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LICENSING REQUIREMENT FOR COLLECTIONS

An appeal has been made to the Department of Financial Protection and Innovation that law firms and management companies that collect delinquent assessments not be deemed debt collectors requiring a license. Assuming the appeal to the DFPI is unsuccessful, HOA assessment "debt collectors" will have to be licensed by the state commencing January 1, 2022.

To apply for a license, a debt collector must submit an application through the Nationwide Mortgage Licensing System (NMLS). To submit an application, a company or individual must first create an account on the NMLS website (see "Getting Started").

Once an account is created, then the company (I am sticking with the company procedure here) must file, online, an MU1 form and, thereafter, an MU2 form for the individuals in control of the company.  In addition, if the company has branch locations, an MU3 form must be completed. This is an onerous process containing many pages (and many attachments to upload including, inter alia, proof of a $25,000 surety bond, A Certificate of Good Standing from the Secretary of State, copies of sample collection letters and other documents documents, Articles of Incorporation, a Management Chart, an Organizational Chart, a form appointing the Commissioner of Financial Protection and Innovation as agent for service of process, a Supplemental Request for Information stating the company's net proceeds and a Business Plan.

The MU2 form for the individual shareholders and, no doubt, the MU3 form for branch offices), require additional documents to be uploaded. In addition, there is a 13 page Checklist for California applicants published by the DFPI.

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