Bill Text: CA SB204 | 2009-2010 | Regular Session | Amended

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

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Bill Title: Financial transactions: escrow agents: exchange

Spectrum: Partisan Bill (Republican 4-0)

Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 568, Statutes of 2009. [SB204 Detail]

Download: California-2009-SB204-Amended.html

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BILL NUMBER: SB 204	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 13, 2009

INTRODUCED BY   Senators Benoit  , Huff,  and Runner
    (   Coauthor:   Assembly Member  
Hagman   ) 

                        FEBRUARY 23, 2009

    An act to amend Sections 17202.1, 17207, 17209, 17323,
and 17405 of, and to repeal Section 17210 of, the Financial Code,
relating to escrow agents.   An act to amend Sections
17405, 17600, 50123, and 50124 of, and to amend and repeal Section
17207 of, the Financial Code, relating to financial transactions.




	LEGISLATIVE COUNSEL'S DIGEST


   SB 204, as amended, Benoit.  Escrow agents.  
Financial transactions: regulation. 
   Existing law provides for the licensing and regulation of escrow
agents by the Commissioner of Corporations. Existing law, until
January 1, 2010, requires each escrow agent to pay an annual license
fee of up to $2,800 for each office or location and authorizes the
commissioner to additionally levy a special assessment  , which
is required to be paid by the escrow agent within 30 days of receipt
of notification by the commissioner,  for each office or
location in certain circumstances. Commencing January 1, 2010,
existing law instead requires each escrow agent to pay to the
commissioner the agent's pro rata share of the commissioner's annual
administrative costs and expenses, as specified. 
   This bill would delay the change in these fee requirements to
January 1, 2016, and would, until that date, lower the maximum amount
of the annual license fee to $2,500 for each office or location.
 
   Existing law requires that escrow agents maintain a specified
tangible net worth, including certain liquid assets. 

   This bill would eliminate that requirement, and make related
changes.  
   This bill would repeal the provisions that would require an escrow
agent, commencing January 1, 2010, to pay to the commissioner the
agent's pro rata share of the commissioner's annual administrative
costs and expenses. The bill would, instead, continue the requirement
for an escrow agent to pay an annual license fee of up to $2,800 for
each office or location. The bill would authorize the special
assessment that may be levied by the commissioner to be in an amount
of up to $1,000. The bill would require an escrow agent to pay the
special assessment within 60 days of notification by the
commissioner. The bill would require the commissioner to submit a
budget and program justification and information to the Escrow Law
Advisory Committee prior to providing notice of a special assessment
to escrow agents. 
   Existing law  requires the commissioner to examine an
escrow agent as often as the commissioner deems necessary, based on
factors designated by the commissioner by rule or order, but not less
than every 48 months. Existing law also  authorizes the
commissioner to conduct examinations, as specified, of a new licensee
within one year and within 2 years of the issuance of a license.
   This bill would  authorize the commissioner to examine an
escrow agent only for cause and would  require the
commissioner to conduct the examinations, as specified, of new
licensees  or upon change of ownership  . 
   Existing law provides that the license of an escrow agent remains
in effect until surrendered, revoked, or suspended. Existing law sets
forth the procedure for the surrender of the license of an escrow
agent, and requires a surrendering licensee to, among other things,
notify the commissioner in writing of surrender, tender his or her
license and all other indicia of licensure to the commissioner, and,
within 105 days of the written notification, submit a closing audit
to the commissioner, as specified. Existing law provides that a
license is not surrendered until the commissioner has reviewed and
accepted the closing audit, made a determination that there is no
violation of law, and, in writing, accepted tender of the license.
 
