CA SAFE Flashcards

1
Q

What are the two laws that regulate mortgage licensees?

A

California Finance Lenders Law and California Residential Mortgage Lending Act

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2
Q

How many hours of pre-licensing education is required?

A

20 hours

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3
Q

How many hours of pre-licensing education is devoted to California-specific law?

A

2 hours

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4
Q

Who is the state regulator for Florida?

A

California Department of Business Oversight (DBO)

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5
Q

What two divisions fall under the Department of Business Oversight?

A

Department of Corporations and Department of Financial Institutions

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6
Q

Who heads the DBO?

A

The Commissioner

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7
Q

Who regulates banks, credit unions, and money transmitters

A

Division of Financial Institutions

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8
Q

Who regulates mortgage lenders, finance lenders, and MLOs?

A

Division of Corporations

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9
Q

What Division of the Financial Code can the Finance Lenders Law be found?

A

Division 9

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10
Q

Chapter One of the Finance Lenders Law describes what?

A

Licensing requirements and exemptions

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11
Q

Chapter Two of the Finance Lenders Law describes what?

A

Relevant to consumer loans

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12
Q

Chapter Three of the Finance Lenders Law describes what?

A

Relevant to commercial loans

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13
Q

Chapter Four of the Finance Lenders Law describes what?

A

Covers license revocation/suspension and penalties for violations

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14
Q

What are some of the purposes of the Finance Lenders Law?

A
  1. Ensure adequate supply of credit to borrowers
  2. Simplify, clarify, and modernize the law governing loans made by finance lenders
  3. Foster competition among finance lenders
  4. Protect borrowers from unfair practices
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15
Q

What Division of the California Financial Code can the Residential Mortgage Lending Act be found?

A

Division 20

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16
Q

The California Residential Mortgage Lending Act applies to who?

A

Non-depository lenders and loan services and to the MLOs they employ

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17
Q

The California Finance Lenders Law applies to who?

A

Regulates the lending activities of finance lenders and brokers

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18
Q

What are some examples of exemptions for an MLO license?

A
  1. An individual who performs administrative or clerical tasks only
  2. An individual who renegotiates terms for an existing mortgage loan
  3. An individual solely involved in extensions of credit related to timeshare plans
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19
Q

What are some examples of exemptions for a Residential Mortgage Lending Act license?

A
  1. A depository institutions
  2. An agency of the federal, state, or municipal government
  3. A person acting in a fiduciary capacity conferred by the authority of a court
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20
Q

What are some examples of exemptions for a Finance Lenders Law license?

A
  1. A check casher holding a valid permit
  2. College financial aid/scholarship
  3. A broker-dealer
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21
Q

MU1 Form

A

Identifies information about the entity’s executive officers and owners and info regarding criminal actions against the entity

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22
Q

MU2 Form

A

Biographical statement of each individual designated as a control person and info regarding criminal action

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23
Q

MU3 Form

A

Branch offices

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24
Q

MU4 Form

A

Applicants for MLO licenses, info and disclosures

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25
Q

Licensure for MLO fees

A
  1. Application fee - $330
  2. Criminal Background Check fee - $36.25
  3. Credit Report fee - $15
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26
Q

Sponsorship Request

A

MLOs must be sponsored by one company, the employer

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27
Q

An applicant may be denied a license if their personal history includes what?

A
  1. Any liens or judgments for fraud, misrepresentation, dishonest dealing, or mishandling of trust funds
  2. Other liens, judgments, or financial or professional conditions that indicate a pattern of dishonesty
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28
Q

Licensure under the Finance Lenders Law fees

A

Application fee - $400

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29
Q

How many days prior to conducting business in a new location must licensees submit an application for a branch office?

A

10 days prior

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30
Q

Who approves or denies applications for branch offices?

A

The Commissioner

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31
Q

What is the maximum amount of days the Commissioner can render a decision regarding an application for a branch office?

A

90 days

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32
Q

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?

A

10 days

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33
Q

What must an individuals net worth be at a minimum?

A

$25,000

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34
Q

For a licensed finance lender or broker that makes residential mortgage loans and employs one or more MLOs, their net worth must be what?

