PREDATORY LENDING AGENDAS REMAIN ACTIVE
Predatory lending agendas remain active with changes in Colorado, California and New York.
Colorado enacted a predatory lending law June 7, 2002. Co. H.B. 1259. The law applies to “covered loans” as defined in federal law with certain modifications to that definition. The law restricts balloon payments, acceleration, negative amortization, interest rates on default, arbitration clauses, advance payments and prepayment fees. The law requires that a notice be provided to consumers cautioning them about obtaining such a loan and outlining potential risks prior to making a covered loan. The law prohibits making a covered loan without regard to the consumer’s repayment ability. The law restricts refinancing of loans and payments to home improvement contractors and contains additional restrictions. The above provisions of the law apply to loans offered or entered into on or after January 1, 2003. In addition the law prohibits mortgage brokers or originators from facilitating the consummation of an unconscionable mortgage loan or agreement.
California’s two predatory lending laws enacted last October took effect July 1, 2002. Ca. A.B. 344; Ca. A.B. 489. The laws apply to “covered loans,” defined more broadly than under federal law, and contain provisions similar to those contained in the Colorado law.
Three predatory lending bills were introduced in the New York General Assembly in June. All three bills apply to “high cost home loans” defined to include open-end mortgage loans. The bills contain provisions similar to those contained in the Colorado law plus additional restrictions. N.Y. H.B. 11856; N.Y. S.B. 7728; N.Y. S.B. 7811.
For more information or copies of any bills, please contact Elizabeth Anstaett at 614-628-1604 or [email protected] .