Senate BillNo. 1459


Introduced by Committee on Banking and Financial Institutions (Senators Correa (Chair), Berryhill, Block, Hill, Hueso, Roth, Torres, and Vidak)

February 25, 2014


An act to amend Sections 22109.2, 22109.3, 22109.5, 50142, 50143, and 50145 of the Finance Code, relating to mortgage loan originators.

LEGISLATIVE COUNSEL’S DIGEST

SB 1459, as introduced, Committee on Banking and Financial Institutions. Mortgage loan originators: educational requirements.

The California Finance Lenders Law and the California Residential Mortgage Lending Act define a mortgage loan originator as an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan for compensation or gain. These laws require that mortgage loan originators be appropriately licensed and fulfill certain educational and other requirements.

This bill would increase the number of hours of approved education that an applicant for a mortgage loan originator license must complete from 20-22 and require that 2 of those hours be related to relevant California law and regulation. The bill would increase the number of hours of continuing education that a holder of a mortgage loan originator license must complete from 8 to 9 and require that one of those hours be related to relevant California law and regulation. The bill would specify certain tests that satisfy the requirement for a written test that an applicant for a mortgage loan originator must pass.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 22109.2 of the Financial Code is amended
2to read:

3

22109.2.  

(a) An applicant for a mortgage loan originator
4license shall complete at leastbegin delete 20end deletebegin insert 22end insert hours of education approved
5in accordance with subdivision (b). The education shall include at
6least the following:

7(1) Three hours of instruction on federal law and regulations.

8(2) Three hours of ethics, which shall include instruction on
9fraud, consumer protection, and fair lending issues.

10(3) Two hours of training related to lending standards for the
11 nontraditional mortgage product marketplace.

begin insert

12(4) Two hours of training related to relevant California law
13and regulations.

end insert

14(b) For purposes of subdivision (a), prelicensing education
15courses shall be reviewed and approved by the Nationwide
16Mortgage Licensing System and Registry. Review and approval
17of a prelicensing education course shall include review and
18approval of the course provider.

19(c) Nothing in this section shall preclude any prelicensing
20education course, as approved by the Nationwide Mortgage
21Licensing System and Registry, that is provided by the employer
22of the applicant or an entity that is affiliated with the applicant by
23an agency contract, or any subsidiary or affiliate of the employer
24or entity.

25(d) Prelicensing education may be offered either in a classroom,
26online, or by any other means approved by the Nationwide
27Mortgage Licensing System and Registry.

28(e) The prelicensing education requirements approved by the
29Nationwide Mortgage Licensing System and Registry for any state
30other than California shall be accepted as credit toward completion
31of prelicensing education requirements in California.

32(f) An individual previously licensed under this division as a
33mortgage loan originator, applying to be licensed again, shall prove
34that he or she has completed all of the continuing education
35requirements for the year in which the license was last held.

36

SEC. 2.  

Section 22109.3 of the Financial Code is amended to
37read:

P3    1

22109.3.  

(a) An applicant for a mortgage loan originator
2license shall pass a qualified written test developed by the
3Nationwide Mortgage Licensing System and Registry and
4administered by a test provider approved by the Nationwide
5Mortgage Licensing System and Registry.

6(b) begin insert(1)end insertbegin insertend insertA written test shall not be treated as a qualified written
7test for purposes of subdivision (a) unless the test adequately
8measures the applicant’s knowledge and comprehension in
9appropriate subject areas, including all of the following:

begin delete

10(1)

end delete

11begin insert(A)end insert Ethics.

begin delete

12(2)

end delete

13begin insert(B)end insert Federal law and regulation relating to mortgage origination.

begin delete

14(3)

end delete

15begin insert(C)end insert State law and regulation relating to mortgage origination.

begin delete

16(4)

end delete

17begin insert(D)end insert Federal and state law and regulation, including instruction
18on fraud, consumer protection, the nontraditional mortgage
19marketplace, and fair lending issues.

begin insert

20(2) The following tests satisfy the requirements of this
21subdivision:

end insert
begin insert

22(A) The National SAFE Test and the California component.

end insert
begin insert

23(B) The National SAFE Test with the Uniform State Content.

end insert
begin insert

24(C) The National SAFE Test and the Stand-Alone Uniform State
25Test.

end insert
begin insert

26(D) Any other test approved by the Nationwide Mortgage
27Licensing System and Registry that the Nationwide Mortgage
28Licensing System and Registry deems to satisfy the SAFE Act’s
29qualified written test requirement.

end insert

30(c) Nothing in this section shall prohibit a test provider approved
31by the Nationwide Mortgage Licensing System and Registry from
32providing a test at the location of the employer of the applicant or
33the location of any subsidiary or affiliate of the employer of the
34applicant, or the location of any entity with which the applicant
35holds an exclusive arrangement to conduct the business of a
36mortgage loan originator.

