BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1730
                                                                  Page  1

          Date of Hearing:   May 14, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                   AB 1730 (Wagner) - As Amended:  April 23, 2014 

          Policy Committee:                               
          JudiciaryVote:10-0
                        Banking and Finance                   10-0

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

           SUMMARY  

          This bill enhances civil and criminal penalties for violations  
          with respect to advance fees for loan modification services.  
          Specifically, this bill:

          1)Provides that a violation of existing prohibitions concerning  
            advance fees for loan modification services can be punished as  
            a felony, subject to 16 months, two or three years in county  
            jail, and as a civil violation resulting in a civil penalty of  
            $20,000 for each violation brought by the Attorney General  
            (AG) or a local prosecutor.

          2)Specifies that if the victim is a disabled person, as defined  
            under existing law, or a senior citizen, then in addition to  
            the penalties in (1), the violator may be liable for a civil  
            penalty of $2,500 per violation.

          3)Allows a court to make orders and judgments as necessary, to  
            restore to a senior citizen or disabled person, money or  
            property that may have been acquired by means of a violation. 

           FISCAL EFFECT  

          1)Any costs to the AG or local prosecutors would be absorbable,  
            and would be offset to some extent by increased fine revenues.

          2)Potential increased nonreimbursable incarceration costs to  
            counties for felony convictions. (Currently law provides a  
            misdemeanor penalty subject to up to one year in jail.)









                                                                  AB 1730
                                                                  Page  2

           COMMENTS  

           Purpose  . According to the author, "Mortgage loan modification  
          fraud is a huge issue, especially amongst unwitting senior  
          citizens.  Due to the deflation of real property values, either  
          (1) the liens securing the promissory note(s) for principal  
          residential property exceeds the value of the parcel or (2) the  
          loans which were made have resulted in mortgage payments beyond  
          the ability of the property owners to pay.  As a consequence,  
          individuals desperate to save their homes have paid what little  
          money they may still have in advance to individuals who claim to  
          be able to save the home by obtaining a loan modification.   
          These individuals then take the money, abandon the homeowners,  
          and allow the property to be sold at foreclosure."

          Current law, effective 2009, prohibits acceptance of any advance  
          fee for assisting a homeowner with a loan modification. This  
          provision was the result of a cottage industry of scammers  
          preying on struggling homeowners.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081