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Chapter 2. Licensing: Residential Mortgage Lender of California Financial Code >> Division 20. >> Chapter 2.
(a) A residential mortgage lender shall file an application
for licensure under this chapter with the commissioner to make or
service residential mortgage loans in this state.
(b) A licensee may not engage in the business as a residential mortgage lender under a name other than the name that appears on the license, or a legally assumed name disclosed either in the application or in an amendment to the application, which shall be reflected on the license.
(c) A licensee may not make or service residential mortgage loans secured by real property pursuant to the authority of a license, or an exemption from licensure, under the Real Estate Law.
(d) The commissioner may, pursuant to Section 50321, order a licensee to cease any other business conducted at any location where the licensee operates under the authority of a residential mortgage lender license, if the commissioner finds that the conduct of that business has facilitated evasions of this division or the rules adopted pursuant to this division, or that the conduct of that business is in violation of any law to which that business is subject.
(e) A license issued for a business location outside this state shall constitute an agreement by the licensee to, at the sole discretion of the commissioner, either (1) make the licensee's books, accounts, papers, records, and files available to the commissioner or the commissioner's representatives in this state within 10 calendar days of a request from the commissioner or, (2) pay the reasonable expenses for travel, meals, and lodging of the commissioner or the commissioner's representatives incurred during an investigation or examination made at the licensee's location outside this state.
(f) The commissioner may, by rule, require an applicant for a residential mortgage lender or servicer license or a residential mortgage lender or servicer licensee to make some or all filings with the commissioner through the Nationwide Mortgage Licensing System and Registry.
(g) The commissioner may, by rule, require licensees to pay assessments through the Nationwide Mortgage Licensing System and Registry.
(b) A licensee may not engage in the business as a residential mortgage lender under a name other than the name that appears on the license, or a legally assumed name disclosed either in the application or in an amendment to the application, which shall be reflected on the license.
(c) A licensee may not make or service residential mortgage loans secured by real property pursuant to the authority of a license, or an exemption from licensure, under the Real Estate Law.
(d) The commissioner may, pursuant to Section 50321, order a licensee to cease any other business conducted at any location where the licensee operates under the authority of a residential mortgage lender license, if the commissioner finds that the conduct of that business has facilitated evasions of this division or the rules adopted pursuant to this division, or that the conduct of that business is in violation of any law to which that business is subject.
(e) A license issued for a business location outside this state shall constitute an agreement by the licensee to, at the sole discretion of the commissioner, either (1) make the licensee's books, accounts, papers, records, and files available to the commissioner or the commissioner's representatives in this state within 10 calendar days of a request from the commissioner or, (2) pay the reasonable expenses for travel, meals, and lodging of the commissioner or the commissioner's representatives incurred during an investigation or examination made at the licensee's location outside this state.
(f) The commissioner may, by rule, require an applicant for a residential mortgage lender or servicer license or a residential mortgage lender or servicer licensee to make some or all filings with the commissioner through the Nationwide Mortgage Licensing System and Registry.
(g) The commissioner may, by rule, require licensees to pay assessments through the Nationwide Mortgage Licensing System and Registry.
The commissioner shall issue a residential mortgage lender
license upon the satisfaction of all of the following:
(a) The filing with the commissioner of a complete and executed application for licensure, which may, at the discretion of the commissioner, include background and experience disclosures required by any of the uniform application forms of the Nationwide Mortgage Licensing System and Registry.
(b) The payment of a nonrefundable investigation fee of one hundred dollars ($100), plus the cost of fingerprint processing and clearance, and an application filing fee of nine hundred dollars ($900).
(c) An investigation of the statements required by Section 50124 based upon which the commissioner is able to issue findings that the financial responsibility, criminal records (verified by fingerprint, at the discretion of the commissioner), experience, character, and general fitness of the applicant and of the partners or members thereof, if the applicant is a partnership or association, and of the principal officers and directors thereof, if the license applicant is a corporation, support a finding that the business will be operated honestly, fairly, and in accordance with the requirements of this division.
(a) The filing with the commissioner of a complete and executed application for licensure, which may, at the discretion of the commissioner, include background and experience disclosures required by any of the uniform application forms of the Nationwide Mortgage Licensing System and Registry.
