Amended in Senate June 19, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1396

Introduced by Committee on Banking and Finance (Dickinson (Chair), Morrell (Vice Chair), Achadjian, Blumenfield, Bonta, Chau, Gatto, Harkey, Linder, Perea, Torres, and Weber)

March 6, 2013

An act to amend Sections 25005, 29503, and 31004 of the Corporations Code, to amend Sections 125, 300, 320, 4805.055, 5104, 5106, 12003, 14003, 14200.1, 14200.2, 17002, 18002, 18002.5, 22005, 30002, 31055, and 50003 of, to repeal and add Sections 321, 351, and 371 of, and to amend the headings of Chapter 3 (commencing with Section 300) of, and Article 2 (commencing with Section 320) of Chapter 3 of Division 1 of, the Financial Code, and to amend Sections 11552, 13978.6, and 13984 of, and to add Section 12804 to, the Government Code, relating to financial institutions.

LEGISLATIVE COUNSEL’S DIGEST

AB 1396, as amended, Committee on Banking and Finance. Department of Financial Services.

Existing law, until July 1, 2013, creates the Department of Corporations and the Department of Financial Institutions within the Business, Transportation and Housing Agency. The Department of Corporations provides for the licensure and regulation of businesses engaged in financial transactions, including securities brokers and dealers, investment advisors, financial planners, and certain fiduciaries and lenders, as specified. The Department of Financial Institutions oversees the operation of state-chartered financial institutions, including banks, credit unions, and various entities providing financial services. The Commissioner of Corporations and the Commissioner of Financial Institutions are responsible for overseeing and carrying out the duties and responsibilities of their respective departments.

The Governor’s Reorganization Plan No. 2 of 2012 (GRP 2), effective July 1, 2013, abolishes the Department of Corporations and the Department of Financial Institutions and transfer their responsibilities to the Department of Business Oversight, which would be established within the Business and Consumer Services Agency. The executive officer of the new Department of Business Oversight would be the Commissioner of Business Oversight. The department is organized to include a Division of Corporations and a Division of Financial Institutions, each of which would be overseen by a deputy commissioner of the department.

This bill would delete references to the Department of Business Oversight, as provided for in the GRP 2, and would instead transfer the duties of the Department of Corporations and the Department of Financial Institutions to the Department of Financial Services, as specified. The bill also would make various technical changes provided for in the GRP 2.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 25005 of the Corporations Code is
amended to read:

25005.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Corporations. end delete begin insert Services. end insert

SEC. 2.  

Section 29503 of the Corporations Code is amended
to read:

29503.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Corporations. end delete begin insert Services. end insert

SEC. 3.  

Section 31004 of the Corporations Code is amended
to read:

31004.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Financial Institutions. end delete
begin insert Services. end insert

SEC. 4.  

Section 125 of the Financial Code is amended to read:

125.  

“Commissioner” means the Commissioner of Financial
Services and “department” means the Department of Financial
Services.

SEC. 5.  

The heading of Chapter 3 (commencing with Section
300) of Division 1 of the Financial Code is amended to read:

 

Chapter  3. Department of Financial Services

 

SEC. 6.  

Section 300 of the Financial Code, as amended by
Section 5 of Chapter 147 of the Statutes of 2012, is amended to
read:

300.  

(a) In this section:

(1) “Business and industrial development corporation” means
a corporation licensed under Division 15 (commencing with
Section 31000).

(2) “Payment instrument” has the same meaning as set forth in
Section 33059.

(3) “Traveler’s check” has the same meaning as set forth in
Section 1803.

(b) There is in the state government, in the Business, Consumer
Services, and Housing Agency, a Department of Financial Services,
which has charge of the execution of, among other laws, the laws
of this state relating to any of the following: (1) banks or trust
companies or the banking or trust business; (2) savings associations
or the savings association business; (3) credit unions or the credit
union business; (4) persons who engage in the business of receiving
money for transmission to foreign nations or such business; (5)
issuers of traveler’s checks or the traveler’s check business; (6)
issuers of payment instruments or the payment instrument business;
(7) business and industrial development corporations or the
business and industrial development corporation business begin delete , end delete begin insert ; end insert or (8)
insurance premium finance agencies or the insurance premium
finance business.

