Mortgage Guide: SAFE ACT California Study Guide Free By Caroline Gerardo

by fraudswatch

About Caroline Gerardo: Poet and Writer at night with a passion for my “job” as a Mortgage Banker

I’m studying to take the California component of the SAFE ACT Test
These questions and answers I have provided as a study guide.
I don’t guarantee you will pass or these are the questions, but practice on the laws can’t hurt.
Some where over the rainbow our values will come back?
Some where over the rainbow being in the mortgage business won’t mean you are frowned upon in every circle.

  1. A compensation contract for a loan transaction must be retained for three years.
  2. MLO’s certificate for Continuing Education does not need to be retained.
  3. Grace period for a DRE license is two years after expiration
  4. Division of California Department of Corporations that handles violations of the California Financial Code is the Enforcement Division
  5. If a MLO is not in compliance with a DOC provision, his bond can be increased from $50000 to $100000
  6. If an advertisement has been disapproved, the MLO must discontinue the ad immediately.
  7. MLO who advertises on radio/ air waves must maintain a transcript of the ad for audit 90 days
  8. Regulators are concerned with improper production, not loan volume
  9. An administrative penalty is $2500 while civil court penalty is $25000
  10. Independent escrow agents are subject to regulations of the Department of Corporations
  11. MLO and certain fiduciaries are regulated by the operational arm of the California Department of Corporations known as the Financial Services Division
  12. Commissioner of DRE is a real estate broker with 5 years experience and is appointed by the Governor
  13. DRE audits a licensed real estate broker and charges cost if a violation is proven
  14. MLO can prove a particular interest rate was available by showing the rate sheet
  15. California Foreclosure Act guides borrowers in the pursuit of a modification
  16. Lenders and brokers may not add anything to the appraisal fee
  17. MLO files BK must notify commissioner in 5 days
  18. Covered loan can have a prepay for 3 years
  19. Loan denial record must be kept 3 years
  20. Prepay penalty is waived in a natural declared disaster
  21. MLO guilty of redlining license suspended
  22. Conversion is misappropriation of funds
  23. Fees on a covered loan can’t exceed $1000 or 6% of original balance
  24. Violation on covered loan is suspend 6 months to 3 years 2nd time permanent  and $2500+ civil liable $15000+++
  25. Broker must place $ for others in trust account in 3 business days
  26. Broker must withdraw any of his own funds from trust account (example property manager) as fees in 25 days
  27. Mortgage lender may no longer consider rising real estate prices as a mitigating factor against loan risks
  28. MLO continuing education on: 3 hours of Federal law and regulations;
  29. Net worth and surety bond for California Residential Mortgage Lenders is: surety bond $50000 net worth $250000
  30. Net worth and surety bond for Finance Lenders License is: surety bond of $25000 and net worth $25000
  31. If Finance Lender employs more than one MLO net worth increases to $250000.
  32. Law October 2009 to ensure California complied with SAFE Act is SB 32
  33. January 2010 all licensed real estate brokers, salespersons and RE corporations who make arrange or service loans must submit to the DRE an online report called the RE-866.
  34. RE-866 if licensee is a real estate corporation, the name an license number of the officer will be provided
  35. Re-866 form due January 31, 2010 or 30 days of commencing Mortgage orginations
  36. Penalty to file RE—866 $50 day for first 30 and $100 a day up to $10000.
  37. B&PCode Section 10131 real estate broker is one who for compensation, solicits, negotiates or performs services for others
  38. B&P Code Section 10131 real estate broker engages n the making of loans, buying from. Selling to, or exchanging with the public real property sales contracts or secured promissory notes as a principal
  39. B&P Code “in the business” means acquiring for resale to the public real property sales contracts or secured promissory notes in the amount of 8 or more a year
  40. Cash, corporate capital, warehouse credit lines, other $ that are liability items on the person’s financial statements secured or unsecured are known as own funds
  41. To renew a California real estate license licensee must take
  42. Fees for a lock-in agreement are refunded if the agreement is executed and the loan is denied
  43. MLO activity can take place only at the address on license unless borrower requests otherwise
  44. MLO license should be placed prominently in office
  45. Renewal fees are due December 31 each year
