California Mandates Mortgage Document Translations

Beginning January 1, non-English speakers in California will have their consumer rights protected by a new state statute. The law stipulates that if a loan or extension of credit secured by real property is negotiated in Spanish, Chinese, Tagalog, Vietnamese, or Korean, the borrower must be given a translation of the key terms in the contract. The translation must be provided at least three days following the initial loan application. Any subsequent document making substantial revisions in the rights and obligations of the parties also requires translation. The new requirements do not apply when the terms of the contract are negotiated through an interpreter. Assemblyman Paul Fong believes that the measure is necessary because of the complexity of mortgage financial transactions. He says, "For most consumers, mortgages are the largest and most complex financial transactions of their lives. For many non-English speakers, failure to translate the documents results in limited or an incorrect understanding of key loan terms like interest rate adjustments and prepayment penalties. As a result, many end up with excessively costly loans or loans that will result in high levels of default and foreclosure."

From "New Year Brings Protection to Consumers Who Speak Foreign Languages, Enter Into Contracts" 

Sacramento Government Examiner (CA) (12/15/09) Ross, Michael