Bill Text: CA SB820 | 2011-2012 | Regular Session | Amended
Bill Title: Public employees' retirement: state employer
Spectrum: Partisan Bill (Republican 8-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB820 Detail]
Download: California-2011-SB820-Amended.html
BILL NUMBER: SB 820 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 21, 2011
INTRODUCED BY Senator Walters
( Coauthors: Senators Dutton
and Runner )
( Coauthors: Assembly Members
Garrick, Grove, Harkey, Jeffries,
and Mansoor )
FEBRUARY 18, 2011
An act to amend Section 50003 of the Financial Code,
relating to residential mortgages. An act to amend
Section 20229 of the Government Code, relating to public employees'
retirement.
LEGISLATIVE COUNSEL'S DIGEST
SB 820, as amended, Walters. Residential mortgage
lending. Public employees' retirement: state employer
contribution rates: reports.
The Public Employees' Retirement Law (PERL) provides a defined
benefit to members of the Public Employees' Retirement System based
on age at retirement, service credit, and final compensation, as
those terms are defined. The management and control of PERL is vested
in the board of administration of PERL, including the calculation of
the contribution rates for public employers.
Existing law requires the board, any time it adopts or forecasts
the contribution rates, to submit a report to the Legislature, the
Governor, and the Treasurer describing the investment return
assumptions, discount rates, and amortization periods utilized by the
board in the calculation of the contribution rates for all public
employees and employers. Existing law also requires that this report
include recalculations of those rates based on specified adjustments
of the investment return assumptions, amortization periods, and
discount rates utilized by the board, and specifically requires the
board to calculate the liabilities of the fund using a discount rate
equal to the rate of the 10-year United States Treasury Bond.
Existing law requires the Treasurer, within 30 days following receipt
of the report, to provide each house of the Legislature, at a
publicly noticed floor session, with an explanation of the role
played by the investment return assumption and amortization period in
the calculation of the contribution rates and the consequences for
future state budgets if the investment return assumptions are not
realized, to report whether the board's amortization period exceeds
the estimated average remaining service periods of employees covered
by the contributions, and to express his or her opinion of the
reasonableness of the board's calculation of the contribution rates.
This bill would instead require an annual report and would limit
the scope of this report to include only contribution rates for the
state employer. The bill would delete the reference to the 10-year
United States Treasury Bond, and would instead require the board to
include a calculation of the liabilities of the fund using discount
rates equal to (1) the average rate of investment return since the
establishment of the fund, and (2) the average rate of investment
return since January 1, 1984. The bill would require the Treasurer,
within 30 days of receipt of the report, to present the
above-described information to a publicly noticed, joint meeting of
the budget and retirement committees of both houses of the
Legislature.
Existing law, the California Residential Mortgage Lending Act,
provides for the licensure and regulation of residential mortgaging
lending and serving. Existing law provides that a person shall not be
deemed to control a licensee solely by reason of his or her status
as an officer or a director of the licensee.
This bill would make a nonsubstantive change to those provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 20229 of the
Government Code is amended to read:
20229. (a) The board, notwithstanding Section 10231.5,
any time it adopts the contribution rates described in Chapter 8
(commencing with Section 20671) and Chapter 9 (commencing with
Section 20790), shall annually provide the
Legislature, the Governor, and the Treasurer with a report that
includes all of the following:
(1) (A) A description of the investment return assumption utilized
by the board when determining the state employer
contribution rates described in Chapter 9 (commencing with
Section 20790) .
(B) A calculation of the those
contribution rates utilizing an investment return assumption based on
the lesser of 6 percent per annum or one percentage point below the
investment return assumption utilized by the board.
(2) (A) A description of the amortization period for any unfunded
liabilities utilized by the board when determining the
those contribution rates.
(B) A calculation of the those
contribution rates based on an amortization period equal to the
estimated average remaining service periods of employees covered by
the contributions.
(3) (A) A description of the discount rate utilized by the board
for reporting liabilities.
