BILL ANALYSIS                                                                                                                                                                                                    



                                                                     SB 235


                                                                    Page  1





          Date of Hearing:  July 14, 2015


                           ASSEMBLY COMMITTEE ON JUDICIARY


                                  Mark Stone, Chair


          SB  
          235 (Block) - As Amended July 8, 2015


                              As Proposed to be Amended

          SENATE VOTE:  39-0


          SUBJECT:  SMALL DOLLAR LOANS: FINDER DUTIES AND COMPENSATION


          KEY ISSUE:  SHOULD THE FEES FOR FINDERS USED BY PROVIDERS OF  
          SMALL DOLLAR LOANS UNDER THE SMALL DOLLAR LOAN PILOT PROGRAM BE  
          INCREASED FROM $40 TO $65 FOR LOAN MARKETING SERVICES AND SHOULD  
          A $2 PER TRANSACTION FEE BE ALLOWED FOR LOAN SERVICING?


                                      SYNOPSIS


          This bill, as proposed to be amended, seeks to expand the  
          small-dollar loan pilot program for consumer loans in principal  
          amounts of $300 to $2,500.  The original Small-Dollar Loan Pilot  
          program, established in 2010, was based on a model developed by  
          Progreso Financiero (Progreso), a company based in Mountain  
          View, California that offered short-term, unsecured loans of  
          $250 to $2,500 directed primarily to Latino borrowers who lacked  
          credit scores.  In 2013, the pilot program lenders returned to  
          the Legislature seeking to change some of the provisions of the  








                                                                     SB 235


                                                                    Page  2





          program.  The lenders argued that the terms of the pilot were so  
          restrictive that the lender participants were not able to earn a  
          profit.  The Legislature allowed the program to be re-vamped, as  
          requested, because the pilot program lenders were offering a  
          small loan product for which there was strong demand and the  
          program provided a valuable resource to consumers with very few  
          good alternatives for borrowing money.  The main change to the  
          program in 2013 was raising the maximum interest rate that could  
          be charged to borrowers, increased from 30 percent to 36  
          percent.  After the 2013 change, several of the pilot program  
          participants were able to increase their profits and service  
          more borrowers. 


          One of the pilot program lenders, Insikt, who is the sponsor of  
          this bill, would like to utilize finders (third-party businesses  
          that work on behalf of pilot program lenders to connect  
          prospective borrowers with pilot program lenders) as an integral  
          part of its business model.  The goal is to grow the  
          small-dollar loan market and to provide small dollar loan  
          services to more borrowers in more communities.  According to  
          Insikt, current law does not allow them to pay enough money to  
          finders to interest them in acting as finders.  Current law  
          imposes a cap of $45 for the first 40 loans originated by a  
          finder in a year; and after the first 40 loans, the finder can  
          only make $40 per loan.  The provisions of this bill would allow  
          pilot program lenders to pay increased fees to finders for  
          marketing and servicing of loans to borrowers, but would not  
          allow those fees or costs to be passed to borrowers in any way.   
          This bill adds additional reporting requirements for the pilot  
          program lenders to assist the Department of Oversight in its  
          regulation of small dollar lenders and their associated finders.  
           The bill clarifies that those reports from lenders to the  
          Commissioner of the Department of Oversight are already exempt  
          from public disclosure under the Public Records Act.  This bill  
          also increases the number of consumer protection provisions for  
          borrowers, especially in the interactions between borrowers and  
          finders.  This bill passed the Senate unanimously, is supported  
          by several small dollar lenders, and has no known opposition. 








                                                                     SB 235


                                                                    Page  3







          SUMMARY:   Authorizes finders under the Small Dollar Loan  
          Program to provide additional services on behalf of pilot  
          program lenders.  Specifically, this bill:  


          1)Authorizes finders who are licensed as financial service  
            providers, under one of thirteen different state or federal  
            laws, to disburse loan proceeds to borrowers, and receive  
            small dollar loan payments from borrowers, if borrowers chose  
            this method of disbursement or loan payment.


