Sacramento digest: Governor signs mortgage bill

Mortgage lenders would be barred from taking applications or assessing fees for reverse mortgages until the potential borrower receives a counseling session under a bill signed Tuesday by Gov. Arnold Schwarzenegger.

The bill, which takes effect Jan. 1, also requires lenders to translate reverse mortgage contracts into Spanish, Chinese, Tagalog, Vietnamese or Korean if the contract was negotiated in one of those languages. Moreover, it prevents lenders from making borrowers buy annuities as a condition of obtaining mortgages.

The bill, by Sen. Joseph Simitian, D-Palo Alto, tightens federal rules governing mortgages that pay borrowers a monthly sum based on their age and the value of their homes. Borrowers must be at least 62 to be eligible for reverse mortgages.

Schwarzenegger also signed bills allowing the Department of Real Estate and Department of Corporations to suspend licenses of real estate brokers and mortgage brokers who mislead the public about their experience.