(B) A calculation of those liabilities based upon a discount rate
equal to the rate of the 10-year United States Treasury Note
as of 30 days before the date of the report average
rate of investment return since the establishment of the fund .
(C) A calculation of those liabilities based on a discount rate
equal to an average rate of investment return since January 1, 1984.
(4) The market value of the assets controlled by the board and an
explanation of how the actuarial value assigned to those assets
differs from the market value of those assets.
(b) The board, notwithstanding Section 10231.5, at any time it
forecasts the contribution rates described in Chapter 8 (commencing
with Section 20671) and Chapter 9 (commencing with Section 20790),
shall provide the Legislature with a revised calculation of the
forecasted contribution rates utilizing an investment rate assumption
based on the lesser of 6 percent or one percentage point below the
investment return assumption utilized by the board in the calculation
of the forecasted contribution rates.
(c)
(b) The Treasurer , within 30 days of receipt
of the report required by subdivision (a) , shall, during
a publicly noticed floor session of each house of the
Legislature joint meeting of the Assembly Committee on
Budget, Assembly Committee on Public Employees, Retirement and
Social Security, Senate Committee on Budget and Fiscal Review, and
Senate Committee on Public Employment and Retirement , do all
of the following:
(1) Explain the role played by the investment return assumption
and amortization period in the calculation of the state employer
contribution rates.
(2) Describe the consequences for future state budgets should the
investment return assumption not be realized.
(3) Report whether the board's amortization period exceeds the
estimated average remaining service periods of employees covered by
the contributions.
(4) Express his or her opinion of the reasonableness of the board'
s selection of the investment return assumption and the amortization
period.
(d)
(c) The reports required by subdivisions (a) and (b)
shall be submitted in compliance with Section 9795.
SECTION 1. Section 50003 of the Financial Code
is amended to read:
50003. (a) "Annual audit" means a certified audit of the licensee'
s books, records, and systems of internal control performed by an
independent certified public accountant in accordance with generally
accepted accounting principles and generally accepted auditing
standards.
(b) "Borrower" means the loan applicant.
(c) "Buy" includes exchange, offer to buy, or solicitation to buy.
(d) "Commissioner" means the Commissioner of Corporations.
(e) "Control" means the possession, directly or indirectly, of the
power to direct, or cause the direction of, the management and
policies of a licensee under this division, whether through voting or
through the ownership of voting power of an entity that possesses
voting power of the licensee, or otherwise. Control is presumed to
exist if a person, directly or indirectly, owns, controls, or holds
10 percent or more of the voting power of a licensee or of an entity
that owns, controls, or holds, with power to vote, 10 percent or more
of the voting power of a licensee. No person shall be deemed to
control a licensee solely by reason of his or her status as an
officer or a director of the licensee.
(f) "Depository institution" has the same meaning as in Section 3
of the Federal Deposit Insurance Act, and includes any credit union.
(g) "Engage in the business" means the dissemination to the
public, or any part of the public, by means of written, printed, or
electronic communication or any communication by means of recorded
telephone messages or spoken on radio, television, or similar
communications media, of any information relating to the making of
residential mortgage loans, the servicing of residential mortgage
loans, or both. "Engage in the business" also means, without
limitation, making residential mortgage loans or servicing
residential mortgage loans, or both.
(h) "Federal banking agencies" means the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the
Director of the Office of Thrift Supervision, the National Credit
Union Administration, and the Federal Deposit Insurance Corporation.
(i) "In this state" includes any activity of a person relating to
making or servicing a residential mortgage loan that originates from
this state and is directed to persons outside this state, or that
originates from outside this state and is directed to persons inside
this state, or that originates inside this state and is directed to
persons inside this state, or that leads to the formation of a
contract and the offer or acceptance thereof is directed to a person
in this state (whether from inside or outside this state and whether
the offer was made inside or outside the state).
(j) "Institutional investor" means the following:
(1) The United States or any state, district, territory, or
commonwealth thereof, or any city, county, city and county, public
district, public authority, public corporation, public entity, or
political subdivision of a state, district, territory, or
commonwealth of the United States, or any agency or other
instrumentality of any one or more of the foregoing, including, by
way of example, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation.
