A state licensed loan originator is:

A state licensed loan originator is indeed defined as not being an employee of a depository institution. This distinction is important because it highlights the role of loan originators who operate independently or with agencies that are not traditional banks or credit unions.

Loan originators are typically required to obtain state licensing, which involves meeting educational and experience criteria specific to their state. They may work for mortgage brokerages, non-bank lenders, or other financial service providers that do not have the same regulatory framework as depository institutions. This independence allows them to cater to a broader spectrum of lending solutions and client needs, often making them more versatile in the market.

Understanding this distinction is crucial for recognizing the various roles and responsibilities within the mortgage industry as well as knowing which regulatory oversight governs these professionals compared to those working directly for banks or credit unions.