Under the SAFE Act, what prerequisite test must MLOs pass to obtain a license?

The prerequisite test that Mortgage Loan Originators (MLOs) must pass to obtain a license under the SAFE Act is a national written test that encompasses questions on federal law, ethics, and mortgage loan origination. This requirement is designed to ensure that MLOs have a comprehensive understanding of the varied regulations that govern the mortgage industry, as well as a strong awareness of ethical practices that uphold the integrity of the profession.

This national written test is pivotal because it establishes a baseline of knowledge necessary for MLOs to function effectively and responsibly in their roles. The inclusion of both federal laws and ethical considerations reflects the commitment to consumer protection and regulatory compliance in the mortgage lending process.

The other choices do not meet the comprehensive requirements set by the SAFE Act. A written test on state law only would fail to cover vital federal regulations and ethical standards. A background check without a written test would not assess the MLO's knowledge and competency. Similarly, a practical exam on loan processing, while useful, does not cover the essential knowledge of laws and ethics critical for a licensed MLO. Thus, the national written test ensures that MLOs are well-prepared to serve consumers effectively and adhere to industry standards.