2010 California Code
Civil Code
Chapter 3. Loan Of Money

1912.  A loan of money is a contract by which one delivers a sum of
money to another, and the latter agrees to return at a future time a
sum equivalent to that which he borrowed. A loan for mere use is
governed by the Chapter on Loan for Use.



1913.  A borrower of money, unless there is an express contract to
the contrary, must pay the amount due in such money as is current at
the time when the loan becomes due, whether such money is worth more
or less than the actual money lent.



Ý1914.]  Section Nineteen Hundred and Fourteen. Whenever a loan of
money is made, it is presumed to be made upon interest, unless it is
otherwise expressly stipulated at the time in writing.



Ý1915.]  Section Nineteen Hundred and Fifteen. Interest is the
compensation allowed by law or fixed by the parties for the use, or
forbearance, or detention of money.



1916.  When a rate of interest is prescribed by a law or contract,
without specifying the period of time by which such rate is to be
calculated, it is to be deemed an annual rate.



1916.1.  The restrictions upon rates of interest contained in
Section 1 of Article XV of the California Constitution shall not
apply to any loan or forbearance made or arranged by any person
licensed as a real estate broker by the State of California, and
secured, directly or collaterally, in whole or in part by liens on
real property. For purposes of this section, a loan or forbearance is
arranged by a person licensed as a real estate broker when the
broker (1) acts for compensation or in expectation of compensation
for soliciting, negotiating, or arranging the loan for another, (2)
acts for compensation or in expectation of compensation for selling,
buying, leasing, exchanging, or negotiating the sale, purchase,
lease, or exchange of real property or a business for another and (A)
arranges a loan to pay all or any portion of the purchase price of,
or of an improvement to, that property or business or (B) arranges a
forbearance, extension, or refinancing of any loan in connection with
that sale, purchase, lease, exchange of, or an improvement to, real
property or a business, or (3) arranges or negotiates for another a
forbearance, extension, or refinancing of any loan secured by real
property in connection with a past transaction in which the broker
had acted for compensation or in expectation of compensation for
selling, buying, leasing, exchanging, or negotiating the sale,
purchase, lease, or exchange of real property or a business. The term
"made or arranged" includes any loan made by a person licensed as a
real estate broker as a principal or as an agent for others, and
whether or not the person is acting within the course and scope of
such license.



1916.2.  The restrictions upon rates of interest contained in
Section 1 of Article XV of the California Constitution do not apply
to any loans made by, or forbearances of, a public retirement or
pension system that is created, authorized, and regulated by the laws
of a state other than California, or the laws of a local agency of a
state other than California.
   This section establishes as an exempt class of persons pursuant to
Section 1 of Article XV of the California Constitution, any public
retirement or pension system that is created, authorized, and
regulated by the laws of a state other than California, or the laws
of a local agency of a state other than California.



