California Legislative Update

California Legislative Update

The California legislature recently amended its laws governing mortgage loan originator pre-licensing and continuing education requirements, mortgage loan modifications, and foreclosures.  All of the bills discussed in this memorandum are effective January 1, 2015.




The pre-licensing education requirement now includes two hours of training relating to relevant California law and regulations, and the continuing education requirement now includes one hour of training related to relevant California law and regulations.




California law 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.


In addition to other penalties and remedies provided by California law, a person who violates this law will be liable for a civil penalty not to exceed $20,000 for each violation, which will be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General, by any district attorney, by any county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, by any city attorney of a city having a population in excess of 750,000, by any city attorney of any city and county, or, with the consent of the district attorney, by a city prosecutor in any city having a full-time city prosecutor in any court of competent jurisdiction.


In addition to any liability for a civil penalty pursuant to this law, if a person violates the above provision with respect to a victim who is a senior citizen or a disabled person, the violator may be liable for a civil penalty not to exceed $2,500 for each violation, which may be assessed and recovered in a civil action.  Disabled person means a person who has a physical or mental disability as defined by California law.  Senior citizen means a person who is 65 years of age or older.


In determining whether to impose a civil penalty and the amount, the court must consider, in addition to any other appropriate factors, the extent to which one or more of the following factors are present:


  • Whether the defendant knew or should have known that his or her conduct was directed to one or more senior citizens or disabled persons.
  • Whether the defendant’s conduct caused one or more senior citizens or disabled persons to suffer any of the following: loss or encumbrance of a primary residence, principal employment, or source of income, substantial loss of property set aside for retirement, or for personal or family care and maintenance, or substantial loss of payments received under a pension or retirement plan or a government benefits program, or assets essential to the health or welfare of the senior citizen or disabled person.
  • Whether one or more senior citizens or disabled persons are substantially more vulnerable than other members of the public to the defendant’s conduct because of age, poor health or infirmity, impaired understanding, restricted mobility, or disability, and actually suffered substantial physical, emotional, or economic damage resulting from the defendant’s conduct.


A court of competent jurisdiction hearing an action may make orders and judgments as necessary to restore to a senior citizen or disabled person money or property, real or personal, that may have been acquired by means of a violation of this law.


Any action to enforce any cause of action pursuant to this law must be commenced within four years after the cause of action accrued.  No cause of action barred under existing law on January 1, 2015 will be revived by its enactment.




The California legislature recently amended the Buyer’s Choice Act which prohibits a lender or beneficiary under a deed of trust who acquired title to residential real property improved by 4 or fewer dwelling units at a foreclosure sale from requiring, directly or indirectly, as a condition of selling the property, that the buyer purchase title insurance or escrow services in connection with the sale from a particular title insurer or escrow agent.  A seller who violates this law is liable to the buyer for an amount equal to 3 times all the charges made for the title insurance or escrow services.  The Buyer’s Choice Act was set to expire on January 1, 2015, but the expiration date has been removed, and the law will now remain in effect indefinitely.