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2006 Enacted Predatory Mortgage Lending Legislation

February 19, 2007

State:	Bill Summary:
Illinois	H.R. 824 Adopted 1/25/06 Urges the Illinois Congressional delegation to defeat proposals that would undermine Illinois predatory lending laws.
	S.B. 304 Signed by governor 7/14/06, Public Act 94-1029 Amends the Residential Real Property Disclosure Act with respect to the predatory lending database pilot program. Provides that the secretary of Financial and Professional Regulation shall declare in writing an inception date for the pilot program and shall give notice of that date. The inception date shall be no later than September 1, 2006. Provides that the pilot program applies to all mortgage applications governed by the predatory lending database Article of the Act that are made or taken on or after the inception date. Provides that the pilot program shall be in effect and operational for four years. Provides that the title insurance company or closing agent shall attach a certificate of compliance to the mortgage before recording the mortgage (rather than recording the certificate separately). Provides limited immunity for credit counselors providing counseling services in good faith.
Louisiana	H.B. 77, Second Extraordinary Session Signed by governor 12/21/06, Act 3 Relates to financing single premium insurance in connection with residential mortgage loans under the "Residential Mortgage Lending Act"; provides for financing single premium insurance in connection with residential mortgage loans during the period beginning on August 15, 2006, and ending on August 14, 2007.
	H.B. 602 Signed by governor 6/2/06, Act 188 Prohibits prepayment penalties under certain circumstances for consumer credit transactions and residential mortgage loans; and to provide for related matters.
Ohio	S.B. 185 Signed by governor 6/19/06 Modifies the application of, and damages available under, the Consumer Sales Practices Act; generally prohibits the appraisal of real estate for a mortgage loan without state certification or licensure; requires that a national criminal background check be conducted on all applicants for a mortgage broker certificate of registration, loan officer license, or real estate appraiser certificate or license; modifies the Mortgage Broker/Loan Officer Law with respect to disclosure of information, fiduciary duties, prohibited acts, record keeping, and pre-licensure examination; and makes other changes relative to mortgage lending.
Rhode Island	H.B. 7814 Signed by governor 7/11/06, Chapter 569 Establishes a home loan protection act to protect borrowers from predatory lending practices.
	S.B. 2257 Passed both houses 2/2/06, Resolution 2006-65 Extends the reporting date of the Special Legislative Commission to Study Predatory Mortgage Lending Practices from February 1, 2006 to February 15, 2006, and said commission would expire on April 1, 2006.
	S.B. 2851 Signed by governor 7/11/06, Chapter 573 Establishes a home loan protection act to protect borrowers from predatory lending practices.
Tennessee	H.B. 3597 Signed by governor 5/26/06, Public Law Chapter 801 S.B. 3989 Passed Senate 5/10/06 Enacts the Tennessee Homeowners' Protection Act of 2006.
Wisconsin	A.B. 456 Signed by governor 2/7/06, Act 110 Eliminates the prepayment penalty requirements for variable rate loans and creates new requirements.  Under the bill, a lender may not include a prepayment penalty in a variable rate loan unless the lender has, in writing, offered the borrower a variable rate loan without a prepayment penalty and the borrower initials the offer to indicate that the borrower has declined the offer.  If the borrower declines the offer, the lender may include a prepayment penalty that applies if prepayment of the loan is made within the first three years of the loan and is not made in connection with the sale of the dwelling or mobile home secured by the loan.  Limits the prepayment penalty or fee to three percent in the first year of the loan, two percent in the second year of the loan, or one percent in the third year of the loan, of the amount by which the prepayment exceeds 80 percent of the principal balance of the loan outstanding immediately prior to prepayment.

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NCSL Contact:  Heather Morton, 303-364-7700, Denver