BILL NUMBER: AB 764 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 20, 2009
AMENDED IN ASSEMBLY APRIL 2, 2009
INTRODUCED BY Assembly Member Nava
FEBRUARY 26, 2009
An act to amend Sections 10085 and 10085.5 of the Business and
Professions Code, relating to real estate brokers.
LEGISLATIVE COUNSEL'S DIGEST
AB 764, as amended, Nava. Real estate brokers.
The Real Estate Law provides for the regulation and licensure of
real estate brokers and real estate salespersons by the Real Estate
Commissioner. Existing law authorizes the commissioner to require
that materials used in obtaining advance fee agreements be submitted
to him or her at least 10 calendar days before the materials are used
and makes it a misdemeanor , punishable by a fine not exceeding
$1,000, or imprisonment in the county jail not exceeding 6 months,
or both, to use any agreement that the commissioner has ordered
not to be used. Existing law authorizes the commissioner to
determine the form of the advance fee agreements.
This bill would instead require the commissioner to determine the
form of advance fee agreements and loan modification agreements, as
defined, and to mandate the submission of advance fee agreement and
loan modification agreement materials prior to their use. The bill
would also prohibit advertisements used in obtaining advance fee
agreements or loan modification agreements from using words, letters,
initials, symbols, or other devices that are similar to those used
by a governmental agency or nonprofit entity, as specified. The
bill would also increase the maximum fine for using any agreement
that the commissioner has ordered not to be used from $1,000 to
$2,500. By expanding the scope of a crime, the bill would
impose a state-mandated local program.
The Real Estate Law makes it unlawful for any person to claim,
demand, charge, receive, collect, or contract for an advance fee for
soliciting lenders on behalf of borrowers or performing services for
borrowers in connection with a mortgage loan before the borrower
becomes obligated to complete the loan and for performing any other
activity for which a license is required, unless the person is a
licensed real estate broker and has complied with the provisions of
the Real Estate Law. A violation of that provision constitutes a
public offense punishable by a fine of up to $10,000 for an
individual or $50,000 for a corporation. Existing law exempts from
that prohibition state-chartered banks, savings
associations, credit unions, industrial loan companies, and licensed
finance lenders and brokers.
This bill would increase those fines to $20,000 and $60,000,
respectively. The bill would also make it unlawful for any person to
claim, demand, charge, receive, collect, or contract for any fee for
performing services for borrowers in connection with the modification
of the terms of a mortgage loan, unless the person is a licensed
real estate broker, and, as applied to real estate brokers, would
prohibit advance fees for the performance of those services. By
creating a new crime, the bill would impose a state-mandated local
program. The bill would authorize the commissioner to adopt rules and
regulations to implement provisions related to loan modification
agreements. The bill would further exempt from the fee prohibition
licensed residential mortgage lenders and services.
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 1. Section 10085 of the Business and Professions Code is
amended to read:
10085. (a) The commissioner shall require that any or all
materials used in obtaining advance fee agreements and loan
modification agreements, including but not limited to the contract
forms, letters or cards used to solicit prospective sellers or
borrowers, and radio and television advertising be submitted to him
or her at least 10 calendar days before they are used. Should the
commissioner determine that any such matter, when used alone or with
any other matter, would tend to mislead, he or she may, within 10
calendar days of the date he or she receives same, order that it not
be used, disseminated, nor published.
(1) Advertisements used in obtaining advance fee agreements or
loan modification agreements shall not employ words, letters,
initials, symbols, or other devices that are so similar to those used
by a governmental agency, nonprofit or charitable institution, or
senior organization that they could have the capacity or tendency to
mislead the public. Examples of misleading materials include, but are
not limited to, those that imply either of the following:
(A) The advertised services are in any manner provided or endorsed
by a governmental agency, nonprofit or charitable institution, or
senior organization.
(B) The advertiser is the same as, connected with, or endorsed by,
a governmental agency, nonprofit or charitable institution, or
senior organization.
(2) Any person using, disseminating, or publishing any matter that
the commissioner has ordered, pursuant to this section, not to be
used, published, or disseminated shall be guilty of a misdemeanor
punishable by a fine not exceeding one thousand dollars
($1,000) two thousand five hundred dollars ($2,500)
or by imprisonment in the county jail not exceeding six months,
or both, for each use, dissemination, or publication.
(b) The commissioner shall determine the form of the advance fee
agreements and loan modification agreements, and all material used in
soliciting prospective owners, sellers, and borrowers shall be used
in the form and manner which he or she determines is necessary to
carry out the purposes and intent of this part.
(c) For purposes of this section, "loan modification agreement"
means a contract by a licensed real estate broker for the performance
of services for a borrower in connection with the modification of
the terms of a loan secured directly or collaterally by a lien on
single-family residential real property.
(d) Any violation of any of the provisions of this part or of the
rules, regulations, orders or requirements of the commissioner
thereunder shall constitute grounds for disciplinary action against a
licensee, or for proceedings under Section 10081, or both. These
sanctions are in addition to the criminal proceedings hereinbefore
provided.
SEC. 2. Section 10085.5 of the Business and Professions Code is
amended to read:
10085.5. (a) It shall be unlawful for any person to claim,
demand, charge, receive, collect, or contract for an advance fee (1)
for soliciting lenders on behalf of borrowers or performing services
for borrowers in connection with loans to be secured directly or
collaterally by a lien on real property, before the borrower becomes
obligated to complete the loan or, (2) for performing any other
activities for which a license is required, unless the person is a
licensed real estate broker and has complied with the provisions of
this part.
(b) (1) It shall be unlawful for a licensed real estate broker to
claim, demand, charge, receive, collect, or contract for an advance
fee for performing services for borrowers in connection with the
modification of the terms of a loan secured directly or collaterally
by a lien on a single family residential real property.
(2) Any licensed real estate broker who contracts for loan
modification agreements, as defined in subdivision (c) of Section
10085, shall first seek approval from the commissioner. The
commissioner may issue such rules and regulations as he or she deems
necessary to accomplish the purpose of the provisions of this code
related to loan modification agreements.
(c) It shall be unlawful for any person to claim, demand, charge,
receive, collect, or contract for any fee for performing services for
borrowers in connection with the modification of the terms of a loan
secured directly or collaterally by a lien on single-family
residential real property, unless the person is a licensed real
estate broker and has complied with the provisions of this part
.
(d) This section does not prohibit the acceptance or receipt of
any fee by a bank, savings association, credit union, industrial loan
company, person acting within the scope of a license issued to that
person pursuant to Division 9 (commencing with Section 22000) of the
Financial Code, or person acting within the scope of a license issued
to that person pursuant to Division 20 (commencing with Section
50000) of the Financial Code, in connection with loans to be secured
directly or collaterally by a lien on real property or in connection
with the modification of the terms of a loan secured directly or
collaterally by a lien on single-family residential real property.
This section does not apply to charges made by title insurers and
controlled escrow companies pursuant to Chapter 1 (commencing with
Section 12340) of Part 6 of Division 2 of the Insurance Code.
(e) A violation of this section is a public offense punishable by
a fine not exceeding twenty thousand dollars ($20,000), by
imprisonment in the county jail for a term not to exceed six months,
or by both that fine and imprisonment, or if by a corporation, the
violation is punishable by a fine not exceeding sixty thousand
dollars ($60,000).
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.