Mortgage loan originators licensed anywhere in the U.S. can now obtain a temporary MLO license in Ohio, which will be valid for up to 120 days, while a more permanent license is obtained.
The law allows an out-of-state MLO to engage in the business of a mortgage loan originator as long as they remain compliant with the requirements necessary to obtain an Ohio MLO license.
The Secure and Fair Enforcement for Mortgage Licensing Act, also known as the SAFE Act, was established in the summer of 2008. Since then, there has been a national discussion about the need for transitional licensing for mortgage loan officers.
The law has been pending in Ohio for a while, but upon incessant requests from those in the industry, was eventually enacted.
"In April of 2012, the CFPB issued a bulletin that supported the industry’s position that transitional licensing is permitted, or in other words not prohibited, by the SAFE Act," said John Socknat, partner at Ballard Spahr. "If a state wanted to create a structure or mechanism for an individual who was licensed in one state to more quickly be able to begin conducting business in a new state. That was within the digression of each state."
There are prerequisites for the temporary license. To qualify, individuals must have a minimum of two years experience in residential mortgage lending within the past five years. Applicants may only apply for the license once. Also, the applicant must have a clean legal record for the past seven years and cannot have had an MLO license revoked in the past.
There is an application fee associated with the temporary license. To qualify for the license, applicants need to register and provide fingerprints along with a unique identifier through the Nationwide Mortgage Licensing System at the time of application.
The NMLS will be authorized to obtain a credit report that will be submitted to the Ohio Superintendent of Financial Institutions.
The law allows for further rule making in the future to improve the new licensing scheme. The law takes effect on March 19.
The temporary MLO license is a first in the U.S. It is a response to the industry’s request for less rigid licensing laws.
"It will be interesting to see whether other states follow Ohio’s lead," said Matthew Saunig, associate at Ballard Spahr. "We will monitor similar state initiatives."