BILL NUMBER: AB 1950	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 10, 2012

INTRODUCED BY   Assembly Member Davis

                        FEBRUARY 23, 2012

   An act to amend  Sections 10085.6 and 10130 of the Business
and Professions Code, to amend  Section 2944.7 of the Civil
Code, to amend Section 27388 of the Government Code, and to amend
Section 802 of the Penal Code, relating to  mortgages
  business  .


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1950, as amended, Davis.  Mortgages and deeds of trust:
prohibited  Prohibited business  practices:
enforcement. 
   Existing law prohibits any person from engaging in the business,
acting in the capacity of, advertising or assuming to act as a real
estate broker or a real estate salesman without first obtaining a
real estate license, as specified.  
   This bill would additionally prohibit any person from engaging in
the business, acting in the capacity of, advertising or assuming to
act as a mortgage loan originator without being so licensed or
without having obtained a license endorsement, as specified. 
   Existing law, until January 1, 2013, prohibits any person who
negotiates or arranges residential mortgage loan modifications, as
specified, for a fee, from demanding or receiving preperformance
compensation, as specified, or requiring security as collateral or
taking a power of attorney from the borrower  and makes a
violation of that prohibition a misdemeanor subject to specified
fines  . 
   Existing law, until January 1, 2013, makes a violation of that
prohibition a misdemeanor subject to specified fines. 
   Existing law, until January 1, 2013,  provides that those
prohibitions do not apply to actions taken by a person who offers a
loan modification, as specified, for a loan owned or serviced by that
person   also prohibits certain conduct by a real 
 estate licensee in connection with a mortgage loan modification
or forbearance, including demanding compensation before service is
fully performed, taking a lien on property or wage assignment, or
taking a power of attorney from the borrower. A violation of those
prohibitions is a misdemeanor  .
   This bill would extend the operation of the above-described
provisions indefinitely. By extending the operation of  an
existing offense   existing crimes  , this bill
would impose a state-mandated local program.
   Existing law provides that in addition to other recording fees,
upon adoption of a resolution by the county board of supervisors, a
fee of up to $3 shall be paid at the time of recording of specified
real estate instruments, to be placed in the Real Estate Fraud
Prosecution Trust Fund and to be expended to fund programs for the
local police and prosecutors to prosecute real estate fraud crimes.
   This bill would  authorize counties to distribute all or
part of the $3 fee to the Department of Justice to prosecute real
estate fraud crimes. The bill would also  impose an
additional $25 fee to be paid at the time of recording a notice of
default. The fee would be deposited in the State Real Estate Fraud
Prosecution Account of the General Fund, which  is 
 would be  created by the bill, to be available, upon
appropriation by the Legislature, for purposes of combating real
estate fraud crimes, as specified. The bill would make additional
technical changes.
   Existing  law provides that any person advertising or holding
himself or herself out as practicing or entitled to practice law or
otherwise practicing law who is not an active member of the State
Bar, or any person acting or advertising themselves as a real estate
broker, real estate salesperson, or mortgage loan originator without
a license or license endorsement, is guilty of a misdemeanor. 
 Existing  law requires any person  , including a person
licensed to practice law,  who performs a mortgage loan
modification or other form of mortgage loan forbearance for a fee or
other compensation, as specified, to provide a specified notice to
the borrower  ,  concerning 3rd parties arranging
loan modifications. Existing law also prohibits certain conduct by
that person including, among other things, demanding compensation
before service is fully performed, taking a lien on property or a
wage assignment, or taking a power of attorney from the borrower.
Existing law provides that a violation of  the  
these  requirements or prohibitions  described above
 is a misdemeanor with specified penalties. Existing law
requires that a prosecution for these offenses be commenced within
one year of the commission of the offense.
   This bill would extend the time to commence a prosecution for
these offenses to  3   4  years from the
 discovery of the  commission of the offense, or within
4 years after completion of  the offense  , whichever is
later  .
