Temporary Authority to Operate as a Mortgage Loan Originator

The Temporary Authority to Operate permits retail loan officers who want to switch over to the broker side but are not state licensed to originate loans for 120 days while completing any state-specific requirements for licensure such as education or testing.

The SAFE Act mandates that loan officers working for FDIC-insured banks such as Chase, Citibank, Citizens, Wells Fargo, Bank of America, credit unions, and other financial institutions that accept deposits insured under federal law must obtain a license and register through the federal registry. Mortgage Loan Officers/Originators (MLOs) employed by mortgage companies and other financial institutions that do not provide deposit accounts are required to be registered and licensed through the state in which they conduct business.

What does the granting of temporary authority mean?

The amendment to the SAFE Act permits licensed MLOs to continue to originate loans under temporary authority while seeking licensing in a different jurisdiction. For example, an MLO licensed and registered under the federal system may go to work for a mortgage company and continue to originate loans while waiting to be licensed and registered in by the state. Temporary authority also permits MLOs to apply for licensing in multiple jurisdictions without losing the ability to originate loans during the application process. 

Applying for Temporary Authority

To apply for Temporary Authority, Individuals must complete the MU4 Filing in NMLS. An eligible individual can submit an MLO license application without passing the SAFE Act Test or meeting Pre-Licensure education requirements.

 Eligibility Criteria

To be considered eligible, an MLO must meet several criteria such as:  

• Be Registered or Licensed: Individuals must be Federally registered in NMLS as an MLO continuously during the one-year period preceding the application submission; or be State licensed in NMLS as an MLO continuously during the 30-day period preceding the date of application. Show Employment with a State License Company.
• W2 Status: MLOs must be employed by a State licensed mortgage company in the application state. This is reflected through the company establishing a relationship with the individual and listing the worker classification as a W2 employee.

Employment and Sponsorship Requirements Under Temporary Authority

For an applicant to be eligible for Temporary Authority the applicant must be employed as a W-2 employee and sponsored by an originating entity. Therefore, originating entities must ensure that the NMLS “Worker Classification” is set to W-2 employee.

Also, originating entities are reminded of their responsibility to conduct due diligence on applicants sponsored by the company [ 3 NYCRR 420.18(a)(2)]. Additionally, the Department expects originating entities to ensure that all sponsored MLOs, including those operating under Temporary Authority, are properly supervised.

 Disqualification for Temporary Authority

Applicants who do not qualify for Temporary Authority are prohibited from acting as an MLO in New York unless subsequently licensed as an MLO by the Department of Financial Services. The Department will not grant Temporary Authority to act as an MLO to an applicant who:

• Had an application for an MLO authorization, license, or license equivalent denied in any jurisdiction;
• Had an MLO authorization, license, or license equivalent revoked or suspended in any jurisdiction;
• Was the subject of, or served with, a cease-and-desist order in any jurisdiction;
• Failed to submit fingerprint cards and supporting documents to facilitate the New York State-specific criminal background check;
• Had been convicted of, or pled guilty or nolo contendere to a felony in a domestic, foreign, or military court: during the seven-year period preceding the date of the application for licensing; or at any time preceding the date of application, if the felony involved an act of fraud, dishonesty, or breach of trust or money laundering;
• Failed to submit a New York jurisdiction-specific Mortgage Loan Originator Affirmation form;
• Has not uploaded explanations and supporting documents for any “Yes” answer to a disclosure question;
• Is not a W-2 employee of and sponsored by a mortgage banker or broker licensed or registered by the Department;
• Does not work from a location licensed or registered by the Department; or
• Has not timely authorized a credit report.

Ready to embark on an exciting journey with us as a Temporary Authority? Reach out to us today at 212-705-4000 or drop us an email at [email protected]. Your next career move awaits!