Gov. Schwarzenegger to Sign Legislation to
Protect California Homeowners
and Homebuyers
With California disproportionately impacted by national fluctuations in the
housing market, Governor Schwarzenegger announced that he will sign
three bills to increase protections for Californians who own or plan to
purchase homes and to expand affordable housing opportunities.
"It is critical that we continue to take steps to protect Californians
against unscrupulous lending practices and to ensure that consumers can make
informed decisions," said Governor Schwarzenegger. "That is why
I am pleased to sign these bills, which increase transparency and accountability
in the lending market that will help homeowners preserve their American dream."
SB 223 by Senator Mike Machado (D-Linden) will make it a crime for licensed
appraisers to engage in any appraisal activity that is connected to the purchase,
sale, transfer, financing or development of property if their compensation
is impacted by the final price generated by the appraisal.
SB 385 also by Senator Machado permits state agencies involved with residential
mortgage lending and brokering to adopt emergency measures and new policies
to ensure that all mortgage lenders and brokers are subject to federal guidelines
on non-traditional mortgages. This law impacts the Department of Financial
Institutions (DFI), the Department of Corporations (DOC) and the Department
of Real Estate (DRE).
AB 929 by Assemblymember Sharon Runner (R-Lancaster) increases the amount
of affordable housing in California by raising the total debt that the California
Housing Finance Agency (CalHFA) can carry by $2 billion. CalHFA issues bonds
to finance housing for low and moderate-income families.
Governor Schwarzenegger is taking additional actions to protect Californians,
who are at the forefront of the national downturn in the housing market.
The state's foreclosure rate is more than twice the national average and
the Mortgage Bankers Association is reporting that the state's homeowners
hold 20 percent of the nation's subprime adjustable rate mortgages, a record
number of which are expected to result in foreclosure.
"It's absolutely crucial that Californians facing the threat of foreclosure
reach out to their lenders and discuss available options to save their homes," said
Governor Schwarzenegger. "The worst thing someone can do is nothing
- most lenders would prefer not to foreclose, but 50 percent of borrowers
who lose their homes never return calls from their lenders."
Today the Administration announced the following actions and resources to
help homeowners that are facing financial distress or foreclosure as a result
of non-traditional mortgages:
California 's licensing departments will adopt regulations to strengthen
California 's underwriting and consumer disclosures, in order to ensure that
consumers have the tools to fully understand the ramifications of taking
out a sub-prime loan. As part of this effort, licensees will use a new, multilingual
consumer disclosure form to illustrate worst-case payment scenarios.
Licensing departments will continue to work closely with law enforcement to discipline lenders and brokers who take unfair advantage of consumers. These departments are also currently training consumer counselors, non-profits and legal aid societies to help identify licensees who have defrauded consumers or otherwise violated state law, so enforcement actions can be taken against their licenses.
State agencies will continue to partner with local legislators in the areas hit hardest by foreclosures to connect borrowers with non-profit counselors who can help them negotiate with their lenders. The state has already held events in Stockton , Riverside , Sun Valley and La Quinta. Another event will be held in Los Angeles on October 20th in cooperation with the Los Angeles Neighborhood Housing Service. For more information on this service call (213) 381-2862.
The state will continue to promote two key state resources for homeowners:
The "HOPE Hotline" (1-888-995-HOPE or www.995HOPE.org), which provides
free mortgage counseling 24 hours a day, seven days a week.
And, the recently launched, Spanish and English language mortgage websites: http://www.yourhome.ca.gov and www.sucasa.ca.gov.
Earlier this year, the Governor directed his Cabinet to form the Interdepartmental
Task Force on Non-Traditional Mortgages. In September, he made $1.16 million
in Community Development Block Grant funds available to counties for consumer
counseling and urged Congress to provide more funding for these programs
in California . He also called on Congress to raise federal loan limits so
that more California families can take advantage of these secure products,
rather than relying on subprime loans.