   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 include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII  A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
   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 
 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, or otherwise offers to perform a
mortgage loan modification or other form of mortgage loan forbearance
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) 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) This section shall apply only to mortgages and deeds of trust
secured by residential real property containing four or fewer
dwelling units. 
   (d) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date. 
   SEC. 2.    Section 10130 of the   Business
and Professions Code   is amended to read: 
   10130.  It is unlawful for any person to engage in the business,
act in the capacity of, advertise or assume to act as a real estate
broker or a real estate salesman within this state without first
obtaining a real estate license from the department  , or to
engage in the business, act in the capacity of, advertise or assume
to act as a mortgage loan originator within this state without being
so licensed or without having obtained a license endorsement  .
   The commissioner may prefer a complaint for violation of this
section before any court of competent jurisdiction, and the
commissioner and his counsel, deputies or assistants may assist in
presenting the law or facts at the trial.
   It is the duty of the district attorney of each county in this
state to prosecute all violations of this section in their respective
counties in which the violations occur.
   SECTION 1.   SEC. 3.   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, or otherwise offers to perform a
mortgage loan modification or other form of mortgage loan forbearance
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) 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) 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) This section shall apply only to mortgages and deeds of trust
secured by residential real property containing four or fewer
dwelling units.
   SEC. 2.   SEC. 4.   Section 27388 of the
Government Code is amended to read:
   27388.  (a) (1) In addition to any other recording fees specified
in this code,  upon the adoption of a resolution by the county
board of supervisors,  a fee of up to three dollars ($3) shall
be paid at the time of recording of every real estate instrument,
paper, or notice required or permitted by law to be recorded within
that county, except those expressly exempted from payment of
recording fees. The fees, after deduction of any actual and necessary
administrative costs incurred by the county in carrying out this
section, shall be paid quarterly to the county auditor or director of
finance, to be placed in the Real Estate Fraud Prosecution Trust
Fund. The amount deducted for administrative costs shall not exceed
10 percent of the fees paid pursuant to this section.
   (2) "Real estate instrument" is defined for the purposes of this
section as a deed of trust, an assignment of deed of trust, a
reconveyance, a request for notice, a notice of default, a
substitution of trustee, a notice of trustee sale, and a notice of
rescission or declaration of default. "Real estate instrument" does
not include any deed, instrument, or writing subject to the
imposition of a documentary transfer tax as defined in Section 11911
of the Revenue and Taxation Code, or any document required to
facilitate the transfer subject to the documentary transfer tax.
   (3) An additional fee of twenty-five dollars ($25) shall be paid
at the time of recording a notice of default pursuant to Section 2924
of the Civil Code. Counties shall transmit the twenty-five-dollar
($25) fee, less administrative costs of transmittal, to the
Department of Justice.
   (b) (1) Money placed in the Real Estate Fraud Prosecution Trust
Fund shall be expended to fund programs to enhance the capacity of
 the Department of Justice and  local police and
prosecutors to deter, investigate, and prosecute real estate fraud
crimes.
   (2)  Except as provided in paragraph (4) and after
  After    deduction of the actual and
necessary administrative costs referred to in  paragraph (1) of
 subdivision (a), 60 percent of the funds shall be distributed
to district attorneys subject to review pursuant to subdivision (e),
and 40 percent of the funds shall be distributed to local law
enforcement agencies within the county in accordance with subdivision
(d).
   (3)  Except as provided in paragraph (4), in 
 In  those counties where the investigation of real estate
fraud is done exclusively by the district attorney, after deduction
of the actual and necessary administrative costs referred to in
paragraph (1) of  subdivision (a), 100 percent of the funds
shall be distributed to the district attorney, subject to review
pursuant to subdivision  (d)  (e)  . The
funds so distributed shall be expended for the exclusive purpose of
deterring, investigating, and prosecuting real estate fraud crimes.

