A state may grant a transitional loan originator license to an individual who holds a valid loan originator license from another state, according to an April 19 bulletin from the Consumer Financial Protection Bureau.
Under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), states have reciprocity in granting loan originator licenses. The bulletin explains: “To receive a transitional loan originator license from the second state, an individual must meet either a net worth or surety bond requirement, or pay into a state fund, as required by the second state’s loan originator supervisory authority, consistent with Regulation H and the SAFE Act.”
The bulletin also addresses the issue of what happens with loan originators who leave their place of employment, such as a federally regulated bank. In those cases, “their status reverts to being simply an unlicensed individual who is a registered loan originator,” according to the CFPB, and Reg. H does not allow for a transitional license while the individual pursues a state license.