A CRMLA-licensed lender fails to maintain the required $250,000 minimum net worth. What is the most likely consequence?
Correct Answer
B) The DFPI may suspend or revoke the lender's license for failing to meet financial requirements
Failure to maintain the required $250,000 net worth is grounds for license suspension or revocation by the DFPI. The net worth requirement is a continuous obligation, and falling below it triggers potential enforcement action.
Why This Is the Correct Answer
Failure to maintain the required $250,000 net worth is grounds for license suspension or revocation by the DFPI. The net worth requirement is a continuous obligation, and falling below it triggers potential enforcement action. The correct consequence is that the DFPI may suspend or revoke the lender's license for failing to meet financial requirements.
Why the Other Options Are Wrong
Option A: The DFPI will automatically increase the lender's surety bond to compensate
The DFPI does not automatically increase surety bond amounts to compensate for net worth deficiencies. The net worth and surety bond are separate requirements.
Option C: The lender has unlimited time to restore net worth as long as they report the deficiency
There is no unlimited timeframe to restore net worth. The DFPI may set specific deadlines and can take enforcement action at its discretion.
Option D: The deficiency will be noted but has no impact on the lender's license
A net worth deficiency is a serious regulatory issue with direct license implications. It is not simply noted without consequences.
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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