  46. Change of ownership form is filed with Commissioner when mortgage co changes hands
  47. Print media must match business name and information registered with NMLS
  48. DOC commissioner inspects books and records of MLO every 2 years
  49. DOC commissioner may inspect as often as necessary
  50. Commissioner of DOC and DRE can issue a desist and refrain order
  51. Audits by DRE or Doc MLO Co pays costs
  52. Broker licensed under Consumer Finance Lending Laws may broker loans to Finance Lenders
  53. Delaying the closing of a loan to increase costs is predatory lending
  54. Compensation contract for a loan transaction must be retained for 3 years
  55. Residential mortgage loan is 1-4 units
  56. MU1- corporation or sole proprietor-business
  57. MU2 –each control persons
  58. MU3-license branch
  59. MU4 individual
  60. 2 hours of ethics including training on fair lending, fraud, and consumer protection challenges;2 hours of lessons related to lending standards for the nontraditional mortgage product market; and 1 hour other
  61. Mortgage bankers must have net worth $250000 and surety $50000
  62. Application fee for California Mortgage banker’s license is $900 CRMLA
  63. Maintenance annual fee DRE license MLO endorsement is $300
  64. Reporting requirements for brokers: list of licensees, advertising media, types loans serviced- how many covered loans…
  65. Maintain license classes: 8 hours continuing education+ 45 hours continuing education every 4 years
  66. Processors and Underwriters who work as independent contractors must be licensed
  67. Pre-licensed education is 20 hours
  68. Applicants who completed endorsement before August 31 2010 do not have to complete the 20 hours
  69. New applicants for Finance lender in CA file through NMLS is they intend to make or broker mortgage loans (they can finance cars and not do mortgages)
  70. Section2924.6 Civil Code due on sale clauses are not allowed for:transfer resulting from death of spouse, adding spouse on title, divorce decree- Dissolution, inter vivos trust transfer where they are beneficiaries,junior liens
  71. Section 50318 misleading public as to education, license … 12 months bar
  72. Unruh Civil rights act- sex race color religion ancestry national origin disability medical condition marital status sexual orientation
  73. Holden Act- redlining geographical discrimination 1-4  Section 35801, Borrower complains to Secretary of the California Department of Business, Transportation and Housing 30 days determination
  74. Holden Act is Secretary determines the violation desist and refrain – make the loan or pay $1000
  75. Holden Act Appeal to hearing 10 days – hearing happens in 20 days – decision in 45 days can be appealed in court
  76. Section2780 RE Commissioner Regulations: race color  sex religion ancestry physical handicap marital status national origin- panic selling block busting
  77. Mortgage broker agreements-cannot be for high cost per HOEPA
  78. Mortgage broker agreements can charge actual charges upfront and an application fee
  79. Advertising no no words: guaranteed, safe, bonded, sound, investment plan, growth plan, low doc, no income, no assets, stated, immediate approvals
  80. Loan modification scams cannot charge fees upfront, take a wage assignment, power of attorney,
  81. Loan modification scam fines $10000 plus one year county jail individual, $50000 for corporation 3X damages
  82. California Foreclosure Prevention Act- 90 days notice of default + 90 4 days before sale for reinstatement
  83. MLO can’t charge a fee for best efforts to find a loan- must deliver
  84. Loan servicers must pay interest of 2% on advance impound accounts
  85. Covered loan law California Civil Code 4970- 4979.8 High Cost Loans Any residential loan does not exceed Fannie Mae’s conforming loan limit- APR exceeds 8% over Treasuries of 15th day of month or total points and fees paid by consumer exceed 6% of loan amount or $1000– No prepayment 3 years, no balloon less than 5 except for bridge loans, neg am must be disclosed, 55% DTI, no loan flipping, must be a benefit
  86. Trust funds – must deposit in escrow or trust account 3 business days
  87. Trust fund record keeping: 3 years, reconcile monthly, no interest
  88. Covered loan is not a super jumbo
  89. Willful violation of Covered Loan Law $15000 or damages
  90. California Finance Lenders Law Commissioner Department Corporations can suspend a license not to exceed 12 months
  91. Maximum criminal penalty for violation of California Residential Mortgage Lending Act is $10000 and one year in jail
  92. DRE cannot file criminal charges
  93. Max payout to consumers from DRE Real Estate Recovery account  $250000
  94. California Administrative Procedures Act hearing final decision 100 days

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