SEC. 7.  

The heading of Article 2 (commencing with Section
320) of Chapter 3 of Division 1 of the Financial Code is amended
to read:

 

Article 2.  Commissioner of Financial Services

 

SEC. 8.  

Section 320 of the Financial Code is amended to read:

320.  

The chief officer of the Department of Financial Services
is the Commissioner of Financial Services. The Commissioner of
Financial Services is the head of the department, with the authority
and responsibility over all officers, employees, and activities in
the department, and, except as otherwise provided in this code, is
subject to the provisions of the Government Code relating to
department heads, but need not reside in Sacramento.

SEC. 9.  

Section 321 of the Financial Code is repealed.

SEC. 10.  

Section 321 is added to the Financial Code, to read:

321.  

(a) In this section, “order” means any approval, consent,
authorization, exemption, denial, prohibition, requirement, or other
administrative action, applicable to a specific case.

(b) The office of the Commissioner of Financial Institutions
and the Department of Financial Institutions are abolished. All
powers, duties, responsibilities, and functions of the Commissioner
of Financial Institutions and the Department of Financial
Institutions are transferred to the Commissioner of Financial
Services and the Department of Financial Services, respectively.
The Commissioner of Financial Services and the Department of
Financial Services succeed to all of the rights and property of the
Commissioner of Financial Institutions and Department of
Financial Institutions, respectively; the Commissioner of Financial
Services and the Department of Financial Services are subject to
all the debts and liabilities of the Commissioner of Financial
Institutions and the Department of Financial Institutions,
respectively, as if the Commissioner of Financial Services and the
Department of Financial Services had incurred them. Any action
or proceeding by or against the Commissioner of Financial
Institutions or the Department of Financial Institutions may be
prosecuted to judgment, which shall bind the Commissioner of
Financial Services or the Department of Financial Services,
respectively, or the Commissioner of Financial Services or the
Department of Financial Services may be proceeded against or
substituted in place of the Commissioner of Financial Institutions
or the Department of Financial Institutions, respectively.
References in the Constitution of the State of California or in any
statute or regulation to the Superintendent of Banks or the
Commissioner of Financial Institutions or to the State Banking
Department or the Department of Financial Institutions mean the
Commissioner of Financial Services or the Department of Financial
Services, respectively. All agreements entered into with, and orders
and regulations issued by, the Commissioner of Financial
Institutions or the Department of Financial Institutions shall
continue in effect as if the agreements were entered into with, and
the orders and regulations were issued by, the Commissioner of
Financial Services or the Department of Financial Services,
respectively.

(c) The office of the Commissioner of Corporations and the
Department of Corporations are abolished. All powers, duties,
responsibilities, and functions of the Commissioner of Corporations
and the Department of Corporations are transferred to the
Commissioner of Financial Services and the Department of
Financial Services, respectively. The Commissioner of Financial
Services and the Department of Financial Services succeed to all
of the rights and property of the Commissioner of Corporations
and Department of Corporations, respectively; the Commissioner
of Financial Services and the Department of Financial Services
are subject to all the debts and liabilities of the Commissioner of
Corporations and the Department of Corporations, respectively,
as if the Commissioner of Financial Services and the Department
of Financial Services had incurred them. Any action or proceeding
by or against the Commissioner of Corporations or the Department
of Corporations may be prosecuted to judgment, which shall bind
the Commissioner of Financial Services or the Department of
Financial Services, respectively, or the Commissioner of Financial
Services or the Department of Financial Services may be proceeded
against or substituted in place of the Commissioner of Corporations
or the Department of Corporations, respectively. References in the
Constitution of the State of California or in any statute or regulation
to the Commissioner of Corporations or the Department of
Corporations mean the Commissioner of Financial Services or the
Department of Financial Services, respectively. All agreements
entered into with, and orders and regulations issued by, the
Commissioner of Corporations or the Department of Corporations
shall continue in effect as if the agreements were entered into with,
and the orders and regulations were issued by, the Commissioner
of Financial Services or the Department of Financial Services,
respectively.

SEC. 11.  

Section 351 of the Financial Code is repealed.

SEC. 12.  

Section 351 is added to the Financial Code, to read:

351.  

