3 Major California mortgage laws

If you’re planning to purchase a house in California or thinking of shifting there, then you should know about California mortgage laws in detail. It is imperative to educate yourself on California mortgage laws before taking out a mortgage or a home equity loan. These laws will make you understand the mortgage lending process in California easily. A thorough knowledge will also help you know about the rights of a borrower. This article discusses 3 major California mortgage laws that you should be aware of.

California mortgage laws

The 3 major California mortgage laws are given below:

1. California Residential Mortgage Lending Act (CRMLA): This law was enacted in 1994 but became effective in 1996. This law was specially introduced by The California government for monitoring the activities of the mortgage bankers. In short this law is especially applicable on the mortgage bankers. This law monitors mortgage lending activities like approving licensees to give federal home loans, house construction loans, sell loans to recognized investors and act as the service company on mortgage loans.

As per CRMLA, the licensed mortgage bankers (under this law) can purchase and sell federal home loans, give underwriting services to the licensed lenders. According to this law, licensed mortgage lenders are also permitted to offer brokerage services to a borrower, by trying to acquire a home loan on behalf of the consumer from another lender.

2. The Unruh Civil Rights Act: This is one of the major California mortgage laws that work like the Disabilities Act of 1990. This mortgage law prohibits the lenders to discriminate among the borrowers on the basis of gender, race, color, nationality, health condition, sexual orientation, lineage, caste and disability. The mortgage lenders can’t forbid the borrowers to apply or qualify for home loans on the ground of these factors.

3. California community property law: According to this law, the residents of California are not allowed to apply for a mortgage on home without any consent from their spouse. This particular law also specifies that if an individual is showing a spouse’s earnings and child support for qualifying for a mortgage, then the spouse needs to give necessary information to the lender.

Finally, another mortgage law is the California Finance Lenders Law. This law came into effect on 1st July, 1995. As per this law, the Commissioner of the Department of Corporations (DOC) will appraise the applications for granting the licenses of the financial brokers, mortgage lenders. Moreover, this law specifies that the individuals applying for a mortgage license need to qualify the state mortgage broker exam. This is one of the most important California mortgage laws you must know.