CA Real Property Loan Law - Posted by David C. Cooper

Real Estate Investing Real Estate Financing
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Posted by Rich-CA on July 03, 2007 at 11:37:27:

Sorry, we’re not going to come to agreement on this. I do not have the time to “shop brokers”. I sent along the relevant portion of the websites of the government agencies in question. There does not need to be further discussion. As I said, I deal primarily with nationally (43 to 50 state) licensed out of state brokers and have not had any problem with the properties here. Both Quicken Loans, GMAC, and Countrywide advertise as being under CRMLA. I would not call any of those “minors”. Well, maybe Quicken loans.

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CA Real Property Loan Law - Posted by David C. Cooper

Posted by David C. Cooper on June 30, 2007 at 12:07:14:

In the book “California Real Estate Principles” by Sherry Shindler Price (7th ed. 2003) it describes something called the “Real Property Loan Law.”

“The Real Estate Law requires anyone negotiating a loan to have a real esate license.”

Then, further down, it says:

“The Real Property Loan Law now applies to loans secured by first trust deeds under $30,000 and by junior trust deeds under $20,000.”

It says anyone negotiating a loan must provide a “Mortgage Loan Broker’s Statement” or “Mortgage Loan Disclosure Statement.”

Does this invalidate any private loans negotiated in CA without a licensed RE Agent?

So, basically I either have to be licensed or pay an agent to negotiate owner carries and wraps with both my seller and my buyer? What about lease options and short sales?

How does someone negotiate these kinds of deals without a license or an agent?

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Re: CA Real Property Loan Law - Posted by Kristine-CA

Posted by Kristine-CA on July 01, 2007 at 10:19:12:

The issues you are reading about refer to purchase money loans in CA.
Sellers carrying back paper and doing wraps are exempt as they are not
purchase-money loans.

Lease options aren’t loans. Negotiating a short sale is negotiating a
purchase, not a loan.

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Re: CA Real Property Loan Law - Posted by Rich-CA

Posted by Rich-CA on June 30, 2007 at 19:39:25:

I’ve never heard of that. We’ve done several loans here in CA, both for our primary and for investment properties, and at no time did we use a person with any kind of RE lic. to handle the loan. We used lic. mortgage brokers, but our RE agent had no input into the process. Our last CA loan was through a broker in Utah with a CA license as a mortgage broker.

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Can someone in CA confirm? - Posted by Kristine-CA

Posted by Kristine-CA on July 01, 2007 at 20:03:59:

Correction: In my previous post I made an error. A seller carryback is
considered purchase money.

However, can someone point me to the lending guidelines regarding
seller-carrybacks. My understanding was that they are exempt from
the interest rate cap. Now I’m wondering where I got that idea.
Kristine

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Re: CA Real Property Loan Law - Posted by BTI

Posted by BTI on June 30, 2007 at 21:29:24:

Rich

California mortgage brokers work under a California real estate brokers license.

Owners can do seller carry-backs without a license and not have to worry about usury.

A private party can use a real estate agent to loan money and not worry about usury.

A private party loaning money their own money directly better worry about usury.

BTI

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Re: Can someone in CA confirm? - Posted by BTI

Posted by BTI on July 02, 2007 at 20:01:47:

Kristine

Your right the seller carry back is exempt. For one reason once upon a time a long long long time ago the California courts ruled they were “an extension of credit” and not a loan.

BTI

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Re: CA Real Property Loan Law - Posted by Rich-CA

Posted by Rich-CA on July 01, 2007 at 13:27:46:

According to the ads on the radio, the mortgage brokers are licensed under the “California Residential Mortgage Lending Act”.

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Re: CA Real Property Loan Law - Posted by BTI

Posted by BTI on July 02, 2007 at 20:08:46:

Rich

Yes, and what kind of license is required by the California Residential Mortgage Lending Act? I’ll give you a clue, call the California Department of Real Estate.

BTI

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Re: CA Real Property Loan Law - Posted by Rich-CA

Posted by Rich-CA on July 03, 2007 at 06:56:03:

Your comment was nagging the back of my head last night - my “trick knee” was saying this is in error. So, I googled “CRMLA” this morning. It came up under the Department of Corporations. Here is from the CA Dept of Corp website:

The California Residential Mortgage Lending Act (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.).

The CRMLA was enacted in 1994 and became operative 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, in order to provide mortgage bankers with a licensing law specifically intended to regulate their primary functions of originating loans and servicing loans. Unlike the Real Estate Law and the California Finance Lenders Law, the CRMLA is 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.

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 authorized to purchase and sell federally related mortgage loans and to provide contract underwriting services for institutional lenders. Licensees are authorized to service any federally related mortgage loan regardless of whether they make the loan or purchase a servicing portfolio.

Effective March 20, 1996, a licensed CRMLA lender is authorized to provide brokerage services to a borrower, by attempting to obtain a mortgage loan on behalf of the borrower from another lender.

Then, from the Dept of Real Estate site:

Although the Department of Real Estate has jurisdiction over certain licensees engaged in mortgage loan brokering, we routinely receive calls concerning many areas in which we have no enforcement authority. These include the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA & Regulation Z), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), and the Home Mortgage Disclosure Act (HMDA) to name a few. We also receive calls with questions regarding mortgage brokers or lendersâ?? holding a California Finance Lenderâ??s License (CFL) or a Residential Mortgage Lenderâ??s License (RML) which are issued and regulated by the California Department of Corporations. For problems or complaints related to loan servicing, please see our Loan Servicing information under FAQâ??s on our home page.

Botom line: the CA Finance Lender’s License and the Residential Mortgage Lender’s License are NOT under the Dept. of RE jurisdiction. Neither is any lending entity operating under CRMLA.

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Re: CA Real Property Loan Law - Posted by Rich-CA

Posted by Rich-CA on July 02, 2007 at 22:18:01:

Forget the bureaucrats. I’ll just call the broker. They know what kind of license they have to have. Since they are out of state but licensed to do business in CA, I am fairly certain the do not have a CA RE license of any variety, but they might have a proxy that does.

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Re: CA Real Property Loan Law - Posted by BTI

Posted by BTI on July 03, 2007 at 10:56:54:

Rich

The code your referring to is what I call a “partial license”, it’s for people that want to get into the game but can’t play in the majors.

So while your calling, open the yellow pages and call three mortgage brokers in your area and ask what license they operate under, if they are a real mortgage broker, it will be a California real estate brokers license.

If I remember right your in Pittsburg, Ca., so there still must be a few left in east Contra Costa County.

BTI