81-14
October 30, 1981
Re: ______________
Financial Code Section 1590
No Action Letter
Dear Mr. _________:
This is in reference to your letter dated October 20, 1981 in which you request a no action letter on the propriety of the above company of operating as a trustee under deeds of trust.
The proposed business, as described in your letter would operate as follows: upon the determination by a bank or savings and loan association that a debtor is in default on a promissory note that is secured by a deed of trust on real property, the deed of trust will be forwarded to the above company to initiate foreclosure proceedings.
The proceedings shall, in most instances be a non-judicial foreclosure under the power of sale contained within the promissory note and deed of trust. The trustee shall not act in any other capacity other than as trustee under the deed of trust.
Financial Code Section 1590 provides as express exemption to Financial Code Section 106 and the licensing requirements of a trust company under Financial Code Section 350. Section 1590 allows any person to act as a trustee under a deed of trust “… given solely for the purpose of securing obligations for the repayment of money …”
Assuming that the deeds of trust are given for the above purpose, we conclude that the operation of such a business as described in your letter comes within Section 1590 and does not constitute the operation of a banking or trust business as defined in California Financial Code Sections 102, 105, and 106. Therefore, no application is necessary to establish a trust company pursuant to Financial Code Section 350.
We trust that this has answered your inquiry. Should you have any further questions, please do not hesitate to contact us.
Very truly yours,
RICHARD M. DOMINGUEZ
Superintendent of Banks
By:
LOREN P. HANSEN
Counsel
LPH:11
cc: State Banking Department, S.F.
October 20, 1981
State Banking Department
600 So. Commonwealth Avenue
Suite 1501
Los Angeles, Ca. 90005
Attn.: Loren Hansen
Re: Request for No Action Letter for_________as Operating within Financial Code § 1590
Dear Mr. _________:
The above-referenced corporation hereby requests a no action letter to be issued by your department. This request is made as, for the reasons set forth below, it is the undersigned’s opinion that the corporation will be operating under the exemption set forth in Financial Code § 1590
The acts of the corporation shall be as follows:
Upon the determination by the Bank or Savings and Loan Association that the debtor is in default on the promissory note, secured by a deed of trust on the real property, the deed of trust will be forwarded to the corporation to initiate foreclosure proceedings.
The proceedings shall be in most if not all instances under a nonjudicial foreclosure in accordance with the power of sale contained within the promissory note and deed of trust agreement.
The corporation shall act solely as the trustee on the note doing all acts of foreclosure and shall not be acting for itself on the deed of trust.
The corporation, as trustee under the deed of trust, shall not act in any manner other than as stated herein.
Due to the nature of the acts that the corporation will engage in, it is believed that the corporation need not establish itself as a Trust Company as defined in the Code.
Your reply to this matter at your earliest convenience will be appreciated.
Very truly yours