citation: FIN § 7265

text:
Bonds of any irrigation district, water, storage district, water conservation district, county water district, reclamation district, drainage district, and any district the primary function of which is the irrigation, reclamation, or drainage of land within its boundaries, located in California, other than bonds referred to in Section 7262, subject to any of the following:

(a) The bonds qualify under Section 7263.

(b) The bonds have been certified as legal securities pursuant to Chapter 1 (commencing with Section 20000) of Division 10 of the Water Code and the certification remains unrevoked.

(c) The total outstanding bonded indebtedness of the district, including bonds authorized, but not issued, but excluding bonds payable solely from revenues and not directly or indirectly from assessments, does not exceed 50 percent of the aggregate of the assessed value of the lands, exclusive of improvements, subject to assessment by the district, and the value of the property owned by the district or to be acquired or constructed with the proceeds of the bonds under consideration.


kind: section

code: FIN

citation: FIN § 7266

text: Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by federal land banks or federal intermediate credit banks established under the Federal Farm Loan Act, as amended, the Farm Credit Act of 1971, in debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933, as amended, and the Farm Credit Act of 1971, and in stocks, bonds, debentures, participations, and other obligations of, or issued by, the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association, and the Federal Home Loan Mortgage Corporation.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 40.5.)

division: 2. SAVINGS ASSOCIATION LAW

chapter: 6. Investment Operations

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 2.5. Other Authorized Investments in Bonds and Securities


citation: FIN § 7267

text: Bonds, notes, or other obligations issued by the Federal Financing Bank, the United State Postal Service, or issued or assumed by the International Bank for Reconstruction and Development, the Tennessee Valley Authority, the Inter-American Development Bank, the Government Development Bank for Puerto Rico, the Asian Development Bank, or the African Development Bank.

history: (History: Added by Stats. 1988, Ch. 718, Sec. 14.)

article: 2.5. Other Authorized Investments in Bonds and Securities


citation: FIN § 7268

text:
(a) Notes with a maturity not exceeding 15 months after the date of issue, issued in anticipation of uncollected taxes, income, revenue, cash receipts, and other moneys of the State of California or any city, county, city and county, or school district, therefore, provided the notes and warrants and the interest thereon shall be a first lien and charge against, and shall be payable from, the first moneys received by the local agency from the pledged moneys, provided the total amount of the notes issued at any one time or during any specified period does not exceed 85 percent of the receipts or revenues.

(b) Grant anticipation notes issued by the agencies and payable not later than 36 months after the date of issue, provided that the total amount of the notes and interest payable thereon issued at any one time or during any specified period does not exceed 80 percent of the grant funds stated in writing by the granting authority as committed, appropriated and shall be paid on a specified date or dates within a 36-month period from the dating of the notes.


citation: FIN § 7269

text:
In revenue securities of any state of the United States, or of the Commonwealth of Puerto Rico, and of any city, county, city and county, political subdivision, public corporation, or district (herein referred to generally as public corporations) of any such state or commonwealth and of any department, board, agency, or authority of any such state or commonwealth or of any public corporation subject to the following:

(a) The revenue securities constitute obligations payable out of the revenues from a revenue-producing property owned, controlled, or operated by the state, commonwealth, public corporation, or by a department, board, agency, or authority thereof and are secured by those revenues.

(b) Either:

(1) The new income from the property available for the payment of the securities for the five fiscal years next preceding any such investment, shall have averaged at least one and one-tenth times all debt service requirement for principal, interest, and sinking fund of all revenue securities payable only out of the revenues from the property during each of those fiscal years, and for each of those five fiscal years shall have equaled at least all debt service requirements for principal, interest, and sinking fund of those securities, and for the last fiscal year shall have amounted to at least the maximum annual debt service requirement for any fiscal year thereafter on all such securities which were outstanding during the last fiscal year and which will be outstanding in any fiscal year thereafter.

The gross income from the property, the net income from which is pledged for the payment of those securities, in the last fiscal year prior to that investment was not less than one million dollars ($1,000,000), is located in California, and was not less than five million dollars ($5,000,000) if located elsewhere.

The issuer is obligated to maintain rates at least sufficient to meet debt service requirements and those obligations are legally enforceable.

(2) The issuer of the securities is entitled to receive under a legally enforceable contract with a corporation any of the securities of which are a legal investment for commercial banks under Division 1, annual payments averaging not less than nine hundred thousand dollars ($900,000) a year commencing with the completion of a project or projects as fixed in the construction contract therefore and continuing during the maximum term for which those revenue securities are to mature.

The issuer of the securities is obligated to maintain rates to produce revenue, or will receive contract payments, either or both of which will be sufficient to meet debt service requirements and that obligation contract is legally enforceable.

(c) The public corporation or any department, board, agency, or authority thereof which issues the securities, if existing elsewhere than in California, has not within 10 years prior to that investment defaulted for a period of more than 90 days in the payment of principal or interest on any of its debts.


citation: FIN § 7270

text: Bonds of any local public housing agency (as defined in the United States Housing Act of 1937, as amended) as are secured either, (a) by an agreement between the public housing agency and the Public Housing Administration in which the public housing agency agrees to borrow from the Public Housing Administration, and the Public Housing Administration agrees to lend to the public housing agency, prior to the maturity of those obligations (which obligations shall have a maturity of not more than 18 months), moneys in an amount which (together with any other moneys irrevocably committed to the payment of interest on the obligations) will suffice to pay the principal of those obligations with interest to maturity thereon, which moneys under the terms of that agreement are required to be used for the purpose of paying the principal of, and the interest on, those obligations at their maturity, or (b) by a pledge of annual contributions under an annual contributions contract between the public housing agency and the Public Housing Administration if the contract shall contain the covenant by the Public Housing Administration which is authorized by subsection (b) of Section 22 of the United States Housing Act of 1937, as amended, and if the maximum sum and the maximum period specified in the contract pursuant to subsection (b) of Section 22 of the United States Housing Act of 1937 shall not be less than the annual amount and the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on those obligations.


citation: FIN § 7271

text: Bonds secured by an insurance commitment of the Federal Housing Administration.


citation: FIN § 7272

text:
Evidences of indebtedness of companies incorporated in the United States and, directly or indirectly, engaged in manufacturing, extraction, merchandising, or commercial financing and in bonds of authorities established pursuant to the California Industrial Development Financing Act (Title 10 (commencing with Section 91500) of the Government Code), to which those institutions are obligated with respect to payment, provided:

(a) Any unsecured evidences of indebtedness shall be issued by a company substantially all of whose property is free of mortgage and shall carry a covenant by the obligor that they will be secured equally with any mortgage bond, except a purchase money mortgage, which may be later issued.

(b) The company is of such size as to attract at least statewide interest in its publicly held securities and its gross income shall have averaged not less than ten million dollars ($10,000,000) and its net income shall have averaged not less than one million dollars ($1,000,000) for the five fiscal years preceding the investment and its gross income was not less than one million dollars ($1,000,000) for at least three of those five fiscal years.

(c) Working capital as measured by consolidated current assets less consolidated current liabilities as shown in the latest published balance sheet shall exceed 150 percent of the total of consolidated debt due in longer than one year and “minority interest” (i.e., any outstanding interest in a subsidiary having a prior claim on the earnings of the subsidiary), except that the foregoing ratio requirement shall not apply in the case of evidences of indebtedness of any corporation whose consolidated gross assets less any valuation reserves exceed five hundred million dollars ($500,000,000) and whose consolidated current assets exceed consolidated current liabilities by at least one hundred million dollars ($100,000,000) as shown by the latest published balance sheet. When new financing is involved, the changes in gross assets, capital structure, and working capital shall be considered and reliance may be placed on the representations made in the official prospectus prepared under the rules of the Securities and Exchange Commission as to the application of the proceeds of that financing.

(d) The total consolidated debt of the company including current liabilities and “minority interest” (i.e. any outstanding interest in a subsidiary having a prior claim on the earnings of the subsidiary), as shown on the latest published balance sheet, does not exceed 3313 percent of its gross assets less valuation reserves.

(e) The consolidated annual net income for the five fiscal years next preceding the investment, before deductions of state and federal taxes imposed on or measured by income or profits but after deducting all charges (including reserves, regularly recurring charges for amortization of discount, and expense allocable to funded debt) (1) shall have averaged not less than six times the annual consolidated interest charges existing at the time the investment is made; (2) in at least three of those five fiscal years shall have been at least four times the annual consolidated interest charges for the same year; and (3) for the fiscal year next preceding the investment shall have been not less than six times the consolidated interest charges for that year and not less than six times the annual consolidated charges on the funded debt outstanding at the time of the investment.


citation: FIN § 7273

text:
Fixed interest railroad bonds meeting the requirements of subdivisions (a) and (b), bonds secured by a mortgage on jointly operated railroad facilities meeting the requirements of subdivision (c), and railroad equipment trust certificates meeting the requirements of subdivision (d), as follows:

(a) The railroad bonds are issued by or are assumed, guaranteed, or provision is made unconditionally for the payment of principal and interest on specified dates, by a solvent railroad company:

(1) That operates at least 500 miles of standard gauge road within the continental United States and that has had average annual operating revenues of at least ten million dollars ($10,000,000) during the five years next preceding the investment.

