Forecasts are showing that the California housing market is poised for a pick-up, as affordability remains stable and rich investors are giving regular Joes some room in the market. If you’re considering applying for a mortgage broker license in California or expanding your existing practice to that state, now is a great time to jump on it.
Here’s an overview of the necessary steps you’ll have to take on your way to becoming a licensed broker.
Choosing a Mortgage Broker Type: DBO or BRE?
The State of California distinguishes between two types of mortgage brokers that each go through a different process of licensing and work in accordance with different laws.
The first type registers with the California Department of Business Oversight (DBO) and falls under the regulations of the California Finance Lenders Law (CFL). This means that DBO-licensed brokers can only work with loans issued by lenders who are also licensed by the same law.
The second type of mortgage broker license is issued by the California Bureau of Real Estate (BRE). Unlike DBO brokers, BRE brokers may work with all kinds of financial institutions.
Depending on the way you get your license, your practice will be governed by different laws. Make sure you choose the one that’s right for your business goals. Regardless of type, all California mortgage broker licenses are kept under the National Mortage Licensing System (NMLS).
NMLS Pre-Licensing Requirements
As in all US states, the NMLS has some pre-licensing requirements for all mortgage brokers. These include:
3 hours Federal Law classes;
3 hours Ethics classes;
2 hours non-traditional mortgage lending classes;
12 hours elective classes;
8 hours of continuing education with a NMLS-approved instructor each year;
The rest of the requirements vary dependending on the type of license you wish to obtain.
BRE Licensing Requirements
Mortgage brokers wishing to get licensed with the California Department of Real Estate must have at least two years of experience as salespeople, go through a mandatory background check, complete 8 college-level courses in the areas of financing and real estate, and successfully pass a written examination.
The cost of a BRE license is $330 plus additional fees for processing, credit report check and background check. All fees are non-refundable.
DBO Licensing Requirements
Licensing under the California Department of Corporation is somewhat similar, but doesn’t require prior experience as a salesperson or college-level courses.
While the application fee is smaller (at only $169), there is a bigger expense associated with a $25,000 surety bond requirement. Read on to find out more.
Mortgage Broker Bonds in California
The surety bond you are required to post with a DBO type license is called a mortgage broker bond. The bond is there to ensure that your business will operate in accordance with state laws and regulations. It also protects your customers, i.e the borrowers, from fraudulent practices. In case you are found guilty of breaking the surety bond agreement, a claim may be triggered against you.
In such cases, you become legally responsible to financially compensate the state or the client. It’s best, however, to avoid claims as that will damage your reputation and make it harder (and more expensive) for you to renew your mortgage broker bond.
Obtaining a California Mortgage Broker Bond
So how do you obtain a mortgage broker bond? As with all surety bonds, mortgage broker bonds are underwritten by companies known as sureties. By giving you the bond they are financially guaranteeing for you. That’s why in case of a claim they’re financially responsible for the compensation, too.
The total amount of the mortgage broker bond in California is $25,000. But you don’t need to have that much cash in order to get licensed. You get mortgage broker bonds by paying annual premiums, which are calculated after an evaluation of your credit history.
If you have outstanding credit, you will most likely pay premiums of about 1% – 3% of the total bond amount. If you have some credit issues, the price can go as high as 10%. That makes sense, as sureties always assume a 0% loss ratio.
Even if you have more serious credit issues, there is little reason to worry. 99% of applicants manage to obtain a mortgage broker bond. Of course, there are certain exceptions, such as applicants with open bankruptcies (closed ones are fine) or late child support payments.
Lance Surety Bonds is an agency that has partnerships with a large network of underwriters. This makes it possible for us to secure the best possible quote for your bond. Apply now and don’t hesitate to contact us should any questions arise!
While the extremely cold temperatures are the main culprit, it seems that there are other factors at play, such as the economy slowing down towards the end of 2013. Despite expectations, retail sales saw a slowdown in both November and December, while expert growth took a downward turn in December.
The weather explanation seems to have another weak point. The northwest experienced an increase in new home construction projects, despite the fact that it was one of the regions with the lowest temperatures this winter. On the other hand, some parts of the West were spared from the cold but that didn’t help their home construction sector.
According to some economists, the reason might be intertwined with “weakening in housing market fundamentals”, such as higher mortgage rates and house prices.
Read the full article at Reuters.
The growth was spurred by both domestic and international buyers and is expecting to remain strong in 2014, according to Liza Mendez, a Chairman of the Board of the Miami Association of Realtors. The prediction is justified by 5 factors.
1. Single-family homes are selling at a very fast rate, suprassing that of last year;
2. The Association is leading a successful campaign, helping its members to get more listings;
3. Prices of both condos and single-family homes continue increased 19.9% and 19.7%, respectively, compared to last year;
4. The average percent of original list prices is also seeing an increase;
5. Miami is popular with international buyers, as witnessed by an increase in all-cash sales.
Read the full article at the Housing Wire.
Working as an unlicensed contractor is a risk not worth taking. Six Salinas-based contractors were caught in a sting operation conducted by the Contractors State License Board (CSLB) of California. They were found through online ads in various websites, such as Craigslist.
The investigators pretended to be potential customers who requested bids for a landscaping project. Under the current law, unlicensed contractors may not bid on projects larger than $500, whereas the highest bid got as high as $15,000. Bids of that sort can only be executed by CSLB-licensed contractors.
