BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1091|
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THIRD READING
Bill No: AB 1091
Author: Skinner (D)
Amended: 6/25/13 in Senate
Vote: 21
SENATE BANKING & FINANCIAL INST. COMM. : 9-0, 6/19/13
AYES: Correa, Berryhill, Beall, Calderon, Hill, Hueso, Roth,
Torres, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/29/13 - See last page for vote
SUBJECT : Finance and mortgage lenders
SOURCE : Author
DIGEST : This bill authorizes the Commissioner of the
Department of Corporations (Commissioner) to issue citations and
levy fines for violations of the California Finance Lenders Law
(CFLL) and California Residential Mortgage Lending Act (CRMLA),
as specified; prohibits specified acts by CFLL licensees; and
revises the de minimis exemption for commercial finance lenders
within the CFLL.
ANALYSIS :
Existing law:
1.Authorizes a de minimis exemption under the CFLL for persons
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who make no more than one commercial loan in a 12-month period
(Financial Code Section 22050).
2.Prohibits a person subject to the CFLL from (a) making a
materially false or misleading statement or representation to
a borrower about the terms or conditions of that borrower's
loan, when making or brokering the loan; or (b) advertising,
printing, displaying, publishing, distributing, or
broadcasting, or causing or permitting to be advertised,
printed, displayed, published, distributed, or broadcast in
any manner, any statement or representation that is false,
misleading, or deceptive, or that omits material information,
as specified.
3.Provides that any person who willfully violates any provisions
of the CFLL, or who willfully violates any rule or order
adopted pursuant to the CFLL, is liable for a civil penalty
not to exceed $2,500 for each violation, which must be
assessed and recovered in a civil action brought in the name
of the people of the State of California by the Commissioner
in any court of competent jurisdiction.
4.Provides that whenever, in the opinion of the Commissioner,
any person is engaged in the business as a broker or finance
lender, or a mortgage loan originator, without a license from
the Commissioner, or any licensee is violating any provision
of the CFLL, the Commissioner may order that person or
licensee to desist and to refrain from engaging in the
business or further violating the CFLL. If a written request
for a hearing is filed by the recipient of an order within 30
days after the order is served, and no hearing is held within
30 days thereafter, the order is rescinded.
5.Provides that any person who violates a provision of the
CRMLA, or any rule or order issued pursuant to the CRMLA, is
liable for a civil penalty not to exceed $2,500 for each
violation, which must be assessed and recovered in a civil
action brought in the name of the people of the State of
California by the Commissioner in any court of competent
jurisdiction. Further provides that any person who willfully
violates any provision of the CRMLA or any rule or order
issued pursuant to the CRMLA is, upon conviction, liable for a
fine of not more than $10,000 or imprisonment in a county jail
for not more than one year, or both that fine and
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imprisonment. No person may be imprisoned for the violation
of any rule or order unless he/she had knowledge of the rule
or order.
This bill:
1.Revises the de minimis exemption for commercial finance
lenders, by providing that the CFLL does not apply to any
person who makes five or fewer commercial loans in a 12-month
period, provided the loans are incidental to the business of
the person relying on the exemption.
2.Prohibits, additionally, a CFLL licensee from doing any of the
following:
A. Committing an act in violation of Civil Code Section
1695.13 which states that it is unlawful for any person to
initiate, enter into, negotiate, or consummate any
transaction involving residential real property in
foreclosure, if such person, by the terms of such
transaction, takes unconscionable advantage of the property
owner in foreclosure.
B. Engaging in an act in violation of Business and
Professions Code Section 17200 which states that it is
unlawful to engage in unfair and deceptive business
practices or advertising practices, as specified.
C. Knowingly misrepresenting, circumventing, or concealing,
through subterfuge or device, any material aspect or
information regarding a transaction to which the person is
a party.
D. Committing an act that constitutes fraud or dishonest
dealings.
1.Authorizes the Commissioner to direct the discontinuance of
specified practices, by written order, of a CFFL licensee if,
after an investigation, there are reasonable grounds to
believe that a person is conducting business in an unsafe or
injurious manner. Requires the Commissioner to address the
written order to that person which shall be effective
immediately but shall not become final, except as specified.
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2.Authorizes the Commissioner, under both the CFLL and the
CRMLA, to issue citations and levy administrative fines to any
person that the Commissioner has cause to believe is violating
any provision of either law or any rule or order issued
pursuant to either law. Specifics of the citations and fines
will be as follows:
A. The citation must be in writing, and describe with
particularity the basis for the citation. Each citation
may contain an order to correct the violation(s) identified
and provide a reasonable time period(s) in which to do so.
Each citation may assess an administrative fine not to
exceed $2,500 (per citation, not per violation).
B. A citation issued or a fine assessed pursuant to this
authority, while constituting punishment for a violation of
law, will be in lieu of other administrative discipline by
the Commissioner for the offense(s) cited. Notwithstanding
this point, the Commissioner is authorized to issue an
order to desist and refrain from engaging in a specific
business activity or activities to a person issued a
citation.
C. Citations will become final within 30 days, if not
contested by the recipient of the citation. Recipients
will be able to contest their citations using procedures
set forth in the Administrative Procedures Act.
D. Once all administrative appeal remedies have been
exhausted, if a cited person fails to comply with the
citation or pay the assessed fine, the Commissioner is
authorized to apply to the appropriate superior court for a
judgment in the amount of the administrative fine and an
order compelling the cited licensee or person to comply
with the order. The application, which is to include a
certified copy of the final order of the Commissioner, will
constitute a sufficient showing to warrant the issuance of
the judgment and order.
Comments
According to the author's office, this bill will improve the
Department of Corporation's ability to sanction CFLL and CRMLA
licensees who violate their licensing laws, and to give the
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department more authority to stop the unlicensed activities of
persons who require a CFLL or CRMLA license, but have failed to
obtain one. It also contains a provision intended to update the
commercial portion of the CFLL to minimize unnecessary
over-regulation of businesses.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
ASSEMBLY FLOOR : 76-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Fong, Fox, Frazier, Beth
Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Patterson, Perea, V. Manuel P�rez, Quirk,
Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A.
P�rez
NO VOTE RECORDED: Donnelly, Eggman, Holden, Vacancy
MW:ej 8/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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