text: An application for authority to engage in the industrial loan business shall be in such form and contain such information as the commissioner may require and shall be accompanied by a filing fee of four hundred dollars ($400).

history: (History: Amended by Stats. 1983, Ch. 725, Sec. 2.)

article: 2. Applications

path: 7. INDUSTRIAL LOAN COMPANIES > 2. Formation and Organization > 2. Applications


kind: section

code: FIN

text:
Upon the filing of an application, the commissioner shall make or cause to be made a careful investigation and examination relative to the following:

(a) The background and experience of the organizers or incorporators, the proposed officers and managers, and the proposed stockholders and directors.

(b) The need for industrial loan facilities or additional industrial loan facilities, as the case may be, in the community where the proposed industrial loan company is to be located, giving particular consideration to the adequacy of existing industrial loan facilities in the community.

(c) The ability of the community to support the proposed industrial loan company, giving consideration to (1) the competition offered by existing industrial loan companies; (2) the previous industrial loan history of the community; and (3) the opportunities for profitable employment of industrial loan funds as indicated by the average demand for credit, the number of potential investors, the volume of industrial loan transactions and the business and industries of the community with particular regard to their stability, diversification and size.

(d) Such other facts and circumstances bearing on the proposed industrial loan company as in the opinion of the commissioner may be relevant.

history: (History: Amended by Stats. 1980, Ch. 974, Sec. 8.)

division: 7. INDUSTRIAL LOAN COMPANIES

chapter: 2. Formation and Organization

article: 2. Applications


text:
The commissioner, upon reasonable notice and opportunity to be heard, may deny the application for any of the following reasons:

(a) The public convenience and advantage will not be promoted by the establishment of the proposed industrial loan company.

(b) The industrial loan company is being formed for a purpose other than the legitimate objectives contemplated by this division.

(c) The proposed capital structure is inadequate.

(d) Any proposed officer, director, or shareholder of the applicant has, within the last 10 years, (1) been convicted of or pleaded nolo contendere to a crime, or (2) committed any act involving dishonesty, fraud, or deceit, which crime or act is substantially related to the qualifications, functions, or duties of a person engaged in business in accordance with the provisions of this division.

(e) The applicant has not complied with all the applicable provisions of this division.

(f) The proposed officers and directors do not have sufficient banking, industrial loan, finance company, or other experience to afford reasonable promise of successful operation.

(g) A false statement of a material fact has been made in the application.

(h) The applicant or any officer, director, or incorporator of the applicant has violated any provision of this division or the rules thereunder or any similar regulatory scheme of a foreign jurisdiction.

history: (History: Amended by Stats. 1980, Ch. 974, Sec. 9.)

article: 2. Applications


text: Within 30 days after an application is filed for authorization to establish an industrial loan company which intends to sell and issue its investment certificates, the commissioner shall give written notice of the filing of the application to each industrial loan company subject to this division.

history: (History: Amended by Stats. 1986, Ch. 1011, Sec. 3. Effective September 23, 1986.)

article: 2. Applications


text: Before the commissioner issues a certificate of authorization to operate as an industrial loan company, there must be paid in cash for the benefit of the corporation, the minimum capital stock and minimum paid-in surplus or reserve required pursuant to Article 3 (commencing with Section 18130) of this chapter.

history: (History: Amended by Stats. 1977, Ch. 264.)

article: 2. Applications


text:
The capital stock of an industrial loan company incorporated under this division shall not be less than:

(a) Five hundred thousand dollars ($500,000), if incorporated or commencing business on or before July 8, 1975.

(b) Seven hundred fifty thousand dollars ($750,000), and a paid-in surplus of five hundred thousand dollars ($500,000), at the time business is commenced, if incorporated or commencing business on or after July 9, 1975.

(c) Industrial loan companies which commenced business prior to July 9, 1975, and which do not meet the capital stock and paid-in surplus requirements of this section shall be governed until January 1, 1987, by Sections 18130, 18131, 18132, 18133, 18134, and 18135 of the Financial Code, as in effect on December 31, 1983.

history: (History: Amended by Stats. 1983, Ch. 858, Sec. 4.)

article: 3. Capitalization

path: 7. INDUSTRIAL LOAN COMPANIES > 2. Formation and Organization > 3. Capitalization


text: In addition to the capital stock required by Section 18130, an industrial loan company which has branch offices or which opens an additional branch office or place of business shall have additional capital stock of fifty thousand dollars ($50,000) for each branch office.

history: (History: Repealed and added by Stats. 1983, Ch. 858, Sec. 6.)

article: 3. Capitalization


text: An industrial loan company may declare a dividend on its capital stock only if the company has minimum unimpaired capital of seven hundred fifty thousand dollars ($750,000) plus additional capital stock of fifty thousand dollars ($50,000) for each branch office.

history: (History: Repealed and added by Stats. 1983, Ch. 858, Sec. 8.)

article: 3. Capitalization


text: An industrial loan company shall not reduce its capital stock to an amount less than is required by this article to be maintained by such company or less than any indebtedness of such company other than its investment certificates.

history: (History: Added by Stats. 1976, Ch. 964.)

article: 3. Capitalization


text:
(a) No person may acquire in the aggregate 10 percent or more of the capital stock of, or the capital of, an industrial loan company through purchase, foreclosure pursuant to a pledge or hypothecation, or other devices without the written consent of the commissioner. Prior to any person acquiring 10 percent or more of the capital stock of, or the capital of, an industrial loan company, or prior to any person acquiring additional capital stock or capital of an industrial loan company which would result in an aggregate acquisition of 10 percent or more of the capital stock or of the capital, that person seeking the acquisition shall make written application to the commissioner requesting written consent for the acquisition.

(b) No person may acquire in the aggregate 10 percent or more of the capital stock or other securities that have voting power or control over the management of a holding company as defined in Section 18025 through purchase, foreclosure pursuant to a pledge or hypothecation, or otherwise without the written consent of the commissioner. Prior to any person acquiring 10 percent or more of the capital stock or other securities that have voting power or control over the management of a holding company as described herein, or prior to any person acquiring additional capital stock or other securities that have voting power or control over the management of a holding company as described herein which would result in an aggregate acquisition of 10 percent or more of the capital stock or other securities, or prior to any person acquiring 10 percent or more of the capital stock or other securities that have voting power or control over the management of a holding company as described herein, through the conversion of a security into another security or through the exercise of a right to purchase or subscribe to another security, that person seeking the acquisition shall make written application to the commissioner requesting written consent for the acquisition notwithstanding subdivision (e) of Section 25017 of the Corporations Code.

(c) With respect to the application required to be filed under subdivisions (a) and (b), the commissioner shall consent in writing or decline to consent within 60 days of the filing of a completed application.

(d) An application for consent under subdivision (a) or (b) shall be in the form and contain information as the commissioner may by rule or order require and shall be accompanied by a fee of four hundred dollars ($400).

history: (History: Amended by Stats. 1995, Ch. 479, Sec. 1. Effective October 2, 1995.)

article: 3. Capitalization


text: A sale, merger, or conversion involving an industrial loan company and another industrial loan company, a bank, or a savings association is subject to Division 1.6 (commencing with Section 4800).

history: (History: Amended by Stats. 2016, Ch. 277, Sec. 10. (AB 2907) Effective January 1, 2017.)

article: 3. Capitalization


text: Subject to Section 18145.1, when authorized by the commissioner as provided in this division, an industrial loan company, pursuant to a resolution of its board of directors, may establish and maintain one or more branch offices within the state.

history: (History: Amended by Stats. 1997, Ch. 190, Sec. 1. Effective January 1, 1998.)

article: 4. Branch Offices

path: 7. INDUSTRIAL LOAN COMPANIES > 2. Formation and Organization > 4. Branch Offices


text:
(a) The commissioner may, by order or regulation, exempt from the requirement of authorization by the commissioner set forth in Section 18145 any establishment of an office or place of business that the commissioner finds not necessary or appropriate to regulate under that section.

(b) In granting an exemption under this section, the commissioner may impose any conditions that the commissioner finds necessary or appropriate.

history: (History: Added by Stats. 1997, Ch. 190, Sec. 2. Effective January 1, 1998.)

article: 4. Branch Offices


text: The request for authority to establish a branch office shall be set forth in an application in such form and containing such information as the commissioner may require and shall be accompanied by an application fee of one hundred dollars ($100) for each new branch office.

article: 4. Branch Offices


text:
The commissioner shall not approve an application for a branch office until the commissioner has ascertained to the commissioner’s satisfaction that the facts set forth in the application are true and:

(a) That the public convenience and advantage will be promoted by the establishment of the proposed branch office.

(b) That the industrial loan company has the capital required by this division.

(c) That the industrial loan company has established branch operational controls.

(d) That the financial condition of the industrial loan company justifies the establishment of the proposed branch office.

