New Mortgage Laws in California
After California's budget standoff backed up nearly 850 bills on his desk, Governor Schwarzenegger is furiously signing significant legislation that will affect the California mortgage market. Last week, the Governor signed 10 bills into law related to mortgage and housing finance regulation:
SB1461 requires real estate agents to disclose their license number on all first point of contact marketing materials and property purchases beginning July 1, 2009;
SB1737 authorizes the Department of Real Estate to suspend or bar a person who has committed a violation of the Real Estate Law if the suspension or bar is in the best interest of the public;
AB69 mandates that all mortgage loan servicers report specific, detailed data to their licensing agency concerning loan modifications;
AB180 provides a registration and bonding process for foreclosure consultants and prohibits a foreclosure consultant from entering into an agreement to assist an owner in arranging the release of surplus funds after the trustee's sale is conducted;
SB870 allows the California Housing Finance Agency to more quickly establish a mortgage refinance program;
SB1065 includes the refinancing of home mortgages in the criteria for a city or county-administered home financing program;
SB1055 allows taxpayers to exclude the forgiven mortgage debt from their incomes for state income tax purposes which brings the state in compliance with federal law;
SB1604 requires that any private insurance policy maintained by an escrow agent be applied as primary coverage in the event of a loss covered by both the private insurance and the Escrow Agents Fidelity Corporation;
SB1675 provides the California Department of Veterans Affairs with the discretion to structure the terms and conditions of any authorized debt issuance; and
AB2454 would increase potential recovery for harmed consumers applying for Recovery Account payments filed on or after January 1, 2009, to $50,000 for any one transaction and $250,000 for any one licensee.
Details on the "Emergency Economic Stabilization Act"
Congressional leaders and the administration announced agreement this evening on the Troubled Asset Relief Program, reborn as the expanded "Emergency Economic Stabilization Act of 2008." House Speaker Nancy Pelosi issued a statement detailing the agreement. Congressional leadership also released a section-by-section analysis of the proposed legislation and the full text of the bill. The American Bankers Association has posted its reactions and resources, including detailed analysis of versions of the proposed legislation.
A vote on the bill could come as early as Monday.
(No) Agreement on "Troubled Asset Relief Program"?
The administration and the Congress reached preliminary agreement on the "Troubled Asset Relief Program," a massive program that would provide up to $700 billion in increments for the U.S. government to purchase and manage portfolios of troubled asset-backed securities from financial institutions. After several days of testimony in the House and the Senate followed by a presidential address, the administration's proposed program changed substantially in negotiations and emerged as an "Agreement on Principles" today. Late in the day talks stalled and the agreement was called into question.
Continue Reading...9th Circuit Rescuscitates California Privacy Law
The Ninth Circuit has partially revived a part of California's erstwhile Financial Information Privacy Law. In American Bankers Association v. Lockyer, the Court held California Financial Code §4053(b)(1) has non-preempted applications and reformed that section to sever its preempted portions.
American Bankers v. Lockyer is a preemption dispute that is as old as the 2003 California Financial Information Privacy Act, California Financial Code §4050 et seq., commonly known as SB1. In American Bankers Association v. Gould, 412 F.3d 1081 (9th Circuit 2005), plaintiffs alleged that the federal Fair Credit Reporting Act ("FCRA") preempted SB1's regulation of information sharing between financial institutions and their affiliates. The Ninth Circuit held that the regulation of nonpublic personal information in 15 U.S.C. 1681t(b)(2) preempted any application to consumer report information in section 4053(b)(1).
The Court remanded for a determination whether any portion of SB1's affiliate sharing regulations in section 4053(b)(1) survived preemption and whether any preempted section was severable. On remand, the district court held that no portion of section 4053(b)(1) survived preemption and that the preempted applications were not severable. Defendants appealed.
Continue Reading...Treasury Details its Fannie/Freddie Conservatorship
Less than two months after receiving congressional authority for increased control over Fannie Mae and Freddie Mac, the Treasury Department today released details about its plan to place Fannie and Freddie under federal government conservatorship.
The Treasury Department's fact sheet includes information related to the appointment of James Lockhart, Director of the newly-created Federal Housing Finance Agency ("FHFA"), as conservator for Fannie and Freddie for an indefinite duration. FHFA also issued a statement about the plan.
In addition to the appointment of a conservator, the Treasury plan has four parts: (1) Fannie and Freddie will "modestly increase" their mortgage-backed securities portfolios through the end of 2009; (2) Treasury and FHFA have entered Preferred Stock Purchase Agreements for Fannie and Freddie stock; (3) Treasury will establish a new secured lending credit facility, which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; and (4) Treasury is initiating a temporary program to purchase Fannie and Freddie mortgage-backed securities.
