About Mortgage Loan Originators

The laws and regulations for MLO are contained in California Residential Mortgage Lending Act (CRMLA) and California Finance Law (CFL).

A mortgage loan originator is an individual who, for compensation or gain, or in the expectation of compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.

A residential mortgage loan means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling which contains 1 to 4 residential units. Dwelling includes an individual condominium unit, cooperative unit, mobile home and trailer if it is used as a residence.

Who is Required to Obtain a Mortgage Loan Originator License?

Any person who originates residential mortgage loans must apply for and receive a mortgage loan originator license from the Department of Financial Protection and Innovation. All licenses are applied for and maintained through the Nationwide Multistate Licensing System and Registry (NMLS). The license must be renewed annually between November 1 and December 31.

All MLOs employed by finance lenders/brokers under the California Finance Law (CFL) or residential mortgage lenders/servicers under the California Residential Mortgage Lending Act (CRMLA) must be licensed. MLOs may apply for a license by submitting a Form MU4 to the California Department of Financial Protection and Innovation (DFPI) through the Nationwide Multistate Licensing System and Registry (NMLS).

Mortgage loan originator does not include:

  • An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator. The term “administrative or clerical tasks” means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.
  • An individual who solely renegotiates terms for existing mortgage loans held or serviced by his or her employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires that employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.
  • An individual that is solely involved in extensions of credit relating to timeshare plans.
  • An individual licensed as a mortgage loan originator pursuant to the California Real Estate Law and the SAFE Act.
  • A registered mortgage loan originator who is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.

Exemption for employees of bona fide nonprofit organization:

Employees of a bona fide nonprofit organization may be exempt from licensure as a mortgage loan originator if certain yearly requirements are met. See Bona Fide Non-Profit Affordable Housing Organization for complete details.

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Last updated: Sep 26, 2023 @ 4:23 pm