CALIFORNIA MORTGAGE LENDERS & MORTGAGE BROKERS

LICENSES

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CA has 3 licenses: Which License is Best For You? Let us Help You.

{1} CA Residential Mortgage Law Act License "RML" or "Mortgage Banker" through the CA
Department of Corporations which requires a large governmental approval like Fannie
Mae, Freddie Mac or HUD Full Eagle in order to apply

[2] CA Finance Lender License "CFL" through the CA Department of Corporations that
allows both brokering [with CFL Lenders only] and lending [but not table-funding]

[3] CA Real Estate Broker License "DRE" or "Mortgage Broker" through the CA Department
of Real Estate which is the broadest and most popular CA mortgage broker license but
cannot be used from locations outside of CA.

Most brokers cannot qualify for the RML so they choose between the CFL and DRE. There
is no perfect license in CA. Each license has its pros and cons. The CFL is the license of
choice for most out-of-state brokers because there is no CA physical office requirement,
no loan officer requirement and out-of-state branches are permitted. The DRE would
require all their loan officers to CA to take college courses and an exam to get their Real
Estate Salesman licenses, a CA Physical office requirement and does not permit
out-of-state branches. However, the CFL brokering capacity is limited and restricted only
to CFL lenders but most CFL brokers develop a new group of wholesale lenders in CA
and can shift to being a lender at some time in the future when they obtain a warehouse
line of credit.

It depends on how you want to conduct mortgage business in CA as to whether you need
just the CFL or whether you need both the DRE and the CFL licenses. If you do not have
the HUD Full Eagle you cannot qualify for the RML. CFL license allows both a broker and
a lender license [but it does not allow table funding]. The brokering is restricted to using
only wholesale lenders who have the CFL license [which precludes many wholesale
lenders like banks but there are still plenty of good wholesale lenders that do have the
CFL - they just might not be the ones that you are used to working with]. The lending is
restricted to selling to only institutional investors and not private investors. Under the
CFL, your Loan Officers can be located anywhere in the country and do not need a
separate loan officer license if they are your W-2 employee. The DRE [Dept of Real Estate]
license must have a CA physical office and all deals must go through the Designated
Broker located in CA holding a real estate broker license and all loan officers must have
Real Estate Salesman Licenses [which has hard courses and exam] and all loan officers
must be located only in CA and operate out of the CA offices. The good part of the DRE
license is that you can use all wholesale lenders including banks.
CA MORTGAGE BROKER CA MORTGAGE LENDER/
LICENSE- DRE BROKER LICENSE -CFL
CA Department of Real Estate
CA Dept of Real Estate
320 West 4th Street
Suite 350
Los Angeles CA 90013-1105
Phone Number: (213) 620-2072
Fax Numbers:
Enforcement: (213) 620-6442
Legal: (213) 576-6917
Subdivisions: (213) 576-6942
http://www.dre.cahwnet.gov/
Real Estate Broker License from Ca.
Dept. of Real Estate permits
mortgage loans to be brokered to
banks, saving loans and credit unions.
Key Requirements: CA PHYSICAL
OFFICE, CA DESIGNATED
BROKER, EACH BROKER AND
LOAN OFFICER MUST BE
SEPARATELY LICENSED AND
TAKE THE NECESSARY
COURSES AND EXAM [this is the
mainline mortgage broker license for
CA but it is a burden on out-of-state
companies]
B. CA Real Estate Broker License [CA
Department of Real Estate]
http://www.dre.cahwnet.gov/
PRO
1. Mortgage brokering to any licensed
or exempt CA Lender permitted
CON
CA MORTGAGE LENDER
LICENSE -RML
CA Department of Corporations CA Department of Corporations
CONSUMER FINANCE LENDERS RESIDENTIAL MORTGAGE LOAN
LAW ACT
DEPT. OF CORPORATIONS DEPT. OF CORPORATIONS
320 West 4th Street, Suite 750 320 West 4th Street, Suite 750
Los Angeles, CA 90013-1105 Los Angeles, CA 90013-1105
(213) 576-7500 (213) 576-7500
http://www.corp.ca.gov
http://www.corp.ca.gov/pub/mb.htm
/pub/lender.htm
LICENSING REQUIREMENTS
Consumer Finance Lender License Financial Code Section 50002(a) states
from the CA Deptartment of that no person shall engage in the
Corporations Brokers are defined in the business of making residential mortgage
California Finance Lenders Law as "any loans or servicing residential mortgage
person engaged in the business of loans in this state without first obtaining a
negotiating or performing any act as license from the commissioner in
broker in connection with loans made accordance with the requirements of the
by a Finance Lender". Brokers licensed Act and any rules promulgated by the
under this law, may only broker loans to commissioner under this law. Financial
lenders possessing a valid California Code Section 50003(s) defines "person"
Finance Lenders license. to mean a natural person, a sole
proprietorship, a corporation, a
Key requirements: $300 filing fee, NO partnership, a limited liability company,
CA PHYSICAL OFFICE an association, a trust, a joint venture, an
REQUIREMENT, NO FINGER PRINT unincorporated organization, a joint stock
CARDS, NO EXAM, NO SEPARATE company, a government or a political
LOAN OFFICER LICENSES, CAN subdivision of a government, and any
APPLY AS BOTH BROKER AND other entity. Financial Code Section
LENDER BUT TABLE FUNDING 50003(f) defines "engage in the business"
NOT PERMITTED, broad license to mean the dissemination to the public,
covering commercial lending, or any part of the public, by means of
equipment leasing, secured and written, printed or electronic
unsecured consumer loans, low net communication or any communication by
worth $25,000, low bond $25000, NO means of recorded telephone messages or
AUDITED FINANCIALS; CAN ONLY spoken on radio, television, or similar
BROKER TO CFL LENDERS; SEE communication media, of any
SEARCH ENGINE FOR WHO THEY information relating to the making of
ARE residential mortgage loans, the servicing
of residential mortgage loans, or both.
A. CA Finance Lender License [CA "Engage in the business" also means,
Department of Corporations] without limitation, making residential
http://www.corp.ca.gov/pub/lender.htm mortgage loans or servicing residential
mortgage loans, or both.Financial Code
PRO Section 50003(l) defines a California
1. Mortgage brokering [restricted] and Residential Mortgage Lender as a lender
Mortgage Lending [restricted] of CA who is (1) an approved lender for the

