ARTICLE 5. Investment in Loans [7450. - 7462.]

Cal. Financial Code - FIN 5.

in effect

Cal. Financial Code - FIN § 7450. Section 7450.

(a) An association may make any loan authorized by this division, but the association shall first determine that the type, amount, purpose, and repayment provisions of the loan in relation to the borrower’s resources and credit standing support the reasonable belief that the loan will be financially sound and will be repaid according to its terms, and that the loan is not otherwise unlawful. (b) Subject to any regulations of the commissioner, an association may make or acquire loans directly or indirectly to or from any director, officer, affiliated person, or any parent or subsidiary. Loans made or acquired, directly or indirectly, the proceeds of which are intended to inure or have inured to the benefit of these parties are subject to the same regulations.

Cal. Financial Code - FIN § 7450.2. Section 7450.2.

Except with the prior written consent of the commissioner, no association shall knowingly make: (a) Any loan to any corporation of which 10 percent or more of the stock is owned or controlled individually or collectively by any one or more of the directors, officers, employees, or substantial stockholders of the association. As used in this subdivision, “substantial stockholder” means a person who has a real or beneficial ownership of more than 10 percent of the outstanding stock of the association. For this purpose, stock owned by the person’s immediate family shall be deemed owned by that person. (b) Any loan the proceeds of which are intended to inure to the benefit of any corporation specified in subdivision (a).

Cal. Financial Code - FIN § 7451. Section 7451.

Except as otherwise provided by the commissioner, an association shall not make or acquire total loans with respect to one borrower or on one project in an amount exceeding 25 percent of the net worth of the association. As used in this section, “one borrower” has the meaning defined in Section 7453.

Cal. Financial Code - FIN § 7452. Section 7452.

(a) An association may make consumer loans, provided that the total of such loans shall not exceed 30-percent of the assets of the association. (b) An association may include loans to dealers in consumer goods to finance inventory and floor planning in the total investment as part of the 30-percent limitation described in subdivision (a). For purposes of the limitations on loans to one borrower, loans to dealers in consumer goods to finance inventory and floor planning shall be treated as commercial loans.

Cal. Financial Code - FIN § 7453. Section 7453.

(a) An association may make, invest in, sell, purchase, participate in, or otherwise deal in secured or unsecured loans for agricultural, business, commercial, or corporate purposes, provided that the total investment in such loans does not exceed 10 percent of the assets of the association. (b) An association may invest in, sell, purchase, participate in, or otherwise deal in loans specified in subdivision (a) which are originated by any savings association, federal association, holding company of a federally insured savings association, commercial bank, bank holding company, subsidiary of a bank holding company, or insurance company, provided that the total investment in such loans shall not exceed 10 percent of the association’s assets. (c) For the purposes of this section, the term “loan” does not include any corporate debt security unless it is rated in one of the four highest rating categories by at least one nationally recognized rating service. (d) No association shall make, invest in, purchase, or participate in a loan for agricultural, business, commercial, or corporate purposes to one borrower, except as the commissioner may approve in writing, if the sum of the amount of the association’s interest in the loan and the total balance of the association’s interest in all outstanding loans for those purposes owed to the association by that borrower exceed the greater of (1) the amount a national bank having an identical total capital and surplus could lend to one borrower, or (2) the amount a commercial bank, as defined in Section 105, having an identical total shareholders’ equity, capital notes, and debentures, could lend to one borrower. This subdivision shall not apply to loans (1) secured by real property, (2) sold without recourse, (3) on the security of the association’s deposit accounts, or (4) of unsecured day funds, including federal funds or similar unsecured loans. (e) As used in this section the term “one borrower” means: (1) Any person that is, or upon the making of a loan will become, an obligor on the loans. However, a guarantor shall not be included within the meaning of “obligor” if, in connection with a loan the association has determined, in good faith, that the primary obligor has qualified for the loan irrespective of the existence of the guarantor. In the case of a loan that has been assumed by a third party with the consent of the association, the former debtor and any guarantor shall not be deemed to be an “obligor.” (2) Nominees of the obligor. (3) All persons, trusts, syndicates, partnerships and corporations of which the obligor is a nominee, a beneficiary, a member, a general partner, a limited partner owning an interest of 10 percent or more based on the value of his or her capital contribution, or a record or beneficial stockholder owning 10 percent or more of the capital stock. (4) If the obligor is a trust, syndicate, partnership or corporation, all trusts, syndicates, partnerships and corporations of which any beneficiary, member, general partner, limited partner owning an interest of 10 percent or more based on the value of his or her capital contribution, or record or beneficial stockholder owning 10 percent or more of the capital stock, is also a beneficiary, member, general partner, limited partner owning an interest of 10 percent or more based on the value of his or her capital contribution, or record or beneficial stockholder owning 10 percent or more of the capital stock of the obligor.

