State Codes and Statutes

Statutes > California > Bpc > 10166.01-10166.17

BUSINESS AND PROFESSIONS CODE
SECTION 10166.01-10166.17



10166.01.  For purposes of this article, the following definitions
shall apply:
   (a) "SAFE Act" means the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (Public Law 110-289).
   (b) (1) "Mortgage loan originator" means an individual who takes a
residential mortgage loan application or offers or negotiates terms
of a residential mortgage loan for compensation or gain.
   (2) Mortgage loan originator does not include any of the
following:
   (A) An individual who performs purely administrative or clerical
tasks on behalf of a person meeting the definition of a mortgage loan
originator, except as otherwise provided in subdivision (c) of
Section 10166.03. The term "administrative or clerical tasks" means
the receipt, collection, and distribution of information common for
the processing or underwriting of a loan in the mortgage industry and
communication with a consumer to obtain information necessary for
the processing or underwriting of a residential mortgage loan.
   (B) An individual that only performs real estate brokerage
services, as defined in subdivision (a) or (b) of Section 10131,
unless that person is compensated by a lender, other mortgage loan
originator, or by any agent of any lender or other mortgage loan
originator.
   (C) An individual who solely renegotiates terms for existing
mortgage loans held or serviced by his or her employer and who does
not otherwise act as a mortgage loan originator, unless the United
States Department of Housing and Urban Development or a court of
competent jurisdiction determines that the SAFE Act requires such an
employee to be licensed as a mortgage loan originator under state
laws implementing the SAFE Act.
   (D) An individual that is solely involved in extensions of credit
relating to timeshare plans, as that term is defined in Section 101
(53D) of Title 11 of the United States Code.
   (E) An individual licensed or registered as a mortgage loan
originator pursuant to the provisions of the Financial Code and the
SAFE Act.
   (c) "Nationwide Mortgage Licensing System and Registry" means a
mortgage licensing system developed and maintained by the Conference
of State Bank Supervisors and the American Association of Residential
Mortgage Regulators for the licensing and registration of mortgage
loan originators.
   (d) "Residential mortgage loan" means any loan primarily for
personal, family, or household use that is secured by a mortgage,
deed of trust, or other equivalent consensual security interest on a
dwelling, or residential real estate upon which is constructed or
intended to be constructed a dwelling. "Dwelling" means a residential
structure that contains one to four units, whether or not that
structure is attached to real property. The term includes an
individual condominium unit, cooperative unit, mobilehome, or
trailer, if it is used as a residence.
   (e) "Unique identifier" means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.
   (f) "Loan processor or underwriter" means an individual who
performs clerical or support duties as an employee at the direction
of, and subject to the supervision and instruction of, a mortgage
loan originator.



10166.02.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131, and who makes,
arranges, or services loans secured by real property containing one
to four residential units, and any salesperson who acts in a similar
capacity under the supervision of that broker, shall notify the
department by January 31, 2010, or within 30 days of commencing that
activity, whichever is later. The notification shall be made in
writing, as directed, on a form that is acceptable to the
commissioner.
   (b) No individual may engage in business as a mortgage loan
originator under this article without first doing both of the
following:
   (1) Obtaining and maintaining a real estate license pursuant to
Article 2 (commencing with Section 10150).
   (2) Obtaining and maintaining a real estate license endorsement
pursuant to this article identifying that individual as a licensed
mortgage loan originator.
   (c) License endorsements shall be valid for a period of one year
and shall expire on the 31st of December each year.
   (d) Applicants for a mortgage loan originator license endorsement
shall apply in a form prescribed by the commissioner. Each form shall
contain content as set forth by rule, regulation, instruction, or
procedure of the commissioner.
   (e) In order to fulfill the purposes of this article, the
commissioner may establish relationships or contracts with the
Nationwide Mortgage Licensing System and Registry or other entities
designated by the Nationwide Mortgage Licensing System and Registry
to collect and maintain records and process transaction fees or other
fees related to licensees or other persons subject to this article.
   (f) A real estate broker or salesperson who fails to notify the
department pursuant to subdivision (a), or who fails to obtain a
license endorsement required pursuant to paragraph (2) of subdivision
(b), shall be assessed a penalty of fifty dollars ($50) per day for
each day written notification has not been received or a license
endorsement has not been obtained, up to and including the 30th day
after the first day of the assessment penalty. On and after the 31st
day, the penalty is one hundred dollars ($100) per day, not to exceed
a total penalty of ten thousand dollars ($10,000), regardless of the
number of days, until the department receives the written
notification or the licensee obtains the license endorsement.
Penalties for violations of subdivisions (a) and (b) shall be
additive.
   (g) The commissioner may suspend or revoke the license of a real
estate broker or salesperson who fails to pay a penalty imposed
pursuant to this section. In addition, the commissioner may bring an
action in an appropriate court of this state to collect payment of
that penalty.
   (h) All penalties paid or collected under this section shall be
deposited into the Recovery Account of the Real Estate Fund and
shall, upon appropriation by the Legislature, be available for
expenditure for the purposes specified in Chapter 6.5 (commencing
with Section 10470).



10166.03.  (a) A loan processor or underwriter who does not
represent to the public, through advertising or other means of
communicating or providing information, including the use of business
cards, stationery, brochures, signs, rate lists, or other
promotional items, that the individual can or will perform any of the
activities of a mortgage loan originator shall not be required to
obtain a license endorsement as a mortgage loan originator.
   (b) An individual engaging solely in loan processor or underwriter
activities shall not represent to the public, through advertising or
other means of communicating or providing information including the
use of business cards, stationery, brochures, signs, rate lists, or
other promotional items, that the individual can or will perform any
of the activities of a mortgage loan originator.
   (c) An independent contractor who is employed by a mortgage loan
originator may not engage in the activities of a loan processor or
underwriter for a residential mortgage loan unless the independent
contractor loan processor or underwriter obtains and maintains an
endorsement as a mortgage loan originator under this article. Each
independent contractor loan processor or underwriter who obtains and
maintains an endorsement as a mortgage loan originator under this
article shall have and maintain a valid unique identifier issued by
the Nationwide Mortgage Licensing System and Registry.



10166.04.  (a) In connection with an application to the commissioner
for a license endorsement as a mortgage loan originator, every
applicant shall furnish to the Nationwide Mortgage Licensing System
and Registry information concerning the applicant's identity,
including the following:
   (1) Fingerprint images and related information, for purposes of
performing a federal, or both a state and federal, criminal history
background check.
   (2) Personal history and experience in a form prescribed by the
Nationwide Mortgage Licensing System and Registry, including the
submission of authorization for the Nationwide Mortgage Licensing
System and Registry and the commissioner to obtain both of the
following:
   (A) An independent credit report from a consumer reporting agency.
   (B) Information related to any administrative, civil, or criminal
findings by any governmental jurisdiction.
   (b) The commissioner may ask the Nationwide Mortgage Licensing
System and Registry to obtain state criminal history background check
information on applicants described in subdivision (a) using the
procedures set forth in subdivisions (c) and (d).
   (c) If the Nationwide Mortgage Licensing System and Registry
electronically submits fingerprint images and related information, as
required by the Department of Justice, for an applicant for a
mortgage loan originator license endorsement, to the Department of
Justice for the purposes of obtaining information as to the existence
and content of a record of state convictions and state arrests, and
as to the existence and content of a record of state arrests for
which the Department of Justice establishes that the person is free
on bail or on his or her recognizance pending trial or appeal, the
Department of Justice shall provide an electronic response to the
Nationwide Mortgage Licensing System and Registry pursuant to
paragraph (1) of subdivision (p) of Section 11105 of the Penal Code,
and shall provide the same electronic response to the department.
   (d) The Nationwide Mortgage Licensing System and Registry may
request from the Department of Justice subsequent arrest notification
service, as provided pursuant to Section 11105.2 of the Penal Code,
for persons described in subdivision (a). The Department of Justice
shall provide the same electronic response to the department.
   (e) The Department of Justice shall charge a fee sufficient to
cover the cost of processing the requests described in this section.



10166.05.  Notwithstanding any other provision of law, the
commissioner shall not issue a license endorsement to act as a
mortgage loan originator to an applicant unless the commissioner
makes all of the following findings:
   (a) The applicant has never had a mortgage loan originator license
revoked in any governmental jurisdiction, except that a subsequent
formal vacation of a revocation shall not be deemed a revocation.
   (b) The applicant has not been convicted of, or pled guilty or
nolo contendere to, a felony in a domestic, foreign, or military
court, under either of the following conditions, however, any pardon
of a conviction shall not be considered a conviction for purposes of
this subdivision:
   (1) During the seven year period preceding the date of the
application for licensing.
   (2) At any time preceding the date of application, if the felony
involved an act of fraud, dishonesty, a breach of trust, or money
laundering.
   (c) The applicant has demonstrated such financial responsibility,
character, and general fitness as to command the confidence of the
community and warrant a determination that the mortgage loan
originator will operate honestly, fairly, and efficiently within the
purposes of the article.
   (d) The applicant has complied with the education and written
testing requirements in Section 10166.06.



10166.051.  In addition to any penalties authorized by regulations
adopted pursuant to Section 10166.15, the commissioner may do one or
more of the following, after appropriate notice and opportunity for
hearing:
   (a) Deny, suspend, revoke, restrict, or decline to renew a
mortgage loan originator license endorsement for a violation of this
article, or any rules or regulations adopted hereunder.
   (b) Deny, suspend, revoke, condition, or decline to renew a
mortgage loan originator license endorsement, if an applicant or
endorsement holder fails at any time to meet the requirements of
Section 10166.05 or 10166.09, or withholds information or makes a
material misstatement in an application for a license endorsement or
license endorsement renewal.
   (c) Issue orders or directives to licensees who hold mortgage loan
originator license endorsements, as follows:
   (1) Order or direct persons subject to this article to desist and
refrain from conducting business, including immediate temporary
orders to desist and refrain.
   (2) Order or direct persons subject to this article to cease any
harmful activities or violations of this article, including immediate
temporary orders to desist and refrain.
   (3) Enter immediate temporary orders to cease business under a
license endorsement if the commissioner determines that the license
endorsement was erroneously granted or the endorsement holder is
currently in violation of this article.
   (4) Order or direct any other affirmative action the commissioner
deems necessary.



