Current through Register 2024 Notice Reg. No. 38, September 20, 2024
The procedures set forth in this section are applicable to
a person who is required to be licensed pursuant to Financial Code section
28102, as a
student loan servicer. The application for a license as a student loan servicer
shall be filed as follows:
(a) INITIAL
APPLICATION: The application for a license as a student loan servicer under
subdivision (a) of Financial Code section
28102, and
any amendment to such application, shall be filed upon Form MU1, in accordance
with the instructions of NMLS, for transmission to the Commissioner. All
exhibits, and supporting documents related to the application or amendment
shall also be filed with NMLS, in accordance with the instructions of NMLS, for
transmission to the Commissioner. Exhibits that cannot be submitted through
NMLS, if any, shall be submitted directly to the Commissioner. The notices set
forth in section
2036 are part of every
application. An applicant shall provide the following information, exhibits and
documentation in the manner provided:
(1) An
applicant shall identify all fictitious business names on Form MU1.
(A) For each fictitious business name, an
applicant shall upload to NMLS a copy of the Fictitious Business Name
Statement, with the "filed stamp" from the county clerk's office.
(B) An applicant may not use a fictitious
business name until the Commissioner approves the use of the name.
(C) Every applicant and licensee shall comply
with the rules governing the filing of a fictitious business name, set forth in
Business and Professions Code sections
17900-
17930.
(2) For every additional business location,
an applicant shall submit through NMLS a Form MU3, in accordance with section
2035.5 of these rules.
(3) An applicant shall provide the names,
personal history, and experience of individual applicants, officers, directors,
managing members (in the case of a limited liability company), general and
managing partners (in the case of a partnership), individuals owning or
controlling, directly or indirectly, ten percent (10%) or more of the
applicant, and individuals with responsibility for the servicing activities of
the applicant, through NMLS, on Form MU1, within the "Direct Owners and
Executive Officers" or the "Indirect Owners" section, as applicable, and on
Form MU2.
(A) The individuals named in Form
MU1, for whom a Form MU2 has been filed, shall provide authorization for, and
subsequent delivery of, fingerprints to the California Department of Justice,
or NMLS, if and when NMLS can process fingerprints taken in a specific state,
to check criminal history in that state. Fingerprinting shall be done in
accordance with section
2034.5 of these rules.
(B) An individual named in Form MU1, for whom
a Form MU2 has been filed, who is not residing in the United States, or who has
not resided in the United States for at least ten years, is not required to
submit fingerprints but must submit an investigative background report, in
accordance with section
2035 of these rules.
(C) An applicant shall pay all fees related
to fingerprinting, the criminal history background check, and the investigative
background report.
(4) An
applicant shall submit through NMLS, as an exhibit to Form MU1, audited
financial statements with an unqualified opinion prepared by an independent
certified public accountant, in accordance with generally accepted accounting
principles, and acceptable to the Commissioner. The audited financial
statements shall be prepared as of the applicant's most recent fiscal year end,
or a more recent date, and must document a minimum tangible net worth of
$250,000.
A startup may file a statement of condition in lieu of
audited financial statements when applying for a student loan servicer license
if audited financial statements are not available. The statement of condition
must be attested to by a duly authorized individual who has submitted a Form
MU2 or has been delegated to attest to the filing by an individual who has
submitted a Form MU2. The attestation shall constitute the applicant's
representation that the statement of condition is a true and accurate portrayal
of the startup applicant's financial condition. If granted a student loan
servicer license, startup licensees must thereafter submit annual audited
financial statements pursuant to Financial Code section
28148.
(5) In addition to the
identification of business activities requested on Form MU1, an applicant shall
upload to NMLS a detailed description of the applicant's business activities.
If an applicant identifies additional contact employees in Item # 7 of Form
MU1, the applicant must upload an entity organizational chart.
(6) An applicant shall submit the surety bond
required by Financial Code section
28142,
through NMLS, utilizing NMLS' electronic surety bond function and form, in
accordance with section
2039 of these rules.
