California Form RE 4053 is the Mortgage Loan Disclosure Statement – Non-Traditional Mortgage Product (MLDS-NT), the disclosure a California-licensed real estate broker must give a borrower within three business days of receiving a completed loan application for any non-traditional residential mortgage product, such as an interest-only loan, a payment-option ARM, or a 40-year amortizing loan. The form is published by the California Department of Real Estate (DRE) and is required by Business and Professions Code §10240.2 and 10 CCR §2842.
The current revision is RE 4053 (Rev. 7/10), and brokers should always verify they are working from the latest version on the DRE forms library before delivery. According to the DRE’s most recent enforcement summary, non-disclosure or late delivery of the MLDS family of forms accounts for roughly 1 in 7 broker discipline cases each year, with fines reaching up to $10,000 per violation under B&P §10080.9.
Here is what you will learn in this guide:
- 📝 How to complete every field on RE 4053, line by line, with sample entries
- ⏱️ The exact 3-business-day delivery rule and how to prove compliance
- 💵 How to disclose broker compensation, points, and closing costs without triggering a DRE audit
- ⚠️ The 10 most common mistakes brokers make on RE 4053 and the consequences of each
- 🧾 How RE 4053 interacts with the federal Loan Estimate, RE 882, and NMLS records
What the Form Is and Who Must File It
California Form RE 4053 is a borrower-facing disclosure, not a government filing. The broker prepares it, signs it, and delivers it to the borrower; no copy is sent to DRE unless DRE later requests it during an audit under B&P §10148. The purpose of the form is to put the unusual features of a non-traditional loan, such as negative amortization or a payment that does not cover interest, in front of the borrower in plain language before the loan closes.
Every California real estate broker who negotiates, arranges, or makes a non-traditional residential mortgage loan secured by 1-to-4 unit residential property must deliver RE 4053 to the borrower. A “non-traditional mortgage” is defined in 10 CCR §2842 and the DRE’s non-traditional loan guidance as any product that allows the borrower to defer principal or interest, including interest-only loans, payment-option ARMs, and 40-year or longer amortization loans.
If the loan is a traditional fully amortizing mortgage, the broker uses RE 882 (MLDS – Traditional) instead. If the loan has both traditional and non-traditional features, the broker must deliver both RE 882 and RE 4053. Mortgage Loan Originators (MLOs) acting under a broker also share liability, and their NMLS ID number must appear on the form.
Before You Start: Documents and Information You Need
Pull these items together before you open RE 4053. Missing any one of them is the most common reason brokers blow the 3-day delivery deadline.
- Borrower’s completed loan application (Form 1003) — you cannot start the 3-day clock without it, and the application date drives the delivery deadline.
- Subject property address and APN — the form must match the address on the title commitment, or the lender’s funding department will reject the package.
- Proposed loan amount, rate, and term — pulled from the lender’s rate sheet or the locked Loan Estimate, because guesses lead to redisclosure.
- Loan product features — interest-only period, negative amortization cap, payment recast date, prepayment penalty terms, and balloon date.
- Estimated closing costs itemization — title, escrow, appraisal, credit report, recording, and lender fees, ideally pulled from the Loan Estimate.
- Broker compensation details — total dollars, source (borrower-paid, lender-paid, or both), and any yield spread premium, since miscoding compensation is the #1 DRE audit finding.
- Broker’s DRE license number and NMLS ID — verify the active status on eLicensing and NMLS Consumer Access the same day.
- Lender name and NMLS ID — required even when the broker is also the funding source.
- Existing liens to be paid off — payoff demands from current lien holders, because an under-disclosed payoff creates a cash-to-close shortfall at signing.
- Borrower signature method — wet ink, e-sign platform (e.g., DocuSign), or in-person delivery, because the proof-of-delivery rule differs for each.