10166.06.  (a) In addition to the requirements of Section 10153, an
applicant for a license endorsement as a mortgage loan originator
shall complete at least 20 hours of education courses, which shall
include at least the following:
   (1) Three hours of federal law and regulations.
   (2) Three hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues.
   (3) Two hours of training related to lending standards for the
nontraditional mortgage product marketplace.
   (b) For purposes of this section, education courses are only
acceptable if they have been reviewed and approved, or otherwise
deemed acceptable, by the Nationwide Mortgage Licensing System and
Registry, in accordance with the SAFE Act. Education may be offered
in a classroom, online, or by any other means approved by the
Nationwide Mortgage Licensing System and Registry, in accordance with
the SAFE Act.
   (c) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner toward completion of the education requirements of this
section.
   (d) Before being issued a license endorsement to act as a mortgage
loan originator, an individual shall pass a qualified written test
developed or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry and administered by a test provider
approved or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry.
   (e) A written test shall not be treated as a qualified written
test for purposes of this section, unless the test adequately
measures the applicant's knowledge and comprehension in the following
subject areas: ethics, federal law and regulation pertaining to
mortgage origination, state law and regulation pertaining to mortgage
origination, and federal and state law and regulation relating to
fraud, consumer protection, the nontraditional mortgage marketplace,
and fair lending issues.
   (f) Nothing in this section shall prohibit a test provider
approved by the Nationwide Mortgage Licensing System and Registry
from providing a test at the location of the employer of the
applicant or any subsidiary or affiliate of the employer of the
applicant, or any entity with which the applicant holds an exclusive
arrangement to conduct the business of a mortgage loan originator.
   (g) An individual shall not be considered to have passed a
qualified written test administered pursuant to this section unless
the individual achieves a test score of not less than 75 percent
correct answers to questions.
   (h) An individual who fails the qualified written test may retake
the test up to three consecutive times, although at least 30 days
must pass between each retesting.
   (i) An applicant who fails three consecutive retests must wait at
least six months before retesting.
   (j) A mortgage loan originator who fails to maintain a valid
license endorsement for a period of five years or longer or who fails
to register as a mortgage loan originator in accordance with
applicable California law shall retake the qualified written test.




10166.07.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131, and who makes,
arranges, or services one or more loans in a calendar year that are
secured by real property containing one to four residential units,
shall annually file a business activities report, within 90 days
after the end of the broker's fiscal year or within any additional
time as the commissioner may allow for filing for good cause. The
report shall contain within its scope all of the following
information for the fiscal year, relative to the business activities
of the broker and those of any other brokers and real estate
salespersons acting under that broker's supervision:
   (1) Name and license number of the supervising broker and names
and license numbers of the real estate brokers and salespersons under
that broker's supervision. The report shall include brokers and
salespersons who were under the supervising broker's supervision for
all or part of the year.
   (2) A list of the real estate-related activities in which the
supervising broker and the brokers and salespersons under his or her
supervision engaged during the prior year. This listing shall
identify all of the following:
   (A) Activities relating to mortgages, including arranging, making,
or servicing.
   (B) Other activities performed under the real estate broker's or
salesperson's license.
   (C) Activities performed under related licenses, including, but
not limited to, a license to engage as a finance lender or a finance
broker under the California Finance Lenders Law (Division 9
(commencing with Section 22000) of the Financial Code), or a license
to engage as a residential mortgage lender or residential mortgage
loan servicer under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000) of the Financial Code).
   (3) A list of the forms of media used by the broker and those
under his or her supervision to advertise to the public, including
print, radio, television, the Internet, or other means.
   (4) For fixed rate loans made, brokered, or serviced, all of the
following:
   (A) The total number, aggregate principal amount, lowest interest
rate, highest interest rate, and a list of the institutional lenders
of record. If the loan was funded by any lender other than an
institutional lender, the broker shall categorize the loan as
privately funded.
   (B) The total number and aggregate principal amount of covered
loans, as defined in Section 4970 of the Financial Code.
   (C) The total number and aggregate principal amount of loans for
which Department of Real Estate form RE Form 885 or an equivalent is
required.
   (5) For adjustable rate loans made, brokered, or serviced, all of
the following:
   (A) The total number, aggregate principal amount, lowest beginning
interest rate, highest beginning interest rate, highest margin, and
a list of the institutional lenders of record. If the loan was funded
by any lender other than an institutional lender, the broker shall
categorize the loan as privately funded.
   (B) The total number and aggregate principal amount of covered
loans, as defined in Section 4970 of the Financial Code.
   (C) The total number and aggregate principal amount of loans for
which Department of Real Estate form RE Form 885 or an equivalent is
required.
   (6) For all loans made, brokered, or serviced, the total number
and aggregate principal amount of loans funded by institutional
lenders, and the total number and aggregate principal amount of loans
funded by private lenders.
   (7) For all loans made, brokered, or serviced, the total number
and aggregate principal amount of loans that included a prepayment
penalty, the minimum prepayment penalty length, the maximum
prepayment penalty length, and the number of loans with prepayment
penalties whose length exceeded the length of time before the
borrower's loan payment amount could increase.
   (8) For all loans brokered, the total compensation received by the
broker, including yield spread premiums, commissions, and rebates,
but excluding compensation used to pay fees for third-party services
on behalf of the borrower.
   (9) For all mortgage loans made or brokered, the total number of
loans for which a mortgage loan disclosure statement was provided in
a language other than English, and the number of forms provided per
language other than English.
   (10) For all mortgage loans serviced, the total amount of funds
advanced to be applied toward a payment to protect the security of
the note being serviced.
   (11) For purposes of this section, an institutional lender has the
meaning specified in paragraph (1) of subdivision (c) of Section
10232.
   (b) A broker subject to this section and Section 10232.2 may file
consolidated reports that include all of the information required
under this section and Section 10232.2. Those consolidated reports
shall clearly indicate that they are intended to satisfy the
requirements of both sections.
   (c) If a broker subject to this section fails to timely file the
report required under this section, the commissioner may cause an
examination and report to be made and may charge the broker one and
one-half times the cost of making the examination and report. In
determining the hourly cost incurred by the commissioner for
conducting an examination and preparing the report, the commissioner
may use the estimated average hourly cost for all department audit
staff performing audits of real estate brokers. If a broker fails to
pay the commissioner's cost within 60 days of the mailing of a notice
of billing, the commissioner may suspend the broker's license or
deny renewal of that license. The suspension or denial shall remain
in effect until the billed amount is paid or the broker's right to
renew a license has expired. The commissioner may maintain an action
for the recovery of the billed amount in any court of competent
jurisdiction.
   (d) The report described in this section is exempted from any
requirement of public disclosure by paragraph (2) of subdivision (d)
of Section 6254 of the Government Code.
   (e) The commissioner may waive the requirement to submit certain
information described in paragraphs (1) to (10), inclusive, of
subdivision (a) if the commissioner determines that this information
is duplicative of information required by the Nationwide Mortgage
Licensing System and Registry, pursuant to Section 10166.08.



10166.08.  Each mortgage loan originator shall submit reports of
condition to the Nationwide Mortgage Licensing System and Registry
reports of condition, and those reports shall be in the form and
shall contain information as the Nationwide Mortgage Licensing System
and Registry may require.



10166.09.  The minimum standards for renewal of an endorsement as a
mortgage loan originator shall include the following:
   (a) The mortgage loan originator continues to meet the minimum
standards for obtaining an endorsement as a mortgage loan originator.
   (b) The mortgage loan originator satisfies the annual continuing
education requirements described in Section 10166.10.



10166.10.  (a) A mortgage loan originator shall complete at least
eight hours of continuing education annually, which shall include at
least three hours relating to federal law and regulations, two hours
of ethics, which shall include instruction on fraud, consumer
protection, and fair lending issues, and two hours related to lending
standards for the nontraditional mortgage product marketplace.
   (b) For purposes of subdivision (a), continuing education courses
and course providers shall be reviewed and approved by the
commissioner and the Nationwide Mortgage Licensing System and
Registry.
   (c) The commissioner shall have the authority to substitute any of
the courses described in subdivision (a) for the course requirements
of Section 10170.5, subject to a finding that the course
requirements in subdivision (a) and the course completion standards
in subdivision (g) of Section 10166.06 are substantially equivalent
to, and meet the intent of, Section 10170.5.
   (d) Nothing in this section shall preclude any education course,
as approved by the commissioner and the Nationwide Mortgage Licensing
System and Registry, that is provided by the employer of the
mortgage loan originator or an entity that is affiliated with the
mortgage loan originator by an agency contract, or any subsidiary or
affiliate of the employer or entity.
   (e) Continuing education may be offered either in a classroom,
online, or by any other means approved by the commissioner and the
Nationwide Mortgage Licensing System and Registry.
   (f) A mortgage loan originator may only receive credit for a
continuing education course in the year in which the course is taken.
   (g) A mortgage loan originator may not take the same approved
course in the same or successive years to meet the requirements of
this section for continuing education.
   (h) A mortgage loan originator who is an instructor of an approved
continuing education course may receive credit for his or her own
annual continuing education requirement at the rate of two hours
credit for every one hour taught.
   (i) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner towards completion of continuing education requirements
in this state.
   (j) A mortgage loan originator whose license endorsement lapses,
expires, or is suspended or revoked, and who wishes to regain his or
her license endorsement, shall complete continuing education
requirements for the last year in which the endorsement was held,
prior to issuance of a new or renewed endorsement.



