SB 153, as introduced, Berryhill. Mortgage brokers: fiduciary duty.
Existing law provides that a mortgage broker, as defined, providing mortgage brokerage services, as defined, to a borrower is the fiduciary of the borrower, and any violation of the broker’s fiduciary duties is a violation of the mortgage broker’s licensing law and specified civil penalty and liability provisions. Existing law further provides that this fiduciary duty includes a requirement that the mortgage broker place the economic interest of the borrower ahead of his or her own economic interest.
This bill would make a technical, nonsubstantive change to these provisions.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 2923.1 of the Civil Code is amended to
2read:
(a) A mortgage broker providing mortgage brokerage
4services to a borrower is the fiduciary of the borrower, andbegin delete anyend deletebegin insert aend insert
5 violation of the broker’s fiduciary duties shall be a violation of the
6mortgage broker’s license law. This fiduciary duty includes a
7requirement that the mortgage broker place the economic interest
8of the borrower ahead of his or her own economic interest. A
P2 1mortgage broker who provides mortgage brokerage services to the
2borrower owes this fiduciary duty to the borrower regardless of
3whether the mortgage broker is acting as an agent for any other
4party in connection with the residential mortgage loan transaction.
5(b) For purposes of this section, the following definitions apply:
6(1) “Licensed person” means a real estate broker licensed under
7the Real Estate Law (Part 1 (commencing with Section 10000) of
8Division 4 of the Business and Professions Code), a finance lender
9or broker licensed under the California Finance Lenders Law
10(Division 9 (commencing with Section 22000) of the Financial
11Code), a residential mortgage lender licensed under the California
12Residential Mortgage Lending Act (Division 20 (commencing
13with Section 50000) of the Financial Code), a commercial or
14industrial bank organized under thebegin delete Banking Lawend deletebegin insert Financial end insert
15begin insertInstitutions Lawend insert (Division 1 (commencing with Section 99) of the
16Financial
Code), a savings association organized under the Savings
17Association Law (Division 2 (commencing with Section 5000) of
18the Financial Code), and a credit union organized under the
19California Credit Union Law (Division 5 (commencing with
20Section 14000) of the Financial Code).
21(2) “Mortgage broker” means a licensed person who provides
22mortgage brokerage services. For purposes of this section, a
23licensed person who makes a residential mortgage loan is a
24“mortgage broker,” and subject to the requirements of this section
25applicable to mortgage brokers, only with respect to transactions
26in which the licensed person provides mortgage brokerage services.
27(3) “Mortgage brokerage services” means arranging or
28attempting to arrange, as exclusive agent for the borrower or as
29dual agent for the borrower and lender, for compensation or in
30expectation of compensation, paid directly or indirectly,
a
31residential mortgage loan made by an unaffiliated third party.
32(4) “Residential mortgage loan” means a consumer credit
33transaction that is secured by residential real property that is
34improved by four or fewer residential units.
35(c) The duties set forth in this section shall not be construed to
36limit or narrow any other fiduciary duty of a mortgage broker.
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