Cal. Financial Code - FIN § 7454. Section 7454.

Each association is authorized to issue credit cards, extend credit in connection with the cards, and otherwise engage in or participate in credit card operations. The provisions of Title 2 (commencing with Section 1801) of the Civil Code shall not apply to any credit extended by an association pursuant to the provisions of this section.

Cal. Financial Code - FIN § 7455. Section 7455.

No association or director, officer, or employee of an association shall require, as a condition to the granting of any loan or the extension of any other service by the association, that the borrower or any other person undertake a contract of insurance with any specific company, agency, or individual.

Cal. Financial Code - FIN § 7456. Section 7456.

Any loan commitment made by an association shall be counted as an investment and shall be included in total assets of the association only to the extent that funds have been advanced (and not repaid) pursuant to the commitment. For the purposes of this section, the term “loan commitment” includes a loan in process, a letter of credit, or any other commitment to extend credit.

Cal. Financial Code - FIN § 7457. Section 7457.

An association may make loans on the security of its savings accounts, whether or not the borrower is the owner of the account, subject to the limitations of this article.

Cal. Financial Code - FIN § 7458. Section 7458.

An association may make overdraft loans specifically related to transaction accounts, subject to regulations issued by the commissioner.

Cal. Financial Code - FIN § 7459. Section 7459.

In addition to establishing reserves pursuant to Section 6476, an association or federal association, as defined in Section 5102, may establish a separate loan reserve account regarding losses resulting from fraud by a borrower and may recover any of those losses from that borrower.

Cal. Financial Code - FIN § 7460. Section 7460.

(a) Notwithstanding Section 726 of the Code of Civil Procedure or any other provision of law to the contrary, an association, a federal association, an affiliate of an association or federal association, a service corporation, or any successor in interest thereto, that originates, acquires, or purchases, in whole or in part, any loan secured directly or collaterally, in whole or in part, by a mortgage or deed of trust on real property, or any interest therein, may bring an action for recovery of damages, including exemplary damages not to exceed 50 percent of the actual damages, against a borrower where the action is based on fraud under Section 1572 of the Civil Code and the fraudulent conduct by the borrower induced the original lender to make that loan. (b) The provisions of this section shall not apply to loans secured by single-family, owner-occupied residential real property, when the property is actually occupied by the borrower as represented to the lender in order to obtain the loan and the loan is for an amount of one hundred fifty thousand dollars ($150,000) or less, as adjusted annually, commencing on January 1, 1987, to the Consumer Price Index as published by the United States Department of Labor. (c) Any action maintained under this section for damages shall not constitute a money judgment for deficiency or a deficiency judgment within the meaning of Section 580a, 580b, or 580d of the Code of Civil Procedure.

Cal. Financial Code - FIN § 7461. Section 7461.

The provisions of any deed of trust or mortgage on real property which authorize an association, federal association, affiliate or service corporation of an association or federal association, or any successor in interest thereto, to accelerate the maturity date of the principal and interest on any loan secured thereby or to exercise any power of sale or other remedy contained therein upon the failure of the trustor or mortgagor to pay, at the times provided for under the terms of the deed of trust or mortgage, any taxes, rents, assessments, or insurance premiums with respect to the property or the loan, or any advances made by the association, federal association, affiliate or service corporation of an association or federal association, or any successor in interest thereto, shall be enforceable whether or not impairment of the security interest in the property has resulted from the failure of the trustor or mortgagor to so pay the taxes, rents, assessments, insurance premiums, or advances.

Cal. Financial Code - FIN § 7462. Section 7462.

The provisions of any deed of trust or mortgage on real property which authorize an association, federal association, affiliate or service corporation of an association or federal association, or any successor in interest thereto, to receive and control the disbursement of the proceeds of any policy of fire, flood, or other hazard insurance respecting the property shall be enforceable whether or not impairment of the security interest in the property has resulted from the event that caused the proceeds of the insurance policy to become payable.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026