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Will the transitional mortgage loan officer licensing changes affect the employment landscape for mo

Effective November 24, 2019, the new law allowing temporary authority to operate for licensed or federally registered mortgage professionals will go into effect. It will permit qualified originators who properly apply for a MLO (mortgage loan originator) license to originate mortgage applications while their license applications are in process.

This law is logical and beneficial for mortgage companies and their sales professionals. It will primarily affect qualified MLO’s who are changing employment from a depository institution to a state-licensed mortgage company and qualified state-licensed MLO’s seeking licensure in an additional state(s). Specific details and frequently asked questions can be found on the NMLS website:

It will be interesting to see how these changes will affect employment and business for the different companies in the industry. While all companies are inherently different, most companies that originate residential mortgages fall into 1 of 3 groups:

  1. Depositories: banks and credit unions. (Approximately 40% market share).

  2. Mortgage banking firms: non-depositories/non-banks who fund loans in their name, usually on warehouse lines of credit. (Approximately 40% market share).

  3. Mortgage brokerage firms: non-depositories/non-banks who broker loans to the depositories and mortgage banking firms. (Approximately 20% market share).

So what do we believe the effect of the new law will be on employment and market share going forward?

I believe market conditions and competitive advantages will affect the market share of these companies more than this new law. Every company has competitive advantages and disadvantages for mortgage sales professionals in regards to marketing, operations, underwriting, compensation, compliance, technology, support, products, management, etc. There may be a slight shift by originators away from depository organizations and the depositories market share may decline slightly. However, I don’t believe this new law will have an industry-changing dynamic. What the law will do is:

  1. It will be easier for mortgage banking and brokerage firms to recruit depository loan officers. The challenge is that many depository loan officers do not have a referral-based book of business or transition well to opportunities that require them to source all of their own business, which is what most non-depository companies primarily want. Depository loan officers who want to transition to a non-depository should look for a company that has an excellent training/coaching program, support, operations, and marketing/lead generation system.

  2. It will be easier for mortgage banking firms to acquire depository mortgage divisions.

  3. It will be easier for mortgage originators and non-bank companies to conduct business compliantly. Previously, the reality of how business was conducted and individuals changed companies could cause regulatory and compliance challenges.

Mortgage sales professionals should be with a company that puts them in the best position to be successful and is beneficial for their long-term career. Whether you are state-licensed or federally registered to originate will not determine this, hundreds of mortgage sales professionals are very successful in both licensing statuses. You need to understand how the various companies operate and be honest about your goals, work ethic, passion for the business, priorities, etc.


If you need help exploring the competitive advantages and disadvantages of various companies and business models for your career, let us know. Loan Academy is an independent mortgage recruiting and consulting company. We specialize in connecting exceptional managers and loan officers with leading mortgage companies that maintain a culture of excellence, trust, and transparency.

Visit our website at or contact Jeff Flees today at (877) 721-4822 or

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