Lending.

(1) The Real Estate Law provides for the licensure and regulation of real estate brokers and salespersons by the Real Estate Commissioner. Existing law authorizes the commissioner to suspend or revoke the license of a real estate licensee or corporation, or to deny the issuance of a license to an applicant or corporation, for specified violations. This bill would further authorize the commissioner to suspend or revoke those licenses, or to deny issuance of those licenses, upon a violation of specified federal lending laws or regulations or upon the violation or failure to comply with specified provisions of state law relating to mortgages. (2) Existing law imposes certain limitations and prohibitions on licensed persons, as defined, with respect to the making of a covered loan, defined as a consumer loan in which the original principal balance of the loan does not exceed the most current conforming loan limit for a single-family first mortgage loan established by the Federal National Mortgage Association in the case of a mortgage or deed of trust, and as specified. Existing law does not regulate or define the term "higher-priced mortgage loan." This bill would establish "higher-priced mortgage loans," as defined, as a new category of regulated loans. The bill would, among other things, limit prepayment penalties and prohibit provisions for negative amortization. The bill would prohibit a licensed person, as defined, from making false, deceptive, or misleading statements or representations in connection with higher-priced mortgage loans. The bill would also, among other things, prohibit a mortgage broker, as defined, who arranges higher-priced mortgage loans with prepayment penalties from receiving a compensation that exceeds certain amounts. The bill would provide that a violation of the provisions regulating higher-priced mortgage loans by a licensed person is also a violation of the person's licensing law. The bill would authorize a licensing agency or the Attorney General to enforce the provisions regulating higher-priced mortgage loans. The bill would authorize civil penalties in an amount up to $10,000 against a licensed person who willfully and knowingly violates the provisions regulating higher-priced mortgage loans, and would nullify prepayment penalties or yield spread premiums that violate these provisions. The bill would also establish specified duties for mortgage brokers performing mortgage brokerage services for higher-priced mortgage loans. The bill's provisions would apply to higher-priced mortgage loans originated on or after July 1, 2010. (3) Existing law imposes certain limitations and prohibitions on specified licensees, including commercial banks, credit unions, finance lenders, and residential mortgage lenders, with respect to the making of consumer loans. This bill would provide that a violation of specified federal lending laws or regulations by those licensees is also a violation of the licensing law of the licensee. The bill would also provide that a mortgage broker, as defined, providing mortgage brokerage services, as defined, to a borrower is the fiduciary of the borrower, and any violation of the broker's fiduciary duties is a violation of the mortgage broker's licensing law and specified civil penalty and liability provisions. The bill would further provide that this fiduciary duty includes a requirement that the mortgage broker place the economic interest of the borrower ahead of his or her own economic interest. (4) Because a violation of the bill's provisions by certain licensees may be punished as crimes under the licensing law of the licensees, the bill would impose a state-mandated local program. 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.