Finance Lender

• California Financial Code, Section 22000, defines the term "finance lender" as applying to any individual who makes consumer or commercial loans or the act of lending. In addition, a finance lender applies to a person who acts in the name of the lender in any form or accepts collateral for a loan, contract or other security that involves giving up the rights in or to personal property. The term also applies to a party that uses or controls the property of the lender. Lenders have a responsibility to follow section 22150-22172 as it concerns maintaining their license, business address or keeping reports and books. The law requires lenders to keep financial documents for at least three years after making the last entry.
  
  

Maximum Charges on Unpaid Principal Under $2,500

• According to Section 22300-22347 and 22450-22467, lenders cannot charge consumers an interest rate that exceeds the following: 2 1/2 percent a month on the outstanding principal on any loan up to but not more than $225. The maximum allowable rate on the unpaid principal that exceeds $225, but not more than $900, is 2 percent each month. The lender can charge 1 1/2 percent interest on unpaid principal of more than $900 up to and including $1,650. The law allows a maximum of 1 percent interest on legitimate loan principal amounts that exceed $1,650 to under $2,500. The rules allow two exceptions. These rules do not apply to commercial loans of $5,000 or more. Section 22400-22402 governs the computation of charges on this type of loan. The computation for charges on open-ended loans, such as department store cards, fall under Section 22450-22467.
  
  

Appraisal Fees

• The lender cannot charge the borrower more for the cost of any appraisal fee for a loan, secured by real estate, greater than the actual cost for the appraisal made by a licensed qualified appraiser. The lender may collect only one fee for appraising the same property. However, if the borrower obtains an additional loan or a new loan, and a year has passed since the previous appraisal, the lender may assess a charge for a new appraisal. The appraisal fee does not apply to the maximum charges for making the loan. This is in accordance with CA Financial Code Section 22317.
  
  

Real Property Loans

• For a loan secured by real estate, the lender may not fail to release the funds to the borrower in accordance with the lender's agreement to make the loan to the borrower. The regulations, according to CA Financial Code Section 223198-22319, make it illegal for the lender to delay a loan intentionally to increase interest rates, costs, fees or other charges the borrower must pay. The lender may charge the borrower a reasonable escrow fee, which does not apply to the maximum charges. A fee collected by the lender and paid to a trustee for reconveyance of a trust deed does not apply to the maximum charge rules.