1916.5.  (a) No increase in interest provided for in any provision
for a variable interest rate contained in a security document, or
evidence of debt issued in connection therewith, by a lender other
than a supervised financial organization is valid unless that
provision is set forth in the security document, and in any evidence
of debt issued in connection therewith, and the document or documents
contain the following provisions:
   (1) A requirement that when an increase in the interest rate is
required or permitted by a movement in a particular direction of a
prescribed standard an identical decrease is required in the interest
rate by a movement in the opposite direction of the prescribed
standard.
   (2) The rate of interest shall not change more often than once
during any semiannual period, and at least six months shall elapse
between any two changes.
   (3) The change in the interest rate shall not exceed one-fourth of
1 percent in any semiannual period, and shall not result in a rate
more than 2.5 percentage points greater than the rate for the first
loan payment due after the closing of the loan.
   (4) The rate of interest shall not change during the first
semiannual period.
   (5) The borrower is permitted to prepay the loan in whole or in
part without a prepayment charge within 90 days of notification of
any increase in the rate of interest.
   (6) A statement attached to the security document and to any
evidence of debt issued in connection therewith printed or written in
a size equal to at least 10-point boldface type, consisting of the
following language:
   NOTICE TO BORROWER: THIS DOCUMENT CONTAINS PROVISIONS FOR A
VARIABLE INTEREST RATE.
   (b) (1) This section shall be applicable only to a mortgage
contract, deed of trust, real estate sales contract, or any note or
negotiable instrument issued in connection therewith, when its
purpose is to finance the purchase or construction of real property
containing four or fewer residential units or on which four or fewer
residential units are to be constructed.
   (2) This section does not apply to unamortized construction loans
with an original term of two years or less or to loans made for the
purpose of the purchase or construction of improvements to existing
residential dwellings.
   (c) Regulations setting forth the prescribed standard upon which
variations in the interest rate shall be based may be adopted by the
Commissioner of Financial Institutions with respect to savings
associations and by the Insurance Commissioner with respect to
insurers. Regulations adopted by the Commissioner of Financial
Institutions shall apply to all loans made by savings associations
pursuant to this section prior to January 1, 1990.
   (d) As used in this section:
   (1) "Supervised financial organization" means a state or federally
regulated bank, savings association, savings bank, or credit union,
or state regulated industrial loan company, a licensed finance lender
under the California Finance Lenders Law, a licensed residential
mortgage lender under the California Residential Mortgage Lending
Act, or holding company, affiliate, or subsidiary thereof, or
institution of the Farm Credit System, as specified in 12 U.S.C. Sec.
2002.
   (2) "Insurer" includes, but is not limited to, a nonadmitted
insurance company.
   (3) "Semiannual period" means each of the successive periods of
six calendar months commencing with the first day of the calendar
month in which the instrument creating the obligation is dated.
   (4) "Security document" means a mortgage contract, deed of trust,
or real estate sales contract.
   (5) "Evidence of debt" means a note or negotiable instrument.
   (e) This section is applicable only to instruments executed on and
after the effective date of this section.
   (f) This section does not apply to nonprofit public corporations.
   (g) This section is not intended to apply to a loan made where the
rate of interest provided for is less than the then current market
rate for a similar loan in order to accommodate the borrower because
of a special relationship, including, but not limited to, an
employment or business relationship, of the borrower with the lender
or with a customer of the lender and the sole increase in interest
provided for with respect to the loan will result only by reason of
the termination of that relationship or upon the sale, deed, or
transfer of the property securing the loan to a person not having
that relationship.



1916.6.  A security document, or evidence of debt issued in
connection therewith, executed pursuant to Section 1916.5 may provide
that the rate of interest shall not change until five years after
execution of such document or documents, and not more frequently than
every five years thereafter. In every security document, or evidence
of debt issued in connection therewith, executed pursuant to this
section all the provisions of Section 1916.5 shall be applicable,
except those provisions specifying the frequency of interest rate
changes and limiting rate changes to one-fourth of 1 percent in any
semiannual period. For the purposes of this section "five years"
means each of the successive periods of five years commencing with
the first day of the calendar month in which the instrument creating
the obligation is dated.



