Governor Fails to Address Foreclosure Free-fall, Vetoes Mortgage Reform Bill
Sacramento – As financial institutions across the country crumble due to predatory and irresponsible lending practices, the need for common-sense regulation has never been more needed. Yet, Governor Schwarzenegger today vetoed AB 1830 (Lieu), a bill that would have restricted predatory lending practices that trapped families in bad loans and directly created the economic crisis we now face.
California’s working families have been devastated by the foreclosure freefall. While tens of thousands are losing their homes, millions are watching as their home values plummet, stripping them of their only real asset. Collectively, we are now at the lowest level of home equity since the Great Depression.
AB 1830, which received strong bipartisan support in the Legislature, would have prohibited some of the most abusive predatory mortgage lending practices. It imposed a duty of good faith on brokers and banned them from steering people with good credit into sub-prime loans. It also capped prepayment penalties and incorporated federal regulations that require prepayment penalties to expire prior to a rate reset.
In vetoing this bill, Governor Schwarzenegger has turned his back on working Californians, struggling to achieve the dream of home ownership.
“This veto is straight out of the George W. Bush playbook, pushing for a Wall Street bailout while leaving Main Street families in the cold. We are deeply disappointed that the Governor chose to side with the industries that created this economic crisis,” said Art Pulaski, Executive Secretary-Treasurer of the California Labor Federation.