BILL NUMBER: SB 217	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 29, 2011
	AMENDED IN ASSEMBLY  JUNE 16, 2011

INTRODUCED BY   Senator Vargas

                        FEBRUARY 9, 2011

   An act to amend Section 22013 of, and to add Section 22065 to, the
Financial Code, relating to mortgage loan originators.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 217, as amended, Vargas. California Finance Lenders Law:
exemptions: mortgage loan originators.
   Existing law, the California Finance Lenders Law, provides for the
licensure and regulation of finance lenders and brokers and mortgage
loan originators, as defined, by the Commissioner of Corporations.
Existing law exempts from the provisions of the California Finance
Lenders Law specified persons and entities, including any person
doing business under any law of any state or of the United States
relating to banks, trust companies, savings and loan associations,
and insurance premium finance agencies. A willful violation of the
California Finance Lenders Law is a crime.
   This bill would exempt from the definition of a mortgage loan
originator, under the California Finance Lenders Law, an individual
who acts as a mortgage loan originator for 5 or fewer residential
mortgage loans during a calendar year, if specified requirements are
met. The bill would also authorize a person exempt from the
provisions of the California Finance Lenders Law to apply to the
commissioner for an exempt company registration for the purpose of
sponsoring one or more individuals required to be licensed as
mortgage loan originators under the federal Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) if
specified requirements are met, including that the mortgage loan
originator is covered under an exclusive written contract with, and
originates mortgage loans solely on behalf of, the exempt person. The
bill would require an exempt person to comply with all rules and
orders that the commissioner deems necessary to ensure compliance
with the SAFE Act and would require an exempt person to pay an annual
registration fee established by the commissioner.
   Because a willful violation of these requirements under the
California Finance Lenders Law would be a crime, this bill would
impose a state-mandated local program.
   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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 22013 of the Financial Code is amended to read:

   22013.  (a) "Mortgage loan originator" means an individual who,
for compensation or gain, or in the expectation of compensation or
gain, takes a residential mortgage loan application or offers or
negotiates terms of a residential mortgage loan.
   (b) Mortgage loan originator does not include any of the
following:
   (1) An individual who performs purely administrative or clerical
tasks on behalf of a person meeting the definition of a mortgage loan
originator, except as provided in subdivision (c) of Section 22014.
The term "administrative or clerical tasks" means the receipt,
collection, and distribution of information common for the processing
or underwriting of a loan in the mortgage industry and communication
with a consumer to obtain information necessary for the processing
or underwriting of a residential mortgage loan, to the extent that
the communication does not include offering or negotiating loan rates
or terms, or counseling consumers about residential mortgage loan
rates or terms.
   (2) An individual who solely renegotiates terms for existing
mortgage loans held or serviced by his or her employer and who does
not otherwise act as a mortgage loan originator, unless the United
States Department of Housing and Urban Development or a court of
competent jurisdiction determines that the SAFE Act requires such an
employee to be licensed as a mortgage loan originator under state
laws implementing the SAFE Act.
   (3) An individual that is solely involved in extensions of credit
relating to timeshare plans, as that term is defined in Section 101
(53D) of Title 11 of the United States Code.
   (4) An individual licensed as a mortgage loan originator pursuant
to the provisions of Article 2.1 (commencing with Section 10166.01)
of Chapter 3 of Part 1 of Division 4 of the Business and Professions
Code and the SAFE Act.
   (5) (A) An individual who acts as a mortgage loan originator for
five or fewer residential mortgage loans during a calendar year shall
not be deemed a mortgage loan originator and shall not be required
to obtain a mortgage loan originator license from the commissioner if
all of the following requirements are met:
   (i) The individual acts as a mortgage loan originator on behalf of
a single licensee.
   (ii) The licensee on whose behalf the individual acts brokers the
loans exclusively to a single depository institution.
   (iii) Before authorizing the individual to originate mortgage
loans on its behalf, the licensee submits the name of the individual
to the commissioner; agrees in writing, on a form acceptable to the
commissioner, to be accountable for the actions of the individual in
connection with the loan origination; and provides any other
information to the commissioner about the individual that the
commissioner may request.
   (B) Any licensee that becomes aware of an individual who is
originating residential mortgage loans on its behalf and who has
exceeded the five loan per calendar year threshold shall immediately
notify the commissioner and shall direct the individual to cease
engaging in mortgage loan originator activity, until he or she
obtains a mortgage loan originator license.
   (C) Notwithstanding Sections 22004 and 22059, a licensee may
broker loans to a depository institution  pursuant to this
paragraph  .
   (D) The exclusion from licensing provided by this paragraph shall
not apply if the Director of the federal Consumer Financial
Protection Bureau or a court of competent jurisdiction makes a final
and specific determination that this paragraph does not comply with
the requirements of Section 1508 of the SAFE Act (12 U.S.C. Sec.
5107).
   (c) "Registered mortgage loan originator" means any individual who
is all of the following:
   (1) Meets the definition of mortgage loan originator.
   (2) Is an employee of a depository institution, a subsidiary that
is owned and controlled by a depository institution and regulated by
a federal banking agency, or an institution regulated by the Farm
Credit Administration.
   (3) Is registered with, and maintains a unique identifier through,
the Nationwide Mortgage Licensing System and Registry.
   (d) "Loan processor or underwriter" means an individual who
performs clerical or support duties as an employee at the direction
of, and subject to the supervision and instruction of, a mortgage
loan originator licensed by the state or a registered mortgage loan
originator.
  SEC. 2.  Section 22065 is added to the Financial Code, to read:
   22065.  (a) Persons not subject to this division may apply to the
commissioner for an exempt company registration for the purpose of
sponsoring one or more individuals required to be licensed as
mortgage loan originators pursuant to the SAFE Act. A mortgage loan
originator eligible for licensure pursuant to this section shall meet
all of the following requirements:
   (1) Be covered under an exclusive written contract with, and
originate mortgage loans solely on behalf of, that exempt person.
   (2) Be a licensed insurance producer in good standing under
Article 3 (commencing with Section 1631) of Chapter 5 of Part 2 of
Division 1 of the Insurance Code.
   (3) Hold a license from the Insurance Commissioner as an insurance
producer for an insurer that controls, is controlled by, or is under
common control with that exempt person.
   (b) An exempt person shall comply with all rules and orders that
the commissioner deems necessary to ensure compliance with the SAFE
Act and shall pay an annual registration fee established by the
commissioner.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.