Business News
SACRAMENTO – On Friday Insurance Commissioner Dave Jones released draft guidance for Senate Bill 1163.
The new law, which went into effect on Jan. 1, requires insurers to provide detailed information regarding proposed premium increases and to submit a certification from an outside actuary to the California Department of Insurance (CDI) for review.
The draft guidance which is subject to a seven-day public comment period before it is finalized will provide insurers with the factors that will be used by the department to determine if a rate is unreasonable.
“SB 1163 is intended to provide greater transparency, but it does not provide the Insurance Commissioner with the authority to reject excessive rate increases,” said Jones. “I will review health insurance rate filings to determine if the insurer has provided complete and accurate information and whether the proposals are in compliance with the law, but I continue to lack the authority to reject excessive health insurance premium increases.”
Under state law, the insurance commissioner does not have the authority to reject excessive health insurance rate increases. As a member of the State Assembly, Commissioner Jones authored legislation on three separate occasions to give the insurance commissioner this power.
This year Jones is supporting AB 52 (Feuer), which would grant the Insurance Commissioner this authority.
“During my time in the Assembly I worked hard to pass legislation to provide the Insurance Commissioner with the ability to reject excessive rate increases,” Jones said. “Double digit premium increases are not sustainable for families year after year.”
- Details
- Written by: Editor
LOS ANGELES – Attorney General Kamala D. Harris on Wednesday announced a $6.5 million settlement of a predatory lending case against Angelo Mozilo and David Sambol, former officers of Countrywide Financial Corp.
Harris said the settlement money will be used to establish an innovative statewide California Foreclosure Crisis Relief Fund to combat the effects of California's high rates of foreclosure and mortgage delinquency.
“Our prior settlement with Countrywide provided restitution for foreclosed homeowners and set in motion loan modification programs that have helped tens of thousands of consumers,” Harris said. “We will use the current settlement to help Californians affected by the mortgage crisis by providing grants to help homeowners facing foreclosure with relocation assistance and providing money to state and local agencies to prosecute mortgage fraud.”
During the 18 months ending last September, 282,000 California homes went into foreclosure, and in the last three months of 2010, notices of default were filed on another 70,000 homes in the state.
This settlement concludes litigation filed by Attorney General Edmund G. Brown Jr. in June 2008 against Countrywide Financial Corp., Countrywide Home Loans and Full Spectrum Lending, as well as Mozilo and Sambol.
The financial relief provided under the current settlement augments the Attorney General's October 2008 settlement with Countrywide to provide loan modifications and other foreclosure relief valued at $8.68 billion nationwide, with $3.5 billion provided to California borrowers.
According to the lawsuit, leading up to the mortgage crisis, Countrywide lured borrowers with low “teaser” rates often as low as 1 percent adjustable rate loans.
Its loan officers obscured the downsides of these loans, which included rapidly rising rates after teaser rates expired, big prepayment penalties, and negative amortization in which a borrower's total loan costs rose even as additional payments were made.
Countrywide also loosened its mortgage standards and verification procedures in order to write more loans.
As a result of these practices, tens of thousands of homeowners with Countrywide loans ended up in default and foreclosure.
The attorney general's lawsuit alleged that Mozilo and Sambol knew of these practices and allowed them to continue.
The complaint alleged that Countrywide sought to increase its share of the nationwide mortgage market to 30 percent through a deceptive scheme to mass produce loans – with little concern about borrowers' long-term ability to afford them. It then would sell the loans on the secondary market to earn the highest possible premiums.
The settlement with Mozilo, the CEO of Countrywide, and Sambol, its president, was filed Wednesday in Los Angeles Superior Court. Mozilo and Sambol left Countrywide when it was purchased by Bank of America in July 2008.
Bank of America acquired Countrywide's loan portfolio and assumed responsibility to make restitution to mortgage holders who qualify under the terms of the attorney general's 2008 settlement.
Since that settlement, Countrywide has made more than 32,000 modifications, worth more than $1.3 billion, on loans made to California borrowers and has paid $28 million in cash to Californians who lost their homes to foreclosure.
- Details
- Written by: Editor
How to resolve AdBlock issue?