(b) The payment of a nonrefundable investigation fee of one hundred dollars ($100), plus the cost of fingerprint processing and clearance, and an application filing fee of nine hundred dollars ($900).
(c) An investigation of the statements required by Section 50124 based upon which the commissioner is able to issue findings that the financial responsibility, criminal records (verified by fingerprint, at the discretion of the commissioner), experience, character, and general fitness of the applicant and of the partners or members thereof, if the applicant is a partnership or association, and of the principal officers and directors thereof, if the license applicant is a corporation, support a finding that the business will be operated honestly, fairly, and in accordance with the requirements of this division.
(a) Except as provided in Section 50120, the information
provided on an application for a residential mortgage lender,
residential mortgage servicer, or residential mortgage lender and
servicer license shall be sworn testimony on a form prescribed by the
commissioner. If an applicant proposes to engage in business as a
residential mortgage loan servicer as well as a residential mortgage
lender, this information shall be set forth in the application. The
commissioner may issue a license under this chapter to engage in
business as a residential mortgage lender or to engage in business as
a residential mortgage lender and residential mortgage loan
servicer. A person filing an application under this chapter to engage
in business as a residential mortgage lender and a residential
mortgage loan servicer is not required to file an application under
Chapter 3 (commencing with Section 50130).
(b) The application shall contain the name and complete business and residential address or addresses of the applicant. If the applicant is a partnership, association, corporation, or other entity, the application shall contain the names and complete business and residential addresses of each member, director, and principal officer. The application also shall include a description of the activities of the applicant in the detail and for the periods that the commissioner may require, including all of the following:
(1) A statement of financial solvency, noting the net worth requirements and supported by an audited financial statement prepared by an independent certified public accountant, and access to the supporting credit information as required by this division.
(2) A statement that the applicant or its members, directors, or principals, as appropriate, are at least 18 years of age. The statement may be made by providing each person's date of birth.
(3) Information as to the character, fitness, financial and business responsibility, background, experience, and criminal convictions of any of the following:
(A) Any person that owns or controls, directly or indirectly, 10 percent or more of any class of stock of the applicant.
(B) Any person that controls, directly or indirectly, the election of 25 percent or more of the members of the board of directors of an applicant.
(C) Any person or entity that significantly influences or controls the management of the applicant.
(4) A description of any disciplinary action filed under any other license through which the person conducts its business.
(5) A description of any adverse judgments entered in court actions filed by borrowers based upon allegations of fraud, misrepresentation, or dishonesty in the conduct of the person's business.
(6) A copy of the fidelity bond currently in effect.
(7) Other information as required by rule of the commissioner.
(b) The application shall contain the name and complete business and residential address or addresses of the applicant. If the applicant is a partnership, association, corporation, or other entity, the application shall contain the names and complete business and residential addresses of each member, director, and principal officer. The application also shall include a description of the activities of the applicant in the detail and for the periods that the commissioner may require, including all of the following:
(1) A statement of financial solvency, noting the net worth requirements and supported by an audited financial statement prepared by an independent certified public accountant, and access to the supporting credit information as required by this division.
(2) A statement that the applicant or its members, directors, or principals, as appropriate, are at least 18 years of age. The statement may be made by providing each person's date of birth.
(3) Information as to the character, fitness, financial and business responsibility, background, experience, and criminal convictions of any of the following:
(A) Any person that owns or controls, directly or indirectly, 10 percent or more of any class of stock of the applicant.
(B) Any person that controls, directly or indirectly, the election of 25 percent or more of the members of the board of directors of an applicant.
(C) Any person or entity that significantly influences or controls the management of the applicant.
(4) A description of any disciplinary action filed under any other license through which the person conducts its business.
(5) A description of any adverse judgments entered in court actions filed by borrowers based upon allegations of fraud, misrepresentation, or dishonesty in the conduct of the person's business.
(6) A copy of the fidelity bond currently in effect.
(7) Other information as required by rule of the commissioner.
(a) A residential mortgage lender license shall remain in
effect until suspended, surrendered, or revoked.
