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CA MLO practice questions

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Question 1California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Which California agency licenses non-depository mortgage lenders and servicers under the California Residential Mortgage Lending Act?

  1. The Conference of State Bank Supervisors
  2. The Department of Real Estate
  3. The Nationwide Multistate Licensing System and Registry
  4. The Department of Financial Protection and Innovation Correct answer.

Explanation

The California Residential Mortgage Lending Act is administered by the Department of Financial Protection and Innovation (DFPI), which licenses and supervises non-depository residential mortgage lenders and servicers. The DRE regulates real estate brokers and the MLO endorsements attached to those licenses, while CSBS and NMLS are not California licensing agencies.

Question 2California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

What is the Nationwide Multistate Licensing System and Registry (NMLS)?

  1. A federal agency created by Congress that issues mortgage licenses nationwide
  2. A licensing system run by the Conference of State Bank Supervisors Correct answer.
  3. A credit reporting bureau used by mortgage lenders
  4. A California agency that supervises state-chartered banks

Explanation

NMLS is a multistate system owned and operated by the Conference of State Bank Supervisors that state agencies use to receive applications, issue licenses, and track regulatory information. It does not itself grant licenses; the licensing decision remains with the state agency such as the DFPI or DRE.

Question 3California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Under the SAFE Act, the minimum number of hours of pre-licensure education required for a new mortgage loan originator is:

  1. 12 hours
  2. 8 hours
  3. 24 hours
  4. 20 hours Correct answer.

Explanation

The SAFE Act requires at least 20 hours of NMLS-approved pre-licensure education, including specified hours in federal law and regulation, ethics, and non-traditional mortgage lending. States may add their own requirements on top of that federal floor.

Question 4California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

How many hours of continuing education must a licensed mortgage loan originator complete each year?

  1. 6 hours
  2. 4 hours
  3. 8 hours Correct answer.
  4. 10 hours

Explanation

The SAFE Act sets an annual continuing education requirement of 8 hours, which must include specified hours of federal law and regulation, ethics, and non-traditional mortgage lending. The education must come from an NMLS-approved provider.

Question 5California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Where must a licensed mortgage loan originator's NMLS unique identifier appear?

  1. Only on the annual renewal filing submitted to NMLS
  2. Only on advertisements placed in print media
  3. Only on the sponsorship agreement with the lender
  4. On loan documents and business cards Correct answer.

Explanation

Federal law requires the originator's unique identifier to be disclosed to consumers on loan documents, business cards, and websites, so borrowers can look up the originator's license record. The identifier is a public disclosure requirement, not merely an internal filing item.

Question 6California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Which federal agency has rulemaking authority to implement the SAFE Act?

  1. The Consumer Financial Protection Bureau Correct answer.
  2. The Department of Housing and Urban Development
  3. The Office of the Comptroller of the Currency
  4. The Federal Deposit Insurance Corporation

Explanation

The Consumer Financial Protection Bureau was given authority to prescribe regulations implementing the SAFE Act. The states, through systems such as NMLS, handle licensing and enforcement for non-depository originators.

Question 7California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

The California Consumer Financial Protection Law of 2020 accomplished which of the following?

  1. Created the Department of Real Estate and gave it authority over mortgage lenders
  2. Abolished the California Residential Mortgage Lending Act
  3. Renamed the Department of Business Oversight as the DFPI Correct answer.
  4. Transferred mortgage loan originator licensing from NMLS to the state

Explanation

The California Consumer Financial Protection Law renamed the Department of Business Oversight as the Department of Financial Protection and Innovation and expanded its consumer financial protection mandate. The DFPI continues to administer the Residential Mortgage Lending Act and the California Financing Law.

Question 8California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

What is the primary consumer purpose of the NMLS Consumer Access website?

  1. Submitting a mortgage loan application directly to a lender
  2. Scheduling the state licensing examination
  3. Calculating the maximum loan amount a borrower can qualify for based on income
  4. Checking whether an originator's license is active Correct answer.

Explanation

NMLS Consumer Access is a public database that lets consumers confirm whether a mortgage company or originator holds an active license and view the regulator that issued it. It does not accept applications or perform underwriting functions.

