Real Estate Law and DRE Mortgage Loan Originator Licensing
The Real Estate Law framework
The Real Estate Law (Business and Professions Code Section 10000 et seq.) is administered by the DRE Commissioner. It licenses real estate brokers and salespersons. A broker license requires age 18 or older, honesty and truthfulness, two years of full-time licensed experience (or a qualifying degree), 135 hours of pre-licensure statutory coursework and a passing exam. A salesperson license requires three college-level courses, an exam, and employment by a licensed broker - a salesperson may never broker loans independently.
The MLO endorsement
A DRE licensee who wants to originate residential mortgage loans must add the MLO license endorsement: 20 hours of NMLS-approved education, the SAFE test with the California component, fingerprints, credit authorization, and a sponsoring broker or lender. The endorsement is personal; the broker holds the license under which the originator may act.
Mortgage Loan Disclosure Statement
DRE licensees arranging loans secured by real property must deliver the Mortgage Loan Disclosure Statement (MLDS), signed by the borrower, disclosing the broker's compensation from all sources, estimated costs, and whether the broker has a related interest in the lender. Timing matters: the MLDS is due promptly after receipt of the loan application - generally within three business days.
Trust funds and traps
Broker trust accounts must not be commingled with operating funds; borrower deposits and loan proceeds held pending disbursement go into a trust account with proper records. Exam traps include testing whether a salesperson can take a mortgage application (only with the MLO endorsement under a broker) and whether the MLDS is required on a commercial loan (it is required for loans secured by real property).
Rule of thumb: DRE license plus MLO endorsement plus sponsoring broker equals authority to originate - all three, every time.