Chapter 3.5Mortgage Loan Originators

Section § 50140

Explanation

This law details the process for applying for a mortgage loan originator license in California. Applicants must use a specific online form provided by the Nationwide Mortgage Licensing System and Registry. The application must include fingerprint images for background checks, a personal history, and an independent credit report. The commissioner is responsible for setting rules about application fees and timelines. The Department of Justice is involved in checking criminal records when applicants submit fingerprints. If needed, the licensing system can request updates on any future arrests of licensees. The fees charged should cover these processes' costs.

(a)CA Financial Code § 50140(a) An applicant for a license as a mortgage loan originator shall apply by submitting the uniform form prescribed for that purpose by the Nationwide Mortgage Licensing System and Registry. The commissioner may require the submission of additional information or supporting documentation to the department.
(b)CA Financial Code § 50140(b) Section 461 of the Business and Professions Code shall not be applicable to the Department of Financial Protection and Innovation when using a national uniform application adopted or approved for use by the Nationwide Mortgage Licensing System and Registry in connection with the SAFE Act.
(c)CA Financial Code § 50140(c) The commissioner shall, by rule, establish the timelines, fees, and assessments applicable to applicants for original mortgage loan originator licenses, license renewals, and license changes under this division.
(d)CA Financial Code § 50140(d) The commissioner may, by rule, require mortgage loan originator licensees to pay assessments through the Nationwide Mortgage Licensing System and Registry.
(e)CA Financial Code § 50140(e) In connection with an application for a license as a mortgage loan originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including the following:
(1)CA Financial Code § 50140(e)(1) Fingerprint images and related information, for purposes of performing a federal, or both a state and federal, criminal history background check.
(2)CA Financial Code § 50140(e)(2) Personal history and experience in a form prescribed by the Nationwide Mortgage Licensing System and Registry, including the submission of authorization for the Nationwide Mortgage Licensing System and Registry and the commissioner to obtain both of the following:
(A)CA Financial Code § 50140(e)(2)(A) An independent credit report obtained from a consumer reporting agency.
(B)CA Financial Code § 50140(e)(2)(B) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
(f)CA Financial Code § 50140(f) The commissioner may ask the Nationwide Mortgage 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 (g) and (h).
(g)CA Financial Code § 50140(g) If the Nationwide Mortgage 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, for the purposes of obtaining information as to the existence and content of a record of state convictions and state arrests and 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 Mortgage 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 commissioner.
(h)CA Financial Code § 50140(h) The Nationwide Mortgage 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 commissioner.
(i)CA Financial Code § 50140(i) The Department of Justice shall charge a fee sufficient to cover the cost of processing the requests described in this section.
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(Amended by Stats. 2022, Ch. 452, Sec. 159. (SB 1498) Effective January 1, 2023.)

Section § 50141

Explanation

This law outlines the conditions that must be met for an individual to be granted a mortgage loan originator license. The commissioner will deny the application if the applicant previously had a license revoked, was convicted of a felony involving fraud or dishonesty, or fails to show financial responsibility and good character. The applicant must also complete specific education and testing requirements, and be employed by a licensed mortgage lender or servicer who has a suitable surety bond. If the commissioner intends to deny a license, they must follow a specified legal process.

(a)CA Financial Code § 50141(a) The commissioner shall deny an application for a mortgage loan originator license unless the commissioner makes at a minimum the following findings:
(1)CA Financial Code § 50141(a)(1) The applicant has never had a mortgage loan originator license revoked in any governmental jurisdiction, except that a subsequent formal vacation or set aside of such revocation shall not be deemed a revocation.
(2)Copy CA Financial Code § 50141(a)(2)
(A)Copy CA Financial Code § 50141(a)(2)(A) 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 and registration, or at any time preceding the date of application, if such 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.
(B)CA Financial Code § 50141(a)(2)(A)(B) For purposes of this paragraph, 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 paragraph or paragraph (3).
(3)CA Financial Code § 50141(a)(3) The applicant has demonstrated such financial responsibility, character, and general fitness as to command the confidence of the community and to warrant a determination that the mortgage loan originator will operate honestly, fairly, and efficiently within the purposes of this division.
(4)CA Financial Code § 50141(a)(4) The applicant has completed the prelicensing education requirement described in Section 50142.
(5)CA Financial Code § 50141(a)(5) The applicant has passed a written test that meets the test requirements described in Section 50143.
(6)CA Financial Code § 50141(a)(6) The applicant is employed by, and subject to the supervision of, a residential mortgage lender or servicer that has obtained a license from the commissioner pursuant to this division.
(7)CA Financial Code § 50141(a)(7) The surety bond of the residential mortgage lender or servicer employing the applicant covers the activities of the applicant and meets the requirements of Section 50205.
(b)CA Financial Code § 50141(b) Before denying a license under this section, the commissioner shall proceed as prescribed by Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code and shall have all the powers granted under that chapter.
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(Amended by Stats. 2011, Ch. 444, Sec. 4. (SB 217) Effective January 1, 2012.)