10166.11.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131 and who makes,
arranges, or services loans secured by real property containing one
to four residential units, shall keep documents and records that will
properly enable the commissioner to determine whether the
residential mortgage brokerage, servicing, and lending functions
performed by the broker comply with this division and with all
applicable rules and orders made by the commissioner. These documents
shall include, at a minimum, the documents described in Section
10148. Upon request of the commissioner, a real estate broker shall
file an authorization for disclosure to the commissioner of financial
records of his or her licensed business pursuant to Section 7473 of
the Government Code.
   (b) Notwithstanding subdivision (a) of Section 10148, the business
documents and records of real estate brokers described in
subdivision (a) and real estate salespersons acting under those
brokers are subject to inspection and examination or audit by the
commissioner, at his or her discretion, after reasonable notice. That
real estate broker or salesperson shall, upon request by the
commissioner and within the time period specified in that request,
allow the commissioner, or his or her authorized representative, to
inspect and copy any business documents and records. The commissioner
may suspend or revoke the license of the broker or salesperson if he
or she fails to produce documents or records within the time period
specified in the request.
   (c) Inspection and examination or audit reports prepared by the
commissioner's duly designated representatives pursuant to this
section are not public records. Those reports may be disclosed to the
officers or directors of a licensee that is the subject of the
report for the purpose of corrective action. That disclosure shall
not operate as a waiver of the exemption specified in subdivision (d)
of Section 6254 of the Government Code.



10166.12.  (a) As often as the commissioner deems necessary and
appropriate, the commissioner shall examine the affairs of each real
estate broker who is required to notify the commissioner or obtain a
license endorsement pursuant to Section 10166.02 for compliance with
this part. These examinations shall also include a review of the
affairs of all real estate brokers and real estate salespersons
acting under the supervision of each real estate broker who is
required to file reports with the department pursuant to Section
10166.07. The commissioner shall appoint suitable persons to perform
these examinations. The commissioner and his or her appointees may
examine the books, records, and documents of the licensee, and may
examine the licensee's officers, directors, employees, or agents
under oath regarding the licensee's operations. The commissioner may
cooperate with any agency of the state or federal government, other
states, agencies, the Federal National Mortgage Association, or the
Federal Home Loan Mortgage Corporation. The commissioner may accept
an examination conducted by one of these entities in place of an
examination by the commissioner under this section, unless the
commissioner determines that the examination does not provide
information necessary to enable the commissioner to fulfill his or
her responsibilities under this division.
   (b) The commissioner may impose a penalty against a real estate
broker or real estate salesperson whose affairs are examined or
reviewed pursuant to subdivision (a) based on the findings of the
examination or review. The commissioner may suspend or revoke the
license or license endorsement of a real estate broker or real estate
salesperson who fails to pay that penalty. In addition, the
commissioner may bring an action in an appropriate court of this
state to collect payment of the penalty.
   (c) Penalties collected pursuant to subdivision (b) shall be
deposited into the Recovery Account of the Real Estate Fund and
shall, upon appropriation by the Legislature, be available for
expenditure for the purposes specified in Chapter 6.5 (commencing
with Section 10470).
   (d) The statement of the findings of an examination conducted
pursuant to this section shall belong to the commissioner and shall
not be disclosed to anyone other than the licensee, law enforcement
officials, or other state or federal regulatory agencies for further
investigation and enforcement. Reports required of licensees by the
commissioner under this division and results of examinations
performed by the commissioner under this division are the property of
the commissioner.


10166.13.  A real estate broker who acts pursuant to Section 10131.1
or subdivision (d) or (e) of Section 10131 and who makes, arranges,
or services loans secured by real property containing one to four
residential units shall make any special reports to the commissioner
that the commissioner may, from time to time, require.




10166.14.  A real estate broker shall notify the department when he
or she is no longer subject to this part. If a broker has already
made reports required by Sections 10166.07 and 10166.08 within the
year, he or she shall continue reports for that year, but shall
notify the department prior to the expiration of that year that he or
she will no longer be subject to this part in the succeeding year.




10166.15.  (a) The commissioner shall regularly report violations of
this article, as well as enforcement actions taken against any
mortgage loan originator to whom an endorsement has been issued, and
enforcement actions taken against any individual for failure to
obtain an endorsement as a mortgage loan originator, to the
Nationwide Mortgage Licensing System and Registry.
   (b) The commissioner shall establish a process that may be used by
mortgage loan originators to challenge information entered into the
Nationwide Mortgage Licensing System and Registry by the
commissioner.
   (c) The commissioner is authorized to promulgate regulations
specifying (1) the recordkeeping requirements that mortgage loan
originators shall satisfy and (2) the penalties that shall apply to
mortgage loan originators for violations of this article.



10166.16.  (a) Except as otherwise provided in Section 1512 of the
SAFE Act, the requirements under any federal or state law regarding
the privacy or confidentiality of any information or material
provided to the Nationwide Mortgage Licensing System and Registry,
and any privilege arising under federal or state law, including the
rules of any federal or state court, with respect to that information
or material, shall continue to apply to the information or material
after the information or material has been disclosed to the
Nationwide Mortgage Licensing System and Registry. The information
and material may be shared with all state and federal regulatory
officials with mortgage industry oversight authority without the loss
of privilege or the loss of confidentiality protections provided by
federal or state law.
   (b) For these purposes, the commissioner is authorized to enter
agreements or sharing arrangements with other governmental agencies,
the Conference of State Bank Supervisors, the American Association of
Residential Mortgage Regulators, or other associations representing
governmental agencies as established by rule, regulation or order of
the commissioner.
   (c) Information or material that is subject to a privilege or
confidentiality under subdivision (a) shall not be subject to either
of the following:
   (1) Disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or an
agency of the federal government or the state.
   (2) Subpoena or discovery, or admission into evidence, in any
private civil action or administrative process, unless with respect
to any privilege held by the Nationwide Mortgage Licensing System and
Registry with respect to the information or material, the person to
whom the information or material pertains waives, in whole or in
part, in the discretion of the person, that privilege.
   (d) This section shall not apply with respect to the information
or material relating to the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, mortgage
loan originators that is included in the Nationwide Mortgage
Licensing System and Registry for access by the public.



10166.17.  In addition to any other duties imposed upon the
commissioner by law, the commissioner shall require mortgage loan
originators to be licensed and registered through the Nationwide
Mortgage Licensing System and Registry. In order to carry out this
requirement the commissioner is authorized to participate in the
Nationwide Mortgage Licensing System and Registry. For this purpose,
the commissioner may establish by rule, regulation, or order,
requirements as necessary, including, but not limited to, the
following:
   (a) Background checks for the following:
   (1) Criminal history through fingerprint or other databases.
   (2) Civil or administrative records.
   (3) Credit history.
   (4) Any other information as deemed necessary by the Nationwide
Mortgage Licensing System and Registry.
   (b) The payment of fees to apply for or renew licenses through the
Nationwide Mortgage Licensing System and Registry.
   (c) The setting or resetting as necessary of renewal or reporting
dates.
   (d) Requirements for amending or surrendering a license or any
other activities as the commissioner deems necessary for
participation in the Nationwide Mortgage Licensing System and
Registry.

State Codes and Statutes

Statutes > California > Bpc > 10166.01-10166.17

BUSINESS AND PROFESSIONS CODE
SECTION 10166.01-10166.17



10166.01.  For purposes of this article, the following definitions
shall apply:
   (a) "SAFE Act" means the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (Public Law 110-289).
   (b) (1) "Mortgage loan originator" means an individual who takes a
residential mortgage loan application or offers or negotiates terms
of a residential mortgage loan for compensation or gain.
   (2) Mortgage loan originator does not include any of the
following:
   (A) An individual who performs purely administrative or clerical
tasks on behalf of a person meeting the definition of a mortgage loan
originator, except as otherwise provided in subdivision (c) of
Section 10166.03. The term "administrative or clerical tasks" means
the receipt, collection, and distribution of information common for
the processing or underwriting of a loan in the mortgage industry and
communication with a consumer to obtain information necessary for
the processing or underwriting of a residential mortgage loan.
   (B) An individual that only performs real estate brokerage
services, as defined in subdivision (a) or (b) of Section 10131,
unless that person is compensated by a lender, other mortgage loan
originator, or by any agent of any lender or other mortgage loan
originator.
   (C) An individual who solely renegotiates terms for existing
mortgage loans held or serviced by his or her employer and who does
not otherwise act as a mortgage loan originator, unless the United
States Department of Housing and Urban Development or a court of
competent jurisdiction determines that the SAFE Act requires such an
employee to be licensed as a mortgage loan originator under state
laws implementing the SAFE Act.
   (D) An individual that is solely involved in extensions of credit
relating to timeshare plans, as that term is defined in Section 101
(53D) of Title 11 of the United States Code.
   (E) An individual licensed or registered as a mortgage loan
originator pursuant to the provisions of the Financial Code and the
SAFE Act.
   (c) "Nationwide Mortgage Licensing System and Registry" means a
mortgage licensing system developed and maintained by the Conference
of State Bank Supervisors and the American Association of Residential
Mortgage Regulators for the licensing and registration of mortgage
loan originators.
   (d) "Residential mortgage loan" means any loan primarily for
personal, family, or household use that is secured by a mortgage,
deed of trust, or other equivalent consensual security interest on a
dwelling, or residential real estate upon which is constructed or
intended to be constructed a dwelling. "Dwelling" means a residential
structure that contains one to four units, whether or not that
structure is attached to real property. The term includes an
individual condominium unit, cooperative unit, mobilehome, or
trailer, if it is used as a residence.
   (e) "Unique identifier" means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.
   (f) "Loan processor or underwriter" means an individual who
performs clerical or support duties as an employee at the direction
of, and subject to the supervision and instruction of, a mortgage
loan originator.