(a) The chief officer of the Division of Corporations is
the begin insert Senior end insert Deputy Commissioner of Financial Services for the
Division of Corporations. The begin insert Senior end insert Deputy Commissioner of
Financial Services for the Division of Corporations shall, under
the direction of the commissioner, administer the laws of this state
that were, prior to July 1, 2013, under the charge of the Department
of Corporations. The begin insert Senior end insert Deputy Commissioner of Financial
Services for the Division of Corporations shall be appointed by
the Governor begin insert , subject to Senate confirmation, end insert and shall hold office
at the pleasure of the Governor. The begin insert Senior end insert Deputy Commissioner
of Financial Services for the Division of Corporations shall receive
an annual salary as fixed by the Governor.

(b) The chief officer of the Division of Financial Institutions is
the begin insert Senior end insert Deputy Commissioner of Financial Services for the
Division of Financial Institutions. The begin insert Senior end insert Deputy
Commissioner of Financial Services for the Division of Financial
Institutions shall, under the direction of the commissioner,
administer the laws of this state that were, prior to July 1, 2013,
under the charge of the Department of Financial Institutions. The
begin insert Senior end insert Deputy Commissioner of Financial Services for the Division
of Financial Institutions shall be appointed by the Governor begin insert , subject
to Senate confirmation, end insert and shall hold office at the pleasure of the
Governor. The begin insert Senior end insert Deputy Commissioner of Financial Services
for the Division of Financial Institutions shall receive an annual
salary as fixed by the Governor.

SEC. 13.  

Section 371 of the Financial Code is repealed.

SEC. 14.  

Section 371 is added to the Financial Code, to read:

371.  

(a) There is in the Department of Financial Services, the
Division of begin delete Corporations. The Division of Corporations end delete
begin insert Corporations, under the direction of the Senior Deputy
Commissioner of Financial Services for the Division of
Corporations. The senior deputy commissioner end insert has charge of the
execution of the laws of the state that were, prior to July 1, 2013,
under the charge of the Department of Corporations.

(b) There is in the Department of Financial Services, the begin insert Senior
Deputy Commissioner of Financial Services for the end insert Division of
Financial Institutions. begin delete The end delete begin insert Under the direction of the senior deputy
commissioner, the end insert Division of Financial Institutions has charge of
the execution of the laws of the state that were, prior to July 1,
2013, under the charge of the Department of Financial Institutions.

SEC. 15.  

Section 4805.055 of the Financial Code is amended
to read:

4805.055.  

“Commissioner” means the begin delete Deputy end delete Commissioner
of Financial begin delete Services for the Division of Financial Institutions. end delete
begin insert Services. end insert

SEC. 16.  

Section 5104 of the Financial Code is amended to
read:

5104.  

“Commissioner” means begin delete Deputy end delete the Commissioner of
Financial begin delete Services for the Division of Financial Institutions. end delete
begin insert Services. end insert

SEC. 17.  

Section 5106 of the Financial Code is amended to
read:

5106.  

“Department” means begin delete the Division of Financial
Institutions in end delete the Department of Financial Services.

SEC. 18.  

Section 12003 of the Financial Code is amended to
read:

12003.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial Services begin delete for the Division of Corporations end delete , or any deputy,
investigator, auditor, or any other person employed by him or her.

SEC. 19.  

Section 14003 of the Financial Code is amended to
read:

14003.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Financial Institutions. end delete
begin insert Services. end insert

SEC. 20.  

Section 14200.1 of the Financial Code is amended
to read:

14200.1.  

There is in the Department of Financial Services, the
Office of Credit Unions. The Office of Credit Unions has charge
of the execution of the laws of this state relating to credit unions
or to the credit union business.

SEC. 21.  

Section 14200.2 of the Financial Code is amended
to read:

14200.2.  

The Chief Officer of the Office of Credit Unions is
the Deputy Commissioner of begin delete Financial Services for end delete the Office of
Credit Unions. The begin delete Chief end delete begin insert Deputy Commissioner end insert of the Office of
Credit Unions begin insert , under the direction and on behalf of the Senior
Deputy Commissioner of Business Oversight for the Division of
Financial Institutions, end insert shall administer the laws of this state relating
to credit unions or the credit union begin delete business under the direction of
and on behalf of the commissioner. The Chief end delete begin insert business. The Deputy
Commissioner end insert of the Office of Credit Unions shall be appointed
by the Governor and shall hold office at the pleasure of the
Governor. The begin delete Chief end delete begin insert Deputy Commissioner end insert of the Office of Credit
Unions shall receive an annual salary as fixed by the Governor.