   (4) Counties may distribute all or a part of the three-dollar ($3)
fee described in subdivision (a) from the Real Estate Fraud
Prosecution Trust Fund to the department. 
   (c) Moneys transmitted pursuant to paragraph (3) of subdivision
(a) shall be deposited in the State Real Estate Fraud Prosecution
Account of the General Fund, which is hereby created, to be
available, upon appropriation by the Legislature, for expenditure by
the department for the purpose of determining, investigating, and
prosecuting real estate fraud crimes.
   (d) The county auditor or director of finance shall distribute
funds in the Real Estate Fraud Prosecution Trust Fund to eligible law
enforcement agencies within the county pursuant to subdivision (b),
as determined by a Real Estate Fraud Prosecution Trust Fund Committee
composed of the district attorney, the county chief administrative
officer, the chief officer responsible for consumer protection within
the county, and the chief law enforcement officer of one law
enforcement agency receiving funding from the Real Estate Fraud
Prosecution Trust Fund, the latter being selected by a majority of
the other three members of the committee. The chief law enforcement
officer shall be a nonvoting member of the committee and shall serve
a one-year term, which may be renewed. Members may appoint
representatives of their offices to serve on the committee. If a
county lacks a chief officer responsible for consumer protection, the
county board of supervisors may appoint an appropriate
representative to serve on the committee. The committee shall
establish and publish deadlines and written procedures for local law
enforcement agencies within the county to apply for the use of funds
and shall review applications and make determinations by majority
vote as to the award of funds using the following criteria:
   (1) Each law enforcement agency that seeks funds shall submit a
written application to the committee setting forth in detail the
agency's proposed use of the funds.
   (2) In order to qualify for receipt of funds, each law enforcement
agency submitting an application shall provide written evidence that
the agency either:
   (A) Has a unit, division, or section devoted to the investigation
or prosecution of real estate fraud, or both, and the unit, division,
or section has been in existence for at least one year prior to the
application date.
   (B) Has on a regular basis, during the three years immediately
preceding the application date, accepted for investigation or
prosecution, or both, and assigned to specific persons employed by
the agency, cases of suspected real estate fraud, and actively
investigated and prosecuted those cases.
   (3) The committee's determination to award funds to a law
enforcement agency shall be based on, but not be limited to, the
number of real estate fraud cases filed in the prior year, the number
of real estate fraud cases investigated in the prior year, the
number of victims involved in the cases filed, and the total
aggregated monetary loss suffered by victims, including individuals,
associations, institutions, or corporations, as a result of the real
estate fraud cases filed, and those under active investigation by
that law enforcement agency.
   (4) Each law enforcement agency that, pursuant to this section,
has been awarded funds in the previous year, upon reapplication for
funds to the committee in each successive year, in addition to any
information the committee may require in paragraph (3), shall be
required to submit a detailed accounting of funds received and
expended in the prior year. The accounting shall include the amount
of funds received and expended, the uses to which those funds were
put, including payment of salaries and expenses, purchase of
equipment and supplies, and other expenditures by type, the number of
filed complaints, investigations, arrests, and convictions that
resulted from the expenditure of the funds, and other relevant
information the committee may reasonably require.
   (e) The county board of supervisors shall annually review the
effectiveness of the district attorney in deterring, investigating,
and prosecuting real estate fraud crimes based upon information
provided by the district attorney in an annual report. The district
attorney shall submit the annual report to the board and to the
Legislative Analyst's Office on or before September 1 of each year.
The Legislative Analyst's Office shall compile the results and report
to the Legislature, detailing both:
   (1) Facts, based upon, but not limited to, the number of real
estate fraud cases filed in the prior year, the number of real estate
fraud cases investigated in the prior year, the number of victims
involved in the cases filed, the number of convictions obtained in
the prior year, and the total aggregated monetary loss suffered by
victims, including individuals, associations, institutions,
corporations, and other relevant public entities, according to the
number of cases filed, investigations, prosecutions, and convictions
obtained.
