The questions below recur from California brokers on the §10232.4 threshold-broker framework. The answers run against the California Department of Real Estate framework, the §2846 California Code of Regulations Title 10 framework on Quarterly Trust Account Reports, and the §10145 trust-fund framework.

What are the §10232.4 trigger tests?

The first trigger runs against the broker’s §10238 multi-lender loan count — ten or more multi-lender loans in the measurement year. The second trigger runs against the broker’s aggregate principal value on arranged loans across the year. The third trigger runs against the broker’s servicing aggregate collected through the trust account on a rolling three-month window.

What is the QTAR?

The Quarterly Trust Account Report runs as a Department of Real Estate filing on threshold brokers under §2846 of the California Code of Regulations Title 10. The report runs the broker’s trust-account reconciliation against the broker’s system of record on each calendar quarter and files within the statutory filing window after each quarter’s close.

What is the annual financial report?

The annual financial report runs against the broker’s arranged-loan portfolio, the broker’s servicing portfolio, and the broker’s compliance position across the year. The report runs through a CPA compilation, review, or audit against the broker’s portfolio profile. The report files with the Department of Real Estate within the statutory annual filing window.

What CPA engagement does the annual report require?

The annual report runs through a CPA compilation, review, or audit engagement against the broker’s portfolio profile. The engagement scope runs the broker’s arranged-loan portfolio, the broker’s servicing portfolio, the broker’s trust-account framework, the broker’s compliance position on the §10232.5 and §10240 frameworks, and the broker’s internal-control framework.

What happens if a broker misses a §10232.4 filing?

A threshold broker who misses a filing runs the Department of Real Estate’s enforcement framework against the broker’s license — license suspension, license revocation, administrative fines, and the broker’s corrective-action requirement. The broker’s lender-investors and borrowers run the lender-investor protection framework against the broker’s license status during the suspension or revocation period.

Can a third-party servicer support the broker’s QTAR?

A third-party servicer engaged on the broker’s servicing portfolio runs the trust-account reconciliation, the lender-investor distributions, the borrower-payment processing, the §6050H Form 1098 reporting, and the broker-level reconciliation support against the broker’s QTAR filing. The broker retains the QTAR filing obligation against the Department of Real Estate but the servicer supports the reconciliation framework against the system of record.

What is the rolling three-month measurement on trigger three?

The third trigger runs the rolling three-month measurement on the broker’s servicing aggregate collected through the trust account. The broker runs the rolling-window analysis on each three-month measurement period across the year. A broker who crosses the statutory dollar threshold on any rolling three-month window runs the threshold-broker classification on the trigger.

How does a broker transition from standard to threshold?

A standard broker who crosses a §10232.4 trigger in the measurement year runs the threshold-broker classification at the year-end measurement step. The broker engages a CPA at the year-end step, runs the trust-account reconciliation against the system of record across the year, documents the internal-control framework, and prepares the annual financial report against the CPA engagement. The first QTAR cycle runs on the next calendar quarter after the classification step.

Does the threshold-broker framework apply to commercial loans?

The §10232.4 framework runs against the California real estate broker’s arrangement and servicing portfolio regardless of the borrower-purpose classification on the loans. A broker arranging commercial-purpose multi-lender loans and servicing commercial-purpose notes runs the §10232.4 framework against the broker’s portfolio measurements. The federal servicing rules under Regulation X and Regulation Z run separately against the broker’s residential consumer-purpose loan portfolio where applicable.

Related Topics

This article is educational and does not constitute legal advice. The §10232.4 threshold-broker framework runs against the California Department of Real Estate licensing and reporting framework, the §2846 California Code of Regulations Title 10 framework on Quarterly Trust Account Reports, the §10145 California Real Estate Law trust-fund framework, and federal servicing rules under Regulation X and Regulation Z on residential consumer-purpose loans. Consult qualified legal counsel and a qualified CPA on the specific filing and audit requirements that apply to any California broker portfolio.

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