The California Residential Mortgage Lending Act (CRMLA) was enacted in 1994 and went into effect in 1996. The CRMLA was enacted as an alternative to the existing laws licensing lenders under the Real Estate Law and the California Finance Lenders Law (CFLL), with the purpose of providing mortgage bankers with a licensing law specifically intended to regulate their primary functions of originating and servicing residential mortgage loans.
The CRMLA requires that any person engaged in the business of making or servicing residential mortgage loans within California must be licensed under the CRMLA. The following entities are exempt from the licensing requirements:
- Banks, trust companies, insurance companies, and industrial loan companies;
- Federally chartered savings and loan associations, federal savings banks, and federal credit unions;
- Savings and loan associations, savings banks, and credit unions authorized to conduct business in California;
- Persons engaged solely in business, commercial, or agricultural mortgage lending;
- Wholly owned service corporations of savings and loan associations or savings banks;
- Federal, state and municipal governments;
- Pension plans making residential mortgage loans to their participants;
- Persons acting in a fiduciary capacity conferred by the authority of a court;
- Licensed California real estate brokers;
- California finance lenders; and
- Trustees in a foreclosure proceeding.
The CRMLA contains many requirements specifically designed to authorize and regulate mortgage banking activities. An applicant under the CRMLA may obtain a license as a lender, a servicer, or both. Each branch location of a parent licensee desiring to conduct business under the parent’s CRMLA license must be separately authorized and must file Form MU3 through the NMLS. All branch locations in California must be authorized.
A branch office is defined as any physical location of the entity, other than the “home/main” office location, which is either located in California or if located outside of California conducts activities subject to the CRMLA. Every location in California must be an approved location. Also, every location outside of California which conducts California business subject to the CRMLA must be an approved location. Business locations outside of California which do not conduct California business under the California Residential Mortgage Lending Act do not need to be approved.
The CRMLA is contained in Division 20 of the California Financial Code, commencing with Section 50000. The regulations are contained in Subchapter 11.5 of Chapter 3 of Title 10 of the California Code of Regulations, commencing with Section 1950.003 (10 C.C.R. §1950.003, et seq.).
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