US 2007 Introduced Predatory Mortgage & Subprime Lending Legislation Resources in United States
US 2007 Introduced Predatory Mortgage & Subprime Lending Legislation Resources
| State: | Bill Summary: |
| Arizona | S.B. 1438 Creates the Home Loan Protection Act. |
| California | A.B. 628 Prohibits a real estate broker or a residential mortgage lender or servicer from making a gift, as defined, to a borrower or a potential borrower. |
| Delaware | H.B. 162 Creates the Delaware Predatory Mortgage Lending Prevention Act which prohibits unfair lending practices in relation to residential home loans, and provides civil and administrative enforcement procedures. |
| District of Columbia | B17-0167 Transmitted for Congressional Review 12/13/07, Act A17-0208 Amends the Mortgage Lender and Broker Act of 1996 to require mortgage lenders to provide clear and complete information to District consumers for all non-conventional mortgage loans; amends §28-3904 of the District of Columbia Official Code to make the failure of mortgage lenders to provide disclosures to consumers an unfair trade practice. |
| Florida | S.B. 1496 Died in committee 5/4/07 Requires lenders to place certain funds for homeowner’s insurance premium and property tax payment into escrow when requested by borrower; amends provision regarding disclosures for high-cost home loans. |
| Hawaii | H.C.R. 77 Passed House 4/12/07 Requests the auditor to conduct a study on predatory mortgage lending in Hawaii. |
| S.C.R. 72 Requests the auditor to conduct a study on predatory mortgage lending in Hawaii. |
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| Illinois | H.B. 1478 Creates the Predatory Home Loan Practices Act. Prohibits various practices and charges in connection with home loans made to persons with respect to their primary residence. Prohibits the imposition of prepayment penalties, flipping of loans, and lender financing of credit insurance. Imposes limitations on high-cost loans. Prohibits loans unless the lender reasonably believes that the borrower is able to make scheduled payments to repay the loan without respect to the borrower’s equity in the property. Authorizes a borrower to obtain damages for violations of the Act. |
| H.B. 2594 Amends the High Risk Home Loan Act. Makes a technical change in a section concerning the prohibition on certain home loans. |
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| H.B. 2642 Amends the High Risk Home Loan Act. Makes a technical change in a section concerning the prohibition on certain home loans. |
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| S.B. 428 Amends the High Risk Home Loan Act. Makes a technical change in a section concerning the prohibition on certain home loans. |
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| S.B. 1347 Passed Senate 4/19/07 Amends the Illinois Fairness in Lending Act. Provides that “equity stripping” and “loan flipping” shall only include loans that qualify as high risk home loans. Amends the High Risk Home Loan Act. Provides that “points and fees” does not include: (i) fees paid to the Veterans Administration required by law; (ii) fees paid to the Federal Housing Administration required by law; (iii) fees paid for private mortgage insurance; or (iv) all fees paid to a mortgage broker by a lender if the loan is less than $50,000, or 50 percent of fees paid to a mortgage broker by a lender if the loan is between $50,000 and $100,000. |
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| Iowa | S.F. 313 Became S.F. 541 3/13/07 Establishes consumer protection measures in relation to certain home loans, and establishes additional related requirements applicable to mortgage bankers and mortgage brokers. Provides that a mortgage banker or broker shall not finance, directly or indirectly, any credit life, disability, or unemployment insurance, or any other life or health insurance premiums; or knowingly engage in the act or practice of “flipping” or “churning” a consumer home loan, which the bill defines as making a consumer home loan to a borrower which refinances an existing consumer home loan when the new loan has no reasonable, net tangible benefit to the borrower considering all of the circumstances. Establishes a mortgage lending fraud prosecution surcharge and fund. A surcharge in the amount of $1 shall be assessed by the county recorder when a mortgage or deed of trust is recorded. The surcharge amounts, less an administrative charge, shall be transmitted monthly to the treasurer of state, who shall deposit the funds into a mortgage lending fraud prosecution fund established for the investigation and prosecution of frauds related to mortgage lending. |
| S.F. 541 Passed Senate 3/19/07 Establishes consumer protection measures in relation to specified home loans, and establishes additional related requirements applicable to mortgage bankers and mortgage brokers. |
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| Kentucky | H.B. 90 Amends KRS 286.3-214, 286.8-110, and 360.010 to prohibit a mortgage loan lender from charging or collecting prepayment fees or penalties more than 36 months after the loan closing or which exceed three percent of the amount prepaid during the first 12 months, or two percent of the amount prepaid during the second 12 months, or one percent of the amount prepaid during the third 12 months after the loan closing; amends KRS 286.5-441 and 286.6-485 to require any charges to be assessed against the borrower if a real estate loan is paid prior to maturity to be prominently displayed and made part of the note and the loan closing statement regarding the method of computation of any rebate; prohibit a mortgage loan lender from charging or collecting prepayment fees or penalties more than 36 months after the loan closing or which exceed three percent of the amount prepaid during the first 12 months, or two percent of the amount prepaid during the second 12 months, or one percent of the amount prepaid during the third 12 months after the loan closing. |
