CA SAFE Flashcards
What are the two laws that regulate mortgage licensees?
California Finance Lenders Law and California Residential Mortgage Lending Act
How many hours of pre-licensing education is required?
20 hours
How many hours of pre-licensing education is devoted to California-specific law?
2 hours
Who is the state regulator for Florida?
California Department of Business Oversight (DBO)
What two divisions fall under the Department of Business Oversight?
Department of Corporations and Department of Financial Institutions
Who heads the DBO?
The Commissioner
Who regulates banks, credit unions, and money transmitters
Division of Financial Institutions
Who regulates mortgage lenders, finance lenders, and MLOs?
Division of Corporations
What Division of the Financial Code can the Finance Lenders Law be found?
Division 9
Chapter One of the Finance Lenders Law describes what?
Licensing requirements and exemptions
Chapter Two of the Finance Lenders Law describes what?
Relevant to consumer loans
Chapter Three of the Finance Lenders Law describes what?
Relevant to commercial loans
Chapter Four of the Finance Lenders Law describes what?
Covers license revocation/suspension and penalties for violations
What are some of the purposes of the Finance Lenders Law?
- Ensure adequate supply of credit to borrowers
- Simplify, clarify, and modernize the law governing loans made by finance lenders
- Foster competition among finance lenders
- Protect borrowers from unfair practices
What Division of the California Financial Code can the Residential Mortgage Lending Act be found?
Division 20
The California Residential Mortgage Lending Act applies to who?
Non-depository lenders and loan services and to the MLOs they employ
The California Finance Lenders Law applies to who?
Regulates the lending activities of finance lenders and brokers
What are some examples of exemptions for an MLO license?
- An individual who performs administrative or clerical tasks only
- An individual who renegotiates terms for an existing mortgage loan
- An individual solely involved in extensions of credit related to timeshare plans
What are some examples of exemptions for a Residential Mortgage Lending Act license?
- A depository institutions
- An agency of the federal, state, or municipal government
- A person acting in a fiduciary capacity conferred by the authority of a court
What are some examples of exemptions for a Finance Lenders Law license?
- A check casher holding a valid permit
- College financial aid/scholarship
- A broker-dealer
MU1 Form
Identifies information about the entity’s executive officers and owners and info regarding criminal actions against the entity
MU2 Form
Biographical statement of each individual designated as a control person and info regarding criminal action
MU3 Form
Branch offices
MU4 Form
Applicants for MLO licenses, info and disclosures
Licensure for MLO fees
- Application fee - $330
- Criminal Background Check fee - $36.25
- Credit Report fee - $15
Sponsorship Request
MLOs must be sponsored by one company, the employer
An applicant may be denied a license if their personal history includes what?
- Any liens or judgments for fraud, misrepresentation, dishonest dealing, or mishandling of trust funds
- Other liens, judgments, or financial or professional conditions that indicate a pattern of dishonesty
Licensure under the Finance Lenders Law fees
Application fee - $400
How many days prior to conducting business in a new location must licensees submit an application for a branch office?
10 days prior
Who approves or denies applications for branch offices?
The Commissioner
What is the maximum amount of days the Commissioner can render a decision regarding an application for a branch office?
90 days
If the Commissioner denies the person chosen to oversee lending activity at a new branch office, how many days does the licensee have to submit a new application?
10 days
What must an individuals net worth be at a minimum?
$25,000
For a licensed finance lender or broker that makes residential mortgage loans and employs one or more MLOs, their net worth must be what?
$250k
For a licensed finance broker that arranges but does not make residential mortgage loans and employs one or more MLOs, their net worth must be what?
$50k
What is the minimum amount of surety bond? (general)
$25k
Under the Finance Lenders Law, how many days must a new bond be filed?
Within 10 days after payment on the existing bond or within 10 days after the Commissioner notifies the licensee of the need for a new bond
Licensure under the Residential Mortgage Lending Act fee
Application fee - $1,100
Under the RMLA, how many days must licensees submit their MU3 form before engaging business at a new branch location?
10 days
Statement of Financial Solvency
Must be submitted by applicants, demonstrates satisfaction of the net worth requirements
Under the RMLA, what net worth must applicants “continuously maintain?”
$250k
What must the surety bond be at a minimum under the RMLA?
$50k
Under the RMLA, how many days must a new bond be filed?
10 days
How many days must the Commissioner render a decision on a license application?
Within 60 days of the receipt of a complete application
After how many days of no response regarding a denied application will it be considered withdrawn?
90 days
How many hours of continuing education must licensees complete yearly?
8 hours
If information changes regarding a licensee, how many days must a licensee file an amendment?
Within 5 days of the change
A MLO must file changed information through the NMLS within how many days of the change?
Within 20 days
An MLO has how many days to file an amendment to terminate a relationship with an employer with the NMLS? How many days for a licensee to terminate the sponsorship of an employee?
15 days, 15 days
Under the Finance Lenders Law, within how many days must a licensee notify the Commissioner of a change of address?
Within 10 days prior to the change
If the Commissioner denies a change of address, how many days must they notify the licensee?
10 days
Under the Residential Mortgage Lending Act, how many days prior to opening a branch office or relocating must a licensee notify the Commissioner?
10 days
Under the RMLA, an amendment must be made within how many days of the filing of a material judgment against the licensee or of a bankruptcy petition filed by the licensee?
Within 5 days
If an MLO fails to renew their license by Dec. 31, when must a request for reinstatement be submitted by?
March 1
What must be completed by March 1 for reinstatement of a license to be considered?
All minimum requirements and fees
If a licensee no longer wants to maintain a license, what must they do?
File an application to surrender the license
What must be included when a license is surrendered (under the RMLA)?
