How to Become a MLO in Texas

The Texas Department of Savings and Mortgage Lending (SML) has two key areas of regulatory responsibility: the chartering, regulation, and supervision of the state’s thrift industry; and the licensing, registration, and regulation of the state’s mortgage industry. The SML will aggressively enforce the state’s statutes, rules, and regulations to promote public confidence, protect consumers, and provide a healthy mortgage lending environment to meet the credit needs of Texas and maintain a safe and sound thrift system.

Total Texas SML MLOs:
Annual Percentage Change:

29,914
10.7%

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)
  4. Obtain a company sponsorship

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.
  • A high school diploma, or equivalent, is required.

There will eventually be a criminal background check. If you are concerned about this and want to find out if you will be eligible before going through all the work, you can fill out the Eligibility Determination Application Package and a $75 fee to the SML. They will notify you within 90 days of their decision.

1. Complete the Pre-Licensure Education (PE)

The SML requires you to complete 23 hours of NMLS-approved education.

The subjects must include the following:

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

Before you start your education, the first thing your education provider will have you do is obtain an NMLS ID# if you don’t have one. It’s a very easy process and the best part is it’s free.

If you already have NMLS ID #, you’ll just continue using the one you have.

This will be important when you’re done with the course, because your education provider will be submitting your certificates to the NMLS with your unique NMLS ID #. 

There are both online and live programs available that can take anywhere from 2 days to 14 days. Regardless of which program you choose, you will still spend 20 overall classroom hours.

If you take an online program, you’ll have to log at least 16.67 total hours online. The NMLS has also implemented measures to make sure you’re paying attention. For instance, if your mouse cursor is idle for more than 6 minutes, you will be logged out automatically.

2. Pass the National Exam with UST

Prometric is the designated testing service used to administer the exams. They are one of the largest testing companies in the country, so they have locations all over Texas. 

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.

You have to enroll with the NMLS before actually scheduling your exam date with Prometric. 

You can enroll on the NMLS website, and pay for the $110 exam fee online. 

After you have enrolled, you can go to Prometric’s website or call them at (877) 671-6657 to schedule a time and place to sit for the exam. 

Once you enroll, you will have 180 days to sit for the exam. If you still have not taken the exam by then, you will have to re-pay the $110 test fee.

I strongly recommend that you allocate a good amount of time to study for the test. I’ve seen a lot of people take a few practice exams and think they will be ready for it. 

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

 

The National Exam with UST isn’t hard. You just have to know what to study and prepare for it. 

The test covers the most recent laws and regulations in the mortgage industry. The only way to study for this is to memorize what those laws are.

Also, keep in mind that the laws change and get amended all the time. Just in 2018, there was a major change to the TRID rule, and a lot of people were caught off guard when they were tested on it. 

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 complete the PE and the National Exam with UST, the rest of the way is pretty much just paperwork.

You’ll need to go online to the NMLS website and fill out the Multistate Uniform Individual License Form (MU4 FORM).

This is a simple form where you put in your contact information, work history, and any financial or criminal disclosures you want them to know. This has a $150 application fee.

You’ll also have to get your fingerprints taken, so they can run a federal background check with the FBI. Make sure that you get them taken at a NMLS-authorized Live Scan Provider. It’s a quick process and the results are usually sent back within 2 days. You can find one here. The Live Scan fee is $36.25.

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

They will also review your credit history. There is no standard (or at least, one that they disclose to the public). That means, there is no minimum credit score or automated scoring system. Each applicant is handled on a case-by-case basis and reviewed thoroughly. The credit report fee is $15. 

They are basically checking to see if you are financially responsible. After all, you are applying for a license to help other people make the largest financial decisions of their lives. it makes sense that they want to see how you handle financial matters in your private life first. 

If you have doubts about your own credit history, I recommend getting your free annual credit report and checking it for any irregularities before you submit your final application. I personally like to use Credit Karma, because they give you a free credit score. 

4. Obtain a Company Sponsorship

Once everything is approved, your license will be in “Approved-Inactive” status. This means you are licensed, but you can’t use it for business yet. 

If you want to start using your license to originate loans, you will need to designate an approved NMLS mortgage company who is willing to sponsor you. The NMLS will accept or reject your sponsorship request. If they approve it, your license status changes to “Approved-Active.”

Once your application is Active, you will be a licensed Mortgage Loan Originator in Texas under the SML!