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SB-179 Mortgage loan originators.(2013-2014)

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SB179:v98#DOCUMENT

Amended  IN  Senate  March 19, 2013

CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION

Senate Bill No. 179


Introduced by Senator Correa Roth

February 06, 2013


An act to amend Section 799.2 of the Civil Code, relating to mobilehome parks. Sections 22013 and 50003.5 of the Financial Code, relating to mortgage loan originators.


LEGISLATIVE COUNSEL'S DIGEST


SB 179, as amended, Correa Roth. Mobilehome parks. Mortgage loan originators.
The California Finance Lenders Law and the California Residential Mortgage Lending Act define a “mortgage loan originator” as an individual who, for compensation or gain, or in the expectation of compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. The acts except certain individuals from the definition of mortgage loan originator. Existing law requires that mortgage loan originators be licensed and fulfill certain educational and other requirements.
This bill would except from the definition of mortgage loan originator an individual who originates 5 or fewer residential mortgage loans secured by a manufactured home or mobilehome, as defined, in any 12-consecutive-month period.

Existing law provides for the rights of a resident who has an ownership interest in the subdivision, cooperative, or condominium for mobilehomes, or a resident-owned mobilehome park in which his or her mobilehome is located or installed. Existing law prohibits the ownership or management of the subdivision, cooperative, or condominium for mobilehomes or a resident-owned mobilehome park from showing or listing for sale a mobilehome owned by a resident without first obtaining the resident’s written authorization.

This bill would make a technical, nonsubstantive changes to these provisions.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 22013 of the Financial Code is amended to read:

22013.
 (a) “Mortgage loan originator” means an individual who, for compensation or gain, or in the expectation of compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.
(b) Mortgage loan originator does not include any of the following:
(1) An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator, except as provided in subdivision (c) of Section 22014. The term “administrative or clerical tasks” means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.
(2) An individual who solely renegotiates terms for existing mortgage loans held or serviced by his or her employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires such an employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.
(3) An individual that is solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11 of the United States Code.
(4) An individual licensed as a mortgage loan originator pursuant to the provisions of Article 2.1 (commencing with Section 10166.01) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code and the SAFE Act.
(5) An individual who is an employee of a federal, state, or local government agency or housing finance agency and who acts as a loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency or housing finance agency.
(A) For purposes of this paragraph, the term “employee” means an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by the controlling person.
(B) For purposes of this paragraph, the term “housing finance agency” means any authority:
(i) That is chartered by a state to help meet the affordable housing needs of the residents of the state.
(ii) That is supervised directly or indirectly by the state government.
(iii) That is subject to audit and review by the state in which it operates.
(6) (A) An employee of a bona fide nonprofit organization who exclusively originates residential mortgage loans for a bona fide nonprofit organization, and who acts as a mortgage loan originator only with respect to residential mortgage loans with terms that are favorable to the borrower.
(B) To qualify for the exemption under this paragraph, the bona fide nonprofit organization under this paragraph must shall register with the department on a form prescribed by the commissioner, along with documentation of all of the following by December 31 of each year:
(i) Status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986.
(ii) That the organization promotes affordable housing or provides home ownership education or similar services.
(iii) That the organization conducts its activities in a manner that serves public or charitable purposes, rather than commercial purposes.
(iv) That the organization receives funding and revenue, and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients.
(v) That the organization compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients.
(vi) That the organization provides to, or identifies for, the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs.
(vii) That the organization is certified by the United States Department of Housing and Urban Development as a housing counselor who engages solely in traditional housing counseling services, if applicable.
(C) The commissioner may periodically require reports regarding the activities of the bona fide nonprofit organization, and shall examine the nonprofit organization’s books and records in accordance with the regulations of the United States Department of Housing and Urban Development, or any successor guidance or requirement by the Consumer Financial Protection Bureau. If the nonprofit organization fails to provide documentation as required by subparagraph (B), or if it does not continue to meet the criteria under subparagraph (B), the commissioner may revoke the nonprofit organization’s status as a registered bona fide nonprofit organization.
(D) For residential mortgage loans to have terms that are favorable to the borrower, the terms shall be consistent with loan origination in a public or charitable context, rather than a commercial context.
(E) In making its determinations and examinations, the commissioner may rely on the receipt and review of:
(i) Reports filed with federal, state, or local housing agencies and authorities.
(ii) Reports and attestations prescribed by the commissioner by rule or order.
(7) An individual who originates five or fewer residential mortgage loans secured by a manufactured home, as defined in Section 18007 of the Health and Safety Code, or a mobilehome, as defined in Section 18008 of the Health and Safety Code, in any 12-consecutive-month period.
(c) “Registered mortgage loan originator” means any individual who is all of the following:
(1) Meets the definition of mortgage loan originator.
(2) Is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.
(3) Is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
(d) “Loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a mortgage loan originator licensed by the state or a registered mortgage loan originator.