1. CA physical office required with a
Designated Broker located at that
Address
2. The Designated Broker must sign off
on every loan brokered
3. Extensive Courses must be taken by
Designated Broker
4. Exam must be passed in CA by
Designated Broker
5. Separate real estate salesman licenses
for each loan officer requiring extensive
courses and passing an exam in CA
Section 10162 of the Business and
Professions Code
Every licensed real estate broker shall
have and maintain a
definite place of business in the State of
California which shall
serve as his office for the transaction of
business. This office
shall be the place where his license is
displayed and where
personal consultations with clients are
held.
Residential Consumer Loans permitted
2. No CA physical office required
3. No Exams
4. No Courses to take
5. No separate Loan Officer licenses,
courses, exams
6. License permits lending
7. License permits commercial loans,
unsecured loans, personal property
loans
8. Low Net Worth [$25,000] and low
filing fee [$300] and low Bond
[$25,000]
9. No Audited Financials Required
CON
1. Table-Funding of CA Residential
Consumer Loans not permitted
2. Brokering exclusively to Lenders
with CFL license permitted [Note: only
a limited number of CA Lenders have
this License so client is advised to work
up a group of new lenders to work with
in CA before applying for this license if
Client only brokers loans]
3. As a lender, sale of loans restricted to
Institutional Investors
A lender who only has [1] cannot be a
wholesale lender to a broker under [2].
Only lenders who have a CFL license
can broker to a CFL broker. Attached is
a list of some of the bigger lenders who
have a CFL license. The best way for
you to find lenders in CA with the CFL
License is to pull up our website.
http://www.thomas-law.com/ , click on
License Confirmation Page link. Next
scroll down to CA and click on the
California Finance Lenders and
Federal Housing Administration,
Veterans Administration, Farmers Home
Administration, Ginnie Mae, Fannie Mae,
or Freddie Mac; (2) directly makes
residential mortgage loans; and (3) makes
the credit decision in the loan
transactions. Financial Code Section
50003(n) defines "makes or making
residential mortgage loans" or "mortgage
lending" to mean the processing,
underwriting, or as a lender using or
advancing one's own funds, or making a
commitment to advance one's own funds,
to a loan applicant for a residential
mortgage loan. Financial Code Section
50003(t) defines "residential real
property" or "residential real estate" as
real property located in this state that is
improved by a one-to-four family
dwelling. Financial Code Section
50003(p) defines a "mortgage servicer"
or "residential mortgage loan
servicer" as a person that (1) is an
approved servicer for the Federal
Housing Administration, Veterans
Administration, Farmers Home
Administration, Ginnie Mae, Fannie Mae,
or Freddie Mac, and (2) directly services
or offers to service mortgage loans.
Financial Code Section 50003(u) defines
"Service" or "servicing" to mean
receiving more than three
installment payments of principal,
interest, or other amounts placed in
escrow, pursuant to the terms of a
mortgage loan. Financial Code Sections
50201(a)(b) require that all licensees
maintain a minimum tangible net worth at
all times of two hundred fifty thousand
dollars ($250,000). Tangible net worth
should be computed in accordance with
generally accepted accounting principles.
Financial Code Section 50205(a) requires
that a licensee maintain a surety bond of
$50,000.
The bond shall be used for the recovery
of expenses, fines, and fees levied by the
commissioner or for losses or damages
incurred by borrowers or consumers as a
result of a licensee's noncompliance with
the requirements of the Act. Financial
Code Section 50206(a) requires that prior
to a change of control of the business of a
licensee, the person wishing to acquire
control shall submit a written application
to the commissioner and pay an
investigation fee of one hundred dollars

