Real Estate Chapter 14: Third Party Originators

Questions and Answers

What is one way institutional lenders from other states can invest in California loans?

Use third party originators.

Either B or C. (correct)

Advertise in California and make loans by mail.

Buy loans from mortgage bankers.

What licensing requirement applies to a third party originator of mortgage loans?

Need not be licensed.

May not solicit borrowers.

Must have a securities dealer license.

Must be licensed by the Department of Real Estate. (correct)

What licensing status is required for salespersons of third party originators?

Need not possess a real estate license.

Must be licensed as a real estate salesperson or broker. (correct)

Are not subject to broker supervision.

Must be licensed as a securities dealer.

What is the primary function of finders in the context of mortgage loans?

Introduce prospective borrowers to lenders. Signup and view all the answers

Which of the following could a third party originator be categorized as?

Any of the above. Signup and view all the answers

In advertising, what must a third party originator indicate?

Both A and B. Signup and view all the answers

Which scenario would be considered a bait and switch ad?

An ad for a loan quoting terms that are not available. Signup and view all the answers

How should trust fund accounts managed by third party originators be used?

May never be interest bearing. Signup and view all the answers

What is true regarding interest bearing broker trust accounts?

The broker is entitled to the interest earned. Signup and view all the answers

Which option is a valid way for institutional lenders in other states to engage in California loans?

Utilize third party originators. Signup and view all the answers

Study Notes

Third Party Originators Overview

Institutional lenders from other states can invest in California loans by either purchasing loans from mortgage bankers or using third party originators.
A third party originator of mortgage loans must be licensed by the Department of Real Estate and cannot operate without proper licensing.

Licensing and Regulation

Salespersons working for third party originators must hold a real estate license, whether as a salesperson or broker.
Third party originators may act as an agent for borrowers, lenders, or serve in a dual capacity.

Advertising and Compliance

Any advertising done by a third party originator must clearly state that the advertiser is a licensed real estate professional and include the broker's license number.
An example of a bait and switch advertisement is one that quotes loan terms not actually available to consumers.

Trust Fund Accounts

Trust fund accounts used by third party originators must be kept separate from general business accounts and are not allowed to be mixed with personal or business funds.
Interest bearing trust accounts must split interest either between borrowers and lenders or may allow brokers to keep the interest earned, depending on the specific arrangements in place.

Record Keeping

Trust fund records for third party originators must document key information such as the names of the individuals depositing funds, the amounts received, and the dates of these transactions, ensuring thorough and accurate financial tracking.

Third Party Originators Overview

Institutional lenders from other states can invest in California loans by either purchasing loans from mortgage bankers or using third party originators.
A third party originator of mortgage loans must be licensed by the Department of Real Estate and cannot operate without proper licensing.

Licensing and Regulation

Salespersons working for third party originators must hold a real estate license, whether as a salesperson or broker.
Third party originators may act as an agent for borrowers, lenders, or serve in a dual capacity.

Advertising and Compliance

Any advertising done by a third party originator must clearly state that the advertiser is a licensed real estate professional and include the broker's license number.
An example of a bait and switch advertisement is one that quotes loan terms not actually available to consumers.

Trust Fund Accounts

Trust fund accounts used by third party originators must be kept separate from general business accounts and are not allowed to be mixed with personal or business funds.
Interest bearing trust accounts must split interest either between borrowers and lenders or may allow brokers to keep the interest earned, depending on the specific arrangements in place.

Record Keeping

Trust fund records for third party originators must document key information such as the names of the individuals depositing funds, the amounts received, and the dates of these transactions, ensuring thorough and accurate financial tracking.

Description

Test your knowledge with this quiz on Chapter 14, focusing on third party originators in the mortgage lending process. Explore concepts related to institutional lenders, licensing requirements, and the role of third party originators in real estate finance.