Bill Text: CA AB642 | 2019-2020 | Regular Session | Amended
Bill Title: California Financing Law.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2019-07-11 - From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on B. & F.I. [AB642 Detail]
Download: California-2019-AB642-Amended.html
Amended
IN
Senate
July 11, 2019 |
Amended
IN
Senate
June 17, 2019 |
Amended
IN
Assembly
April 30, 2019 |
Introduced by Assembly Member Limón |
February 15, 2019 |
LEGISLATIVE COUNSEL'S DIGEST
(2)Existing law exempts specified entities from the CFL. Under existing federal law, a federally recognized Indian tribe is immune from suit on the basis of tribal sovereign immunity, and the California Supreme Court held in People ex rel. Owen v. Miami Nation Enterprises (2016) 2 Cal.5th 222 that tribal sovereign immunity can extend to an entity that is acting as an arm of the tribe provided the entity meets 5 factors articulated in that case.
The bill would state that the provisions of the CFL should not be interpreted to alter federal and state law governing tribal sovereign immunity.
(3)
(4)
(5)
(6)The CFL authorizes the commissioner to examine specified records of every person engaged in the business of a finance lender, broker, or, beginning on January 1, 2019, program administrator, for the purpose of discovering violations
of the CFL or securing information otherwise required in the administration and enforcement of this division.
This bill would require the commissioner to examine the affairs of each finance lender licensee for compliance at least once every 48 months. The bill would authorize the commissioner to conduct the examination under oath. By expanding the crime of perjury, this bill would impose a state-mandated local program. The bill would require the commissioner to provide a written statement of the findings of the examination, to issue a copy of that statement to the licensee’s principals, officers, or directors, and to take appropriate steps to ensure correction of any violations.
(7)
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 22004 of the Financial Code is amended to read:22004.
(a) “Broker” includes any person who is engaged in the business of performing any of the following acts in connection with loans made by a finance lender, unless that person is otherwise exempt from this division pursuant to(A)Provides the prospective borrower a clear and conspicuous written statement that discloses that the licensee either may be compensated by the finance lender for transmitting the confidential data, or, if applicable, will be compensated by the finance lender if the transmittal results in a funded loan. The form of the statement shall comply with paragraph (1) of subdivision (c) of Section 22337.5.
(B)After providing the statement required under subparagraph (A), obtains the prospective borrower’s acknowledgment of receipt of the statement and express consent to transmit the confidential data.
(A)Provides the prospective borrower a clear and conspicuous written statement that discloses that the licensee either may be compensated by the finance lender for making the referral, or, if applicable, will be compensated by the finance lender if the referral results in a funded loan. The form of the statement shall comply with paragraph (1) of subdivision (c) of Section 22337.5.
(B)After providing the statement required by subparagraph (A), obtains the prospective borrower’s acknowledgment of receipt of the statement and express consent to make the referral.
(b)A person shall not be deemed a broker if both of the following are met:
(1)The person distributes or otherwise disseminates to a prospective borrower a finance lender’s marketing materials or factual information about the finance lender, its lending activities, or its loan products, such as the finance lender’s interest rates, minimum or maximum loan amounts or loan periods, or a general description of the finance lender’s underwriting criteria.
(2)The person does not perform any of the acts specified in subdivision (a).
(c)This section shall not apply to a person who performs
any of the acts described in subdivision (a) five or fewer times in a calendar year.
(d)
SEC. 2.
Section 22005.2 is added to the Financial Code, to read:22005.2.
(a) For purposes of this division, “confidential data” means any of the following:SEC. 3.
Section 22005.5 is added to the Financial Code, to read:22005.5.
For purposes of this division, “express consent” means an affirmative action taken by a person to authorize one or more specific acts by others in connection with that person’s confidential data. Express consent may be written, electronic, or oral but cannot be implied or inferred.SEC. 4.
Section 22010.5 is added to the Financial Code, to read:22010.5.
“Referral” means the introduction of a prospective borrower to a finance lender or the delivery of a prospective borrower’s contact information to a finance lender for the purposes of making an introduction.Nothing in this division shall be interpreted to alter federal and state law governing tribal sovereign immunity.
SEC. 6.SEC. 5.
Section 22059 of the Financial Code is amended to read:22059.
