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State Fee Limits for Second Mortgages in California
 
Nationwide mortgage broker examines the second mortgage fee restrictions in California. Homeowners can choose from fixed or variable interest rates but if your credit score is low you may be forced to consider a HELOC because of the APR restrictions that are enforced by the state. California does not allow section 32 loans, but they also have deeper APR restrictions than most states. Unfortunately,any potential borrowers are steered away from consolidating debt with a second mortgages because their credit score is too low.
California's new laws, AB 489 and AB 344, became effective July 1, 2002. They apply to a mortgage or deed of trust with a loan balance of no more than $250,000. The protections provided by the laws are triggered if the annual percentage rate of the loan is more than eight percentage points over the yield on Treasury securities, or if the total points and fees payable by the consumer exceed six percent of the total loan amount. Thus, there is a 5.99% max in fees.
If California homeowners want to consolidate credit card debt that they are paying 20% a month for, they should be able to consolidate the debt into a second mortgage. Interest rates are driven by market conditions, and credit risks determined by the lenders. CA should follow suit with the rest of the nation.
Copyright Nationwide Mortgage Loan Company 2006 ©
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