Bill Text: CA SB153 | 2013-2014 | Regular Session | Introduced
Bill Title: Mortgage brokers: fiduciary duty.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2014-02-03 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB153 Detail]
Download: California-2013-SB153-Introduced.html
BILL NUMBER: SB 153 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Berryhill
JANUARY 31, 2013
An act to amend Section 2923.1 of the Civil Code, relating to
lending.
LEGISLATIVE COUNSEL'S DIGEST
SB 153, as introduced, Berryhill. Mortgage brokers: fiduciary
duty.
Existing law provides that a mortgage broker, as defined,
providing mortgage brokerage services, as defined, to a borrower is
the fiduciary of the borrower, and any violation of the broker's
fiduciary duties is a violation of the mortgage broker's licensing
law and specified civil penalty and liability provisions. Existing
law further provides that this fiduciary duty includes a requirement
that the mortgage broker place the economic interest of the borrower
ahead of his or her own economic interest.
This bill would make a technical, nonsubstantive change to these
provisions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 2923.1 of the Civil Code is amended to read:
2923.1. (a) A mortgage broker providing mortgage brokerage
services to a borrower is the fiduciary of the borrower, and
any a violation of the broker's fiduciary
duties shall be a violation of the mortgage broker's license law.
This fiduciary duty includes a requirement that the mortgage broker
place the economic interest of the borrower ahead of his or her own
economic interest. A mortgage broker who provides mortgage brokerage
services to the borrower owes this fiduciary duty to the borrower
regardless of whether the mortgage broker is acting as an agent for
any other party in connection with the residential mortgage loan
transaction.
(b) For purposes of this section, the following definitions apply:
(1) "Licensed person" means a real estate broker licensed under
the Real Estate Law (Part 1 (commencing with Section 10000) of
Division 4 of the Business and Professions Code), a finance lender or
broker licensed under the California Finance Lenders Law (Division 9
(commencing with Section 22000) of the Financial Code), a
residential mortgage lender licensed under the California Residential
Mortgage Lending Act (Division 20 (commencing with Section 50000) of
the Financial Code), a commercial or industrial bank organized under
the Banking Law Financial Institutions Law
(Division 1 (commencing with Section 99) of the Financial
Code), a savings association organized under the Savings Association
Law (Division 2 (commencing with Section 5000) of the Financial
Code), and a credit union organized under the California Credit Union
Law (Division 5 (commencing with Section 14000) of the Financial
Code).
(2) "Mortgage broker" means a licensed person who provides
mortgage brokerage services. For purposes of this section, a licensed
person who makes a residential mortgage loan is a "mortgage broker,"
and subject to the requirements of this section applicable to
mortgage brokers, only with respect to transactions in which the
licensed person provides mortgage brokerage services.
(3) "Mortgage brokerage services" means arranging or attempting to
arrange, as exclusive agent for the borrower or as dual agent for
the borrower and lender, for compensation or in expectation of
compensation, paid directly or indirectly, a residential mortgage
loan made by an unaffiliated third party.
(4) "Residential mortgage loan" means a consumer credit
transaction that is secured by residential real property that is
improved by four or fewer residential units.
(c) The duties set forth in this section shall not be construed to
limit or narrow any other fiduciary duty of a mortgage broker.