1916.7.  (a) Sections 1916.5, 1916.6, 1916.8, and 1916.9 of the
Civil Code, and any other provision of law restricting or setting
forth requirements for changes in the rate of interest on loans,
shall not be applicable to loans made pursuant to this section.
   (b) A mortgage loan made pursuant to the provisions of this
section is an adjustable-payment, adjustable-rate loan, on the
security of real property occupied or intended to be occupied by the
borrower containing four or fewer residential units and incorporating
terms substantially as follows:
   (1) The term of the loan shall be not less than 29 years,
repayable in monthly installments amortized over a period of not less
than 30 years.
   (2) Monthly payments may be adjusted to reflect changes in the
variable interest rate of the loan. Changes in interest and monthly
payment shall not occur more often than twice during any annual
period and at least six months shall elapse between any two changes.
The rate of interest and monthly payments shall not change during the
first semiannual period. The amount of any increase in monthly
payment shall not exceed 7.5 percent annually.
   (3) Monthly payments may also be established on a graduated basis
within the parameters of a loan originated pursuant to the provisions
of this section. A graduated payment adjustable mortgage loan shall
meet all the requirements of this section and shall set forth in the
note, at the time of origination, limitations on the rate of increase
in the scheduled payments due both to graduation and to changes in
the interest rate.
   (4) Whenever any monthly installment is less than the amount of
interest accrued during the month with respect to which the
installment is payable, the borrower shall have the option to select
one, or any combination of, the following:
   (A) Notwithstanding paragraph (2) of subdivision (b), increase the
monthly installment in an amount which at least covers the increase
in interest.
   (B) Have the difference added to the principal of the loan as of
the due date of the installment and thereafter shall bear interest as
part of the principal. In no instance shall the difference which is
added to the principal be an amount which causes the resulting
loan-to-value ratio to exceed the loan-to-value ratio at the time of
loan origination.
   (C) Extend the term of the loan up to, but not exceeding, 40
years.
   (5) Changes in the rate of interest on the loan shall reflect the
movement, in reference to the date of the original loan, of a
periodically published index selected by the lender which may be
either of the following:
   (A) The contract interest rate on the purchase of previously
occupied homes in the most recent monthly national average mortgage
rate index for all major lenders published periodically by the
Federal Home Loan Bank Board.
   (B) The weighted average cost of funds for California Associations
of the Eleventh District Savings and Loan Associations as published
periodically by the Federal Home Loan Bank of San Francisco.
   (6) Any change in the interest rate shall not exceed the limit,
specified by the lender in the loan contract, for rate increases in
any semiannual period and shall not exceed the limit, specified by
the lender in the loan contract, for rate increases greater than the
base index rate.
   (7) Notwithstanding any change in the interest rate indicated by a
movement of the index, increases in the interest rate shall be
optional with the lender, while decreases are mandatory. Such
decreases, upon the option of the borrower, shall be used (1) to pay
off any negative amortization accrued when the interest rate was
increased, or (2) to decrease the monthly payment as reflected in the
decrease in the interest rate.
   (8) The borrower is permitted to prepay the loan in whole or in
part without a prepayment charge at any time, and no fee or other
charge may be required by the lender of the borrower as a result of
any change in the interest rate or the exercise of any option or
election extended to the borrower pursuant to this section.
   (9) The borrower, after initiation of the loan, shall not be
subsequently required to demonstrate his or her qualification for the
loan, except that this paragraph shall not limit any remedy
available to the lender by law for default or other breach of
contract.
   (10) In the event the remaining principal due on a loan made
pursuant to this section will not be paid off during the current
term, within 90 days of expiration of the term a borrower may elect
in writing to repay the remaining balance in full or in substantially
equal installments of principal and interest over an additional
period not to exceed 10 years, during which period the interest rate
shall remain fixed.
   (c) An applicant for a loan originated pursuant to the provisions
of this section must be given, at the time he or she requests an
application, a disclosure notice in the following form:

                                NOTICE TO BORROWER
IMPORTANT INFORMATION ABOUT THE ADJUSTABLE-PAYMENT, ADJUSTABLE-RATE
LOAN
PLEASE READ CAREFULLY
(at least 10-point bold type)

   You have received an application form for an adjustable-payment,
adjustable-rate mortgage loan. This loan may differ from other
mortgages with which you are familiar.

