[FUNd]

From an email sent by LoanMe this morning:

"As of January 1st, 2016 changes in the California Finance Lenders Law (Senate Bill 197) requires brokers and lenders to be licensed when referring or making loans to California residents."

As we know, many legal trends start in CA and the rest of the states follow their lead. This is just the tip of the iceberg. The little ISO lacking the resources for licensing or those with shady track records will be squeezed out in the next year.

[AndyYSCISOdept]

You think they're going to require individual licensing or a company wide license?

[Chambo]

You think they're going to require individual licensing or a company wide license?

It is no longer enough for the funder to be licensed. The ISO submitting has to be licensed as well

[WhoisKingsley]

It is no longer enough for the funder to be licensed. The ISO submitting has to be licensed as well

Licensed to what? Submit to that licensed Funder who also brokers? So, we will have a bunch of licensed people running around still doing the same crap they are doing now only pay to do it and maybe be audited for it?

[Funder Mark]

Or you may have 5 little ISO's combining shops to make 1 bigger one, which would have an easier time getting licensed. That would also likely make the industry more efficient.

[AndyYSCISOdept]

I like the idea of small shops banding to gether to create one larger shop, I think the cumulative effect will be very positive.

[lauren2028]

I like the idea of small shops banding to gether to create one larger shop, I think the cumulative effect will be very positive.

I also agree with you making a large shop by binding small ones.

[FUNd]

I think that the ISO will need to be licensed and eventually individuals. My humble prediction is that there will be a mini NMLS for our space. There are thousands of complaints filed every year, and I personally have seen horrendous acts of greed by brokers to deceive and flat out steal from the small businesses of this country.

[AndyYSCISOdept]

I think that the ISO will need to be licensed and eventually individuals. My humble prediction is that there will be a mini NMLS for our space. There are thousands of complaints filed every year, and I personally have seen horrendous acts of greed by brokers to deceive and flat out steal from the small businesses of this country.

Correct me if I'm wrong but requiring licensing for individuals would be the responsibility of the SEC. And if they were involved wouldn't most of the guidelines around Cash advance need to change to adhere to the usury laws which the SEC enforces/endorses etc.? Note: Im making this assumption not based on any facts just logic so I could be entirely wrong.

[PRIMO CASH]

First of all Regulation is the best thing that could happen to this industry. However, If I understand this correctly, this is for ISOs referring "loans" correct?? Still seems to be a grey area there...Even though California is on most funders restricted list as it is....

[brokerCompany]

Since the regulation states "loans" will the cash advance funders require this of their iso and brokers? As we have been told before the cash advance is technically not a loan.

[Sean Cash]

Since the regulation states "loans" will the cash advance funders require this of their iso and brokers? As we have been told before the cash advance is technically not a loan.

Many if not most MCA companies are actually issuing loans in California even if they are doing purchases in the other 49 states. That was one consequence of the usury class actions several years ago. A lot of funders became licensed there and are recognized as lenders.

[Funder Mark]

BUT, how exactly would you regulate a broker? To regulate a funder is easy, 'Do what we say, or residents of our state wont have to pay you bank', or something similar. But, when a merchant deals with a licensed funder, and the funder pays the broker, how would the broker regulations work?

[AndyYSCISOdept]

BUT, how exactly would you regulate a broker? To regulate a funder is easy, 'Do what we say, or residents of our state wont have to pay you bank', or something similar. But, when a merchant deals with a licensed funder, and the funder pays the broker, how would the broker regulations work?

This was my exact question, and then the next question is with all of the switching of companies and jumping around of brokers to this iso and that iso who would be in charge of tracking that. And further complications arrive in the form of who does the licensing and what the state agencies part will be. What if I live in NJ work in NY ?

[WhoisKingsley]

There is no way to regulate (control) a Broker. A Broker can say and do whatever the broker pleases. Unless you completely strip away the right for a Funding Company or a Lending Company to accept outside sales from an individually owned and operated company, there will still be brokers.

You can regulate programs, products, submission standards, closing standards, and different operations and make "rules" on the way things are put across, but one (not government or anything) can regulate an actual human being.

How about we talk about regulating a standard? That's a good topic or are we going to continue going back and forth on something that isn't going to happen?

