On November 24, the mortgage loan originator temporary authority to operate (Temporary Authority) provisions of the Federal Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) take effect. The primary goal of Temporary Authority is to streamline MLO licensing and reduce friction in lending nationwide by permitting qualified MLOs to apply to be temporarily authorized to operate as MLOs in states during the period of time that they are completing any state-specific licensing requirements (for example, testing and education).

To help you get up to speed on, here are the top ten things that you need to know about Temporary Authority:

  1. Temporary Authority is available in all states.
     
  2. Temporary Authority is available to MLOs that are federally registered, but are changing employment from a depository institution to a state-licensed mortgage company, as well as to MLOs that are already state licensed, but are seeking licensure in additional states.
     
  3. Temporary Authority solely authorizes an individual to “act as a loan originator” in an application state. If an MLO license authorizes additional activities, Temporary Authority does not extend to those activities.
     
  4. To be eligible for Temporary Authority, an MLO’s company must be licensed in the application state, as well as identify the MLO as a W-2 employee and sponsor the MLO in the NMLS. Temporary Authority ends if a company rescinds or denies its sponsorship of the MLO.
     
  5. To be eligible for Temporary Authority, the MLO must be (1) federally registered as an MLO continuously during the one-year period preceding the date of application, or (2) state licensed as an MLO continuously during the 30-day period preceding the date of application.
     
  6. With respect to the time frames above, a break in service is permitted, but may not exceed 14 calendar days. (Without this, very few MLOs would be eligible for Temporary Authority.) The break in service begins when federal registration or state licensure ends, and stops when the new employing company submits a sponsorship request.
     
  7. To be eligible for Temporary Authority, the MLO cannot have any disqualifying criminal or regulatory history (for example, license revocation). Companies should carefully vet individuals prior to sponsoring them as MLOs.
     
  8. An eligible MLO can operate under Temporary Authority beginning on the date that he or she submits a complete license application and until the earliest of the following:
     
    • The MLO withdraws the application
    • The state denies or issues a notice of intent to deny the application
    • The state grants the license
    • The application remains in an “incomplete” status 120 days after submission. At the end of 120 days, if the application is complete and the state agency has not yet made a decision on the application, Temporary Authority will remain in effect until the state agency acts on the application.
       
  9. The NMLS Resource Center provides a wealth of information regarding Temporary Authority, including answers to FAQs.
     
  10. An MLO’s Temporary Authority designation will appear in NMLS Consumer Access.
     

APPROVED is here to help with all of your Temporary Authority questions and needs. Check out our recent webcast on Temporary Authority for more information or contact us to find out how we can assist your organization.