Amended in Senate March 28, 2014

Senate BillNo. 1459

Introduced by Committee on Banking and Financial Institutions (Senatorsbegin delete Correa (Chair)end deletebegin insert Evans (Chair)end insert, Berryhill, Block,begin insert Correa,end insert 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 thebegin delete Financeend deletebegin insert Financialend insert Code, relating to mortgage loan originators.

LEGISLATIVE COUNSEL’S DIGEST

SB 1459, as amended, 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 wouldbegin delete increase the number of hours of approved education that an applicant for a mortgage loan originator license must complete from 20-22 andend delete requirebegin insert, for the purpose of obtaining a mortgage loan originator license,end insert thatbegin insert an applicant completeend insert 2begin delete of thoseend delete hoursbegin delete beend deletebegin insert of approved educationend insert related to relevant California law and regulation. The bill wouldbegin delete increase the number of hours of continuing education that a holder of a mortgage loan originator license must complete from 8 to 9 andend delete requirebegin insert, for purposes of continuing educational requirements for mortgage loan originators,end insert thatbegin insert a licensee completeend insert onebegin delete of those hours beend deletebegin insert hour of continuing educationend insert related to relevant California law and regulation. The bill would specifybegin delete certain tests that satisfyend deletebegin insert a test deemed acceptable by the Nationwide Mortgage Licensing System and Registry meetsend insert 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 22end deletebegin insert 20end 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.

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

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.

P3    1(f) An individual previously licensed under this division as a
2mortgage loan originator, applying to be licensed again, shall prove
3that he or she has completed all of the continuing education
4requirements for the year in which the license was last held.

5

SEC. 2.  

Section 22109.3 of the Financial Code is amended to
6read:

7

22109.3.  

(a) An applicant for a mortgage loan originator
8license shall pass a qualified written test developed by the
9Nationwide Mortgage Licensing System and Registry and
10administered by a test provider approvedbegin insert or otherwise deemed
11acceptableend insert by the Nationwide Mortgage Licensing System and
12Registry.

13(b) begin delete(1)end deletebegin delete end deleteA written test shall not be treated as a qualified written
14test for purposes of subdivision (a) unless the test adequately
15measures the applicant’s knowledge and comprehension in
16appropriate subject areas, including all of the following:

begin delete

17(A)

end delete

18begin insert(1)end insert Ethics.

begin delete

19(B)

end delete

20begin insert(2)end insert Federal law and regulation relating to mortgage origination.

begin delete

21(C)

end delete

22begin insert(3)end insert State law and regulation relating to mortgage origination.

begin delete

23(D)

end delete

24begin insert(4)end insert Federal and state law and regulation, including instruction
25on fraud, consumer protection, the nontraditional mortgage
26marketplace, and fair lending issues.

begin delete

27(2) The following tests satisfy the requirements of this
28subdivision:

end deletebegin delete

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

end deletebegin delete

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

end deletebegin delete

31(C) The National SAFE Test and the Stand-Alone Uniform State
32Test.

end deletebegin delete

33(D) Any other test approved by the Nationwide Mortgage
34Licensing System and Registry that the Nationwide Mortgage
35Licensing System and Registry deems to satisfy the SAFE Act’s
36qualified written test requirement.

end delete

37(c) Nothing in this section shall prohibit a test provider approved
38by the Nationwide Mortgage Licensing System and Registry from
39providing a test at the location of the employer of the applicant or
40the location of any subsidiary or affiliate of the employer of the
P4    1applicant, or the location of any entity with which the applicant
2holds an exclusive arrangement to conduct the business of a
3mortgage loan originator.

4(d) An individual shall not be considered to have passed a
5qualified written test administered pursuant to this section unless
6the individual achieves a test score of not less than 75 percent of
7correct answers to questions.

8(e) An individual who fails the qualified written test may retake
9the test up to three consecutive times, although at least 30 days
10shall pass between each retesting.

11(f) An applicant who fails three consecutive retests shall wait
12at least six months before retesting.

13(g) A licensed mortgage loan originator who fails to maintain
14a valid license for a period of five years or longer shall retake the
15test, not taking into account any time during which the individual
16is a registered mortgage loan originator.

17

SEC. 3.  

Section 22109.5 of the Financial Code is amended to
18read:

19

22109.5.  

