Mortgage lending.

(1) Existing law, the Real Estate Law, provides for the licensure and regulation of real estate brokers and real estate salespersons by the Real Estate Commissioner and makes a willful violation of its provisions a crime. Existing law makes it unlawful for a real estate broker to employ or compensate, directly or indirectly, any unlicensed person for performing any acts for which a real estate broker or real estate salesperson license is required. Existing law makes it a crime for a person to act as a real estate broker or real estate salesperson, or to advertise themselves as a real estate broker, without having a license. This bill would make it unlawful for a real estate broker to employ or compensate, directly or indirectly, any licensee for engaging in any activity for which a mortgage loan originator license endorsement is required if that licensee does not hold a mortgage loan originator license endorsement. The bill would make it a crime for a person to act as a mortgage loan originator without a license endorsement or to advertise using words indicating the person is a real estate salesperson or a mortgage loan originator without having a license or license endorsement. The bill would also authorize the commissioner to deny, suspend, revoke, restrict, condition, or decline to renew a mortgage loan originator license endorsement, or take other actions, after notice and opportunity for a hearing, under specified conditions. Existing law requires a real estate broker who acts, as specified, to make, arrange, or service loans secured by real property containing one to 4 residential units, and any real estate person who acts in a similar capacity under the supervision of the broker, to notify the Department of Real Estate within 30 days of commencing that activity. Existing law makes a real estate broker that fails to notify the department subject to specified penalties and authorizes the commissioner to suspend or revoke the license of the real estate broker. This bill would specify that these penalties also apply to a real estate salesperson who fails to notify the commissioner within 30 days of commencing those activities. Because a willful violation of these provisions would be a crime, the bill would impose a state-mandated local program. (2) Existing law provides for the licensure and regulation of finance lenders and brokers, residential mortgage lenders and servicers, and mortgage loan originators by the Department of Corporations. The California Finance Lenders Law requires a licensed finance lender or broker employing one or more mortgage loan originators to continuously maintain a minimum net worth of $250,000. This bill would, instead, require a licensed finance lender or broker that employs one or more mortgage loan originators and that makes residential mortgage loans to continuously maintain that net worth of $250,000 and would require a licensed finance broker that employs one or more mortgage loan originators and that arranges, but does not make, residential mortgage loans, to continuously maintain a net worth of $50,000. Existing law requires each finance lender and broker licensee to pay to the commissioner its pro rata share of all costs and expenses associated with the administration of the California Finance Lenders Law. Existing law requires the commissioner to notify a licensee, on or before the 30th day of November in each year, the amount levied against it for its pro rata share of those costs and requires a licensee to pay that amount by December 31. This bill would, instead, require the commissioner to notify each finance lender and broker licensee by the 30th day of September in each year and would require a licensee to pay by October 31. Existing law requires each finance lender and broker licensee to maintain a surety bond in a minimum amount of $25,000. Existing law authorizes the commissioner to, by rule, require a higher bond amount for a licensee employing one or more mortgage loan originators. This bill would, instead, authorize the commissioner to, by rule, require a higher bond amount for a licensee who employs one or more mortgage loan originators and who makes or arranges residential mortgage loans. The California Finance Lenders Law and the California Residential Mortgage Lending Act prohibit the commissioner from issuing a mortgage loan originator license unless the commissioner makes specified findings relating to the background, financial responsibility, and education of the applicant. Those laws also require a mortgage loan originator to comply with specified minimum standards by December 31 of each year and require a mortgage loan originator license to expire at midnight on January 31 if the licensee fails to satisfy those standards. This bill would, instead, require the commissioner to deny an application for a mortgage loan originator license unless the commissioner makes those specified findings and would require the commissioner, before denying an application for licensure, to proceed pursuant to specified administrative hearing procedures. The bill would also require a mortgage loan originator license to expire at midnight on December 31, instead of January 31, if a licensee fails to satisfy the minimum standards. Existing law defines the term "brokerage services" for purposes of the California Residential Mortgage Lending Act. This bill would correct an erroneous cross-reference in the provisions defining "brokerage services." (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.