Understanding Pre-Licensing and Continuing Education Requirements for MLOs

Starting a career as a mortgage loan originator (MLO) requires understanding two distinct but critical educational requirements: pre-licensing education and continuing education. While the SAFE Act mandates both, they serve different purposes and have unique requirements that new MLOs must master to build successful careers in the mortgage industry.

Bottom Line: Pre-licensing education is your entry ticket to the mortgage industry, while continuing education keeps your license active and your knowledge current throughout your career.

What is MLO Pre-Licensing Education?

MLO pre-licensing education is the foundational training required before you can obtain your mortgage loan originator license. All states require a minimum of 20 hours of mortgage pre-licensing education from an NMLS-approved mortgage school, establishing the knowledge base necessary to work in the mortgage industry.

Pre-Licensing Education Requirements

The minimum requirement is 20 hours of NMLS approved education which includes the following: Three (3) hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues; Two (2) hours related to lending standards for the nontraditional mortgage product market; and Twelve (12) hours of undefined instruction on mortgage origination.

If you're wondering how to get licensed as a mortgage loan originator, the 20-hour SAFE comprehensive course consists of five core modules:

• Federal Mortgage-Related Laws (3 hours): Including RESPA, ECOA, TILA, and The SAFE Act

• Ethics Training (3 hours): Covering fraud prevention, consumer protection, and fair lending issues

• Non-Traditional Mortgage Products (2 hours): Understanding alternative lending products and their risks

• General Mortgage Knowledge (12 hours): Mortgage programs, loan products, and industry terminology

• Mortgage Loan Origination Activities: Application processes, underwriting, appraisals, and closing procedures

State-Specific Pre-Licensing Requirements

While the national requirement is 20 hours, some states require additional state-specific education hours. Many states require more hours of state-specific training in addition to the nationally-required 20 hours. It's essential to check your state's specific requirements before beginning your education. If you're interested in starting a career in the mortgage industry, understanding these requirements early in your career planning is crucial for success.

What is MLO Continuing Education?

Continuing education (CE) is the ongoing training required to maintain your mortgage license once you're already licensed. The SAFE Act requires licensed mortgage loan originators (MLOs) to take a minimum of 8 hours of continuing education (CE) every year as a condition for mortgage license renewal.

Annual CE Requirements

Federal and State law requires MLOs to complete a minimum of eight (8) hours of annual CE which must include the following: Two (2) hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues; Two (2) hours of training related to lending standards for the nontraditional mortgage product market; and One (1) hour of undefined instruction on mortgage origination.

The standard 8-hour CE breakdown includes:

• Federal Law Updates (3 hours): Current regulations and compliance requirements

• Ethics Training (2 hours): Ongoing fraud prevention and consumer protection

• Non-Traditional Mortgage Products (2 hours): Updates on alternative lending standards

• Elective Hour (1 hour): Additional mortgage-related education

State-Specific CE Variations

Most states require a total of 8 hours of NMLS-approved Continuing Education, but some states require additional hours. For example, New York requires 11 total hours, New Jersey requires 12 total hours, and Oregon requires 10 total hours. Check with your state's specific requirements for exact hour counts.

Key Differences Between Pre-Licensing and Continuing Education

Purpose and Timing

Pre-Licensing Education:

• Purpose: Provides foundational knowledge for entering the mortgage industry

• Timing: Required before taking the NMLS exam and obtaining your license

• Duration: One-time requirement (unless retaking due to extended inactivity)

Continuing Education:

• Purpose: Keeps licensed MLOs current with industry changes and regulations

• Timing: Required annually after obtaining your license

• Duration: Ongoing requirement throughout your career

Content Focus

Pre-Licensing Education covers comprehensive foundational topics, including basic mortgage concepts, federal regulations, and industry practices. The 20-hour course is crucial for exam success, as it covers both foundational knowledge and exam preparation. Many people walk into the NMLS exam unprepared, which is why proper preparation is essential.

Continuing Education focuses on updates to regulations, new industry practices, and reinforcement of ethical standards. The content is updated annually to reflect current market conditions and regulatory changes.

Hour Requirements

• Pre-Licensing: 20 hours nationally (plus state-specific requirements)

• Continuing Education: 8 hours annually (plus state-specific requirements)

Important Deadlines and Timeline Considerations

Pre-Licensing Timeline

There's no specific deadline for completing pre-licensing education, but you must complete it before scheduling your NMLS exam. The timeline varies for each individual depending on the specific license requirements for the state(s) they want to be licensed in, but most people can complete the process within several weeks to a few months.

CE Deadlines

For most states, the NMLS recommends that all CE is completed by the SMART deadline in early December to ensure all credits are submitted and approved in time for mortgage license renewal on January 1st. Missing deadlines can result in license expiration and potential late fees. Your time is valuable, and completing CE during the summer months means no year-end pressure, no system delays, and no compliance worries.

The NMLS establishes three key deadlines each year:

• SMART Deadline: Early December (recommended target)

• At-Risk-to-Miss Deadline: Mid-December

• Final Deadline: Late December

Consequences of Missing Deadlines

If you fail to complete all of your Continuing Education — thereby preventing you from initiating and completing the license renewal process — before the final deadline in late December, your NMLS account will be deemed inactive and you'll be unable to perform any mortgage origination. Should you remain inactive beyond the last day of February, you will have to retake your Pre-Licensing education and reapply for your mortgage license. Learn more about how CE credits are reported to the NMLS and common mistakes to avoid to confirm your education is recorded correctly.