(a) A licensed mortgage loan originator shall
20complete at leastbegin delete nineend deletebegin insert eightend insert hours of continuing education approved
21in accordance with subdivision (b). The continuing education shall
22include at least the following:

23(1) Three hours of instruction on federal law and regulations.

24(2) Two hours of ethics, which shall include instruction on fraud,
25consumer protection, and fair lending issues.

26(3) Two hours of training related to lending standards for the
27 nontraditional mortgage product marketplace.

28(4) One hour of training related to relevant California law and
29regulations.

30(b) For purposes of this section, continuing education courses
31shall be reviewed and approved by the Nationwide Mortgage
32Licensing System and Registry. Review and approval of a
33continuing education course shall include review and approval of
34the course provider.

35(c) Nothing in this section shall preclude any education course,
36as approved by the Nationwide Mortgage Licensing System and
37Registry, that is provided by the employer of the mortgage loan
38originator or an entity which is affiliated with the mortgage loan
39originator by an agency contract, or any subsidiary or affiliate of
40the employer or entity.

P5    1(d) Continuing education may be offered in a classroom, online,
2and by any other means approved by the Nationwide Mortgage
3Licensing System and Registry.

4(e) Except as provided in subdivision (i), a licensed mortgage
5loan originator:

6(1) May only receive credit for a continuing education course
7in the year in which the course is taken.

8(2) May not take the same approved course in the same or
9successive years to meet the annual requirements for continuing
10education.

11(f) A licensed mortgage loan originator who is an approved
12instructor of an approved continuing education course may receive
13credit for the licensed mortgage loan originator’s own annual
14continuing education requirement at the rate of two hours credit
15for every one hour taught.

16(g) A person who has successfully completed continuing
17education requirements approved by the Nationwide Mortgage
18Licensing System and Registry for any state other than California
19shall be granted credit toward completion of continuing education
20requirements in California.

21(h) A licensed mortgage loan originator who subsequently
22becomes unlicensed shall complete the continuing education
23requirements for the last year in which the license was held prior
24to issuance of a new or renewed license.

25(i) A person meeting the requirements of paragraphs (1) and (3)
26of subdivision (b) of Section 22109.4 may correct any deficiency
27in continuing education as established by rule or regulation of the
28commissioner.

29

SEC. 4.  

Section 50142 of the Financial Code is amended to
30read:

31

50142.  

(a) An applicant for a mortgage loan originator license
32shall complete at leastbegin delete 22end deletebegin insert 20end insert hours of education approved in
33accordance with subdivision (b). The education shall include at
34least the following:

35(1) Three hours of instruction on federal law and regulations.

36(2) Three hours of ethics, which shall include instruction on
37fraud, consumer protection, and fair lending issues.

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

P6    1(4) Two hours of training related to relevant California law and
2regulations.

3(b) For purposes of subdivision (a), prelicensing education
4courses shall be reviewed and approved by the Nationwide
5Mortgage Licensing System and Registry. Review and approval
6of a prelicensing education course shall include review and
7approval of the course provider.

8(c) Nothing in this section shall preclude any prelicensing
9education course approved by the Nationwide Mortgage Licensing
10System and Registry that is provided by the employer of the
11applicant or an entity that is affiliated with the applicant by an
12agency contract, or any subsidiary or affiliate of the employer or
13 entity.

14(d) Prelicensing education may be offered either in a classroom,
15online, or by any other means approved by the Nationwide
16Mortgage Licensing System and Registry.

17(e) The prelicensing education requirements approved by the
18Nationwide Mortgage Licensing System and Registry for any state
19other than California shall be accepted as credit toward completion
20of prelicensing education requirements in California.

21(f) An individual previously licensed under this chapter applying
22to be licensed again must prove that he or she has completed all
23of the continuing education requirements for the year in which
24that individual last held the license.

25

SEC. 5.  

Section 50143 of the Financial Code is amended to
26read:

27

50143.  

(a) An applicant for a mortgage loan originator license
28shall pass a qualified written test developed by the Nationwide
29Mortgage Licensing System and Registry and administered by a
30test provider approvedbegin insert or otherwise deemed acceptableend insert by the
31Nationwide Mortgage Licensing System and Registry.