| Maryland | H.B. 1107 Passed House 3/23/07 Clarifies that specified limitations on a mortgage broker’s ability to charge and collect a finder’s fee for obtaining more than one loan secured by the same property within 24 months applies only if the second loan is obtained from the same borrower as under the initial loan and is obtained for a specified purpose or is a specified covered loan; and defining “covered loan”. |
| Massachusetts | H.B. 4085 See H.B. 4306 for further action 10/18/07 Draws upon the recommendations of the Mortgage Summit Group, a partnership of 50 participants with a wide range of expertise— from non-profit agencies, government agencies and the mortgage lending industry. The bill criminalizes mortgage fraud in the Commonwealth; creates a centralized statewide foreclosure database of foreclosure activity to monitor and analyze foreclosures and foreclosure patterns at the Division of Banks; and mandates that mortgage holders file a 90-day notice of intent to foreclose with the homeowner and the Division of Banks. Finally, this bill requires mortgagees to receive consumer counseling prior to obtaining nonconforming variable rate mortgage loans. |
| H.B. 4306 See H.B. 4387 for further action 11/20/07 Protects and preserves home ownership; provides mortgage protection for existing and new home owners; appropriates funds; regulates licensing of mortgage loan originators and background investigation fees; regulates assignment of mortgage; provides that no mortgagee shall make a subprime loan at a variable or adjustable rate of interest unless the mortgagor opts in writing for the variable or adjustable rate subprime loan and receives certification of loan counseling with a qualified third party; provides that a tenant occupying a dwelling in foreclosure shall be deemed a tenant at will as specified. |
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| S.B. 2296 Substituted by S.B. 2299 7/24/07 Provides that no mortgagee shall make a subprime loan at a variable or adjustable rate of interest unless the mortgagor opts in writing for the variable or adjustable rate subprime loan and receives certification of loan counseling with a qualified third party; creates a centralized statewide foreclosure database of foreclosure activity to monitor and analyze foreclosures and foreclosure patterns at the Division of Banks; regulates licensing of mortgage loan originators and background investigation fees; criminalizes mortgage fraud in the Commonwealth. |
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| S.B. 2299 Passed Senate 7/26/07 Provides that no mortgagee shall make a subprime loan at a variable or adjustable rate of interest unless the mortgagor opts in writing for the variable or adjustable rate subprime loan and receives certification of loan counseling with a qualified third party; creates a centralized statewide foreclosure database of foreclosure activity to monitor and analyze foreclosures and foreclosure patterns at the Division of Banks; regulates licensing of mortgage loan originators and background investigation fees; criminalizes mortgage fraud in the Commonwealth. |
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| S.B. 2382 Substituted by H.B. 4306 10/25/07 Establishes a program to develop employer assisted housing; ensures responsible mortgage lending practices in the commonwealth; relates to licensure of and criminal background checks for mortgage loan originators; relates to performance ratings of mortgage lenders; relates to subprime lending at variable or adjustable rates; relates to advertising practices of mortgage lenders; relates to breach of a mortgage contract and residential mortgage fraud; relates to real estate appraisal and appraisers; provides for notice procedures when instituting foreclosure procedures; requires the commissioner of Banks to maintain a foreclosure database. |
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| Michigan | H.B. 5272 Allows for the regulation of certain predatory lending practices by municipalities. |
| H.B. 5294 Provides a general revision to the consumer mortgage protection act; revises the title and general definitions. |
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| H.B. 5295 Provides a general revision to the consumer mortgage protection act; prohibits certain lending practices. |
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| H.B. 5296 Provides a general revision to the consumer mortgage protection act; regulates the rate spread and high-cost home loans and revises default provisions. |
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| H.B. 5297 Provides a general revision to the consumer mortgage protection act; revises provisions concerning notices and disclosures. |
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| H.B. 5299 Provides a general revision to the consumer mortgage protection act; revises claims and defenses in civil actions. |
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| H.B. 5302 Provides a general revision to the consumer mortgage protection act; provides for the general applicability of the act. |
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| H.B. 5303 Provides a general revision to the consumer mortgage protection act; revises references to home loans in local preemption provisions. |
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| H.B. 5304 Requires compliance with the home loan protection act by domestic credit unions. |
