|SB 0786||Places certain restrictions and limitations on lenders who provide high-cost home loans|
|LR Number:||3160S.01I||Fiscal Note:||3160-01|
|Committee:||Financial and Governmental Organization|
|Last Action:||03/06/00 - SCS Voted Do Pass S Financial & Governmental||Journal page:|
|Effective Date:||August 28, 2000|
SCS/SB 786 - This act outlaws certain unfair or deceptive practices relating to home improvement loans. Prohibited are home solicitations where a home improvement loan is made encumbering the person's home to pay the loan by:
(1) Extending credit under a mortgage for home improvements secured by the dwelling without regard for repayment ability;
(2) Paying a contractor from the proceeds of a mortgage in a way other than the prescribed way; or
(3) Selling or assigning certain mortgages without furnishing notice that the mortgage is subject to special laws, rules, or regulations provided by law.
The act exempts third parties from liability, except where there was an agency relationship between the solicitor and the third party or where the third party had actual knowledge of or participated in the unfair or deceptive transaction. Third party holders in due course under a home solicitation transaction will not be liable.
Any person violating this portion of the act is guilty of a Class D felony and will be required to make restitution.
This portion of the act is similar to HB 1144 (2000) and SB 899 (2000).
This act also revises some of the current statutes regarding
the licensing of mortgage brokers. The act also repeals the
current auditing procedure of a brokers books. The act also
requires mortgage brokers applying for a license to file a surety
bond or an irrevocable letter of credit in the amount of $100,000
to secure the obligations of the broker and its agents in
connection with servicing a mortgage, including payment to
providers for third party services. The removal of audit and the
bonding requirements are similar to SB 845 (2000).