Question 9California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Which subject area must be included in an originator's annual continuing education under the SAFE Act?

  1. Two hours of ethics Correct answer.
  2. Four hours of California real estate appraisal
  3. One hour of title insurance practice
  4. Three hours of mortgage servicing

Explanation

The annual 8-hour continuing education requirement must include specified hours of federal law and regulation, ethics, and non-traditional mortgage lending, and at least 2 of those hours must cover ethics. Appraisal, servicing, and title insurance topics are not mandated content categories.

Question 10California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

After passing the required examinations and receiving a California mortgage loan originator license, an individual may begin originating residential mortgage loans only after:

  1. Completing an additional ten hours of continuing education
  2. Paying the annual NMLS system fee
  3. Being sponsored by a licensed lender or broker through NMLS Correct answer.
  4. Receiving written approval from the Real Estate Commissioner

Explanation

A California originator license must be associated with a licensed mortgage lender or broker, and that sponsorship is recorded in NMLS. An originator cannot originate independently without a sponsoring licensee.

Question 11California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A California real estate salesperson who wants to take residential mortgage loan applications must obtain:

  1. A mortgage loan servicer license from the DRE
  2. A federal registration with the CFPB
  3. A separate California Finance Lenders Law license issued by the DFPI
  4. A mortgage loan originator license endorsement from the DRE Correct answer.

Explanation

Real estate licensees who originate residential mortgage loans must hold an MLO license endorsement issued by the Department of Real Estate in addition to their real estate license. The endorsement is processed through NMLS and requires education, testing, and a background check.

Question 12California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

How is the criminal history background check for a California mortgage loan originator applicant conducted?

  1. Through a county-level records search performed by the DFPI
  2. Through a self-certification signed under penalty of perjury
  3. Through a background report purchased from a private investigator
  4. Through fingerprints submitted to the FBI as part of the NMLS filing Correct answer.

Explanation

Applicants submit fingerprints through NMLS, which are used to obtain state and FBI criminal history records. The results are provided to the licensing agency for review under the SAFE Act standards.

Question 13California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Which circumstance would most directly raise a financial responsibility concern under the SAFE Act licensing standards?

  1. A bankruptcy filed within the past 10 years Correct answer.
  2. A student loan that is currently in repayment
  3. A late credit card payment made five years ago
  4. A foreclosure that occurred twelve years ago

Explanation

The SAFE Act financial responsibility standards look at items such as bankruptcies within the past 10 years, foreclosures within the past 3 years, outstanding judgments, and delinquency on government debt. Older isolated credit events generally do not disqualify an applicant.

Question 14California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A California mortgage loan originator license must be renewed on what schedule?

  1. Annually by December 31 Correct answer.
  2. Annually by June 30
  3. Every two years on the anniversary of issuance
  4. By March 1 of each year

Explanation

California originator licenses are renewed annually through NMLS, with the renewal period ending December 31. Continuing education must be completed before the renewal is processed.

Question 15California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

An unlicensed employee of a licensed mortgage lender reviews loan files and assembles disclosure packages but never discusses rates, terms, or applications with consumers. The employee:

  1. May perform the work without an MLO license as administrative support Correct answer.
  2. Must hold an MLO license because the work involves loan files
  3. Must obtain a real estate broker license endorsement
  4. Must be registered with the CFPB as a mortgage loan originator

Explanation

The MLO definition covers individuals who take applications or offer or negotiate loan terms; purely clerical and administrative functions are excluded. Because this employee has no consumer contact on loan terms, licensing is not required for the role.

Question 16California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

What score must an applicant achieve to pass the national SAFE mortgage loan originator test?

  1. 60 percent
  2. 80 percent
  3. 65 percent
  4. 75 percent Correct answer.

Explanation

The national SAFE test requires a passing score of 75 percent. Failing applicants must wait before retaking the examination, and California also requires its state-specific testing component.

