Articles

Update, Reaction, and Analysis Regarding Suitability and SB 978

N. Mitchell Feinstein, Esq.

By N. Mitchell Feinstein, Esq. In a previous post, I had discussed the probable passage of legislation in California to require real estate brokers to determine that trust deed investments offered to the public were appropriate for an investor.  The bill, SB 978, is still wending its way through the labyrinth known as the legislative process. The reaction from members of  the industry with whom I have discussed the prospect of obtaining and reviewing prospective investor information has ranged from unabashed pleasure (“I have been doing this for years, and getting this information has saved me in expensive litigation several times!”) to concern that there is no...

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Perfection of Ownership Interests in Promissory Notes and Deeds of Trust

Guy Puccio

Prior and subsequent to the enactment of Business & Professions Code § 10233.2 in July of 1992, I served as the Chair of the Real Estate Finance Advisory Committee (“REFAC”) established by the DRE as a joint regulator and industry committee to advise the Commissioner and the Executive Staff of the DRE regarding matters affecting the mortgage brokerage and lending industries. The language for Business and Professions Code § 10233.2 was developed by REFAC under my direction. Two industry counsel were assigned to draft the proposed language to be submitted to REFAC. These legal counsel were Bruce Newman, representing the California Independent Mortgage Brokers Association (“CIMBA”) and...

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JOBS Act and You!

JOBS Act and You!

As you may be aware, President Obama signed the “Jumpstart Our Business Startups Act” (the JOBS Act) on April 5. This bill will make it substantially easier for companies to raise money, although key provisions do not take effect immediately. Will these changes provide opportunities — or challenges — to those selling interests in notes secured by deeds of trust and similar investments? Over the past 25 years, many new forms of securities offerings of interests in notes secured by deeds of trusts or “pool” arrangements for notes secured by deeds of trust have been created, some of which rely on rules that exempt the seller of...

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California Legislature Moves to Impose Due Diligence Standards on Brokers

California Capitol Building

By N. Mitchell Feinstein, Esq. An analysis of new legislation that will require brokers to qualify their investors before taking their money. Read on to learn more about what changes to expect and how you can access new tools to protect yourself and your business now. Please be sure to take advantage of the free offer located at the bottom of this message. For at least ten years I have been preaching to the mortgage brokerage industry that every day the members were acting less like real estate brokers and more like securities dealers.  My diatribe goes back to my being a member of the committee—appointed by...

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Action by Governor Brown Threatens Extinction of Mortgage Brokers

In his most recent Budget Proposal, Governor Brown has included plans to consolidate all businesses in the financial industry under one head. He proposes the elimination of the Department of Real Estate and the Office of Real Estate Appraisers and placing jurisdiction of these licensees under the Department of Consumer Affairs. At the same time the Department of Corporations and the Department of Financial Institutions will be merged into one new entity called the Department of Business Oversight. It seems that the Governor wants the consumer groups to limit the operations of the mortgage brokers, and the regulators of the big banks to regulate all the lenders...

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Independent Contractor Relationships Are Now More Dangerous to Establish or Maintain

Mousetrap with money

By Guy Puccio Two measures regarding independent contractor relationships were just enacted into law by the California Legislature. These legislative measures signed by Governor Brown are AB 1396 (Committee on Labor and Employment) and SB 459 (Corbett). Effective January 1, 2013, AB 1396 requires whenever an employer enters into a contract of employment for services to be rendered within this state and the contemplated method of payment involves commissions (as defined), the contract is to be in writing and is to include the method by which the commissions are to be computed and paid. This measure amends Section 2751 and repeals 2752 of the Labor Code. The...

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Must Mortgage Brokers Complete and Deliver Mortgage Loan Disclosure Statements in Residential Mortgage Loan Transactions?

Guy Puccio

By Guy Puccio Business and Professions Code Section 10240(c) purportedly extends an exemption to mortgage brokers when arranging “federally regulated residential mortgage loans.” However, this exemption is inapplicable to most loan transactions conducted by mortgage brokers registered with the NMLS as an LO (MLB/MLO) and even when arranging transactions where the loan proceeds are used for personal, family, or household purposes. The phrase “federally regulated” is substantially narrower than “federally related.” Under current law, “federally regulated” loan transactions are loans made by nationally chartered or licensed banks, savings and loans, savings banks, thrifts, and credit unions; or if state chartered or licensed, those financial institutions that have...

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Agency Relationships Are Material Facts

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By S. Guy Puccio The agency relationships intended among principals and real estate and mortgage brokers are material facts. Regardless of whether it is a dual agency, a bifurcated agency, or an agency relationship with one party leaving the other unrepresented, it is a material fact to be disclosed at the outset or when the relationship becomes more than casual. See, Business and Professions Code Sections 10176(a) and (d), Civil Code Sections 2079.13 et seq., 2295 et seq., and 2923.1 and Huijers v. DeMarrais (1992) 11 Cal.App.4th 676. The obligation to disclose agency relationships in commercial transactions exists notwithstanding the typical interpretation that Civil Code Section 2079.13...

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Short-Sale Law Clarification

mortapp

The 3 Wise Men recommend this succinct article by Neil J. Rubenstein of Buchalter Nemer about the new short-sale law and its effect on delinquency judgments and guarantors. (Click the link to download the full article PDF.) Please note: Under the act as written the lender approving the short sale must not receive a fee for approving the short sale.

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Regulatory Overload Requires Knowledgeable Consultants Now More than Ever

legislative

By Guy Puccio The greatest recession ever experienced has facilitated an overwhelming amount of new statues and regulations. These new rules are promoted by those who believe expanding federal government control is the solution to prevent a future economic crisis. Much of this regulatory overload affects the financial services industry. For example, the “Dodd-Frank Act” is approximately 2000 pages of legislation—including trailer bills—with an additional 6000 pages expected in implementing rules and regulations. If you run a small-to-moderate size business, do you have the tools or the time to absorb and apply this sea change without the assistance of knowledgeable consultants? Consider the following: The Board of...

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Set Reasonable Goals, Stick to the Budget and Keep the Napkin

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By Scott J. Corwin Eighteen years ago I passed the bar. Before I was even admitted, I made a decision that I wanted to work for myself. I had no clients, no money and a mountain of debt from law school. I decided to hang out my own shingle seven days after I was admitted. I would never have predicted that my practice would have grown into what it is today. Nor would I have predicted that I would have as fulfilling a professional life as I do today. The path to getting from there to here has been both challenging and rewarding. And the single most...

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