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Introduced Version House Bill 2500 History

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hb2500 intr
H. B. 2500


(By Delegate Louisos)

[Introduced February 18, 2005; referred to the

Committee on Banking and Insurance then the Judiciary.]





A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new section, designated §31A-1-5a, relating to providing that a commercial lender, who forecloses upon or repossesses collateral on a loan, whether the collateral is real or personal property, must consider the loan paid in full at the time the property is foreclosed upon or repossessed; providing that in the event a commercial lender sells a note securing a loan prior to the note's maturity that the debtor on the note may purchase the note at a prorated value that is no more than one percent above the prime rate; and, providing that in the event a commercial lender sells a note prior to maturity that contains a balloon provision, that the balloon provision is no longer enforceable.

Be it enacted by the Legislature of West Virginia:

That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §31A-1-5a, to read as follows:
ARTICLE 1. GENERAL PROVISIONS AND DEFINITIONS.

§31A-1-5a. Foreclosure and repossession limitations of fiduciaries, financial institutions and other persons; lenders right to purchase note sold by lender prior to maturity.

(a) Notwithstanding any other provision of this code to the contrary, banking institutions, fiduciaries, building and loan associations, regulated consumer lenders, insurance companies, fraternal benefit societies and other persons lawfully engaging in the lending and investing business and services shall, in the event of foreclosing or repossessing any real or personal property previously pledged as collateral on a loan, consider the loan paid in full at the time the property is foreclosed upon or repossessed and no further right of action or recourse may exist against the debtor.
(b) Notwithstanding any provision of this code to the contrary, in the event any banking institution, fiduciary, building and loan association, regulated consumer lender, insurance company, fraternal benefit society or other person lawfully engaging in the lending and investing business and services, sells a note securing a loan, currently paid and in good standing, prior to the note's maturity, to another commercial lender, the debtor on the note shall have the option to purchase the note at a prorated value that is no more than one percent over the prime interest rate.
(c) Notwithstanding any other provision of this code to the contrary, in the event a note held by a commercial lender that contains a balloon provision is sold prior to maturity, the balloon provision shall no longer be legally binding, but shall convert to the periodic terms that precede the requirement for the balloon payment unless otherwise agreed by the debtor. For the purpose of this subsection, "balloon provision" means any provision in a commercial loan contract that requires the debtor to pay the total sum left due and owing on the loan, regardless of amount, on a specific date or with the occurrence of a specific contingency.


NOTE: The purpose of this bill is to provide that a commercial lender, who forecloses upon or repossesses collateral on a loan, whether the collateral is real or personal property, must consider the loan paid in full at the time the property is foreclosed upon or repossessed.
The bill also contains provisions that provide that in the event a commercial lender sells a note securing a loan prior to the note's maturity that the debtor on the note may purchase the note at a prorated value that is no more than one percent above the prime rate, and that in the event a commercial lender sells a note prior to maturity that contains a balloon provision, the balloon provision becomes unenforceable.


This section is new; therefore, strike-throughs and underscoring have been omitted.
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