SB 36 – Effective January 31, 2010 and December 2010: Licensing Requirements for Mortgage Loan Originators.
Mortgage Loan Originators Regulated: If a real estate broker or the broker’s salesperson makes, arranges, or services loans secured by residential property containing one-to-four units, the broker must notify the DRE by January 31, 2010 or within 30 days of commencing such loan activity, whichever is later.
Beginning in December 2010, a real estate licensee acting as mortgage loan originator must obtain a license endorsement, which entails education, written testing, and reporting requirements. A mortgage loan originator is anyone who, for compensation or gain, takes a mortgage loan application or offers or negotiates terms of a mortgage loan for residential property containing one-to-four units. Exemptions include real estate agents who only engage in selling, buying, or leasing activities, unless compensated by a lender or mortgage loan originator. This license endorsement requirement comports with the creation of a Nationwide Mortgage Licensing System and Registry under recent federal law. Finance lenders and residential mortgage lenders under the Department of Corporation must also register in the nationwide system. There will be education, testing and reporting requirements for registration, which have not yet been established.
AB 1160 – Effective July 1, 2010 or 90 days after a form is issued: Multi-lingual loan docs. Requires lenders to provide to borrowers loan documents for mortgages to be written in the same language as that in which the negotiations primarily took place.
Current real estate law states that real estate contracts must be provided in the language that was used during negotiations prior to execution. AB 1160 will require loan documents to meet the same regulations. The requirement is triggered by the Department of Corporations or Department of Financial Institutions publishing the forms. The languages covered are Spanish, Chinese, Tagalog, Vietnamese and Korean.
The form must be provided within three days of the borrower submitting an application.
The law does not apply to federally chartered banks, credit unions, savings banks or thrifts.
The law does not apply if the loan was negotiated using the borrowers’ translator.