Secure And Fair Enforcement For Mortgage Licenses - Real Estate Regulations - Business & Professions - CA

Section § 10166.01

In this section, several important terms related to mortgage lending are explained. The 'SAFE Act' is a federal law for mortgage licensing. A 'mortgage loan originator' is someone who deals with residential mortgage loans for payment, but does not include people doing just administrative work, real estate brokers not paid by lenders, those renegotiating for employers, timeshare credit extensions, or those already licensed under certain laws. It defines 'residential mortgage loan' as a loan for personal or family use secured by a home. The term 'Nationwide Multistate Licensing System and Registry' refers to a system for licensing mortgage originators, and a 'Unique identifier' is a special number from that system.

For purposes of this article, the following definitions shall apply:

(a) “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

(b)

(1) “Mortgage loan originator” means an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain.

(2) Mortgage loan originator does not include any of the following:

(A) An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator, except as otherwise provided in subdivision (c) of Section 10166.03. The term “administrative or clerical tasks” means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan.

(B) An individual that only performs real estate brokerage services, as defined in subdivision (a) or (b) of Section 10131, unless that person is compensated by a lender, other mortgage loan originator, or by any agent of any lender or other mortgage loan originator.

(C) An individual who solely renegotiates terms for existing mortgage loans held or serviced by their employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires such an employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.

(D) An individual that is solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11 of the United States Code.

(E) An individual licensed or registered as a mortgage loan originator pursuant to the Financial Code and the SAFE Act.

(c) “Nationwide Multistate Licensing System and Registry” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage loan originators.

(d) “Residential mortgage loan” means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling, or residential real estate upon which is constructed or intended to be constructed a dwelling. “Dwelling” means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobilehome, or trailer, if it is used as a residence.

(e) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

(f) “Loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a mortgage loan originator.

SAFE Act mortgage loan originator residential mortgage loan

Section § 10166.02

If you're a real estate broker or salesperson in California dealing with loans secured by properties with up to four units, you must notify the Department of Real Estate in writing about your activities. This must be done by January 31, 2010, or within 30 days of starting such activities. To work as a mortgage loan originator, you need a real estate license and a special license endorsement. The endorsement lasts a year and expires every December 31st. If you don't comply or notify the department, you'll face penalties: $50 per day for up to 30 days, and $100 per day after that, but not more than $10,000. Failing to pay penalties can lead to license suspension or revocation. Any collected penalties go into the Consumer Recovery Account for specific uses decided by the state legislature.

(a) A real estate broker who acts pursuant to Section 10131.1 or subdivision (d) or (e) of Section 10131, and who makes, arranges, or services loans secured by real property containing one to four residential units, and any salesperson who acts in a similar capacity under the supervision of that broker, shall notify the department by January 31, 2010, or within 30 days of commencing that activity, whichever is later. The notification shall be made in writing, as directed, on a form that is acceptable to the commissioner.

(b) No individual may engage in business as a mortgage loan originator under this article without first doing both of the following:

(1) Obtaining and maintaining a real estate license pursuant to Article 2 (commencing with Section 10150).

(2) Obtaining and maintaining a real estate license endorsement pursuant to this article identifying that individual as a licensed mortgage loan originator.

(c) License endorsements shall be valid for a period of one year and shall expire on December 31 each year.

(d) Applicants for a mortgage loan originator license endorsement shall apply in a form prescribed by the commissioner. Each form shall contain content as set forth by rule, regulation, instruction, or procedure of the commissioner.

(e) In order to fulfill the purposes of this article, the commissioner may establish relationships or contracts with the Nationwide Multistate Licensing System and Registry or other entities designated by the Nationwide Multistate Licensing System and Registry to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to this article.

