Mortgage Guide: SAFE ACT California Study Guide Free By Caroline Gerardo

About Caroline Gerardo: Poet and Writer at night with a passion for my “job” as a Mortgage Banker

I’m studying to take the California component of the SAFE ACT Test
These questions and answers I have provided as a study guide.
I don’t guarantee you will pass or these are the questions, but practice on the laws can’t hurt.
Some where over the rainbow our values will come back?
Some where over the rainbow being in the mortgage business won’t mean you are frowned upon in every circle.

A compensation contract for a loan transaction must be retained for three years.
MLO’s certificate for Continuing Education does not need to be retained.
Grace period for a DRE license is two years after expiration
Division of California Department of Corporations that handles violations of the California Financial Code is the Enforcement Division
If a MLO is not in compliance with a DOC provision, his bond can be increased from $50000 to $100000
If an advertisement has been disapproved, the MLO must discontinue the ad immediately.
MLO who advertises on radio/ air waves must maintain a transcript of the ad for audit 90 days
Regulators are concerned with improper production, not loan volume
An administrative penalty is $2500 while civil court penalty is $25000
Independent escrow agents are subject to regulations of the Department of Corporations
MLO and certain fiduciaries are regulated by the operational arm of the California Department of Corporations known as the Financial Services Division
Commissioner of DRE is a real estate broker with 5 years experience and is appointed by the Governor
DRE audits a licensed real estate broker and charges cost if a violation is proven
MLO can prove a particular interest rate was available by showing the rate sheet
California Foreclosure Act guides borrowers in the pursuit of a modification
Lenders and brokers may not add anything to the appraisal fee
MLO files BK must notify commissioner in 5 days
Covered loan can have a prepay for 3 years
Loan denial record must be kept 3 years
Prepay penalty is waived in a natural declared disaster
MLO guilty of redlining license suspended
Conversion is misappropriation of funds
Fees on a covered loan can’t exceed $1000 or 6% of original balance
Violation on covered loan is suspend 6 months to 3 years 2^nd time permanent and $2500+ civil liable $15000+++
Broker must place $ for others in trust account in 3 business days
Broker must withdraw any of his own funds from trust account (example property manager) as fees in 25 days
Mortgage lender may no longer consider rising real estate prices as a mitigating factor against loan risks
MLO continuing education on: 3 hours of Federal law and regulations;
Net worth and surety bond for California Residential Mortgage Lenders is: surety bond $50000 net worth $250000
Net worth and surety bond for Finance Lenders License is: surety bond of $25000 and net worth $25000
If Finance Lender employs more than one MLO net worth increases to $250000.
Law October 2009 to ensure California complied with SAFE Act is SB 32
January 2010 all licensed real estate brokers, salespersons and RE corporations who make arrange or service loans must submit to the DRE an online report called the RE-866.
RE-866 if licensee is a real estate corporation, the name an license number of the officer will be provided
Re-866 form due January 31, 2010 or 30 days of commencing Mortgage orginations
Penalty to file RE—866 $50 day for first 30 and $100 a day up to $10000.
B&PCode Section 10131 real estate broker is one who for compensation, solicits, negotiates or performs services for others
B&P Code Section 10131 real estate broker engages n the making of loans, buying from. Selling to, or exchanging with the public real property sales contracts or secured promissory notes as a principal
B&P Code “in the business” means acquiring for resale to the public real property sales contracts or secured promissory notes in the amount of 8 or more a year
Cash, corporate capital, warehouse credit lines, other $ that are liability items on the person’s financial statements secured or unsecured are known as own funds
To renew a California real estate license licensee must take
Fees for a lock-in agreement are refunded if the agreement is executed and the loan is denied
MLO activity can take place only at the address on license unless borrower requests otherwise
MLO license should be placed prominently in office
Renewal fees are due December 31 each year
