BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 469
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          Date of Hearing:   April 23, 2013

              ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER  
                                     PROTECTION
                              Richard S. Gordon, Chair
                 AB 469 (Wagner) - As Introduced:  February 19, 2013
           
          SUBJECT  :   Telephonic sellers: loan modifications. 

           SUMMARY  :   Redefines "telephonic seller" to include a person  
          making a telephone solicitation to arrange or assist in the  
          arrangement of a loan modification, for purposes of an existing  
          law that mandates the registration and regulates the practices  
          of telephonic sellers.   

           EXISTING LAW : 

          1)Prohibits persons from charging advance fees to borrowers in  
            connection with a loan modification, and requires those who  
            wish to charge a fee for loan modification services to provide  
            a notice to borrowers regarding alternative options available.  
             Provides that a violation is punishable by a fine up to  
            $10,000, or up to $50,000 for a business entity, by  
            imprisonment in a county jail up to one year, or by both fine  
            and imprisonment. (Business and Professions Code [BPC] Section  
            10085.6, Civil Code Section 2944.7) 

          2)Provides that any salesperson who makes a telephone  
            solicitation and is not properly registered with the  
            Department of Justice (DOJ) is guilty of a misdemeanor,  
            punishable by a fine up to $2,500, by county imprisonment up  
            to six months, or by both fine and imprisonment. (BPC 17511.8)  


          3)Provides that any willful violation of the laws relating to  
            telephonic sellers or any fraudulent or deceitful sale by or  
            in connection with a telephonic seller is punishable by a fine  
            up to $10,000, by county imprisonment up to one year, or by  
            both fine and imprisonment. (BPC 17511.9)

          4)Defines "telephonic seller" to include a person who represents  
            or implies in a telephone solicitation, that he or she is  
            offering to make a loan, arrange or assist in arranging a  
            loan, or provide information which may lead to the obtainment  
            of a loan. (BPC 17511.1) 








                                                                  AB 469
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           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           1)Purpose of this bill  .  This bill is intended to regulate  
            individuals making telephone solicitations related to loan  
            modifications.  By adding loan modification to the definition  
            of a "telephonic seller", this bill would apply existing law  
            requiring registration and regulation of telephonic sellers to  
            those solicitations, thereby giving consumers stronger  
            protections and more robust remedies against unscrupulous  
            sales practices.  This bill is author sponsored.

           2)Author's statement  .  According to the author's office, "While  
            it is currently illegal to collect upfront fees for loan  
            modification services, the scams have continued unabated?   AB  
            469 would provide an additional tool to law enforcement to  
            shut down the most insidious loan modification scams, those  
            that, through the operation of boiler rooms, prey on massive  
            numbers of distressed homeowners, often specifically targeting  
            non-English speakers and other vulnerable groups."  

           3)Telephone solicitations .  This bill would redefine "telephonic  
            sellers" to include individuals who make telephone  
            solicitations relating to loan modifications, and require  
            those individuals to annually register with the DOJ and be  
            subject to regulatory oversight by DOJ.  This bill applies to  
            telephone solicitations for all types of loan modifications,  
            not just residential home loan modifications.  

          Under existing law, any salesperson who makes a telephone  
            solicitation and is not properly registered with the DOJ is  
            guilty of a misdemeanor, punishable by a fine up to $2,500,   
            county imprisonment up to six months, or both.  In addition,  
            any deceptive or fraudulent act, or any willful violation of  
            the laws relating to telephonic sellers is punishable by a  
            fine up to $10,000, county imprisonment up to one year, or  
            both.  This bill would apply those penalties and enforcement  
            tools against individuals who sell loan modification services  
            by phone and violate the law.   

          Current law also prohibits the collection of advance fees in  
            connection with loan modifications and requires that  
            individuals who wish to charge a fee for loan modification  








                                                                  AB 469
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            services to provide a notice to borrowers regarding other  
            options available to the borrower.  Existing law provides that  
            a violation is punishable by a fine up to $10,000, or up to  
            $50,000 for a business entity, by imprisonment in a county  
            jail up to one year, or both.   

           4)Previous legislation  .  AB 1950 (Davis), Chapter 569, Statutes  
            of 2012, deletes the sunset date on the prohibition against  
            collecting advance fees in connection with offers to help  
            borrowers obtain mortgage loan modifications or other forms of  
            mortgage loan forbearance.

          SB 94 (Calderon), Chapter 630, Statutes of 2009, prohibits  
            persons, until January 1, 2013, from charging advance fees to  
            borrowers in connection with a loan modification, and requires  
            those who wish to charge a fee for loan modification services  
            to provide a notice to borrowers regarding other options  
            available to the borrower.   

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file. 

           Opposition 
           
          None on file. 
           
          Analysis Prepared by  :    Joanna Gin / B.,P. & C.P. / (916)  
          319-3301