Real estate brokers.

The Real Estate Law provides for the regulation and licensure of real estate brokers and real estate salespersons by the Real Estate Commissioner. Existing law authorizes the commissioner to require that materials used in obtaining advance fee agreements be submitted to him or her at least 10 calendar days before the materials are used and makes it a misdemeanor, punishable by a fine not exceeding $1,000, or imprisonment in the county jail not exceeding 6 months, or both, to use any agreement that the commissioner has ordered not to be used. Existing law authorizes the commissioner to determine the form of the advance fee agreements. This bill would instead require the commissioner to determine the form of advance fee agreements and to mandate the submission of advance fee agreement materials prior to their use. The bill would also prohibit advertisements used in obtaining advance fee agreements from using words, letters, initials, symbols, or other devices that are similar to those used by a governmental agency or nonprofit entity, as specified. The bill would also increase the maximum fine for using any agreement that the commissioner has ordered not to be used from $1,000 to $2,500, and would increase the maximum imprisonment time for a violation to 12 months. By expanding the scope of a crime, the bill would impose a state-mandated local program. The Real Estate Law makes it unlawful for any person to claim, demand, charge, receive, collect, or contract for an advance fee for soliciting lenders on behalf of borrowers or performing services for borrowers in connection with a mortgage loan before the borrower becomes obligated to complete the loan and for performing any other activity for which a license is required, unless the person is a licensed real estate broker and has complied with the provisions of the Real Estate Law. A violation of that provision constitutes a public offense punishable by a fine of up to $10,000 for an individual or $50,000 for a corporation. Existing law exempts from that prohibition state-chartered banks, savings associations, credit unions, industrial loan companies, and licensed finance lenders and brokers. This bill would increase those fines to $20,000 and $60,000, respectively, and would increase the maximum imprisonment time for a violation to 12 months. The bill would also make it unlawful, until January 1, 2013, for a real estate broker, or any other person who performs loan modification services, as specified, to claim, demand, charge, receive, or collect a fee paid for by a borrower for a loan modification agreement, as defined, until the terms of the loan have been modified, and would require provision of a specified notice prior to entering into a loan modification agreement with a borrower. By creating a new crime, the bill would impose a state-mandated local program. The bill would make an attorney subject to disciplinary sanctions if he or she claims, demands, charges, receives, or collects a fee paid for by a borrower in connection with a loan modification agreement until the terms of the loan have been modified. The bill would further exempt from the fee prohibition licensed residential mortgage lenders and servicers. The bill would also exempt nonprofit community-based organizations, and employees of those organizations, that provide counseling services at no cost to borrowers in connection with loan modifications from certain provisions of the Real Estate Law regulating certain activities of real estate brokers and salespersons. 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.