California Bills wait Governor’s Signature

Law makers are trying to pass bills to regulate the mortgage industry however they have meet with resistance from mortgage industry lenders and the Governor Arnold Schwarzenegger himself. Last year Schwarzenegger vetoed one that was similar. Law makers are looking for Governor Schwarzenegger to sign the three that would benefit every Californian looking to purchase or refinance a home in the state. The bills are designed to regulate brokers and loan officers conducting business in the state of California.  Lawmakers see the bills as modest with regard to accountability.

Ted Lieu (D-Torrance) and two other Democrats sponsored the bill AB 260 that was designed to ban mortgage brokers from navigating consumers into costly deals and prohibits subprime loans that would allow borrowers to propel downhill into further debt. The bill would also prohibit financial incentives to brokers for add expensive additional features to the loan and require brokers to act in the best financial interest of the borrower. A concession was made to the bill that weakens the bill by dropping a provision that would entitle borrowers the ability to sue for violations under the bills terms. The concession made it up to state regulators to make that call. The past performance of state regulators has left Californians empty handed and the Attorney General’s Office holding the bag. The concession was made on behalf of Governor Schwarzenegger in hope he will sign this one.

Bill AB 260 coincides with another measure sponsored by Senior Ron Calerson (D-Montebello) called SB 36. SB 36 would require anyone that originates mortgages to obtain a license to operate in the state. Congress successfully adopted a similar rule and it has helped to eliminate brokers who consistently ignore state regulations. The license requires in the bill itself however would be of more meaning if Bill AB 260 were conjoined with it.

Bill AB 1160 sponsored by Paul Fong (D-Cupertino) hold the third component which would enforce common sense requirements. The bill would require those borrowers who negotiate mortgage loans in Spanish, Chinese, Vietnamese, Korean or Tagalog be given a translation of the major terms of the loan documents prior to signing the document.

Bill SB 36 and AB 1160 have not been very controversial to say the least. Bill AB 260 has been catching heat by administration officials for the cost it would require to enforce the bill.  Supporters’ of the bill contend that the notion is ridiculous when you consider the cost of damage caused to the economy by predatory lending and the continuing down slide of the housing market. The bill will reduce the freedoms that borrowers currently have to take more risk when obtaining loans.  Supporters point out that less than unmindful borrowers and immoral brokers have put this country in the currently housing crisis and left the country’s economy in a disaster. Supporters contend that its time the state take some privileges away from  the mortgage market and see these as small sacrifices in exchange for evading another housing crisis in the future.