(2) Whose average annual balance of income available for fixed charges for the last 15 years for which the necessary statistical data are available, when divided by an amount equal to its fixed charges for the last fiscal year, shall produce a quotient that is at least 15 percent higher than the quotient obtained by dividing the average annual balance of income available for fixed charges of all class 1 railroads for the same 15-year period by an amount equal to the fixed charges of all class 1 railroads for the last year in the period.

(3) Whose average “balance of net income” (computed by deducting the sum of its fixed charges and contingent interest charges for the latest fiscal year from the average annual balance available for fixed charges for the latest 15 years for which the necessary statistical data are available) when divided by its average annual railroad operating income for the same 15-year period, shall produce a quotient at least 15 percent greater than the quotient obtained by dividing the average balance of income of all class 1 railroads, computed in the same manner, by the average annual railway operating income of all class 1 railroads for the same 15-year period.

(4) Whose average balance of income available for fixed charges for the last three fiscal years preceding the investment, or for the lesser number of fiscal years that may have elapsed since December 31, 1946, has not been less than one and one-half times its fixed charges for the last fiscal year.

(b) The railroad bonds are secured by any of the following:

(1) A mortgage, either direct or collateral, that shall be a first mortgage on not less than 75 percent of the mileage subject to the mortgage.

(2) A first mortgage on terminal properties comprising the company’s principal freight or passenger terminal in a city of not less than 250,000 population according to the latest federal or state census.

(3) A refunding mortgage on not less than 75 percent of the railroad mileage owned or operated by the issuing company under which bonds may be issued for retirement or refunding of all debts secured by prior liens on all or any part of the property, other than liens on equipment, subject to the mortgage, if the amount of debt senior to the refunding mortgage is not more than 50 percent of the sum of all senior debt and the refunding mortgage or if underlying mortgage bonds in an amount equal to at least 50 percent of the debt outstanding under the refunding mortgage are pledged as security under that refunding mortgage.

(4) A first mortgage on railroad property leased to and operated by the company if the lease extends beyond the maturity date of the bonds and the company has guaranteed, assumed, or committed itself under the terms of the lease to pay principal and interest on the bonds.

(c) Bonds secured by a mortgage on jointly operated railroad facilities shall be secured by a first mortgage on a terminal, depot, tunnel, or bridge used by or leased to two or more railroads that have jointly and severally agreed unconditionally to pay the interest and principal payment, one of which railroads shall meet the requirements set forth in subdivision (a).

(d) Railroad equipment trust certificates shall be issued by a solvent class 1 railroad whose average balance of income available for fixed charges for the last three fiscal years preceding the investment, or for the lesser number of fiscal years that may have elapsed since December 31, 1946, shall be not less than one and one-half times its fixed charges for the last fiscal year. Those certificates shall be issued to provide funds for the construction or acquisition of new standard gauge railroad equipment made with the approval of the federal Surface Transportation Board and secured by an equipment trust, lease, conditional sales contract, or first lien on the equipment. The aggregate principal amount of the obligations shall not exceed 80 percent of the purchase price of the equipment and the certificates shall mature within 15 years of the date of issuance in equal annual, semiannual, or monthly installments, beginning not later than one year after the date of issuance.

(e) As used in this section, “balance of income available for fixed charges,” “fixed charges,” “contingent interest,” and “railway operating income” shall have the same meaning as in the accounting reports filed by common carriers by rail pursuant to regulations of the federal Surface Transportation Board, except that “balance of income available for payment of fixed charges” shall be computed before deduction of federal income of excess profits taxes, and “fixed charges” and “contingent interest” of the railroad shall be those charges existing as of the time the computation is made, excluding charges with respect to debt that has been retired or will be retired within six months and for the payment of which funds have been or are contemporaneously being set aside in trust but including charges with respect to new debt issued or in the process of being issued.

history: (History: Amended by Stats. 2019, Ch. 143, Sec. 58. (SB 251) Effective January 1, 2020.)


citation: FIN § 7274

text:
Bonds and debentures of gas, electric, or gas and electric companies meeting the requirements of subdivision (a), bonds and debentures of telephone companies meeting the requirements of subdivision (b), and the bonds and debentures of water companies meeting the requirements of subdivision (c), as follows:

(a) Bonds or debentures of gas, electric, or gas and electric companies shall be of an issue that originally amounted to not less than one million dollars ($1,000,000) and, if bonds, be secured by a mortgage on substantially all of its physical property, and, if debentures, shall be issued by a company substantially all of whose physical property is free of mortgage and shall carry a covenant to be secured equally with any mortgage indebtedness, except a purchase money mortgage, subsequently issued, and both bonds and debentures shall be issued by a public utility corporation, which does all of the following:

(1) Derives more than 50 percent of its gross operating revenue from the business of supplying electricity, artificial gas, or natural gas or all or any of these services, and at least 80 percent of its gross operating revenue from all or any of the public utility businesses enumerated in this section.

(2) Has a gross operating revenue of not less than seven million five hundred thousand dollars ($7,500,000) for its most recent fiscal year.

(3) Has a funded debt not exceeding two-thirds of the value of its physical property as shown by the books of the corporation or by a statement of a certified public accountant issued within one year, which statement may be based upon the books of the corporation, less the amount of any reserves for depreciation, retirement, or amortization of the physical property. Physical property of a corporation shall include the physical property of a subsidiary corporation if the corporation owns not less than 90 percent of the outstanding voting shares of the subsidiary corporation.

(4) Has had earnings, including earnings of subsidiaries mentioned in paragraph (3), available for interest payments, before deduction of state and federal taxes imposed on or measured by income or profits, during four of the five most recent fiscal years and during the most recent fiscal year equal to at least twice the existing annual interest charges on the corporation’s total funded debt during those respective fiscal years.

(b) Bonds or debentures of telephone companies shall be of an issue originally amounting to at least one million dollars ($1,000,000) and, if bonds, secured by a mortgage on substantially all of the physical property of the company, and, if debentures, be issued by a company substantially all of whose physical property is free of mortgage and shall carry a covenant to be secured equally with any mortgage indebtedness, except a purchase money mortgage, subsequently issued, and both bonds and debentures shall be issued by a company subject to the following:

(1) The company has during its last fiscal year had gross revenues of at least seven million five hundred thousand dollars ($7,500,000), more than 50 percent of which was derived from owned properties used in furnishing telephone and other communication services and at least 80 percent of its gross revenues from all or any of the public utility businesses enumerated in this section.

(2) The funded debt does not exceed two-thirds of the value of its physical property as shown by the books of the corporation or by a statement of a certified public accountant issued within one year, which statement may be based upon the books of the corporation, less the amount of any reserves shown on the statement for depreciation, retirement, or amortization as the physical property. Physical property of a corporation shall include the physical property of a subsidiary corporation if the corporation owns not less than 90 percent of the outstanding voting shares of the subsidiary corporation.

(3) For four of the five most recent fiscal years and for the last fiscal year has had earnings, including earnings of subsidiaries mentioned in paragraph (2), available for the payment of interest charges, before deduction of state and federal taxes imposed on or measured by income or profits, at least equal to twice the interest charges on the company’s total funded debt during those respective fiscal years.

(c) Water company bonds or debentures shall be of an issue originally amounting to at least one million dollars ($1,000,000) and, if bonds, secured by a first mortgage on the company’s property, and, if debentures, issued by a company substantially all of whose property is free of mortgage and carry a covenant to be secured equally with any mortgage indebtedness, except a purchase money mortgage, subsequently issued, and both bonds and debentures shall be issued by a company subject to the following:

(1) The company is the supplier of substantially all water for domestic use in a community or communities having a population of not less than 25,000.

(2) The funded debt of the company does not exceed two-thirds of the value of its physical property as shown by the published statement of the company for its next preceding fiscal period, less the amount of any reserves shown for depreciation, retirement, or amortization of the physical property. Physical property of a corporation shall include the physical property of a subsidiary corporation if the corporation owns not less than 90 percent of the outstanding voting shares of the subsidiary corporation.

(3) For four out of the five most recent fiscal years and for the most recent fiscal year has had earnings, including those of subsidiaries mentioned in paragraph (2), available for the payment of interest charges, before deduction of state and federal taxes imposed on or measured by income or profits, of at least one and one-half times the interest charges on the company’s total funded debt during those respective fiscal years.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 168. Effective January 1, 2007.)


citation: FIN § 7275

text: As used in this article, “funded debt” means all interest-bearing indebtedness of a corporation not maturing within one year of the date it was incurred.


citation: FIN § 7300

text:
(a) Each association shall have power to invest in real property, tangible personal property and interests in real property for the conduct of the business of the association, or its service corporation, which power shall include the ownership of stock of a wholly owned subsidiary corporation having as its exclusive activity the ownership and management of the property or interests.

(b) As used in this section, the term “real property” includes structures or buildings located on land owned in fee or held under a lease or sublease by the association with an unexpired term, including extensions or renewals that are automatically effective or may be exercised at the association’s option, of 25 years at the date of execution by the association of the lease or sublease.

