Exploring the 2 License Types for Private Mortgage Lending in California (2024)

January 18, 2024

In the ever-evolving landscape of private mortgage lending, understanding the different license types is crucial for success. As a private lender in California, you have two options: the Real Estate Broker License and the Finance Lender License. Each license type comes with its own set of requirements and benefits, so let’s dive into the details.

Real Estate Broker License

The Real Estate Broker License is a popular choice among private mortgage lenders in California. This license allows you to engage in loan origination activities while also conducting real estate brokerage services. It provides a unique opportunity to offer a comprehensive range of services to borrowers.

To obtain a Real Estate Broker License, you must meet certain criteria set by the California Department of Real Estate (DRE). These requirements include completing specific educational courses, passing an exam, and gaining practical experience under a licensed broker.

Once licensed, you can originate loans secured by real estate properties, negotiate loan terms with borrowers, and facilitate the loan closing process. Additionally, as a licensed real estate broker, you can earn commissions from both loan origination and real estate transactions.

Finance Lender License

The Finance Lender License is another option for private mortgage lenders in California. This license focuses solely on lending activities and does not include real estate brokerage services. If your primary focus is lending rather than real estate sales or brokering, this license may be more suitable for your business model.

To obtain a Finance Lender License, you need to comply with the requirements outlined by the California Department of Business Oversight (DBO). These requirements include submitting an application, providing financial statements, demonstrating good character and competency, and paying licensing fees.

With a Finance Lender License, you can engage in various lending activities such as originating loans, servicing loans, and collecting payments. However, it’s important to note that without a Real Estate Broker License, you cannot earn commissions from real estate transactions.

Choosing the Right License for Your Business

Deciding between the Real Estate Broker License and the Finance Lender License depends on your business goals and strategy. If you plan to offer both lending and real estate brokerage services, the Real Estate Broker License provides a comprehensive solution. On the other hand, if your focus is solely on lending activities, the Finance Lender License may be more suitable.

Consider factors such as the nature of your business, target market, and long-term objectives when making this decision. It’s also essential to consult with legal professionals who specialize in mortgage licensing to ensure compliance with all relevant regulations.

Conclusion

As a private mortgage lender in California, obtaining the appropriate license is crucial for operating legally and effectively. Whether you choose the Real Estate Broker License or the Finance Lender License, understanding their requirements and benefits will help you make an informed decision.

Remember that compliance with state regulations is paramount to maintaining a successful private lending business. Stay up-to-date with any changes in licensing requirements and seek professional guidance when needed.

If you’re interested in exploring loan management or origination software solutions that can streamline your private lending operations, consider scheduling a demo with Fundingo. Our innovative platform offers comprehensive features designed specifically for private lenders like yourself. Contact us here or call us toll-free at (877) 227-7271 to learn more about how Fundingo can support your business growth.

Disclaimer: This article does not constitute legal advice. Please consult with legal professionals for specific guidance regarding licensing requirements for private mortgage lending in California.