Many real estate brokers and private lenders unintentionally trigger DRE reporting requirements simply through normal lending activity. Sections 10232 and 10238 of the Business & Professions Code outline specific thresholds that, once met, require formal notification and ongoing reporting to the DRE.
Section 10232 – Trust Fund & Loan Activity Thresholds
You may be subject to DRE reporting if, within certain periods, you:
• Negotiate 10+ loans totaling over $1,000,000 in a 12-month period
• Collect $250,000+ in mortgage payments in a 12-month period (including payoffs)
• Negotiate 2+ loans totaling over $250,000 in any 3-month period
• Negotiate 5+ loans totaling over $500,000 in any 6-month period
Once these thresholds are met, notification to the DRE is required within 30 days. Failure to do so may result in daily penalties and potential license suspension or revocation.
Required filings for the broker may include:
• RE 853 – Threshold Notification
• RE 855 / RE 856 – Quarterly Trust Fund Reports & Reconciliations
• RE 881 – Annual Mortgage Loan Report
• Annual Reviewed Financial Statements (CPA Prepared)
Section 10238 – Multi-Lender Transactions
Additional requirements apply if:
• You service multi-lender loans with payments exceeding $125,000 in any 3 consecutive months, or
• The number of investors entitled to payments exceeds 120
Required filings may include:
• RE 860 – Multi-Lender Transaction Notice
• RE 852 – Trust Account Report (CPA Prepared)
Many brokers don’t realize they’ve crossed these thresholds until penalties begin. Staying compliant early can prevent fines, audits, and licensing issues. If you’re unsure whether these rules apply to your activity, it’s worth reviewing before the DRE does. Contact us to schedule a free consultation.