BILL NUMBER: SB 1137	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 3, 2010

INTRODUCED BY   Committee on Banking, Finance and Insurance (Senators
Calderon (Chair), Cogdill, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, and Runner)

                        FEBRUARY 18, 2010

   An act to amend  Section   Sections 10137,
10139, and 10166.02 of the Business and Professions Code, and to
amend Sections 22104, 22107, 22109.1, 22109.4, 22112, 50002, 50141,
50144, and  50700 of the Financial Code, relating to mortgage
lending.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1137, as amended, Committee on Banking, Finance and Insurance.
 Residential mortgage lenders.   Mortgage
lending.  
   (1) Existing law, the Real Estate Law, provides for the licensure
and regulation of real estate brokers and real estate salespersons by
the Real Estate Commissioner and makes a willful violation of its
provisions a crime. Existing law makes it unlawful for a real estate
broker to employ or compensate, directly or indirectly, any
unlicensed person for performing any acts for which a real estate
broker or real estate salesperson license is required. Existing law
makes it a crime for a person to act as a real estate broker or real
estate salesperson, or to advertise themselves as a real estate
broker, without having a license.  
   This bill would make it unlawful for a real estate broker to
employ or compensate, directly or indirectly, any licensee for
engaging in any activity for which a mortgage loan originator license
endorsement is required if that licensee does not hold a mortgage
loan originator license endorsement. The bill would also make it a
crime for a person to act as a mortgage loan originator without a
license endorsement or to advertise using words indicating the person
is a real estate salesperson or a mortgage loan originator without
having a license or license endorsement.  
   Existing law requires a real estate broker who acts, as specified,
to make, arrange, or service loans secured by real property
containing one to 4 residential units, and any real estate person who
acts in a similar capacity under the supervision of the broker, to
notify the Department of Real Estate within 30 days of commencing
that activity. Existing law makes a real estate broker that fails to
notify the department subject to specified penalties and authorizes
the commissioner to suspend or revoke the license of the real estate
broker.  
   This bill would specify that these penalties also apply to a real
estate salesperson who fails to notify the commissioner within 30
days of commencing those activities.  
   Because a willful violation of these provisions would be a crime,
the bill would impose a state-mandated local program.  
   (2) Existing law provides for the licensure and regulation of
finance lenders and brokers, residential mortgage lenders and
servicers, and mortgage loan originators by the Department of
Corporations. The California Finance Lenders Law requires a licensed
finance lender or broker employing one or more mortgage loan
originators to continuously maintain a minimum net worth of $250,000.
 
   This bill would, instead, require a licensed finance lender or
broker that employs one or more mortgage loan originators and that
makes residential mortgage loans to continuously maintain that net
worth of $250,000 and would require a licensed finance broker that
employs one or more mortgage loan originators and that arranges, but
does not make, residential mortgage loans, to continuously maintain a
net worth of $50,000.  
   Existing law requires each finance lender and broker licensee to
pay to the commissioner its pro rata share of all costs and expenses
associated with the administration of the California Finance Lenders
Law. Existing law requires the commissioner to notify a licensee, on
or before the 30th day of November in each year, the amount levied
against it for its pro rata share of those costs and requires a
licensee to pay that amount by December 31.  
   This bill would, instead, require the commissioner to notify each
finance lender and broker licensee by the 30th day of September in
each year and would require a licensee to pay by October 31. 

   Existing law requires each finance lender and broker licensee to
maintain a surety bond in a minimum amount of $25,000. Existing law
authorizes the commissioner to, by rule, require a higher bond amount
for a licensee employing one or more mortgage loan originators.
 
   This bill would, instead, authorize the commissioner to, by rule,
require a higher bond amount for a licensee who employs one or more
mortgage loan originators and who makes or arranges residential
mortgage loans.  
