BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 376
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   SB 376 (Fuller) - As Amended:  August 15, 2011 

          Policy Committee:                              Business and 
          Professions  Vote:                            9 - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill revises the definition of real estate broker to allow 
          brokers to make, arrange, or service chattel (personal property) 
          mobile home loans under their Department of Real Estate (DRE) 
          license, without having to obtain a finance lender or broker 
          license from the Department of Corporations.

           FISCAL EFFECT  

          Costs associated with this legislation are minor and absorbable 
          within existing DRE resources.

           COMMENTS  

           1)Rationale  . According to the Western Manufactured Housing 
            Communities Association (WMA), sponsor of this bill, the 
            federal Secure and Fair Enforcement for Mortgage Licensing Act 
            of 2008 (SAFE Act) and newly amended provisions of the federal 
            Truth in Lending Act pose a substantial problem for the 
            state's mobile home parks.  Before these federal measures and 
            state legislation implementing the SAFE Act were in place, 
            park owners were making sellers carry back chattel loans on 
            used mobile homes using their own money to fund the loans.  
            This was necessary because traditional lenders were not 
            willing to make $5,000 to $20,000 chattel loans on used mobile 
            homes that park owners acquired through default, abandonment, 
            or warehouse liens.  Park owners were not required to be 
            licensed as lenders by the Department of Corporations, because 
            these loans were not categorized as "engaged in the business 
            of chattel lending" and did not trigger the need for a finance 
            lender license.








                                                                  SB 376
                                                                  Page  2


            WMA states, "The S.A.F.E. Act redefined Residential Mortgage 
            Loans to include chattel loans on mobile homes whether or not 
            they were attached to real property?Thus, park owners who are 
            engaged in making seller carry back loans on mobile homes?are 
            required to be licensed as mortgage loan originators (MLOs) 
            and to be licensed as a consumer finance lender by the 
            Department of Corporations in order to finance homes which 
            they own and self-finance."

            This bill allows real estate brokers who are licensed as MLOs 
            to arrange for chattel mobile home loans without requiring 
            them to obtain a license from the Department of Corporations. 
           
          Analysis Prepared by  :    Julie Salley-Gray / APPR. / (916) 
          319-2081