(e) (1) As to an industrial loan company transacting business before October 1, 1985, that the industrial loan company is a member of the Federal Deposit Insurance Corporation, or (2) as to an industrial loan company commencing business on or after October 1, 1985, that the industrial loan company is a member of the Federal Deposit Insurance Corporation.

history: (History: Amended by Stats. 1987, Ch. 787, Sec. 2. Operative January 1, 1989, by Sec. 7 of Ch. 787.)

article: 4. Branch Offices


text: The failure of an industrial loan company to open and operate a branch office within six months after the commissioner has issued an order approving the application for a branch office shall automatically terminate the right of the industrial loan company to open the branch office. However, the commissioner may for good cause on written application made before the expiration of the six months’ period, extend for additional periods, not in excess of six months each, the time within which the branch office may be opened.

article: 4. Branch Offices


text: When the commissioner has approved an application for permission to establish a branch office and the applicant pays to the commissioner an additional fee of one hundred dollars ($100) for a certificate of authorization to transact business, the commissioner shall issue a certificate of authorization to transact business authorizing the opening and operation of the branch office and specifying the date on which and the conditions under which it may be opened and the place where it will be located.

article: 4. Branch Offices


text: An industrial loan company shall keep posted in a conspicuous place in each branch office the certificate of authorization to transact business issued by the commissioner permitting the operation of the branch office.

article: 4. Branch Offices


text: An industrial loan company which opens a branch office without first obtaining a certificate of authorization to transact business shall forfeit to the people of the state the sum of one hundred dollars ($100) for every day during which the branch office is maintained without authority.

article: 4. Branch Offices


text: The provisions of Sections 18146, 18147, 18148, 18149, 18150, and 18151 shall not affect branch offices which are opened and operating prior to September 18, 1959.

article: 4. Branch Offices


text: An industrial loan company which maintains a branch office or branch offices shall give to each branch office maintained by it a specified designation by name or number and include in the designation the word “branch” or the word “office” and shall prominently display the designation at the place of business of the branch.

article: 4. Branch Offices


text:
With the prior written approval of the commissioner, an industrial loan company may close or discontinue the opertion of any branch office provided public notice thereof is given in such manner as the commissioner directs at least 30 days before the date of closing or discontinuance.

After a branch office has been closed or discontinued, it may not be reopened without the approval of the commissioner and compliance with the applicable provisions of this division.

article: 4. Branch Offices


text:
(a) Except as otherwise provided for in this division, an industrial loan company shall not transact business or make any loan provided for by this division at any other place of business than that designated in its certificate of authorization issued pursuant to Section 18101 or 18149, without having obtained the prior written approval of the commissioner.

(b) An industrial loan company may solicit and make loans and acquire obligations at a place of business other than designated in its certificate of authorization upon written request to and written approval of the commissioner, except as set forth in Section 18165.1, without obtaining a certificate of authorization to conduct business at a branch office pursuant to Article 4 (commencing with Section 18145), subject to the provisions of subdivision (d). The written request for approval to conduct business shall be accompanied by a processing fee of two hundred dollars ($200) for each place of business and shall include the following:

(1) The proposed location of the place of business.

(2) A description of the industrial loan company’s proposed plan of business, including a description of the manner and extent to which the industrial loan company proposes to direct and supervise the place of business.

(3) The character, business qualifications, and other experience of the proposed officers and managers directing the line of business for which authorization is requested.

(4) If the place of business is to be located outside of this state, a description of the regulation of the place of business by the state of the United States where the place of business is proposed to be located, including:

(A) A summary of the laws, administrative policies, and rules or regulations of the state relating to the proposed establishment and operation of the place of business.

(B) The name, address, and telephone number of the state agency having jurisdiction over the proposed establishment and operation of the place of business.

(C) A description of the extent and manner in which the establishment and operation of the place of business will be regulated by the state agency.

(D) Whether or not any law, administrative policy, or rule or regulation of the state of the United States where the place of business is proposed to be located would prohibit the commissioner from, or restrict the commissioner in, examining or regulating the place of business, and, if so, a citation to and summary of the law, administrative policy, rule, or regulation.

(5) Any other information bearing on the proposal that, in the opinion of the commissioner, may be relevant.

(c) The commissioner shall approve the request made pursuant to subdivision (b) within 30 days after filing unless the commissioner has ascertained that the company has failed to show any of the following:

(1) Compliance with all applicable requirements of subdivision (b).

(2) That the proposed plan of business would not violate any of the laws or the regulations of the state in which the office is proposed to conduct its business.

(3) That the company has adequate internal controls to manage the conduct of the business proposed to be conducted.

(4) That the company has a person with the necessary business qualifications, experience, or ability to direct and manage the operations of the proposed plan of business.

(d) An industrial loan company that has given notice or has been approved by the commissioner pursuant to subdivision (b) to solicit and make loans and acquire obligations at a place of business other than designated in its certificate of authorization shall comply with the following:

(1) No investment certificates shall be solicited, offered, or sold at the place of business.

(2) Loan files for loans originating at the place of business shall be retained at the main or licensed branch location of the industrial loan company, and all loans originating at the place of business shall be coded in a manner so as to easily identify that place of business.

(3) The place of business shall not be identified in any manner as a branch location or as a licensed location of the industrial loan company.

(4) If the place of business is outside of this state, the industrial loan company shall, not less than five business days before commencing business at that place of business, file with the commissioner a report stating that the industrial loan company has complied with all laws of that state applicable to the establishment and operation of the place of business, and which contains a copy of any document issued by the state agency having jurisdiction over the proposed establishment and operation of the place of business authorizing the industrial loan company to establish the place of business.

(5) All books, accounts, papers, records, and files of the place of business shall, upon request, be made available to the commissioner or the commissioner’s representatives in this state within the time specified in the request.

(6) Any other conditions and limitations the commissioner may require.

(e) An industrial loan company that opens a place of business for which approval is required under subdivision (b) without first obtaining the commissioner’s written approval shall be liable for a civil penalty of one hundred dollars ($100) for every day during which the place of business is maintained without approval.

(f) The commissioner may by rule, order, or regulation permit loans to be made or entered into and loans and obligations solicited and acquired at places other than designated by an industrial loan company in its certificate of authorization if those loans can be so made consistent with the purposes of the Industrial Loan Law.

history: (History: Amended by Stats. 1997, Ch. 190, Sec. 3. Effective January 1, 1998.)

article: 5. Change of Location

path: 7. INDUSTRIAL LOAN COMPANIES > 2. Formation and Organization > 5. Change of Location


text:
(a) The commissioner may, by order or regulation, exempt from the requirement of authorization by the commissioner set forth in Section 18165 any establishment of an office or place of business that the commissioner finds not necessary or appropriate to regulate under that section.

(b) In granting an exemption under this section, the commissioner may impose any conditions that the commissioner finds necessary or appropriate.

history: (History: Added by Stats. 1997, Ch. 190, Sec. 4. Effective January 1, 1998.)

article: 5. Change of Location


text:
(a) If an industrial loan company desires to change its place of business to a street address other than that designated in its authorization, it shall give written notice to the commissioner who shall issue his or her written authorization of the change, provided the commissioner finds the change would not justify a negative finding with respect to any matters set forth in Section 18117 or 18147.

(b) The commissioner may, by order or regulation, exempt from the requirement of authorization by the commissioner set forth in subdivision (a) any change of location of a place of business that the commissioner finds not necessary or appropriate to regulate under that section.

history: (History: Amended by Stats. 1997, Ch. 190, Sec. 5. Effective January 1, 1998.)

article: 5. Change of Location


text:
An industrial loan company may:

(a) Loan money, secured or unsecured, with or without the pledge of its installment investment certificates.

(b) Collect and receive charges for loans in advance or otherwise.

(c) Purchase, sell, or discount the following obligations: bona fide trust receipts, secured or unsecured choses in action, conditional sales contracts, or security agreements.

(d) Purchase, sell, discount, or originate lease obligations.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 10. Effective January 1, 1999.)

chapter: 3. Loans and Purchased Obligations

article: 1. General

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 1. General


text:
Sections 18008, 18009, 18010, 18212, 18212.1, 18214, 18219, 18220, 18222, 18230 through 18234, 18290 through 18295, and 18439 do not apply to:

(a) Any bona fide loan of a principal amount of ten thousand dollars ($10,000) or more or to an industrial loan company in connection with any such loan if the provisions of the section are not used for the purpose of evading this division.

(b) An amount due from a contingent guarantor on his or her obligations purchased under the provisions of this division.

(c) A loan to a primary borrower who has pledged accounts receivable or installment accounts to secure loans which taken in the aggregate amount to ten thousand dollars ($10,000) or more.

history: (History: Amended by Stats. 1983, Ch. 858, Sec. 13.)

article: 1. General


text:
Sections 18008, 18009, 18010, 18212, 18212.1, and 18214 do not apply to:

(a) Any bona fide loan of a principal amount of five thousand dollars ($5,000) or more, or to an industrial loan company in connection with any bona fide loan of a principal amount of five thousand dollars ($5,000) or more if the provisions of the section are not used for the purpose of evading this division.

(b) An amount due from a contingent guarantor on his or her obligations purchased under the provisions of this division.

