Amended in Assembly June 30, 2016

Amended in Senate May 31, 2016

Senate BillNo. 984


Introduced by Senator Hueso

(Principal coauthor: Assembly Member Alejo)

(Coauthors: Senators begin deleteHillend deletebegin insert Hill, Leno,end insert and Mitchell)

(Coauthors: Assembly Members Bonilla, Bonta, Brown, Low, Mullin, Ting, and Williams)

February 10, 2016


An act to amend Sections 22380 and 22381 of the Financial Code, relating to consumer loans.

LEGISLATIVE COUNSEL’S DIGEST

SB 984, as amended, Hueso. Pilot Program for Increased Access to Responsible Small Dollar Loans: extension.

(1) Existing law, the California Finance Lenders Law, provides for the licensure and regulation of finance lenders and brokers by the Commissioner of Business Oversight and makes a willful violation of its provisions a crime. Existing law, until January 1, 2018, establishes the Pilot Program for Increased Access to Responsible Small Dollar Loans for the purpose of allowing greater access for responsible installment loans in principal amounts of at least $300 and less than $2,500. Existing law requires licensees and other entities to file an application and pay a specified fee to the commissioner to participate in the program. Existing law authorizes a licensee approved by the commissioner to participate in the program to impose specified alternative interest rates and charges, including an administrative fee and delinquency fees, on loans of at least $300 and less than $2,500, subject to certain requirements. Existing law, on or before January 1, 2017, requires the commissioner to post a report on his or her Internet Web site containing specified information including a recommendation whether the pilot program should be continued after January 1, 2018.

This bill would extend the Pilot Program for Increased Access to Responsible Small Dollar Loans until January 1, 2023,begin insert require an additional report on or before July 1, 2020,end insert and make a conforming change to the requirement that the report include the above-referenced recommendation.

Because a willful violation of these extended provisions would be a crime, this bill would impose a state-mandated local program.

(2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

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

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

P2    1

SECTION 1.  

Section 22380 of the Financial Code is amended
2to read:

3

22380.  

(a) On or before July 1, 2015,begin delete andend delete again, on or before
4January 1, 2017,begin insert and again, on or before July 1, 2020,end insert the
5commissioner shall post a report on his or her Internet Web site
6summarizing utilization of the Pilot Program for Increased Access
7to Responsible Small Dollar Loans. The report required to be
8submitted on or before July 1, 2015, shall additionally include the
9information required by former Section 22361, summarizing
10utilization of the Pilot Program for Affordable Credit-Building
11Opportunities, which was created by Chapter 640 of the Statutes
12of 2010.

13(b) The information disclosed to the commissioner for the
14commissioner’s use in preparing the report described in this section
15is exempted from any requirement of public disclosure by
16paragraph (2) of subdivision (d) of Section 6254 of the Government
17Code.

18(c) If there is more than one licensee approved to participate in
19the program under this article, the report required pursuant to
P3    1subdivision (a) shall state information in aggregate so as not to
2identify data by specific licensee.

3(d) The report required pursuant to this section shall specify the
4time period to which the report corresponds, and shall include, but
5not be limited to, the following for that time period:

6(1) The number of entities that applied to participate in the
7program.

8(2) The number of entities accepted to participate in the program.

9(3) The reason or reasons for rejecting applications for
10participation, if applicable. This information shall be provided in
11a manner that does not identify the entity or entities rejected.

12(4) The number of program loan applications received by lenders
13participating in the program, the number of loans made pursuant
14to the program, the total amount loaned, the distribution of loan
15lengths upon origination, and the distribution of interest rates and
16principal amounts upon origination among those loans.

17(5) The number of borrowers who obtained more than one
18program loan and the distribution of the number of loans per
19borrower.

20(6) Of the number of borrowers who obtained more than one
21program loan, the percentage of those borrowers whose credit
22scores increased between successive loans, based on information
23from at least one major credit bureau, and the average size of the
24increase.

25(7) The income distribution of borrowers upon loan origination,
26including the number of borrowers who obtained at least one
27program loan and who resided in a low-to-moderate-income census
28tract at the time of their loan application.

29(8) The number of borrowers who obtained loans for the
30following purposes, based on borrower responses at the time of
31their loan applications indicating the primary purpose for which
32the loan was obtained:

33(A) Medical.

34(B) Other emergency.

35(C) Vehicle repair.

36(D) Vehicle purchase.

37(E) To pay bills.

38(F) To consolidate debt.

39(G) To build or repair credit history.

P4    1(H) To finance a purchase of goods or services other than a
2vehicle.

3(I) For other than personal, family, or household purposes.

4(J) Other.