32(b) begin delete(1)end deletebegin delete end deleteA written test shall not be treated as a qualified written
33test for purposes of subdivision (a) unless the test adequately
34measures the applicant’s knowledge and comprehension in
35appropriate subject areas, including the following:

begin delete

36(A)

end delete

37begin insert(1)end insert Ethics.

begin delete

38(B)

end delete

39begin insert(2)end insert Federal law and regulation relating to mortgage origination.

begin delete

40(C)

end delete

P7    1begin insert(3)end insert State law and regulation relating to mortgage origination.

begin delete

2(D)

end delete

3begin insert(4)end insert Federal and state law and regulation, including instruction
4on fraud, consumer protection, the nontraditional mortgage
5marketplace, and fair lending issues.

begin delete

6(2) The following tests satisfy the requirements of this
7subdivision:

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

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

10(C) The National SAFE Test and the Stand-Alone Uniform State
11Test.

12(D) Any other test approved by the Nationwide Mortgage
13Licensing System and Registry that the Nationwide Mortgage
14Licensing System and Registry deems to satisfy the SAFE Act’s
15qualified written test requirement.

end delete

16(c) Nothing in this section shall prohibit a test provider approved
17by the Nationwide Mortgage Licensing System and Registry from
18providing a test at the location of the employer of the applicant or
19the location of any subsidiary or affiliate of the employer of the
20applicant, or the location of any entity with which the applicant
21holds an exclusive arrangement to conduct the business of a
22mortgage loan originator.

23(d) (1) An individual shall not be considered to have passed a
24qualified written test unless the individual achieves a test score of
25not less than 75 percent of correct answers to questions.

26(2) An individual who fails the qualified written test may retake
27the test up to three consecutive times, although at least 30 days
28shall pass between each retesting.

29(3) An applicant who fails three consecutive retests shall wait
30at least six months before retesting.

31(4) A licensed mortgage loan originator who fails to maintain
32a valid license for a period of five years or longer shall retake the
33test, not taking into account any time during which the individual
34is a registered mortgage loan originator.

35

SEC. 6.  

Section 50145 of the Financial Code is amended to
36read:

37

50145.  

(a) A licensed mortgage loan originator shall complete
38at leastbegin delete nineend deletebegin insert eightend insert hours of continuing education approved in
39accordance with subdivision (b). The continuing education shall
40include at least the following:

P8    1(1) Three hours of instruction on federal law and regulations.

2(2) Two hours of ethics, which shall include instruction on fraud,
3consumer protection, and fair lending issues.

4(3) Two hours of training related to lending standards for the
5 nontraditional mortgage product marketplace.

6(4) One hour of training related to relevant California law and
7regulations.

8(b) For purposes of subdivision (a), continuing education courses
9shall be reviewed and approved by the Nationwide Mortgage
10Licensing System and Registry. Review and approval of a
11continuing education course shall include review and approval of
12the course provider.

13(c) Nothing in this section shall preclude any education course
14approved by the Nationwide Mortgage Licensing System and
15Registry that is provided by the employer of the mortgage loan
16originator or an entity that is affiliated with the mortgage loan
17originator by an agency contract, or any subsidiary or affiliate of
18the employer or entity.

19(d) Continuing education may be offered either in a classroom,
20online, or by any other means approved by the Nationwide
21Mortgage Licensing System and Registry.

22(e) Except as provided in subdivision (i), a licensed mortgage
23loan originator:

24(1) May only receive credit for a continuing education course
25in the year in which the course is taken.

26(2) May not take the same approved course in the same or
27successive years to meet the annual requirements for continuing
28education.

29(f) A licensed mortgage loan originator who is an approved
30instructor of an approved continuing education course may receive
31credit for the licensed mortgage loan originator’s own annual
32continuing education requirement at the rate of two hours credit
33for every one hour taught.

34(g) A person who has successfully completed continuing
35education requirements approved by the Nationwide Mortgage
36Licensing System and Registry for any state other than California
37shall be granted credit toward completion of continuing education
38requirements in California.

39(h) A licensed mortgage loan originator who subsequently
40becomes unlicensed shall complete the continuing education
P9    1requirements for the last year in which the license was held prior
2to issuance of a new or renewed license.

3(i) A person meeting the requirements of paragraphs (1) and (3)
4of subdivision (b) of Section 50144 may correct any deficiency in
5continuing education as established by rule or regulation of the
6commissioner.


O

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