Question 17California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Under California advertising rules for licensed mortgage loan originators, a mortgage advertisement directed to consumers must include:

  1. The interest rate for every loan product the licensee offers
  2. The originator's NMLS unique identifier Correct answer.
  3. The name of the loan officer's sponsoring warehouse bank
  4. A disclaimer that rates are set by the Federal Reserve

Explanation

Consumer-facing advertising must display the originator's NMLS unique identifier so the public can verify license status. Advertising rules also require accuracy and the licensed name, but they do not require disclosure of warehouse bank relationships or a Federal Reserve disclaimer.

Question 18California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

As part of a California mortgage loan originator license application, the applicant must:

  1. Post a surety bond payable to the CFPB
  2. Authorize NMLS to obtain a credit report Correct answer.
  3. Submit a business plan for the sponsoring mortgage company
  4. Provide three personal references from licensed originators

Explanation

The licensing process includes a credit report review, and the applicant authorizes NMLS to obtain that report as part of the financial responsibility assessment. Bonds, where required, are posted at the company level, and a business plan is not part of the individual application.

Question 19California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

The supervisory authority of the DFPI over a licensed residential mortgage lender includes:

  1. Insuring the licensee's warehouse lines of credit
  2. Guaranteeing the licensee against borrower defaults
  3. Examining the licensee's books, records, and operations Correct answer.
  4. Setting the interest rate charged on all residential loans

Explanation

The DFPI examines licensees' books, records, and business practices and may take enforcement action for violations. It does not set loan interest rates, guarantee credit performance, or insure lender funding lines.

Question 20California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Which individual is acting as a mortgage loan originator under California law?

  1. A person who sells title insurance policies to homebuyers
  2. A person who appraises residential property for a lender
  3. A person who performs only clerical or administrative filing tasks for a lender
  4. An individual who takes a residential mortgage loan application Correct answer.

Explanation

The MLO definition focuses on taking residential mortgage loan applications and offering or negotiating loan terms for compensation. Clerical staff, appraisers, and title insurance producers fall outside that definition.

Question 21California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A licensed originator is arrested and charged with a misdemeanor involving dishonesty. Under NMLS reporting requirements, the originator must report the event:

  1. Only at the next annual renewal
  2. Within 12 months of the event
  3. Within 30 days of the event Correct answer.
  4. Only if the charge results in a conviction

Explanation

Originators must keep their NMLS record current and report certain events, including criminal charges, within 30 days. Waiting for renewal or for a conviction would leave the regulatory record inaccurate.

Question 22California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

An originator licensed and in good standing in another state applies for a California license. Under the federal temporary authority provision, the originator may:

  1. Transfer the out-of-state license permanently by paying a transfer fee
  2. Originate in California for up to 120 days while the application is pending Correct answer.
  3. Originate without any California license for up to one year if sponsored
  4. Skip the California pre-licensure education requirement and the state examination entirely

Explanation

Temporary authority allows a properly licensed originator who meets the federal criteria to originate in a new state for up to 120 days while the new license application is processed. It is a bridge period, not a substitute for meeting California's licensing requirements.

Question 23California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

An originator ends employment with one licensed California lender and joins another licensed lender. Before originating for the new company, the originator must:

  1. Retake the national SAFE examination
  2. Wait six months after the termination date
  3. Obtain a new NMLS unique identifier
  4. Have the sponsorship by the new lender recorded in NMLS Correct answer.

Explanation

An originator's license must be associated with a sponsoring licensed entity, and the new relationship is filed in NMLS. Originating before the new sponsorship is effective would be unlicensed activity.

Question 24California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A California originator offers to negotiate a loan modification for a financially distressed homeowner. Under California law, the originator:

  1. May collect fees only through automatic withdrawal from the borrower's account
  2. May collect the full fee if the homeowner signs a written waiver
  3. May collect up to half of the fee before performing the services
  4. May not collect a fee before the promised services are completed Correct answer.

Explanation

California law prohibits charging or collecting advance fees for loan modification and foreclosure consultant services before the services have been fully performed. A waiver or a particular payment method does not cure the prohibition.

Question 25California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A mortgage loan originator licensed only in Nevada wants to take applications from consumers for homes located in California. What must the originator obtain?

