Gov. Schwarzenegger signs mortgage overhaul bills
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