BILL NUMBER: AB 180	CHAPTERED
	BILL TEXT

	CHAPTER  278
	FILED WITH SECRETARY OF STATE  SEPTEMBER 25, 2008
	APPROVED BY GOVERNOR  SEPTEMBER 25, 2008
	PASSED THE SENATE  AUGUST 22, 2008
	PASSED THE ASSEMBLY  AUGUST 31, 2008
	AMENDED IN SENATE  AUGUST 19, 2008
	AMENDED IN SENATE  AUGUST 13, 2008
	AMENDED IN SENATE  JULY 2, 2008
	AMENDED IN SENATE  JUNE 12, 2008
	AMENDED IN ASSEMBLY  JANUARY 24, 2008
	AMENDED IN ASSEMBLY  JANUARY 7, 2008

INTRODUCED BY   Assembly Members Bass and Lieu
   (Coauthors: Assembly Members Lieber and Wolk)

                        JANUARY 24, 2007

   An act to amend Sections 1632, 2945.2, 2945.3, and 2945.4 of, and
to add Section 2945.45 to, the Civil Code, relating to mortgages.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 180, Bass. Mortgages: foreclosure consultants.
   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, except as specified.
Existing law prohibits a foreclosure consultant from entering into an
agreement to assist the owner in arranging, or arrange for the
owner, the release of surplus funds prior to 65 days after the
trustee's sale is conducted.
   This bill would, instead, prohibit a foreclosure consultant from
entering into an agreement described above at any time.
   Existing law allows a homeowner to cancel a contract with a
foreclosure consultant within 3 days after signing the contract by
providing written notice of the cancellation at the address provided
by the foreclosure consultant. Existing law requires that the
contract be written in the same language as principally used by the
foreclosure consultant to describe his or her services or to
negotiate the contract. Existing law prohibits a foreclosure
consultant from taking any power of attorney from an owner, except to
inspect documents as provided by law.
   This bill would instead allow a homeowner to cancel a contract
with a foreclosure consultant within 5 days after signing the
contract, and to do so by mail, e-mail, or facsimile. It would
require that a contract with a foreclosure consultant be written in
the language principally used by the foreclosure consultant to
describe his or her services or to negotiate the contract, and would
require the foreclosure consultant, in specified circumstances, to
provide the owner, before the owner signs the contract, with one or
more copies of a completed contract written in specified other
languages, and would make a conforming change in this regard. The
bill would prohibit a foreclosure consultant from taking any power of
attorney from an owner for any purpose.
   The bill would require a foreclosure consultant to register with
the Department of Justice in accordance with certain requirements,
and to obtain and maintain a surety bond of $100,000. A violation of
these provisions would be a crime. By creating a new crime, the bill
would impose a state-mandated local program. The bill would permit
the Department of Justice to refuse to issue, or to revoke, a
foreclosure consultant's registration for any violation of the law
regulating foreclosure consultants. The bill would create the
Foreclosure Consultant Regulation Fund in the State Treasury for the
deposit of fees submitted to the Department of Justice for
registration as a foreclosure consultant, and make moneys in that
fund available to the department upon appropriation by the
Legislature for the costs of administering the registration 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.
   The bill would provide that its provisions will become operative
on July 1, 2009.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1632 of the Civil Code is amended to read:
   1632.  (a) The Legislature hereby finds and declares all of the
following:
   (1) This section was enacted in 1976 to increase consumer
information and protections for the state's sizeable and growing
Spanish-speaking population.
   (2) Since 1976, the state's population has become increasingly
diverse and the number of Californians who speak languages other than
English as their primary language at home has increased
dramatically.
   (3) According to data from the United States Census of 2000, of
the more than 12 million Californians who speak a language other than
English in the home, approximately 4.3 million speak an Asian
dialect or another language other than Spanish. The top five
languages other than English most widely spoken by Californians in
their homes are Spanish, Chinese, Tagalog, Vietnamese, and Korean.
Together, these languages are spoken by approximately 83 percent of
all Californians who speak a language other than English in their
homes.