[Chambo]

There is no way to regulate (control) a Broker. A Broker can say and do whatever the broker pleases. Unless you completely strip away the right for a Funding Company or a Lending Company to accept outside sales from an individually owned and operated company, there will still be brokers.

You can regulate programs, products, submission standards, closing standards, and different operations and make "rules" on the way things are put across, but one (not government or anything) can regulate an actual human being.

How about we talk about regulating a standard? That's a good topic or are we going to continue going back and forth on something that isn't going to happen?

What are you talking about? It is easy as pie. the ISO submitting to Funder A has to be licensed in the state. If not licensed, Funder A cannot accept the file

[WhoisKingsley]

What are you talking about? It is easy as pie. the ISO submitting to Funder A has to be licensed in the state. If not licensed, Funder A cannot accept the file

Sounds simple enough.

Real Time Example: Broker A who is a call center with 2 managing partners and 10 originators and 4 closers. One of the partners has a criminal background and 3 employees do as well. Before having to be licensed... that broker was doing over $1M a month with that Funding Company.... What is done then?

[FUNd]

There is no way to regulate (control) a Broker. A Broker can say and do whatever the broker pleases. Unless you completely strip away the right for a Funding Company or a Lending Company to accept outside sales from an individually owned and operated company, there will still be brokers.

You can regulate programs, products, submission standards, closing standards, and different operations and make "rules" on the way things are put across, but one (not government or anything) can regulate an actual human being.

How about we talk about regulating a standard? That's a good topic or are we going to continue going back and forth on something that isn't going to happen?

The NMLS regulates thousands of mortgage brokers, right down to the proper disclosure of costs and advertising methods. Why would brokers in the business space be treated any differently?

[WhoisKingsley]

The NMLS regulates thousands of mortgage brokers, right down to the proper disclosure of costs and advertising methods. Why would brokers in the business space be treated any differently?

What controls thousands of mortgage brokers? A PRODUCT that is in favor of regulations to form some type of control on the ways business is conducted.

Why would brokers be treated any differently? The way they are now and will always be. There will always be relationships of seniority, favoritism, and a little slip of some green. I meant money not hash.

[FUNd]

What controls thousands of mortgage brokers? A PRODUCT that is in favor of regulations to form some type of control on the ways business is conducted.

Why would brokers be treated any differently? The way they are now and will always be. There will always be relationships of seniority, favoritism, and a little slip of some green. I meant money not hash.

Sorry, the mortgage product didn't call for regulations for itself, consumers and government did. Same applies here.

[WhoisKingsley]

Sorry, the mortgage product didn't call for regulations for itself, consumers and government did. Same applies here.

As I agree. If there cannot be anything done by self-regulating and doing things right, the consumers and government should. Will a passed law alone vs. a passed law and a system like NMLS work? Probably Not. Can somebody do this? Yes. Will they? Not until they can milk every penny. Is that anytime soon? No, banks aren't getting their worth AND a standard way of submitting and qualifying to the thousands of outlets aren't formed yet. To each his own right now, but as everyone can see, it will happen eventually.

[AndyYSCISOdept]

^^^Thank you for pointing that out, because honestly this sounds like a way for the fed gov. to cash in on our industry more than our taxes we pay already do.

A silly piece of paper isn't going to stop brokers from lying.

[WhoisKingsley]

All-in-all, Funding Companies who aren't your "original" or "innovative" tech companies or people/companies that partnered to "innovate" in some way to help the consumer directly- are struggling. Like everything in the world, there are always ways to distract. Regulations are a distraction to take away from the ones one the lower end of the totem pole to really see the big issues and actually work together to create a standard. Once the standard is built- those who do things right will stay and the BS will be weeded out. They won't make the type of "one-time" high dollar amount commissions and there would actually be work to put in.

We can easily self regulate today if we all decided too, Doesn't matter if your Direct or In-direct.

[jotucker1983]

I would like to know more information about this too. From my understanding of this in relation to our industry of reselling MCAs and Alt. Business Loans, the "brokers" are considered referral partners, which avoids the requirement to be licensed similarly to how brokers in the mortgage industry in certain states have to be licensed.

[Chambo]

I would like to know more information about this too. From my understanding of this in relation to our industry of reselling MCAs and Alt. Business Loans, the "brokers" are considered referral partners, which avoids the requirement to be licensed similarly to how brokers in the mortgage industry in certain states have to be licensed.

Used to be, no longer.