California Legislature—2015–16 Regular Session

Assembly Bill No. 1341

Introduced by Assembly Member Brown

February 27, 2015

An act to amend Sections 12214, 12306, 17207, 17405.1, 22107, 22707, 23016, 23046, 50302, 50314, and 50401 of the Financial Code, relating to financial service providers.

LEGISLATIVE COUNSEL’S DIGEST

AB 1341, as introduced, Brown. Department of Business Oversight: financial service providers: costs of licensing and regulations.

Existing law authorizes the Commissioner of Business Oversight to require certain financial service providers that are licensed and regulated by the Department of Business Oversight, including, among others, check sellers, proraters, escrow agents, finance lenders and brokers, residential mortgage lenders or servicers, and businesses making deferred deposit transactions, to pay their pro rata share of the costs and expenses of the department’s licensing and regulating activities. A violation of the licensing laws applicable to these financial service providers is a crime.

This bill would revise these provisions to require a licensee under the supervision of the department to pay to the commissioner its pro rata share of all costs and expenses in an amount sufficient, in the commissioner’s judgment, to meet the expenses of the department in administering the applicable licensing law for the next year that includes, but shall not be limited to, the cost of routine examinations and the provision of a reasonable reserve for contingencies, with a consideration of any deficit or less any surplus actually incurred in the prior fiscal year, as specified. The bill would make May 31 the uniform date for the commissioner to notify these licensees of the amount assessed for the next year, and generally give 30 days to all of these licensees to pay the assessment. The bill would authorize the commissioner, whenever he or she found it is necessary or advisable, to conduct a nonroutine examination of, or to devote any extraordinary attention to, any licensee and charge and collect from that licensee the department’s expenses, including, but not limited to, hourly wages and travel costs, for doing so. The bill would authorize the commissioner to maintain an action for the recovery of these costs in any court of competent jurisdiction.

This bill would raise the minimum assessment for a licensee under the Check Sellers, Bill Payers and Proraters Law from $150 to $1,000, and the California Finance Lenders Law from $250 to $800. The bill would modify the minimum calculation of an assessment for a licensee under the Escrow Law based on $5,000 per main office and $3,500 per each branch location, and the California Residential Mortgage Lending Act, based on mortgages loan originated by the licensee.

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 12214 of the Financial Code is amended
to read:

12214.  

(a) An applicant at the time of filing an application for
a license under this division shall pay to the commissioner the sum
of fifty dollars ($50) as a fee for investigating the application and
two hundred dollars ($200) as an application fee. The investigation
fee and application fee are not refundable if an application is denied
or withdrawn.

begin delete

(b) (1) Each licensee shall pay to the commissioner its pro rata
share of all costs and expenses, reasonably incurred in the
administration of this division as estimated by the commissioner
for the ensuing year and any deficit actually incurred or anticipated
in the administration of the programs in the year in which such
assessment is made. The pro rata share shall be the proportion
which a licensee’s gross income bears to the aggregate gross
income of all licensees as shown by the annual financial reports
to the commissioner. The pro rata share shall not include the costs
of any examinations provided for in Section 12306, unless they
cannot be collected from the licensee examined.

end delete begin insert

(b) (1) Each licensee under the supervision of the department
shall pay to the commissioner its pro rata share of all costs and
expenses in an amount sufficient, in the commissioner’s judgment,
to meet the expenses of the department in administering the law
for the next year that shall include, but not be limited to, the cost
of examination pursuant to Section 12306, and the provision of a
reasonable reserve for contingencies, with a consideration of any
deficit or less any surplus actually incurred in the prior fiscal year.
The pro rata share shall be determined by the proportion which
a licensee’s gross income bears to the aggregate gross income of
all licensees, as shown by the annual financial reports to the
commissioner, for the costs and expenses remaining after the
amount assessed pursuant to paragraph (3).

end insert

(2) On or before the begin delete 30th end delete begin insert 31st end insert day of May in each year, the
commissioner shall notify each licensee begin delete by mail end delete of the amount
assessed and levied against it and that amount shall be paid within
begin delete 20 end delete begin insert 30 end insert days thereafter. If payment is not made within begin delete 20 end delete begin insert 30 end insert days,
the commissioner begin delete shall end delete begin insert may end insert assess and collect a penalty in addition
to the assessment, of 1 percent of the assessment for each month
or part of a month that the payment is delayed or withheld.

