Sacramento, CA –Assemblymember Ted Lieu (D-Torrance), the Chair of the State Assembly Banking and Finance Committee, today introduced legislation forcing mortgage lenders to disclose data about their programs to help homeowners avoid foreclosure. The bill, Assembly Bill (AB) 69, is the first of its kind in the nation.
“It’s a matter of trust, but verify,” Lieu said. “If these programs are what they’re supposed to be, the lenders should be proud to report this data and show what a good job they’re doing. If they’re not, we’re going to shine a light on them.”
Since the mortgage crisis began last year, many of the largest lenders have announced “workout” programs, where they are contacting their customers facing foreclosure in an attempt to come to an agreement. The programs, however, are entirely voluntary on the part of the lenders, and many mortgagees are reporting difficulty accessing them.
"The Bush Administration's failure to require lenders to report data on their loss mitigation programs sends the strong message that these programs are currently woefully inadequate," Lieu said.
Under AB 69, residential mortgage lenders would be required to report on all of their loan loss mitigation efforts to the Department of Corporations every month. State licensed banks and credit unions would report to the Department of Financial Institutions. Both Departments would make the information publicly available.
“Foreclosures are bad for everyone – homeowners, lenders, and the community,” Lieu added. “We need to make sure that lenders are doing everything possible to avoid them.”
Currently, about 12,000 homeowners a week in California receive notices of default. That number is expected to increase substantially this year, as more adjustable rate loans from 2005 and 2006 begin to re-set.
AB 69 is the first piece in a package of bills carried by the Assembly Democrats in an attempt to stem the mortgage crisis and help homeowners facing foreclosure.
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