Senate votes 48-0 to crack down on predatory lending; protect consumers

January 24, 2008

STATEHOUSE — State Senators passed by a vote of 48-0 today legislation aimed at reducing home foreclosures in Indiana through stricter regulations for mortgage lending. Senate Bill 89 authored by Sen. Connie Lawson (R-Danville) will improve regulations on loan brokers in an effort to eliminate predatory lending in the state.

“Indiana has one of the highest rates of foreclosures in the nation due in part to unethical mortgage practices by some loan brokers,” Lawson said. “It’s my hope this legislation will give Indiana the tools it needs to protect Hoosier borrowers from predatory lending.”

SB 89 will:

* Require all appraisers and mortgage brokers to submit to a federal criminal background check;

* Allow the Securities Commissioner to use a national licensing system for processing applications;

* Prohibit anyone from receiving funds that the person knows were generated as a result of a fraudulent loan transaction;

* Prohibit anyone from filing or causing to be filed a mortgage loan document with any county recording office that contains a misstatement or omits a material of fact;

* Prohibits a loan broker from knowingly releasing or engaging in any reckless or negligent activity with a borrowers personal information; and

* Requires loan brokers to dispose of personal information in such a manner that the information is kept confidential.

Lawson said the bill is the result of the Interim Study Committee on Mortgage Lending Practices and Home Foreclosures, which she chaired this summer. SB 89 will now move to the House of Representatives for further consideration.