5(9) The number of borrowers who self-report that they had a
6bank account at the time of their loan application, the number of
7borrowers who self-report that they had a bank account and used
8check-cashing services, and the number of borrowers who
9self-report that they did not have a bank account at the time of
10their loan application.

11(10) With respect to refinance loans, the report shall specifically
12include the following information:

13(A) The number and percentage of borrowers who applied for
14a refinance loan.

15(B) Of those borrowers who applied for a refinance loan, the
16number and percentage of borrowers who obtained a refinance
17loan.

18(C) Of those borrowers who obtained a refinance loan:

19(i) The percentage of borrowers who refinanced once.

20(ii) The percentage of borrowers who refinanced twice.

21(iii) The percentage of borrowers who refinanced more than
22twice.

23(D) Of those borrowers who obtained a refinance loan, the
24 average percentage of principal paid down before obtaining a
25refinance loan.

26(E) Of those borrowers who obtained a refinance loan, the
27average amount of additional principal extended.

28(F) Of those borrowers who obtained a refinance loan, the
29average number of late payments made on the loan that was
30refinanced.

31(11) The number and type of finders used by licensees and the
32relative performance of loans consummated by finders compared
33to the performance of loans consummated without a finder.

34(12) The number and percentage of borrowers who obtained
35one or more program loans on which late fees were assessed, the
36total amount of late fees assessed, and the average late fee assessed
37by dollar amount and as a percentage of the principal amount
38loaned.

39(13) (A) The performance of loans under this article, as reflected
40by all of the following:

P5    1(i) The number and percentage of program borrowers who
2experienced at least one delinquency lasting between 7 and 29
3days, and the distribution of principal loan amounts corresponding
4to those delinquencies.

5(ii) The number and percentage of program borrowers who
6experienced at least one delinquency lasting between 30 and 59
7days, and the distribution of principal loan amounts corresponding
8to those delinquencies.

9(iii) The number and percentage of program borrowers who
10experienced at least one delinquency lasting 60 days or more, and
11the distribution of principal loan amounts corresponding to those
12delinquencies.

13(iv) The number and percentage of program borrowers who
14experienced at least one delinquency of greater than 7 days and
15who did not subsequently bring their loan current.

16(v) Among loans that were ever delinquent for 7 days or more,
17the average number of times borrowers experienced a delinquency
18of 7 days or more.

19(B) To the extent data are readily available to the commissioner,
20the commissioner shall include in his or her report comparable
21delinquency data for unsecured loans made by persons licensed
22under Chapter 2 (commencing with Section 22365) of Division 9
23in principal amounts between two thousand five hundred dollars
24($2,500) and four thousand nine hundred ninety-nine dollars
25($4,999), and in principal amounts between five thousand dollars
26($5,000) and nine thousand nine hundred ninety-nine dollars
27($9,999), and for unsecured extensions of credit made by
28state-chartered banks and credit unions under the commissioner’s
29jurisdiction, in principal amounts between two thousand five
30hundred dollars ($2,500) and four thousand nine hundred
31ninety-nine dollars ($4,999), and in principal amounts between
32five thousand dollars ($5,000) and nine thousand nine hundred
33ninety-nine dollars ($9,999).

34(14) The number and types of violations of this article by finders,
35which were documented by the commissioner.

36(15) The number and types of violations of this article by
37licensees, which were documented by the commissioner.

38(16) The number of times that the commissioner disqualified a
39finder from performing services, barred a finder from performing
40services at one or more specific locations of the finder, terminated
P6    1a written agreement between a finder and a licensee, or imposed
2an administrative penalty.

3(17) The number of complaints received by the commissioner
4about a licensee or a finder, and the nature of those complaints.

5(18) Recommendations for improving the program.

6(19) Recommendations regarding whether the program should
7be continued after January 1, 2023.

8(e) The commissioner shall conduct a random sample survey
9of borrowers who have participated in the program to obtain
10information regarding the borrowers’ experience and licensees’
11compliance with this article. The results of this survey shall be
12included in the report required by this section.

13

SEC. 2.  

Section 22381 of the Financial Code is amended to
14read:

15

22381.  

This article shall remain in effect only until January 1,
162023, and as of that date is repealed.

17

SEC. 3.  

No reimbursement is required by this act pursuant to
18Section 6 of Article XIII B of the California Constitution because
19the only costs that may be incurred by a local agency or school
20district will be incurred because this act creates a new crime or
21infraction, eliminates a crime or infraction, or changes the penalty
22for a crime or infraction, within the meaning of Section 17556 of
23the Government Code, or changes the definition of a crime within
24the meaning of Section 6 of Article XIII B of the California
25Constitution.



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