There are several lenders who lack the necessary license to lend in California. As a result, many instead arrange for a licensed real estate broker to facilitate the loan, letting the lender continue to offer their services without needing to be licensed. They are also exempt from the state’s interest rate limit. This includes fees such as origination fees and other classified fees.

While this arrangement may provide convenience for the lender, it could pose a potential risk for borrowers. Since the lender lacks licensure in that specific state, they are prohibited from exercising certain rights under California law. This could put borrowers in a precarious situation, such as if they or the lender are unable to handle an unexpected issue. Consequently, it is important for borrowers to research the licensure requirements before entering an agreement with a lender.

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