        I. GENERAL DESCRIPTION OF ADJUSTABLE-PAYMENT, ADJUSTABLE-RATE
LOAN

   The adjustable-payment, adjustable-rate mortgage loan is a
flexible loan instrument. This means that the interest, monthly
payment and/or the length of the loan may be changed during the
course of the loan contract.
   The first flexible feature of this loan is the interest rate. The
interest rate on the loan may be changed by the lender every six
months. Changes in the interest rate must reflect the movement of an
index that is selected by the lender. Changes in the interest rate
may result in increases or decreases in your monthly payment, in the
outstanding principal loan balance, in the loan term, or in all
three.
   The lender is required by law to limit the amount that the
interest can change at any one time or over the life of the loan. The
law does not specify what these limits are. That is a matter you
should negotiate with the lender.
   You may also want to make inquiries concerning the lending terms
offered by other lenders on adjustable-payment, adjustable-rate
mortgage loans to compare the terms and conditions.
   Another flexible feature of the adjustable-payment,
adjustable-rate mortgage loan is the monthly payment. The amount of
the monthly payment may be increased or decreased by the lender every
six months to reflect the changes in the interest rate. State law
prohibits the lender from increasing your monthly payment by more
than 7.5 percent per year. There may be circumstances, however, in
which you, the borrower, may want to increase the amount of your
monthly payment beyond the 7.5 percent limit. This option would be
available to you whenever changes in the interest rate threaten to
increase the outstanding principal loan balance on the loan.
   A third flexible feature of the adjustable-payment,
adjustable-rate mortgage loan is that the outstanding principal loan
balance (the total amount you owe) may be increased from time to
time. This situation, called "negative amortization," can occur when
rising interest rates make the monthly payment too small to cover the
interest due on the loan. The difference between the monthly payment
and the actual amount due in interest is added to the outstanding
loan balance.
   Under the terms of this mortgage, you as a borrower would always
have the option of either incurring additions to the amount you owe
on the loan or voluntarily increasing your monthly payments beyond
the 7.5 percent annual limit to an amount needed to pay off the
rising interest costs.
   Continual increases in the outstanding loan balance may cause a
situation in which the loan balance is not entirely paid off at the
end of the 30-year loan term. If this occurs, you may elect in
writing to repay the outstanding principal all at once, or with a
series of fixed payments at a fixed rate of interest for up to 10
years.
   The final flexible feature of the adjustable-payment,
adjustable-rate mortgage loan is that you may lengthen the loan term
from 30 to up to 40 years. Extending the loan term will lower your
monthly payment slightly less than they would have been had the loan
term not been extended.

                                     II. INDEX

   Adjustments to the interest rate of an adjustable-payment,
adjustable-rate mortgage loan must correspond directly to the
movement of an index which is selected, but not controlled, by the
lender. Any adjustments to the interest rate are subject to
limitations provided in the loan contract.
   If the index moves down, the lender must reduce the interest rate
by at least the decrease in the index. If the index moves up, the
lender has the right to increase the interest rate by that amount.
Although making such an increase is optional by the lender, you
should be aware that the lender has this right and may be
contractually obligated to exercise it.
   The index used is ÝName and description of index to be used for
applicant's loan, initial index value (if known) and date of initial
index value, a source or sources where the index may be readily
obtained by the borrower, and the high and low index rates during the
previous calendar year].

                   III. KEY PROVISIONS OF ÝName of Institution]
ADJUSTABLE-PAYMENT, ADJUSTABLE-RATE MORTGAGE LOAN

   The following information is a summary of the basic terms on the
mortgage loan being offered to you. This summary is intended for
reference purposes only. Important information relating specifically
to your loan will be contained in the loan agreement.
   ÝProvide a summary of basic terms of the loan, including the loan
term, the frequency of rate changes, the frequency of payment
changes, the maximum rate change at any one time, the maximum rate
change over the life of the loan, the maximum annual payment change,
and whether additions to the principal loan balance are possible, in
the following format:]
   LOAN TERM
   FREQUENCY OF RATE CHANGES
   FREQUENCY OF PAYMENT CHANGES

     IV. HOW YOUR ADJUSTABLE-PAYMENT, ADJUSTABLE-RATE MORTGAGE LOAN
WOULD WORK

   A. INITIAL INTEREST RATE
   The initial interest rate offered by ÝName of Institution] on your
adjustable-payment, adjustable-rate mortgage loan will be
established and disclosed to you on Ýcommitment date, etc.] based on
market conditions at that time.
   ÝInsert a short description of each of the key provisions of the
loan to be offered to the borrower, using headings where
appropriate.]

   B. NOTICE OF PAYMENT ADJUSTMENTS
   ÝName of Institution] will send you notice of an adjustment to the
payment amount at least 60 days before it becomes effective. Ý
Describe what information the notice will contain.]
   C. PREPAYMENT PENALTY
   You may prepay your adjustable-payment, adjustable-rate mortgage
in whole or in part without penalty at any time during the term of
the loan.

