The California Residential Mortgage Lending Act (CRMLA), the California Financing Law (CFLL), and the California Franchise Investment Law (CFIL) authorize the Commissioner of Business Oversight to issue citations for violations of the CFLL, CRMLA, and CFIL, and any rule or order issued pursuant to these California laws.

Under both the CFLL and CRMLA, the commissioner may issue citations to compel corrective action. Under the CFIL, if the commissioner has cause to believe that the CFLL or the CRMLA have been violated, the commissioner may issue citations to correct such violations.

Citations must particularize the basis for their issuance and may contain orders to desist and refrain from the illegal conduct the Commissioner believes is involved. The citations may also assess administrative penalties of up to two thousand five hundred dollars ($2,500) per violation. All penalties collected are deposited in the State Corporations Fund.

Citations issued under CFIL are deemed final if, within 60 days from the receipt of the citation, the person cited does not notify the Commissioner and express the intention to request a hearing. Citations issued under the CFLL and CRMLA only allow 30 days for the person cited to request a hearing.

Any citations issued and fines assessed under the CFLL and CRMLA are in lieu of other administrative discipline by the Commissioner for the offense or offenses cited. The citations against, and fine payments made by, a licensee are not reported as disciplinary action taken by the Commissioner. However, sanctions authorized under CFIL are separate from, and in addition to, all other administrative, civil, or criminal remedies.

Under the CRMLA and CFLL the Commissioner must give due consideration to the appropriateness of the amount of the fine and will consider the gravity of the violation, the good faith of the person or licensees cited, and the history of any previous violations.
The Commissioner may apply to the superior court for a judgment in the amount of the administrative penalty and an order compelling the cited person to comply with the order of the Commissioner.

If you are involved in residential mortgage lending, finance lending or franchise investments, should you receive an inquiry or citation from the Commissioner of Business Oversight do not ignore it. Immediately contact your legal counsel as there are very short timeframes in which to take action should you dispute the claims made by the Commissioner.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.