37(d) An individual shall not be considered to have passed a
38qualified written test administered pursuant to this section unless
39the individual achieves a test score of not less than 75 percent of
40correct answers to questions.

P4    1(e) An individual who fails the qualified written test may retake
2the test up to three consecutive times, although at least 30 days
3shall pass between each retesting.

4(f) An applicant who fails three consecutive retests shall wait
5at least six months before retesting.

6(g) A licensed mortgage loan originator who fails to maintain
7a valid license for a period of five years or longer shall retake the
8test, not taking into account any time during which the individual
9is a registered mortgage loan originator.

10

SEC. 3.  

Section 22109.5 of the Financial Code is amended to
11read:

12

22109.5.  

(a) A licensed mortgage loan originator shall
13complete at leastbegin delete eightend deletebegin insert nineend insert hours of continuing education approved
14in accordance with subdivision (b). The continuing education shall
15include at least the following:

16(1) Three hours of instruction on federal law and regulations.

17(2) Two hours of ethics, which shall include instruction on fraud,
18consumer protection, and fair lending issues.

19(3) Two hours of training related to lending standards for the
20 nontraditional mortgage product marketplace.

begin insert

21(4) One hour of training related to relevant California law and
22regulations.

end insert

23(b) For purposes of this section, continuing education courses
24shall be reviewed and approved by the Nationwide Mortgage
25Licensing System and Registry. Review and approval of a
26continuing education course shall include review and approval of
27the course provider.

28(c) Nothing in this section shall preclude any education course,
29as approved by the Nationwide Mortgage Licensing System and
30Registry, that is provided by the employer of the mortgage loan
31originator or an entity which is affiliated with the mortgage loan
32originator by an agency contract, or any subsidiary or affiliate of
33the employer or entity.

34(d) Continuing education may be offered in a classroom, online,
35and by any other means approved by the Nationwide Mortgage
36Licensing System and Registry.

37(e) Except as provided in subdivision (i), a licensed mortgage
38loan originator:

39(1) May only receive credit for a continuing education course
40in the year in which the course is taken.

P5    1(2) May not take the same approved course in the same or
2successive years to meet the annual requirements for continuing
3education.

4(f) A licensed mortgage loan originator who is an approved
5instructor of an approved continuing education course may receive
6credit for the licensed mortgage loan originator’s own annual
7continuing education requirement at the rate of two hours credit
8for every one hour taught.

9(g) A person who has successfully completed continuing
10education requirements approved by the Nationwide Mortgage
11Licensing System and Registry for any state other than California
12shall be granted credit toward completion of continuing education
13requirements in California.

14(h) A licensed mortgage loan originator who subsequently
15becomes unlicensed shall complete the continuing education
16requirements for the last year in which the license was held prior
17to issuance of a new or renewed license.

18(i) A person meeting the requirements of paragraphs (1) and (3)
19of subdivision (b) of Section 22109.4 may correct any deficiency
20in continuing education as established by rule or regulation of the
21commissioner.

22

SEC. 4.  

Section 50142 of the Financial Code is amended to
23read:

24

50142.  

(a) An applicant for a mortgage loan originator license
25shall complete at leastbegin delete 20end deletebegin insert 22end insert hours of education approved in
26accordance with subdivision (b). The education shall include at
27least the following:

28(1) Three hours of instruction on federal law and regulations.

29(2) Three hours of ethics, which shall include instruction on
30fraud, consumer protection, and fair lending issues.

31(3) Two hours of training related to lending standards for the
32 nontraditional mortgage product marketplace.

begin insert

33(4) Two hours of training related to relevant California law
34and regulations.

end insert

35(b) For purposes of subdivision (a), prelicensing education
36courses shall be reviewed and approved by the Nationwide
37Mortgage Licensing System and Registry. Review and approval
38of a prelicensing education course shall include review and
39approval of the course provider.

P6    1(c) Nothing in this section shall preclude any prelicensing
2education course approved by the Nationwide Mortgage Licensing
3System and Registry that is provided by the employer of the
4applicant or an entity that is affiliated with the applicant by an
5agency contract, or any subsidiary or affiliate of the employer or
6 entity.

7(d) Prelicensing education may be offered either in a classroom,
8online, or by any other means approved by the Nationwide
9Mortgage Licensing System and Registry.

10(e) The prelicensing education requirements approved by the
11Nationwide Mortgage Licensing System and Registry for any state
12other than California shall be accepted as credit toward completion
13of prelicensing education requirements in California.

14(f) An individual previously licensed under this chapter applying
15to be licensed again must prove that he or she has completed all
16of the continuing education requirements for the year in which
17that individual last held the license.

18

SEC. 5.  

Section 50143 of the Financial Code is amended to
19read:

20

50143.  