   (b) Any person engaged in a trade or business who negotiates
primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally
or in writing, in the course of entering into any of the following,
shall deliver to the other party to the contract or agreement and
prior to the execution thereof, a translation of the contract or
agreement in the language in which the contract or agreement was
negotiated, which includes a translation of every term and condition
in that contract or agreement:
   (1) A contract or agreement subject to the provisions of Title 2
(commencing with Section 1801) of, and Chapter 2b (commencing with
Section 2981) and Chapter 2d (commencing with Section 2985.7) of
Title 14 of, Part 4 of Division 3.
   (2) A loan or extension of credit secured other than by real
property, or unsecured, for use primarily for personal, family or
household purposes.
   (3) A lease, sublease, rental contract or agreement, or other term
of tenancy contract or agreement, for a period of longer than one
month, covering a dwelling, an apartment, or mobilehome, or other
dwelling unit normally occupied as a residence.
   (4) Notwithstanding paragraph (2), a loan or extension of credit
for use primarily for personal, family or household purposes where
the loan or extension of credit is subject to the provisions of
Article 7 (commencing with Section 10240) of Chapter 3 of Part 1 of
Division 4 of the Business and Professions Code, or Division 7
(commencing with Section 18000), or Division 9 (commencing with
Section 22000) of the Financial Code.
   (5) Notwithstanding paragraph (2), a reverse mortgage as described
in Chapter 8 (commencing with Section 1923) of Title 4 of Part 4 of
Division 3.
   (6) A contract or agreement, containing a statement of fees or
charges, entered into for the purpose of obtaining legal services,
when the person who is engaged in business is currently licensed to
practice law pursuant to Chapter 4 (commencing with Section 6000) of
Division 3 of the Business and Professions Code.
   (7) A foreclosure consulting contract subject to Article 1.5
(commencing with Section 2945) of Chapter 2 of Title 14 of Part 4 of
Division 3.
   (c) Notwithstanding subdivision (b), for a loan subject to this
part and to Article 7 (commencing with Section 10240) of Chapter 3 of
Part 1 of Division 4 of the Business and Professions Code, the
delivery of a translation of the statement to the borrower required
by Section 10240 of the Business and Professions Code in any of the
languages specified in subdivision (b) in which the contract or
agreement was negotiated, is in compliance with subdivision (b).
   (d) At the time and place where a lease, sublease, or rental
contract or agreement described in subdivision (b) is executed,
notice in any of the languages specified in subdivision (b) in which
the contract or agreement was negotiated shall be provided to the
lessee or tenant.
   (e) Provision by a supervised financial organization of a
translation of the disclosures required by Regulation M or Regulation
Z, and, if applicable, Division 7 (commencing with Section 18000) or
Division 9 (commencing with Section 22000) of the Financial Code in
any of the languages specified in subdivision (b) in which the
contract or agreement was negotiated, prior to the execution of the
contract or agreement, shall also be deemed in compliance with the
requirements of subdivision (b) with regard to the original contract
or agreement.
   (1) "Regulation M" and "Regulation Z" mean any rule, regulation,
or interpretation promulgated by the Board of Governors of the
Federal Reserve System and any interpretation or approval issued by
an official or employee duly authorized by the board to issue
interpretations or approvals dealing with, respectively, consumer
leasing or consumer lending, pursuant to the Federal Truth in Lending
Act, as amended (15 U.S.C. Sec. 1601 et seq.).
   (2) As used in this section, "supervised financial organization"
means a bank, savings association as defined in Section 5102 of the
Financial Code, credit union, or holding company, affiliate, or
subsidiary thereof, or any person subject to Article 7 (commencing
with Section 10240) of Chapter 3 of Part 1 of Division 4 of the
Business and Professions Code, or Division 7 (commencing with Section
18000) or Division 9 (commencing with Section 22000) of the
Financial Code.
   (f) At the time and place where a contract or agreement described
in paragraph (1) or (2) of subdivision (b) is executed, a notice in
any of the languages specified in subdivision (b) in which the
contract or agreement was negotiated shall be conspicuously displayed
to the effect that the person described in subdivision (b) is
required to provide a contract or agreement in the language in which
the contract or agreement was negotiated, or a translation of the
disclosures required by law in the language in which the contract or
agreement was negotiated, as the case may be. If a person described
in subdivision (b) does business at more than one location or branch,
the requirements of this section shall apply only with respect to
the location or branch at which the language in which the contract or
agreement was negotiated is used.
