California legislators propose SB 784 to protect homeowners from deceptive contractors

The California Assembly Banking and Finance Committee convened on July 7, 2025, to address significant concerns regarding predatory practices in the home improvement financing industry. Lawmakers discussed the alarming rise in complaints against contractors who mislead homeowners, particularly targeting vulnerable populations such as seniors, non-English speakers, and people of color.

During the meeting, it was highlighted that many homeowners are lured into signing contracts under false pretenses, often believing they are agreeing to a quote or public program. Instead, they inadvertently sign loans that may come with liens on their properties. This deceptive practice has left many homeowners burdened with debt for unfinished or ineffective projects, with contractors disappearing after the initial sale.

The increase in complaints—up 154% since 2019—has prompted the establishment of a new enforcement unit within the Contractors State Licensing Board. This surge has drawn comparisons to the subprime mortgage crisis, with state attorneys general taking legal action against some of these predatory actors.

To combat these issues, the committee discussed Senate Bill 784, which aims to enhance consumer protections. Key provisions of the bill include requiring a confirmation call between lenders and borrowers before finalizing loans, ensuring homeowners do not pay for projects until they are confirmed complete, and increasing transparency around hidden fees. The bill also extends the cancellation period, giving consumers more time to reconsider their decisions.

Lawmakers expressed a commitment to working collaboratively with financial institutions to refine the bill while ensuring it protects consumers from exploitation. The overarching goal is to create a fairer marketplace for both honest contractors and lenders, ensuring Californians are not left paying for home improvements they never agreed to or received. The committee plans to continue discussions on this critical issue, emphasizing the need for immediate action to safeguard homeowners.