(a) An applicant for a mortgage loan originator license
21shall pass a qualified written test developed by the Nationwide
22Mortgage Licensing System and Registry and administered by a
23test provider approved by the Nationwide Mortgage Licensing
24System and Registry.

25(b) begin insert(1)end insertbegin insertend insertA written test shall not be treated as a qualified written
26test for purposes of subdivision (a) unless the test adequately
27measures the applicant’s knowledge and comprehension in
28appropriate subject areas, including the following:

begin delete

29(1)

end delete

30begin insert(A)end insert Ethics.

begin delete

31(2)

end delete

32begin insert(B)end insert Federal law and regulation relating to mortgage origination.

begin delete

33(3)

end delete

34begin insert(C)end insert State law and regulation relating to mortgage origination.

begin delete

35(4)

end delete

36begin insert(D)end insert Federal and state law and regulation, including instruction
37on fraud, consumer protection, the nontraditional mortgage
38marketplace, and fair lending issues.

begin insert

39(2) The following tests satisfy the requirements of this
40subdivision:

end insert
begin insert

P7    1(A) The National SAFE Test and the California component.

end insert
begin insert

2(B) The National SAFE Test with the Uniform State Content.

end insert
begin insert

3(C) The National SAFE Test and the Stand-Alone Uniform State
4Test.

end insert
begin insert

5(D) Any other test approved by the Nationwide Mortgage
6Licensing System and Registry that the Nationwide Mortgage
7Licensing System and Registry deems to satisfy the SAFE Act’s
8qualified written test requirement.

end insert

9(c) Nothing in this section shall prohibit a test provider approved
10by the Nationwide Mortgage Licensing System and Registry from
11providing a test at the location of the employer of the applicant or
12the location of any subsidiary or affiliate of the employer of the
13applicant, or the location of any entity with which the applicant
14holds an exclusive arrangement to conduct the business of a
15mortgage loan originator.

16(d) (1) An individual shall not be considered to have passed a
17qualified written test unless the individual achieves a test score of
18not less than 75 percent of correct answers to questions.

19(2) An individual who fails the qualified written test may retake
20the test up to three consecutive times, although at least 30 days
21shall pass between each retesting.

22(3) An applicant who fails three consecutive retests shall wait
23at least six months before retesting.

24(4) A licensed mortgage loan originator who fails to maintain
25a valid license for a period of five years or longer shall retake the
26test, not taking into account any time during which the individual
27is a registered mortgage loan originator.

28

SEC. 6.  

Section 50145 of the Financial Code is amended to
29read:

30

50145.  

(a) A licensed mortgage loan originator shall complete
31at leastbegin delete eightend deletebegin insert nineend insert hours of continuing education approved in
32accordance with subdivision (b). The continuing education shall
33include at least the following:

34(1) Three hours of instruction on federal law and regulations.

35(2) Two hours of ethics, which shall include instruction on fraud,
36consumer protection, and fair lending issues.

37(3) Two hours of training related to lending standards for the
38 nontraditional mortgage product marketplace.

begin insert

39(4) One hour of training related to relevant California law and
40regulations.

end insert

P8    1(b) For purposes of subdivision (a), continuing education courses
2shall be reviewed and approved by the Nationwide Mortgage
3Licensing System and Registry. Review and approval of a
4continuing education course shall include review and approval of
5the course provider.

6(c) Nothing in this section shall preclude any education course
7approved by the Nationwide Mortgage Licensing System and
8Registry that is provided by the employer of the mortgage loan
9originator or an entity that is affiliated with the mortgage loan
10originator by an agency contract, or any subsidiary or affiliate of
11the employer or entity.

12(d) Continuing education may be offered either in a classroom,
13online, or by any other means approved by the Nationwide
14Mortgage Licensing System and Registry.

15(e) Except as provided in subdivision (i), a licensed mortgage
16loan originator:

17(1) May only receive credit for a continuing education course
18in the year in which the course is taken.

19(2) May not take the same approved course in the same or
20successive years to meet the annual requirements for continuing
21education.

22(f) A licensed mortgage loan originator who is an approved
23instructor of an approved continuing education course may receive
24credit for the licensed mortgage loan originator’s own annual
25continuing education requirement at the rate of two hours credit
26for every one hour taught.

27(g) A person who has successfully completed continuing
28education requirements approved by the Nationwide Mortgage
29Licensing System and Registry for any state other than California
30shall be granted credit toward completion of continuing education
31requirements in California.

32(h) A licensed mortgage loan originator who subsequently
33becomes unlicensed shall complete the continuing education
34requirements for the last year in which the license was held prior
35to issuance of a new or renewed license.

36(i) A person meeting the requirements of paragraphs (1) and (3)
37of subdivision (b) of Section 50144 may correct any deficiency in
P9    1continuing education as established by rule or regulation of the
2commissioner.



O

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