BILL ANALYSIS                                                                                                                                                                                                    

                                                                         




                        SENATE COMMITTEE ON BANKING, FINANCE,
                                    AND INSURANCE
                           Senator Ronald Calderon, Chair


          SB 36 (Calderon)                        Hearing Date:  April 1,  
          2009  

          As Amended March 17, 2009
          Fiscal:             Yes
          Urgency:       No
          

           SUMMARY    Would amend California's Real Estate Law, Finance  
          Lenders Law, and Residential Mortgage Lending Act, to ensure  
          compliance with the federal Secure and Fair Enforcement for  
          Mortgage Licensing Act of 2008 (the SAFE Act).
           
          DIGEST
            
          Existing federal law  provides for the SAFE Act, pursuant to  
          Title V of the provisions of the Housing and Economic Recovery  
          Act of 2008 (HR 3221; Public Law 110-289).  The provisions of  
          the SAFE Act are discussed in more detail below in the  
          Background section of this analysis.  
           
           Existing law
            
           1.  Authorizes residential mortgage lending, brokering, and  
              servicing under five different laws, including the Banking Law,  
              Credit Union Law, California Finance Lenders Law (CFLL),  
              California Residential Mortgage Lending Act (CRMLA), and Real  
              Estate Law, and the regulations that interpret those laws;

           2.  Generally regulates the entities that engage in mortgage  
              lending, brokering, and servicing under three different  
              departments, including the Department of Financial Institutions  
              (DFI), Department of Corporations (DOC), and the Department of  
              Real Estate (DRE).  

          This bill

            1.  Would amend California's Real Estate Law, CFLL, and CRMLA,  
              in compliance with the SAFE Act.  Specifically, the bill  
              would require mortgage loan originators, as defined, to  
              apply for and obtain a license or license endorsement, from  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 2 -


              DOC or DRE, as applicable, and obtain a unique identifier,  
              as defined, before engaging in mortgage loan origination  
              activities in connection with a residential mortgage loan in  
              California;  

           2.  Would require applicants for a license or license  
              endorsement to complete at least 20 hours of pre-licensing  
              education and successfully pass an examination on that  
              material, submit to a criminal history background check and  
              a credit check, and meet several requirements related to  
              their personal character, as a condition of being approved  
              to act as a mortgage loan originator;

           3.  Would further require licensed mortgage loan originators to  
              renew their licenses or license endorsements annually, by  
              completing at least 8 hours of continuing education, as  
              specified, and continuing to meet the minimum standards for  
              license/license endorsement approval; 

           4.  Would provide that the Real Estate Law sections of the bill  
              are operative when the Commissioner of Real Estate issues a  
              finding that the Nationwide Mortgage Licensing System and  
              Registry is capable of two-way electronic communication with  
              the enterprise information system maintained by DRE;

           5.  Would provide that the CFLL and CRMLA sections of the bill  
              are operative January 1, 2010, but would further provide  
              that no person is required to hold a mortgage loan  
              originator license under the CFL or CRMLA, nor a mortgage  
              loan originator license endorsement under the Real Estate  
              Law, before August 1, 2010;

           6.  Would make other related changes, described below.


           COMMENTS

           1.  Purpose of the bill   To ensure that California is in  
              compliance with the SAFE Act, and, in doing so, avoid  
              triggering action by the Secretary of the U.S. Department of  
              Housing and Urban Development (HUD) to take over regulation  
              of California's mortgage loan originators.

            2.  Background   On July 30, 2008, President Bush signed the  
              Housing and Economic Recovery Act of 2008, whose provisions  
              included the SAFE Act.  The SAFE Act requires all states to  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 3 -


              license and register their mortgage loan originators through  
              a nationwide organization called the Nationwide Mortgage  
              Licensing System and Registry (NMLSR).  Any state that does  
              not implement a mortgage loan originator licensing system,  
              in compliance with the SAFE Act, by July 30, 2009, risks  
              direct intervention by HUD.  

           Under the SAFE Act, HUD is authorized to establish and maintain  
              a mortgage loan originator system in any state that fails to  
              voluntarily comply with SAFE by July 30, 2009.  States  
              deemed by the Secretary of HUD to be making a good faith  
              effort to establish a state licensing law which complies  
              with the SAFE Act may be granted one additional year in  
              which to comply, before risking HUD intervention.  Avoiding  
              HUD intervention will be critical, if California wishes to  
              retain its existing authority to regulate the  
              mortgage-related activities of its state licensees.

