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