   (g) The term "contract" or "agreement," as used in this section,
means the document creating the rights and obligations of the parties
and includes any subsequent document making substantial changes in
the rights and obligations of the parties. The term "contract" or
"agreement" does not include any subsequent documents authorized or
contemplated by the original document such as periodic statements,
sales slips or invoices representing purchases made pursuant to a
credit card agreement, a retail installment contract or account or
other revolving sales or loan account, memoranda of purchases in an
add-on sale, or refinancing of a purchase as provided by, or pursuant
to, the original document.
   The term "contract" or "agreement" does not include a home
improvement contract as defined in Sections 7151.2 and 7159 of the
Business and Professions Code, nor does it include plans,
specifications, description of work to be done and materials to be
used, or collateral security taken or to be taken for the retail
buyer's obligation contained in a contract for the installation of
goods by a contractor licensed pursuant to Chapter 9 (commencing with
Section 7000) of Division 3 of the Business and Professions Code, if
the home improvement contract or installation contract is otherwise
a part of a contract described in subdivision (b).
   Matters ordinarily incorporated by reference in contracts or
agreements as described in paragraph (3) of subdivision (b),
including, but not limited to, rules and regulations governing a
tenancy and inventories of furnishings to be provided by the person
described in subdivision (b), are not included in the term "contract"
or "agreement."
   (h) This section does not apply to any person engaged in a trade
or business who negotiates primarily in a language other than
English, as described by subdivision (b), if the party with whom he
or she is negotiating is a buyer of goods or services, or receives a
loan or extension of credit, or enters an agreement obligating
himself or herself as a tenant, lessee, or sublessee, or similarly
obligates himself or herself by contract or lease, and the party
negotiates the terms of the contract, lease, or other obligation
through his or her own interpreter.
   As used in this subdivision, "his or her own interpreter" means a
person, not a minor, able to speak fluently and read with full
understanding both the English language and any of the languages
specified in subdivision (b) in which the contract or agreement was
negotiated, and who is not employed by, or whose service is made
available through, the person engaged in the trade or business.
   (i) Notwithstanding subdivision (b), a translation may retain the
following elements of the executed English-language contract or
agreement without translation: names and titles of individuals and
other persons, addresses, brand names, trade names, trademarks,
registered service marks, full or abbreviated designations of the
make and model of goods or services, alphanumeric codes, numerals,
dollar amounts expressed in numerals, dates, and individual words or
expressions having no generally accepted non-English translation. It
is permissible, but not required, that this translation be signed.
   (j) The terms of the contract or agreement which is executed in
the English language shall determine the rights and obligations of
the parties. However, the translation of the contract or the
disclosures required by subdivision (e) in any of the languages
specified in subdivision (b) in which the contract or agreement was
negotiated shall be admissible in evidence only to show that no
contract was entered into because of a substantial difference in the
material terms and conditions of the contract and the translation.
   (k) Upon a failure to comply with the provisions of this section,
the person aggrieved may rescind the contract or agreement in the
manner provided by this chapter. When the contract for a consumer
credit sale or consumer lease which has been sold and assigned to a
financial institution is rescinded pursuant to this subdivision, the
consumer shall make restitution to and have restitution made by the
person with whom he or she made the contract, and shall give notice
of rescission to the assignee. Notwithstanding that the contract was
assigned without recourse, the assignment shall be deemed rescinded
and the assignor shall promptly repurchase the contract from the
assignee.
  SEC. 2.  Section 2945.2 of the Civil Code is amended to read:
   2945.2.  (a) In addition to any other right under law to rescind a
contract, an owner has the right to cancel such a contract until
midnight of the fifth business day, as defined in subdivision (e) of
Section 1689.5, after the day on which the owner signs a contract
that complies with Section 2945.3.
   (b) Cancellation occurs when the owner gives written notice of
cancellation to the foreclosure consultant by mail at the address
specified in the contract, or by facsimile or electronic mail at the
number or address identified in the contract.
   (c) Notice of cancellation, if given by mail, is effective when
deposited in the mail properly addressed with postage prepaid. If
given by facsimile or electronic mail, notice of cancellation is
effective when successfully transmitted.
   (d) Notice of cancellation given by the owner need not take the
particular form as provided with the contract and, however expressed,
is effective if it indicates the intention of the owner not to be
bound by the contract.
