The few local mortgage lenders that remain soon won’t have the same business freedoms they once enjoyed if a Torrance politician has his way.
Democratic Assemblyman Ted Lieu announced last week that his mortgage reform bill has passed the Assembly and will head to the state Senate.
The bill spurred by the deceptive practices of some subprime mortgage lenders, a number of which were based in the Los Angeles area would offer protections for borrowers and tighten restrictions on lenders.
The bill, AB 260, would ban negative amortization loans in which the payment amount does not cover the interest and the loan balance continues to rise.
Additionally, lenders would be restricted from intentionally making misleading statements about subprime loans and would not be allowed to steer borrowers to unnecessarily risky loans.
Former executives from Countrywide Financial Corp., which was the nation’s largest independent mortgage lender before being acquired last year, and the defunct IndyMac Bancorp have been named in numerous lawsuits from disgruntled borrowers, shareholders and states over the companies’ allegedly deceptive lending practices.
Lieu is hoping the second time will be the charm for the mortgage reform bill. The assemblyman introduced a similar measure last year, but Gov. Arnold Schwarzenegger vetoed it over concerns that the law would not apply to federally regulated lenders. The new bill would not apply to federally regulated companies, but Lieu said he is hopeful the continued deterioration of the mortgage market would force the governor to reconsider.
“Enough is enough,” Lieu said in a statement. “We must enact landmark reforms to address the systemic failures in California’s subprime mortgage industry.”
Late Filer
First California Financial Group Inc., the L.A. holding company for First California Bank, has fallen out of compliance with Nasdaq rules for failing to submit its quarterly earnings report on time.
The company announced that it received a notice May 26 from stock market officials directing First California to submit its revised earnings report within 60 days in order to regain compliance.
In a regulatory filing, First California said it would need to revise its earnings report because “certain issues had arisen that may require adjustments to the allowance for loan losses and the carrying value of certain assets.”
Conversion Complete
U.S. Bank officially doubled its local footprint this past month when it converted all 173 branches of the former Downey Savings & Loan.
The bank, owned by Minneapolis-based U.S. Bancorp, acquired Downey in November after the Newport Beach thrift was seized by regulators. Downey, which had $12.8 billion in assets as of September, suffered substantial losses as a result of its heavy concentration of option adjustable-rate mortgages.
U.S. Bank, which also acquired Rancho Cucamonga-based PFF Bancorp in November, has been looking to increase its Southern California presence.
“These new offices give us tremendous room to grow our business, and it’s already happening,” said Joseph Otting, the bank’s L.A.-based vice chairman, in a statement. “We’ve opened 23,000 new accounts in the legacy Downey branches in just the last six months.”
U.S. Bank now has more than 500 locations across California.
Looser Lending
The Small Business Administration announced a sharp increase in the number of so-called SBA-504 loans, which are used primarily for office or industrial buildings, approved recently in Los Angeles.
The administration, which grants loans to small businesses, approved 28 of the loans for a total of $46 million in April, compared with just 18 in March for a total of $31 million.
Officials said the increase is likely due to a significant drop in interest rates as well as a reduction of program fees.
C-Suite News
L.A. money manager TCW Group Inc. announced that Chief Executive Robert Beyer will step down at the end of the month. Vice Chairman Marc Stern was named as Beyer’s replacement. Center Financial Corp., the L.A. holding company of Center Bank, announced that its board has named Jin Chul Jhung chairman. Investment bank Moelis & Co. announced that Stuart Goldstein has been hired as a managing director in its Century City office. L.A. wealth management firm Stonnington Group announced that David Knowles has joined the firm as managing director. First Private Bank & Trust of Los Angeles announced the appointment of Brian Shapiro as chairman. William Shea, Thomas Evans and Doug Stewart also joined the board. Stellar Business Bank appointed Bernard Bernstein and Anthony Lima to its board. Kinecta Federal Credit Union in Manhattan Beach announced the appointment of Mary Yasui-Yamabe as chairwoman.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