SEC. 22.  

Section 17002 of the Financial Code is amended to
read:

17002.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Corporations. end delete begin insert Services. end insert

SEC. 23.  

Section 18002 of the Financial Code is amended to
read:

18002.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Financial Institutions. end delete
begin insert Services. end insert

SEC. 24.  

Section 18002.5 of the Financial Code is amended
to read:

18002.5.  

“Department” means the begin delete Division of Financial
Institutions in the end delete Department of Financial Services.

SEC. 25.  

Section 22005 of the Financial Code is amended to
read:

22005.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Corporations. end delete begin insert Services. end insert

SEC. 26.  

Section 30002 of the Financial Code is amended to
read:

30002.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Corporations. end delete begin insert Services. end insert

SEC. 27.  

Section 31055 of the Financial Code is amended to
read:

31055.  

“Commissioner” means the begin delete Deputy end delete Commissioner of
Financial Services begin delete for the Division of Financial Institutions end delete or any
person to whom the begin delete deputy end delete commissioner delegates the authority
to act for him or her in the particular matter.

SEC. 28.  

Section 50003 of the Financial Code is amended to
read:

50003.  

(a) “Annual audit” means a certified audit of the
licensee’s books, records, and systems of internal control performed
by an independent certified public accountant in accordance with
generally accepted accounting principles and generally accepted
auditing standards.

(b) “Borrower” means the loan applicant.

(c) “Buy” includes exchange, offer to buy, or solicitation to
buy.

(d) “Commissioner” means the begin delete Deputy end delete Commissioner of
Financial begin delete Services for the Division of Corporations. end delete begin insert Services. end insert

(e) “Control” means the possession, directly or indirectly, of
the power to direct, or cause the direction of, the management and
policies of a licensee under this division, whether through voting
or through the ownership of voting power of an entity that
possesses voting power of the licensee, or otherwise. Control is
presumed to exist if a person, directly or indirectly, owns, controls,
or holds 10 percent or more of the voting power of a licensee or
of an entity that owns, controls, or holds, with power to vote, 10
percent or more of the voting power of a licensee. No person shall
be deemed to control a licensee solely by reason of his or her status
as an officer or director of the licensee.

(f) “Depository institution” has the same meaning as in Section
3 of the Federal Deposit Insurance Act, and includes any credit
union.

(g) “Engage in the business” means the dissemination to the
public, or any part of the public, by means of written, printed, or
electronic communication or any communication by means of
recorded telephone messages or spoken on radio, television, or
similar communications media, of any information relating to the
making of residential mortgage loans, the servicing of residential
mortgage loans, or both. “Engage in the business” also means,
without limitation, making residential mortgage loans or servicing
residential mortgage loans, or both.

(h) “Federal banking agencies” means the Board of Governors
of the Federal Reserve System, the Comptroller of the Currency,
the Director of the Office of Thrift Supervision, the National Credit
Union Administration, and the Federal Deposit Insurance
Corporation.

(i) “In this state” includes any activity of a person relating to
making or servicing a residential mortgage loan that originates
from this state and is directed to persons outside this state, or that
originates from outside this state and is directed to persons inside
this state, or that originates inside this state and is directed to
persons inside this state, or that leads to the formation of a contract
and the offer or acceptance thereof is directed to a person in this
state (whether from inside or outside this state and whether the
offer was made inside or outside the state).

(j) “Institutional investor” means the following:

(1) The United States or any state, district, territory, or
commonwealth thereof, or any city, county, city and county, public
district, public authority, public corporation, public entity, or
political subdivision of a state, district, territory, or commonwealth
of the United States, or any agency or other instrumentality of any
one or more of the foregoing, including, by way of example, the
Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation.

(2) Any bank, trust company, savings bank or savings and loan
association, credit union, industrial bank or industrial loan
company, personal property broker, consumer finance lender,
commercial finance lender, or insurance company, or subsidiary
or affiliate of one of the preceding entities, doing business under
the authority of or in accordance with a license, certificate, or
charter issued by the United States or any state, district, territory,
or commonwealth of the United States.