- A proposal for the closing of the licensee’s residential mortgage lending or loan servicing business
- A detailed plan to compete any pending loan apps, a plan including transfer of pending apps
- A detailed plan to transfer existing portfolio, including timeline
- A time frame for payouts
- A closing audit
How long must records be kept?
36 months
Under the Residential Mortgage Lending Act, if the Commissioner requests records, how many days must licensees make records available?
Within 10 calendar days of the request or pay the reasonable costs for the travel out-of-state
How long does the Commissioner have authority to take control of a licensee’s records?
Up to 30 days
If the Commissioner places a rep. in control of books and records, what happens?
The license and its employees are forbidden from removing any documents except by court order - they have permission to access records unless the Commissioner believes records are at-risk of being altered
Under the Finance Lenders Law, licensees must product records within what time frame of a request?
48 hours
What are some documents that must be maintained under the FLL?
- Promissory note
- Loan app
- Payment record
- Escrow closing statement
- Insurance policies
What are some documents that must be maintained under the RMLA?
- General account records
- Trust accounts
- Loan log
- Mortgage app data
- Books and records
For the FLL, an annual report must be filed by what date?
March 15
For the RMLA, the annual report must be filed by what date?
March 1
RMLA - Licensee must file the certified audit report (CPA) with the Department within how many days of the end of their fiscal year?
105 days
Under both laws, any information included in an advertisement must be
Stated “fully and clearly”
Under both laws, what type of advertising is prohibited?
“Blind” advertising
What is “blind” advertising?
Any advertisement used to solicit business that provides only a telephone number, post office box number, or a name other than the licensee’s name
(FLL) Copies of advertisements must be maintained for how long?
Two years from the date of use
What language must be included on advertisements (FLL)?
“Loans made or arranged pursuant to a California Finance Lenders Law license” plus the unique identifier
(RMLA) Copes of advertisements must be maintained for how long?
At least 90 days from the date of use
(RMLA) What language must be included on advertisements?
“Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act”
Examinations
- FLL?
- RMLA?
FLL - periodic exams
RMLA - every 48 months
(FLL) Licensees may not charge what type of fees unless such services are actually performed?
“Brokerage” services
A licensee may also not pay any compensation to who?
To an unlicensed person for the solicitation or acceptance of apps
Under the RMLA, a licensee may only charge what fees prior to closing?
- Actual charges incurred by the licensee on behalf of the borrower for third-party services
- An app fee
- A rate-lock fee (if there is a written agreement)
- A commitment fee upon approval of app
(RMLA) If a licensee has performed its obligations under law, when must all fees or charges, other than appropriate third-party fees and app fee, be refunded?
When a valid commitment or closing does not occur
A licensee may retain appropriate fees if what occurs (RMLA)?
- The borrower withdraws app
- The borrower made a material misrepresentation or omission on the app
- The borrower failed to provide docs necessary for the processing or closing of the loan app
- The closing failed to occur due to the fault of the borrower
Lenders licensed under the Residential Mortgage Lending Act cannot provide brokerage services without offering what?
A loan brokerage agreement
When must lenders offer a loan brokerage agreement?
“As soon as practical” after a borrower asks them to arrange a loan from another lender
After the loan brokerage agreement is executed, how long does the lender have to give it to the borrower?
Within three business days
What are some examples of prohibited conduct listed under the Finance Lenders Law?
- Making a materially false or misleading statement
- Engaging in unfair competition
- Committing an act of fraud
- Entering into a transaction involving a residential real property in foreclosure if the transaction takes unconscionable advantage of the owner of the property in foreclosure
Business may not be conducted in any place not authorized by the Commissioner except when…?
- The borrower requests, either orally or in writing
- The licensee makes a solicitation for or makes an offer of a loan online and a borrower transmits info to the licensee in connection that offer
What are some examples of prohibited conduct listed under the Residential Mortgage Lending Act?
- conducting business with unlicensed MLOs
- Changing a borrower’s fees prior to closing
- Conducting business under a name other than the name that appears on the license
- Failing to disburse funds in accordance with an agreement
Who has rulemaking and adjudicative powers in California in regards to lenders and brokers?
The Department of Business Oversight
The Commissioner has authority to…?
- Deny, suspend, revoke, renew a license
- Order restitution
- Impose fines, up to $25,000 for each violation of the law if the Commissioner finds, after a hearing, that violations have occurred
- Order a licensee to cease and desist
- Conduct investigations and examinations
From the time a cease and desist order is issued, how many days do licensees have to request a hearing?
Thirty days from the date an order is served
Under the Finance Lenders Law, what is the timeframe for a hearing to occur once it is requested?
Thirty days from the request
Under the Residential Mortgage Lending Act, what is the timeframe for a hearing to occur once it is requested?
Sixty days from the request
If a citation is written, what is the max fine that can be imposed on the licensee?
$2,500
When will a citation be deemed final?
If the licensee does not notify the Department within thirty days of their intent to request a hearing
What is the maximum timeframe that the Commissioner may suspend a license?
No more than 12 months
How many days can licensees request a hearing after receiving notice that their license will be suspended?
15 days
After receiving a hearing request, how many days does the Commissioner have to schedule the hearing?
Within thirty days
(RMLA) If a licensee fails to file any required report within ten days of the due date, the Commissioner has the right to do what?
Impose a $100 fine per day for up to ten days
Under what act does the Commissioner have the right to order anyone in possession of trust funds to discontinue disbursement of funds?
Residential Mortgage Lending Act
What is the maximum civil penalty?
$2,500/violation
Nothing in the law prevents a private citizen from doing what?
Filing suit and collecting additional damages
