Governor Schwarzenegger signed six mortgage relief bills Thursday. The measures that got the "thumbs up" will help homeowners facing foreclosure, but KPCC's Julie Small reports the Governor vetoed one bill that would have cracked down on California lenders.
Julie Small: Among the mortgage relief bills signed was one by Santa Ana State Senator Lou Correa. It lets cities and counties work with private lenders to help struggling homeowners refinance their mortgages. Another bill, this one by L.A. Senator Mark Ridley-Thomas, allows the California Housing Finance Agency to speed up refinancing programs for low-income borrowers.
Good measures, says Assemblyman Ted Lieu of Torrance. He just can't understand why Governor Schwarzenegger vetoed his bill. It would have banned the lending abuses that put California homeowners in distress in the first place.
Ted Lieu: The steering of borrowers into higher interest rate, riskier loans, even though they had qualified for a traditional prime loan. Cases where the brokers made misleading and deceptive statements. Where predatory lending practices occurred.
Small: In his veto message, the governor wrote that Lieu's bill duplicates new federal regulations that tighten oversight of the mortgage industry. And because Lieu's bill applied only to state-regulated lenders, the governor asserted it would undermine their competitiveness. Lieu says the governor's arguments make no sense, given that state-regulated entities sold 60 percent of the subprime loans in California.
Lieu: It was exactly these risky loans that were defaulting, putting people in foreclosures, which has now resulted in this $700 billion taxpayer bailout. And so it was the state's regulations that were too lax, that weren't doing the job.
Small: Assemblyman Lieu plans to introduce the bill again next year.