  SEC. 3.  Section 2945.3 of the Civil Code is amended to read:
   2945.3.  (a) Every contract shall be in writing and shall fully
disclose the exact nature of the foreclosure consultant's services
and the total amount and terms of compensation.
   (b) The following notice, printed in at least 14-point boldface
type and completed with the name of the foreclosure consultant, shall
be printed immediately above the statement required by subdivision
(d):
        ""NOTICE REQUIRED BY CALIFORNIA LAW
_______________________________________or anyone
working
(Name)
for him or her CANNOT:
  (1) Take any money from you or ask you for
money
until________________________________________has
(Name)
completely finished doing everything he or she
said he or she would do; and
  (2) Ask you to sign or have you sign any lien,
deed of trust, or deed.''


   (c) The contract shall be written in the same language as
principally used by the foreclosure consultant to describe his or her
services or to negotiate the contract. In addition, the foreclosure
consultant shall provide the owner, before the owner signs the
contract, with a copy of a completed contract written in any other
language used in any communication between the foreclosure consultant
and the owner and in any language described in subdivision (b) of
Section 1632 and requested by the owner. If English is the language
principally used by the foreclosure consultant to describe the
foreclosure consultant's services or to negotiate the contract, the
foreclosure consultant shall notify the owner orally and in writing
before the owner signs the contract that the owner has the right to
ask for a completed copy of the contract in a language described in
subdivision (b) of Section 1632.
   (d) The contract shall be dated and signed by the owner and shall
contain in immediate proximity to the space reserved for the owner's
signature a conspicuous statement in a size equal to at least
10-point boldface type, as follows: "You, the owner, may cancel this
transaction at any time prior to midnight of the fifth business day
after the date of this transaction. See the attached notice of
cancellation form for an explanation of this right."
   (e) The contract shall contain on the first page, in a type size
no smaller than that generally used in the body of the document, each
of the following:
   (1) The name, mailing address, electronic mail address, and
facsimile number of the foreclosure consultant to which the notice of
cancellation is to be mailed.
   (2) The date the owner signed the contract.
   (f) The contract shall be accompanied by a completed form in
duplicate, captioned "notice of cancellation," which shall be
attached to the contract, shall be easily detachable, and shall
contain in type of at least 10-point the following statement written
in the same language as used in the contract:
                ""NOTICE OF CANCELLATION
_____________________________
(Enter date of transaction)    (Date)
You may cancel this transaction, without any penalty
or
obligation, within five business days from the above
date.
To cancel this transaction, mail or deliver a signed
and dated copy of this cancellation notice, or any
other written notice, or send a telegram,
to __________________________________________________
   (Name of foreclosure consultant)
at __________________________________________________
  (Address of foreclosure consultant's place of
business)
You may also cancel by sending a facsimile (fax) of
a signed and dated copy of this cancellation notice,
or any other written notice, to the following number:
_____________________________________________________
  (Facsimile telephone number of foreclosure
consultant's place of       business)
You may also cancel by sending an e-mail canceling
this transaction to the following e-mail address:
_____________________________________________________
   (E-mail address of foreclosure consultant's
business)
I       hereby      cancel       this
transaction
____________________________________________________.
                             (Date)
                           _________________________''
                     (Owner's signature)


   (g) The foreclosure consultant shall provide the owner with a copy
of the contract and the attached notice of cancellation.
   (h) Until the foreclosure consultant has complied with this
section, the owner may cancel the contract.
  SEC. 4.  Section 2945.4 of the Civil Code is amended to read:
   2945.4.  It shall be a violation for a foreclosure consultant to:
   (a) Claim, demand, charge, collect, or receive any compensation
until after the foreclosure consultant has fully performed each and
every service the foreclosure consultant contracted to perform or
represented that he or she would perform.
   (b) Claim, demand, charge, collect, or receive any fee, interest,
or any other compensation for any reason which exceeds 10 percent per
annum of the amount of any loan which the foreclosure consultant may
make to the owner.
   (c) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation. That security shall be void and unenforceable.
   (d) Receive any consideration from any third party in connection
with services rendered to an owner unless that consideration is fully
disclosed to the owner.
