GOVERNOR COMMITS TO FIGHT PREDATORY LENDING
Calls for legislative action to combat abusive and fraudulent mortgage practices

COLUMBUS (January 05, 2006) – Governor Bob Taft today called on the Ohio General Assembly to enact tough measures to prevent unscrupulous lenders from taking advantage of vulnerable consumers, trapping them into unfair home loans that often lead to foreclosure or bankruptcy. Taft presented his plan of action at a meeting of the Hilltop Kiwanis Club in Columbus and asked for legislators to act by the end of the year.

“Predatory lending is turning the American dream into a nightmare for far too many Ohioans,” said Governor Taft. “Strengthening current laws, protecting prospective Ohio home owners and stopping practices that contribute to Ohio’s high foreclosure rates are among my top priorities in 2006.”

Taft’s plan includes expanding the Consumer Sales Practices Act to cover mortgage brokers and loan officers. Currently in Ohio, brokers and lenders are exempted from the law that prohibits deceptive sales practices.

“When Ohioans are making the biggest purchase of their lives, they deserve the same protections they are guaranteed when buying a $10 waffle maker,” said Taft.

Additionally, the Governor’s plan calls for:

• A comprehensive licensing framework for mortgage appraisers that ensures structure, oversight and accountability;
• Requiring a pre-licensing examination for loan officers, closing the loophole that currently allows loan officers to practice on a temporary license before taking exams;
• Extending background checks from a state check to a national check to ensure loan officers have not committed crimes outside Ohio;
• Strengthening conduct requirements for licensed lenders;
• Imposing automatic suspensions for certain breaches of conduct;
• Establishing net worth requirements and increasing bonding requirements for mortgage brokers;
• Cracking down on industry employees holding dual roles that present a conflict of interest, such as acting as a mortgage broker and a real estate agent in the same transaction; and
• Requiring greater disclosure to consumers about the terms of a home loan.

The Governor’s plan builds upon current efforts to regulate the home-buying industry. In 2001, Taft signed Senate Bill 76, requiring the licensing of loan officers for the first time in Ohio history. With legislative approval in 2002, the Department of Commerce created the Office of Consumer Affairs to handle complaints from consumers. The Office also educates consumers about the mortgage process through the “Borrow Smart” campaign and refers consumers to organizations that provide assistance to borrowers. Additionally, in October 2005, Governor Taft directed Department of Commerce Director Doug White to seek an additional $1.5 million to hire 14 additional staff members to build on its current licensing, enforcement and consumer outreach initiatives in the consumer finance industry.

“In Ohio, we will not tolerate criminals and predators seeking to take advantage of people who want to provide a good home for their families,” said Governor Taft.

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