   D. FEES
   You will be charged fees by ÝName of Institution] and by other
persons in connection with the origination of your loan. The
association will give you an estimate of these fees after receiving
your loan application. However, you will not be charged any costs of
fees in connection with any regularly scheduled adjustment to the
interest rate, the payment, the outstanding principal loan balance,
or the loan term.

   V. EXAMPLE OF OPERATION OF YOUR ADJUSTABLE-PAYMENT,
ADJUSTABLE-RATE MORTGAGE   LOAN

   ÝSet out an example of the operation of the mortgage loan,
including the use of a table. In at least one of the examples, create
a situation showing how negative amortization could occur.]

   (d) At least 60 days prior to the due date of a monthly
installment to be revised due to a change in the interest rate,
notice shall be mailed to the borrower of the following:
   (1) The base index.
   (2) The most recently published index at the date of the change in
the rate.
   (3) The interest rate in effect as a result of the change.
   (4) The amount of the unpaid principal balance.
   (5) If the interest scheduled to be paid on the due date exceeds
the amount of the installment, a statement to that effect, including
the amount of excess and extent of borrower options as described in
paragraph (4) of subdivision (b).
   (6) The amount of the revised monthly installment.
   (7) The borrower's right to prepayment under paragraph (8) of
subdivision (b).
   (8) The address and telephone number of the office of the lender
to which inquiries may be made.
   (e) As used in this section:
   (1) "Base index" means the last published index at the date of the
note.
   (2) "Base index rate" means the interest rate initially applicable
to the loan as specified in the note.
   (3) "Graduated Payment Adjustable Mortgage Loan" means a loan on
which the monthly payments begin at a level lower than that necessary
to pay off the remaining principal balance over an amortization
period of not less than 30 years. During a period the length of which
is fixed at loan origination (the "graduation period"), the
scheduled payments gradually rise to a level sufficient to pay off
the remaining principal balance over the stipulated amortization
period. Limitations on the rate of increase in the scheduled payments
due both to graduation and to changes in the interest rate are also
fixed at loan origination.
   (4) "Note" means the note or other loan contract evidencing an
adjustable-payment, adjustable-rate mortgage loan.




1916.8.  Any lender may make, purchase or participate in a
renegotiable rate mortgage loan under this section if the loan
complies with the provisions of this section pertaining to one- to
four-family home loans.
   (a) For purposes of this section, a renegotiable rate mortgage
loan is a loan issued for a term of three, four or five years,
secured by a long-term mortgage or deed of trust of up to 30 years,
and automatically renewable at equal intervals except as provided in
paragraph (1) of subdivision (b). The loan must be repayable in equal
monthly installments of principal and interest during the loan term,
in an amount at least sufficient to amortize a loan with the same
principal and at the same interest rate over the remaining term of
the mortgage or deed of trust. Only one of the indices described in
paragraph (1) of subdivision (b) shall be used and no other index
shall be used during the term of the mortgage or deed of trust
securing the loan. At renewal, no change other than in the interest
rate may be made in the terms or conditions of the initial loan.
Prepayment in full or in part of the loan balance secured by the
mortgage or deed of trust may be made without penalty at any time
after the beginning of the minimum notice period for the first
renewal, or at any earlier time specified in the loan contract.
   (b) Interest rate changes at renewal shall be determined as
follows:
   (1) Subject to the provisions of subdivision (a) the interest rate
offered at renewal shall reflect the movement, in reference to the
date of the original loan, of an index, which may be either (i) the
contract interest rate on the purchase of previously occupied homes
in the most recent monthly national average mortgage rate index for
all major lenders published by the Federal Home Loan Bank Board, or
(ii) the weighted average cost of funds for the 11th District Savings
and Loan Associations as computed by the Federal Home Loan Bank of
San Francisco; provided that a lender may extend the initial terms of
loans for a period less than six months so that they may mature on
the same date three, four or five years after the end of such period
of extension, in which case the interest rate offered at renewal
shall reflect the movement of the index from the end of such period
so that loans may be grouped as though all loans of such group had
originated at the end of the extension period.
   (2) The maximum rate increase or decrease shall be 1/2 of 1
percentage point per year multiplied by the number of years in the
loan term, with a maximum increase or decrease of 5 percentage points
over the life of the mortgage or deed of trust. The lender may offer
a borrower a renegotiable rate mortgage loan with maximum annual and
total interest rate decreases smaller than the maximum set out in
this paragraph, except that in such a case the maximum annual and
total interest rate increases offered shall not exceed the maximum
annual and total decreases set out in the loan contract.
   (3) Interest rate decreases from the previous loan term shall be
mandatory. Interest rate increases are optional with the lender, but
the lender may obligate itself to a third party to take the maximum
increase permitted by this paragraph.
   (c) The borrower may not be charged any costs or fees in
connection with the renewal of such loan.
   (d) At least 90 days before the due date of the loan, the lender
shall send written notification in the following form to the
borrower:

