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AB 2666
THIRD READING
Bill No:
Author:
Amended:
Vote:
AB 2666
Assembly Banking and Finance Committee
6/12/12 in Senate
21
SENATE BANKING & FINACIAL INST. COMMITTEE: 7-0, 6/20/12
AYES: Vargas, Blakeslee, Evans, Kehoe, Liu, Padilla, Walters
ASSEMBLY FLOOR: 75-0, 5/17/12 (Consent) - See last page for vote
SUBJECT:
Mortgage loan originators
SOURCE:
Author
DIGEST: This bill makes technical and clarifying changes to provisions
of the California Finance Lenders Law (CFLL) and California Residential
Mortgage Lending Act (CRMLA) that implement the federal Secure and
Fair Enforcement for Mortgage Licensing Act (SAFE Act) of 2008.
ANALYSIS: Existing federal law provides for the SAFE Act, pursuant to
Title V of the provisions of the Housing and Economic Recovery Act of
2008 (HR 3221; Public Law 110-289). The SAFE Act required all states to
license and register their mortgage loan originators, as defined, through a
nationwide organization called the Nationwide Mortgage Licensing System
and Registry. Any state that failed to implement a mortgage loan originator
licensing system, in compliance with the SAFE Act, by July 30, 2009 risked
direct intervention by the U.S. Department of Housing and Urban
Development (HUD). Under the SAFE Act, HUD is authorized to establish
and maintain a mortgage loan originator system in any state that fails to
voluntarily comply with SAFE. Authority for SAFE Act oversight was
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transferred from HUD to the Consumer Financial Protection Bureau (CFPB)
in July 2011.
Existing law, pursuant to SB 36 (Calderon, Chapter 160, Statutes of 2009),
SB 1137 (Senate Banking, Finance and Insurance Committee, Chapter 287,
Statutes of 2010), and SB 217 (Vargas, Chapter 444, Statutes of 2011),
conforms California’s Real Estate Law, CFLL, and CRMLA to the SAFE
Act, thus preserving California’s ability to continue regulating mortgage
loan origination by non-depository institutions operating in California.
This bill:
1. Adds California’s Penal Code definition of “expungement” to the CFLL
and CRMLA.
2. Amends the CFLL and CRMLA to exempt the following individuals
from the definition of a mortgage loan originator:
A. Employees of federal, state, or local government agencies or housing
finance agencies, who act as mortgage loan originators only in their
official duties as employees of those agencies.
B. Employees of bona fide nonprofit organizations, who exclusively
originate residential mortgage loans for those bona fide nonprofit
organizations, and who act as mortgage loan originators only with
respect to residential mortgage loans with terms that are favorable to
the borrower, as defined. To qualify for the exemption, a bona fide
nonprofit organization must register with the Department of
Corporations (DOC); provide specified documentation to DOC
regarding its activities on an annual basis; periodically provide
reports regarding its activities, as requested by the Commissioner of
DOC (Commissioner); and subject itself to periodic examinations of
its books and records by the Commissioner, as specified. The
Commissioner is given the authority to revoke a nonprofit
organization’s status as a registered bona fide nonprofit organization
(and thus revoke the exemption provided to its employees), if the
organization fails to provide required documentation to DOC or does
not continue to meet specified criteria.
3. Amends the CFLL to authorize companies that are “not subject to” the
CFLL and amend the CRMLA to authorize companies that are “exempt
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from” the CRMLA to apply to the Commissioner for exempt company
registrations.
4. Amends the CFLL and CRMLA to clarify that applications and other
documents held in the Nationwide Mortgage Licensing System and
Registry are deemed to be valid original records, upon printing to paper.
5. Clarifies the CFLL by expressly stating that:
A. An individual may not engage in the business of a mortgage loan
originator with respect to any dwelling located in this state, without
first obtaining and maintaining annually a license in accordance with
the requirements of the CFLL;
B. A registered mortgage loan originator is exempt from licensure
under the CFLL when that individual is employed by a depository
institution, a subsidiary of a depository institution owned and
controlled by a depository institution and regulated by a federal
banking agency, or an institution regulated by the Farm Credit
Administration;
C. A finance lender, finance broker, or mortgage loan originator
licensed under the CFLL may not pay any commission, fee, or other
compensation to an unlicensed individual for conducting activities
that require a license, unless that unlicensed individual is exempt
from licensure pursuant to the CFLL.
Comments
Background and discussion. The federal SAFE Act was enacted in July of
2008, and gave jurisdiction to HUD to implement regulations clarifying its
operation. On June 30th, 2011, shortly before its authority to administer the
SAFE Act was transferred to the CFPB, HUD issued its final rules
implementing the SAFE Act (Federal Register Volume 76, Number 126,
Thursday, July 30th, 2011, pp. 38464 – 38501).
SB 217, referenced above, was enacted to incorporate some of the changes
reflected in the HUD final regulations, and to authorize certain companies,
which did not require lending licenses from the state of California, but
whose employees engaged in activities which required mortgage loan
originator licenses pursuant to the SAFE Act, to obtain so-called “exempt
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company registrations” from DOC. These exempt company registrations
allow the companies to sponsor their employees on the Nationwide
Mortgage Licensing System and Registry (a database used to facilitate the
licensing of mortgage loan originators nationwide), and thus enable their
employees to obtain mortgage loan originator licenses.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT: (Verified 6/21/12)
Housing Trust Fund of Santa Barbara County
San Luis Obispo County Housing Trust Fund
ASSEMBLY FLOOR: 75-0, 5/17/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill Berryhill,
Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler,
Charles Calderon, Campos, Carter, Cedillo, Chesbro, Conway, Cook,
Davis, Dickinson, Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove, Hagman,
Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande, Nielsen, Norby,
Olsen, Pan, V. Manuel Pérez, Portantino, Silva, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, John A.
Pérez
NO VOTE RECORDED: Fletcher, Bonnie Lowenthal, Perea, Skinner,
Yamada
JJA:m 6/21/12 Senate Floor Analyses
SUPPORT/OPPOSITION:
SEE ABOVE
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