MLO Mentor: CRMLA Annual Reports

MLO Mentor is an ongoing series covering compliance best practices for mortgage loan originators (MLOs). This article details MLO reporting under the California Residential Mortgage Loan Act (CRMLA) — learn more in our introduction to the CRMLA.

Annual reports

A CRMLA licensee is required to file several reports with the Department of Financial Protection and Innovation (DFPI) or Nationwide Mortgage Licensing System (NMLS) on an annual basis:

  • the annual report to set the annual assessment amount, filed with the DFPI;
  • the nontraditional, adjustable-rate mortgage (ARM) and mortgage loan survey report, filed with the DFPI;
  • the residential mortgage loan report, filed with the DFPI;
  • the Mortgage Call report, filed with the NMLS; and
  • audited financial statements.

Failure to file any report within ten days of its due date subjects the CRMLA licensee to a fine of $100 per day, up to $1,000. After ten days, failure to file reports is grounds for suspension and license revocation. [Fin C §50326]

Annual report to set annual assessment 

CRMLA licensees are subject to a minimum annual assessment of $1,000. The minimum annual assessment is based on an annual report prepared by the CRMLA licensee.

An invoice for the annual assessment fee is sent by the DFPI to the CRMLA licensee before September 30th of each calendar year. The invoice is due in 20 days of the invoice date.

Failure to pay results in a penalty of 1% of the assessment for each partial month the payment is delayed. After 30 days of non-payment, the DFPI Commissioner may suspend or revoke a license for failure to pay the annual assessment. [Fin C §50401(c)-(d)]

To set the annual assessment amount, each CRMLA licensee needs to file an annual report of the calendar year’s mortgage activity by March 1 of the following year. The annual report includes monthly totals for:

  • the number of California loans processed and underwritten;
  • the aggregate principal mortgage amount of California loans processed and underwritten;
  • the number of California loans originated;
  • the aggregate principal mortgage amount of California loans originated;
  • the number of California loans brokered;
  • the aggregate principal mortgage amount of California loans brokered; and
  • the aggregate amount of California loans serviced. [Fin C §§50401, 50702]

The report also requires the CRMLA licensee to provide:

  • the total number of foreclosures processed by the licensee during the prior calendar year; and
  • disclose if it has made any mortgage other than a 30-year fixed rate mortgage, called nontraditional mortgages, during the year, and its policy for implementing guidance for safely offering nontraditional mortgages.

Nontraditional loan survey

In addition to the small questionnaire provided in the annual report, the nontraditional loan survey is to be completed each year by March 1 by CRMLA licensees who engage in warehouse lending.

The survey requires the CRMLA licensee to provide the prior year’s loan volume and aggregate dollar amount of residential mortgage loans retained or sold, organized by:

  • interest-only mortgages;
  • payment option ARMs;
  • reduced documentation loans;
  • simultaneous second lien loans;
  • home equity lines of credit (HELOCs);
  • covered loans; and
  • ARMs.

Residential mortgage loan report

The residential mortgage loan report is a report filed by CRMLA licensees who act as lenders and who do not report under the federal Home Mortgage Disclosure Act (HMDA). [Calif. Health and Safety Code §35816(b)]

CRMLA licensees acting as lenders use this filing to report their annual residential mortgage activity to the DFPI. Data on both applications and closed residential mortgages are reported.

A residential mortgage for this report includes both consumer mortgages and commercial mortgages secured by one-to-four unit residential property which fund either the purchase or improvement of the secured property. This includes cash-out refinancing which funds some improvement to the property. [21 CCR §7117(d), 7118(b)-(c)]

A CRMLA licensee making mortgages as a direct lender that is exempt from HMDA reporting files the California residential mortgage loan report with the DFPI if, during the calendar year:

  • they make residential mortgages exceeding 10% of the total dollar amount of all mortgages they make [21 CCR §7121(a)];
  • they make 12 or more residential mortgages during the calendar year with a total amount of $500,000; and
  • they have assets no greater than $10 million.

If a CRMLA licensee is exempt from filing the residential mortgage loan report, they must fill out a cover page which indicates they are exempt due to HMDA reporting, or low residential mortgage loan volume.

Report by MSAs

The CRMLA licensee files a residential mortgage loan report for each metropolitan statistical area (MSA) in which they have a branch. MSAs are regions defined by the U.S. Office of Management and Budget (OMB) and used by government agencies for statistical purposes. MSAs represent regions of high population density.