(7) An applicant shall upload to NMLS copies
of its Policies and Procedures, demonstrating how the applicant will comply
with the borrower protection requirements of the Act, the Student Loans:
Borrower Rights law, and these rules, related to borrower
protections.
(8) If an applicant
intends to engage in any activities not specified in Item #1 of Form MU1, the
applicant shall upload this information to NMLS.
(9) Business entities shall upload the
following documents to NMLS, for transmission to the Commissioner:
(A) A corporate applicant shall upload a
certificate of qualification or good standing from the California Secretary of
State, executed not more than sixty days before the filing of the application.
The certificate must show that the applicant is authorized to transact business
in the State of California.
(B) A
foreign corporation shall upload a certificate of qualification or good
standing from the Secretary of State of the state of incorporation, executed
not more than 60 days before the filing of the application, showing that the
applicant is authorized to transact business in that state.
(C) A partnership applicant shall upload its
partnership agreement.
(D) A
limited liability company shall upload its Operating Agreement.
(E) A limited partnership or limited
liability company applicant shall upload a certificate of qualification or good
standing from the California Secretary of State, executed not more than 60 days
before the filing of the application, showing that the applicant is authorized
to transact business in the State of California.
(F) A foreign limited partnership or limited
liability company applicant shall upload a certificate of qualification or good
standing from the Secretary of State of the state of formation, executed not
more than 60 days before the filing of the application, showing that the
applicant is authorized to transact business in that state.
(10) Every applicant shall provide
a registered agent for service of process, located within the state of
California, through NMLS, on Form MU1. Every applicant shall also upload to
NMLS an Appointment of the Commissioner as the applicant's agent to receive
process, in accordance with the Act and section
2034 of these rules.
(11) An applicant shall provide its website
information, through NMLS, on Form MU1.
(12) The individual attesting to the filing
of the Form MU1 must be a duly authorized individual, who has submitted a Form
MU2, or has been delegated to attest to the filing by an individual who has
submitted a Form MU2. The attestation provided pursuant to this paragraph shall
constitute an agreement to comply with the requirements of the Act, the Student
Loans: Borrower Rights law, these rules, all applicable federal laws relating
to student loan servicing, and the regulations promulgated
thereunder.
(b) FEES: The
application fee ($300), and the investigation fee ($100), required under
Financial Code section
28112, and
any other fees payable through NMLS, shall be paid through NMLS, for
transmission to the Commissioner. Any fees that cannot be paid through NMLS
shall be paid directly to the Commissioner. Fees are not refundable.
(c) COMPLETION OF FILING AND ISSUANCE OF
LICENSE: An application for licensure as a student loan servicer is not deemed
complete until all required fees, all required submissions, and all background
and investigative reports are received by the Commissioner. The filing of Form
MU1 with NMLS does not constitute automatic approval of a license. The student
loan servicer shall not consider the application approved until it is approved
by the Commissioner and a license is issued to the applicant. In accordance
with Financial Code section
28122,
subdivision (b), the Form MU1 application may be considered withdrawn, if the
Commissioner does not receive information requested in a deficiency
notification, within 60 days of the date of notification.
(d) FILING AN AMENDMENT: In the event of a
change to the information in the application, or exhibits thereto, the student
loan servicer shall file an amendment to the Form MU1, MU2, or MU3 through
NMLS, in accordance with the procedures in section
2036.5 of these rules. Prior to
the issuance of a license, any amendment to an application shall be filed
within five (5) days of the event necessitating the amendment.
(e) DESIGNATED EMAIL ADDRESS: Upon receiving
a license, an applicant shall establish a designated email address by
registering for a Department of Financial Protection and Innovation
Self-Service Portal Account through the Department of Financial Protection and
Innovation's website. The email account shall be established and monitored in
accordance with the requirements in Financial Code section
331.5. By
registering the designated email address, the applicant consents to receive
information from the Commissioner at that email address.
Note: Authority cited: Section
28106,
Financial Code. Reference: Sections
28106,
28110,
28112,
28114,
28116,
28118,
28122,
28128,
28130 and
28142,
Financial Code.
