Bill Text: CA SB2 | 2011-2012 | Regular Session | Introduced
Bill Title: Mortgage loans.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB2 Detail]
Download: California-2011-SB2-Introduced.html
BILL NUMBER: SB 2 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Calderon
DECEMBER 6, 2010
An act to amend Sections 6106.3, 10085.6, and 10147.6 of the
Business and Professions Code, and to amend Sections 2944.6 and
2944.7 of the Civil Code, relating to mortgage loans, and declaring
the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 2, as introduced, Calderon. Mortgage loans.
The Real Estate Law provides for the regulation and licensure of
real estate brokers and real estate salespersons by the Real Estate
Commissioner. The California Finance Lenders Law provides for the
regulation and licensure of finance lenders and brokers by the
Commissioner of Corporations. The California Residential Mortgage
Lending Act provides for the regulation and licensure of residential
mortgage lenders and servicers by the Commissioner of Corporations.
The Banking Law provides for the regulation of state commercial banks
by the Commissioner of Financial Institutions. The California Credit
Union Law provides for the regulation of state credit unions by the
Commissioner of Financial Institutions. A willful violation of
specified provisions of those acts is a crime.
Existing law, until January 1, 2013, prohibits any person who
negotiates, attempts to negotiate, arranges, attempts to arrange, or
otherwise offers to perform residential mortgage loan modifications
or forbearance for a fee paid by the borrower, from demanding or
receiving any preperformance compensation, requiring collateral to
secure final payment, or taking power of attorney from the borrower,
and makes a violation of those provisions a misdemeanor. Existing law
also requires those persons, when providing services for mortgage
loan modifications or forbearance, to provide a 14-point bold type
statement to the borrower regarding the borrower's right to contact
his or her lender directly rather than using a 3rd party to arrange
for those services, and makes a violation of those provisions a
misdemeanor.
This bill would extend those provisions until January 1, 2015, and
to persons who facilitate or attempt to facilitate mortgage loan
modifications or forbearance. The bill would further extend those
prohibitions to persons who for a fee negotiate, attempt to
negotiate, arrange, attempt to arrange, facilitate, attempt to
facilitate, or otherwise offer to accomplish the sale of a
residential dwelling for less than the remaining amount of
indebtedness due to a mortgagor, mortgagors, trustor, or trustors at
the time of sale. The bill would make conforming changes to the
14-point bold type statement that is required to be provided to a
borrower, as specified.
Because the bill would create new crimes, and because a willful
violation of these provisions by certain licensees may be punished as
crimes, the 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.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6106.3 of the Business and Professions Code, as
added by Section 1 of Chapter 630 of the Statutes of 2009, is
amended to read:
6106.3. (a) It shall constitute cause for the imposition of
discipline of an attorney within the meaning of this chapter for an
attorney to engage in any conduct in violation of Section 2944.6 or
2944.7 of the Civil Code.
(b) This section shall remain in effect only until January 1,
2013 2015 , and as of that date is
repealed, unless a later enacted statute, that is enacted before
January 1, 2013 2015 , deletes or
extends that date.
SEC. 2. Section 6106.3 of the Business and Professions Code, as
added by Section 2 of Chapter 630 of the Statutes of 2009, is amended
to read:
6106.3. (a) It shall constitute cause for the imposition of
discipline of an attorney within the meaning of this chapter for an
attorney to engage in any conduct in violation of Section 2944.6 of
the Civil Code.
(b) This section shall become operative on January 1,
2013 2015 .
SEC. 3. Section 10085.6 of the Business and Professions Code is
amended to read:
10085.6. (a) Notwithstanding any other provision of law, it shall
be unlawful for any licensee who negotiates, attempts to negotiate,
arranges, attempts to arrange, facilitates, attempts to
facilitate, or otherwise offers to perform a mortgage loan
modification or other form of mortgage loan forbearance or
forgiveness, or who negotiates, attempts to negotiate, arranges,
attempts to arrange, facilitates, attempts to facilitate, or
otherwise offers to accomplish the sale of a residential dwelling for
less than the remaining amount of indebtedness due to the mortgagor,
mortgagors, trustor, or trustors at the time of sale, for a
fee or other compensation paid by the borrower, to do any of the
following:
(1) Claim, demand, charge, collect, or receive any compensation
until after the licensee has fully performed each and every service
the licensee contracted to perform or represented that he, she, or it
would perform.
