Mortgage Concepts is a recurring video series covering best practices and compliance education for California mortgage loan originators. This video reviews CFL and MLO licensing by the DFPI, consumer mortgage originating, and reporting under the CRMLA. For course credit toward renewing your NMLS license, visit

Distinguishing the CFL license

The California Residential Mortgage Lending Act (CRMLA) requires CFL licensing by the Department of Financial Protection and Innovation (DFP)I for mortgage banking operations:

  • whose main business is originating and servicing consumer mortgages; and
  • are not DRE licensed Brokers, federally regulated depository institutions or government agencies. [Fin C §50002(c)]

Thus, a California Finance Lender (CFL) license is issued by the DFPI to act as a lender or a servicer of only consumer mortgages, not business purpose mortgages. [Fin C §§50000 et seq.]

The CFL license is distinguished from:

  • DFPI MLO licensing under the California Finance Lender Law; and
  • DRE MLO endorsement of licensees under the Real Estate Law.

Both the DFPI CFL license and the DRE broker license allow these licensees to make and service consumer mortgages when they are first licensed by the NMLS as registered MLOs. While an CFL licensee is limited in their activities to consumer mortgages, DRE brokers may engage in all variety of real estate sales, leasing and mortgage activity, including engage in business, commercial or agricultural mortgages.

The CFL license only authorizes and regulates consumer mortgage banking activities, such as:

  • making consumer mortgages;
  • making consumer mortgage loans to finance the construction of a home;
  • purchasing and selling consumer mortgages to institutional investors;
  • servicing consumer mortgages;
  • brokering consumer mortgages; and
  • providing contract underwriting services for consumer mortgage lenders.

MLOs as NMLS registered licensees may obtain authorization to originate consumer mortgage loans under one or more of these California licensing schemes. The MLO’s activities and employment will determine which license to pursue.

Related video:

Mortgage concepts: Limited “changed circumstances” for TRID disclosures

Who needs to be CFL licensed

Anyone who makes or services consumer mortgages in California and is not a DRE Broker, a depository institution (banks), or a government agency needs to hold a CFL license issued by the DFPI. [Fin C §50002(a)]

consumer mortgage is a mortgage secured by a one-to-four-unit residential dwelling acquired and made primarily for funding a:

  • personal;
  • household; or
  • family use. [12 Code of Federal Regulations §1026.2]