          2)Deems any loan disbursement made by a finder to a borrower to  
            be a loan made by the pilot program lender on the date that  
            funds are disbursed or otherwise made available by the finder  
            to the borrower.


          3)Deems the date when any loan payment is made by a borrower to  
            a finder to be the date when the payment is received by the  
            pilot program lender.


          4)Requires that a finder who disburses loan proceeds to a  
            borrower, or accepts loan payments from a borrower must  
            provide a receipt to the borrower containing specified  
            information, together with a statement informing the borrower  
            that "if you have any questions about your loan, now or in the  
            future, you should direct those questions to [name of pilot  
            program ender] by [insert at least two different ways in which  
            the borrower may contact the pilot program lender]."


          5)Requires the finder to maintain records of all disbursements  
            made and loan payments received for a period of at least two  
            years or until one month following the completion of a regular  
            examination by the Commissioner of the Department of Business  








                                                                     SB 235


                                                                    Page  4





            Oversight.


          6)Requires the finder to provide any notice or disclosure that  
            the law requires the lender to provide to the borrower.


          7)Increases the maximum amount of compensation a pilot program  
            lender may pay its finder to the lesser of either $65 per  
            loan, or the sum of the origination fee and interest charges  
            paid by the borrower to the lender over the life of the loan.


          8)Allows a pilot program lender to pay a $2 servicing fee to a  
            finder who receives a borrower's loan payment on the lender's  
            behalf.  


          9)Requires pilot program lenders that use finders to submit  
            specific information to the Commissioner of the Department of  
            Business Oversight regarding the performance of loans that are  
            consummated with the use of finders, and authorizes the  
            Commissioner to use this information when deciding whether a  
            finder should be disqualified from performing services for one  
            or more pilot program lenders.


          EXISTING LAW:  


          1)Provides that the California Finance Lenders Law (CFLL),  
            administered by the Department of Corporations (DOC),  
            authorizes the licensure of finance lenders, who make secured  
            and unsecured consumer and commercial loans.  (Financial Code  
            Section 22000 et seq.  All further statutory references are to  
            the California Financial Code, unless otherwise indicated.)


          2)Provides that consumer loans under $2,500 are capped at  








                                                                     SB 235


                                                                    Page  5





            interest rates which range from 12 percent to 30 percent per  
            year, depending on the unpaid balance of the loan; and that  
            administrative fees are capped at the lesser of five percent  
            of the principal amount of the loan, or $50.  (Sections 22303  
            - 22305.)  
           
          3)Authorizes, until January 1, 2018, the Pilot Program for  
            Increased Access to Responsible Small Dollar Loans within the  
            California Finance Lenders Law (CFLL), administered by the  
            Department of Business Oversight (DBO).  (Section 22365 et  
            seq.)  

          4)Provides that CFLL licensees who are approved by the  
            Commissioner of DBO (Commissioner) for participation in the  
            pilot program are allowed to receive charges for a loan  
            subject to an annual simple interest rate not to exceed:  (1)  
            the lesser of 36 percent or the sum of 32.75 percent plus the  
            United States prime lending rate on the portion of the  
            balance, including, but not in excess of, $1,000; and (2) the  
            lesser of 36 percent or the sum of 28.75 percent plus the  
            United States prime lending rate on the portion of balance in  
            excess of $1,000, but less than $2,500.  (Section 22370.)

          5)Allows CFLL licensees operating under the pilot program to use  
            one or more "finders" that are defined as entities which, at  
            the finders' physical address, bring licensees and prospective  
            borrowers together for the purpose of negotiating loan  
            contracts.  (Section 22371.)  

