Transitional Mortgage License

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Transitional Mortgage License for Registered Mortgage Loan Originators

Transitional Mortgage Licensing - The Secure and Fair Enforcement for Mortgage Licensing Act - Modified May 24, 2018, Effective November 24, 2019

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 rules.

How Long Can An MLO Operate Under Temporary Authority?

Temporary authority starts when a current Federally Registered Bank MLO, who meets the 1 year experience requirement submits an application with all of the required background check information and ends when one of the following happens:

1.) Application withdrawn by MLO

2.) State denies

3.) State Grants approval

4.) 120 days after application is submitted if it is incomplete

Are There Transitional State Mortgage Originator Licenses For Existing Licensed MLO's?

More great news! If you are currently a state licensed MLO and you are seeking to obtain a license in another state you may also be granted temporary authority to originate upon submitting an application as long as you were licensed for at least 30 days prior to the application. This is fantastic news as the number of MLO's licensed in 10+ states over the last few years has been the most rapid growing segment of the market. This trend will continue with the transitional authority to operate while waiting on the license.

Can An MLO Obtain Temporary Authority In All States?

Yes! There are no limits to how many states you may operate under temporary authority

Which Mortgage Jobs Require A License?

Mortgage Loan Originator working for a mortgage broker

Mortgage Loan Originator working for a mortgage lender

Mortgage Loan Modifier

Contract Mortgage Processor or Underwriter

I Am Currently A Bank MLO, How Difficult Is The Mortgage License Exam?

The test is extremely diverse and covers the full spectrum of the mortgage industry. This is why choosing the right provider is so important, even if you have years of mortgage banking experience! There are many discount courses available through a quick internet search but as the old adage goes, you get what you pay for. In addition, there are many providers who discount their pricing but do not include their test prep materials needed to help you prepare, its actually sold as an add on which usually ends up costing more than using a Nationwide provider like My Mortgage Trainer, Inc. who will give you all of the study material needed for one reasonable price. You can see thier reviews here.

To see the current NMLS Mortgage Loan Originator test outline, click here

What Course Options Exist To Meet The Pre License Education Requirement?

First, there are over 100 approved providers on the NMLS approved list but less than a handful that can actually serve Nationwide. There are three methods for taking the course however, finding a local live course when you need it is very difficult as there may not be one scheduled when you need one. Therefore the top two most popular methods for taking the course are as follows:

1.) Live Webinar

2.) Online Instructor Led

Need Help?

Webinar

The webinar is the best way to learn what is needed to prepare for the exam if your current schedule allows. The webinar is done over 3 straight days with a live instructor from the comfort of your own home or office. A webcam is not required. Click the video below to get an idea of how the webinar functions:

Online Instructor Led

The Online Instructor Led Option is delivered over a 7 day window and allows for some more flexibility for those who cannot spend 3 straight days in a webinar. To find out more about this delivery method, please view the video below:

What is A Mortgage Loan Originator?

For more information on what a mortgage loan originator is click here.

Have additional questions? Call 317-566-0425, Click Here to fill out a contact request form or view the NMLS FAQ's

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