(2) Any bank, trust company, savings bank or savings and loan
association, credit union, industrial bank or industrial loan
company, personal property broker, consumer finance lender,
commercial finance lender, or insurance company, or subsidiary or
affiliate of one of the preceding entities, doing business under the
authority of or in accordance with a license, certificate, or charter
issued by the United States or any state, district, territory, or
commonwealth of the United States.
(3) Trustees of pension, profit-sharing, or welfare funds, if the
pension, profit-sharing, or welfare fund has a net worth of not less
than fifteen million dollars ($15,000,000), except pension,
profit-sharing, or welfare funds of a licensee or its affiliate,
self-employed individual retirement plans, or individual retirement
accounts.
(4) A corporation or other entity with outstanding securities
registered under Section 12 of the federal Securities Exchange Act of
1934 or a wholly owned subsidiary of that corporation or entity,
provided that the purchaser represents either of the following:
(A) That it is purchasing for its own account for investment and
not with a view to, or for sale in connection with, any distribution
of a promissory note.
(B) That it is purchasing for resale pursuant to an exemption
under Rule 144A (17 C.F.R. 230.144A) of the Securities and Exchange
Commission.
(5) An investment company registered under the Investment Company
Act of 1940; or a wholly owned and controlled subsidiary of that
company, provided that the purchaser makes either of the
representations provided in paragraph (4).
(6) A residential mortgage lender or servicer licensed to make
residential mortgage loans under this law or an affiliate or
subsidiary of that person.
(7) Any person who is licensed as a securities broker or
securities dealer under any law of this state, or of the United
States, or any employee, officer or agent of that person, if that
person is acting within the scope of authority granted by that
license or an affiliate or subsidiary controlled by that broker or
dealer, in connection with a transaction involving the offer, sale,
purchase, or exchange of one or more promissory notes secured
directly or indirectly by liens on real property or a security
representing an ownership interest in a pool of promissory notes
secured directly or indirectly by liens on real property, and the
offer and sale of those securities is qualified under the California
Corporate Securities Law of 1968 or registered under federal
securities laws, or exempt from qualification or registration.
(8) A licensed real estate broker selling the loan to an
institutional investor specified in paragraphs (1) to (7), inclusive,
or paragraph (9) or (10).
(9) A business development company as defined in Section 2(a)(48)
of the Investment Company Act of 1940 or a Small Business Investment
Company licensed by the United States Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958.
(10) A syndication or other combination of any of the foregoing
entities that is organized to purchase a promissory note.
(11) A trust or other business entity established by an
institutional investor for the purpose of issuing or facilitating the
issuance of securities representing undivided interests in, or
rights to receive payments from or to receive payments primarily
from, a pool of financial assets held by the trust or business
entity, provided that all of the following apply:
(A) The business entity is not a sole proprietorship.
(B) The pool of assets consists of one or more of the following:
(i) Interest-bearing obligations.
(ii) Other contractual obligations representing the right to
receive payments from the assets.
(iii) Surety bonds, insurance policies, letters of credit, or
other instruments providing credit enhancement for the assets.
(C) The securities will be either one of the following:
(i) Rated as "investment grade" by Standard and Poor's Corporation
or Moody's Investors Service, Inc. "Investment grade" means that the
securities will be rated by Standard and Poor's Corporation as AAA,
AA, A, or BBB or by Moody's Investors Service, Inc. as Aaa, Aa, A, or
Baa, including any of those ratings with "+" or "--" designation or
other variations that occur within those ratings.
(ii) Sold to an institutional investor.
(D) The offer and sale of the securities is qualified under the
California Corporate Securities Law of 1968 or registered under
federal securities laws, or exempt from qualification or
registration.