(c) A loan to a primary borrower who has pledged accounts receivable or installment accounts to secure loans which taken in the aggregate amount to five thousand dollars ($5,000) or more.

history: (History: Amended by Stats. 1984, Ch. 68, Sec. 1. Effective April 5, 1984.)

article: 1. General


text: The payment of money, credit, goods, or things in action as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, is, for the purposes of regulation under this division, a loan secured by such assignment, and the amount by which the assigned compensation exceeds the amount of consideration actually paid is interest and charges upon or for such loan from the date of payment to the date the compensation is payable. This section does not modify or affect existing statutes governing wage assignments in this state, or authorize such assignments.

article: 1. General


text: Except as otherwise provided for in this division, an industrial loan company shall not make any loan or purchase or discount any other obligation that provides for a repayment of principal over more than 120 months and 30 days.

history: (History: Amended by Stats. 1988, Ch. 427, Sec. 1.)

article: 2. Terms and Maximum Charges

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 2. Terms and Maximum Charges


text: Notwithstanding any other provision of this division, an industrial loan company may make a loan or acquire an obligation that is repayable in unequal periodic payments during its term and that is secured by either real property or personal property. In order to ensure the safety and soundness of industrial loan companies and to avoid an unreasonable concentration of loans and obligations that could result in balloon payments, all these loans and obligations with a term in excess of 10 years shall be repaid in substantially equal weekly, semimonthly, monthly, or quarterly installments during the term. For purposes of this section, “real property” means real property other than home loans and other residential real property loans subject to Title VIII (Alternative Mortgage Transaction Parity Act of 1982) of the Garn-St. Germain Depository Institutions Act of 1982, as those terms are defined in Part 541 of Title 12 of the Code of Federal Regulations, as amended. For purposes of this section, the term of a nonconsumer loan or a nonconsumer obligation secured solely or primarily by personal property shall not exceed 15 years and 30 days from the date the loan is made or obligation is acquired by the industrial loan company. For purposes of this section, the term of a nonconsumer loan or a nonconsumer obligation secured primarily by real property shall be as set forth in subdivision (a) of Section 18210.

history: (History: Amended by Stats. 1997, Ch. 201, Sec. 1. Effective January 1, 1998.)

article: 2. Terms and Maximum Charges


text: Consumer loans made and obligations acquired that are secured by a motor vehicle and repayable other than in equal periodic payments during its term shall not exceed 50 percent of all consumer loans and obligations that are secured by motor vehicles or 20 percent of assets, whichever is less. This section shall not apply to a loan made to a graduate student while attending an accredited college or university and for the purpose of actively pursuing a study program leading to a postbaccalaureate degree.

history: (History: Amended by Stats. 1997, Ch. 201, Sec. 2. Effective January 1, 1998.)

article: 2. Terms and Maximum Charges


text: An industrial loan company may make a consumer loan that is not secured primarily by real property or other type of loan which is repayable at maturity by a single payment which includes principal and charges. In no event shall such loans have a term in excess of one year or be made for the purpose of evading or avoiding this division.

history: (History: Repealed and added by Stats. 1976, Ch. 964.)

article: 2. Terms and Maximum Charges


text: An industrial loan company may make a consumer loan in which the principal and charges are payable at any time during the loan, provided that the loan is secured at all times at least 100 percent by either investment certificates of an industrial loan company authorized to conduct business in the State of California under this division or traded securities.

article: 2. Terms and Maximum Charges


text: An industrial loan company may make loans, purchase or discount notes, mortgages, contracts or other commercial paper insured by the Federal Housing Administrator, Veterans Administration, other federal agency or an agency of the state. Loans so insured may be made for a term up to but not to exceed the maximum permitted by such agencies.

article: 2. Terms and Maximum Charges


text:
(a) Except as provided in Sections 18205.5 and 18209 and subject to subdivisions (b) and (c), an industrial loan company shall not make any loan or purchase or discount any note secured primarily by real property unless the loan or other obligation is repayable in substantially equal weekly, semimonthly, monthly, or quarterly installments during its term, which shall not exceed 30 years and 30 days from the date the loan or other obligation is made or acquired by the company. Equal installment requirements shall not apply to adjustable or variable rate loans or obligations made or purchased by the industrial loan company in accordance with Title VIII of the Garn-St. Germaine Depository Institutions Act of 1982 and any applicable regulations, guidelines, and policies adopted thereunder. However, an industrial loan company may make loans secured by first trust deeds on real property containing single family, or one to four residential, units provided that the repayment period for each loan does not exceed 40 years and 30 days from the date the loan is made by the company. All loans with repayment periods in excess of 30 years and 30 days shall not exceed in the aggregate 5 percent of all outstanding loans and obligations of the company.

(b) Any consumer loan or any purchase or discount of any consumer obligation having a term in excess of three years from the date the loan or other obligation is made or acquired by the company shall be secured solely by real property or solely by personal property. However, if the original principal amount of the consumer loan or obligation is twenty thousand dollars ($20,000) or more, then the loan or obligation shall be secured solely by real property or solely by personal property, or by both real property and personal property. All loans and obligations made and purchased pursuant to this subdivision shall be repayable in installments and within a term not to exceed the limitations set forth in subdivision (a), except that consumer loans or obligations secured solely by personal property shall have a term not to exceed the term provided for in Section 18205 and except as otherwise may be provided for in Sections 18207, 18208, and 18209. The equal installment requirements set forth in subdivision (a) shall not apply to loans or obligations made or purchased by the industrial loan company in accordance with Title VIII of the Garn-St. Germaine Depository Institutions Act of 1982 and any applicable regulations, guidelines, and policies adopted thereunder.

(c) In order to ensure the safety and soundness of industrial loan companies and to avoid an unreasonable concentration of loans and obligations that could result in balloon payments, all loans and obligations with a term in excess of 15 years and 30 days shall be repaid in substantially equal weekly, semimonthly, monthly, or quarterly installments during their term.

history: (History: Amended by Stats. 2000, Ch. 135, Sec. 61. Effective January 1, 2001.)

article: 2. Terms and Maximum Charges


text: No charge shall be collected unless a loan is made, except that an industrial loan company may charge, contract for, and receive a fee in connection with making a written commitment to make a loan, secured by real property having a face amount in excess of five thousand dollars ($5,000) whether or not the loan is consummated, or in connection with the purchase, sale, or origination of a lease as lessor and may charge, contract for, and receive an application fee for a loan having an original principal balance in excess of five thousand dollars ($5,000) or for a lease which payments are in excess of five thousand dollars ($5,000), provided, however, that a disclosure statement setting forth the amount of the fee, which may be reviewed by the commissioner as to form and content, shall be provided to each person to whom an application fee is charged. The commitment fee or the loan application fee with respect to a consumer loan shall be limited to the actual expenses incurred.

history: (History: Amended by Stats. 1987, Ch. 790, Sec. 2.)

article: 2. Terms and Maximum Charges


text:
(a) The charges by an industrial loan company, broker, and all other persons on any loan, forbearance of money, credit, goods, or things in action under this division, shall not exceed in the aggregate:

(1) Two percent per month on that part of the unpaid principal balance of any loan up to, including, but not in excess of, one thousand dollars ($1,000).

(2) One percent per month on any remainder of such unpaid principal balance in excess of one thousand dollars ($1,000).

(b) As an alternative to the charges authorized by subdivision (a), a company may contract for and receive charges at a rate not exceeding 1.6 percent per month on the unpaid principal balance.

history: (History: Amended by Stats. 1979, Ch. 270.)

article: 2. Terms and Maximum Charges


text: As an alternative to the charges authorized by Section 18212 a licensee may contract for and receive charges at a rate not exceeding five-sixths of 1 percent per month plus a percentage per month equal to one-twelfth of the annual rate prevailing on the 25th day of the second month of the quarter preceding the quarter in which the loan is made as established by the Federal Reserve Bank of San Francisco on advances to member banks under Section 13 and 13a of the Federal Reserve Act as now in effect or hereafter from time to time amended, or if there is no such single determinable rate for advances, the closest counterpart of such rate as shall be designated by the commissioner. Charges shall be calculated on the unpaid principal balance.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 588. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. Terms and Maximum Charges


text: In addition to the charges authorized by Section 18212 or 18212.1 an industrial loan company may contract for and receive an administrative fee, which shall be fully earned immediately upon making the loan, with respect to a loan of a principal amount of not more than two thousand five hundred dollars ($2,500) at a rate not in excess of 5 percent of the principal amount or fifty dollars ($50), whichever is lesser. No administrative fee may be contracted for or received in connection with refinancing a loan unless at least one year has elapsed since receipt of a previous administrative fee paid by the borrower.

history: (History: Amended by Stats. 1984, Ch. 890, Sec. 4.)

article: 2. Terms and Maximum Charges


text: Notwithstanding any other provision of law not within this division, industrial loan companies making loans pursuant to this division may not precompute interest on such loans.

history: (History: Repealed and added by Stats. 1979, Ch. 270.)

article: 2. Terms and Maximum Charges


text: For the purpose of computing the charges set forth in this article, a month is any period of 30 consecutive days.

history: (History: Added by Stats. 1976, Ch. 964.)

article: 2. Terms and Maximum Charges


text:
An industrial loan company may contract for, collect, and receive at the time of making the loan or at any time thereafter, any of the following:

(a) Any cost of publication as required by law.

(b) The statutory fee paid by it to any public officer for acknowledging, filing, recording, or releasing in any public office any instrument securing the loan or executed in connection with a loan.