(2) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation.
(3) Take any power of attorney from the borrower for any purpose.
(b) This section shall not prohibit a licensee from engaging in
activities described in subdivision (a) of Section 10131, pursuant to
a sales contract that provides that payment for services shall be
made at or after the closing of escrow.
(b)
(c) A violation of this section by a natural person who
is a licensee is a public offense punishable by a fine not exceeding
ten thousand dollars ($10,000), by imprisonment in the county jail
for a term not to exceed one year, or by both that fine and
imprisonment, or if by a corporation, the violation is punishable by
a fine not exceeding fifty thousand dollars ($50,000). These
penalties are cumulative to any other remedies or penalties provided
by law.
(c)
(d) This section shall apply only to mortgages and
deeds of trust secured by residential real property containing four
or fewer dwelling units.
(d)
(e) This section shall remain in effect only
until January 1, 2013 2015 , and as of
that date is repealed, unless a later enacted statute, that is
enacted before January 1, 2013 2015 ,
deletes or extends that date.
SEC. 4. Section 10147.6 of the Business and Professions Code is
amended to read:
10147.6. (a) Any licensee who negotiates, attempts to negotiate,
arranges, attempts to arrange, facilitates, attempts to
facilitate, or otherwise offers to perform a mortgage loan
modification or other form of mortgage loan forbearance or
forgiveness, or who negotiates, attempts to negoti ate,
arranges, attempts to arrange, facilitates, attempts to facilitate,
or otherwise offers to accomplish the sale of a residential dwelling
for less than the remaining amount of indebtedness due to the
mortgagor, mortgagors, trustor, or trustors at the time of sale,
for a fee or other form of compensation paid by the borrower,
shall provide the following to the borrower, as a separate statement,
in not less than 14-point bold type, prior to entering into any fee
agreement with the borrower:
It is not necessary to pay a third party to arrange for a loan
modification or other form of forbearance or forgiveness
from your mortgage lender or servicer. You may call your lender
directly to ask for a change in your loan terms or to ask for
approval to sell your house for less than you owe on your mortgage
. Nonprofit housing counseling agencies also offer these and
other forms of borrower assistance free of charge. A list of
nonprofit housing counseling agencies approved by the United States
Department of Housing and Urban Development (HUD) is available from
your local HUD office or by visiting www.hud.gov.
(b) If loan modification , short sale, or other
mortgage loan forbearance or forgiveness services are
offered or negotiated in one of the languages set forth in Section
1632 of the Civil Code, a translated copy of the statement in
subdivision (a) shall be provided to the borrower in that foreign
language.
(c) A violation of this section by a natural person who is a
licensee is a public offense punishable by a fine not exceeding ten
thousand dollars ($10,000), by imprisonment in the county jail for a
term not to exceed one year, or by both that fine and imprisonment,
or if by a corporation, the violation is punishable by a fine not
exceeding fifty thousand dollars ($50,000). These penalties are
cumulative to any other remedies or penalties provided by law.
(d) This section shall apply only to mortgages and deeds of trust
secured by residential real property containing four or fewer
dwelling units.
SEC. 5. Section 2944.6 of the Civil Code is amended to read:
2944.6. (a) Notwithstanding any other provision of law, any
person who negotiates, attempts to negotiate, arranges, attempts to
arrange, facilitates, attempts to facilitate, or otherwise
offers to perform a mortgage loan modification or other form of
mortgage loan forbearance or forgiveness, or who negotiates,
attempts to negotiate, arranges, attempts to arrange, facilitates,
attempts to facilitate, or otherwise offers to accomplish the sale of
a residential dwelling for less than the remaining amount of
indebtedness due to the mortgagor, mortgagors, trustor, or trustors
at the time of sale, for a fee or other compensation paid by
the borrower, shall provide the following to the borrower, as a
separate statement, in not less than 14-point bold type, prior to
entering into any fee agreement with the borrower:
It is not necessary to pay a third party to arrange for a loan
modification or other form of forbearance or forgiveness
from your mortgage lender or servicer. You may call your lender
directly to ask for a change in your loan terms or to ask for
approval to sell your house for less than you owe on your mortgage
. Nonprofit housing counseling agencies also offer these and
other forms of borrower assistance free of charge. A list of
nonprofit housing counseling agencies approved by the United States
Department of Housing and Urban Development (HUD) is available from
your local HUD office or by visiting www.hud.gov.
