Casi Mod
California Loan Modification Laws
California Loan Modification Laws
CALIFORNIA Loan
Modification Laws
An act to amend Sections 10026,
10085, 10133.1, and 10177 of, to
add Section 10147.6 to, and to add and repeal Sections 6106.3 and
10085.6 of, the Business and Professions Code, to amend Section 2945.1
of, to add Section 2944.6 to, and to add and repeal Section 2944.7 of,
the Civil Code, and to amend Section 22161 of the Financial Code,
relating to mortgage loans, and declaring the urgency thereof, to take
effect immediately.
legislative counsel’s digest
SB 94, as amended, Calderon. Mortgage loans.
(1) The Real Estate Law provides for the regulation and licensure of real
estate brokers and real estate salespersons by the Real Estate Commissioner.
The California Finance Lenders Law provides for the regulation and licensure
of finance lenders and brokers by the Commissioner of Corporations. The
California Residential Mortgage Lending Act provides for the regulation and
licensure of residential mortgage lenders and servicers by the Commissioner
of Corporations.
The Banking Law provides for the regulation of state commercial banks by the
Commissioner of Financial Institutions. The California Credit Union Law
provides for the regulation of state credit unions by the Commissioner of
Financial Institutions. A willful violation of specified provisions of those
acts is a crime.
This bill would, until January 1, 2013, prohibit any person, including a
real estate licensee, who negotiates, attempts to negotiate, arranges,
attempts to arrange, or otherwise offers to perform residential mortgage
loan modifications or other forms of mortgage loan forbearance, as
specified, for a fee or other compensation paid by a borrower, from
demanding or receiving any pre performance compensation, as specified,
requiring any security as collateral for final compensation, or taking a
power of attorney from a borrower, and would make a violation of that
prohibition a misdemeanor or subject to specified fines. By creating a new
crime, the bill would impose a state-mandated local program. This bill would
also require any person, including a real estate licensee, who negotiates,
attempts to negotiate, arranges, attempts to arrange, or otherwise offers to
perform residential mortgage loan modifications or other forms of mortgage
loan forbearance, as specified, for a fee or other compensation paid by a
borrower, to provide a
specified 14-point bold type statement regarding loan modification fees. The
bill would make a violation of that prohibition a misdemeanor or subject to
specified fines, thereby creating a new crime and imposing a state-mandated
local program. The bill would also provide that a real
estate licensee who fails to comply with specified provisions related to
mortgages, including the loan modification provisions, would be subject to
disciplinary action by the Real Estate Commissioner, and would provide that
a violation of the above by an attorney may also subject
him or her to disciplinary action. The bill would add to the California
Finance Lenders Law a prohibition on making a materially false or misleading
statement or representation to a borrower about the terms or conditions of
that borrower’s loan, when making or brokering a loan.
Because a willful violation of these provisions by certain licensees may be
punished as crimes under their respective licensing laws, this bill would
impose a state-mandated local program.
The bill would also provide that these provisions do not apply to actions
taken by a person who offers loan modification or other loan forbearance
services for a loan owned or serviced by that person, including, but not
limited to, collecting principal, interest, or other charges under the terms
of a loan, before the loan is modified, including charges to establish a new
payment schedule.
(2) The Real Estate Law provides for the regulation and licensure of real
estate brokers and salespersons by the Real Estate Commissioner. Existing As
used in the Real Estate Law, the term “advance fee” is defined as a fee that
is claimed, demanded, charged, received, collected,
or contracted from a principal for a listing, advertisement, or offer to
sell or lease property, and as specified. This bill would redefine the term
“advance fee” to mean a fee, regardless of the form, that is claimed,
demanded, charged, received, or collected by a licensee from a principal
before fully completing each and every service the licensee contracted to
perform, or represented
would be performed, as specified.
(3) Existing law provides that certain persons are exempt from regulation
under certain provisions of the Real Estate Law dealing with real estate
loans. This bill would further exempt from those provisions specified
organizations that have been approved by the United States Department
of Housing and Urban Development to provide counseling services, when those
services are provided at no cost and in connection with residential
mortgage loan
modifications.
(4) Existing law defines a foreclosure consultant as a person who offers,
for compensation, to perform specified services for a homeowner relating to
a foreclosure sale, and imposes regulations upon foreclosure consultants
when servicing a foreclosure sale, as specified. Existing law excludes
specified persons from the definition of a foreclosure consultant, including
a person licensed under the Real Estate Law when to make loans as a finance
lender, subject to the authority of the Commissioner of Corporations to
terminate this exclusion, as specified. This bill would instead specify that
a real estate licensee and a finance
lender are excluded from the definition of a foreclosure consultant when
acting under the authority of that person’s license, and would delete the
commissioner’s authority to terminate the finance lender’s exclusion. The
bill would also delete obsolete statutory references from those
provisions.
(5) 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.
(6) This bill would declare that it is to take effect immediately as an
urgency statute.
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