MSAs are not defined strictly by county or city lines, but rather larger regions linked by common economic ties (e.g. Riverside-San Bernardino-Ontario).

Data collected

In the top portion of the residential mortgage loan report, the CRMLA licensee provides:

  • their name;
  • their CRMLA license number;
  • their address and phone number;
  • the enforcement agency;
  • the address of the enforcement agency;
  • the census map on which the MSA is based;
  • the year of the data being reported; and
  • the MSA covered in the report.

Section 1 contains information about originations and applications, sorted by census tract. [21 CCR §7118(b)]

For each census tract within the MSA, the report provides:

  • the total number of applications taken;
  • the total number of mortgages made; and
  • the total dollar amount of mortgages made, shown in terms of thousands;

for each of the following situations:

  • the total of FHA-insured mortgages, FHA mortgages and VA-guaranteed mortgages used to purchase a property occupied by the borrower;
  • conventional mortgages used to purchase a property occupied by the borrower;
  • home improvement mortgages on one-to-four unit residential properties occupied by the borrower; and
  • all home improvement loans on one-to-four unit residential properties not occupied by the borrower. [21 CCR §7118(b)(2)]

In Section 2, the CRMLA licensee provides the same totals for mortgages secured by one-to-four residential properties located outside of the MSA for their branch. The data is not broken down by census tracts for financed properties in MSAs other than where the CRMLA licensee has a branch. [21 CCR §7118(b)(1)(B)] 

Mortgage Call report

The Mortgage Call report is administered by the NMLS. Data collected by the mortgage call reports are used to track and enhance regulatory oversight.

The Mortgage Call report contains:

  • a residential mortgage loan activity (RMLA) report; and
  • a financial condition (FC)

The RMLA for a standard Mortgage Call report contains:

  • a company-level report; and
  • a state-level report.

The company-level report provides information about the CRMLA licensee’s nationwide mortgage activity, including:

  • identification of providers of lines of credit available to the CRMLA licensee, the total credit limit and current amount available at the end of the reporting period;
  • total nationwide servicing activity by total dollar amount, mortgage count and average mortgage size; and
  • delinquency data on serviced mortgages.

The state-level report is completed for each state in which the CRMLA licensee conducts business. For each state, mortgage activity reported includes the dollar amount, count and average dollar amount of:

  • mortgage applications;
  • closed mortgages, by channel (brokered, retail or wholesale), organized by:
    • mortgage type (conventional, FHA-insured, etc.);
    • property type;
    • mortgage purpose; and
    • lien position;
  • the amount of fees collected;
  • reverse mortgages;
  • qualified versus non-qualified mortgages;
  • mortgage repurchase information;
  • the total revenue from mortgage operations;
  • servicing data; and
  • mortgages originated by each MLO employed, including the name and NMLS ID of each MLO employed.

The state-level report in an expanded Mortgage Call report additionally includes reporting of the dollar amount, count and average dollar amount of mortgages by features such as:

  • whether the mortgage has a fixed or adjustable interest rate;
  • whether the mortgage is classified as a jumbo or non-jumbo;
  • the borrower’s Fair Isaac Corporation (FICO) score;
  • the loan-to-value ratio (LTV);
  • the warehouse period; and
  • additional servicing detail.

The financial condition report

The financial condition report contains information about CRMLA licensee’s:

  • assets;
  • liabilities and equity;
  • income;
  • cash flow; and
  • non-interest expenses and net income.

Filing the Mortgage Call report

Both parts of the Mortgage Call report are filed online through the CRMLA licensee’s NMLS account. The RMLA is filed within 45 days of the end of each calendar quarter. The financial condition report is filed within 90 days of the end of the CRMLA licensee’s fiscal year.

A CRMLA licensee files both parts of the Mortgage Call report even if their company has no mortgage activity to report. On the RMLA, the CRMLA licensee simply checks the “No Activity to Report” button. A full financial condition report is still required.

Annual audit

A CRMLA licensee must undergo an annual financial audit by an independent certified public accountant (CPA). The annual audit report is filed with the DFPI Commissioner within 105 days of the end of the CRMLA licensee’s fiscal year. [Fin C §50200]

Recordkeeping

A CRMLA licensee must keep records regarding a residential mortgage made or serviced for at least 36 months from the date of CRMLA licensee’s final action on the residential mortgage. [Fin C §50124(a)(2)]

And that concludes our discussion of the California Residential Mortgage Loan Act. Next week, we’ll discuss licensing, practices, and reporting under a California Financing Law (CFL) license.