How to Become a MLO in California (DRE)

The California Department of Real Estate (DRE) was created to safeguard and promote the public interests in real estate matters through licensure, regulation, education and enforcement. The DRE strives to be an effective consumer advocate by monitoring and regulating industry practices while promoting public awareness, and to be an effective customer-focused department providing timely and efficient services to licensees, sub-dividers and consumers.

Total DRE MLOs in California:
Annual Percentage Change:

19,280
0.8%

Special Note:

If you currently have a California real estate license and want to originate loans, you will be getting an MLO endorsement under the DRE.

If you don’t have a real estate license, then you will get the MLO license under the DBO.

What’s the difference?
Not much. It’s virtually the same process and same requirements. It is just regulated by a different agency depending on whether or not you have a real estate license.

Short Answer

  1. Complete the Pre-Licensure Education (PE)
  2. Pass the National Exam with Uniform State Content
  3. Submit your License Application (Includes a background check and credit report)

From start to finish, the entire process takes about 6 weeks to 8 weeks.

Long Answer

Basic Requirements:

  • You need to be at least 18 years or older.
  • Applicants must be a US citizen or lawfully admitted alien.
  • A high school diploma, or equivalent, is required.

1. Complete Pre-Licensure Education (PE)

The DRE requires you to complete 20 hours of NMLS-approved education.

The subjects must include the following:

  • 2 hours – Non-traditional mortgage lending
  • 3 hours – Federal Law
  • 3 hours – Ethics (Includes fraud, consumer protection, and fair lending issues)
  • 12 hours – Elective topics of your choice

The course can be pretty dull at times, but it’s only 20 hours. There are both online and live programs that range between 2 days to 14 days.

The NMLS has also implemented measures to make sure you’re paying attention in these courses. For instance, if your mouse cursor is idle for more than 6 minutes, you will be logged out automatically.

The PE does not need to be completed prior to taking the National Exam with UST, but must be completed before an endorsement is issued.

2. Pass the National Exam with UST

Applicants must pass the National Exam with UST, which is administered at Prometric testing centers (not DRE examination sites). This is a good thing. Prometric is a private testing service, so they have more locations and availability than the DRE.

The National Exam with UST consists of 125 multiple-choice questions. You have 190 minutes to score a 75% or better to pass. The exam fee is $110.

The first step to applying for the National Exam with UST is to enroll on the NMLS website, where you’ll pay the $110 testing fee.

Once you’ve enrolled, you can schedule an exam on Prometric’s website or by calling them at (877) 671-6657.

You have 180 days to take the exam from the date that you enrolled on the NMLS website. Otherwise, you will have to repay the $110 exam fee again.

National Exam with UST Pass Rates

 Tests TakenTests PassedPass Rate
1st Attempt61,79835,91858%
Subsequent Attempts27,11011,57043%
Overall88,90847,48853%
Source: NMLS; Tests administered between 1/1/2017 to 12/31/2018

 

Most people don’t prepare enough for this exam, which is resulting in low test scores. The test itself isn’t hard. You just need to know what to study.

The National Exam with UST is testing you on the most current laws and regulations, and they are changing all the time. There were some big changes to the TILA-RESPA Integrated Disclosure (TRID) rule just back in 2018 and a lot people were surprised by this. Needlessly to say, this caused a lot of people to fail the exam.

If you don’t pass, you can re-take it but there is a waiting period of 30 days. If you fail Attempt #2, you have to wait another 30 days. If you fail Attempt #3, you have to wait 180 days.

3. Submit Your License Application

After you successfully pass the exam, there are only a few administrative items left to take care of.

You’ll need to login to your account on the NMLS website and fill out the Multistate Uniform Individual License Form (MU4 FORM). This is the actual application form to apply for the license, which has an application fee of $300.

The SAFE Act requires that each MLO applicant submit a set of fingerprints through the NMLS. You must have them taken by an NMLS-approved Live Scan provider, which charges a fee of $36.25. You can schedule an appointment here. The results are back within 48 hours.

If you had your fingerprints taken in the NMLS within 3 years, then you do not need to be reprinted.

If you’ve already had your fingerprints taken for your real estate license, the DRE won’t accept them. You will need to get a new set of fingerprints taken and submitted to the NMLS.

They will use your fingerprints to run a federal criminal background check with the FBI.

They may deny your application if you have ever been convicted of a felony involving an act of fraud, dishonesty, breach of trust, or money laundering, or convicted of any felony in the seven-year period before filing an application for an endorsement.

The SAFE Act requires that each MLO applicant authorize NMLS to obtain a credit report. The credit report fee is $15

They will be looking for evidence of financial responsibility. There is no minimum credit score or automated scoring system. They will be reviewing each applicant’s credit history one at a time to make a decision. Every state goes by their own guidelines and they don’t tell you what that is.

They may deny your application if they see a demonstrated a lack of financial responsibility, character, and general fitness.

Basically, since you will be helping other people with the largest financial decision of their lives, they want to be confident that you will operate honestly, fairly, and efficiently.

4. Obtain a Company Sponsorship

Once the DRE approves your application, you will technically have your endorsement, but you won’t be able to do anything with it just yet.

Your status will be “Approved-Inactive” until you find an approved mortgage company to work for. Then, they will change your status to “Approved-Active” and you can begin to use your license for business transactions (and to start making money!).

Once they approve your sponsor, you will have an MLO endorsement on your real estate license under the DRE in California!