Where to Get the Form and How to Access It
The official, fillable PDF of RE 4053 lives on the DRE Forms and Publications page. Brokers should download a fresh copy for each transaction rather than reusing a saved file, because DRE updates the form without changing the file name. The current version, Rev. 7/10, prints across two pages and includes Sections I (Estimated Closing Costs), II (Compensation), III (Loan Features), and IV (Signatures).
You may also access RE 4053 inside most loan origination systems (LOS) such as Encompass, Calyx Point, and LendingPad, where the data flows automatically from the 1003 and the Loan Estimate. Do not rely on third-party form mills like real estate forum downloads, because outdated revisions still circulate and DRE auditors will cite a broker for using a superseded version under 10 CCR §2840.
If your LOS does not include RE 4053, print the PDF, complete it in black ink (the DRE’s Real Estate Bulletin recommends black ink for legibility on imaged copies), and scan a clean copy into the transaction file. Keep the signed original for three years under B&P §10148.
Step-by-Step: How to Fill Out RE 4053 Line by Line
The form is organized into a header block, four numbered sections, and a signature block. Work top to bottom and never skip a field, because DRE treats a blank field as an undisclosed item.
Header: Borrower Name, Property Address, and Date Prepared
The header asks for the borrower’s full legal name, the subject property address, and the date the form is prepared.
Enter the borrower’s name exactly as it appears on the loan application and title, last name first if the rest of the file uses that order. Use the property’s full street address, unit number, city, ZIP, and county. The “Date Prepared” must be the date you complete the form, not the application date.
For example, Maria Lopez writes Lopez, Maria A. in the borrower box, 1428 Pine Street, Unit 3, Sacramento, CA 95814, Sacramento County in the address box, and 03/14/2026 in the date box.
A common edge case is a borrower who uses a trust as title holder. In that case, list the trustee’s name and add “as Trustee of the [Trust Name]” so the disclosure matches title vesting.
The most common mistake here is using the borrower’s nickname, which causes the lender’s QC team to flag an identity mismatch and delay funding by 3–7 days.
A frequent misconception is that the “Date Prepared” can be backdated to match the application; backdating is a license-disciplinable offense under B&P §10176(a).
Header: Broker Name, License Number, and NMLS ID
This block identifies the broker of record and the individual MLO.
Print the brokerage’s exact legal name as registered with DRE, the 8-digit DRE broker license number, and the NMLS ID. If an individual MLO is taking the application, add the MLO’s name and personal NMLS ID below the brokerage block.
For example, Pacific Crest Mortgage, Inc., DRE #01987654, NMLS #245678; MLO: Daniel Park, NMLS #998877.
If the broker operates under a DBA, list the DBA followed by “dba” and the legal entity name, because DRE requires both on consumer disclosures per the DRE DBA rules.
A common mistake is entering the salesperson’s license number instead of the broker’s; only the broker’s license number belongs here, and a wrong number is grounds for a citation under B&P §10140.6.
A misconception is that NMLS is only required for federally chartered lenders; California-licensed brokers arranging residential mortgages must hold an NMLS endorsement under the SAFE Act.
Section I: Estimated Closing Costs
Section I is a grid that itemizes all fees the borrower will pay at closing.
For each line, enter the dollar amount in the right-hand column. Common lines include appraisal, credit report, title insurance, escrow fee, recording fee, notary, lender’s underwriting fee, and broker fee. Use whole dollars and cents ($1,250.00), and write $0.00 on any line that does not apply rather than leaving it blank.
For example, Carlos Nguyen’s Section I shows Appraisal $750.00, Credit Report $85.00, Title Insurance $1,425.00, Escrow Fee $1,100.00, Recording $185.00, Lender Underwriting $995.00, Broker Fee $4,500.00, totaling $9,040.00.
A nuance: if a fee is a range or estimate, mark it with an “E” and use the high end, because under-disclosing a fee by more than the TRID tolerance requires a redisclosure and a new 3-day waiting period.
The most common mistake is leaving the “Total Estimated Closing Costs” line blank; the DRE auditor treats a blank total as a non-disclosure, even if every individual line is filled in.
