Volume 11, Number 3

Gov. Schwarzenegger to Sign Legislation to Protect California Homeowners and Homebuyers, Expand Affordable Housing Opportunities

Governor Urges Consumers Facing Foreclosure to Take Action To Save Their
Homes, Calls On Lenders To Help Preserve Homeownership
With California disproportionately impacted by national fluctuations in the housing market, Governor
Schwarzenegger announced today that he will sign three bills to increase protections for Californians
who own or plan to purchase homes and to expand affordable housing opportunities.
“It is critical that we continue to take steps to protect Californians against unscrupulous lending
practices and to ensure that consumers can make informed decisions,” said Governor Schwarzenegger.
“That is why I am pleased to sign these bills, which increase transparency and accountability in the
lending market that will help homeowners preserve their American dream.”
• HUSB 223UH by Senator Mike Machado (D-Linden) will make it a crime for licensed appraisers to
engage in any appraisal activity that is connected to the purchase, sale, transfer, financing or
development of property if their compensation is impacted by the final price generated by the
appraisal.
• HUSB 385UH also by Senator Machado permits state agencies involved with residential mortgage
lending and brokering to adopt emergency measures and new policies to ensure that all mortgage
lenders and brokers are subject to federal guidelines on non-traditional mortgages. This law
impacts the Department of Financial Institutions (DFI), the Department of Corporations (DOC)
and the Department of Real Estate (DRE).
2 Monthly Bulletin September 2007
• HUAB 929UH by Assemblymember Sharon Runner (R-Lancaster) increases the amount of affordable
housing in California by raising the total debt that the California Housing Finance Agency
(CalHFA) can carry by $2 billion. CalHFA issues bonds to finance housing for low and
moderate-income families.
Governor Schwarzenegger is taking additional actions to protect Californians, who are at the forefront
of the national downturn in the housing market. The state’s foreclosure rate is more than twice the
national average and the Mortgage Bankers Association is reporting that the state’s homeowners hold 20
percent of the nation’s subprime adjustable rate mortgages, a record number of which are expected to
result in foreclosure.
“It’s absolutely crucial that Californians facing the threat of foreclosure reach out to their lenders and
discuss available options to save their homes,” said Governor Schwarzenegger. “The worst thing
someone can do is nothing – most lenders would prefer not to foreclose, but 50 percent of borrowers
who lose their homes never return calls from their lenders.”
Today the Administration announced the following actions and resources to help homeowners that are
facing financial distress or foreclosure as a result of non-traditional mortgages:
• California’s licensing departments will adopt regulations to strengthen California’s underwriting
and consumer disclosures, in order to ensure that consumers have the tools to fully understand
the ramifications of taking out a sub-prime loan. As part of this effort, licensees will use a new,
multilingual consumer disclosure form to illustrate worst-case payment scenarios.
• Licensing departments will continue to work closely with law enforcement to discipline lenders
and brokers who take unfair advantage of consumers. These departments are also currently
training consumer counselors, non-profits and legal aid societies to help identify licensees who
have defrauded consumers or otherwise violated state law, so enforcement actions can be taken
against their licenses.
• State agencies will continue to partner with local legislators in the areas hit hardest by
foreclosures to connect borrowers with non-profit counselors who can help them negotiate with
their lenders. The state has already held events in Stockton, Riverside, Sun Valley and La
Quinta. Another event will be held in Los Angeles on October 20th in cooperation with the Los
Angeles Neighborhood Housing Service. For more information on this service call (213) 381-
2862.
• The state will continue to promote two key state resources for homeowners:
o The “HOPE Hotline” (1-888-995-HOPE or HUwww.995HOPE.orgUH), which provides free
mortgage counseling 24 hours a day, seven days a week.
o And, the recently launched, Spanish and English language mortgage websites:
HUhttp://www.yourhome.ca.govUH and HUwww.sucasa.ca.govUH.
Earlier this year, the Governor directed his Cabinet to form the Interdepartmental Task Force on NonTraditional Mortgages. In September, he made $1.16 million in Community Development Block Grant
funds available to counties for consumer counseling and urged Congress to provide more funding for
these programs in California. He also called on Congress to raise federal loan limits so that more
California families can take advantage of these secure products, rather than relying on subprime loans.
3 Monthly Bulletin September 2007
Non-Traditional Mortgage Survey
A Special Thank You
The Department thanks each of its bank and credit union licensees for their timely response to the recent
non-traditional mortgage survey. In responding to the survey, many have indicated an interest in the
results. The Department will post the cumulative responses from each industry on our Web site in the
near future. In addition, the results will be published in the Monthly Bulletin.
