Until recently, most people reasonably assumed that taking out a home loan was merely part of realizing the American dream, not a potentially dangerous risk analogous to taking a stroll after dark in a bad part of town, where hidden dangers lurk.   However, after the collapse of the recent boom in the real estate market, it came to light that a new type of white collar predator has been stalking unwary home owners and home buyers:  the unscrupulous loan agent.   This person wears nice clothes, has a clean office, and a disarming smile, so that one is at ease during the signing of the endless stack of forms and fine print boilerplate that is always required but rarely if ever read.  What we didn't know what the pleasant person recommending various loans might earn very large fees,  especially if the loan has bad things for the borrower, such as a large pre-payment penalty, a volatile interest rate, or other ingenious but impossible to understand contractual terms, all of which are designed to generate fees and charges paid by the borrower.   The result of taking out a bad loan versus a good loan might be that thousands of dollars in commissions are paid to a loan agent, while tens of thousands of dollars of extra expense might be paid by the borrower.  This new predator intentionally urged consumers to take out bad loans instead of good ones purely in order to earn a greater profit on the transaction at the expense of the consumer.  While this practice has always arguably been illegal, the law was not entirely clear on the duties and obligations of the loan officers in these circumstances.  That is no longer the case.

Fortunately, California has now enacted AB 260, which covers state-regulated independent mortgage brokers, and:

• Limits prepayment penalties and prohibits brokers from receiving compensation for arranging a higher priced loan with prepayment penalties.
• Confirms and Codifies that a mortgage broker owes a fiduciary duty to a borrower and require the mortgage broker to place the economic interests of the borrower ahead of his own.
• Makes a licensed person who violates any of the new laws provisions liable to the borrower in the amount of borrower's damages, and would authorize the court to award court costs and attorney's fees to a prevailing plaintiff.
• Prohibits a licensed person from making false, deceptive, or misleading statements or representations in connection with higher-priced mortgage loans.
  
• Provides that a mortgage broker shall not steer a borrower to accept a loan at a higher cost than that for which the borrower could qualify.

Our firm is experienced in handling consumer loan cases and normally handles them on a contingency fee basis, in which our compensation is determined by whether or not we recover money for our clients.  We are accepting clients who have been the victims of predatory loan practices.

Call us at (858) 259-7790 or contact us online.