RISMEDIA, June 23, 2008-The California Mortgage Bankers Association (CMBA) released the following statement in reaction to the state Senate Banking, Finance & Insurance hearing held Wednesday, June 18, 2008:
“…the State Senate Banking, Finance & Insurance Committee heard a package of bills that proposed drastic changes in the way mortgage loans are handled in California.
None of the bills considered yesterday would stop any of the foreclosures currently under way in the market. The California Mortgage Bankers Association did reach agreement on a comprehensive measure, SB 1137 by Senator Don Perata that is designed to provide additional protections for borrowers facing foreclosure.
All the measures would go into effect next year and focus on removing certain loans from the market and adding penalties to other loan products. The net result would have severely impacted the flow of capital to California’s mortgage market.
The California Mortgage Bankers Association opposed many of these measures because they further restrict credit to borrowers and perpetuate the liquidity crisis that is stalling the movement of homes for sale throughout the state.
It was also important to make sure that California efforts to reform the mortgage market are consistent with the current federal efforts to regulate subprime loans. New federal rules have been proposed and will likely become effective this summer. These rules will apply to all lenders, whether they are organized under state or federal law. Any laws passed in California that conflict with federal law would only serve to promote litigation and drive lending prices in California much higher than they are today.
While consumer groups are complaining about the Senate’s rejection of their proposals, we believe that the Senate acted prudently to ensure the continual availability of loan products to consumers with less than perfect credit.
If the package of bills had all passed as they were introduced, the state would have faced a drastic reduction in the loan products available to working families, further postponing their hopes of becoming homeowners in California’s pricey market.
As lenders, we believe that reforms are needed and several bills that are still moving forward will help reform the market without impairing market liquidity. Those bills include:
Senator Machado’s package of bills to ensure regulatory oversight and improve market liquidity, including:
SB 1053 – broker regulation
SB 1054 – broker fraud protection
SB 1055 – tax credits for borrowers
SB 1137 (Perata) – The recent amendments develop new processes to reach out to homeowners prior to foreclosures to provide them with additional information on the process and continue efforts to avoid foreclosure where possible. It also provides additional notices to tenants of foreclosed properties and creates new requirements for the maintenance of foreclosed properties to protected impacted neighborhoods.
A.J.R. No. 45 (Coto) – This measure would memorialize the President and the Congress of the United States to permanently increase the federal conforming mortgage loan limit to 125% of the area median price in high-cost areas of California, but in no case to exceed $729,750.”
For more information, visit http://www.cmba.com/.
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