California, Missouri Jump on MLO Uniform State Test Bandwagon

A multi-year Mortgage Bankers Association advocacy effort continued to pay off this week, as regulatory agencies in California and Missouri paved the way for adoption of a national uniform test for state-licensed mortgage loan originators in those states.  

The California Department of Business Oversight and the California Bureau of Real Estate jointly announced this week that they will adopt the Uniform State Test for state-licensed mortgage loan originators effective Jan. 1.  Also this week, legislators in Missouri overrode a veto by Gov. Jay Nixon (D) of Senate Bill 345 (http://www.senate.mo.gov/15info/pdf-bill/tat/SB345.pdf), which included a provision requiring UST adoption. The next step for the Missouri Department of Insurance, Financial Institutions and Professional Registration is to establish an effective date.  

These actions bring total UST adoption to 50 regulators from 43 states, the District of Columbia, Puerto Rico, Guam and the Virgin Islands.  

The UST, launched by the Nationwide Mortgage Licensing System in April 2013 (http://mortgage.nationwidelicensingsystem.org/news/nmlsnews/Pages/default.aspx), represents the first major change to SAFE Act mortgage loan origination test requirements since 2009. The UST replaces state-specific test components for states that adopt it; a passing result on the National Test with Uniform State Content satisfies the testing requirements for licensure in those adopting states and any states that adopt in the future.  

State agencies that choose not to adopt the UST continue to require applicants to take and pass the current state specific test components. With California and Missouri on board, the number of states agencies that have not adopted the UST form a distinct minority: Arkansas, Colorado, Florida, Illinois, West Virginia, South Carolina (two agencies) and Utah, where one agency has approved the UST and one has not.  

MBA has long-advocated for nationwide adoption of the UST, noting that because of “duplicative and divergent” requirements among states, the ability of non-bank lenders to hire/attract well-qualified mortgage loan originators that are licensed in another state has been impeded, notwithstanding that these out-of-state MLOs have satisfied background, education, and testing standards and currently serve borrowers. In addition to these costly disadvantages, delays involved in moving from one state licensing regime to another encourage mortgage loan originators to instead work for federally insured depository lenders, where they can serve the same consumers in their new state more immediately and without a state license.  

Pete Mills, MBA senior vice president for residential policy and member engagement, said the successful efforts this week in California were the “direct result of the sustained advocacy engagement of the California MBA and MBA, which together helped push for legislation last year that provided these regulators the authority to move forward.”  

Mills said the news in Missouri is “the welcome result of a strong and coordinated effort of MBA and its partners, the MBA of Missouri and local MBAs in St. Louis and Kansas City.”   To view a map of all adopting state regulators, click http://mortgage.nationwidelicensingsystem.org/profreq/testing/Documents/UST Adoption Table and Map.pdf.