BILL ANALYSIS �
AB 1950
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Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1950 (Davis) - As Amended: May 21, 2012
Policy Committee: Public
SafetyVote: 4-2
Local Government 7-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill expands protections related to mortgage fraud.
Specifically, this bill:
1)Removes the January 1, 2013 sunset date on prohibitions on
unlawfully performing mortgage loan modification or loan
forbearance services.
2)States that it is unlawful to engage as a mortgage loan
originator without being licensed.
3)Extends the statute of limitations for specified misdemeanor
crimes related to mortgage fraud from one year after
commission of the offense, to three years after the discovery
or the completion of the offense, whichever is later.
FISCAL EFFECT
Unknown nonreimbursable, likely minor, local law enforcement
costs as a result of deleting the sunset on existing misdemeanor
prohibitions, and extending the sunset on misdemeanor mortgage
fraud.
COMMENTS
1)Rationale . This bill is part of the Attorney General's (A.G.)
package of mortgage fraud reform, termed the California
Homeowner Bill of Rights. The author's intent is to expand
consumer protections by providing district attorneys and the
attorney general with the tools and resources necessary to
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investigate and prosecute mortgage fraud.
According to the author, "�i]n May 2011, the Attorney
General's Office established a Mortgage Fraud Strike Force to
investigate and prosecute civil and criminal violations of
California's mortgage and foreclosure laws. A widespread
investigation of misconduct is required, due to the depth and
breadth of the crisis, and the degree to which scam artists
have gravitated towards homeowners in distress. To be
effective, the Mortgage Fraud Strike Force will need adequate
time to investigate and prepare prosecutions."
2)Support . According to the A.G., "the Attorney General's
Mortgage Fraud Strike Force needs adequate time to investigate
and prepare prosecutions. Under existing law, misdemeanor
violations of California laws that protect homeowners in the
foreclosure process are subject to a one-year statute of
limitations?. Additionally, the crimes of acting as a real
estate broker or salesperson without a license, acting as a
mortgage loan originator without a license, and practicing law
without a license are all misdemeanor offenses that are
subject to a one-year statute of limitations. The Attorney
General's Office has successfully brought charges against and
shut down a number of mortgage-related scams. However, the
one-year limitations period has inhibited a number of
prosecutions because the foreclosure process is a protracted
one, and victims often do not discover the illegal activity
and refer their case to the Attorney General before it is too
late for prosecution.
3)The most recent amendments delete a new $25 recording fee for
notices of default to fund real estate fraud prosecution. That
proposed fee made the bill a tax levy, requiring a 2/3 vote.
4)Support - if $25 fee is deleted . A coalition of business
interests, including the Bankers Association, the Chamber of
Commerce, Financial Services Association, the Independent
Bankers, the California Land Title Association, the Mortgage
Association, and the Mortgage Bankers Association state they
would support the bill if the $25 fee was deleted. "As such,
the measure would no longer impose a new TAX that will
ultimately be paid for by housing market participants already
reeling from a market in crisis, including financially
distressed homeowners. It's notable that not every notice of
default filed results in a final foreclosure. In fact, many
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foreclosure sales are avoided through efforts like loan
modifications, short sales and deeds-in-lieu."
Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081