           The provisions of the SAFE Act were sponsored by the Conference  
              of State Bank Supervisors (CSBS) and American Association of  
              Residential Mortgage Regulators (AARMR), two organizations  
              which represent state banking and mortgage lending  
              regulators nationwide.  In 2003, CSBS and AARMR developed  
              the idea for the NMLSR.  The system was officially launched  
              in January 2008.  

           Prior to enactment of the SAFE Act, participation by states in  
              the NMLSR was voluntary.  Several of the country's smaller  
              states signed on, but lack of participation among the  
              country's larger states, including California, hampered the  
              registry's ability to function as a truly national registry.  
               

           In sponsoring the SAFE Act, CSBS and AARMR were seeking to  
              drive more states to sign on to its NMLSR.  Under the SAFE  
              Act, participation in NMLSR remains voluntary, but states  
              that fail to participate will lose regulatory authority over  
              their mortgage loan originators, a threat so great that no  
              large states appear willing to risk it through  
              non-participation.  To date, 23 states have signed on to  
              NMLSR, and most others are expected to sign on by July 31,  
              2010.  

           In promotional material regarding the NMLSR, CSBS and AARMR  
              describe the system, as follows:  "Through NMLS, licensed  
              mortgage lenders, bankers, broker companies and loan  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 4 -


              officers in participating states are able to complete a  
              single uniform form electronically, regardless of the number  
              of states in which they are licensed.  This information is  
              housed in a secure centralized repository available to  
              mortgage regulators.  Licensees are able to access their own  
              record 7 days a week through the NMLS website to update,  
              amend and renew their licenses, or apply for new licenses?As  
              mortgage companies and/or individuals create a record for  
              themselves and submit [it] to their regulators, NMLS will  
              permanently assign a unique identifying number to each  
              record.  The unique identifying number allows regulators to  
              definitively track companies and professionals across states  
              and over time."

            What Does the SAFE Act Require?   The SAFE Act defines the term  
              "mortgage loan originator" as (generally speaking) one who  
              takes a residential mortgage loan application or offers or  
              negotiates terms of a residential mortgage loan for  
              compensation or gain.  Administrative and/or clerical  
              employees are not included within the definition, nor are  
              real estate brokers who don't broker mortgages.  SAFE  
              creates a distinction between mortgage loan originators who  
              are employed by depository institutions or subsidiaries of  
              depository institutions, and all other mortgage loan  
              originators.  

           Under the SAFE Act, mortgage loan originators who are not  
              employed by a depository institution or a subsidiary of a  
              depository institution must be both licensed by their state  
              and registered on NMLSR.  License applicants must undergo  
              background checks, submit to credit checks, complete and  
              successfully pass pre-licensing education courses approved  
              by NMLSR, meet specific personal character requirements  
              specified in the SAFE Act, and, once licensed, must complete  
              annual continuing education courses approved by NMLSR and  
              submit as-yet-unspecified call reports to NMLSR annually.

           Mortgage loan originators employed by depository institutions  
              or their subsidiaries must register on NMLSR, using rules to  
              be established by the Federal Financial Institutions  
              Examination Council (FFIEC), but need not be licensed.   
              Registrants will have to undergo background checks, but are  
              not required to submit to credit checks, nor comply with the  
              education requirements that apply to mortgage loan  
              originators who are required to be licensed under the Act.   
              The SAFE Act allows the five federal banking agencies,  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 5 -


              through the FFIEC, to establish de minimis exceptions from  
              the rules to register.  However, because the FFIEC's  
              regulations have not yet been released, the details of their  
              contents are uncertain.

            How Does SB 36 Work?   Under the provisions of the bill, real  
              estate licensees who wish to act as mortgage loan  
              originators must obtain a license endorsement.  The license  
              endorsement will only be available to real estate licensees  
              that comply with the background check and education  
              requirements of the SAFE Act, and that meet the SAFE Act's  
              personal character requirements.  Thus, under the Real  
              Estate Law, step 1 will be obtaining a real estate license.   
              Only with that real estate license may an individual obtain  
              a license endorsement to act as a mortgage loan originator.

