BILL NUMBER: SB 526	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 9, 2013

INTRODUCED BY   Senator Calderon

                        FEBRUARY 21, 2013

    An act to amend Section 2954.8 of the Civil Code,
relating to banks.   An act to add Section 23026.5 to
the Financial Code, relating to deferred deposit transactions. 


	LEGISLATIVE COUNSEL'S DIGEST


   SB 526, as amended, Calderon.  Banks: mortgage loans:
advance payments.   Deferred deposit transactions. 

   Existing law, the California Deferred Deposit Transaction Law,
provides for the licensure and regulation by the Commissioner of
Corporations of persons engaged in the business of originating or
making deferred deposit transactions, as defined. Existing law
requires a licensee to file an annual report with the commissioner.
Existing law requires the commissioner to prepare an annual
consolidated report based upon specified information received from
licensees.  
   The Governor's Reorganization Plan No. 2 of the 2011-12 Regular
Session provides that, on and after July 1, 2013, the
responsibilities of the Department of Corporations and the
Commissioner of Corporations shall be transferred to the Department
of Business Oversight and the Commissioner of Business Oversight.
 
   This bill would require the commissioner to include in the annual
consolidated report specified information related to the practices of
unlicensed deferred deposit lenders that make or originate deferred
deposit transactions through the Internet to borrowers in this state.
The bill would also require the department to report to the
Legislature its recommendations with regard to those practices, as
specified.  
   Existing state and federal law define and regulate banks. Existing
state law requires a financial institution that makes loans secured
by residential real property, as specified, that receives money in
advance for payment of taxes and assessments on the property, for
insurance, or for other purposes relating to the property, to pay
interest on the amount held to the borrower.  
   This bill would make nonsubstantive, technical amendments to these
provisions. 
   Vote: majority. Appropriation: no. Fiscal committee:  no
  yes  . State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    It is the intent of the Legislature in
enacting these provisions to address the abhorrent and illegal
practices employed by unlicensed deferred deposit lenders that make
or originate deferred deposit transactions through the Internet to
borrowers in this state, including, but not limited to, to address
the collection practices employed by these lenders. 
   SEC. 2.    Section 23026.5 is added to the  
Financial Code   , to read:  
   23026.5.  (a) The commissioner shall include in the annual
consolidated report prepared pursuant to Section 23026 an analysis of
the practices of unlicensed deferred deposit lenders that make or
originate deferred deposit transactions through the Internet to
borrowers in this state, including, but not limited to, an analysis
of the collection practices employed by these lenders. The analysis
shall also include the rates and terms offered by these lenders and
the extent to which these lenders comply with, or do not comply with,
the California Deferred Deposit Transaction Law. The commissioner
shall also include in the annual consolidated report a summary of the
department's compliance efforts regarding unregulated and unlicensed
deferred deposit lending through the Internet to borrowers in this
state.
   (b) (1) On or before January 1, 2015, the department shall report
to the Legislature its recommendations pertaining to the regulation
and enhancement of its enforcement authority with regard to
unlicensed deferred deposit lenders that make or originate deferred
deposit transactions through the Internet to borrowers in this state.
The department shall make recommendations with regard to changes to
law that may minimize adverse consumer experiences.
   (2) The report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
   (3) The requirement for submitting a report pursuant to paragraph
(1) shall become inoperative on January 1, 2019, pursuant to Section
10231.5 of the Government Code.  
  SECTION 1.    Section 2954.8 of the Civil Code is
amended to read:
   2954.8.  (a) Every financial institution that makes loans upon the
security of real property containing only a one- to four-family
residence and located in this state, or purchases obligations secured
by the property, and that receives money in advance for payment of
taxes and assessments on the property, for insurance, or for other
purposes relating to the property, shall pay interest on the amount
held to the borrower. The interest on these amounts shall be at the
rate of at least 2 percent simple interest per annum. This interest
shall be credited to the borrower's account annually or upon
termination of the account, whichever is earlier.
   (b) No financial institution subject to the provisions of this
section shall impose any fee or charge in connection with the
maintenance or disbursement of money received in advance for the
payment of taxes and assessments on real property securing loans made
by the financial institution, or for the payment of insurance, or
for other purposes relating to such real property, that will result
in an interest rate of less than 2 percent per annum being paid on
the moneys so received.
   (c) For the purposes of this section, "financial institution"
means a bank, savings and loan association or credit union chartered
under the laws of this state or the United States, or any other
person or organization making loans upon the security of real
property containing only a one- to four-family residence.
   (d) The provisions of this section do not apply to any of the
following:
   (1) Loans executed prior to the effective date of this section.
   (2) Moneys that are required by a state or federal regulatory
authority to be placed by a financial institution other than a bank
in a non-interest-bearing demand trust fund account of a bank.
   The amendment of this section made by the 1979-80 Regular Session
of the Legislature shall only apply to loans executed on or after
January 1, 1980.