  1. A federal MLO passport issued by the CFPB
  2. A referral agreement with a California-licensed real estate broker
  3. A California mortgage loan originator license issued through NMLS Correct answer.
  4. Registration with the Department of Real Estate as an out-of-state lender

Explanation

Mortgage loan originator licensing is state-specific, so an originator must hold a California license to take applications for California properties. Neither referral arrangements nor federal registration substitutes for a California license.

Question 26California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

In California, a mortgage loan originator who is employed by a non-depository residential mortgage lender licensed under the California Residential Mortgage Lending Act is licensed by which agency?

  1. The California Housing Finance Agency
  2. The DRE
  3. The Bureau of Real Estate Appraisers
  4. The DFPI Correct answer.

Explanation

Originators who work for non-depository lenders and servicers licensed under the Residential Mortgage Lending Act or the California Financing Law are licensed through the DFPI. The DRE is the licensing agency for originators employed by real estate brokers.

Question 27California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A first-time applicant for a California mortgage loan originator license must complete how many hours of NMLS-approved pre-licensing education?

  1. 8 hours
  2. 24 hours
  3. 20 hours Correct answer.
  4. 12 hours

Explanation

The SAFE Act establishes a floor of 20 hours of NMLS-approved pre-licensing education for first-time originator applicants, and California requires the full 20 hours before a license is issued.

Question 28California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

How many hours of approved continuing education must a licensed California mortgage loan originator complete each year?

  1. 4 hours
  2. 20 hours
  3. 8 hours Correct answer.
  4. 10 hours

Explanation

The SAFE Act requires licensed originators to complete at least 8 hours of approved continuing education annually, and California applies that minimum to every licensee.

Question 29California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Which statement best describes the NMLS unique identifier assigned to a licensed mortgage loan originator?

  1. It follows the individual permanently, regardless of employer. Correct answer.
  2. It is reassigned each time the originator changes sponsoring companies.
  3. It is identical to the originator's California real estate license number.
  4. It is issued only after the originator completes the annual continuing education requirement.

Explanation

The NMLS unique identifier is a permanent number assigned to an individual originator and retained for the life of that individual's NMLS record, independent of any employer or license status.

Question 30California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A first-time California mortgage loan originator applicant is reviewing the 20 required hours of pre-licensing education. At a minimum, how many of those hours must cover ethics?

  1. 1 hour
  2. 5 hours
  3. 2 hours
  4. 3 hours Correct answer.

Explanation

The 20-hour pre-licensing package is allocated as 3 hours of federal law and regulations, 3 hours of ethics (fraud, consumer protection, and fair lending), 2 hours of non-traditional mortgage lending, and 12 hours of general origination content.

Question 31California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Under the California Residential Mortgage Lending Act, a licensed residential mortgage lender must maintain which of the following as a condition of licensure?

  1. A pledge of the lender's mortgage servicing rights
  2. A trust fund account held by the Commissioner
  3. A letter of credit from the borrower's escrow holder
  4. A surety bond filed with the Commissioner Correct answer.

Explanation

The Residential Mortgage Lending Act requires a licensee to file and maintain a surety bond with the Commissioner, in an amount determined under the statute, in addition to meeting the minimum net worth requirement.

Question 32California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

An applicant fails the national SAFE mortgage loan originator test on the first attempt. Under NMLS testing rules, how long must the applicant wait before retaking the test?

  1. 30 days Correct answer.
  2. 7 days
  3. 24 hours
  4. 6 months

Explanation

A candidate must wait at least 30 days after a failed attempt before retesting; a 6-month waiting period is triggered only after three consecutive failed attempts.

Question 33California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

An individual employed by a federally chartered bank takes residential mortgage loan applications in California. Which statement is accurate?

  1. The individual is exempt from all federal registration requirements.
  2. The individual must hold a California MLO license issued by the DFPI.
  3. The individual is registered in NMLS but is not state-licensed. Correct answer.
  4. The individual must hold both a California MLO license and a DRE broker license.

Explanation

Employees of federally insured depository institutions and their subsidiaries who originate residential mortgage loans are registered through the federal registry in NMLS rather than licensed by the state.