Change of ownership form is filed with Commissioner when mortgage co changes hands
Print media must match business name and information registered with NMLS
DOC commissioner inspects books and records of MLO every 2 years
DOC commissioner may inspect as often as necessary
Commissioner of DOC and DRE can issue a desist and refrain order
Audits by DRE or Doc MLO Co pays costs
Broker licensed under Consumer Finance Lending Laws may broker loans to Finance Lenders
Delaying the closing of a loan to increase costs is predatory lending
Compensation contract for a loan transaction must be retained for 3 years
Residential mortgage loan is 1-4 units
MU1- corporation or sole proprietor-business
MU2 –each control persons
MU3-license branch
MU4 individual
2 hours of ethics including training on fair lending, fraud, and consumer protection challenges;2 hours of lessons related to lending standards for the nontraditional mortgage product market; and 1 hour other
Mortgage bankers must have net worth $250000 and surety $50000
Application fee for California Mortgage banker’s license is $900 CRMLA
Maintenance annual fee DRE license MLO endorsement is $300
Reporting requirements for brokers: list of licensees, advertising media, types loans serviced- how many covered loans…
Maintain license classes: 8 hours continuing education+ 45 hours continuing education every 4 years
Processors and Underwriters who work as independent contractors must be licensed
Pre-licensed education is 20 hours
Applicants who completed endorsement before August 31 2010 do not have to complete the 20 hours
New applicants for Finance lender in CA file through NMLS is they intend to make or broker mortgage loans (they can finance cars and not do mortgages)
Section2924.6 Civil Code due on sale clauses are not allowed for:transfer resulting from death of spouse, adding spouse on title, divorce decree- Dissolution, inter vivos trust transfer where they are beneficiaries,junior liens
Section 50318 misleading public as to education, license … 12 months bar
Unruh Civil rights act- sex race color religion ancestry national origin disability medical condition marital status sexual orientation
Holden Act- redlining geographical discrimination 1-4 Section 35801, Borrower complains to Secretary of the California Department of Business, Transportation and Housing 30 days determination
Holden Act is Secretary determines the violation desist and refrain – make the loan or pay $1000
Holden Act Appeal to hearing 10 days – hearing happens in 20 days – decision in 45 days can be appealed in court
Section2780 RE Commissioner Regulations: race color sex religion ancestry physical handicap marital status national origin- panic selling block busting
Mortgage broker agreements-cannot be for high cost per HOEPA
Mortgage broker agreements can charge actual charges upfront and an application fee
Advertising no no words: guaranteed, safe, bonded, sound, investment plan, growth plan, low doc, no income, no assets, stated, immediate approvals
Loan modification scams cannot charge fees upfront, take a wage assignment, power of attorney,
Loan modification scam fines $10000 plus one year county jail individual, $50000 for corporation 3X damages
California Foreclosure Prevention Act- 90 days notice of default + 90 4 days before sale for reinstatement
MLO can’t charge a fee for best efforts to find a loan- must deliver
Loan servicers must pay interest of 2% on advance impound accounts
Covered loan law California Civil Code 4970- 4979.8 High Cost Loans Any residential loan does not exceed Fannie Mae’s conforming loan limit- APR exceeds 8% over Treasuries of 15^th day of month or total points and fees paid by consumer exceed 6% of loan amount or $1000– No prepayment 3 years, no balloon less than 5 except for bridge loans, neg am must be disclosed, 55% DTI, no loan flipping, must be a benefit
Trust funds – must deposit in escrow or trust account 3 business days
Trust fund record keeping: 3 years, reconcile monthly, no interest
Covered loan is not a super jumbo
Willful violation of Covered Loan Law $15000 or damages
California Finance Lenders Law Commissioner Department Corporations can suspend a license not to exceed 12 months
Maximum criminal penalty for violation of California Residential Mortgage Lending Act is $10000 and one year in jail
DRE cannot file criminal charges
Max payout to consumers from DRE Real Estate Recovery account $250000
California Administrative Procedures Act hearing final decision 100 days