Mortgage loan originators.

(1) Existing law, the California Finance Lenders Law, provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Corporations. Existing law, the California Residential Mortgage Lending Act, prohibits a person from engaging in the business of making residential mortgage loans or servicing residential mortgage loans in the state without a license from the commissioner. Existing law defines a "mortgage loan originator" and specifies individuals who are not mortgage loan originators, and defines other terms for purposes of the law and the act. The willful violation of the law or the act is a crime. This bill would provide that a government employee and an employee of a nonprofit organization who originate loans exclusively in their capacity as an employee, under certain conditions as specified, are not mortgage loan originators under the California Finance Lenders Law or the California Residential Mortgage Lending Act. (2) Existing law prohibits a person from engaging in the business of a finance lender or broker without obtaining a license from the commissioner. This bill would prohibit an individual from engaging in the business of a mortgage loan originator with respect to any dwelling in this state without obtaining and maintaining annually a license from the commissioner. The bill would exempt a registered mortgage loan originator, as defined, from this licensure requirement when he or she is employed by a depository institution or an affiliated company, as specified, or an institution regulated by the Farm Credit Administration. (3) Existing law authorizes the commissioner to order an unlicensed person who is engaged in business as a broker or finance lender, or a licensee who is violating the Finance Lenders Law, to desist from engaging in that business or violating the law, as specified. The bill would also authorize the commissioner to order an unlicensed person engaged in the business of a mortgage loan originator or a licensed mortgage loan originator to desist from violating these provisions. The bill would prohibit a person engaged in the business of making or brokering residential mortgage loans or the business of a mortgage loan originator from paying, receiving any compensation, as specified, for performing services in violation of these provisions. (4) Under existing law an employee of a licensed residential mortgage lender or licensed mortgage loan originator or of an exempt person is not required to be licensed when acting within the scope of his or her employment. Existing law allows a person not subject to the licensure provisions to apply to the commissioner for an exempt company registration for the purpose of sponsoring one or more individuals required to be licensed as mortgage loan originators, provided that the person applying complies with all rules and orders that the commissioner deems necessary, as specified. Existing law also requires those mortgage loan originators to be covered under an exclusive written contract with, and originate mortgage loans solely on behalf of, that exempt person, hold a current insurance producer license, as specified, and have a current appointment notice, as specified. This bill would apply those additional requirements only to a mortgage loan originator who is also an insurance producer. (5) Existing law authorizes the commissioner, after notice and a reasonable opportunity to be heard, to suspend or revoke a residential mortgage lender or mortgage loan originator license if the licensee has, among other things, violated any provision of the California Residential Mortgage Lending Act, or rule order of the commissioner under the act, and provides that the commissioner's power of investigation and examination is not terminated by the surrender, suspension, or revocation of a license. This bill would authorize the commissioner to also deny or decline to renew a license under those circumstances, and would provide that the commissioner's power of investigation and examination is not terminated by the denial or nonrenewal of a license. (6) Because this bill would create new crimes under the California Finance Lenders Law and the California Residential Mortgage Lending Act, the bill would create a state-mandated local program. 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.