Mortgage Broker duty defined

Broker’s Duty to Borrower
2923.1.
(a) A mortgage broker providing mortgage brokerage services to a borrower is the fiduciary of the
borrower, and any violation of the broker’s fiduciary duties shall be a violation of the mortgage broker’s
license law. This fiduciary duty includes a requirement that the mortgage broker place the economic
interest of the borrower ahead of his or her own economic interest. A mortgage broker who provides
mortgage brokerage services to the borrower owes this fiduciary duty to the borrower regardless of
whether the mortgage broker is acting as an agent for any other party in connection with the residential
mortgage loan transaction.
(b) For purposes of this section, the following definitions apply:
(1) “Licensed person” means a real estate broker licensed under the Real Estate Law (Part 1
(commencing with Section 10000) of Division 4 of the Business and Professions Code), a finance
lender or broker licensed under the California Finance Lenders Law (Division 9 (commencing with
Section 22000) of the Financial Code), a residential mortgage lender licensed under the California
Residential Mortgage Lending Act (Division 20 (commencing with Section 50000) of the Financial
Code), a commercial or industrial bank organized under the Banking Law (Division 1 (commencing with
Section 99) of the Financial Code), a savings association organized under the Savings Association
Law (Division 2 (commencing with Section 5000) of the Financial Code), and a credit union organized
under the California Credit Union Law (Division 5 (commencing with Section 14000) of the Financial
Code).
(2) “Mortgage broker” means a licensed person who provides
mortgage brokerage services. For purposes of this section, a licensed person who makes a residential
mortgage loan is a “mortgage broker,”and subject to the requirements of this section applicable to
mortgage brokers, only with respect to transactions in which the
licensed person provides mortgage brokerage services.
(3) “Mortgage brokerage services” means arranging or attempting to arrange, as exclusive agent for
the borrower or as dual agent for the borrower and lender, for compensation or in expectation of
compensation, paid directly or indirectly, a residential mortgage loan made by an unaffiliated third party.
(4) “Residential mortgage loan” means a consumer credit
transaction that is secured by residential real property that is
improved by four or fewer residential units.
(c) The duties set forth in this section shall not be construed to limit or narrow any other fiduciary duty of
a mortgage broker.

Author: timothymccandless

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