          6)Allows finders to perform one or more of the following  
            services at the finder's physical location for the business:

             a)   Distributing, circulating, using or publishing  
               preprinted written materials relating to loans;
             b)   Providing written factual information about loan terms,  
               conditions, or qualification requirements to a prospective  
               borrower that has been either prepared by the licensee or  
               reviewed and approved in writing by the licensee.  A finder  
               may discuss that information with a prospective borrower  








                                                                     SB 235


                                                                    Page  6





               but may not provide counseling or advice;
             c)   Notifying a prospective borrower of the information  
               needed in order to complete a loan application without  
               providing counseling or advice;
             d)   Entering information provided by the prospective  
               borrower into an application form or onto a preformatted  
               computer database without providing counseling or advice;
             e)   Assembling credit applications and other materials  
               obtained in the course of a credit application transaction  
               for submission to the lender;
             f)   Contacting the lender to determine the status of a loan  
               application;
             g)   Communicating a response that is returned by the  
               licensee's automated underwriting system to a borrower; and
             h)   Obtaining a borrower's signature on documents prepared  
               by the licensee and delivering final copies of the  
               documents to the borrower.  (Section 22372(a).)

          7)Prohibits finders from engaging in any of the following  
            activities:

             a)   Providing counseling or advice to a borrower or  
               prospective borrower;
             b)   Providing loan-related marketing material that has not  
               previously been approved by the pilot lender to a borrower  
               or prospective borrower;
             c)   Interpreting or explaining the relevance, significance,  
               or effect of any of the marketing materials or loan  
               documents the finder provides to a borrower or prospective  
               borrower;
             d)   Negotiating the price, length, or any other loan terms  
               between a pilot lender and a prospective borrower (unless  
               separately licensed as a finance broker under the CFLL);  
               and
             e)   Advising a prospective borrower or a pilot lender as to  
               any loan term (unless separately licensed as a finance  
               broker under the CFLL).  (Section 22372(b).)

          8)Provides that any person who performs one or more of the  








                                                                     SB 235


                                                                    Page  7





            following activities is a broker, rather than a finder:

             a)   Negotiating the price, length, or any other loan term  
               between a licensee and a prospective borrower;
             b)   Advising either a prospective borrower or a licensee as  
               to any loan term;
             c)   Offering information pertaining to a single prospective  
               borrower to more than one licensee, except as specified;  
               and
             d)   Personally contracting or providing services to a  
               borrower or prospective borrower at any place other than  
               the finder's physical location for business.  (Section  
               22372(c).)

          9)Requires a finder, at the time of receiving or processing an  
            application, to provide the following statutory notice, in no  
            smaller than 10-point type:

               Your loan application has been referred to us by [Name of  
               Finder]. We may pay a fee to [Name of Finder] for the  
               successful referral of your loan application. IF YOU ARE  
               APPROVED FOR THE LOAN, [NAME OF LICENSEE] WILL BECOME  
               YOUR LENDER, AND YOU WILL BE BUILDING A RELATIONSHIP WITH  
               [NAME OF LICENSEE]. If you wish to report a complaint  
               about [Name of Finder] or [Name of Licensee] regarding  
               this loan transaction, you may contact the Department of  
               Business Oversight, Division of Corporations at  
               1-866-ASK-CORP (1-866-275-2677), or file your complaint  
               online at www.corp.ca.gov.  (Section 22373.)


          10)Permits a finder to be compensated by the licensee pursuant  
            to a written agreement and subjects the compensation to the  
            following requirements:

             a)   No fee shall be paid to a finder in connection with a  
               loan application until and unless the loan is  
               consummated;
             b)   No fee shall be paid to a finder based upon the  








                                                                     SB 235


                                                                    Page  8





               principal amount of the loan;
             c)   No fee paid to a finder shall exceed the following  
               amounts:
               i)     $45 per loan for the first 40 loans originated  
                 each month; and
               ii)    $40 per loan for any subsequent loans originated  
                 during that month; and
             d)   The finder's location and other information have been  
               reported to the commissioner and the finder has not been  
               barred from providing services at that location by the  
               Commissioner.  (Section 22374.)

