Wednesday, 28 February 2024

Governor signs several mortgage bills aiming to protect homeowners, homebuyers

THIS STORY HAS BEEN CORRECTED REGARDING SB 1675.

 

On Thursday Gov. Arnold Schwarzenegger has signed legislation aimed at protecting homeowners and homebuyers in California and helping establish a safe, more accountable lending environment.


The legislation aims to increase accountability in the real estate market, improve transparency standards in order to prevent abusive lending practices and help Californians maintain homeownership in the aftermath of the foreclosure crisis.


"All Californians deserve the opportunity to achieve the American dream of homeownership and this legislation will help homebuyers realize that dream in the aftermath of the housing crisis," Schwarzenegger said in a written statement. "I am pleased to sign legislation that protects consumers and creates a responsible and accountable lending environment that will encourage homeownership in our state."


SB 1461 by Sen. Gloria Negrete McLeod (D-Montclair) requires real estate agents to disclose their license number on all first point of contact marketing materials and property purchases beginning July 1, 2009 and SB 1737 by Sen. Michael Machado authorizes the Department of Real Estate to suspend or bar a person who has committed a violation of the Real Estate Law if the suspension or bar is in the best interest of the public.


The governor also signed AB 69 by Assemblymember Ted Lieu (D-Torrance) mandating that all mortgage loan servicers report specific, detailed data to their licensing agency concerning loan modifications and AB 180 by Assembly Speaker Karen Bass (D-Los Angeles) provides a registration and bonding process for foreclosure consultants and prohibits a foreclosure consultant from entering into an agreement to assist an owner in arranging the release of surplus funds after the trustee's sale is conducted.


To help Californians refinancing their mortgages in the aftermath of the foreclosure crisis the governor signed SB 870 by Sen. Mark Ridley-Thomas (D-Los Angeles) which allows the California Housing Finance Agency to more quickly establish a mortgage refinance program and SB 1065 by Sen. Lou Correa (D-Santa Ana) that includes the refinancing of home mortgages in the criteria for a city or county-administered home financing program.


The following four housing-related bills have also been signed into law:


  • SB 1055 by Sen. Michael Machado and co-authored by Sen. Patricia Wiggins (D-Santa Rosa) allows taxpayers to exclude the forgiven mortgage debt from their incomes for state income tax purposes which brings the state in compliance with federal law. “The current housing crisis has many causes, which means we have to address it at many levels,” said Wiggins. “SB 1055 offers state income tax relief to borrowers whose mortgage debt has been forgiven by their lender, debt which is currently taxable to the borrower as ordinary income. In this economy, that can place a heavy burden on borrowers who already are experiencing financial difficulties.”

  • SB 1604, also by Machado, requires that any private insurance policy maintained by an escrow agent be applied as primary coverage in the event of a loss covered by both the private insurance and the Escrow Agents Fidelity Corporation.

  • SB 1675 by Sen. Dave Cox (R-Fair Oaks) provides the California Department of Veterans Affairs with the discretion to structure the terms and conditions of any authorized debt issuance.

  • AB 2454 by Assemblymember Bill Emmerson (R-Redlands) would increase potential recovery for harmed consumers applying for Recovery Account payments filed on or after Jan. 1, 2009, to $50,000 for any one transaction and $250,000 for any one licensee.


In July 2008, Schwarzenegger signed legislation giving Californians one more tool to help them stay in their homes. SB 1137 by Senate President Pro Tem Don Perata (D-Oakland) and co-authored by Wiggins, requires lenders to contact homeowners and explore restructuring options before initiating the foreclosure process. The governor also previously signed SB 1448 by Sen. Jack Scott (D-Pasadena) increasing penalties for acting or advertising as a real estate broker or salesperson without a license.


Additionally last year, the governor signed the following legislation to help homeowners preserve their homeownership, increase protections for Californians who plan to purchase homes and expand affordable housing opportunities:


  • SB 223 by Machado 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 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, the Department of Corporations and the Department of Real Estate.

  • 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.


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