HB 1492 -- High Risk Home Loan Act

Sponsor:  George

This bill establishes the High Risk Home Loan Act.  In its main
provisions, the bill:

(1)  Defines "approved credit counselor," "borrower," "good
faith," "high risk home loan," "points and fees," and "total loan
amount";

(2)  Prohibits creditors from making high risk home loans to any
borrower if his or her monthly payment on the loan, including
principal, interest, taxes, insurance, and assessments, combined
with the scheduled payments for all other disclosed debts,
exceeds 50% of the borrower's monthly gross income;

(3)  Requires lenders to verify the borrower's ability to repay
the loan;

(4)  Requires lenders to act in good faith and not employ
deceptive acts or practices;

(5)  Specifies penalty provisions and amounts a lender may
charge;

(6)  Prohibits lenders from:

(a)  Financing insurance premiums;

(b)  Refinancing loans within 12 months unless the borrower
benefits;

(c)  Charging finance points and fees exceeding 6% of the loan;

(d)  Making payments directly to a contractor;

(e)  Making loans where the outstanding balance will increase;

(f)  Charging excessive late fees;

(g)  Requiring more than two payments be paid in advance of the
loan;

(h)  Accelerating loan payments without cause; and

(i)  Making loans without notice to the borrower that he or she
may be able to obtain a loan at a lower cost;

(7)  Specifies the lender's and borrower's duties regarding late
payments and defaults.  Before actions to foreclose or collect
money can be taken, the lender must deliver the borrower a notice
of the right to cure the default, informing the borrower of his
or her rights;

(8)  Establishes the Mortgage Awareness Program within the
Division of Finance and the Division of Credit Unions to provide
counseling and education on residential mortgage loans;

(9)  Requires each servicer of Missouri residential mortgage
loans on or before October 1 and April 1 of each year to report
to the Director of the Division of Finance or the Director of the
Division of Credit Unions the default and foreclosure data of
conventional loans for the six-month period ending June 13 and
December 31 respectively; and

(10)  Specifies that any violation of these provisions is
considered an unlawful practice under Section 407.020, RSMo.

Missouri House of Representatives
93rd General Assembly, 2nd Regular Session
Last Updated November 29, 2006 at 9:43 am