Gonzalez Fletcher
Author
(1) Existing law, the California Financing Law, generally provides for the licensure and regulation of finance lenders, brokers, and, beginning on January 1, 2019, program administrators, by the Commissioner of Business Oversight. The CFL makes a willful violation of specified provisions a crime. The CFL, until January 1, 2023, establishes the Pilot Program for Increased Access to Responsible Small Dollar Loans (pilot program) , which requires licensees and other entities that wish to participate in the pilot program to file an application and pay a specified fee to the commissioner to participate in the pilot program. The pilot program authorizes a licensee approved by the commissioner to participate in the pilot program to impose specified alternative interest rates and charges, including an administrative fee and delinquency fees, on unsecured loans of at least $300 and less than $2,500, subject to certain requirements. This bill would increase the upper limit on the amount of a permissible loan under the pilot program from $2,500 to $7,500 and make corresponding changes. (2) Under the pilot program, a licensee is prohibited from making a loan if that licensee determines, through its underwriting, that the borrower's total monthly debt service payments exceed 50% of the borrower's monthly gross income. This bill would instead prohibit a licensee from making a loan under these circumstances if the borrower's total monthly debt service payments exceed 50% of the borrower's gross monthly income for a loan of no more than $2,500, or exceed 36% of the borrower's gross monthly income for a loan in excess of $2,500. (3) The pilot program establishes that a loan with a principal balance, upon origination, of at least $1,500 is required to have a term of not less than 180 days. As an alternative to other authorized charges, a licensee approved by the commissioner to participate in the pilot program may contract for and receive charges at an annual simple interest rate not exceeding specified amounts. This bill would additionally require a loan under the pilot program that has a principal balance exceeding $2,500 to have a minimum term of one year and a maximum term of 5 years. The bill would also require licensees to reduce the interest rates on each subsequent loan to the same borrower by a minimum of one percentage point and subject to additional reductions, if specified conditions are satisfied. (4) Under the pilot program, licensees are required to develop and implement policies and procedures designed to respond to questions raised by applicants and borrowers regarding their loans, including those involving finders. Existing law describes a finder as an entity that brings a licensee and a prospective borrower together for the purpose of negotiating a loan contract. This bill would also require licensees to perform reasonable background checks on any finders associated with a licensee's participation in the pilot program. (5) The pilot program authorizes a licensee who is approved to participate in the program to use the services of one or more finders. Existing law defines a "finder" for these purposes as an entity that, at the finder's physical location for business, brings a licensee and a prospective borrower together for the purpose of negotiating a loan contract. This bill would authorize the commissioner to charge a licensee participating in the program an additional fee to offset the commissioner's costs to oversee and examine the activities of that licensee's finder or finders. (6) Existing law requires the Commissioner of Business Oversight to examine each licensee that is accepted into the program at least once every 24 months. This bill would require the commissioner also to examine each finder whose services were used by the licensee at least once every 24 months. (7) Existing law requires the Commissioner of Business Oversight to post reports containing specified information on his or her Internet Web site that summarize utilization of the Pilot Program for Increased Access to Responsible Small Dollar Loans. If more than one licensee is approved to participate in the program, existing law requires that information in the report to be stated in aggregate to avoid identifying data by specific licensee. This bill would require that these reports also contain specified information for each finder whose services were used by a licensee in connection with the loans or loan applications, along with the finder's identity. By increasing the scope of the program, the bill would expand the definition of a crime, thereby imposing a state-mandated local program. (8) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.
Approved by the Governor.
Chaptered by Secretary of State - Chapter 1016, Statutes of 2018.
Enrolled and presented to the Governor at 4:30 p.m.
Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 75. Noes 0.).
Assembly Rule 56 suspended. (Page 6959.)
Joint Rule 62(a), file notice suspended. (Page 6959.)
(Com. on B. & F.)
From committee: That the Senate amendments be concurred in. (Ayes 12. Noes 0.) (August 30).
From committee: That the Senate amendments be concurred in, but first be re-referred to Com. on APPR. (Ayes 8. Noes 0.) (August 30). Re-referred to Com. on APPR.
(pending re-refer to Com. on APPR.)
In Assembly. Concurrence in Senate amendments pending.
Re-referred to Coms. on B. & F. and APPR. pursuant to Assembly Rule 77.2.
Read third time. Passed. Ordered to the Assembly. (Ayes 33. Noes 0. Page 5942.).
Read second time. Ordered to third reading.
Read third time and amended. Ordered to second reading.
Read second time and amended. Ordered to third reading.
From committee: Amend, and do pass as amended. (Ayes 7. Noes 0.) (August 16).
Measure version as amended on July 3 corrected.
Read second time and amended. Re-referred to Com. on APPR.
From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 6. Noes 0.) (June 26).
From committee: Do pass and re-refer to Com. on JUD. (Ayes 7. Noes 0.) (June 20). Re-referred to Com. on JUD.
Withdrawn from committee.
From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on HUMAN S.
In committee: Set, first hearing. Hearing canceled at the request of author.
In Senate. Read first time. To Com. on RLS. for assignment.
Read third time. Passed. Ordered to the Senate. (Ayes 77. Noes 0. Page 1811.)
From committee: Do pass. (Ayes 17. Noes 0.) (May 26).
Read second time. Ordered to third reading.
In committee: Set, first hearing. Referred to APPR. suspense file.
From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (April 25). Re-referred to Com. on APPR.
From committee chair, with author's amendments: Amend, and re-refer to Com. on HUM. S. Read second time and amended.
From committee chair, with author's amendments: Amend, and re-refer to Com. on HUM. S. Read second time and amended.
From committee chair, with author's amendments: Amend, and re-refer to Com. on HUM. S. Read second time and amended.
From printer. May be heard in committee March 2.
Read first time. To print.
| Bill Text Versions | Format |
|---|---|
| AB237 | HTML |
| 01/30/17 - Introduced | |
| 03/28/17 - Amended Assembly | |
| 04/17/17 - Amended Assembly | |
| 04/19/17 - Amended Assembly | |
| 06/04/18 - Amended Senate | |
| 07/03/18 - Amended Senate | |
| 08/21/18 - Amended Senate | |
| 08/24/18 - Amended Senate | |
| 09/05/18 - Enrolled | |
| 09/30/18 - Chaptered |
| Document | Format |
|---|---|
| No related documents. |
Data on Open States is updated periodically throughout the day from the official website of the California State Legislature.
If you notice any inconsistencies with these official sources, feel free to file an issue.