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The California Department of Corporations is requiring all finance lenders and mortgage banker originators under its jurisdiction to fill out a survey showing the number and dollar amount of all nontraditional mortgage loans on their books as of Dec. 31, or sold over the preceding 12 months.
The survey, which is due April 3, will be “utilized in formulating appropriate guidance for our Department’s licensees and examination staff,” according to a March 19 letter to lenders.
California is one of 24 states that have yet to adopt the new federal guidance for nontraditional interest-only and payment-option ARM loans (the guidance says lenders have to qualify buyers at the fully indexed rate, and provide more complete disclosure of loan terms).
State Sen. Mike Machado, who chairs the Banking, Finance and Insurance Committee, has introduced Senate Bill 385, directing the California Department of Corporations to implement the federal guidance to lenders under the state’s jurisdiction.
Machado held a hearing in Sacramento Monday on subprime lending — the committee’s second in two months. Steven Krystofiak, president of the Mortgage Broker Association for Responsible Lending, tells Inman News that the Department of Corporations “has been getting barraged and hammered” in the hearings. The department, he says, has 25 examiners to supervise 4,800 lenders.
That said, Krystofiak wonders if it would have been helpful to have the information the state is now seeking months, or even years, ago. In addition to stats on interest-only and payment-option ARM loans, the survey seeks data on reduced documentation, piggyback and home equity loans.
At a hearing in Washington, D.C., Tuesday, Massachusetts Commissioner of Banks Steven Antonakes testified that state regulators have been frustrated in their attempts to police subprime lenders by federal preemption of state consumer protection laws.
–Matt Carter, Inman News