(1) The California Finance Lenders Law provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight and makes a willful violation of its provisions a crime. Existing law regulates the charges a licensee may impose or receive on loans it makes.
This bill would expand the application of that law to include finders, and would prohibit a person from engaging in business as a finder, defined to include any person who helps bring a prospective borrower and finance lender together regarding certain loan activities, without first registering with the commissioner. The bill would require the commissioner to establish timelines and fees for finder registration and renewals, and would mandate that specified minimum information be required for applicants seeking registration,
including the name, business address, and licensing details of the finder and his or her employees who are responsible for that finder’s activities, and a list of activities the finder would perform on behalf of lenders. The bill would authorize the commissioner to order the suspension or revocation of a finder’s registration upon failure to pay a required fee or assessment by the specified due date and would prohibit a finder from engaging in specific activities, including counseling or providing advice to a borrower, and would also prohibit a finder, during any period when its registration is revoked or suspended, from conducting any business unless permitted by the commissioner.
The bill would authorize a licensee to compensate a registered finder for that finder’s activities, subject to various requirements, including entering into a written agreement clearly describing the services to be performed, and complying with the applicable statutory provisions
governing those transactions. The bill would further require finders to provide specified disclosure information to consumers about the nature of the finder’s business as an independent loan matching/referral/comparison service registered with the Department of Business Oversight.
(2) Existing law prohibits a person from making a materially false or misleading statement or representation about the terms or conditions of a borrower’s loan, when making or brokering that loan.
This bill additionally would prohibit a person from making a materially false or misleading statement or representation to a prospective borrower about the terms or conditions of a loan for which the prospective borrower may qualify, when engaging in finding activities on behalf of a licensee subject to that division. The bill also would make related and conforming changes, including authorizing the commissioner to take various
enforcement actions upon finding that a finder has violated the act. By expanding the definition of a crime, the bill would impose a state-mandated local program.
Existing law requires finance lenders, brokers, and mortgage loan originator licensees to preserve their books, accounts, and records for at least 3 years after making the final entry on any loan recorded in those documents.
This bill also would require finance lenders that utilize the services of a finder to maintain their records of dealings with that finder for at least 3 years and would require finders to maintain records related to finding activities on behalf of lenders for at least 3 years following the creation of those documents.
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.