Under the CRMLA, which of the following is required when a mortgage loan servicing is transferred from one servicer to another?
Correct Answer
C) The borrower must be provided with written notice of the transfer within the timeframes required by law
When mortgage servicing is transferred, the borrower must receive written notice within the required servicing-transfer timeframes. Borrower consent is not a condition for the transfer, but notice is mandatory.
Why This Is the Correct Answer
When mortgage servicing is transferred, the borrower must receive written notice within the required servicing-transfer timeframes. Borrower consent is not a condition for the transfer, but notice is mandatory.
Why the Other Options Are Wrong
Option A: The new servicer must reduce the borrower's interest rate as a condition of the transfer
A servicing transfer does not require the new servicer to reduce the borrower's interest rate.
Option B: The borrower must consent in writing before the transfer can occur
Servicing-transfer rules require notice to the borrower; borrower consent is not the transfer condition.
Option D: The original lender must repurchase the loan before it can be transferred
A loan repurchase by the original lender is not the required step for a servicing transfer.
Memory Technique
CA -> ca-crmla-lenders-servicers-bonds-net-worth-servicing
Exam Tip
CRMLA questions usually turn on lender versus servicer authority, branch authority, $250,000 net worth, surety bond coverage, servicing duties, DFPI oversight, and exemptions for regulated depository institutions.
Common Mistakes to Avoid
- -Using a national baseline answer when California has agency-specific DFPI or DRE requirements
- -Confusing CFL, CRMLA, covered-loan, usury, servicing, and DRE endorsement rules
- -Relying on legacy California state-exam or education assumptions instead of current NMLS source pages
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