The primary purpose of licensing laws is to ensure that license applicants are ethically, financially, & professionally qualified to serve consumers. Under the Residential Mortgage Lending Act (RMLA), licensees have certain duties to fulfill. in Cal. Fin. Code §50124(a), the RMLA creates specific affirmative duties for licensees. A residential mortgage lender or servicer must do all of the following:
1) Maintain adequate staff;
2) Maintain records for 36 months from the date of final entry;
3) File all required reports;
4) Disburse funds in accordance with agreements between the licensee and the consumer;
5) Conduct closings in a timely manner;
6) Deliver or account for personal property that is in the possession of the licensee at the time agreed, or if a time for delivery is not established, upon the demand of the person who is entitled to the delivery or the accounting;
7) Comply with the provisions of this division of the code and any other requirements imposed by the Commissioner;
8) Submit to periodic examination by the commissioner as required;
9) File amendments prior to material changes, and advise the Commissioner within five days of a material judgment filed against, or a bankruptcy petition filed by, the licensee;
10) Notify the commissioner, in writing, prior to opening a branch office in this state or changing its business location or locations or its branch offices from which activities subject to this division are conducted;
11) Comply with requirements for state and federal tax return filings;
12) Refrain from employing, or paying a commission or other fee to, a mortgage loan originator who is not licensed in California, unless the individual is exempt from licensure;
13) Refrain from committing a crime against the laws of any state or the United States, involving moral turpitude, misrepresentation, fraudulent or dishonest dealing, or fraud, and disclose to the commissioner any final judgment entered against it in a civil action upon grounds or allegations of fraud, misrepresentation, or deceit;
14) Refrain from conduct that would be grounds for a license denial;
15) Remain solvent; and
16) Act with due care and competence in performing licensed activities.
In sum, licensees must maintain adequate staff, keep records for three years, and file all required reports. Licensees must disburse funds as previously agreed and make an honest effort to effectuate timely closings. Certain notice requirements must be given. These are related to material changes in an application for a license. Also, any notice must be given of any judgments filed against or bankruptcies filed by a licensee.
Licensees must observe the law, act with due care, remain solvent, refrain from criminal or fraudulent conduct, and comply with all requirements related to the filing of tax returns. The commissioner of the DBO may require an applicant to submit a statement agreeing to comply with these requirements. Licensees may also be required to submit to examination as required by law. Licensees are not required to maintain any offices within the State of California.
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