   The California Finance Lenders Law and the California Residential
Mortgage Lending Act prohibit the commissioner from issuing a
mortgage loan originator license unless the commissioner makes
specified findings relating to the background, financial
responsibility, and education of the applicant. Those laws also
require a mortgage loan originator to comply with specified minimum
standards by December 31 of each year and require a mortgage loan
originator license to expire at midnight on January 31 if the
licensee fails to satisfy those standards.  
   This bill would, instead, require the commissioner to deny an
application for a mortgage loan originator license unless the
commissioner makes those specified findings and would require the
commissioner, before denying an application for licensure, to proceed
pursuant to specified administrative hearing procedures. The bill
would also require a mortgage loan originator license to expire at
midnight on December 31, instead of January 31, if a licensee fails
to satisfy the minimum standards. 
   Existing law  , the California Residential Mortgage
Lending Act, provides for the regulation and licensure of residential
mortgage lenders and servicers and mortgage loan originators by the
Commissioner of Corporations. Existing law  defines the term
"brokerage services" for purposes of  these provisions
  the California Residential Mortgage Lending Act 
.
   This bill would correct an erroneous cross-reference in the
provisions defining "brokerage services." 
   (3) 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:  no
  yes  . State-mandated local program:  no
  yes  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 10137 of the  
Business and Professions Code   is amended to read: 
   10137.  It is unlawful for any licensed real estate broker to
employ or compensate, directly or indirectly, any person for
performing any of the acts within the scope of this chapter who is
not a licensed real estate broker, or a real estate  salesman
  salesperson  licensed under the broker employing
or compensating him  or her, or to employ or compensate,
directly or indirectly, any licensee for engaging in any activity for
which a mortgage loan originator license endorsement is required, if
that licensee does not hold a mortgage loan originator license
endorsement  ; provided, however, that a licensed real estate
broker may pay a commission to a broker of another  State
  st   ate  .
   No real estate  salesman  salesperson 
shall be employed by or accept compensation from any person other
than the broker under whom he  or she  is at the time
licensed.
   It is unlawful for any licensed real estate  salesman
  salesperson  to pay any compensation for
performing any of the acts within the scope of this chapter to any
real estate licensee except through the broker under whom he  or
she  is at the time licensed.
   For a violation of any of the provisions of this section, the
commissioner may temporarily suspend or permanently revoke the
license of the real estate licensee, in accordance with the
provisions of this part relating to hearings.
   SEC. 2.    Section 10139 of the   Business
and Professions Code   is amended to read: 
   10139.  Any person acting as a real estate broker  or
  ,  real estate salesperson  , or mortgage
loan originator  without a license  or license endorsement,
 or who advertises using words indicating that he or she is a
real estate broker  , real estate salesperson, or mortgage loan
originator  without being so licensed  or without having
obtained a license endorsement,  shall be guilty of a public
offense punishable by a fine not exceeding twenty thousand dollars
($20,000), or by imprisonment in the county jail for a term not to
exceed six months, or by both fine and imprisonment; or if a
corporation, be punished by a fine not exceeding sixty thousand
dollars ($60,000). If a Real Estate Fraud Prosecution Trust Fund, as
described in Section 27388 of the Government Code, exists in the
county where a person or corporation is convicted, any fine collected
from the person in excess of ten thousand dollars ($10,000) or any
fine collected from the corporation in excess of fifty thousand
dollars ($50,000) shall be deposited in that Real Estate Fraud
Prosecution Trust Fund.
   SEC. 3.    Section 10166.02 of the  
Business and Professions Code   is amended to read: 
   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).
   SEC. 4.    Section 22104 of the   Financial
Code   is amended to read: 
   22104.  (a) The applicant shall file with the application for a
finance lender or broker license financial statements prepared in
accordance with generally accepted accounting principles and
acceptable to the commissioner that indicate a net worth of at least
twenty-five thousand dollars ($25,000). Except as provided in
 subdivision   subdivisions  (b)  and
(c)  , a licensee shall maintain a net worth of at least
twenty-five thousand dollars ($25,000) at all times.
