Legislation calls for action to ensure fair mortgage practices

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(The Center Square) – Banks, credit unions and mortgage lenders in California would have to allow state officials to examine their records to ensure that mortgage lending practices aren’t discriminatory, if a new bill passes into law.

Assembly Bill 801, authored by Assemblymember Mia Bonta, D-Oakland, would require the commissioner of the Department of Financial Protection and Innovation to examine records and documents pertaining to mortgage lending to make sure residential mortgage lenders are complying with nondiscrimination laws. State officials would examine books, records and documents detailing mortgage lending every four years. 

According to a legislative analysis, the bill is a response to the federal government pulling back on similar enforcement actions, making access to fair mortgage lending challenging for homeowners of color.

“We’ve outlawed redlining, but for [Black, Indigenous and people of color] and poor communities, that hasn’t necessarily been the case,” Art Rodriguez, central vice chair of the California Democratic Renters Council, which supports the bill, told The Center Square on Monday. “What’s being proposed here is allowing an enforcement mechanism by requiring agencies to audit lending practices so banks and credit unions are investing in their communities where they make their money.”

Affordability is at the top of the minds of many people across the state, Rodriguez said, adding that holding lenders accountable is an important way to keep housing affordable for many people of color who want to buy a home.

“We were very proud to support the bill and address redlining that continues today,” Rodriguez said.

The Center Square could not reach Bonta for an interview before press time on Monday, but Daniel McGreevy, her communications coordinator, emailed The Center Square additional information about the bill.

According to McGreevy, multiple federal agencies recently rolled back longstanding protections that ensured homeowners of color were not denied fair mortgages compared to their white counterparts. California still has the authority to enforce fair lending practices, but only if the state has a structure in place to detect violations of state law meant to ensure fair lending, McGreevy said.

Despite concerns that there are still policies in place that allow discriminatory mortgage lending practices for communities of color, some groups, like the California Bankers Association, said they already comply with fair housing and mortgage lending laws. 

“Traditional commercial banks have been complying with fair lending laws for decades, and we take those obligations seriously," Samantha DeMelo, communications, marketing and media relations manager for the California Bankers Association, told The Center Square on Monday. "We're continuing to work with the author's office on some additional implementation challenges in the bill before it moves forward."

The Center Square reached out to three national banks who do mortgage lending in California – Bank of America, Wells Fargo and Chase. All declined to comment.

The bill will go to the Senate Appropriations Committee after the Legislature comes back from its summer break in August.