Bill Text: CA AB1091 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Finance and mortgage lenders.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-09-06 - Chaptered by Secretary of State - Chapter 243, Statutes of 2013. [AB1091 Detail]

Download: California-2013-AB1091-Amended.html

---

BILL NUMBER: AB 1091	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 6, 2013
	AMENDED IN ASSEMBLY  APRIL 18, 2013

INTRODUCED BY   Assembly Member Skinner

                        FEBRUARY 22, 2013

   An act to amend Section 22050 of, and to add Sections 22173,
22707.5, 22709.5, and 50501.5 to, the Financial Code, relating to
lending.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1091, as amended, Skinner. Finance and mortgage lenders.
   Existing law, the California Finance Lenders Law, provides for the
licensure and regulation of finance lenders and brokers. Existing
law, the California Residential Mortgage Lending Act, provides for
the regulation and licensure of residential mortgage lenders,
servicers, and originators. Existing law makes the Commissioner of
Corporations responsible for administering the law and act until July
1, 2013, and thereafter the Deputy Commissioner of Business
Oversight for the Division of Corporations will be responsible,
pursuant to the Governor's Reorganization Plan No. 2 of 2012. A
willful violation of the law or act is a crime.
   Existing law exempts, among others, California business and
industrial development corporations, licensed pawnbrokers, and
persons making no more than one commercial loan in a 12-month period
from the California Finance Lenders Law.
   This bill would exempt from the California Finance Lenders Law
California business and industrial development corporations when
acting under federal law or other state authority, licensed
pawnbrokers when acting under the authority of that license, and
persons making no more than 5 commercial loans in a 12-month period
as long as the loans are incidental to the business of the person
relying on the exemption. The bill would, among other things,
prohibit a finance lender or broker from knowingly misrepresenting
any material information regarding a transaction and committing any
act that constitutes fraud or dishonest dealings. By expanding the
definition of a crime, the bill would impose a state-mandated local
program.
   Upon inspection, examination, or investigation, if the
commissioner has cause to believe that a licensee under the
California Finance Lenders Law or the California Residential Mortgage
Lending Act is violating  or has violated  the respective
law applicable to the licensee, or that any other person is violating
those laws, the bill would authorize the commissioner  or his or
her designee  to issue a  written  citation to the
licensee or person that may contain an order to  desist and
refrain   correct the violation or violations  and
an assessment of an administrative  penalty  
fine  not to exceed $2,500  per violation  .
The bill would require the commissioner, if the commissioner after
investigation has reasonable grounds to believe that a finance lender
or broker is conducting business in an unsafe or injurious manner,
to issue a written order directing the discontinuance of the unsafe
or injurious practice.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 22050 of the Financial Code is amended to read:

