- Introduced -

SB 786 - This act places certain restrictions and limitations on lenders with regards to high-cost home loans. This act places restrictions on certain "predatory" lending practices. Under this act, high cost home loans are home loans, other than an open ended credit plan or reverse mortgage transaction, which have interest rates and corresponding fees that exceed a certain level.

This act prohibits certain "predatory" lending practices with regards to high-cost loans. This act prohibits:

1) Lenders from charging prepayment fees;

2) The practice of negative amortization;

3) Flipping;

4) Making a loan when the lender knows the borrower will default;

5) Credit insurance packing; and

6) Charging for services not actually provided.

In addition to prohibiting certain practices, this act also limits how the lender may structure the repayment of the loan. The act also prohibits increasing the interest rate after default and prohibits the lender from charging fees to modify the loan or to defer payments. This act also prohibits lenders from making investments backed by high-cost home loans.

Lenders who violated this act shall forfeit all principle and interest on all loans made in violation of this act. The act also requires lenders to report the average and median interest rates on loans they originate according to certain categories.

This act has a delayed effective date of January 1, 2001.