Consumer advocates urge governor to sign mortgage bill

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Consumer advocates joined a Santa Barbara lawmaker to urge Gov. Arnold Schwarzenegger to sign a bill aimed at protecting homeowners from predatory firms that collect advance payments for promises to lower monthly mortgage bills.

The measure, AB 764 by Democratic Assemblyman Pedro Nava, would crack down on companies that charge thousands of dollars to negotiate with mortgage companies to help people lower their monthly payments and avoid foreclosure. But many of those companies do little or nothing to help customers, who wind up losing their homes, Nava said.

The bill would prohibit the charging of any fees by a loan modification service until the loan is actually rewritten with more favorable terms for the homeowner.

The groups urging Schwarzenegger to act include Consumers Union, publisher of Consumer Reports magazine, and the California Reinvestment Coalition.

‘AB 764 will end these scams, ban the collection of advance fees and impose severe penalties for those who violate the law,’ Nava said.

Schwarzenegger, who has until Oct. 12 to consider the bill, has not indicated whether he will sign or veto it.

-- Marc Lifsher