AB 1072, as introduced, Wagner. 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. Existing law makes a violation of these provisions by a natural person a misdemeanor punishable by a specified fine or imprisonment, or both.
This bill would authorize a violation of these provisions to be punished as a felony with imprisonment in county jail, as specified. By changing the definition of a crime, the bill would impose 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.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
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 other provision of law, it
4shall be unlawful for any person who negotiates, attempts to
5negotiate, arranges, attempts to arrange, or otherwise offers to
6perform a mortgage loan modification or other form of mortgage
7loan forbearance for a fee or other compensation paid by the
8borrower, to do any of the following:
9(1) Claim, demand, charge, collect, or receive any compensation
10until after the person has fully performed each and every service
11the person contracted to perform or represented that he or she
12would perform.
13(2) Take any wage assignment, any lien of any type on real or
14personal property, or other security to secure the payment of
15compensation.
16(3) Take any power of attorney from the borrower for any
17purpose.
18(b) A violation of this section by a natural person is abegin delete public punishable by a fine not exceeding ten thousand dollars
19offenseend delete
20($10,000), by imprisonment in the county jail for a term not to
21exceed one yearbegin insert or imprisonment in county jail pursuant to
22subdivision (h) of Section 1170 of the Penal Codeend insert, or by both that
23fine and imprisonment, or if by a business entity, the violation is
24punishable by a fine not exceeding fifty thousand dollars ($50,000).
25These penalties are cumulative to any other remedies or penalties
26provided by law.
27(c) Nothing in this section
precludes a person, or an agent acting
28on that person’s behalf, who offers loan modification or other loan
29forbearance services for a loan owned or serviced by that person,
30from doing any of the following:
31(1) Collecting principal, interest, or other charges under the
32terms of a loan, before the loan is modified, including charges to
33establish a new payment schedule for a nondelinquent loan, after
34the borrower reduces the unpaid principal balance of that loan for
35the express purpose of lowering the monthly payment due under
36the terms of the loan.
37(2) Collecting principal, interest, or other charges under the
38terms of a loan, after the loan is modified.
P3 1(3) Accepting payment from a federal agency in connection
2with the federal Making Home Affordable Plan or other federal
3plan intended to help borrowers refinance or
modify their loans
4or otherwise avoid foreclosures.
5(d) This section shall apply only to mortgages and deeds of trust
6secured by residential real property containing four or fewer
7dwelling units.
No reimbursement is required by this act pursuant to
9Section 6 of Article XIII B of the California Constitution because
10the only costs that may be incurred by a local agency or school
11district will be incurred because this act creates a new crime or
12infraction, eliminates a crime or infraction, or changes the penalty
13for a crime or infraction, within the meaning of Section 17556 of
14the Government Code, or changes the definition of a crime within
15the meaning of Section 6 of Article XIII B of the California
16Constitution.
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