Department of Real Estate. Beginning in 1958, California opposed the pre-fee system by passing the Business and Professions Code 10085 and then the DRE 2970 and 2972 regulations. The rules require a broker to submit to the DRE his agreement in advance, his accounting format and all advertising and advertising materials. They pass over them with a thin tooth crest and very little, if ever approved. They authorize the collection of an assessment and credit tax in advance, provided they are either paid directly to the seller, or paid into the broker`s trust account and paid from the broker. Since most brokers hate the treatment of trust funds, the most common and laudable practice is to charge the candidate directly to the expert and recover credit charges when the credit closes. We have three types of original mortgage licenses in California. Everyone treats the issue of advance fees a little differently. California Finance Lender. One of the two loan licenses managed by the Department of Business Oversight is the California Lender`s License. You will see a previous Doss Guide that describes the functions of the CFL license and describes how it is compared to a DRE license. With respect to consumer credit, the BOD prohibits advance fees from CFL lenders.
Financial Code, Section 22300. The same prohibition does not apply to non-consumer loans (commercial loans). However, expect administrative sanctions if the BOD receives complaints that commercial licensees are taking advances but not providing promised credits. Conclusion: Avoid fees in advance. You are better served with a good supply contract (brokerage contract), if you want contractual insurance, you will be paid. If there are expenses, charge the borrower directly. If you need travel expenses, have the borrower book and pay for the trip for you. A good prior agreement with the borrower gives you the exclusive right to represent the borrower to obtain a loan within certain parameters. If the borrower is lured to another location or is attacking you, you can take the borrower to court or arbitration to collect your fees and credit commissions. Residential Real Estate Mortgage Aratgeber. Many mortgage bankers opt for the California Residential Mortgage Lender (“RML”), also managed by the Department of Business Oversight.
The licence is limited to residential real estate loans and covers an audited net worth requirement of $250,000. The RML statutes and BOD rules do not prohibit the payment of an “application tax” in addition to direct loan fees, such as credit and valuation. However, when the licensee acts as a broker and not as a direct lender in the transaction, he must obtain the agreement of the DBO for some kind of brokerage contract that requires an “application fee”. Financial Code, Section 50701.