(c) Premiums of the kind and to the extent described in paragraph (2) of subsection (e) of Section 226.4 of Regulation Z promulgated by the Board of Governors of the Federal Reserve System (12 C.F.R. 226.1 et seq.).

These amounts are not included in computing the maximum charges which may be made under this division.

history: (History: Amended by Stats. 1984, Ch. 199, Sec. 2.)

article: 2. Terms and Maximum Charges


text:
(a) Notwithstanding Section 18211, an appraisal fee may be charged to an applicant or borrower by an industrial loan company in connection with an application or request for any loan having a face amount in excess of five thousand dollars ($5,000) that is secured primarily by real property whether or not the loan is made. That fee shall not exceed the actual cost of the appraisal. The appraisal shall be rendered to the industrial loan company in writing by a qualified appraiser approved pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Public Law 101-73, and any applicable regulations, guidelines, and policies adopted thereunder. Only one fee for appraising the same real property made in connection with the same applicant or borrower may be collected unless the applicant or borrower has obtained a new or additional loan and more than one year has elapsed since the prior appraisal. The fee is not included in charges as defined in this division or in computing the maximum charges that may be made under this division.

(b) If an appraisal fee is charged, a copy of the appraisal report shall be provided by the industrial loan company upon the request of the borrower or applicant at or before the closing of a loan transaction.

history: (History: Amended by Stats. 1995, Ch. 272, Sec. 1. Effective January 1, 1996.)

article: 2. Terms and Maximum Charges


text: An escrow fee of a reasonable amount may be charged for any loan made which is secured primarily by real property when such services are actually performed. Such fee shall be considered reasonable when paid to a company licensed to do business under the Escrow Law, Division 6 (commencing with Section 17000), or any person exempted by the Escrow Law, provided that such fees are comparable to fees being charged by escrow companies so authorized to do business in this state. Such fee is not included in computing the maximum charges which may be made under this division.

article: 2. Terms and Maximum Charges


text:
Notwithstanding any other provision of this division, an industrial loan company, in the collection of a delinquent loan of an unpaid principal balance, may do any of the following:

(a) Collect and receive the court costs and reasonable attorney’s fees allowed by a court in a judgment against a defaulting debtor.

(b) Contract for, collect, and receive the bona fide expenses actually incurred and paid by the industrial loan company, not exceeding 10 percent of the unpaid principal balance of the loan where no judgment at law is sought.

(c) Contract for, collect, and receive the bona fide expenses actually incurred and paid by the industrial loan company in obtaining a certificate of compliance or certificate of noncompliance issued for a motor vehicle pursuant to Part 5 (commencing with Section 43000) of Division 26 of the Health and Safety Code and the rules and regulations of the State Air Resources Board prior to the consignment of the vehicle for sale at public auction, pursuant to Sections 24007 and 24007.5 of the Vehicle Code.

history: (History: Amended by Stats. 1991, Ch. 1054, Sec. 1.3.)

article: 2. Terms and Maximum Charges


text: With respect to a loan under this division, a fee not to exceed fifteen dollars ($15) for return by a depository institution of a dishonored check, negotiable order of withdrawal, or share draft may be charged and collected by the licensee. The fee is not included in charges as defined in this division or in determining the applicable maximum charges which may be made under this article.

history: (History: Amended by Stats. 1993, Ch. 101, Sec. 4. Effective January 1, 1994.)

article: 2. Terms and Maximum Charges


text: An industrial loan company shall not induce or permit any borrower to split up or divide any loan and thereby contract for or receive a higher rate of charge than would otherwise be permitted by this division.

article: 2. Terms and Maximum Charges


text: An industrial loan company shall not induce any spouses, jointly or severally, to become obligated, directly or contingently or both, under more than one contract of loan at the same time, with the result of obtaining a higher rate of charge than would otherwise be permitted by this division.

history: (History: Amended by Stats. 2016, Ch. 50, Sec. 38. (SB 1005) Effective January 1, 2017.)

article: 2. Terms and Maximum Charges


text: Nothing in this division shall prevent an industrial loan company from transacting loan contracts with different borrowers and from contracting for and receiving, up to and including the highest rate of charge permitted by this division at the time of making said loans; provided, however, that if any person is obligated to and does pay more than one loan contract outstanding at the same time, the entire amount of charges paid by such person and received by the industrial loan company on such loan contracts, shall not exceed the maximum that would be permitted by this division if all such loan contracts so paid were combined into one loan transaction.

article: 2. Terms and Maximum Charges


text: An industrial loan company shall permit payment to be made in advance in any amount on any contract of loan at any time. The industrial loan company shall apply such payment first to all charges due up to the date of such payment and the remainder to the loan balance.

article: 2. Terms and Maximum Charges


text: Each industrial loan company shall display prominently in each place of business a full and accurate schedule of the maximum charges to be made and the method of computing the same. The schedule is subject to the approval of the commissioner.

article: 3. Disclosure and Loan Documents

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 3. Disclosure and Loan Documents


text:
Each industrial loan company shall:

(a) Deliver or cause to be delivered to the borrowers, or any one thereof, at the time the loan is made, a written statement showing in clear and distinct terms the name and address of such company and the broker, if any. The statement shall show the date, amount, and maturity of the loan contract, how and when repayable, the nature of the security, if any, for the loan, and the agreed rate of charge.

(b) Obtain from the borrower a signed statement as to whether any person has performed any act as a broker in connection with the making of the loan. If such statement discloses a broker or other person has participated, the company shall obtain a full statement of all sums paid or payable to the broker or other person.

(c) Keep the statements required by this section for a period of two years from and after the date the loan has been paid in full, or has matured according to its terms, or has been charged off.

article: 3. Disclosure and Loan Documents


text: An industrial loan company shall deliver or cause to be delivered to the person making any payment in person in cash at any office of the company, at the time such payment is made on account of any loan, a plain and complete receipt showing the total amount received and identifying the loan contract upon which such payment is applied, and showing the unpaid balance of the loan.

article: 3. Disclosure and Loan Documents


text: An industrial loan company shall upon repayment of any loan in full, cancel or plainly mark “paid” and return to the borrower or person making final payment, the note evidencing the loan. If such borrower is not otherwise obligated to such company, the company shall release all security for such loan, endorse and return any certificate of ownership, and return to the borrower any security agreement, assignment, or order signed by the borrower, except such as are a part of the court record in any action, or such as have been delivered to a third person for the purpose of carrying out the terms thereof.

article: 3. Disclosure and Loan Documents


text: An industrial loan company shall not take any note, promise to pay, or security agreement that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate of charge, nor any instrument in which blanks are left to be filled in after execution.

article: 3. Disclosure and Loan Documents


text:
(a) Subject to any regulations that the commissioner may issue, an industrial loan company may issue credit cards and may acquire or hold obligations resulting from the use of credit cards.

(b) Except as the commissioner may otherwise provide by regulation or order, the acquiring and holding of obligations pursuant to subdivision (a) are not subject to Article 2 (commencing with Section 18205) or Article 6.5 (commencing with Section 18300).

history: (History: Added by Stats. 1998, Ch. 827, Sec. 11. Effective January 1, 1999.)

article: 4. Credit Cards

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 4. Credit Cards


text:
An industrial loan company that has investment certificates outstanding shall not make any loan or purchase or discount any other obligation with a maturity of more than 60 months and 15 days unless all of the following conditions are met:

(a) The loan or other obligation is secured.

(b) The property, or collateral securing the loan or other obligation, is of a kind or class that has been declared eligible by regulation of the commissioner.

(c) The aggregate principal balance of such loans and other obligations outstanding with a remaining maturity of more than 60 months and 15 days at any time shall not exceed a percentage of the aggregate principal balance due on all loans and other obligations owing to the industrial loan company by rule of the commissioner.

history: (History: Amended by Stats. 1983, Ch. 858, Sec. 21.)

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 5. Limitations and Regulations of Loans and Purchased Obligations


text:
(a) Except as set forth in subdivisions (b) and (c), any loan or obligation made or acquired by an industrial loan company that has investment certificates outstanding that is secured primarily by real property and has an outstanding principal balance of ten thousand dollars ($10,000) or more shall be secured by real property having a fair market value, or real property and personal property combined having a fair market value, at the time the loan or other obligation is made or acquired, of at least 110 percent of the principal amount owing on the loan or obligation and on prior encumbrances, except nondelinquent tax liens, secured by the same real property with regard to loans secured solely by real property, or by both real property and personal property. Fair market value of the real property for purposes of this section shall be determined by a real property appraiser who meets the qualifications established pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Public Law 101-73, and any applicable regulations, guidelines, or policies thereunder.

(b) Subdivision (a) does not apply to:

(1) Any loan guaranteed in whole or in part by the Administrator of Veterans Affairs pursuant to the Servicemen’s Readjustment Act of 1944 or any act of Congress supplementary or amendatory thereof.

(2) Any loan insured by the Federal Housing Administration pursuant to the National Housing Act or any act of Congress supplementary or amendatory thereof.

