I recently wrote about the Mortgage Reform legislation for California that was vetoed by Governor Schwarzenegger and I wanted to give you some positive responses. One of the main issues this reform addressed was the increased restrictions over California mortgage brokers; it would take preventive steps to cure some of the mortgage lending problems we encountered in the recent years.

Many people were disappointed by the veto for various reasons. I won’t go into detail or justify any of these political standings. But I will offer this piece of universal generalization; no one wants home owners to get taken advantage of. Yes, the legislation would have addressed many issues. Fortunately, there are still many things you have control of to make you are not take advantage of. Here are three simple tips any home owner can follow:

1. Do your research

Negative amortization loans, interest only loans, adjustable rate loans. “Creative lending” has caused California quite the headache as many homeowners are now realizing what these loans actually mean. These loans exist for a reason, so make sure you understand the reason behind them. By doing so, you’ll be less likely to sign for these loans simply because of a sales technique or marketing tactics.

2. Ask and Ye Shall Receive - Not Quite

Don’t get anxious or overbearing, just be cautious. Question your broker. Question the Lender. Question the Docs. Don’t be afraid to ask a question if you don’t understand. This is one of the biggest financial decisions you’ll make in one of the most chaotic markets in history.  By asking questions along the way, you’ll stand a much better chance of receiving the loan terms you originally asked for.

3. Stop and Think.  Relax then Focus.

Take a moment and seriously consider the decisions you are about to make. I’m not saying to take your sweet time - in fact, time isn’t on your side given the volatility of the mortgage market. But don’t just sign anything that comes your way. There’s a lot of pressure going both ways during a mortgage transaction and things can get pretty crazy pretty fast. Time is of the essence, but rushing won’t get you anywhere.

While we didn’t get the actual legislation to curb some of these predatory practices, there are many ways you can protect yourself. Follow these simple steps in your next mortgage transaction and you’ll avoid a lot of the headaches without any fancy bills or legislation.

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