(c) No association may without written approval of the commissioner purchase, sell, or pay interest on or dividends involving, gold or silver bullion or related instruments or securities except gold coins minted and issued by the United States Treasury pursuant to Public Law 99-185, 99 Stat. 1177 (1985).

history: (History: Amended by Stats. 1987, Ch. 1162, Sec. 12. Effective September 26, 1987.)

article: 3. Investment in Business Property

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 3. Investment in Business Property


citation: FIN § 7350

text:
(a) An association may acquire and hold stock of one or more corporations the primary activities of which are engaging in real property investment, in which event the sum of (1) investments made by an association pursuant to the authority of this subdivision, (2) any loans and guarantees extended by an association to, or for the benefit of, corporations the stock of which it holds pursuant to the authority of this subdivision, and (3) real property investments made pursuant to the authority of subdivision (b), unless a higher percentage is approved by the commissioner in writing, shall not exceed 10 percent of the total assets of the association.

(b) An association may engage in real property investment. The total of all real property investments made pursuant to the authority of this subdivision, unless a higher percentage is approved by the commissioner in writing, shall not exceed the total shareholders’ equity of the association.

(c) Prior to initially engaging in real property investment activities authorized by subdivision (a) or (b), an association shall make application with the commissioner for approval of its general plan of real property investment. The application for approval shall be in letter form, shall contain a copy of the general plan for real property investment as approved or adopted by the board of directors of the association, which shall include a brief description of either the activities of the corporations the association will invest in or the activities the association will engage in, or both, the approximate amount to be invested, the extent, if any, of diversification of those activities or investment, and the approximate date of the initial investment, and shall be signed by the chief executive officer of the association. Unless the commissioner finds (1) that the capital, assets, management, earnings, and liquidity of the association are, on a composite basis, not satisfactory or (2) that the plan for the association to engage in real property investment or to acquire and hold the stock of one or more real property investment corporations is unsafe or unsound, the commissioner shall approve the application. An application for approval shall be deemed approved on the 46th day after the application is filed with the commissioner, unless the commissioner earlier makes a final decision on the application or extends the period for approving or denying the application. For purposes of this subdivision, an application for approval shall be deemed to be filed with the commissioner on the date when the application, substantially in compliance with the requirements of this subdivision, is received by the commissioner. Upon the filing of the application for approval, the applicant shall pay to the commissioner a filing fee of five hundred dollars ($500).

(d) As used in this section, “real property investment” means all forms of investing in real property, whether direct or in the form of partnerships, joint ventures, or other methods of investment. It includes, but is not limited to, the purchasing, subdividing, and developing of real property or any interest therein, the building of residential housing or commercial improvements, and the owning, renting, leasing, managing, operating for income, or selling of that property.

(e) The legality of any investment lawfully made pursuant to former Section 7350, as repealed by the act enacting this section, shall not be affected by this section, nor shall this section be construed to require the changing of any investments lawfully made prior to January 1, 1991.

history: (History: Repealed and added by Stats. 1990, Ch. 1118, Sec. 41.5.)

article: 4. Purchase of Real Estate

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 4. Purchase of Real Estate


citation: FIN § 7450

text:
(a) An association may make any loan authorized by this division, but the association shall first determine that the type, amount, purpose, and repayment provisions of the loan in relation to the borrower’s resources and credit standing support the reasonable belief that the loan will be financially sound and will be repaid according to its terms, and that the loan is not otherwise unlawful.

(b) Subject to any regulations of the commissioner, an association may make or acquire loans directly or indirectly to or from any director, officer, affiliated person, or any parent or subsidiary. Loans made or acquired, directly or indirectly, the proceeds of which are intended to inure or have inured to the benefit of these parties are subject to the same regulations.

history: (History: Amended by Stats. 1987, Ch. 1162, Sec. 13. Effective September 26, 1987.)

article: 5. Investment in Loans

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 5. Investment in Loans


text:
Except with the prior written consent of the commissioner, no association shall knowingly make:

(a) Any loan to any corporation of which 10 percent or more of the stock is owned or controlled individually or collectively by any one or more of the directors, officers, employees, or substantial stockholders of the association.

As used in this subdivision, “substantial stockholder” means a person who has a real or beneficial ownership of more than 10 percent of the outstanding stock of the association. For this purpose, stock owned by the person’s immediate family shall be deemed owned by that person.

(b) Any loan the proceeds of which are intended to inure to the benefit of any corporation specified in subdivision (a).

history: (History: Added by Stats. 1986, Ch. 1158, Sec. 6. Effective September 26, 1986.)

article: 5. Investment in Loans


citation: FIN § 7451

text: Except as otherwise provided by the commissioner, an association shall not make or acquire total loans with respect to one borrower or on one project in an amount exceeding 25 percent of the net worth of the association. As used in this section, “one borrower” has the meaning defined in Section 7453.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 42.)

article: 5. Investment in Loans


citation: FIN § 7452

text:
(a) An association may make consumer loans, provided that the total of such loans shall not exceed 30-percent of the assets of the association.

(b) An association may include loans to dealers in consumer goods to finance inventory and floor planning in the total investment as part of the 30-percent limitation described in subdivision (a). For purposes of the limitations on loans to one borrower, loans to dealers in consumer goods to finance inventory and floor planning shall be treated as commercial loans.

history: (History: Amended by Stats. 1984, Ch. 225, Sec. 5. Effective June 21, 1984.)

article: 5. Investment in Loans


citation: FIN § 7453

text:
(a) An association may make, invest in, sell, purchase, participate in, or otherwise deal in secured or unsecured loans for agricultural, business, commercial, or corporate purposes, provided that the total investment in such loans does not exceed 10 percent of the assets of the association.

(b) An association may invest in, sell, purchase, participate in, or otherwise deal in loans specified in subdivision (a) which are originated by any savings association, federal association, holding company of a federally insured savings association, commercial bank, bank holding company, subsidiary of a bank holding company, or insurance company, provided that the total investment in such loans shall not exceed 10 percent of the association’s assets.

(c) For the purposes of this section, the term “loan” does not include any corporate debt security unless it is rated in one of the four highest rating categories by at least one nationally recognized rating service.

(d) No association shall make, invest in, purchase, or participate in a loan for agricultural, business, commercial, or corporate purposes to one borrower, except as the commissioner may approve in writing, if the sum of the amount of the association’s interest in the loan and the total balance of the association’s interest in all outstanding loans for those purposes owed to the association by that borrower exceed the greater of (1) the amount a national bank having an identical total capital and surplus could lend to one borrower, or (2) the amount a commercial bank, as defined in Section 105, having an identical total shareholders’ equity, capital notes, and debentures, could lend to one borrower. This subdivision shall not apply to loans (1) secured by real property, (2) sold without recourse, (3) on the security of the association’s deposit accounts, or (4) of unsecured day funds, including federal funds or similar unsecured loans.

(e) As used in this section the term “one borrower” means:

(1) Any person that is, or upon the making of a loan will become, an obligor on the loans. However, a guarantor shall not be included within the meaning of “obligor” if, in connection with a loan the association has determined, in good faith, that the primary obligor has qualified for the loan irrespective of the existence of the guarantor. In the case of a loan that has been assumed by a third party with the consent of the association, the former debtor and any guarantor shall not be deemed to be an “obligor.”

(2) Nominees of the obligor.

(3) All persons, trusts, syndicates, partnerships and corporations of which the obligor is a nominee, a beneficiary, a member, a general partner, a limited partner owning an interest of 10 percent or more based on the value of his or her capital contribution, or a record or beneficial stockholder owning 10 percent or more of the capital stock.

(4) If the obligor is a trust, syndicate, partnership or corporation, all trusts, syndicates, partnerships and corporations of which any beneficiary, member, general partner, limited partner owning an interest of 10 percent or more based on the value of his or her capital contribution, or record or beneficial stockholder owning 10 percent or more of the capital stock, is also a beneficiary, member, general partner, limited partner owning an interest of 10 percent or more based on the value of his or her capital contribution, or record or beneficial stockholder owning 10 percent or more of the capital stock of the obligor.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 43.)

article: 5. Investment in Loans


citation: FIN § 7454

text: Each association is authorized to issue credit cards, extend credit in connection with the cards, and otherwise engage in or participate in credit card operations. The provisions of Title 2 (commencing with Section 1801) of the Civil Code shall not apply to any credit extended by an association pursuant to the provisions of this section.

history: (History: Amended by Stats. 1985, Ch. 983, Sec. 12.4. Effective September 26, 1985.)

article: 5. Investment in Loans


citation: FIN § 7455

text: No association or director, officer, or employee of an association shall require, as a condition to the granting of any loan or the extension of any other service by the association, that the borrower or any other person undertake a contract of insurance with any specific company, agency, or individual.

history: (History: Added by Stats. 1984, Ch. 287, Sec. 27. Effective July 6, 1984.)

article: 5. Investment in Loans


citation: FIN § 7456

text: Any loan commitment made by an association shall be counted as an investment and shall be included in total assets of the association only to the extent that funds have been advanced (and not repaid) pursuant to the commitment. For the purposes of this section, the term “loan commitment” includes a loan in process, a letter of credit, or any other commitment to extend credit.

history: (History: Added by Stats. 1984, Ch. 225, Sec. 7. Effective June 21, 1984.)