(c) Subject to all other provisions of subdivision (a) and any requirements the commissioner may impose by rule or order, the following loans may be secured by real property having a fair market value of less than 110 percent of the principal amount of the loan and prior encumbrances:

(1) Any loan made by an industrial loan company to facilitate the sale of real property owned by the industrial loan company resulting from foreclosure or receipt of a deed in lieu of foreclosure.

(2) Any loan renewed or modified by an industrial loan company pursuant to a clearly defined and well-documented program adopted by the board of directors of the industrial loan company to achieve orderly repayment of the loan or to maximize recovery of the loan.

(3) Any loan or obligation saleable in the secondary market. For purposes of this paragraph, “saleable in the secondary market” means saleable to a qualified institutional buyer, as evidenced by irrevocable commitments to buy by those qualified institutional buyers.

(4) Any loan or obligation owned for less than 90 days.

(d) In complying with the requirement of subdivision (a), an industrial loan company may include the principal amount of private mortgage insurance.

(e) Any loan or obligation made or acquired by an industrial loan company that has investment certificates outstanding that is secured solely by motor vehicles or other personal property shall be secured by that property having a fair market value at the time the loan or other obligation is made or acquired of at least 100 percent of the principal amount owing on the loan or obligation. The personal property held as security shall be of a class or kind that has been declared eligible by regulation of the commissioner.

history: (History: Amended by Stats. 1996, Ch. 227, Sec. 1. Effective January 1, 1997.)

article: 5. Limitations and Regulations of Loans and Purchased Obligations


text: An industrial loan company may make loans and acquire obligations, the proceeds of which are used for home improvements that are secured by real property having a market value of at least 100 percent of the principal amount owing on the loan being made by the industrial loan company or obligation being acquired by the industrial loan company and on prior encumbrances, except nondelinquent tax liens, secured by the same real property. Home improvements means additions, alterations, or modifications to owner-occupied property consisting of one to four dwelling units and appurtenant buildings thereto or to the real property containing same.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 12. Effective January 1, 1999.)


text:
An industrial loan company shall file a written request for authorization to conduct business under Section 18266.1. The request shall include the following information:

(a) A description of the company’s proposed plan of business.

(b) The character, business qualifications, and other experience of the proposed officers and managers directing the line of business for which authorization is requested.

(c) Any other facts and circumstances bearing on the proposal that, in the opinion of the commissioner, may be relevant.

history: (History: Added by Stats. 1989, Ch. 889, Sec. 2.)


text:
The commissioner shall approve the request made pursuant to Section 18266.2 within 30 days after filing unless the commissioner has ascertained that the company has failed to show either of the following:

(a) That the proposed plan of business has a reasonable promise of a successful operation.

(b) That the company has a person with the necessary business qualifications, experience or ability to direct and manage the operations of the plan of business.

history: (History: Added by Stats. 1989, Ch. 889, Sec. 3.)


text: An industrial loan company that has investment certificates outstanding shall not lend in the aggregate more than 5 percent of its capital stock and surplus not available for dividends as provided in Section 18319 upon the security of the stock of any one corporation and that stock may not exceed 10 percent of the outstanding stock of the corporation, or upon the security of the bonds of any one obligor except bonds of the United States or for the payment of which the credit of the United States is pledged, bonds of the State of California, or for the payment of which the credit of the State of California is pledged, and any security authorized in writing by the commissioner or any security authorized by rule of the commissioner.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 6. Operative January 1, 1991, by Sec. 20 of Ch. 663.)


text: An industrial loan company that has investment certificates outstanding shall not make any loan secured primarily by improved real property in a principal amount in excess of 20 percent of the company’s unimpaired capital stock and surplus not available for dividends as provided in Section 18319. An industrial loan company that has investment certificates outstanding shall not make any loan secured primarily by unimproved real property in a principal amount in excess of 10 percent of the company’s unimpaired capital stock and surplus not available for dividends as provided in Section 18319.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 7. Operative January 1, 1991, by Sec. 20 of Ch. 663.)


text: An industrial loan company may require the borrower to sign a contract of pledge, assignment, mortgage, security agreement, deed of trust, or trust receipt relating to real or personal property given by the borrower as security for the repayment of the loan and interest and charges thereon.


text: An industrial loan company that has investment certificates outstanding shall not make loans to, or hold the obligations of, any one person as primary obligor in an aggregate principal amount in excess of 20 percent of the unimpaired capital stock and surplus of the company not available for dividends as provided in Section 18319. Unsecured loans or obligations of any person as primary obligor made or held by a company may not, in any event, exceed in the aggregate principal amount 5 percent of the unimpaired capital stock and surplus of the company not available for dividends as provided in Section 18319.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 8. Operative January 1, 1991, by Sec. 20 of Ch. 663.)


text: An industrial loan company shall diversify the loans and lease obligations it makes and other obligations it acquires, both as to the types of debtors and obligors, types of collateral, and as to terms and types of repayment schedules. The requirement for diversification notwithstanding, an industrial loan company may specialize in its lending, leasing, and other authorized practices under this division. The commissioner may promulgate rules and regulations pursuant to this section.

history: (History: Amended by Stats. 1984, Ch. 873, Sec. 4.)


text: The principal balances of loans made, or obligations purchased, by an industrial loan company that has investment certificates outstanding, which loans or obligations are secured by unimproved real property, shall not in the aggregate exceed 5 percent of the company’s assets unless the commissioner consents to the taking of collateral to protect an existing jeopardized obligation.

history: (History: Amended by Stats. 1986, Ch. 296, Sec. 4.)


text:
(a) As used in this division:

(1) “Credit life insurance” and “credit disability insurance” have the same meanings as defined in Section 779.2 of the Insurance Code.

(2) “Credit loss-of-income insurance” means insurance issued to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is involuntarily unemployed, as defined in the policy.

(b) An industrial loan company may provide and collect the costs for credit life insurance on the life of one or more of the borrowers, or credit disability, or loss-of-income insurance, or any combination of these coverages, to provide indemnity for payments becoming due on the indebtedness, with his or her consent, the form to be approved by the Insurance Commissioner, and a copy, together with evidence of its approval by the Insurance Commissioner, to be filed with the commissioner, and in an amount not in excess of the amount of the indebtedness. The amount charged to the borrower for credit life or disability insurance shall not exceed, in the case of credit life insurance, fifty cents ($0.50) per year per one hundred dollars ($100) of indebtedness (and in the same proportion for longer or shorter maturities and larger or smaller amounts) or the amount established by or pursuant to Section 779.35 of the Insurance Code, whichever is less, or, in the case of credit disability insurance, the amount established by or pursuant to Section 779.35 of the Insurance Code.

history: (History: Amended by Stats. 1987, Ch. 1314, Sec. 1.)

article: 6. Insurance Sold With Loans

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 6. Insurance Sold With Loans


text:
(a) If credit life or disability insurance is provided pursuant to this division, and if the insured borrower dies or becomes disabled during the term of the loan contract, the insurance shall be sufficient to pay the total amount due on the loan (excluding unearned charges) outstanding on the date of death, or all amounts which become due on the loan thereafter during the period of disability, as the case may be, without any exception, reservation, or limitation, subject, however, to the provisions of Section 18292.

(b) Any credit life, disability, or loss-of-income insurance as provided shall be in force as soon as the loan is made. An industrial loan company shall not require any of these coverages as a condition of making a loan.

history: (History: Amended by Stats. 1986, Ch. 813, Sec. 2.)

article: 6. Insurance Sold With Loans


text:
(a) If credit disability insurance is provided pursuant to this division, it shall not provide indemnity against the risk of a borrower becoming disabled for a period of less than 14 days. The insurance may provide indemnity for any single period of continuous disability of 14 days or longer, after which the risk may become compensable. The insurance may be offered with retroactive coverage to an earlier date based upon the disability having continued for a period stated in the policy, but if insurance with retroactive coverage is offered, it shall also be offered without retroactive coverage, and the premium rate for each coverage shall be separately stated in writing to the borrower.

(b) If insurance with retroactive coverage is provided, the coverage shall provide for a prorated payment based upon the fraction of the month during which the insured is disabled, provided that the insured is continuously disabled during the waiting period set forth in the policy. If insurance without retroactive coverage is provided, the coverage shall provide for a prorated payment based upon the fraction of the month during which the insured is disabled, after first excluding the elimination period set forth in the policy. For the purpose of this subdivision, a month is any period of 30 consecutive days.

(c) Credit disability insurance, if made available by an industrial loan company, shall be available on a monthly or annual premium basis, and the premium by the month shall not exceed a pro rata relationship to the annual premium. Credit disability insurance need not be offered for a period less than the term of the loan to which it is applicable and no credit disability insurance shall be written for a period in excess of the term of the loan to which it is applicable.

(d) The monthly disability benefit payable with respect to an open end loan shall not exceed the monthly payment computed pursuant to Section 18300 on the outstanding balance at the time the disability is incurred.

history: (History: Amended by Stats. 1984, Ch. 199, Sec. 3.)

article: 6. Insurance Sold With Loans


text:
If credit loss-of-income insurance is provided pursuant to this division, it shall be subject to the following conditions:

(a) The insurance shall provide indemnity in accordance with the terms of the policy after any single period of continuous unemployment of 45 days or less as determined by the policy, after which benefits shall commence. The insurance may be offered with retroactive coverage to an earlier date based upon unemployment having continued for the period stated in the policy.

