H. B. 3183
(By Delegate Mezzatesta)
[Introduced March 30, 2001; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact section one hundred eleven, article
four, chapter forty-six-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to amend
article four of said chapter by adding thereto a new section,
designated section one hundred ten-b, all relating to consumer
real estate loans and consumer credit reports; prohibiting a
consumer lender from making a loan having real estate as
security without establishing an escrow for taxes and
insurance; and recognizing a consumer credit reporting
business as having a fiduciary relationship with the consumers
it reports upon.
Be it enacted by the Legislature of West Virginia:
That section one hundred eleven, article four, chapter
forty-six-a of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; and that article four of said chapter be amended by adding thereto a new section,
designated section one hundred ten-b, all to read as follows:
ARTICLE 4. REGULATED CONSUMER LENDERS.
§46A-4-110a. Prohibited conduct.
(1) A regulated consumer lender shall not:
(a) Accept or receive deposits or sell or offer for sale its
secured or unsecured evidences or certificates of indebtedness;
(b) Pay any fees, bonuses, commissions, rewards or other
consideration to any person, firm or corporation for the privilege
of using any plan of operation, scheme or device for the
organization or carrying on of business under this article, or the
use of any name, trademark or copyright to be so used: Provided,
That nothing herein prevents a regulated consumer lender from
agreeing in connection with a loan to pay a broker fee, finders fee
or dealer participation fee, or to split the origination fee or
points paid: Provided, however, That the fee or fee split is
disclosed to the borrower and where proper is included in the
finance charge; or
(c) Fail to disclose the amount of a payoff of an existing
loan within three business days of receiving a request for such
information from either the borrower or an agent acting on behalf
of the borrower; or
(d) Fail to pay the taxes and any hazard insurance escrowed as
required under the terms of the loan. Failure to so pay shall result in a ten thousand dollar penalty.
(2) Unless preempted by federal law, no consumer loan by a
regulated consumer lender may contain any scheduled balloon payment
as set forth in this chapter. Nor may any regulated consumer
lender loan contain terms of repayment which result in negative
amortization: Provided, That nothing herein prevents unequal
payment schedules resulting from a variable rate loan or a
revolving line of credit.
(3) A regulated consumer lender may not make revolving loans
for the retail purchase of consumer goods and services by use of a
lender credit card.
§46A-4-110b. Consumer credit reporting business; relationship to
consumer.
A consumer credit reporting business stands in its
relationship with the consumers upon which it reports as a
fiduciary, which shall exercise reasonable care to make no
erroneous reports to third parties regarding the consumer's credit
standing and will take care to promptly correct any erroneous
report.
NOTE: The purpose of this bill is to protect consumers from
financial difficulties in the payment of real estate taxes and
hazard insurance premiums and to place credit reporting businesses
in a relationship with consumers that will create a duty in the business that will create a cause of action for the consumer if
violated.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§46A-4-110b is new; therefore, strike-throughs and
underscoring have been omitted.