The California Residential Mortgage Lending Act (CRMLA) and the California Financing Law (CFLL), respectively in code sections Cal. Fin. Code §50501.5 and Cal. Fin. Code §22707.5, as well as the California Franchise Investment Law (CFIL) in Cal. Corporations Code §31406, empower the state’s Commissioner of Business Oversight to issue citations to offenders who violate the CFLL, CRMLA, and CFIL, or any rule or order issued pursuant to these California laws.
Under both the CFLL and CRMLA, If, upon inspection, examination, or investigation, the commissioner has cause to believe that a person or entity has violated the CFLL or the CRMLA, the commissioner may issue citations to compel violators to take corrective action. Under the CFIL, if, upon inspection or investigation, including such based upon a complaint, the commissioner has cause to believe that a person or entity has violated the CFLL or the CRMLA, the commissioner may issue citations requiring offenders to correct any violations.
A citation must particularly describe the basis for its issuance and may contain an order to desist and refrain from the illegal conduct involved. It may also include the assessment of an administrative penalty which may not exceed two thousand five hundred dollars ($2,500) per violation. The code sections providing authority for the issuance of a citation must be referenced therein, whether Cal. Fin. Code §50501.5, Cal. Fin. Code §22707.5, or Cal. Corporations Code §31406. All penalties collected under these sections are deposited in the State Corporations Fund.
Citations issued under CFIL must state that the citation is deemed final if, within 60 days from the receipt of the citation, the person cited does not notify the commissioner and express the intention to request a hearing. Citations issued under the CFLL and CRMLA only allow 30 days for an offender to request a hearing. A citation may provide a reasonable time period or periods by which any violations must be corrected.
Any citations issued or fines assessed pursuant to the CFLL and CRMLA, while constituting punishment for a violation of law, are considered in lieu of other administrative discipline by the commissioner for the offense or offenses cited, and the citation and payment of any ensuing fine by a licensee is not reported as disciplinary action taken by the commissioner. In contrast, the sanctions authorized under CFIL are separate from, and in addition to, all other administrative, civil, or criminal remedies.
The CRMLA and CFLL state that the commissioner must give due consideration to the appropriateness of the amount of the fine considering factors including the gravity of the violation, the good faith of the person or licensees cited, and the history of any previous violations.
After the exhaustion of the review procedures provided for in this section, the commissioner may apply to the appropriate superior court for a judgment in the amount of the administrative penalty and order compelling the cited person to comply with the order of the commissioner. The application shall include a certified copy of the final order of the commissioner and must contain sufficient evidence indicating that the issuance of the judgment and order was warranted.
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