          11)Requires each licensee that utilizes the services of one or  
            more finders to inform the Commissioner regarding the  
            identities of and contact information for their finders, as  
            specified; pay an annual finder registration fee to the  
            Commissioner to cover the Commissioner's costs to regulate  
            their finders; and submit an annual report to the  
            Commissioner, containing whatever information the  
            Commissioner requests related to the finder's finding  
            activities.  (Section 22375.)
             
          12)Authorizes the Commissioner to examine the operations of  
            each finder to ensure that the activities of the finder are  
            in compliance with the pilot program and it's implementing  
            regulations, and requires the costs of the Commissioner's  
            examination of each finder to be charged to the licensee  
            with which the finder has its agreement.  Provides that any  
            violation of the pilot program or its regulations by a  
            finder or a finder's employee is attributed to the lender.   
            (Section 22377.)





          13)Gives the Commissioner authority to disqualify a finder  
            from performing services under the pilot program, bar a  
            finder from performing services at one or more specific  








                                                                     SB 235


                                                                    Page  9





            locations, terminate a written agreement between a finder  
            and a pilot program lender, and prohibit the use of a finder  
            by all licensees accepted to participate in the pilot  
            program, if the Commissioner determines that the finder has  
            violated the pilot program rules or regulations.   
            Additionally authorizes the Commissioner to impose an  
            administrative penalty of up to $2,500 for violations of the  
            pilot program that are committed by a finder.  (Section  
            22377.)



          14)Provides that applications filed with any state agency  
            responsible for the regulation or supervision of the  
            issuance of securities or of financial institutions,  
            including, but not limited to, banks, savings and loan  
            associations, industrial loan companies, credit unions, and  
            insurance companies.  (Government Code Section 6254(d)(1).)

          FISCAL EFFECT:  As currently in print this bill is keyed fiscal.


          COMMENTS:  History of the Small-Dollar Loan Program.  The  
          Department of Business Oversight (formerly the Department of  
          Corporation) administers the CFLL and licenses finance lenders  
          who make secured and unsecured consumer and commercial loans  
          under that law.  The Department of Corporation's (DOC) "2008  
          Annual Report on the Operation of Finance Companies Licensed  
          under the CFLL" indicates that, in 2008, licensees made 96,665  
          consumer loans under $2,500.  Of this amount, 81,790 were  
          unsecured loans.  In contrast, during that same time period,  
          payday lenders made over 11 million payday loans.  (DOC, 2008  
          Annual Report on the Operation of Deferred Deposit Originators  
          under the California Deferred Deposit Transaction Law.)  


          In an effort to create a responsible alternative to payday  
          loans, the Legislature in SB 1147 (Florez), Chap. 640, Stats.  
          2010, established a pilot program until January 1, 2015 that  








                                                                     SB 235


                                                                    Page  10





          allowed CFLL licensees to offer a new type of small-dollar  
          consumer loan that met specified requirements.  The small-dollar  
          loan pilot program was based on the small-dollar loan model of  
          Progreso Financiero (Progreso), a company based in Mountain  
          View, California which offered short-term, unsecured loans of  
          $250 to $2,500 directed to Latino borrowers who lacked credit  
          scores.  Progreso made its loans through 27 retail locations in  
          California, all of which were located inside ethnic supermarkets  
          and pharmacies.  At that time, the company, which was created in  
          2005, had made 40,000 loans totaling $36 million with an average  
          loan of $900 and an average term of nine months. 


          At the time, concerns were raised that any relaxation of  
          existing rules for loan products targeted to those who lack or  
          have more risky credit histories naturally created the need for  
          appropriate safeguards to prevent any potential abuse by lenders  
          in the newly created market.  Accordingly, that bill was crafted  
          in collaboration with consumer advocates in an effort to  
          anticipate and preclude as many pitfalls as stakeholders were  
          able to identify.  In particular, that bill contained provisions  
          regarding late fees, finder's fees, insurance products, and  
          assuring as much accuracy as possible in determining an  
          applicant's debt for the purpose of meeting the debt-to-income  
          ratio requirements.  


