BILL NUMBER: SB 1137INTRODUCED BILL TEXT INTRODUCED BY Committee on Banking, Finance and Insurance (Senators Calderon (Chair), Cogdill, Correa, Cox, Florez, Kehoe, Liu, Lowenthal, Padilla, Price, and Runner) FEBRUARY 18, 2010 An act to amend Section 50700 of the Financial Code, relating to mortgage lending. LEGISLATIVE COUNSEL'S DIGEST SB 1137, as introduced, Committee on Banking, Finance and Insurance. Residential mortgage lenders. Existing law, the California Residential Mortgage Lending Act, provides for the regulation and licensure of residential mortgage lenders and servicers and mortgage loan originators by the Commissioner of Corporations. Existing law defines the term "brokerage services" for purposes of these provisions. This bill would correct an erroneous cross-reference in the provisions defining "brokerage services." Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 50700 of the Financial Code is amended to read: 50700. (a) A residential mortgage lender, or a person or employee acting under the authority of a residential mortgage lender's license, including a mortgage loan originator, shall not provide brokerage services to a borrower, except as provided in subdivision (c). (b) "Brokerage services" means either of the following: (1) Obtaining or attempting to obtain, on behalf of a borrower, a residential mortgage loan, as defined in subdivision (p) of Section 50003, secured by residential real estate, as defined in subdivision(w)(v) of Section 50003, made with the funds of another institutional lender, as defined in paragraphs (1), (2), and (4) of subdivision (k) of Section 50003, and closed in the name of that lender, for a fee paid by the borrower or the institutional lender. (2) Obtaining or attempting to obtain, on behalf of a borrower, a residential mortgage loan, as defined in subdivision (p) of Section 50003, secured by residential real estate, as defined in subdivision(w)(v) of Section 50003, made with the funds of another institutional lender, as defined in paragraphs (1), (2), and (4) of subdivision (k) of Section 50003, but closed in the name of the licensee, for a fee paid by the borrower or the institutional lender. (c) A residential mortgage lender or a mortgage loan originator employed by a residential mortgage lender may provide brokerage services under the authority of the lender's license, if the lender first enters into a written brokerage agreement with the borrower that satisfies the requirements of Section 50701. (d) This chapter does not authorize a residential mortgage lender licensee to do any of the following: (1) Provide brokerage services through independent contractors. (2) Provide brokerage services through an employee not licensed as a mortgage loan originator. (3) Obtain or attempt to obtain for a borrower a residential mortgage loan that is a "high cost mortgage," referred to in Section 152(aa)(1) of the federal Home Ownership and Equity Protection Act of 1994, as amended (15 U.S.C. Sec. 1602(aa)). (4) Hold itself out to borrowers, through advertising, as a mortgage broker, rather than a residential mortgage lender. However, a licensee shall disclose its status as a broker or agent when that disclosure is required by law. (5) Perform activity subject to Section 10131 of the Business and Professions Code, except activities authorized by this division. (e) A mortgage loan originator may only provide brokerage services as an employee of a licensed residential mortgage lender.