California Makes Illegal Home Fraud Illegal…Again
California has taken direct action against inflated appraisals, falsified information to qualify for loans, and other illegal activity by making such action illegal again.
Inman has the latest news:
California lawmakers will allow the state’s Housing Finance Agency to take on another $2 billion in debt while criminalizing attempts to pressure appraisers and adopting federal guidance for subprime and “exotic” loans.
California Gov. Arnold Schwarzenegger promised this week to sign into law three separate bills affecting mortgage lending in the state, including legislation that would subject lenders licensed at the state level to guidance that had pertained only to federally chartered lenders.
The guidance advises lenders to provide more complete disclosure of loan terms, and to qualify borrowers at the fully indexed rate — assessing whether they will be able to afford their monthly payments even after interest rates reset.
The guidance for “exotic” interest-only and pay-option adjustable-rate mortgage (ARM) loans was issued to federally chartered lenders more than a year ago. It has since been adopted by 38 other states, according to the Conference of State Bank Supervisors (CSBS).
In addition to redundantly legislating against already illegal activity, California is nobly purchasing a 2nd mortgage load, an additional 2 billion dollars worth of debt.
It remains to be seen if California actually does anything to prevent it’s citizens from blatantly lying to lenders or if this is just another round of empty legislation.
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[...] sbeck wrote a fantastic post today on “California Makes Illegal Home Fraud Illegal…Again”Here’s ONLY a quick extractCalifornia lawmakers will allow the state’s Housing Finance Agency to take on another $2 billion in debt while criminalizing attempts to pressure appraisers and adopting federal guidance for subprime and “exotic” loans. California Gov. … [...]