RSK.IQ Question of the Week 4/22/19

Temporary Authority Under the S.A.F.E. Act


The Bank understands that certain MLOs will be given temporary authority to originate loans while waiting to be licensed. How will this work and when will it go into effect?

Response Summary

The SAFE Act has been amended, effective November 24, 2019, to allow eligible MLOs to act as loan originators while they are waiting to be licensed by the state. The temporary authority will remain in effect until the application is granted, denied, or withdrawn, or is incomplete and more than 120 days have elapsed.

Response Detail

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (“Economic Growth Act”) was signed into law. Among other things, such affected the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”) by granting registered mortgage loan originators (“MLO”) moving from a depository institution to a non-depository institution, or a state-licensed lender in one state 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.

The new rules will go into effect on November 24, 2019.

Temporary authority to act as MLOs will be provided to the following:

  • Qualified MLOs who are changing employment from a depository institution to a state-licensed mortgage company
  • Qualified state-licensed MLOs seeking licensure in another state.

In order to obtain this authority, certain conditions must be met by the MLO, including the following:

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

Such MLOs will be permitted to originate loans while completing any state-specific requirements for licensure, such as education or testing.

MLOs receiving temporary authority must be:

  • Employed and sponsored through the National Mortgage Licensing System (“NMLS”) by a state-licensed mortgage company
  • Either registered in the NMLS as an MLO during the one-year period preceding the application submission, or licensed as an MLO during the 30-day period preceding the date of the application

The temporary authority ends when the earliest of the following occurs:

  • The MLO withdraws the application
  • The state denies or issues a notice of intent to deny the application
  • The state grants the license
  • 120 days have elapsed after the application submission if the application is listed on the NMLS as incomplete

At the end of 120 days, if the application is complete, including testing and education, and the agency has not yet made a decision on the application, the MLO’s temporary authority remains in effect until the state agency acts on the application.

This entry was posted on Monday, April 22nd, 2019 at 6:00 am.

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