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Gov. Schwarzenegger signs mortgage overhaul bills

October 12, 2009 |  9:39 am

In a flurry of end-of-session bill signings, Gov. Arnold Schwarzenegger approved seven new laws that provide a range of consumer protections to home-mortgage holders.

AB 260 by Assemblyman Ted Lieu (D-Torrance) tightens restrictions on mortgage brokers so they cannot "steer" borrowers to riskier, higher-interest loans when they can afford and qualify for more economical ones. The new law also bans negative-amortization loans in which the principal keeps rising even though monthly payments are made. The measure caps prepayment penalties to 2% of the principal balance and allows state regulators to enforce federal lending laws.

Other mortgage-related bills signed by the governor include:

-- SB 36,  by Sen. Ron Calderon (D-Montebello),  sets standardized licensing requirements for all residential loan originators.

-- SB 239, by Sen. Fran Pavley (D-Agoura Hills), makes it a felony to commit fraud on a mortgage loan application.

-- AB 329, by Assemblyman Mike Feuer (D-Los Angeles), requires lenders to provide more, clear information to senior consumers interested in reverse mortgages.

-- SB 237, by Calderon, creates a registration program for appraisal management companies.

-- AB 957, by Assemblywoman Cathleen Galgiani (D-Stockton), allows buyers of foreclosed homes to choose local escrow officers.

-- AB 1160, by Assemblyman Paul Fong (D-Cupertino), Requires that mortgage loan documents be translated into the language the verbal negotiations were conducted in.

-- Marc Lifsher