BILL NUMBER: SB 385	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Machado

                        FEBRUARY 21, 2007

   An act to add Section 10248.7 to the Business and Professions
Code, to add Sections 215.5, 22169, and 50333 to the Financial Code,
and to add Section 13984 to the Government Code, relating to
mortgages.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 385, as introduced, Machado. Nontraditional mortgage products.
   The Business, Transportation and Housing Agency consists of
various agencies, including, but not limited to, the Department of
Corporations, the Department of Real Estate, and the Department of
Financial Institutions. The agency is under the supervision of the
Secretary of Business, Transportation and Housing.
   Under existing law, state financial institutions are regulated by
the Department of Financial Institutions. Other entities that engage
in the business of making or brokering residential mortgage loans are
regulated by the Department of Corporations under the California
Finance Lenders Law or the California Residential Mortgage Lending
Act or by the Department of Real Estate under the Real Estate Law.
Federal financial institution regulatory agencies and the Conference
of State Bank Supervisors, together with the American Association of
Residential Mortgage Regulators, have each published guidance on
nontraditional mortgage product risks.
   This bill would require the Commissioner of Financial Institutions
to issue regulations applying that guidance to all state regulated
financial institutions and to issue emergency regulations in that
regard. The bill would also require the Commissioner of Real Estate
and the Commissioner of Corporations to adopt regulations or rules
applying the guidance to real estate brokers and licensees,
respectively, and would require those commissioners to adopt
emergency regulations or rules in that regard. The bill would require
the Secretary of Business, Transportation and Housing to ensure
these commissioners adopt those regulations or rules in a consistent
manner.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  (a) The Legislature finds and declares that uniform
application of the Interagency Guidance on Nontraditional Mortgage
Product Risks and the guidance on nontraditional mortgage product
risks by the Conference of State Bank Supervisors and the American
Association of Residential Mortgage Regulators to both federal and
state licensees is critical to protect borrowers and lenders.
   (b) It is the intent of the Legislature that the Department of
Real Estate, the Department of Financial Institutions, and the
Department of Corporations take steps to ensure that lenders and
brokers are aware of the existence and content of the guidance as
soon as possible and that lenders and brokers are encouraged to
comply with the guidance before formal regulations are adopted
requiring them to do so.
  SEC. 2.  Section 10248.7 is added to the Business and Professions
Code, to read:
   10248.7.  (a) The commissioner shall adopt regulations applying
the guidance on nontraditional mortgage product risks published on
November 14, 2006, by the Conference of State Bank Supervisors and
the American Association of Residential Mortgage Regulators to real
estate brokers. The regulations shall include subsequent amendments
to that guidance.
   (b) The commissioner shall adopt emergency regulations to
implement this section as soon as possible.
  SEC. 3.  Section 215.5 is added to the Financial Code, to read:
   215.5.  (a) The commissioner shall issue regulations applying the
Interagency Guidance on Nontraditional Mortgage Product Risks
published on October 4, 2006, by Office of the Comptroller of the
Currency, Treasury, Board of Governors of the Federal Reserve System,
Federal Deposit Insurance Corporation, Office of Thrift Supervision,
Treasury, and the National Credit Union Administration to state
regulated financial institutions. The regulations shall include
subsequent amendments to that guidance.
   (b) The commissioner shall issue emergency regulations to
implement this section as soon as possible.
  SEC. 4.  Section 22169 is added to the Financial Code, to read:
   22169.  (a) The commissioner shall make regulations applying the
guidance on nontraditional mortgage product risks published on
November 14, 2006, by the Conference of State Bank Supervisors and
the American Association of Residential Mortgage Regulators to
licensees. The regulations shall include subsequent amendments to
that guidance.
   (b) The commissioner shall make emergency regulations to implement
this section as soon as possible.
  SEC. 5.  Section 50333 is added to the Financial Code, to read:
   50333.  (a) The commissioner shall promulgate rules applying the
guidance on nontraditional mortgage product risks published on
November 14, 2006, by the Conference of State Bank Supervisors and
the American Association of Residential Mortgage Regulators to
licensees. The regulations shall include subsequent amendments to
that guidance.
   (b) The commissioner shall promulgate emergency rules to implement
this section as soon as possible.
  SEC. 6.  Section 13984 is added to the Government Code, to read:
   13984.  In order to ensure that the guidances specified in Section
10248.7 of the Business and Professions Code and Sections 215.5,
22169, and 50333 of the Financial Code are applied uniformly to all
California entities engaged in the brokering, servicing,
underwriting, and issuance of nontraditional mortgage products, the
secretary shall ensure that the Commissioner of Real Estate, the
Commissioner of Financial Institutions, and the Commissioner of
Corporations adopt and implement in a consistent manner regulations
or rules applying the guidances.