TITLE 10 OF THE CALIFORNIA CODE OF REGULATIONS

1 TITLE 10 OF THE CALIFORNIA CODE OF REGULATIONS . DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION. PROPOSED REGULATIONS . Chapter 3. Commissioner of Business Oversight, Division of Corporations Financial Protection and Innovation Subchapter 6. CALIFORNIA Finance Lenders Financing Law (Finance Company Rules). 1404. Definitions. The following terms used in Subchapter subchapter 6 of these rules shall have (unless the context otherwise indicates) the following meanings: (a) "Call report" or "NMLS Mortgage Call Report" means a report of condition on the company and its operations including financial statements and production activity volumes. (b) "Company" includes all domestic and foreign private corporations, limited liability companies, joint ventures, associations, syndicates, joint stock companies, partnerships of every kind, unincorporated organizations, government or political subdivisions of a government, trustees and individuals.

2 (c) "Department" means the Department of Corporations Financial Protection and Innovation of the State of CALIFORNIA . (d) "Finance company" means a company finance lender or broker subject to the CALIFORNIA Finance Lenders Financing Law and also has the same meaning as "licensee as defined in Financial Code Section 22007. (e) "Law" or "Code" means the CALIFORNIA Finance Lenders Financing Law. (f) "Mortgage lender" or "mortgage broker" or "mortgage lender and broker" means 1. PRO 02/17 FINAL TEXT. a finance company, finance lender, or broker who makes, brokers, or services residential mortgage loans and who is required to be licensed pursuant to Section section 22100 of the Code. (g) "Form MU1" means the uniform licensing form, entitled NMLS Company Form, developed by the Nationwide Mortgage Multistate Licensing System and Registry for use by a company or sole proprietor to apply for and maintain licensure by a state through NMLS.

3 Version , dated 9/12/2015, is hereby incorporated by reference in its entirety. for a mortgage lender, mortgage servicer, or mortgage broker business, entitled "Uniform Mortgage Lender/Mortgage Broker Form. (h) "Form MU2" means the uniform licensing form, entitled NMLS Individual Form, developed by the Nationwide Mortgage Multistate Licensing System and Registry for background information about individuals who own or control the activities of an applicant or licensee. for a person that directly or indirectly exercises control over Version 9, dated 9/12/16, is hereby incorporated by reference in its entirety. a mortgage lender, mortgage servicer, or mortgage broker business, or a branch thereof, including qualifying individuals and branch managers specified in Form MU1, entitled "Uniform Mortgage Biographical Statement & Consent Form.

4 ". (i) "Form MU3" means the uniform licensing form, entitled NMLS Branch Form, . developed by the Nationwide Mortgage Multistate Licensing System and Registry for an applicant or a licensee under Form MU1 to apply for or maintain a the branch office of through NMLS. Version 10, dated 3/31/14, is hereby incorporated by reference in its entirety. a mortgage lender, mortgage servicer, or mortgage broker, entitled "Uniform Mortgage Branch Office Form.". 2. PRO 02/17 FINAL TEXT. (j) "Form MU4" means the uniform licensing form developed by the Nationwide Mortgage Multistate Licensing System and Registry for an individual mortgage loan originator license or registration, entitled "Uniform Individual Mortgage License/Registration & Consent Form.". (k) "NMLS" means the Nationwide Mortgage Multistate Licensing System and Registry.