article: 5. Investment in Loans


citation: FIN § 7457

text: An association may make loans on the security of its savings accounts, whether or not the borrower is the owner of the account, subject to the limitations of this article.

history: (History: Added by Stats. 1984, Ch. 868, Sec. 11.2.)

article: 5. Investment in Loans


citation: FIN § 7458

text: An association may make overdraft loans specifically related to transaction accounts, subject to regulations issued by the commissioner.

history: (History: Added by Stats. 1984, Ch. 868, Sec. 11.3.)

article: 5. Investment in Loans


citation: FIN § 7459

text: In addition to establishing reserves pursuant to Section 6476, an association or federal association, as defined in Section 5102, may establish a separate loan reserve account regarding losses resulting from fraud by a borrower and may recover any of those losses from that borrower.

history: (History: Added by Stats. 1985, Ch. 656, Sec. 2.)

article: 5. Investment in Loans


citation: FIN § 7460

text:
(a) Notwithstanding Section 726 of the Code of Civil Procedure or any other provision of law to the contrary, an association, a federal association, an affiliate of an association or federal association, a service corporation, or any successor in interest thereto, that originates, acquires, or purchases, in whole or in part, any loan secured directly or collaterally, in whole or in part, by a mortgage or deed of trust on real property, or any interest therein, may bring an action for recovery of damages, including exemplary damages not to exceed 50 percent of the actual damages, against a borrower where the action is based on fraud under Section 1572 of the Civil Code and the fraudulent conduct by the borrower induced the original lender to make that loan.

(b) The provisions of this section shall not apply to loans secured by single-family, owner-occupied residential real property, when the property is actually occupied by the borrower as represented to the lender in order to obtain the loan and the loan is for an amount of one hundred fifty thousand dollars ($150,000) or less, as adjusted annually, commencing on January 1, 1987, to the Consumer Price Index as published by the United States Department of Labor.

(c) Any action maintained under this section for damages shall not constitute a money judgment for deficiency or a deficiency judgment within the meaning of Section 580a, 580b, or 580d of the Code of Civil Procedure.

history: (History: Amended by Stats. 1986, Ch. 173, Sec. 2.)

article: 5. Investment in Loans


citation: FIN § 7461

text: The provisions of any deed of trust or mortgage on real property which authorize an association, federal association, affiliate or service corporation of an association or federal association, or any successor in interest thereto, to accelerate the maturity date of the principal and interest on any loan secured thereby or to exercise any power of sale or other remedy contained therein upon the failure of the trustor or mortgagor to pay, at the times provided for under the terms of the deed of trust or mortgage, any taxes, rents, assessments, or insurance premiums with respect to the property or the loan, or any advances made by the association, federal association, affiliate or service corporation of an association or federal association, or any successor in interest thereto, shall be enforceable whether or not impairment of the security interest in the property has resulted from the failure of the trustor or mortgagor to so pay the taxes, rents, assessments, insurance premiums, or advances.

history: (History: Added by Stats. 1987, Ch. 397, Sec. 3.)

article: 5. Investment in Loans


citation: FIN § 7462

text: The provisions of any deed of trust or mortgage on real property which authorize an association, federal association, affiliate or service corporation of an association or federal association, or any successor in interest thereto, to receive and control the disbursement of the proceeds of any policy of fire, flood, or other hazard insurance respecting the property shall be enforceable whether or not impairment of the security interest in the property has resulted from the event that caused the proceeds of the insurance policy to become payable.

history: (History: Added by Stats. 1987, Ch. 397, Sec. 4.)

article: 5. Investment in Loans


citation: FIN § 7500

text:
(a) Subject to limitations, if any, within this chapter, an association may originate, invest in, sell, purchase, service, participate, or otherwise deal in (including brokerage or warehousing) loans, including construction loans, made on the security of residential or nonresidential real property, or interests in these loans.

(b) No investment in real property or a real estate loan shall be made by an association until one or more written appraisal reports, prepared at the request of an association or its agent, have been submitted to the association by a person or persons meeting the qualification standards for an appraiser as set forth in the commissioner’s regulations. No commitment to disburse shall be made by the association until the person or persons have been duly appointed and qualified as appraisers by the association. Such a person or persons shall have made a physical inspection and submitted to the association a fully documented appraisal of the real estate that would secure the loan or constitute the investment, or, in the case of a purchased loan, the person or persons have reviewed and approved an appraisal report in support of the loan. If the balance of any purchased loan is one million dollars ($1,000,000) or more, the person or persons reviewing and approving the appraisal report shall have inspected the real estate. Each appraisal report submitted to an association pursuant to this subdivision shall be signed and shall include the tax identification number, social security number, or other form of verifiable identification of the person or persons signing the appraisal report.

(c) For the purpose of determining appraised value, unimproved property without offsite improvements shall be evaluated as though offsite improvements have been installed if a subdivision map has been recorded and a bond or other instrument guaranteeing installation of the offsite improvements has been accepted by the governing authorities in connection with the recording of the subdivision map.

history: (History: Amended by Stats. 1988, Ch. 718, Sec. 15.)

article: 6. Real Estate Loans

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 6. Real Estate Loans


citation: FIN § 7501

text: Each real estate loan shall be evidenced by a note or instrument of obligation for the amount of the loan. The note or instrument shall specify the amount and terms of repayment including any penalty or charge for late payment, and may contain all other terms of the loan contract.

history: (History: Added by Stats. 1983, Ch. 1091, Sec. 2.)

article: 6. Real Estate Loans


citation: FIN § 7502

text:
(a) Each real estate loan shall be secured by a deed of trust, mortgage, or other transaction or instrument constituting a lien or claim, or its equivalent, upon the real estate securing the loan, according to any lawful and recognized practice that is suited to the transaction. Any deed of trust or other instrument or transaction constituting a lien or claim is included in the term “mortgage” in this division.

(b) A mortgage shall provide specifically for full protection to the association with respect to the loan and additional advances, including any terms and conditions that the association deems necessary and appropriate to state the agreement between the parties.

article: 6. Real Estate Loans


citation: FIN § 7503

text: Except as specified by the loan contract or by Section 2954.8 of the Civil Code, an association shall have no obligation to pay interest to the borrower upon funds credited to an impound, trust, or other type of account for payment of taxes, insurance, or other charges relating to the property, or to invest them for the benefit of the borrower, unless the funds have been placed in an interest bearing savings account under the terms of the loan contract.

history: (History: Amended by Stats. 1984, Ch. 287, Sec. 29. Effective July 6, 1984.)

article: 6. Real Estate Loans


citation: FIN § 7504

text:
Notwithstanding any other provision of law, an association may adjust the interest rate, payment, balance, or term-to-maturity on any loan secured by real property as authorized by the loan contract, and may receive a portion of the consideration for making a real estate loan in the form of a percentage of the amount by which the current market value of the property during the loan term or at maturity exceeds the original appraised value, subject to the limitations of subdivision (b) and Section 341 of P.L. 97-320 (H.R. 6267, the Garn-St. Germain Depository Institutions Act of 1982).

(a) For the purposes of this section:

(1) “Fully amortized loan” means a loan in which, at inception of the loan, the entire principal balance, together with accrued interest, shall be payable with the scheduled term of the loan in substantially equal installments (excepting the last payment, which may be smaller than a regular scheduled payment).

(2) “Home loans” means loans made on the security of one- to four-unit residential dwellings (including condominiums and cooperatives), combinations of these dwellings and business property (where no more than 20 percent of the total appraised value of the real estate is attributable to the business use), farm residences and combinations of farm residences and commercial farm real property.

(3) “Nonamortized loan” means a loan in which none of the principal balance shall be payable prior to the maturity of the loan.

(4) “Open end line of credit” means a loan plan in which the association reasonably contemplates repeated transactions; the association may impose interest from time to time on the unpaid principal of the loan plan, and the amount of credit that may be extended to the borrower during the term of the loan plan (up to any limit set by the association) is generally made available to the extent that any outstanding principal balance is repaid.

(5) “Partially amortized loan” means a loan in which some but not all of the principal balance, together with accrued interest, shall be payable prior to the maturity of the loan.

(6) “Reverse annuity mortgage” means an instrument which provides for periodic payments to be made to a homeowner based on accumulated equity. The payments are made monthly directly by the association, or are made through the purchase of an annuity from an insurance company. The loan becomes due on a specified date after disbursement of the entire principal amount of the loan or when a specified event occurs, such as sale of the property or death of the borrower. The interest rate on this instrument may be fixed, or may be adjusted periodically as provided by this section.

(b) Adjustments to the interest rate, payment, balance, or term-to-maturity on home loans shall be subject to the limitations of this subdivision.

(1) The loan term shall not exceed 40 years, with interest payable at least semiannually, except as expressly authorized by this section.

(2) The loan balance for other than nonamortized and open end line of credit loans shall be repayable in at least semiannual installments; provided, that loans on the security of farm residences and combinations of farm residences and commercial farm real property may be repayable in annual installments.

(3) The loan may be fully amortized, partially amortized, nonamortized, a reverse annuity mortgage, or an open end line of credit loan. The loan contract may provide for the deferral of principal and capitalization of a portion of interest, or of all interest, in the case of loans to natural persons secured by borrower-occupied real property and on which periodic advances are being made.

