Revocation and PenaltiesConsumer Loan Penalties

Section § 22750

Explanation

This law states that if a lender charges more than what is allowed, or if any part of the lending rules is intentionally broken during the loan process, the loan contract becomes void. This means the lender cannot collect any money, including the original loan amount or any fees, from the borrower.

(a)CA Financial Code § 22750(a) If any amount other than, or in excess of, the charges permitted by this division is willfully charged, contracted for, or received, the contract of loan is void, and no person has any right to collect or receive any principal, charges, or recompense in connection with the transaction.
(b)CA Financial Code § 22750(b) If any provision of this division is willfully violated in the making or collection of a loan, whether by a licensee or by an unlicensed person subject to this division, the contract of loan is void, and no person has any right to collect or receive any principal, charges, or recompense in connection with the transaction.
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Section § 22751

Explanation

This law states that if a lender charges more interest or fees than allowed, whether by mistake or oversight, they can't collect any interest or fees at all; they can only get back the original loan amount. However, if the mistake was genuinely unintentional and despite having systems in place to prevent errors, the lender must prove this with evidence. Plus, they have to inform the borrower and fix the mistake within 60 days of noticing it.

(a)CA Financial Code § 22751(a) If any amount other than or in excess of the charges permitted by this division is charged or contracted for, or received, for any reason other than a willful act of the licensee, the licensee shall forfeit all interest and charges on the loan and may collect or receive only the principal amount of the loan.
(b)CA Financial Code § 22751(b) Subdivision (a) shall not apply to an error in computation if (1) the licensee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error, and (2) within 60 days of discovering the error the licensee notifies the borrower of the error and makes whatever adjustments in the account are necessary to correct the error.
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Section § 22752

Explanation

This law states that if a lender violates certain rules when making or collecting a loan, and it's not done on purpose, they can't charge any interest or fees; they can only collect the original amount borrowed.

However, if the violation was truly accidental (even with proper error-prevention measures in place) and the lender fixes it within 30 days of discovery, such as by notifying the borrower and correcting the paperwork, they are not penalized under this law.

(a)CA Financial Code § 22752(a) If any provision of this division is violated in the making or collection of a loan, for any reason other than a willful act of the licensee, the licensee shall forfeit all interest and charges on the loan and may collect or receive only the principal amount of the loan.
(b)CA Financial Code § 22752(b) Subdivision (a) shall not apply to a violation if (1) the licensee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error, and (2) within 30 days of discovering the error the licensee notifies the borrower of the error and rectifies the error by making the appropriate changes in the documents or account and by taking other action necessary to correct the error.
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Section § 22753

Explanation

If someone knowingly breaks rules or laws covered in this section, they could face a fine up to $10,000 and/or up to a year in county jail. Jail time for violating a rule is only possible if the person knew about the rule. A conviction here doesn't stop further actions that a commissioner might take.

Except as provided in Section 22696, any person who willfully violates any provision of this division or who willfully violates any rule or order adopted pursuant to this division, shall, upon conviction, be punished by a fine of not more than ten thousand dollars ($10,000), by imprisonment in a county jail for not more than one year or pursuant to subdivision (h) of Section 1170 of the Penal Code, or by both that fine and imprisonment. However, no person may be imprisoned for the violation of any rule or order unless he or she had knowledge of the rule or order. Conviction under this section shall not preclude the commissioner from exercising the authority in Section 22713.
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Section § 22754

Explanation

This law states that if someone acts or fails to act in good faith based on a written rule, regulation, or decision from the commissioner, they won't be held liable even if that rule is later changed, canceled, or found to be invalid.

No provision imposing liability under this division, including the provisions of subdivision (a) of Section 22751 and subdivision (a) of Section 22752, shall apply to any act done or omitted in good faith in conformity with any written general rule, regulation, or specific ruling of the commissioner, notwithstanding that after the act or omission has occurred, the written general rule, regulation, or specific ruling is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.
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Section § 22755

Explanation

This law outlines actions that are illegal for mortgage loan originators. They can't use fraud, deception, or unfair practices when dealing with borrowers or lenders. Mortgage originators must have a valid license and cannot collect fees or commissions unless a loan is secured and available as advertised. They can't provide misleading information, make false statements, or manipulate appraisers. Originators should also ensure insurance doesn't exceed the property’s replacement cost and must accurately manage loan transaction funds.

It is a violation of this division for a mortgage loan originator to do any of the following:
(a)CA Financial Code § 22755(a) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person.
(b)CA Financial Code § 22755(b) Engage in any unfair or deceptive practice toward any person.
(c)CA Financial Code § 22755(c) Obtain property by fraud or misrepresentation.
(d)CA Financial Code § 22755(d) Solicit or enter into a contract with a borrower that provides in substance that the mortgage loan originator may earn a fee or commission through best efforts to obtain a loan even though no loan is actually obtained for the borrower.
(e)CA Financial Code § 22755(e) Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting.
(f)CA Financial Code § 22755(f) Conduct any business covered by this division without holding a valid license as required under this division, or assist or aide and abet any person in the conduct of business under this division without a valid license as required under this division.
(g)CA Financial Code § 22755(g) Fail to make disclosures as required by this division and any other applicable state or federal law, including regulations thereunder.
(h)CA Financial Code § 22755(h) Fail to comply with this division or rules or regulations promulgated under this division, or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under this division.
(i)CA Financial Code § 22755(i) Make, in any manner, any false or deceptive statement or representation including, with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising.
(j)CA Financial Code § 22755(j) Negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the Nationwide Mortgage Licensing System and Registry or in connection with any investigation conducted by the commissioner or another governmental agency.
(k)CA Financial Code § 22755(k) Make any payment, threat, or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan, or make any payment, threat, or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property.
(l)CA Financial Code § 22755(l) Collect, charge, attempt to collect or charge, or use or propose any agreement purporting to collect or charge any fee prohibited by this division.
(m)CA Financial Code § 22755(m) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer.
(n)CA Financial Code § 22755(n) Fail to truthfully account for moneys belonging to a party of a residential mortgage loan transaction.
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Section § 22756

Explanation

This law states that any applications, amendments, registrations, or notices submitted electronically under financial protection laws in California will count as original documents if they are printed out by the Department of Financial Protection and Innovation. This includes electronic records filed with the Nationwide Mortgage Licensing System and Registry.

Notwithstanding any other law, any application for licensure, amendment to the application or registration document or notice filed under any of the laws administered by the Department of Financial Protection and Innovation, or record otherwise required to be filed in this state as an electronic record pursuant to a nationwide central depository for information regarding licensees, including mortgage loan originators, or any electronic record filed through the Nationwide Mortgage Licensing System and Registry, shall be deemed to be a valid original document upon reproduction to paper form by the Department of Financial Protection and Innovation.
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Section § 22757

Explanation

This law says that anyone who is licensed as a finance lender, broker, or mortgage loan originator cannot pay commissions or fees to someone who isn't licensed if the work requires having a license. The only exception is if that person doesn't need a license because they are officially exempt under the same set of rules.

A finance lender, broker, or mortgage loan originator licensed under this division shall not pay any commission, fee, or other compensation to an unlicensed individual for conducting activities that require a license, unless that unlicensed individual is exempt from licensure pursuant to this division.
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Section § 22758

Explanation

This law section states that it doesn't pertain to program administrators or PACE solicitors. Essentially, these roles are exempt from the provisions in this article.

This article does not apply to a program administrator or a PACE solicitor.
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