(b) A residential mortgage lender licensee that ceases to engage in the business regulated by this division and desires to no longer be licensed shall inform the commissioner in writing and, at that time, surrender the license and all other indicia of licensure to the commissioner. The licensee shall file a plan for the withdrawal from regulated business, and the plan shall include a timetable for the disposition of the business. The plan shall also include a closing audit, review, or other agreed upon procedures performed by an independent certified public accountant prescribed by rule or order of the commissioner. Upon receipt of the written notice and plan, the commissioner shall review the plan and, if satisfactory to the commissioner, shall accept the surrender of the license. A license is not surrendered until its tender is accepted in writing by the commissioner after a review, and a finding has been made on the licensee's plan required to be filed by this section, and a determination has been made that there is no violation of this law.
(c) A residential mortgage lender or servicer licensee may not surrender its license under this division and, under the authority of a real estate license, subsequently engage in residential mortgage lending or servicing activities that are subject to this division, unless the licensee has been licensed under this division for a period of five years or more.
(b) A residential mortgage lender licensee that ceases to engage in the business regulated by this division and desires to no longer be licensed shall inform the commissioner in writing and, at that time, surrender the license and all other indicia of licensure to the commissioner. The licensee shall file a plan for the withdrawal from regulated business, and the plan shall include a timetable for the disposition of the business. The plan shall also include a closing audit, review, or other agreed upon procedures performed by an independent certified public accountant prescribed by rule or order of the commissioner. Upon receipt of the written notice and plan, the commissioner shall review the plan and, if satisfactory to the commissioner, shall accept the surrender of the license. A license is not surrendered until its tender is accepted in writing by the commissioner after a review, and a finding has been made on the licensee's plan required to be filed by this section, and a determination has been made that there is no violation of this law.
(c) A residential mortgage lender or servicer licensee may not surrender its license under this division and, under the authority of a real estate license, subsequently engage in residential mortgage lending or servicing activities that are subject to this division, unless the licensee has been licensed under this division for a period of five years or more.
(a) A residential mortgage lender or servicer shall do all
of the following:
(1) Maintain staff adequate to meet the requirements of this division, as prescribed by rule or order of the commissioner.
(2) Keep and maintain for 36 months from the date of final entry the business records and other information required by law or rules of the commissioner regarding any mortgage loan made or serviced in the course of the conduct of its business.
(3) File with the commissioner any report required under law or by rule or order of the commissioner.
(4) Disburse funds in accordance with its agreements and to make a good faith and reasonable effort to effect closing in a timely manner.
(5) Account or deliver to a person any personal property such as money, funds, deposit, check, draft, mortgage, other document, or thing of value, that has come into its possession and is not its property, or that it is not in law or equity entitled to retain under the circumstances, at the time that has been agreed upon or is required by law, or, in the absence of a fixed time, upon demand of the person entitled to the accounting or delivery.
(6) File with the commissioner an amendment to its application prior to any material change in the information contained in the application for licensure, including, without limitation, the plan of operation. The commissioner shall, within 20 business days of receiving a completed amendment to the application, or within a longer time if agreed to by the licensee, approve or disapprove the effectiveness of the proposed amendment.
(7) Comply with the provisions of this division, and with any order or rule of the commissioner.
(8) Submit to periodic examination by the commissioner as required by this division.
(9) Advise the commissioner by amendment to its application of any material judgment filed against, or bankruptcy petition filed by, the licensee within five days of the filing.
(10) Notify the commissioner, in writing, prior to opening a branch office in this state or changing its business location or locations or its branch offices from which activities subject to this division are conducted.
(11) Comply with all applicable state and federal tax return filing requirements.
(12) Refrain from employing, or paying a commission or other fee to, a mortgage loan originator who is not licensed in this state, unless the individual is exempt from licensure.
(13) Refrain from committing a crime against the laws of any state or the United States, involving moral turpitude, misrepresentation, fraudulent or dishonest dealing, or fraud, and disclose to the commissioner any final judgment entered against it in a civil action upon grounds or allegations of fraud, misrepresentation, or deceit.
(14) Refrain from engaging in conduct that would be cause for denial of a license.
(15) Remain solvent.
(16) Proceed with due care and competence in performing any act for which it is required to hold a license under this division.
