THREE NEW LAWS PROTECT CONSUMERS.

Byline: GREGORY J. WILCOX

Consumers now have more protection when it comes to buying a home or obtaining a traditional or reverse mortgage, courtesy of three bills signed last week by Gov. Arnold Schwarzenegger.

Surprisingly, there was no opposition.

Two Assembly bills, 790 and 2890, provide regulators with a big hammer and the California Mortgage Brokers Association with house-cleaning ability.

AB 790, introduced by Leland Yee, D-San Francisco, deals with licensed real estate brokers and AB 2890 introduced by Mark Ridley-Thomas, D-Los Angeles, focuses on mortgage brokers.

Both give regulators the right to suspend the licenses of brokers who mislead the public about their experience in the industry. In the case of real-estate brokers, it's the California Department of Real Estate, and the Department of Corporations for the mortgage industry.

Ridley-Thomas said it was no easy task to get the bill through the legislature without opposition.

``Consumers deserve being treated honestly when it comes to borrowing money and trying to raise their standard of living. They shouldn't be ripped off or misled and that's what the legislation seeks to address,'' he said.

His was supported by the California Mortgage Brokers Association.

``For the first time, it's going to give the industry the opportunity to self-regulate and start cleaning up our industry from the inside out,'' said Michael Faust, association vice president and chairman of its government affairs committee.

``From now on, the consumer is going to be able to tell who adheres to a code of ethics and best practices.''

For example, if a mortgage broker claims to be a member of the association but is not, he or she can be disciplined by the state.

After due process, the broker could lose his or her license and be barred from working for any Department of Corporations licensed company in the state.

Possible infractions in both cases also include falsely claiming education or specialized skills.

Alex Creel, senior vice president of legislative affairs for the California Association of Realtors, said his group had no problem with AB 790.

``You shouldn't represent yourself as having a certification that you don't have,'' he said.

The trademarked term Realtor is a case in point. To be certified as a Realtor requires joining a local chapter of the state association, Creel said.

There about 500,000 licensed real-estate sales people in California and somewhat less than half are association members.

And some that aren't likely use the term in generic fashion.

The third piece of legislation, SB 1609, introduced by Sen. Joseph Simitian, D-Palo Alto, helps protect seniors when they enter into reverse mortgages.

``It is our responsibility to help protect those who are most vulnerable in our society,'' Schwarzenegger said in a statement.

The bill prohibits a reverse mortgage lender from accepting an application or assessing any fees until the borrower has received independent counseling regarding the loan.

It also prohibits a lender from requiring a borrower to purchase an annuity as a part of the reverse-mortgage transaction and requires a reverse-mortgage contract to be translated into Spanish, Chinese, Tagalog, Vietnamese or Korean if the contract was primarily negotiated in one of those languages.

Typically, a reverse mortgage allows homeowners 62 and older to receive either monthly payments or one lump sum from the property's equity without having to sell the property or make monthly repayments.

The reverse mortgages also don't have to be repaid for as long as residents do not move, but they must be repaid in full, including all interest and other charges, when the last living borrower dies, sells the home or permanently moves away.

The borrowers continue to own their homes and are responsible for property taxes, insurance and repairs. ``Older Californians considering reverse mortgages as a source of retirement income will be provided greater consumer protections as a result of SB 1609,'' Corporations Commissioner Preston DuFauchard said in a statement.

greg.wilcox(at)dailynews.com

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