Temporary LO Authority went into effect on 11/24/2019. It gives the Loan Originator 120 days from when they apply and obtain Temporary Authority to complete Education and Testing while still being able to originate loans. The State may allow you to gather required documents during that time as well; however, some states may take away Temporary Authority so we recommend submitting state specific documents at the time of application.
Here are some things to consider. It’s important the Loan Originator meets all of the following criteria or the Temporary Authority will not be granted or will be removed. If one state denies a license app, all State Temporary Authorities immediately become cancelled and the LO cannot conduct business until each state approves the license. Also, there could be some issues in some states regarding state-specific requirements.
Requirements for Temporary Authority Eligibility
- W-2 – Confirm w-2 Employee
- Currently/Previously Licensed/Registered – Confirm Previously State Licensed Last 30 days (UT Lending Manger not accepted) or Federally Registered Last 365 days – (Window of 14 days without an Active License – The 14 calendar days is determined from the last day of registration/licensure, which is based on the license status date, to the day that the sponsorship is requested.)
- Denials, Revocations, or Suspensions – Confirm no LO License Denials, Revocations, or Suspensions. Would not apply if LO obtained active LO License from that same state after a denial, revocation, or suspension. (Should Employer check LexisNexis?)
- Cease and Desist Orders – Confirm not subject to or served with Cease and Desist Orders (Should Employer check LexisNexis?)
- Criminal Background – Confirm if any criminal convictions would preclude licensing in that State. Felony in last 7 years or Felony that is Financial Related. Other criminal conviction prohibited by State, i.e. GA no felonies ever, NH and SC no felonies in last 10 years, UT certain misdemeanors in last 5 years, WA certain misdemeanors. (Should Employer perform National Background Check?)
- Credit Background – Confirm if any existing credit issue would preclude licensing (Should Employer perform Credit Check?)
- Company and/or Branch License Active – Confirm Registered Office Location is licensed in State, if applicable, and commutable distance (telecommuting) requirements are met. If company license is not approved yet (i.e. Pending), then LO will not be TA Eligible.
State Specific Requirements
- AZ – 60 days to provide all required application documentation per statute. AZ Recovery Fund Fee for MLOs not covered by Company MLO Surety Bond must be paid before conducting business under TA.
- CA DRE – Confirm already hold CA DRE Salesperson or Broker License.
- CO – 7 days to complete CO DORA App, CO Fingerprinting, and CO MLO Bond and E&O (Must appoint CO Responsible MLO on CO DORA that already holds CO LO License)
- DE – DE Surety Bond Coverage Form must be provided to state before conducting business under TA.
- GA – 30 days to submit proof of enrollment in outstanding education and/or registration for outstanding testing to State, if not yet completed.
- IL – Temporary Authority may not allow LO to access Anti-Predatory Database, so LO may not be able to originate in these 4 counties in IL (Cook, Kane, Peoria & Will) until the license is fully approved.
- MI – Individual MLO Surety Bond must be provided to state before conducting business under TA. (if not covered by Company MLO Surety Bond)
- NY – Individual MLO Surety Bond or Company MLO Surety Bond Cert must be provided to state before conducting business under TA.
Frequently Asked Questions
Validity of Loan if LO loses TA
Is a loan still valid if an MLO with Temporary Authority (TA) originates a loan and then loses their TA?
Yes. The loan is still valid as the MLO had TA at the time that it was originated. The loan will need to be moved to either another MLO with TA or to a fully licensed MLO in the company.
Branch License required for TA, if applicable
Must a company with a branch location be licensed before the MLO with TA can work there?
In order to receive TA, the MLO must be employed by a state-licensed mortgage company. In order to work at a branch location, the branch must be properly licensed per the state’s regulatory requirements. If branch licensure is required by the State, then no MLO can work there until licensure occurs.
Education or Testing Fails
If an MLO with TA fails their Testing and Education requirements during the 120 days does this impact their TA abilities?
The MLO with TA can continue working for 120 days regardless of whether they pass or fail their Testing and Education requirements. However, at day 121, as they have not met their Testing and Education requirements, their license status would change to Pending-Deficient and be moved to the State’s normal application review process. The State also has the ability to issue an intent to deny license item or a denial during the 120 days if the MLO failed their Testing and Education and will not be able to complete it due to time constraints.
Company not required to allow their LOs to operate under TA
While an MLO may be TA Eligible, can we as a company choose not to allow the employee to originate until the application is fully approved by the State?
Yes. You as a company, have the right to follow your internal procedures on how you will allow originators to act for your company. If you do not want them to originate until they receive full licensure, that is permissible. However, through the system, you can simply not request sponsorship. This will put the application in a Pending-Deficient Temporary Authority Eligible status. Please remember that while this will allow the State time to review all other application documentation, that sponsorship is required for full licensure in the majority of states. Once all application requirements are met, you would then need to request sponsorship to ultimately have the license fully approved.
New Company Licensing (Not TA Eligible until Company License Approved)
If a company were to apply for a license in a new state, would Temporary Authority permit the company’s current MLOs to work in the new state once the company is approved?
A company moving from one state to another would first need to apply and be licensed as a mortgage company in the new state. Once licensed, the company’s MLOs may then be eligible for Temporary Authority if they apply for licensure.
Surety Bond Coverage Required for TA LO
Will an MLO with Temporary Authority be required to be covered by a surety bond or recovery fund?
Yes. Section 5107(f)(1) of the SAFE Act gives the Consumer Financial Protection Bureau authorization to set minimum net worth or surety bond requirements for MLOs and for recovery funds paid into by MLOs. Section 5107(d)(6) explains that states are required to base that bond or fund amount on the amount of loans originated by an MLO. S.2155 adds section 5117(d) to the SAFE Act. 5117(d)(2) states that: “Any individual who is deemed to have Temporary Authority to act as a loan originator in an application State under this section and who engages in residential mortgage loan origination activities shall be subject to the requirements of this chapter and to applicable State law to the same extent as if that individual was a State-licensed loan originator licensed by the application State.” An MLO with Temporary Authority to originate must meet all requirements of the SAFE Act including bonding requirements. MLOs with Temporary Authority are able to originate loans, therefore, based on Section 5107(d)(6) above, their loan amount would need to be covered by a bond or fund. Similar language in 5117(d)(1) extends this applicability to employers of MLOs with Temporary Authority. A sponsoring company’s bond satisfies the bonding requirement for their MLOs.