Calif. lawmaker seeks to ban certain types of risky mortgages

By SAMANTHA YOUNG, Associated Press Writer

A state legislator on Wednesday will introduce a lending-regulation bill that seeks to mandate the obvious — that people who want to buy a home can actually afford the mortgage, property taxes and insurance.

The prevalence of exotic mortgages that put home buyers into loans they couldn’t afford to repay when interest rates jumped and home values plummeted has contributed to a wave of foreclosures across the country.

State Assemblyman Ted Lieu wants to make sure future home buyers do not find themselves in similar circumstances.

His bill would require mortgage lenders to ensure that borrowers can afford their basic monthly housing bills before qualifying them for a home loan.

Full story available at: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/01/22/financial/f180005S15.DTL