Question 34California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

Under the California Residential Mortgage Lending Act, a licensed residential mortgage lender must maintain a minimum net worth of at least:

  1. $500,000
  2. $250,000 Correct answer.
  3. $100,000
  4. $50,000

Explanation

The Residential Mortgage Lending Act sets a minimum net worth requirement of $250,000 for a licensed lender, which operates alongside the required surety bond.

Question 35California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

By what date must a California mortgage loan originator complete the continuing education that supports renewal of the license?

  1. March 31
  2. December 31 Correct answer.
  3. The anniversary date of initial licensure
  4. November 1

Explanation

Continuing education is tracked on a calendar-year basis, so the required hours must be completed by December 31 before the license can be renewed for the following year.

Question 36California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

If the DFPI denies an application for a California mortgage loan originator license, the applicant is entitled to:

  1. a hearing before the Commissioner after notice Correct answer.
  2. an automatic provisional license while the matter is reviewed
  3. arbitration through the NMLS
  4. a jury trial in superior court

Explanation

Licensing decisions under the California Financing Law and the Residential Mortgage Lending Act require written notice and an opportunity for a hearing before the Commissioner before the denial becomes final.

Question 37California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A mortgage loan originator licensed in California legally changes their name and home address. The individual must update the NMLS record within:

  1. 10 days
  2. 30 days Correct answer.
  3. 60 days
  4. 5 business days

Explanation

Licensees are responsible for keeping their NMLS record current and must report changes such as name, address, and contact information within 30 days of the change.

Question 38California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

An applicant was convicted of felony fraud 12 years before applying for a California mortgage loan originator license. Under the SAFE Act minimum standards, that conviction:

  1. is disqualifying because fraud felonies are disqualifying at any time Correct answer.
  2. cannot be considered because the conviction is more than 7 years old
  3. may be considered only if the applicant was incarcerated within the past 7 years
  4. must be disregarded once the applicant completes pre-licensing education

Explanation

Under the SAFE Act, a felony involving fraud, dishonesty, breach of trust, or money laundering is disqualifying regardless of when it occurred; the 7-year lookback applies only to felonies that do not involve those elements.

Question 39California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

The DFPI concludes that an unlicensed person is taking residential mortgage loan applications in California. The Commissioner may issue:

  1. a letter of non-objection
  2. a notice of default
  3. a lien on the person's commissions
  4. a desist and refrain order Correct answer.

Explanation

The California Financing Law and the Residential Mortgage Lending Act authorize the Commissioner to order a person to desist and refrain from unlicensed activity, and a violation of that order can be enforced in court.

Question 40California Regulatory Framework and MLO Licensing (DFPI, DRE, NMLS)

A person is paid to arrange a $3 million loan secured by an office building for a business borrower. Under California law, that person:

  1. must hold a California MLO license because all real property loans are covered
  2. needs an MLO license only if the lender is a depository institution
  3. does not need an MLO license because the loan is not residential Correct answer.
  4. must hold both an MLO license and a real estate broker license

Explanation

California MLO licensing covers residential mortgage loans, meaning loans secured by real property improved with one to four dwelling units. A business-purpose loan secured by an office building falls outside that definition, so arranging it does not require an MLO license.

Question 41California Residential Mortgage Lending Act (CRMLA)

Which California agency administers the licensing and enforcement provisions of the California Residential Mortgage Lending Act?

  1. Department of Financial Protection and Innovation Correct answer.
  2. Department of Insurance
  3. California Housing Finance Agency
  4. Department of Real Estate

Explanation

The CRMLA is administered by the Department of Financial Protection and Innovation, whose Commissioner issues, denies, suspends, and revokes residential mortgage lending licenses and examines licensees. Other state agencies regulate different segments of the housing finance industry under separate statutes.

Question 42California Residential Mortgage Lending Act (CRMLA)

CRMLA license applications, amendments, and renewals are filed electronically through which system?

  1. The SEC's EDGAR filing system
  2. Nationwide Multistate Licensing System Correct answer.
  3. The Secretary of State's bizfile portal
  4. FHA Connection

Explanation

The Commissioner requires CRMLA license records to be maintained and filed through the Nationwide Multistate Licensing System (NMLS). NMLS also holds the sponsorship links between licensed mortgage loan originators and their sponsoring lenders.

