BILL NUMBER: SB 479	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Calderon

                        FEBRUARY 26, 2009

   An act to amend Section 2945 of the Civil Code, relating to
mortgages.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 479, as introduced, Calderon. Mortgage foreclosure consultants.

   Existing law generally regulates mortgage foreclosure consultants,
as defined. Existing law states that it is the intent of the
Legislature in those regulatory provisions to require that
foreclosure consultant service agreements be expressed in writing, to
safeguard the public against deceit and financial hardship, to
permit rescission of foreclosure consultation contracts, to prohibit
representations that tend to mislead, and to encourage fair dealing
in the rendition of foreclosure services.
   This bill would state the intent of the Legislature to enact
legislation that would protect consumers who seek out debt settlement
or debt management services by codifying acceptable industry
business practices and outlawing unacceptable industry business
practices.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.  Section 2945 of the Civil Code is amended to read:
   2945.  (a) The Legislature finds and declares that homeowners
whose residences are in foreclosure are subject to fraud, deception,
harassment, and unfair dealing by foreclosure consultants from the
time a Notice of Default is recorded pursuant to Section 2924 until
the time surplus funds from any foreclosure sale are distributed to
the homeowner or his or her successor. Foreclosure consultants
represent that they can assist homeowners who have defaulted on
obligations secured by their residences. These foreclosure
consultants, however, often charge high fees, the payment of which is
often secured by a deed of trust on the residence to be saved, and
perform no service or essentially a worthless service. Homeowners,
relying on the foreclosure consultants' promises of help, take no
other action, are diverted from lawful businesses which could render
beneficial services, and often lose their homes, sometimes to the
foreclosure consultants who purchase homes at a fraction of their
value before the sale. Vulnerable homeowners are increasingly relying
on the services of foreclosure consultants who advise the homeowner
that the foreclosure consultant can obtain the remaining funds from
the foreclosure sale if the homeowner executes an assignment of the
surplus, a deed, or a power of attorney in favor of the foreclosure
consultant. This results in the homeowner paying an exorbitant fee
for a service when the homeowner could have obtained the remaining
funds from the trustee's sale from the trustee directly for minimal
cost if the homeowner had consulted legal counsel or had sufficient
time to receive notices from the trustee pursuant to Section 2924j
regarding how and where to make a claim for excess proceeds.
   (b) The Legislature further finds and declares that foreclosure
consultants have a significant impact on the economy of this state
and on the welfare of its citizens.
   (c) The intent and purposes of this article are the following:
   (1) To require that foreclosure consultant service agreements be
expressed in writing; to safeguard the public against deceit and
financial hardship; to permit rescission of foreclosure consultation
contracts; to prohibit representations that tend to mislead; and to
encourage fair dealing in the rendition of foreclosure services.
   (2) The provisions of this article shall be liberally construed to
effectuate this intent and to achieve these purposes. 
   (d) It is the intent of the Legislature to enact legislation that
would protect consumers who seek out debt settlement or debt
management services by codifying acceptable industry business
practices and outlawing unacceptable industry business practices.