AB 2350

AB2350:v96#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 2350

An act to add Section 22348 to Article 7 (commencing with Section 22475) to Chapter 2 of Division 9 of the Financial Code, relating to consumer loans.

LEGISLATIVE COUNSEL'S DIGEST

AB 2350, as amended, McKinnor. Consumer loans: residential real property rental obligations. payments.

The California Financing Law (CFL) generally regulates consumer loan lending practices by finance lenders, brokers, and program administrators. The CFL makes a willful violation of its provisions a crime.

This bill would prohibit finance lenders, brokers, and program administrators from making a consumer loan if a purpose of the loan is to pay for any obligation under an agreement to rent residential real property, including, but not limited to, a rent split loan agreement, as specified. prescribe requirements on loans provided to consumers for the purpose of advancing residential real property rent payments for certain finance lenders and servicers, including prohibiting more than 2 installment payments for the loans, specifying the amount that may be charged for late fees, prescribing disclosure requirements, and prohibiting advertising 0% APR for the loan unless specified conditions are met. By expanding the scope of a crime under the CFL, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

Bill Text

The people of the State of California do enact as follows:

SECTION 1.Section 22348 is added to the Financial Code, to read:

22348.

A licensee shall not make a consumer loan if a purpose of the loan is to pay for any obligation under an agreement to rent residential real property, including, but not limited to, a rent split loan agreement.

SECTION 1.

Article 7 (commencing with Section 22475) is added to Chapter 2 of Division 9 of the Financial Code, to read:

Article 7. Rent Now Pay Later Services22475. (a) For purposes of this division:(1) “Provider” means a finance lender or servicer who provides a loan to a consumer for the purposes of advancing residential real property rent payments and can do any of the following:(A) Furnish information to a credit reporting agency.(B) Provide a notice or disclosure to the consumer.(C) Manage payment dates for the consumer.(D) Initiate an automatic bank withdrawal for the consumer.(E) Charge a subscription fee for a service.(2) “Service” means providing a loan to a consumer for the purpose of advancing a residential real property rent payment.(b) All of the following apply to a service provided by a provider:(1) A provider shall not permit more than two installment payments for the service.(2) If the service includes a subscription fee or a flat fee, any fee for a missed payment related to the service shall not exceed 50 percent of the subscription fee or flat fee that is independent of the amount borrowed by the consumer.(3) If the service does not include a subscription fee or a flat fee, any fee for a missed payment shall not exceed 0.5 percent of the rent amount.(4) (A) Subject to subparagraph (B), a servicer shall not charge the consumer any fee for the service.(B) A servicer may charge the consumer a fee for the service if the fee is actually incurred by the servicer for purposes of completing the rent payment transaction, including, but not limited to, a credit card transaction fee or a passthrough fee if required by the apartment management payment processor.(5) (A) The consumer shall have until the fifth day of the month after the service was originated to cure any missed payment by paying the full amount of the balance owed.(B) If the borrower does not make a payment by the date described in subparagraph (A), the provider shall discontinue the service until the borrower is current on the amount owed.(6) The provider shall not charge an interest or other charge on any late fee or remaining balance for the service.(7) (A) A service shall give the consumer the option to select the date for the second installment payment so long as that date is on or before 30 days after the first installment payment.(B) The borrower shall have at least two calendar days after the date the second installment payment is due to change the date for the next second installment payment, where applicable.(8) The service shall allow the consumer to pay the amount owed in full at any time.(9) A servicer shall not require a minimum subscription term or service term or impose any other condition to incentivize retention.(10) (A) A servicer shall not attempt more than one automatic withdrawal from each of the consumer’s bank accounts that have been provided to the servicer for payment of the service.(B) If a servicer attempts an automatic withdrawal from the consumer’s bank account and the account has insufficient funds or otherwise does not complete the transaction, the servicer shall immediately notify the consumer of the attempted withdrawal using the consumer’s preferred method of communication.(11) To the extent consistent with federal law, a servicer shall not report delinquent payments to any consumer credit reporting agency.(c) (1) Prior to enrolling a consumer in a service, a servicer shall provide clear disclosures in terms easily understood by the least sophisticated consumer that include, but are not limited to, all of the following:(A) Each fee and possible fee, including, but not limited to, credit card or passthrough fees, service fees, and loan origination fees.(B) An itemized list of every charge that is included in the calculation of the rent amount.(C) Clear information that any grace period for a rent payment provided in a rental agreement is independent of the time provided to cure by the servicer.(D) Clear information that a failure to cure a late payment within any grace period for a rent payment provided in a rental agreement will result in late fees or other consequences specified by the rental agreement and applicable laws.(2) A servicer shall make the disclosures required by paragraph (1) available in each language designated in Section 1632 of the Civil Code.(d) A servicer shall not advertise a 0-percent APR for a service unless the service does not include any interest, flat fees, or subscription fees.

SEC. 2.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.