The California Residential Mortgage Lending Act (CRMLA) and the California Financing Law (CFLL), respectively in code sections Cal. Fin. Code §50318 and Cal. Fin. Code §22169, allow the state’s Commissioner of Business Oversight (“Commissioner “) to take action against licensees that violate California law, including provisions of the CRMLA and CFLL. These statutes grant the Commissioner the authority to suspend, bar or censure the licenses of any individual or entity, including residential mortgage lenders, residential mortgage loan servicers, and mortgage loan originators.
Under both the CFLL and CRMLA, after appropriate notice and opportunity for a hearing, the Commissioner of Business Oversight may suspend a licensee or bar a licensee from a position of employment, management, or control for a period that may not exceed 12 months. After receiving notice of the Commissioner’s intention to issue an order suspending a license, licensees have 15 days to request a hearing. Any failure to request a hearing within this 15-day period constitutes a waiver of the right to a hearing. If the Commissioner receives a request for a hearing, she must schedule a hearing to commence within 30 days of receipt.
The statutes divide the findings that may serve as a basis for such action into two categories. The first is a finding that the licensee has committed a violation that was known or should have been known to the person committing it, or the violation caused material damage to the licensee, the residential mortgage lender, residential mortgage loan servicer, mortgage loan originator or to the public. Second, a finding that the licensee has been convicted of or pled no contest to a crime or was found liable in a civil or administrative action, and the crime or violation related to dishonesty, fraud, or deceit, or to any of the qualifications or duties of the licensee.
If a licensee receives a notice that the Commissioner intends to suspend its license, the licensee is immediately prohibited from participating in any business activity of a licensed residential mortgage lender, residential mortgage loan servicer, or mortgage loan originator and from engaging in any business activity on the premises where a licensed residential mortgage lender, residential mortgage loan servicer, or mortgage loan originator is conducting its business. If a licensee fails to comply with this order, the Commissioner has the right to revoke the license immediately (Cal. Fin. Code §§22714(a)(1); 50325).
Under the Residential Mortgage Lending Act, the Commissioner has the right to impose a $100 fine per day for up to ten days if the licensee fails to file any required report within ten days of it being due. After ten days, the Commissioner has the right to suspend or revoke the license (Cal. Fin. Code §50326). The Commissioner may not revoke a license if, within 10 days from the effective date of the revocation order, the licensee secures a court order restraining the enforcement of the revocation order.
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