10166.02.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131, and who makes,
arranges, or services loans secured by real property containing one
to four residential units, and any salesperson who acts in a similar
capacity under the supervision of that broker, shall notify the
department by January 31, 2010, or within 30 days of commencing that
activity, whichever is later. The notification shall be made in
writing, as directed, on a form that is acceptable to the
commissioner.
   (b) No individual may engage in business as a mortgage loan
originator under this article without first doing both of the
following:
   (1) Obtaining and maintaining a real estate license pursuant to
Article 2 (commencing with Section 10150).
   (2) Obtaining and maintaining a real estate license endorsement
pursuant to this article identifying that individual as a licensed
mortgage loan originator.
   (c) License endorsements shall be valid for a period of one year
and shall expire on the 31st of December each year.
   (d) Applicants for a mortgage loan originator license endorsement
shall apply in a form prescribed by the commissioner. Each form shall
contain content as set forth by rule, regulation, instruction, or
procedure of the commissioner.
   (e) In order to fulfill the purposes of this article, the
commissioner may establish relationships or contracts with the
Nationwide Mortgage Licensing System and Registry or other entities
designated by the Nationwide Mortgage Licensing System and Registry
to collect and maintain records and process transaction fees or other
fees related to licensees or other persons subject to this article.
   (f) A real estate broker or salesperson who fails to notify the
department pursuant to subdivision (a), or who fails to obtain a
license endorsement required pursuant to paragraph (2) of subdivision
(b), shall be assessed a penalty of fifty dollars ($50) per day for
each day written notification has not been received or a license
endorsement has not been obtained, up to and including the 30th day
after the first day of the assessment penalty. On and after the 31st
day, the penalty is one hundred dollars ($100) per day, not to exceed
a total penalty of ten thousand dollars ($10,000), regardless of the
number of days, until the department receives the written
notification or the licensee obtains the license endorsement.
Penalties for violations of subdivisions (a) and (b) shall be
additive.
   (g) The commissioner may suspend or revoke the license of a real
estate broker or salesperson who fails to pay a penalty imposed
pursuant to this section. In addition, the commissioner may bring an
action in an appropriate court of this state to collect payment of
that penalty.
   (h) All penalties paid or collected under this section shall be
deposited into the Recovery Account of the Real Estate Fund and
shall, upon appropriation by the Legislature, be available for
expenditure for the purposes specified in Chapter 6.5 (commencing
with Section 10470).



10166.03.  (a) A loan processor or underwriter who does not
represent to the public, through advertising or other means of
communicating or providing information, including the use of business
cards, stationery, brochures, signs, rate lists, or other
promotional items, that the individual can or will perform any of the
activities of a mortgage loan originator shall not be required to
obtain a license endorsement as a mortgage loan originator.
   (b) An individual engaging solely in loan processor or underwriter
activities shall not represent to the public, through advertising or
other means of communicating or providing information including the
use of business cards, stationery, brochures, signs, rate lists, or
other promotional items, that the individual can or will perform any
of the activities of a mortgage loan originator.
   (c) An independent contractor who is employed by a mortgage loan
originator may not engage in the activities of a loan processor or
underwriter for a residential mortgage loan unless the independent
contractor loan processor or underwriter obtains and maintains an
endorsement as a mortgage loan originator under this article. Each
independent contractor loan processor or underwriter who obtains and
maintains an endorsement as a mortgage loan originator under this
article shall have and maintain a valid unique identifier issued by
the Nationwide Mortgage Licensing System and Registry.



10166.04.  (a) In connection with an application to the commissioner
for a license endorsement as a mortgage loan originator, every
applicant shall furnish to the Nationwide Mortgage Licensing System
and Registry information concerning the applicant's identity,
including the following:
   (1) Fingerprint images and related information, for purposes of
performing a federal, or both a state and federal, criminal history
background check.
   (2) Personal history and experience in a form prescribed by the
Nationwide Mortgage Licensing System and Registry, including the
submission of authorization for the Nationwide Mortgage Licensing
System and Registry and the commissioner to obtain both of the
following:
   (A) An independent credit report from a consumer reporting agency.
   (B) Information related to any administrative, civil, or criminal
findings by any governmental jurisdiction.
   (b) The commissioner may ask the Nationwide Mortgage Licensing
System and Registry to obtain state criminal history background check
information on applicants described in subdivision (a) using the
procedures set forth in subdivisions (c) and (d).
   (c) If the Nationwide Mortgage Licensing System and Registry
electronically submits fingerprint images and related information, as
required by the Department of Justice, for an applicant for a
mortgage loan originator license endorsement, to the Department of
Justice for the purposes of obtaining information as to the existence
and content of a record of state convictions and state arrests, and
as to the existence and content of a record of state arrests for
which the Department of Justice establishes that the person is free
on bail or on his or her recognizance pending trial or appeal, the
Department of Justice shall provide an electronic response to the
Nationwide Mortgage Licensing System and Registry pursuant to
paragraph (1) of subdivision (p) of Section 11105 of the Penal Code,
and shall provide the same electronic response to the department.
   (d) The Nationwide Mortgage Licensing System and Registry may
request from the Department of Justice subsequent arrest notification
service, as provided pursuant to Section 11105.2 of the Penal Code,
for persons described in subdivision (a). The Department of Justice
shall provide the same electronic response to the department.
   (e) The Department of Justice shall charge a fee sufficient to
cover the cost of processing the requests described in this section.



10166.05.  Notwithstanding any other provision of law, the
commissioner shall not issue a license endorsement to act as a
mortgage loan originator to an applicant unless the commissioner
makes all of the following findings:
   (a) The applicant has never had a mortgage loan originator license
revoked in any governmental jurisdiction, except that a subsequent
formal vacation of a revocation shall not be deemed a revocation.
   (b) The applicant has not been convicted of, or pled guilty or
nolo contendere to, a felony in a domestic, foreign, or military
court, under either of the following conditions, however, any pardon
of a conviction shall not be considered a conviction for purposes of
this subdivision:
   (1) During the seven year period preceding the date of the
application for licensing.
   (2) At any time preceding the date of application, if the felony
involved an act of fraud, dishonesty, a breach of trust, or money
laundering.
   (c) The applicant has demonstrated such financial responsibility,
character, and general fitness as to command the confidence of the
community and warrant a determination that the mortgage loan
originator will operate honestly, fairly, and efficiently within the
purposes of the article.
   (d) The applicant has complied with the education and written
testing requirements in Section 10166.06.



10166.051.  In addition to any penalties authorized by regulations
adopted pursuant to Section 10166.15, the commissioner may do one or
more of the following, after appropriate notice and opportunity for
hearing:
   (a) Deny, suspend, revoke, restrict, or decline to renew a
mortgage loan originator license endorsement for a violation of this
article, or any rules or regulations adopted hereunder.
   (b) Deny, suspend, revoke, condition, or decline to renew a
mortgage loan originator license endorsement, if an applicant or
endorsement holder fails at any time to meet the requirements of
Section 10166.05 or 10166.09, or withholds information or makes a
material misstatement in an application for a license endorsement or
license endorsement renewal.
   (c) Issue orders or directives to licensees who hold mortgage loan
originator license endorsements, as follows:
   (1) Order or direct persons subject to this article to desist and
refrain from conducting business, including immediate temporary
orders to desist and refrain.
   (2) Order or direct persons subject to this article to cease any
harmful activities or violations of this article, including immediate
temporary orders to desist and refrain.
   (3) Enter immediate temporary orders to cease business under a
license endorsement if the commissioner determines that the license
endorsement was erroneously granted or the endorsement holder is
currently in violation of this article.
   (4) Order or direct any other affirmative action the commissioner
deems necessary.



10166.06.  (a) In addition to the requirements of Section 10153, an
applicant for a license endorsement as a mortgage loan originator
shall complete at least 20 hours of education courses, which shall
include at least the following:
   (1) Three hours of federal law and regulations.
   (2) Three hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues.
   (3) Two hours of training related to lending standards for the
nontraditional mortgage product marketplace.
   (b) For purposes of this section, education courses are only
acceptable if they have been reviewed and approved, or otherwise
deemed acceptable, by the Nationwide Mortgage Licensing System and
Registry, in accordance with the SAFE Act. Education may be offered
in a classroom, online, or by any other means approved by the
Nationwide Mortgage Licensing System and Registry, in accordance with
the SAFE Act.
   (c) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner toward completion of the education requirements of this
section.
   (d) Before being issued a license endorsement to act as a mortgage
loan originator, an individual shall pass a qualified written test
developed or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry and administered by a test provider
approved or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry.
   (e) A written test shall not be treated as a qualified written
test for purposes of this section, unless the test adequately
measures the applicant's knowledge and comprehension in the following
subject areas: ethics, federal law and regulation pertaining to
mortgage origination, state law and regulation pertaining to mortgage
origination, and federal and state law and regulation relating to
fraud, consumer protection, the nontraditional mortgage marketplace,
and fair lending issues.
   (f) Nothing in this section shall prohibit a test provider
approved by the Nationwide Mortgage Licensing System and Registry
from providing a test at the location of the employer of the
applicant or any subsidiary or affiliate of the employer of the
applicant, or any entity with which the applicant holds an exclusive
arrangement to conduct the business of a mortgage loan originator.
   (g) An individual shall not be considered to have passed a
qualified written test administered pursuant to this section unless
the individual achieves a test score of not less than 75 percent
correct answers to questions.
   (h) An individual who fails the qualified written test may retake
the test up to three consecutive times, although at least 30 days
must pass between each retesting.
   (i) An applicant who fails three consecutive retests must wait at
least six months before retesting.
   (j) A mortgage loan originator who fails to maintain a valid
license endorsement for a period of five years or longer or who fails
to register as a mortgage loan originator in accordance with
applicable California law shall retake the qualified written test.