           The CFLL and CRMLA laws will work quite differently.  Under  
              these laws, every mortgage loan originator employee of a  
              California licensed finance lender or California licensed  
              residential mortgage lender will be required to obtain a  
              mortgage loan originator license.  That license will only be  
              available to loan originator employees who comply with the  
              background check and education requirements of the SAFE Act,  
              and who meet the SAFE Act's personal character requirements.  
               The mortgage loan originator license will be separate and  
              apart from a CFL or RML license.  Every licensed CFL or RML  
              will have to ensure that their mortgage loan originator  
              licensees are licensed as such.  

           Consistent with the SAFE Act, SB 36 requires mortgage loan  
              originators to renew their licenses or license endorsements  
              annually.  CSBS and AARMR have determined that all licenses  
              and license endorsements will expire on December 31st of  
              each year, and must be renewed, effective January 1st of  
              each year.

           SB 36 does not contain any amendments to the Banking Law or  
              Credit Union Law, because DFI does not believe any changes  
              to these statutes are required.  Instead, DFI anticipates  
              directing its licensees to follow the regulations that will  
              be issued by FFIEC, using regulatory authority the  
              Department already has.  
            
            How Will the SAFE Act Change The Status Quo in California?   The  
              SAFE Act will require different types of changes under the  
              Real Estate Law than it will under the CFLL and CRMLA.




                                                                            
                                                                            
                                             SB 36 (Calderon) - 6 -



           Real Estate Law changes:  Under existing California law,  
              licensed real estate salespersons and licensed real estate  
              brokers may engage in activities that are defined in the  
              SAFE Act as mortgage loan origination.  Real estate licenses  
              may be issued to individuals or to corporations.  The SAFE  
              Act will require these already-licensed individuals and  
              corporations to obtain special mortgage loan originator  
              license endorsements in order to continue engaging in  
              activities for which no special license endorsement is  
              currently required.  

           The SAFE Act requirements are similar to, but somewhat  
              different from, the requirements for licensure under the  
              Real Estate Law.  For example, real estate licensees must  
              complete both pre-licensing education and continuing  
              education classes, and must undergo background checks, all  
              of which are required under the SAFE Act.  However, the  
              personal character requirements under California's Real  
              Estate Law are different than those under the SAFE Act (more  
              stringent in certain places, less stringent in others), and  
              California's real estate license cycle is four years long,  
              rather than annual (thus, under existing California law,  
              continuing education requirements must be satisfied over a  
              four year period, rather than once annually).  

           Under the SAFE Act, licensed real estate salespersons and  
              brokers who wish to continue engaging in mortgage loan  
              origination activities must undergo brand new background  
              checks and take different education classes in order to  
              satisfy the SAFE Act mortgage loan originator licensing  
              requirements.  They will also have to continue to meet the  
              SAFE Act's personal character requirements on an annual  
              basis, in order to remain eligible to retain their license  
              endorsements.  Corporations engaged in mortgage loan  
              origination will have to register with NMLSR and obtain a  
              license endorsement for their company.  Corporations  
              licensed under the Real Estate Law will also have to ensure  
              that each of their mortgage loan originator employees  
              obtains an individual mortgage loan originator license  
              endorsement.  

           CFLL and CRMLA changes:  The SAFE Act will impact CFLL and  
              CRMLA licensees very differently than it will impact Real  
              Estate Law licensees.  Under existing law, DOC licenses  
              corporations under the CFLL and CRMLA and requires  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 7 -


              background checks on the persons controlling these  
              corporations.  Individual employees of these corporations  
              are not licensed, nor are they subject to background checks  
              (unless, as noted above, they are controlling persons in the  
              organization).  Pre-licensing education and continuing  
              education are not required.  

           Under the SAFE Act, every CFLL and CRMLA employee who performs  
              activities that meet the SAFE Act definition of a mortgage  
              loan originator must be both licensed by California and  
              registered on NMLSR.  Thus, employees who were previously  
              untracked by the state will now be required to undergo a  
              background check, submit to a credit check, complete  
              pre-licensing education classes, and satisfy the SAFE Act's  
              personal character requirements to obtain their licenses.   
              They will also have to comply with annual continuing  
              education requirements and continue to meet the SAFE Act's  
              personal character requirements in order to remain eligible  
              to retain their licenses.  These requirements represent a  
              significant change for CFLL and CRMLA licensees, who have  
              not previously had to ensure that their mortgage loan  
              originator employees were licensed.

