This bill  creates a mandate that all states must recognize a "Transitional License" under the SAFE Act.  A Transitional License would be available to unlicensed MLOs that have been Registered at a depository institution for only 12 months so that they can transfer to a mortgage banker or broker and have a 120 day automatic license during which they must get prelicense education, pass the license exam and pass an FBI background check.  (In Texas, 50% of the people that take the exam, don't pass the first time.)  This license supercedes state licensing laws.

The reason this bill has appeal is that MLOs that are working for depositories, do not have the education required for the license, have not taken the federal exam an have not had a FBI background check and when they do, that information is uploaded to the NMLS license management system and their bank employers can then see the informatioon and will recognize that their MLO is taking steps to leave the bank's employment.  Many of these MLOs have had their employment summarily terminated over the past few years.

In our opinion, the Federal government should not be superceding state laws, they should make it optional for a state to create such a license and leave the implementation to the states.  Some states may create a 90 day license, some 180 days, some will require the FBI background check to be completed first and some may take the position that this is not good for consumers in their state.

We see this as a software issue not a legislative one.  The real solution and the most expedient, is to change the information that is visible and available to depository employers in the NMLS system so that as a MLO advances toward becoming licensed, the information is not made public or visible to the employer.  A competent computer programmer can resolve this whole issue in hours, much faster than Congress can pass a law and certainly faster than the 18 months waiting period between passing and implementation, as the current version of the bill provides.  

Ironically, HR 2121 does not solve the issue of these MLOs being discovered and terminated, it simply gives them relief from licensing for the first 120 days after they are terminated.  Further, depositories should be thrilled that their MLOs are learning more and taking advanced responsibility in their mortgage careers and should be encouraged to embrace the MLO license.

HR 2121 has passed the US House and has been incorporated into Senate Bill S-1484, which is an omnibus bill that covers many issues.