BILL ANALYSIS �
SB 6
Page 1
Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 6 (Calderon) - As Amended: July 7, 2011
Policy Committee: Banking and
Finance Vote: 11-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill updates California's real estate and appraisal law to
reflect recent changes enacted at the federal level pursuant to
the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank). Specifically, this bill:
1)Provides that no real estate licensee shall knowingly or
intentionally misrepresent the value of real property, and, no
real estate licensee that offers or provides an opinion of
value of real property that is used as the basis for an
origination of a mortgage loan shall have an interest in that
property.
2)Clarifies that no person or entity acting in the capacity of
an appraisal management company (AMC) shall improperly
influence the development or review of any appraisal and no
person or entity preparing an appraisal, or performing
appraisal management functions shall have a direct or indirect
interest in the property or the transaction.
3)Provides that no person with an interest in a real estate
transaction involving a valuation shall improperly influence
the valuation.
FISCAL EFFECT
Costs to the Department of Real Estate will be minor and
absorbable.
COMMENTS
SB 6
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1)Purpose . According to the author's office, "In recent years,
California has enacted legislation to ensure the integrity of
the real property appraisal process. Until enactment of
Dodd-Frank in July 2010, these California's laws were more
comprehensive, and more protective of consumers than the
federal rules. Since enactment of Dodd-Frank, however,
California's rules have fallen behind some of those recently
promulgated by federal regulators. Portions of state law are
also now inconsistent with federal regulations in certain
cases.
2)Background . Dodd-Frank, signed into law by President Obama in
July 2010, was a response to the mortgage crisis in the middle
of the last decade. Dodd-Frank made significant changes to
the American financial regulatory environment and affects all
federal financial regulatory agencies and almost every aspect
of the nation's financial services industry. The Federal
Reserve Board (FRB) recently promulgated regulations
implementing Dodd-Frank. This bill updates state law to
conform to provisions of Dodd-Frank that reform the mortgage
business.
3)Support . The California Government Relations Subcommittee of
the Appraisal Institute, sponsor of this measure, states, "SB
6 is largely technical, to make sure that federal rules and
state rules align on important questions of inappropriate
pressure on appraisers and conflicts of interest in rendering
real property value conclusions. As the appraisal process has
been implicated to some degree in evaluations of the national
financial crisis, it is important that state and federal laws
be consistent."
4)Previous legislation .
a) SB 237 (Machado) Chapter 173, Statues of 2009, required
management companies doing business in California to
register with the Office of Real Estate Appraisers and
enacted a set of allowable and prohibited actions for AMCs
and appraisers.
b) SB 223 (Machado) Chapter 291, Statutes of 2007,
prohibits any person with an interest in a real estate
transaction from inappropriately influencing, or attempting
to inappropriately influence, a real property appraiser
with the aim of convincing the appraiser to alter his or
SB 6
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her value conclusion.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081