            Is SB 36 In Compliance with the SAFE Act?   CSBS staff have  
              reviewed SB 36 and believe the bill, as currently drafted,  
              is in substantial compliance with the provisions of the SAFE  
              Act.   Although HUD has not yet reviewed the bill (and, in  
              fact, has not identified anyone to whom states should send  
              legislation for review), HUD expects to rely very heavily on  
              CSBS to vet state SAFE Act compliance legislation.  Thus,  
              for all practical purposes, CSBS' sign-off on a piece of  
              state legislation is equivalent to HUD sign-off.   A  
              drafting map prepared by Committee staff to aid CSBS' and  
              others' review of the bill for compliance with the SAFE Act  
              is appended to this analysis for reference.

           As shown on that drafting map, the vast majority of the  
              provisions of SB 36 pattern the Model Law drafted by CSBS  
              and AARMR, to help states achieve compliance with the SAFE  
              Act and avoid intervention by HUD.  The two sections in  
              which SB 36 deviates from the Model Law are the  
              "definitions" section and "background check" section of the  
              Model Law.  

           The definitions sections of SB 36 track SAFE Act language,  
              rather than the Model Law language, because the former is  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 8 -


              clearer as to intent and coverage.  Thus, CSBS has no  
              concerns with this deviation.

           The background check sections of SB 36 were developed through  
              negotiation among CSBS, California's Department of Justice  
              (DOJ), DRE, DOC, and Committee staff, when California's  
              Department of Justice (DOJ) expressed concerns with the  
              Model Law background check language originally amended into  
              SB 36.  The background check language in the current version  
              of SB 36 is acceptable to all of the parties to the  
              negotiation, including CSBS.  

           SB 36 goes beyond the Model Law in one area, by including a  
              reporting requirement intended to give DRE important  
              information about the California-specific business  
              activities of its mortgage brokering, lending, and servicing  
              licensees.  DRE currently lacks this information, and will  
              continue to lack it without an amendment to augment to Model  
              Law. The list of specific information to be requested of  
              licensees on an annual basis was developed, working closely  
              with DRE, to focus on those aspects of a licensee's business  
              activities of greatest interest to the Department.  CSBS has  
              no concerns with the inclusion of this provision.  

            Remaining Outstanding Issues:   At present, there appear to be  
              three outstanding issues involving SAFE Act implementation.   
              Two have been brought forward by industry, and one by DRE.   
              Amendments to address the two industry issues are being  
              negotiated, and are expected to be resolved shortly.  These  
              issues generally involve questions of whether employees of  
              manufactured home dealers must be licensed as mortgage loan  
              originators, and whether individuals who help facilitate  
              mortgage loan modifications must be licensed as mortgage  
              loan originators.

           The one outstanding issue on which amendments are not currently  
              pending involves the operative date of the Real Estate Law  
              sections of the bill.   As currently drafted, SB 36 provides  
              that the operative date of the Real Estate Law sections of  
              the bill is the date that the Commissioner of Real Estate  
              issues a finding that the NMLSR is capable of two-way  
              electronic communication with the enterprise information  
              system (EIS) maintained by DRE.  The bill is drafted in this  
              way, to draw attention to a costly problem facing DRE and  
              its licensees, and to encourage CSBS and AARMR to reverse  
              their current position on two-way electronic communications  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 9 -


              between the NMLSR and California's DRE.

           According to CSBS, the NMLSR is not designed to allow states to  
              electronically upload information about its licensees to the  
              nationwide registry.  Instead, state regulators will be  
              expected to manually enter data regarding license  
              applicants.  Manual uploads may not be a significant problem  
              for a small state that did not previously license the  
              individuals required to obtain mortgage loan originator  
              licenses under the SAFE Act.  However, California's size,  
              together with the fact that DRE already maintains  
              considerable information about most of the individuals who  
              will be applying to the Department for license endorsements,  
              are creating an enormously costly problem for the Department  
              and its licensees.

