Navigating lending compliance in California requires expertise across multiple regulatory frameworks. Private lenders face oversight from both state and federal agencies, with requirements varying based on license type, loan structure, and borrower profile.
50-State Expertise
Geraci LLP provides lending compliance guidance across all 50 states. Whether you’re expanding into new markets or need clarity on multi-state operations, our team offers comprehensive licensing and compliance surveys tailored to your business model.
Federal Compliance
Federal lending regulations create baseline requirements for all lenders:
- Truth in Lending Act (TILA) – Disclosure requirements for consumer credit
- Real Estate Settlement Procedures Act (RESPA) – Settlement cost disclosures and servicing standards
- Equal Credit Opportunity Act (ECOA) – Anti-discrimination provisions
- Fair Credit Reporting Act (FCRA) – Credit report usage and adverse action requirements
- HMDA Reporting – Data collection and reporting for mortgage transactions
While business purpose loans are exempt from many consumer-focused requirements, certain federal laws—including ECOA, FCRA, and HMDA—still apply.
California Department of Real Estate (DRE) Compliance
For California real estate brokers arranging loans, compliance encompasses:
Disclosure Requirements
- Borrower and investor disclosure preparation, review, and compliance
- Multi-lender disclosure requirements for fractional investments
- Threshold broker reporting obligations
Trust Account Management
- Trust account compliance and auditing
- Proper handling of investor and borrower funds
- Documentation and record-keeping requirements
Loan Documentation
- Loan document preparation and review
- Compliance with DRE-specific disclosure requirements
- Loan file audits for regulatory compliance
Operational Compliance
- Procurement agreement preparation and negotiation
- Broker agreement drafting and review
- NDA and non-solicitation agreement preparation
- Broker servicing compliance, including servicing agreement review
Enforcement Response
- DRE enforcement action response and negotiation
- Representation in regulatory proceedings
- Corrective action plan development
Marketing Review
- Website and advertisement compliance review
- Marketing material approval processes
- Compliance with advertising restrictions
California Department of Financial Protection and Innovation (DFPI) Compliance
For California Finance Lender (CFL) licensees, compliance requirements include:
Borrower Protection
- Borrower disclosure preparation and compliance
- Required disclosure timing and content
- Documentation retention requirements
Loan Operations
- Loan document preparation and compliance review
- Loan file audits for regulatory compliance
- Loan sale documentation and advice
Regulatory Reporting
- DFPI reporting requirements and best practices
- Mock audit preparation
- Annual report filings
Enforcement Response
- DFPI examination response
- Enforcement action negotiation and representation
- Corrective measures and compliance remediation
Third-Party Relationships
- Broker agreement preparation and negotiation
- Correspondent lending arrangements
- Participation agreement drafting and review
Structural Guidance
- General regulatory advice
- Corporate structuring for compliance optimization
- License expansion considerations
Why Compliance Matters
California’s lending regulations carry significant penalties for violations:
- Civil penalties from regulatory agencies
- License revocation or suspension
- Borrower lawsuits for disclosure violations
- Inability to foreclose on non-compliant loans
- Voided interest provisions for usury violations
Proactive compliance protects both your license and your ability to enforce loan terms when borrowers default.
Common Compliance Challenges
Multi-State Operations
Lenders operating across state lines face varying requirements in each jurisdiction. Compliance surveys identify applicable regulations before you close loans in new markets.
Loan Sale Transactions
Selling loans to investors or secondary market participants requires proper documentation and disclosures. Assignment provisions, investor disclosures, and servicing transfer procedures must comply with applicable regulations.
Servicing Compliance
Loan servicers face distinct regulatory requirements, including:
- Periodic statement obligations
- Payment application rules
- Default notification requirements
- Loss mitigation procedures
License Maintenance
Annual renewals, reporting requirements, and continuing education obligations vary by license type. Missing deadlines can result in license suspension or additional fees.
How Geraci LLP Can Help
The Banking & Finance team at Geraci LLP focuses exclusively on private lending. We understand the unique compliance challenges facing hard money lenders, mortgage funds, and private debt investors.
Our services include:
- Regulatory compliance audits and assessments
- Loan document preparation and review
- License application and maintenance support
- Enforcement action response and representation
- Compliance training for lending teams
Contact our Banking & Finance team to discuss your compliance needs and ensure your lending operations meet California’s regulatory requirements.
