An individual who solely renegotiates terms for existing mortgage loans held or serviced by his or her employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires such an employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.
- An individual that is solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101 (53D) of Title 11 of the United States Code.
- An individual licensed or registered as a mortgage loan originator pursuant to the provisions of the Financial Code and the SAFE Act.
Additional Information Regarding Loan Processing-Section 10166.03(a-c) B&P Code:
- A loan processor or underwriter who does not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator shall not be required to obtain a license endorsement as a mortgage loan originator.
- An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.
- An independent contractor who is employed by a mortgage loan originator may not engage in the activities of a loan processor or underwriter for a residential mortgage loan unless the independent contractor loan processor or underwriter obtains and maintains an endorsement as a mortgage loan originator under this article. Each independent contractor loan processor or underwriter who obtains and maintains an endorsement as a mortgage loan originator under this article shall have and maintain a valid unique identifier issued by the NMLS.
Last Updated - 12/31/09
Effective January 1, 2010, all licensees must report to the Department of Real Estate if they make, arrange, or service loans secured by residential property, 1 to 4 units. The report must be made within 30 days of commencing activity and must be completed online using Form RE 866 - Mortgage Loan Activity Notification.
In the event you no longer perform, or do not intend to perform loan origination for residential mortgage loans, you should complete and submit an updated online RE 866. You may choose to cancel your status as a residential mortgage loan originator or update your status. For example, if you will be performing residential mortgage loan activities such as servicing, funding, buying/selling notes, etc, which will not include origination activities requiring an endorsement, then you must make certain the RE 866 notification accurately reflects the activities you are performing.
Penalty fees can apply for failure to submit this required notification. Penalties are fifty dollars ($50) per day for the first 30 days the report is not filed and one hundred dollars ($100) per day for every day thereafter not to exceed a maximum of $10,000.
Last Updated - 1/4/11
The SAFE Act requires all MLO license applicants to complete 20 hours of pre-license education, including the following specific areas:
- Three hours of federal law and regulations
- Three hours of ethics, including fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product marketplace
Pre-license education must be completed through a NMLS approved provider. Further details
The pre-license education requirement does not have to be completed before taking either the National or State examination components.
Last Updated - 1/5/11
State-licensed loan originators pass a qualified written test developed by NMLS and administered by an approved test provider. As required by the SAFE Act, the test is designed to adequately measure an individual's knowledge and comprehension in appropriate areas, to include:
- Federal law and regulation pertaining to mortgage origination;
- State law and regulation pertaining to mortgage origination;
- Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
The SAFE Test includes two components, a National Component and a Unique California State Component. A MLO license endorsement applicant wishing to satisfy the SAFE test requirements for licensure, must pass each component with a test score of not less than 75 percent correct answers to questions. MLO license applicants wishing to seek licensure in more than one state or jurisdiction, must pass the unique State Component test in each of those states.
To schedule an examination, applicants must first register and establish a base record in the NMLS . The initial registration step is a no fee process. A fee is required to schedule an examination.
Further details are provided on examination scheduling, content outlines, fees, and procedures. Be sure to review The MLO testing handbook is a guide to completing this process. The pre-license education requirement does not have to be satisfied before completing the examination process.
Applicants are encouraged to start this process as soon as possible in order to successfully complete both portions of the examination. If an applicant is unsuccessful, there is a mandatory 30 day waiting period between each of the first three attempts to pass an examination. After the fourth attempt, the waiting period is 180 days.
- Note-Review Fingerprint/Background Requirement - Applicants are cautioned to carefully consider whether their background history conflicts with any of these requirements before filing for a SAFE examination or registering on the NMLS as fees are NOT refundable.
The National or State components can be taken at any approved NMLS location in the United States.
Last Updated - 5/5/11
Listed below are electronic application filing procedures through the NMLS based on DRE license types. These filing procedures include pertinent DRE requirements for submitting filings through the NMLS. Corporations and real estate brokers working as sole proprietors are referred to as a "company" in the NMLS system. Brokers, broker-associates, broker/officers, and salespersons are referred to as "individuals" in the NMLS system. It is strongly recommended that you read these procedures in full prior to submitting filings through the NMLS system. It may helpful to print these instructions and have them readily available as you go through this process.
- Real Estate Broker License Endorsement (Also Broker-Associates)
- Real Estate Corporation License Endorsement
- Real Estate Salesperson License Endorsement
- Real Estate Branch Endorsement
- Real Estate MLO License Endorsement Fee Summary
Last Updated - 11/15/11
The SAFE Act requires that each MLO applicant submit a set of fingerprints through the NMLS. Although DRE licensees were required to submit fingerprints before their license was issued, a new set of fingerprints must be obtained based on the provisions of the SAFE Act and SB 36.
Important Reminder - The SAFE Act prohibits the licensing of an MLO under any of the following conditions:
- If the applicant has ever been convicted of a felony involving an act of fraud, dishonesty, breach of trust, or money laundering, or convicted of any felony in the seven year period before filing an application for an endorsement.
- If an applicant has ever had a loan originator license revoked in any governmental jurisdiction.
- If an applicant has demonstrated a lack of financial responsibility by showing disregard in the management of his or her own financial condition.
- When completing the individual MLO license application (link to NMLS application and Fee Requirement Section) Form MU 4, you will be prompted to make arrangements to schedule an appointment to have your fingerprints taken using a live scan process. This process can only be completed at specific locations established by the NMLS Further information.
- A $39 fee will be charged when the criminal background check is authorized through NMLS.