(3) In the levying and collection of the assessment, a licensee
shall not be assessed for nor be permitted to pay less than begin delete one
hundred fifty dollars ($150) end delete begin insert one thousand dollars ($1,000) end insert per
year.

(4) If a licensee fails to pay the assessment on or before the 30th
day of June following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the
certificate issued to such licensee. If, after such an order is made,
a request for hearing is filed in writing and a hearing is not held
within 60 days thereafter, the order is deemed rescinded as of its
effective date. During any period when its certificate is revoked
or suspended, a licensee shall not conduct business pursuant to
this division except as may be permitted by order of the
commissioner; provided, however, that the revocation, suspension
or surrender of a certificate shall not affect the powers of the
commissioner as provided in this division.

SEC. 2.  

Section 12306 of the Financial Code is amended to
read:

12306.  

begin insert (a) end insert begin insert   end insert The cost of begin delete every end delete begin insert a routine end insert examination of a
licensee or other person subject to this division shall be begin delete paid to the
commissioner by the licensee or person examined, and the
commissioner may maintain an action for the recovery of these
costs in any court of competent jurisdiction. In determining the
cost of an examination, the commissioner may use the estimated
average hourly cost for all persons performing examinations of
licensees or other persons subject to this division for the fiscal
year. end delete begin insert included in the annual assessment pursuant to Section 12214.
The cost of a routine examination shall be determined by the
expenses deemed necessary by the department to carry out its
duties, including, but not limited to, the estimated cost for all
persons performing examinations for the fiscal year. end insert For the
purposes of this section only, no person other than a licensee shall
be deemed to be a person subject to this division unless and until
the person is determined to be a person subject to this division by
an administrative hearing in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title
2 of the Government Code or by a judicial hearing in any court of
competent jurisdiction.

begin insert

(b) Whenever in the judgment of the commissioner it is necessary
or advisable to conduct a nonroutine examination of, or to devote
any extraordinary attention to, any licensee, the commissioner
may do so and charge and collect from that licensee an amount
not exceeding the department’s expenses, including, but not limited
to, the average hourly cost of each examiner engaged in the
examination and compensation of employees. The commissioner
may maintain an action for the recovery of these costs in any court
of competent jurisdiction.

end insert begin insert

(c) Whenever in the judgment of the commissioner it is necessary
or expedient for any examiner engaged in any examination to
travel within or outside this state, the commissioner may charge
for the travel expenses of the examiner.

end insert

SEC. 3.  

Section 17207 of the Financial Code is amended to
read:

17207.  

The commissioner shall charge and collect the following
fees and assessments:

(a) For filing an application for an escrow agent’s license, six
hundred twenty-five dollars ($625) for the first office or location
and four hundred twenty-five dollars ($425) for each additional
office or location.

(b) For filing an application for a duplicate of an escrow agent’s
license lost, stolen, or destroyed, or for replacement, upon a
satisfactory showing of the loss, theft, destruction, or surrender of
certificate for replacement, two dollars ($2).

(c) For investigation services in connection with each
application, one hundred dollars ($100), and for investigation
services in connection with each additional office application, one
hundred dollars ($100).

(d) For holding a hearing in connection with the application, as
set forth under Section 17209.2, the actual costs experienced in
each particular instance.

begin delete

(e) (1) Each escrow agent shall pay to the commissioner for
the support of this division for the ensuing year an annual license
fee not to exceed two thousand eight hundred dollars ($2,800) for
each office or location.