(b) The statement required by Section 18293 shall include disclosure of the term of the coverage, the conditions of coverage, the benefits to be paid, and the exclusions from coverage.

(c) The borrower shall sign a certificate of voluntary acceptance of any credit loss-of-income insurance purchased. The certificate shall state in boldface type which is larger than the type used in the loan contract that purchase of the insurance is not a necessary condition to receiving the loan and that the insurance may be canceled by the borrower at any time within 15 days after it goes into force, in which event a full refund shall be made of the premium paid.

(d) The minimum benefit shall be payment up to the agreed amount on not less than four benefit payments, as stated in the policy, which accrue during a covered period of unemployment, except that during the first 60 days after inception of the policy, the minimum benefit may be payment up to the agreed amount of one-half the number of benefit payments, as stated in the policy, which accrue during a covered period of unemployment. The maximum benefits shall be established in the contract of insurance.

(e) If combination credit disability and loss-of-income coverage is offered, credit disability and credit loss-of-income coverages shall also be offered separately.

(f) Benefits may not be denied because the insured cannot establish a valid claim for unemployment compensation benefits under Part 1 (commencing with Section 100) of Division 1 of the Unemployment Insurance Code solely because the former employer was not required to contribute to the State Unemployment Fund.

(g) If insurance with retroactive coverage is provided, the coverage shall provide for a prorated payment based upon the fraction of the month during which the insured is unemployed, provided that the insured is continuously unemployed during the waiting period set forth in the policy. If insurance without retroactive coverage is provided, the coverage shall provide for a prorated payment based upon the fraction of the month during which the insured is unemployed, after first excluding the elimination period set forth in the policy. For the purpose of this subdivision, a month is any period of 30 consecutive days.

(h) When unemployment continues for a number of months equal to or greater than the maximum number of benefit payments stated in the policy, the final payment shall be equal to the difference between a benefit payment and the initial prorated payment.

(i) As used in this section, “benefit payment” means payment of an amount equal to a loan repayment installment or a maximum amount established in the contract of insurance, whichever is less.

(j) The minimum benefit payment offered may not be less than the amount of a loan repayment installment unless the borrower or borrowers have two or more sources of income. If the maximum benefit payment offered is less than the amount of a loan repayment installment, the borrower shall also be offered coverage in which the maximum benefit payment is equal to the amount of a loan repayment installment.

history: (History: Amended by Stats. 1987, Ch. 1314, Sec. 2.)

article: 6. Insurance Sold With Loans


text: If credit disability or loss-of-income insurance is provided pursuant to this division, the industrial loan company shall also deliver an understandable written statement to the borrower detailing the conditions when the borrower will be entitled to make a claim under the insurance policy and the procedure to be followed in making the claim.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 13. Effective January 1, 1999.)

article: 6. Insurance Sold With Loans


text: An industrial loan company may collect the costs for insurance of tangible personal or real property offered as security for a loan, reasonably insured against loss for a reasonable term considering the circumstances of the loan, when the policy of insurance is made payable to the borrower or any member of his family, even though the customary mortgagee clause is attached, and if the insurance is sold at standard rates through duly licensed insurance agents.

history: (History: Added by Stats. 1976, Ch. 964.)

article: 6. Insurance Sold With Loans


text:
An industrial loan company may collect the costs of title insurance for loans secured primarily by real property. The costs for such insurance may be collected if:

(1) The principal amount of the loan is at least one thousand dollars ($1,000);

(2) The loan is secured by a lien of a deed of trust or mortgage on real property which is the subject of such policy of title insurance;

(3) The policy of title insurance is made payable to the lender or jointly to such lender and the borrower as their interests may appear;

(4) The coverage of such insurance may not exceed the lesser of the principal amount of the loan or the fair market value of the real property less prior encumbrances;

(5) The insurance is placed at standard rates through a title insurance company authorized to do business in the State of California;

(6) In connection with the renewal or extension of a loan, the additional cash advance is at least one thousand dollars ($1,000).

Such costs as herein authorized are not included in the maximum charges which may be made under this division.

history: (History: Amended by Stats. 1983, Ch. 858, Sec. 24.)

article: 6. Insurance Sold With Loans


text: An industrial loan company may collect the costs of insurance of the type defined by subdivision (a) of Section 12640.02 of the Insurance Code. Costs authorized by this section are not included in the maximum charges which may be made under this division.

history: (History: Added by Stats. 1984, Ch. 199, Sec. 4.)

article: 6. Insurance Sold With Loans


text:
(a) As used in this article, “open-end loan” means a loan or loans made by an industrial loan company pursuant to a loan agreement which expressly states that it is made pursuant to this section and pursuant to which:

(1) The industrial loan company may permit the borrower to obtain advances of money from the industrial loan company from time to time or the industrial loan company may advance money on behalf of the borrower from time to time as directed by the borrower.

(2) The amount of each advance and the charges and other permitted costs are debited to an account.

(3) The charges are computed from time to time on the unpaid balances of the borrower’s account, excluding from the computation any unpaid charges other than permitted fees, costs and expenses.

(4) The borrower has the privilege of paying the account in full at any time or in monthly installments.

(b) Subject to the written approval of the commissioner of the industrial loan company’s plan of business for making open-end loans as not being misleading or deceptive and subject to regulations the commissioner may promulgate with respect to open-end loans under Section 18347, an industrial loan company may make open-end loans pursuant to this section and may contract for and receive thereon charges as set forth in Section 18212. Such charges may be calculated on an amount not exceeding the greater of:

(1) The actual daily unpaid balances of the open-end account in the billing cycle for which the charge is made, in which case one-thirtieth of the monthly rate may be charged for each day the unpaid balance is outstanding.

(2) The average daily unpaid balance of the open-end account in the billing cycle for which the charge is made, which is the sum of the amount unpaid each day during that cycle divided by the number of days in that cycle. The amount unpaid on a day is determined by adding to the balance unpaid as of the beginning of that day all advances and other debits and deducting all payments and other credits made or received as of that day.

The billing cycle shall be monthly. A billing cycle is monthly if the closing date of that cycle is the same date each month or does not vary by more than four days from the regular date.

(c) No industrial loan company shall enter into any agreement for an open-end loan that provides for a minimum payment that would result in the full repayment of principal over more than the maximum periods set forth below opposite the respective size of loans.Principal amount of loanMaximum periodLess than $1,500 24 months and 15 days$1,500 but less than $2,500 36 months and 15 days$2,500 but less than $4,000 48 months and 15 days$4,000 but less than $6,000 60 months and 15 days$6,000 but less than $10,000 84 months and 15 daysThe minimum payment shall be determined by the amount of the initial loan advance and shall continue at that amount until a subsequent loan advance is made, at which time the minimum payment shall be determined by the amount of the unpaid balance of the loan after the advance and including the advance. Minimum payments after each advance shall be determined in the same manner.

(d) On open-end loans the industrial loan company may contract for and receive the fees, costs and expenses permitted on other loans, including those permitted by Sections 18215, 18218, 18290, 18294, and 18412, subject to all of the conditions and restrictions set forth in those sections with the following variations:

(1) The charge for credit life insurance shall be on a monthly basis. No credit life insurance written in connection with an open-end loan shall be cancelled by the lender because of delinquency of the borrower in the making of the minimum payments thereon unless one or more of such payments is past due for a period of 90 days or more, and the lender shall advance to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited to the borrower’s account.

(e) An industrial loan company shall not make an open-end loan in excess of ten thousand dollars ($10,000) principal amount.

(f) The loan contract shall provide for payment of minimum payments complying with subdivision (c). All loans made pursuant to this section shall be repayable by equal or substantially equal monthly payments during the term of the loan.

(g) In lieu of applying the provisions of Section 18290, the provisions contained herein shall apply to open-end loans.

An industrial loan company may provide insurance on the life of one or more borrowers with the borrower’s consent. The form of the insurance shall be approved by the Insurance Commissioner and shall be in an amount not in excess of the indebtedness. The amount charged to the borrower for such insurance shall not exceed the amount provided in paragraph (1) or (2) following, whichever is less:

(1) The premium rate filed with the Insurance Commissioner for the coverage provided pursuant to Article 5.9 (commencing with Section 779.1) of Chapter 1 of Part 2 of Division 1 of the Insurance Code and which has not been disapproved by the Insurance Commissioner.

(2) Fifty cents ($0.50) per year per one hundred dollars ($100) of indebtedness (and in the same proportion for longer or shorter maturities and larger or smaller amounts) or such different maximum as is fixed by the Insurance Commissioner by a valid and effective regulation hereafter adopted.

Notwithstanding Section 18291, any such life insurance shall be in force as soon as the loan is made or coverage is agreed upon, whichever is later.

(h) The open-end loan agreement shall contain the name and address of the industrial loan company and shall disclose the nature of the security taken, if any, the method of determining the minimum payments which will be required to repay the initial advance, and any subsequent advances on the loan, and the agreed rate of charge.

