CAMB is working for you at the State Capitol!

July 10, 2008
California Association of Mortgage Brokers
State Bills Status Report
By George L. Duarte, CMC
Government Affairs Regional Vice-Chair

The State Assembly has had a change of individual leadership, with new Assembly Speaker Karen Bass from Los Angeles, and Sen. Don Perata from Oakland remains President Pro Tem of the Senate; both remain with solid Democratic Party majorities. However, there seems to be some serious static between the Assembly and the Senate, the cause of which is not entirely clear, but this has had a beneficial effect on the bills that CAMB has been watching and fighting. Apparently, a political climate exists such that bills are not put forward or debated on their merits or their benefit to Californians, but based on what legislator has put them forward, from what committee, and pushed by whatever lobbying group with a particular axe to grind, no matter how unrealistic the intent or result of the bill. Gridlock is a sorry state of affairs, indeed.

Fortunately, CAMB has been a direct beneficiary of this situation. CAMB, in coordination with other industry members, has been lobbying hard in “the building”, and have brought about very significant revisions to the 2 main bills of most extreme danger to our business and California consumers- AB 2880(Wolk) and AB 1830 (Lieu).

AB 1830 passed the Assembly and was sent over to the Senate, where it had its final revision on June 25th, it was withdrawn from the Senate Appropriations Committee on June 26th. One of the main features of the bill that remained after the revisions was that it created a class of “higher cost” loans, with triggers only 3 percentage points over the corresponding Treasuries for first loans, and 5 points over the corresponding Treasuries for seconds. These features would have made current Jumbo fixed rate loans fall under this category. Even with all the revisions, it was a bad bill for Californians. It was withdrawn by the bill’s author because it was the opinion of a legislative analyst that if the bill passed, it would most certainly be in conflict with current and proposed changes to the Federal Reserve’s Reg Z; TILA; and HUD’s RESPA reform. So we are only temporarily reprieved from this battle, we will see this again after the Federal Reserve and HUD finalize their new regulations, probably next session. Needless to say, CAMB was “Opposed” to this bill.

AB 2880 never made it out of the Assembly, where it died in the Assembly Appropriations Committee on May 22nd, having been last amended on April 10th. This bill also had many onerous features remaining, even after having been revised 3 times. This bill was directed at DRE mortgage brokers specifically, and among other things would have required a surety bond of $100,000 be posted by mortgage brokers. Additionally, the bill would have codified that mortgage brokers are “fiduciaries” of the consumer, which exists now only in case law; would have prohibited mortgage brokers from receiving compensation for placing borrowers in loans with higher rates than what they would have qualified for; would have prohibited a broker from contacting a client for a one year period after the closing of the loan, unless the client contacted the broker first, and would have had the broker civilly liable to the borrower for damages, and authorized a court to impose punitive damages to the borrower. CAMB was and is “Opposed” to this bill, we don’t know if it will be resurrected at some time in the future.

SB 1053(Machado) is a bill that CAMB had initially opposed, but with working with Sen. Machado’s staff, the CAMB position has been changed to “Support with amendments”. In the latest proposed version, not yet even officially posted, there would be 3 new reports that would be required to be produced by DRE mortgage brokers and given to the DRE, annually or bi-annually, depending on the quantity of loans the broker’s office does. The first report, an “Agreed Upon Procedures Report” is to be prepared by a CPA annually, if greater than 100 loans is produced, or bi-annually (every 2 years), if more than 8 and less than 100 loans are closed. The concern with this report being done by a CPA firm only, it will be expensive. Efforts are being made to expand the authorized entities from CPA’s, who know nothing about the mortgage or real estate business.

The second report “Business Activities Report” is also new, would be required annually, and names the employees of the broker; production figures, commissions paid, total compensation earned, and other details. The third report “CPA Trust Fund Report” applies only if the broker has a Trust Account with a balance of more than $250,000. If anyone has this, they are nuts.

AB 2359(Jones) is a bill that CAMB was “Opposed” to, however there have been substantial revisions to this bill on May 27th , and will be reviewed by CAMB for possible change of position.

AB 2105(DeSaulnier) is another bill that CAMB has an “Opposed” position on, it expanded the “mandated reporter of elder abuse” to include DRE licensees, however there was a substantial revision to this bill on June 25th that removed DRE licensees from this expanded requirement, leaving only Dept. of Corporation and RML licensees still on the bill. CAMB will review our position on this bill as well.

Those are the bills of major interest to CAMB in the California State Legislature at this time, Federal Bills and Regulatory changes will be under separate cover.

Respectfully submitted.

If you want more information about these issues or about CAMB’s government affairs efforts, please contact the CAMB Government Affairs team at (916) 448-8236 or at governmentaffairs@cambweb.org.