BILL ANALYSIS �
SB 217
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Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 217 (Vargas) - As Amended: August 15, 2011
Policy Committee: Banking and
Finance Vote: 11-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill amends state law to reflect new requirements of the
federal Secure and Fair Enforcement of Mortgage Licensing Act of
2008 (SAFE Act). Specifically, this bill:
1)Provides that persons not subject to the California Finance
Lenders Law (CFLL) may apply to the commissioner of
Departments of Corporations (DOC) for an exempt company
registration for the purpose of sponsoring one or more
individuals required to be licensed as mortgage loan
originators pursuant to the SAFE Act.
2)Allows the Commissioners of Real Estate and Corporations when
reviewing a license application from a party with a criminal
record, to consider the underlying crime and circumstances
when there is a record of a pardon or expunged felony
conviction rather than automatically denying the application.
FISCAL EFFECT
Minor and absorbable costs to the Departments of Corporations
and Real Estate to administer the provisions of this bill.
COMMENTS
1)Purpose . According to supporters, this bill addresses an
issue facing State Farm Bank, a division of State Farm
Insurance Company. State Farm contracts with independent
agents that write insurance on behalf of State Farm Insurance.
These agents also may originate mortgages on behalf of State
Farm Bank, requiring registration under SAFE Act. However,
SB 217
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because they are independent agents and not employees of State
Farm, they cannot easily obtain SAFE Act registration. SB 217
would allow State Farm Bank, or another entity similarly
situated to apply to the commissioner of DOC for an exempt
person registration in order to sponsor its agents to become
licensed and registered under the SAFE Act. It also requires
an exempt person to pay an annual registration fee, and comply
with all rules and orders the commissioner deems necessary to
ensure compliance with the SAFE Act.
2)Background. Title V of the Federal Housing Finance Regulator
Reform Act, signed by President Bush on July 30, 2008,
established the SAFE Act requiring the establishment of a
national registry for mortgage loan originators, and required
all the states to establish requirements to carry out SAFE Act
licensing and registration. California's SAFE Act licensing
framework was put into law by SB 36 (Calderon), Chapter 160,
Statutes of 2009. In California, employees of those licensees
licensed under the CFLL and California Residential Mortgage
Lending Act that meet the definition of mortgage loan
originator must obtain licenses from DOC. Persons licensed by
the Department of Real Estate must obtain a mortgage loan
originator license endorsement if they meet the mortgage loan
originator definition.
3)Federal view . The Department of Housing and Urban Development
(HUD) recently issued federal regulations setting standards
for state compliance. Among the provisions were new criteria
for addressing the issue of pardons and expunging criminal
records.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081