California Laws Get Tough on Mortgage Finance
Housing Wire, October 14th, 2009
California Governor Arnold Schwarzenegger signed seven mortgage
finance-related bills into state law Monday. The new laws aim to crack
down on fraud, set requirements for loan documents and set restrictions
on mortgage and reverse mortgage originators.
Senate Bill (SB) 36 regulates the licensing
requirements for residential loan originators in compliance with the
federal Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.
SB 237 requires appraisal management companies
(AMCs) and appraisers register with the Office of Real Estate
Appraisers and subjects appraisers to the provisions of the Real Estate
Appraisers’ Licensing and Certification Law.
SB 239 raises the crime of mortgage fraud from a
misdemeanor to a felony and makes it easier for prosecutors to obtain
fraudulent loan documents to investigate cases.
Assembly Bill (AB) 260 places restrictions on
subprime loans and prohibits originators from “steering” borrowers, or
encouraging borrowers to buy riskier loan products when they are
eligible for affordable products. It also gives state regulatory
agencies the authority to suspend or revoke the licenses of real estate
lenders and mortgage brokers that violate the state’s lending laws.
AB 329 sets guidelines for reverse mortgages
originated for elderly borrowers — those over 65 years old — requiring
specific disclosures and offering counseling service referrals.
Originators are also prohibited from selling other financial products
to a reverse mortgage borrower.
AB 957 gives the buyers of foreclosed property the
right to choose local escrow officers to complete transactions. It
prohibits the seller of a residential property from requiring the buyer
to use an escrow service company or purchase title insurance chosen by
the seller.
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