A BRE broker’s license is considerably more restrictive than a California Finance Lender’s license. Some of the restrictions include:
- Fiduciary Duties
BRE licensed brokers owe a fiduciary duty to their borrowers and their investors. This includes a duty of loyalty and a duty of care.
- Limitations on Lending
BRE imposes LTV limitations on loans. Limits include 75% for non-owner occupied SFR and 65% for commercial real estate. In addition, it restricts loans based on after repair value (FV) to $2,500,000.
The BRE may require quarterly reporting certified by a CPA. Furthermore, it could also require trust fund reporting.
- Restrictions on Advance Fees
Lenders relying on their BRE Broker’s license are strictly prohibited from charging borrowers advance fees.
- Ongoing Education
BRE Brokers are required to maintain a continuing education requirement much like CPAs and Attorneys.
- Real Estate Box
BRE licensees are limited to brokering only real estate and real estate related loans.
Under the California Finance Lender Law, a CFL licensee is authorized to negotiate both consumer and commercial loans, without being hampered by these restrictions. The CFLL is a “true lender’s license,” allowing businesses to unleash their full potential and expand their reach into construction lending and non-real estate financing.
For lenders who want to streamline their operation, expand their portfolio, and offer larger loan amounts, the CFLL is the way to go.
The benefits of a CFLL include:
- No LTV Restrictions
- No restrictions on advance fees
- No restriction on loan amounts
- No fiduciary responsibility to clients
- Single annual reporting requirement
- No continuing education
- Permissible to finance non-real estate loans
- Permissible to fund large construction loans
Lenders that want to grow their business to new heights need to explore the possibilities that come along with adding a CFL license. Offer larger loans, with a more robust fee structure, less restrictions, and less reporting requirements than is possible with just a BRE license alone.
For more information about how a CFL license can complement your existing mortgage business, contact Kevin Kim at:
Geraci Law Firm