Could “Transitional” Mortgage Licensing Bridge Federal and State Requirements?

The dual licensing system currently in place to regulate federally-chartered banks and state entities that do not fall under the national regulatory umbrella could be putting some originators at a disadvantage. Especially light of recent exits of large national banks from the reverse mortgage industry where many lenders operate under state licensing, it can be time consuming for an originator to leave a large bank lender to pursue a new position at a state-regulated organization.

A potential solution raised by the Mortgage Bankers Association is to implement a form of “transitional licensing,” which would enable an originator who operated previously under the national rule to continue originating in the short term while he or she obtains licensing for a new employer under the state system.

At an American Association of Residential Mortgage Regulators industry conference in San Francisco, MBA’s regulatory counsel presented the association’s proposal to amend the SAFE Act to allow for transitional licensing for those originators who want to move from federally regulated institutions to state regulated entities, National Mortgage News reported in August.

Advertisement

Currently, any originators who work for state-regulated companies must be licensed and registered, while those who operate under a federally-regulated bank, credit union or savings and loan, must be registered only, because they are already regulated under federal law.

“MBA wants to ‘form a bridge’ from the federal system to the state system with a transitional license that would give applicants 120 days in which to complete any and all requirements a particular state would deem appropriate,” National Mortgage News reported.

Ken Markison, MBA regulatory counsel, told attendees and members of AARM that without the transitional licensing, state-regulated lenders won’t hire originators who are only registered or licensed in another state because of the lapse caused by the time it takes to obtain new licensing.

He said the delays can take 30 days or longer, and that lacking transitional licensing, often small enterprises and other state-regulated companies can be at a disadvantage because of the process by which employees of federally-regulated institutions or other states must obtain licensing. On the flip side, state-licensed employees can easily make the shift to federally-regulated companies.

“What we’re saying is when you have well qualified people who want to come into the state system, you should recognize their qualifications by putting them into a transitional license,” Markison told RMD. “Assuming they meet the qualifications of a transitional license then any additional requirements can be satisfied during the transitional period.”

Some states do currently allow for a temporary license that does not go into effect until the licensee is employed, Bill Matthews of the Conference of State Bank Supervisors told RMD. However, he said, the SAFE Act requires that at all times, a loan officer must be licensed or registered.

“Regulators can do a lot of things,” Matthews said, “but if they have a law or regulation that says you have to do x, y and z, it’s hard for them to grant something that’s temporary.”

As of July 21, the SAFE Act falls under the authority of the Consumer Financial Protection Bureau.

Written by Elizabeth Ecker

Join the Conversation (9)

see all

This is a professional community. Please use discretion when posting a comment.

  • I agree with both comments above. Let originators who escaped licensing and SAFE ACT testing bear the same expense and the same inconvenience as those of us who are state regulated. There should be no special consideration and no more favored treatment whatsoever. Get licensed properly or find another profession.

  • Do they really just make this up as they go along?
    Not trying to be a complainer but it just seems that all the rules and all the
    breaks seem to go to the big banks. These people need to go through the process
    just like all of us who had to endure the time and expense of getting licensed
    properly according to the “Law”. We all had to make sacrifice’s and
    it interfered with our businesses just like it will these people. I do not
    remember anyone making exceptions for us.

  • Raymond,
     
    So what if you have no broker affiliation, you are still a licensed real estate licensee by CA DRE standards; you just cannot perform any sales until you become affiliated with a broker and properly notify the CA DRE.  As a real estate broker I do not have to be tied to “a broker affiliate” but to get there, I had to take more courses than you were ever REQUIRED to take for a salesperson license and take another and longer exam to qualify for that right.
     
    I am not against American citizens being able to make this decision or that.  I am just against those who claim to have been in the industry for 6 years on Linkedin and then show less than two years of experience in the field but their work experience goes back to 1987 (oops, I’ll try that again in the next paragraph).
     
    I am against any law which creates two different set of requirements for the right to do exactly the same kind of work in the same state.  I am penalized for passing a federal exam where you are rewarded for not doing it because of who our employers are.  That is ridiculous and elitist nonsense.

    You are far less regulated under federal law than I am.  But neither are you exempt from state regulation.  What I am saying is that since we both have the same right to perform the same work and we are both based in California one set of rules should apply to both of us in doing loans in California and Arizona.
     