(f) A real estate broker or salesperson who fails to notify the department pursuant to subdivision (a), or who fails to obtain a license endorsement required pursuant to paragraph (2) of subdivision (b), shall be assessed a penalty of fifty dollars ($50) per day for each day written notification has not been received or a license endorsement has not been obtained, up to and including the 30th day after the first day of the assessment penalty. On and after the 31st day, the penalty is one hundred dollars ($100) per day, not to exceed a total penalty of ten thousand dollars ($10,000), regardless of the number of days, until the department receives the written notification or the licensee obtains the license endorsement. Penalties for violations of subdivisions (a) and (b) shall be additive.

(g) The commissioner may suspend or revoke the license of a real estate broker or salesperson who fails to pay a penalty imposed pursuant to this section. In addition, the commissioner may bring an action in an appropriate court of this state to collect payment of that penalty.

(h) All penalties paid or collected under this section shall be deposited into the Consumer Recovery Account of the Real Estate Fund and shall, upon appropriation by the Legislature, be available for expenditure for the purposes specified in Chapter 6.5 (commencing with Section 10470).

real estate broker residential loans mortgage loan originator

Section § 10166.03

This law section states that if you're a loan processor or underwriter and you don't advertise or imply that you can perform the duties of a mortgage loan originator, you don't need a special license for that. However, independent contractors who process or underwrite loans under a mortgage loan originator must get and keep a special endorsement as a mortgage loan originator. They also need a unique identification number from the Nationwide Multistate Licensing System.

(a) A loan processor or underwriter who does not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator shall not be required to obtain a license endorsement as a mortgage loan originator.

(b) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.

(c) An independent contractor who is employed by a mortgage loan originator may not engage in the activities of a loan processor or underwriter for a residential mortgage loan unless the independent contractor loan processor or underwriter obtains and maintains an endorsement as a mortgage loan originator under this article. Each independent contractor loan processor or underwriter who obtains and maintains an endorsement as a mortgage loan originator under this article shall have and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.

loan processor underwriter mortgage loan originator

Section § 10166.04

If you're applying for a license to originate mortgage loans, you'll need to provide certain identity details to the Nationwide Multistate Licensing System. This includes fingerprints for background checks and personal history information for a credit report. The state may also check your criminal background. The Department of Justice can charge a fee for handling these requests.

(a) In connection with an application to the commissioner for a license endorsement as a mortgage loan originator, every applicant shall furnish to the Nationwide Multistate Licensing System and Registry information concerning the applicant’s identity, including the following:

(1) Fingerprint images and related information, for purposes of performing a federal, or both a state and federal, criminal history background check.

(2) Personal history and experience in a form prescribed by the Nationwide Multistate Licensing System and Registry, including the submission of authorization for the Nationwide Multistate Licensing System and Registry and the commissioner to obtain both of the following:

(A) An independent credit report from a consumer reporting agency.

(B) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction.

(b) The commissioner may ask the Nationwide Multistate Licensing System and Registry to obtain state criminal history background check information on applicants described in subdivision (a) using the procedures set forth in subdivisions (c) and (d).

(c) If the Nationwide Multistate Licensing System and Registry electronically submits fingerprint images and related information, as required by the Department of Justice, for an applicant for a mortgage loan originator license endorsement, to the Department of Justice for the purposes of obtaining information as to the existence and content of a record of state convictions and state arrests, and as to the existence and content of a record of state arrests for which the Department of Justice establishes that the person is free on bail or on their recognizance pending trial or appeal, the Department of Justice shall provide an electronic response to the Nationwide Multistate Licensing System and Registry pursuant to paragraph (1) of subdivision (p) of Section 11105 of the Penal Code, and shall provide the same electronic response to the department.

(d) The Nationwide Multistate Licensing System and Registry may request from the Department of Justice subsequent arrest notification service, as provided pursuant to Section 11105.2 of the Penal Code, for persons described in subdivision (a). The Department of Justice shall provide the same electronic response to the department.

