BILL NUMBER: SB 36 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Calderon
(Principal coauthor: Assembly Member Nava)
DECEMBER 18, 2008
An act to amend Sections 10140.6, 10150, 10235.5, and 10236.4 of,
to add Article 2.1 (commencing with Section 10166.01) to Chapter 2 of
Division 4 of, and to repeal Section 10131.8 of, the Business and
Professions Code, relating to mortgages.
LEGISLATIVE COUNSEL'S DIGEST
SB 36, as introduced, Calderon. Real estate licenses: mortgages.
Existing law, the Real Estate Law, governs the licensing and
regulation of real estate licensees, as defined, as administered by
the Real Estate Commissioner. Existing law imposes specified
requirements on real estate brokers who solicit borrowers or lenders
or negotiate loans or collect payments or perform services for
borrowers or lenders relative to loans secured by real property. A
willful violation of the Real Estate Law is a crime.
This bill would require a real estate license endorsement from the
commissioner in order to engage in the business of a mortgage loan
originator, as defined. The bill would establish penalties if a real
estate licensee fails to obtain a license endorsement before
conducting business as a mortgage loan originator and would authorize
the commissioner to suspend or revoke a real estate license for a
failure to pay these penalties. The bill would require applicants for
a license endorsement as a mortgage loan originator to furnish
specified background information to the Nationwide Mortgage Licensing
System and Registry. The bill would establish standards for issuance
and renewal of a license endorsement to act as a mortgage loan
originator, including satisfying specified educational requirements.
The bill would require these real estate licensees to annually submit
business activities reports, and other reports that may be required,
to the commissioner. The bill would authorize the commissioner to
examine the affairs of real estate brokers, including those that
obtain license endorsement as a mortgage loan originator. The bill
would require the commissioner to report violations of the provisions
regulating real estate brokers and mortgage loan originators to the
Nationwide Mortgage Licensing System and Registry. The bill would
require recipients of a license endorsement as a mortgage loan
originator to use or disclose a specified unique identifier provided
by the Nationwide Mortgage Licensing System and Registry in
advertisements and solicitations of the mortgage loan originator. The
bill would enact other related provisions.
Because a willful violation of these provisions would be a crime,
this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10131.8 of the Business and Professions Code is
repealed.
10131.8. (a) A real estate broker who acts pursuant to
subdivision (d) of Section 10131 and who meets all of the following
requirements shall notify the department annually in writing on a
form that is acceptable to the commissioner:
(1) The real estate broker is an approved lender for the Federal
Housing Administration, Veterans Administration, Farmers Home
Administration, Government National Mortgage Association, Federal
National Mortgage Administration, or the Federal Home Loan Mortgage
Corporation.
(2) The real estate broker makes residential mortgage loans to a
loan applicant for a residential mortgage loan by using or advancing
the broker's own funds, or by making a commitment to advance the
broker's own funds.
(3) The real estate broker makes the credit decision in the loan
transaction.
(4) The real estate broker at all times maintains a tangible net
worth, computed in accordance with generally accepted accounting
standards, of a minimum of two hundred fifty thousand dollars
($250,000).
(b) As used in paragraph (2) of subdivision (a), "own funds" means
(1) cash, corporate capital, or warehouse credit lines at commercial
banks, savings banks, savings and loan associations, industrial loan
companies, or other sources that are liability items on the real
estate broker's financial statements, whether secured or unsecured,
or (2) cash, corporate capital, or warehouse credit lines at
commercial banks, savings banks, savings and loan associations,
industrial loan companies, or other sources that are liability items
on the financial statements of an affiliate of the real estate
broker, whether secured or unsecured. "Own funds" does not include
funds provided by a third party to fund a loan on condition that the
third party will subsequently purchase or accept an assignment of the
loan.
SEC. 2. Section 10140.6 of the Business and Professions Code is
amended to read:
10140.6. (a) A real estate licensee shall
not publish, circulate, distribute, nor or
cause to be published, circulated, or distributed in any
newspaper or periodical, or by mail , any matter
pertaining to any activity for which a real estate license is
required which that does not contain a
designation disclosing that he or she is performing acts
for which a real estate license is required.
(b) (1) A real estate licensee shall disclose his or her license
identification number and, if that licensee is a mortgage loan
originator, the unique identifier assigned to that licensee by the
Nationwide Mortgage Licensing System and Registry, on all
solicitation materials intended to be the first point of contact with
consumers and on real property purchase agreements when acting as an
agent in those transactions. The commissioner may adopt regulations
identifying the materials in which a licensee must disclose a license
identification number and, if that licensee is a mortgage loan
originator, the unique identifier assigned to that licensee by the
Nationwide Mortgage Licensing System and Registry.
(2) For purposes of this section, "solicitation materials intended
to be the first point of contact with consumers" includes business
cards, stationery, advertising fliers, and other materials designed
to solicit the creation of a professional relationship between the
licensee and a consumer, and excludes an advertisement in print or
electronic media and "for sale" signs.
(3) Nothing in this section shall be construed to limit or change
the requirement described in Section 10236.4 as applicable to real
estate brokers.
The
(c) The provisions of this
section shall not apply to classified rental advertisements reciting
the telephone number at the premises of the property offered for rent
or the address of the property offered for rent.
(d) "Mortgage loan originator," "unique identifier," and
"Nationwide Mortgage Licensing System and Registry" have the meanings
set forth in Section 10166.01.
SEC. 3. Section 10150 of the Business and Professions Code is
amended to read:
10150. (a) Application for the real estate broker license
examination shall be made in writing to the commissioner. The
commissioner may prescribe the format and content of the broker
examination application. The application for the broker examination
shall be accompanied by the real estate broker license examination
fee.
