SECTIONS 22600-22601 - California Statutes

FINANCIAL CODE

SECTION 22600-22601

22600. (a) A licensee may sell promissory notes evidencing the
obligation to repay loans made by the licensee pursuant to this
division or evidencing the obligation to repay loans purchased from
and made by another licensee pursuant to this division to
institutional investors, and may make agreements with institutional
investors for the collection of payments or the performance of
services with respect to those notes.
(b) For the purposes of this section, "institutional investor"
means the following:
(1) The United States or any state, district, territory, or
commonwealth thereof, or any city, county, city and county, public
district, public authority, public corporation, public entity, or
political subdivision of a state, district, territory, or
commonwealth of the United States, or any agency or other
instrumentality of any one or more of the foregoing.
(2) Any bank, trust company, savings bank or savings and loan
association, credit union, industrial bank or industrial loan
company, finance lender, or insurance company doing business under
the authority of and in accordance with a license, certificate, or
charter issued by the United States or any state, district,
territory, or commonwealth of the United States.
(3) Trustees of pension, profit sharing, or welfare funds, if the
pension, profit sharing, or welfare fund has a net worth of not less
than fifteen million dollars ($15,000,000), except pension, profit
sharing, or welfare funds of a licensee or its affiliate,
self-employed individual retirement plans, or individual retirement
accounts.
(4) Any corporation with outstanding securities registered under
Section 12 of the Securities Exchange Act of 1934 or any wholly owned
subsidiary of that corporation; provided, however, that the
purchaser represents that it is purchasing for its own account for
investment and not with a view to or for sale in connection with any
distribution of the promissory note.
(5) Any syndication or other combination of any of the foregoing
that is organized to purchase the promissory note.
(6) A trust or other business entity established by an
institutional investor for the purpose of issuing or facilitating the
issuance of undivided interests in, the right to receive payments
from, or that are payable primarily from, a pool of financial assets
held by the trust or business entity if all of the following apply:
(A) The business entity is not a sole proprietorship.
(B) The pool of assets consists of one or more of the following:
(i) Interest bearing obligations.
(ii) Other contractual obligations representing the right to
receive payments from the assets.
(iii) Surety bonds, insurance policies, letters of credit, or
other instruments providing credit enhancements for these assets.
(C) The interests will be either of the following:
(i) Rated investment grade by Standard & Poor's Corporation or
Moody's Investors Service, Inc. "Investment grade" means that the
securities will be rated by Standard & Poor's Corporation as AAA, AA,
A, or BBB, or by Moody's Investor Service, Inc., as Aaa, Aa, A, or
Baa, including a rating with a "+" or "-" designation or other
variations that occur within these ratings.
(ii) Sold to an institutional investor as otherwise defined in
this section.
(D) The offer and sale of the securities is qualified under the
Corporate Securities Law of 1968 (Division 1 (commencing with Section
25000) of Title 4 of the Corporations Code) or is registered under
federal securities laws, or is exempt from qualification or
registration.
(c) In the absence of agreement to the contrary by the licensee
and the institutional investor, all payments received from the
collection of payments shall be deposited and maintained in a trust
account, and shall be disbursed from the trust account only in
accordance with the instructions of the owner of the promissory note.

22600.1. (a) A licensee that is a finance lender may sell to (1) an
institutional lender, or (2) an institutional investor described in
paragraph (6) of subdivision (b) of Section 22600, promissory notes
evidencing the obligation to repay real estate secured business
purpose loans, as defined in Section 3500.5 of Title 24 of the Code
of Federal Regulations, purchased from and made by an institutional
lender, and may make agreements for the collection of payments and
performance of services with respect to those notes. For purposes of
this section, "institutional lender" means any bank, trust company,
savings bank or savings and loan association, credit union, or
industrial loan company doing business under the authority of and in
accordance with a license, certificate or charter issued by the
United States or this state.
(b) In the absence of agreement to the contrary by the licensee
and the institutional investor or institutional lender, all payments
received from the collection of payments shall be deposited and
maintained in a trust account, and shall be disbursed from the trust
account only in accordance with the instructions of the owner of the
promissory note.

22601. With respect to a loan under this division, a fee not to
exceed fifteen dollars ($15) for the return by a depository
institution of a dishonored check, negotiable order of withdrawal, or
share draft may be charged and collected by the licensee. The fee is
not included in charges as defined in this division.