Temporary Authority to Operate

Background

The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155 or the amendments), which was signed into law on May 24, 2018, adds a new section to the federal SAFE Act (12 U.S.C. 5101 et seq.) entitled “Employment Transition of Loan Originators.” These amendments became effective November 24, 2019.

The amendments allow applicants of the mortgage loan originator license who meet certain criteria the authority to act as a mortgage loan originator (MLO) for a period while the State reviews their application. The purpose of the amendments is to allow MLOs who are changing employment from a depository institution to a state-licensed mortgage company or are already state-licensed and are seeking licensure in another state to continue working while they complete state-specific requirements such as testing or education. 

Eligibility

To be eligible for temporary authority (TA), MLOs must be:

• employed by a state-licensed mortgage company in the application-state, and
• either:
  1. registered in NMLS as an MLO continuously during the one-year period preceding the application submission; or
  2. licensed as an MLO continuously during the 30-day period preceding the date of application.

Disqualification

An MLO is disqualified from TA if they have:

• had an MLO license application denied or an MLO license revoked or suspended in any jurisdiction;
• been subject to, or served with, a cease and desist order; or
• been convicted of a misdemeanor or felony that would preclude licensure under the law of the application state.

Length of Temporary Authority

Temporary Authority begins on the date an eligible MLO submits a license application with the required background check information, authorization for a credit report, and sponsorship, assuming there is no disqualifying event. It ends when the earliest of the following occurs:

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

How to Obtain Temporary Authority

Temporary Authority is automatically granted when all the conditions are met in a MLO application. There is not a separate application or application process to obtain TA. The application must include:

• completed Individual Licensing Form (MU4) which contains personal history and experience,
• explanation and supporting documentation uploads for any “Yes” answer to a disclosure question,
• the receipt of a criminal history record information check from the FBI,
• authorization for a credit report to be obtained,
• Worker Classification, and
• a request for sponsorship from the MLO’s employer.

The TA applicant has 120 days to complete the application by submitting:

• any state-specific document required as part of an MLO license application in the Application State
• SAFE Act Test
• Pre-licensure educations requirements

More Information

For more information, please see the NMLS’s Temporary Authority FAQs.