Dennis Brown And Scott Riehl 2016-07-29 05:30:25
Illinois Lenders License Legislation Temporarily Sidetracked
ELFA WAS A PARTICIPANT as Illinois Senate Financial Institutions Committee Chairperson Jacqueline Collins met with organizations opposed to her Lenders License legislation, Senate Bill 2865, which was authored by the office of the Chicago City Treasurer. The bill generated wide-ranging opposition, causing it to be temporarily held to take into account the concerns expressed and to draft a revised bill.
Following this meeting the Office of Chicago City Treasurer requested details about ELFA membership as well as concerns the association had expressed to the sponsor. During a conference call it was explained that the sponsor was considering exemptions for segments of the finance industry, who were never their focus, and outside their objective of setting in place, by law, oversight of online marketplace lenders. ELFA followed up with a statement further detailing why our industry does not fall within the focus of their attention.
Senate Bill 2865 will undergo a major rewrite, which was expected to be released in July. ELFA will remain engaged.
ELFA Advocacy Continues in Louisiana
ELFA worked in partnership with a coalition supporting efforts to restore the sale for resale exemption as a second special legislative session opened in June. Unfortunately, an ELFA backed amendment to House Bill 51 that would have restored the sale for resale exemption was ruled not germane to the agenda established by Louisiana Governor John Bel Edwards.
ELFA is in communication with multiple partners about next steps. Advocacy under consideration during the current year include a presentation and /or written testimony to the Task Force on Structural Changes in Budget and Tax Policy established by the Louisiana Legislature and administered by the Louisiana Department of Revenue.
California Response to ELFA Creates New Lenders License Questions
The California Department of Business Oversight (DBO) response to questions posed by ELFA created more uncertainties about implementation of Senate Bill 197, the new Finance Lenders License legislation. With final answers from the DBO rare, ELFA uses caution before publishing information that may be viewed as definitive.
DBO Deputy Commissioner, Legal Division, Lila Mirrashidi [Lila.Mirrashidi@dbo.ca.gov] is assisting efforts to determine a method for the holder of a California Finance Lenders (CFL) License to broker deals to banks and other exempt institutions. Provided below without editing or validation by ELFA are instructions from DBO Deputy Commissioner Mirrashidi in the form of a question sent to DBO regarding a licensed broker passing deals to banks and other exempt entities. Additional information subsequently provided to ELFA is provided as well. ELFA advises, while questions remain, you consult with your corporate counsel on this and other issues related to the CFL License.
Question Posed to California DBO
There is at present enormous confusion over whether the CFL license precludes a licensed broker from brokering deals to banks and other exempt institutions. I am of the opinion that it does not. However, many of my colleagues do not, as the result of recent comments made by at least one DBO analyst in a license application deficiency letter. I feel it is of paramount importance that this issue be resolved immediately, as the confusion is casting tremendous unrest within the equipment finance community.
Answer Issued by California DBO
The California Finance Lenders Law does not prohibit a licensee from brokering loans to banks or other exempt institutions. However, the California Finance Lenders Law only authorizes CFL broker licensees to broker loans to other CFL licensees. Therefore, a CFL broker must ensure that it has proper authority to broker a loan to non-CFL licensees under other provisions of law that may be applicable, such as the Real Estate Law for real estate-secured loans.
Further, a CFL-licensed broker must notify the department and obtain the consent of the department if the licensed broker intends to engage in business that is beyond the lending and brokering activity that falls under the jurisdiction of the Finance Lenders Law. Therefore, a licensed CFL broker must notify the department if it will be engaging in the business of brokering loans to non-CFL licensees, such as banks and other exempt institutions, and obtain the consent of the department. If the CFL-licensed broker intends to broker real estate loans to non-CFL licensees, the department would want confirmation that the broker has a license from the Bureau of Real Estate to engage in this activity.
Below is supplemental Information sent by DBO Deputy Commissioner Mirrashidi, provided without editing or validation by ELFA. Please be reminded to consult with your corporate counsel on this and other issues related to the CFL License.
During the initial licensing process, there is a question on the application. Item #8 asks if the applicant conducts or intends to conduct any other business at the proposed place of business. It also asks them to describe the business.
If subsequent to licensing the licensee wants to conduct other activity at the licensed place of business, the licensee will need to submit a letter directed to the attention of Patricia Speight, Special Administrator, requesting approval to conduct the other activity. The letter should include a detailed description of the type of activity they intend to conduct and an explanation that they will comply with applicable laws, including DBO laws. Also, the records would need to be maintained separately.
Ms. Speight’s address is:
DBO
Patricia Speight, Special Administrator, CFL
320 W. 4th Street, Suite 750
Los Angeles, CA 90013
For more information, please contact Vice Presidents of State Government Relations Dennis Brown or Scott Riehl at dbrown@elfaonline.org or sriehl@elfaonline.org.
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