(4) (A) At origination, the loan-to-value ratio may not exceed the maximum permitted by Section 7509, as determined by the association’s board of directors (but not more than 100 percent). During the term of the loan, the loan-to-value ratio may increase above the maximum percentage otherwise permissible if the increase results from an adjustment described in paragraph (3) or (5). The commissioner shall assume continued compliance with applicable loan-to-value limitations where the original loan-to-value ratio met the requirements of this paragraph, but in no event may the loan balance exceed 125 percent of the original appraised value of the security property during the term of the loan unless pursuant to clause (i) of subparagraph (B) of paragraph (5) of subdivision (b) or unless the loan contract provides that the payment shall be adjusted at least once every five years, beginning no later than the 10th year of the loan, to a level sufficient to amortize the loan at the then existing interest rate and loan balance over the remaining term of the loan. However, this 125 percent limitation shall not apply to the portion of a loan balance that is interest received in the form of a percentage of the appreciation in value of the security property.

(B) If, at maturity of a loan secured by a home that provides for adjustments pursuant to paragraph (3) or (5), the ratio of the loan balance to the current market value of the security property exceeds the maximum permissible amount under Section 7509, the association may offer to refinance the loan if (i) the refinanced loan complies with subdivision (b) of Section 7509 and (ii) the loan contract for the refinanced loan requires that, in addition to full or partial amortization of the loan, the pro rata portion, based on the number of installments due annually, of estimated annual taxes and assessments on the security property be paid in advance to the association with each installment payment.

(5) For any home loan secured by borrower-occupied property or property to be occupied by the borrower, adjustments to the interest rate, payment, balance, or term-to-maturity shall comply with the limitations of this paragraph.

(A) Adjustments to the interest rate shall correspond directly to the movement of an interest rate index or of a national or regional index that measures the rate of inflation or the rate of change in consumer disposable income, which index is readily available to, and verifiable by, the borrower and is beyond the direct control of the association. An association also may increase the interest rate pursuant to a formula or schedule that specifies the amount of the increase and the time at which it may be made and which is set forth in the loan contract. An association, in its sole discretion, may decrease the interest rate at any time.

(B) Adjustments to the payment and the loan balance that do not reflect an interest rate adjustment may be made if: (i) the adjustments reflect a change in a national or regional index that measures the rate of inflation or the rate of change in consumer disposable income, is readily available to and verifiable by the borrower, and is beyond the direct control of the association; (ii) in the case of a payment adjustment, the adjustment reflects a change in the loan balance or is made pursuant to a formula, or to a schedule specifying the percentage or dollar change in the payment as set forth in the loan contract; or (iii) in the case of an open end line of credit loan, the adjustment reflects an advance taken by the borrower under the line of credit, or a payment made by the borrower, that is permitted by the loan contract.

(C) Any combination of indices or a moving average of index values may be used as an index, and an association (i) may use more than one index during the term of a loan, if set forth in the loan contract and (ii) may provide for the selection of a substitute index by the association in the event the index being used is no longer available to or verifiable by the borrower or as otherwise provided in the loan contract.

(D) The loan term may be adjusted only to reflect a change in the interest rate, the payment or the loan balance. A loan contract may provide an association with the right to call the loan due and payable either after a specified period of time has elapsed following the date of the loan contract or as specified in a reverse annuity mortgage.

(6) For any home loan secured by borrower-occupied property and on which the interest rate may be adjusted pursuant to paragraph (5), an association may not impose a prepayment charge on any prepayment made within 90 days of a required notice of an interest-rate increase with respect to the loan.

(c) Disclosure and notices for loans made pursuant to this section shall comply with the regulations codified in Section 563.99 of Title 12 of the Code of Federal Regulations.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 43.5.)

article: 6. Real Estate Loans


citation: FIN § 7505

text:
(a) Notwithstanding any other provision of law, an association may originate, invest in, sell, purchase, service, participate, or otherwise deal in loans (including construction loans) on the security of real property for primarily residential (other than a one- to four-unit dwelling) or nonresidential use, subject to the limitations of this article.

(b) An association’s aggregate investment in real property loans for primarily nonresidential use under this section shall not exceed 40 percent of assets.

history: (History: Amended by Stats. 1987, Ch. 730, Sec. 15.)

article: 6. Real Estate Loans


text:
(a) A savings association may make loans the principal purpose of which is to provide financing with respect to what is, or what is to become, primarily residential real estate, for which the association relies substantially on the borrower’s general credit standing and projected future income for repayment, without other security, or relies on other assurances for repayment, including guarantees or other obligations of third parties.

(b) An association’s aggregate investment in residential real estate loans described in subdivision (a) shall not exceed an amount equal to 5 percent of the association’s assets.

history: (History: Added by Stats. 1990, Ch. 1118, Sec. 44.)

article: 6. Real Estate Loans


citation: FIN § 7506

text: Notwithstanding any other provision of the law, an association may make a loan secured by an assignment of a loan or loans to the extent that it could, under applicable law and regulations, make or purchase the underlying assigned loan or loans.

history: (History: Added by Stats. 1983, Ch. 1176, Sec. 9.)

article: 6. Real Estate Loans


citation: FIN § 7507

text:
(a) An association may make loans or advances of credit, or invest in interests therein, on the security of real property, which loans, advances of credit, or investments are not otherwise authorized under the law because of the following reasons:

(1) The loan-to-value ratio, stated maturity, or loan amount is in excess of the maximum allowable limits.

(2) Lack of any required borrower certification or required private mortgage insurance.

(3) The loan would cause an applicable percentage-of-assets category to be exceeded.

(4) A combination of the foregoing factors.

(b) Investments made under the authority of this section are subject to the following restrictions:

(1) No association shall have investments under this section aggregating at any one time more than 5 percent of its total assets.

(2) Each investment made under this section shall be fully documented to support the conclusion that it was made on a prudent basis.

(3) Loans made pursuant to this section shall comply with subparagraph (D) of paragraph (5), and paragraph (6), of subdivision (b), of Section 7504, where applicable.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 45.)

article: 6. Real Estate Loans


citation: FIN § 7509

text:
(a) (1) At the time of origination, a real estate loan may not exceed 100 percent of the market value of security property. An association shall, by vote of its board of directors, establish maximum loan-to-value ratios for loans made on the security of real estate, and the resolution adopting those ratios shall be included in the minutes of the directors’ meeting. Home loans, as defined in Section 7504, made on the combined security of real estate and savings accounts may be made in excess of the maximum loan-to-value ratios adopted pursuant to this subdivision with the excess secured by the savings account.

(2) However, for loans originated in excess of 90 percent of the initial appraised value of the security property, the savings account shall consist only of funds belonging to the borrower, the borrower’s family, or the borrower’s employer, and the loans shall not exceed the appraised value of the real estate.

(b) With respect to home loans originated or refinanced in excess of 90 percent of the appraised value of the security property, that part of the unpaid balance that exceeds 80 percent of the property value shall be insured or guaranteed by a mortgage insurance company that the Federal Home Loan Mortgage Corporation has determined to be a “qualified private insurer.”

(c) With respect to all other loans on the security of real estate originated in excess of 90 percent of the appraised value of the security property, an association’s board of directors shall approve each of these loans prior to its origination and that approval shall be recorded in the minutes of its meeting.

(d) An association shall not make a loan secured by unimproved real property if the loan-to-value ratio would exceed 80 percent of the appraised value of the unimproved real property securing the loan.

(e) In determining compliance with maximum loan-to-value-ratio limitations for real estate loans, at the time of making a loan, an association shall add together the unpaid amount, or in the case of a line-of-credit loan, the approved credit limit, of all recorded loans secured by prior mortgages, liens, or other encumbrances on the security property that would have priority over the association’s lien, and shall not make the loan unless the total amount of those loans, including the loan to be made but excluding loans that will be paid off out of the proceeds of the new loan, does not exceed the applicable maximum loan-to-value-ratio limitations prescribed in this subdivision. In determining the value of the real estate security, an association shall use the current appraised value of the security property, which may include any expected value of improvements to be financed.

(f) “Value” for a real estate loan means the market value of the real estate.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 169. Effective January 1, 2007.)

article: 6. Real Estate Loans


citation: FIN § 7600

text: In the case of any investment made by an association in a real estate loan, in the event all or part of the ownership of the real estate security becomes vested in a person other than the party or parties originally executing the security instruments and if there is not an agreement in writing to the contrary, an association may, without notice to the party or parties, deal with a successor in interest to the mortgage and debt in the same manner as with the original party or parties, and may forbear to sue or may extend time for payment of or otherwise modify the terms of the debt, without discharging or in any way affecting the original liability of the party or parties or their debt.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 170. Effective January 1, 2007.)

article: 7. Successors in Interest in Loans

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 7. Successors in Interest in Loans


citation: FIN § 7650

text:
(a) Except as provided in subdivision (b), nothing in this division or the laws of this state shall be construed as denying to an association the right to invest its funds, operate a business, manage or deal in property, or take any other action over whatever period of time may reasonably be necessary to avoid loss on a loan or investment made or an obligation created in good faith.