Less than Satisfactory Banks to Reimburse DFI for
Extraordinary Attention Costs
Pursuant to Financial Code section 1901(a) the Commissioner is authorized to charge and collect from a
bank or foreign bank for extra examinations at the rate of $75 per hour per examiner engaged in the
extra examination and in the case of extraordinary attention, an amount not exceeding the department’s
expenses in providing the extraordinary attention, including but not limited to compensation of
employees. Since 1997, the policy of this department has been to bill a bank or foreign bank in less than
satisfactory condition for the second examination during a two-year period. This policy is being
modified.
Effective immediately, every bank and foreign bank which is examined by DFI more frequently than
required by statute Ubecause of its less than satisfactory conditionU (ratings of 3, 4 or 5) will be billed at
the rate of $75 per hour per examiner engaged in the examination.
Also, every bank and foreign bank which receives extraordinary attention either due to its less than
satisfactory condition (rating of 3, 4 or 5) or as necessary or advisable in the judgment of the
Commissioner for other reasons, will be billed at the rate of $75 per hour per employee involved in
providing the extraordinary attention plus other Department expenses. Those employees include, but
are not limited to, Department executives, managers, examiners and attorneys.
“Extraordinary attention” includes, but is not limited to, preparation and negotiation of enforcement
actions, reviewing materials required under enforcement actions, traveling to and participating in
meetings with management/directors, attorneys, consultants and regulators, conducting visitations and
reviewing other correspondence relating to ongoing supervision activities of the bank or foreign bank.
Other Department expenses include, but are not limited to, travel and per diem expenses in providing the
extraordinary attention.
Billing for extra examinations and for extraordinary attention will continue until such time as the bank
or foreign bank is restored to a satisfactory condition.
This change in policy is being implemented so that the added cost to the Department of banks operating
in less than satisfactory condition are borne by the institutions that generate those costs and are not
subsidized by banks in satisfactory condition that do not require extra examinations or added attention.
4 Monthly Bulletin September 2007
CSBS to Hold First Boot Camp for BSA
Professionals in California
The Conference of State Bank Supervisors (CSBS) will be conducting its Boot Camp for BSA
Professionals in San Jose, California on November 5 – 9, 2007. This is an intensive 4½ day experience
that will fast forward your Bank Security Act (BSA) compliance knowledge and anti-money laundering
acumen by incrementally building a comprehensive and structured matrix of BSA understanding. This
skills driven program is designed to meet the needs of regulators and those who work in financial
institutions and money service businesses. Each session includes focused “hands-on exercises” that
reinforce what you learn and permit you to apply your knowledge to real-life situations. A highly
experienced team of BSA experts with senior level government and private experience will lead each
session, giving you the latest information and coaching on real life exercises and case studies. This
program is also the first step in qualifying for Certification as a Professional BSA Compliance
Practitioner. If you are interested in attending or would like additional information, please use this HUlinkUH.
DFI Encourages the Use of FDICconnect for Secure
Submission of Examination Information
DFI is pleased to announce its partnership through the Conference of State Bank Supervisors (CSBS)
with the Federal Deposit Insurance Corporation (FDIC) on the FDICconnect Examination File
Exchange system. FDICconnect is a secure web site to support e-commence activities and allows for
the secure electronic transmission of examination information between insured financial institutions and
state and federal banking regulatory agencies. DFI has been using FDICconnect for new branch
applications since December 2004.
DFI currently requests pre-examination information that is reviewed prior to the on-site portion of an
examination. With the expansion of FDICconnect, institutions and other affiliated parties, such as data
servicers, will be able to quickly and securely exchange files with the DFI and FDIC. In addition, use of
the system should relieve examination burden on institutions by allowing DFI staff to complete a
significant portion of the examination process offsite. We encourage all state-chartered banks to take
advantage of this system when contacted by the DFI or FDIC for information before or during an
examination. The FDIC announced the adoption of FDICconnect for secure transmission of examination
information in Financial Institution Letter HUFIL 53-2007UH.
The FDIC provides technical and instructional support for bankers using FDICconnect. You may
contact the FDICconnect Help Desk by calling toll-free 1-877-275-3342 (select options 1 for English, 1
for financial institutions, and 5 for the Help Desk) or by sending an e-mail to HUFDICconnect@fdic.govU
DFI to Cease Filing the Group 990 Tax Returns for
California State-Chartered Credit Unions
Due to significant changes by the IRS, the DFI will no longer file the Group Return for Credit Unions
(Form 990 “Return of Organization Exempt from Income Tax”). Previously, as an accommodation to
5 Monthly Bulletin September 2007
the state-chartered credit unions in California, particularly smaller credit unions, the DFI prepared and
filed these returns.
The return’s growing complexity, liability, and costs to the DFI led to the decision. Many other state
credit union regulators have discontinued the group filing. Accordingly, each state-chartered credit
union will be responsible for filing its own Form 990 beginning with the 2007 tax year.
