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HUD allocates nearly $4 billion to stabilize neighborhoods in high foreclosure rate areas

Sep 25, 2008

CAMB helps secure governor's veto on AB 1830: A message from CAMB President Fred Arnold and President-Elect Ed Smith Jr.MortgagePress.comCAMB, Governor Schwarzenegger, AB 1830, SB 1240, Department of Real Estate, audits California Gov. Schwarzenegger vetoed AB 1830 (Lieu) and SB 1240 (Machado). AB 1830 was proposed broker-only legislation that would have had a detrimental impact on the Mortgage Broker industry, consumers and the California economy. SB 1240 was proposed legislation that would have required brokers who operate under Department of Real Estate (DRE) licenses to prepare certain reports for the DRE Commissioner and undergo certain audits. When AB 1830 was introduced it contained harsh language that would have forced many mortgage brokers out of business. For eight months, the California Association of Mortgage Brokers (CAMB) worked diligently with Assemblyman Lieu to amend the unacceptable sections of the bill. Although much progress was made, when the bill was put to a vote, it still contained language that CAMB believed undermined the bill's goal of protecting the California consumer. AB 1830 passed both branches of the legislature earlier this month. CAMB immediately took the California brokers case to Governor Schwarzenegger in a formal Request for Veto. We are very pleased the Governor found value in our arguments, and determined that a veto of AB 1830 was in the best interest of the citizens of California. CAMB's main objections to AB 1830 as passed were: • The proposed broker-only statutory fiduciary dutys economic interest test was unreasonably vague; • The anti-steering clause of the proposed higher-priced loan regulation forced brokers to guess under penalty how to define the higher cost loans that they were not allowed to suggest to their clients; • The attorney fee clause would have invited lawsuits against brokers on the flimsiest of grounds; • The safe harbors within AB 1830, designed to allow brokers an opportunity to correct certain unintended errors before facing liability, could not be used because they required a broker to offer to change loan terms after a loan funded (an offer the broker could not fulfill); and • The AB 1830 interest rate based definition of higher-priced loans was over-inclusive and would have extended regulations intended for subprime loans into some Alt-A loans and some jumbo loans. SB 1240 also passed both branches of the legislature. This bill would have required DRE brokers only to bear the expense of annual business reports and CPA audits. The Governors veto will help keep DRE brokers on a more level playing field, promote continued competition, and ultimately serve the people of California. CAMB pledges to continue to monitor upcoming legislation and to work to support reasonable changes that benefit California consumers. In this task CAMB asks your help: we must continue to maintain strong representation in Sacramento and Washington DC, and your financial support is needed. Thank you. Sincerely, Fred Arnold, CMC, President California Association of Mortgage Brokers Ed Smith Jr., President-Elect and Government Affairs and Industry Relations Chair California Association of Mortgage Brokers
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