(b) If loan modification , short sale, or other
mortgage loan forbearance or forgiveness services are
offered or negotiated in one of the languages set forth in Section
1632, a translated copy of the statement in subdivision (a) shall be
provided to the borrower in that foreign language.
(c) A violation of this section by a natural person is a public
offense punishable by a fine not exceeding ten thousand dollars
($10,000), by imprisonment in the county jail for a term not to
exceed one year, or by both that fine and imprisonment, or if by a
business entity, the violation is punishable by a fine not exceeding
fifty thousand dollars ($50,000). These penalties are cumulative to
any other remedies or penalties provided by law.
(d) This section does not apply to a person, or an agent acting on
that person's behalf, offering loan modification or other loan
forbearance services for a loan owned or serviced by that person.
(e) This section shall apply only to mortgages and deeds of trust
secured by residential real property containing four or fewer
dwelling units.
SEC. 6. Section 2944.7 of the Civil Code is amended to read:
2944.7. (a) Notwithstanding any other provision of law, it shall
be unlawful for any person who negotiates, attempts to negotiate,
arranges, attempts to arrange, facilitates, attempts to
facilitate, or otherwise offers to perform a mortgage loan
modification or other form of mortgage loan forbearance or
forgiveness, or who negotiates, attempts to negotiate, arranges,
attempts to arrange, facilitates, attempts to facilitate, or
otherwise offers to accomplish the sale of a residential dwelling for
less than the remaining amount of indebtedness due to the mortgagor,
mortgagors, trustor, or trustors at the time of sale, for a
fee or other compensation paid by the borrower, to do any of the
following:
(1) Claim, demand, charge, collect, or receive any compensation
until after the person has fully performed each and every service the
person contracted to perform or represented that he or she would
perform.
(2) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation.
(3) Take any power of attorney from the borrower for any purpose.
(b) This section shall not prohibit a real estate licensee, or
other person exempt from real estate licensure pursuant to Section
10133 or 10133.1 of the Business and Professions Code, from engaging
in activities described in subdivision (a) of Section 10131 of the
Business and Professions Code, pursuant to a sales contract that
provides that payment for services shall be made at or after the
closing of escrow.
(b)
(c) A violation of this section by a natural person is
a public offense punishable by a fine not exceeding ten thousand
dollars ($10,000), by imprisonment in the county jail for a term not
to exceed one year, or by both that fine and imprisonment, or if by a
business entity, the violation is punishable by a fine not exceeding
fifty thousand dollars ($50,000). These penalties are cumulative to
any other remedies or penalties provided by law.
(c)
(d) Nothing in this section precludes a person, or an
agent acting on that person's behalf, who offers loan modification or
other loan forbearance services for a loan owned or serviced by that
person, from doing any of the following:
(1) Collecting principal, interest, or other charges under the
terms of a loan, before the loan is modified, including charges to
establish a new payment schedule for a nondelinquent loan, after the
borrower reduces the unpaid principal balance of that loan for the
express purpose of lowering the monthly payment due under the terms
of the loan.
(2) Collecting principal, interest, or other charges under the
terms of a loan, after the loan is modified.
(3) Accepting payment from a federal agency in connection with the
federal Making Home Affordable Plan or other federal plan intended
to help borrowers refinance or modify their loans or otherwise avoid
foreclosures.
(d)
(e) This section shall apply only to mortgages and
deeds of trust secured by residential real property containing four
or fewer dwelling units.
(e)
(f) This section shall remain in effect only until
January 1, 2013 2015 , and as of that
date is repealed, unless a later enacted statute, that is enacted
before January 1, 2013 2015 , deletes
or extends that date.
SEC. 7. 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.
SEC. 8. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
With California's unemployment rate hovering above ten percent,
California's housing market continuing to stagnate, and historically
high numbers of California homeowners owing more on their mortgages
than their homes are worth, short sale and loan modification rescue
scams are pervasive and rampant. In order to prevent financially
stressed homeowners from being victimized and to provide them with
needed protection at the earliest possible time, it is necessary that
this act take effect immediately.
