The Safe Act was passed into law in 2008 in response to the sub-prime mortgage crisis. As a result, this law requires anyone seeking to originate mortgage loans to obtain a state license as a mortgage loan originator (MLO), unless working for a deposit taking institution. In order to become a licensee you must take a 20 Hour Pre Licensing Course
, pass an exam and meet certain criteria under the required background check. The SAFE ACT prohibits anyone from engaging in the business of residential mortgage loan origination without registering and obtaining any required licensing.
For years a Federally Registered MLO working for a depository could not move to a nonbank lender or broker until they received a license. Unfortunately, this meant taking a 20 hour course, a possible state required pre licensing course and passing a test prior to ever stepping foot in the door for their new employer.
To make matters worse, when a current bank MLO completed the education needed to become a licensed MLO, the NMLS automatically notifies the current employer of the completed course. This makes for a very uncomfortable situation for those seeking other employment.
Fortunately, this is about to change!
With the new rule change effective November 24, 2019, bank MLO's can now join the ranks of most other professions and leave their job with the bank and start originating for a nonbank lender or broker under a "transitional authority" while still meeting the SAFE act