Editor’s note — Alongside the California Department of Real Estate (DRE), the California Department of Business Oversight (DBO) supervises, licenses and regulates mortgage loan originators (MLOs) holding a Nationwide Multistate (or Mortgage) Licensing System & Registry (NMLS) license. The DBO publishes a monthly bulletin updating the public on the latest DBO news. Here’s a rundown of July’s most important DBO happenings.

Small dollar loan program

In 2014, the California State Legislature enacted a pilot program to increase access to Responsible Small Dollar Loans (RSDL). Since the beginning of 2019, this includes loans of between $300 and $7,500. The pilot program aims to increase consumer access to capital by strengthening California’s small-dollar loan market.

To reach this goal, the program allows participating lenders to charge slightly higher rates, larger origination fees and delinquency fees than the California Financing Law (CFL) allows. In turn, borrowers can build their credit without taking on risky payday loans.

The DBO published their annual report of activity based on information gathered from lenders participating in the pilot program. It found that over 53% of borrowers who took out multiple loans between 2016 and 2018 improved their credit scores in the process. In 2018, these borrowers saw their credit scores improve by an average of 178 points.

The program sunsets in 2023, so there’s still time to participate. Lenders looking to prepare for the coming recession may diversify their brokerage by participating in small-dollar lending programs like the RSDL pilot. Ready to apply? Visit the DBO website for more information on participating.

Read the full report here.

A few reminders

The DBO issues a friendly reminder that licensees are required to provide them the following information based on the California Financial Code:

  • a valid email address for commissioner communications and documents;
  • a notice of a change in officer of a licensee;
  • an annual list of offices operated by the bank on or before January 1 of each year; and
  • a notice of a branch opening, closing or relocating within ten days of the change.

Also, financial institution assessments for the 2019-20 year are due by July 30. This includes money transmitters. Licensees paying via electronic funds transfers have until August 6.

That’s a wrap on July 2019’s DBO bulletin digest! Read the full bulletin here.