Uniform State Test – This Is Not a Joke

By: Costas A. Avrakotos , *Jeffrey Prost *Robin L. Gieseke
Mr. Prost and Ms. Gieseke are not admitted to the practice of law.

April Fools’ Day, a day traditionally reserved for pranks, trickery, and funny escapades, is upon us.

All joking aside, on this April 1, 2013, the Conference of State Bank Supervisors (“CSBS”) will begin to offer the new Uniform State Test (“UST”) for the licensing of state regulated mortgage loan originators (“MLOs”).

No fooling around, 26 states have agreed to scuttle their state-specific tests, and adopt the new UST, with 20 states on board as of April 1, 2013, 5 states doing so on July 1, 2013, and 1 more online as of October 1, 2013.

Pinch me to make sure I am not dreaming, but there will be one state test in these states that will replace 27 individual state exams.

I am sure you’re shocked, but states stepping forward with the UST on April 1, 2013 are Delaware, Georgia, Idaho, Indiana (DFI), Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Utah (DFI), Virginia, Washington, and Wisconsin. States adopting the UST effective July 1, 2013 are Alaska, Kansas, Nebraska, Tennessee and Vermont. The two Texas agencies that regulate mortgage loan originators (the Department of Savings and Mortgage Lending (“SML”) and the Office of the Consumer Credit Commissioner (“OCCC”)) will join the group in October. Other states plan to adopt the UST, but will first require legislative changes. CSBS will maintain and update on a quarterly basis a list of the states that will rely on the UST.

I kid you not, but these states were willing to drop questions from the state exam that involved questions specific to originating mortgage loans under their mortgage finance laws.

Believe it or not, the UST will be comprised of 25 questions based on the SAFE Act and the Model State Law, which states have followed to enact their own state SAFE Act statute.

No tomfoolery here, the 25 question UST will be integrated into the 100 question national test increasing the test to 125 questions.

But wait, there is more. The existing national test will be retired on April 1, 2013. In addition, the 25 question UST will be offered as a stand-alone test for those MLOs who previously passed the National Test Component, but still must meet state SAFE Act requirements. This will be available until March 31, 2014.

Hard to believe, but the time allotment for applicants taking the national test with the UST will increase from 150 minutes to 190 minutes, with the addition of the 25 UST questions. With the addition of the 25 UST questions, applicants taking the 25 question stand-alone UST will have 45 minutes to complete the test. Of the 125 questions on the national test with the UST, 115 of the questions will be scored, while all of the 25 questions will be scored for individuals taking the stand alone UST.

This is no shell game. The minimum passing score on the national test with the UST will continue to be 75 percent. MLOs who previously have passed the national test, and take the stand-alone UST will be scored on the results of both their national test score and the stand-alone UST score.

Who would have thunk it a year ago – the breakdown of the national test with the UST will be as follows: (i) Federal Mortgage Related Laws (24 – 25 percent); (ii) General Mortgage Knowledge (19 – 20 percent); (iii) Mortgage Loan Origination Activities (19 – 20 percent); (iv) Ethics (14 – 15 percent); and (v) Uniform State Content (20 – 22 percent).

No Lucy pulling the football away, but there is a catch: several states that have adopted the UST will require additional educational requirements of their MLOs. Nonetheless, all told, an enormous stride forward by state regulators and CSBS to promote uniformity with the licensing of MLOs.

So come April 1st, be on the lookout for short-sheeted beds, offices wrapped in tinfoil, and hold onto your hat – a uniform state test for MLOs.

Yes, we can attest that this is current, true and complete (until the next change).

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