end delete begin insert

(e) (1) Each licensee under this division shall pay to the
commissioner its pro rata share of all costs and expenses in an
amount sufficient, in the commissioner’s judgment, to meet the
expenses of the department in administering the law for the next
year that shall include, but not be limited to, the cost of inspection
and examination pursuant to Section 17405.1, and the provision
of a reasonable reserve for contingencies, with a consideration of
any deficit or less any surplus actually incurred in the prior fiscal
year. The assessment shall be determined by a pro rata share of
the proportion which a licensee’s gross income bears to the
aggregate gross income of all licensees, as shown by the annual
financial statements to the commissioner, for the costs and expenses
remaining after assessing up to five thousand dollars ($5,000) per
main office and up to three thousand five hundred dollars ($3,500)
for each branch location.

end insert

(2) On or before May begin delete 30 end delete begin insert 31 end insert in each year, the commissioner
shall notify each escrow agent by mail of the amount of the annual
license fee levied against it, and that the payment of the invoice
is payable by the escrow agent within 30 days after receipt of
notification by the commissioner.

(3) If payment is not made within 30 days, the commissioner
may assess and collect a penalty, in addition to the annual license
fee, of 10 percent of the fee for each month or part of a month that
the payment is delayed or withheld.

(4) If an escrow agent fails to pay the amount due on or before
the June 30 following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the
certificate issued to the company.

(5) If, after an order is made pursuant to paragraph (4), a request
for a hearing is filed in writing and a hearing is not held within 60
days thereafter, the order is deemed rescinded as of its effective
date. During any period when its certificate is revoked or
suspended, a company shall not conduct business pursuant to this
division, except as may be permitted by order of the commissioner.
However, the revocation, suspension, or surrender of a certificate
shall not affect the powers of the commissioner as provided in this
division.

(f) Fifty dollars ($50) for investigation services in connection
with each application for qualification of any person under Section
17200.8, other than investigation services under subdivision (c)
of this section.

(g) A fee not to exceed twenty-five dollars ($25) for the filing
of a notice or report required by rules adopted pursuant to
subdivision (a) or Section 17203.1.

begin delete

(h) (1) If costs and expenses associated with the enforcement
of this division, including overhead, are or will be incurred by the
commissioner during the year for which the annual license fee is
levied, and that will or could result in the commissioner’s incurring
of costs and expenses, including overhead, in excess of the costs
and expenses, including overhead, budgeted for expenditure for
the year in which the annual license fee is levied, then the
commissioner may levy a special assessment on each escrow agent
for each office or location in an amount estimated to pay for the
actual costs and expenses associated with the enforcement of this
division, including overhead, in an amount not to exceed one
thousand dollars ($1,000) for each office or location. The
commissioner shall notify each escrow agent by mail of the amount
of the special assessment levied against it, and that payment of the
special assessment is payable by the escrow agent within 60 days
of receipt of notification by the commissioner. The funds received
from the special assessment shall be deposited into the State
Corporations Fund and shall be used only for the purposes for
which the special assessment is made.

(2) If payment is not made within 60 days, the commissioner
may assess and collect a penalty, in addition to the special
assessment, of 10 percent of the special assessment for each month
or part of a month that the payment is delayed or withheld. If an
escrow agent fails to pay the special assessment on or before 60
days following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the
certificate issued to the company. If an order is made under this
subdivision, the provisions of paragraph (5) of subdivision (e) shall
apply.

(3) If the amount collected pursuant to this subdivision exceeds
the actual costs and expenses, including overhead, incurred in the
administration and enforcement of this division and any deficit
incurred, the excess shall be credited to each escrow agent on a
pro rata basis.

end delete

SEC. 4.  

Section 17405.1 of the Financial Code is amended to
read:

17405.1.  