(b) Associations which do not meet the requirements of Section 6475, or have been issued an order pursuant to Section 8200, shall not take any action pursuant to this section without first obtaining approval, in writing, from the commissioner.

history: (History: Amended by Stats. 1985, Ch. 983, Sec. 12.7. Effective September 26, 1985.)

article: 8. Salvage of Loans and Investments

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 8. Salvage of Loans and Investments


citation: FIN § 7675

text:
(a) Pursuant to the authority contained in Section 1 of Article XV of the California Constitution, the restrictions upon rates of interest contained in Section 1 of Article XV of the California Constitution shall not apply to any obligations of, loans made or arranged by, or forbearances of, an association; a federal association; a qualified foreign savings association; an entity that is a savings and loan holding company; a subsidiary of a savings and loan holding company that is not an association; or a service corporation which is a subsidiary of an association, a federal association, or a qualified foreign savings association. As used in this section, the terms “savings and loan holding company” and “subsidiary” mean a savings and loan holding company or a subsidiary, as defined in Section 10 of the Home Owners Loan Act, as amended (12 U.S.C. Sec. 1467a), and the term “service corporation” means a service corporation described in Section 5(c)(4)(B) of the Home Owners’ Loan Act of 1933 (12 U.S.C. Sec. 1464), as amended, or Section 7252, or a wholly owned subsidiary referred to in Section 7300.

(b) Subdivision (a) creates and authorizes an exempt class of persons pursuant to Section 1 of Article XV of the California Constitution. Notwithstanding any other provision of law, subdivision (a) does not exempt an association; a federal association; a foreign savings association; a savings and loan holding company, a subsidiary of a savings and loan holding company; a service corporation which is a subsidiary of an association; a federal association, or foreign savings association from complying with all other law and regulations governing the business in which the association, federal association, foreign savings association, savings and loan holding company, subsidiary of a savings and loan holding company, or service corporation which is a subsidiary of an association, a federal association, or a foreign savings association is engaged.

(c) For purposes of this section, “foreign savings association” means a foreign savings association as defined in Chapter 10 (commencing with Section 10000) or Chapter 10.1 (commencing with Section 10010) and “qualified foreign savings association” means a foreign savings association that has been authorized to conduct the business of an association in this state by the commissioner.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 46.5.)

article: 9. Usury Exemption

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 9. Usury Exemption


text: An association may engage in leasing activities that are the functional equivalent of lending, subject to the limitations of Sections 7701 to 7704, inclusive.

history: (History: Added by Stats. 1985, Ch. 983, Sec. 13. Effective September 26, 1985.)

article: 10. Finance Leasing

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 10. Finance Leasing


citation: FIN § 7701

text:
An association may become the legal or beneficial owner of tangible personal property or real property for the purpose of leasing such property, may obtain an assignment of a lessor’s interest in a lease of such property, and may incur obligations incidental to its position as the legal or beneficial owner and lessor of the leased property, if:

(1) The lease is a net, full-payout lease representing a noncancelable obligation of the lessee, notwithstanding the possible early termination of the lease.

(2) At the expiration of the lease, the association’s interest in the property shall be liquidated or released on a net basis as soon as practicable.

history: (History: Added by Stats. 1984, Ch. 225, Sec. 8. Effective June 21, 1984.)

article: 10. Finance Leasing


citation: FIN § 7702

text:
(a) A lease of tangible personal property made to a natural person for personal, family, or household purposes pursuant to this section shall be subject to all limitations applicable to the amount of an association’s investment in consumer loans.

(b) A lease made for commercial, corporate, business, or agricultural purposes pursuant to this section shall be subject to all limitations applicable to the amount of an association’s investment in commercial loans.

(c) A lease of residential or nonresidential real property made pursuant to this section shall be subject to all limitations applicable to the amount of an association’s investment in real estate loans.

article: 10. Finance Leasing


citation: FIN § 7703

text:
For the purposes of this article:

(a) A “net lease” is a lease under which the association will not, directly or indirectly, provide or be obligated to provide for:

(1) The servicing, repair, or maintenance of the leased property during the lease term.

(2) The purchasing of parts and accessories for the leased property; provided that improvements and additions to the leased property may be leased to the lessee upon its request in accordance with the full pay-out requirement of this section.

(3) The loan of replacement or substitute property while the leased property is being serviced.

(4) The purchasing of insurance for a lessee, except where the lessee has failed to discharge a contractual obligation to purchase or maintain insurance.

(5) The renewal of any license, registration, or filing for the property unless such action by the association is necessary to protect its interest as an owner or financer of the property.

(b) A “full-payout” lease is one from which the lessor can reasonably expect to realize a return of its full investment in the leased property, plus the estimated cost of financing the property over the term of the lease, from rentals, estimated tax benefits, and the estimated residual value of the property at the expiration of the initial term of the lease; provided that no more than 20 percent of the return may be realized from the residual value of the property at the expiration of the initial term of the lease. Both the estimated residual value of the property and that portion of the estimated residual value relied upon by the lessor to satisfy the requirements of a full-payout lease must be reasonable in light of the nature of the leased property and all relevant circumstances so that realization of the lessor’s full investment plus the cost of financing the property depends primarily on the creditworthiness of the lessee, and not on the residual market value of the leased property. The maximum term of a full-payout lease shall be 40 years.

article: 10. Finance Leasing


citation: FIN § 7704

text:
If, in good faith, an association believes that there has been an unanticipated change in conditions that threatens its financial position by significantly increasing its exposure to loss, the provisions of Sections 7702 and 7703 of this article shall not prevent the association:

(a) As the owner and lessor under a net, full pay-out lease, from taking reasonable and appropriate action to salvage or protect the value of the property or its interest arising under the lease.

(b) As the assignee of a lessor’s interest in a lease, from becoming the owner and lessor of the leased property pursuant to its contractual right, or from taking any reasonable and appropriate action to salvage or protect the value of the property or its interest arising under the lease.

(c) From including any provisions in a lease, or from making any additional agreements, to protect its financial position or investment in the circumstances set forth in subdivisions (a) and (b) of this section.

article: 10. Finance Leasing


citation: FIN § 7720

text:
(a) An association may invest in tangible personal property, including without limitation, vehicles, mobilehomes, machinery, equipment, or furniture, and may hold the property for rental or sale.

(b) Investment under this section is limited to not in excess of 10 percent of the total assets of the association.

history: (History: Added by renumbering Section 7700 by Stats. 1990, Ch. 216, Sec. 25.)

article: 10.5. Leasing

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 10.5. Leasing


citation: FIN § 7800

text: Subject to the provisions of Section 2955.5 of the Civil Code, the board of directors of every association and affiliate or service corporation of an association shall establish standards for the maintenance of hazard insurance which are considered necessary to protect the institution’s interest in real estate security for its loans. The standards may include establishment of criteria based on such factors as recognized financial ratings of insurers and coverage forms, but those standards may not be based on the insurer’s corporate structure. Subject to compliance with these standards, an association, an affiliate or service corporation of an association shall permit a borrower to have reasonable freedom of choice in selecting the insurer to provide hazard insurance coverage on the real estate security.

history: (History: Added by Stats. 1988, Ch. 718, Sec. 17.)

article: 11. Hazard Insurance

path: 2. SAVINGS ASSOCIATION LAW > 6. Investment Operations > 11. Hazard Insurance


citation: FIN § 8009

text:
(a) Except where required by law, regulation, or court order, or permitted under subdivision (b), the commissioner, and all employees of the department, shall not disclose any information acquired by them in the discharge of their duties as prescribed by this division.

(b) The commissioner may furnish information relating to the condition or operation of any association or other person to state and federal authorities that supervise financial institutions, to state, local and federal law enforcement agencies, and state agencies that are engaged in any investigation of an unsafe or unsound business practice.

(c) No record or document in the possession or custody of the department which contains information specified in subdivision (a) shall be produced pursuant to a subpoena duces tecum addressed to the commissioner or any employee of the department except upon a determination of a court of competent jurisdiction that disclosure of the information in the record or document would serve the public interest and assist the department in conducting the duties prescribed by this subdivision. With respect to each item subject to the subpoena duces tecum, the court shall either make this determination or shall determine that the item is not subject to disclosure. The court’s determination shall be made upon hearing on a motion by the subpoenaing party under this subdivision to compel production of the document or record.

history: (History: Amended by Stats. 1989, Ch. 868, Sec. 9. Effective September 26, 1989.)

chapter: 7. Supervision

article: 1. Department of Savings and Loan

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 1. Department of Savings and Loan


citation: FIN § 8010

text: The commissioner, after a determination of value made in accordance with Article 4 (commencing with Section 8150) of Chapter 7, may order that assets, individually or in the aggregate, to the extent that the assets are overvalued on an association’s books, be charged off against current operations, or that a special reserve or reserves equal to the overvaluation be set up by transfers from retained earnings or reserves.

history: (History: Amended by Stats. 1989, Ch. 868, Sec. 10. Effective September 26, 1989.)

article: 1. Department of Savings and Loan


citation: FIN § 8030

text:
(a) To meet the operating costs and expenses of the department in administering this division and other laws relating to savings associations or the savings association business, for the payment of which no provision is otherwise made, the commissioner shall require each association doing business in this state to pay in advance an annual assessment for its pro rata share of all operating costs and expenses as estimated by the commissioner for the ensuing year.

