PACE Program Finance Lender and/or Broker ($25,000) Bond - Statewide in California

Brief Summary

A company that administers a PACE program for a California public agency has needed a DFPI license since January 1, 2019, and the license carries a surety bond of at least $25,000 payable to the Commissioner. The bond keeps $25,000 of cash in the business instead of with the state, and one bond covers every licensed location.

DFPI requires PACE program administrators to maintain a surety bond of at least $25,000 and a net worth of at least $25,000. Licensees under the California Financing Law maintain the bond under Financial Code 22112. It is payable to the Commissioner, issued by an insurer authorized in California, and answers for Commissioner fines and fees and for losses borrowers or consumers suffer from noncompliance.

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How to Apply for a PACE Program Finance Lender and/or Broker ($25,000) Bond:

• Confirm you meet the program administrator definition in Financial Code 22018.
• Apply for the license through NMLS.
• Show a net worth of at least $25,000.
• Buy a surety bond of at least $25,000 payable to the Commissioner, from an insurer authorized in California.
• File the original bond and any riders with the Commissioner within 10 days of execution.
• Pay the $200 application fee plus investigation, fingerprint and background check costs.

Detailed Information About the California PACE Program Finance Lender and/or Broker ($25,000) Bond:

Who this bond is for

California regulates PACE financing through the California Financing Law in Division 9 of the Financial Code. Financial Code 22016 defines a PACE program as financing for efficiency improvements on real property funded through property assessments. Under 22018, a program administrator is a person administering a PACE program on behalf of, and with the written consent of, a public agency. Since January 1, 2019, program administrators must be licensed by the Department of Financial Protection and Innovation and maintain a surety bond of at least $25,000.

Who falls outside the definition

Section 22018 excludes two groups. A public agency is not a program administrator. Neither is a person who meets both conditions in 22018(b): it does not administer a PACE program financing improvements on residential property with four or fewer units, and it does not administer a PACE program financing improvements on real property with a market value under $1,000,000. An administrator working only on high value commercial property may fall outside the license entirely.

PACE solicitors and solicitor agents are handled through the administrator. Under Financial Code 22680 and 22681, the program administrator runs their enrollment, background checks, compliance monitoring and training, and reports enrollments and cancellations to the Commissioner.

Bond terms under Financial Code 22112

A CFL licensee must maintain a surety bond of at least $25,000, payable to the Commissioner and issued by an insurer authorized to do business in California. The original bond and any riders are filed with the Commissioner within 10 days of execution, and one bond covers all licensed locations. The bond covers expenses, fines and fees levied by the Commissioner and losses or damages borrowers or consumers incur because the licensee failed to comply with the law. When an action is commenced on the bond, the Commissioner may require a new bond, and after a recovery the licensee has 10 days to file a replacement or faces suspension or revocation.

The $25,000 figure is a floor. For CFL licensees that make or broker residential mortgage loans, DFPI bases the bond amount on origination activity.

Other licensing items

DFPI lists a $25,000 minimum net worth for program administrators, a $200 application fee plus the cost of the application investigation, fingerprint processing and criminal background check, an annual report due by March 15, and record retention for at least three years after the extinguishment of a PACE assessment is recorded. Applications are filed through NMLS.

Eligibility and Requirements for a California PACE Program Finance Lender and/or Broker ($25,000) Bond:

• Obligee: the Commissioner of Financial Protection and Innovation.
• Minimum penal sum of $25,000 under Financial Code 22112(a).
• One bond covers all licensed locations.
• Replacement bond within 10 days after a recovery on the bond.
• Annual report to DFPI by March 15.

California PACE Program Finance Lender and/or Broker ($25,000) Bond FAQs:

Official and Additional Resources for the California PACE Program Finance Lender and/or Broker ($25,000) Bond: