Current through Register 2022 Notice Reg. No. 16, April 25, 2022 Show
These instructions have been prepared as an aid to licensees and their independent certified public accountants in the preparation of the audit report to be filed with the Department pursuant to Section 50200 of the California Residential Mortgage Lending Act [Division 20 (commencing with Section 50000), Financial Code.] A.In General. This report should be filed with the office of the Department with which the residential mortgage lender or residential mortgage loan servicer ordinarily transacts its business within 105 days of the end of the licensee's fiscal year. B.Internal Control The independent certified public accountant must provide a description of the system of internal control used by the residential mortgage lender or residential mortgage loan servicer, including material weaknesses in internal accounting controls, recommendations for improvements, and comments concerning corrective actions taken or in process. C.The independent certified public accountant's opinion, the Statement of Financial Position, the Statement of Income and the Statement of Cash Flows, including any footnotes that are an integral part of those statements, are public records except as provided in Section 250.10, Title 10, California Code of Regulations. Other information required in the report will be considered confidential information and should be submitted as a separate report or in such a manner as to be easily separated from the Statement of Financial Position, Statement of Income and the Statement of Cash Flows. NotesCal. Code Regs. Tit. 10, § 1950.200 Note: Authority cited: Section 50304, Financial Code. Reference: Section 50200, Financial Code. 1. New article 4 (section 1950.200) and section filed 11-25-96; operative 12-25-96 (Register 96, No. 48). The following state regulations pages link to this page. State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
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California License Law and Regulation (25%) The Residential Mortgage Lending Act Terms in this set (78)The NMLS processing fees are the same for every state, and they are: • $100 for mortgage company applications The Residential Mortgage Lending Act The law applies to non-depository lenders, loan servicers, and to the Mortgage Loan Originators that they employ. Licensed Individuals and Entities Under the RMLA include: • Mortgage Lenders Activities Requiring a License Pursuant to the CMLRA, the following mortgage-related activities require a license before a person may engage in them: Making Residential Mortgage Loans or Mortgage Lending: Processing or underwriting a mortgage loan or advancing one's own funds to a loan applicant. Servicing: Receiving more than 3 payments of principal, interest, or escrow payments for taxes & insurance according to the terms of a mortgage lending agreement & performing other services as required by the holder of the note related to the mortgage loan. Buying or Selling Mortgage Loans: The RMLA gives Licensed Mortgage Lenders & Servicers authority to engage as a principal in buying Residential Mortgage Loans from an investor or selling them to an investor. Brokering Mortgage Loans: Although the RMLA does not offer a Mortgage Broker License, it allows Licensed Mortgage Lenders to broker loans if they: Exemptions Each of the following lending institutions and individuals is exempt from the licensing requirements that apply to lenders and servicers under the CRMLA Federal and State-Chartered Institutions: Banks, trust companies, insurance companies, & industrial loan companies that are licensed, certified, or chartered by the United States or by any state or territory authorized to do business in California Federal and State-Chartered Depository Institutions: Savings and Loan companies, Savings Banks, & Credit Unions that are Federally Chartered or that are organized under the laws of any state authorized to do business in California Wholly Owned Service Corporations of Exempt Entities: Wholly owned service corporations of Savings Banks & of Savings & Loan Associations that are Federally chartered or that are organized under the laws of any state authorized to do business in California Pension Plan Lenders: An employer or employee pension plan making Residential Mortgage Loan only to its participants Court-Appointed Fiduciaries: An individual or business entity acting in a fiduciary capacity as conferred by a court Real Estate Brokers: A Real Estate Broker licensed under California law However, California-licensed Real Estate Brokers who also arrange, sell, or service mortgage loans must obtain a Mortgage Loan Originator License under the California Real Estate Law Licensees Under the Finance Lenders Law: A California Finance Lender or Broker that is licensed under the Finance Lenders Law & that is acting under the authority of that license Foreclosure Trustees: A trustee under a deed of trust, collecting delinquent payments, or performing other acts related to a foreclosure proceeding Registered Mortgage Loan Originators: • Mortgage Loan Originators who are employed & supervised by depository institutions or by subsidiaries of depository institutions, as long as these institutions & their subsidiaries are regulated by the Federal Banking Agencies or the Farm Credit Administration Filing Initial Applications For a License Filing Initial Applications For a License Application Fees •$1,100 for Lender & Mortgage Servicer Applications The primary purpose of licensing laws is to ensure that license applicants are Ethically, financially, & professionally qualified to serve consumers. Background checks, fingerprints, & disclosures regarding past or pending criminal, civil, or regulatory actions are the tools used for determining whether a license applicant is: Ethically fit to obtain a license as a lender or a mortgage servicer from California's Department of Corporations. The California Residential Mortgage Lending Act requires fingerprints from all of the following individuals: • Partners, if the applicant is a partnership Applicants must establish their creditworthiness with the submission of: • A statement of financial solvency The California Residential Mortgage Lending Act requires Lenders & Mortgage Servicers to secure & maintain a surety bond of: $50,000 After initial licensure, the bond amount is based on the amount of origination &/or servicing activities conducted by the licensee in the preceding calendar year. The requirements are as follows: • $0- $50,000,000 in loans: $50,000 bond amount The Residential Mortgage Lending Act requires Lenders & Mortgage Servicers to "continuously maintain" a minimum net worth of: $250,000 Grounds for Denying Lender or Servicer Applications Grounds for Denying Lender or Servicer Applications