(b) As used in this article, “association” includes a foreign savings association doing business in this state under an approval issued by the commissioner.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 562.5. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. Savings and Loan Account

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 2. Savings and Loan Account


citation: FIN § 8031

text: The proportion of operating costs and expenses to be assessed against each association shall be determined and prescribed by the commissioner by regulation. The total amount assessed for all associations, together with any existing surplus, shall not exceed the amount of the budget for the ensuing fiscal year plus a reasonable reserve for contingencies.

history: (History: Amended by Stats. 1984, Ch. 287, Sec. 35. Effective July 6, 1984.)

article: 2. Savings and Loan Account


citation: FIN § 8032

text:
(a) On or before the 20th day of June of each year the commissioner shall notify each association by mail of the amount assessed and levied against it.

(b) Except as provided in this article, an association shall pay one-half or more of the amount assessed so as to be received by the commissioner not later than the 10th day of July and shall pay the remainder so as to be received by the commissioner not later than the following 10th day of January.

(c) If payment is not received by the commissioner on time, the commissioner shall assess and collect in addition to the annual assessment, a penalty of 5 percent of the unpaid assessment for each month or part of a month that the payment is delinquent.

history: (History: Added by Stats. 1983, Ch. 1091, Sec. 2.)

article: 2. Savings and Loan Account


citation: FIN § 8033

text: If an association ceases to be an association by reason of merger, consolidation, conversion, acquisition of assets, or a similar type of transaction, any unpaid assessment for the fiscal year ended June 30 in which the conversion, merger, or acquisition occurs shall be due and payable on or before the day preceding the date of the conversion, merger, or acquisition. Payment of the unpaid assessment under this section shall be a condition of approval of any transaction requiring the commissioner’s approval.

article: 2. Savings and Loan Account


citation: FIN § 8034

text:
(a) If a new domestic association is formed during a fiscal year, the initial assessment provided for by this article shall be computed on the same basis as if such new association had been an association and assessed on or before the 20th day of June in the fiscal year preceding the initial assessment except that the initial assessment shall be based on the assets of the new association at the time of issuance of its certificate of authority and, except as provided in subdivision (b), the assessment shall be reduced, if the certificate of authority is not issued in July, by one-twelfth for each full month of the fiscal year which has expired at the time of issuance of the certificate of authority and shall be payable in full on the date of issuance.

(b) In the levy and collection of an assessment under this article, no association shall be assessed for, or be permitted to pay less than five hundred dollars ($500) for the unexpired portion of the fiscal year in which the domestic association is formed.

history: (History: Amended by Stats. 1984, Ch. 868, Sec. 15.5.)

article: 2. Savings and Loan Account


citation: FIN § 8035

text: If any domestic association proposes to acquire the assets of any federal association or any state or national bank by transfer, conversion, or otherwise, the initial assessment provided for by this article shall be computed on the same basis as if the federal association or state or national bank had been an association and assessed on or before the 20th day of June in the fiscal year preceding the initial assessment, except that the initial assessment shall be based on the assets of the federal association or of the state or national bank, as shown by the institution’s report to the Office of Thrift Supervision, the commissioner, or the Comptroller of the Currency, respectively, next preceding the 20th day of June in the fiscal year preceding the initial assessment and the assessment shall be reduced, if the certificate of authority is not issued in July, by one-twelfth for each full month of the fiscal year which has expired at the time of the issuance of the certificate of authority and shall be payable in full on the date of issuance.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 563. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. Savings and Loan Account


text:
As of the operative date of this section:

(a) The Savings Association Special Regulatory Fund is converted into a separate account in the Financial Institutions Fund and designated as the Savings and Loan Account.

(b) All moneys and other assets and all liabilities of the Savings Association Special Regulatory Fund shall be transferred to the Savings and Loan Account.

history: (History: Added by Stats. 1996, Ch. 1064, Sec. 563.5. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. Savings and Loan Account


citation: FIN § 8036

text: All money collected or received by the commissioner under this division or any other law relating to savings associations or the savings association business, except money belonging to associations whose business property and assets are in the possession of the commissioner, shall be deposited with the State Treasurer to the credit of the Savings and Loan Account in the Financial Institutions Fund.

history: (History: Amended by Stats. 1996, Ch. 1064, Sec. 564. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. Savings and Loan Account


citation: FIN § 8037

text: All expenses of the department in administering the division and other laws relating to savings associations or to the savings association business shall be paid by the Savings and Loan Account; and, except as otherwise provided in Section 276 or 277, and the Savings and Loan Account shall be used only for such purposes.

history: (History: Repealed and added by Stats. 1996, Ch. 1064, Sec. 565.5. Effective January 1, 1997. Operative July 1, 1997.)

article: 2. Savings and Loan Account


citation: FIN § 8050

text:
(a) The commissioner shall have general supervision over all (1) associations, (2) savings and loan holding companies, (3) service corporations, (4) finance subsidiaries, and (5) other persons that are subject to the provisions of this division.

(b) The commissioner shall enforce the purposes of this division by use of the powers conferred by it and by an action in any court of competent jurisdiction if required.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 46.7.)

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 3. General Supervisory Powers and Duties of Commissioner


citation: FIN § 8051

text: Each decision, order, or instruction shall be in writing signed by the commissioner or a deputy commissioner and shall be sent by registered or first-class mail, addressed to the home office of the appropriate association or person.

history: (History: Amended by Stats. 1986, Ch. 361, Sec. 10.)

article: 3. General Supervisory Powers and Duties of Commissioner


citation: FIN § 8053

text: The commissioner may from time to time issue, amend and rescind any rules, regulations, forms, and orders that are necessary to carry out the provisions of this division, including rules and regulations governing the administration of any association, savings and loan holding company and their subsidiaries, and defining any terms whether or not used in the law insofar as the definitions are not inconsistent with the provisions of this division. The commissioner may waive any requirement of any rule or regulation in situations where, in the commissioner’s opinion, the requirement is not necessary in the public interest or for the protection of the public.


citation: FIN § 8054

text:
(a) Notwithstanding any other provision of law, whenever by statute or regulation there is extended to federal associations doing business in this state any right, power, privilege, or duty not authorized for state associations, the commissioner may by regulation extend to state associations that right, power, privilege, or duty.

(b) Any regulation adopted under this section shall expire at 12 p.m. on December 31 of the year following the calendar year in which it is promulgated.

(c) For the purposes of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code regulations adopted under this section are subject only to the provisions of Sections 11343.4, 11346.1, and 11349.6 of the Government Code.

(d) The provisions of this section shall not apply to any federal statute or regulation promulgated prior to January 1, 1984.

history: (History: Amended by Stats. 1995, Ch. 938, Sec. 9.2. Effective January 1, 1996.)


citation: FIN § 8055

text: Every final decision of the commissioner is subject to judicial review in accordance with law. An action or proceeding for judicial review pursuant to this section shall be commenced within 60 days after issuance of the final decision.

history: (History: Added by Stats. 1986, Ch. 361, Sec. 12.)


citation: FIN § 8150

text:
(a) On or before the last day of January in each year, or within 30 days following the end of the fiscal year, each association, savings and loan holding company, and those subsidiaries of an association or savings and loan holding company that the commissioner may require, shall make an annual written report to the commissioner, in a format to be prescribed by the commissioner.

(b) Each report shall be verified by an authorized officer.

history: (History: Amended by Stats. 1984, Ch. 868, Sec. 16.)

article: 4. Reports and Examinations

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 4. Reports and Examinations


citation: FIN § 8151

text: Each association, savings and loan holding company and subsidiary of any association or savings and loan holding company that is required to file an annual report under Section 8150 also shall make any other reports that the commissioner may from time to time require, which shall be in a format and filed on a date that the commissioner may prescribe and shall, if required by the commissioner, be verified in the same manner as the annual report.

history: (History: Repealed and added by Stats. 1983, Ch. 1091, Sec. 2.)

article: 4. Reports and Examinations


citation: FIN § 8152

text: From time to time the commissioner may, without previous notice, examine or cause an examination to be made into the affairs of each association, and any office of the association within or outside this state, savings and loan holding company and subsidiary of any association or savings and loan holding company subject to this division.

history: (History: Amended by Stats. 2003, Ch. 404, Sec. 15. Effective January 1, 2004.)

article: 4. Reports and Examinations


citation: FIN § 8153

text:
(a) In lieu of a report or an examination under Section 8150 or 8152, the commissioner may accept any report made to, or examination made by, a federal or state authority that supervises financial institutions, or by a certified or other public accountant or firm of certified or other public accountants selected by the association and approved by the commissioner.

(b) An examination under Section 8152 may be conducted in conjunction with an examination by a federal authority that supervises financial institutions.

article: 4. Reports and Examinations


citation: FIN § 8154

text:
(a) Whenever, in the judgment of the commissioner, the condition of any association, savings and loan holding company, or any of their subsidiaries renders it necessary or expedient to make an extra examination or audit or to devote any extraordinary attention to its affairs, the commissioner shall do so or may appoint a certified public accountant or any expert to do so.

