SB 1201: Contracts: consumer protection: residential mortgage lending.

Existing law requires a supervised financial organization that negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, whether orally or in writing, in the course of entering into a contract or agreement for a loan or extension of credit secured by residential real property, to deliver to the other party to that contract or agreement before execution of the contract or agreement, a specific form, created by the Department of Business Oversight, in each of these languages for use by a supervised financial organization to summarize the terms of a mortgage loan. Existing law authorizes the department, in creating the form, to use a specific federal disclosure form from the United States Department of Housing and Urban Development as guidance.

This bill would also require a supervised financial organization that negotiates the modification of any of the terms of a loan or extension of credit secured by residential real property primarily in one of the above languages and that offers a borrower a final loan modification in writing, to deliver to that borrower, at the time the final loan modification offer is made, a specified form summarizing the modified loan terms in the same language as the negotiation.

The bill would additionally require delivery of an applicable form or forms for transactions subject to certain federal regulations, and in this regard would authorize the Department of Business Oversight, in making available each of its forms in each of the languages set forth above, to use as guidance 2 additional forms from the Consumer Financial Protection Bureau and 3 additional forms from the Federal National Mortgage Association. The bill would specify that these provisions become operative 90 days following the issuance of the forms by the Department of Business Oversight, but in no instance before January 1, 2019.

Under existing law, the California Residential Mortgage Lending Act, if a licensee that is required to make an audit fails to do so, the Commissioner of Business Oversight is authorized to have the audit made by an independent certified public accountant at the licensees expense. Existing law authorizes the commissioner to summarily revoke the license of a licensee who fails to file a certified financial statement prepared by an independent certified public accountant, as specified.

This bill would specify that, if, after a revocation order is made, a request for hearing is filed in writing and a hearing is not held within a specified period of time, the order would be deemed rescinded as of its effective date. The bill would prohibit a licensee, during the revocation period, from conducting business, except as specified. The bill would provide that the revocation of a license does not affect the powers of the commissioner pursuant to the act.