If you originate loans in California, expect more of your loans to be subject to the limitations imposed under California's covered loan law (California Financial Code Section 4970 et seq.) courtesy of California Assembly Bill No. 901. Currently, California's covered loan law applies to a consumer loan only if the original principal balance does not exceed $250,000. Effective January 1, 2006, California's covered loan law will apply to "a consumer loan in which the original principal balance of the loan does not exceed the most current conforming loan limit for a single-family first mortgage loan established by [Fannie Mae]." While Fannie Mae has yet to establish its conforming loan limits for 2006 (expect that to occur sometime in November), many analysts believe Fannie Mae will raise its current (2005) conforming loan limit from $359,650 to about $400,000. For additional information regarding California's covered loan law, visit Compliance Update: California Covered Loan Law and YSP's Not Included in California Covered Loan Law Calculations.