BILL NUMBER: AB 1950	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 22, 2012
	PASSED THE ASSEMBLY  AUGUST 27, 2012
	AMENDED IN SENATE  AUGUST 6, 2012
	AMENDED IN ASSEMBLY  MAY 21, 2012
	AMENDED IN ASSEMBLY  APRIL 19, 2012
	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, and to
amend Section 802 of the Penal Code, relating to business.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1950, Davis. Prohibited business practices: enforcement.
   (1) Existing law prohibits any person from engaging in the
business of, acting in the capacity of, advertising as, or assuming
to act as, a real estate broker or a real estate salesperson without
first obtaining a real estate license, as specified.
   This bill would additionally prohibit any person from engaging in
the business of, acting in the capacity of, advertising as, or
assuming to act as, a mortgage loan originator without having
obtained a license endorsement, as specified.
   (2) 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, 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 existing
crimes, this bill would impose a state-mandated local program.
   (3) 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 these
requirements or prohibitions 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 years from the discovery of the commission of the
offense, or within 3 years after completion of the offense,
whichever is later.
   (4) 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 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.
  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
of, act in the capacity of, advertise as, or assume to act as a real
estate broker or a real estate salesperson within this state without
first obtaining a real estate license from the department, or to
engage in the business of, act in the capacity of, advertise as, or
assume to act as a mortgage loan originator within this state 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 or her 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.
  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. 4.  Section 802 of the Penal Code, as amended by Chapter 43 of
the Statutes of 2012, 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 or pursuant to subdivision (h) of Section 1170
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 6126,
10085.6, 10139, or 10147.6 of the Business and Professions Code or
Section 2944.6 or 2944.7 of the Civil Code shall be commenced within
three years after discovery of the commission of the offense, or
within three years after completion of the offense, whichever is
later.
  SEC. 5.  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.