   This bill would delete the requirement that the commissioner make
a determination that there is no violation of law, and instead
require a determination that acceptance of a surrender is in the
public interest.  
   Existing law, the California Residential Mortgage Lending Act,
provides for the licensure and regulation of residential mortgage
lenders and servicers by the Commissioner of Corporations. Existing
law provides that the license of a residential mortgage lender or
servicer remains in effect until surrendered, revoked, or suspended.
Existing law sets forth the procedure for the surrender of the
license of a residential mortgage lender or servicer, and requires a
surrendering licensee to, among other things, notify the commissioner
in writing of surrender, tender his or her license and all other
indicia of licensure to the commissioner, and file a plan for the
withdrawal from regulated business that includes a timetable for the
disposition of business and a closing audit, review, or, if agreed
upon, a procedure performed by an independent certified public
accountant as prescribed by rule or order of the commissioner.
Existing law provides that a license is not surrendered until the
commissioner has, in writing, accepted tender after review, made a
finding on the withdrawal plan, and made a determination that there
is no violation of law.  
   This bill would delete the provision that allows the licensee's
withdrawal plan to include an agreed upon procedure performed by an
independent certified public accountant, and instead provide that the
withdrawal plan include any other document prescribed by rule or
order of the commissioner, including a document that demonstrates
that all custodial fund accounts have been properly transferred and
closed. The bill would also delete the requirement that the
commissioner make a determination that there is no violation of law,
and instead require a determination that acceptance of a surrender is
in the public interest.  
   Existing law, the California Residential Mortgage Lending Act,
requires an application for licensure to be accompanied by an exhibit
containing statements that the applicant agrees to take specified
actions, including, but not limited to, agreeing to notify the
commissioner, in writing, by certified mail, return receipt
requested, prior to opening a branch office in this state or changing
the business location or locations of the applicant, as specified.
 
