SAFE Act Update
WMA has been informed by the California Department of Corporations that parkowners do not need to be licensed by the Department of Corporations or have a Mortgage Loan Originator (MLO) license to service chattel loans in California. This is indeed very good news. Please note, however, that a parkowner who negotiates or makes chattel loans on a mobilehome will need to be licensed as a consumer finance lender under the Department of Corporations and secure a MLO license from the Nationwide Mortgage Licensing System NMLS.
A mortgage loan originator means an individual who, for compensation or gain, or in the expectation of compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. A residential mortgage loan means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling as defined in Section 103(v) of the federal Truth in Lending Act or residential real estate upon which is constructed or intended to be constructed a dwelling. Dwelling means a residential structure that contains one to four units whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobilehome or trailer if it is used as a residence. Mortgage loan originators employed by California Finance Lenders or California Residential Mortgage Lenders licensees must be licensed through NMLS by July 31, 2010. We are hoping that HUD will postpone this date and extend the time frame for being licensed as an MLO. However, HUD has not notified anyone yet whether or not they will provide an extension of time. We will keep you posted.
WMA has been informed by the California Department of Real Estate that real estate brokers are not permitted to make chattel loans under their real estate broker license. Real estate brokers are only permitted to make loans secured by real property. Chattel loans are not secured by real property. As a consequence a mortgage loan originator license for chattel loans on mobilehomes will need to be obtained from the Department of Corporations if parkowners wish to make loans on mobilehomes.
B&P Code Section 10131.1. (a) A real estate broker within the meaning of this part is also a person who engages as a principal in the business of making loans or buying from, selling to, or exchanging with the public, real property sales contracts or promissory notes secured directly or collaterally by liens on real property, or who makes agreements with the public for the collection of payments or for the performance of services in connection with real property sales contracts or promissory notes secured directly or collaterally by liens on real property.
Because the B&P code section is specific to loans secured by real property, chattel loans are not permitted under the DRE licensing.