(17) Comply with any other requirement established by rule of the commissioner.
(b) The commissioner may require an applicant to submit a statement agreeing to comply with the requirements of this section.
(1) Maintain staff adequate to meet the requirements of this division, as prescribed by rule or order of the commissioner.
(2) Keep and maintain for 36 months from the date of final entry the business records and other information required by law or rules of the commissioner regarding any mortgage loan made or serviced in the course of the conduct of its business.
(3) File with the commissioner any report required under law or by rule or order of the commissioner.
(4) Disburse funds in accordance with its agreements and to make a good faith and reasonable effort to effect closing in a timely manner.
(5) Account or deliver to a person any personal property such as money, funds, deposit, check, draft, mortgage, other document, or thing of value, that has come into its possession and is not its property, or that it is not in law or equity entitled to retain under the circumstances, at the time that has been agreed upon or is required by law, or, in the absence of a fixed time, upon demand of the person entitled to the accounting or delivery.
(6) File with the commissioner an amendment to its application prior to any material change in the information contained in the application for licensure, including, without limitation, the plan of operation. The commissioner shall, within 20 business days of receiving a completed amendment to the application, or within a longer time if agreed to by the licensee, approve or disapprove the effectiveness of the proposed amendment.
(7) Comply with the provisions of this division, and with any order or rule of the commissioner.
(8) Submit to periodic examination by the commissioner as required by this division.
(9) Advise the commissioner by amendment to its application of any material judgment filed against, or bankruptcy petition filed by, the licensee within five days of the filing.
(10) Notify the commissioner, in writing, prior to opening a branch office in this state or changing its business location or locations or its branch offices from which activities subject to this division are conducted.
(11) Comply with all applicable state and federal tax return filing requirements.
(12) Refrain from employing, or paying a commission or other fee to, a mortgage loan originator who is not licensed in this state, unless the individual is exempt from licensure.
(13) Refrain from committing a crime against the laws of any state or the United States, involving moral turpitude, misrepresentation, fraudulent or dishonest dealing, or fraud, and disclose to the commissioner any final judgment entered against it in a civil action upon grounds or allegations of fraud, misrepresentation, or deceit.
(14) Refrain from engaging in conduct that would be cause for denial of a license.
(15) Remain solvent.
(16) Proceed with due care and competence in performing any act for which it is required to hold a license under this division.
(17) Comply with any other requirement established by rule of the commissioner.
(b) The commissioner may require an applicant to submit a statement agreeing to comply with the requirements of this section.
The commissioner may refuse to issue a residential mortgage
lender or servicer license if any of the following apply:
(a) The applicant is not in material compliance with a provision of this division or an order or rule of the commissioner.
(b) The commissioner cannot make the findings specified in subdivision (c) of Section 50121.
(c) A material requirement for issuance of a license has not been met.
(a) The applicant is not in material compliance with a provision of this division or an order or rule of the commissioner.
(b) The commissioner cannot make the findings specified in subdivision (c) of Section 50121.
(c) A material requirement for issuance of a license has not been met.
(a) Upon reasonable notice and opportunity to be heard, the
commissioner may deny an application for any of the following
reasons:
(1) A false statement of a material fact has been made in the application.
(2) Any officer, director, general partner, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant has, within the last 10 years, (A) been convicted of, or pleaded nolo contendere to, a crime or (B) committed any act involving dishonesty, fraud, or deceit, if the crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this division.
(3) The applicant or any officer, director, general partner, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant, has violated any provision of this division or the rules thereunder or any similar regulatory scheme of the State of California or a foreign jurisdiction.
(4) The applicant employs a mortgage loan originator who is not licensed in this state, unless the mortgage loan originator is exempt from licensure.
(b) The application shall be considered withdrawn within the meaning of this section if the applicant fails to respond to a written notification of a deficiency in the application within 90 days of the date of the notification.
(c) The commissioner shall, within 60 days from the filing of a full and complete application for a license, including the receipt of background and investigative reports from the Department of Justice or other government agencies, and the payment of the fees required by Section 50121, issue either a residential mortgage lender or servicer license or a statement of issues prepared in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
(1) A false statement of a material fact has been made in the application.
