Governor Signs Seven New Mortgage-Related Laws
As of October 11th, there are seven new California laws relating to real estate mortgages.
- SB 36: Those who engage in mortgage loan origination will need to have a special license from either the CA Department of Corporations or the Department of Real Estate, after meeting specified requirements. Comment — Part of our current mortgage mess is related to the fact that, previously, a real estate license allowed an individual to both sell real property and make loans. This resulted in a number of questionable transactions where the real estate agent was also the loan provider and took advantage of unsuspecting buyers.
- SB 239: Raises the penalty for “mortgage fraud,” i.e., lying on a loan application, from misdemeanor to felony, punishable by up to one year in jail. Comment — Whereas before “stretching the truth” on a mortgage application was considered by many borrowers and their real estate licensee “no big deal.” For borrowers, mortgage fraud is no longer just an ethical problem, but a legal one as well.
- SB 237: Requires Appraisal Management Companies (AMCs) to register with the CA Office of Real Estate Appraisers (OREA). Comment — While this is a complicated issue, the benefit to real estate agents is that it will now allow them to file a complaint with OREA against a specific AMC and appraiser. This would be for situations where out-of-area appraisers have come in with factually deficient appraisals that have caused escrows to crash. Perhaps this will cause the AMCs to make sure that the appraiser they assign is familiar with the area.
For information on other new laws, go to ‘Schwarzenegger Signs Seven Mortgage Laws”