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SPONSOR: |
Smith |
DATE TYPED: |
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HB |
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SHORT TITLE: |
High-Cost Home Loans |
SB |
616 |
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ANALYST: |
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APPROPRIATION
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Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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See Narrative |
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Relates to SB 225, SB 433, HB526, HB647 and HB427.
Responses
Received From
Regulation
& Licensing (RLD)
SUMMARY
Synopsis
of Bill
Senate Bill 616 amends
the Mortgage Loan Company and Loan Broker Act (MLBA) by prohibiting certain
mortgage lending practices by mortgage lenders/brokers and providing disclosure
requirements, civil remedies and enforcement provisions. SB 616 removes the exemption of consumer
finance companies from the MLBA.
Significant
Issues
SB 616 allows the
Director of the Financial Institutions Division to ultimately set the annual percentage
rate and total points and fees that are the threshold for the definition of a
high cost home loan.
The
inclusion of consumer finance companies in this bill means that deferred
deposit loan companies or payday lenders would be subject to the MLBA.
FISCAL IMPLICATIONS
Verification
of compliance with SB 616 will be on a case by case basis, upon the receipt of
a complaint regarding a licensee. The
number of complaints that might arise is unknown, thus making it difficult to
determine if there would be fiscal implications as a result of these amendments. For the present RLD does not estimate any
fiscal implication..
RELATIONSHIP
SB
616 relates to the following bills: SB 225, SB 433, HB526, HB647, and HB427.
These also have provisions referring to deferred deposit or payday loans.
TECHNICAL ISSUES
RLD provided the
following:
Page
3, line 18, through page 4, line 5; define “high cost loans” by substituting
the following: “the annual percentage
rate and points exceed the requirements of Federal truth in lending laws
(Regulation Z Section 226.32 (a) (1)”.
Also omit the language on page 10, lines 10 through 17.
Page
4, lines 14 and 15; Various closing costs are normally
charged by third party affiliates of mortgage lenders/brokers.
Page
6, line13; It appears that introductory language has been omitted (“…or an
affiliate…”)
Page 7 line 5 –
the sentence should begin with the word “shall”.
Page
7, lines 8 through 10;
(“prearranged appointment …expressed invitation”). Verification would be obscure and enforcement
elusive.
Page
8, lines 2 through 6; It should be noted that creditors incur costs to modify,
refinance, extend or amend loans and that such activity may become necessary
more often than once every twelve months.
Page
8, line10 through Page10, line 7; SB 616 does not require that disclosures need
to be in a form that is signed and dated by a borrower for the purposes of
verification and enforcement.
Page
7, line18 through page 8, line 1; (A late payment fee may not be charged more
than once…”) This language is unclear and compliance
may prohibit lenders from assessing late fees on loans where the borrower is
chronically past due.
Page
12, lines 15 through 16;
(“…noncompliance was not intentional and resulted in a bona fide
error.”) Verification would be obscure
and enforcement elusive.
Page
12, line 20; (“…computer
malfunction and programming...”) Verification will be obscure and enforcement
elusive.
Page
12, line 10; the language, “Loan in good faith”, is unclear.