BILL NUMBER: AB 941 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 17, 2007
AMENDED IN ASSEMBLY APRIL 11, 2007
INTRODUCED BY Assembly Member Torrico
FEBRUARY 22, 2007
An act to amend Section 10240 of the Business and Professions Code
, and to add Section 1922 to the Civil Code , relating to
lending.
LEGISLATIVE COUNSEL'S DIGEST
AB 941, as amended, Torrico. Real property loans: written
statement to borrower. documents.
Existing law, the Real Estate Law, requires a real estate broker,
who negotiates a loan to be secured by a lien on real property, to
deliver to the borrower a statement in writing containing specified
information relating to the loan transaction. A willful violation of
the Real Estate Law is a crime. Existing law requires a lender
to provide a borrower with specified information prior to execution
by the borrower of a mortgage payment instrument.
This bill would require a real estate broker to provide a borrower
the option to receive a copy of this statement , and any other
document connected with the loan, in an electronic format
instead of in paper format, as specified. The bill would also require
a lender, as defined, that negotiates or services a loan secured by
a lien on real property to provide a borrower with the option to
receive a copy of any document connected with the loan in an
electronic format .
Because a willful violation of the bill's requirements by a
real estate broker would be a crime, this bill would impose a
state-mandated local program.
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:
SECTION 1. Section 10240 of the Business and Professions Code is
amended to read:
10240. (a) Every real estate broker, upon acting within the
meaning of subdivision (d) of Section 10131, who negotiates a loan to
be secured directly or collaterally by a lien on real property
shall, within three business days after receipt of a completed
written loan application or before the borrower becomes obligated on
the note, whichever is earlier, cause to be delivered to the borrower
a statement in writing, containing all the information required by
Section 10241. It shall be personally signed by the borrower and by
the real estate broker negotiating the loan or by a real estate
licensee acting for the broker in negotiating the loan. When so
executed, an exact copy thereof shall be delivered to the borrower at
the time of its execution. The real estate broker negotiating the
loan shall retain on file for a period of three years a true and
correct copy of the statement as signed by the borrower.
No real estate licensee shall permit the statement to be signed by
a borrower if any information required by Section 10241 is omitted.
(b) For the purposes of applying the provisions of this article, a
real estate broker is acting within the meaning of subdivision (d)
of Section 10131 if he or she solicits borrowers, or causes borrowers
to be solicited, through express or implied representations that the
broker will act as an agent in arranging a loan, but in fact makes
the loan to the borrower from funds belonging to the broker.
(c) In a federally regulated residential mortgage loan transaction
in which the principal loan amount exceeds the principal loan levels
set forth in Section 10245, a real estate broker satisfies the
requirements of this section if the borrower receives (1) a "good
faith estimate" that satisfies the requirements of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C.A. 2601 et seq.), and
that sets forth the broker's real estate license number and a clear
and conspicuous statement on the face of the document stating that
the "good faith estimate" does not constitute a loan commitment, (2)
all applicable disclosures required by the Truth in Lending Act (15
U.S.C.A. 1601 et seq.), and (3) if the loan contains a balloon
payment provision, the disclosure described in subdivision (h) of
Section 10241, the balloon disclosure required for that loan by
Fannie Mae or Freddie Mac, or an alternative disclosure determined by
the commissioner to satisfy the requirements of the Truth in Lending
Act.
Prior to becoming obligated on the loan the borrower shall
acknowledge, in writing, receipt of the "good faith estimate" and all
applicable disclosures required by the Truth in Lending Act. The
real estate broker shall retain on file for a period of three years a
true and correct copy of the signed acknowledgment and a true and
correct copy of the "good faith estimate" and all applicable
disclosures required by the Truth in Lending Act as acknowledged by
the borrower.
(d) A real estate broker shall give a borrower the option to
receive a copy of the statement required by this section and any
other document connected with the loan in electronic format
instead of in paper format. For purposes of this subdivision,
"electronic format" means a format in which the information is held
in a record created, generated, sent, communicated, received, or
stored by electronic means. The electronic format shall be a format
that does not jeopardize or compromise the security or
integrity of the original record or of any proprietary software in
which it is maintained .
SEC. 2 Section 1922 is added to the
Civil Code , to read:
1922. A lender, as defined in paragraph (2) of subdivision (a) of
Section 1921, that negotiates or services a loan for a borrower
secured directly or collaterally by a lien on real property shall
give the borrower the option to receive a copy of any document
connected with the loan in electronic format instead of in paper
format. For purposes of this section, "electronic format" means a
format in which the information is held in a record created,
generated, sent, communicated, received, or stored by electronic
means. The electronic format shall be a format that does not
jeopardize or compromise the security or integrity of the original
record or of any proprietary software in which it is maintained.
SEC. 2. SEC. 3. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.