begin insert (a) end insert begin insert   end insert The cost of begin delete every end delete begin insert a routine end insert inspection and
examination of a licensee or other person subject to this division
shall be begin delete paid to the commissioner by the licensee or person
examined, and the commissioner may maintain an action for the
recovery of these costs in any court of competent jurisdiction. In
determining the cost of an inspection or examination, the
commissioner may use the estimated average hourly cost for all
persons performing inspections or examinations of licensees or
other persons subject to this division for the fiscal year. end delete begin insert included
in the annual assessment pursuant to Section 17207. The cost of
a routine inspection or examination shall be determined by the
expenses deemed necessary by the department to carry out its
duties, including, but not limited to, the estimated cost for all
persons performing inspections and examinations for the fiscal
year. end insert

begin insert

(b) Whenever in the judgment of the commissioner it is necessary
or advisable to conduct a nonroutine inspection, including an
indoctrination or preliminary examination in subdivision (d) of
Section 17405, or conduct an examination of, or to devote any
extraordinary attention to, any licensee, the commissioner may do
so and charge and collect from the licensee an amount not
exceeding the department’s expenses, including, but not limited
to, the average hourly cost for each examiner engaged in the
examination and compensation of employees. The commissioner
may maintain an action for the recovery of these costs in any court
of competent jurisdiction.

end insert begin insert

(c) Whenever in the judgment of the commissioner it is necessary
or expedient for any examiner engaged in any examination to
travel within or outside this state, the commissioner may charge
for the travel expenses of the examiner.

end insert begin delete

For

end delete

begin insert (d) end insert begin insert   end insert begin insert For end insert the purposes of this section only, no person other than
a licensee shall be deemed to be a person subject to this division
unless and until the person is determined to be a person subject to
this division by an administrative hearing in accordance with
Chapter 5 (commencing with Section 11500) of Part 1 of Division
3 of Title 2 of the Government Code or by a judicial hearing in
any court of competent jurisdiction.

SEC. 5.  

Section 22107 of the Financial Code is amended to
read:

22107.  

(a) Each begin delete finance lender and broker licensee shall pay
to the commissioner its pro rata share of all costs and expenses,
including the costs and expenses associated with the licensing of
mortgage loan originators it employs, reasonably incurred in the
administration of this division, as estimated by the commissioner,
for the ensuing year and any deficit actually incurred or anticipated
in the administration of the program in the year in which the
assessment is made. The pro rata share shall be the proportion that
a licensee’s gross income bears to the aggregate gross income of
all licensees as shown by the annual financial reports to the
commissioner, for the costs and expenses remaining after the
amount assessed pursuant to subdivision (c). end delete begin insert licensee under this
division shall pay to the commissioner its pro rata share of all
costs and expenses in an amount sufficient, in the commissioner’s
judgment, to meet the expenses of the department in administering
the law for the next year that shall include, but not be limited to,
the costs of examination pursuant to Section 22707, and the
provision of a reasonable reserve for contingencies, with a
consideration of any deficit or less any surplus actually incurred
in the prior fiscal year. The pro rata share shall be determined by
the proportion which a licensee’s gross income bears to the
aggregate gross income of all licensees, as shown by the annual
financial reports to the commissioner, for the costs and expenses
remaining after the amount assessed pursuant to subdivision (c). end insert

(b) On or before the begin delete 30th end delete begin insert 31st end insert day of begin delete September end delete begin insert May end insert in each
year, the commissioner shall notify each licensee of the amount
assessed and levied against it and that amount shall be paid begin delete by
October 31. end delete begin insert within 30 days thereafter. end insert If payment is not made begin delete by
October 31, end delete begin insert within 30 days, end insert the commissioner shall assess and
collect a penalty, in addition to the assessment, of 1 percent of the
assessment for each month or part of a month that the payment is
delayed or withheld.

(c) In the levying and collection of the assessment, a licensee
shall neither be assessed for nor be permitted to pay less than begin delete two
hundred fifty dollars ($250) end delete begin insert eight hundred dollars ($800) end insert per
licensed location per year.

(d) If a licensee fails to pay the assessment on or before the begin delete 31st
day of October, end delete begin insert 30th day of June following the day upon which
payment is due. end insert the commissioner may by order summarily suspend
or revoke the certificate issued to the licensee. If, after an order is
made, a request for hearing is filed in writing within 30 days, and
a hearing is not held within 60 days thereafter, the order is deemed
rescinded as of its effective date. During any period when its
certificate is revoked or suspended, a finance lender or broker
licensee and any mortgage loan originator licensee employed by
the finance lender or broker shall not conduct business pursuant
to this division except as may be permitted by order of the
commissioner. However, the revocation, suspension, or surrender
of a certificate shall not affect the powers of the commissioner as
provided in this division.