(k) "Institutional lender" means the following:
(1) The United States or any state, district, territory, or
commonwealth thereof, or any city, county, city and county, public
district, public authority, public corporation, public entity, or
political subdivision of a state, district, territory, or
commonwealth of the United States, or any agency or other
instrumentality of any one or more of the foregoing, including, by
way of example, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation.
(2) Any bank, trust company, savings bank or savings and loan
association, credit union, industrial loan company, or insurance
company, or service or investment company that is wholly owned and
controlled by one of the preceding entities, doing business under the
authority of and in accordance with a license, certificate, or
charter issued by the United States or any state, district,
territory, or commonwealth of the United States.
(3) Any corporation with outstanding securities registered under
Section 12 of the Securities Exchange Act of 1934 or any wholly owned
subsidiary of that corporation.
(4) A residential mortgage lender or servicer licensed to make
residential mortgage loans under this law.
(l) "Law" means the California Residential Mortgage Lending Act.
(m) "Lender" means a person that (1) is an approved lender for the
Federal Housing Administration, Veterans Administration, Farmers
Home Administration, Government National Mortgage Association,
Federal National Mortgage Association, or Federal Home Loan Mortgage
Corporation, (2) directly makes residential mortgage loans, and (3)
makes the credit decision in the loan transactions.
(n) "Licensee" means, depending on the context, a person licensed
under Chapter 2 (commencing with Section 50120), Chapter 3
(commencing with Section 50130), or Chapter 3.5 (commencing with
Section 50140).
(o) "Makes or making residential mortgage loans" or "mortgage
lending" means processing, underwriting, or as a lender using or
advancing one's own funds, or making a commitment to advance one's
own funds, to a loan applicant for a residential mortgage loan.
(p) "Mortgage loan," "residential mortgage loan," or "home
mortgage loan" means a federally related mortgage loan as defined in
Section 3500.2 of Title 24 of the Code of Federal Regulations, or a
loan made to finance construction of a one-to-four family dwelling.
(q) "Mortgage servicer" or "residential mortgage loan servicer"
means a person that (1) is an approved servicer for the Federal
Housing Administration, Veterans Administration, Farmers Home
Administration, Government National Mortgage Association, Federal
National Mortgage Association, or Federal Home Loan Mortgage
Corporation, and (2) directly services or offers to service mortgage
loans.
(r) "Nationwide Mortgage Licensing System and Registry" means a
mortgage licensing system developed and maintained by the Conference
of State Bank Supervisors and the American Association of Residential
Mortgage Regulators for the licensing and registration of licensed
mortgage loan originators.
(s) "Net worth" has the meaning set forth in Section 50201.
(t) "Own funds" means (1) cash, corporate capital, or warehouse
credit lines at commercial banks, savings banks, savings and loan
associations, industrial loan companies, or other sources that are
liability items on a lender's financial statements, whether secured
or unsecured, or (2) a lender's affiliate's cash, corporate capital,
or warehouse credit lines at commercial banks or other sources that
are liability items on the affiliate's financial statements, whether
secured or unsecured. "Own funds" does not include funds provided by
a third party to fund a loan on condition that the third party will
subsequently purchase or accept an assignment of that loan.
(u) "Person" means a natural person, a sole proprietorship, a
corporation, a partnership, a limited liability company, an
association, a trust, a joint venture, an unincorporated
organization, a joint stock company, a government or a political
subdivision of a government, and any other entity.
(v) "Residential real property" or "residential real estate" means
real property located in this state that is improved by a
one-to-four family dwelling.
(w) "SAFE Act" means the federal Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (Public Law 110-289).
(x) "Service" or "servicing" means receiving more than three
installment payments of principal, interest, or other amounts placed
in escrow, pursuant to the terms of a mortgage loan and performing
services by a licensee relating to that receipt or the enforcement of
its receipt, on behalf of the holder of the note evidencing that
loan.
(y) "Sell" includes exchange, offer to sell, or solicitation to
sell.
(z) "Unique identifier" means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.
(aa) For purposes of Sections 50142, 50143, and 50145,
"nontraditional mortgage product" means any mortgage product other
than a 30-year fixed rate mortgage.
