BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 6
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                     SB 6 (Calderon) - As Amended:  July 7, 2011 

          Policy Committee:                             Banking and 
          Finance      Vote:                            11-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill updates California's real estate and appraisal law to 
          reflect recent changes enacted at the federal level pursuant to 
          the Dodd-Frank Wall Street Reform and Consumer Protection Act 
          (Dodd-Frank).  Specifically, this bill:   

          1)Provides that no real estate licensee shall knowingly or 
            intentionally misrepresent the value of real property, and, no 
            real estate licensee that offers or provides an opinion of 
            value of real property that is used as the basis for an 
            origination of a mortgage loan shall have an interest in that 
            property.

          2)Clarifies that no person or entity acting in the capacity of 
            an appraisal management company (AMC) shall improperly 
            influence the development or review of any appraisal and no 
            person or entity preparing an appraisal, or performing 
            appraisal management functions shall have a direct or indirect 
            interest in the property or the transaction.

          3)Provides that no person with an interest in a real estate 
            transaction involving a valuation shall improperly influence 
            the valuation.

           FISCAL EFFECT  

          Costs to the Department of Real Estate will be minor and 
          absorbable. 

           COMMENTS  









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           1)Purpose  .  According to the author's office, "In recent years, 
            California has enacted legislation to ensure the integrity of 
            the real property appraisal process.  Until enactment of 
            Dodd-Frank in July 2010, these California's laws were more 
            comprehensive, and more protective of consumers than the 
            federal rules.  Since enactment of Dodd-Frank, however, 
            California's rules have fallen behind some of those recently 
            promulgated by federal regulators.  Portions of state law are 
            also now inconsistent with federal regulations in certain 
            cases.

           2)Background  .  Dodd-Frank, signed into law by President Obama in 
            July 2010, was a response to the mortgage crisis in the middle 
            of the last decade.  Dodd-Frank made significant changes to 
            the American financial regulatory environment and affects all 
            federal financial regulatory agencies and almost every aspect 
            of the nation's financial services industry.  The Federal 
            Reserve Board (FRB) recently promulgated regulations 
            implementing Dodd-Frank.  This bill updates state law to 
            conform to provisions of Dodd-Frank that reform the mortgage 
            business.
                
            3)Support  .  The California Government Relations Subcommittee of 
            the Appraisal Institute, sponsor of this measure, states, "SB 
            6 is largely technical, to make sure that federal rules and 
            state rules align on important questions of inappropriate 
            pressure on appraisers and conflicts of interest in rendering 
            real property value conclusions.  As the appraisal process has 
            been implicated to some degree in evaluations of the national 
            financial crisis, it is important that state and federal laws 
            be consistent."
                
            4)Previous legislation  . 

             a)   SB 237 (Machado) Chapter 173, Statues of 2009, required 
               management companies doing business in California to 
               register with the Office of Real Estate Appraisers and 
               enacted a set of allowable and prohibited actions for AMCs 
               and appraisers.

             b)   SB 223 (Machado) Chapter 291, Statutes of 2007, 
               prohibits any person with an interest in a real estate 
               transaction from inappropriately influencing, or attempting 
               to inappropriately influence, a real property appraiser 
               with the aim of convincing the appraiser to alter his or 








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               her value conclusion.  


           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081