(i) At the time the open-end loan agreement is made the industrial loan company shall obtain from the borrower a signed statement as to whether any person has performed any act as a broker in connection with the making of the loan. If such statement discloses a broker or other person has participated, the company shall obtain a full statement of all sums paid or payable to the broker or other person. The open-end loan agreement and the statement required by this subdivision shall be kept for a period of two years after the date the loan has been paid in full, or has matured according to its terms, or has been charged off.

(j) Except in the case of an account which the industrial loan company deems to be uncollectible, or with respect to which delinquency collection procedures have been instituted, the company shall deliver or cause to be delivered to the borrower, or any one thereof, for each billing cycle at the end of which there is an outstanding balance in the account or with respect to which a finance charge is imposed, a statement setting forth the outstanding balance in the account at the beginning of the billing cycle, the date and amount of any subsequent loan advance during the period, the amounts and dates of crediting to the account during the billing cycle for payments, the amount of any finance charge debited to the account during the billing cycle, the annual percentage rate of finance charged determined under Regulation Z promulgated by the Board of Governors of the Federal Reserve System (12 C.F.R. 226), the balance on which the finance charge was computed, the closing date of the billing cycle, the outstanding balance on that date, and the minimum monthly payment required in the absence of any additional advance. If there has been any change in the nature of the security for the loan since the next preceding advance, the statement shall contain or be accompanied by a statement of the nature of the security for the loan after such change.

(k) An industrial loan company shall not take any instrument in connection with an open-end loan in which blanks are left to be filled in after execution.

(l) Subdivision (a) of Section 18205, and Sections 18206, 18214, 18222, 18231, and 18235 shall not apply to open-end loans.

(m) An industrial loan company shall not make an open-end loan secured by real property in whole or in part.

(n) An industrial loan company shall not charge for, offer or provide credit disability insurance in connection with an open-end loan.

(o) This section shall not apply to loans other than open-end loans.

history: (History: Amended by Stats. 1985, Ch. 297, Sec. 2.)

article: 6.5. Open-End Loans

path: 7. INDUSTRIAL LOAN COMPANIES > 3. Loans and Purchased Obligations > 6.5. Open-End Loans


text:
(a) Whenever authorized by the commissioner, an industrial loan company whose thrift obligations are insured by the Federal Deposit Insurance Corporation may make a secured line of credit loan. Security for line of credit loans shall be of a kind and class that has been declared eligible by the commissioner.

(b) Line of credit loans authorized under Title VIII (Alternative Mortgage Transaction Party Act of 1982) of the Garn-St. Germain Depository Institutions Act of 1982 are not subject to subdivision (a).

(c) As used in this article, “line of credit loan” means a loan whereby a borrower requests and a company disburses loan proceeds in an installment or installments during the term of the loan by an advance or series of advances, whether or not the timing of the advance or advances is known on the date the loan is approved by the company.

(d) This section does not apply to secured line of credit lending activities engaged in on or before May 1, 1989, unless, after that date there is a change in the secured line of credit plan of business by the company.

history: (History: Added by Stats. 1989, Ch. 889, Sec. 4.)

article: 6.5. Open-End Loans


text:
An industrial loan company shall file a written request for authorization to conduct business under subdivision (a) of Section 18301. The request shall include all of the following information:

(a) A description of the company’s proposed plan of business.

(b) The character, business qualifications, and other experience of the proposed officers and managers directing the line of business for which authorization is requested.

(c) Any other facts and circumstances bearing on the proposal that, in the opinion of the commissioner, may be relevant.

history: (History: Added by Stats. 1989, Ch. 889, Sec. 5.)

article: 6.5. Open-End Loans


text:
The commissioner shall approve the request made pursuant to Section 18302 within 30 days after filing unless the commissioner has ascertained that the company has failed to show either of the following:

(a) That the proposed plan of business has a reasonable promise of a successful operation.

(b) That the company has a person with the necessary business qualifications, experience, or ability to direct and manage the operations of the plan of business.

history: (History: Added by Stats. 1989, Ch. 889, Sec. 6.)

article: 6.5. Open-End Loans


text:
(a) When authorized to conduct business pursuant to this division, an industrial loan company may sell and issue its investment certificates subject to the provisions of this division. The commissioner may, by written order directed to a company or by rule or regulation, impose terms and conditions upon investment certificates and the sale or redemption thereof or the payment of interest thereon, as he or she deems reasonable and necessary or advisable for the protection of the company or the public, and he or she may from time to time in his or her discretion amend, alter or revoke any such order or regulation or any condition or provision thereof.

(b) Any change in the form, terms, or provisions of outstanding investment certificates or in the rights, privileges, or restrictions upon the holder or issuer thereof is deemed a sale and issuance of investment certificates.

(c) The company named in any order issued pursuant to subdivision (a) of this section may, within 15 days after receipt thereof, file with the commissioner its written request for hearing. The filing of the request shall not operate to postpone or suspend the effectiveness of any order issued by the commissioner unless otherwise directed by the commissioner. The commissioner shall, within 15 days after the receipt of the written request or at such later time as may be mutually agreed with the company, cause the matter to be heard and shall thereafter issue his final decision. The decision may be amended or set aside by the commissioner at any time.

(d) Every order or decision of the commissioner made pursuant to this section is subject to judicial review in accordance with law.

history: (History: Amended by Stats. 1998, Ch. 827, Sec. 14. Effective January 1, 1999.)

chapter: 4. Investment Certificates

path: 7. INDUSTRIAL LOAN COMPANIES > 4. Investment Certificates


text: An industrial loan company may, in addition to the sale of installment investment certificates with loans, sell or negotiate investment certificates either in certificates, or in receipt book form. The certificates may provide for the payment of money at any time, either fixed or uncertain. The company may receive payments therefor in installments or otherwise, with or without an allowance of interest upon such installments.


text: No company may have investment certificates outstanding with a person or related persons in an aggregate amount in excess of 20 percent of the unimpaired capital stock and surplus of the company not available for dividends as provided in Section 18319.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 10. Operative January 1, 1991, by Sec. 20 of Ch. 663.)


text: Investment or thrift certificates may be issued to or in the name of a minor and as such shall be for the exclusive right and benefit of such minor and may be redeemed in whole or part by said minor or his order and payment so made is a valid release and discharge to the company for such payment.


text: An investment or thrift certificate that is a multiple-party account as defined in Section 5132 of the Probate Code is governed by Part 2 (commencing with Section 5100) of Division 5 of the Probate Code.

history: (History: Amended by Stats. 1990, Ch. 79, Sec. 11. Operative July 1, 1991, pursuant to Stats. 1990, Ch. 710, Sec. 46.)


text: In no event shall an industrial loan company have outstanding at any time its investment certificates (exclusive of those hypothecated with the company issuing them) in an aggregate sum in excess of 20 times the aggregate amount of its paid-up and unimpaired capital and such of its unimpaired surplus as is declared by a bylaw of the company to be not available for cash dividends. The commissioner by rule or by order issued pursuant to Section 18315, may limit the amount of outstanding investment certificates of an industrial loan company.

history: (History: Amended by Stats. 1983, Ch. 858, Sec. 29.)


text:
Notwithstanding Section 18319, an industrial loan company shall in no event:

(a) Have outstanding at any time during its first 12 months of operation as an industrial loan company under this division, its investment certificates (exclusive of those hypothecated with the company issuing them) in an aggregate sum in excess of six times the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus not available for dividends pursuant to Section 18319.

(b) After 12 months of operation as an industrial loan company under this division and during the next 12 months of operation the industrial loan company may file an application with the commissioner seeking authority to increase the aggregate sum of its investment certificates which (exclusive of those investment certificates hypothecated with the company issuing them) in no event shall exceed eight times the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus not available for dividends pursuant to Section 18319.

(c) After 24 months of operation as an industrial loan company under this division and during the next 24 months of operation the company may file an application with the commissioner seeking authority to increase the aggregate sum of its investment certificates which (exclusive of those investment certificates hypothecated with the company issuing them) in no event shall exceed 12 times the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus not available for dividends pursuant to Section 18319.

(d) If after 36 months of operation as an industrial loan company under this division the outstanding investment certificates of a company are insured by the Federal Deposit Insurance Corporation, the company may file an application with the commissioner seeking authority to increase the aggregate sum of its investment certificates which it may have outstanding to the extent authorized by the capital-adequacy requirements of the federal Deposit Insurance Corporation. An industrial loan company that is authorized to increase the aggregate sum of its investment certificates to the extent authorized by the capital-adequacy requirements of the Federal Deposit Insurance Corporation also shall meet the requirements of subdivisions (e) and (f).

(e) After 48 months of operation as an industrial loan company under this division and during the next 12 months of operation the company may file an application with the commissioner seeking authority to increase the aggregate sum of its investment certificates which, exclusive of those investment certificates hypothecated with the company issuing them, in no event shall exceed 15 times the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus not available for dividends pursuant to Section 18319, only if both of the following requirements are met:

(1) A company shall maintain a liquidity reserve in cash, or cash equivalent, equal to 112 percent of its total investment certificates outstanding. “Cash equivalent” means investments legal for commercial banks under the laws of this state, with a maturity of not more than 12 months.

(2) In addition to the reserve for losses required by the commissioner pursuant to Section 18343, a company shall establish and maintain such special reserves for losses as the commissioner, by rule or order, may require.

