BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2325|
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THIRD READING
Bill No: AB 2325
Author: Lieu (D)
Amended: 4/26/10 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 3-1, 6/22/10
AYES: Corbett, Hancock, Leno
NOES: Harman
NO VOTE RECORDED: Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 46-24, 5/20/10 - See last page for vote
SUBJECT : Mortgage foreclosure consultants: loan audits
SOURCE : Author
DIGEST : This bill adds the audit of any obligation
secured by a lien on a residence in foreclosure to the
definition of services that a foreclosure consultant
performs, thus, adding individuals who perform forensic
loan audits to the foreclosure consultant law, as
specified.
ANALYSIS : Existing law defines "foreclosure consultant"
as any person who makes any solicitation, representation,
or offer to any owner to perform for compensation or who,
for compensation, performs any service which the person in
any manner represents will in any manner do any of the
CONTINUED
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following: (1) stop or postpone the foreclosure sale; (2)
obtain any forbearance from any beneficiary or mortgagee;
(3) assist the owner to exercise the right of
reinstatement, as specified; (4) obtain any extension of
the period within which the owner may reinstate his or her
obligation; (5) obtain any waiver of an acceleration
clause; (6) assist the owner obtain a loan or advance of
funds; (7) avoid or ameliorate the impairment of the
owner's credit resulting from the recording of a notice of
default or foreclosure sale; (8) save the owner's residence
from foreclosure; or (8) assist the owner in obtaining the
remaining proceeds from the foreclosure sale of the owner's
residence. (Civ. Code Sec. 2945.1(a).)
Existing law exempts numerous individuals from the
definition of foreclosure consultant, including persons
licensed to practice law and real estate brokers. (Civ.
Code Sec. 2945.1(b).)
Existing law defines "service" to include, among other
things, debt, budget, or financial counseling of any type,
and contacting creditors on behalf of an owner in
foreclosure. (Civ. Code Sec. 2945.1(e).)
Existing law imposes numerous requirements on foreclosure
consultants, including:
1.Requiring contracts made with a consultant to be
cancelled until midnight of the fifth business day after
signing; (Civ. Code Sec. 2945.2.)
2.Prohibiting the collection or receipt of compensation
until after performance of each and every service the
consultant contracted to perform or represented that he
or she would perform; (Civ. Code Sec. 2945.4.)
3.Prohibiting the consultant from taking any wage
assignment, any lien of any type on real or personal
property, or other security to secure the payment of
compensation; (Civ. Code Sec. 2945.4.)
4.Prohibiting the consultant to take a power of attorney
from an owner for any purpose; and (Civ. Code Sec.
2945.4.)
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5.Requiring registration with the Department of Justice and
the maintenance of a surety bond in the amount of
$100,000. (Civ. Code Sec. 2945.45.)
Existing law permits an owner to bring an action against a
foreclosure consultant for violations, and permits the
recovery of actual damages, reasonable attorneys' fees and
costs, and appropriate equitable relief. The court may
also award exemplary damages equivalent to three times the
compensation received in violation of specified provisions,
and three time the actual damages. (Civ. Code Sec.
2945.6.)
This bill adds the act of arranging or attempting to
arrange an audit of any obligation secured by a lien on a
residence in foreclosure to the list of activities included
in the definition of "service."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/4/10)
Greenlining Institute
ARGUMENTS IN SUPPORT : According to the author's office:
AB 2325 establishes greater protections for homeowners
by providing that foreclosure consultant services
include the audit of any obligation secured by a lien
on a residence in foreclosure. AB 2325 also requires
a foreclosure consultant to register with the
Department of Justice to provide a forensic loan
audit. With record unemployment persisting and
foreclosures continuing to devastate our economy, we
need to be as vigilant as we can. AB 2325 strengthens
current law to address a new scam, and ensures people
offering a forensic loan service comply with existing
consumer protection requirements, including a ban on
advance fees. This bill would result in fewer
homeowners being victimized.
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ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield,
Bradford, Brownley, Buchanan, Caballero, Charles
Calderon, Carter, Chesbro, Davis, De Leon, Eng, Feuer,
Fong, Fuentes, Furutani, Gaines, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, V. Manuel Perez,
Portantino, Ruskin, Salas, Saldana, Skinner, Solorio,
Swanson, Torlakson, Torres, Torrico, Yamada
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Emmerson, Fuller,
Garrick, Gilmore, Hagman, Jeffries, Knight, Logue,
Miller, Nestande, Niello, Nielsen, Norby, Silva, Audra
Strickland, Tran
NO VOTE RECORDED: Coto, De La Torre, Evans, Fletcher,
Harkey, Nava, Smyth, Villines, John A. Perez, Vacancy
RJG:nl 8/4/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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