Carol Chesbrough becomes Interim Commissioner
On September 7, 2007 Commissioner Michael Kelley left the Department of Financial Institutions.
Pursuant to Financial Code Section 235, the Chief Deputy Commissioner became Interim Commissioner
of Financial Institutions. Until a new commissioner is appointed, please address all correspondence for
the Commissioner’s attention to Carol D. Chesbrough, Interim Commissioner of Financial Institutions,
1810 – 13th Street, Sacramento, CA 95811; (916) 322-0282; HUcchesbrough@dfi.ca.govUH.
Commercial Bank Activity
UNew Bank
Commerce Bank of Temecula Valley
25220 Hancock Avenue, Murrieta, Riverside County
(951) 973-7400
(951) 973-7401 (fax)
Officers: Bill Demmin, President and Chief Executive Officer
LouEllen Ficke, Executive Vice President and Chief Financial Officer
Skip Maniscalco, Executive Vice President and Chief Credit Officer
Capitalization: $15,023,740.00
Opened: 9/17/07
Conekta Bank
530 Broadway, Chula Vista, San Diego County
Correspondent: Maryam Hamzeh
Carpenter & Company
Five Park Plaza, Suite 950
Irvine, CA 92614
(949) 261-8888
Approved: 9/24/07
Gateway Pacific Bank
801 National City Boulevard, National City, San Diego County
Correspondent: Russell W. Bushore
Carpenter & Company
Five Park Plaza, Suite 950
Irvine, CA 92614
(949) 261-8888
Filed: 9/12/07
6 Monthly Bulletin September 2007
UNew Bank (Continued)
Suncrest Bank
400 W. Center Avenue, Visalia, Tulare County
Correspondent: Michael T. Wilson
814 W. Center Avenue, Suite F
Visalia, CA 93291
(559) 622-8841
Approved: 9/14/07
UMerger
Business First National Bank, Santa Barbara, to merge with and into Heritage Oaks Bank, Paso Robles
Approved: 9/17/07
UAcquisition of Control
Brian K. Garrett and Debra M. Pitts to acquire control of Community Bank of the Bay
Filed: 8/23/07
Approved: 9/19/07
WCB Holdings, Inc. to acquire control of Western Commercial Bank
Effected: 9/17/07
UPurchase of Partial Business Unit
County Bank, Merced, California, to acquire the California branches of National Bank of Arizona,
Tucson, Arizona
Approved: 9/14/07
Premium Finance Company Activity
UNew Premium Finance Company
Allied Premium Finance Co., Inc.
8530 La Mesa Boulevard, La Mesa, San Diego County
Opened: 9/01/07
Coastal Premium Finance Corp.
4201 Long Beach Boulevard, Long Beach, Los Angeles County
Filed: 9/18/07
UVoluntary Surrender of License
California Flatiron Corp.
Effected: 9/18/07
7 Monthly Bulletin September 2007
Foreign (Other Nation) Bank Activity
UNew Office
Intesa Sanpaolo S.p.A.
444 S. Flower Street, City and County of Los Angeles (Representative Office)
Opened: 9/10/07
Credit Union Activity
UField of Membership
Two credit unions received approvals to add four new fields of membership during August 2007.
UBylaw Amendment
Two credit unions received approval for eleven bylaw amendments during August 2007.
UMerger
Great American Credit Union, San Diego, to merge with and into Wescom Central Credit Union,
Pasadena
Filed: 9/24/07
UChange of Name
Norton Community Credit Union to change its name to Alta Vista Credit Union
Approved: 12/5/06
Effected: 12/11/06
UFinal Order (Financial Code Section 14304)
Cal State 9 Credit Union
3000 Clayton Road, Concord, Contra Costa County
Issued: 9/6/07
Transmitter of Money Abroad Activity
UNew Transmitter of Money Abroad
Pronto Money Transfer, Inc.
Opened: 8/28/07
8 Monthly Bulletin September 2007
UAcquisition of Control
Bancolombia (Panama) S.A., to acquire control of Banagricola de El Salvador, Inc.
Approved: 9/26/07
Coinstar E-Payment Services, Inc., to acquire control of GroupEx Financial Corporation
Filed: 9/26/07
Voluntary Surrender of License
Pekao Trading Corporation
Effected: 9/28/07
CAROL D. CHESBROUGH
Interim Commissioner of Financial Institutions
Bulletin for Month ended
September 2007, issued pursuant
to Financial Code section 258
The Monthly Bulletin is available without charge via e-mail. To subscribe, go to HUhttp://www.dfi.ca.gov/bulletin/subscription/public.aspUH. To
unsubscribe, send a blank e-mail to HUleave-dfi_public@blizzard.sparklist.comUH. Contact the list administration team at HUbulletin@dfi.ca.govUH