           Although the specific details of the programming that will be  
              required to accomplish two-way communication are  
              complicated, the issue can be described simply - without a  
              change in CSBS' position regarding electronic uploads by  
              states, DRE employees will be required to manually enter  
              specific information into the NMLSR about an estimated  
              50,000 to 75,000 mortgage loan originator licensees, on an  
              annual basis.  (This estimate is approximate and is based on  
              an estimated 10,000 to 15,000 real estate brokers acting as  
              mortgage loan originators, each of whom will supervise an  
              average of four real estate salespersons acting as loan  
              originators; all of these individuals will need mortgage  
              loan originator license endorsements under the provisions of  
              the SAFE Act).  

           The process of manually uploading data to NMLSR will be  
              time-consuming, labor-intensive, and costly, not only  
              because of the number of people expected to apply for  
              license endorsements from DRE, but also because of CSBS'  
              requirement that all licenses be renewed as of December 31st  
              of each year.  Because rolling renewals will not be allowed,  
              California will be unable to spread out the workload  
              associated with license renewals across twelve months;  
                                                                                    instead, the bulk of the work will fall toward the end of  
              the year, when license endorsements expire.  

           An estimate of the costs associated with these manual uploads  
              is currently being developed by DRE.  Those costs will be of  
              particular interest to DRE licensees, because they will be  
              passed on to applicants for mortgage loan originator license  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 10 -


              endorsements.  Obtaining a streamlined ability to  
              electronically upload licensee information to the NMLSR  
              could potentially save applicants for mortgage loan  
              originator license endorsements a considerable sum of money.  
               

           California may have some leverage on this issue, in part  
              because CSBS and AARMR are expecting DRE to pay $500,000  
              toward development of the NMLSR, and in part because the  
              SAFE Act was authored by Senator Feinstein, who, one would  
              imagine, might be receptive to ameliorating unintended  
              negative consequences of her bill on her home state.  

            3.  Support  .  The California Association of Realtors (CAR)  
              believes that SB 36 takes the appropriate approach toward  
              SAFE Act implementation by using an additional endorsement  
              on the real estate license and applying similar licensing  
              requirements to other types of loan originators regulated  
              outside of DRE.  CAR believes that this approach will result  
              in the least disruption of existing systems and minimize  
              compliance costs to both the state and individual licensees.  
               CAR also speaks to the electronic exchange issue discussed  
              immediately above by stating, "we hope that in your role as  
              Chair that you can intervene with the federal entities  
              involved to ensure that state costs are minimized by  
              allowing electronic exchanges of databases and discipline  
              records."

           The California Mortgage Association (CMA) and the Los Angeles  
              District Attorney's Office support the bill, because they  
              believe that the state must act to implement the SAFE Act.   
              CMA is concerned that failing to enact the SAFE Act will  
              risk intervention in the state's regulatory affairs by HUD.   
              The Los Angeles District Attorney's Office believes that  
              complying with the SAFE Act will provide important consumer  
              protections.

           Consumers Union (CU), the California Reinvestment Coalition  
              (CRC), and several other members of CRC's coalition are  
              supportive of SB 36, if it is amended to go beyond SAFE Act  
              compliance, to additionally enhance consumer protections and  
              reduce fraud in a way that they believe will be meaningful  
              for Californians.  These organizations are requesting four  
              amendments, as follows:  1) include sections on prohibited  
              acts for real estate brokers and residential mortgage  
              lenders; 2) strengthen the list of prohibited acts by  




                                                                            
                                                                            
                                             SB 36 (Calderon) - 11 -


              including prohibitions against steering, recommending  
              default on an existing mortgage, originating loans without  
              regard to a borrower's ability to repay, charging yield  
              spread premiums, charging prepayment penalties, and engaging  
              in bait-and-switch tactics during one-on-one communications  
              with a borrower; 3) increase net worth or bonding  
              requirements and licensing fees for real estate brokers to  
              the value of the loans that a broker originated during the  
              prior year; and 4) extend the data reporting requirements in  
              the bill to include borrower race, ethnicity, and income,  
              and the quality of loans originated, and make the data  
              publicly available.  

