California 2017-2018 Regular Session Status: In Committee 1 D cosponsors

AB 1109 — Consumer loans.

Last action — From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

  1. ✓
    Introduced
  2. 2
    In Committee
  3. 3
    Passed Assembly
  4. 4
    Passed Senate
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2017-2018 Regular Session. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Summary

Existing law, the California Finance Lenders Law, prohibits acting as a finance lender without a license from the Commissioner of Business Oversight and defines a "finance lender" as a person in the business of making consumer or commercial loans. Existing law defines a "consumer loan" as a loan, secured or unsecured, the proceeds of which are to be used primarily for person, family, or household purposes. Under these provisions, a licensee is generally prohibited from taking a deed of trust, mortgage, or lien upon real property as security for a consumer loan unless the loan is for a bona fide principal amount of $5,000 or more. Existing law provides that this provision, among others that contain a regulatory ceiling provision, only applies to a loan for a bona fide principal amount, as specified, if the amount and purpose of that loan is not used to evade regulation under the California Finance Lenders Law. Existing law prescribes principles to be applied to determine that amount and purpose, including prohibiting amounts paid for specified types of credit insurance from being used to calculate whether a loan exceeds the bona fide principal amount. This bill would remove the prohibition described above, and would thereby authorize payments for those types of credit insurance to be used to calculate whether a loan exceeds the bona fide principal amount under provisions of the California Finance Lenders Law that include a regulatory ceiling provision. Existing law, in certain instances, prescribes the maximum rate of the charges that may be received for making a consumer loan in relation to the amount of the loan. Existing law generally defines "charges" for this purpose broadly to include aggregate interest, fees, bonuses, commissions, and other costs charged, subject to certain exception, including fees paid to participate in an open-end credit program. A willful violation of the California Finance Lenders Law is a crime. This bill would eliminate fees paid to participate in an open-end credit program and specified forms of credit insurance from the exceptions provided for the definition of charges, as described above, thereby bringing these fees within the definition of charges. Existing law prescribes limits on the rate of charges that may be received for consumer loans with a bona fide principal amount of less than $2,500. This bill would prescribe a limit on the rate of charges that may be received for consumer loans with a bona fide principal amount of $2,500 or more, but not exceeding $10,000, of 2% per month of the unpaid principal balance. The bill would also apply these provisions to specified open-end loans. The bill would make conforming changes. Existing law authorizes a licensee to make open-end loans, as defined, to consumers subject to certain requirements, and excepts from these provisions open-end credit programs primarily for the purpose of purchasing or leasing licensee goods or services. Existing law prescribes limits on charges for open-end loans made by a licensee who is subject to these provisions. Existing law applies these limits to an open-end loan of a bona fide principal amount of less than $5,000. The bill would expand the application of prescribed limits on charges for open-end loans with a bona fide principal amount of less than $5,000 to open-end loans of a bona fide principal amount of up to $10,000. By expanding the definition of a crime, this 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.

Bill Text

Action History

  1. From committee: Filed with the Chief Clerk pursuant to Joint Rule 56.

  2. Died pursuant to Art. IV, Sec. 10(c) of the Constitution.

  3. In committee: Set, first hearing. Hearing canceled at the request of author.

  4. In committee: Hearing postponed by committee.

  5. Re-referred to Com. on B. & F.

  6. From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.

  7. Re-referred to Com. on B. & F.

  8. From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.

  9. Referred to Com. on B. & F.

  10. From printer. May be heard in committee March 21.

  11. Read first time. To print.

Sponsors

Sponsorship breakdown

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1 sponsors · 0 co-sponsors · 121 not signed on

Sponsors (1)

Co-sponsors (0)

None.

Not signed on (121)

121 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

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Subjects

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Frequently asked questions

What does AB 1109 do?
Existing law, the California Finance Lenders Law, prohibits acting as a finance lender without a license from the Commissioner of Business Oversight and defines a "finance lender" as a person in the business of making consumer or commercial loans. Existing law defines a "consumer loan" as a loan, secured or unsecured, the proceeds of which are to be used primarily for person, family, or household purposes. Under these provisions, a licensee is generally prohibited from taking a deed of trust, mortgage, or lien upon real property as security for a consumer loan unless the loan is for a bona fide principal amount of $5,000 or more. Existing law provides that this provision, among others that contain a regulatory ceiling provision, only applies to a loan for a bona fide principal amount, as specified, if the amount and purpose of that loan is not used to evade regulation under the California Finance Lenders Law. Existing law prescribes principles to be applied to determine that amount and purpose, including prohibiting amounts paid for specified types of credit insurance from being used to calculate whether a loan exceeds the bona fide principal amount. This bill would remove the prohibition described above, and would thereby authorize payments for those types of credit insurance to be used to calculate whether a loan exceeds the bona fide principal amount under provisions of the California Finance Lenders Law that include a regulatory ceiling provision. Existing law, in certain instances, prescribes the maximum rate of the charges that may be received for making a consumer loan in relation to the amount of the loan. Existing law generally defines "charges" for this purpose broadly to include aggregate interest, fees, bonuses, commissions, and other costs charged, subject to certain exception, including fees paid to participate in an open-end credit program. A willful violation of the California Finance Lenders Law is a crime. This bill would eliminate fees paid to participate in an open-end credit program and specified forms of credit insurance from the exceptions provided for the definition of charges, as described above, thereby bringing these fees within the definition of charges. Existing law prescribes limits on the rate of charges that may be received for consumer loans with a bona fide principal amount of less than $2,500. This bill would prescribe a limit on the rate of charges that may be received for consumer loans with a bona fide principal amount of $2,500 or more, but not exceeding $10,000, of 2% per month of the unpaid principal balance. The bill would also apply these provisions to specified open-end loans. The bill would make conforming changes. Existing law authorizes a licensee to make open-end loans, as defined, to consumers subject to certain requirements, and excepts from these provisions open-end credit programs primarily for the purpose of purchasing or leasing licensee goods or services. Existing law prescribes limits on charges for open-end loans made by a licensee who is subject to these provisions. Existing law applies these limits to an open-end loan of a bona fide principal amount of less than $5,000. The bill would expand the application of prescribed limits on charges for open-end loans with a bona fide principal amount of less than $5,000 to open-end loans of a bona fide principal amount of up to $10,000. By expanding the definition of a crime, this 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.
Who sponsors AB 1109?
AB 1109 is sponsored by Kalra, Ash (Democratic).
What is the current status of AB 1109?
This bill died with 2017-2018 Regular Session. It reached “In Committee” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
Where can I track AB 1109?
Track AB 1109 free on One Click Politics — get push/email alerts when it moves.

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