   This bill would require the application for licensure to include a
statement that the applicant agrees to notify the commissioner prior
to the closing of a business location. 
   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.    Section 17207 of the  
Financial Code   , as amended by Section 1 of Chapter 257 of
the Statutes of 2005, is amended to read: 
   17207.  The commissioner shall charge and collect the following
fees and assessments:
   (a) For filing an application for an escrow agent's license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.
   (b) For filing an application for a duplicate of an escrow agent's
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).
   (c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).
   (d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in each
particular instance.
   (e) (1) Each escrow agent shall pay to the commissioner for the
support of this division for the ensuing year an annual license fee
not to exceed two thousand eight hundred dollars ($2,800) for each
office or location.
   (2) On or before May 30 in each year, the commissioner shall
notify each escrow agent by mail of the amount of the annual license
fee levied against it, and that the payment of the invoice is payable
by the escrow agent within 30 days after receipt of notification by
the commissioner.
   (3) If payment is not made within 30 days, the commissioner may
assess and collect a penalty, in addition to the annual license fee,
of 10 percent of the fee for each month or part of a month that the
payment is delayed or withheld.
   (4) If an escrow agent fails to pay the amount due on or before
the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to the company.
   (5) If, after an order is made pursuant to paragraph (4), a
request for a hearing is filed in writing and a hearing is not held
within 60 days thereafter, the order is deemed rescinded as of its
effective date. During any period when its certificate is revoked or
suspended, a company shall not conduct business pursuant to this
division, except as may be permitted by order of the commissioner.
However, the revocation, suspension, or surrender of a certificate
shall not affect the powers of the commissioner as provided in this
division.
   (f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c) of
this section.
   (g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.
   (h) (1) If costs and expenses associated with the enforcement of
this division, including overhead, are or will be incurred by the
commissioner during the year for which the annual license fee is
levied, and that will or could result in the commissioner's incurring
of costs and expenses, including overhead, in excess of the costs
and expenses, including overhead, budgeted for expenditure for the
year in which the annual license fee is levied, then the commissioner
may levy a special assessment on each escrow agent for each office
or location in an amount estimated to pay for the actual costs and
expenses associated with the enforcement of this division, including
overhead, in an amount not to exceed  five hundred dollars
($500)   one thousand dollars ($1,000)  for each
office or location. The commissioner shall notify each escrow agent
by mail of the amount of the special assessment levied against it,
and that payment of the special assessment is payable by the escrow
agent within  30   60  days of receipt of
notification by the commissioner. The funds received from the special
assessment shall be deposited into the State Corporations Fund and
shall be used only for the purposes for which the special assessment
is made.
   (2) If payment is not made within  30   60
 days, the commissioner may assess and collect a penalty, in
addition to the special assessment, of 10 percent of the special
assessment for each month or part of a month that the payment is
delayed or withheld. If an escrow agent fails to pay the special
assessment on or before  30   60  days
following the day upon which payment is due, the commissioner may by
order summarily suspend or revoke the certificate issued to the
company. If an order is made under this subdivision, the provisions
of paragraph (5) of subdivision (e)  of this section
 shall apply.
   (3) If the amount collected pursuant to this subdivision exceeds
the actual costs and expenses, including overhead, incurred in the
administration and enforcement of this division and any deficit
incurred, the excess shall be credited to each escrow agent on a pro
rata basis. 
   (i) This section shall remain in effect only until January 1,
2010, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2010, deletes or extends
that date.  
   (4) Prior to notifying an escrow agent of a special assessment
under this subdivision, the commissioner shall submit, as part of a