            4.  Opposition    None received.

            5.  Prior Legislation   

                  a.        SB 1240 (Machado), 2007-08 Legislative  
                    Session:  Would have required real estate licensees  
                    engaged in mortgage brokering, lending, and/or  
                    servicing activities to notify DRE about those  
                    activities, submit an annual business activities  
                    report, and contract for a compliance review by an  
                    independent public accountant on an annual or biennial  
                    basis, depending on loan volume.  Vetoed by the  
                    Governor, with a veto message requesting the  
                    Legislature to send him a SAFE Act implementation bill  
                    to sign;

                  b.        SB 491 (Maldonado):  Would begin the process  
                    of amending California's mortgage lending and  
                    brokering laws in compliance with the SAFE Act.   
                    Pending in the Senate Banking, Finance & Insurance  
                    Committee.  

                  c.        AB 34 (Nava):  Spot bill stating the intent of  
                    the Legislature to place California in compliance with  
                    the SAFE Act.  Pending in the Assembly Banking &  
                    Finance Committee.











                                                                            
                                                                            
                                             SB 36 (Calderon) - 12 -


           POSITIONS
          
          Support
           
          California Association of Realtors
          California Mortgage Association
          Los Angeles District Attorney's Office
           
          Oppose
               
          None received

          Consultant:  Eileen Newhall (916) 651-4102





































                                                                         






      ---------------------------------------------------------------------------------------------------- 
     | MODEL  | MODEL STATE LAW | BUSINESS AND  |  FINANCIAL   |FINANCIAL CODE |         COMMENTS         |
     | STATE  |   DESCRIPTION   |  PROFESSIONS  |  CODE (CFL)  | (RML) SECTION |                          |
     |  LAW   |                 | CODE SECTION  |   SECTION    |               |                          |
     |SECTION |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Title            |      N/A      |     N/A      |      N/A      |Not needed.  SB 36 amends |
     |XX.XX.01|                 |               |              |               |existing laws, and does   |
     |0       |                 |               |              |               |not create a new          |
     |        |                 |               |              |               |stand-alone Act.          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Purpose of this  |      N/A      |     N/A      |      N/A      |Optional.  Not included.  |
     |XX.XX.02|Act              |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Definitions      |   10166.01,   |22012, 22013, |    50003,     |Definition of loan        |
     |XX.XX.03|                 |   10166.03    |    22014     |   50003.5,    |processor or underwriter  |
     |0       |                 |               |              |    50003.6    |and clerical or support   |
     |        |                 |               |              |               |duties tracks the SAFE    |
     |        |                 |               |              |               |Act, not the Model Law.   |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |License and      |   10166.02    | 22100, 22014 |   50002.5,    |Treatment of independent  |
     |XX.XX.04|registration     |               |              |    50003.6    |contractor loan           |
     |0       |required         |               |              |               |processors or             |
     |        |                 |               |              |               |underwriters is handled   |
     |        |                 |               |              |               |in 22014 and 50003.6      |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |State license    |   10166.04    |    22100,    | 50120, 50140  |                          |
     |XX.XX.05|and registration |               |   22105.1,   |               |                          |
     |0       |application and  |               |   22105.2    |               |                          |
     |        |issuance         |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Issuance of      |   10166.05    |   22109.1    |     50141     |                          |
     |XX.XX.06|license          |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Pre-licensing    |   10166.06    |   22109.2    |     50142     |                          |
     |XX.XX.07|and re-licensing |               |              |               |                          |







                                                                            
                                                                            
                                             SB 36 (Calderon) - 14 -


     |0       |education of     |               |              |               |                          |
     |        |loan originators |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Testing of loan  |   10166.06    |   22109.3    |     50143     |                          |
     |XX.XX.08|originators      |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Standards for    |   10166.09    |   22109.4    |     50144     |                          |
     |XX.XX.09|license renewal  |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Continuing       |    10166.1    |   22109.5    |     50145     |                          |
     |XX.XX.10|education for    |               |              |               |                          |
     |0       |mortgage loan    |               |              |               |                          |
     |        |originators      |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Authority to     |   10166.17    |   22109.6    |     50146     |                          |
     |XX.XX.11|require license  |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |NMLSR            |   10166.15    |   22105.2    |     50150     |                          |
     |XX.XX.12|information      |               |              |               |                          |
     |0       |challenge        |               |              |               |                          |
     |        |process          |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Enforcement      |      N/A      |     N/A      |      N/A      |Duplicative of existing   |
     |XX.XX.13|authorities,     |               |              |               |law.  The commissioners   |
     |0       |violations, and  |               |              |               |already contain this      |
     |        |penalties        |               |              |               |authority under the RE    |
     |        |                 |               |              |               |Law, CFL, and RML.        |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Surety bond, net |     10474     | 22104, 22112 | 50201, 50205  |SB 36 does not amend      |
     |XX.XX.14|worth, or state  |               |              |               |Business and Professions  |
     |0       |fund requirement |               |              |               |Code Section 10474 or     |
     |        |                 |               |              |               |Financial Code Sections   |
     |        |                 |               |              |               |22112, as no changes are  |
     |        |                 |               |              |               |required to comply with   |
     |        |                 |               |              |               |the SAFE Act.  These      |
     |        |                 |               |              |               |sections are listed only  |
     |        |                 |               |              |               |to demonstrate that       |







