BILL NUMBER: SB 980	CHAPTERED
	BILL TEXT

	CHAPTER  563
	FILED WITH SECRETARY OF STATE  SEPTEMBER 25, 2012
	APPROVED BY GOVERNOR  SEPTEMBER 25, 2012
	PASSED THE SENATE  MAY 29, 2012
	PASSED THE ASSEMBLY  AUGUST 16, 2012

INTRODUCED BY   Senator Vargas

                        JANUARY 23, 2012

   An act to amend Sections 6106.3 and 10085.6 of the Business and
Professions Code, and to amend Section 2944.7 of the Civil Code,
relating to mortgage loans.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 980, Vargas. Mortgage loans.
   Existing law, until January 1, 2013, prohibits any person who
negotiates, attempts to negotiate, arranges, attempts to arrange, or
otherwise offers to perform residential mortgage loan modifications
for mortgages and deeds of trust secured by real property containing
4 or fewer dwelling units, or other forms of mortgage loan
forbearance for a fee paid by the borrower, from demanding or
receiving any preperformance compensation, requiring collateral to
secure payment, or taking a power of attorney from the borrower.
Existing law makes the violation of those provisions a crime and,
with respect to an attorney, cause for imposition of discipline.
   This bill would extend the operation of those provisions until
January 1, 2017.
   By extending the operative effect of certain crimes, this bill
would create a state-mandated local 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 PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 6106.3 of the Business and Professions Code, as
added by Section 1 of Chapter 630 of the Statutes of 2009, is
amended to read:
   6106.3.  (a) It shall constitute cause for the imposition of
discipline of an attorney within the meaning of this chapter for an
attorney to engage in any conduct in violation of Section 2944.6 or
2944.7 of the Civil Code.

   (b) This section shall remain in effect only until January 1,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
  SEC. 2.  Section 6106.3 of the Business and Professions Code, as
added by Section 2 of Chapter 630 of the Statutes of 2009, is amended
to read:
   6106.3.  (a) It shall constitute cause for the imposition of
discipline of an attorney within the meaning of this chapter for an
attorney to engage in any conduct in violation of Section 2944.6 of
the Civil Code.
   (b) This section shall become operative on January 1, 2017.
  SEC. 3.  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 misdemeanor punishable by a fine not exceeding ten
thousand dollars ($10,000), by imprisonment in a 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,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
  SEC. 4.  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
misdemeanor punishable by a fine not exceeding ten thousand dollars
($10,000), by imprisonment in a 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.
   (e) This section shall remain in effect only until January 1,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2017, deletes or extends
that date.
  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.