LEGISLATIVE COUNSEL'S DIGEST


SB 94, as amended, Calderon. Mortgage loans.
(1) 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.
This bill would, until January 1, 2013, prohibit any person,
including a real estate licensee, who negotiates, attempts to
negotiate, arranges, attempts to arrange, or otherwise offers to
perform residential mortgage loan modifications or other forms of
mortgage loan forbearance, as specified, for a fee or other
compensation paid by a borrower, from demanding or receiving any
preperformance compensation, as specified, requiring any security as
collateral for final compensation, or taking a power of attorney from
a borrower, and would make a violation of that prohibition a
misdemeanor or subject to specified fines. By creating a new crime,
the bill would impose a state-mandated local program.
This bill would also provide that these provisions do not apply to
actions taken by a person who offers loan modification or other loan
forbearance services for a loan owned or serviced by that person,
including, but not limited to, 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.
This bill would also require any person, including a real estate
licensee, who negotiates, attempts to negotiate, arranges, attempts
to arrange, or otherwise offers to perform residential mortgage loan
modifications or other forms of mortgage loan forbearance, as
specified, for a fee or other compensation paid by a borrower, to
provide a specified 14-point bold type statement regarding loan
modification fees. The bill would make a violation of that
prohibition a misdemeanor or subject to specified fines, thereby
creating a new crime and imposing a state-mandated local program. The
bill would also provide that a real estate licensee who fails to
comply with specified provisions related to mortgages, including the
loan modification provisions, would be subject to disciplinary action
by the Real Estate Commissioner, and would provide that a violation
of the above by an attorney may also subject him or her to
disciplinary action. The bill would add to the California Finance
Lenders Law a prohibition on making a materially false or misleading
statement or representation to a borrower about the terms or
conditions of that borrower's loan, when making or brokering a loan.
Because a willful violation of these provisions by certain
licensees may be punished as crimes under their respective licensing
laws, this bill would impose a state-mandated local program.

The bill would also provide that these provisions do not apply to
actions taken by a person who offers loan modification or other loan
forbearance services for a loan owned or serviced by that person,
including, but not limited to, 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.
(2) The Real Estate Law provides for the regulation and licensure
of real estate brokers and salespersons by the Real Estate
Commissioner. As used in the Real Estate Law, the term "advance fee"
is defined as a fee that is claimed, demanded, charged, received,
collected, or contracted from a principal for a listing,
advertisement, or offer to sell or lease property, and as specified.
This bill would redefine the term "advance fee" to mean a fee,
regardless of the form, that is claimed, demanded, charged, received,
or collected by a licensee from a principal before fully completing
each and every service the licensee contracted to perform, or
represented would be performed, as specified.
Existing law authorizes the commissioner to require that
materials used in obtaining advance fee agreements, as defined, be
submitted to him or her at least 10 calendar days before the
materials are used and makes it a misdemeanor, punishable by a fine
not exceeding $1,000, or imprisonment in the county jail not
exceeding 6 months, or both, to use any agreement that the
commissioner has ordered not to be used.
This bill would increase the maximum fine for using any advance
fee agreement that the commissioner has ordered not to be used from
$1,000 to $2,500.
(3) Existing law provides that certain persons are exempt from
regulation under certain provisions of the Real Estate Law dealing
with real estate loans.
This bill would further exempt from those provisions specified
organizations that have been approved by the United States Department
of Housing and Urban Development to provide counseling services,
when those services are provided at no cost and in connection with
residential mortgage loan modifications.
(4) Existing law defines a foreclosure consultant as a person who
offers, for compensation, to perform specified services for a
homeowner relating to a foreclosure sale, and imposes regulations
upon foreclosure consultants when servicing a foreclosure sale, as
specified. Existing law excludes specified persons from the
definition of a foreclosure consultant, including a person licensed
under the Real Estate Law when making a direct loan or engaging in
specified acts, and a person licensed to make loans as a finance
lender, subject to the authority of the Commissioner of Corporations
to terminate this exclusion, as specified.
This bill would instead specify that a real estate licensee and a
finance lender are excluded from the definition of a foreclosure
consultant when acting under the authority of that person's license,
and would delete the commissioner's authority to terminate the
finance lender's exclusion. The bill would also delete obsolete
statutory references from those provisions.

(5) 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.
(6) This bill would declare that it is to take effect immediately
as an urgency statute.

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Comments/questions on SB 94 (Calderon and Corbett and Steinberg): Mortgage loans.