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 prohibit a person who engages in mortgage loan modification from accepting payment for services in advance of the loan modification approval. The bill would assess civil penalties for various related violations and would authorize designated state and local government officials to commence civil actions to recover those penalties. The bill would specify the manner of distribution of penalties recovered and would establish the Mortgage Loan Modification Fraud Account in the General Fund for deposit of funds payable to the state, to be available for expenditure upon appropriation by the Legislature. This bill would, in addition to the civil penalties described above, authorize further civil penalties for unlawful or fraudulent mortgage modifications perpetrated against seniors or disabled persons, 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 or disabled victim, as specified. This bill would also authorize the court to provide injunctive relief, and would provide that a person who intentionally violates an injunction prohibiting offering loan modification services for a fee under these provisions is subject to civil penalties. The bill would authorize designated state and local government officials to commence civil actions to recover those penalties, and would specify the manner of distribution of penalties recovered. 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.