The Consumer Financial Protection Bureau provided the industry with a partial victory in its efforts to push for transitional licensing for mortgage loan originators. Through its Bulletin 2012-05, the CFPB has confirmed that the SAFE Act permits a state to provide a transitional license to a mortgage loan originator licensed in another state. The CFPB also advised that Regulation H—the final SAFE Act Rule as issued by HUD and now under the CFPB’s authority—does not permit states to provide a transitional license for a registered mortgage loan originator moving from a depository institution to a licensed entity, notwithstanding the CFPB’s acknowledgement that this “creates impediments to job changes.”

Industry members have been advocating for transitional licensing for some time and requested that the CFPB issue guidance on the matter as a number of state regulatory agencies were unwilling to provide for it absent express guidance from the CFPB. While the Bulletin is welcome news for the industry, it falls short with regard to mortgage loan originators moving from depository institutions to licensed entities. The CFPB has stated its commitment to continuing to work with the states, the industry and NMLSR to minimize the impediments it acknowledges mortgage loan originators face when seeking to move from a depository institution to a licensed entity. The industry will no doubt be making another run at the CFPB on this issue.