AB 844, as introduced, Dickinson. Mortgage loan modification.
Existing law, applicable to residential mortgages, prohibits a person who negotiates, arranges, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation from, among other things, demanding or receiving any compensation until every service that the person contracted to perform or represented that he or she would perform is accomplished.
This bill would make technical, nonsubstantive changes to these provisions.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 2944.7 of the Civil Code is amended to
2read:
(a) Notwithstanding any otherbegin delete provision ofend delete law, it
4shall be unlawful forbegin delete anyend deletebegin insert aend insert person who negotiates, attempts to
5negotiate, arranges, attempts to arrange, or otherwise offers to
6perform a mortgage loan modification or other form of mortgage
P2 1loan forbearance for a fee or other compensation paid by the
2borrowerbegin delete,end delete to do any of the following:
3(1) Claim, demand, charge, collect, or receive any compensation
4until
after the person has fully performed each and every service
5the person contracted to perform or represented that he or she
6would perform.
7(2) Take any wage assignment, any lien of any type on real or
8personal property, or other security to secure the payment of
9compensation.
10(3) Take any power of attorney from the borrower for any
11purpose.
12(b) A violation of this section by a natural person is a public
13offense punishable by a fine not exceeding ten thousand dollars
14($10,000), by imprisonment in the county jail for a term not to
15exceed one year, or by both that fine and imprisonment, or if by
16a business entity, the violation is punishable by a fine not exceeding
17fifty thousand dollars ($50,000). These penalties are cumulative
18to any other remedies or penalties provided by law.
19(c) Nothing in this section precludes a person, or an agent acting
20on that person’s behalf, who offers loan modification or other loan
21forbearance services for a loan owned or serviced by that person,
22from doing any of the following:
23(1) Collecting principal, interest, or other charges under the
24terms of a loan, before the loan is modified, including charges to
25establish a new payment schedule for a nondelinquent loan, after
26the borrower reduces the unpaid principal balance of that loan for
27the express purpose of lowering the monthly payment due under
28the terms of the loan.
29(2) Collecting principal, interest, or other charges under the
30terms of a loan, after the loan is modified.
31(3) Accepting payment from a federal agency in connection
32with the federal
Making Home Affordable Plan or other federal
33plan intended to help borrowers refinance or modify their loans
34or otherwise avoid foreclosures.
35(d) This section shall apply only to mortgages and deeds of trust
36secured by residential real property containing four or fewer
37dwelling units.
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