Horses escape and then the barn door closes

Central Valley Business Times:

With California an epicenter of the mortgage meltdown and housing slump, Gov. Arnold Schwarzenegger says he will sign three bills that he says will 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," says Mr. Schwarzenegger in a written statement released by his office Wednesday morning.

The bills are:
• SB 223 by Sen. Mike Machado, D-Linden, which 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 Mr. Machado, which 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 Assemblywoman Sharon Runner, R-Lancaster, which increases the amount of affordable housing in California by raising the total debt that the California Housing Finance Agency can carry by $2 billion. CalHFA issues bonds to finance housing for low and moderate-income families.

California’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," says the governor. "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."

Mr. Schwarzenegger says he has ordered other actions to help homeowners facing financial distress or foreclosure as a result of non-traditional mortgages.

These include ordering the state’s licensing departments to adopt regulations to strengthen 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.

Mr. Schwarzenegger says the state’s licensing departments will work closely with law enforcement to discipline lenders and brokers who take unfair advantage of consumers. The 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.

He says 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.

The state has also set up a hotline for homeowners in mortgage trouble. The "HOPE Hotline" (888) 995-HOPE or online at www.995HOPE.org provides free mortgage counseling 24 hours a day, seven days a week