Question 43California Residential Mortgage Lending Act (CRMLA)

Under the CRMLA, a loan is a residential mortgage loan when it is primarily for personal, family, or household use and is secured by real property improved with how many residential units?

  1. No more than ten
  2. One to four Correct answer.
  3. Five or more
  4. Any number, if the borrower occupies one unit

Explanation

The definition turns on both the property type and the purpose of the loan: it must be secured by improved real property containing one to four residential units and be primarily for personal, family, or household use. Larger residential properties fall outside this definition.

Question 44California Residential Mortgage Lending Act (CRMLA)

A California-licensed mortgage loan originator must complete how many hours of continuing education each year?

  1. Ten hours
  2. Four hours
  3. Eight hours Correct answer.
  4. Two hours

Explanation

California follows the SAFE Act model, requiring eight hours of approved continuing education annually. The hours must cover specified subject areas, including federal law and regulation, ethics, and non-traditional mortgage lending.

Question 45California Residential Mortgage Lending Act (CRMLA)

Before taking the NMLS licensing test, a first-time mortgage loan originator applicant must complete at least how many hours of pre-licensing education?

  1. Forty hours
  2. Twenty hours Correct answer.
  3. Sixty hours
  4. Eight hours

Explanation

First-time originator applicants must complete twenty hours of approved pre-licensing education before sitting for the NMLS test. Those hours must include specified components such as federal law, ethics, and non-traditional mortgage lending.

Question 46California Residential Mortgage Lending Act (CRMLA)

Which item must appear in a licensed mortgage loan originator's advertising, such as a rate flyer or business card?

  1. The lender's net worth figure
  2. The borrower's annual percentage rate for a sample loan
  3. The Commissioner's signature block
  4. The originator's NMLS unique identifier Correct answer.

Explanation

Federal and state rules require that the unique identifier assigned to a licensed originator appear clearly on advertisements, including print and electronic materials. This allows consumers to look up the originator's licensing record.

Question 47California Residential Mortgage Lending Act (CRMLA)

How often must a CRMLA lender or servicer license be renewed?

  1. Annually Correct answer.
  2. Every three years
  3. Every five years
  4. Every two years

Explanation

CRMLA licenses are renewed each year through NMLS, and the licensee must continue to meet net worth, bonding, and reporting conditions to keep the license in force. Failure to renew leaves the entity unlicensed for lending or servicing activity.

Question 48California Residential Mortgage Lending Act (CRMLA)

A company that wants to make residential mortgage loans to California consumers secured by single-family homes must first:

  1. Obtain a CRMLA license from the Commissioner Correct answer.
  2. Register with the county recorder
  3. Join the California Mortgage Bankers Association
  4. File a financing statement with the Secretary of State

Explanation

Making residential mortgage loans covered by the CRMLA without a license is unlawful, so the entity must first be licensed by the Commissioner. Licensing involves an application, background review, minimum net worth, and ongoing reporting.

Question 49California Residential Mortgage Lending Act (CRMLA)

What minimum net worth must a CRMLA licensee maintain at all times?

  1. $500,000
  2. $25,000
  3. $1,000,000
  4. $250,000 Correct answer.

Explanation

The Commissioner requires CRMLA licensees to maintain a minimum net worth of $250,000 at all times and to demonstrate it in financial statements submitted with the application and renewal. The requirement is designed to ensure the licensee can fund operations and absorb losses.

Question 50California Residential Mortgage Lending Act (CRMLA)

Which of these entities is exempt from CRMLA licensing when it makes residential mortgage loans?

  1. A state-chartered credit union Correct answer.
  2. A nonbank subservicer of mortgage portfolios
  3. A mortgage banker funded by warehouse lines
  4. A mortgage broker that funds loans in its own name

Explanation

Depository and similar institutions, such as banks, credit unions, savings associations, trust companies, and insurers, are supervised under other regulatory frameworks and are excluded from CRMLA licensing. Nonbank lenders, servicers, and brokers that fund loans generally need a CRMLA license.