Section 2033.5 - License Application for Student Loan ServicerThe 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.Cal. Code Regs. Tit. 10, § 2033.5
Note: Authority cited: Section 28106, Financial Code. Reference: Sections 28106, 28110, 28112, 28114, 28116, 28118, 28122, 28128, 28130 and 28142, Financial Code.
1. New section filed 3-28-2019; operative 3/28/2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).
2. Amendment filed 10-4-2023; operative 1/1/2024 (Register 2023, No. 40).