Bill Text: CA SB297 | 2017-2018 | Regular Session | Amended
Bill Title: California Finance Lenders Law: regulation of lead generators.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2018-02-01 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB297 Detail]
Download: California-2017-SB297-Amended.html
Amended
IN
Senate
April 17, 2017 |
Amended
IN
Senate
March 27, 2017 |
Senate Bill | No. 297 |
Introduced by Senator Dodd (Principal coauthor: Assembly Member Dababneh) |
February 13, 2017 |
LEGISLATIVE COUNSEL'S DIGEST
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.
(a) It is the intent of the Legislature to amend the California Finance Lenders Law to recognize the existence of, and to regulate, persons whose function is limited to bringing parties to a loan transaction together so that those parties may negotiate their own loan contract, and to distinguish the acts of these persons from the acts of loan brokers. The term “lead generator,” as used in this act, is intended to carry the same meaning as the term “finder,” as used in Tyrone v. Kelley (1973) 9 Cal.3d 1, and other related court opinions.SECTION 1.SEC. 2.
Section 22009.5 is added to the Financial Code, to read:22009.5.
“Finance broker” means any person who brings a prospective borrower and a finance lender together, and who is engaged in the business of performing one or both of the following(1)
(2)Advising a prospective borrower as to any loan term. Providing financial education or information of a general nature to a prospective borrower shall not be considered advising.
SEC. 2.SEC. 3.
Section 22010.5 is added to the Financial Code, to read:22010.5.
(d)Delivering disclosures to borrowers or prospective borrowers that are required pursuant to this division.
(e)Providing written factual information about loan terms, conditions, or qualification requirements to a prospective borrower that has been either prepared by a finance lender or reviewed and approved in writing by that lender. A finder may discuss that information with a prospective borrower in general terms, but may not
engage in brokerage activity without being licensed as a finance broker, as defined in Section 22009.5.
(f)Notifying a prospective borrower of the information needed to complete an application for a loan subject to this division, without providing counseling or advice to a prospective borrower.
(g)Contacting a finance lender on behalf of a prospective borrower to determine the status of a prospective borrower’s loan application.
(h)Communicating a response that is returned by a finance lender’s automated underwriting system to a borrower or a prospective borrower.
(i)Obtaining a borrower’s signature on documents prepared by a
finance lender and delivering final copies of the documents to the borrower.
SEC. 3.SEC. 4.
Section 22010.6 is added to the Financial Code, to read:22010.6.
The following shall not be deemed to be finance brokers orSEC. 5.
Section 22107 of the Financial Code is amended to read:22107.
(a) Each finance lender and broker licensee shall pay to the commissioner its pro rata share of all costs and expenses, including the costs and expenses associated with the licensing of mortgage loan originators it employs, reasonably incurred in the administration of this division, as estimated by the commissioner, for the ensuing year and any deficit actually incurred or anticipated in the administration of the program in the year in which the assessment is made. The pro rata share shall be the proportion that a licensee’s gross income bears to the aggregate gross income of all licensees as shown by the annual financial reports to the commissioner, for the costs and expenses remaining after the amount assessed pursuant to subdivision(b)
(c)
(d)
(e)
(f)
SEC. 6.
Section 22112 of the Financial Code is amended to read:22112.
(a)SEC. 4.SEC. 7.
Section 22113 is added to the Financial Code, to read:22113.
(a) No person may engage in the business of aSEC. 5.SEC. 8.
Section 22114 is added to the Financial Code, to read:22114.
(a) Upon reasonable notice and opportunity to be heard, the commissioner may deny an application for a registration as aSEC. 6.SEC. 9.
Section 22152 of the Financial Code is amended to read:22152.
(a) A finance lender or broker licensee shall maintain only one place of business under a duplicate or original license issued pursuant to Section 22101 or 22102. The commissioner may issue more than one license to the same licensee upon compliance with all the provisions of this division governing an original issuance of a license.SEC. 7.SEC. 10.
Section 22157 of the Financial Code is amended to read:22157.
(a) Finance lender, broker, and mortgage loan originator licensees shall preserve their books, accounts, and records, including cards used in the card system, if any, for at least three years after making the final entry on any loan recorded therein.SEC. 11.
Section 22159 of the Financial Code is amended to read:22159.
(a) Each finance lender and broker licensee and each lead generator registrant shall file an annual report with the commissioner, on or before the 15th day of March, giving the relevant information that the commissioner reasonably requires concerning the business and operations conducted by the licensee or registrant within the state during the preceding calendar year for each licensed place of business. The individual annual reports filed pursuant to this section shall be made available to the public for inspection except, upon request in the annual report to the commissioner, the balance sheet contained in the annual report of a sole proprietor or any other nonpublicly traded persons. “Nonpublicly traded person” for purposes of this section means persons with securities owned by 35 or fewer individuals. The report shall be made under oath and in the form prescribed by the commissioner.SEC. 8.SEC. 12.
Section 22161 of the Financial Code is amended to read:22161.
No person subject to this division shall do any of the following:SEC. 9.SEC. 13.
Section 22168 of the Financial Code is amended to read:22168.
(a) The commissioner may, after appropriate notice and opportunity for hearing, suspend for a period not to exceed 12 months or bar a person from any position of employment with a licensee or a registeredSEC. 10.SEC. 14.
Section 22169 of the Financial Code is amended to read:22169.
(a) The commissioner may, after appropriate notice and opportunity for hearing, by order, censure or suspend for a period not exceeding 12 months, or bar from any position of employment, management, or control any finance lender, broker, mortgage loan originator,SEC. 11.SEC. 15.
Section 22173 is added to the Financial Code, to read:22173.
A licensee may compensate a registered(c)Each licensee shall exercise oversight over each of its finder’s compliance with the provisions of this division and shall maintain the records documenting its oversight efforts. A
SEC. 16.
Section 22173.5 is added to the Financial Code, to read:22173.5.
(a) Each licensee that uses the services of a lead generator shall develop and implement policies and procedures reasonably intended to do all of the following:SEC. 12.SEC. 17.
Section 22174 is added to the Financial Code, to read:22174.
(a)(b)
(c)
SEC. 13.SEC. 18.
Section 22175 is added to the Financial Code, to read:22175.
(a) A(b)Nonpublic personal financial information collected from a borrower by a finder in connection with a loan request or application may not be disclosed to or used by any third party,
unless authorized by the borrower electronically or in writing, or unless required or permitted by applicable law.
SEC. 14.SEC. 19.
Section 22176 is added to the Financial Code, to read:22176.
A(d)
(e)