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Background: A home equity loan is a loan taken by a homeowner using equity in the home as collateral. Proposition 8 changes various consumer protections that apply to home equity loans. It would allow the use of preprinted checks to obtain an advance under a home equity loan if the borrower specifically asks to be able to use such checks. (Unsolicited checks are still prohibited.) It would allow a loan agreement to take effect even if it contained some blanks that are not filled in, if the blanks did not relate to “substantive terms” of the agreement. And, it would allow a waiver of the required 12-day waiting period to close a home equity loan if the home is in an area under an official state of emergency.

Proposition 8 would also require the borrower to receive a written copy of any completed loan application at least one business day before closing on the loan. Currently, borrowers are allowed to apply for a loan orally without ever seeing the application they are submitting until it’s too late to confirm the accuracy of any information on the application.

For: Proposition 8 would strengthen consumer protections while eliminating unnecessary “gotchas”. Currently many lenders accept oral applications, and the proposed amendment will help homeowners ensure they are fully aware of the agreement they are about to sign. Proposition 8 also helps give homeowners faster access to home equity loans after hurricanes or other natural emergencies.

Against: One business day is still not enough to review the written copy of an oral application. This amendment should go much further to protect consumers by limiting high fees being charged by some lenders.

Political advertising paid for by:
the Scott Hochberg Campaign
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9/20/07