The DFPI discovers that a CRMLA licensee has been steering borrowers into higher-cost loans to earn larger commissions. What enforcement action can the DFPI take?
Correct Answer
A) Suspend or revoke the lender's CRMLA license and impose civil penalties
The DFPI has authority to suspend or revoke a CRMLA license and impose civil penalties for violations such as loan steering. Steering borrowers into inappropriate loans for personal gain is a serious violation of consumer protection requirements.
Why This Is the Correct Answer
The DFPI has authority to suspend or revoke a CRMLA license and impose civil penalties for violations such as loan steering. Steering borrowers into inappropriate loans for personal gain is a serious violation of consumer protection requirements.
Why the Other Options Are Wrong
Option B: Refer the matter to the local Better Business Bureau
The Better Business Bureau is a private organization, not a regulatory body. The DFPI handles CRMLA enforcement directly.
Option C: Issue a verbal warning with no further action required
A verbal warning with no further action is inadequate for a serious violation like steering. The DFPI has stronger enforcement tools at its disposal.
Option D: Require the lender to attend a one-hour ethics seminar
A one-hour ethics seminar is not a recognized CRMLA enforcement action. The DFPI uses administrative penalties, not informal educational requirements.
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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