With California home foreclosures mounting, home buyers are looking to their political leaders to rein in abuses in the lending industry.

Unfortunately, Gov. Arnold Schwarzenegger vetoed legislation Thursday that would have offered Californians some protection when applying for a home-mortgage loan.

Authored by Democratic Assemblyman Ted Lieu of Torrance, Assembly Bill 1830 was the centerpiece of several mortgage- and foreclosure-related bills sent to the governor's desk. While he did sign several, AB1830, backed by consumer advocates, was the linchpin to strengthening the state's regulatory control over the mortgage industry.

Namely, it would have:

— Prohibited mortgage brokers from steering customers toward higher-priced loans if they qualify for lower rates.

— Allowed borrowers, who were victims of broker misconduct, such as from predatory loans, to recover legal fees and other related costs through the courts.

— Capped prepayment penalties, which were a fixture in nearly all the subprime mortgages written near the end of the housing boom.

— Banned negative amortization loans, in which a borrower is permitted to pay less than he owes each month, often causing the loan balance to rise.

"Wall Street won and Main Street lost today," Assemblyman Lieu told The Associated Press in response to the veto. "AB1830 was a balanced compromise that fixed a dysfunctional mortgage system, was nonideological and would have helped all of the people of California, not just the minority of industry groups that opposed this bill."

In his veto message Thursday, Gov. Schwarzenegger sided with the mortgage industry, saying he feared the bill could lead to increased litigation. He also said it was unfair to state-regulated brokers, putting them at a disadvantage when competing against brokers regulated by the federal government, which has looser regulations.

Surely, these concerns are not enough to override protection of residents from unscrupulous lenders operating in a poorly regulated industry.

With California seeing nearly 1,300 homes being foreclosed on each day — in Ventura County, there were 1,798 foreclosure filings, including 774 default notices, 513 auction sale notices and 511 bank repossessions in August — it's clear the regulation and oversight of the state's mortgage industry need strengthening.

The lack of oversight is one of the reasons for the U.S. financial crisis. Gov. Schwarzenegger's veto is not helping.

© 2008 Ventura County Star