(e) The Department of Justice shall charge a fee sufficient to cover the cost of processing the requests described in this section.

mortgage loan originator license endorsement fingerprint images

Section § 10166.05

This law states that to get a license to work as a mortgage loan originator, certain conditions must be met. The applicant must not have had a license revoked before, unless it was formally overturned later. They must not have been convicted of a felony involving fraud, dishonesty, breach of trust, or money laundering in the past seven years, unless the conviction was expunged or pardoned. They also need to show financial responsibility and good character, suggesting they will act honestly and fairly. Finally, they must meet specific education and testing requirements.

Notwithstanding any other provision of law, the commissioner shall not issue a license endorsement to act as a mortgage loan originator to an applicant unless the commissioner makes all of the following findings:

(a) The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation of a revocation shall not be deemed a revocation.

(b)

(1) The applicant has not 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 date of the application for licensing, or at any time preceding the date of application, if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering. Whether a particular crime is classified as a felony shall be determined by the law of the jurisdiction in which an individual is convicted.

(2) For purposes of this subdivision, an expunged or pardoned felony conviction shall not require denial of an application. However, the commissioner may consider the underlying crime, facts, or circumstances of an expunged or pardoned felony conviction when determining the eligibility of an applicant for licensure under this subdivision or subdivision (c).

(c) The applicant has demonstrated such financial responsibility, character, and general fitness as to command the confidence of the community and warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of the article.

(d) The applicant has complied with the education and written testing requirements in Section 10166.06.

mortgage loan originator license endorsement criminal background

Section § 10166.051

This law gives the commissioner the power to take various actions against mortgage loan originators if they violate rules or fail to meet certain requirements. These actions can include denying, suspending, revoking, or not renewing their license endorsements. Additionally, the commissioner can issue orders to stop harmful business practices and can take immediate action if a license was wrongly issued or if there are current violations. All these activities require appropriate notice and a chance for a hearing.

In addition to any penalties authorized by regulations adopted pursuant to Section 10166.15, the commissioner may do one or more of the following, after appropriate notice and opportunity for hearing:

(a) Deny, suspend, revoke, restrict, or decline to renew a mortgage loan originator license endorsement for a violation of this article, or any rules or regulations adopted hereunder.

(b) Deny, suspend, revoke, condition, or decline to renew a mortgage loan originator license endorsement, if an applicant or endorsement holder fails at any time to meet the requirements of Section 10166.05 or 10166.09, or withholds information or makes a material misstatement in an application for a license endorsement or license endorsement renewal.

(c) Issue orders or directives to licensees who hold mortgage loan originator license endorsements, as follows:

(1) Order or direct persons subject to this article to desist and refrain from conducting business, including immediate temporary orders to desist and refrain.

(2) Order or direct persons subject to this article to cease any harmful activities or violations of this article, including immediate temporary orders to desist and refrain.

(3) Enter immediate temporary orders to cease business under a license endorsement if the commissioner determines that the license endorsement was erroneously granted or the endorsement holder is currently in violation of this article.

(4) Order or direct any other affirmative action the commissioner deems necessary.

mortgage loan originator license endorsement suspend license

Section § 10166.06

To become a licensed mortgage loan originator in California, applicants must complete 20 hours of specific education, including courses on federal law, ethics, and nontraditional mortgage standards. This education must be approved by the Nationwide Multistate Licensing System and Registry (NMLS). Applicants who complete NMLS-approved education in another state will receive credit in California. They also need to pass a written test covering multiple subjects with at least a 75% score. If they fail, they can retake the test after 30 days, but after three failures, they must wait six months. Those who leave the profession for over five years must retake the test.

(a) In addition to the requirements of Section 10153, an applicant for a license endorsement as a mortgage loan originator shall complete at least 20 hours of education courses, which shall include at least the following:

(1) Three hours of federal law and regulations.

(2) Three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues.

(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.

(b) For purposes of this section, education courses are only acceptable if they have been reviewed and approved, or otherwise deemed acceptable, by the Nationwide Multistate Licensing System and Registry, in accordance with the SAFE Act. Education may be offered in a classroom, online, or by any other means approved by the Nationwide Multistate Licensing System and Registry, in accordance with the SAFE Act.

