Comments on: California Could Redefine Mortgage Lending with New Legislation

By: BestOne

BestOne — Tue, 29 Jan 2008 16:35:24 +0000

Most texans are haters of California and anywhere BUT texas. Please keep your verbal abuse in texas. We don’t want it.

By: Sensible Lender

Sensible Lender — Mon, 28 Jan 2008 17:30:18 +0000

The reason that this is necessary is because he state has not regulated brokers and finance lenders. They not only had crazy lending products, but too many committed fraud on top of them. I do not see much punishment. In a few minutes I can search the multiple listings and find “short sales” or REOs where the last sold price is 100,000-150,000 over market, financed with 100%, and the owner walked immediately or just months after sale. Who did the loans and appraisals and arranged the kickbacks? I know, and it is easy to find out. Perhaps some prosecutions would also help.

By: Morgan

Morgan — Mon, 28 Jan 2008 17:22:34 +0000

Tom » This is a very interesting idea Tom and one that is used in correspondent lending on a regular basis with buy-back and early payoff fees, etc. It would be interesting to see how it would impact brokers who are usually under-capitalized to begin with…

By: Morgan

Morgan — Mon, 28 Jan 2008 17:21:18 +0000

Captain Ned » Thanks Captain. Of course a law like this would pretty much eliminate state-regulated entities (or severely limit their numbers) while making little real change as federally-chartered entities would continue to be immune from the regulation.

By: Morgan

Morgan — Mon, 28 Jan 2008 17:20:08 +0000

Tom » Some may see California as the beach-head for mortgage reform. Since it ran so amuck over the last half-decade those in other states may use it as a boiler-plate or best practice legislative guide to implementing reform. Tougher laws also set a precedent and a “bar” so to speak that other states may use as a compass in their legislative efforts. That would be the main outcome in my opinion.

By: Brent

Brent — Mon, 28 Jan 2008 17:17:41 +0000

If CA had laws like we do in Texas, they would not be in the mess they are in now. Our Homestead Mortgage laws are so strict here its almost borderline Socialism. CA if a victim of itself, like Morgan said,”poor state tax base” the helped them look the other way….

I see it as good thing.

By: Tom

Tom — Mon, 28 Jan 2008 17:04:14 +0000

Why not require originators to keep reserves for buy-backs of bad loans?
Under this model the entity that makes the loan will finally have some skin in the game…

By: Ann

Ann — Mon, 28 Jan 2008 13:58:03 +0000

What else can they do? They already realize that the crisis that they are in will not change for years and years to come.(10 to 15)…

The only thing they can do is try to prevent the past from being repeated..and as our history teaches us..it will be…

By: Morgan

Morgan — Mon, 28 Jan 2008 08:43:41 +0000

Angelo – I’m certainly a fan of a return to sanity. I just like to point out the implications for those that see some type of short-term stabilization of California house values. This law would clearly preclude that version of reality for some time to come.

By: Angelo

Angelo — Mon, 28 Jan 2008 04:53:00 +0000

“What is for certain is that passage of this type of legislation will exacerbate the fall of California real estate value – steepening the slope of its current decline.”

It’s about time sanity began to creep back. This proposed law is like outlawing murder and rape – it’s a no brainer. California housing prices are artificially high because of toxic mortgage products like option ARMs. They need to be done away with like a bad case of the clap.

Law or no law, the market has effectively eliminated these loan types for the vast majority of borrowers. Their complete elimination can only serve to protect the unlucky few who are still falling into this old trap.

Personally, I’d like to see a legal cap to DTI.