BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 764
                                                                  Page  1

          Date of Hearing:   May 13, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                     AB 764 (Nava) - As Amended:  April 20, 2009 

          Policy Committee:                              Business and  
          Professions  Vote:                            6-3
                       Banking and Finance                    8-3

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill prohibits real estate brokers from receiving advance  
          fees for the performance of loan modification services. The bill  
          also:

          1)Requires the Real Estate Commissioner to approve the form of  
            any agreements used by mortgage brokers in connection with  
            loan modifications.

          2)Prohibits advertisements used in obtaining 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, and increases the fine for  
            publishing such advertisements without the commissioner's  
            approval from $1,000 to $2,500.

          3)Increases fines for unlawfully charging advance fees for loan  
            modifications, from $10,000 to $20,000 for an individual and  
            $50,000 to $60,000 for a corporation.  

           FISCAL EFFECT  

          Department of real estate indicates that, since it is already  
          approving most agreements used by mortgage brokers for loan  
          modification services, new costs will be minor and absorbable.  
          Costs are supported by license fees charged to the industry.

           COMMENTS  

           1)Rationale.   According to the author, this bill is intended to  








                                                                  AB 764
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            "ensure homeowners seeking to modify their home loans do not  
            become victims of scam artists who are trying to exploit those  
            at their lowest point through exorbitant loan modification  
            fees when in reality, successful loan modifications are  
            completed for free through HUD-certified counseling agencies  
            and lenders." The author further asserts that the elimination  
            of the advanced fee will have the effect of requiring real  
            estate brokers to determine whether a loan modification is  
            possible, and actually perform the modification, prior to  
            receiving payment.


           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081