5 (l)(1) If the applicant or licensee is a finance company, outstanding interests . means equity interests in a finance company (if the applicant or the licensee is a partnership) that have the power to: (1) vote to elect or direct the management of the applicant or the finance company, or (2) conduct or manage the lending activities of the finance company. The term outstanding interests does not include: (i) an equity interest in the partnership which represents only an economic interest such as a right to receive income and other distributions from the partnership, or (ii) an equity interest which does not give the owner or holder the right or ability, directly or indirectly, to elect or direct management of the applicant or the finance company, or (iii) equity interests where the owner or holder of such interests have entered into a written agreement whereby any right to vote such equity interests are disclaimed (such as an undertaking that any vote will mirror management's vote or the vote of the rest of the finance company's equity interests)

6 Or relinquished such that the owner or holder of such equity interests cannot, directly or indirectly, elect officers, directors, or management or otherwise direct, conduct or manage the lending activities of the applicant or finance company. (2) If the applicant or licensee is a program administrator, outstanding 3. PRO 02/17 FINAL TEXT. interests means equity interests in a program administrator (if the applicant or the licensee is a partnership) that have the power to: (1) vote to elect or direct the management of the applicant or the program administrator, or (2) conduct or manage the administering of the PACE program of the program administrator. The term outstanding interests does not include: (i) an equity interest in the partnership which represents only an economic interest such as a right to receive income and other distributions from the partnership, or (ii) an equity interest which does not give the owner or holder the right or ability, directly or indirectly, to elect or direct management of the applicant or the program administrator, or (iii) equity interests where the owner or holder of such interests have entered into a written agreement whereby any right to vote such equity interests are disclaimed (such as an undertaking that any vote will mirror management's vote or the vote of the rest of the program administrator's equity interests)

7 Or relinquished such that the owner or holder of such equity interests cannot, directly or indirectly, elect officers, directors, or management or otherwise direct, conduct or manage the administering of the PACE program activities of the applicant or program administrator. (m)(1) If the applicant or licensee is a finance company, outstanding equity securities means securities of a corporation, trust, limited liability company, or association, including an unincorporated organization, that have the power to: (1) vote for or elect the management of the applicant or the finance company, or (2) direct, conduct or manage the lending activities or other operations of the finance company. The term outstanding equity securities does not include: (i) non-voting equity securities which represent only an economic interest or a right to receive income and 4.

8 PRO 02/17 FINAL TEXT. other distributions, or (ii) equity securities which do not give the owner or holder the right or ability, directly or indirectly, to elect or direct management of the applicant or the finance company, or (iii) equity securities where the owner or holder of such securities have entered into a written agreement whereby any right to vote such equity securities are disclaimed (such as an undertaking that any vote will mirror management's vote or the vote of the rest of the finance company's stockholders) or relinquished such that the owner or holder of such equity securities cannot elect, directly or indirectly, officers, directors, or management or otherwise direct, conduct or manage the lending activities of the applicant or finance company. (2) If the applicant or licensee is a program administrator, outstanding equity securities means securities of a corporation, trust, limited liability company, or association, including an unincorporated organization, that have the power to: (1) vote for or elect the management of the applicant or the program administrator, or (2).

9 Direct, conduct or manage the administering of the PACE program or other operations of the program administrator. The term outstanding equity securities does not include: (i) non-voting equity securities which represent only an economic interest or a right to receive income and other distributions, or (ii) equity securities which do not give the owner or holder the right or ability, directly or indirectly, to elect or direct management of the applicant or the program administrator, or (iii) equity securities where the owner or holder of such securities have entered into a written agreement whereby any right to vote such equity securities are disclaimed (such as an undertaking that any vote will mirror management's vote or the vote of the rest of the program administrator's stockholders) or relinquished such that the owner or holder of 5.

10 PRO 02/17 FINAL TEXT. such equity securities cannot elect, directly or indirectly, officers, directors, or management or otherwise direct, conduct or manage the lending activities of the applicant or program administrator. (n) "Sponsoring" or "to sponsor" means to maintain an employment relationship between a mortgage loan originator and a mortgage lender, mortgage broker, or mortgage lender and broker where the mortgage loan origination activities of the mortgage loan originator are subject to the supervision and oversight of the mortgage lender, mortgage broker, or mortgage lender and broker. A licensed mortgage lender, mortgage broker, or mortgage lender and broker is the "sponsor" of a mortgage loan originator employed by, and subject to the supervision and oversight of, the mortgage lender, mortgage broker, or mortgage lender and broker.