BILL ANALYSIS Ó
AB 1730
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CONCURRENCE IN SENATE AMENDMENTS
AB 1730 (Wagner)
As Amended August 19, 2014
Majority vote
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|ASSEMBLY: |73-0 |(May 23, 2014) |SENATE: |33-0 |(August 21, |
| | | | | |2014) |
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Original Committee Reference: JUD.
SUMMARY : Enhances potential civil and criminal penalties for
violation of existing prohibitions regarding mortgage loan
modification fees. Specifically, this bill :
1)Provides that a violation of Civil Code Section 2944.7
regarding advance fees for mortgage loan modification and
related services by a natural person may be punished by a fine
not exceeding $10,000, by imprisonment in the 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 $50,000.
2)Provides that a violation of Civil Code Section 2944.7 shall
be subject to a civil penalty up to $20,000 per violation in
an action by a public prosecutor pursuant to existing
authority under the Unfair Competition Law.
3)Provides that a violation of Civil Code Section 2944.7 shall
be subject to an additional civil penalty of up to $2500 in
any action where the subject of the violation was a person
over the age of 65 or a person with a disability.
4)Provides that any action to enforce any cause of action
pursuant to Civil Code Sections 2944.7 or 2944.8 shall be
commenced within four years after the cause of action accrued.
The Senate amendments clarify and reduce the criminal penalties.
FISCAL EFFECT : According to the Senate Appropriations
Committee, minor, absorbable costs to the Attorney General and
non-reimbursable costs to prosecutors for new civil actions,
offset to a degree by fine revenues under the enhanced civil
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penalty provisions of this measure.
Under 2011 Realignment Legislation, the state provided funding
to the counties to place offenders in county jail for specified
felonies ("1170(h) felonies") that previously would have
required a state prison sentence. Pursuant to Proposition 30
(2012), legislation enacted after September 30, 2012, that has
an overall effect of increasing the costs already borne by a
local agency for programs or levels of service mandated by the
2011 Realignment Legislation apply to local agencies only to the
extent that the state provides annual funding for the cost
increase. While Proposition 30 specifies that legislation
defining a new crime or changing the definition of an existing
crime is not subject to this provision, changing the penalty for
a crime is not specifically exempted and could potentially
require a subvention of funds from the state.
COMMENTS : According to the author, "Mortgage loan modification
fraud is a huge issue, especially amongst unwitting senior
citizens. Due to the deflation of real property values, either
1) the liens securing the promissory note(s) for principal
residential property exceeds the value of the parcel or 2) the
loans which were made have resulted in mortgage payments beyond
the ability of the property owners to pay. As a consequence,
individuals desperate to save their homes have paid what little
money they may still have in advance to individuals who claim to
be able to save the home by obtaining a loan modification.
These individuals then take the money, abandon the homeowners,
and allow the property to be sold at foreclosure."
Under this bill, prosecutors would have the discretion to charge
mortgage loan modification violations as a felony - rather than
simply a misdemeanor, as permitted under existing law. In other
words, the existing crime would be made a "wobbler." In
addition, wrongdoers would be subject to an additional civil
penalty in an action by public prosecutors, as well as an
enhanced civil penalty in any action involving seniors and
persons with disabilities.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334
FN: 0005271
AB 1730
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