BILL ANALYSIS Ó
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