Senate Bill No. 153

Introduced by Senator Huff

February 2, 2015

An act to amend Section 2945 of the Civil Code, relating to mortgage foreclosure consultants.

LEGISLATIVE COUNSEL’S DIGEST

SB 153, as introduced, Huff. Mortgage foreclosure consultants.

Existing law defines mortgage foreclosure consultants and regulates their activities. Existing law states the intent of the Legislature to protect homeowners who are in the process of foreclosure from abuses and fraudulent practices by foreclosure consultants.

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 1.  

Section 2945 of the Civil Code is amended to
read:

2945.  

(a) The Legislature finds and declares that homeowners
whose residences are in foreclosure are subject to fraud, deception,
harassment, and unfair dealing by foreclosure consultants from
the time a Notice of Default is recorded pursuant to Section 2924
until the time surplus funds from any foreclosure sale are
distributed to the homeowner or his or her successor. Foreclosure
consultants represent that they can assist homeowners who have
defaulted on obligations secured by their residences. These
foreclosure consultants, however, often charge high fees, the
payment of which is often secured by a deed of trust on the
residence to be saved, and perform no service or essentially a
worthless service. Homeowners, relying on the foreclosure
consultants’ promises of help, take no other action, are diverted
from lawful businesses which could render beneficial services,
and often lose their homes, sometimes to the foreclosure
consultants who purchase homes at a fraction of their value before
the sale. Vulnerable homeowners are increasingly relying on the
services of foreclosure consultants who advise the homeowner
that the foreclosure consultant can obtain the remaining funds from
the foreclosure sale if the homeowner executes an assignment of
the surplus, a deed, or a power of attorney in favor of the
foreclosure consultant. This results in the homeowner paying an
exorbitant fee for a service when the homeowner could have
obtained the remaining funds from the trustee’s sale from the
trustee directly for minimal cost if the homeowner had consulted
legal counsel or had sufficient time to receive notices from the
trustee pursuant to Section 2924j regarding how and where to make
a claim for excess proceeds.

(b) The Legislature further finds and declares that foreclosure
consultants have a significant impact on the economy of this state
and on the welfare of its citizens.

(c) The intent and purposes of this article are the following:

(1) To require that foreclosure consultant service agreements
be expressed in begin delete writing; to end delete begin insert writing. end insert

begin insert (2) end insert begin insert   end insert begin insert To end insert safeguard the public against deceit and financial begin delete hardship;
to end delete begin insert hardship. end insert

begin insert (3) end insert begin insert   end insert begin insert To end insert permit rescission of foreclosure consultation begin delete contracts;
to end delete begin insert contracts. end insert

begin insert (4) end insert begin insert   end insert begin insert To end insert prohibit representations that tend to begin delete mislead; and to end delete
begin insert mislead. end insert

begin insert (5) end insert begin insert   end insert begin insert To end insert encourage fair dealing in the rendition of foreclosure
services.

begin delete

(2)

end delete

begin insert (d) end insert  The provisions of this article shall be liberally construed to
effectuate this intent and to achieve these purposes.