No real estate license authorizes the
licensee to do business
except from the location stipulated in license under the CFL because you
the real estate license
issued or as altered pursuant to Section tremendous benefit and costs you no
10161.8.”
DRE FORMS
Real Estate Corporation License
A corporation may be licensed as a real
estate broker through one or more of its
officers who are brokers or have
qualified for a broker license by
examination within the twelve months
preceding receipt of application. All acts
of the licensed broker/officer(s) under
this license must be performed only on
behalf of the corporation.
If you are not a resident of California,
see Out-of-State Applicants.
For the fee of $165, the license issued to
a corporation’s designated officer
entitles that individual to conduct
licensed activities on behalf of the
corporation without payment of an
additional license fee. (A fingerprint
processing fee may be required of those
applicants who have passed the broker
examination, but do not currently hold a
real estate license (see Fingerprint
Requirements). The person applying for
a designated broker/officer license must
hold an officer title in the corporation.
The term "broker/officer" is not an
official officer title.
Residential Loan Licensees link to the
right. This will bring you to a CA search
page. Choose Company Contains , then
type in Mortgage or Lender and hit ($100). Financial Code Section 50003(e)
search. This will bring up hundreds of defines "control" as the possession,
companies with the CFL license. You directly or indirectly, of the power to
will need to review the list as some of direct, or cause the direction of, the
the companies my only broker, but there management and policies of a licensee
are hundreds that are active lenders. under this division, whether through
That will be your best way of contacting voting or through the ownership of voting
a lender in CA with the CFL license. power of an entity that possesses voting
We applied for both a broker and lender power of the licensee, or otherwise.
Control is presumed to exist if a person,
could qualify for it and it gives you a directly or indirectly, owns, controls, or
holds 10 percent or more of the voting
extra. If at some point in the future, you power of a licensee or of an entity that
decide that you want to work with some owns, controls, or holds, with power to
of your present lenders who do not have vote, 10 percent or more of the voting
a CFL license, you can get a warehouse power of a licensee. No person shall be
line of credit, close the loans in your deemed to control a licensee solely by
name funded with your warehouse line reason of his or her status as an officer or
and sell the loan to these lenders. The director of the
only restriction on whom you can sell licensee.
loans to is that they must be an
"institutional investor" which I can sure
most of the lenders would be.
CFL FORMS: RML FORMS
Financial Code Section 50306 requires
that each licensee notify the Department,
in writing, by certified mail, return
receipt requested, prior to opening a
branch office in California or proposed
change of business location(s) from
which activities subject to the Act are
conducted. Failure to do so may subject
the licensee, by order of the
Commissioner, to a penalty of $100 per
day for the first 10 days and $10 for each
day thereafter during which the branch
office or changed location is
maintained without authority. Each
licensee is required to file an annual
report for the calendar year just ended
containing the
information required by the
commissioner each year, whether or not
any business has been conducted under
the license. The deadline for filing is
March 1. Failure to file the report within
10 days from the day designated for the
making of the report or any extension
will result in a penalty of
$100 per day for every day up to the 10th
day. Thereafter any failure to file shall
constitute grounds for the suspension or
revocation of the license. [Financial Code
Sections 50307 and 50326]. Financial