A

$250k

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35
Q

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?

A

$50k

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36
Q

What is the minimum amount of surety bond? (general)

A

$25k

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37
Q

Under the Finance Lenders Law, how many days must a new bond be filed?

A

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

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38
Q

Licensure under the Residential Mortgage Lending Act fee

A

Application fee - $1,100

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39
Q

Under the RMLA, how many days must licensees submit their MU3 form before engaging business at a new branch location?

A

10 days

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40
Q

Statement of Financial Solvency

A

Must be submitted by applicants, demonstrates satisfaction of the net worth requirements

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41
Q

Under the RMLA, what net worth must applicants “continuously maintain?”

A

$250k

42
Q

What must the surety bond be at a minimum under the RMLA?

A

$50k

43
Q

Under the RMLA, how many days must a new bond be filed?

A

10 days

44
Q

How many days must the Commissioner render a decision on a license application?

A

Within 60 days of the receipt of a complete application

45
Q

After how many days of no response regarding a denied application will it be considered withdrawn?

A

90 days

46
Q

How many hours of continuing education must licensees complete yearly?

A

8 hours

47
Q

If information changes regarding a licensee, how many days must a licensee file an amendment?

A

Within 5 days of the change

48
Q

A MLO must file changed information through the NMLS within how many days of the change?

A

Within 20 days

49
Q

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?

A

15 days, 15 days

50
Q

Under the Finance Lenders Law, within how many days must a licensee notify the Commissioner of a change of address?

A

Within 10 days prior to the change

51
Q

If the Commissioner denies a change of address, how many days must they notify the licensee?

A

10 days

52
Q

Under the Residential Mortgage Lending Act, how many days prior to opening a branch office or relocating must a licensee notify the Commissioner?

A

10 days

53
Q

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?

A

Within 5 days

54
Q

If an MLO fails to renew their license by Dec. 31, when must a request for reinstatement be submitted by?

A

March 1

55
Q

What must be completed by March 1 for reinstatement of a license to be considered?

A

All minimum requirements and fees

56
Q

If a licensee no longer wants to maintain a license, what must they do?

A

File an application to surrender the license

57
Q

What must be included when a license is surrendered (under the RMLA)?

A
  1. A proposal for the closing of the licensee’s residential mortgage lending or loan servicing business
  2. A detailed plan to compete any pending loan apps, a plan including transfer of pending apps
  3. A detailed plan to transfer existing portfolio, including timeline
  4. A time frame for payouts
  5. A closing audit
58
Q

How long must records be kept?

A

36 months

59
Q

Under the Residential Mortgage Lending Act, if the Commissioner requests records, how many days must licensees make records available?

A

Within 10 calendar days of the request or pay the reasonable costs for the travel out-of-state

60
Q

How long does the Commissioner have authority to take control of a licensee’s records?

A

Up to 30 days

61
Q

If the Commissioner places a rep. in control of books and records, what happens?

A

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

62
Q

Under the Finance Lenders Law, licensees must product records within what time frame of a request?

A

48 hours

63
Q

What are some documents that must be maintained under the FLL?

A
  1. Promissory note
  2. Loan app
  3. Payment record
  4. Escrow closing statement
  5. Insurance policies
64
Q

What are some documents that must be maintained under the RMLA?

A
  1. General account records
  2. Trust accounts
  3. Loan log
  4. Mortgage app data
  5. Books and records
65
Q

For the FLL, an annual report must be filed by what date?

A

March 15

66
Q

For the RMLA, the annual report must be filed by what date?

A

March 1

67
Q

RMLA - Licensee must file the certified audit report (CPA) with the Department within how many days of the end of their fiscal year?

A

105 days

68
Q

Under both laws, any information included in an advertisement must be

A

Stated “fully and clearly”

69
Q

Under both laws, what type of advertising is prohibited?

A

“Blind” advertising

70
Q

What is “blind” advertising?

A

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

71
Q

(FLL) Copies of advertisements must be maintained for how long?

A

Two years from the date of use

72
Q

What language must be included on advertisements (FLL)?