(b) Persons who have been notified by the commissioner that they
passed the real estate broker license examination may apply for a
real estate broker license. A person applying for the broker
examination may also apply for a real estate broker license. However,
a license shall not be issued until the applicant passes the real
estate broker license examination. If there is any change to the
information contained in a real estate broker license application
after the application has been submitted and before the license has
been issued, the commissioner may require the applicant to submit a
supplement to the application listing the changed information.
(c) Application for the real estate broker license shall be made
in writing to the commissioner. The commissioner may prescribe the
format and content of the broker license application. The application
for the real estate broker license shall be accompanied by the
appropriate fee.
(d) Application for an endorsement to act as a mortgage loan
originator, as defined in Section 10166.01, shall be made either
electronically or in writing to the commissioner. The commissioner
may prescribe the format and content of the mortgage loan originator
endorsement application, which shall meet the minimum requirements
for licensing of a mortgage loan originator, pursuant to the Secure
and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law
110-289).
SEC. 4. Article 2.1 (commencing with Section 10166.01) is added to
Chapter 2 of Division 4 of the Business and Professions Code, to
read:
Article 2.1. Secure and Fair Enforcement for Mortgage Licenses
10166.01. For purposes of this article, the following definitions
shall apply:
(a) "SAFE Act" means the 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 and offers or negotiates terms
of a residential mortgage loan for compensation or gain. An
individual real estate licensee acting within the meaning of
paragraph (d) of Section 10131 is a mortgage loan originator for
purposes of this article with respect to activities involving
residential mortgage loans.
(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. 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 is not compensated by a lender, other
mortgage loan originator, or by any agent of any lender or other
mortgage loan originator.
(C) 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.
(D) 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, mobile home, 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.
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, shall notify the department within 30 days
of the effective date of this section or upon commencing that
activity, whichever is later. The notification shall be made in
writing 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
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 who fails to notify the department
pursuant to subdivision (a), or who fails to obtain a license
endorsement required pursuant to 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 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) 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) Fingerprints or fingerprint images, for purposes of performing
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 requirements of subdivision (a) are satisfied if the
applicant has previously complied with Section 10152 to the
satisfaction of the commissioner.
(c) The commissioner shall request subsequent arrest notification
service from the Department of Justice, as provided pursuant to
Section 11105.2 of the Penal Code, in connection with an applicant
for a license endorsement as a mortgage loan originator.
10166.04. 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 other governmental jurisdiction.
(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
conviction expunged from the applicant's record 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 financial responsibility,
character, and general fitness such 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 10166.05.
10166.05. (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, and by the commissioner.
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, and by the commissioner.
The commissioner may substitute any of the courses described in
subdivision (a) for the course requirements of Section 10153.2,
10153.3, 10153.4, or 10153.5, subject to a finding that the course
requirements in subdivision (a) are substantially equivalent to, and
meet the intent of, Section 10153.2, 10153.3, 10153.4, or 10153.5, as
applicable.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) An applicant who fails three consecutive retests must wait at
least six months before retesting.
(i) 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.
10166.06. (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.
10166.07. 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.
10166.08. 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 10166.09.
10166.09. (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) 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.
10166.10. (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
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.
10166.11. (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
10166.06. 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.
10166.12. 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.
10166.13. 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 10166.06 and 10166.07 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.
10166.14. (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.
SEC. 5. Section 10235.5 of the Business and Professions Code is
amended to read:
10235.5. (a) No real estate licensee
or mortgage loan originator shall place an advertisement
disseminated primarily in this state for a loan unless there is
disclosed within the printed text of that advertisement, or the oral
text in the case of a radio or television advertisement, the
license Department of Real Estate license number and
the unique identifier assigned to that licensee by the Nationwide
Mortgage Licensing System and Registry under which
the loan would be made or arranged.
(b) "Mortgage loan originator, "unique identifier," and
"Nationwide Mortgage Licensing System and Registry" have the meanings
set forth in Section 10166.01.
SEC. 6. Section 10236.4 of the Business and Professions Code is
amended to read:
10236.4. (a) In compliance with Section 10235.5, every licensed
real estate broker shall also display his or her license number on
all advertisements where there is a solicitation for borrowers or
potential investors. Every mortgage loan originator, as defined
in Section 10166.01, shall also display the unique identifier
assigned to that individual by the Nationwide Mortgage Licensing
System and Registry on all advertisements where there is a
solicitation for borrowers.
(b) The disclosures required by Sections 10232.4 and 10240 shall
include the licensee's license number , the mortgage
originator's unique identifier, if applicable, and the
department's license information telephone number.
(c) This section shall become operative July 1, 1998
"Mortgage loan originator," "unique identifier," and
"Nationwide Mortgage Licensing System and Registry" have
the meanings set forth in Section 10166.01 .
SEC. 7. The Legislature finds and declares that Section 4 of this
act imposes a limitation on the public's right of access to the
meetings of public bodies or the writings of public officials and
agencies within the meaning of Section 3 of Article I of the
California Constitution. Pursuant to that constitutional provision,
the Legislature makes the following findings to demonstrate the
interest protected by this limitation and the need for protecting
that interest:
In order to allow the Department of Real Estate to fully
accomplish its goals, it is imperative to protect the interests of
those persons submitting information to the department to ensure that
any personal or sensitive business information that this act
requires those persons to submit is protected as confidential
information.
SEC. 8. The provisions of this act shall become operative when the
Real Estate Commissioner issues a finding that the Nationwide
Mortgage Licensing System and Registry is capable of two-way
electronic communication with the enterprise information system
maintained by the Department of Real Estate.
SEC. 9. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.