The short answer
Most US licensing turns on one question: is the loan for consumer or business purposes? Consumer residential lending triggers federal and state licensing almost everywhere. Business-purpose real estate lending is lightly licensed in many states, but not all, and California stands out. Separately, a Canadian entity may or may not need to register to do business in the state, and a Canadian broker should not assume a referral fee is lawful.
Layer one: the loan's purpose
The federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), 12 U.S.C. §§ 5101–5117, requires states to license individuals who originate residential mortgage loans for consumers. Federal consumer credit law, including the Truth in Lending Act and Regulation Z, exempts credit extended primarily for business, commercial or agricultural purposes (12 C.F.R. § 1026.3(a)).
This is why US private lenders obtain business-purpose certifications, lend to entities, and confirm that residential properties are non-owner-occupied investment properties. The label on the file is not enough: regulators and courts look at the real purpose. A loan to an LLC to refinance the principal's home can be treated as consumer credit.
Layer two: state lender and broker licensing
| State | Business-purpose real estate loans | Consumer residential loans | Notes |
|---|---|---|---|
| California | California Financing Law license (Fin. Code § 22000 et seq.) unless exempt; brokers need a DRE license (Bus. & Prof. Code § 10131(d)) | CFL or DRE license plus SAFE Act MLO licensing | Loans made or arranged by a licensed DRE broker also gain the usury exemption (Article 2) |
| Florida | Generally no lender license for commercial-purpose loans | Chapter 494, Florida Statutes: lender and loan originator licenses | Chapter 494 focuses on residential loans for personal, family or household use |
| New York | Generally no license above small-loan thresholds; Banking Law Article 9 applies to smaller loans at rates above 16% | Banking Law Article 12-D: mortgage banker and broker licenses | Check the one-to-four family residential rules carefully |
| Texas | Generally no license for business-purpose loans | Finance Code chapters 156, 157 and 180 (SAFE Act) | Business-purpose status must be documented |
| Washington | Consumer Loan Act (RCW 31.04) and Mortgage Broker Practices Act (RCW 19.146) reach mainly consumer residential lending | License required | Business-purpose burden rests on the lender (RCW 19.52.080) |
This table is a starting map, not a clearance. Licensing statutes have de minimis thresholds, entity-type rules and exemptions that change the answer. Obtain a state-specific opinion before the first loan in a new state.
Layer three: foreign qualification to do business
A Canadian corporation lending into a US state often asks whether it must register ("qualify") as a foreign entity. Most states follow the Model Business Corporation Act, which lists activities that do not by themselves amount to transacting business. They include creating or acquiring indebtedness, mortgages and security interests; securing or collecting debts and enforcing mortgages; and conducting an isolated transaction.
So a Canadian lender making and collecting a loan usually need not qualify. The picture changes when the lender takes title through foreclosure and operates or leases the property, opens a US office, or lends regularly in the state. The usual penalty for failing to qualify is that the entity cannot sue in state court until it does. That can delay enforcement exactly when it matters.
Qualifying has its own consequences. A non-US entity registered to do business in a US state is a "foreign reporting company" under the Corporate Transparency Act, even after FinCEN's 2026 final rule removed domestic companies from reporting. See Blog 3.
Layer four: brokers and referral fees
Canadian mortgage brokers often introduce Canadian investors to US deals, or US borrowers to Canadian lenders. Three risks arise.
- Unlicensed brokerage. In California, a person who solicits borrowers or lenders, or negotiates loans secured by real property for compensation, generally needs a DRE license (Bus. & Prof. Code § 10131(d)). Paying compensation to an unlicensed person for that work is itself prohibited (§ 10137).
- RESPA kickbacks. For federally related consumer mortgage loans, the Real Estate Settlement Procedures Act § 8 (12 U.S.C. § 2607) prohibits fees for referrals of settlement service business.
- Home-province rules. A Canadian broker who arranges a US loan for a Canadian investor may still be dealing or trading in mortgages at home, which can trigger provincial licensing and disclosure duties (Article 4) and securities rules (Article 9).
A practical sequence for a first US deal
- Confirm the borrower, the property type and the use of funds
- Document business purpose with a certificate and supporting evidence
- Check the state's lender and broker licensing rules and exemptions
- Confirm whether any broker or finder in the chain must be licensed
- Decide whether foreign qualification is required now or on enforcement
- Diarize CTA and state beneficial ownership filings if you qualify
Frequently asked questions
Frequently asked questions
Does a Canadian lender need a license to make a business-purpose loan in the US?
In many states, no, but California generally requires a California Financing Law license unless an exemption applies. Confirm the rule in each state.
What is the SAFE Act?
A federal law that requires state licensing and registration of individuals who originate residential mortgage loans for consumers.
Must a Canadian company register to do business in a US state to make a loan?
Usually not for making and collecting loans, which most states exclude from "transacting business". Owning and operating foreclosed property can change that.
Can I pay a Canadian broker a referral fee on a US loan?
It depends on the state and loan type. In California, compensating an unlicensed person for arranging a real estate loan is prohibited.
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com