§ 8073. Loss Reserve Accounts.

(a) Upon the Executive Director's acceptance of an application under Section 8071, the Authority shall establish a Loss Reserve Account for that Participating Financial Institution for the following purposes:

(1) to receive all Fees deposited by the Participating Financial Institution, Borrowers and/or Independent Contributors;

(2) to receive Matching Contributions deposited by the Authority and/or Independent Contributors; and

(3) to pay claims in accordance with Section 8074.

(b) The Loss Reserve Account shall, in the Authority's sole determination, be held by the Participating Financial Institution or by a Program Trustee.

(c) Any Loss Reserve Account held in a Participating Financial Institution shall be an interest-bearing demand account or deposit account at a banking institution, or a Money Market Fund approved by the Executive Director, or a combination thereof, and earning a rate of interest that would be expected of accounts of similar type and size. The Loss Reserve Account shall be insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or the Securities Investor Protection Corporation, as appropriate, to the extent permitted by law. The Authority shall not deposit any Loss Reserve Account with a Participating Financial Institution if:

(1) there are any charges by the Participating Financial Institution for the establishment or maintenance of the Loss Reserve Account at such Financial Institution; or

(2) at the time the Loss Reserve Account is established with the Participating Financial Institution, it has a rating below “75” from IDC Financial Publishing Inc.'s Bank Financial Quarterly, S&L-Savings Bank Financial Quarterly, or Credit Union Financial Profiles; or it has a rating of “C” or below from LACE Financial Corp; or it has a rating below “11” from Highline Inc.'s Bank Quarterly or S&L Quarterly or successor publication approved by the Executive Director.

(d) All moneys in a Loss Reserve Account are property of the Authority (subject to the Participating Financial Institution's right to receive a portion of the remaining balance in the Loss Reserve Account upon its withdrawal from the Program pursuant to Section 8076 and subject to subsection (e) below). Interest or income earned on moneys credited to the Loss Reserve Account shall be deemed to be part of the Loss Reserve Account. The Executive Director shall be authorized to withdraw from the loss reserve all interest and income that has been credited to the loss reserve account as set forth in Health and Safety Code Section 44559.3(d). The Executive Director shall be authorized to return to a Participating Financial Institution any fees improperly deposited in a Loss Reserve Account.

(e) Notwithstanding any other provision of this article, the Executive Director shall be authorized, with the approval of the applicable Participating Financial Institution, to assign, transfer, pledge or create security interests in all or a portion of any Loss Reserve Account to any other entity or entities (including a trustee of a securitization trust or trusts) in connection with the securitization of all or a portion of the Participating Financial Institution's loans enrolled in the Program.

(f) The Participating Financial Institution shall provide information to the Authority regarding the status of accounts, enrolled loans, claims and recoveries upon request.

HISTORY

1. New section filed 3-21-94 as an emergency; operative 3-21-94 (Register 94, No. 12). This filing was deemed an emergency by Health and Safety Code section 44520(b). A Certificate of Compliance must be transmitted to OAL by 9-19-94 or the emergency regulation will be repealed by operation of law on the following day.

2. Certificate of Compliance as to 3-21-94 order including amendment of subsections (a) and (d) and Note transmitted to OAL 9-16-94 and filed 10-31-94 (Register 94, No. 44).

3. Amendment of subsections (a)(1) and (2), (b) and (d) filed 2-6-96 as an emergency pursuant to Health and Safety Code section 44520(b); operative 2-6-96 (Register 96, No. 6). Pursuant to Health and Safety Code section 44520(b), a Certificate of Compliance must be transmitted to OAL by 8-5-96 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 2-6-96 order, including amendment of subsections (c)-(c)(1), transmitted to OAL 8-2-96 and filed 9-10-96 (Register 96, No. 37).

5. Amendment of subsections (c) and (d) filed 12-23-98; operative 12-23-98 pursuant to Government Code section 11343.4(d) (Register 98, No. 52).

6. Amendment of subsection (d), new subsection (e) and amendment of Note filed 2-24-2000 as an emergency pursuant to Health and Safety Code section 44520; operative 2-24-2000 (Register 2000, No. 8). A Certificate of Compliance must be transmitted to OAL by 8-22-2000 or emergency language will be repealed by operation of law on the following day.

7. Certificate of Compliance as to 2-24-2000 order transmitted to OAL 8-21-2000 and filed 10-2-2000 (Register 2000, No. 40).

8. Amendment of subsection (c) filed 12-29-2005 as an emergency pursuant to Health and Safety Code section 44520(b); operative 12-29-2005 (Register 2005, No. 52). Pursuant to Health and Safety Code section 44520(b), a Certificate of Compliance must be transmitted to OAL by 6-27-2006 or emergency language will be repealed by operation of law on the following day.

9. Certificate of Compliance as to 12-29-2005 order transmitted to OAL 4-21-2006 and filed 6-1-2006 (Register 2006, No. 22).

10. Amendment of subsections (c) and (c)(2) filed 1-22-2008 as an emergency; operative 1-22-2008 (Register 2008, No. 4). A Certificate of Compliance must be transmitted to OAL by 7-21-2008 or emergency language will be repealed by operation of law on the following day.

11. Certificate of Compliance as to 1-22-2008 order transmitted to OAL 5-30-2008 and filed 7-14-2008 (Register 2008, No. 29).

12. Amendment of subsection (d) filed 12-17-2009 as an emergency; operative 12-17-2009 (Register 2009, No. 51). A Certificate of Compliance must be transmitted to OAL by 6-15-2010 or emergency language will be repealed by operation of law on the following day.

13. Amendment of subsection (d) refiled 6-21-2010 as an emergency; operative 6-21-2010 (Register 2010, No. 26). A Certificate of Compliance must be transmitted to OAL by 9-20-2010 or emergency language will be repealed by operation of law on the following day.

14. Repealer of 6-21-2010 operative amendment of subsection (d) by operation of law; operative 9-21-2010 (Register 2010, No. 40).

15. Amendment of subsection (d) refiled 9-29-2010 as an emergency; operative 9-29-2010 (Register 2010, No. 40). A Certificate of Compliance must be transmitted to OAL by 12-28-2010 or emergency language will be repealed by operation of law on the following day.

16. Amendment of subsection (c)(2) filed 11-29-2010 as an emergency; operative 11-29-2010 (Register 2010, No. 49). A Certificate of Compliance must be transmitted to OAL by 5-31-2011 or emergency language will be repealed by operation of law on the following day.

17. Certificate of Compliance as to 9-29-2010 order transmitted to OAL 11-24-2010 and filed 1-6-2011 (Register 2011, No. 1).

18. Notice of repeal and deletion of 11-29-2010 emergency amendment by operation of Government Code section 11346.1(f) (Register 2011, No. 33).

19. Amendment of subsection (c)(2) filed 8-16-2011; operative 8-16-2011 pursuant to Government Code section 11343.4(c) (Register 2011, No. 33).

20. New subsection (f) filed 11-7-2011 as an emergency; operative 11-7-2011 (Register 2011, No. 45). A Certificate of Compliance must be transmitted to OAL by 5-7-2012 or emergency language will be repealed by operation of law on the following day.

21. Certificate of Compliance as to 11-7-2011 order transmitted to OAL 2-22-2012 and filed 2-29-2012 (Register 2012, No. 9).

Note

Note: Authority cited: Sections 44520 and 44559.5(f), Division 27, Health and Safety Code. Reference: Sections 44559.3 and 44559.8, Division 27, Health and Safety Code.