BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 239
                                                                  Page  1

          Date of Hearing:   July 8, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                     SB 239 (Pavley) - As Amended:  May 5, 2009 

          Policy Committee:                              Public  
          SafetyVote:  7-0

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

           SUMMARY  

          This bill:

          1)Defines mortgage fraud as a separate form of fraud, in which  
            the fraudulent acts involve loans secured by real property,  
            and places mortgage fraud in a stand-alone section, with the  
            same alternate felony/misdemeanor penalties as the general  
            crime of fraud.  

           2)Applies the procedures for obtaining escrow and financial  
            records to mortgage fraud investigations.

          3)Provides that mortgage fraud may only be prosecuted when the  
            value of the alleged fraud meets the threshold for grand  
            theft, as specified. 

           FISCAL EFFECT  

          1)Unknown, likely minor costs for increased state incarceration.  
            The proposed penalty for the stand-alone offense is the same  
            as prescribed under current law, and in 2007 and 2008, no one  
            was incarcerated in state prison for fraud under the existing  
            section.

          2)Unknown, likely minor non-reimbursable local incarceration  
            costs.   
           
          COMMENTS  

           Rationale  . Sponsored by the CA District Attorneys Association  
          (CDAA), the intent of this bill is to clarify statutes related  








                                                                  AB 239
                                                                  Page  2

          to mortgage fraud and to provide more effective tools to  
          investigate mortgage fraud. As CDAA notes, "the bill does not  
          represent a penalty increase, nor does it expose anyone to  
          felony liability that is not already exposed."

          "Also, this proposal grants law enforcement greater  
          investigatory tools that are needed because real estate fraud  
          investigations, in general, and mortgage fraud cases, in  
          particular, are document driven. Frequently, borrowers/victims  
          do not possess the specific documents needed to determine  
          whether a crime has been committed. It is extremely  
          time-consuming, especially in the early stages of an  
          investigation when no charges have been filed, for law  
          enforcement to get the needed documents via search warrant."
            
          Analysis Prepared by  :    Geoff Long / APPR. / (916) 319-2081