Since this is their first conviction, the six contractors are facing fines of up to $5,000 or jail time for up to six months. And since their online ads did not specify that they are not licensed contractors, they were also cited for illegal advertising.
Read the full story at Workerscompensation.com
Lance Surety Bonds can help contractors get a contractor license bond, an important part of the licensing process.
A new study by Urban Science found that, though the number of US dealerships remained mostly unchanged in 2013, the sales of new cars brought a surge in their profits.
Although the year started with slightly less dealerships than the same time last year, the change was neglible (0,1%). Furthermore, “in the next three to four years, we’ll see flat and slight uptick in the number of dealerships” with no significant differences from coast to coast, according to John Frith, Urban Science’s Vice President.
The only states that saw a significant increase in their dealership counts in 2013 were California and Texas with 34 and 15 new car dealers, respectively.
As for profits, the analysis shows that the average US car dealerships sold 874 vehicles, compared to 812 in 2012 and just 564 in 2009. According to Mr. Firth in 2014 the number can go as high as 914.
Read the full article at Autonews.
In an article about freight numbers from the month of January, the Commercial Carrier Journal gives its perspective on the state of the industry in 2014, based on the opinion of several industry leaders.
Noël Perry, a Senior Consultant with the FDR expect growth rates of about 4% this year due to slow GDP growth. Still, he cautions drivers to “stay flexible” as unexpected demand may catch them off-guard, as capacity is already close to 98%.
Now onto the numbers. According to the Cass Truckload Linehaul Index, truckload linehaul rates increased by 2.9% in January, constituting the largest increase since last February.
“Persistent cost pressures, relatively tepid demand, soft pricing, increasing regulatory pressure, and a less robust used truck market” seem to be among the culprits, according to market strategist Donald Broughton.
The Cass Freight Index, on the other hand, shows shipment volumes and freight expenditures continue to go down, a trend that started in December last year.
Finally, the DAT North American Freight Index indicates that spot market freight availability increased by 24%,”exceeding December levels for only the second time since index began in 1996.”
Read the full story at the Commercial Carrier Journal.
In a statement given on Thursday, General Motors recalled a total of 778,562 of cars from the North American market, in particular Chevrolet Cobalt and Pontiac G5 models, made in the years between 2005 and 2007.
The problem in question seem to be that “the weight on the key ring, road conditions or some other jarring event may cause the ignition switch to move out of the run position, turning off the engine and most of the car’s electrical components”. The recall became necessary after at least “five frontal-impact crashes and six front-seat fatalities” were brought to GM’s attention.” It’s important to note that the crashes in question were accompanied by other high-risk factors such as high speed, alcohol use and failure to use seat belts.
GM dealership across the country will make the replacement free of charge, but meanwhile drivers are advised to remove everything that is not absolutely necessary from their key rings.
To read the full article, click here.
According to credit reports provider TransUnion the rate of mortgage delinquencies continues to drop (60 days and more) – from 4.09% in Q3 to 3.85% in Q4 of 2013. This result marks a 5-year low.
Still, it might be too early to celebrate, according to TransUnion’s head of financial services Steve Chaouki. Although the past two years saw a gradual decline in mortgage delinquencies, they “continue to be twice as high as levels observed prior to the housing bubble”. Moreover, the housing market is still not stabilized with prices and originations improving in early 2013 only to drop once again during the second half of the year.
Despite that, there is no reason to underestimate the positive trend. According to Mr. Saouki, the terend will continue in the same direction as the new mortgage rules kick in and some of the older mortgages “exit the system”.
To read more about the report, visit housingwire.com.
The recently proposed rule to lower permissible exposure limits (PEL) of crystalline silica in construction sites, made by the Occupational Safety and Health Adminisration (OSHA), has met with criticism from several construction industry leaders. One of them is the National Association of Home Builders (NAHB).
In NAHB’s view, OSHA lacks significant understanding of how the implementation of the rule will work in practice. Home builders are afraid they might not be able to meet the increased costs that will come with it. According to OSHA’s own estimate, meeting the new PEL regulations will cost around $511 million, but other economists think $2.2 billion per year is a more realistic approximation.
And while OSHA argues that the new PEL could significantly reduce health hazards for construction workers, NAHB points to data provided by the Centers for Disease Control and Prevention “that shows a sharp decline in the incidences of silicosis in recent decades.” Thus, until a more sustainable solution is found, NAHB thinks its best tо treat the proposal as an “advance notice of a proposed rule.“
Read the full story on nahb.org.
Land Line Magazine’s state legislative editor Keith Goble summarizes efforts across the U.S. to increase speed limits on highways. Currently, 16 states are working on such proposals.
Among them, Florida and Georgia are considering upping speed limits from 65 mph to 70 mph. The former will seek DOT approval first, while the latter will look into traffic studies before making its decision final. Other states, such as Wyoming and Utah can go as high as 80 mph, but for Wyoming the change would only apply to truckers. Regular vehicles can expect to see 75 mph speed limits after evaluation of the state’s highways. New York, Mississippi and Missouri are also working on proposals allowing all vehicles to drive as high as 75 mph within state lines.
A growing trend among state lawmakers seem to be an increased reliance on the opinion of experts from transportation departments.
Read the full story in Land Line Magazine.1 2 3 … 24 Next »