BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1091
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1091 (Skinner)
          As Amended  June 25, 2013
          Majority vote
           
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          |ASSEMBLY:  |76-0 |(May 29, 2013)  |SENATE: |37-0 |(August 19,    |
          |           |     |                |        |     |2013)          |
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           Original Committee Reference:    B. & F.  

           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  
            five or fewer 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  
            authority of their license.

           The Senate amendments  make technical and clarifying changes.
           
          EXISTING LAW  : 

          1)Provides for the regulation of finance lenders under the CFLL.  








                                                                  AB 1091
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             (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 the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state 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  
          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  








                                                                  AB 1091
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            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: 0001465