A misconception is that Section I duplicates the federal Loan Estimate and therefore does not need to match. It must match, because conflicting figures violate Reg Z §1026.19 and California’s parallel rule.
Section II: Compensation to Broker
Section II is the most heavily audited part of the form.
Disclose every dollar the broker will earn, broken into “Compensation from Borrower” and “Compensation from Lender.” Add origination points, processing fees, and any rebate or yield spread premium. The total must equal the broker compensation shown on the Loan Estimate, line A.
For example, Janet Reyes’s broker discloses Compensation from Borrower: $4,500 (1.5 points on a $300,000 loan) and Compensation from Lender: $2,250 (0.75% lender credit retained as broker comp), total $6,750.
A nuance: under the federal Loan Originator Compensation Rule, a broker cannot be paid by both borrower and lender on the same loan. If your firm uses borrower-paid comp, lender-paid must be $0.00, and vice versa.
The most common mistake is omitting lender-paid compensation on the theory that the borrower does not “see” it; DRE treats this as a material misrepresentation under B&P §10240 and pursues restitution.
A misconception is that broker comp can be rounded to the nearest hundred. It cannot; round to the cent and match the LE exactly.
Section III: Proposed Loan Amount, Rate, and Term
Section III states the dollar amount, interest rate, term, and amortization of the proposed loan.
Enter the base loan amount (excluding any financed MIP or guarantee fee on the row above), the note rate as a percentage to three decimals, and the term in months. Then check the box for the loan type: fixed, ARM, interest-only, payment option, or other.
For example, Aisha Brown’s Section III shows Loan Amount $425,000, Initial Rate 6.875%, Term 360 months, Type: 5/6 ARM with 10-year interest-only period.
A nuance: for payment-option ARMs, you must also disclose the fully indexed rate and the payment recast trigger (e.g., 110% of original balance), because the borrower needs both numbers to understand payment shock.
The most common mistake is entering the teaser rate as the note rate; the note rate is the rate after the teaser period unless the loan is a true fixed-rate teaser, and DRE has cited brokers for this exact substitution.
A misconception is that an ARM “rate” is just the start rate; for disclosure purposes, the rate is the rate at consummation, and the index plus margin must be shown separately.
Section III: Non-Traditional Loan Features Checkboxes
This sub-section is the heart of why RE 4053 exists.
Check every feature that applies: interest-only payments, negative amortization, balloon payment, prepayment penalty, demand feature, and “other.” For each checked feature, fill in the related blanks (e.g., interest-only period length, neg-am cap, balloon date, prepayment penalty term and amount).
For example, Daniel Park’s Section III shows checked boxes for Interest-Only (120 months), Negative Amortization (cap 115% of original balance), and Prepayment Penalty (3 years, 6 months interest on amount prepaid above 20%).
A nuance: a soft prepayment penalty (waived on sale of the home) still requires the box to be checked, with a note that it is soft.
The most common mistake is forgetting to check the negative amortization box on a payment-option ARM because the broker assumes the borrower will always make the fully amortizing payment; DRE treats the missed checkbox as a non-disclosure regardless of intent.
A misconception is that a balloon under 7 years does not need disclosure because of the federal QM rule; the QM rule limits origination, not disclosure, and California still requires the box to be checked.
Section III: Payment Examples
Right under the features, the form provides space for payment examples.
Show the initial payment, the fully indexed payment, the maximum possible payment, and the payment after recast. Use principal-and-interest figures only; tax and insurance escrow goes elsewhere.
For example, Marcus Hill’s form shows Initial P&I $1,892.00, Fully Indexed P&I $2,415.00, Maximum P&I $3,612.00, Recast P&I $2,995.00.
A nuance: if the loan has multiple recast triggers (time-based and balance-based), show the earlier of the two.
The most common mistake is using rounded payments; the lender’s amortization schedule will show cents, and a $1 mismatch is enough to trigger a redisclosure under TRID.