regular meeting of the Escrow Law Advisory Committee created under
this division, any budget and program justification and information
for the current or prior budget years that would support the special
assessment. 
   SEC. 2.    Section 17207 of the   Financial
Code   , as amended by Section 2 of Chapter 257 of the
Statutes of 2005, is repealed.  
   17207.  The commissioner shall charge and collect the following
fees and assessments:
   (a) For filing an application for an escrow agent's license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.
   (b) For filing an application for a duplicate of an escrow agent's
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).
   (c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).
   (d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in each
particular instance.
   (e) (1) Each escrow agent shall pay to the commissioner its pro
rata share of all costs and expenses reasonably incurred in the
administration of this division, as estimated by the commissioner for
the ensuing year, and of any deficit actually incurred or
anticipated in the administration of this division in the year in
which the assessment is made. Commencing with the assessment for
fiscal year 2010-11, the assessment shall not increase by more than
25 percent over the amount assessed in the prior year. The pro rata
share shall be the proportion which a licensee's gross income from
escrow operations bears to the aggregate gross income from escrow
operations of all licensees as compiled by the commissioner. The pro
rata share shall not include the costs of any examinations provided
for in Section 17405.1, unless they cannot be collected from the
company examined. If the pro rata assessment collected pursuant to
this paragraph exceeds the actual costs and expenses incurred in the
administration of this division and any deficit incurred, the excess
shall be credited to each escrow agent on a pro rata basis.
   (2) On or before May 30 in each year, the commissioner shall
notify each escrow agent by mail of the amount assessed and levied
against it, and that the payment of any invoice for assessments of
the commissioner is payable by the escrow agent in three installments
with the first installment payable within 20 days after receipt of
notification by the commissioner and the second and third
installments payable within 20 days of August 31 and November 30,
respectively, in each year. The first installment payment shall be 50
percent of the amount assessed, and the second and third installment
payments shall each be 25 percent of the amount assessed.
   (A) If the first installment payment is not made within 20 days,
the commissioner may assess and collect a penalty, in addition to the
assessment, of 10 percent of the assessment for each month or part
of a month that the payment is delayed or withheld.
   (B) If the second installment payment is not made within 20 days
of August 31 in each year, the commissioner may assess and collect a
penalty, in addition to the assessment, of 10 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
   (C) If the third installment payment is not made within 20 days of
November 30 in each year, the commissioner may assess and collect a
penalty, in addition to the assessment, of 10 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
   (3) In the levying and collection of the assessment, an escrow
agent shall not be assessed for, nor be permitted to pay less than,
three hundred fifty dollars ($350) per year, per location.
   (4) (A) If an escrow agent fails to pay the first assessment on or
before the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to the company.
   (B) If an escrow agent fails to pay the second installment payment
on or before September 30 in each year, the commissioner may by
order summarily suspend or revoke the certificate issued to the
company.
   (C) If an escrow agent fails to pay the third installment payment
on or before December 31 in each year, the commissioner may by order
summarily suspend or revoke the certificate issued to the company.
   (D) If, after this order is made, a request for a hearing is filed
in writing and a hearing is not held within 60 days thereafter, the
order is deemed rescinded as of its effective date. During any period
when its certificate is revoked or suspended, a company shall not
conduct business pursuant to this division, except as may be
permitted by order of the commissioner. However, the revocation,
suspension, or surrender of a certificate shall not affect the powers
of the commissioner as provided in this division.
   (f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c) of
this section.
   (g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.
   (h) This section shall become operative January 1, 2010. 