(e) The commissioner shall, by rule, establish the timelines,
fees, and assessments applicable to applicants for original mortgage
loan originator licenses, license renewals, and license changes
under this division.

(f) Notwithstanding subdivisions (a) to (e), inclusive, the
commissioner may by rule require licensees to pay assessments
through the Nationwide Mortgage Licensing System and Registry.

SEC. 6.  

Section 22707 of the Financial Code is amended to
read:

22707.  

(a) The cost of begin delete each end delete begin insert a routine end insert examination of a licensee
or a person subject to this division shall be begin delete paid to the
commissioner by the licensee or person examined, and the
commissioner may maintain an action for the recovery of the cost
in any court of competent jurisdiction. In determining the cost of
an examination, the commissioner may use the estimated average
hourly cost for all persons performing examinations of licensees
or other persons subject to this division for the fiscal year. end delete begin insert included
in the annual assessment pursuant to Section 22107. The cost of
a routine examination shall be determined by the expenses deemed
necessary by the department to carry out its duties, including, but
not limited to, the estimated cost for all persons performing
examinations for the fiscal year. end insert

(b) For the purpose of this section only, no person other than a
licensee shall be deemed to be a person subject to this division
until the person is determined to be a person subject to this division
by an administrative hearing in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title
2 of the Government Code or by a judicial hearing in any court of
competent jurisdiction.

begin insert

(c) Whenever in the judgment of the commissioner it is necessary
or advisable to conduct a nonroutine examination of, or to devote
any extraordinary attention to, any licensee, the commissioner
may do so and charge and collect from the licensee an amount not
exceeding the department’s expenses, including, but not limited
to, the estimated average hourly cost for all persons performing
the examinations and compensation of employees. The
commissioner may maintain an action for the recovery of the cost
in any court of competent jurisdiction.

end insert begin insert

(d) Whenever in the judgment of the commissioner it is necessary
or expedient for any examiner engaged in any examination to
travel within or outside this state, the commissioner may charge
for the travel expenses of the examiner.

end insert

SEC. 7.  

Section 23016 of the Financial Code is amended to
read:

23016.  

(a) Each licensee begin delete shall pay to the commissioner its pro
rata share of all costs and expenses reasonably incurred in the
administration of this division, as estimated by the commissioner,
for the ensuing year and any deficit actually incurred or anticipated
in the administration of the program in the year in which the
assessment is made. The assessment will be based on the number
of locations. end delete begin insert under this division shall pay the commissioner its pro
rata share of all costs and expenses in an amount sufficient, in the
commissioner’s judgment, to meet the expenses of the department
in administering the law for the next year that shall include, but
not be limited to, the cost of examination pursuant to Section
23046, and the provision of a reasonable reserve for contingencies,
with a consideration of any deficit or less any surplus actually
incurred in the prior fiscal year. end insert

(b) On or before the begin delete 20th end delete begin insert 30th end insert day of May in each year, the
commissioner shall notify each licensee begin delete by mail end delete of the amount
assessed and levied against it and that amount shall be paid within
30 days thereafter. If payment is not made within 30 days, the
commissioner may assess and collect a penalty, in addition to the
assessment, of 1 percent of the assessment for each month or part
of a month that the payment is delayed or withheld.

(c) If a licensee fails to pay the assessment on or before the 30th
day of June following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the
certificate issued to the licensee. If, after an order is made, a request
for hearing is filed in writing within 30 days, and a hearing is not
held within 60 days thereafter, the order is deemed rescinded as
of its effective date. During any period when its certificate is
revoked or suspended, a licensee shall not conduct business
pursuant to this division except as may be permitted by order of
the commissioner. However, the revocation, suspension, or
surrender of a certificate shall not affect the powers of the
commissioner as provided in this division.

SEC. 8.  

Section 23046 of the Financial Code is amended to
read:

23046.  

