Bill Text: CA SB1280 | 2013-2014 | Regular Session | Amended

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Bill Title: Department of Business Oversight: unsecured consumer loans.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2014-04-29 - Set, first hearing. Hearing canceled at the request of author. [SB1280 Detail]

Download: California-2013-SB1280-Amended.html

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BILL NUMBER: SB 1280	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 22, 2014

INTRODUCED BY   Senator Hueso

                        FEBRUARY 21, 2014

   An act to add Article 3.8 (commencing with Section 22390) to
Chapter 2 of Division 9 of the Financial Code, relating to finance
lenders.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1280, as amended, Hueso. Department of Business Oversight:
unsecured consumer loans.
   Existing law, the California Finance Lenders Law, provides for the
licensure and regulation of finance lenders and brokers by the
Commissioner of Business Oversight and makes a willful violation of
its provisions a crime. Existing law regulates the terms and
conditions under which a lender may make consumer loans. Under
existing law, "consumer loan" means a loan, whether secured by either
real or personal property, or both, or unsecured, the proceeds of
which are intended by the borrower for use primarily for personal,
family, or household purposes.
   Existing law, until January 1, 2018, establishes the Pilot Program
for Increased Access to Responsible Small Dollar Loans for the
purpose of allowing greater access for responsible installment loans
in principal amounts of at least $300 and less than $2,500.
   This bill would require the Department of Business Oversight to
establish  , by regulation,  a licensure program for the
provision of unsecured consumer loans  in an amount up to
$1,000, as specified  .  In developing this program, the
bill would authorize the department to consider certain factors, as
specified. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 3.8 (commencing with Section 22390) is added to
Chapter 2 of Division 9 of the Financial Code, to read:

      Article 3.8.  Unsecured Consumer Loans


   22390.  (a) The Department of Business Oversight shall establish
 , by regulation,  a licensure program for the provision of
unsecured consumer loans in accordance with this article. 
   (b) The principal amount of a loan made under this article shall
not exceed one thousand dollars ($1,000).  
   (c) The program established under this article shall be designed
to ensure that the loan product allows the licensee to receive a
reasonable return on its investment, taking into account the needs of
the consumer.  
   (b) In developing this program, the department may consider all of
the following, at a minimum:  
   (1) The minimum and maximum principal amount of loans that may be
extended by lenders approved as licensees under the program. 

   (2) The minimum and maximum length of program loans.  
   (3) The interest rates and fees that lenders should be allowed to
charge, and the extent to which these rates and fees:  
   (A) Are fair and reasonable to borrowers given state and federal
consumer protection guidance and the rates and fees associated with
other lending alternatives for which these borrowers may be eligible.
 
   (B) Provide lenders with the opportunity for a reasonable rate of
return on their investment given lenders' cost of funds, the risk
profiles of these loans, and the returns on investment common to
licensed nondepository lenders that offer unsecured installment loan
products in states other than California.  
   (4) Whether program loans should be underwritten, and, if so, the
underwriting criteria that should be applied.  
   (5) Whether borrower repayment history should be reported to a
consumer reporting agency that compiles and maintains files on
consumers on a nationwide basis.  
   (6) Whether licensees should be required to offer credit education
approved by the department to borrowers who seek out program loans.
 
   (7) What disclosures should be provided to borrowers at the time a
loan application is submitted.  
   (8) Whether lenders that offer program loans should be able to
offer other loans or insurance products concurrent with a program
loan.  
   (9) Whether, and under what circumstances, past-due loans may be
referred to independent third parties for collection.  
   (10) Whether, and under what circumstances, lenders that offer
program loans may use unlicensed persons to aid in identifying
borrowers who may be eligible for program loans. 
   (11) The frequency with which licensees should be examined, and
the manner in which the costs of these examinations should be
allocated.  
   (12) The nature of reporting that will be required of program
licensees and of the department regarding lender and borrower
performance under the program.  
   (13) Whether the lending program should replace existing
California Finance Lenders Law rules for installment loans of similar
amounts or be offered as an alternative to the existing California
Finance Lenders Law.  
   (14) How the success of the lending program will be measured.