A misconception is that the maximum payment is the lifetime cap times the start balance; it must reflect the highest scheduled payment under the note, including post-recast amortization on the highest possible balance.
Section IV: Borrower and Broker Signatures
The signature block is where the disclosure becomes legally effective.
The broker signs and dates first, then the borrower signs and dates upon receipt. Each co-borrower signs separately. If delivered electronically, attach the e-sign certificate showing the timestamp and IP address.
For example, Pacific Crest Mortgage’s MLO signs on 03/14/2026, and borrowers Maria Lopez and David Lopez each sign on 03/15/2026.
A nuance: if the borrower refuses to sign, the broker must still deliver the form and document the refusal in the file with a dated memo, because the obligation is delivery, not signature.
The most common mistake is letting the borrower sign before the broker; an unsigned broker line invalidates the disclosure under 10 CCR §2840.
A misconception is that an electronic signature is not valid for RE 4053; it is, under the California UETA, provided the platform produces a tamper-evident audit trail.
Three Filled-Out Examples Using Real Scenarios
Scenario 1: Maria Lopez — Interest-Only ARM on a Primary Residence
Maria is refinancing her Sacramento home into a 5/6 ARM with a 10-year interest-only period.
| Form Section | What Maria’s Broker Enters |
|---|---|
| Borrower Name | Lopez, Maria A. |
| Property Address | 1428 Pine Street, Unit 3, Sacramento, CA 95814 |
| Date Prepared | 03/14/2026 |
| Broker / NMLS | Pacific Crest Mortgage, Inc., DRE #01987654, NMLS #245678 |
| Section I Total Closing Costs | $9,040.00 |
| Section II Broker Compensation | Borrower-paid: $4,500; Lender-paid: $0.00 |
| Section III Loan Amount / Rate / Term | $425,000 / 6.875% / 360 months |
| Loan Features Checked | Interest-Only (120 mo); Prepayment Penalty (3 yr) |
| Initial / Max P&I Payment | $2,435 / $3,612 |
| Borrower Signature Date | 03/15/2026 |
Scenario 2: Carlos Nguyen — Payment-Option ARM Refinance with Negative Amortization
Carlos is refinancing a Fresno duplex into a payment-option ARM.
| Form Section | What Carlos’s Broker Enters |
|---|---|
| Borrower Name | Nguyen, Carlos T. |
| Property Address | 2210 Olive Ave, Fresno, CA 93728 |
| Date Prepared | 04/02/2026 |
| Broker / NMLS | Sierra Lending Group, DRE #02112233, NMLS #334455 |
| Section I Total Closing Costs | $11,250.00 |
| Section II Broker Compensation | Lender-paid: $5,500; Borrower-paid: $0.00 |
| Section III Loan Amount / Rate / Term | $510,000 / 7.250% / 360 months |
| Loan Features Checked | Interest-Only; Negative Amortization (cap 115%); Recast at 60 months |
| Initial / Fully Indexed / Max P&I | $1,742 / $3,478 / $4,210 |
| Borrower Signature Date | 04/04/2026 |
Scenario 3: Aisha Brown — 40-Year Fixed for a Self-Employed Borrower
Aisha is buying her first home in Long Beach using a 40-year fixed non-QM loan.
| Form Section | What Aisha’s Broker Enters |
|---|---|
| Borrower Name | Brown, Aisha M. |
| Property Address | 3915 Cedar Ave, Long Beach, CA 90807 |
| Date Prepared | 05/10/2026 |
| Broker / NMLS | Coastline Mortgage, DRE #01776543, NMLS #112233 |
| Section I Total Closing Costs | $13,470.00 |
| Section II Broker Compensation | Borrower-paid: $7,200; Lender-paid: $0.00 |
| Section III Loan Amount / Rate / Term | $480,000 / 7.625% / 480 months |
| Loan Features Checked | 40-Year Amortization; No Prepayment Penalty |
| Initial / Max P&I | $3,212 / $3,212 |
| Borrower Signature Date | 05/12/2026 |
How to File the Completed Form
RE 4053 is delivered to the borrower, not filed with DRE, but the broker must retain proof of delivery. Use one of the channels below and keep the proof for at least three years under B&P §10148.
