Push For Subprime Mortgage Regulations Loses Steam

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A key Senate committee Wednesday killed or greatly watered down a series of Assembly bills that would have imposed new regulations on sub-prime mortgages in an attempt to curb the worst wave of foreclosures since the Great Depression, the L.A. Times reports.


The measures, part of a package launched with fanfare last winter by the Assembly leadership, sought to protect Californians from getting stuck with loans they couldn’t afford and didn’t understand.


Sen. Michael Machado (D-Linden), chairman of the Senate Banking, Finance and Insurance Committee, opposed most of the bills, saying they would subject the mortgage industry to contradictory federal and state regulations.


Machado worried that cracking down on mortgage bankers and brokers could dry up credit and “restrict the accessibility to home loans for the very people” lawmakers were trying to help.

Consumer advocates were outraged.


“The system does not work in favor of the consumer,” said Kevin Stein of the California Reinvestment Coalition, a group that promotes economic development in low-income communities. “The lobbyists for the industry outnumber the consumer groups. They seem to have greater access [to lawmakers] and give more money.”



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