          Expanding the Original Small-Dollar Loan Program.  Premised on  
          the notion that the existing small loan pilot rules authorized  
          by SB 1146 did not allow the loan companies to make enough money  
          to continue with the program, SB 318 (Hill and Steinberg), Chap.  
          467, Stats. 2013, sought to expand the number of lenders  
          offering loans between $300 and $2,500 by, among other things,  
          streamlining procedures and increasing the amounts of various  
          fees that could be charged under the program.  To accomplish  
          that goal, SB 318 modified provisions of SB 1146 as the Pilot  
          Program for Increased Access to Responsible Small Dollar Loans. 










                                                                     SB 235


                                                                    Page  11





          The rationale for expanding the program was that pilot lenders  
          were offering a small loan product for which there was strong  
          demand and very few good alternatives.  The thought was that if  
          the pilot program lenders were more profitable, lending in this  
          segment of the market would increase.  If those loans were made  
          responsibly, increased lending would be beneficial for consumers  
          in addition to being profitable for lenders.  These loans  
          offered an alternative to payday loans, offering amounts above  
          the payday loan limit of $300 and with significantly lower  
          interest rates.  These two program target different potential  
          borrowers -- payday loans are not underwritten and are therefore  
          most appealing to customers with damaged credit, while pilot  
          loans are required to be underwritten and therefore target  
          customers with little or no credit histories, rather than those  
          with bad credit histories.  Also, the pilot lenders program  
          required that the borrowers be educated about credit and  
          borrowing, designed to help these borrowers increase their  
          credit scores.  As a result of the expanded pilot program,  
          Progreso Financiero (which has since changed its name to  
          Opportun) and other smaller-sized program participants have been  
          able to increase their profits from their participation in the  
          program.  According to a letter from Opportun, dated April 8,  
          2015, the company writes:  "Opportun has made approximately $1.3  
          billion in responsible small dollar loans to nearly 500,000  
          Californians and have done so at rates and terms that are  
          dramatically less than alternatives that were available to those  
          borrowers absent the Pilot."


          According to the author:


               Relatively few installment loans are made in California  
               with principal amounts under $2,500.  This represents a  
               challenge to the significant population of people in  
               California who are unable to access affordable credit  
               through banks and credit unions.  Californians who lack  
               credit scores, or have very thin credit files or damaged  
               credit, currently have very few affordable options when  








                                                                     SB 235


                                                                    Page  12





               they need to borrow money.  Credit cards are often  
               unavailable to this population, or, if available, bear very  
               high interest rates and fees.  When their spending needs  
               outpace their incomes, these Californians commonly turn to  
               payday loans, auto title loans, or high-interest rate,  
               unsecured installment loans.  All three of these options  
               come with high costs, and none rewards timely loan  
               repayment with a credit score increase.  


          Recognizing California's shortage of affordable, credit-building  
          loans, the California Legislature authorized a small-dollar loan  
          Pilot program in 2010.  (SB 1146, Florez, Chap. 640, Stats.  
          2010)  The Legislature modified that Pilot program in 2013,  
          based on Pilot participants' first two years of experience, with  
          the aim of attracting more lenders to the program and increasing  
          the viability of lenders participating in the Pilot.  (SB 318,  
          Hill, Chap. 467, Stats. of 2013)  SB 235 proposes to modify one  
          element of the 2010 Pilot that has not yet been updated to  
          reflect knowledge gained through Pilot participants' experience:  
                                        the finder provisions.  


          As envisioned in the 2010 legislation, finders are third parties  
          who can work on behalf of Pilot program lenders to identify  
          prospective borrowers and connect them with the lenders, helping  
          to lower pilot program lenders' costs of customer acquisition.   
          Until very recently, however, no pilot program lender had  
          utilized the finder authority granted in the 2010 legislation,  
          because the finder provisions have proven too rigid for the  
          realities of the small dollar loan marketplace.  SB 235 is  
          premised on the belief that the finder provisions require  
          revision, if the Pilot program is to achieve its full potential.  
           


