On August 19, the California Department of Financial Protection and Innovation (DFPI) announced the adoption of final rules passing the application form and certain other California lender license submissions to “catch” paper forms. electronic filings. (The final rules also contain detailed provisions that affect PACE program administrators, but these are beyond the scope of this alert.)
California has a lender licensing law called the California Financing Law (CFL), which applies to all people who make consumer or business loans, unless a license exemption applies. Historically, applications for CFL licenses not involving a home loan have been submitted on paper forms, including supporting documents such as personal statements called Statements of Identity and Questionnaires (SIQ).
Earlier this year, the DFPI announced on its website a plan to migrate paper applications and other forms to electronic repositories, using the Multi-State Licensing System and Registry (NMLS) to l nationwide. The announcement said the transition would be mandatory by December 31, 2021, but informal discussions with the DFPI strongly encouraged the use of the NMLS to submit applications immediately, creating uncertainty, especially for those who were in the process. prepare paper applications.
The new regulations set a “clear line” date of October 1, 2021 for the transition from paper applications to electronic applications. The regulation also confirms that existing licensees will need to migrate to the NMLS for future filings, such as changes, by December 31, 2021, as per the previous announcement.
Why is this important
People and entities who are currently considering preparing paper applications or are in the process of filling out paper forms were uncertain whether these forms would still be accepted by the DFPI, given these previous communications. The final rule eliminates the uncertainty but brings the firm change date forward to October 1.
Individuals who have already spent time starting the paper application process and do not wish to move halfway through the NMLS should take steps to ensure that full applications are filed with the DFPI. before October 1st. And existing licensees are expected to familiarize themselves with NMLS as part of the migration by the end of the year. The NMLS experience is quite different from the old paper forms, and we would be happy to discuss it.