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| H.B. 5305 Requires compliance with the home loan protection act by state banks. |
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| H.B. 5306 Requires compliance with the home loan protection act by state savings banks. |
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| H.B. 5307 Requires compliance with the home loan protection act by mortgage brokers and lenders; imposes additional duties with respect to borrowers. |
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| H.B. 5308 Requires compliance with the home loan protection act by mortgage brokers and lenders in the secondary market; imposes additional duties with respect to borrowers. |
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| H.B. 5309 Requires compliance with the home loan protection act by savings and loan associations. |
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| H.B. 5310 Provides for enforcement of the home loan protection act through the Michigan consumer protection act. |
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| H.B. 5376 Creates the Michigan homeownership preservation fund in the state treasury. Fines assessed under subsection (1)(c) shall be deposited in the fund and used by the commissioner to do any of the following: (a) Award grants to finance financial literacy programs, homeownership training, and homeownership protection training. (b) Provide down payment assistance to individuals seeking home loans. (c) Provide loans and grants to low income individuals seeking to avoid foreclosure. |
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| S.B. 924 Requires a mortgage disclosure form as specified to prevent predatory lending practices. |
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| Minnesota | H.F. 387 S.F. 766 Regulates predatory lending practices; provides remedies and criminal penalties. |
| H.F. 1225 S.B. 1474 Relates to commerce; prohibits the sale of certain mortgage information; modifies residential mortgage lending licensing and education requirements; provides examination powers to the commissioner; regulating certain transactions with homeowners whose homes are in foreclosure; prohibits certain predatory mortgage lending practices; regulates recovery for breaches of statutory housing warranties; permits victims of domestic abuse to terminate a lease in certain circumstances; modifies the limitation on actions for damages based on services or construction to improve real property for certain actions; regulates homestead property; prescribing criminal penalties; provides remedies. |
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| H.B. 1748 S.F. 1547 Relates to residential mortgage lending; modifies licensing and education requirements; prohibits predatory lending practices; provides examination powers to the commissioner; prescribes a criminal penalty. |
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| H.F. 1753 S.F. 225 Relates to financial institutions; requires counseling and disclosures with respect to high-cost home loans. |
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| Mississippi | H.B. 1449 Died in committee 1/30/07 Creates the Mississippi Predatory Lending Act; defines certain terms; prescribes certain procedures, limitations and restrictions regarding home loans, consumer home loans and consumer loans to protect borrowers; provides for enforcement of the provisions of this act. |
| Missouri | S.B. 74 Under the act, lenders may not encourage nonpayment of existing debts in connection with the closing of a home loan that refinances portions of the existing debt. Lenders may not affect an appraiser’s independent judgment with respect to the value of real estate covered by a home loan or being offered as security in an application for a home loan. In addition, lenders may not leave any blanks in any loan document, to be filled in after the borrower signs the documents. If the discussion between the borrower and the lender is in a language other than English, the lender must provide a copy, free of charge, of all disclosures in the language in which the discussion was primarily conducted. This act bars the lender from allowing advance collection of premiums for life or health insurance, or other fees in connection with a home loan. The lender may not knowingly refinance an existing home loan when the new loan does not have tangible benefit to the borrower. This act provides restrictions on charging late payment fees. High-cost home loans shall not contain provisions allowing lenders to accelerate the loan upon their sole discretion. Amounts of compensation paid to a mortgage broker must be disclosed to the borrower no later than three days prior to closing. The act places restrictions on high-cost home loans pertaining to prepayment penalties, interest increases after default, payments of contractors under the loan, inability to make payments, and mandatory arbitration. The act also includes disclosure requirements and procedures for curing high-cost home loans. Lenders who violate the provisions of this act are eligible for actual, statutory, and punitive damages along with injunctive, declaratory and other equitable relief. |
| Montana | H.B. 538 Missed deadline for revenue bill transmittal 4/3/07 Establishes the Homeowner’s Protection Act; defines and regulates “high-cost mortgage loans”; prohibits flipping of mortgage loans; regulates types of fees and discount points in certain mortgage loans; prohibits certain practices among lenders intended to encourage defaults or certain types of refinancing; requires notice on high-cost mortgage loans; regulates methods for curing mortgage loan defaults; extends the regulation of high-cost mortgage loans to purchasers or assignees; provides borrowers with a private right of action and other forms of relief; extends a good faith defense to lenders; provides the Department of Administration with investigatory, rulemaking, and enforcement authority; provides penalties; and authorizes criminal prosecution under the deceptive practices statute. |