          Increase in the use of Finders.  Insikt Corporation, the sponsor  
          of this bill and a new pilot program lender, has devised a way  
          to utilize "finders" in its business model to promote and  








                                                                     SB 235


                                                                    Page  13





          service its small-dollar loan program and to provide services to  
          more borrowers.  However, Insikt believes there are two  
          impediments to its attempts to expand.  First, although the use  
          of finders is allowed under existing law, the law is silent on  
          whether finders may disburse loan proceeds, whether finders must  
          provide required disclosures to approved borrowers, and whether  
          finders may accept loan payments from borrowers.  Second, the  
          existing finder compensation that small dollar lenders are  
          allowed to pay finders ($45 per loan for the first 40 loans  
          originated monthly; and then $40 per loan for each subsequent  
          loan within the same month) is too low to attract enough finders  
          to facilitate their business model.  This bill would allow  
          finders to disburse loan proceeds, provide required disclosures  
          to approved borrowers, and accept loan payments from borrowers.   
          This bill would also increase the per-loan compensation of a  
          finder from $40 or $45 to $65 per loan, regardless of the number  
          of loans originated within a month.  This bill would allow a  
          lender to compensate a finder by $2 for each loan payment that  
          the finder receives on the lender's behalf.   None of the  
          compensation paid to the finder is allowed to be charged to the  
          borrower, so the borrower's interest rates would remain the same  
          under the provisions of this bill as they are under existing  
          law. 


          Public Records Act Exemption.  Documents are generally open to  
          the public pursuant to the California Public Records Act (PRA)  
          unless a document is exempt under the PRA, or another provision  
          of the law.  (See Government Code 6254 et seq.)  Any limitation  
          to public access is always of great concern because the public  
          is presumed to have a right to access information and records  
          that are in the possession of a public agency.   

          A small dollar pilot program lender, under the provisions of  
          this bill, is required to submit an annual report to the  
          Commissioner of the Department of Business Oversight that  
          includes, for each finder, the following information: (1) the  
          number and percentage of borrowers who obtained one or more  
          program loans on which late fees were assessed; (2) The total  








                                                                     SB 235


                                                                    Page  14





          amount of late fees assessed; (3) The average late fee assessed  
          by dollar amount and as a percentage of the principal amount  
          loaned; and (4) Any other  information pertaining to each finder  
          and the licensee's relationship and business arrangements with  
          each finder as the Commissioner may by regulation require. 



          The information disclosed to the Commissioner in this annual  
          report is exempt from public disclosure because it is an  
          application filed with the DBO, the regulator of loan  
          associations. (Government Code Section 6254(d)(1).)  Considering  
          that information in the report includes specific fees that are  
          assessed by each finder, operating on behalf of a pilot program  
          lender, the information in the report appears to be the same  
          information that is exempt, under existing law, from disclosure  
          to the public.  

          Oversight and Additional Consumer Protections Added by this  
          bill. The oversight of the small-dollar loan pilot program will  
          remain within the purview of the DBO.  Several consumer  
          protections have been added by the provisions of this bill,  
          including the following: 


          1)The pilot program lender is required to develop and implement  
            policies and procedures designed to respond to questions  
            raised by applicants and borrowers regarding their loans,  
            including those involving finders, and must address customer  
            complaints as soon as reasonably practicable.


