On June 29, 2018, the California Commissioner of Business Oversight warned California residential mortgage lenders and servicers that their failure to file annual reports could lead to enforcement actions. The same day, the California Department of Business Oversight issued its annual report for calendar year 2017 on the operation of licensed lenders and servicers. The report relied on mandatory self-reported data from lenders and servicers. However, 8% fewer licensees filed reports for 2017 than for 2016. The Commissioner called the decline "disturbing" and warned that the Department would take appropriate action under the law to deal with licensees that do not file their reports.

California's Residential Mortgage Lending Act requires licenses for any person "engage[d] in the business of making residential mortgage loans or servicing mortgage loans." Cal. Fin. Code § 50002(a). Banks, savings and loan associations, savings banks, and credit unions that are federally chartered or chartered in other states, among other entities, are exempt from licensure. Cal. Fin. Code § 50002(c). All licensed lenders and servicers must annually file a report with the California Department of Business Oversight. Cal. Fin. Code § 50307.

Failure to report immediately authorizes an audit by the Department of Business Oversight. Cal. Fin. Code § 50307(c). Ordinarily, audits only occur once every four years. Cal. Fin. Code § 50302(a). If the Department discovers any violation of the Residential Mortgage Lending Act, it may suspend or revoke any licenses. Cal. Fin. Code § 50327. Other possible penalties include fines, censure, suspension for up to one year, and total bars on working as a lender or servicer. Cal. Fin. Code §§ 50318(a), 50500–50501, 50513.

According to the Department's 2017 report, both the total number and dollar amount of non-bank mortgage lending declined by nearly 30% in 2017. Overall mortgage market activity followed a similar but less dramatic trend, with the total number of brokered loans declining by 24.3% and the aggregate dollar amount of brokered loans down 14.3%. Interestingly, foreclosures and consumer complaints also declined. There were 27.7% fewer foreclosures in 2017 than 2016. Finally, aggregate servicer activity increased by 2.13%.