LEGISLATION

AB 34 (Nava) SAFE Act.

Requires all mortgage loan originators to be individually licensed. Additionally, requires all loan originators to register with a national database and submit criminal history background checks. This bill will provide enhanced consumer protections by ensuring that all loan originators follow the same licensing standards and requirements. Registration with a national database will also ensure that loan originators who commit fraud in another state are not able to become licensed in California.

Finally, this bill will also include advertising provisions that will require mortgage advertisements to be pre-approved by the regulator prior to usage.

AB 33 (Nava) Regulatory Consolidation

Combines the Department of Financial Institutions, Department of Corporations and Department of Real Estate into the California Department of Financial Services. Currently three agencies regulated banking activity in the state. These three agencies are also responsible for the regulation of various entities involved in mortgage lending. This tripartite system of regulation leads to consumer confusion and dilutes regulatory authority and power.

AB 764 (Nava) Homeowner Fraud Prevention Act

Prohibits anyone from charging a fee for modifying a loan unless the person is a licensed real estate broker. Provides conformity with SB 1448 by increasing the fines from $10,000 to $20,000 and $50,000 to $60,000. Also, requires the Department of Real Estate to look at all advertising materials related to advance fee agreements and requires all real estate brokers to use the advance fee agreement form set forth by the department.

AB 260 (Lieu, Bass, and Nava)– Subprime Lending.

This bill enacts duties, requirements and prohibitions relating to higher priced mortgage loans.  Establishes consumer protections for borrowers who receive subprime mortgage loans and requires that mortgage brokers act as fiduciaries of borrowers. 

AB 1160 (Fong) – Mortgage Contracts: translation

Provides that if a mortgage loan is negotiated in language other than English, then a translated summary of the key terms of the loan must be provided to the borrower in the language that the loan was negotiated in prior to execution of the mortgage loan contract.

AB 1720 (Galgiani) - The Buyer's Choice Act
AB 1720 makes clarifying changes to my Buyer’s Choice Act legislation from 2009, and closes an unintended loophole.  The Buyer’s Choice Act required written notice be provided by the seller to the buyer informing them of their right to choose title and escrow settlement service providers; however, the bill did not specify either the content of this notice or a specific form and sellers have continued their illegal practice of requiring buyers to use certain services.  This bill would provide for a standardized form that a seller would provide a buyer of a foreclosed home which explains the buyer’s right to choose their own title and escrow settlement providers.  A standard form will eliminate any confusion between the buyer and the seller as well as further clarify state and federal law regarding these transactions. This bill takes a further step forward in ensuring buyers are aware of their right to choose their own title and escrow services.

AB 1639 (Nava, Bass, Lieu) – Mediated Meetings with Your Lender
AB 1639 establishes the Mediated Mortgage Workout Program (MMW).   The MMW will give borrowers the option to request a face-to-face meeting with their servicer/lender and a neutral third party, monitor.   The process will begin when a borrower receives a notice of default (NOD).  At the time of receiving the NOD, the borrower will also receive an election form to participate in the MMW program.  A borrower must respond within 30 days in order to participate and also demonstrate financial capability to participate in the program.  Once a borrower has elected to participate, the servicer/lender must also respond by paying a fee to the administrator of the MMW program, of which half, is refundable to the servicer if a loan modification agreement is reached.  The MMW session will provide an opportunity for the mediator to review the financial condition of the borrower and the offer for modification from the lender and make a determination based on set criteria as to whether a loan modification is appropriate.  During the time in which the borrower participates in the MMW Program, foreclosure activity does not occur on the property at issue.

AB 2024 (Blumefield) – Detailed Explanation of Denied Mortgage Modification
This bill provides that any lender or servicer that rejects a loan modification request shall respond to the borrower making the request within 7 days via certified mail with the specific reasons why the request was rejected.  Additionally requires that the response must comply with certain language translation requirements. 

AB 2043 (Torrico) – Additional Funding for the Home Affordable Modification Program
This bill authorizes a redevelopment agency to use redevelopment funds to issue loans, up to a maximum of $75,000, to reduce the principal mortgage balance of a borrower that has received a mortgage modification under the federal Home Affordable Modification Program and meets other specified requirements.

AB 2678 (Fuentes) – Time for Loan Modification Negotiations
AB 2678 prohibits a notice of sale from being issued, if the mortagee, trustee, beneficiary or authorized agent is currently in negotiations with a borrower on a loan modification. 

SB 1275 (Leno, Steinberg) – Loan Modification before Notice of Default
This bill requires a mortgagee, trustee, beneficiary, or authorized agent, prior to the filing of a notice of default, to provide the borrower with an application for a loan modification and other foreclosure avoidance options and a specified notice regarding the borrower's rights during the foreclosure process.  Prohibits the mortgagee, beneficiary, or authorized agent from combining collections activity with communication with the borrower about foreclosure avoidance options. Deletes the requirement that the notices of default contain a specified declaration, and would instead require the mortgagee, beneficiary, or authorized agent to, concurrently with the filing of a notice of default, record a declaration of compliance that attests to specified facts, and mail the borrower a notice stating that these requirements have been met. Provides that failure to record a declaration of compliance, or recordation of a declaration of compliance that fails to meet the specified requirements, would constitute grounds for the borrower to bring an action to void the foreclosure, or to recover either treble damages or statutory damages in the amount of $10,000, whichever is greater, from the mortgagee, trustee, beneficiary, or authorized agent.

2008 Legislation Page