Failure to Comply with the Law: Failure to operate in compliance with the California Residential Mortgage Lending Act or with regulations or orders of the Commissioner is sufficient grounds, under the law, for the Department to refuse to issue a license. Deficiencies in the Application: Any of the following deficiencies in an application is legal basis for
the Department to deny an application: Criminal Violations: If the applicant or an officer, director, general partner, or a person with a 10% or greater interest in the company has, within the past 10 years been convicted of or pled no contest to a crime or committed acts of fraud, dishonesty, or deceit, the Department may deny the application after providing the applicant with an opportunity to defend the application in a hearing before the Commissioner. Regulatory Violations: If the applicant or an officer, director, general partner, or a person with a 10% or greater interest in the company has violated the California Residential Mortgage Lending Act or similar laws in any other jurisdiction, the Department may deny the application after providing the applicant with an opportunity to defend the application in a hearing before the Commissioner. Employment of an Unlicensed Mortgage Loan Originator: Unless the Mortgage Loan Originator is exempt from licensing requirements, the Commissioner may deny a license application on these grounds. The Commissioner will issue a decision on a license application within... • 60 days of the receipt of a complete application. License Maintenance & Notification Requirements License Maintenance & Notification Requirements Licenses issued for Lenders & Mortgage Servicers under the California Residential Mortgage Lending Act are NOT subject to renewal requirements. These licenses are valid until they are surrendered, suspended, or revoked. In order to maintain a license it is necessary to... Pay annual assessments, submit to examinations by the Commissioner, & meet notice, reporting, & record-keeping requirements. Affirmative duties that licensees must meet in order to maintain their licenses: • Maintain adequate staff to meet the requirements of
the law Notification Requirements As participants in the NMLS system, licensees must submit most notifications to the NMLS as changes to their initial applications. Five Days' Notice: Licensees must submit an amendment to their applications to notify the Commissioner of a judgment filed against them or of a bankruptcy petition filed by them Licenses must provide the Commissioner w/ prior written notice of: • Material Changes: Any material change in the information in the application, including a change in the plan of operation requires prior
approval. Licensees must submit this information as an amendment to the license, & the Commissioner will give approval or disapproval of the change within 20 days of receipt of the proposed amendment. There are two situations in which licenses must not only provide notice to the Department
of Corporations, but ALSO offer additional information that will allow the Commissioner to approve a change. • Change in Control Change in Control Prior to a change in control, the person who wants to acquire control must submit an application and a $100 investigation fee to the DOC. If denied the applicant is required, by law, to immediately discontinue any activities regulated under the RMLA If a licensed mortgage lender no longer wishes to conduct business or to maintain a license to conduct business, it is necessary to provide the DOC with: • Written notice of the licensee's intent to discontinue business Annual Assessments and Reports Annual Assessments and Reports Licensed Lenders & Mortgage Servicers are required to pay • An annual assessment to the Department of Corporations. In calculating the amount of funds that it needs to collect from its licensees, the Department must consider: • Funds Received from the State Corporations Fund: These are funds used for the administrative & operating costs of the DOC, & the source of the funds includes licensing fees After calculating the amount of assessments that it needs to receive, the Department will charge Lenders & Mortgage Servicers the lesser of: • Their pro rata share of the expenses that the Commissioner expects to incur in the current fiscal year, with the
licensee's Annual Financial Reports used to calculate their pro rata shares On Sept 30th of each year, the Commissioner will notify • Each lender & Mortgage Servicer of its assessment. Annual Financial Report • On March 1st of each year, licensees must submit an annual financial report that provides the Department with the info that it needs to calculate each licensee's pro rata share of the Department's expenses. Reports of Condition •The Commissioner may require licensees employing one or more mortgage loan originators to submit "reports of condition" to the NMLS. Audit Report At the end of each fiscal year, but not more than 12 months after the last audit conducted pursuant to this section, Lenders & Mortgage Servicers must engage the services of a CPA to conduct an audit of their books & accounts. Licensees must file the certified audit report within 105 days of the end of their fiscal year. Consequences of failing to file the audit report include: • The selection, by the Commissioner of a CPA to conduct the audit at
