2005 California Financial Code Sections 50120-50129 CHAPTER 2. LICENSING: RESIDENTIAL MORTGAGE LENDER

50120.  (a) A residential mortgage lender shall file an application
for licensure under this chapter with the commissioner to make or
service residential mortgage loans in this state.
   (b) A licensee may not engage in the business as a residential
mortgage lender under a name other than the name that appears on the
license, or a legally assumed name disclosed either in the
application or in an amendment to the application, which shall be
reflected on the license.
   (c) A licensee may not make or service residential mortgage loans
secured by real property pursuant to the authority of a license, or
an exemption from licensure, under the Real Estate Law.
   (d) The commissioner may, pursuant to Section 50321, order a
licensee to cease any other business conducted at any location where
the licensee operates under the authority of a residential mortgage
lender license, if the commissioner finds that the conduct of that
business has facilitated evasions of this division or the rules
adopted pursuant to this division, or that the conduct of that
business is in violation of any law to which that business is
subject.
   (e) A license for a business location outside this state may be
issued if the licensee agrees in writing, and subject to the sole
discretion of the commissioner, to either (1) make the licensee's
books, accounts, papers, records, and files available to the
commissioner or the commissioner's representatives in this state
within 10 calendar days of a request from the commissioner or, (2)
pay the reasonable expenses for travel, meals, and lodging of the
commissioner or the commissioner's representatives incurred during an
investigation or examination made at the licensee's location outside
this state.
50121.  The commissioner shall issue a license upon the satisfaction
of all of the following:
   (a) The filing with the commissioner of a complete and verified
application for licensure.
   (b) The filing as an exhibit to the application of a listing of
material judgments filed against, and bankruptcy petitions filed by,
the applicant for the preceding five years, and the disposition
thereof.
   (c) The payment of a nonrefundable investigation fee of one
hundred dollars ($100), plus the cost of fingerprint processing and
clearance, and an application filing fee of nine hundred dollars
($900).
   (d) An investigation of the statements required by Section 50124
based upon which the commissioner is able to issue findings that the
financial responsibility, criminal records (verified by fingerprint,
at the discretion of the commissioner), experience, character, and
general fitness of the applicant and of the partners or members
thereof, if the applicant is a partnership or association, and of the
principal officers and directors thereof, if the license applicant
is a corporation, support a finding that the business will be
operated honestly, fairly, and in accordance with the requirements of
this division.
50122.  (a) The application for a residential mortgage lender
license shall be in writing, executed under penalty of perjury, and
verified on a form prescribed by the commissioner.  If an applicant
proposes to engage in business as a residential mortgage loan
servicer as well as a residential mortgage lender, this information
shall be set forth in the application.  The commissioner may issue a
license under this chapter to engage in business as a residential
mortgage lender or to engage in business as a residential mortgage
lender and residential mortgage loan servicer.  A person filing an
application under this chapter to engage in business as a residential
mortgage lender and a residential mortgage loan servicer is not
required to file an application under Chapter 3 (commencing with
Section 50130).
   (b) The application shall contain the name and complete business
and residential address or addresses of the applicant.  If the
applicant is a partnership, association, corporation, or other
entity, the application shall contain the names and complete business
and residential addresses of each member, director, and principal
officer.  The application also shall include a description of the
activities of the applicant in the detail and for the periods that
the commissioner may require, including all of the following:
   (1) A statement of financial solvency, noting the net worth
requirements and supported by an audited financial statement prepared
by an independent certified public accountant, and access to the
supporting credit information as required by this division.
   (2) A statement that the applicant or its members, directors, or
principals, as appropriate, are at least 18 years of age.
   (3) Information as to the character, fitness, financial and
business responsibility, background, experience, and criminal
convictions of any of the following:
   (A) Any person that owns or controls, directly or indirectly, 10
percent or more of any class of stock of the applicant.
   (B) Any person that controls, directly or indirectly, the election
of 25 percent or more of the members of the board of directors of an
applicant.
   (C) Any person or entity that significantly influences or controls
the management of the applicant.
   (4) A description of any disciplinary action filed under any other
license through which the person conducts its business.
   (5) A description of any adverse judgments entered in court
actions filed by borrowers based upon allegations of fraud,
misrepresentation, or dishonesty in the conduct of the person's
business.
   (6) A copy of the fidelity bond currently in effect.
   (7) Other information as required by rule of the commissioner.
50123.  (a) A license shall remain in effect until suspended,
surrendered, or revoked.
   (b) A licensee that ceases to engage in the business regulated by
this division and desires to no longer be licensed shall inform the
commissioner in writing and, at that time, surrender the license and
all other indicia of licensure to the commissioner.  The licensee
shall file a plan for the withdrawal from regulated business,
including a timetable for the disposition of the business and a
closing audit performed by an independent certified public
accountant.  Upon receipt of the written notice and plan, the
commissioner shall review the plan and, if satisfactory to the
commissioner, shall accept the surrender of the license.  A license
is not surrendered until its tender is accepted in writing by the
commissioner after a review, and a finding has been made on the
licensee's plan required to be filed by this section, and a
determination has been made that there is no violation of this law.
   (c) A licensee may not surrender its license under this division
and, under the authority of a real estate license, subsequently
engage in residential mortgage lending or servicing activities that
are subject to this division, unless the licensee has been licensed
under this division for a period of five years or more.
50124.  (a) A license application must be accompanied by an exhibit
containing statements that the applicant agrees to do the following:
   (1) To maintain staff adequate to meet the requirements of this
division, as prescribed by rule or order of the commissioner.
   (2) To keep and maintain for 36 months from the date of final
entry the business records and other information required by law or
rules of the commissioner regarding any mortgage loan made or
serviced in the course of the conduct of its business.
