BILL ANALYSIS
AB 69
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Date of Hearing: January 24, 2008
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
AB 69 (Lieu) - As Amended: January 18, 2008
Policy Committee: Banking and
Finance Vote: 8-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires state-regulated financial institutions
servicing home loans to provide monthly reports to the
Department of Financial Institutions (DFI) and the Department of
Corporations (DOC) containing information relating to past-due
loans and loan loss mitigation efforts. These reports are
required to contain information on:
1)The volume of sub-prime, prime, and alternative mortgage
products that they are servicing, by type of loan (fixed,
variable, amortizing, interest-only, or options-ARMs, first,
and second mortgages).
2)The amount of loans that are past due and/or are in various
stages of foreclosure, and loans that have been modified in
the past year.
3)Loan modifications that resulted in short sales, repayment
plans, or changes in interest rates or payment terms.
FISCAL EFFECT
Annual costs of about $200,000 to DOC and DFI, combined, to
compile and maintain data provided by financial institutions.
COMMENTS
1)Background. Under existing federal law, a financial
institution must report data regarding its applications,
originations, and purchases of home loans, home improvement
loans, and loan refinancing. Lenders must also provide
AB 69
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information relating to loan applications that are approved
and denied, including the ethnicity, gender, and gross income
of mortgage applicants and borrowers.
At the state level, DOC is responsible for regulating mortgage
lenders in California, while DFI is responsible for regulating
state banks and credit unions. DOC requires lenders to provide
some general information regarding their lending activities,
including limited information on loss mitigation efforts. DOC
also receives additional information from some lenders on a
voluntary basis.
2)Rationale . This bill is intended to strengthen existing
reporting requirements, and provide accurate and complete
information on loan mitigation efforts being undertaken by
financial institutions related to borrowers affected by the
mortgage crisis. The author contends that recent announcements
by lenders relating to the modification of loan terms are not
being matched by actual practice, and that the bill is needed
to ensure accountability and transparency in this area.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081