BILL ANALYSIS Ó
SB 1459
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Date of Hearing: June 9, 2014
ASSEMBLY COMMITTEE ON BANKING AND FINANCE
Roger Dickinson, Chair
SB 1459 (Committee on Banking and Financial Institutions) - As
Amended: April 21, 2014
SENATE VOTE : 36-0
SUBJECT : Mortgage loan originators: educational requirements.
SUMMARY : Requires an applicant for a mortgage loan originator
(MLO) license to complete 2 hours of approved education related
to relevant California law and regulation. Specifically, this
bill :
1)Requires a licensed MLO to complete at least one hour of
continuing education related to relevant California law and
regulations.
2)Specifies that an applicant for a MLO license shall take a
test that is deemed acceptable by the Nationwide Mortgage
Licensing System and Registry (NMLSR).
EXISTING FEDERAL LAW
1)Provides for the Secure and Fair Enforcement for Mortgage
Licensing (SAFE) Act, pursuant to Title V of the Housing and
Economic Recovery Act of 2008. The SAFE Act requires all
states to license and register their MLOs, as defined, through
a nationwide organization called the NMLSR. Any state that
failed to implement an MLO licensing system in compliance with
the SAFE Act by July 30, 2009, risked direct intervention by
the U.S. Department of Housing and Urban Development (HUD).
Under the SAFE Act, HUD was authorized to establish and
maintain an MLO licensing system in any state that failed to
voluntarily comply with the federal SAFE Act.
2)Pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act, transferred authority for implementing the
SAFE Act from HUD to the federal Consumer Financial Protection
Bureau.
EXISTING STATE LAW
SB 1459
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1)Conforms California's Real Estate Law, California Finance
Lenders Law (CFLL), and California Residential Mortgage
Licensing Act (CRMLA) to the SAFE Act, thus preserving
California's ability to continue regulating mortgage loan
origination by nondepository institutions operating in
California.
2)Permits companies that are not required to hold a lending
license by California, but whose employees meet the SAFE Act
definition of an MLO, to apply to the Department of Business
Oversight (DBO) for exempt company registrations. Those
exempt company registrations allow the employees of those
companies to be eligible to obtain MLO licenses.
FISCAL EFFECT : None
COMMENTS :
The federal SAFE Act and California's implementing legislation
generally requires all individuals who meet the SAFE Act
definition of an MLO to obtain a license from the state to
undertake those activities, if they work for a nondepository
institution regulated by the state, or to register with the
NMLSR, if they work for a depository institution that is state-
or federally-regulated.
In California, employees of CFLL licensees and CRMLA licensees
must obtain an MLO license from DBO if they wish to engage in
mortgage loan origination activities. Bureau of Real Estate
(BRE) licensees who engage in mortgage loan origination must
obtain an MLO license endorsement from BRE. This bill would
modify the education requirements applicable to applicants for
and recipients of DBO-issued MLO licenses. It would not modify
the education requirements applicable to applicants for and
recipients of BRE-issued MLO license endorsements, as BRE MLO
licensees must be licensed as a real estate salesperson or real
estate broker. Both the real estate salesperson and real estate
broker licenses require considerable pre-licensing education and
continuing education on California-specific laws and
regulations.
The primary motivation of this bill is that NMLSR most likely
will move toward a uniform state test that would serve all
states through a National Test with Uniform State Content that
would test applicants on their knowledge of state-related
SB 1459
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content in the context of the SAFE Act and the Conference of
State Bank Supervisors/American Association of Residential
Mortgage Regulators Model State Law. This testing regime would
not test applicants on specific state laws. SB 1459 will
require applicants and those seeking a MLO license renewal to
take a test relative to specific California laws. DBO plans to
implement regulations to specify the exact content of the test.
Finally, SB 1459 makes a technical clarification to bring the
CFLL and CRMLA in line with the California Real Estate Law by
allowing test that are deemed acceptable by NMLSR to fulfil the
testing requirement.
REGISTERED SUPPORT / OPPOSITION :
Support
California Mortgage Bankers Association (CMBA)
Opposition
None on file.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081