Re: Usury Lending in CA - Posted by Brad (CA)
Posted by Brad (CA) on July 06, 2003 at 19:21:24:
I just wrote a response to your inquiry and then decided to do some small amount of research to get some more information. I originally had thought that the governing text for predatory lending was “section 32”, something I know next to nothing about in fact. I had first thought that the maximum points/fees/etc were 5.99% for loans under $322,700 and 7.99% for loans over that amount.
After some research, and disappointment in my lack of success finding a suitable source to research this “section 32” I came across another regulatory entity, “AB 489”. This California regulation/law(I dont know), effective 7/02, has more of the information I had been expecting. It appears however to merely require more paperwork/disclosures when brokering loans with either an APR higher than a certain amount, or points & fees greater than a certain amount. The APR must not exceed the yield of a Treasury security(of ~equal maturity) by 8 percentage points, and the points/fees must remain below 6 percentage points of the total loan amount. So it appears that some of my original knowledge was correct, perverted in form though it was. Another odd prerequisite of this regulation is that it applies only to loans whos principle balance is below $250,000.
So, I hope this answers some question, or provides you with enough information to more rigorously persue your inquiry.
-Disclaimer: I’m young and dont know everything.
http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=12&PART=226&SECTION=32&TYPE=TEXT -some info on Section 32
http://www.leginfo.ca.gov/pub/01-02/bill/asm/ab_0451-0500/ab_489_bill_20011011_chaptered.html -some info on AB 489