Look before you leap into the California mortgage industry

In California real estate prices are soaring and interest rates are lying at a all time low. These trends are indicative as California is a trend setting state of the United States of America and often the events taking place in the mortgage industry here act as a precedent for the other states. One may associate oneself with the California mortgage industry by venturing into some deal or transaction there. In such case one must remember and be careful about certain things as revealed upon analysis of the industry. These can also throw light on the general trends prevalent in the U.S. mortgage market.

The State Statutory and Common Law primarily governs the mortgage activities in California. The California Residential Mortgage Lending Act or CRMLA (enacted in 1994 and effective since 1996) takes care of legal aspects of mortgage in California. However, the people in this industry also have to conform to the Federal Truth-in-lending Act and regulations followed by the federal government institutions. In order to avail a mortgage loan in the state it must be ensured that the lender or banker has a license under CRMLA. Such CRMLA licensed lenders can provide brokerage services also. They can obtain a mortgage for the borrower from another lender as well. Such brokers can, in all probability, procure for you an unbiased loan. This is quite a unique facility.

In California the borrowers are empowered to put up a fight against predatory lending practices of lenders by the Predatory Lending Act (introduced in February 25, 2000). This Act has also been revised several times owing to the rising levels of lending crimes and frauds facilitated by technology. In recent times mortgage fraud in the U.S. is increasing at an alarming rate. The Federal Bureau of Investigation put the number of suspicious activity reported in 2004 to be nearly three times of those reported in the previous year. California ranks among the top 10 states in mortgage fraud. Still, quite a significant portion of the mortgage industry avoids reporting fraud though it is quite mandatory. The fraud in the secondary market is also frequently under reported. This presents a gloomy picture where the actual level of mortgage fraud though unknown is estimated to be very high.

The real estate prices in California are rising. The State’s mortgage delinquency rate is thereby going down further- to a 25 year low. The homeowners will now stand to gain though the mortgage payments may be made late. This is because they can now sell their homes even at a profit. However, qualifying for a mortgage loan has become quite difficult in the areas where home/real estate prices are soaring. For example, in Southern California the median price for an existing single-family home is around $567,000 (as per the California Association of REALTORS).

Estimates point out that the mortgage market will remain fit and fine in 2005. This is because:
• The interest rates are lying at 40 year low levels.
• The maximum amount permissible for conforming mortgages has been increased proving an enhancement for mortgage activity. Many families can now become capable of qualifying for and thereby obtaining a mortgage.
• The range of loan plans available to borrowers has widened.

Not only will the mortgage market remain healthy and fit but the U.S. Bureau of Labor Statistics (BLS) economists report that jobs in the mortgage banking/broker sector are rising too. It is anticipated that this job growth and employment rise will continue further.

The low interest rates prevailing are paving the way for Adjustable Rate Mortgages (ARMs) to become more popular. The ARMs are the in-thing right now and the fixed rate mortgages have taken a back seat.

For getting an in-depth knowledge about California’s mortgage laws visit: http://www.mortgagefit.com/california/

Also for being acquainted with the current mortgage trends prevailing in the state visit: http://www.mortgagefit.com/california-mortgage.html

To get a complete overview of the U.S. mortgage industry via the mortgage laws prevalent in its various states visit: http://www.mortgagefit.com/unitedstates/