10166.07.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131, and who makes,
arranges, or services one or more loans in a calendar year that are
secured by real property containing one to four residential units,
shall annually file a business activities report, within 90 days
after the end of the broker's fiscal year or within any additional
time as the commissioner may allow for filing for good cause. The
report shall contain within its scope all of the following
information for the fiscal year, relative to the business activities
of the broker and those of any other brokers and real estate
salespersons acting under that broker's supervision:
   (1) Name and license number of the supervising broker and names
and license numbers of the real estate brokers and salespersons under
that broker's supervision. The report shall include brokers and
salespersons who were under the supervising broker's supervision for
all or part of the year.
   (2) A list of the real estate-related activities in which the
supervising broker and the brokers and salespersons under his or her
supervision engaged during the prior year. This listing shall
identify all of the following:
   (A) Activities relating to mortgages, including arranging, making,
or servicing.
   (B) Other activities performed under the real estate broker's or
salesperson's license.
   (C) Activities performed under related licenses, including, but
not limited to, a license to engage as a finance lender or a finance
broker under the California Finance Lenders Law (Division 9
(commencing with Section 22000) of the Financial Code), or a license
to engage as a residential mortgage lender or residential mortgage
loan servicer under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000) of the Financial Code).
   (3) A list of the forms of media used by the broker and those
under his or her supervision to advertise to the public, including
print, radio, television, the Internet, or other means.
   (4) For fixed rate loans made, brokered, or serviced, all of the
following:
   (A) The total number, aggregate principal amount, lowest interest
rate, highest interest rate, and a list of the institutional lenders
of record. If the loan was funded by any lender other than an
institutional lender, the broker shall categorize the loan as
privately funded.
   (B) The total number and aggregate principal amount of covered
loans, as defined in Section 4970 of the Financial Code.
   (C) The total number and aggregate principal amount of loans for
which Department of Real Estate form RE Form 885 or an equivalent is
required.
   (5) For adjustable rate loans made, brokered, or serviced, all of
the following:
   (A) The total number, aggregate principal amount, lowest beginning
interest rate, highest beginning interest rate, highest margin, and
a list of the institutional lenders of record. If the loan was funded
by any lender other than an institutional lender, the broker shall
categorize the loan as privately funded.
   (B) The total number and aggregate principal amount of covered
loans, as defined in Section 4970 of the Financial Code.
   (C) The total number and aggregate principal amount of loans for
which Department of Real Estate form RE Form 885 or an equivalent is
required.
   (6) For all loans made, brokered, or serviced, the total number
and aggregate principal amount of loans funded by institutional
lenders, and the total number and aggregate principal amount of loans
funded by private lenders.
   (7) For all loans made, brokered, or serviced, the total number
and aggregate principal amount of loans that included a prepayment
penalty, the minimum prepayment penalty length, the maximum
prepayment penalty length, and the number of loans with prepayment
penalties whose length exceeded the length of time before the
borrower's loan payment amount could increase.
   (8) For all loans brokered, the total compensation received by the
broker, including yield spread premiums, commissions, and rebates,
but excluding compensation used to pay fees for third-party services
on behalf of the borrower.
   (9) For all mortgage loans made or brokered, the total number of
loans for which a mortgage loan disclosure statement was provided in
a language other than English, and the number of forms provided per
language other than English.
   (10) For all mortgage loans serviced, the total amount of funds
advanced to be applied toward a payment to protect the security of
the note being serviced.
   (11) For purposes of this section, an institutional lender has the
meaning specified in paragraph (1) of subdivision (c) of Section
10232.
   (b) A broker subject to this section and Section 10232.2 may file
consolidated reports that include all of the information required
under this section and Section 10232.2. Those consolidated reports
shall clearly indicate that they are intended to satisfy the
requirements of both sections.
   (c) If a broker subject to this section fails to timely file the
report required under this section, the commissioner may cause an
examination and report to be made and may charge the broker one and
one-half times the cost of making the examination and report. In
determining the hourly cost incurred by the commissioner for
conducting an examination and preparing the report, the commissioner
may use the estimated average hourly cost for all department audit
staff performing audits of real estate brokers. If a broker fails to
pay the commissioner's cost within 60 days of the mailing of a notice
of billing, the commissioner may suspend the broker's license or
deny renewal of that license. The suspension or denial shall remain
in effect until the billed amount is paid or the broker's right to
renew a license has expired. The commissioner may maintain an action
for the recovery of the billed amount in any court of competent
jurisdiction.
   (d) The report described in this section is exempted from any
requirement of public disclosure by paragraph (2) of subdivision (d)
of Section 6254 of the Government Code.
   (e) The commissioner may waive the requirement to submit certain
information described in paragraphs (1) to (10), inclusive, of
subdivision (a) if the commissioner determines that this information
is duplicative of information required by the Nationwide Mortgage
Licensing System and Registry, pursuant to Section 10166.08.



10166.08.  Each mortgage loan originator shall submit reports of
condition to the Nationwide Mortgage Licensing System and Registry
reports of condition, and those reports shall be in the form and
shall contain information as the Nationwide Mortgage Licensing System
and Registry may require.



10166.09.  The minimum standards for renewal of an endorsement as a
mortgage loan originator shall include the following:
   (a) The mortgage loan originator continues to meet the minimum
standards for obtaining an endorsement as a mortgage loan originator.
   (b) The mortgage loan originator satisfies the annual continuing
education requirements described in Section 10166.10.



10166.10.  (a) A mortgage loan originator shall complete at least
eight hours of continuing education annually, which shall include at
least three hours relating to federal law and regulations, two hours
of ethics, which shall include instruction on fraud, consumer
protection, and fair lending issues, and two hours related to lending
standards for the nontraditional mortgage product marketplace.
   (b) For purposes of subdivision (a), continuing education courses
and course providers shall be reviewed and approved by the
commissioner and the Nationwide Mortgage Licensing System and
Registry.
   (c) The commissioner shall have the authority to substitute any of
the courses described in subdivision (a) for the course requirements
of Section 10170.5, subject to a finding that the course
requirements in subdivision (a) and the course completion standards
in subdivision (g) of Section 10166.06 are substantially equivalent
to, and meet the intent of, Section 10170.5.
   (d) Nothing in this section shall preclude any education course,
as approved by the commissioner and the Nationwide Mortgage Licensing
System and Registry, that is provided by the employer of the
mortgage loan originator or an entity that is affiliated with the
mortgage loan originator by an agency contract, or any subsidiary or
affiliate of the employer or entity.
   (e) Continuing education may be offered either in a classroom,
online, or by any other means approved by the commissioner and the
Nationwide Mortgage Licensing System and Registry.
   (f) A mortgage loan originator may only receive credit for a
continuing education course in the year in which the course is taken.
   (g) A mortgage loan originator may not take the same approved
course in the same or successive years to meet the requirements of
this section for continuing education.
   (h) A mortgage loan originator who is an instructor of an approved
continuing education course may receive credit for his or her own
annual continuing education requirement at the rate of two hours
credit for every one hour taught.
   (i) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner towards completion of continuing education requirements
in this state.
   (j) A mortgage loan originator whose license endorsement lapses,
expires, or is suspended or revoked, and who wishes to regain his or
her license endorsement, shall complete continuing education
requirements for the last year in which the endorsement was held,
prior to issuance of a new or renewed endorsement.



10166.11.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131 and who makes,
arranges, or services loans secured by real property containing one
to four residential units, shall keep documents and records that will
properly enable the commissioner to determine whether the
residential mortgage brokerage, servicing, and lending functions
performed by the broker comply with this division and with all
applicable rules and orders made by the commissioner. These documents
shall include, at a minimum, the documents described in Section
10148. Upon request of the commissioner, a real estate broker shall
file an authorization for disclosure to the commissioner of financial
records of his or her licensed business pursuant to Section 7473 of
the Government Code.
   (b) Notwithstanding subdivision (a) of Section 10148, the business
documents and records of real estate brokers described in
subdivision (a) and real estate salespersons acting under those
brokers are subject to inspection and examination or audit by the
commissioner, at his or her discretion, after reasonable notice. That
real estate broker or salesperson shall, upon request by the
commissioner and within the time period specified in that request,
allow the commissioner, or his or her authorized representative, to
inspect and copy any business documents and records. The commissioner
may suspend or revoke the license of the broker or salesperson if he
or she fails to produce documents or records within the time period
specified in the request.
   (c) Inspection and examination or audit reports prepared by the
commissioner's duly designated representatives pursuant to this
section are not public records. Those reports may be disclosed to the
officers or directors of a licensee that is the subject of the
report for the purpose of corrective action. That disclosure shall
not operate as a waiver of the exemption specified in subdivision (d)
of Section 6254 of the Government Code.



10166.12.  (a) As often as the commissioner deems necessary and
appropriate, the commissioner shall examine the affairs of each real
estate broker who is required to notify the commissioner or obtain a
license endorsement pursuant to Section 10166.02 for compliance with
this part. These examinations shall also include a review of the
affairs of all real estate brokers and real estate salespersons
acting under the supervision of each real estate broker who is
required to file reports with the department pursuant to Section
10166.07. The commissioner shall appoint suitable persons to perform
these examinations. The commissioner and his or her appointees may
examine the books, records, and documents of the licensee, and may
examine the licensee's officers, directors, employees, or agents
under oath regarding the licensee's operations. The commissioner may
cooperate with any agency of the state or federal government, other
states, agencies, the Federal National Mortgage Association, or the
Federal Home Loan Mortgage Corporation. The commissioner may accept
an examination conducted by one of these entities in place of an
examination by the commissioner under this section, unless the
commissioner determines that the examination does not provide
information necessary to enable the commissioner to fulfill his or
her responsibilities under this division.
   (b) The commissioner may impose a penalty against a real estate
broker or real estate salesperson whose affairs are examined or
reviewed pursuant to subdivision (a) based on the findings of the
examination or review. The commissioner may suspend or revoke the
license or license endorsement of a real estate broker or real estate
salesperson who fails to pay that penalty. In addition, the
commissioner may bring an action in an appropriate court of this
state to collect payment of the penalty.
   (c) Penalties collected pursuant to subdivision (b) shall be
deposited into the Recovery Account of the Real Estate Fund and
shall, upon appropriation by the Legislature, be available for
expenditure for the purposes specified in Chapter 6.5 (commencing
with Section 10470).
   (d) The statement of the findings of an examination conducted
pursuant to this section shall belong to the commissioner and shall
not be disclosed to anyone other than the licensee, law enforcement
officials, or other state or federal regulatory agencies for further
investigation and enforcement. Reports required of licensees by the
commissioner under this division and results of examinations
performed by the commissioner under this division are the property of
the commissioner.


10166.13.  A real estate broker who acts pursuant to Section 10131.1
or subdivision (d) or (e) of Section 10131 and who makes, arranges,
or services loans secured by real property containing one to four
residential units shall make any special reports to the commissioner
that the commissioner may, from time to time, require.




10166.14.  A real estate broker shall notify the department when he
or she is no longer subject to this part. If a broker has already
made reports required by Sections 10166.07 and 10166.08 within the
year, he or she shall continue reports for that year, but shall
notify the department prior to the expiration of that year that he or
she will no longer be subject to this part in the succeeding year.




