The Consumer Financial Protection Bureau (“CFPB”) issued guidance on May 20, 2013 that validates the use of a Uniform State Test, instead of requiring originators to pass a separate examination in each state in which they wish to be licensed. Under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), mortgage loan originators must pass a “qualified written test.” The test must adequately measure the applicant’s knowledge of ethics, federal and state laws pertaining to mortgage origination, and federal and state laws regarding fraud, consumer protection, and fair lending. (Section 1505(d), SAFE Act.)
Earlier this spring, the Conference of State Bank Supervisors and the National Mortgage Licensing System and Registry rolled out the Uniform State Test as a national examination for originators seeking licensure under the SAFE Act. More than half of the states, including North Carolina, Pennsylvania, and Virginia, have agreed to accept Uniform State Test results or have agreed to do so in the future. To accommodate individuals who took an older version of the examination (predating these recent changes), there is a component of the Uniform State Test that originators can take, rather than re-taking the entire exam, to take advantage of the national reciprocity features.
These changes will make the licensing process more streamlined for financial institutions and should reduce burdens associated with multi-state licensure. Because of the CFPB’s recent changes, it is possible that other states will adopt the use of the Uniform State Test and curtail the examinations that are state-specific.