(a) For the purpose of discovering violations of this
division or securing information required by the commissioner in
the administration and enforcement of this division, the
commissioner may at any time, but not less than once every two
years, investigate the business of deferred deposits, and examine
the books, accounts, records, and files used in the business of
deferred deposit transactions, of every person engaged in the
business of deferred deposit transactions, whether the person acts
or claims to act as a principal or an agent, or under or without the
authority of this division. For the purpose of examination, the
commissioner and the commissioner’s representatives shall have
free access to the offices and places of business, books, accounts,
papers, records, files, safes, and vaults of all these persons.

(b) The cost of begin delete each end delete begin insert a routine end insert examination of a licensee or a
person subject to this division shall be begin delete paid to the commissioner
by the licensee or person examined, and the commissioner may
maintain an action for the recovery of the cost in any court of
competent jurisdiction. In determining the cost of an examination,
the commissioner may use the estimated average hourly cost for
all persons performing examinations of licensees or other persons
subject to this division for the fiscal year. end delete begin insert included in the annual
assessment pursuant to Section 23016. The cost of a routine
inspection or examination shall be determined by the expenses
deemed necessary by the department to carry out its duties,
including, but not limited to, the estimated cost for all persons
performing inspections and examinations for the fiscal year. end insert

begin insert

(c) Whenever in the judgment of the commissioner it is necessary
or advisable to conduct a nonroutine examination of, or to devote
any extraordinary attention to, any licensee, the commissioner
may do so and charge and collect from the licensee an amount not
exceeding the department’s expenses, including, but not limited
to, the estimated average hourly cost for all persons performing
the examinations and compensation of employees. The
commissioner may maintain an action for the recovery of the cost
in any court of competent jurisdiction.

end insert begin insert

(d) Whenever in the judgment of the commissioner it is necessary
or expedient for any examiner engaged in any examination to
travel within or outside this state, the commissioner may charge
for the travel expenses of the examiner.

end insert

SEC. 9.  

Section 50302 of the Financial Code is amended to
read:

50302.  

(a) As often as the commissioner deems necessary and
appropriate, but at least once every 48 months, the commissioner
shall examine the affairs of each residential mortgage lender and
servicer licensee for compliance with this division. The
commissioner shall appoint suitable persons to perform the
examination. The commissioner and his or her appointees may
examine the books, records, and documents of the licensee, and
may examine the licensee’s officers, directors, employees, or agents
under oath regarding the licensee’s operations. The commissioner
may cooperate with any agency of the state or federal government,
other states, agencies, the Federal National Mortgage Association,
or the Federal Home Loan Mortgage Corporation. The
commissioner may accept an examination conducted by one of
these entities in place of an examination by the commissioner
under this law, unless the commissioner determines that the
examination does not provide information necessary to enable the
commissioner to fulfill his or her responsibilities under this
division.

(b) The commissioner shall provide a written statement of the
findings of the examination, issue a copy of that statement to each
licensee’s principals, officers, or directors, and take appropriate
steps to ensure correction of any violations of this division.

(c) Affiliates of a licensee are subject to examination by the
commissioner on the same terms as the licensee, but only when
reports from, or examination of, a licensee provides documented
evidence of unlawful activity between a licensee and affiliate
benefiting, affecting, or arising from the activities regulated by
this division.

(d) The residential mortgage lender or servicer licensee shall
pay, and the commissioner shall assess, begin insert in the annual assessment, end insert
the begin delete reasonable expenses end delete begin insert cost end insert of any examination of the licensee
and affiliates, consistent with the requirements of subdivision (c)
of Section 50314.

(e) The statement of the findings of an examination shall belong
to the commissioner and shall not be disclosed to anyone other
than the licensee, law enforcement officials, or other state or federal
regulatory agencies for further investigation and enforcement.
Reports required of licensees by the commissioner under this
division and results of examinations performed by the
commissioner under this division are the property of the
commissioner.

SEC. 10.  

Section 50314 of the Financial Code is amended to
read:

50314.  

