Code Section Group

Insurance Code - INS


  ( Division 2 enacted by Stats. 1935, Ch. 145. )


  ( Part 6 enacted by Stats. 1935, Ch. 145. )

CHAPTER 2A. Mortgage Guaranty Insurance [12640.01 - 12640.20]

  ( Chapter 2A added by Stats. 1961, Ch. 719. )

ARTICLE 5. Rebates and Commissions [12640.12 - 12640.15]
  ( Article 5 added by Stats. 1961, Ch. 719. )


Every mortgage guaranty insurer shall adopt, print and make available a schedule of premium charges for mortgage guaranty insurance policies. The schedule shall show the entire amount of premium charge for each type of mortgage guaranty insurance policy issued by the insurer.

(Added by Stats. 1961, Ch. 719.)


(a) No mortgage guaranty insurer shall pay to any person who is acting as agent, representative, attorney or employee of the owner, mortgagee of the prospective owner, or mortgagee of the real property or any interest therein, either directly or indirectly, any commission, or any part of its premium charges or any other consideration as an inducement for or as compensation on any mortgage guaranty insurance business.

(b) Notwithstanding subdivision (a), or the provisions of Section 751, activities of mortgage guaranty insurers in dealing with the secondary mortgage market, which are made available to the mortgage lending industry, whether insureds or not, shall not be deemed to be unlawful rebates or commissions. Included, but not limited to such activities, are the following:

(1) Services provided for the purpose of assisting in the purchase or sale of mortgage loans in the secondary market.

(2) Preparation of forms necessary for the sale of mortgage loans in the secondary mortgage market.

(3) Educational seminars dealing with issues affecting the mortgage lending industry.

(Amended by Stats. 1981, Ch. 419, Sec. 1.)


No mortgage guaranty insurer shall make any rebate of any portion of the premium charge shown by the schedule required by Section 12640.12. No mortgage guaranty insurer shall quote any premium charge to any person which is less than that currently available to others for the same type of mortgage guaranty insurance policy. The amount by which any premium charge is less than that called for by the current schedule of premium charges is an unlawful rebate.

(Added by Stats. 1961, Ch. 719.)


No mortgage guaranty insurer shall pay any compensation to any person for transacting insurance for or with it based in whole or in part upon a commission basis unless such person is licensed pursuant to and subject to all the provisions of and restrictions in Chapter 5, Part 2, Division 1 of this code. This section shall not be construed so as to affect the meaning of any other provisions of this article.

(Added by Stats. 1963, Ch. 1284.)


The commissioner may after a hearing suspend or revoke the certificate of authority of any mortgage guaranty insurer which, after 10 days written notice from the commissioner requiring it to cease and desist, continues to pay any commission or to make any unlawful rebate in willful violation of the provisions of this article (commencing with Section 12640.12). The hearings of the commissioner shall be conducted in accordance with the Administrative Procedure Act, Chapter 5, Part 1, Division 3, Title 2 of the Government Code, and the commissioner shall have all the powers granted therein.

(Added by Stats. 1961, Ch. 719.)

INSInsurance Code - INS5.