(c) A person who successfully completes the education requirements approved by the Nationwide Multistate Licensing System and Registry in any state other than California shall be granted credit by the commissioner toward completion of the education requirements of this section.

(d) Before being issued a license endorsement to act as a mortgage loan originator, an individual shall pass a qualified written test developed or otherwise deemed acceptable by the Nationwide Multistate Licensing System and Registry and administered by a test provider approved or otherwise deemed acceptable by the Nationwide Multistate Licensing System and Registry.

(e) A written test shall not be treated as a qualified written test for purposes of this section, unless the test adequately measures the applicant’s knowledge and comprehension in the following subject areas: ethics, federal law and regulation pertaining to mortgage origination, state law and regulation pertaining to mortgage origination, and federal and state law and regulation relating to fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

(f) This section does not prohibit a test provider approved by the Nationwide Multistate Licensing System and Registry from providing a test at the location of the employer of the applicant or any subsidiary or affiliate of the employer of the applicant, or any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.

(g) An individual shall not be considered to have passed a qualified written test administered pursuant to this section unless the individual achieves a test score of not less than 75 percent correct answers to questions.

(h) An individual who fails the qualified written test may retake the test, although at least 30 days must pass between each retesting, except as provided in subdivision (i).

(i) An applicant who fails three consecutive tests shall wait at least six months before retesting.

(j) A mortgage loan originator who fails to maintain a valid license endorsement for a period of five years or longer or who fails to register as a mortgage loan originator shall retake the qualified written test.

mortgage loan originator education requirements federal law and regulations

Section § 10166.07

This law requires real estate brokers in California, who are involved in certain loan activities secured by residential properties, to file an annual business activities report. The report must include details about the brokers and salespersons under their supervision, their real estate-related activities, and their advertising methods. It must also cover information about both fixed and adjustable rate loans, such as the number and amount of loans, interest rates, and prepayment penalties. If brokers fail to file this report on time, the commissioner can conduct an audit at the broker's expense and may suspend their license if the cost isn't paid. The report is not disclosed to the public, and some data may be waived if it overlaps with what is reported to a national registry.

(a) A real estate broker who acts pursuant to Section 10131.1 or subdivision (d) or (e) of Section 10131, and who makes, arranges, or services one or more loans in a calendar year that are secured by real property containing one to four residential units, shall annually file a business activities report, within 90 days after the end of the broker’s fiscal year or within any additional time as the commissioner may allow for filing for good cause. The report shall contain within its scope all of the following information for the fiscal year, relative to the business activities of the broker and those of any other brokers and real estate salespersons acting under that broker’s supervision:

(1) Name and license number of the supervising broker and names and license numbers of the real estate brokers and salespersons under that broker’s supervision. The report shall include brokers and salespersons who were under the supervising broker’s supervision for all or part of the year.

(2) A list of the real estate-related activities in which the supervising broker and the brokers and salespersons under the supervising broker’s supervision engaged during the prior year. This listing shall identify all of the following:

(A) Activities relating to mortgages, including arranging, making, or servicing.

(B) Other activities performed under the real estate broker’s or salesperson’s license.

(C) Activities performed under related licenses, including, but not limited to, a license to engage as a finance lender or a finance broker under the California Financing Law (Division 9 (commencing with Section 22000) of the Financial Code), or a license to engage as a residential mortgage lender or residential mortgage loan servicer under the California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000) of the Financial Code).

(3) A list of the forms of media used by the broker and those under the broker’s supervision to advertise to the public, including print, radio, television, the internet, or other means.

(4) For fixed rate loans made, brokered, or serviced, all of the following:

(A) The total number, aggregate principal amount, lowest interest rate, highest interest rate, and a list of the institutional lenders of record. If the loan was funded by any lender other than an institutional lender, the broker shall categorize the loan as privately funded.