Section § 50142

Explanation

If you're applying for a mortgage loan originator license in California, you need to complete 20 hours of approved education. This includes 3 hours on federal laws, 3 hours on ethics covering fraud and consumer protection, 2 hours on lending standards for nontraditional mortgages, and 2 hours on California-specific laws.

The courses must be approved by the Nationwide Mortgage Licensing System and Registry, who also approve course providers. You can take the courses through your employer if they're approved, and they can be delivered in various formats like classroom or online.

Education requirements completed in other states will count in California. If you've held a license before and want to get licensed again, you need to show you've kept up with required continuing education.

(a)CA Financial Code § 50142(a) An applicant for a mortgage loan originator license shall complete at least 20 hours of education approved in accordance with subdivision (b). The education shall include at least the following:
(1)CA Financial Code § 50142(a)(1) Three hours of instruction on federal law and regulations.
(2)CA Financial Code § 50142(a)(2) Three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues.
(3)CA Financial Code § 50142(a)(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.
(4)CA Financial Code § 50142(a)(4) Two hours of training related to relevant California law and regulations.
(b)CA Financial Code § 50142(b) For purposes of subdivision (a), prelicensing education courses shall be reviewed and approved by the Nationwide Mortgage Licensing System and Registry. Review and approval of a prelicensing education course shall include review and approval of the course provider.
(c)CA Financial Code § 50142(c) Nothing in this section shall preclude any prelicensing education course approved by the Nationwide Mortgage Licensing System and Registry that is provided by the employer of the applicant or an entity that is affiliated with the applicant by an agency contract, or any subsidiary or affiliate of the employer or entity.
(d)CA Financial Code § 50142(d) Prelicensing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Mortgage Licensing System and Registry.
(e)CA Financial Code § 50142(e) The prelicensing education requirements approved by the Nationwide Mortgage Licensing System and Registry for any state other than California shall be accepted as credit toward completion of prelicensing education requirements in California.
(f)CA Financial Code § 50142(f) An individual previously licensed under this chapter applying to be licensed again must prove that he or she has completed all of the continuing education requirements for the year in which that individual last held the license.
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(Amended by Stats. 2014, Ch. 123, Sec. 4. (SB 1459) Effective January 1, 2015.)

Section § 50143

Explanation

If you want to become a licensed mortgage loan originator, you need to pass a written test approved by the Nationwide Mortgage Licensing System. This test must cover important topics like ethics, federal and state laws about mortgages, consumer protection, and fraud.

You need to score at least 75% to pass. If you don’t pass, you can retake the test up to three times, with a 30-day gap between attempts. If you fail three times in a row, you have to wait six months to try again.

If you let your mortgage originator license expire for more than five years, you have to retake the test, unless you were a registered mortgage originator during that time.

(a)CA Financial Code § 50143(a) An applicant for a mortgage loan originator license shall pass a qualified written test developed or otherwise deemed acceptable by the Nationwide Mortgage Licensing System and Registry and administered by a test provider approved by the Nationwide Mortgage Licensing System and Registry.
(b)CA Financial Code § 50143(b) A written test shall not be treated as a qualified written test for purposes of subdivision (a) unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including the following:
(1)CA Financial Code § 50143(b)(1) Ethics.
(2)CA Financial Code § 50143(b)(2) Federal law and regulation relating to mortgage origination.
(3)CA Financial Code § 50143(b)(3) State law and regulation relating to mortgage origination.
(4)CA Financial Code § 50143(b)(4) Federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
(c)CA Financial Code § 50143(c) Nothing in this section shall prohibit a test provider approved by the Nationwide Mortgage Licensing System and Registry from providing a test at the location of the employer of the applicant or the location of any subsidiary or affiliate of the employer of the applicant, or the location of any entity with which the applicant holds an exclusive arrangement to conduct the business of a mortgage loan originator.
(d)Copy CA Financial Code § 50143(d)
(1)Copy CA Financial Code § 50143(d)(1) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than 75 percent of correct answers to questions.
(2)CA Financial Code § 50143(d)(2) An individual who fails the qualified written test may retake the test up to three consecutive times, although at least 30 days shall pass between each retesting.
(3)CA Financial Code § 50143(d)(3) An applicant who fails three consecutive retests shall wait at least six months before retesting.
(4)CA Financial Code § 50143(d)(4) A licensed mortgage loan originator who fails to maintain a valid license for a period of five years or longer shall retake the test, not taking into account any time during which the individual is a registered mortgage loan originator.
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(Amended by Stats. 2014, Ch. 123, Sec. 5. (SB 1459) Effective January 1, 2015.)

Section § 50144

Explanation

This law requires mortgage loan originators to renew their licenses by December 31 each year. To renew, they must meet specific standards, including continuing education and paying the renewal fees. If these conditions aren't met, the license expires on December 31. However, there's a process for possibly getting an expired license reinstated.

