BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 376|
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THIRD READING
Bill No: SB 376
Author: Fuller (R), et al.
Amended: 4/7/11
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 9-0,
4/11/11
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Walters, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Real estate brokers
SOURCE : Western Manufactured Housing Communities
Association
DIGEST : This bill provides that a person licensed as a
real estate broker and a mortgage loan originator by the
Department of Real Estate and who makes, arranges, or
services chattel mobilehome loans, or what are called
seller carry back chattel loans on mobilehomes, will only
be required to be licensed pursuant to the Real Estate Law
and will not be required to be licensed by the Department
of Corporations as a finance lender or broker under the
California Finance Lenders Law.
ANALYSIS :
Existing Real Estate Law:
CONTINUED
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1. Establishes in the Business and Transportation Agency
the Department of Real Estate (DRE), the chief officer
of which is the Real Estate Commissioner (Commissioner),
and specifies that the Commissioner, through the DRE, is
responsible for the regulation of real estate
transactions and licensure of real estate agents,
brokers and salespersons.
2. Provides for the examination, licensure and regulation
of real estate brokers and real estate salespersons by
the DRE and for payment of specified fees for licenses
issued in that regard, which fees are deposited into the
Real Estate Fund.
3. Specifies that a licensed real estate broker is a person
who may solicit borrowers or lenders for or negotiate
loans or collect payments or perform services for
borrowers or lenders or note owners in connection with
loans secured directly or collaterally by liens on real
property or on a business opportunity.
4. Specifies that a licensed real estate broker is a person
who may sell or offer to sell, buy or offer to buy, or
exchange or offer to exchange a real property sales
contract, or a promissory note secured directly or
collaterally by a lien on real property or on a business
opportunity, and performs services for the holders
thereof.
5. Specifies other requirements for real estate brokers who
solicit borrowers or lenders or negotiate loans or
collect payments or perform services for borrowers or
lenders relative to loans secured by real property,
including a limited notification provision for brokers
who advance their own funds as defined.
6. Provides that a person licensed as a real estate broker
may sell, or offer to sell, buy or offer to buy, solicit
prospective purchasers of and perform other activities
related to purchase, sale, or exchange of any
manufactured home or mobilehome only if the mobilehome
has been registered under Part 2 (commencing with
Section 18000) of Division 13 of the Health and Safety
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Code.
7. Prohibits any real estate licensee from performing
certain activities related to the advertising or offer
to sell a manufactured home or mobilehome, and from
charging additional fees upon transfer of title and from
failing to provide delivery and additional
documentation, as specified.
8. Defines a "mortgage loan originator" as an individual
who takes a residential mortgage loan application or
offers or negotiates terms of a residential mortgage
loan for compensation or gain.
9. Defines "residential mortgage loan" as any loan
primarily for personal, family, or household use that is
secured by a mortgage, deed of trust, or other
equivalent consensual security interest on a dwelling,
or residential real estate upon which is constructed or
intended to be constructed a dwelling. "Dwelling" means
a residential structure that contains one to four units,
whether or not that structure is attached to real
property. The term includes an individual condominium,
cooperative unit, mobilehome, or trailer, if it is used
as a residence.
10.Requires a mortgage loan originator to obtain and
maintain a real estate license and to obtain and
maintain a real estate license endorsement, as
specified, identifying that individual as a licensed
mortgage loan originator.
This bill provides that a person licensed as a real estate
broker who performs any of those acts involved in the
selling, purchasing or renting of real property, or in
arranging loans or making other arrangements for the
purchase or sale of real property, and in addition makes,
arranges, or services chattel mobilehome loans for
registered mobilehomes, need only meet the requirements for
licensure under the Real Estate Law.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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SUPPORT : (Verified 5/2/11)
Western Manufactured Housing Communities Association
(source)
ARGUMENTS IN SUPPORT : According to the bill's sponsor,
the Western Manufactured Housing Communities Association
(WMA), the SAFE Act and the newly amended provisions of the
Truth in Lending Act HR 4173, 2009, Dodd-Frank (Lending
Act), will have a devastating effect on mobilehome parks in
the state of California. In California, there are over
4,600 mobilehome parks representing 390,000 spaces.
Mobilehome parks provide a very viable source of privately
owned, affordable housing.
The WMA explains that prior to enactment of the SAFE Act,
the amendments to the Lending Act, and implementing
legislation for the SAFE Act, SB 36 (Calderon), Chapter
160, Statutes of 2009, park owners were making seller carry
back chattel loans on used mobilehomes using their own
money to fund the loans and were not required to be
licensed as lenders under the Department of Corporations
(DOC). This was due to the fact the occasional seller
carry back loans were not categorized as "engaged in the
business of chattel lending" which would have required a
finance lender license under the DOC.
WMA further explains that as traditional lending on used
mobilehomes has not been available for a number of years
and traditional lenders were not willing to make $5,000 to
$20,000 chattel loans on used mobilehomes; park owners have
been making these loans out of necessity to rent their
spaces. The SAFE Act redefined "residential mortgage
loans" to include chattel loans on mobilehomes whether or
not they were attached to real property. WMA contends that
mobilehome parkowners were unaware until January 2010, that
loans on mobilehomes, which were not permanently affixed to
real property, were specifically defined as residential
mortgage loans.
WMA argues that parkowners need to self-finance these used
mobilehomes in order to rent out their spaces in their
mobilehome parks. Thus, parkowners who are engaged in
making seller carry back loans on mobilehomes that have
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acquired by default, abandonment or warehouse liens, are
now required to be licensed as mortgage loan originators
and to be licensed as a finance lender by DOC in order to
finance homes which they own and self-finance. "This is a
very costly and difficult process for a park owner who
makes an occasional seller financed chattel loan."
CTW:mw 5/2/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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