US 2008 Enacted Predatory Mortgage & Subprime Lending Legislation Resources in United States
US 2008 Enacted Predatory Mortgage & Subprime Lending Legislation Resources
| State: | Bill Summary: |
| District of Columbia | B17-0167 Approved 1/29/08, Law L17-0090 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; and 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. |
| Kentucky | H.B. 552 Signed by governor 4/24/08, Chapter 175 Creates a new section of KRS Chapter 198A to permit the Kentucky Homeownership Protection Center to be established by or through the Kentucky Housing Corporation; declares the purpose of the center to be providing a centralized location for information on public services to assist a homeowner who is in default or in danger of default on a home loan; creates a new section of Subtitle 2 of KRS Chapter 286 to require the mortgagee to provide to the homeowner at the time of closing any brochure, pamphlet, or brief document prepared or approved by the Kentucky Housing Corporation that describes services provided by the center; creates a new section of Subtitle 2 of KRS Chapter 286 to declare it is unlawful for a person in the course of a mortgage transaction to improperly influence the development, report, result, or review of a real estate appraisal in connection with a mortgage loan; amends KRS 286.8-010 to define terms; amends KRS 286.8-020 to clarify who is subject to the subtitle; establishes procedure for any mortgage loan company, loan broker, or branch to apply for an exemption; amends KRS 286.8-030 to specify when it is unlawful to make a mortgage loan; amends KRS 286.8-032 to permit the executive director to require electronic filing of applications and fees; exempts a broker from the educational training course required of applicants if the broker has held a license for at least one year and has held a license within a five year period prior to filing the application; requires a broker-applicant to establish that the district, state, or territory from which the applicant applies, resides, or performs the primary portion of his business has rules, regulations, or other provisions which by reciprocity or comity are at least equal to the ones in this section; requires a mortgage loan company or broker to give at least 10 days’ notice to the executive director of a change in location or business name or addition of a branch; require every mortgage loan company to maintain an agent for service of process in Kentucky; amends KRS 286.8-034 to increase license fees for each principal office and branch office; amends KRS 286.8-090 to create new actions for which the executive director may suspend or revoke a license or take other action against an applicant, licensee, person, or registrant; declares that surrender or expiration of a license, registration, or exemption shall not affect the licensee’s civil or criminal liability for acts committed prior to the surrender or expiration; amends KRS 286.8-100 to allow the executive director to deem an application abandoned when it is received incomplete and the applicant fails to provide required information and fees or fails to respond to a request for information; amends KRS 286.8-110 to prohibit prepayment penalties after the third anniversary of the mortgage or after 60 days prior to the date of the first interest rate reset, whichever is less; restricts prepayment penalties to not more than three percent of the outstanding balance the first year, two percent the second year, and one percent the third year; amends KRS 286.8-140 to permit the executive director to require electronic filing of certain filings and fees; amends KRS 286.8-160 to require mortgage loan companies and brokers to keep records for a period determined by regulation by the executive director but no more than five years after a mortgage loan application is completed; permits preservation of records in an electronic retrievable format; requires a mortgage loan company or broker that will cease operations to notify the executive director prior to discontinuance of the mortgage lending business as to the physical location where records are preserved and requires the designation of a custodian of records; amends KRS 286.8-190 to make technical changes; amends KRS 286.8-220 to prohibit the use of prescreened trigger lead information derived from a consumer report to solicit a consumer who has applied for a mortgage loan with another mortgage loan company or broker under certain conditions; amends KRS 286.8-250 delete the definition of “physical location”; amends KRS 286.8-255 to require registration of mortgage loan originators and mortgage loan processors; permits the executive director to require submission of federal and state criminal background records as part of an application; designates when a certificate of registration expires; requires mortgage loan originators and mortgage loan processors to notify the executive director in writing of a change of employment within 30 days of the change; amends KRS 286.8-260 to require the executive director to approve professional education courses and education providers to meet the continuing professional education requirements; amends KRS 286.8-270 to require the mortgage loan broker to act in good faith towards the borrower and comply with certain duties; amends KRS 286.8-990 to create the Kentucky Residential Mortgage Fraud Act; increase fines that may be imposed by courts for violations of this subtitle; amends KRS 286.8-060 to require surety bonds to be payable to the executive director and provide that bonds shall be available for recovery of expenses, fines, and fees levied by the executive director and for losses and damages; creates new sections of Subtitle 8 of KRS Chapter 286 to create the mortgage lending fraud prosecution account; allows expenditures from the fund for criminal prosecution of fraudulent activities within the residential mortgage lending process; authorizes the executive director to file administrative complaints for potential or actual violations of this subtitle; permits the executive director to levy a civil penalty of $1,000 to $25,000 for violation of any provision of this subtitle or any administrative regulation promulgated thereunder; declares it unlawful for a licensee or entity holding a claim of exemption to broker or fund a mortgage loan if the total net income generated on the loan exceeds $2,000 or four percent of