BILL ANALYSIS Ó AB 1950 Page 1 Date of Hearing: April 17, 2012 Counsel: Milena Blake ASSEMBLY COMMITTEE ON PUBLIC SAFETY Tom Ammiano, Chair AB 1950 (Davis) - As Amended: April 10, 2012 As Proposed to be Amended in Committee SUMMARY : Modifies provisions related to mortgage fraud enforcement. Specifically, this bill : 1)Removes the sunset date on prohibitions against unlawful mortgage loan modification or loan forbearance, as specified. 2)States that it is unlawful for any person 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. 3)Requires an additional fee of $25 paid at the time of recording a notice of default, as specified, which must be transmitted to the Department of Justice, less administrative costs of transmittal. 4)Creates the State Real Estate Fraud Prosecution Account of the General Fund, which the above fee must be deposited into. This fund is to be used for the purpose of determining, investigating, and prosecuting real estate fraud crimes. 5)Extends the statute of limitations for misdemeanor crimes related to mortgage fraud, as specified, from one year to three years after discovery of the offense, or within three years after the completion of the offense, whichever is later. EXISTING LAW : 1)States that prosecution for a misdemeanor must be commenced within one year of the commission of the offense. ÝPenal Code Section 802(a).] AB 1950 Page 2 2)States that the prosecution for a felony not punishable by death or life imprisonment, or for the embezzlement of public money, must be commenced within three years, unless the offense carries a sentence of eight years or more. (Penal Code Section 801.) 3)States that the prosecution for a felony punishable by imprisonment of eight years or more, but not punishable by death or life imprisonment, or for the embezzlement of public money, must be commenced within six years. (Penal Code Section 800.) 4)States that the prosecution for a felony punishable by death, life in prison, or for the embezzlement of public money, may be commenced at any time. (Penal Code Section 799.) 5)States that the statute of limitations may be tolled for specified offenses. (Penal Code Section 803.) FISCAL EFFECT : Unknown. COMMENTS : 1)Author's Statement : According to the author, "Because of the complicated nature of the mortgage crisis, it is often a while before misconduct is discovered, at which point there is little to no time left in the statute of limitations for the Attorney General to investigate. Furthermore, due to the inevitable budget cuts, there is a need to insulate the Attorney General's Mortgage Fraud Strike Force." 2)Statute of Limitations : The statute of limitations requires commencement of a prosecution within a certain period of time after the commission of a crime. A prosecution is initiated by filing an indictment or information, filing a complaint, certifying a case to superior court, or issuing an arrest or bench warrant. (Penal Code Section 804.) If prosecution is not commenced within the applicable period of limitation, it is a complete defense to the charge. The statute of limitations is jurisdictional and may be raised as a defense at any time before or after judgment. ÝPeople v. Morris, (1988) 46 Cal.3d 1, 13.] The defense may only be waived under limited circumstances. ÝCowan v. Superior Court, (1996) 14 Cal.4th 367.] AB 1950 Page 3 Criminal statutes of limitations are laws that limit the time during which a prosecution can be commenced. These statutes have been in operation for over 350 years and are deeply rooted in the American legal system. There are several rationales underlying statutes of limitations. First, they ensure that prosecutions are based upon reasonably fresh evidence - the idea being that over time memories fade, witnesses die or leave the area, and physical evidence becomes more difficult to obtain, identify or preserve. In short, the possibility of erroneous conviction is minimized when prosecution is prompt. Second, statutes of limitations encourage law enforcement officials to investigate suspected criminal activity in a timely fashion. In addition, it is thought that the statute of limitations may reduce the possibility of blackmail based on threats to disclose information to prosecutors or law enforcement officials. Another rationale is that as time goes by, the likelihood increases that an offender has reformed, making punishment less necessary. In addition, society's retributive impulse may lessen over time, making punishment less desirable. Finally, there is the thought that statutes of limitations provide an overall sense of security and stability to human affairs. ÝLauren Kerns, "Incorporating Tolling Provisions into Sex Crimes Statute of Limitations", 13 Temple Policy and Civil Rights Law Review, 325, 327; internal citation omitted.] 3)Related Legislation : a) AB 1763 (Davis), would authorize the Attorney General to convene a special grand jury, as prescribed, for cases involving fraud or theft of public moneys, impairment of the collection of public money, fraud or theft that occurs in more than one county and where all potential charges could not otherwise be brought in a single county, and charges that could reasonably result in a sentencing enhancement for aggravated white collar crime. AB 1763 is scheduled to be heard in this committee today. b) SB 1474 (Hancock), would authorize the Attorney General to convene a special grand jury, as prescribed, for cases involving fraud or theft of public moneys, impairment of the collection of public money, fraud or theft that occurs in more than one county and where all potential charges could not otherwise be brought in a single county, and charges that could reasonably result in a sentencing AB 1950 Page 4 enhancement for aggravated white collar crime. SB 1474 is scheduled to be heard in Senate Committee on Public Safety today. REGISTERED SUPPORT / OPPOSITION : Support California Attorney General's Office California Professional Firefighters California Nurses Association 226 Private individuals Opposition California Bankers Association California Credit Union League California Independent Bankers California Land Title Association California Mortgage Bankers Association Community Financial Services Association County Recorders' Association of California United Trustees Association Analysis Prepared by : Milena Blake / PUB. S. / (916) 319-3744