   (e) Acquire any interest in a residence in foreclosure from an
owner with whom the foreclosure consultant has contracted. Any
interest acquired in violation of this subdivision shall be voidable,
provided that nothing herein shall affect or defeat the title of a
bona fide purchaser or encumbrancer for value and without notice of a
violation of this article. Knowledge that the property was
"residential real property in foreclosure," does not constitute
notice of a violation of this article. This subdivision may not be
deemed to abrogate any duty of inquiry which exists as to rights or
interests of persons in possession of residential real property in
foreclosure.
   (f) Take any power of attorney from an owner for any purpose.
   (g) Induce or attempt to induce any owner to enter into a contract
which does not comply in all respects with Sections 2945.2 and
2945.3.
   (h) Enter into an agreement at any time to assist the owner in
arranging, or arrange for the owner, the release of surplus funds
after the trustee's sale is conducted, whether the agreement involves
direct payment, assignment, deed, power of attorney, assignment of
claim from an owner to the foreclosure consultant or any person
designated by the foreclosure consultant, or any other compensation.
  SEC. 5.  Section 2945.45 is added to the Civil Code, to read:
   2945.45.  (a) Except as provided in subdivision (b) of Section
2945.1, a person shall not take any action specified in subdivision
(a) of Section 2945.1 unless the person satisfies the following
requirements:
   (1) The person registers with, and is issued and maintains a
certificate of registration from, the Department of Justice in
accordance with the following requirements:
   (A) The person shall submit a completed registration form, along
with applicable fees, to the department. The registration form shall
include the name, address, and telephone number of the foreclosure
consultant, all of the names, addresses, telephone numbers, Internet
Web sites, and e-mail addresses used or proposed to be used in
connection with acting as a foreclosure consultant, a statement that
the person has not been convicted of, or pled nolo contendere to, any
crime involving fraud, misrepresentation, dishonesty, or a violation
of this article, a statement that the person has not been liable
under any civil judgment for fraud, misrepresentation, or violations
of this article or of Section 17200 or 17500 of the Business and
Professions Code, and any additional information required by the
department.
   (B) The registration form shall be accompanied by a copy of all
print or electronic advertising and other promotional material, and
scripts of all telephonic or broadcast advertising and other
statements used or proposed to be used in connection with acting as a
foreclosure consultant.
   (C) The registration form shall be accompanied by a copy of the
bond required pursuant to paragraph (2).
   (D) The person shall file an update of any material change in the
information required by subparagraphs (A) and (B) with the
department.
   (E) The person shall pay any fee set by the department to defray
reasonable costs incurred in connection with the department's
responsibilities under this article.
   (2) The person obtains and maintains in force a surety bond in the
amount of one hundred thousand dollars ($100,000). The bond shall be
executed by a corporate surety admitted to do business in this
state. The bond shall be made in favor of the State of California for
the benefit of homeowners for damages caused by the foreclosure
consultant's violation of this article or any other provision of law.
A copy of the bond shall be filed with the Secretary of State, with
a copy provided to the department pursuant to subparagraph (C) of
paragraph (1).
   (b) The Foreclosure Consultant Regulation Fund is hereby created
in the State Treasury for the deposit of fees submitted to the
Department of Justice pursuant to subparagraph (A) of paragraph (1)
of subdivision (a) for registration as a foreclosure consultant.
Moneys in the fund shall be available, upon appropriation by the
Legislature, for the costs of the department incurred in connection
with the administration of the registration program.
   (c) The Department of Justice may refuse to issue, or may revoke,
a certificate of registration because of any misstatement in the
registration form, because the foreclosure consultant has been held
liable for the violation of any law described in subparagraph (A) of
paragraph (1) of subdivision (a), because the foreclosure consultant
has failed to maintain the bond required under paragraph (2) of
subdivision (a), or because of any violation of this chapter.
   (d) A person who violates subdivision (a) shall be punished, for
each violation, by a fine of not less than one thousand dollars
($1,000) and not more than twenty-five thousand dollars ($25,000), by
imprisonment in the county jail for not more than one year, or by
both that fine and imprisonment. The imposition of a penalty pursuant
to this subdivision shall not be affected by the availability of any
other relief, remedy, or penalty provided by law, and shall not
affect the availability of any such relief, remedy, or penalty.
  SEC. 6.  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. 7.  This act shall become operative on July 1, 2009.