Key Takeaways
- Temporary authority allows MLOs licensed in one state to work temporarily in another state while their license application is pending, for up to 120 days
- Eligibility requires the MLO to be currently licensed in at least one state, have submitted an application in the new state, and have no license revocations, suspensions, or pending disciplinary actions
- The 120-day period begins when the application is submitted to NMLS and the MLO begins working under temporary authority in the new state
- MLOs working under temporary authority must comply with all applicable laws and regulations of the state where they are operating
- Temporary authority ends when the license is granted, denied, withdrawn, or when the 120-day period expires—whichever occurs first
- This provision was introduced by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act as an amendment to the SAFE Act
Temporary Authority to Act as MLO
One of the challenges historically faced by mortgage loan originators was the inability to work in a new state while waiting for license approval. This could take weeks or months, creating problems for both MLOs and their employers. The temporary authority provision addresses this issue by allowing qualified MLOs to begin working in a new state while their application is pending.
What is Temporary Authority?
Temporary authority is a provision that allows mortgage loan originators who are already licensed in at least one state to work in another state on a temporary basis while their license application in that new state is pending. This eliminates the waiting period that previously prevented licensed MLOs from working across state lines.
Key Features of Temporary Authority
| Feature | Description |
|---|---|
| Duration | Up to 120 days maximum |
| Eligibility | Must be licensed in at least one state |
| Scope | Allows full MLO activities in the new state |
| Compliance | Must follow all laws of the new state |
| Tracking | Monitored through NMLS |
Eligibility Requirements
Not all MLOs qualify for temporary authority. You must meet all of the following requirements:
Positive Requirements (Must Have)
| Requirement | Details |
|---|---|
| Active license | Currently licensed and in good standing in at least one state |
| Pending application | Must have submitted a complete license application in the new state through NMLS |
| Sponsorship | Must be sponsored by a licensed mortgage company in the new state |
Disqualifying Conditions (Must NOT Have)
| Condition | Effect |
|---|---|
| License revocation | Any previous MLO license revocation in any jurisdiction disqualifies you |
| License suspension | Current suspension in any state disqualifies you |
| Denied renewal | Having been denied license renewal in any state disqualifies you |
| Pending disciplinary action | Unresolved regulatory action pending against you disqualifies you |
| NMLS denial | Having had a license application denied through NMLS disqualifies you |
Verification Process
When you assert temporary authority:
- NMLS verifies your license status in other states
- System checks for disqualifying conditions
- State is notified of your temporary authority status
- 120-day clock starts when you begin operating under temporary authority
The 120-Day Period
The temporary authority period is strictly limited to 120 days. Understanding how this period works is critical.
When the Clock Starts
The 120-day period begins when:
- You have submitted a complete application to the new state, AND
- You begin working as an MLO in that state under temporary authority
Timeline Example
| Day | Event |
|---|---|
| Day 0 | Submit license application to State B while licensed in State A |
| Day 1 | Begin originating loans in State B under temporary authority |
| Day 1-120 | Work in State B while application is processed |
| By Day 120 | Must have license decision—or temporary authority expires |
What Happens During the 120 Days
During the temporary authority period:
- You can perform all MLO functions in the new state
- You must comply with all state and federal laws applicable in that state
- Your employing company must maintain proper supervision
- You must continue to meet requirements in your existing licensed state(s)
- Your temporary authority status is visible in NMLS
Compliance During Temporary Authority
Operating under temporary authority does not reduce your compliance obligations—in fact, you must be especially careful.
State Law Compliance
| Obligation | Requirement |
|---|---|
| Disclosures | Must provide all disclosures required by the new state |
| Fee limits | Must comply with any state-specific fee restrictions |
| Product rules | Must follow state rules on mortgage products |
| Advertising | Must comply with state advertising requirements |
| Consumer protection | Must follow all state consumer protection laws |
NMLS Display Requirements
Your NMLS unique identifier must still be displayed on:
- All loan documents
- Business cards
- Advertisements
- Email signatures
- Company website
Continuing Education
- You must maintain CE compliance in your home state(s)
- The temporary authority state may have additional CE requirements once licensed
- CE deficiencies in any state can affect your temporary authority
How Temporary Authority Ends
Temporary authority is not permanent—it ends when one of the following occurs:
Ways Temporary Authority Ends
| Event | Result |
|---|---|
| License granted | Temporary authority ends; you become fully licensed |
| License denied | Temporary authority ends immediately; you must stop working in that state |
| Application withdrawn | Temporary authority ends; you must stop working in that state |
| 120 days expire | Temporary authority ends; you must stop working unless license is approved |
Consequences of Denial or Expiration
If temporary authority ends without license approval:
- Immediately cease all MLO activities in that state
- Pending loans may need to be transferred to another licensed MLO
- Documentation must reflect the date you stopped acting as MLO
- Future applications to that state may reference the denial
Legislative Background
Temporary authority was not part of the original SAFE Act. It was added later to address practical challenges faced by the mortgage industry.
2018 Economic Growth Act
The Economic Growth, Regulatory Relief, and Consumer Protection Act (also known as S. 2155 or the "Economic Growth Act") was signed into law on May 24, 2018. Key provisions included:
| Provision | Description |
|---|---|
| SAFE Act Amendment | Added temporary authority provisions |
| 120-day limit | Established the maximum temporary period |
| Eligibility criteria | Defined who qualifies for temporary authority |
| Consumer protections | Maintained all existing consumer protections |
Why This Law Was Needed
| Problem | Solution |
|---|---|
| MLOs couldn't work while applications processed | Temporary authority allows immediate work |
| Multi-state employers faced staffing gaps | Can deploy licensed MLOs across state lines |
| Consumers had fewer MLO options | More MLOs available to serve consumers |
| License processing delays hurt business | No longer need to wait for full approval |
Practical Considerations
For MLOs
- Verify eligibility before asserting temporary authority
- Document everything during the temporary period
- Monitor your application status regularly
- Plan for contingencies if your license is denied
- Know the end date of your 120-day period
For Mortgage Companies
| Responsibility | Action |
|---|---|
| Verify eligibility | Confirm MLO meets all requirements before deployment |
| Supervise closely | Ensure compliance with new state laws |
| Track the clock | Monitor the 120-day period |
| Have backup plans | Prepare for possible denial |
| Maintain records | Document temporary authority period |
Common Mistakes to Avoid
| Mistake | Consequence |
|---|---|
| Assuming you qualify without checking | May be operating without authority |
| Not tracking the 120-day deadline | May work illegally after expiration |
| Ignoring new state requirements | May face enforcement action |
| Continuing to work after denial | Serious violation—possible criminal charges |
Key Takeaways
- Temporary authority allows licensed MLOs to work in a new state for up to 120 days while their application is pending
- You must be currently licensed in at least one state and have no disqualifying conditions such as revocations, suspensions, or pending disciplinary actions
- The 120-day period begins when you start working under temporary authority in the new state
- You must comply with all laws and regulations of the state where you are operating
- Temporary authority ends when your license is granted, denied, withdrawn, or the 120 days expire
- This provision was created by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act as an amendment to the SAFE Act
What is the maximum duration of temporary authority for an MLO to work in a new state?
Which of the following would disqualify an MLO from using temporary authority in a new state?
Which legislation introduced the temporary authority provision as an amendment to the SAFE Act?