There is a little known law in the state of California that was set in place to protect non-English speaking borrowers against predatory lenders. The funny thing is that it was never, ever followed and I have yet to see one case of a lender or broker following this law. Many homeowners could stop foreclosure if they only knew about this law that protects them against these abuses.

The law in particular that relates to non-English speaking borrowers is California Civil Code 1632.

(f) At the time and place where a contract or agreement described in paragraph (1) or (2) of subdivision (b) is executed, a notice in any of the languages specified in subdivision (b) in which the contract or agreement was negotiated shall be conspicuously displayed to the effect that the person described in subdivision (b) is required to provide a contract or agreement in the language in which the contract or agreement was negotiated, or a translation of the disclosures required by law in the language in which the contract or agreement was negotiated, as the case may be. If a person described in subdivision (b) does business at more than one location or branch, the requirements of this section shall apply only with respect to the location or branch at which the language in which the contract or agreement was negotiated is used.

The law is very clear and it states that if a “contract” is negotiated in a foreign language then that contract needs to be written in that foreign language. If the loan is negotiated in Spanish, then the loan documents need to be in Spanish.

The reality is that this never happened and many of these borrowers are going into foreclosure when they have a legitimate defense and can fight back against this form of predatory lending.

This is a serious law and one that needs appropriate attention in today’s foreclosure and predatory lending climate. I assume that there are many other states that have similar laws and these non-English speaking borrowers have an equitable defense against a foreclosure action or unlawful loan.

The law states that ”Regulation M” and “Regulation Z” mean any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System and any interpretation or approval issued by an official or employee duly authorized by the board to issue interpretations or approvals dealing with, respectively, consumer leasing or consumer lending, pursuant to the Federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).

Upon a failure to comply with the provisions of this section, the person aggrieved may rescind the contract or agreement in the manner provided by this chapter. When the contract for a consumer credit sale or consumer lease which has been sold and assigned to a financial institution is rescinded pursuant to this subdivision, the consumer shall make restitution to and have restitution made by the person with whom he or she made the contract, and shall give notice of rescission to the assignee. Notwithstanding that the contract was assigned without recourse, the assignment shall be deemed rescinded and the assignor shall promptly repurchase the contract from the assignee.


The law is very clear and it states that if a “contract” is negotiated in a foreign language then that contract needs to be written in that foreign language. If the loan is negotiated in Spanish, then the loan documents need to be in Spanish.

The reality is that this never happened and many of these borrowers are going into foreclosure when they have a legitimate defense and can fight back against this form of predatory lending.
California Civil Code 1632

According to data from the United States Census of 2000, of the more than 12 million Californians who speak a language other than English in the home, approximately 4.3 million speak an Asian dialect or another language other than Spanish. The top five languages other than English most widely spoken by Californians in their homes are Spanish, Chinese, Tagalog, Vietnamese, and Korean. Together, these languages are spoken by approximately 83 percent of all Californians who speak a language other than English in their homes.
(b) Any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement and prior to the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, which includes a translation of every term and condition in that contract or agreement:

(1) A contract or agreement subject to the provisions of Title 2 (commencing with Section 1801) of, and Chapter 2b (commencing with Section 2981) and Chapter 2d (commencing with Section 2985.7) of Title 14 of, Part 4 of Division 3.
(2) A loan or extension of credit secured other than by real property, or unsecured, for use primarily for personal, family or household purposes.

(3) A lease, sublease, rental contract or agreement, or other term of tenancy contract or agreement, for a period of longer than one month, covering a dwelling, an apartment, or mobile home, or other dwelling unit normally occupied as a residence.