(B) The total number and aggregate principal amount of covered loans, as defined in Section 4970 of the Financial Code.

(C) The total number and aggregate principal amount of loans for which Department of Real Estate form RE Form 885 or an equivalent is required.

(5) For adjustable rate loans made, brokered, or serviced, all of the following:

(A) The total number, aggregate principal amount, lowest beginning interest rate, highest beginning interest rate, highest margin, and a list of the institutional lenders of record. If the loan was funded by any lender other than an institutional lender, the broker shall categorize the loan as privately funded.

(B) The total number and aggregate principal amount of covered loans, as defined in Section 4970 of the Financial Code.

(C) The total number and aggregate principal amount of loans for which Department of Real Estate form RE Form 885 or an equivalent is required.

(6) For all loans made, brokered, or serviced, the total number and aggregate principal amount of loans funded by institutional lenders, and the total number and aggregate principal amount of loans funded by private lenders.

(7) For all loans made, brokered, or serviced, the total number and aggregate principal amount of loans that included a prepayment penalty, the minimum prepayment penalty length, the maximum prepayment penalty length, and the number of loans with prepayment penalties whose length exceeded the length of time before the borrower’s loan payment amount could increase.

(8) For all loans brokered, the total compensation received by the broker, including yield spread premiums, commissions, and rebates, but excluding compensation used to pay fees for third-party services on behalf of the borrower.

(9) For all mortgage loans made or brokered, the total number of loans for which a mortgage loan disclosure statement was provided in a language other than English, and the number of forms provided per language other than English.

(10) For all mortgage loans serviced, the total amount of funds advanced to be applied toward a payment to protect the security of the note being serviced.

(11) For purposes of this section, an institutional lender has the meaning specified in paragraph (1) of subdivision (c) of Section 10232.

(b) A broker subject to this section and Section 10232.2 may file consolidated reports that include all of the information required under this section and Section 10232.2. Those consolidated reports shall clearly indicate that they are intended to satisfy the requirements of both sections.

(c) If a broker subject to this section fails to timely file the report required under this section, the commissioner may cause an examination and report to be made and may charge the broker one and one-half times the cost of making the examination and report. In determining the hourly cost incurred by the commissioner for conducting an examination and preparing the report, the commissioner may use the estimated average hourly cost for all department audit staff performing audits of real estate brokers. If a broker fails to pay the commissioner’s cost within 60 days of the mailing of a notice of billing, the commissioner may suspend the broker’s license or deny renewal of that license. The suspension or denial shall remain in effect until the billed amount is paid or the broker’s right to renew a license has expired. The commissioner may maintain an action for the recovery of the billed amount in any court of competent jurisdiction.

(d) The report described in this section is exempted from any requirement of public disclosure by subdivision (b) of Section 7929.000 of the Government Code.

(e) The commissioner may waive the requirement to submit certain information described in paragraphs (1) to (10), inclusive, of subdivision (a) if the commissioner determines that this information is duplicative of information required by the Nationwide Multistate Licensing System and Registry, pursuant to Section 10166.08.

real estate broker report business activities report supervising broker

Section § 10166.08

Mortgage loan originators must regularly submit reports about their condition to the Nationwide Multistate Licensing System and Registry. These reports have to include specific information as required by the system.

Each mortgage loan originator shall submit reports of condition to the Nationwide Multistate Licensing System and Registry reports of condition, and those reports shall be in the form and shall contain information as the Nationwide Multistate Licensing System and Registry may require.

mortgage loan originators reports of condition Nationwide Multistate Licensing System

Section § 10166.09

To renew their endorsement, a mortgage loan originator must still meet the initial requirements for obtaining the endorsement and must complete required annual continuing education.

The minimum standards for renewal of an endorsement as a mortgage loan originator shall include the following:

(a) The mortgage loan originator continues to meet the minimum standards for obtaining an endorsement as a mortgage loan originator.