- In person: hand the signed form to the borrower; keep the borrower-signed copy. Cost: $0. Processing time: instant. Proof: signed original.
- U.S. mail: mail to the borrower’s address; use Certificate of Mailing or USPS Tracking. Cost: $1.50 per piece. Processing time: 3–5 days. Proof: USPS receipt.
- Email / e-sign: send via DocuSign, Adobe Sign, or your LOS portal. Cost: included in LOS. Processing time: instant. Proof: e-sign certificate with timestamp and IP.
- Fax: rarely used today, but legal under California Civil Code §1633.7. Cost: $0. Proof: fax confirmation page.
The 3-business-day delivery clock runs from the date the broker receives a completed application, defined under TRID as the date the broker has the borrower’s name, income, SSN, property address, estimated value, and loan amount. If the form is mailed, delivery is presumed three business days after the postmark.
For DRE audits, the broker’s transaction file should include the signed RE 4053, the proof-of-delivery item above, the matching Loan Estimate, and any redisclosed RE 4053 if loan terms changed by more than the TRID tolerance.
What Happens After You File
After delivery, the borrower has the right to review, ask questions, and walk away from the loan without penalty before signing the note. A signed RE 4053 does not lock the borrower into the loan; it only confirms receipt of the disclosure.
If loan terms change in a material way (rate goes up by more than 0.125%, loan amount changes, product changes from interest-only to fully amortizing, etc.), the broker must prepare a redisclosed RE 4053 and restart the 3-business-day clock before consummation. This redisclosure rule mirrors the federal Closing Disclosure 3-day waiting period.
DRE may request the file during a routine DRE audit or in response to a consumer complaint. If the file is missing the signed RE 4053 or proof of delivery, the broker faces fines, license suspension, and potential restitution to the borrower under B&P §10080.9.
Mistakes to Avoid When Filling Out the Form
- Using an outdated revision of RE 4053. Consequence: DRE citation under 10 CCR §2840.
- Missing the 3-business-day delivery deadline. Consequence: $1,000–$10,000 fine and possible license suspension.
- Leaving Section I closing-cost lines blank. Consequence: treated as undisclosed fees and triggers a redisclosure.
- Mixing borrower-paid and lender-paid comp on the same loan. Consequence: federal LO Comp Rule violation and CFPB referral.
- Entering the teaser rate as the note rate in Section III. Consequence: material misrepresentation and DRE discipline.
- Forgetting to check the negative-amortization box on a payment-option ARM. Consequence: rescission risk under TILA §1635.
- Using the salesperson’s license number instead of the broker’s. Consequence: citation under B&P §10140.6.
- Backdating the “Date Prepared”. Consequence: license revocation under B&P §10176(a).
- Letting the borrower sign before the broker. Consequence: invalid disclosure, requires reissuance.
- Failing to retain the signed form for 3 years. Consequence: audit failure under B&P §10148 and fines per missing file.
- Rounding broker compensation instead of matching the LE to the cent. Consequence: TRID tolerance violation and redisclosure.
- Omitting the NMLS ID for the MLO. Consequence: SAFE Act violation and federal penalty exposure.
Do’s and Don’ts
- Do download a fresh copy of RE 4053 from the DRE forms page for every transaction so you never use a stale revision.
- Do match every dollar in Sections I and II to the Loan Estimate, because TRID tolerances are unforgiving.
- Do check every applicable loan-feature box, even soft prepayment penalties.
- Do date the broker signature first, then deliver to the borrower for signature.
- Do retain the signed RE 4053 for three years in the transaction file as required by B&P §10148.
- Do verify the broker’s DRE and NMLS status the same day you sign, because an expired license invalidates the disclosure.
- Don’t use whiteout or strike-throughs; reprint and re-sign instead, because altered forms are presumed fraudulent.