                                                                            
                                                                            
                                             SB 36 (Calderon) - 15 -


     |        |                 |               |              |               |California has a Real     |
     |        |                 |               |              |               |Estate Recovery Fund, and |
     |        |                 |               |              |               |has both net worth and    |
     |        |                 |               |              |               |surety bond requirements  |
     |        |                 |               |              |               |for CFL and RML           |
     |        |                 |               |              |               |licensees, as required by |
     |        |                 |               |              |               |the SAFE Act.             |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Confidentiality  |   10166.16    |   22105.3    |     50151     |                          |
     |XX.XX.15|                 |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Investigation    |      N/A      |     N/A      |      N/A      |Duplicative of existing   |
     |XX.XX.16|and examination  |               |              |               |law.  The commissioners   |
     |0       |authority        |               |              |               |already contain this      |
     |        |                 |               |              |               |authority under the RE    |
     |        |                 |               |              |               |Law, CFL, and RML.        |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Prohibited acts  |      N/A      |    22346     |      N/A      |B&P Code Sections 10176   |
     |XX.XX.17|and practices    |               |              |               |and 10177 already cover   |
     |0       |                 |               |              |               |this for the RE Law.      |
     |        |                 |               |              |               |Financial Code Sections   |
     |        |                 |               |              |               |50502 through 50512       |
     |        |                 |               |              |               |already cover this for    |
     |        |                 |               |              |               |the RML.                  |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Mortgage call    |   10166.07,   |    22159     |    50307.2    |                          |
     |XX.XX.18|reports          |   10166.08    |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Report to NMLSR  |   10166.15    |   22105.4    |     50152     |                          |
     |XX.XX.19|                 |               |              |               |                          |
     |0       |                 |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Privately        |      N/A      |     N/A      |      N/A      |Not needed.  DFI already  |
     |XX.XX.20|insured credit   |               |              |               |has this authority.       |
     |0       |unions           |               |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Unique           |   10140.6,    |    22347     |     50209     |                          |
     |XX.XX.21|identifier shown |   10235.5,    |              |               |                          |







                                                                            
                                                                            
                                             SB 36 (Calderon) - 16 -


     |0       |                 |    10236.4    |              |               |                          |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Severability     |      N/A      |     N/A      |      N/A      |Added as an uncodified    |
     |XX.XX.22|                 |               |              |               |section at the end of the |
     |0       |                 |               |              |               |bill.                     |
     |--------+-----------------+---------------+--------------+---------------+--------------------------|
     |MSL     |Effective date   |               |              |               |Operative date of the RE  |
     |XX.XX.23|                 |               |              |               |Law portions is the date  |
     |0       |                 |               |              |               |the RE commissioner finds |
     |        |                 |               |              |               |that NMLSR has developed  |
     |        |                 |               |              |               |the ability to            |
     |        |                 |               |              |               |electronically            |
     |        |                 |               |              |               |communicate with DRE's    |
     |        |                 |               |              |               |enterprise information    |
     |        |                 |               |              |               |system.  Operative date   |
     |        |                 |               |              |               |of the CFL and RML        |
     |        |                 |               |              |               |sections is January 1,    |
     |        |                 |               |              |               |2010.  However, no        |
     |        |                 |               |              |               |individual is required to |
     |        |                 |               |              |               |be licensed as a mortgage |
     |        |                 |               |              |               |loan originator before    |
     |        |                 |               |              |               |July 31, 2010.            |
      ----------------------------------------------------------------------------------------------------