Ohio lawmakers pass opposing predatory lending bills.
In February, the state Senate passed S.B. 185, the Ohio Home Buyer's Protection Act. Among its provisions, the act would make mortgage transactions subject to Ohio's Consumer Sales Practices Act (CSPA), as well as require mortgage brokers and lenders to act in the "best financial interest" of the client.
Meanwhile, the state House passed its own version of the bill, which includes vague and ambiguous standards to guide lenders' conduct of business, lower annual percentage rate (APR) triggers and restricted prepayment penalties, and provides for other caps and controls on prices and fees that would be problematic for lenders if enacted into law, according to Kurt Pfotenhauer, MBA's senior vice president of government affairs.
Although the House version of the bill addressed some of MBA's concerns with S.B. 185, final passage of either version, as is, could result in unintended and adverse consequences for both Ohio lenders and consumers.
"MBA is pleased that members of the Ohio House of Representatives heard many of our concerns about the Senate-passed version of the Ohio Homeowners Protection Act (S.B. 185), and that the resulting House bill addressed some of them," said Pfotenhauer. "Unfortunately, there are still significant issues with both versions of this anti-predatory-lending bill that will make lending in the state of Ohio more difficult for lenders and much more costly for consumers."
Specifically, MBA is concerned that the bill:
* Unnecessarily expands coverage to prime loans as well as high-cost loans, which will result in increased monthly payments for all borrowers;
* Includes subjective standards that will create an uncertain legal and regulatory environment that invites the filing of frivolous lawsuits; and
* Establishes unwarranted caps on fees that will limit the number of affordable credit options available to Ohio's consumers.
With each legislative chamber having passed its own version of the legislation, both will be forced to go to a conference committee for reconciliation following the legislature's return in mid-May.
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|Title Annotation:||Briefing Book|
|Date:||May 1, 2006|
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