Bill Text: CA AB643 | 2011-2012 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Income taxes: hiring credits: investment credits.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2012-02-01 - Died pursuant to Art. IV, Sec. 10(c) of the Constitution. From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB643 Detail]

Download: California-2011-AB643-Amended.html

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BILL NUMBER: AB 643	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 15, 2011

INTRODUCED BY   Assembly Member Davis

                        FEBRUARY 16, 2011

   An act to amend Section 2923.1 of, and to add Section 2923.51 to,
the Civil Code, relating to real property transactions.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 643, as amended, Davis. Mortgages: counseling.
   (1) Existing law provides that a mortgage broker, as defined, who
provides mortgage brokerage services to a borrower is the fiduciary
of the borrower and any violation of the broker's fiduciary duty is a
violation of the mortgage broker's license law. Existing law
provides that this fiduciary duty includes a requirement that the
mortgage broker place the economic interest of the borrower ahead of
his or her own economic interest. Under existing law, a violation of
the licensing laws of certain mortgage brokers is a crime.
   This bill would provide  that a mortgage broker, for purposes
of these provisions, includes specified mortgage loan originators.
This bill would provide  that the fiduciary duty owed to a
borrower includes a requirement that the mortgage broker provide a
borrower prepurchase  debt  counseling that  details
the advantages and disadvantages of the loan options available to
the borrower based upon   explains what a prudent
debt-to-income ratio would be for the borrower, taking into account
 the borrower's income and credit rating.  The bill would
require the Department of Corporations, the Department of Financial
Institutions, and the Department of Real Estate to collaborate to
establish a standard for determining a prudent debt-to-income ratio
for borrowers.  Because a violation of  this requirement
  these provisions  by certain mortgage brokers
would be a crime, this bill would impose a state-mandated local
program.
    (2) Existing law requires that, upon a breach of the obligation
of a mortgage or transfer of an interest in property, the trustee,
mortgagee, or beneficiary record a notice of default in the office of
the county recorder where the mortgaged or trust property is
situated and mail the notice of default to the mortgagor or trustor.
Existing law, until January 1, 2013, prohibits a mortgagee, trustee,
beneficiary, or authorized agent from filing a notice of default for
an additional 30 days on loans made between January 1, 2003, to
December 31, 2007, that secure owner-occupied residential real
property, under certain circumstances.
   This bill would prohibit a mortgagee, trustee, beneficiary, or
authorized agent from filing a notice of default unless the borrower
has been provided counseling relating to foreclosure prevention that
includes assistance in negotiating an agreement to cure the default.
   (3) 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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 2923.1 of the Civil Code is amended to read:
   2923.1.  (a) A mortgage broker providing mortgage brokerage
services to a borrower is the fiduciary of the borrower, and any
violation of the broker's fiduciary duties shall be a violation of
the mortgage broker's license law. This fiduciary duty includes a
requirement that the mortgage broker place the economic interest of
the borrower ahead of his or her own economic interest and a
requirement that the mortgage broker provide a borrower prepurchase
 debt  counseling that  details the advantages and
disadvantages of the loan options available to the borrower based
upon   explains what a prudent debt-to-income ratio
would be for the borrower taking into account  the borrower's
income and credit rating. A mortgage broker who provides mortgage
brokerage services to the borrower owes this fiduciary duty to the
borrower regardless of whether the mortgage broker is acting as an
agent for any other party in connection with the residential mortgage
loan transaction.
   (b) For purposes of this section, the following definitions apply:

   (1) "Licensed person" means a real estate broker licensed  ,
or mortgage loan originator endorsed,  under the Real Estate Law
(Part 1 (commencing with Section 10000) of Division 4 of the
Business and Professions Code), a finance lender or broker  or
mortgage loan originator  licensed under the California Finance
Lenders Law (Division 9 (commencing with Section 22000) of the
Financial Code), a residential mortgage lender  or mortgage loan
originator  licensed under the California Residential Mortgage
Lending Act (Division 20 (commencing with Section 50000) of the
Financial Code), a commercial or industrial bank organized under the
Banking Law (Division 1 (commencing with Section 99) of the Financial
Code), a savings association organized under the Savings Association
Law (Division 2 (commencing with Section 5000) of the Financial
Code), and a credit union organized under the California Credit Union
Law (Division 5 (commencing with Section 14000) of the Financial
Code).
   (2) "Mortgage broker" means a licensed person who provides
mortgage brokerage services. For purposes of this section, a licensed
person who makes a residential mortgage loan is a "mortgage broker,"
and subject to the requirements of this section applicable to
mortgage brokers, only with respect to transactions in which the
licensed person provides mortgage brokerage services.
   (3) "Mortgage brokerage services" means arranging or attempting to
arrange, as exclusive agent for the borrower or as dual agent for
the borrower and lender, for compensation or in expectation of
compensation, paid directly or indirectly, a residential mortgage
loan made by an unaffiliated third party.
   (4) "Residential mortgage loan" means a consumer credit
transaction that is secured by residential real property that is
improved by four or fewer residential units.
   (c) The duties set forth in this section shall not be construed to
limit or narrow any other fiduciary duty of a mortgage broker. 
   (d) For purposes of this section, the Department of Corporations,
the Department of Financial Institutions, and the Department of Real
Estate shall collaborate to establish a standard for determining a
prudent debt-to-income ratio for borrowers. 
  SEC. 2.  Section 2923.51 is added to the Civil Code, to read:
   2923.51.  (a) A mortgagee, trustee, beneficiary, or authorized
agent shall not file a notice of default pursuant to Section 2924
unless the borrower has been provided counseling relating to
foreclosure prevention that includes assistance in negotiating an
agreement to cure the default.
   (b) For purposes of this section, "borrower" shall include a
mortgagor or trustor.
  SEC. 3.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.