   (b) A  licensee employing   licensed finance
lender or broker, that employs  one or more mortgage loan
originators  and that makes residential mortgage loans, 
shall continuously maintain a minimum net worth of at least two
hundred fifty thousand dollars ($250,000). 
   (c) A licensed finance broker, that employs one or more mortgage
loan originators and that arranges, but does not make, residential
mortgage loans, shall continuously maintain a minimum net worth of at
least fifty thousand dollars ($50,000).  
   (c) 
    (d)  The commissioner may promulgate rules or
regulations with respect to the requirements for minimum net worth,
as are necessary to accomplish the purposes of this division and
comply with the SAFE Act.
   SEC. 5.    Section 22107 of the   Financial
Code   is amended to read: 
   22107.  (a) Each finance lender and broker licensee shall pay to
the commissioner its pro rata share of all costs and expenses,
including the costs and expenses associated with the licensing of
mortgage loan originators it employs, reasonably incurred in the
administration of this division, as estimated by the commissioner,
for the ensuing year and any deficit actually incurred or anticipated
in the administration of the program in the year in which the
assessment is made. The pro rata share shall be the proportion that a
licensee's gross income bears to the aggregate gross income of all
licensees as shown by the annual financial reports to the
commissioner, for the costs and expenses remaining after the amount
assessed pursuant to subdivision (c).
   (b) On or before the 30th day of  November  
September  in each year, the commissioner shall notify each
licensee of the amount assessed and levied against it and that amount
shall be paid by  December   October  31.
If payment is not made by  December  October
 31, the commissioner shall assess and collect a penalty, in
addition to the assessment, of 1 percent of the assessment for each
month or part of a month that the payment is delayed or withheld.
   (c) In the levying and collection of the assessment, a licensee
shall neither be assessed for nor be permitted to pay less than two
hundred fifty dollars ($250) per licensed location per year.
   (d) If a licensee fails to pay the assessment on or before the
31st day of  January following the day upon which payment is
due   October  , the commissioner may by order
summarily suspend or revoke the certificate issued to the licensee.
If, after an order is made, a request for hearing is filed in writing
within 30 days, and a hearing is not held within 60 days thereafter,
the order is deemed rescinded as of its effective date. During any
period when its certificate is revoked or suspended, a finance lender
or broker licensee and any mortgage loan originator licensee
employed by the finance lender or broker shall not conduct business
pursuant to this division except as may be permitted by order of the
commissioner. However, the revocation, suspension, or surrender of a
certificate shall not affect the powers of the commissioner as
provided in this division.
   (e) The commissioner shall, by rule, establish the timelines,
fees, and assessments applicable to applicants for original mortgage
loan originator licenses, license renewals, and license changes under
this division.
   (f) Notwithstanding subdivisions (a) to (e), inclusive, the
commissioner may by rule require licensees to pay assessments through
the Nationwide Mortgage Licensing System and Registry.
   SEC. 6.    Section 22109.1 of the  
Financial Code   is amended to read: 
   22109.1.   (a)    The commissioner shall
 not issue   deny an application for  a
mortgage loan originator license unless the commissioner makes, at a
minimum, the following findings: 
   (a) 
    (1) 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) 
    (2)  The applicant has not been convicted of, or pled
guilty or nolo contendere to, a felony in a domestic, foreign, or
military court, as follows: 
   (1) 
    (A)  During the seven-year period preceding the date of
the application for licensing and registration. 
   (2) 
    (B)  At any time preceding the date of application, if
the felony involved an act of fraud, dishonesty, or a breach of
trust, or money laundering. 
   (3) 
    (C)  Provided that any pardon of a conviction shall not
be a conviction for purposes of this  subdivision 
 paragraph  . 
   (c) 
    (3)  The applicant has demonstrated such financial
responsibility, character, and general fitness as to command the
confidence of the community and to warrant a determination that the
mortgage loan originator will operate honestly, fairly, and
efficiently within the purposes of this division. 
