BILL ANALYSIS Ó
AB 1091
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Date of Hearing: May 24, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
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
SUMMARY
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.
COMMENTS
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
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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