(a) A license to act as a broker under this division does not authorize the licensee to negotiate or perform any act as a broker in connection with loans made or to be made by a lender not licensed as a finance lender under this division.SEC. 7.SEC. 6.
Section 22100 of the Financial Code is amended to read:22100.
(a) A person shall not engage in the business of a finance lender or broker without obtaining a license from the commissioner.SEC. 8.SEC. 7.
Section 22337 of the Financial Code is amended to read:22337.
Each licensed finance lender shall:SEC. 9.SEC. 8.
Section 22337.5 is added to the Financial Code, to read:22337.5.
(a) Before making a loan to a prospective borrower who was referred by a licensed broker through an act described in paragraph (1) or (2) of subdivision (a) of Section 22004, and before the prospective borrower is obligated on the loan, the licensed finance lender shall provide to the prospective borrower a statement in a clear and conspicuous manner that provides all of the following:(2)
SEC. 10.SEC. 9.
Section 22338 of the Financial Code is amended to read:22338.
In connection with any of the acts described in paragraphs (3) to (7), inclusive, of subdivision (a) of Section 22004, each licensed broker shall:SEC. 11.SEC. 10.
Section 22338.5 is added to the Financial Code, to read:22338.5.
(a) Before performing an act described in paragraph (1) or (2) of subdivision (a) of Section 22004, a licensed broker shall do the following:(C)
(D)
(E)
(F)
(2)
SEC. 12.SEC. 11.
Section 22348 is added to the Financial Code, to read:22348.
(a) A licensed broker who compensates unlicensed persons for referrals that would have required the unlicensed person to obtain a license under paragraph (1) or (2) of subdivision (a) of Section 22004 had those referrals been made to a licensed finance lender shall develop, maintain, and implement policies and procedures intended to:(B)An explanation of how the unlicensed person engages in the process described in subparagraph (A).
(C)
SEC. 13.SEC. 12.
Section 22602 of the Financial Code is amended to read:22602.
(a) Notwithstanding subdivision (c) of Section 22100, a licensed finance lender may pay compensation to a person that is not licensed pursuant to this division in connection with a referral, as described in paragraphs (1) and (2) of subdivision (a) of Section 22004, of one or more prospective borrowers to the licensee only if all of the following conditions are met:SEC. 14.SEC. 13.
Section 22604 of the Financial Code is amended to read:22604.
(a) Any person that receives compensation pursuant to subdivision (a) or (e) of Section 22602 shall not do any of the following:(a)(1)The commissioner shall, at least once every 48 months, and as often as the commissioner deems necessary and appropriate, examine the affairs of each finance lender, broker, or program administrator licensee for compliance with this division. The commissioner may, as often as the commissioner deems necessary and appropriate, examine the books, accounts, records, and files used in the business of every person engaged in the business of a finance lender, broker, or program administrator, whether the person acts or claims to act as principal or agent, or under or without the authority of this division in order to discover violations of this division or to secure information required in order to enforce the division. The
commissioner shall appoint suitable persons to perform the examination. For the purpose of examination, the commissioner and the commissioner’s representatives shall have free access to the offices and places of business, books, accounts, papers, records, documents, files, safes, and vaults of all these persons, and may examine the officers, directors, and employees of the person being examined, under oath, regarding the person’s operations.
(2)In conducting the examination described in paragraph (1), the commissioner may cooperate with any agency of the state or federal government. The commissioner may accept an examination conducted by a state or federal agency in place of the mandatory 48-month examination required by paragraph (1), unless the commissioner determines that the examination conducted by the state or federal agency
does not provide information necessary to enable the commissioner to fulfill responsibilities under this division.
(b)After conducting an examination described in subdivision (a), the commissioner shall do all the following:
(1)Prepare a written statement of the findings of the examination.
(2)Issue a copy of that statement to each licensee’s principals, officers, or directors.
(3)Take appropriate steps to ensure correction of any violations of this division.
(c)The commissioner may subject an affiliate of a licensee to examination on the same terms as the licensee, but only when reports
from, or examination of, a licensee provides documented evidence of unlawful activity between a licensee and the affiliate benefiting or affecting the licensee or the affiliate or arising from the activities regulated by this division.
(d)This section shall become operative on January 1, 2019.