BILL ANALYSIS
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UNFINISHED BUSINESS
Bill No: SB 1137
Author: Senate Banking, Finance and Insurance Committee
Amended: 8/12/10
Vote: 21
SENATE BANKING, FINANCE, AND INS. COMM : 11-0, 4/7/10
AYES: Calderon, Cogdill, Correa, Cox, Florez, Kehoe, Liu,
Lowenthal, Padilla, Price, Runner
SENATE FLOOR : 35-0, 4/15/10
AYES: Aanestad, Alquist, Ashburn, Calderon, Cedillo,
Cogdill, Corbett, Correa, Cox, DeSaulnier, Dutton,
Florez, Hancock, Harman, Hollingsworth, Huff, Kehoe,
Leno, Liu, Lowenthal, Maldonado, Oropeza, Padilla,
Pavley, Price, Romero, Runner, Simitian, Steinberg,
Strickland, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Denham, Ducheny, Negrete McLeod, Wiggins,
Vacancy
ASSEMBLY FLOOR : 76-1, 8/17/10 - See last page for vote
SUBJECT : Residential mortgage lenders
SOURCE : Author
DIGEST : This bill makes several, mostly technical,
changes to legislation passed last year that brought
California into conformity with the federal Secure and Fair
Enforcement Act for mortgage loan originators.
CONTINUED
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Assembly Amendments provide an exception to last year's
increase in the minimum net worth requirements for real
estate brokers that facilitate, but do not make, mortgage
loans. Such brokers are required to maintain a net worth of
at least $50,000 instead of the $250,000 minimum for other
brokers, and makes explicit the regulatory authority of the
Department of Real Estate to take enforcement actions for
non-compliance with federal law.
ANALYSIS : Existing federal law provides for the federal
Secure and Fair Enforcement Act (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
SAFE Act required all states to license and register their
mortgage loan originators, as defined, through a nationwide
organization called the Nationwide Mortgage Licensing
System and Registry. Any state that failed to implement a
mortgage loan originator licensing system, in compliance
with the SAFE Act, by July 30, 2009 risked direct
intervention by the U.S. Department of Housing and Urban
Development (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.
Existing law, pursuant to SB 36 (Calderon), Chapter 160,
Statutes of 2009, conforms California's Real Estate Law,
Finance Lenders Law, and Residential Mortgage Lending Act
to the SAFE Act, thus preserving California's ability to
continue regulating mortgage loan origination by
non-depository institutions operating in California.
This bill:
1.Provides an exception to last year's increase in the
minimum net worth requirements for real estate brokers
that facilitate, but do not make, mortgage loans. Such
brokers are required to maintain a net worth of at least
$50,000 instead of the $250,000 minimum for other
brokers.
2.Makes explicit the regulatory authority of the Department
of Real Estate to take enforcement actions for
non-compliance with federal law.
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3.Makes other technical and conforming changes to the
statutes enacted last year.
Background
SB 36 was a 72-page bill that significantly amended three
of California's mortgage lending and brokering laws, and
gave the Department of Real Estate and Department of
Corporations significant rulemaking authority to facilitate
California's compliance with the SAFE Act. Both
departments have begun the process of transitioning their
licensees and licensees' employees onto the Nationwide
Mortgage Licensing System and Registry, and expect to enact
emergency and final regulations implementing the SAFE Act
later this year. HUD is also in the process of finalizing
its SAFE Act implementing regulations this year. Given the
length and complexity of SB 36 and the extensive rulemaking
processes underway at both the state and federal levels, it
is likely that additional cleanup changes will be necessary
to SB 36. This bill was introduced to provide a vehicle
for those changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Bill
Berryhill, Tom Berryhill, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Carter, Chesbro, Conway,
Cook, Coto, Davis, De La Torre, De Leon, DeVore, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani,
Gaines, Galgiani, Garrick, Gatto, Gilmore, Hagman, Hall,
Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Lieu, Logue, Bonnie Lowenthal,
Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello,
Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin,
Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra
Strickland, Swanson, Torlakson, Torres, Torrico, Tran,
Villines, Yamada, John A. Perez
NOES: Anderson
NO VOTE RECORDED: Blakeslee, Charles Calderon, Vacancy
JJA:nl 8/17/10 Senate Floor Analyses
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SUPPORT/OPPOSITION: NONE RECEIVED
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