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April 23, 2012 – A state may grant a transitional mortgage loan originator license to a person who holds a valid license from another state, the Consumer Financial Protection Bureau says in a guidance bulletin issued last week on state reciprocity in mortgage licensing under federal law.

In Bulletin 2012-5, the CFPB says this reciprocity between states on mortgage licensing is permitted under the Secure and Fair Enforcement for Mortgage Licensing Act, or SAFE Act. "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," the bulletin also says.

Under the SAFE Act, states may also allow persons who work for federally regulated institutions to act as mortgage loan originators if they are registered with and have a unique identifier from the National Mortgage Licensing System and Registry. The CFPB bulletin notes, however, that states may not issue a transitional license to such persons when they leave those institutions.

"The Bureau recognizes that this can create impediments to job changes and is committed to working with the states, industry, and the NMLSR to minimize these impediments going forward, consistent with the statutory language of the SAFE Act," the bulletin says.