   (2) An accounting of funds received and expended in the prior
year, which shall include the amount of funds received and expended,
the uses to which those funds were put, including payment of salaries
and expenses, purchase of equipment and supplies, and other
expenditures by type, the number of filed complaints, investigations,
prosecutions, and convictions that resulted from the expenditure of
funds, and other relevant information provided at the discretion of
the district attorney.
   (f) A county in which a district attorney fails to submit an
annual report to the Legislative Analyst's Office pursuant to the
requirements of subdivision (e) shall not expend funds held in that
county's Real Estate Fraud Prosecution Trust Fund until the district
attorney has submitted an annual report for the county's most recent
full fiscal year.
   (g) Annual reports submitted to the Legislative Analyst's Office
pursuant to subdivision (e) shall be made in a standard form and
manner determined by the Legislative Analyst's Office, in
consultation with participating law enforcement agencies.
   (h) The intent of the Legislature in enacting this section is to
have an impact on real estate fraud involving the largest number of
victims. To the extent possible, an emphasis should be placed on
fraud against individuals whose residences are in danger of, or are
in, foreclosure as defined in subdivision (b) of Section 1695.1 of
the Civil Code. Case filing decisions continue to be at the
discretion of the prosecutor.
   (i) A district attorney's office or a local enforcement agency
that has undertaken investigations and prosecutions that will
continue into a subsequent program year may receive nonexpended funds
from the previous fiscal year subsequent to the annual submission of
information detailing the accounting of funds received and expended
in the prior year.
   (j) No money collected pursuant to this section shall be expended
to offset a reduction in any other source of funds. Funds from the
Real Estate Fraud Prosecution Trust Fund shall be used only in
connection with criminal investigations or prosecutions involving
recorded real estate documents.
   SEC. 3.   SEC. 5.   Section 802 of the
Penal Code is amended to read:
   802.  (a) Except as provided in subdivision (b), (c), (d), or (e),
prosecution for an offense not punishable by death or imprisonment
in the state prison shall be commenced within one year after
commission of the offense.
   (b) Prosecution for a misdemeanor violation of Section 647.6 or
former Section 647a committed with or upon a minor under the age of
14 years shall be commenced within three years after commission of
the offense.
   (c) Prosecution of a misdemeanor violation of Section 729 of the
Business and Professions Code shall be commenced within two years
after commission of the offense.
   (d) Prosecution of a misdemeanor violation of Chapter 9
(commencing with Section 7000) of Division 3 of the Business and
Professions Code shall be commenced as follows:
   (1) With respect to Sections 7028.17, 7068.5, and 7068.7 of the
Business and Professions Code, within one year of the commission of
the offense.
   (2) With respect to Sections 7027.1, 7028.1, 7028.15, 7118.4,
7118.5, 7118.6, 7126, 7153, 7156, 7157, 7158, 7159.5 (licensee only),
7159.14 (licensee only), 7161, and 7189 of the Business and
Professions Code, within two years of the commission of the offense.
   (3) With respect to Sections 7027.3 and 7028.16 of the Business
and Professions Code, within three years of the commission of the
offense.
   (4) With respect to Sections 7028, 7159.5 (nonlicensee only) and
7159.14 (nonlicensee only), of the Business and Professions Code,
within four years of the commission of the offense.
   (e) Prosecution for a misdemeanor violation of  Section
6106.3, 6126, 10085.6, 10139, or 10147.6 of the Business and
Professions Code or of  Section 2944.6 or 2944.7 of the Civil
Code shall be commenced within  three  four
 years  after discovery  of the commission of the
offense  , or within four years after completion of the offense,
whichever is later  . 
   (f) This section shall become operative on July 1, 2005, only if
Senate Bill 30 of the 2003-04 Regular Session is enacted and becomes
effective on or before January 1, 2005. 
   SEC. 4.   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.