California Amends Provisions Regarding Consumer Protection
The state of California amended its consumer protection provisions. These provisions are effective on January 1, 2019.
Section 1 of the amendment requires a supervised financial organization that negotiates a modification of any terms of a loan, or extension of credit, primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, and offers a borrower a final loan modification in writing, to deliver to that borrower, at the time the final loan modification offer is made, a written disclosure summarizing the modified loan terms in the same language as the negotiation.
The amendment requires translation of a Loan Estimate by the supervised financial organization in the applicable language no later than three business days after receipt of the written application for transactions where a Loan Estimate is provided to a borrower.
If any of the summarized loan terms materially change after the provision of the Loan Estimate form but prior to consummation of the loan, the supervised financial organization shall provide an updated version of the translated form prior to consummation of the loan.
Additionally, for transactions where a Closing Disclosure is provided to the borrower, the supervised financial organization must translate the Closing Disclosure into the applicable language at least three business days prior to consummation of the loan.
The Department of Business Oversight is required to make available each of the above forms based on existing forms in each of the specified language for use by a supervised financial organization to summarize the terms of a mortgage loan.
In making available the forms, the Department of Business Oversight may use as guidance the following existing forms:
- “The Good Faith Estimate disclosure form from the United States Department of Housing and Urban Development”
- “The Loan Estimate form from the Consumer Finance Protection Bureau”
- “The Closing Disclosure form from the Consumer Finance Protection Bureau”
- “The Agreement for Modification, Re-Amortization, or Extension of a Mortgage (Form 181), the Loan Modification Agreement (Providing for Fixed Interest Rate) (Form 3179), and the Loan Modification Agreement (Providing for Adjustable Interest Rate) (Form 3161) from the Federal National Mortgage Association”
Section 2 of the amendment provides that, after a revocation order is made by the Commissioner against a licensee who fails to file a certified financial statement prepared by an independent certified public accountant, and a request for hearing is filed in writing within 30 days from the date of service of the order and a hearing is not held within 90 days of the filing, the order is deemed rescinded as of its effective date.
The amendment further provides that a licensee shall not conduct business during the period when its license is revoked, except as may be permitted by further order of the Commissioner. However, the revocation, suspension, or surrender of a license shall not affect the powers of the Commissioner as provided in this division.
Lastly, Section 3 of the amendment provides that amendments made relating to the written disclosure summarization become operative 90 days following the issuance of forms by the Department of Business Oversight but in no instance prior to January 1, 2019.
California Modifies Provisions Regarding Debt Collection
The state of California modified its provisions relating to debt collection. These provisions are effective on January 1, 2019.
Section 1 of the amendment prohibits a debt collector from sending written communication to a debtor attempting to collect a time-barred debt without providing specified written notices stating that the debtor may not be sued for the debt, but that the debt, depending on its age, may be reported as unpaid to credit reporting agencies.
Section 2 of the amendment provides that when the four year period in which an action must be commenced has run, no person may bring suit or initiate an arbitration or other legal proceeding to collect the debt. The period in which an action may be commenced under this section may be extended only in specified circumstances.
Rhona Kyeyune, LLM, is a regulatory compliance consultant with CLA. She is a graduate of Makerere University and earned her master of laws at Boston University School of Law.
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