2945. (a) The Legislature finds and declares that homeowners whose residences
are in foreclosure are subject to fraud, deception, harassment, and unfair
dealing by foreclosure consultants from the time a Notice of Default is recorded
pursuant to Section 2924 until the time of the foreclosure sale. Foreclosure
consultants represent that they can assist homeowners who have defaulted on
obligations secured by their residences. These foreclosure consultants, however,
often charge high fees, the payment of which is often secured by a deed of trust
on the residence to be saved, and perform no service or essentially a worthless
service. Homeowners, relying on the foreclosure consultants' promises of help,
take no other action, are diverted from lawful businesses which could render
beneficial services, and often lose their homes, sometimes to the foreclosure
consultants who purchase homes at a fraction of their value before
the sale.
(b) The Legislature further finds and declares that foreclosure consultants have
a significant impact on the economy of this state and on the welfare of its
citizens.
(c) The intent and purposes of this article are the following:
(1) To require that foreclosure consultant service agreements be expressed in writing; to safeguard the public against deceit and financial hardship; to permit rescission of foreclosure consultation contracts; to prohibit representations that tend to mislead; and to encourage fair dealing in the rendition of foreclosure services.
(2) The provisions of this article shall be liberally construed to effectuate this intent and to achieve these purposes.
2945.1. The following definitions apply to this chapter:
(a) "Foreclosure consultant" means any person who makes any solicitation,
representation, or offer to any owner to perform for compensation or who, for
compensation, performs any service which the person in any manner represents
will in any manner do any of the following:
(1) Stop or postpone the foreclosure sale.
(2) Obtain any forbearance from any beneficiary or mortgagee.
(3) Assist the owner to exercise the right of reinstatement
provided in Section 2924c.
(4) Obtain any extension of the period within which the owner may
reinstate his or her obligation.
(5) Obtain any waiver of an acceleration clause contained in any
promissory note or contract secured by a deed of trust or mortgage on
a residence in foreclosure or contained in any such deed of trust or
mortgage.
(6) Assist the owner to obtain a loan or advance of funds.
(7) Avoid or ameliorate the impairment of the owner's credit
resulting from the recording of a notice of default or the conduct of
a foreclosure sale.
(8) Save the owner's residence from foreclosure.
(b) A foreclosure consultant does not include any of the following:
(1) A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney-at-law.
(2) A person licensed under Division 3 (commencing with Section 12000) of the Financial Code when the person is acting as a prorater as defined therein.
(3) A person licensed under Part 1 (commencing with Section 10000) of Division 4 of the Business and Professions Code when the person makes a direct loan or when the person (A) engages in acts whose performance requires licensure under that part, (B) is entitled to
compensation for the acts performed in connection with the sale of a residence in foreclosure or with the arranging of a loan secured by a lien on a residence in foreclosure, (C) does not claim, demand, charge, collect, or receive any compensation until the acts have been performed or cannot be performed because of an owner's failure to make the disclosures set forth in Section 10243 of the Business and Professions Code or failure to accept an offer from a purchaser or lender ready, willing, and able to purchase a residence in foreclosure or make a loan secured by a lien on a residence in foreclosure on the terms prescribed in a listing or a loan agreement, and (D) does not acquire any interest in a residence in foreclosure directly from an owner for whom the person agreed to perform the acts other than as a trustee or beneficiary under a deed of trust given to secure the payment of a loan or that compensation. For the purposes of this paragraph, a "direct loan" means a loan of a real estate broker's own funds secured by a deed of trust on the residence in foreclosure, which loan and deed of trust the broker in good faith attempts to assign to a lender, for an amount at least sufficient to cure all of the defaults on obligations which are then subject to a recorded notice of default, provided that, if a foreclosure sale is conducted with respect to the deed of trust, the person conducting the foreclosure sale has no interest in the residence in foreclosure or in the outcome of the sale and is not owned, controlled, or managed by the lending broker; the lending broker does not acquire any interest in the residence in foreclosure directly from the owner other than as a beneficiary under the deed of trust; and the loan is not made for the purpose or effect of avoiding or evading the provisions of this article.(4) A person licensed under Chapter 1 (commencing with Section 5000) of Division 3 of the Business and Professions Code when the person is acting in any capacity for which the person is licensed under those provisions.
(5) A person or his or her authorized agent acting under the express authority or written approval of the Department of Housing and Urban Development or other department or agency of the United States or this state to provide services.
(6) A person who holds or is owed an obligation secured by a lien on any residence in foreclosure when the person performs services in connection with this obligation or lien.
(7) Any person licensed to make loans pursuant to Division 9 (commencing with Section 22000), 10 (commencing with Section 24000), or 11 (commencing with Section 26000) of the Financial Code, subject to the authority of the Commissioner of Corporations to terminate this exclusion, after notice and hearing, for any person licensed pursuant to any of those divisions upon a finding that the licensee is found to have engaged in practices described in subdivision (a) of Section 2945.
(8) Any person or entity doing business under any law of this state, or of the United States relating to banks, trust companies, savings and loan associations, industrial loan companies, pension trusts, credit unions, insurance companies, or any person or entity authorized under the laws of this state to conduct a title or escrow business, or a mortgagee which is a United States Department of Housing and Urban Development approved mortgagee and any subsidiary or affiliate of the above, and any agent or employee of the above
while engaged in the business of these persons or entities.