    I like the way you say:  “I joined the other side.”  It almost sounds like you are Darth Vader admitting you joined the “dark side.”  What an interesting Freudian slip — and Yoda I am, backwards everything saying.  How strange!!
    .

    • >> I had to take more courses than you were ever REQUIRED to take for a
      salesperson license and take another and longer exam to qualify for that
      right.

      I’ve taken all those same Broker courses you’ve taken, actually, way more then the minimum requirement.  And you’re correct in that I haven’t taken the Broker examination – I didn’t see the need after I learned how the Federal side worked … it just made more sense to me to switch.

      >>I like the way you say:  “I joined the other side.”

      I say it like that because I used to think like you.

    • >> I had to take more courses than you were ever REQUIRED to take for a
      salesperson license and take another and longer exam to qualify for that
      right.

      I’ve taken all those same Broker courses you’ve taken, actually, way more then the minimum requirement.  And you’re correct in that I haven’t taken the Broker examination – I didn’t see the need after I learned how the Federal side worked … it just made more sense to me to switch.

      >>I like the way you say:  “I joined the other side.”

      I say it like that because I used to think like you.

    • And how do I know you’re really a “Broker”?  It’s easy to find out about me, because I use my real name.  I have no idea who you are, and as such am unable to validate or confirm your claims.

    • And how do I know you’re really a “Broker”?  It’s easy to find out about me, because I use my real name.  I have no idea who you are, and as such am unable to validate or confirm your claims.

  • Raymond,
     
    So what if you have no broker affiliation, you are still a licensed real estate licensee by CA DRE standards; you just cannot perform any sales until you become affiliated with a broker and properly notify the CA DRE.  As a real estate broker I do not have to be tied to “a broker affiliate” but to get there, I had to take more courses than you were ever REQUIRED to take for a salesperson license and take another and longer exam to qualify for that right.
     
    I am not against American citizens being able to make this decision or that.  I am just against those who claim to have been in the industry for 6 years on Linkedin and then show less than two years of experience in the field but their work experience goes back to 1987 (oops, I’ll try that again in the next paragraph).
     
    I am against any law which creates two different set of requirements for the right to do exactly the same kind of work in the same state.  I am penalized for passing a federal exam where you are rewarded for not doing it because of who our employers are.  That is ridiculous and elitist nonsense.

    You are far less regulated under federal law than I am.  But neither are you exempt from state regulation.  What I am saying is that since we both have the same right to perform the same work and we are both based in California one set of rules should apply to both of us in doing loans in California and Arizona.
     
    I like the way you say:  “I joined the other side.”  It almost sounds like you are Darth Vader admitting you joined the “dark side.”  What an interesting Freudian slip — and Yoda I am, backwards everything saying.  How strange!!
    .

  • Raymond,
     
    So what if you have no broker affiliation, you are still a licensed real estate licensee by CA DRE standards; you just cannot perform any sales until you become affiliated with a broker and properly notify the CA DRE.  As a real estate broker I do not have to be tied to “a broker affiliate” but to get there, I had to take more courses than you were ever REQUIRED to take for a salesperson license and take another and longer exam to qualify for that right.
     
    I am not against American citizens being able to make this decision or that.  I am just against those who claim to have been in the industry for 6 years on Linkedin and then show less than two years of experience in the field but their work experience goes back to 1987 (oops, I’ll try that again in the next paragraph).
     
    I am against any law which creates two different set of requirements for the right to do exactly the same kind of work in the same state.  I am penalized for passing a federal exam where you are rewarded for not doing it because of who our employers are.  That is ridiculous and elitist nonsense.

    You are far less regulated under federal law than I am.  But neither are you exempt from state regulation.  What I am saying is that since we both have the same right to perform the same work and we are both based in California one set of rules should apply to both of us in doing loans in California and Arizona.
     
    I like the way you say:  “I joined the other side.”  It almost sounds like you are Darth Vader admitting you joined the “dark side.”  What an interesting Freudian slip — and Yoda I am, backwards everything saying.  How strange!!
    .

string(120) "https://reversemortgagedaily.com/2011/08/29/could-transitional-mortgage-licensing-bridge-federal-and-state-requirements/"

Share your opinion