   SEC. 3.    Section 17405 of the   Financial
Code   is amended to read: 
   17405.  (a) The business, accounts and records of every person
performing as an escrow agent, whether required to be licensed under
this division or not, are subject to inspection and examination by
the commissioner at any time without prior notice. The provisions of
this section shall not apply to persons specified in Section 17006.
   (b) Any person subject to this division shall, upon request,
exhibit and allow inspection and copying of any books and records by
the commissioner or his or her authorized representative.
   (c) (1) The commissioner shall conduct an examination of each
licensed escrow agent as described in subdivision (a) as often as the
commissioner deems necessary and appropriate, but not less than once
every 48 months.
   (2) The examination shall be conducted for the 12-month period
immediately preceding the date that the examination is commenced
unless the commissioner finds, based on information uncovered in the
examination or in the most recent independent audit report, that the
examination should be extended beyond the 12-month period.
   (3) In determining how often an examination shall be conducted,
the commissioner may consider each licensed escrow agent's compliance
with the requirements set forth in this division and other factors
the commissioner may by rule or order designate.
   (4) This subdivision shall apply only to examinations commenced
after the effective date established by the rule or order of the
commissioner for the factors described in paragraph (3).
   (d) Notwithstanding subdivision (c), the commissioner  may
  shall  conduct an indoctrination or preliminary
examination, or both, under this section of any new licensee  or
of a change of ownership  within one year of the issuance of the
license under this division, and an examination described in
subdivision (a) within two years of the issuance of the license 
or of the change of ownership  under this division.
   SEC. 4.    Section 17600 of the   Financial
Code   is amended to read: 
   17600.  (a) An escrow agent's license remains in effect until
surrendered, revoked, or suspended.
   (b) A licensee that ceases to engage in the business regulated by
this division and desires to no longer be licensed shall notify the
commissioner in writing and, at that time, tender the license and all
other indicia of licensure to the commissioner. Within 105 days of
the written notice to the commissioner, the licensee shall submit to
the commissioner, at its own expense, a closing audit report as of
the date the license is tendered to the commissioner for surrender,
or for another period as the commissioner may specify, to be
performed by an independent certified public accountant. The closing
audit shall include, but not be limited to, information required by
the commissioner, a bank reconciliation of the trust account, and a
verified statement from a certified public accountant confirming
lawful disbursement of funds. A license is not surrendered until the
commissioner has reviewed and accepted the closing audit report, a
determination has been made by the commissioner that there is
no violation of this law   acceptance of the surrender
is in the public interest  , and tender of the license is
accepted in writing by the commissioner.
   SEC. 5.    Section 50123 of the   Financial
Code   is amended to read: 
   50123.  (a) A license shall remain in effect until suspended,
surrendered, or revoked.
   (b) A licensee that ceases to engage in the business regulated by
this division and desires to no longer be licensed shall inform the
commissioner in writing and, at that time, surrender the license and
all other indicia of licensure to the commissioner. The licensee
shall file a plan for the withdrawal from regulated business, and the
plan shall include a timetable for the disposition of the business.
The plan shall also include a closing audit, review, or  any
 other  agreed upon procedures performed by an
independent certified public accountant   document 
prescribed by rule or order of the commissioner  , including,
but not limited to, any document or documents that demonstrate that
all custodial fund accounts have been properly transferred and closed
 . Upon receipt of the written notice and plan, the
commissioner shall review the plan and, if satisfactory to the
commissioner, shall accept the surrender of the license. A license is
not surrendered until its tender is accepted in writing by the
commissioner after a review, and a finding has been made on the
licensee's plan required to be filed by this section, and a
determination has been made that  there is no violation of
this law   acceptance of the surrender is in the public
interest  .
   (c) A licensee may not surrender its license under this division
and, under the authority of a real estate license, subsequently
engage in residential mortgage lending or servicing activities that
are subject to this division, unless the licensee has been licensed
under this division for a period of five years or more.
   SEC. 6.    Section 50124 of the   Financial
Code   is amended to read: 
   50124.  (a) A license application must be accompanied by an
exhibit containing statements that the applicant agrees to do the
following:
   (1) To maintain staff adequate to meet the requirements of this
division, as prescribed by rule or order of the commissioner.
   (2) To keep and maintain for 36 months from the date of final
entry the business records and other information required by law or
rules of the commissioner regarding any mortgage loan made or
serviced in the course of the conduct of its business.
   (3) To file with the commissioner any report required under law or
by rule or order of the commissioner.
   (4) To disburse funds in accordance with its agreements and to
make a good faith and reasonable effort to effect closing in a timely
manner.
   (5) To account or deliver to a person any personal property such
as money, funds, deposit, check, draft, mortgage, other document, or
thing of value, that has come into its possession and is not its
property, or that it is not in law or equity entitled to retain under
the circumstances, at the time that has been agreed upon or is
required by law, or, in the absence of a fixed time, upon demand of
the person entitled to the accounting or delivery.
   (6) To file with the commissioner an amendment to its application
prior to any material change in the information contained in the
application for licensure, including, without limitation, the plan of
operation. The commissioner shall, within 20 business days of
receiving a completed amendment to the application, or within a
longer time if agreed to by the licensee, issue an order approving or
disapproving the effectiveness of the proposed amendment.
   (7) To comply with the provisions of this division, and with any
order or rule of the commissioner.
   (8) To submit to periodic examination by the commissioner as
required by this division.
   (9) To advise the commissioner by amendment to its application of
any material judgment filed against, or bankruptcy petition filed by,
the licensee within five days of the filing.
   (10) To notify the commissioner, in writing, by certified mail,
return receipt requested, prior to opening a branch office in this
state  ,  or changing  or closing  the business
location or locations of the applicant or the branch offices of the
applicant from which activities subject to this division are
conducted.
   (b) The exhibit also shall contain a space for the applicant to
attest that the applicant:
   (1) Has complied with all applicable state and federal tax return
filing requirements for the past three years or has filed with the
commissioner an accountant's or attorney's statement as to why no
return was filed.
   (2) Has not committed a crime against the laws of any state or the
United States, involving moral turpitude, misrepresentation,
fraudulent or dishonest dealing, or fraud, and has disclosed to the
commissioner any final judgment entered against it in a civil action
upon grounds or allegations of fraud, misrepresentation, or deceit.
   (3) Has not engaged in conduct that would be cause for denial of a
license.
   (4) Is not insolvent.
   (5) Has acted with due care and competence in performing any act
for which it is required to hold a license under this division.
   (6) Any other matter as required by rule of the commissioner.

