Since the mortgage collapse, California law of mortgage companies has increased. A license may be held by mortgage companies with the California Department of Real Estate or the California Department of Corporations. With the passage of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, all of mortgage companies making consumer loans secured by residential property of one to four components must register with the Nationwide Mortgage Licensing System starting in 2010.
California Department of Real Estate
As of January 1, 2010, all mortgage companies need to report to the Department of Real Estate should they make, arrange or service loans secured by residential property of one to four components. Additionally, the California Department of Real Estate monitors trust fund handling of mortgage companies, in which consumer funds have been entrusted to the mortgage company for loan obligations deposited into a servicing assurance account.
California Department of Corporations
The Financial Services Division of the California Department of Corporations governs mortgage companies. To be licensed with the Department of Corporations, a mortgage firm must maintain a minimum net worth of $25,000, obtain a $25,000 surety bond and have no criminal history. California Finance Lenders Law manages both consumer and industrial loans.
National Mortgage Licensing System
Starting in 2010, mortgage companies which make consumer loans need to register with the National Mortgage Licensing System. Registration consists in regulations and national law, consumer protection, fair lending and nontraditional mortgage knowledge. Additionally, anyone originating mortgage loans through a mortgage company must pass a written exam, be fingerprinted, pass a background check and exhibit proof of financial responsibility through a credit investigation.
Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE)
The SAFE Act establishes minimum criteria for registration and the licensing of mortgage companies that are state-licensed. It requires uniform loan applications, streamlines the flow of communication between accreditation branches and enriches consumer protection and fraud prevention through education requirements for mortgage companies. What’s more, it demands that mortgage companies licensed by the Department of Corporations and the Department of Real Estate also be licensed with the National Mortgage Licensing System, by July 31 and September 15, 2010, respectively.
Federal Trade Commission
The Federal Trade Commission manages the Truth-in-Lending Act which requires mortgage companies to disclose to borrowers how much the overall loan will cost with respect to an annual percentage rate with an itemization of all costs incurred for your loan, as stated by the United States Code: Title 15, Chapter 41, Subchapter 1, Part B, Section 1639. What’s more, the Federal Trade Commission regulates the Fair Credit Reporting Act, making sure consumer credit reports are accurate if applying for a home mortgage.