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The September 2022 DFPI Bulletin focuses on debt scams, the California Financing Law reports and the new DFPI Commissioner, among other topics.

Editor’s note — The California Department of Financial Protection and Innovation (DFPI, formerly the Department of Business Oversight) supervises, licenses, and regulates a variety of financial institutions, including some real estate mortgage loan originators (MLOs) holding a Nationwide Multistate (or Mortgage) Licensing System and Registry (NMLS) license. Alongside the California Department of Real Estate (DRE), the DFPI shares the responsibility for overseeing MLOs depending on their license use.

Licensees, read on for news and events affecting MLOs in September 2022.

New DFPI Commissioner

On August 10, 2022, the DFPI’s Commissioner Clothilde V. Hewlett appeared for her Senate Rules Committee confirmation hearing for the DFPI Commissioner position. The Committee voted unanimously 5-0, advancing her to the full Senate for approval.

Regarding her confirmation, Commissioner Hewlett said, “It is an honor to lead a team of dedicated public servants committed to advancing the mission to protect consumers, and foster trust, innovation, and fairness in the financial marketplace. I look forward to our continued partnership to advance the critically important work of the Department on behalf of all Californians.”

Enforcement actions against debt relief company

On August 1, 2022, the DFPI took enforcement actions against Docu-Pros for engaging in unlicensed, unlawful, and deceptive practices under the Student Loan Servicing Act and the California Consumer Financial Protection Law (CCFPL).

Posing as a debt relief company, Docu-Pros violated the CCFPL by feigning affiliation with a federal government agency, charging upfront fees for services, and using high-pressure sales tactics on calls with Californians burdened with student debt.

Under the enforcement action, Docu-Pros needs to cancel all debt relief, debt management, or debt consulting service agreements, provide full refunds, and pay a $2,500 penalty for each agreement with California residents. This action follows similar actions issued by the DFPI against Optima Advocates, Federal Document Assistance Center, and Higher-Level Processing Inc.

MLOs and their clients encounter similar scams in the mortgage industry. As California’s housing market faces a downturn, scammers are freshly emboldened. Review our three-part video series on common mortgage scams to protect your clients and your license.

Related article:

Mortgage Concepts: Common mortgage fraud schemes, Part 1

2021 Annual Report for California Financing Law

The DFPI has posted the annual report on its website for the California Financing Law (CFL).

In the 2021 Annual Report of Operation of Finance Lenders, Brokers, and PACE Administrators Licensed Under the California Financing Law, the DFPI has compiled data submitted by finance lenders, brokers, and program administrators licensed under the CFL. The report was compiled using data submitted by licensees.

Search past reports at the DFPI CFL Reports webpage.

CalMoneySmart Grantees

On August 9, 2022, the DFPI announced recipients of almost $2 million in CalMoneySmart grants to support free financial education and empowerment programs.

For its third round of CalMoneySmart grants, the DFPI received 128 grant proposals from state and national nonprofits. After committee review, 12 nonprofits were selected based on eligibility and program effectiveness. The 2022-23 CalMoneySmart grantees represent communities and financial education nonprofits across California that serve unbanked households in 27 counties.

See the full list of recipients and grant amounts in the Press Release.

DFPI actions on crypto accounts and businesses

On August 19, 2022, the DFPI informed Celsius Lending LLC that their CFL license will be suspended, pending resolution of the revocation action.

The DFPI accuses Celsius Lending of over 55,000 CFL violations, including originating loans while unlicensed, deceptive advertising, lying to the Commissioner in the course of becoming licensed, unlawful prepayment penalties, enforcing excessive liquidation charges, imposing other illegal contract terms and omitting required disclosures to borrowers.

While Celsius Lending cannot make new loans, existing lawful contracts between are not impacted.

Additionally, the DFPI issued an order to Celsius Network and its CEO, Alex Mashinsky, for misleading crypto interest account borrowers and failing to qualify those accounts as securities. The DFPI issued a consumer alert warning California consumers and investors that many crypto interest account providers don’t bother disclosing the risks customers face when they deposit crypto assets onto these platforms.

As crypto assets continue to creep into the real estate space, consumers should exercise extra caution when evaluating any crypto investment or financial services. California customers of crypto interest account providers that have slowed or paused withdrawals or transfers are encouraged to contact the DFPI at Ask.DFPI@dfpi.ca.gov or call toll-free at (866) 275-2677.

Filing a formal complaint is as easy as visiting the DFPI “File a Complaint” page.

That’s a wrap on the September 2022 DFPI Bulletin. Find out more about the topics mentioned here by reading the full bulletin on the DFPI website.