(b) The association, savings and loan holding company, or subsidiary specially examined under this section may be required to pay the actual expenses incurred by the commissioner for all extra services rendered by the commissioner, by the appointed accountant, or any expert.

history: (History: Amended by Stats. 1988, Ch. 718, Sec. 18.)

article: 4. Reports and Examinations


citation: FIN § 8155

text:
(a) The commissioner is authorized in connection with any examination or audit of any association or any subsidiary to cause to be made appraisals of real estate or other property held by it or securing its assets.

(b) Unless otherwise ordered by the commissioner, appraisal of real estate or other property in connection with any examination or audit pursuant to this article shall be made by a department appraiser or by an independent professional appraiser employed or selected by the commissioner, and the cost of the appraisal promptly shall be paid by the association or subsidiary to the commissioner or directly to the appraiser upon receipt by it of a statement of cost bearing the written approval of the commissioner.

(c) A copy of the report of each appraisal caused to be made by the commissioner pursuant to this section shall be furnished to the association or subsidiary within a reasonable time, not to exceed 60 days, following the completion of the appraisals.

article: 4. Reports and Examinations


citation: FIN § 8156

text:
(a) Each association shall at least annually cause its books and accounts to be audited at its own expense by a certified public accountant or firm of certified public accountants selected by the association and approved by the commissioner.

(b) The annual audit date and audit period shall be approved in writing by the commissioner prior to commencement of the audit.

(c) Each savings association which engages certified public accountant services for any audit shall transmit to the accountant or accountants copies of the most recent report of condition made by the association pursuant to state or federal law and a copy of the most recent report of examination received by the savings association.

(d) In addition to the copies of the reports required to be provided pursuant to subdivision (c), each savings association shall provide the auditing accountant or accountants with all of the following:

(1) A copy of any supervisory memorandum of understanding with the association and any written agreement between the association and any federal financial regulatory agency or the commissioner which is in effect during the period covered by the audit.

(2) A report of any action initiated or taken pursuant to subdivisions (a), (b), (c), (e), (g), (i), or (s) of Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), and a report of any action taken by the commissioner pursuant to Section 8200 or 8201, or any other civil monetary penalty assessed under any provision of law with respect to the savings association or any institution-affiliated party.

history: (History: Amended by Stats. 1990, Ch. 1118, Sec. 47.)

article: 4. Reports and Examinations


citation: FIN § 8157

text:
(a) The commissioner may prescribe the scope of the annual audit and may require the auditor to furnish information in addition to that contained in the audit report.

(b) Each association shall furnish the commissioner annually, within 90 days after the end of the period covered by the audit, five copies of the financial statements, which shall be accompanied by a report signed by the auditor, prepared and containing the information prescribed in regulations of the commissioner. The financial statements shall be certified by the auditor.

history: (History: Amended by Stats. 1986, Ch. 361, Sec. 13.5.)

article: 4. Reports and Examinations


citation: FIN § 8158

text:
(a) The commissioner, or any department employee authorized by the commissioner, shall have free access to all books and records of an association, savings and loan holding company, and any of their subsidiaries that relate to the business of the association, holding company, or subsidiary, and to the books and records kept by any officer, agent, or employee that relate to the business of the association, holding company, or subsidiary.

(b) The commissioner, or any department employee authorized by the commissioner, may summon witnesses and administer oaths or affirmations in the examination of the directors, officers, agents, or employees of any association, savings and loan holding company, any of their subsidiaries, or any other person, in relation to their affairs, transactions, and conditions, and may require and compel the production of records, books, papers, contracts, or other documents by court order, if not voluntarily produced.

(c) This section applies to all parties designated in subdivisions (a) and (b) when an association is placed in conservatorship or receivership.

history: (History: Amended by Stats. 1987, Ch. 730, Sec. 19.)

article: 4. Reports and Examinations


citation: FIN § 8159

text: For each department examination or appraisal made outside this state, a reasonable fee and the actual traveling expenses incurred shall be paid to the department by the association, savings and loan holding company, or subsidiary so examined.

history: (History: Amended by Stats. 1988, Ch. 718, Sec. 19.)

article: 4. Reports and Examinations


citation: FIN § 8160

text:
If an association, savings and loan holding company, or any subsidiary of an association or savings and loan holding company fails to report to the commissioner as required by this article, the commissioner may impose penalties in accordance with the following:

(a) Any association, savings and loan holding company, or any subsidiary of an association or savings and loan holding company which (1) maintains procedures reasonably adapted to avoid any inadvertent error and, unintentionally and as a result of such an error (A) fails to make, obtain, transmit, or publish any report or information required by the commissioner by the due date set forth in this article or, if no due date is set forth in this article, the date specified by the commissioner, or (B) submits or publishes any false or misleading report or information or (2) inadvertently transmits or publishes any report which is minimally late, shall be subject to a civil penalty of not more than two thousand dollars ($2,000) for each day during which the failure continues or the false or misleading information is not corrected. The association, savings and loan holding company, or subsidiary of an association or savings and loan holding company shall have the burden of proving that an error was inadvertent and that a report was inadvertently transmitted or published late.

(b) Any association, savings and loan holding company, or any subsidiary of an association or savings and loan holding company which (1) fails to make, obtain, transmit, or publish any report or information required by the commissioner by the due date set forth in this article or, if no due date is set forth in this article, the date specified by the commissioner or (2) submits or publishes any false or misleading report or information, in a manner not described in subdivision (a) shall be subject to a civil penalty of not more than twenty thousand dollars ($20,000) for each day during which the failure continues or the false and misleading information is not corrected.

(c) Any association, savings and loan holding company, or any subsidiary of an association or savings and loan holding company which knowingly or with reckless disregard for the accuracy of any information or report subject to this section submits or publishes any false or misleading report or information, shall be subject to a civil penalty of not more than one million dollars ($1,000,000) or 1 percent of total assets of the savings institution, whichever is less, per day for each day during which the false or misleading information is not corrected.

(d) Any penalty imposed under subdivisions (a), (b), or (c) shall be assessed and collected by the commissioner in the same manner as provided in Section 5330.

history: (History: Repealed and added by Stats. 1990, Ch. 1118, Sec. 49.)

article: 4. Reports and Examinations


citation: FIN § 8200

text:
The commissioner may issue cease and desist orders which may order affirmative action in accordance with the following:

(a) If the commissioner, as a result of any examination or from any report, finds or has reasonable cause to believe (1) that any savings association, savings and loan holding company or any of their subsidiaries, or an institution-affiliated party, (A) is violating or has violated any provision of this division or the laws of this state or of the United States or any order, regulation, or any condition imposed in writing by the commissioner in connection with the granting of any application of an association or any written agreement entered into with the commissioner or (B) is engaging or has engaged in an unsafe or unsound business practice, or (2) that an association, savings and loan holding company, or any of their subsidiaries are maintaining books and records that are so incomplete and inaccurate that the commissioner is unable, through the normal supervisory process, to determine their financial condition or the details or purpose of any transaction that may have a material effect on their financial condition, the commissioner may issue a formal written order to be served by delivery to the home office of the association or to the person named in the order. The order shall state the alleged violation or practice and state the facts in support of the allegation, and shall order discontinuance of the violation or practice and order conformance with all requirements of law. The commissioner may require the association or other named person to take affirmative action (A) to prevent the insolvency or dissipation of assets of the association, or (B) to restore the books and records to a complete and accurate state.

(b) The authority of the commissioner to issue orders to correct any conditions resulting from any violation or practice includes the authority to require the person named in the order to do any of the following:

(1) Make restitution or provide reimbursement, indemnification, or guarantee against loss if (A) the person named in the order was unjustly enriched in connection with the violation or practice or (B) the violation or practice involved a reckless disregard for any state or federal statute or applicable regulations or prior order of the commissioner.

(2) Restrict the growth of the association.

(3) Dispose of any loan or asset involved.

(4) Rescind agreements or contracts.

(5) Employ qualified officers or employees (who may be subject to prior approval of the commissioner at his or her direction).

(6) Take such other action as the commissioner determines to be appropriate.

(c) The authority to issue orders includes the authority to place limitations on the activities or functions of the person named in the order.

(d) The order shall specify an effective date, which may be immediate or may be at a later date, and shall remain in effect until withdrawn by the commissioner or until terminated by a court order.

(e) Any association or person affected by an order of the commissioner may apply within 10 days after service of the order to a court having jurisdiction for an immediate hearing and may request a stay of the order until the hearing has been completed. The hearing shall be held as provided in a notice to the commissioner by the court.

(f) The commissioner may, on or after the effective date of the order, apply for enforcement of the order to the superior court in the county in which the home office of the association or the person is located. The order shall be enforced ex parte and without notice by the court. The proceedings shall be given precedence over other cases pending in court, and shall in every way be expedited.

(g) Whether upon application by the commissioner or by the person named in the order, the court shall have jurisdiction, shall adjudicate the question, and shall enter and enforce the proper order or orders.

history: (History: Repealed and added by Stats. 1990, Ch. 1118, Sec. 51.)

article: 5. Enforcement

path: 2. SAVINGS ASSOCIATION LAW > 7. Supervision > 5. Enforcement