The California Residential Mortgage Lenders Act (CRMLA) was enacted by the California legislature as an alternative to existing licensing laws related to lenders under the Real Estate Law and the California Finance Lenders Law (CFLL), The purpose of the CRMLA was to provide mortgage bankers with a licensing law for the specific purpose of regulating the origination and servicing of residential mortgage loans. The CRMLA directly authorizes and regulates mortgage banking activities, unlike the Real Estate Law and the CFLL. A party applying pursuant to the provisions of the CRMLA may obtain a license as a servicer, lender, or both.
Generally, a license may be obtained by any form of organization, including natural persons, sole proprietorships, corporations, partnerships, limited liability companies, associations, trusts, joint ventures, unincorporated organizations, joint stock companies, governments or political subdivisions of governments and any other entity.
The CRMLA authorizes licensees:
- to make federally related mortgage loans,
- to make loans to finance the construction of a home,
- to sell the loans to institutional investors, and
- to service such loans.
Licensees are also authorized:
- to purchase and sell federally related mortgage loans;
- to provide contract underwriting services for institutional lenders; and
- to service any federally related mortgage loan. A licensee may service a loan whether it makes the loan or purchases a servicing portfolio.
A licensed CRMLA lender is also authorized to provide brokerage services to a borrower by attempting to obtain a mortgage loan on behalf of the borrower from an institutional lender. Note that employees who engage in brokerage activities on behalf of a CRMLA licensee must be licensed mortgage loan originators employed by the licensee.
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