In 1973, to alleviate the plight of commercial real estate lenders caught between the rising costs of making loans and the limitations on interest and charges, the California Legislature enacted legislation which authorized the formation of the mortgage banker-industrial loan company, a new entity intended to fall within the class of exempt lenders created by article XX, section 22 of the California Constitution. The author discusses the nature and formation of the mortgage banker-industrial loan company and addresses provisions which allow the mortgage banker-industrial loan company to make assignments or transfers to nonexempt lenders. In this discussion he concludes that while such operations are generally authorized by the legislation, the courts will not allow the new institution to act as a "mere conduit," circumventing the distinction between classes of exempt and nonexempt lenders. Finally, the author discusses he constitutionality of the mortgage banker-industrial loan company, marshalling arguments that the institution is a valid subclass of the constitutionality exempt industrial loan company, that public policy considerations support an affirmative finding of constitutionality, and that the creation of the institution does not violate equal protection of the law.
J M. Waxman,
The Mortgage Banker-Industrial Loan Company: A New Exempt Lender,
Pac. L. J.
Available at: https://scholarlycommons.pacific.edu/mlr/vol6/iss1/4