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Why Do So Many People Fail the MLO Test?
December 3, 2021

Why Do So Many People Fail the MLO Test?

by The CE Shop Team

The SAFE MLO Test is Difficult, But Why?

As an aspiring Mortgage Loan Officer (MLO), there are certain steps you need to take to obtain your license, including taking and passing the SAFE MLO Test. Failing this test is a shared experience for new MLOs, with only 57% of test takers passing on their first attempt. But why is this test so hard and what can you do to set yourself up for success?

What Makes the SAFE MLO Test Difficult?

After the SAFE Act of 2008 was passed, there were many regulations created to protect the integrity of the mortgage industry. There are three factors that tend to make the MLO Test difficult, including:

  • To ensure compliance with the SAFE Act, the test developers designed the test to be challenging.
  • Some test takers don’t fully understand or apply the key concepts necessary to pass.
  • Test takers don’t always devote a sufficient amount of time to study for the exam.

With proper preparation, you can overcome these roadblocks and excel when taking the test. Though you’ll be required to take at least 20 hours of Pre-Licensing education before scheduling your test, there’s more you should know before taking the SAFE MLO Test. Follow this guide to learn more about the test as well as boost your chances of passing on the first try.

SAFE MLO Test Requirements

Before taking your test, you must review the Nationwide Mortgage Licensing System & Registry (NMLS) Candidate Agreement and Rules of Conduct. The Candidate Agreement outlines certain guidelines you must follow as a test taker. You will be agreeing to:

  • Not share or discuss any of the material from the test with anyone
  • Not seek out test information from any other source or previous test takers
  • Comply with the test takers’ Rules of Conduct as presented on their site

The Rules of Conduct explains the conduct expected from test takers. These rules lay out:

  • The assistance you are allowed during the test
  • The break policy 
  • Which personal belongings are allowed in the room
  • Test confidentiality
  • The behavior expected during the test

If the Candidate Agreement or Rules of Conduct are breached, there are consequences. These can include:

  • Criminal charges
  • Dismissal from the test
  • Permanent ban from testing
  • Reporting of the violation to the state in which you are seeking licensure
  • Denial or revocation of MLO license

The SAFE MLO Test upholds strict requirements to stay in compliance with the SAFE Act. You must follow these rules or risk not obtaining licensure. Now that you understand the rules you need to follow, it’s time to check out what’s actually on the test.

MLO Test

SAFE MLO Test Overview

You are given 190 minutes to complete the 120 question exam, with each test component consisting of four-part multiple choice questions. Only 115 of the 120 questions will be counted towards your score, and you will need a score of 75% or higher to pass the exam. If you fail to get a 75% or higher you’re able to retake the test. Below is an outline of the retake cycle based on the number of attempts taken:

Test Attempt Test Result Retake Waiting Period
Initial Fail 30 days
2nd Fail 30 days
3rd Fail 180 days
Initial (New retake cycle starts) Fail 30 days
2nd Fail 30 days
3rd Fail 180 days

It is important to note that if you do not maintain a valid MLO license for five consecutive years, you are required to retake the SAFE MLO Test. To maintain your MLO license, you must complete your annual Continuing Education. So, what can you do to prepare for this test?

How to Prepare

It is extremely important to go into this test prepared. NMLS provides a test outline as well as the MLO Testing Handbook to help you study for the test. You can also take your studying a step further by enrolling in an Exam Prep program.

As you gear up to take the test, remember to:

  • Start studying as far out from your testing day as possible. 
  • Set aside time every day (or every other day) to study, even if you work for only 10-15 minutes at a time.
  • Study using methods that work best for your learning style. Taking practice exams, making flash cards, or reading core concepts aloud could help you absorb more of the information you need to know.
  • Get adequate sleep leading up to the day of your test.
  • Eat a hearty meal before your test. You’ve got enough on your mind - don’t let your hunger weigh you down!

No matter how you decide to study, focus on fully understanding the concepts presented to you rather than memorizing answers. It is beneficial to take the test as soon as you feel ready, as the mortgage industry moves quickly and the test questions follow suit. The percentage of questions that correspond with different facets of mortgage are as follows:

Content Area Percentage of the Test
Federal Mortgage-Related Laws 24%
Uniform State Content 11%
General Mortgage Knowledge 20%
Mortgage Loan Origination Activities 27%
Ethics 18%

Before scheduling a time to take your exam, you’ll have to sign into your NMLS account to pay the associated testing fees of $110. You have two options for the delivery of your test: in-person or online. The in-person test taking will need to take place in a Prometric Testing Center, while the online proctored test has separate regulations through the Prometric ProProctor system. You are able to reschedule or cancel your test as long as you follow the cancellation and rescheduling policy.

Although this test is a difficult one, don’t forget to keep a positive mindset. Whether passing the SAFE MLO Test takes you four tries or one, you’ll still become a mortgage professional at the end of the day. Do as much as you can to prepare. Then, when you feel most confident, take a whack at it! 

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