(a) Every person subject to this division shall keep
documents and records that will properly enable the commissioner
to determine whether the residential mortgage lending or residential
mortgage loan servicing functions performed by that person comply
with the provisions of this division and with all rules and orders
made by the commissioner under this division. Upon request of
the commissioner, residential mortgage lenders and residential
mortgage loan servicers shall file an authorization for disclosure
to the commissioner of financial records of the licensed business
pursuant to Section 7473 of the Government Code.

(b) The business documents and records of every residential
mortgage lender or residential mortgage loan servicer, whether
required to be licensed under this division or not, are subject to
inspection and examination by the commissioner at any time
without prior notice. The provisions of this subdivision shall not
apply to persons specified in subdivision (g) of Section 50003.

Any person subject to this division shall, upon request and within
the time specified in the request, allow inspection and copying of
any documents and records by the commissioner or his or her
authorized representative.

(c) The cost of begin delete every end delete begin insert a routine end insert inspection and examination of
a licensee or other person subject to this division shall be begin delete paid to
the commissioner by the licensee or person examined, and the
commissioner may maintain an action for the recovery of these
costs in any court of competent jurisdiction. In determining the
cost of any inspection or examination, the commissioner may use
the estimated average hourly cost, including overhead, for all
persons performing inspections or examinations of licensees or
other persons subject to this division for the fiscal year. end delete begin insert included
in the annual assessment pursuant to Section 50401. The cost of
a routine inspection or examination shall be determined by the
expenses deemed necessary by the department to carry out its
duties, including, but not limited to, the estimated cost for all
persons performing inspections and examinations. end insert

For the purpose of this subdivision only, no person other than a
licensee shall be deemed to be a person subject to this division
unless and until the person is determined to be a person subject to
this division by an administrative hearing in accordance with
Chapter 5 (commencing with Section 11500) of Part 1 of Division
3 of Title 2 of the Government Code, or by a judicial hearing in
any court of competent jurisdiction.

(d) Investigation and examination reports prepared by the
commissioner’s duly designated representatives are not public
reports. Those reports may be disclosed to the officers or directors
of a licensee that is the subject of the report for the purpose of
corrective action by the officers or directors. Such a disclosure
shall not operate as a waiver of the exemption specified in
subdivision (d) of Section 6254 of the Government Code.

begin insert

(e) Whenever in the judgment of the commissioner it is necessary
or advisable to conduct a nonroutine examination of, or to devote
any extraordinary attention to, any licensee, the commissioner
may do so and charge and collect from the licensee an amount not
exceeding the department’s expenses, including, but not limited
to, the estimated average hourly cost for all persons performing
the examinations and compensation of employees. The
commissioner may maintain an action for the recovery of the cost
in any court of competent jurisdiction.

end insert begin insert

(f) Whenever in the judgment of the commissioner it is necessary
or expedient for any examiner engaged in any examination to
travel within or outside this state, the commissioner may charge
for the travel expenses of the examiner.

end insert

SEC. 11.  

Section 50401 of the Financial Code is amended to
read:

50401.  

(a) In addition to other fees and reimbursements
required to be paid under this division, each begin delete residential mortgage
lender or servicer licensee shall pay to the commissioner an amount
equal to the lesser of: (1) its pro rata share of all costs and expenses
(including overhead and the maintenance of a prudent reserve not
to exceed 90 days’ costs and expenses) that the commissioner
reasonably expects to incur in the current fiscal year in the
administration of this division and not otherwise recovered by the
commissioner under this division or from the State Corporations
Fund, plus a deficit or less a surplus actually incurred during the
prior fiscal year; or (2) five thousand dollars ($5,000). The pro
rata share shall be the greater of either one thousand dollars
($1,000) or the sum of: (A) a number derived from the ratio of the
aggregate principal amount of the mortgage loans secured by
residential real property originated by the licensee to all mortgage
loans secured by residential real property originated by all licensees
under this division, as shown by the annual financial reports to the
commissioner, which number is then multiplied by one-half of the
costs and expenses estimated by the commissioner for the current
fiscal year; plus (B) a number derived from the ratio of the average
value of mortgage loans secured by residential real property
serviced by a licensee to the average value of all mortgage loans
secured by residential real property serviced by all licensees under
this division, as shown by the annual financial reports to the
commissioner, which number is then multiplied by one-half of the
costs and expenses estimated by the commissioner for the current
fiscal year. For the purposes of this section, the “principal amount”
of a mortgage loan means the initial total amount a borrower is
obligated to repay the lender and the “average value” of loans
serviced means the sum of the aggregate dollar value of all
mortgage loans secured by residential real property serviced by a
licensee, calculated as of the last day of each month in the calendar
year just ended, divided by 12. end delete begin insert licensee shall pay to the
commissioner a pro rata share of all costs and expenses in an
amount sufficient, in the commissioner’s judgment, to meet the
expenses of the department in administering the law for the next
year that shall include, but not be limited to, the cost of
examination pursuant to Sections 50302 and 50314, and the
provision of a reasonable reserve for contingencies, as provided
in subdivision (b). end insert

