Mortgage Loan Activity Reporting

Senate Bill 36 (SB 36), which was signed into law in October 2009, was enacted in order to bring California into compliance with the federal Secure and Fair Enforcement Mortgage License Act (SAFE Act) of the Housing and Economic Recovery Act of 2008 (Public Law 110-289). After December 31, 2009, new SB 36 requirements for those intending to engage in mortgage loan activities go into effect.

Per to SB 36, B&P Section 10166.02, real estate brokers who act pursuant to B&P Sections 10131(d), 10131(e), or 10131.1 and who make, arrange, or service loans secured by residential 1-4 unit property, and any salespersons who act in a similar capacity under the supervision of a broker, must submit a Mortgage Loan Activity Notification (RE 866) to the Department within 30 days of commencing the activity. The report must be completed on-line. This means that each licensed broker, licensed real estate corporation, and licensed salesperson who conducts residential mortgage loan activities must submit an RE 866.

The notification will identify the mortgage loan activities being performed as well as mortgage loan originator activities, specifically.

Penalty fees apply for failure to submit this required notification. Penalties are fifty dollars ($50) per day for the first 30 days the report is not filed and one hundred dollars ($100) per day thereafter for a maximum of $10,000.

Per B&P Section 10166.07, real estate brokers who act pursuant to B&P Sections 10131(d), 10131(e), or 10131.1 and who make, arrange, or service loans secured by residential 1-4 unit property must also file a Business Activity Report (BAR) for their respective fiscal years. The report must be completed online. The BAR includes the mortgage loan activities of a broker's salespersons and broker-associates.

Questions about these new reporting requirements should be directed to the Mortgage Loan Activities Section at 877-373-4542.

Excerpt from B&P Code Section 10131. A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:

(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.

(e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.

B&P Code Section 10131.1. (a) A real estate broker within the meaning of this part is also a person who engages as a principal in the business of making loans or buying from, selling to, or exchanging with the public, real property sales contracts or promissory notes secured directly or collaterally by liens on real property, or who makes agreements with the public for the collection of payments or for the performance of services in connection with real property sales contracts or promissory notes secured directly or collaterally by liens on real property.

(b) As used in this section:

  1. "In the business" means any of the following:

    1. The acquisition for resale to the public, and not as an investment, of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year.


    2. The sale to or exchange with the public of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year. However, no transaction negotiated through a real estate licensee shall be considered in determining whether a person is a real estate broker within the meaning of this section.


    3. The making of eight or more loans in a calendar year from the person's own funds to the public when those loans are held or resold and are secured directly or collaterally by a lien on residential real property consisting of a single dwelling unit in a condominium or cooperative or on any parcel containing only residential buildings if the total number of units on the parcel is four or less. However, no transaction negotiated through a real estate broker who meets the criteria of subdivision (a) or (b) of Section 10232 shall be considered in determining whether a person is a real estate broker within the meaning of this section.

  2. "Sale," "resale," and "exchange" include every disposition of any interest in a real property sales contract or promissory note secured directly or collaterally by a lien on real property, except the original issuance of a promissory note by a borrower or a real property sales contract by a vendor, either of which is to be secured directly by a lien on real property owned by the borrower or vendor.


  3. "Own funds" means either of the following:


    1. Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the person's financial statements, whether secured or unsecured.


    2. Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the financial statement of an affiliate of the person, whether secured or unsecured.

  4. "Own funds" does not include funds provided by a third party to fund a loan on condition that the third party will subsequently purchase or accept an assignment of the loan.

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