Residents of California have suffered a one-two punch from the financial crisis in Wall Street as well as the housing crisis on Main Street. In order to address these issues and prevent such problems in the future, the Assembly Democrats have written a letter of urgency directed at Governor Schwarzenegger. The letter demands mortgage reform in California to address the serious problem of foreclosures. During a special legislative session, Gov. Schwarzenegger was supposed to address the state budget; but the assembly is asking the governor to also stronlgy reconsider the issues of mortgage reform in California.
In September, Governor Schwarzenegger vetoed mortgage reform bill AB1830 which would have addressed many key mortgage industry related issues. If you missed the details, you can find my summary of the mortgage reform veto here. Among the issues were the prohibition of negative amortization loans, limitation of prepayment penalties, and prevention of steering borrowers towards more expensive and riskier loans. Gov. Schwarzenegger argued that such reform would only apply to state regulated brokers and lenders and would create greater consumer confusion. But, the assembly just isn’t satisfied. The letter thanked Schwarzenegger for passing certain bills that had “positive effects”, but they end with a request to “fix the broken mortgage system, help people stay in their homes, and begin California’s economic recovery.”
For you curious folks, you can view the full letter in PDF format thanks to the Sacramento Bee.
Meanwhile, there are growing concerns over California’s budget as revenues have unexpectedly dropped $3 billion dollars this year. The special legislative session is scheduled to meet this Monday, so it will be interesting to see how Schwarzenegger responds these requests this coming week.
(65 votes, average: 4.98 out of 5)
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Budget should be first, Mortgage system second.
Schwarzenegger should make mortgage reform a key part of his efforts to address California’s budget and financial woes. They are both equally important.
As long as it is a balanced, reasonable budget the mortgage industry will benefit. I guess it’s a chicken and egg question. In my opinion the budget should be first priority over all else.
Your expectations seem to have been correct as most of the focus was on the budget itself. While we’re definitely going to be busy dealing with these budget issues - eventually, there will have to be more focus on mortgage reform because there is obviously a direct correlation between the two.
Almost all politicians are faithful only to their own wallets. Therefore Schwarzenegger’s behavior should not be a shock to anyone.