Chapter 9Authorizations for Banks

Section § 1300

Explanation

Banks and their affiliates can send fingerprints of employees or job applicants to law enforcement to check for criminal records related to specific crimes like fraud or theft. They can deny employment if the person's history poses a risk. The Department of Justice and sometimes the FBI handle these background checks. There is a fee for processing these requests, and any information obtained must be kept confidential. An 'affiliate' is any company controlled by or related to a bank.

(a)CA Financial Code § 1300(a) Notwithstanding the provisions of Sections 1051, 1052, and 1054 of the Labor Code and Section 2947 of the Penal Code, a bank or any affiliate thereof, licensed under the laws of any state or of the United States, or any officer or employee thereof, may deliver fingerprints taken of a director, an officer, an employee, or an applicant for employment to local, state, or federal law enforcement agencies for the purpose of obtaining information as to the existence and nature of a criminal record, if any, of the person fingerprinted relating to convictions, and to any arrest for which that person is released on bail or on his or her own recognizance pending trial, for the commission or attempted commission of a crime involving robbery, burglary, theft, embezzlement, fraud, forgery, bookmaking, receiving stolen property, counterfeiting, or involving checks or credit cards or using computers.
(b)CA Financial Code § 1300(b) The Department of Justice shall, pursuant to Section 11105 of the Penal Code, and a local agency may, pursuant to Section 13300 of the Penal Code, furnish to the officer of the bank or affiliate responsible for the final decision regarding employment of the person fingerprinted, or to his or her designees having responsibilities for personnel or security decisions in the usual scope and course of their employment with the bank or affiliate, summary criminal history information when requested pursuant to this section. If, upon evaluation of the criminal history information received pursuant to this section, the bank or affiliate determines that employment of the person fingerprinted would constitute an unreasonable risk to that bank or affiliate or its customers, the person may be denied employment.
(c)CA Financial Code § 1300(c) Banks and their affiliates shall submit to the Department of Justice fingerprint images and related information required by the Department of Justice of all directors, officers, employees, or an applicant for employment for the purpose of obtaining information regarding the existence and content of a record of state and federal convictions and also information regarding the existence and content of a record of state and federal arrests for which the Department of Justice establishes that the person is free on bail, or on his or her own recognizance, pending trial or appeal.
(d)CA Financial Code § 1300(d) When the Department of Justice receives a request under this section for federal summary criminal history information, it shall forward the request to the Federal Bureau of Investigation. Once the information is received from the Federal Bureau of Investigation, the Department of Justice shall review, compile, and disseminate the information to the federally chartered bank or affiliate pursuant to paragraph (1) of subdivision (o) of Section 11105 of the Penal Code.
(e)CA Financial Code § 1300(e) When the Department of Justice receives a request for federal summary criminal history information from a nonchartered bank, it shall forward the request to the Federal Bureau of Investigation. Once the information is received from the Federal Bureau of Investigation, the Department of Justice shall review and provide a fitness determination on an applicant for employment based on criminal convictions or on arrests for which the person is released on bail or on his or her own recognizance pending trial for the commission or attempted commission of crimes specified in subdivision (a).
(f)CA Financial Code § 1300(f) A bank or affiliate may request from the Department of Justice subsequent arrest notification service, as provided pursuant to Section 11105.2 of the Penal Code, for persons described in subdivision (a).
(g)CA Financial Code § 1300(g) The Department of Justice shall charge a fee sufficient to cover the cost of processing the requests described in this section.
(h)CA Financial Code § 1300(h) Any criminal history information obtained pursuant to this section is confidential and no recipient shall disclose its contents other than for the purpose for which it was acquired.
(i)CA Financial Code § 1300(i) “Affiliate,” as used in this section, means any corporation controlling, controlled by, or under common control with, a bank, whether directly, indirectly, or through one or more intermediaries.
fingerprint checks criminal record bank employment background checks fraud theft Department of Justice Federal Bureau of Investigation employment denial risk assessment confidentiality criminal history information subsequent arrest notification affiliate definition processing fee
(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Section § 1301

Explanation

This law allows banks or their affiliates to sue borrowers for damages if the borrower committed fraud, like lying to get a loan, and caused the lender to grant that loan. The bank can ask for extra damages, but no more than half the actual harm suffered.

However, this rule doesn't apply to loans on single-family homes where the borrower lives there and the loan is $150,000 or less, with this amount adjusted based on the cost of living. Also, any court decision for damages from this rule is not considered a typical deficiency judgment, which means it isn't the usual court order for the borrower to pay what’s left on the loan after the collateral is foreclosed.

(a)CA Financial Code § 1301(a) Notwithstanding Section 726 of the Code of Civil Procedure or any other provision of law to the contrary, a state or nationally chartered bank, its subsidiaries or affiliates transacting business in this state, or any successor in interest thereto, that originates, acquires, or purchases, in whole or in part, any loan secured directly or collaterally, in whole or in part, by a mortgage or deed of trust on real property, or any interest therein, may bring an action for recovery of damages, including exemplary damages not to exceed 50 percent of the actual damages, against a borrower where the action is based on fraud under Section 1572 of the Civil Code and the fraudulent conduct by the borrower induced the original lender to make that loan.
(b)CA Financial Code § 1301(b) The provisions of this section shall not apply to loans secured by single-family, owner-occupied residential real property, when the property is actually occupied by the borrower as represented to the lender in order to obtain the loan and the loan is for an amount of one hundred fifty thousand dollars ($150,000) or less, as adjusted annually, commencing on January 1, 1987, to the Consumer Price Index as published by the United States Department of Labor.
(c)CA Financial Code § 1301(c) Any action maintained under this section for damages shall not constitute a money judgment for deficiency or a deficiency judgment within the meaning of Section 580a, 580b, or 580d of the Code of Civil Procedure.
bank fraud action borrower fraud claims exemplary damages mortgage fraud lender recovery fraud-induced loan borrower misrepresentation residential property loan exception loan amount threshold Consumer Price Index adjustment single-family home exception owner-occupied property money judgment exemption deficiency judgment exclusion real property loan recovery
(Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)