| Nevada | S.B. 538 Makes it unlawful for suppliers of goods or services and residential mortgages to engage in unconscionable trade practices; authorizing the attorney general to institute certain civil proceedings to enforce provisions regulating deceptive trade practices and unconscionable trade practices; provides for the sharing of information and intelligence between the attorney general and a state or federal investigative agency under certain circumstances; authorizes certain equitable relief to be sought by the attorney general for violations of law relating to unfair trade practices; provides penalties. |
| New Jersey | A.B. 3162 Withdrawn from further consideration 2/22/07 Amends the “New Jersey Home Ownership Security Act of 2002,” which prohibits certain abusive lending practices commonly known as predatory lending. Revises part of the definition of “bona fide discount points” to mean loan discount points which in fact reduce the interest rate applicable to the loan by a minimum of 25 basis points per loan discount point. In revising the definition of “bona fide discount points” the bill removes the requirement that loan discount points: (1) in fact reduce the interest rate or time price differential applicable to the loan from an interest rate which does not exceed the conventional mortgage rate for a home loan secured by a first lien, by more than two percentage points, or for a home loan secured by a junior lien, by more than three and one half percentage points; and (2) are recouped within the first five years of the scheduled loan payments. Provides that a creditor must provide a borrower with the mortgage payoff balance within five business days after a request is made. Finally, the bill provides that no provision of the “New Jersey Home Ownership Security Act of 2002” imposing liability shall apply to any act done or omitted in good faith in conformity with any regulation of the commissioner, notwithstanding that the regulation may, after the act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason. |
| A.B. 4213 This bill, the “Teaser Rate Protection Act,” provides additional consumer protections for residential mortgage borrowers by prohibiting certain lending practices with respect to “home loans” and “high-cost home loans” as defined in the “New Jersey Home Ownership Security Act of 2002,” P.L.2003, c.64 (C.46:10B-22 et seq.), which prohibits certain abusive lending practices commonly known as predatory lending. The bill prohibits a creditor from making a home loan to a borrower without verifying and documenting the borrower’s reasonable ability to repay the loan, which shall include a reasonable inquiry into the borrower’s current and expected income, financial obligations, and employment. For adjustable rate, zero rate or “teaser rate” mortgages, which attract borrowers by offering low interest rates at the beginning of the loan but which contain provisions that allow rate increases after the initial rate expires, the reasonable ability to pay shall be determined based on a fully indexed rate and a repayment schedule that achieves full amortization over the life of the loan. The bill also prohibits a creditor from making a high-cost home loan to a borrower unless the creditor establishes an escrow account to ensure that payments for taxes, insurance premiums, and other charges related to the property are collected and paid by the lender. In addition, the bill prohibits the financing of points and fees in connection with a high-cost home loan. |
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| S.R. 103 Memorializes the Congress of the United States to protect residential mortgage borrowers by enacting legislation to allow state predatory lending laws to apply to federally chartered financial institutions and their subsidiaries, or in the alternative, by enacting uniform federal legislation to restrict predatory lending practices by all federally chartered financial institutions and their subsidiaries. |
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| New York | A.B. 30 Enacts the “Home Equity Fraud Act” to control improper activities by home improvement contractors and finance companies; prohibits mortgage brokers or agents from acting as home improvement contractors; provides additional protections for mortgagors and home owners. |
| A.B. 2248 Prohibits banking organizations originating loans secured by real property from engaging in practices with a “discriminatory effect;” defines “discriminatory effect” as underwriting or lending policy or practices whose total effect tends to cause or result in a prohibited discriminatory credit or banking practice unless such policy is necessary for a legitimate banking purpose. |
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| A.B. 8357 Amends the New York State Banking Law pertaining to home loans by adding the following sections 6-m prohibiting pre-payment penalties on home loans; 6-n prohibit certain payment mortgages options such as stated income loans, low documentation loans or “pick-a-payment” option loans; 6-o elimination of “predatory lending” targeting and practices, which deceptively causes individuals into agreements causing the borrower to violate the terms of their agreement, in which they cannot repay; 6-p Elimination of targeting individuals with FICO credit scores of 660 and below in effort to offer borrowers sub-prime mortgages or mortgages through practices of underwriting which can result into foreclosure. The purposes of these amendments are to address the new forms of home loan exploitation that is not currently addressed in the New York State Banking Law. |
