These bills aim to strengthen California’s reverse mortgage laws by providing senior homeowners with greater consumer protections when considering reverse mortgage agreements, make it a felony to commit fraud in connection with a mortgage application and promote responsibility and accountability in the real estate market.
“Fraudulent mortgage practices have become more prevalent as a result of the national foreclosure crisis that negatively impacted California’s housing market and economy,” said Governor Arnold Schwarzenegger. “This legislation helps crack down on abusive lending practices by giving law enforcement the tools to effectively investigate mortgage fraud crimes and provides Californians with greater consumer protections to promote homeownership in a safe and accountable environment.”
The governor signed the following bills:
AB260 by Assemblymember Ted Lieu (D-Torrance) will enact the Higher-Priced Mortgage Loan Law which would codify a fiduciary duty for mortgage brokers, authorize California’s mortgage regulators to apply specified federal mortgage lending laws and regulations to their licensees and cap prepayment penalties and yield spread premiums on higher-priced loans.
SB 36 by Senator Ron Calderon (D-Montebello) to establish standardized licensing requirements for all individual loan originators who offer or negotiate residential mortgages.
SB 239 by Senator Fran Pavley (D-Santa Monica) to make it a felony to commit fraud in connection with a mortgage application. This bill makes individuals who engage in mortgage fraud guilty of a public offense punishable by imprisonment in the state prison or in a county jail up to one year. The bill also provides law enforcement with the necessary tools to make it easier to obtain a search warrant for real estate records and documents believed to contain evidence of mortgage fraud.
AB 329 by Assemblymember Mike Feuer (D-Los Angeles) to establish the Reverse Mortgage Elder Protection Act of 2009 to provide senior homeowners with greater consumer protections to ensure that they are fully informed about the consequences of entering into a reverse mortgage agreement. Specifically, the bill requires lenders to provide prospective borrowers with a clear and informative written disclosure statement and a written checklist pertaining to the risks and suitability of a reverse mortgage, prior to borrower attending loan counseling.
SB 237 by Senator Ron Calderon (D-Montebello) to create a registration program for appraisal management companies (AMCs) and prohibits any person or entity from acting in the capacity of an AMC without first obtaining a certificate for registration from the Office of Real Estate Appraisers.
AB 957 by Assemblymember Cathleen Galgiani (D-Livingston) to mandate that buyers of foreclosed homes would have the choice of using a local escrow office to handle the transaction. It also prohibits a seller of residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller and would also prohibit a seller of residential property from, without good cause, disapproving the use of a title or escrow company chosen by the buyer.
AB 1160 by Assemblymember Paul Fong (D-Cupertino) to require mortgage loan documents to be translated into the language the verbal negotiations were conducted. Mortgage documents would be translated into Spanish, Chinese, Tagalong, Korean and Vietnamese languages.