(b) The mortgage loan originator satisfies the annual continuing education requirements described in Section 10166.10.

mortgage loan originator endorsement renewal continuing education requirements

Section § 10166.10

Mortgage loan originators need to complete at least eight hours of continuing education every year, including courses on federal law, ethics, and nontraditional mortgage lending. These courses must be approved by the commissioner and a national licensing system. The commissioner can adjust courses to align with other existing requirements if they're similar. Education can be through various methods like classes or online. Credits from one year don’t roll over, and the same course can't be repeated year after year. Instructors can earn double credit for teaching. Coursework from other states can count towards California's requirements. If a license lapses, the originator must fulfill the last year's education before renewal.

(a) A mortgage loan originator shall complete at least eight hours of continuing education annually, which shall include at least three hours relating to federal law and regulations, two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues, and two hours related to lending standards for the nontraditional mortgage product marketplace.

(b) For purposes of subdivision (a), continuing education courses and course providers shall be reviewed and approved by the commissioner and the Nationwide Multistate Licensing System and Registry.

(c) The commissioner shall have the authority to substitute any of the courses described in subdivision (a) for the course requirements of Section 10170.5, subject to a finding that the course requirements in subdivision (a) and the course completion standards in subdivision (g) of Section 10166.06 are substantially equivalent to, and meet the intent of, Section 10170.5.

(d) This section does not preclude any education course, as approved by the commissioner and the Nationwide Multistate Licensing System and Registry, that is provided by the employer of the mortgage loan originator or an entity that is affiliated with the mortgage loan originator by an agency contract, or any subsidiary or affiliate of the employer or entity.

(e) Continuing education may be offered either in a classroom, online, or by any other means approved by the commissioner and the Nationwide Multistate Licensing System and Registry.

(f) A mortgage loan originator may only receive credit for a continuing education course in the year in which the course is taken.

(g) A mortgage loan originator may not take the same approved course in the same or successive years to meet the requirements of this section for continuing education.

(h) A mortgage loan originator who is an instructor of an approved continuing education course may receive credit for their own annual continuing education requirement at the rate of two hours credit for every one hour taught.

(i) A person who successfully completes the education requirements approved by the Nationwide Multistate Licensing System and Registry in any state other than California shall be granted credit by the commissioner towards completion of continuing education requirements in this state.

(j) A mortgage loan originator whose license endorsement lapses, expires, or is suspended or revoked, and who wishes to regain their license endorsement, shall complete continuing education requirements for the last year in which the endorsement was held, before issuance of a new or renewed endorsement.

mortgage loan originator continuing education federal law

Section § 10166.11

This law requires real estate brokers involved in lending or arranging loans on residential properties to keep records that allow for compliance checks by the commissioner. Brokers must maintain documents including those listed in another part of the law and must provide access to their business records for inspections or audits upon request. If they don't comply, their license may be suspended or revoked. Inspection reports by the commissioner are not public, but they can be shared with company officers for corrective actions without losing confidentiality.

(a) A real estate broker who acts pursuant to Section 10131.1 or subdivision (d) or (e) of Section 10131 and who makes, arranges, or services loans secured by real property containing one to four residential units, shall keep documents and records that will properly enable the commissioner to determine whether the residential mortgage brokerage, servicing, and lending functions performed by the broker comply with this division and with all applicable rules and orders made by the commissioner. These documents shall include, at a minimum, the documents described in Section 10148. Upon request of the commissioner, a real estate broker shall file an authorization for disclosure to the commissioner of financial records of the broker’s licensed business pursuant to Section 7473 of the Government Code.

(b) Notwithstanding subdivision (a) of Section 10148, the business documents and records of real estate brokers described in subdivision (a) and real estate salespersons acting under those brokers are subject to inspection and examination or audit by the commissioner, at the commissioner’s discretion, after reasonable notice. That real estate broker or salesperson shall, upon request by the commissioner and within the time period specified in that request, allow the commissioner, or the commissioner’s authorized representative, to inspect and copy any business documents and records. The commissioner may suspend or revoke the license of the broker or salesperson if that person fails to produce documents or records within the time period specified in the request.