10166.15.  (a) The commissioner shall regularly report violations of
this article, as well as enforcement actions taken against any
mortgage loan originator to whom an endorsement has been issued, and
enforcement actions taken against any individual for failure to
obtain an endorsement as a mortgage loan originator, to the
Nationwide Mortgage Licensing System and Registry.
   (b) The commissioner shall establish a process that may be used by
mortgage loan originators to challenge information entered into the
Nationwide Mortgage Licensing System and Registry by the
commissioner.
   (c) The commissioner is authorized to promulgate regulations
specifying (1) the recordkeeping requirements that mortgage loan
originators shall satisfy and (2) the penalties that shall apply to
mortgage loan originators for violations of this article.



10166.16.  (a) Except as otherwise provided in Section 1512 of the
SAFE Act, the requirements under any federal or state law regarding
the privacy or confidentiality of any information or material
provided to the Nationwide Mortgage Licensing System and Registry,
and any privilege arising under federal or state law, including the
rules of any federal or state court, with respect to that information
or material, shall continue to apply to the information or material
after the information or material has been disclosed to the
Nationwide Mortgage Licensing System and Registry. The information
and material may be shared with all state and federal regulatory
officials with mortgage industry oversight authority without the loss
of privilege or the loss of confidentiality protections provided by
federal or state law.
   (b) For these purposes, the commissioner is authorized to enter
agreements or sharing arrangements with other governmental agencies,
the Conference of State Bank Supervisors, the American Association of
Residential Mortgage Regulators, or other associations representing
governmental agencies as established by rule, regulation or order of
the commissioner.
   (c) Information or material that is subject to a privilege or
confidentiality under subdivision (a) shall not be subject to either
of the following:
   (1) Disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or an
agency of the federal government or the state.
   (2) Subpoena or discovery, or admission into evidence, in any
private civil action or administrative process, unless with respect
to any privilege held by the Nationwide Mortgage Licensing System and
Registry with respect to the information or material, the person to
whom the information or material pertains waives, in whole or in
part, in the discretion of the person, that privilege.
   (d) This section shall not apply with respect to the information
or material relating to the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, mortgage
loan originators that is included in the Nationwide Mortgage
Licensing System and Registry for access by the public.



10166.17.  In addition to any other duties imposed upon the
commissioner by law, the commissioner shall require mortgage loan
originators to be licensed and registered through the Nationwide
Mortgage Licensing System and Registry. In order to carry out this
requirement the commissioner is authorized to participate in the
Nationwide Mortgage Licensing System and Registry. For this purpose,
the commissioner may establish by rule, regulation, or order,
requirements as necessary, including, but not limited to, the
following:
   (a) Background checks for the following:
   (1) Criminal history through fingerprint or other databases.
   (2) Civil or administrative records.
   (3) Credit history.
   (4) Any other information as deemed necessary by the Nationwide
Mortgage Licensing System and Registry.
   (b) The payment of fees to apply for or renew licenses through the
Nationwide Mortgage Licensing System and Registry.
   (c) The setting or resetting as necessary of renewal or reporting
dates.
   (d) Requirements for amending or surrendering a license or any
other activities as the commissioner deems necessary for
participation in the Nationwide Mortgage Licensing System and
Registry.


State Codes and Statutes

State Codes and Statutes

Statutes > California > Bpc > 10166.01-10166.17

BUSINESS AND PROFESSIONS CODE
SECTION 10166.01-10166.17



10166.01.  For purposes of this article, the following definitions
shall apply:
   (a) "SAFE Act" means the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (Public Law 110-289).
   (b) (1) "Mortgage loan originator" means an individual who takes a
residential mortgage loan application or offers or negotiates terms
of a residential mortgage loan for compensation or gain.
   (2) Mortgage loan originator does not include any of the
following:
   (A) An individual who performs purely administrative or clerical
tasks on behalf of a person meeting the definition of a mortgage loan
originator, except as otherwise provided in subdivision (c) of
Section 10166.03. The term "administrative or clerical tasks" means
the receipt, collection, and distribution of information common for
the processing or underwriting of a loan in the mortgage industry and
communication with a consumer to obtain information necessary for
the processing or underwriting of a residential mortgage loan.
   (B) An individual that only performs real estate brokerage
services, as defined in subdivision (a) or (b) of Section 10131,
unless that person is compensated by a lender, other mortgage loan
originator, or by any agent of any lender or other mortgage loan
originator.
   (C) An individual who solely renegotiates terms for existing
mortgage loans held or serviced by his or her employer and who does
not otherwise act as a mortgage loan originator, unless the United
States Department of Housing and Urban Development or a court of
competent jurisdiction determines that the SAFE Act requires such an
employee to be licensed as a mortgage loan originator under state
laws implementing the SAFE Act.
   (D) An individual that is solely involved in extensions of credit
relating to timeshare plans, as that term is defined in Section 101
(53D) of Title 11 of the United States Code.
   (E) An individual licensed or registered as a mortgage loan
originator pursuant to the provisions of the Financial Code and the
SAFE Act.
   (c) "Nationwide Mortgage Licensing System and Registry" means a
mortgage licensing system developed and maintained by the Conference
of State Bank Supervisors and the American Association of Residential
Mortgage Regulators for the licensing and registration of mortgage
loan originators.
   (d) "Residential mortgage loan" means any loan primarily for
personal, family, or household use that is secured by a mortgage,
deed of trust, or other equivalent consensual security interest on a
dwelling, or residential real estate upon which is constructed or
intended to be constructed a dwelling. "Dwelling" means a residential
structure that contains one to four units, whether or not that
structure is attached to real property. The term includes an
individual condominium unit, cooperative unit, mobilehome, or
trailer, if it is used as a residence.
   (e) "Unique identifier" means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.
   (f) "Loan processor or underwriter" means an individual who
performs clerical or support duties as an employee at the direction
of, and subject to the supervision and instruction of, a mortgage
loan originator.



10166.02.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131, and who makes,
arranges, or services loans secured by real property containing one
to four residential units, and any salesperson who acts in a similar
capacity under the supervision of that broker, shall notify the
department by January 31, 2010, or within 30 days of commencing that
activity, whichever is later. The notification shall be made in
writing, as directed, on a form that is acceptable to the
commissioner.
   (b) No individual may engage in business as a mortgage loan
originator under this article without first doing both of the
following:
   (1) Obtaining and maintaining a real estate license pursuant to
Article 2 (commencing with Section 10150).
   (2) Obtaining and maintaining a real estate license endorsement
pursuant to this article identifying that individual as a licensed
mortgage loan originator.
   (c) License endorsements shall be valid for a period of one year
and shall expire on the 31st of December each year.
   (d) Applicants for a mortgage loan originator license endorsement
shall apply in a form prescribed by the commissioner. Each form shall
contain content as set forth by rule, regulation, instruction, or
procedure of the commissioner.
   (e) In order to fulfill the purposes of this article, the
commissioner may establish relationships or contracts with the
Nationwide Mortgage Licensing System and Registry or other entities
designated by the Nationwide Mortgage Licensing System and Registry
to collect and maintain records and process transaction fees or other
fees related to licensees or other persons subject to this article.
   (f) A real estate broker or salesperson who fails to notify the
department pursuant to subdivision (a), or who fails to obtain a
license endorsement required pursuant to paragraph (2) of subdivision
(b), shall be assessed a penalty of fifty dollars ($50) per day for
each day written notification has not been received or a license
endorsement has not been obtained, up to and including the 30th day
after the first day of the assessment penalty. On and after the 31st
day, the penalty is one hundred dollars ($100) per day, not to exceed
a total penalty of ten thousand dollars ($10,000), regardless of the
number of days, until the department receives the written
notification or the licensee obtains the license endorsement.
Penalties for violations of subdivisions (a) and (b) shall be
additive.
   (g) The commissioner may suspend or revoke the license of a real
estate broker or salesperson who fails to pay a penalty imposed
pursuant to this section. In addition, the commissioner may bring an
action in an appropriate court of this state to collect payment of
that penalty.
   (h) All penalties paid or collected under this section shall be
deposited into the Recovery Account of the Real Estate Fund and
shall, upon appropriation by the Legislature, be available for
expenditure for the purposes specified in Chapter 6.5 (commencing
with Section 10470).



10166.03.  (a) A loan processor or underwriter who does not
represent to the public, through advertising or other means of
communicating or providing information, including the use of business
cards, stationery, brochures, signs, rate lists, or other
promotional items, that the individual can or will perform any of the
activities of a mortgage loan originator shall not be required to
obtain a license endorsement as a mortgage loan originator.
   (b) An individual engaging solely in loan processor or underwriter
activities shall not represent to the public, through advertising or
other means of communicating or providing information including the
use of business cards, stationery, brochures, signs, rate lists, or
other promotional items, that the individual can or will perform any
of the activities of a mortgage loan originator.
   (c) An independent contractor who is employed by a mortgage loan
originator may not engage in the activities of a loan processor or
underwriter for a residential mortgage loan unless the independent
contractor loan processor or underwriter obtains and maintains an
endorsement as a mortgage loan originator under this article. Each
independent contractor loan processor or underwriter who obtains and
maintains an endorsement as a mortgage loan originator under this
article shall have and maintain a valid unique identifier issued by
the Nationwide Mortgage Licensing System and Registry.



10166.04.  (a) In connection with an application to the commissioner
for a license endorsement as a mortgage loan originator, every
applicant shall furnish to the Nationwide Mortgage Licensing System
and Registry information concerning the applicant's identity,
including the following:
   (1) Fingerprint images and related information, for purposes of
performing a federal, or both a state and federal, criminal history
background check.
   (2) Personal history and experience in a form prescribed by the
Nationwide Mortgage Licensing System and Registry, including the
submission of authorization for the Nationwide Mortgage Licensing
System and Registry and the commissioner to obtain both of the
following:
   (A) An independent credit report from a consumer reporting agency.
   (B) Information related to any administrative, civil, or criminal
findings by any governmental jurisdiction.
   (b) The commissioner may ask the Nationwide Mortgage Licensing
System and Registry to obtain state criminal history background check
information on applicants described in subdivision (a) using the
procedures set forth in subdivisions (c) and (d).
   (c) If the Nationwide Mortgage Licensing System and Registry
electronically submits fingerprint images and related information, as
required by the Department of Justice, for an applicant for a
mortgage loan originator license endorsement, to the Department of
Justice for the purposes of obtaining information as to the existence
and content of a record of state convictions and state arrests, and
as to the existence and content of a record of state arrests for
which the Department of Justice establishes that the person is free
on bail or on his or her recognizance pending trial or appeal, the
Department of Justice shall provide an electronic response to the
Nationwide Mortgage Licensing System and Registry pursuant to
paragraph (1) of subdivision (p) of Section 11105 of the Penal Code,
and shall provide the same electronic response to the department.
   (d) The Nationwide Mortgage Licensing System and Registry may
request from the Department of Justice subsequent arrest notification
service, as provided pursuant to Section 11105.2 of the Penal Code,
for persons described in subdivision (a). The Department of Justice
shall provide the same electronic response to the department.
   (e) The Department of Justice shall charge a fee sufficient to
cover the cost of processing the requests described in this section.



