BILL ANALYSIS
AB 1160
Page 1
Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1160 (Fong) - As Amended: May 5, 2009
Policy Committee: Banking and
Finance Vote: 6-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires state-regulated mortgage lenders to provide a
consumer entering into a residential mortgage loan with a
translation of the mortgage contract or designated summary form
if the mortgage is primarily negotiated in Spanish, Chinese,
Tagalog, Vietnamese, or Korean. The bill also:
1)Requires the Department of Corporations (DOC) and Department
of Financial Institutions (DFI) to create the required forms
in each language on specified forms currently available from
the Department of Real Estate (DRE).
2)Requires the lender or broker to provide the forms to
borrowers at least seven days before closing, and if any of
the summarized loan terms change after provision of the
disclosure forms but prior to the consummation of the loan, to
provide an updated version of the forms before closing.
3)Provides for administrative penalties of up to $2,500 for the
first violation, $5,000 for the second violation, and $10,000
for each subsequent violation.
4)Takes effect 60 days after the issuance of specified forms
created by the DOC and DFI, but no later than July 1, 2010.
FISCAL EFFECT
1)DOC, DFI, and DRE indicate that the translation of documents
will result in minor and probably absorbable costs.
2)Minor examination and enforcement costs to DOC and DFI (less
AB 1160
Page 2
than $50,000 annually combined), potentially offset by higher
administrative penalties.
COMMENTS
1)Background . Existing law requires licensees of the Department
of Real Estate, including mortgage brokers , who negotiate a
mortgage loan in one of the five specified languages, to
provide the borrower with a translation of the contract or a
summary form in the language of negotiation. A state licensed
mortgage lender , however, is not subject to the same
translation requirements for mortgage documents.
2)Rationale . The purpose of this bill is to make state law more
uniform by holding state-licensed mortgage lenders to the same
requirements as licensed real estate brokers with regard to
providing translation of mortgage contracts negotiated in a
different language. The author indicates that, for many
non-English speakers, failure to translate mortgage documents
results in limited or an incorrect understanding of key loan
terms like interest rate adjustments and prepayment penalties.
As a result, many end up with excessively costly loans or
loans that will result in high levels of default and
foreclosure.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081