Last month, Virginia Governor Terry McAuliffe signed Senate Bill 118, creating a transitional mortgage loan originator (MLO) license. Specifically, the law authorizes Virginia's State Corporate Commission to issue a transitional MLO license to individuals who are either licensed as an MLO in another state, or (to the extent permitted under the SAFE Act, or any rule, regulation, interpretation, or guideline thereunder) formerly registered loan originators who worked for depository institutions. The new transitional MLO license will allow an individual to engage in the business of an MLO while completing the requirements necessary to obtain a state license. The temporary license will be valid for up to 120 days and cannot be renewed.

To qualify for this transitional license, an eligible individual must provide an application, surety bond, and complete an FBI criminal background check. Further, the person must never have had an MLO license revoked, and must not have been convicted of or pled guilty or nolo contendere to a felony in a domestic, foreign, or military court during the seven-year period preceding the application for licensing and registration, or at any time preceding the date of the application if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering. Applicants must pay an application fee for the license as well as fees for a credit report and criminal background check.

As we previously reported, the Virginia Senate and House of Delegates unanimously passed the legislation, and David H. Stevens, President and CEO of the Mortgage Bankers Association (MBA), strongly voiced the MBA's support for the bill. The creation of the transitional MLO license will allow out-of-state and registered loan originators to more quickly begin engaging in the business of mortgage loan originating in Virginia.

The legislation is effective July 1, 2014.