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CFPB Clarifies State Reciprocity in Loan Originator Licensing

Bureau Clarifies Permissibility of State Reciprocity with Respect to Transitional Licensing of Mortgage Originators

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) announced that federal law permits a level of reciprocity between the states for granting loan originator licenses.

“The Bureau is committed to working with states and the industry to make interstate transitions as smooth as possible for loan originators,” said CFPB Director Richard Cordray.

In a bulletin, the CFPB states that, consistent with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), a state may grant a transitional loan originator license to an individual who holds a valid loan originator license from another state. The SAFE Act allows states to provide a transitional license to a licensed loan originator who holds a valid license from another state.

The CFPB also stated that its regulations do not allow states to provide for transitional licensing for registered but unlicensed loan originators who leave banks to act as loan originators while pursuing a state license.

The CFPB inherited authority to enforce and implement the SAFE Act from the Department of Housing and Urban Development, which also maintained this policy.

The bulletin is available at: