BILL ANALYSIS
SB 204
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Date of Hearing: June 15, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 204 (Benoit) - As Amended: June 8, 2009
Policy Committee: Banking and
Finance Vote: 10-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill changes the fee structure charged to escrow agents and
makes other changes to the escrow law. Specifically, the bill:
1)Permanently extends the current annual $2,800 per-location fee
charged to escrow agents, and deletes a corresponding
provision authorizing the Department of Corporations to levy a
pro rata licensee assessment - base on each companies' share
of total gross income in the industry - if the $2,800 flat
annual assessment sunsets.
2)Increases, from $500 to $1,000, the amount of a special
assessment the Department of Corporations may levy if the
annual $2,800 fee proves to be insufficient to cover annual
expenses related to administering the Escrow Law. Also
increases, from 30 days to 60 days, the amount of time the
licensees have to pay the assessment following notification by
DOC.
3)Requires DOC to conduct a preliminary examination of any new
escrow agent licensee within one year of license issuance or
change of ownership, and a full examination within two years
of license issuance or change of ownership. Currently, DOC is
authorized, but not required, to conduct such examinations.
4)Makes changes to the process for the surrender of an escrow
license under the California Residential Mortgage Lending Act.
FISCAL EFFECT
SB 204
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Any net costs to DOC to conduct additional examinations will be
minor and absorbable.
COMMENTS :
1)Background . Existing law establishes an annual license fee of
up to $2,800 per office or location for escrow licensees, and
additionally allows the DOC to levy a special assessment of up
to $500 for each office or location if the costs of enforcing
the escrow law exceed annual fee revenue. Licensees are
provided 30 days to pay this special assessment. These fee
provisions, which were originally operative in 1997 and have
been extended several times, are scheduled to sunset on
January 1, 2010. At that time, the annual assessment will be
based on a methodology that was in effect prior to 1997, which
required each licensee to pay a pro rata share of the
administrative costs to DOC for enforcing the escrow law.
Under this system, each licensee's assessment was based on its
proportion of the total gross income earned by all licensees
in the industry, so that licensees with larger offices would
pay more than their smaller counterparts.
2)Rationale . The main purpose of the bill is to continue the
current fee structure, which appears to be favored by the
industry over the pro-rata assessment methodology. The author
asserts that the flat fee provides stability and certainty to
the fees paid by escrow agents. The trade-off, however, is
that small licensees will pay the same fee as their larger
counterparts under the continuation of the current flat fee
system. The bill is the result of discussions between the
Escrow Institute of California (sponsor), DOC, and the author.
The DOC has agreed that the $2,800 annual assessment is
sufficient for the purposes of industry oversight and
regulation.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081