GOVERNOR’S STATEMENT ON SIGNING HOUSE BILL 386

 

COLUMBUS (February 22, 2002)—Governor Bob Taft today signed House Bill 386, making Ohio one of four states to enact a “predatory lending law” intended to protect seniors and vulnerable citizens from being victimized by unscrupulous lenders. Predatory lending takes advantage of people with limited means by enticing them into loans they can ill afford.

 

“This bill is an important first step in protecting Ohio citizens from predatory lending,” Taft said. “We will not tolerate predatory lenders, or loan sharks, who take advantage of senior citizens, people with limited incomes, or people with bad credit histories.”

 

House Bill 386 significantly strengthens Ohio law as follows:

 

·        Lenders must disclose upfront how much is being borrowed over the life of a loan, provide cautionary notices that borrowers could lose their homes if payments are not met, and assure borrowers that completing a loan application does not lock them into accepting loans.

·        Twelve types of unfair terms and conditions are strictly prohibited, including refinancing within one year unless it is in the borrower’s interest, certain pre-payment penalties that would hurt the borrower, and lending without regard to the borrower’s ability to pay.

·        The bill allows borrowers to change their minds and cancel loans within three days without penalty.

·        Makes certain predatory lending activities a felony-level crime.

 

 House Bill 386 also contains three prohibitions that go beyond federal law:

 

·        The bill prohibits financing certain insurance policies.

·        The bill prohibits refinancing certain low interest loans made by a governmental or non-profit entity within 10 years.

·        The bill prohibits lenders from making loans if a mortgage broker is involved in a transaction and the broker has not disclosed certain information about the broker’s services, including costs. 

 

The governor met with Ohio Commerce Director Gary Suhadolnik and directed him to use all his powers to vigorously enforce laws against predatory lending and to stop unfair lending practices in Ohio.  The Governor asked Director Suhadolnik to closely monitor this issue and report back to him and the other members of the study committee created in the bill if additional legal tools are needed to combat predatory lending 

House Bill 386 grants the Department of Commerce the following enforcement powers:

·        To examine the records of lenders that make covered loans

·        Authority to investigate and issue subpoenas.

·        Authority to seek injunctions.

·        Authority to issue cease and desist orders.

·        Authority to issue fines of up to $2,500 per violation and up to $5,000 in the case of multiple violations.  Fines may be doubled if the injured person is 65 or older.

 

The governor also instructed the Commerce Department to be aggressive in educating citizens against falling prey to unscrupulous lenders. The bill provides $800,000 to be used for new educational, enforcement and investigative efforts over the next 18 months.

He also said that statewide enforcement would be more effective than a patchwork of local regulations.  

The governor applauded the leaders in the Ohio Senate and House for strengthening consumer protections.

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Contact:  Joe Andrews, Governor’s Office, at (614) 644-0957.