The SAFE Act and Temporary Authority

Issue/Inquiry

The mortgage loan originators working for the Bank’s mortgage division are federally licensed, but they are not licensed with the state since this is not required for mortgage loan originators of a depository institution. When the Bank merges with another financial institution, the mortgage division will not be retained. Some of the mortgage loan originators may go to work for state-licensed mortgage lenders. Will they be required to obtain a state license before they can work as loan originators?

Response Summary

Under amendments of the Economic Growth Act to the SAFE Act going into effect on November 24, 2019, a mortgage loan originator moving from a depository institution to a non-depository institution will have temporary authority for up to 120 days to act as a loan originator, provided that certain conditions are met.

Response Detail

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“Economic Growth Act”) was signed into law. It amended the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”) to grant a registered mortgage loan originator moving from a depository institution to a non-depository institution, or a state-licensed lender in one state moving to the same or another state-licensed lender in another state, the temporary authority to act as a loan originator without having first been licensed by the state.

In order to obtain this temporary authority, the mortgage loan originator must meet certain conditions, including the following:

• They have not had an application for a loan originator license denied.
• They have not had a loan originator license revoked or suspended.
• They have not been subject to, or served with, a cease and desist order in any governmental jurisdiction or under the SAFE Act.
• They have not been convicted of a misdemeanor or felony that would preclude licensure under the law of the applicable state.
• They have submitted a license application in the applicable state.

The temporary authority will begin on the day the mortgage loan originator applies for a state license and registration, and will end on the earlier of the following:

• The date on which the state denies the application or issues a notice of intent to deny
• The date on which the state grants a state license
• 120 days after the date the application was submitted

The effective date of these amendments is 18 months after the enactment of the Economic Growth Act, which will be November 24, 2019.

This entry was posted on Monday, November 19th, 2018 at 6:00 am.