California Licensing Requirements for Unregulated Lenders and Intermediaries
Michael J. Zerman
Michael Zerman is a Partner at Zuber Lawler & Del Duca LLP in Los Angeles. His practice concentrates on real estate lending, leasing, and purchase and sale transactions for public and private companies, financial institutions, pension funds, and government entities.
For much of the last century, real estate lenders were most often regulated financial institutions, such as commercial banks, savings and loan associations, and insurance companies, or regulated pension funds, which held exempt status under California’s lender and broker licensing laws. Intermediaries, who introduced borrowers to lenders and helped to negotiate the loan terms, were called brokers, and they understood that real estate licenses were required to conduct their trade. Today the roles assigned to those engaged in real estate lending contain many grey areas. For example, private lenders and crowdfunding enterprises frequently create a new entity in order to lend funds on a transaction or a pool of transactions, and then create another entity to receive an origination fee or to service the loan(s).