   (d) 
    (4)  The applicant has completed the prelicensing
education requirement described in Section 22109.2. 
   (e) 
    (5)  The applicant has passed a written test that meets
the test requirement described in Section 22109.3. 
   (f) 
    (6)  The applicant is employed by, and subject to the
supervision of, a finance lender or broker that has obtained a
license from the commissioner pursuant to this division. 
   (b) Before denying a license under this section, the commissioner
shall proceed as prescribed by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code and
shall have all the powers granted under that chapter. 
   SEC. 7.    Section 22109.4 of the  
Financial Code   is amended to read: 
   22109.4.  (a) A mortgage loan originator shall comply with the
requirements of this section on or before December 31 of every year.
   (b) The minimum standards for license renewal for a mortgage loan
originator shall include the following:
   (1) The mortgage loan originator continues to meet the minimum
standards for license issuance under Section 22109.1.
   (2) The mortgage loan originator has satisfied the annual
continuing education requirements described in Section 22109.5.
   (3) The mortgage loan originator, or the finance lender or broker
employing the mortgage loan originator, has paid all required fees
for renewal of the license as provided in Section 22107.
   (c) The license of a mortgage loan originator failing to satisfy
the minimum standards for license renewal shall expire at midnight on
 January   December  31, except as
provided in subdivision (h) of Section 22109.5. The commissioner may
adopt procedures for the reinstatement of expired licenses consistent
with the standards established by the Nationwide Mortgage Licensing
System and Registry.
   SEC. 8.    Section 22112 of the   Financial
Code   is amended to read: 
   22112.  (a) A licensee shall maintain a surety bond in accordance
with this subdivision in a minimum amount of twenty-five thousand
dollars ($25,000). The bond shall be payable to the commissioner and
issued by an insurer authorized to do business in this state. An
original surety bond, including any and all riders and endorsements
executed subsequent to the effective date of the bond, shall be filed
with the commissioner within 10 days of execution. For licensees
with multiple licensed locations, only one surety bond is required.
The bond shall be used for the recovery of expenses, fines, and fees
levied by the commissioner in accordance with this division or for
losses or damages incurred by borrowers or consumers as the result of
a licensee's noncompliance with the requirements of this division.
   (b) When an action is commenced on a licensee's bond, the
commissioner may require the filing of a new bond. Immediately upon
recovery of any action on the bond, the licensee shall file a new
bond. Failure to file a new bond within 10 days of the recovery on a
bond, or within 10 days after notification by the commissioner that a
new bond is required, constitutes sufficient grounds for the
suspension or revocation of the license.
   (c) The commissioner may by rule require a higher bond amount for
a licensee  employing   who employs  one or
more mortgage loan originators  and who makes or arranges
residential mortgage loans  , based on the dollar amount of
residential mortgage loans originated by that licensee and any
mortgage loan originators employed by that licensee. Every mortgage
loan originator employed by the licensee shall be covered by the
surety bond.
   SEC. 9.    Section 50002 of the   Financial
Code   is amended to read: 
   50002.  (a) No person shall engage in the business of making
residential mortgage loans or servicing residential mortgage loans,
in this state, without first obtaining a license from the
commissioner in accordance with the requirements of Chapter 2
(commencing with Section 50120) or Chapter 3 (commencing with Section
50130), and any rules promulgated by the commissioner under this
law, unless a person or transaction is excepted from a definition or
exempt from licensure by a provision of this law or a rule of the
commissioner.
   (b) An employee of a licensee or of a person exempt from licensure
is not required to be licensed when acting within the scope of his
or her employment and shall be exempt from any other law from which
his or her employer is exempt, except that an individual who meets
the definition of a mortgage loan originator in Section 50003.5 shall
be subject to this division.