- Specific fingerprinting locations have been established throughout California. Applicants will be directed to the closest location based on their zip code. Depending on the applicant's address and the distance to the nearest NMLS fingerprint vendor location, an applicant may be give the option through the system to obtain a kit to have their fingerprints taken with an ink based method at another authorized agency. There will be an additional charge of $10.00 for the kit plus an additional charge for the authorized agency to take the fingerprints.
- Fingerprints are automatically processed with results reported back to NMLS and available to DRE.
- If the FBI determines that the prints are illegible, you will receive a NMLS system notification email and be required to request and pay for a new criminal background check, based on current NMLS policies.
Last Updated - 3/1/10
The SAFE Act requires that mortgage loan originator applicants have demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purpose of the article.
The SAFE Act also requires that applicants authorize the NMLS to obtain a credit report from a credit reporting agency. This step must be completed as part of the on-line application process through NMLS.
- When the credit report is obtained, it will be done through a "soft pull" process which has no effect on the applicants credit score.
DRE has adopted Regulations in order to define the requirements of the SAFE Act and SB 36. Regulation 2758.3- Evidence of Financial Responsibility, specifically addresses how DRE will evaluate the financial responsibility requirement for mortgage loan originator applicants.
Last Updated - 10/28/10
Under the SAFE Act and SB 36, each mortgage loan originator will be required to submit reports of condition to the NMLS. The scope of this requirement has not yet been determined. Information will be posted as soon as it is available.
Last Updated - 12/31/09
The NMLS renewal application filing period begins each year on November 1st and ends December 31st. MLO license endorsements which were approved for issuance prior to November 1, 2012 will expire on December 31, 2012. Thereafter, MLO license endorsements will be issued annually and expire December 31st of each year.
Current renewal requirements for an Individual MLO license endorsement includes a renewal request/attestation filed electronically through NMLS, the appropriate renewal fees, and filing evidence of completion of 8 hours of continuing education (CE). CE must be taken through a course provider approved through NMLS. However, nothing precludes a DRE approved CE provider from creating a course that meets all the NMLS requirements as well as the DRE requirements for CE credit, qualifying and approving the course under NMLS and also DRE, and then offering the course to licensees. Since it may take as long as seven (7) days for a CE course provider to report a course completion into NMLS, MLOs are strongly encouraged not to wait until the final days of the renewal period to try to complete CE or they may be prevented from submitting an on-time renewal.
Renewal requirements for a Real Estate Corporation Company MLO license endorsement includes a renewal request/attestation filed by the licensed designated broker-officer electronically through NMLS, and the payment of the appropriate renewal fees. The licensed designated broker-officer must complete 8 hours of NMLS approved CE and submit an individual renewal request/attestation through NMLS. This individual renewal request/attestation should be submitted prior to the filing of the corporation renewal request/attestation.
Renewal requirements for a Real Estate Broker Sole-Proprietor Company MLO license endorsement includes a renewal request/attestation filed electronically through NMLS, and the payment of only a NMLS processing fee. The real estate broker must complete 8 hours of NMLS approved CE and submit an individual renewal request/attestation through NMLS. This individual renewal request/attestation should be submitted prior to the filing of the sole-proprietor company renewal request/attestation.
Note: The submission of mortgage call reports is a SAFE Act requirement and is also required pursuant to California Business & Professions Code 10166.08. A licensed company MLO that fails to submit required 2012 mortgage call reports to NMLS will result in the denial of the renewal of that company's MLO license endorsement for 2013. Renewal fees will not be refunded if a MLO renewal filing is denied for failure to submit one or more mortgage call reports.
At the time the renewal request is submitted to NMLS, a MLO license endorsement must be in one of the following "Eligible Statuses": Approved, Approved-Conditional, Approved-Failed to Renew, Approved-Inactive or Terminated-Failed to Renew.
Failing to renew a MLO license endorsement by January 1st will result in an existing MLO license endorsement status changed to "Terminated – Failed to Renew" and requires that the licensee cease performing all activities that require a MLO endorsement.
NMLS does allow for a renewal to be requested during a "Reinstatement Period" which begins January 1st and continues through the end of February. Additional late fees will not be assessed for filings submitted during the reinstatement period. Failing to request a renewal by the end of February will result in a MLO license endorsement status changed to "Terminated-Expired" and will require the filing of a new application, the authorization of a new credit report, the submission of new fingerprints for a criminal background check, completion of (late) CE, and the appropriate NMLS and DRE fees.
It is highly recommended that payments to renew a MLO license endorsement are submitted by credit card. Paying renewal fees by check/ACH may cause unnecessary delays in the processing of a MLO license endorsement renewal.
Additional information regarding the MLO renewal process can be found on the NMLS Web site.
Last Updated - 9/18/12
The term and license identification number of the "base" real estate license will not change. Real estate licensees will continue to be responsible for filing the necessary renewal, continuing education, and record update requirements to maintain their four year real estate license seperate from the MLO license endorsement.
Last Updated - 12/31/09
In order to meet the SAFE Act license requirements in California through the Department of Real Estate (DRE), individuals must first be issued a California Real Estate License and Corporations must be issued a California Real Estate Corporation License. DRE does not license limited liability companies or partnerships.
Last Updated - 12/31/09
- Do the new MLO License Endorsement requirements apply to me?
- Questions regarding the examination requirements
- Questions regarding the educational requirements
- What can you tell me about the Fingerprint/Background requirement?
- What NMLS forms do I need to complete?
- What can you tell me about the Credit Report and Financial Responsibility requirement?
- Form RE 866 – Mortgage Loan Activity Notification Questions
- Questions Regarding Renewing a MLO License Endorsement
- What are the Mortgage Call Reports?
- What is a Business Activity Reports?
- Which New Reports Must I Submit?
Last Updated - 3/29/13