Senators ignore plight of their own districts
Californians must wait another year for needed protections
OAKLAND—The California Senate Banking Committee bowed to industry
today, killing all but one of the Assembly Democrats' crucial bills
designed to rein in abuses prominent in the subprime market and thereby
eliminating the prospect of restoring responsibility and accountability
to the mortgage market in California this year.
One bill, AB
1830 (Lieu, D-Torrance), was left standing, but had been stripped of
key provisions at the urging of Chairman Machado and was reduced to a
bill that merely authorized CA regulators to enforce weak federal
regulations.
“California's economy, current borrowers and
future borrowers all lost today,” said Paul Leonard, director of the
California office of the Center for Responsible Lending (CRL). “The
Assembly handed the committee a solid package of bills that would have
done much to safeguard Californians from another mortgage crisis, but
the committee chose to preserve the status quo, and keep the rules that
brought us the unmitigated foreclosure and credit crisis we are in
today.”
CRL, along with a coalition of partners including
ACORN, CALPIRG, the California Labor Federation, the California
Reinvestment Coalition and Consumers Union, has pushed for reforms that
would have provided strong protections to borrowers and returned the
mortgage market to basic principles of responsible lending.
“California
needs its legislature to pass common sense regulation of unfair lending
practices,” said Kevin Stein, associate director of the California
Reinvestment Coalition. “But today the Senate Banking Committee
weakened and killed mortgage legislation, failed to prevent a
foreclosure crisis from happening again in the future, and did nothing
to help families who are currently struggling to make it.”
Members of the Senate Banking Committee, which includes representatives of some of California's hardest-hit housing markets,
rejected a number of bills that would have limited prepayment
penalties; required lenders to evaluate a borrower's ability to repay;
established mortgage brokers' fiduciary duty to borrowers; regulated
mortgage servicers; required lenders to provide translated summary of
loan terms to non-English speaking borrowers and prohibited involuntary
waivers of legal protections.
“It's baffling that even after
500,000 foreclosures in California, industry continues to defend the
same lax lending rules that got us into this mess in the first place,”
said Pedro Morillas, legislative advocate for CalPIRG. “Industry came
out on top today, but we'll continue fighting for reforms to prevent
another mortgage meltdown from happening ever again.”
Interestingly,
committee Chairman Mike Machado (D-Linden) and Vice Chairman George C.
Runner (R-Antelope Valley) have the dubious distinctions of
representing Central Valley and Inland Empire regions that have borne
the brunt of the foreclosure storm.
According to
ForeclosureRadar.com, from October 2007 to March 2008, Machado's
district, which includes Stockton, Vallejo and Fairfield, had more than
10,000 Notices of Default (NOD) and foreclosures; Runner's district,
which includes parts of San Bernardino and Ventura counties, had more
than 13,000 NODs and foreclosures.
“Knowing what we know now,
maintaining the status quo is not an option,” said Norma Garcia, senior
attorney at Consumers Union. “And to allow it to continue would not
only be negligent, it would be a travesty.”
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About ACORN, California Reinvestment Coalition, CalPIRG, Center for Responsible Lending and Consumers Union
ACORN,
the Association of Community Organizations for Reform Now, is the
nation's largest community organization of low- and moderate-income
families, working together for social justice and stronger communities.
The California Reinvestment Coalition advocates for the right of
low-income communities and communities of color to have fair and equal
access to banking and other financial services.
CALPIRG takes
on powerful interests on behalf of Californians, working to win
concrete results for our health and our well-being.
The Center for Responsible Lending is a research and advocacy organization dedicated to ending abusive financial practices.
Consumers Union, the nonprofit publisher of Consumer Reports, works for a fair, just and safe marketplace for all consumers.