10166.05.  Notwithstanding any other provision of law, the
commissioner shall not issue a license endorsement to act as a
mortgage loan originator to an applicant unless the commissioner
makes all of the following findings:
   (a) The applicant has never had a mortgage loan originator license
revoked in any governmental jurisdiction, except that a subsequent
formal vacation of a revocation shall not be deemed a revocation.
   (b) The applicant has not been convicted of, or pled guilty or
nolo contendere to, a felony in a domestic, foreign, or military
court, under either of the following conditions, however, any pardon
of a conviction shall not be considered a conviction for purposes of
this subdivision:
   (1) During the seven year period preceding the date of the
application for licensing.
   (2) At any time preceding the date of application, if the felony
involved an act of fraud, dishonesty, a breach of trust, or money
laundering.
   (c) The applicant has demonstrated such financial responsibility,
character, and general fitness as to command the confidence of the
community and warrant a determination that the mortgage loan
originator will operate honestly, fairly, and efficiently within the
purposes of the article.
   (d) The applicant has complied with the education and written
testing requirements in Section 10166.06.



10166.051.  In addition to any penalties authorized by regulations
adopted pursuant to Section 10166.15, the commissioner may do one or
more of the following, after appropriate notice and opportunity for
hearing:
   (a) Deny, suspend, revoke, restrict, or decline to renew a
mortgage loan originator license endorsement for a violation of this
article, or any rules or regulations adopted hereunder.
   (b) Deny, suspend, revoke, condition, or decline to renew a
mortgage loan originator license endorsement, if an applicant or
endorsement holder fails at any time to meet the requirements of
Section 10166.05 or 10166.09, or withholds information or makes a
material misstatement in an application for a license endorsement or
license endorsement renewal.
   (c) Issue orders or directives to licensees who hold mortgage loan
originator license endorsements, as follows:
   (1) Order or direct persons subject to this article to desist and
refrain from conducting business, including immediate temporary
orders to desist and refrain.
   (2) Order or direct persons subject to this article to cease any
harmful activities or violations of this article, including immediate
temporary orders to desist and refrain.
   (3) Enter immediate temporary orders to cease business under a
license endorsement if the commissioner determines that the license
endorsement was erroneously granted or the endorsement holder is
currently in violation of this article.
   (4) Order or direct any other affirmative action the commissioner
deems necessary.



10166.06.  (a) In addition to the requirements of Section 10153, an
applicant for a license endorsement as a mortgage loan originator
shall complete at least 20 hours of education courses, which shall
include at least the following:
   (1) Three hours of federal law and regulations.
   (2) Three hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues.
   (3) Two hours of training related to lending standards for the
nontraditional mortgage product marketplace.
   (b) For purposes of this section, education courses are only
acceptable if they have been reviewed and approved, or otherwise
deemed acceptable, by the Nationwide Mortgage Licensing System and
Registry, in accordance with the SAFE Act. Education may be offered
in a classroom, online, or by any other means approved by the
Nationwide Mortgage Licensing System and Registry, in accordance with
the SAFE Act.
   (c) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner toward completion of the education requirements of this
section.
   (d) Before being issued a license endorsement to act as a mortgage
loan originator, an individual shall pass a qualified written test
developed or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry and administered by a test provider
approved or otherwise deemed acceptable by the Nationwide Mortgage
Licensing System and Registry.
   (e) A written test shall not be treated as a qualified written
test for purposes of this section, unless the test adequately
measures the applicant's knowledge and comprehension in the following
subject areas: ethics, federal law and regulation pertaining to
mortgage origination, state law and regulation pertaining to mortgage
origination, and federal and state law and regulation relating to
fraud, consumer protection, the nontraditional mortgage marketplace,
and fair lending issues.
   (f) Nothing in this section shall prohibit a test provider
approved by the Nationwide Mortgage Licensing System and Registry
from providing a test at the location of the employer of the
applicant or any subsidiary or affiliate of the employer of the
applicant, or any entity with which the applicant holds an exclusive
arrangement to conduct the business of a mortgage loan originator.
   (g) An individual shall not be considered to have passed a
qualified written test administered pursuant to this section unless
the individual achieves a test score of not less than 75 percent
correct answers to questions.
   (h) An individual who fails the qualified written test may retake
the test up to three consecutive times, although at least 30 days
must pass between each retesting.
   (i) An applicant who fails three consecutive retests must wait at
least six months before retesting.
   (j) A mortgage loan originator who fails to maintain a valid
license endorsement for a period of five years or longer or who fails
to register as a mortgage loan originator in accordance with
applicable California law shall retake the qualified written test.




10166.07.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131, and who makes,
arranges, or services one or more loans in a calendar year that are
secured by real property containing one to four residential units,
shall annually file a business activities report, within 90 days
after the end of the broker's fiscal year or within any additional
time as the commissioner may allow for filing for good cause. The
report shall contain within its scope all of the following
information for the fiscal year, relative to the business activities
of the broker and those of any other brokers and real estate
salespersons acting under that broker's supervision:
   (1) Name and license number of the supervising broker and names
and license numbers of the real estate brokers and salespersons under
that broker's supervision. The report shall include brokers and
salespersons who were under the supervising broker's supervision for
all or part of the year.
   (2) A list of the real estate-related activities in which the
supervising broker and the brokers and salespersons under his or her
supervision engaged during the prior year. This listing shall
identify all of the following:
   (A) Activities relating to mortgages, including arranging, making,
or servicing.
   (B) Other activities performed under the real estate broker's or
salesperson's license.
   (C) Activities performed under related licenses, including, but
not limited to, a license to engage as a finance lender or a finance
broker under the California Finance Lenders Law (Division 9
(commencing with Section 22000) of the Financial Code), or a license
to engage as a residential mortgage lender or residential mortgage
loan servicer under the California Residential Mortgage Lending Act
(Division 20 (commencing with Section 50000) of the Financial Code).
   (3) A list of the forms of media used by the broker and those
under his or her supervision to advertise to the public, including
print, radio, television, the Internet, or other means.
   (4) For fixed rate loans made, brokered, or serviced, all of the
following:
   (A) The total number, aggregate principal amount, lowest interest
rate, highest interest rate, and a list of the institutional lenders
of record. If the loan was funded by any lender other than an
institutional lender, the broker shall categorize the loan as
privately funded.
   (B) The total number and aggregate principal amount of covered
loans, as defined in Section 4970 of the Financial Code.
   (C) The total number and aggregate principal amount of loans for
which Department of Real Estate form RE Form 885 or an equivalent is
required.
   (5) For adjustable rate loans made, brokered, or serviced, all of
the following:
   (A) The total number, aggregate principal amount, lowest beginning
interest rate, highest beginning interest rate, highest margin, and
a list of the institutional lenders of record. If the loan was funded
by any lender other than an institutional lender, the broker shall
categorize the loan as privately funded.
   (B) The total number and aggregate principal amount of covered
loans, as defined in Section 4970 of the Financial Code.
   (C) The total number and aggregate principal amount of loans for
which Department of Real Estate form RE Form 885 or an equivalent is
required.
   (6) For all loans made, brokered, or serviced, the total number
and aggregate principal amount of loans funded by institutional
lenders, and the total number and aggregate principal amount of loans
funded by private lenders.
   (7) For all loans made, brokered, or serviced, the total number
and aggregate principal amount of loans that included a prepayment
penalty, the minimum prepayment penalty length, the maximum
prepayment penalty length, and the number of loans with prepayment
penalties whose length exceeded the length of time before the
borrower's loan payment amount could increase.
   (8) For all loans brokered, the total compensation received by the
broker, including yield spread premiums, commissions, and rebates,
but excluding compensation used to pay fees for third-party services
on behalf of the borrower.
   (9) For all mortgage loans made or brokered, the total number of
loans for which a mortgage loan disclosure statement was provided in
a language other than English, and the number of forms provided per
language other than English.
   (10) For all mortgage loans serviced, the total amount of funds
advanced to be applied toward a payment to protect the security of
the note being serviced.
   (11) For purposes of this section, an institutional lender has the
meaning specified in paragraph (1) of subdivision (c) of Section
10232.
   (b) A broker subject to this section and Section 10232.2 may file
consolidated reports that include all of the information required
under this section and Section 10232.2. Those consolidated reports
shall clearly indicate that they are intended to satisfy the
requirements of both sections.
   (c) If a broker subject to this section fails to timely file the
report required under this section, the commissioner may cause an
examination and report to be made and may charge the broker one and
one-half times the cost of making the examination and report. In
determining the hourly cost incurred by the commissioner for
conducting an examination and preparing the report, the commissioner
may use the estimated average hourly cost for all department audit
staff performing audits of real estate brokers. If a broker fails to
pay the commissioner's cost within 60 days of the mailing of a notice
of billing, the commissioner may suspend the broker's license or
deny renewal of that license. The suspension or denial shall remain
in effect until the billed amount is paid or the broker's right to
renew a license has expired. The commissioner may maintain an action
for the recovery of the billed amount in any court of competent
jurisdiction.
   (d) The report described in this section is exempted from any
requirement of public disclosure by paragraph (2) of subdivision (d)
of Section 6254 of the Government Code.
   (e) The commissioner may waive the requirement to submit certain
information described in paragraphs (1) to (10), inclusive, of
subdivision (a) if the commissioner determines that this information
is duplicative of information required by the Nationwide Mortgage
Licensing System and Registry, pursuant to Section 10166.08.