                                       NOTICE

   Your loan with Ýname of lender], secured by a Ýmortgage/deed of
trust] on property located at Ýaddress], is due and payable on Ý90
days from the date of notice].
   If you do not pay by that date, your loan will be renewed
automatically for ____ years, upon the same terms and conditions as
the current loan, except that the interest rate will be ____%. (See
accompanying Truth-In-Lending statement for further credit
information.)
   Your monthly payment, based on that rate, will be $____, beginning
with the payment due on ____, 19_.
   You may pay off the entire loan or a part of it without penalty at
any time.
   If you have questions about this notice, please contact Ýtitle and
telephone number of lender's employee].

   (e) An applicant for a renegotiable rate mortgage loan must be
given, at the time he or she requests an application, a disclosure
notice in the following form:

                  INFORMATION ABOUT THE RENEGOTIABLE-RATE MORTGAGE

   You have received an application form for a renegotiable-rate
mortgage ("RRM"). The RRM differs from the fixed-rate mortgage with
which you may be familiar. In the fixed-rate mortgage the length of
the loan and the length of the underlying mortgage are the same, but
in the RRM the loan is short-term (3-5 years) and is automatically
renewable for a period equal to the mortgage (up to 30 years).
Therefore, instead of having an interest rate that is set at the
beginning of the mortgage and remains the same, the RRM has an
interest rate that may increase or decrease at each renewal of the
short-term loan. This means that the amount of your monthly payment
may also increase or decrease.
   The term of the RRM loan is ____ years, and the length of the
underlying mortgage is ____ years. The initial loan term may be up to
six months longer than later terms.
   The lender must offer to renew the loan, and the only loan
provision that may be changed at renewal is the interest rate. The
interest rate offered at renewal is based on changes in an index
rate. The index used is (either of the following statements shall be
given): Ýcomputed monthly by the Federal Home Loan Bank Board, an
agency of the federal government. The index is based on the national
average contract rate for all major lenders for the purchase of
previously occupied, single-family homes.] Ýthe weighted average cost
of savings, borrowings and Federal Home Loan Bank advances to
California members of the Federal Home Loan Bank Board of San
Francisco as computed from statistics tabulated by the Federal Home
Loan Bank of San Francisco. The index used is computed by the Federal
Home Loan Bank of San Francisco.]
   At renewal, if the index has moved higher than it was at the
beginning of the mortgage, the lender has the right to offer a
renewal of the loan at an interest rate equaling the original
interest rate plus the increase in the index rate. This is the
maximum increase permitted to the lender. Although taking such an
increase is optional with the lender, you should be aware that the
lender has this right and may become contractually obligated to
exercise it.
   If the index has moved down, the lender must at renewal reduce the
original interest rate by the decrease in the index rate. No matter
how much the index rate increases or decreases, THE LENDER, AT
RENEWAL, MAY NOT INCREASE OR DECREASE THE INTEREST RATE ON YOUR RRM
LOAN BY AN AMOUNT GREATER THAN ____ OF ONE PERCENTAGE POINT PER YEAR
OF THE LOAN, AND THE TOTAL INCREASE OR DECREASE OVER THE LIFE OF THE
MORTGAGE MAY NOT BE MORE THAN ____ PERCENTAGE POINTS.
   As the borrower, you have the right to decline the lender's offer
of renewal. If you decide not to renew, you will have to pay off the
remaining balance of the mortgage. Even if you decide to renew, you
have the right to prepay the loan in part or in full without penalty
at any time after the beginning of the minimum notice period for the
first renewal. To give you enough time to make this decision, the
lender, 90 days before renewal, will send a notice stating the due
date of the loan, the new interest rate and the monthly payment
amount. If you do not respond to the notice, the loan will be
automatically renewed at the new rate. You will not have to pay any
fees or charges at renewal time.
   The maximum interest rate increase at the first renewal is ____
percentage points. On a $50,000 mortgage with a loan term of ____
years and an original interest rate of Ýlender's current commitment
rate] percent, this rate change would increase the monthly payment
(principal and interest) from $____ to $____. Using the same example,
the highest rate you might have to pay over the life of the mortgage
would be ____ percent, and the lowest would be ____ percent.