   (c) The following persons are exempt from subdivision (a):
   (1) Any bank, trust company, insurance company, or industrial loan
company doing business under the authority of, or in accordance
with, a license, certificate, or charter issued by the United States
or any state, district, territory, or commonwealth of the United
States that is authorized to transact business in this state.
   (2) A federally chartered savings and loan association, federal
savings bank, or federal credit union that is authorized to transact
business in this state.
   (3) A savings and loan association, savings bank, or credit union
organized under the laws of this or any other state that is
authorized to transact business in this state.
   (4) A person engaged solely in business, commercial, or
agricultural mortgage lending.
   (5) A wholly owned service corporation of a savings and loan
association or savings bank organized under the laws of this state or
the wholly owned service corporation of a federally chartered
savings and loan association or savings bank that is authorized to
transact business in this state.
   (6) An agency or other instrumentality of the federal government,
or state or municipal government.
   (7) An employee or employer pension plan making residential
mortgage loans only to its participants, or a person making those
loans only to its employees or the employees of a holding company, or
an owner who controls that person, affiliate, or subsidiary of that
person.
   (8) A person acting in a fiduciary capacity conferred by the
authority of a court.
   (9) A real estate broker licensed under California law, when
making, arranging, selling, or servicing a residential loan.
   (10) A California finance lender or broker licensed under Division
9 (commencing with Section 22000), when acting under the authority
of that license.
   (11) A trustee under a deed of trust pursuant to the Civil Code,
when collecting delinquent loan payments, interest, or other loan
amounts, or performing other acts in a judicial or nonjudicial
foreclosure proceeding.
   (12) A mortgage loan originator who has obtained a license under
Chapter 3.5 (commencing with Section 50140), provided that the
mortgage loan originator is employed by a residential mortgage lender
or servicer.
   (13) A registered mortgage loan originator described in
subdivision (e).
   (d) An individual, unless specifically exempted under subdivision
(e), shall not engage in the business of a mortgage loan originator
with respect to any dwelling located in this state without first
obtaining and maintaining annually a license in accordance with the
requirements of Chapter 3.5 (commencing with Section 50140) and any
rules promulgated by the commissioner under that chapter. Each
licensed mortgage loan originator shall register with and maintain a
valid unique identifier issued by the Nationwide Mortgage Licensing
System and Registry.
   (e) A registered mortgage loan originator is exempt from licensure
under subdivisions (a) and (d), when he or she is employed by a
depository institution, a subsidiary of a depository institution that
is owned and controlled by a depository institution and regulated by
a federal banking agency, or an institution regulated by the Farm
Credit Administration.
   (f) A loan processor or underwriter who is an independent
contractor employed  engaged  by a residential
mortgage lender or servicer may not perform the activities of a loan
processor or underwriter under this division unless the independent
contractor loan processor or underwriter obtains and maintains a
license under Section 50120.
   SEC. 10.    Section 50141 of the   Financial
Code   is amended to read: 
   50141.   (a)    The commissioner shall 
not issue   deny an application for  a mortgage
loan originator license unless the commissioner makes at a minimum
the following findings: 
   (a) 
    (1)  The applicant has never had a mortgage loan
originator license revoked in any governmental jurisdiction, except
that a subsequent formal vacation or set aside of such revocation
shall not be deemed a revocation. 
   (b) 
    (2)  The applicant has not been convicted of, or pled
guilty or nolo contendere to, a felony in a domestic, foreign, or
military court during the seven-year period preceding the date of the
application for licensing and registration, or at any time preceding
the date of application, if such felony involved an act of fraud,
dishonesty, a breach of trust, or money laundering. For purposes of
this  subdivision   paragraph  , any pardon
of a conviction shall not constitute a conviction. 
   (c) 
    (3)  The applicant has demonstrated such financial
responsibility, character, and general fitness as to command the
confidence of the community and to warrant a determination that the
mortgage loan originator will operate honestly, fairly, and
efficiently within the purposes of this division. 