the licensee's expense The Commissioner may also reject an audit report by: • Providing notice of the rejection & a statement of the reason(s) for the rejection Examinations and Recordkeeping Requirements Examinations and Recordkeeping Requirements The Residential Mortgage Lending Act requires the Commissioner to conduct an examination of every Lender & Mortgage Servicer at least once every... 48 months. The Commissioner also has authority, under the law, to conduct more frequent examinations. Licensees are required to pay for the costs of their examinations. The examinations may include: • An examination of licensees' books, records, & documents If the licensee has a location outside of the state, it must pay... The reasonable costs for travel, meals, & lodging that a representative of the DOC incurs while conducting the out-of-state examination. After completion of the examination, the Commissioner must provide a written report of the findings of the examination, & provide a copy of the report to... The principals, officers, &/or directors of each licensee, & take steps to ensure that licensees correct any violations that they have made of the RMLA Under the RMLA, the retention period for records maintained by Lenders and Mortgage Servicers is... 3 years Location of books, records, & files outside of the State of California, must be available to the Commissioner within 10 days of request Prohibited Practices The following acts & practices are prohibited under the RMLA & committing any of these acts or practices can lead to license suspension or revocation Engaging in the business of a lender or a mortgage servicer without A License Conducting Business with Unlicensed Mortgage Originators including: • Employing or compensating a Mortgage Loan Originator who is not
licensed Using an Unlicensed Name: Conducting the business of a Residential Mortgage Lender or Servicer under a name other than the name that appears on the license Improperly Disbursing Funds: • Disbursing mortgage loan proceeds into the borrower's account in a form other than direct deposit, wire, certified check, ACH funds transfer, or attorney's check from a trust account without applying to the Commissioner for a waiver of these procedures & a request to use another method of disbursement Making Loans Beyond the Parameters of the License: • Making or serving a loan that is not a Residential Mortgage Loan Using Predatory Practices including: • Accepting fees at closing that are not listed on the HUD-1 Settlement Statement Violating the California Civil Code
• Violating CA laws that determine when interest begins to accrue
Violating the California Business & Professions Code • Use of unfair business practices, including deceptive, untrue, or misleading advertising
Penalties CRMLA authorizes the Commissioner to impose penalties on Lenders, Servicers, & on Mortgage Loan Originators after the licensee has an opportunity for a hearing to address alleged violations of the law, regulations, and/or orders of Commissioner The maximum penalty for a violation is... $25,000. Each failure to comply w/ the law, regulation, or order is a separate violation & is subject to a separate penalty. California Fair Lending Law, CFL regulation California Health and Safety Code §§35800 through 35833 are known as CFL regulation. California Finance Lenders Law all
of the following for business licensees State Regulatory Registry LLC (SRR) It was established on September 21, 2006 by American Association of Residential Mortgage Regulators and The Conference of State Bank Supervisors (CSBS). mortgage broker license surety bond of $25,000, and tangible net worth of at least $250k MLO pardoned conviction Residential Mortgage Loan Report filed by the real estate broker with the MLO license endorsement no later than March 31 of calendar year. Form RE 857 - Residential Mortgage Loan Report is required by law. The report must be filed no later than March 31 following the calendar year for which the loan data is compiled Sets with similar termsCA State License Exam77 terms amalco2 insurance regulation43 terms catherinepaige Ch 5 + 639 terms popethrill Lesson 1: Louisiana Insurance Regulation72 terms deborah_cannon4 Sets found in the same folderCalifornia Mortgage Exam66 terms joey_queentry Federal Mortgage-Related Laws100 terms Joshua_Bordo Quiz Mod 2 Gtwn 20 hr Course Mod 29 terms quizlette7084835 California Mortgage Lending Licensing119 terms zane1123 Other sets by this creatorCombo with "California Law and Regulation Definiti…38 terms ellie_farhangfar CA Law and Regulation2 terms ellie_farhangfar Loan packaging12 terms ellie_farhangfar Chpt 3- Loan program29 terms ellie_farhangfar Other Quizlet setsSLHS115 Ch 8 - Fluency Disorders42 terms Robustelli104 Women's Health Exam 2 (Units 6-11)101 terms taylor_goodman11 CPPH Exam 1 - Wk 243 terms ashlee_gambacorta Quiz 320 terms BriannaGirod1 Related questionsQUESTION What are the three things an appellate court can do? 8 answers QUESTION Unit of molecular mass. Defined as one-twelfth the mass of an atom of carbon 12 (1.66 × 10-24 g); approximately equal to the mass of a hydrogen atom. 4 answers QUESTION Not happy with ESRB so enacted new code; mandates labeling for violent games; prohibited sale or rental of a video game that had been labeled violent to a minor; violent games needed solid white "18" [label] outlined in black 2 answers QUESTION Does a decision rendered by a California Superior Court apply to the public as a whole? 5 answers When the financing law or the Residential mortgage Lending Act refers to the commissioner to whom is it referring California?When the Financing Law or the Residential Mortgage Lending Act refers to the Commissioner, to whom is it referring? The Commissioner of the Department of Business Oversight.
Which of the following regulations regulates California mortgage originators?Any person who provides services as a mortgage loan originator (MLO) in California under the California Finance Law (CFL) or the California Residential Mortgage Lending Act (CRMLA) must apply for and receive a mortgage loan originator license.
What is the California Residential mortgage Lending Act?The CRMLA authorizes licensees to make federally related mortgage loans, to make loans to finance the construction of a home, to sell the loans to institutional investors, and to service such loans.
Who regulates mortgage lenders in California?California mortgage licensing : CA has 2 regulatory agencies. CA Department of business oversight and CA Bureau of Real Estate.
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