- Don’t assume e-mail delivery alone is enough; capture the e-sign certificate or read receipt.
- Don’t skip the negative-amortization checkbox on payment-option loans, because intent does not matter to DRE.
- Don’t combine borrower-paid and lender-paid comp on one loan, because the federal LO Comp Rule prohibits it.
- Don’t wait until the day before closing to deliver RE 4053; the 3-day clock will already have run.
- Don’t rely on the lender to disclose for you; the broker is the responsible party under California law.
Pros and Cons of Completing RE 4053 In-House vs. With a Compliance Vendor
| In-House Preparation | Outsourced Compliance Vendor |
|---|---|
| Pro: Full control over timing and content. | Pro: Vendor stays current on form revisions automatically. |
| Pro: No per-file fee, lower cost on volume. | Pro: Built-in audit trail and version history. |
| Pro: Direct integration with your LOS. | Pro: Reduces broker liability through E&O-backed review. |
| Pro: Faster turnaround on rush files. | Pro: Catches checkbox and field errors before delivery. |
| Pro: Borrower questions go straight to the broker. | Pro: Provides expert testimony in DRE audits. |
| Con: Higher risk of missed revisions. | Con: Per-file fees of $25–$75 cut into margins. |
| Con: Staff training burden. | Con: Slower turnaround on same-day deliveries. |
| Con: Manual proof-of-delivery tracking. | Con: Less control over disclosure timing. |
| Con: No second set of eyes on Section II comp. | Con: Vendor data-entry errors still bind the broker. |
| Con: Audit defense falls entirely on the broker. | Con: Borrower-facing tone may feel impersonal. |
FAQs
Is RE 4053 the same as the federal Loan Estimate?
No. The Loan Estimate is the federal TRID disclosure; RE 4053 is the California-specific MLDS for non-traditional loans. Brokers must deliver both when applicable.
Do I file RE 4053 with the DRE?
No. The broker delivers the form to the borrower and retains the signed copy for three years under B&P §10148; DRE only sees it during audits.
How long do I have to deliver RE 4053?
Yes, the rule is firm: within 3 business days of receiving a completed loan application, with no extensions for weekends or holidays beyond standard business-day counting.
Do I write the borrower’s name first or last name first in the header?
Yes, write it exactly as it appears on the loan application and title; if the rest of the file uses last-name-first, match that format to avoid identity-mismatch flags.
Can I leave Section I lines blank if the fee does not apply?
No. Enter $0.00 on every non-applicable line, because DRE auditors treat blanks as undisclosed items.
Does the broker license number or the salesperson’s number go in the header?
No to the salesperson’s number. Only the broker of record’s 8-digit DRE license number belongs in the header.
Do I check the negative-amortization box if the borrower plans to make the fully amortizing payment?
Yes. The checkbox is based on the loan’s features, not the borrower’s intent or expected behavior.
Is an e-signature valid on RE 4053?
Yes, under the California UETA, provided the platform creates a tamper-evident audit trail with timestamp and IP address.
Do I need to redisclose if the rate changes by 0.125%?
Yes, any material change, including a rate move above the TRID tolerance, requires a fresh RE 4053 and a new 3-business-day waiting period.
Can I be paid by both the borrower and the lender on the same loan?
No. The federal LO Comp Rule bars dual compensation, and Section II must reflect one source only.
Does RE 4053 replace RE 882?
No. RE 882 covers traditional loans and RE 4053 covers non-traditional loans; loans with both features require both forms.
What happens if the borrower refuses to sign?
Yes, you must still deliver the form and document the refusal with a dated memo; the legal duty is delivery, not signature.
Are there any filing fees for RE 4053?
No. There is no DRE filing fee because the form is borrower-delivered, not government-filed.
Do I need to list the lender’s NMLS ID even if my brokerage is funding the loan?
Yes, list both the brokerage’s NMLS ID and the funding lender’s NMLS ID, because the SAFE Act requires identification of every entity in the loan chain.
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