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State Representative Jim Davnie
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-0173
For more information contact: Charlene Briner 651-296-5809
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PREDATORY LENDING BILL TAKES ANOTHER STEP FORWARD IN MINNESOTA HOUSE
ST. PAUL - A bill to protect consumers from predatory lenders received strong bipartisan support in the Minnesota House today, passing on a vote of 124 - 9.
"This bill strikes a balance between protecting consumers while ensuring continued access to credit, and a robust lending market for both borrowers and the lending industry," said Rep. Jim Davnie, chair of the House Labor and Consumer Protection Division and chief author of the bill.
According to Davnie, a leading consumer protections advocate in the Legislature, House File 1004 provides several protections to consumers; it clamps down on deceptive lending practices and requires full payment disclosure; prevents fast turnover of loans; ensures that lender fees, including payments to mortgage brokers are capped at 5% of total loan cost; and prohibits negative amortization which leads to monthly payments that don't cover the accrued interest on a loan; and ensures that brokers work in the best interests of their client.
"We've simply applied common sense standards for Minnesota consumers regarding the underwriting and marketing of home loans," said Davnie. We're making sure that home loans will be based on a borrowers' ability to pay, and that the borrower will get clear information to understand the transaction. It aligns the interests of brokers and borrowers, consumers and lenders to provide clear, objective standards that everyone can agree on."
The recent wave of foreclosures across Minnesota and the nation have received widespread attention in recent weeks, and have added to economic uncertainty on Wall Street, lending urgency to Davnie's pursuit of quick legislative action. He cited a recent 250-point drop in the stock market after reports showed rising mortgage delinquencies.
"This legislation is a powerful tool for consumers, for the lending industry, and for communities," said Davnie. "Passage of this bill is a testament to all of the stakeholders and advocates who worked to see this through, including Attorney General Lori Swanson and her staff and members of the Attorney Generals' Predatory Lending Study Group, and to the homeowners who shared their compelling stories and paved the way for fairer lending practices for future homeowners."
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