   (d) 
    (4)  The applicant has completed the prelicensing
education requirement described in Section 50142. 
   (e) 
    (5)  The applicant has passed a written test that meets
the test requirements described in Section 50143. 
   (f) 
    (6)  The applicant is employed by, and subject to the
supervision of, a residential mortgage lender or servicer that has
obtained a license from the commissioner pursuant to this division.

   (g) 
    (7)  The surety bond of the residential mortgage lender
or servicer employing the applicant covers the activities of the
applicant and meets the requirements of Section 50205. 
   (b) Before denying a license under this section, the commissioner
shall proceed as prescribed by Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code and
shall have all the powers granted under that chapter. 
   SEC. 11.    Section 50144 of the   Financial
Code   is amended to read: 
   50144.  (a) A mortgage loan originator shall comply with the
requirements of this section on or before December 31 of every year.
   (b) The minimum standards for license renewal for mortgage loan
originators shall include the following:
   (1) The mortgage loan originator continues to meet the minimum
standards for license issuance under Section 50141.
   (2) The mortgage loan originator has satisfied the annual
continuing education requirements described in Section 50145.
   (3) The mortgage loan originator, or the residential mortgage
lender or servicer employing the mortgage loan originator, has paid
all required fees for renewal of the license.
   (4) The license of a mortgage loan originator failing to satisfy
the minimum standards for license renewal shall expire at midnight on
 January   December  31, except as
provided in Section 50145. The commissioner may adopt procedures for
the reinstatement of expired licenses consistent with the standards
established by the Nationwide Mortgage Licensing System and Registry.

   SECTION 1.   SEC. 12.   Section 50700 of
the Financial Code is amended to read:
   50700.  (a) A residential mortgage lender, or a person or employee
acting under the authority of a residential mortgage lender's
license, including a mortgage loan originator, shall not provide
brokerage services to a borrower, except as provided in subdivision
(c).
   (b) "Brokerage services" means either of the following:
   (1) Obtaining or attempting to obtain, on behalf of a borrower, a
residential mortgage loan, as defined in subdivision (p) of Section
50003, secured by residential real estate, as defined in subdivision
(v) of Section 50003, made with the funds of another institutional
lender, as defined in paragraphs (1), (2), and (4) of subdivision (k)
of Section 50003, and closed in the name of that lender, for a fee
paid by the borrower or the institutional lender.
   (2) Obtaining or attempting to obtain, on behalf of a borrower, a
residential mortgage loan, as defined in subdivision (p) of Section
50003, secured by residential real estate, as defined in subdivision
(v) of Section 50003, made with the funds of another institutional
lender, as defined in paragraphs (1), (2), and (4) of subdivision (k)
of Section 50003, but closed in the name of the licensee, for a fee
paid by the borrower or the institutional lender.
   (c) A residential mortgage lender or a mortgage loan originator
employed by a residential mortgage lender may provide brokerage
services under the authority of the lender's license, if the lender
first enters into a written brokerage agreement with the borrower
that satisfies the requirements of Section 50701.
   (d) This chapter does not authorize a residential mortgage lender
licensee to do any of the following:
   (1) Provide brokerage services through independent contractors.
   (2) Provide brokerage services through an employee not licensed as
a mortgage loan originator.
   (3) Obtain or attempt to obtain for a borrower a residential
mortgage loan that is a "high cost mortgage," referred to in Section
152(aa)(1) of the federal Home Ownership and Equity Protection Act of
1994, as amended (15 U.S.C. Sec. 1602(aa)).
   (4) Hold itself out to borrowers, through advertising, as a
mortgage broker, rather than a residential mortgage lender. However,
a licensee shall disclose its status as a broker or agent when that
disclosure is required by law.
   (5) Perform activity subject to Section 10131 of the Business and
Professions Code, except activities authorized by this division.
   (e) A mortgage loan originator may only provide brokerage services
as an employee of a licensed residential mortgage lender.
   SEC. 13.    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.