Common Misconceptions About MLO Education

"I Don't Need CE in My First Year"

You do NOT need to take CE if you obtained your initial mortgage license this calendar year (i.e. you took a 20-hour pre-license course). However, if you obtained your license late in the year (typically after November 1st), you'll need to complete CE the following year.

"All Education is the Same"

Pre-licensing and continuing education serve different purposes and cannot be substituted for each other. Pre-license education is intended to provide originators with a knowledge base to work in the mortgage industry, while CE keeps that knowledge current.

"I Can Take the Same Course Every Year"

MLOs are advised that to comply with the SAFE Act's "successive years" rule, they not take the same CE course two years in a row. This ensures ongoing learning and prevents stagnation.

Choosing the Right Education Provider

NMLS Approval Requirements

Both pre-licensing and continuing education must be completed through NMLS-approved providers. The NMLS requires all completed hours to be "banked" with the NMLS. OnCourse Learning, as your NMLS-approved course provider, will submit your completion record to the NMLS within seven days after you have finished your coursework.

Factors to Consider

When selecting an education provider, consider:

• NMLS approval status: Verify the provider is NMLS-approved

• Course format options: Online, instructor-led, or hybrid formats

• State-specific offerings: Ensure availability of required state courses

• Support services: Access to instructors and customer support

• Pass rates: Track record of student success on NMLS exams

Cost Considerations

Pre-Licensing Education Costs

Pre-licensing education costs vary by provider and state requirements but typically range from $200-$500 for the complete package, including exam preparation materials.

Continuing Education Costs

When it comes to Continuing Education, costs can vary due to a few different factors. CE in places where additional state credit hours are required is likely to cost more. Generally, you can expect CE costs to be significantly lower than pre-licensing education costs.

The Legal Framework: Understanding the SAFE Act

Background and Purpose

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), 12 U.S.C. § 5101, et seq. was enacted on July 30, 2008, and requires individuals who engage in the business of a residential mortgage loan originator (MLO) to be either state-licensed or federally-registered as MLOs.

The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

Regulatory Oversight

Effective July 21, 2011, the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) has been transferred to the Consumer Financial Protection Bureau (CFPB) for administration and enforcement.

Career Impact and Professional Development

Building Your Foundation

Pre-licensing education establishes your credibility and knowledge base. The comprehensive 20-hour curriculum ensures you understand fundamental concepts essential for success in the mortgage industry. The course teaches valuable skills beyond just mortgage knowledge - discover what you learn in the NMLS course beyond mortgages and how it builds life skills for any career path.

Staying Current Through CE

The SAFE Mortgage Licensing Act of 2008, which requires state-licensed MLOs to complete eight hours of continuation education annually was established to ensure mortgage industry integrity for the purpose of consumer protection. With more than 171,000 MLOs expected to complete CE online each year, continuing education is a critical component of industry oversight.

Continuing education helps you:

• Stay current with regulatory changes

• Maintain professional competency

• Advance your career through specialized knowledge

• Meet client expectations for expertise

• Build skills that turn clients into advocates and generate steady referrals

Special Circumstances and Exceptions

Late CE Requirements

If you miss your CE deadline, you must complete continuing education specifically approved by the NMLS as "Late CE". Late CE courses are distinct from regular CE and must be completed during the reinstatement period.

Federally Registered MLOs

Only state-licensed loan originators need to complete SAFE Act required continuing education. Federally registered MLOs are exempt from CE requirements, but your lending institution may have its own education requirements.

Returning to the Industry

If you have been unlicensed in a state for three or more years, you may need to retake the 20hrs of PE. This varies by state, so check specific requirements before assuming you can skip pre-licensing education.

Technology and Education Delivery

Online Learning Advantages

Modern MLO education is primarily delivered online, offering flexibility for working professionals. Online courses provide:

• 24/7 accessibility: Study at your own pace and schedule

• Interactive content: Engaging multimedia and case studies

• Immediate feedback: Instant quiz results and progress tracking

• Mobile compatibility: Access courses from any device

Authentication and Integrity

It is important that MLOs understand failing to verify their identity when taking online CE courses is a serious violation. NMLS-approved providers implement strict authentication measures to ensure course integrity.

Planning Your MLO Education Journey

For New Entrants

1. Research state requirements: Understand your state's specific pre-licensing hour requirements

2. Choose an NMLS-approved provider: Select a provider with strong support and pass rates

3. Plan your timeline: Allow adequate time for course completion and exam preparation

4. Budget appropriately: Factor in education costs, exam fees, and licensing fees

5. Prepare for career success: Mortgage licensing can work for professionals starting at any stage of their career

For Licensed MLOs

1. Track your CE cycle: Know your license renewal date and plan accordingly

2. Complete CE early: Avoid year-end rushes and potential system delays by completing CE during the summer months

3. Maintain records: Keep certificates and completion records for your files

4. Stay informed: Monitor regulatory updates that might affect your practice

5. Focus on growth: Learn what top-performing new mortgage pros do to build confidence, close deals faster, and grow their pipeline

Conclusion

Understanding the distinction between MLO pre-licensing and continuing education is crucial for anyone entering or working in the mortgage industry. Pre-licensing education provides the foundation for your career, while continuing education ensures you remain current with industry standards and regulations.

Both requirements serve essential purposes in maintaining the integrity of the mortgage industry and protecting consumers. By choosing quality education providers and staying current with requirements, you'll build a successful and compliant career as a mortgage loan originator. Remember that mortgage education builds valuable life skills like ethics, compliance, and financial literacy that benefit any career path.