(a)CA Financial Code § 50144(a) A mortgage loan originator shall comply with the requirements of this section on or before December 31 of every year.
(b)CA Financial Code § 50144(b) The minimum standards for license renewal for mortgage loan originators shall include the following:
(1)CA Financial Code § 50144(b)(1) The mortgage loan originator continues to meet the minimum standards for license issuance under Section 50141.
(2)CA Financial Code § 50144(b)(2) The mortgage loan originator has satisfied the annual continuing education requirements described in Section 50145.
(3)CA Financial Code § 50144(b)(3) The mortgage loan originator, or the residential mortgage lender or servicer employing the mortgage loan originator, has paid all required fees for renewal of the license.
(4)CA Financial Code § 50144(b)(4) The license of a mortgage loan originator failing to satisfy the minimum standards for license renewal shall expire at midnight on December 31, except as provided in Section 50145. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the Nationwide Mortgage Licensing System and Registry.
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(Amended by Stats. 2010, Ch. 287, Sec. 13. (SB 1137) Effective January 1, 2011.)

Section § 50145

Explanation

If you are a licensed mortgage loan originator, you need to complete eight hours of continuing education every year. This education must cover three hours on federal law, two hours on ethics, two hours on lending standards for nontraditional mortgages, and one hour on California-specific law.

The courses have to be approved by the Nationwide Mortgage Licensing System and Registry (NMLS). Credit for courses can only be counted in the year they are taken, and you can't repeat the same course for credit in successive years.

Courses can be in-person or online. If you've taught an approved course, you get double the credit for the hours you teach. If you completed education requirements in another state, those might count here, too.

If you become unlicensed but plan to return, you must complete any pending education requirements from your last licensed year.

(a)CA Financial Code § 50145(a) A licensed mortgage loan originator shall complete at least eight hours of continuing education approved in accordance with subdivision (b). The continuing education shall include at least the following:
(1)CA Financial Code § 50145(a)(1) Three hours of instruction on federal law and regulations.
(2)CA Financial Code § 50145(a)(2) Two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues.
(3)CA Financial Code § 50145(a)(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.
(4)CA Financial Code § 50145(a)(4) One hour of training related to relevant California law and regulations.
(b)CA Financial Code § 50145(b) For purposes of subdivision (a), continuing education courses shall be reviewed and approved by the Nationwide Mortgage Licensing System and Registry. Review and approval of a continuing education course shall include review and approval of the course provider.
(c)CA Financial Code § 50145(c) Nothing in this section shall preclude any education course approved by the Nationwide Mortgage 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.
(d)CA Financial Code § 50145(d) Continuing education may be offered either in a classroom, online, or by any other means approved by the Nationwide Mortgage Licensing System and Registry.
(e)CA Financial Code § 50145(e) Except as provided in subdivision (i), a licensed mortgage loan originator:
(1)CA Financial Code § 50145(e)(1) May only receive credit for a continuing education course in the year in which the course is taken.
(2)CA Financial Code § 50145(e)(2) May not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(f)CA Financial Code § 50145(f) A licensed mortgage loan originator who is an approved instructor of an approved continuing education course may receive credit for the licensed mortgage loan originator’s own annual continuing education requirement at the rate of two hours credit for every one hour taught.
(g)CA Financial Code § 50145(g) A person who has successfully completed continuing education requirements approved by the Nationwide Mortgage Licensing System and Registry for any state other than California shall be granted credit toward completion of continuing education requirements in California.
(h)CA Financial Code § 50145(h) A licensed mortgage loan originator who subsequently becomes unlicensed shall complete the continuing education requirements for the last year in which the license was held prior to issuance of a new or renewed license.
(i)CA Financial Code § 50145(i) A person meeting the requirements of paragraphs (1) and (3) of subdivision (b) of Section 50144 may correct any deficiency in continuing education as established by rule or regulation of the commissioner.
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(Amended by Stats. 2014, Ch. 123, Sec. 6. (SB 1459) Effective January 1, 2015.)

Section § 50146

Explanation

This section outlines the commissioner's responsibility to ensure that mortgage loan originators are licensed and registered through a national system. The commissioner can set rules for background checks which may include looking into criminal, civil, administrative records, and credit history. They can also establish fees for licensing, set renewal dates, and manage changes to licenses as needed.

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 Mortgage Licensing System and Registry. In order to carry out this requirement the commissioner is authorized to participate in the Nationwide Mortgage 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)CA Financial Code § 50146(a) Background checks for:
(1)CA Financial Code § 50146(a)(1) Criminal history through fingerprint or other databases.
(2)CA Financial Code § 50146(a)(2) Civil or administrative records.
(3)CA Financial Code § 50146(a)(3) Credit history.
(4)CA Financial Code § 50146(a)(4) Any other information as deemed necessary by the Nationwide Mortgage Licensing System and Registry or the commissioner.
(b)CA Financial Code § 50146(b) The payment of fees to apply for or renew licenses through the Nationwide Mortgage Licensing System and Registry.
(c)CA Financial Code § 50146(c) The setting or resetting as necessary of renewal or reporting dates.
(d)CA Financial Code § 50146(d) Requirements for amending or surrendering a license or any other activities as the commissioner deems necessary for participation in the Nationwide Mortgage Licensing System and Registry.
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(Added by Stats. 2009, Ch. 160, Sec. 60. (SB 36) Effective October 11, 2009.)