Assembly Bill 3207 is one of two bills in California aimed at commercial transactions that will change California’s Finance Laws. The bill is an act to amend Sections 22004, 22059, 22100, 22337, 22338, 22602, 22604, and 22701 of, and to add Sections 22005.5, 22010.5, 22050.1, 22337.5, 22338.5, and 22348 to, the Financial Code, relating to finance lending. The hearing date before the Banking & Finance Committee is scheduled for August 6, 2018.
AB 3207 modifies the definition of a broker under the California Financing Law and modifies the rules applicable to finance brokers and to finance lenders that use the services of brokers.
* re-defines “referral” as applicable under the CFLL;
* re-defines “broker” as applicable under the CFLL;
* defines confidential data as applicable under the CFLL;
* prohibits a finance lender from compensating a person who is required to hold a broker’s license unless that person is licensed as a broker, or specific conditions are met.
* prohibits certain actions performed by finance lenders and finance brokers without an applicable license;
* requires that a licensed broker obtain the express consent of a borrower or prospective borrower in certain situations such as when performing lead generation activities or performing an act that falls within the definition of a broker;
* requires the Department of Business Oversight to examine California Financing Law licensees at least once every 48 months;
* prohibits a finance lender from passing an additional fee on to a borrower that is attributable to a referral fee the finance lender paid or will pay but clarifies that a finance lender may charge a borrower additional fees or costs attributable to non-lead generation brokering activities, if the finance lender pays another person or entity for performing any of those acts for a loan made pursuant to the CFLL.
* imposes a series of requirements on brokers who compensate unlicensed persons for referrals;
* The bill would exempt specified persons from the definition of broker, including the operator of an Internet search engine or social media platform.
Assemblywoman Limon sponsored the bill to update the definition of broker in the CFLL and specify which activities require a broker’s license. She expects that this clarification will increase the number of licensed brokers. Codifying a required examination cycle for CFLL licensees is intended to ensure that these new licensees are conducting business according to the new law.
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