BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 1091
                                                                  Page  1

          Date of Hearing:   May 24, 2013

                                  Mike Gatto, Chair

                    AB 1091 (Skinner) - As Amended:  May 6, 2013 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            11-1

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


          This bill provides the Department of Corporations may issue a  
          citation to a licensee under the California Finance Lenders Law  
          (CFLL) or the California Residential Mortgage Lending Act  
          (CRMLA) under certain circumstances.  Specifically, this bill:

          1)Specifies that upon inspection, examination or investigation,  
            if the department believes that a licensee under the CFLL or  
            CRMLA has violated their licensing law then the commissioner  
            may issue a citation to the licensee or person that may  
            contain a desist and refrain order and the assessment of a  
            $2,500 administrative penalty per violation.

          2)Provides that a CFLL may not engage in specified practices,  
            nor knowingly misrepresent, circumvent, or conceal, through  
            subterfuge or device, any material aspect or information  
            regarding a transaction to which the licensee is a party.

          FISCAL EFFECT  

          Minor and absorbable.


           1)Purpose.   According to the author, AB 1091 will allow  
            administrative citations under the CFLL or CRMLA and allow  
            enforcement of unfair and deceptive practices law under the  
            CFLL.  The bill also extends other protections under the CRMLA  
            to the CFLL to provide greater borrower protection.  The  
            author notes AB 1091 clarifies the exemption from licensure  
            for pawnbrokers and lenders that participate in federal  


                                                                  AB 1091
                                                                  Page  2

            lending programs applies only to loans made under those  
            programs.  The bill also provides flexibility by permitting a  
            lender to make up to five commercial loans a year without  
            obtaining a license under CFLL.  The author argues existing  
            law creates an unnecessary burden on businesses that may not  
            be engaged in the business of lending but just may make a few  
            loans in a context unrelated to the business of lending.  

          2)Background.   The Department of Corporations administers two  
            lending laws under which residential mortgages loan may be  
            made.  Most of the mortgage loan services that are state  
            licensed by the Department under CRMLA.  However, lenders  
            under the CFLL may also service loans.  Additionally under the  
            CFLL, the Department licenses and regulates consumer and  
            commercial lenders.  
            3)Reorganization  .  Last year the Legislature acted on the  
            Governor's Reorganization Plan No. 2, which assigns and  
            reorganizes the functions of state government among executive  
            offices and agencies.  Among the many changes was the  
            reorganization of Department of Corporations and the  
            Department of financial Institutions into a new department,  
            the Department of Business Oversight (DBO) that becomes  
            operational July 1, 2013.  DBO will assume the  
            responsibilities in this bill.  
            4)Previous legislation  .  SB 53 (Calderon), Chapter 717 Statutes  
            of 2011, gave the commissioner of the Department of Real  
            Estate (DRE) the authority to issue citations and/or fine  
            licensees who violate provisions of the Real Estate Law.    

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