AB 1730, as amended, Wagner. Mortgage loan modification.
Existing law, applicable to residential mortgages, prohibits a person who negotiates, arranges, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation from, among other things, demanding or receiving any compensation until every service that the person contracted to perform or represented that he or she would perform is accomplished. Existing law makes a violation of these provisions by a natural person a misdemeanor punishable by a specified fine or imprisonment, or both.
This bill would authorize a violation of these provisions to be punished as a felony with imprisonment, as specified. By changing the definition of a crime, the bill would impose a state-mandated local program.
This bill would also require the assessment of civil penalties for a violation of these provisions and would authorize designated state and local government officials to commence civil actions to recover those penalties.
This bill would, in addition to the civil penalties described above, authorize further civil penalties for unlawful mortgage modifications perpetrated against a senior citizen or disabled person, as defined, and provide criteria for the assessment of these additional penalties. The bill would authorize a court to order the offender to pay restitution to the senior citizen or disabled person, as specified.
This bill would impose a 4-year statute of limitations for actions brought pursuant to these provisions.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Section 2944.7 of the Civil Code is amended to
2read:
(a) Notwithstanding any other law, it shall be unlawful
4for any person who negotiates, attempts to negotiate, arranges,
5attempts to arrange, or otherwise offers to perform a mortgage
6loan modification or other form of mortgage loan forbearance for
7a fee or other compensation paid by the borrower, to do any of the
8following:
9(1) Claim, demand, charge, collect, or receive any compensation
10until after the person has fully performed each and every service
11the person contracted to perform or represented that he or she
12would perform.
13(2) Take any wage assignment, any lien of any type on real or
14personal property, or other
security to secure the payment of
15compensation.
16(3) Take any power of attorney from the borrower for any
17purpose.
18(b) A violation of this section by a natural person is punishable
19by a fine not exceeding ten thousand dollars ($10,000), by
20imprisonment in the county jail for a term not to exceed one year,
21or imprisonment pursuant to subdivision (h) of Section 1170 of
22the Penal Code, or by both that fine and imprisonment, or if by a
23business entity, the violation is punishable by a fine not exceeding
P3 1fifty thousand dollars ($50,000). These penalties are cumulative
2to any other remedies or penalties provided by law.
3(c) In addition to the penalties and remedies provided by Chapter
4
5 (commencing with Section 17200) of Part 2 of Division 7 of the
5Business and Professions Code, a person who violates this section
6shall be liable for a civil penalty not to exceed twenty thousand
7dollars ($20,000) for each violation, which shall be assessed and
8recovered in a civil action brought in the name of the people of
9the State of California by the Attorney General, by any district
10attorney, by any county counsel authorized by agreement with the
11district attorney in actions involvingbegin insert end insertbegin insertaend insert violation of a county
12ordinance, by any city attorney of a city having a population in
13excess of 750,000, by any city attorney of any city and county, or,
14with the consent of the district attorney, by a city prosecutor
in
15any city having a full-time city prosecutor, in any court of
16competent jurisdiction pursuant to Chapter 5 (commencing with
17Section 17200) of Part 2 of Division 7 of the Business and
18Professions Code.
19(d) If the action is brought by the city attorney of the City and
20County of San Francisco, the entire amount of the penalty collected
21shall be paid to the treasurer of the city and county in which the
22judgment was entered for the exclusive use by the city attorney
23for the enforcement of consumer protection laws.
24(e)
end delete
25begin insert(d)end insert Nothing in this section precludes a person, or an agent acting
26on that person’s behalf, who offers loan modification or other loan
27forbearance services for a loan owned or serviced by that person,
28from doing any of the following:
29(1) Collecting principal, interest, or other charges under the
30terms of a loan, before the loan is modified, including charges to
31establish a new payment schedule for a nondelinquent loan, after
32the borrower reduces the unpaid principal balance of that loan for
33the express purpose of lowering the monthly payment due under
34the terms of the loan.
35(2) Collecting principal, interest, or other charges under the
36
terms of a loan, after the loan is modified.
37(3) Accepting payment from a federal agency in connection
38with the federal Making Home Affordable Plan or other federal
39plan intended to help borrowers refinance or modify their loans
40or otherwise avoid foreclosures.
P4 1(f)
end delete
2begin insert(e)end insert This section shall apply only to mortgages and deeds of trust
3secured by residential real property containing four or fewer
4dwelling units.
Section 2944.8 is added to the Civil Code, to read:
(a) In addition to any liability for a civil penalty
7pursuant to Section 2944.7, if a person violates Section 2944.7
8with respect to a victim who is a senior citizen or a disabled person,
9the violator may be liable for a civil penalty not to exceed two
10thousand five hundred dollars ($2,500) for each violation, which
11may be assessed and recovered in a civil action.
12(b) As used in this section, the following terms have the
13following meanings:
14(1) “Disabled person” means a person who has a physical or
15mental disability, as defined in Sections 12926 and 12926.1 of the
16Government Code.
17(2) “Senior citizen” means a person who is 65 years of age or
18older.
19(c) In determining whether to impose a civil penalty pursuant
20to subdivision (a) and the amount thereof, the court shall consider,
21in addition to any other appropriate factors, the extent to which
22one or more of the following factors are present:
23(1) Whether the defendant knew or should have known that his
24or her conduct was directed to one or more senior citizens or
25disabled persons.
26(2) Whether the defendant’s conduct caused one or more senior
27citizens or disabled persons to suffer any of the following: loss or
28encumbrance of a primary residence, principal employment, or
29source of
income, substantial loss of property set aside for
30retirement, or for personal or family care and maintenance, or
31substantial loss of payments received under a pension or retirement
32plan or a government benefits program, or assets essential to the
33health or welfare of the senior citizen or disabled person.
34(3) Whether one or more senior citizens or disabled persons are
35substantially more vulnerable than other members of the public to
36the defendant’s conduct because of age, poor health or infirmity,
37impaired understanding, restricted mobility, or disability, and
38actually suffered substantial physical, emotional, or economic
39damage resulting from the defendant’s conduct.
P5 1(d) A court of competent jurisdiction hearing an action pursuant
2to this section may make orders and judgments as
necessary to
3restore to a senior citizen or disabled person money or property,
4real or personal, that may have been acquired by means of a
5violation of Section 2944.7.
Section 2944.10 is added to the Civil Code, to read:
Any action to enforce any cause of action pursuant
8to Section 2944.7 or 2944.8 shall be commenced within four years
9after the cause of action accrued. No cause of action barred under
10existing law on the effective date of this section shall be revived
11by its enactment.
No reimbursement is required by this act pursuant to
13Section 6 of Article XIII B of the California Constitution because
14the only costs that may be incurred by a local agency or school
15district will be incurred because this act creates a new crime or
16infraction, eliminates a crime or infraction, or changes the penalty
17for a crime or infraction, within the meaning of Section 17556 of
18the Government Code, or changes the definition of a crime within
19the meaning of Section 6 of Article XIII B of the California
20Constitution.
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