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Senator Tom Torlakson Chair, Senate Appropriations Committee State Capitol, Room 5050 Sacramento, CA 95814 Dear Senator Torlakson: I oppose AB 512 (Lieber) relating to foreign language translation of mortgage contracts. Amended on the Assembly Floor to include banks and credit unions, AB 512 attempts to require supervised financial organizations to provide a summary sheet of loan terms in the language the loan was negotiated if that loan was negotiated in one of five statutorily identified foreign languages. This measure will be PREEMPTED by federal law and will not be applicable to federally chartered banks and credit unions. The United States Supreme Court recently upheld strong preemption powers under their ruling in Watters v. Wachovia Bank, N.A (2007) 127 S. Ct. 1559. When preempted, this measure will impose an unfair disadvantage and create an unlevel playing field for state-chartered banks and credit unions that would be left to comply. AB 512 recognizes the likelihood of preemption through the inclusion of a severability clause. The provision, located in Section Two of measure, acknowledges that application may be deemed invalid. This means that federally chartered institutions will be exempt and yet the measure advances notwithstanding the fact that state-charted institutions will be left with an undue burden. Further substantiating preemption is the AB 512 bill analysis prepared by the Assembly Committee on Judiciary. The analysis recognizes that the measure may be preempted for federally chartered institutions, which may “inadvertently create too unlevel a playing field in this area of commerce,” (Assembly Committee on Judiciary Bill Analysis, May 8, 2007, Page 6). Civil Code Section 1632 requires translation of contracts or agreements when a person engaged in business negotiates “primarily” in Spanish, Chinese, Tagalog, Vietnamese, or Korean. Existing law fails to define “primarily” leaving wide variances as to what level of negotiation would trigger the duty to translate. Adding the requirement to translate specified mortgage information exacerbates this current law flaw.