October 19, 2021

Volume XI, Number 292


October 18, 2021

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Why CFL Licensed Lenders Must Submit New License Applications By Year End

Several thousand lenders and brokers are currently licensed by the Department of Financial Protection & Innovation under the California Financing Law.   The CFL generally requires that persons engaged in the business of either finance lender or broker.  The law applies to both consumer and commercial lenders.   

For some time, the DFPI has required residential mortgage lenders and brokers to file license applications through the Nationwide Multistate Licensing System (NMLS).  Other lenders used the infamous "long form" application.  For many applicants the process of becoming licensed under the CFL took several months.  Earlier this year, the DFPI has announced that non-residential mortgage lenders and brokers may apply through the NMLS.   

Beginning October 1, all applicants for licensing under the CFL will be required to transition to the NMLS by December 31, 2021.  10 CCR § 1422.4(b)(3).    Essentially, this will involve filing an MU1 application form through the NMLS.  However, transitioning licensees will not be required to submit the following items if those items are already on file with the DFPI:

  • Copies of Fictitious Business Name Statements bearing the seal of the county clerk;

  • Fingerprints for individuals identified in the “Direct Owners and Executive Officers,” “Indirect Owners,” and “Qualifying Individuals” sections of Form MU1, unless fingerprints have not previously been submitted for an individual;

  • Financial statements required of an applicant;

  • The Customer Authorization of Disclosure of Financial Records form;

  • A business plan, except that a licensee transitioning to NMLS shall provide an updated business plan if the plan previously submitted to the Commissioner is no longer accurate;

  • An organizational chart, unless the organizational chart previously submitted to the Commissioner is no longer accurate;

  • A management chart, unless the management chart previously submitted to the Commissioner is no longer accurate;

  • A certificate of qualification or good standing;

  • A partnership agreement; and

  • An Execution Section.

Despite these exceptions, current licensees should expect that they will be required to expend considerable time and effort to transition to the NMLS.

The DFPI's new rules with respect to NMLS are available here.  They take effect on October 1, 2021.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 232

About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...