  SECTION 1.    Section 17202.1 of the Financial
Code is amended to read:
   17202.1.  An applicant for an escrow agent's license or a licensee
may, in lieu of and subject to the same conditions as the bond
required by Section 17202, deposit with the commissioner a cash bond
in the sum specified in Section 17202. Evidence of the cash bond
shall be a deposit in the amount specified in Section 17202 in a bank
or investment certificates of industrial loan companies, authorized
to do business in this state and insured by the Federal Deposit
Insurance Corporation, or an investment certificate or share account
in the amount specified in Section 17202 issued by a savings and loan
association doing business in this state and insured by the Federal
Savings and Loan Insurance Corporation. Those deposits, certificates,
or accounts shall be assigned to and accepted and maintained by the
commissioner, upon those terms as the commissioner may prescribe,
until released by the commissioner.  
  SEC. 2.    Section 17207 of the Financial Code, as
amended by Section 1 of Chapter 257 of the Statutes of 2005, is
amended to read:
   17207.  The commissioner shall charge and collect the following
fees and assessments:
   (a) For filing an application for an escrow agent's license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.
   (b) For filing an application for a duplicate of an escrow agent's
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).
   (c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).
   (d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in each
particular instance.
   (e) (1) Each escrow agent shall pay to the commissioner for the
support of this division for the ensuing year an annual license fee
not to exceed two thousand five hundred dollars ($2,500) for each
office or location.
   (2) On or before May 30 in each year, the commissioner shall
notify each escrow agent by mail of the amount of the annual license
fee levied against it, and that the payment of the invoice is payable
by the escrow agent within 30 days after receipt of notification by
the commissioner.
   (3) If payment is not made within 30 days, the commissioner may
assess and collect a penalty, in addition to the annual license fee,
of 10 percent of the fee for each month or part of a month that the
payment is delayed or withheld.
   (4) If an escrow agent fails to pay the amount due on or before
the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to the company.
   (5) If, after an order is made pursuant to paragraph (4), a
request for a hearing is filed in writing and a hearing is not held
within 60 days thereafter, the order is deemed rescinded as of its
effective date. During any period when its certificate is revoked or
suspended, a company shall not conduct business pursuant to this
division, except as may be permitted by order of the commissioner.
However, the revocation, suspension, or surrender of a certificate
shall not affect the powers of the commissioner as provided in this
division.
   (f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c) of
this section.
   (g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.
   (h) (1) If costs and expenses associated with the enforcement of
this division, including overhead, are or will be incurred by the
commissioner during the year for which the annual license fee is
levied, and that will or could result in the commissioner's incurring
of costs and expenses, including overhead, in excess of the costs
and expenses, including overhead, budgeted for expenditure for the
year in which the annual license fee is levied, then the commissioner
may levy a special assessment on each escrow agent for each office
or location in an amount estimated to pay for the actual costs and
expenses associated with the enforcement of this division, including
overhead, in an amount not to exceed five hundred dollars ($500) for
each office or location. The commissioner shall notify each escrow
agent by mail of the amount of the special assessment levied against
it, and that payment of the special assessment is payable by the
escrow agent within 30 days of receipt of notification by the
commissioner. The funds received from the special assessment shall be
deposited into the State Corporations Fund and shall be used only
for the purposes for which the special assessment is made.