1916.9.  (a) Every lender who offers a renegotiable rate mortgage
loan pursuant to Section 1916.8 to a borrower who occupies or intends
to occupy the property which is security for the loan shall also
offer to such borrower a fixed rate mortgage loan in the same amount
with a term of at least 29 years.
   (b) Nothing in this section shall require that the terms of such
alternative loans, including the rates of interest thereon, must be
the same as those terms offered with regard to the fixed-payment
adjustable-rate loan or the renegotiable rate mortgage loan also
offered.
   (c) This section does not apply to any lender who makes less than
10 loans per year.



1916.11.  Notwithstanding any other remedy a borrower may have based
on an alleged failure to comply with Sections 1916.5 through 1916.9,
the lien of the mortgage or deed of trust shall be valid.



1916.12.  (a) The Legislature finds that the economic environment of
financial institutions has become increasingly volatile as a result
of regulatory revisions enacted by the United States Congress and
federal agencies such as, but not necessarily limited to, the
Comptroller of the Currency, the Federal Home Loan Bank Board,
Federal Reserve Board, and the Depository Institutions Deregulation
Committee. The Legislature further finds that deposit rate ceilings
are being phased out while the cost of and competition for funds have
escalated. It is the purpose of this section to maintain the quality
of competition between state-licensed and federally regulated
financial institutions in the field of mortgage lending, as well as
promote the convenience, advantage and best interests of California
residents in their pursuit of adequate and available housing. In
order to remain competitive and provide the optimum housing
environment for the citizens of California, state institutions
require the ability to respond in a timely manner to changes in
mortgage lending parameters initiated at the federal level. Local
regulatory guidelines must promote continued parity between the state
and federal levels in order to avoid creation of discriminatory
burdens upon state institutions and to protect interests held by
California citizens. It is the intent of the Legislature to eliminate
past and prevent future inequities between state and federal
financial institutions doing business in the State of California by
creating a sensitive and responsive mortgage parity procedure.
   (b) The Secretary of the Business, Transportation and Housing
Agency, or the secretary's designee as defined by subdivision (c) of
Section 1918.5 of the Civil Code, shall have the authority to
prescribe rules and regulations extending to lenders who make loans
upon the security of residential real property any right, power,
privilege or duty relating to mortgage instruments that is equivalent
to authority extended to federally-regulated financial institutions
by federal statute or regulation.
   (c) In order to grant equivalent mortgage lending authority to
state financial institutions to that which has been extended to
federal financial institutions, the secretary or the secretary's
designee shall adopt such regulations within 60 days of the effective
date of the statute or regulation extending the comparable right,
power, privilege or duty to federally regulated financial
institutions.
   (d) The provisions of Sections 1916.5, 1916.6, 1916.7, 1916.8,
1916.9, and Chapter 5 (commencing with Section 1918) of the Civil
Code, and any other provisions of law relating to the requirements
for changes in the rate of interest on loans, shall not be applicable
to loans made pursuant to the provisions of this section and
regulations promulgated thereunder.
   (e) Any regulations adopted pursuant to this section shall expire
on January 1 of the second succeeding year following the end of the
calendar year in which the regulation was promulgated. Subsequent
amendments to these regulations cannot extend this expiration date.
   (f) This section shall become operative on December 31, 1983.