SCS/HCS/HB 1144 - 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.

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.

This act contains provisions which are similar to SB 899 (2000) and SCS/SB 786.
STEPHEN WITTE