(2) If payment is not made within 30 days, the commissioner may
assess and collect a penalty, in addition to the special assessment,
of 10 percent of the special assessment for each month or part of a
month that the payment is delayed or withheld. If an escrow agent
fails to pay the special assessment on or before 30 days following
the day upon which payment is due, the commissioner may by order
summarily suspend or revoke the certificate issued to the company. If
an order is made under this subdivision, the provisions of paragraph
(5) of subdivision (e) of this section shall apply.
   (3) If the amount collected pursuant to this subdivision exceeds
the actual costs and expenses, including overhead, incurred in the
administration and enforcement of this division and any deficit
incurred, the excess shall be credited to each escrow agent on a pro
rata basis.
   (i) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2010, deletes or extends
that date.  
  SEC. 3.    Section 17207 of the Financial Code, as
amended by Section 2 of Chapter 257 of the Statutes of 2005, is
amended to read:
   17207.  The commissioner shall charge and collect the following
fees and assessments:
   (a) For filing an application for an escrow agent's license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.
   (b) For filing an application for a duplicate of an escrow agent's
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).
   (c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).
   (d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in each
particular instance.
   (e) (1) Each escrow agent shall pay to the commissioner its pro
rata share of all costs and expenses reasonably incurred in the
administration of this division, as estimated by the commissioner for
the ensuing year, and of any deficit actually incurred or
anticipated in the administration of this division in the year in
which the assessment is made. Commencing with the assessment for
fiscal year 2016-17, the assessment shall not increase by more than
25 percent over the amount assessed in the prior year. The pro rata
share shall be the proportion which a licensee's gross income from
escrow operations bears to the aggregate gross income from escrow
operations of all licensees as compiled by the commissioner. The pro
rata share shall not include the costs of any examinations provided
for in Section 17405.1, unless they cannot be collected from the
company examined. If the pro rata assessment collected pursuant to
this paragraph exceeds the actual costs and expenses incurred in the
administration of this division and any deficit incurred, the excess
shall be credited to each escrow agent on a pro rata basis.
   (2) On or before May 30 in each year, the commissioner shall
notify each escrow agent by mail of the amount assessed and levied
against it, and that the payment of any invoice for assessments of
the commissioner is payable by the escrow agent in three installments
with the first installment payable within 20 days after receipt of
notification by the commissioner and the second and third
installments payable within 20 days of August 31 and November 30,
respectively, in each year. The first installment payment shall be 50
percent of the amount assessed, and the second and third installment
payments shall each be 25 percent of the amount assessed.
   (A) If the first installment payment is not made within 20 days,
the commissioner may assess and collect a penalty, in addition to the
assessment, of 10 percent of the assessment for each month or part
of a month that the payment is delayed or withheld.
   (B) If the second installment payment is not made within 20 days
of August 31 in each year, the commissioner may assess and collect a
penalty, in addition to the assessment, of 10 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
   (C) If the third installment payment is not made within 20 days of
November 30 in each year, the commissioner may assess and collect a
penalty, in addition to the assessment, of 10 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.
   (3) In the levying and collection of the assessment, an escrow
agent shall not be assessed for, nor be permitted to pay less than,
three hundred fifty dollars ($350) per year, per location.
   (4) (A) If an escrow agent fails to pay the first assessment on or
before the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the certificate
issued to the company.
   (B) If an escrow agent fails to pay the second installment payment
on or before September 30 in each year, the commissioner may by
order summarily suspend or revoke the certificate issued to the
company.
   (C) If an escrow agent fails to pay the third installment payment
on or before December 31 in each year, the commissioner may by order
summarily suspend or revoke the certificate issued to the company.
   (D) If, after this order is made, a request for a hearing is filed
in writing and a hearing is not held within 60 days thereafter, the
order is deemed rescinded as of its effective date. During any period
when its certificate is revoked or suspended, a company shall not
conduct business pursuant to this division, except as may be
permitted by order of the commissioner. However, the revocation,
suspension, or surrender of a certificate shall not affect the powers
of the commissioner as provided in this division.
   (f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c) of
this section.
   (g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.
   (h) This section shall become operative January 1, 2016. 

