Schwarzenegger vetoes new restrictions on mortgage brokers

[Newsjock]

Source: San Jose Mercury News

Gov. Arnold Schwarzenegger on Thursday signed 10 new laws pertaining to real estate and mortgage finance, measures he said will protect home buyers and create "accountable" lending. But some disappointed consumer advocates say one of the bills the governor vetoed would have been the most potent antidote to shady mortgage lending practices.

AB 1830, authored by Democratic Assemblyman Ted Lieu of Torrance and vetoed by Schwarzenegger on Thursday, would have specified that brokers owe a fiduciary duty to their clients and must put their clients' economic interests ahead of their own. It also would have created a newly defined category of "higher-priced mortgage loans," and would have capped prepayment penalties and prohibited negative amortization for those types of loans. Prepayment penalties and negative amortization — in which borrowers end up owing more principal and interest than they originally signed up to borrow — were common features of the sub prime loans that proved to be financially disastrous for many borrowers.

In denying AB1830, Schwarzenegger "turned his back on consumers," said Ginna Green, spokesperson for the California office of the Center for Responsible Lending, which supported the bill. "Many of the bills signed today do not get at the root cause of the problem, which was reckless lending," she said. "AB1830 would have been a step in that direction."

... In an statement, Lieu, the bill's author, said, "The Governor's veto message repeats the same tired arguments that were made the last eight years by industry, the same arguments that led us to the worst mortgage and foreclosure crisis in American history." Lieu vowed to reintroduce his bill.

Read more: http://www.mercurynews.com/breakingnews/ci_10560313

[David__77]

1. This should go on the ballot.

Let the GOP stand shoulder to shoulder with these crooks. There are some good brokers, sure, but there are a whole lot of criminal ones.

[Snarkoleptic]

2. Most of the criminal types have gone back to selling used cars.

The field has narrowed to the point the very few of the crooks can fake their way through the system.