(2) Any officer, director, general partner, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant has, within the last 10 years, (A) been convicted of, or pleaded nolo contendere to, a crime or (B) committed any act involving dishonesty, fraud, or deceit, if the crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with this division.
(3) The applicant or any officer, director, general partner, or person owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or equity securities of the applicant, has violated any provision of this division or the rules thereunder or any similar regulatory scheme of the State of California or a foreign jurisdiction.
(4) The applicant employs a mortgage loan originator who is not licensed in this state, unless the mortgage loan originator is exempt from licensure.
(b) The application shall be considered withdrawn within the meaning of this section if the applicant fails to respond to a written notification of a deficiency in the application within 90 days of the date of the notification.
(c) The commissioner shall, within 60 days from the filing of a full and complete application for a license, including the receipt of background and investigative reports from the Department of Justice or other government agencies, and the payment of the fees required by Section 50121, issue either a residential mortgage lender or servicer license or a statement of issues prepared in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
The proceedings for a denial of a license shall be conducted
in accordance with Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code, and the
commissioner has all the powers granted therein.
As used in this act, the term "principal officer" means an
officer with direct responsibility for the conduct of the residential
mortgage lender or servicer licensee's or license applicant's
lending or servicing activities in this state.
(a) A residential mortgage lender or servicer licensed under
this chapter may, under the authority of that license and subject to
the provisions of this division, do both of the following:
(1) Engage as a principal in the business of buying from or selling to institutional investors residential mortgage loans by using or advancing one's own funds.
(2) Engage, pursuant to a written agency contract with an institutional lender specified in paragraph (1), (2), or (4) of subdivision (k) of Section 50003, in the business of soliciting, processing applications, or applying residential loan underwriting criteria, but not engage in the business of brokerage services pursuant to this subdivision, for residential mortgage loans for that lender, using or advancing the funds of that lender, provided that no fees or charges may be demanded or collected by the residential mortgage lender licensee for any performance or service, except fees demanded by, or collected on behalf of, the institutional lender, and that the licensee gives a written disclosure to the borrower, as soon as practicable but prior to loan closing, identifying the licensee and stating that the licensee is not the lender in the transaction but has contracted to provide soliciting, processing, or underwriting services for the lender. Separate schedules of the number and principal amount of the loans processed and underwritten shall be included in the licensee's annual report required by subdivision (a) of Section 50401.
(b) The act of soliciting other institutional lenders with whom a residential mortgage lender licensee has concluded an agency contract pursuant to paragraph (2) of subdivision (a) for placement of a loan upon declination of that loan by another institutional lender contracted under paragraph (2) of subdivision (a), constitutes brokerage services, and may be pursued by the licensee only following execution of a loan brokerage agreement with the borrower as provided in this division.
(1) Engage as a principal in the business of buying from or selling to institutional investors residential mortgage loans by using or advancing one's own funds.
(2) Engage, pursuant to a written agency contract with an institutional lender specified in paragraph (1), (2), or (4) of subdivision (k) of Section 50003, in the business of soliciting, processing applications, or applying residential loan underwriting criteria, but not engage in the business of brokerage services pursuant to this subdivision, for residential mortgage loans for that lender, using or advancing the funds of that lender, provided that no fees or charges may be demanded or collected by the residential mortgage lender licensee for any performance or service, except fees demanded by, or collected on behalf of, the institutional lender, and that the licensee gives a written disclosure to the borrower, as soon as practicable but prior to loan closing, identifying the licensee and stating that the licensee is not the lender in the transaction but has contracted to provide soliciting, processing, or underwriting services for the lender. Separate schedules of the number and principal amount of the loans processed and underwritten shall be included in the licensee's annual report required by subdivision (a) of Section 50401.
(b) The act of soliciting other institutional lenders with whom a residential mortgage lender licensee has concluded an agency contract pursuant to paragraph (2) of subdivision (a) for placement of a loan upon declination of that loan by another institutional lender contracted under paragraph (2) of subdivision (a), constitutes brokerage services, and may be pursued by the licensee only following execution of a loan brokerage agreement with the borrower as provided in this division.