To obtain a corporation license, submit
a properly completed Corporation
License Application (RE 201), the
current license fee, and either a
Certificate of Status, Certification of
Foreign Corporation, or Certification of
Qualification (if issued within 30 days
before the date the application is
submitted to our office), or the Articles
of Incorporation (if filed within six
months before the date the application
is submitted to our office). Section III of
the Corporation License Application
(RE 201) requires the designated officer
who obtains the original corporation
license to file a Corporation
Background Statement (RE 212) for any
director, chief executive officer,
president, first level vice president(s),
secretary, chief financial officer, and
subordinate officers with responsibility
for forming policy of the corporation
and all natural persons owning or
controlling more than 10% of its shares,
if such a person has been the subject of
any of the items enumerated in
Regulation 2746. If none of the officers
have been the subject of any of the
items enumerated in that Regulation, a
Corporation Background Statement (RE
212) is not needed. In all instances, the
designated broker/officer must complete
and sign the certification in Part III of
the application.
Other officers who are acting for the
corporation in any capacity which
would require a broker license must be
additionally licensed as officers of the
corporation. Additional broker/officers
may be licensed by submitting a
completed Corporation License
Application (RE 201) and the current
fee. There is no limit to the number of
broker/officers who may be added. All
brokers who are applying for an
additional broker/officer license must
hold an officer title in the corporation.
The term "broker/officer" is not an
official officer title.
The designated corporate officer is
responsible for the supervision and
control of the activities requiring a
license which are conducted, on behalf
of the corporation, by its officers and
Code Section 50200 states that at the end
of each licensee's fiscal year, but in no
case more than 12 months after the last
audit conducted, each residential
mortgage licensee is responsible for
having its books and accounts audited by
an independent certified public
accountant. The audit
report is to be filed with the
Commissioner within 105 days of the end
of the licensee's fiscal year. If a licensee
fails to cause an audit to be made, the
Commissioner may cause the audit to be
made by an independent certified public
accountant at the licensee's expense. The
Commissioner may summarily revoke the
license of a licensee who fails to file an
audited financial statement prepared by
an independent certified public
accountant. All residential mortgage
lenders are required to file a report by the
31st of March regarding Holden Act
reporting requirements.
Financial Code Section 50401 requires
the commissioner by notice to all
licensees on or before September 30 of
each year to levy an annual assessment to
be paid by each licensee of an amount
equal to the greater of its pro rata share
of all costs and expenses (including
overhead, and the
maintenance of a prudent reserve of at
least 90 days' costs and expenses) that
the Commissioner reasonably expects to
incur in the next fiscal year in the
administration of the Act and not
otherwise
recovered by the Commissioner under
this Division from the State Corporations
Fund, plus any deficit or less any surplus
actually incurred during the previous
fiscal year. The minimum assessment
amount is $1,000, the maximum is
$5,000. Failure to pay the assessment
may result in the summary suspension or
revocation of the license(s) held by the
licensee. Financial Code Section 50302
states that a licensee is subject to the
examination of its books and records at
anytime, but at least once every 48
months. Affiliates of a licensee are
subject to
examination by the Commissioner on the
same terms as the licensee, but only
when reports from, or examination of, a
licensee provides documented evidence
of unlawful activity between a licensee
employees. The designated broker
officer may, by resolution of the board
of directors, assign supervisory
responsibility over salespersons licensed
to the corporation to additional licensed
broker officers. A certified copy of the
corporate resolution and Certification
(Assignment of Supervisory
Responsibility) (RE 210) must be
forwarded to DRE within five days after
the adoption or modification thereof if
such supervisory responsibility has been
delegated to other licensed broker
officers.

How to Apply

Submit the following:

and affiliate benefiting, affecting or
Completed Corporation License
arising from the activities regulated. The
Application (RE 201).
cost of routine
regulatory examinations is paid by the
Properly completed Corporation
licensee examined. The licensee will pay
Background Statement(s) (RE 212), if
the reasonable expenses of a nonroutine
applicable.
regulatory examination of the licensee
and affiliates. For the purpose of any
Appropriate Fee (see Fees).
routine or nonroutine examination, a
licensee with a business location outside
A completed Live Scan Service Request
of California is required to make its
(RE 237), when applicable (see
books, accounts, papers, records and files
Fingerprint Requirements).
available to the
Commissioner in California within 10
Certificate of Status, Certification of
days of a request. Alternatively, the
Foreign Corporation, or Certification of
licensee may pay the reasonable
Qualification (if issued within 30 days
expenses incurred for travel, meals and
before the date the application is
lodging of the Commissioner's
submitted to our office), or Articles of
representative(s)
Incorporation (if filed with the
during any investigation or examination
California Secretary of State within six
made at the licensee's location outside
months before the date the application
California. [Financial
is submitted to our office). These
Code Section 50120(e)]
documents can be obtained by any
registered corporation from the
California Secretary of State.

Branch Office Application (RE 203),

when applicable, for each additional
office location being added.

Certified copy of Fictitious Business

Name Statement (DBA), when
applicable, if the corporation will be
doing business with any name other
than the corporation name. See
Fictitious Business Name Information
(RE 282) for further information and
specific instructions.
A completed Salesperson Change
Application (RE 214) for any
salesperson the corporation intends to
employ to conduct licensed activity as
an employee of the corporation.

Mail to:

Department of Real Estate

Corporations Section
P.O. Box 187004
Sacramento, CA 95818-7004
Proof of Legal Presence

All license applicants must submit proof

that they have legal presence in the
United States. A proof of legal presence
document (i.e., birth certificate, resident
alien card, etc.) must be submitted with
a State Public Benefits Statement (RE
205) before a license will be issued. For
further information, see Proof of Legal
Presence.

See also Child Support Obligors.