BILL ANALYSIS �
AB 1091
Page 1
ASSEMBLY THIRD READING
AB 1091 (Skinner)
As Amended May 6, 2013
Majority vote
BANKING & FINANCE 11-1 APPROPRIATIONS 16-0
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|Ayes:|Dickinson, Achadjian, |Ayes:|Gatto, Harkey, Bigelow, |
| |Blumenfield, Bonta, Chau, | |Bocanegra, Bradford, Ian |
| |Gatto, Hagman, Linder, | |Calderon, Campos, Eggman, |
| |Perea, Torres, Weber | |Gomez, Hall, Ammiano, |
| | | |Linder, Pan, Quirk, |
| | | |Wagner, Weber |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell | | |
| | | | |
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SUMMARY : Provides that the commissioner of the Department of
Corporations (Commissioner) may issue a corrective enforcement
citation with associated penalty 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 commissioner 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.
3)Provides that the CFLL does not apply to a person that makes
no more than five commercial loans in a 12-month period and
that the loans are incidental to that person's business.
4)Clarifies that the CFLL does not apply to industrial
development corporations when acting under federal law or
other state authority, or pawnbrokers when acting under
AB 1091
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authority of their license.
EXISTING LAW :
1)Provides for the regulation of finance lenders under the CFLL.
(Financial Code Section 22000 et seq).
2)Regulates non-bank residential mortgage lenders under the
CRMLA. (Financial Code, Section 50000 et seq).
FISCAL EFFECT : According to Assembly Appropriations Committee,
minor and absorbable costs.
COMMENTS : This bill expands the enforcement powers of
Department of Corporations (DOC) under the CFLL by:
1)Prohibiting a licensee from conducting business in an unsafe
or injurious manner, consistent with the protection in the
CRMLA.
2)Prohibiting a licensee from engaging in any unfair or
deceptive act or practice, consistent with the protection in
the CRMLA.
3)Prohibiting a licensee from knowingly misrepresenting,
circumventing, or concealing, through subterfuge or device,
any material aspect or information regarding a transaction to
which the licensee is a party, consistent with the protection
in the CRMLA.
In 2011 the Legislature passed SB 53 (Calderon), Chapter 717,
Statutes of 2011, that gave the commissioner of the Department
of Real Estate (DRE) the authority to issue citations and/or
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fines to licensees found to have violated provisions of the Real
Estate Law. This bill attempts to bring the same provisions of
the Real Estate Law into the CRMLA and the CFLL with the
following:
1)Provides the DOC with the authority to bring administrative
penalties and desist and refrain orders through the issuance
of a citation, under both the CRMLA and the CFLL.
2)Allows the DOC to take the citation to superior court and
obtain a judgment, thereby facilitating collection of
penalties, where the penalties are not paid.
Additionally, this bill provides for an exemption from licensure
under the CFLL to ensure that exempt lenders are only exempt for
activities that are overseen by another regulatory authority.
This exemption would allow businesses that are not lenders to
make a de minimis number of commercial loans, such as bridge
loans, by increasing the exemption for commercial lending from
one loan to five loans in a 12 month period so long as the loans
are incidental to the person's business.
Analysis Prepared by : Mark Farouk / B. & F. / (916) 319-3081
FN: 0000748