Requirements After a Finance Lenders License Has Been Issued

Reporting Requirements

Each licensee is required to file an “annual report” by March 15th of each year, even if no business has been conducted with the license.  Failure to file the report will result in the summary revocation of the license. (California Financial Code Section 22159)

The Department has to receive notification of change in address at least ten days prior to the move.  Failure to do so may subject the licensee to a civil penalty not to exceed $500.  (California Financial Code Section 22153)

 

Annual Assessment

On or before the 30th day of September each year, the Department will notify each licensee of the amount assessed and levied against it and that amount shall be paid by October 31.  The minimum assessment will be $250 per licensed location and failure to pay the assessment will result in the loss of the license. (California Financial Code Section 22107)

 

Surety Bond Requirements

Each licensee is required to maintain a surety bond in a minimum amount of $25,000 at all times.  The commissioner may by rule require a higher bond amount for a licensee who employs one or more mortgage loan originators and who makes or arranges residential mortgage loans, based on the dollar amount of residential mortgage loans originated by that licensee and any mortgage loan originators employed by that licensee.  Every mortgage loan originator employed by the licensee shall be covered by the surety bond.  (California Financial Code Section 22112)

CFLL lender and/or broker licensees who originate residential mortgage loans are required to maintain a surety bond that covers the activities of the MLOs they employ.  The bond amount will be based on the amount of origination activities conducted by the licensee.  The surety bond amounts will be based on the aggregate dollar amount of residential mortgage loans originated by the licensee in the preceding calendar year, as follows:


New Bond Requirements

Aggregate Loans

Bond Amount

0 - $1,000,000

$ 25,000

$1,000,001 - $50,000,000

$ 50,000

$50,000,001 - $500,000,000

$100,000

Over $500,000,001

$200,000


Surety bonding requirements for CFLL licensees who do not originate residential mortgage loans will remain $25,000.

 

Net Worth Requirements

Each licensee is required to maintain a net worth of at least $25,000 at all times.  A licensed finance lender and broker that employs one or more mortgage loan originators and that makes residential mortgage loans shall continuously maintain a minimum net worth of at least $250,000.  A licensed finance broker that employs one or more mortgage loan originators and that arranges, but does not make, residential mortgage loans shall continuously maintain a minimum net worth of at least $50,000.  (California Financial Code Section 22104)

 

Regulatory Examination

Each licensee is subject to a regulatory examination by the Department at any time whether or not any business has been conducted pursuant to their license, and the licensee is responsible for the actual cost of the regulatory examination.  Failure to pay the cost of examination may subject the licensee to administrative action including the revocation of the license.  (California Financial Code Section 22701. 22707 and 22714)