Senate Bill No. 622
(By Senators McCabe, Kessler and Rowe)
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[Introduced February 18, 2002; referred to the Committee
on Banking and Insurance.]
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A BILL to amend article two, chapter forty-six-a of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
one hundred forty, relating to certain nonpurchase money loans
secured by residential real estate.
Be it enacted by the Legislature of West Virginia:
That article two, chapter forty-six-a of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended by adding thereto a new section, designated section one
hundred forty, to read as follows:
ARTICLE 2. CONSUMER CREDIT PROTECTION.
§
46A-2-140. Limitations on certain nonpurchase money loans.
Notwithstanding any provision of this code, a nonpurchase
money consumer loan with an annual percentage rate that exceeds by
six percentage points the yield on United States treasury securities having comparable periods of maturity on the fifteenth
day of the month in which the application for credit is received by
the creditor may be secured by a consensual security interest in
the borrower's principal residence only if the extension of credit:
(a) Does not require the borrower to pay, directly or
indirectly, the total origination fee, points, amortization fee or
broker fee, including yield spread premium or compensation of any
kind to arrange, originate, evaluate, maintain or service the
extension of credit that exceeds, in the aggregate, three percent
of the loan amount; and
(b) Is made with the due regard to the borrower's ability to
repay, including the borrower's current and expected income,
current obligations and employment. A creditor who adheres to a
debt-to-income ratio of forty-five percent shall benefit from a
rebuttable presumption that the creditor made the loan with due
regard to repayment ability; and
(c) Provides for the rebate of unearned points and fees from
the same or affiliated broker and/or lender who made, negotiated or
arranged a loan secured by the borrower's principal residence
within the past twenty-four months. If the broker and/or lender
made, negotiated or arranged a prior loan that was secured by the
borrower's principal residence within the previous twenty-four
months, then he or she must document that the new extension of
credit provides reasonable, tangible net benefit to the borrower after considering all of the circumstances, including the terms of
both extensions of credit, the costs of the new extension of credit
and the borrower's personal circumstances.
For the purposes of this section, "annual percentage rate"
means the annual percentage rate for the loan calculated according
to the provisions of the federal Truth-in-Lending Act, 15 U.S.C.
§
1601 et. seq., and the regulations promulgated thereunder, as the
act and regulations are amended from time to time.
NOTE: The purpose of this bill is to provide limitations on
nonpurchase money consumer loans that may be secured by the
borrower's principal residence.
This section
is new; therefore, strike-throughs and
underscoring have been omitted.