10 CCR s 5285

Cal. Admin. Code tit. 10, s 5285

CALIFORNIA CODE OF REGULATIONS
TITLE 10. INVESTMENT
CHAPTER 7.1. BUSINESS, TRANSPORTATION AND HOUSING AGENCY: METAL PLATING
FACILITY LOAN GUARANTEES
ARTICLE 1. METAL PLATING FACILITY LOAN GUARANTEES
This database is current through 01/05/07, Register 2007, No. 1.
s 5285. Demand Procedures.

(a) The lender shall be authorized to make a demand upon the corporation
executing the guarantee for repayment of the unpaid loan principal and
interest pursuant to the terms of the guarantee, upon compliance with the
following:

(1) Providing proof to the corporation that the borrower is in
default and lender has delivered to both the borrower and the
corporation a minimum of two letters subsequent to the delinquency,
at least thirty (30) days apart, explaining the consequences for
failure to remedy the delinquency. This requirement shall not apply
if borrower is in bankruptcy.

(2) If the guarantee is a collection guarantee, providing proof
that the lender has complied with the liquidation requirements of
section 5286.

(b) The lender shall deliver to the corporation executing the guarantee a
demand letter requesting immediate payment of the guaranteed portion of
loan interest and principal, and documenting compliance with subsection
(a).

(c) Within five (5) days of receipt of the demand letter, the corporation
shall contract with the California Department of Financial Institutions or
an independent auditor to conduct an investigation to determine whether
the lender has complied with the terms of the guarantee, and to issue a
report to both the corporation and the agency. The investigation shall
address each of the following issues:

(1) Whether the loan agreement between the borrower and lender is
consistent with the terms and conditions in the guarantee.

(2) Whether all collateral for the loan and guarantee been
perfected and maintained. Whether all collateral available for
assignment to the corporation in the event that payment is made upon
the demand. Whether any collateral is not available as a result of
lender's negligence, breach of contract, foreclosure or other cause,
and a description of any such collateral.

(3) If the guarantee is a collection guarantee, whether the lender
complied with the liquidation procedures of section 5286.

(4) Calculation on the outstanding principal and interest owed.

(5) Whether the lender complied with the procedures for making a
demand under section 5285(b).

(6) In a section entitled "Loan Information" the report shall
include the following information obtained solely from a review of
lender files: a description of the borrower's business, a
description of the collateral for the loan, and a discussion as to
whether the lender files contain any reference to matters material
to borrower's compliance with any environmental laws or regulations.
The description of collateral shall identify all real property
collateral as one or more of the following: industrial, commercial,
agricultural, single family residence, multi-unit residential,
vacant lot, or unknown.

(7) A loan history.

(d) Within five (5) days of receiving the California Department of
Financial Institutions or auditor's report, the corporation shall do one
of the following:

(1) Deliver to the agency a request for payment on the demand,
along with: A copy of the report described in subsection (c); the
demand; and a calculation of the amount owed pursuant to the
guarantee; or,

(2) Deliver to the lender, with a copy simultaneously delivered to
the agency, a refusal to make payment pursuant to the demand, and
detailing the reasons for refusal.

(e) Within ten (10) calendar days from the date the agency receives the
request for payment, the agency shall do one of the following and
simultaneously inform the lender of such action:

(1) Deliver or cause to be delivered to the corporation a check in
an amount not to exceed the amount contained in the demand letter,
made payable to the lender; or,

(2) Deliver or cause to be delivered a denial of the request for
payment to the corporation based upon fraud or gross negligence on
the part of the lender known to the agency.

(3) Deliver or cause to be delivered to the corporation a statement
that the investigation was incomplete, and requiring the corporation
to complete the investigation and resubmit the request for payment
to the agency within five (5) calendar days from the date the
statement is received by the corporation.

(f) The amount paid to the lender pursuant to a demand letter shall be
less than the amount contained in the demand letter only under the
following circumstances:

(1) The demand contains an incorrect calculation of the amount
owing;

(2) The amount owing on the loan has been reduced by subsequent
payments from the borrower to the lender; or

(3) The lender has engaged in fraudulent activities pertaining to
the loan.

(g) Within one working day of receiving the check from the agency, the
corporation shall contact the lender and arrange to deliver the check to
the lender. The corporation shall deliver the check and simultaneously
collect an assignment by the lender of the lender's interest in the loan.
The assignment shall include the loan note and all collateral, except as
provided in section 5286.

(h) Demand must be made upon the corporation no later than noon on the
thirty-first calendar day following the date on which the guarantee
terminates; provided, however, that if the thirty-first day is not a day
upon which the corporation is open for business, the last day for making a
demand shall occur on the next succeeding day upon which the corporation
is open for business.

Note: Authority cited: Section 42106, Public Resources Code.
Reference: Sections 42101 and 42102.4, Public Resources Code.

HISTORY

1. New section filed 7-26-2006 as an emergency; operative 7-26-2006
(Register
2006, No. 30). This regulatory action is deemed an emergency, was filed
directly with the Secretary of State, and shall remain in effect until
revised
or repealed by the Business, Transportation and Housing Agency pursuant to

Public Resources Code section 42106.

10 CCR s 5285, 10 CA ADC s 5285
1CAC

10 CA ADC s 5285

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