          2)The responsibility for monies disbursed to a borrower and  
            payments collected from a borrower are paced squarely on the  
            finder and the pilot program lender.  The bill's provisions  
            that protect borrowers when interacting with finders include:

             a)   Any loan disbursement made by a finder will be deemed  
               made by the licensee on the date the funds are disbursed or  








                                                                     SB 235


                                                                    Page  15





               otherwise made available by the finder to the borrower.

             b)   A finder that disburses loan proceeds to a borrower must  
               provide to the borrower at the time loan proceeds are  
               disbursed, a plain and complete receipt showing all of the  
               following: (1) The date of disbursement; (2) The total  
               amount disbursed; (3) The corresponding loan account  
               identification; (4) a statement, prominently displayed in a  
               type size equal to or greater than the type size used to  
               display the other items on the receipt: "If you have any  
               questions about your loan, now or in the future, you should  
               direct those questions to [name of licensee] by [insert at  
               least two different ways in which a borrower may contact  
               the licensee]." 

             c)   Any loan payment made by a borrower to a finder must be  
               applied to the borrower's loan and deemed received by the  
               pilot program lender as of the date the payment is received  
               by the finder.

             d)   A finder that receives loan payments must deliver or  
               cause to be delivered to the borrower at the time that the  
               payment is made, a plain and complete receipt showing all  
               of the following:(1) The name of the finder; (2) The total  
               payment amount received; (3) The date of payment; (4) The  
               corresponding loan account identification upon which the  
               payment is being applied; (5) The loan balance prior to and  
               following application of the payment; (6) The amount of the  
               payment that was applied to principal, interest, and fees;  
               (7) The type of payment, such as cash, automated clearing  
               house (ACH) transfer, check, money order, or debit card;  
               (8) a statement, prominently displayed in a type size equal  
               to or greater than the type size used to display the other  
               items on the receipt: "If you have any questions about your  
               loan, now or in the future, you should direct those  
               questions to [name of licensee] by [insert at least two  
               different ways in which a borrower may contact the  
               licensee]." 









                                                                     SB 235


                                                                    Page  16





             e)   A borrower who submits a loan payment to a finder will  
               not be liable for any failure or delay by the finder in  
               transmitting the payment to the pilot program lender.

             f)   A finder that disburses or receives loan payments must  
               maintain records of all disbursements made and loan  
               payments received for a period of at least two years or  
               until one month following the completion of a regular  
               examination by the commissioner, whichever is later. 

          3)A pilot program lender that utilizes the service of a finder  
            must do all of the following: provide the name, business  
            address, and licensing details of the finder and all locations  
            at which the finder will perform services to the Commissioner.

          Author's Amendments:  After a series of negotiations with the  
          stakeholders regarding finders' compensation, the author has  
          proposed the following amendments:





            On page 7, line 25, after "finder" insert "for the services  
            set forth in subdivision (a) of Section 22372"





            On page 7, line 26, strike "seventy dollars (70)" and insert  
          "sixty-five ($65)"





            On page 7, line 28, after "finder," insert "plus $2 per  
          payment 








                                                                     SB 235


                                                                    Page  17







            received by the finder on behalf of the licensee for the  
            duration of the loan, when the finder receives borrower loan  
            payments on the licensee's behalf in accordance 


            with subdivision (b) of Section 22372."


              


          ARGUMENTS IN SUPPORT:  In support of the bill, the sponsor  
          Insikt writes:





               Accordingly, Insikt seeks the flexibility to negotiate  
               compensation schemes that ultimately work for both parties.  
                Otherwise, we risk discouraging potential partnerships to  
               the ultimate detriment of consumers who will find  
               themselves with less access to Pilot Program loans.  To be  
               clear, these changes would not revise any other provisions,  
               including important customer protections and requirements  
               for credit education.  With these changes, Insikt and other  
               participants will be well positioned to enter into  
               partnerships with finders that will increase the  
               availability of Pilot Program loans in underbanked  
               communities throughout California.


          


          REGISTERED SUPPORT / OPPOSITION:









                                                                     SB 235


                                                                    Page  18





          Support

          Insikt (sponsor)

          Silicon Valley Leadership Group

          Check Center

          Listo Inc.

          uTax Software, LLC.

          LendUp

          Opposition

          None on file



          Analysis Prepared by:Khadijah Hargett / JUD. / (916)  
          319-2334