Mortgage Reform Bills to Watch in 2009:
Last year, 236,231 Californians lost their homes to foreclosure. This meltdown has made it all too clear that there are systemic market failures within the lending industry.
We are working to ensure that California’s legislation and policy provide real mortgage reform focused on protecting the state’s homeowners, home buyers, and tenants, and serves to stabilize the California economy.
We have prioritized the following bills because they attempt to address some of the biggest problems with the lending industry in California. This is not our official support or opposition of these bills.
AB 764 (Nava): Amends the law that regulates the ability of real estate brokers to collect advance fees for brokerage services by giving the Real Estate Commissioner the sole ability to create an advance fee agreement. It also makes collection of advance fees in exchange for aid in loan modification illegal unless the individual collecting the fee is a licensed real estate broker.
AB 603 (Price): Will ensure tenants are able to recover their security deposits after a trustee sale of a rental property. Also requires that utility service continue without interruption when in name of the owner of the property, and require new owners to adequately manage properties where tenants remain after a change in ownership of the rental unit; in situations where tenants are paying rent.
AB 919 (Nava): Requires that a document identifying the participants in a mortgage transaction (such as the loan officer, mortgage broker and appraiser), be recorded along with the deed of trust in the county recorder’s office.
AB 1534 (M, Perez): Will prevent home builders from acting as loan originator for the homes they build. It will eliminate the conflict of interest created by builders acting as brokers, which creates an incentive to sell property at an inflated rate.
SB 36 (R, Calderon): Will bring California into compliance with federal standards regarding real estate licensing.
AB 34 (Nava): Will bring California into compliance with federal standards regarding regulation of the mortgage industry.
SB 94 (R, Calderon): Will prohibit services claiming to help consumers obtain a loan modification from receiving up front payment for their services unless they are a licensed real estate broker.
SB 120 (Lowenthal): Will require lenders who take over ownership of properties they foreclose on to abide by minimal tenant protection laws. They are responsible for returning a tenants security deposit. Also, it prohibits them from forcing a tenant out by shutting off utilities, changing locks, or removing property. Finally, SB 120 would establish a uniform set of rules when a landlord fails to pay a utility bill whether the rental property in question is a single-family or multifamily home.
AB 1160 (Fong): Will close a loophole in current law, by requiring lenders to provide translations of mortgage terms just like mortgage brokers. Under current law, a mortgage broker is required to provide a borrower with a translation of mortgage terms when the loan is negotiated in Spanish, Vietnamese, Chinese, Korean or Tagalog. A bank, credit union, or residential mortgage lender is not required to provide a translation, however.
AB 260 (Lieu): Seeks to rein in mortgage brokers by codifying their fiduciary duty to borrowers, and prohibiting them from steering borrowers to loans that are more costly than loans for which they qualify. The bill also goes beyond federal regulations in limiting subprime prepayment penalties – the “exit tax” that subprime borrowers pay for refinancing or otherwise paying off a loan early – to a 2% fee in the first year and 1% in the second year. AB 260 also empowers State agencies, the Attorney General, and harmed borrowers to enforce violations of the law and pursue relief.
ab1160support.pdf