On August 19, the California Department of Financial Protection and Innovation (DFPI) announced the adoption of final rules transitioning the application form and certain other submissions relating to the “catchall” California lender license from paper forms to electronic filings. (The final rules also contain extensive provisions impacting PACE program administrators, but those are beyond the scope of this alert.)
California has a lender licensing law called the California Financing Law (CFL), which applies to all persons making consumer or commercial loans, unless an exemption from licensing applies. Applications for CFL licenses not involving home lending historically have been submitted on paper forms, including exhibits such as personal statements called Statements of Identity and Questionnaires (SIQs).
Earlier this year, the DFPI on its website announced a project migrating from paper applications and other forms to electronic filings, utilizing the Nationwide Multistate Licensing System and Registry (NMLS). The announcement indicated that the transition would be mandatory by December 31, 2021, but informal discussions with DFPI strongly encouraged using NMLS to submit applications immediately, creating uncertainty, especially for those who were in the process of preparing paper applications.
The new regulations set a “bright line” date of October 1, 2021, for switching from paper to electronic applications. The regulations also confirm that existing licensees will need to migrate to NMLS for future filings, such as amendments, by December 31, 2021, consistent with the prior announcement.
Why it matters
Individuals and entities that currently are considering preparing paper applications or are in the process of completing paper forms were uncertain as to whether those forms would still be accepted by DFPI, given those earlier communications. The final regulations eliminate the uncertainty but move up the firm change date to October 1.
Persons that have already spent time beginning the paper application process and do not desire to switch midstream to NMLS should take steps to ensure that complete applications are on file with DFPI before October 1. And existing licensees should become familiar with NMLS in connection with the migration by the end of the year.