The State Regulatory Registry LLC, through NMLS, recently published a proposal to create a uniform time frame for the expiration of pre-licensure education (PE) for state licensed Mortgage Loan Originators (MLO). The comment submission deadline is August 22, 2014.
The move is needed because while the SAFE Act outlines the minimum requirements for pre-licensure education for MLOs, it does not offer any guidance regarding how timely the education must be relative to an individual's application for a license. In the absence of such guidance, the law is unclear and states handle the expiration of PE inconsistently. For example, in Arizona, PE credits expire two years after course completion, whereas in Maryland, PE credits permanently remain valid for the purposes of filing for a state license. The proposed rule indicates an effort by the State Regulatory Registry to implement a clear and uniform policy regarding the expiration of PE.
According to the NMLS Policy Committee, "individuals that fail to acquire a valid license or federal registration within three years from the date of completion that have not maintained an active license or federal registration are not necessarily keeping themselves current on state and federal mortgage and consumer protection laws and therefore should be required to ‘redo’ the initial course requirements."
Specifically, the proposed PE expiration policy would be:
"An individual who:
(1) Fails to acquire a valid license or federal registration within three years from the date of initial completion of any approved PE course; or
(2) Has obtained a license or federal registration but subsequently did not maintain an active license or federal registration for at least three years,
Must complete 20 hours of PE in order to be eligible for state licensure."
Further, the proposed rules would start a PE course expiration clock from the course completion date when the course is banked to the individual's record in NMLS. When the individual becomes PE compliant by completing at least 20 hours of NMLS approved education, the PE course expiration clock stops. When the clock reaches three years, the course expires and may not be counted toward PE compliance in the future. The proposed policy is also accompanied with four sample scenarios that examine how the rules are implemented in practice.