10166.08.  Each mortgage loan originator shall submit reports of
condition to the Nationwide Mortgage Licensing System and Registry
reports of condition, and those reports shall be in the form and
shall contain information as the Nationwide Mortgage Licensing System
and Registry may require.



10166.09.  The minimum standards for renewal of an endorsement as a
mortgage loan originator shall include the following:
   (a) The mortgage loan originator continues to meet the minimum
standards for obtaining an endorsement as a mortgage loan originator.
   (b) The mortgage loan originator satisfies the annual continuing
education requirements described in Section 10166.10.



10166.10.  (a) A mortgage loan originator shall complete at least
eight hours of continuing education annually, which shall include at
least three hours relating to federal law and regulations, two hours
of ethics, which shall include instruction on fraud, consumer
protection, and fair lending issues, and two hours related to lending
standards for the nontraditional mortgage product marketplace.
   (b) For purposes of subdivision (a), continuing education courses
and course providers shall be reviewed and approved by the
commissioner and the Nationwide Mortgage Licensing System and
Registry.
   (c) The commissioner shall have the authority to substitute any of
the courses described in subdivision (a) for the course requirements
of Section 10170.5, subject to a finding that the course
requirements in subdivision (a) and the course completion standards
in subdivision (g) of Section 10166.06 are substantially equivalent
to, and meet the intent of, Section 10170.5.
   (d) Nothing in this section shall preclude any education course,
as approved by the commissioner and the Nationwide Mortgage Licensing
System and Registry, that is provided by the employer of the
mortgage loan originator or an entity that is affiliated with the
mortgage loan originator by an agency contract, or any subsidiary or
affiliate of the employer or entity.
   (e) Continuing education may be offered either in a classroom,
online, or by any other means approved by the commissioner and the
Nationwide Mortgage Licensing System and Registry.
   (f) A mortgage loan originator may only receive credit for a
continuing education course in the year in which the course is taken.
   (g) A mortgage loan originator may not take the same approved
course in the same or successive years to meet the requirements of
this section for continuing education.
   (h) A mortgage loan originator who is an instructor of an approved
continuing education course may receive credit for his or her own
annual continuing education requirement at the rate of two hours
credit for every one hour taught.
   (i) A person who successfully completes the education requirements
approved by the Nationwide Mortgage Licensing System and Registry in
any state other than California shall be granted credit by the
commissioner towards completion of continuing education requirements
in this state.
   (j) A mortgage loan originator whose license endorsement lapses,
expires, or is suspended or revoked, and who wishes to regain his or
her license endorsement, shall complete continuing education
requirements for the last year in which the endorsement was held,
prior to issuance of a new or renewed endorsement.



10166.11.  (a) A real estate broker who acts pursuant to Section
10131.1 or subdivision (d) or (e) of Section 10131 and who makes,
arranges, or services loans secured by real property containing one
to four residential units, shall keep documents and records that will
properly enable the commissioner to determine whether the
residential mortgage brokerage, servicing, and lending functions
performed by the broker comply with this division and with all
applicable rules and orders made by the commissioner. These documents
shall include, at a minimum, the documents described in Section
10148. Upon request of the commissioner, a real estate broker shall
file an authorization for disclosure to the commissioner of financial
records of his or her licensed business pursuant to Section 7473 of
the Government Code.
   (b) Notwithstanding subdivision (a) of Section 10148, the business
documents and records of real estate brokers described in
subdivision (a) and real estate salespersons acting under those
brokers are subject to inspection and examination or audit by the
commissioner, at his or her discretion, after reasonable notice. That
real estate broker or salesperson shall, upon request by the
commissioner and within the time period specified in that request,
allow the commissioner, or his or her authorized representative, to
inspect and copy any business documents and records. The commissioner
may suspend or revoke the license of the broker or salesperson if he
or she fails to produce documents or records within the time period
specified in the request.
   (c) Inspection and examination or audit reports prepared by the
commissioner's duly designated representatives pursuant to this
section are not public records. Those reports may be disclosed to the
officers or directors of a licensee that is the subject of the
report for the purpose of corrective action. That disclosure shall
not operate as a waiver of the exemption specified in subdivision (d)
of Section 6254 of the Government Code.



10166.12.  (a) As often as the commissioner deems necessary and
appropriate, the commissioner shall examine the affairs of each real
estate broker who is required to notify the commissioner or obtain a
license endorsement pursuant to Section 10166.02 for compliance with
this part. These examinations shall also include a review of the
affairs of all real estate brokers and real estate salespersons
acting under the supervision of each real estate broker who is
required to file reports with the department pursuant to Section
10166.07. The commissioner shall appoint suitable persons to perform
these examinations. The commissioner and his or her appointees may
examine the books, records, and documents of the licensee, and may
examine the licensee's officers, directors, employees, or agents
under oath regarding the licensee's operations. The commissioner may
cooperate with any agency of the state or federal government, other
states, agencies, the Federal National Mortgage Association, or the
Federal Home Loan Mortgage Corporation. The commissioner may accept
an examination conducted by one of these entities in place of an
examination by the commissioner under this section, unless the
commissioner determines that the examination does not provide
information necessary to enable the commissioner to fulfill his or
her responsibilities under this division.
   (b) The commissioner may impose a penalty against a real estate
broker or real estate salesperson whose affairs are examined or
reviewed pursuant to subdivision (a) based on the findings of the
examination or review. The commissioner may suspend or revoke the
license or license endorsement of a real estate broker or real estate
salesperson who fails to pay that penalty. In addition, the
commissioner may bring an action in an appropriate court of this
state to collect payment of the penalty.
   (c) Penalties collected pursuant to subdivision (b) shall be
deposited into the Recovery Account of the Real Estate Fund and
shall, upon appropriation by the Legislature, be available for
expenditure for the purposes specified in Chapter 6.5 (commencing
with Section 10470).
   (d) The statement of the findings of an examination conducted
pursuant to this section shall belong to the commissioner and shall
not be disclosed to anyone other than the licensee, law enforcement
officials, or other state or federal regulatory agencies for further
investigation and enforcement. Reports required of licensees by the
commissioner under this division and results of examinations
performed by the commissioner under this division are the property of
the commissioner.


10166.13.  A real estate broker who acts pursuant to Section 10131.1
or subdivision (d) or (e) of Section 10131 and who makes, arranges,
or services loans secured by real property containing one to four
residential units shall make any special reports to the commissioner
that the commissioner may, from time to time, require.




10166.14.  A real estate broker shall notify the department when he
or she is no longer subject to this part. If a broker has already
made reports required by Sections 10166.07 and 10166.08 within the
year, he or she shall continue reports for that year, but shall
notify the department prior to the expiration of that year that he or
she will no longer be subject to this part in the succeeding year.




10166.15.  (a) The commissioner shall regularly report violations of
this article, as well as enforcement actions taken against any
mortgage loan originator to whom an endorsement has been issued, and
enforcement actions taken against any individual for failure to
obtain an endorsement as a mortgage loan originator, to the
Nationwide Mortgage Licensing System and Registry.
   (b) The commissioner shall establish a process that may be used by
mortgage loan originators to challenge information entered into the
Nationwide Mortgage Licensing System and Registry by the
commissioner.
   (c) The commissioner is authorized to promulgate regulations
specifying (1) the recordkeeping requirements that mortgage loan
originators shall satisfy and (2) the penalties that shall apply to
mortgage loan originators for violations of this article.



10166.16.  (a) Except as otherwise provided in Section 1512 of the
SAFE Act, the requirements under any federal or state law regarding
the privacy or confidentiality of any information or material
provided to the Nationwide Mortgage Licensing System and Registry,
and any privilege arising under federal or state law, including the
rules of any federal or state court, with respect to that information
or material, shall continue to apply to the information or material
after the information or material has been disclosed to the
Nationwide Mortgage Licensing System and Registry. The information
and material may be shared with all state and federal regulatory
officials with mortgage industry oversight authority without the loss
of privilege or the loss of confidentiality protections provided by
federal or state law.
   (b) For these purposes, the commissioner is authorized to enter
agreements or sharing arrangements with other governmental agencies,
the Conference of State Bank Supervisors, the American Association of
Residential Mortgage Regulators, or other associations representing
governmental agencies as established by rule, regulation or order of
the commissioner.
   (c) Information or material that is subject to a privilege or
confidentiality under subdivision (a) shall not be subject to either
of the following:
   (1) Disclosure under any federal or state law governing the
disclosure to the public of information held by an officer or an
agency of the federal government or the state.
   (2) Subpoena or discovery, or admission into evidence, in any
private civil action or administrative process, unless with respect
to any privilege held by the Nationwide Mortgage Licensing System and
Registry with respect to the information or material, the person to
whom the information or material pertains waives, in whole or in
part, in the discretion of the person, that privilege.
   (d) This section shall not apply with respect to the information
or material relating to the employment history of, and publicly
adjudicated disciplinary and enforcement actions against, mortgage
loan originators that is included in the Nationwide Mortgage
Licensing System and Registry for access by the public.



10166.17.  In addition to any other duties imposed upon the
commissioner by law, the commissioner shall require mortgage loan
originators to be licensed and registered through the Nationwide
Mortgage Licensing System and Registry. In order to carry out this
requirement the commissioner is authorized to participate in the
Nationwide Mortgage Licensing System and Registry. For this purpose,
the commissioner may establish by rule, regulation, or order,
requirements as necessary, including, but not limited to, the
following:
   (a) Background checks for the following:
   (1) Criminal history through fingerprint or other databases.
   (2) Civil or administrative records.
   (3) Credit history.
   (4) Any other information as deemed necessary by the Nationwide
Mortgage Licensing System and Registry.
   (b) The payment of fees to apply for or renew licenses through the
Nationwide Mortgage Licensing System and Registry.
   (c) The setting or resetting as necessary of renewal or reporting
dates.
   (d) Requirements for amending or surrendering a license or any
other activities as the commissioner deems necessary for
participation in the Nationwide Mortgage Licensing System and
Registry.