(c) Inspection and examination or audit reports prepared by the commissioner’s duly designated representatives pursuant to this section are not public records. Those reports may be disclosed to the officers or directors of a licensee that is the subject of the report for the purpose of corrective action. That disclosure shall not operate as a waiver of the exemption specified in Section 7929.000 of the Government Code.

real estate broker residential mortgage loan records

Section § 10166.12

This law enables the commissioner to examine real estate brokers to ensure they comply with certain rules. If a broker or salesperson doesn't comply, they may face penalties, including fines or losing their license. Any penalties collected support the Consumer Recovery Account to help others affected. The findings of these exams are confidential, except for use by certain officials for further investigation.

(a) As often as the commissioner deems necessary and appropriate, the commissioner shall examine the affairs of each real estate broker who is required to notify the commissioner or obtain a license endorsement pursuant to Section 10166.02 for compliance with this part. These examinations shall also include a review of the affairs of all real estate brokers and real estate salespersons acting under the supervision of each real estate broker who is required to file reports with the department pursuant to Section 10166.07. The commissioner shall appoint suitable persons to perform these examinations. The commissioner and his or her appointees may examine the books, records, and documents of the licensee, and may examine the licensee’s officers, directors, employees, or agents under oath regarding the licensee’s operations. The commissioner may cooperate with any agency of the state or federal government, other states, agencies, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation. The commissioner may accept an examination conducted by one of these entities in place of an examination by the commissioner under this section, unless the commissioner determines that the examination does not provide information necessary to enable the commissioner to fulfill his or her responsibilities under this division.

(b) The commissioner may impose a penalty against a real estate broker or real estate salesperson whose affairs are examined or reviewed pursuant to subdivision (a) based on the findings of the examination or review. The commissioner may suspend or revoke the license or license endorsement of a real estate broker or real estate salesperson who fails to pay that penalty. In addition, the commissioner may bring an action in an appropriate court of this state to collect payment of the penalty.

(c) Penalties collected pursuant to subdivision (b) shall be deposited into the Consumer Recovery Account of the Real Estate Fund and shall, upon appropriation by the Legislature, be available for expenditure for the purposes specified in Chapter 6.5 (commencing with Section 10470).

(d) The statement of the findings of an examination conducted pursuant to this section shall belong to the commissioner and shall not be disclosed to anyone other than the licensee, law enforcement officials, or other state or federal regulatory agencies for further investigation and enforcement. Reports required of licensees by the commissioner under this division and results of examinations performed by the commissioner under this division are the property of the commissioner.

real estate broker examination compliance license endorsement

Section § 10166.13

If you're a real estate broker who deals with loans for residential properties with up to four units, you may need to provide special reports to the commissioner whenever they ask for them.

A real estate broker who acts pursuant to Section 10131.1 or subdivision (d) or (e) of Section 10131 and who makes, arranges, or services loans secured by real property containing one to four residential units shall make any special reports to the commissioner that the commissioner may, from time to time, require.

real estate broker residential loans loan servicing

Section § 10166.14

If a real estate broker stops being regulated by certain rules, they must inform the department. Even if they've submitted the necessary reports for that year, they need to keep doing so for the rest of the year, but also inform the department that they won't be subject to these rules the following year.

A real estate broker shall notify the department when he or she is no longer subject to this part. If a broker has already made reports required by Sections 10166.07 and 10166.08 within the year, he or she shall continue reports for that year, but shall notify the department prior to the expiration of that year that he or she will no longer be subject to this part in the succeeding year.

real estate broker notification to department annual reporting

Section § 10166.15

This law requires the commissioner to report any violations by mortgage loan originators and enforcement actions taken to a national licensing system. It also mandates the creation of a process for these mortgage loan originators to contest any information reported about them. Additionally, the commissioner can set rules about how mortgage originators should keep their records and what penalties they face if they break the rules.