(3) Trustees of pension, profit-sharing, or welfare funds, if the
pension, profit-sharing, or welfare fund has a net worth of not less
than fifteen million dollars ($15,000,000), except pension,
profit-sharing, or welfare funds of a licensee or its affiliate,
self-employed individual retirement plans, or individual retirement
accounts.

(4) A corporation or other entity with outstanding securities
registered under Section 12 of the federal Securities Exchange Act
of 1934 or a wholly owned subsidiary of that corporation or entity,
provided that the purchaser represents either of the following:

(A) That it is purchasing for its own account for investment and
not with a view to, or for sale in connection with, any distribution
of a promissory note.

(B) That it is purchasing for resale pursuant to an exemption
under Rule 144A (17 C.F.R. 230.144A) of the Securities and
Exchange Commission.

(5) An investment company registered under the Investment
Company Act of 1940; or a wholly owned and controlled subsidiary
of that company, provided that the purchaser makes either of the
representations provided in paragraph (4).

(6) A residential mortgage lender or servicer licensed to make
residential mortgage loans under this law or an affiliate or
subsidiary of that person.

(7) Any person who is licensed as a securities broker or
securities dealer under any law of this state, or of the United States,
or any employee, officer, or agent of that person, if that person is
acting within the scope of authority granted by that license or an
affiliate or subsidiary controlled by that broker or dealer, in
connection with a transaction involving the offer, sale, purchase,
or exchange of one or more promissory notes secured directly or
indirectly by liens on real property or a security representing an
ownership interest in a pool of promissory notes secured directly
or indirectly by liens on real property, and the offer and sale of
those securities is qualified under the California Corporate
Securities Law of 1968 or registered under federal securities laws,
or exempt from qualification or registration.

(8) A licensed real estate broker selling the loan to an
institutional investor specified in paragraphs (1) to (7), inclusive,
or paragraph (9) or (10).

(9) A business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940 or a Small
Business Investment Company licensed by the United States Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.

(10) A syndication or other combination of any of the foregoing
entities that is organized to purchase a promissory note.

(11) A trust or other business entity established by an
institutional investor for the purpose of issuing or facilitating the
issuance of securities representing undivided interests in, or rights
to receive payments from or to receive payments primarily from,
a pool of financial assets held by the trust or business entity,
provided that all of the following apply:

(A) The business entity is not a sole proprietorship.

(B) The pool of assets consists of one or more of the following:

(i) Interest-bearing obligations.

(ii) Other contractual obligations representing the right to receive
payments from the assets.

(iii) Surety bonds, insurance policies, letters of credit, or other
instruments providing credit enhancement for the assets.

(C) The securities will be either one of the following:

(i) Rated as “investment grade” by Standard and Poor’s
Corporation or Moody’s Investors Service, Inc. “Investment grade”
means that the securities will be rated by Standard and Poor’s
Corporation as AAA, AA, A, or BBB or by Moody’s Investors
Service, Inc. as Aaa, Aa, A, or Baa, including any of those ratings
with “+” or “--” designation or other variations that occur within
those ratings.

(ii) Sold to an institutional investor.

(D) The offer and sale of the securities is qualified under the
California Corporate Securities Law of 1968 or registered under
federal securities laws, or exempt from qualification or registration.

(k) “Institutional lender” means the following:

(1) The United States or any state, district, territory, or
commonwealth thereof, or any city, county, city and county, public
district, public authority, public corporation, public entity, or
political subdivision of a state, district, territory, or commonwealth
of the United States, or any agency or other instrumentality of any
one or more of the foregoing, including, by way of example, the
Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation.

(2) Any bank, trust company, savings bank or savings and loan
association, credit union, industrial loan company, or insurance
company, or service or investment company that is wholly owned
and controlled by one of the preceding entities, doing business
under the authority of and in accordance with a license, certificate,
or charter issued by the United States or any state, district, territory,
or commonwealth of the United States.

(3) Any corporation with outstanding securities registered under
Section 12 of the Securities Exchange Act of 1934 or any wholly
owned subsidiary of that corporation.

(4) A residential mortgage lender or servicer licensed to make
residential mortgage loans under this law.

