Transitional licensing for mortgage brokers serves as a temporary permit allowing active, licensed mortgage loan originators (MLOs) to work in a different state while waiting for their full license approval in that state. It was introduced under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) and further enabled by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) of 2018 to facilitate interstate mobility for MLOs.
Before transitional licensing, MLOs had to pause their work when moving states until their new license was fully granted — often causing significant income gaps. Transitional licensing allows them to avoid this by granting temporary authority, typically lasting up to 120 days, while states complete full background checks, credit evaluations, education verifications, and state-specific exam requirements.
To qualify, the MLO must:
- Hold an active license in another state or be federally registered through the Nationwide Multistate Licensing System & Registry (NMLS).
- Have no recent license revocations or denials and no disqualifying felony convictions.
- Be sponsored by a licensed mortgage company in the new state.
Once these criteria are met and the new state’s application is submitted through the NMLS, the originator receives provisional authority to originate loans in the new state until a final licensing decision is made.
Transitional licensing does not waive any state-specific licensing requirements. MLOs must still complete all mandatory education, testing, and background checks to obtain the permanent license. Failure to secure the license within the 120-day limit means the temporary authority expires, and the MLO must cease loan origination activities.
This licensing option primarily benefits experienced mortgage brokers relocating across state lines or switching between federal and state licensing regimes, ensuring continued employment and consumer access to licensed professionals.
For more on mortgage brokers and licensing, see our Mortgage Broker glossary entry. Learn about the regulatory framework at the NMLS site and the federal SAFE Act via the Consumer Financial Protection Bureau (CFPB).