BILL ANALYSIS
AB 2325
Page 1
Date of Hearing: May 12, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2325 (Lieu) - As Amended: April 26, 2010
Policy Committee: Banking and
Finance Vote: 9-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires individuals offering "forensic audits" of
mortgage loans to register with the Department of Justice (DOJ).
The bill also:
1)Specifies that these individuals are subject to existing laws
governing foreclosure consultants, including a prohibition
against collecting up-front charges prior to performing all
services.
2)Exempts from its requirements lawyers, mortgage brokers,
lenders, and others licensed under chapters of the financial
code or business and professions code.
FISCAL EFFECT
Minor and absorbable costs to DOJ to register forensic
consultants.
COMMENTS
Rationale . This bill is intended to regulate individuals
offering to perform forensic audits of mortgage loans in
connection with foreclosures. It stems from an advisory that
went out in February, 2010, by the California Attorney General
along with the California Department of Real Estate (DRE) and
the State Bar of California. The advisory warned consumers to
avoid companies advertising to provide forensic loan audits.
These audits are offered to homeowners seeking loan
modifications. Those who offer forensic loan audits portray them
AB 2325
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as comprehensive reviews of all documentation, legal paperwork,
and transaction data associated with a mortgage loan. The
purpose is to uncover evidence of illegal actions by the lender,
the broker, or other parties involved in the loan, which can
then be used by the borrower to gain leverage over lenders,
prompting them to modify loans or provide other relief. In
reality, however, these audits have seldom produced findings of
benefit to homeowners seeking foreclosure relief.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081