(l) “Law” means the California Residential Mortgage Lending
Act.

(m) “Lender” means a person that (1) is an approved lender for
the Federal Housing Administration, Veterans Administration,
Farmers Home Administration, Government National Mortgage
Association, Federal National Mortgage Association, or Federal
Home Loan Mortgage Corporation, (2) directly makes residential
mortgage loans, and (3) makes the credit decision in the loan
transactions.

(n) “Licensee” means, depending on the context, a person
licensed under Chapter 2 (commencing with Section 50120),
Chapter 3 (commencing with Section 50130), or Chapter 3.5
(commencing with Section 50140).

(o) “Makes or making residential mortgage loans” or “mortgage
lending” means processing, underwriting, or as a lender using or
advancing one’s own funds, or making a commitment to advance
one’s own funds, to a loan applicant for a residential mortgage
loan.

(p) “Mortgage loan,” “residential mortgage loan,” or “home
mortgage loan” means a federally related mortgage loan as defined
in Section 3500.2 of Title 24 of the Code of Federal Regulations,
or a loan made to finance construction of a one-to-four family
dwelling.

(q) “Mortgage servicer” or “residential mortgage loan servicer”
means a person that (1) is an approved servicer for the Federal
Housing Administration, Veterans Administration, Farmers Home
Administration, Government National Mortgage Association,
Federal National Mortgage Association, or Federal Home Loan
Mortgage Corporation, and (2) directly services or offers to service
mortgage loans.

(r) “Nationwide Mortgage Licensing System and Registry”
means a mortgage licensing system developed and maintained by
the Conference of State Bank Supervisors and the American
Association of Residential Mortgage Regulators for the licensing
and registration of licensed mortgage loan originators.

(s) “Net worth” has the meaning set forth in Section 50201.

(t) “Own funds” means (1) cash, corporate capital, or warehouse
credit lines at commercial banks, savings banks, savings and loan
associations, industrial loan companies, or other sources that are
liability items on a lender’s financial statements, whether secured
or unsecured, or (2) a lender’s affiliate’s cash, corporate capital,
or warehouse credit lines at commercial banks or other sources
that are liability items on the affiliate’s financial statements,
whether secured or unsecured. “Own funds” does not include funds
provided by a third party to fund a loan on condition that the third
party will subsequently purchase or accept an assignment of that
loan.

(u) “Person” means a natural person, a sole proprietorship, a
corporation, a partnership, a limited liability company, an
association, a trust, a joint venture, an unincorporated organization,
a joint stock company, a government or a political subdivision of
a government, and any other entity.

(v) “Residential real property” or “residential real estate” means
real property located in this state that is improved by a one-to-four
family dwelling.

(w) “SAFE Act” means the federal Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (Public Law 110-289).

(x) “Service” or “servicing” means receiving more than three
installment payments of principal, interest, or other amounts placed
in escrow, pursuant to the terms of a mortgage loan and performing
services by a licensee relating to that receipt or the enforcement
of its receipt, on behalf of the holder of the note evidencing that
loan.

(y) “Sell” includes exchange, offer to sell, or solicitation to sell.

(z) “Unique identifier” means a number or other identifier
assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry.

(aa) For purposes of Sections 50142, 50143, and 50145,
“nontraditional mortgage product” means any mortgage product
other than a 30-year fixed rate mortgage.

(ab) For purposes of Section 50141, “expungement” means the
subsequent order under the provisions of Section 1203.4 of the
Penal Code allowing such individual to withdraw his or her plea
of guilty and to enter a plea of not guilty, or setting aside the verdict
of guilty or dismissing the accusation, information, or indictment.
With respect to criminal convictions in another state, that state’s
definition of expungement will apply.

SEC. 29.  

Section 11552 of the Government Code is amended
to read:

11552.  

(a) Effective January 1, 1988, an annual salary of
eighty-five thousand four hundred two dollars ($85,402) shall be
paid to each of the following:

(1) Commissioner of Financial Services.

(2) Director of Transportation.

(3) Real Estate Commissioner.

(4) Director of Social Services.

(5) Director of Water Resources.

(6) Director of General Services.

(7) Director of Motor Vehicles.

(8) Executive Officer of the Franchise Tax Board.