begin insert

(b) Each licensee under this division shall pay to the
commissioner its pro rata share of all costs and expenses deemed
necessary by the department to carry out its duties and maintain
a reasonable reserve for contingencies for the next fiscal year,
considering any deficit or less any surplus actually incurred in the
prior fiscal year, or fifteen thousand dollars ($15,000). The pro
rata share shall be the greater of either two thousand five hundred
dollars ($2,500) or the sum of: (1) a number derived from the ratio
of the aggregate principal amount of the mortgage loans secured
by residential real property originated by the licensee to all
mortgage loans secured by residential real property originated
by all licensees under this division, as shown by the annual
financial reports to the commissioner, which number is then
multiplied by one-half of the costs and expenses estimated by the
commissioner for the next fiscal year; plus (2) a number derived
from the ratio of the average value of mortgage loans secured by
residential real property serviced by a licensee to the average
value of all mortgage loans secured by residential real property
serviced by all licensees under this division, as shown by the annual
financial reports to the commissioner, which number is then
multiplied by one-half of the costs and expenses estimated by the
commissioner for the next fiscal year. For the purposes of this
section, the “principal amount” of a mortgage loan means the
initial total amount a borrower is obligated to repay the lender
and the “average value” of loans serviced means the sum of the
aggregate dollar value of all mortgage loans secured by residential
real property serviced by a licensee, calculated as of the last day
of each month in the calendar year just ended, divided by 12.

end insert

In order for the commissioner to calculate the assessment under
this section, each licensee shall file an annual report for the
calendar year just ended containing the information required by
the commissioner on or before March 1 of the year in which the
assessment is to be calculated.

In determining the amount assessed, the commissioner shall
consider all appropriations from the State Corporations Fund for
the support of this division and all reimbursements provided for
under this division.

begin delete

(b)

end delete

begin insert (c) end insert  In no case shall the reimbursement, payment, or other fee
authorized by this section exceed the cost, including overhead,
reasonably incurred in the administration of this division, and the
maintenance of a prudent reserve not to exceed 90 days’ costs and
expenses.

begin delete

(c)

end delete

begin insert (d) end insert  On or before the 30th day of September in each year, the
commissioner shall notify each licensee by mail of the amount
assessed and levied against it and that amount shall be paid within
20 days. If payment is not made within 20 days, the commissioner
shall assess and collect a penalty, in addition to the assessment of
1 percent of the assessment for each month or part of a month that
the payment is delayed or withheld.

begin delete

(d)

end delete

begin insert (e) end insert  If a licensee fails to pay the assessment on or before the 30th
day following the day upon which payment is due, the
commissioner may by order summarily suspend or revoke the
license issued to the licensee. An order issued under this section
is not stayed by the filing of a request for a hearing. If, after an
order is made, the request for hearing is filed in writing within 15
days from the date of service of the order and a hearing is not held
within 60 days of the filing, the order is deemed rescinded as of
its effective date. During a period when its license is revoked or
suspended, a licensee shall not conduct business pursuant to this
division except as may be permitted by further order of the
commissioner. However, the revocation, suspension, or surrender
of a license shall not affect the powers of the commissioner as
provided in this division.