SACRAMENTO — With Californians facing a torrent of mortgage defaults and home foreclosures, Gov. Arnold Schwarzenegger said Wednesday that he would sign three bills aimed at protecting homeowners and increasing affordable housing.
The bills would help ensure that state-licensed mortgage lenders and brokers were subject to federal guidelines, forbid linking appraisers' compensation to a property's sale price and allow the state to take on more debt to finance low-cost housing.
However, consumer advocates said none of the legislation would stop foreclosure proceedings against the tens of thousands of borrowers already facing the loss of their homes.
"Given that California is ground zero for the nation's foreclosure crisis, the actions taken by the Legislature and the governor are far too limited and really minimal in their response," said Paul Leonard, director of the Center for Responsible Lending.
Kevin Stein, associate director of the California Reinvestment Coalition, said the bills to be signed were "positive steps" but "too little, too late."
Foreclosures in California hit 17,408 for the three months ended June 30 -- up 799% from the same period last year, according to DataQuick Information Services, a La Jolla firm.
The governor, who was in Shanghai on Wednesday attending a summit on disabled people, issued a statement from his office in Sacramento indicating he would sign the bills.
"It is critical that we continue to take steps to protect Californians against unscrupulous lending practices and to ensure that consumers can make informed decisions," Schwarzenegger said.
The Republican governor said he would sign two bills by Sen. Michael Machado (D-Linden). One would permit state agencies to adopt emergency regulations to ensure that all mortgage lenders and brokers are subject to federal guidelines on nontraditional mortgages. Those guidelines, aimed at reducing the number of loans to people who can't afford them, apply to national banks but not to state-licensed lenders.
Machado's second bill would make it a crime for appraisers to become involved in valuing properties for transactions in which their compensation is tied to the final price generated by the appraisal. The intent is to prevent appraisers from overvaluing properties to increase their fees.
The California Mortgage Assn. supported both Machado bills, but only after the first one was amended to eliminate a provision that would have the state automatically adopt any future changes in the federal guidelines, said George Eckert, legislative chairman for the association.
The bill, he said, "puts everybody on equal footing."
In addition, the governor said he would sign legislation to raise the debt limit applied to the California Housing Finance Agency by $2 billion. That presumably would increase the amount of affordable housing. The bill was sponsored by Assemblywoman Sharon Runner (R-Lancaster).
Schwarzenegger said the bills "increase transparency and accountability in the lending market that will help homeowners preserve their American dream."
But Stein said legislation that would have authorized the Housing Finance Agency to offer a mortgage refinancing program to help homeowners avert foreclosure was killed in committee.
"It was a very disappointing legislative session because in the midst of this crisis, all they did was hold three informational hearings and approve bills that do very little to help those in need now," Stein said.