   (3) To file with the commissioner any report required under law or
by rule or order of the commissioner.
   (4) To disburse funds in accordance with its agreements and to
make a good faith and reasonable effort to effect closing in a timely
manner.
   (5) To account or deliver to a person any personal property such
as money, funds, deposit, check, draft, mortgage, other document, or
thing of value, that has come into its possession and is not its
property, or that it is not in law or equity entitled to retain under
the circumstances, at the time that has been agreed upon or is
required by law, or, in the absence of a fixed time, upon demand of
the person entitled to the accounting or delivery.
   (6) To file with the commissioner an amendment to its application
prior to any material change in the information contained in the
application for licensure, including, without limitation, the plan of
operation.  The commissioner shall, within 20 business days of
receiving a completed amendment to the application, or within a
longer time if agreed to by the licensee, issue an order approving or
disapproving the effectiveness of the proposed amendment.
   (7) To comply with the provisions of this division, and with any
order or rule of the commissioner.
   (8) To submit to periodic examination by the commissioner as
required by this division.
   (9) To advise the commissioner by amendment to its application of
any material judgment filed against, or bankruptcy petition filed by,
the licensee within five days of the filing.
   (10) To notify the commissioner, in writing, by certified mail,
return receipt requested, prior to opening a branch office in this
state or changing the business location or locations of the applicant
or the branch offices of the applicant from which activities subject
to this division are conducted.
   (b) The exhibit also shall contain a space for the applicant to
attest that the applicant:
   (1) Has complied with all applicable state and federal tax return
filing requirements for the past three years or has filed with the
commissioner an accountant's or attorney's statement as to why no
return was filed.
   (2) Has not committed a crime against the laws of any state or the
United States, involving moral turpitude, misrepresentation,
fraudulent or dishonest dealing, or fraud, and has disclosed to the
commissioner any final judgment entered against it in a civil action
upon grounds or allegations of fraud, misrepresentation, or deceit.
   (3) Has not engaged in conduct that would be cause for denial of a
license.
   (4) Is not insolvent.
   (5) Has acted with due care and competence in performing any act
for which it is required to hold a license under this division.
   (6) Any other matter as required by rule of the commissioner.
50125.  The commissioner may refuse to issue a license if any of the
following apply:
   (a) The applicant is not in material compliance with a provision
of this division or an order or rule of the commissioner.
   (b) The commissioner cannot make the findings specified in
subdivision (d) of Section 50121.
   (c) A material requirement for issuance of a license has not been
met.
50126.  (a) Upon reasonable notice and opportunity to be heard, the
commissioner may deny an application for any of the following
reasons:
   (1) A false statement of a material fact has been made in the
application.
   (2) Any officer, director, general partner, or person owning or
controlling, directly or indirectly, 10 percent or more of the
outstanding interests or equity securities of the applicant has,
within the last 10 years, (A) been convicted of, or pleaded nolo
contendere to, a crime or (B) committed any act involving dishonesty,
fraud, or deceit, if the crime or act is substantially related to
the qualifications, functions, or duties of a person engaged in
business in accordance with this division.
   (3) The applicant or any officer, director, general partner, or
person owning or controlling, directly or indirectly, 10 percent or
more of the outstanding interests or equity securities of the
applicant, has violated any provision of this division or the rules
thereunder or any similar regulatory scheme of the State of
California or a foreign jurisdiction.
   (b) The application shall be considered withdrawn within the
meaning of this section if the applicant fails to respond to a
written notification of a deficiency in the application within 90
days of the date of the notification.
   (c) The commissioner shall, within 60 days from the filing of a
full and complete application for a license, including the receipt of
background and investigative reports from the Department of Justice
or other government agencies, and the payment of the fees required by
Section 50121, issue either a license or a statement of issues
prepared in accordance with Chapter 5 (commencing with Section 11500)
of Part 1 of Division 3 of Title 2 of the Government Code.
50127.  The proceedings for a denial of a license shall be conducted
in accordance with Chapter 5 (commencing with Section 11500) of Part
1 of Division 3 of Title 2 of the Government Code, and the
commissioner has all the powers granted therein.
50128.  As used in this act, the term "principal officer" means an
officer with direct responsibility for the conduct of the licensee's
or license applicant's lending or servicing activities in this state.
50129.  (a) A residential mortgage lender licensed under this
chapter may, under the authority of that license and subject to the
provisions of this division, do both of the following:
   (1) Engage as a principal in the business of buying from or
selling to institutional investors residential mortgage loans by
using or advancing one's own funds.
   (2) Engage, pursuant to a written agency contract with an
institutional lender specified in paragraph (1), (2) or (4) of
subdivision (j) of Section 50003, in the business of soliciting,
processing applications, or applying residential loan underwriting
criteria, but not engage in the business of brokerage services
pursuant to this subdivision, for residential mortgage loans for that
lender, using or advancing the funds of that lender, provided that
no fees or charges may be demanded or collected by the licensee for
any performance or service, except fees demanded by, or collected on
behalf of, the lender, and that the licensee gives a written
disclosure to the borrower, as soon as practicable but prior to loan
closing, identifying the licensee and stating that the licensee is
not the lender in the transaction but has contracted to provide
soliciting, processing, or underwriting services for the lender.
Separate schedules of the number and principal amount of the loans
processed and underwritten shall be included in the licensee's annual
report required by subdivision (a) of Section 50401.
   (b) The act of soliciting other institutional lenders with whom a
licensee has concluded an agency contract pursuant to paragraph (2)
of subdivision (a) for placement of a loan upon declination of that
loan by another institutional lender contracted under paragraph (2)
of subdivision (a), constitutes brokerage services, and may be
pursued by the licensee only following execution of a loan brokerage
agreement with the borrower as provided in this division.