02RS SB145


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SB 145 (BR 1868) - G. Neal

     AN ACT relating to home loans.
     Create new sections of KRS Chapter 286 to require lenders making high-cost home loans to disclose the annual percentage rate and that if the borrower obtains the loan the lender will have a mortgage on the borrower's home; prohibit a payment schedule that does not fully pay off the balance by the end of the term for a loan with a term of less than seven years; prohibit a payment schedule that causes the principal balance to increase; prohibit a payment schedule that consolidates two or more payments and pays them in advance from the proceeds; prohibit an increase in the interest rate after default or default charges of more than 5% of the amount in default; prohibit an interest refund calculated by a method less favorable than that allowed in federal law; prohibit a prepayment penalty except in the first three years of a loan; prohibit a mandatory arbitration clause or a waiver of participation; prohibit a call provision that allows the lender to accelerate the indebtedness; require the lender who makes high-cost home loans to report annually the borrower's payment history to a nationally recognized consumer credit reporting agency; restrict a lender's payment to a contractor under a home improvement contract from the proceeds of the loan; prohibit the lender from assigning or selling the loan without notifying assignee or purchaser that the loan is subject to this Act; restrict the prepaid finance charges; prohibit a lender from charging fees to modify, renew, extend, or amend the loan if the loan will still be a high-cost home loan; prohibit the lender from making the loan unless the lender believes the borrower will be able to make the scheduled payments; prohibit the lender from advertising that refinancing preexisting debt with a high-cost home loan will reduce the borrower's aggregate monthly debt payment without disclosing the loan may increase the number of the borrower's monthly payments and the amount paid over the term of the loan; prohibit the lender from recommending default on an existing debt prior to closing of a loan that refinances an existing debt or loan; prohibit making a loan that refinances an existing loan unless the high-cost home loan provides a benefit to the borrower; prohibit making a loan with an unconscionable rate of interest; prohibit a lender from charging fees for services not actually performed or which are not reasonable; require lenders of high-cost home loans on and after January 1, 2003, that offer the borrower the option to purchase insurance on a prepaid single premium basis to also offer the option of purchasing insurance on a monthly premium basis; allow borrower to cancel insurance and receive refund of premiums; require lender to refund or credit the borrower for any default charges, prepayment penalties, or prepaid finance charges; restrict persons licensed by the Department of Financial Institutions that make first mortgage loans in the amount of prepaid finance charges; authorize the commissioner to impose civil penalties; establish civil liability to consumers.

     Jan 29-introduced in Senate
     Feb 1-to Banking and Insurance (S)

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