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Lending

California changes loan originator education requirements

Applicants must complete additional education on state’s laws

California

A newly adopted law changes the education requirements for mortgage loan originators in California. Senate Bill 1459 amends the California Finance Lenders Law and the California Residential Mortgage Lending Act to require that mortgage loan originators receive additional education on California’s laws to gain a license to operate in the state.

California Gov. Jerry Brown signed SB-1459 into law on July 10 after the state senate unanimously approved the bill on June 26.

The new law requires that an applicant seeking a mortgage loan originator license in California must complete two hours of approved education related to relevant California law and regulation.

An applicant seeking a mortgage loan originator license must also complete at least 18 additional hours of Nationwide Mortgage Licensing System and Registry-approved education, including at least:

  • Three hours of instruction on federal law and regulations
  • Three hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues
  • Two hours of training related to lending standards for the nontraditional mortgage product marketplace

Applicants are also required to pass an NMLS-approved written test that covers the following areas:

  • Ethics
  • Federal law and regulation relating to mortgage origination
  • State law and regulation relating to mortgage origination
  • Federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues

Additionally, the new law requires that existing mortgage loan originators complete one hour of continuing education related to relevant California law and regulation every year.

In addition to that hour, MLOs are required to take at least eight hours of continuing education a year, with at least:

  • Three hours of instruction on federal law and regulations
  • Two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues
  • Two hours of training related to lending standards for the nontraditional mortgage product marketplace

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