  SEC. 4.   Section 17209 of the Financial Code is
amended to read:
   17209.  An application for a license as an escrow agent shall be
signed and verified by an authorized officer of the applicant, and
that application shall be accompanied by a certified copy of the
articles of incorporation and a copy of the bylaws of the proposed
licensee. The application shall set forth:
   (a) The names and addresses of the incorporators, directors, and
officers.
   (b) An itemized statement of the estimated receipts and
expenditures of the proposed first year of operations.
   (c) An audited financial statement.
   (d) The name and address of the person, or persons, meeting the
requirements of Section 17200.8, and a statement supporting those
persons' qualifications.
   (e) The type of business for which the license is requested.
   (f) Any other matters the commissioner may require.
   (g) An application for a license as an escrow agent filed with the
commissioner shall also include a completed statement of identity
and questionnaire, as prescribed by the commissioner, for all
stockholders, directors, officers, trustees, managers, and other
persons participating in the escrow business directly or indirectly
compensated by the escrow agent (other than usual and customary
employees who file pursuant to subdivision (d) of Section 17414.1 and
Section 17419) and shall also include fingerprints and related
information for those persons pursuant to subdivision (h). The
commissioner shall notify the applicant in writing if any of the
information received pursuant to this division shows that a person's
employment, participation, or ownership interest would be in
violation of Section 17414.1, and the escrow agent shall deny the
person the employment or interest. If the application is not
satisfactorily amended to remove the deficiency within six months of
the first notice of deficiency, the application shall be summarily
denied. Persons required to file the employment application pursuant
to Section 17419 are not required to file the statement of identity
and questionnaire described in this section.
   (h) (1) The fingerprint images and related information shall be
submitted by the commissioner to the Department of Justice, in a
manner established by the Department of Justice, for the purposes of
obtaining information as to the existence and content of a record of
state or federal convictions, state or federal arrests, and
information as to the existence of and content of a record of state
or federal arrests for which the Department of Justice establishes
that the person is free on bail or on his or her own recognizance
pending trial or appeal.
   (2) Upon receipt, the Department of Justice shall forward to the
Federal Bureau of Investigation requests for federal summary criminal
history information received from the commissioner pursuant to this
section. The Department of Justice shall review the information
returned from the Federal Bureau of Investigation and compile and
disseminate a response to the commissioner pursuant to subdivision
(p) of Section 11105 of the Penal Code.
   (3) The commissioner shall request from the Department of Justice
subsequent arrest notification service as provided pursuant to
Section 11105.2 of the Penal Code.
   (4) The Department of Justice shall charge a fee sufficient to
cover the costs of processing the requests pursuant to this
subdivision.  
  SEC. 5.    Section 17210 of the Financial Code is
repealed.  
  SEC. 6.    Section 17323 of the Financial Code is
amended to read:
   17323.  (a) If any member fails to pay an assessment when due,
Fidelity Corporation shall by written demand addressed to the member
request the payment of the assessment within 30 days of the demand
letter. If the member fails to pay an assessment, the commissioner
may issue an order pursuant to subdivision (b).
   (b) If a member fails to pay the assessment, or any applicable
late fee, the commissioner may by order summarily suspend the license
issued to the company. If after the order is made, a request for a
hearing is filed in writing and a hearing is not held within 60 days
thereafter, the order is deemed rescinded as of its effective date.
During any period when its license is suspended, a company shall not
conduct business pursuant to this division, except as may be
permitted by order of the commissioner. However, the suspension of a
license shall not affect the powers of the commissioner as provided
in this division.
   (c) Fidelity Corporation may bring an action at law or in equity
against the member to recover any assessment or fees.
   (d) Fidelity Corporation may be awarded costs and reasonable
attorney's fees, if it prevails in any action against a member, or
against a third party, except the commissioner, to enforce a claim
against the bond or other security posted by the member pursuant to
Section 17202, or in any action against a member pursuant to
subdivision (c). Those costs and attorney's fees may be awarded as an
item of costs, as provided for in paragraph (10) of subdivision (a)
and paragraph (5) of subdivision (c) of Section 1033.5 of the Code of
Civil Procedure, provided that the payment of the costs and attorney'
s fees will not cause the member to be in violation of Section 17202
or 17202.1.  
  SEC. 7.    Section 17405 of the Financial Code is
amended to read:
   17405.  (a) The business, accounts and records of every person
performing as an escrow agent, whether required to be licensed under
this division or not, are subject to inspection and examination by
the commissioner at any time without prior notice. The provisions of
this section shall not apply to persons specified in Section 17006.
   (b) Any person subject to this division shall, upon request,
exhibit and allow inspection and copying of any books and records by
the commissioner or his or her authorized representative.
   (c) (1) The commissioner may conduct an examination of each
licensed escrow agent as described in subdivision (a) only for cause.

   (2) The examination shall be conducted for the 12-month period
immediately preceding the date that the examination is commenced
unless the commissioner finds, based on information uncovered in the
examination or in the most recent independent audit report, that the
examination should be extended beyond the 12-month period.
   (3) In determining whether an examination shall be conducted for
cause, the commissioner may consider each licensed escrow agent's
compliance with the requirements set forth in this division and other
factors the commissioner may by rule or order designate.
   (4) This subdivision shall apply only to examinations commenced
after the effective date established by the rule or order of the
commissioner for the factors described in paragraph (3).
   (d) Notwithstanding subdivision (c), the commissioner shall
conduct an indoctrination or preliminary examination, or both, under
this section of any new licensee within one year of the issuance of
the license under this division, and an examination described in
subdivision (a) within two years of the issuance of the license under
this division.