   22050.  (a) This division does not apply to any person doing
business under any law of any state or of the United States relating
to banks, trust companies, savings and loan associations, insurance
premium finance agencies, credit unions, small business investment
companies, community advantage lenders, California business and
industrial development corporations when acting under federal law or
other state authority, or licensed pawnbrokers when acting under the
authority of that license.
   "Community advantage lender" means an entity authorized by the
United States Small Business Administration to deliver community
advantage loans.
   (b) This division does not apply to a check casher who holds a
valid permit issued pursuant to Section 1789.37 of the Civil Code
when acting under the authority of that permit, and shall not apply
to a person holding a valid license issued pursuant to Section 23005
of the Financial Code when acting under the authority of that
license.
   (c) This division does not apply to a college or university making
a loan for the purpose of permitting a person to pursue a program or
course of study leading to a degree or certificate.
   (d) This division does not apply to a broker-dealer acting
pursuant to a certificate then in effect and issued pursuant to
Section 25211 of the Corporations Code.
   (e) This division does not apply to any person who makes no more
than five loans in a 12-month period, these loans are commercial
loans as defined in Section 22502, and the loans are incidental to
the business of the person relying upon the exemption.
   (f) This division does not apply to any public corporation as
defined in Section 67510 of the Government Code, any public entity
other than the state as defined in Section 811.2 of the Government
Code, or any agency of any one or more of the foregoing, when making
any loan so long as the public corporation, public entity, or agency
of any one or more of the foregoing complies with all applicable
federal and state laws and regulations.
  SEC. 2.  Section 22173 is added to the Financial Code, to read:
   22173.  A licensee shall not do any of the following:
   (a) Commit an act in violation of Section 1695.13 of the Civil
Code.
   (b) Engage in any acts in violation of Section 17200 or 17500 of
the Business and Professions Code.
   (c) Knowingly misrepresent, circumvent, or conceal, through
subterfuge or device, any material aspect or information regarding a
transaction to which the licensee is a party.
   (d) Commit an act that constitutes fraud or dishonest dealings.
  SEC. 3.  Section 22707.5 is added to the Financial Code, to read:
   22707.5.  (a) If, upon inspection, examination, or investigation,
the commissioner has cause to believe that a licensee or  other
 person is violating any provision of this division or any rule
or order thereunder, the commissioner  or his or her designee,
 may issue a citation to the licensee or person in writing,
describing with particularity the basis of the citation. Each
citation may contain an order to  desist and refrain and an
assessment of an administrative penalty   correct the
violation or violations identified and provide a reasonable time
period or periods by which the violation or violations must be
corrected. In addition, each citation may assess an administrative
fine  not to exceed two thousand five hundred dollars ($2,500)
 per violation. All penalties collected under this section
  that  shall be deposited in the State
Corporations Fund.  In assessing a fine, the commissioner shall
give due consideration to the appropriateness of the amount of the
fine with respect to factors including the gravity of the violation,
the good faith of the person or licensees cited, and the history of
previous violations. A citation issued or a   fine assessed
pursuant to this section, while constituting punishment for a
violation of law, shall be in lieu of other administrative discipline
by the commissioner for the offense or offenses cited, and the
citation and fine payment thereof by a licensee shall not be reported
as disciplinary action taken by the commissioner. 
   (b)  The   Notwithstanding subdivision (a),
nothing in this section shall prevent the commissioner from issuing
an order to desist and refrain from engaging in a specific business
or activity or activities, or an order to suspend all business
operations to a person or licensee who is engaged in or who has
engaged in continued or repeated violations of this division. In any
of these circumstances, the  sanctions authorized under this
section shall be separate from, and in addition to, all other
administrative, civil, or criminal remedies.
   (c) If, within 30 days from the receipt of the citation, the
licensee or person cited fails to notify the department that he or
she intends to request a hearing as described in subdivision (d), the
citation shall be deemed final.
   (d) Any hearing under this section shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code.
   (e) After the exhaustion of the review procedures provided for in
this section, the commissioner may apply to the appropriate superior
court for a judgment in the amount of the administrative penalty and
an order compelling the cited licensee or person to comply with the
order of the commissioner. The application, which shall include a
certified copy of the final order of the commissioner, shall
constitute a sufficient showing to warrant the issuance of the
judgment and order.
  SEC. 4.  Section 22709.5 is added to the Financial Code, to read:
   22709.5.  If, after investigation, the commissioner has reasonable
grounds to believe that any licensee is conducting business in an
unsafe or injurious manner, the commissioner shall, by written order
addressed to the licensee, direct the discontinuance of the unsafe or
injurious practices. The order shall be effective immediately, but
shall not become final except in accordance with the provisions of
Section 22717.
  SEC. 5.  Section 50501.5 is added to the Financial Code, to read:
   50501.5.  (a) If, upon inspection, examination, or investigation,
the  department   commissioner  has cause
to believe that a licensee or person is violating  or has
violated  any provision of this division or any rule or order
thereunder, the commissioner  or his or her designee  may
issue a citation to that  licensee or  person in writing,
describing with particularity the basis of the citation. Each
citation may contain an order to  desist and refrain and an
assessment of an administrative penalty   correct the
violation or violations identified and provide a reasonable time
period or periods by which the violation or violations must be
corrected. In addition, each citation may assess an administrative
fine  not to exceed two thousand five hundred dollars ($2,500)
 per violation. All penalties collected under this section
  that  shall be deposited in the State
Corporations Fund.  In assessing a fine, the commissioner shall
give due consideration to the appropriateness of the amount of the
fine with respect to factors including the gravity of the violation,
the good faith of the person or licensees cited, and the history of
previous violations. A citation issued and a   fine assessed
pursuant to this section, while constituting punishment for a
violation of law, shall be in lieu of other administrative discipline
by the commissioner for the offense or offenses cited, and the
citation and fine payment thereof by a licensee shall not be reported
as disciplinary action taken by the commissioner. 
   (b)  The   Notwithstanding subdivision (a),
nothing in this section shall prevent the commissioner from issuing
an order to desist and refrain from engaging in a specific business
or activity or activities, or an order to suspend all business
operations to a person or licensee who is engaged in or who has
engaged in continued or repeated violations of this division. In any
of these circumstan   ces, the  sanctions authorized
under this section shall be separate from, and in addition to, all
other administrative, civil, or criminal remedies.
   (c) If, within 30 days from the receipt of the citation, the
person cited fails to notify the department that the person intends
to request a hearing as described in subdivision (d), the citation
shall be deemed final.
   (d) Any hearing under this section shall be conducted in
accordance with Chapter 5 (commencing with Section 11500) of Part 1
of Division 3 of Title 2 of the Government Code.
   (e) After the exhaustion of the review procedures provided for in
this section, the commissioner may apply to the appropriate superior
court for a judgment in the amount of the administrative penalty and
an order compelling the cited person to comply with the order of the
commissioner. The application, which shall include a certified copy
of the final order of the commissioner, shall constitute a sufficient
showing to warrant the issuance of the judgment and order.
  SEC. 6.   No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.