Real Property Loans

# Real Property Loans ## Overview of Mortgage Brokerage in California California's mortgage industry is regulated at both the state and federal levels. California real estate brokers have historically played a major role in arranging real property loans — a function governed by the California Real Property Loan Law (RPLL) (BPC §§ 10240–10248), and federal statutes including the Truth in Lending Act and Dodd-Frank. Understanding the RPLL thresholds, commission caps, and disclosure requirements is essential for any broker who participates in mortgage brokerage activities. --- ## Mortgage Broker vs. Mortgage Banker Mortgage Broker: - Acts as an intermediary between the borrower and the lender - Does NOT fund the loan with their own capital - Shops multiple lenders to find suitable terms for the borrower - Earns a broker fee or origination fee - Must be licensed as a real estate broker (California DRE) or NMLS-licensed mortgage broker - Subject to California RPLL when arranging covered loans Mortgage Banker: - Uses its own capital to fund loans - Typically sells loans into the secondary market (Fannie Mae, Freddie Mac) after origination - May retain servicing rights - Subject to DFPI licensing for some activities Key distinction: If the loan is funded from the entity's own warehouse line or balance sheet, it's banking. If it's simply arranged between borrower and lender, it's brokering. --- ## Real Property Loan Law (RPLL) — BPC §§ 10240–10248 The California Real Property Loan Law (BPC §10240 et seq.) imposes additional requirements on certain mortgage transactions arranged by California real estate brokers. ### Threshold —…