(f) After 60 months of operation as an industrial loan company under this division, the company may file an application with the commissioner seeking authority to increase the aggregate sum of its investment certificates which it may have outstanding, which, exclusive of those investment certificates hypothecated with the company issuing them, in no event shall exceed 20 times the aggregate amount of its paid-up and unimpaired capital and unimpaired surplus not available for dividends pursuant to Section 18319, and which may exceed 15 times the amount of its paid-up and unimpaired capital and unimpaired surplus not available for dividends pursuant to Section 18319 only if the requirements of subdivision (e) are met and the capital stock is not less than one million two hundred fifty thousand dollars ($1,250,000) and the unimpaired paid-in surplus is not less than seven hundred fifty thousand dollars ($750,000).

(g) Whenever the commissioner deems it reasonable and necessary or advisable for the protection of the public (including the fact that an industrial loan company is not a member of the Federal Deposit Insurance Corporation), the commissioner may at any time by order authorize said industrial loan company to have its investment certificates outstanding in either a lesser aggregate sum than the maximum aggregate amounts permitted by subdivision (a), (b), (c), (d), (e), or (f), or none at all.

(h) The request for authority filed with the commissioner pursuant to subdivisions (b), (c), (d), (e), and (f) shall be set forth in an application in such form and containing such information as the commissioner may require.

(i) The commissioner shall by rule or regulation set forth the criteria that must be met before an industrial loan company can be granted authority to increase the aggregate sum of its outstanding investment certificates.

(j) If the commissioner does not within 60 days of the filing of an application grant a request by an industrial loan company operating under this division, for authority to increase the aggregate sum of its outstanding investment certificates to the requested amount, or issues an order pursuant to subdivision (g), the company may file with the commissioner its written request for hearing in accordance with subdivisions (c) and (d) of Section 18315.

history: (History: Amended by Stats. 1987, Ch. 787, Sec. 3.)


text:
(a) Nothing in this division authorizes an industrial loan company to receive demand deposits.

(b) Subject to Section 18315, an industrial loan company that is a member of the Federal Deposit Insurance Corporation pursuant to Section 18521.5 may use the term “certificate of deposit” as defined in Section 18003.6 with respect to an investment certificate that does not authorize either of the following:

(1) Redemption prior to its maturity.

(2) Reduction of the interest rate payable thereon other than a variable interest rate.

history: (History: Amended by Stats. 1999, Ch. 345, Sec. 3. Effective January 1, 2000.)


text: An industrial loan company shall obtain the written consent of the commissioner prior to accepting any moneys pursuant to Section 17409. The commissioner may, by regulation or order, impose or revise limitations and requirements, including, but not limited to, liquidity and reserve requirements, as, in the opinion of the commissioner, are necessary for safety and soundness. The commissioner shall rescind that consent if, at any time, the industrial loan company exceeds the limitations or fails to adhere to the requirements imposed or, if in the opinion of the commissioner, the continued acceptance of those moneys would pose a threat to the safety and soundness of the company.

history: (History: Added by Stats. 1990, Ch. 1306, Sec. 3.)


text:
(a) An industrial loan company shall not impose any charge on a periodic investment or thrift certificate, or on an investor in an account evidenced by such certificate, for the failure of an investor to invest, or for the late investment of, any agreed periodic installment investment into such an account. An industrial loan company shall pay interest on periodic investment or thrift certificates at the same rate of interest per annum as is paid on investment or thrift certificates as to which an investor has not agreed to make periodic installment investments.

(b) As used in this section “periodic investment or thrift certificate” means an investment arrangement under which an investor undertakes to make periodic investments of a specified amount into one account, except, however, a periodic investment or thrift certificate shall not mean an impound account established for the purposes of the payment of taxes or other expenses and obligations in connection with a loan secured by real property, or a certificate of investment issued in connection with a loan pursuant to Section 18322.


text:
As of the operative date of this section:

(a) There is established an Industrial Loan Account in the Financial Institutions Fund in the State Treasury.

(b) All money on deposit with the Treasurer in the State Corporations Fund that has been received or collected by the Commissioner of Financial Protection and Innovation under this division or any other law relating to industrial loan companies or the industrial loan business, all other assets of the State Corporations Fund that have been acquired by the Commissioner of Financial Protection and Innovation under this division or any other law relating to industrial loan companies or the industrial loan business, and all liabilities of the State Corporations Fund that have been incurred under this division or any other law relating to industrial loan companies or the industrial loan business shall be transferred to the Industrial Loan Account.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 129. (SB 1498) Effective January 1, 2023.)

article: 1. General

path: 7. INDUSTRIAL LOAN COMPANIES > 5. Administration and Powers of the Commissioner > 1. General


text: All money received or collected by the commissioner under this division or any other law relating to industrial loan companies or the industrial loan business shall be deposited in the State Treasury to the credit of the Industrial Loan Account of the Financial Institutions Fund.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 589. Effective January 1, 1997. Operative July 1, 1997.)

chapter: 5. Administration and Powers of the Commissioner

article: 1. General


text: All expenses of the department in administering this division and other laws relating to industrial loan companies or the industrial loan business shall be paid out of the Industrial Loan Account; and, except as otherwise provided in Section 276 or 277, the Industrial Loan Account shall be used only for such purposes.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 590. Effective January 1, 1997. Operative July 1, 1997.)

article: 1. General


text: Industrial loan companies have the powers specified in this division. In addition, industrial loan companies have the general powers conferred upon corporations by the General Corporation Law. The powers granted, including those granted by the General Corporation Law, are subject to the supervision and control of, and the conditions imposed by, the commissioner.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 11. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. General


text:
The commissioner may require an industrial loan company to establish and maintain reasonable reserves for loans made, and contracts or other obligations purchased or discounted in accordance with sound business practices. The commissioner may by rule or order:

(a) Establish reasonable standards for the classification of loans and contracts or other obligations as to their delinquency or currency.

(b) Prescribe the conditions requiring the writing off of delinquent loans and contracts or other obligations and the conditions under which they may be restored as part of corporate assets.

(c) Establish the basis upon which reasonable and adequate reserves shall be created and maintained.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 12. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. General


text: An industrial loan company shall not conduct the business of making loans under this division, within any office, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction therewith, except as is authorized in writing by the commissioner upon the commissioner’s finding that the character of the other business is such that the granting of the authority would not facilitate evasions of this division or of the rules and regulations made pursuant to this division.

history: (History: Added by Stats. 1976, Ch. 964.)

article: 1. General


text: An industrial loan company shall notify the commissioner of every change in the officers, directors and management personnel of the company and of each branch of the company within 15 days of such change. Such report shall include a complete identification of each person assuming any such office or duties and such other information as the commissioner shall prescribe. The commissioner may by rule or order prescribe the positions or duties which will be deemed to be management personnel within the meaning of this section.

history: (History: Amended by Stats. 1989, Ch. 663, Sec. 13. Operative January 1, 1991, by Sec. 20 of Ch. 663.)

article: 1. General


text: The commissioner may require each industrial loan company to file with the commissioner a fidelity bond indemnifying the industrial loan company against loss of money or property by act of any officer, director or employee of such company, having access to assets owned by or pledged with the company. The fidelity bond shall contain a rider which provides that the coverage of the bond extends to all officers, directors and employees of the insured who are compensated by the insured. The commissioner may require that the fidelity bond contain a rider which provides that coverage of the bond extends to all officers and directors who are not compensated by the insured. The fidelity bond may be either a primary commercial blanket bond, a blanket position bond, or a banker’s blanket bond, but shall be written by an admitted surety insurer. The commissioner shall by regulation prescribe the amount of fidelity coverage to be required. The sufficiency of the sureties on the bond are at all times subject to the approval of the commissioner.

history: (History: Amended by Stats. 1982, Ch. 517, Sec. 226.)

article: 1. General


text:
(a) In lieu of providing a bond required pursuant to Section 18346, a licensee may deposit with the commissioner security in an amount as the commissioner may determine, for the protection of the public against loss suffered through theft or mysterious disappearance. Such security may only be in the form of cash, lawful money of the United States, bearer bonds issued by the United States or the State of California or evidence of deposit in banks or investment certificates issued by insured savings and loan associations authorized or licensed to do business in the State of California.

(b) Security deposited with the commissioner pursuant to subdivision (a) shall not be deemed an asset of the licensee for the purpose of complying with Article 3 of Chapter 2 of this division.

history: (History: Added by Stats. 1980, Ch. 427, Sec. 4.)

article: 1. General


text: The commissioner may establish rules and regulations which are reasonable and necessary to carry out the purposes and provisions of this division, including rules and regulations concerning the terms, form, offer, and sale of investment certificates.

article: 1. General


text: The commissioner may, upon reasonable notice and opportunity to be heard, suspend or revoke the license of an industrial loan company if the commissioner finds that the industrial loan company has violated any provision of this division or any rule or regulation of the commissioner made pursuant to this division, or if any factor or condition exists which, if it had existed at the time of the original application for a license, reasonably would have warranted the commissioner in refusing originally to issue such license.

history: (History: Repealed and added by Stats. 1980, Ch. 974, Sec. 11.)

article: 1. General