New Law Against Predatory Lending Takes Effect July 1st; California Association of Mortgage Brokers Offers Tips for Homebuyers

Business Wire, July 1, 2002

Business Editors/Banking & Real Estate Writers

A new state law designed to protect homebuyers from dishonest lenders will take effect July 1st. AB 489, signed by Governor Gray Davis last fall, is designed to protect consumers from predatory lending. In addition to educating members on how to comply with the new state law, The California Association of Mortgage Brokers strongly fights predatory lending practices and is offering tips for consumers (see second page).

Specifically, the new law will ban:

-- Lenders who ignore the financial ability of a borrower to repay a loan.

-- Lenders who hide the cost of credit insurance into the loan.

-- Lenders who encourage a consumer to default on an existing loan in order to refinance.

-- Lenders who fail to make all required disclosures about the loan.

The California Association of Mortgage Brokers is a non-profit organization representing nearly 2,000 industry professionals throughout California. CAMB provides ongoing education to industry members, maintains industry standards, and supports efforts to increase consumer understanding of mortgage broker services. Additional CAMB information can be accessed via the Internet at www.cambweb.org.

                           Predatory Lending
                       Consumer Protection Tips

1.   Never sign a contract without knowing and  understanding
     all terms of the loan.  Originators should be willing to explain
     all loan terms and conditions.

2.   Never allow yourself to be pressured into a loan.  Reputable
     mortgage originators strive to make consumers aware of and
     comfortable with their loan options.

3.   Beware of door-to-door and telephone solicitations.

4.   Never sign a blank form in a loan package and be sure to get
     copies of all documents bearing your signature.

5.   Request an accounting of all fees associated with the transaction.
     Question any fees you do not understand.

6.   Shop around for a loan originator that you are comfortable with.
     CAMB offers free and confidential referral services so consumers
     can choose a member broker in their area. Consumers can take
     advantage of this online at www.cambweb.org or by phone at
     800.253.2262.

7.   Make sure that you can afford the proposed monthly payments.  Do
     not agree to payments that you cannot comfortably make.

8.   You have three days to cancel a refinance transaction for any
     reason if you are unhappy with the loan. This is called the
     three-day "Right-of-Rescission."

9.   Make sure the loan officer is licensed to originate mortgage
     loans. Also question potential brokers regarding their
     participation in continuing education courses and certifications,
     making sure your originator is up-to-date on all loan policies
     and applicable laws.

10.  Ask if the broker belongs to the California Association of
     Mortgage Brokers. CAMB members adhere to the Association's Code
     of Ethics and Standards of Professional Practice, which prescribe
     the highest level of ethical and professional guidelines.

Note to Editors: Local CAMB Spokespersons are available for media interviews regarding the new predatory lending law. Interested media should contact Randle Communications at 916/446-6667 or 916/612-0979 (after business hours or on weekends).