Quick Guide to Obtaining Your California Mortgage Licensing

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mortgage broker licenseThe housing market in California provides many opportunities for motivated companies to find their path and achieve success. One of the key elements necessary to operate in the state is obtaining your mortgage broker license, which is required for all new mortgage brokers or existing ones who would like to expand into the state of California.

Getting this license may appear confusing initially; this is because California has three different types of licenses, which have different requirements and are issued by different regulatory agencies.

Licenses Issued by the California Department of Business Oversight

The California Department of Business Oversight (DBO) issues two different types of licenses, both of which fall under the regulations of the California Finance Lenders Law. Due to this, brokers licensed by the DBO can only work with loans issued by lenders who are also licensed under the Califonia Finance Lenders Law. The two types of licenses are:

CA Finance Lenders Law License

This license is required for anyone making and brokering commercial and consumer loans in the state. It only allows brokers to broker loans with entities holding a finance lender license, preventing them from working with other lenders, such as banks and credit unions.

Requirements for obtaining a finance broker or lender license include the following:

  • The submission of an application through the Nationwide Mortgage Licensing System (NMLS). Applications will need to include the following elements, along with other documentation:
    • A business plan
    • A Certificate of Authority/Good Standing
    • Financial Statements that document a net worth of at least $50,000 for brokers only, and $250,000 for a residential lender/broker
    • Surety bond information, in the amount of at least $25,000
    • Organizational information, such as management chart and formation documentation
    • Background check authorization for all individuals responsible for lending activities
  • Payment of a $400 processing fee

CA-DBO Residential Mortgage Lending Act License

This license is required for individuals who will make or service residential loans in California or those who broker loans if they also have a mortgage loan originator license. This license also allows individuals to broker with other lenders with the same license as well as institutional lenders.

Requirements for obtaining a residential mortgage lender license include:

  • A California loan originator license (if mortgage brokering)
  • Becoming an approved lender or servicer of at least one of the following: Veterans Administration (VA), the Federal Housing Administration (FHA), Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), or Government National Mortgage Association (Ginnie Mae).
  • The submission of an application through the Nationwide Mortgage Licensing System (NMLS). Applications will need to include the following elements, along with other documentation:
    • A business plan
    • A Certificate of Authority/Good Standing
    • Financial Statements that document a net worth of at least $250,000
    • Surety bond information, in the amount of at least $50,000
    • Organizational information, such as management chart and formation documentation
    • Background check authorization for all senior leaders
    • Documentation of compliance or intended compliance for all regulations
  • Payment of a $1,100 processing fee

Licensing Through the California Bureau of Real Estate

CA-BRE Real Estate Company License

The BRE company license relies very heavily on a Real Estate Broker. The real estate broker license is issued by the California Bureau of Real Estate. A license is required for anyone who will be acting as a real estate broker or a mortgage broker in the state of California. Unlike other tests, this license requires at least two years of prior sales experience within the last five years. Documentation of this employment must be included in the application. This is also the only license type that does not require documentation of a surety bond. Other requirements include:

  • Clearing a mandatory background check
  • Completion of at least eight college-level courses in financing and/or real estate (transcripts required)
  • Passing a written broker exam, which has a $95 processing fee
  • Completion of the broker license application
  • Payment of an application/licensing fee of $300

For applicants who will be making loans to residential borrowers rather than only business loas, they must also seek the Mortgage Loan Originator license (issued through NMLS). This license also has an additional 20-hours or educational requirement and potential licensees must successfully complete a written test.

The Real Estate Broker License also requires renewal at regular intervals, and licensees must complete 45 hours of continuing education every four years.

The journey to obtaining a mortgage brokers license often depends upon the type of license you are seeking. While there are many steps to securing this licensure, a career in brokerage can often be more rewarding and have additional benefits, such as flexibility, over other career options. This often makes it well worth it for many applicants!

The Mortgage Licensing Group, Inc. is a full-service mortgage licensing firm headquartered in Southern California that is recognized throughout the industry as an experienced and reliable service provider. Established in 2006, our company has been on the forefront of the ever-changing rules and regulations, helping alleviate the often daunting task of meeting the diverse state licensing requirements for our clientele.