SEC. 2.

 Section 50003.5 of the Financial Code is amended to read:

50003.5.
 (a) “Mortgage loan originator” means an individual who, for compensation or gain, or in the expectation of compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.
(b) Mortgage loan originator does not include any of the following:
(1) An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator, except as provided in subdivision (c) of Section 50003.6. The term “administrative or clerical tasks” means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.
(2) An individual who solely renegotiates terms for existing mortgage loans held or serviced by his or her employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires that employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.
(3) An individual that is solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11 of the United States Code.
(4) An individual licensed as a mortgage loan originator pursuant to Article 2.1 (commencing with Section 10166.01) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code and the SAFE Act.
(5) An individual who is an employee of a federal, state, or local government agency or housing finance agency and who acts as a loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency or housing finance agency.
(A) For purposes of this paragraph, the term “employee” means an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by the controlling person.
(B) For purposes of this paragraph, the term “housing finance agency” means any authority:
(i) That is chartered by a state to help meet the affordable housing needs of the residents of the state.
(ii) That is supervised directly or indirectly by the state government.
(iii) That is subject to audit and review by the state in which it operates.
(6) (A) An employee of a bona fide nonprofit organization who exclusively originates residential mortgage loans for a bona fide nonprofit organization, and who acts as a mortgage loan originator only with respect to residential mortgage loans with terms that are favorable to the borrower.
(B) To qualify for the exemption under this paragraph, the bona fide nonprofit organization under this paragraph must shall register with the department on a form prescribed by the commissioner, along with documentation of all of the following by December 31 of each year:
(i) Status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986.
(ii) That the organization promotes affordable housing or provides home ownership education or similar services.
(iii) That the organization conducts its activities in a manner that serves public or charitable purposes, rather than commercial purposes.
(iv) That the organization receives funding and revenue, and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients.
(v) That the organization compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients.
(vi) That the organization provides to, or identifies for, the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs.
(vii) That the organization is certified by the United States Department of Housing and Urban Development as a housing counselor who engages solely in traditional housing counseling services, if applicable.
(C) The commissioner may periodically require reports regarding the activities of the bona fide nonprofit organization, and shall examine the nonprofit organization’s books and records in accordance with the regulations of the United States Department of Housing and Urban Development, or any successor guidance or requirement by the Consumer Financial Protection Bureau. If the nonprofit organization fails to provide documentation as required by subparagraph (B), or if it does not continue to meet the criteria under subparagraph (B), the commissioner may revoke the nonprofit organization’s status as a registered bona fide nonprofit organization.
(D) For residential mortgage loans to have terms that are favorable to the borrower, the terms shall be consistent with loan origination in a public or charitable context, rather than a commercial context.
(E) In making its determinations and examinations, the commissioner may rely on the receipt and review of:
(i) Reports filed with federal, state, or local housing agencies and authorities.
(ii) Reports and attestations prescribed by the commissioner by rule or order.
(7) An individual who originates five or fewer residential mortgage loans secured by a manufactured home, as defined in Section 18007 of the Health and Safety Code, or a mobilehome, as defined in Section 18008 of the Health and Safety Code, in any 12-consecutive-month period.
(c) “Registered mortgage loan originator” means any individual who is all of the following:
(1) Meets the definition of mortgage loan originator.
(2) Is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.
(3) Is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
(d) “Loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a mortgage loan originator licensed by the state or a registered mortgage loan originator.

SECTION 1.Section 799.2 of the Civil Code is amended to read:
799.2.

(a)The ownership or management shall not show or list for sale a mobilehome owned by a resident without first obtaining the resident’s written authorization. The authorization shall specify the terms and conditions regarding the showing or listing.

(b)Nothing contained in this section shall be construed to affect the provisions of the Health and Safety Code governing the licensing of a mobilehome salesperson.