BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1160 (Fong)
Hearing Date: 8/17/2009 Amended: 7/23/2009
Consultant: Maureen Ortiz Policy Vote: BFI 7-3 Jud 3-2
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BILL SUMMARY: AB 1160 requires a financial organization that
negotiates a contract in one of five specified languages to
provide the consumer with a summary of loan terms translated
into the language in which the contract was originally
negotiated.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Admin expenses $20 $0
$0 Special*
Enforcement --------unknown, likely
less than $100 ------ Special*
*Financial Institutions
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STAFF COMMENTS:
AB 1160 requires the Department of Corporations and the
Department of Financial Institutions to create a form to be made
available in Spanish, Chinese, Tagalog, Vietnamese, and Korean
which will be used by financial organizations to summarize the
terms of a mortgage loan whenever the contract for that loan was
negotiated in one of those five languages. The Department of
Financial Institutions (DFI) indicates that developing the form
would likely cost less than $20,000 one-time, and enforcement
costs are unknown, but not likely to be significant. However,
the DFI indicates that they do not currently track which of
their licensees negotiate loans in the required five foreign
languages. The Department of Corporations indicates minor
costs.
Financial organizations will be required to provide the form to
the borrower within three business days after receiving a
written loan application from the borrower, and again, if any of
the loan terms summarized on the form materially change after
the form is provided, but before the loan is consummated. These
financial organizations include state-chartered depository
institutions, state-licensed finance lenders and finance
brokers, and state-licensed residential mortgage lenders, but
will not apply to federally-chartered depository institutions.
Financial organizations will not have to comply with the
translation requirement if the consumer used his or her own
interpreter to negotiate the terms of the contract.
AB 1160 provides that any financial organization that violates
the translation requirements provided in this bill may be liable
for administrative penalties of up to $2,500 for the first
violation, $5,000 for the second violation, and $10,000 for each
subsequent violation.
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AB 1160 (Fong)
Current law requires a person engaged in a trade or business who
negotiates a contract primarily in Spanish, Chinese, Tagalog,
Vietnamese, or Korean to deliver a translation of the contract
in the language in which the contract was negotiated. These
contracts include retail installment agreements, auto sales
financing, unsecured loans, reverse mortgages, and others.
Failure to comply with the translation requirement is grounds
for rescission by the aggrieved party.
The provisions of AB 1160 will become operative on July 1, 2010,
or 90 days following the issuance of the form by both the DOC
and the DFI, whichever occurs later.