(a) The commissioner shall regularly report violations of this article, as well as enforcement actions taken against any mortgage loan originator to whom an endorsement has been issued, and enforcement actions taken against any individual for failure to obtain an endorsement as a mortgage loan originator, to the Nationwide Multistate Licensing System and Registry.

(b) The commissioner shall establish a process that may be used by mortgage loan originators to challenge information entered into the Nationwide Multistate Licensing System and Registry by the commissioner.

(c) The commissioner is authorized to promulgate regulations specifying (1) the recordkeeping requirements that mortgage loan originators shall satisfy and (2) the penalties that shall apply to mortgage loan originators for violations of this article.

commissioner mortgage loan originators violations

Section § 10166.16

This law section deals with the privacy and confidentiality of information given to the Nationwide Multistate Licensing System and Registry (NMLS). It basically says that any private or confidential info shared with NMLS keeps its privacy protections under both federal and state laws, even after being shared. Such information can still be shared among state and federal regulatory officials without losing those privacy protections. The law allows the commissioner to make agreements with other government bodies to share this information. Importantly, this protected information isn't subject to public disclosure laws, can't be subpoenaed, or used in private lawsuits, unless the person involved decides to waive their confidentiality rights. Lastly, the law clarifies that it doesn't apply to publicly accessible data about mortgage loan originators' work history and disciplinary actions.

(a) Except as otherwise provided in Section 1512 of the SAFE Act, the requirements under any federal or state law regarding the privacy or confidentiality of any information or material provided to the Nationwide Multistate Licensing System and Registry, and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to that information or material, shall continue to apply to the information or material after the information or material has been disclosed to the Nationwide Multistate Licensing System and Registry. The information and material may be shared with all state and federal regulatory officials with mortgage industry oversight authority without the loss of privilege or the loss of confidentiality protections provided by federal or state law.

(b) For these purposes, the commissioner is authorized to enter agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators, or other associations representing governmental agencies as established by rule, regulation or order of the commissioner.

(c) Information or material that is subject to a privilege or confidentiality under subdivision (a) shall not be subject to either of the following:

(1) Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the state.

(2) Subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Multistate Licensing System and Registry with respect to the information or material, the person to whom the information or material pertains waives, in whole or in part, in the discretion of the person, that privilege.

(d) This section shall not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators that is included in the Nationwide Multistate Licensing System and Registry for access by the public.

Nationwide Multistate Licensing System privacy protections confidentiality

Section § 10166.17

This law requires that mortgage loan originators in California be licensed and registered using a national system called the Nationwide Multistate Licensing System and Registry. The commissioner has the authority to create rules to facilitate this process. These rules can include performing background checks, handling fees, setting license renewal dates, and managing license updates or cancellations.

In addition to any other duties imposed upon the commissioner by law, the commissioner shall require mortgage loan originators to be licensed and registered through the Nationwide Multistate Licensing System and Registry. In order to carry out this requirement the commissioner is authorized to participate in the Nationwide Multistate Licensing System and Registry. For this purpose, the commissioner may establish by rule, regulation, or order, requirements as necessary, including, but not limited to, the following:

(a) Background checks for the following:

(1) Criminal history through fingerprint or other databases.

(2) Civil or administrative records.

(3) Credit history.

(4) Any other information as deemed necessary by the Nationwide Multistate Licensing System and Registry.

(b) The payment of fees to apply for or renew licenses through the Nationwide Multistate Licensing System and Registry.

(c) The setting or resetting as necessary of renewal or reporting dates.

(d) Requirements for amending or surrendering a license or any other activities as the commissioner deems necessary for participation in the Nationwide Multistate Licensing System and Registry.

mortgage loan originators Nationwide Multistate Licensing System background checks

Real Estate Regulations

Real Estate RegulationsSecure and Fair Enforcement for Mortgage Licenses