the total loan amount, whichever is greater; authorizes the executive director to establish standards and requirements by administrative regulation for license testing, prelicensure education and continuing education requirements for mortgage professionals subject to testing and education requirements under this subtitle; requires any person applying for a license, registration, or claim of exemption to pass a written examination prior to issuance of a license, registration, or claim of exemption; requires an examination to be held at least weekly in Frankfort and permit an examination to be held on a monthly basis at a location in Kentucky designated by the executive director which is reasonably accessible to all applicants; requires the executive director to bar an applicant for two years from taking the examination if the applicant fails to pass three consecutive times; authorizes the executive director to enter an emergency order suspending, limiting, or restricting the license, claim of exemption, or registration of a mortgage loan company, broker, originator, or processor; amends KRS 360.100 to delete the minimum principal amount of a high-cost home loan; establishes an additional threshold of total points and fees that exceed the greater of $2,000 or four percent of the total loan amount; defines terms; prohibits a high-cost home loan lender from imposing prepayment penalties unless the lender offers the borrower a loan without prepayment penalties and the borrower initials the offer to indicate that the borrower rejected the offer; prohibits prepayment penalties of more than three percent the first 12 months, two percent the second 12 months, and one percent the third 12 months; establishes criteria which means a borrower is presumed to be able to make scheduled payments to repay the loan; requires loan documents to specifically authorize late payment fees if such fees are to be imposed; prohibits a lender from charging a fee for the first request in a calendar year for a written payoff calculation and permit a fee not to exceed $20 for each subsequent request in a calendar year; requires a lender to require an escrow a ccount be established for taxes and insurance; prohibits a lender from using proceeds to repay the principal of an existing loan secured by the borrower’s principal dwelling that is not a high-cost home loan; prohibits a lender from allowing a borrower to make payments that are applied only to interest and not to the principal; requires the lender to provide a borrower with timely notice of any material change in the terms of the high-cost loan; requires the lender to verify the borrower’s income and financial resources and reasonable ability to repay the loan; creates a new section of KRS Chapter 367 to establish duties of a servicer who collects or processes payments on a residential mortgage loan; amends KRS 367.420 pertaining to home solicitation sales in which security is taken in the principal dwelling of the buyer to permit the buyer to rescind or cancel the transaction until midnight of the tenth, rather than the third, business day following the later of the consummation of the loan transaction or the delivery of the material disclosures required by the Truth in Lending Act. |
| Maine | L.D. 2125 Signed by governor 1/8/08, Public Chapter 471 Public Law 2007, chapter 273 enacted into law, effective January 1, 2008, changes to the truth in lending laws of the Maine Consumer Credit Code to protect homeowners from predatory lending practices. This bill clarifies that law by: 1. Amending definitions in the current law such as “nontraditional mortgage,” “points and fees” and “residential mortgage loan” and adding other definitions to aid in the implementation and enforcement of the law; 2. Specifying that a subprime mortgage loan is a type of residential mortgage loan; 3. Specifying what reasonable alternatives may be used by a creditor to verify a borrower’s income, requiring the determination to be documented and removing language that allowed the creditor to consider and disregard statements submitted by or on behalf of the borrower regarding the borrower’s income; 4. Providing an exemption from the general civil liability law for those residential mortgage loans that are subject to the penalties imposed specifically for violations of the law regarding residential mortgage loans; 5. Specifying that the restriction on flipping a loan only applies to a residential mortgage loan when making a subprime mortgage loan; and 6. Correcting several cross-references. |
| Maryland | H.B. 363 Signed by governor 4/8/08, Chapter 8 S.B. 270 Signed by governor 4/8/08, Chapter 7 Prohibits a lender from requiring or authorizing the imposition of prepayment charges in connection with specified subprime loans; prohibits lenders and credit grantors from making specified mortgage loans without giving due regard to the borrower’s ability to repay the loans; requires a specified representation by a mortgage broker to be contained in a finder’s fee agreement. |
| Minnesota | H.F. 3236 Postponed indefinitely 3/19/08 S.F. 2881 Signed by governor 5/8/08, Chapter 276 Relates to commerce; regulates contracts for deed, rates of interest on certain contracts, and mortgage lending; providing verification of the borrower’s reasonable ability to repay a mortgage loan; providing penalties and remedies for a mortgage broker’s failure to comply with the broker’s duties of agency. |
| H.B. 3839 S.F. 3154 Signed by governor 4/25/08, Chapter 241 Relates to commerce; regulates residential mortgage originators and services; verifying the borrower’s ability to pay. |
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| Washington | H.B. 2770 Signed by governor 3/21/08, Chapter 108 Provides that a residential mortgage loan may not be made unless a disclosure summary of all material terms is placed on a separate sheet of paper and has been provided by a financial institution to the borrower. Declares that a financial institution may not make or facilitate the origination of a residential mortgage loan that includes a prepayment penalty or that imposes negative amortization under certain circumstances. Provides that certain acts and |
| Wisconsin | S.B. 386 Signed by governor 3/25/08, Act 170 Prohibits a lender from requiring property insurance in an amount that exceeds the replacement value of improvements. |
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