A

“Loans made or arranged pursuant to a California Finance Lenders Law license” plus the unique identifier

73
Q

(RMLA) Copes of advertisements must be maintained for how long?

A

At least 90 days from the date of use

74
Q

(RMLA) What language must be included on advertisements?

A

“Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act”

75
Q

Examinations

  • FLL?
  • RMLA?
A

FLL - periodic exams

RMLA - every 48 months

76
Q

(FLL) Licensees may not charge what type of fees unless such services are actually performed?

A

“Brokerage” services

77
Q

A licensee may also not pay any compensation to who?

A

To an unlicensed person for the solicitation or acceptance of apps

78
Q

Under the RMLA, a licensee may only charge what fees prior to closing?

A
  1. Actual charges incurred by the licensee on behalf of the borrower for third-party services
  2. An app fee
  3. A rate-lock fee (if there is a written agreement)
  4. A commitment fee upon approval of app
79
Q

(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?

A

When a valid commitment or closing does not occur

80
Q

A licensee may retain appropriate fees if what occurs (RMLA)?

A
  1. The borrower withdraws app
  2. The borrower made a material misrepresentation or omission on the app
  3. The borrower failed to provide docs necessary for the processing or closing of the loan app
  4. The closing failed to occur due to the fault of the borrower
81
Q

Lenders licensed under the Residential Mortgage Lending Act cannot provide brokerage services without offering what?

A

A loan brokerage agreement

82
Q

When must lenders offer a loan brokerage agreement?

A

“As soon as practical” after a borrower asks them to arrange a loan from another lender

83
Q

After the loan brokerage agreement is executed, how long does the lender have to give it to the borrower?

A

Within three business days

84
Q

What are some examples of prohibited conduct listed under the Finance Lenders Law?

A
  1. Making a materially false or misleading statement
  2. Engaging in unfair competition
  3. Committing an act of fraud
  4. 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
85
Q

Business may not be conducted in any place not authorized by the Commissioner except when…?

A
  1. The borrower requests, either orally or in writing
  2. 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
86
Q

What are some examples of prohibited conduct listed under the Residential Mortgage Lending Act?

A
  1. conducting business with unlicensed MLOs
  2. Changing a borrower’s fees prior to closing
  3. Conducting business under a name other than the name that appears on the license
  4. Failing to disburse funds in accordance with an agreement
87
Q

Who has rulemaking and adjudicative powers in California in regards to lenders and brokers?

A

The Department of Business Oversight

88
Q

The Commissioner has authority to…?

A
  1. Deny, suspend, revoke, renew a license
  2. Order restitution
  3. Impose fines, up to $25,000 for each violation of the law if the Commissioner finds, after a hearing, that violations have occurred
  4. Order a licensee to cease and desist
  5. Conduct investigations and examinations
89
Q

From the time a cease and desist order is issued, how many days do licensees have to request a hearing?

A

Thirty days from the date an order is served

90
Q

Under the Finance Lenders Law, what is the timeframe for a hearing to occur once it is requested?

A

Thirty days from the request

91
Q

Under the Residential Mortgage Lending Act, what is the timeframe for a hearing to occur once it is requested?

A

Sixty days from the request

92
Q

If a citation is written, what is the max fine that can be imposed on the licensee?

A

$2,500

93
Q

When will a citation be deemed final?

A

If the licensee does not notify the Department within thirty days of their intent to request a hearing

94
Q

What is the maximum timeframe that the Commissioner may suspend a license?

A

No more than 12 months

95
Q

How many days can licensees request a hearing after receiving notice that their license will be suspended?

A

15 days

96
Q

After receiving a hearing request, how many days does the Commissioner have to schedule the hearing?

A

Within thirty days

97
Q

(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?

A

Impose a $100 fine per day for up to ten days

98
Q

Under what act does the Commissioner have the right to order anyone in possession of trust funds to discontinue disbursement of funds?

A

Residential Mortgage Lending Act

99
Q

What is the maximum civil penalty?

A

$2,500/violation

100
Q

Nothing in the law prevents a private citizen from doing what?

A

Filing suit and collecting additional damages