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| A.B. 8972 Enacts the “New York State Responsible Lending Act of 2007” to regulate subprime and nontraditional home loan lending. |
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| A.B. 8973 Enacts the “Disclosure in Lending Act”; provides greater disclosure to borrowers; requires a depiction, chart or table be given to borrowers of certain information; requires the banking department to establish a Web site dedicated to the risk of sub-prime mortgages; grants enforcement actions. |
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| A.B. 9547 Enacts the “fairness in lending act”; provides that a mortgage broker has a duty of agency relationship with a borrower; defines “yield spread premium” and prohibits such practice; provides for attorney general enforcement; outlines the duties of mortgage brokers. |
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| S.B. 3695 Imposes certain requirements with respect to permissible interest rate discounts, interest rate increases and the use of negative amortization provisions in alternative mortgage instruments and removes the statutory provisions on graduated payment mortgage instruments which currently limit such provisions to mortgages on one to six family units given by a natural person. |
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| S.B. 5135 Requires a loan counseling disclosure as part of contract of sale for the transfer of property; provides that such form shall be signed at the time of contract and attached to the contract of sale. |
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| S.B. 5311 Relates to issuance of sub-prime home loans. |
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| S.B. 6394 Enacts the “New York Sub-prime Predatory Lending Prevention Act”; establishes guidelines for sub-prime loans; establishes duties of mortgage bankers and mortgage brokers; relates to the qualifications for licensing and certification of real estate appraisers. |
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| Oregon | H.B. 2389 Requires a lender and a seller imposing a prepayment penalty in terms and conditions of a real estate loan agreement or land sale contract to ensure that the instrument identifying terms and conditions of penalty is recorded in deed or mortgage records in county in which the real property is located. Specifies instruments that may satisfy requirement. |
| H.B. 3474 Requires mortgage or trust deed lender to prorate prepayment privilege penalty for prepayments made after first year of loan agreement. |
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| S.B. 965 Passed Senate 5/11/07 Requires lenders involved in residential property nontraditional mortgage products to ensure loan terms and underwriting standards for products and consider borrower’s repayment capacity and risk mitigation factors. Requires lenders involved in residential property nontraditional mortgage products to establish risk management practices, maximum risk levels, controls, procedures and training programs to avoid lender over-reliance on nontraditional mortgage products. Requires disclosures by lender when soliciting, describing, offering, originating or servicing residential property nontraditional mortgage product. Authorizes the director of the Department of Consumer and Business Services to bring action to enjoin violation of provisions of Act. Authorizes court to impose fine of not more than $5,000 for each violation and to appoint receiver for person, or person’s assets, who has violated any provision of Act. Provides the director of the Department of Consumer and Business Services with investigation and enforcement authority. Allows imposition of civil penalties for lender violations, not to exceed $5,000 per violation or $20,000 per continuing violation. Creates private cause of action for damages. |
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| Pennsylvania | H.B. 38 Provides for licensee limitations, for legislative findings, for limitations on covered loan terms and practices and for civil liability; and repeals provisions relating to restricted acts and practices. |
| H.B. 40 Provides for prohibited acts and practices with respect to residential mortgages; further provides for attorney fees; and provides for foreclosure and other legal actions. |
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| Rhode Island | H.B. 5545 Allows the full payment of mortgage loans to be made at any time without penalty. |
| S.B. 35 Allows the full payment of mortgage loans to be made at any time without penalty. |
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| Tennessee | H.B. 2131 S.B. 1712 Requires closings for all loans for residential real property to be held in office of lender or agent of lender; limits period for prepayment penalty to no longer than 24 months after date of consummation of loan of $100,000 or less for home improvements to owner-occupied residence where residence is collateral for loan. |
| Texas | H.B. 1057 Relates to the disclosure of a prepayment penalty for a home loan. |
| H.B. 2274 S.B. 987 Passed Senate 4/30/07 Relates to requiring counseling before closing certain high-risk loans. |
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| West Virginia | H.C.R. 87 Passed House 3/9/07 Requests the Joint Committee on Government and Finance to study consumer lending practices and mortgage lending practices. |
| S.C.R. 8 Requests the Joint Committee on Government and Finance study predatory mortgage lending practices. |
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