OK, I know my weekend won’t interest you. Except for one thing – the SAFE ACT. I took the national part of the required exam. (You can’t take the state part yet – I’ll explain later.) I’ve been dubbed CMA’s official “guinea pig” for the SAFE ACT. Not sure I’m thrilled with the title, but hey – I’m here to help.

Here’s how it goes: As you recall from our Vegas seminar, anyone originating 1-4 family loans must get a National Mortgage Licensing System (NMLS) ID number. Dept. of Corporations (DOC) licensees have until July 31, 2010 to comply, while those licensed by the California Dept. of Real Estate (DRE) have until December 31, 2010. After those dates, your unique, national ID number goes on every 1-4 family application you take.

To recap, requirements to get the federal ID number are:

• Pass two tests, a national part and a state part. You can take the national part of the exam now. You can’t take the California part until the DOC and DRE get up and running with their exams and pre-license training requirements.

• Complete 20 hours of pre-license training. California will likely incorporate the required state pre-license training within the total required 20 hours.

• Pass a background check – no felonies or prior license revocations.

• Pass a credit investigation. The type of credit required hasn’t been revealed yet. My guess is that the credit investigation is primarily for the purpose of excluding people who are in the middle of a huge credit disaster.

• Net worth and/or bonding requirements. DRE companies are exempt from the net worth or bonding requirements because of the DRE recovery fund.

What can you do now…?

First, until the DOC and DRE come out with their requirements, you can only take the NATIONAL portion of the exam. Also, you can only go into the NMLS Web site as an originator. You can’t do anything with your COMPANY until the State of California issues its requirements. Rough estimates are that DRE will come out with requirements around March and DOC will be ready around May 1. With DOC licensees having to comply by 7/31, it’s a very tight time frame.

You CAN get started and take the NATIONAL portion of the exam, and file some of the required information. I’ll explain this in terms of what I understood and where I got confused – please bear with me.

1) Go to the NMLS Web site at www.nationwidelicensingsystem.org or just go to Google and search for “NMLS” – it will show up as the first search result. You can create a password, which gives you access to exam scheduling, etc.

2) Soon after you get started, you’ll notice references to “filing” form MU4. When you print out form MU4, you’ll notice big lettering across the form that says, “DO NOT COMPLETE.” I was already lost – I thought I was supposed to complete this form. Later, I figured out that you use this form to gather information, then you answer all the questions online, which constitutes your “filing” of form MU4. I’m glad I figured that out!

3) Let’s see, then I got confused when I went through prompts to pay for and schedule my exam. You get to a screen that says, “You must already have a license – select state you are licensed in.” Good, I can answer that one! Problem: There are only 26 states to choose from – and California isn’t one of them! (Because Calif. hasn’t done their part to hook up with the Fed system.)

Seriously stumped, I called the “help” number, (240) 386-4444, and they were VERY helpful. (Frankly, I think they felt a little sorry for me.) They advised me that in spite of the fact I’m only licensed in California and in no other state, I should select ARIZONA, when asked to select a state. (I should have known that!) I selected Arizona, got the choice to click on “take national exam only” or “take Arizona exam.” I clicked on “take national exam” and in a few screens was able to pay my $92.00 and set an exam date.

A note on exams: They’re at professional exam centers (Prometric), located all over California. They administer all kinds of tests. You’ll get a choice of 30 or more different dates to choose from and different times of day. You’ll be in a room with people taking all kinds of different exams.

They take this stuff seriously! They give you a locker and you have to take everything out of your pockets including wallet, papers, etc. – you even have to take off your watch. They give you pencils, scratch paper, and a four-function calculator. (Remember those?) And smile – they take your picture.

Oh, and the exam ....

Not easy. I’ve been in this business over 30 years, have stayed awake during most CMA seminars, and I hang around with Rich Temme and Lori Randich. Still, I came within 7 questions of failing the exam – scary.

With the publicized part of the “mortgage crisis” relating primarily to homeowners, most of the questions (about 70%, as I recall) related to residential, institutional lending. I got stumped on a lot of time line questions, like, “When do you have to send out the appraisal notification?” Gee, even Adleson would have to look that one up! I had no clue.

Here’s the deal on passing or failing: $92.00 and 30 days. That’s it. You pay $92.00 and if you fail, you pay again, and wait 30 days

I figured that for $92.00 and having to wait 30 days, the best preparation I could get was taking the exam. If I failed, I’d know what to study for. NOTE: If you fail two times in a row, look into some exam prep – after the third fail, you have to wait 180 days to take it again.

What’s cool is – they break down your scores into the four areas covered by the exam: federal-related mortgage law, general mortgage knowledge, mortgage loan origination issues, and ethics. So if you fail – you know where to hit the books! Also, you get test results just 10 minutes after you answer the last question – you walk out knowing where you stand.

At our Los Angeles seminar, February 4 and 5, you’ll get more information on the SAFE ACT. You’ll also hear from Eileen Newhall, Principal Consultant, Senate Banking, Finance and Insurance Committee, along with representatives from the DOC and the DRE. We’ll get an update on the DRE and DOC’s procedures and hopefully a “macro” view of the situation.

Recommendation: It’s not an easy test – especially with the slant toward institutional lending. I’d jump on the Web site and set up your national exam date now. Either pass it or find out what to study. If you have loan officers, I’d get them started right away.

Hope this helps ... see you in February!