(9) A person licensed as a residential mortgage lender or servicer pursuant to Division 20 (commencing with Section 50000) of the Financial Code, when acting under the authority of that license.
(c) "Person" means any individual, partnership, corporation, limited liability company, association or other group, however organized.
(d) "Service" means and includes, but is not limited to, any of the following:
(1) Debt, budget, or financial counseling of any type.
(2) Receiving money for the purpose of distributing it to creditors in payment or partial payment of any obligation secured by a lien on a residence in foreclosure.
(3) Contacting creditors on behalf of an owner of a residence in foreclosure.
(4) Arranging or attempting to arrange for an extension of the period within which the owner of a residence in foreclosure may cure his or her default and reinstate his or her obligation pursuant to Section 2924c.
(5) Arranging or attempting to arrange for any delay or postponement of the time of sale of the residence in foreclosure.
(6) Advising the filing of any document or assisting in any manner in the preparation of any document for filing with any bankruptcy court.
(7) Giving any advice, explanation or instruction to an owner of a residence in foreclosure which in any manner relates to the cure of a default in or the reinstatement of an obligation secured by a lien on the residence in foreclosure, the full satisfaction of that obligation, or the postponement or avoidance of a sale of a residence in foreclosure pursuant to a power of sale contained in any deed of trust.
(e) "Residence in foreclosure" means a residence in foreclosure as defined in Section 1695.1.
(f) "Owner" means a property owner as defined in Section 1695.1.
(g) "Contract" means any agreement, or any term thereof, between a foreclosure consultant and an owner for the rendition of any service as defined in subdivision (d).
2945.2. (a) In addition to any other right under law to rescind a contract, an owner has the right to cancel such a contract until midnight of the third "business day" as defined in subdivision (e) of Section 1689.5 after the day on which the owner signs a contract
which complies with Section 2945.3.
(b) Cancellation occurs when the owner gives written notice of cancellation to the foreclosure consultant at the address specified in the contract.
(c) Notice of cancellation, if given by mail, is effective when deposited in the mail properly addressed with postage prepaid.
(d) Notice of cancellation given by the owner need not take the particular form as provided with the contract and, however expressed, is effective if it indicates the intention of the owner not to be bound by the contract.
2945.3. (a) Every contract shall be in writing and shall fully disclose the exact nature of the foreclosure consultant's services and the total amount and terms of compensation.
(b) The following notice, printed in at least 14-point boldface type and completed with the name of the foreclosure consultant, shall be printed immediately above the statement required by subdivision
(c):
"NOTICE REQUIRED BY CALIFORNIA LAW
_________________________________ or anyone working
(Name)
for him or her CANNOT:
(1) Take any money from you or ask you for money
until _________________________________________ has
(Name)
completely finished doing everything he or she said he or she would do; and
(2) Ask you to sign or have you sign any lien, deed of trust, or deed."
(c) The contract shall be written in the same language as principally used by the foreclosure consultant to describe his services or to negotiate the contract; shall be dated and signed by
the owner; and shall contain in immediate proximity to the space reserved for the owner's signature a conspicuous statement in a size equal to at least 10-point bold type, as follows: "You, the owner, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right."
(d) The contract shall contain on the first page, in a type size no smaller than that generally used in the body of the document, each of the following:
(1) The name and address of the foreclosure consultant to which the notice or cancellation is to be mailed.
(2) The date the owner signed the contract.
(e) The contract shall be accompanied by a completed form in duplicate, captioned "notice of cancellation", which shall be attached to the contract, shall be easily detachable, and shall
contain in type of at least 10-point the following statement written in the same language as used in the contract:
"NOTICE OF CANCELLATION
_______________________________________
(Enter date of transaction) (Date)
You may cancel this transaction, without any penalty or obligation, within three business days from the above date. To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, or send a telegram to _________________________________________________________
(Name of foreclosure consultant)
at _________________________________________________________
(Address of foreclosure consultant's place of business)
NOT LATER THAN MIDNIGHT OF ________________________________.
(Date)
I hereby cancel this transaction _______________________.
(Date)
_________________________________"
(Owner's signature)
(f) The foreclosure consultant shall provide the owner with a copy of the contract and the attached notice of cancellation.
(g) Until the foreclosure consultant has complied with this section, the owner may cancel the contract.
2945.4. It shall be a violation for a foreclosure consultant to:
(a) Claim, demand, charge, collect, or receive any compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented he would perform.
(b) Claim, demand, charge, collect, or receive any fee, interest, or any other compensation for any reason which exceeds 10 percent per annum of the amount of any loan which the foreclosure consultant may make to the owner.
(c) Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation. Any such security shall be void and unenforceable.
(d) Receive any consideration from any third party in connection with services rendered to an owner unless such consideration is fully disclosed to the owner.
(e) Acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted. Any interest acquired in violation of this subdivision shall be voidable, provided that nothing herein shall affect or defeat the title of a bona fide purchaser or encumbrancer for value and without notice of a violation of this article. Knowledge that the property was "residential real property in foreclosure," shall not constitute notice of a violation of this article. This subdivision shall not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of residential real property in foreclosure.
(f) Take any power of attorney from an owner for any purpose, except to inspect documents as provided by law.
(g) Induce or attempt to induce any owner to en