(9) Director of Employment Development.

(10) Director of Alcoholic Beverage Control.

(11) Director of Housing and Community Development.

(12) Director of Alcohol and Drug Programs.

(13) Director of Statewide Health Planning and Development.

(14) Director of the Department of Personnel Administration.

(15) Director of Health Care Services.

(16) Director of Mental Health.

(17) Director of Developmental Services.

(18) State Public Defender.

(19) Director of the California State Lottery.

(20) Director of Fish and Wildlife.

(21) Director of Parks and Recreation.

(22) Director of Rehabilitation.

(23) Director of the Office of Administrative Law.

(24) Director of Consumer Affairs.

(25) Director of Forestry and Fire Protection.

(26) The Inspector General pursuant to Section 6125 of the
Penal Code.

(27) Director of Child Support Services.

(28) Director of Industrial Relations.

(29) Director of Toxic Substances Control.

(30) Director of Pesticide Regulation.

(31) Director of the Department of Managed Health Care.

(32) Director of Environmental Health Hazard Assessment.

(33) Director of Technology.

(34) Director of California Bay-Delta Authority.

(35) Director of California Conservation Corps.

(b) The annual compensation provided by this section shall be
increased in any fiscal year in which a general salary increase is
provided for state employees. The amount of the increase provided
by this section shall be comparable to, but shall not exceed, the
percentage of the general salary increases provided for state
employees during that fiscal year.

SEC. 30.  

Section 12804 is added to the Government Code, to
read:

12804.  

There is in the state government the Business and
Consumer Services Agency.

The Business and Consumer Services Agency consists of the
following: the Department of Consumer Affairs, the Department
of Housing and Community Development, the Department of Fair
Employment and Housing, the Department of Financial Services,
the Department of Alcoholic Beverage Control, the Alcoholic
Beverage Control Appeals Board, the California Horse Racing
Board, and the Alfred E. Alquist Seismic Safety Commission.

SEC. 31.  

Section 13978.6 of the Government Code, as amended
by Section 18 of Chapter 147 of the Statutes of 2012, is amended
to read:

13978.6.  

(a) There is in the Business, Consumer Services, and
Housing Agency a Department of Financial Services containing
the Division of Corporations, which has the responsibility for
administering various laws. In order to effectively support the
Division of Corporations in the administration of these laws, there
is hereby established the State Corporations Fund. All expenses
and salaries of the Division of Corporations shall be paid out of
the State Corporations Fund. Therefore, notwithstanding any
provision of any law administered by the Division of Corporations
declaring that fees, reimbursements, assessments, or other money
or amounts charged and collected by the Division of Corporations
under these laws are to be delivered or transmitted to the Treasurer
and deposited to the credit of the General Fund, all fees,
reimbursements, assessments, and other money or amounts charged
and collected under these laws shall be delivered or transmitted to
the Treasurer and deposited to the credit of the State Corporations
Fund.

(b) Funds appropriated from the State Corporations Fund and
made available for expenditure for any law or program of the
Division of Corporations may come from the following:

(1) Fees and any other amounts charged and collected pursuant
to Section 25608 of the Corporations Code, except for fees and
other amounts charged and collected pursuant to subdivisions (o)
to (r), inclusive, of Section 25608 of the Corporations Code.

(2) Fees collected pursuant to subdivisions (a), (b), (c), and (d)
of Section 25608.1 of the Corporations Code.

SEC. 32.  

Section 13984 of the Government Code is amended
to read:

13984.  

In order to ensure that Section 10240.3 of the Business
and Professions Code and Sections 215.5, 22171, and 50333 of
the Financial Code are applied consistently to all California entities
engaged in the brokering, originating, servicing, underwriting, and
issuance of nontraditional mortgage products, the secretary shall
ensure that the Director of Consumer Affairs or the Commissioner
of Real Estate, and the Commissioner of Financial Services
coordinate their policymaking and rulemaking efforts.

SEC. 33.  

Notwithstanding Section 12080.8 of the Government
Code, Sections 1 to 32, inclusive, of this act shall prevail over
Section 35 of, Sections 40 to 67, inclusive, of, and Sections 197,
202, 215, and 216 of, the Governor’s Reorganization Plan No. 2
of 2012.