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03 LC 30 0598S
The Senate Banking and Financial Institutions Committee offered the following substitute to SB 53:
A BILL TO BE
ENTITLED
AN ACT
AN ACT
To amend Chapter 6A of Title 7 of the Official Code of
Georgia Annotated, the "Georgia Fair Lending Act," so as to provide for changes
in and exclusions from the definition of creditor; to exclude certain fees from
the definition of points and fees; to specify when and against whom a borrower
may assert claims and defenses for violations of the Act; to provide for limits
on liability for violations of the Act under certain circumstances; to provide
for the application of federal law to certain loans; to provide for related
matters; to repeal conflicting laws; and for other
purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF
GEORGIA:
SECTION 1.
Chapter 6A of Title 7 of the Official Code of Georgia
Annotated, the "Georgia Fair Lending Act," is amended by striking paragraph (7)
of Code Section 7-6A-2, relating to definitions, and inserting in its place the
following:
"(7) 'Creditor' means a person who both regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments and is a person to whom the debt arising from a home loan transaction is initially payableor a person who purchases or
is assigned a home loan. Creditor shall also mean any person brokering
a home loan, which shall include any person who directly or indirectly solicits,
processes, places, or negotiates home loans for others or offers to solicit,
process, place, or negotiate home loans for others or who closes home loans
which may be in the person´s own name with funds provided by others and
which loans are thereafter assigned to the person providing the funding of such
loans, provided that creditor. Creditor shall not
include: (A) a servicer; (B) any state or local housing finance agency or any
other state or local governmental or quasi-governmental entity; or (C) a
person who is an attorney providing legal services in association with the
closing of a home
loan."
"(7) 'Creditor' means a person who both regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments and is a person to whom the debt arising from a home loan transaction is initially payable
SECTION 2.
Said chapter is further amended by striking subparagraph (G)
of paragraph (13) of Code Section 7-6A-2, relating to definitions, and inserting
in its place the
following:
"(G) Points and fees shall not include:
(i) Taxes, filing fees, recording, and other charges and fees paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest;
(ii) Bona fide and reasonable fees paid to a person other than the creditor or an affiliate of the creditor for the following: fees for tax payment services; fees for flood certification; fees for pest infestation and flood determination; appraisal fees; fees for inspections performed prior to closing; credit reports; surveys; attorneys´ fees, if the borrower has the right to select the attorney from an approved list or otherwise; notary fees; escrow charges, so long as not otherwise included under subparagraph (A) of this paragraph; title insurance premiums; and fire and hazard insurance and flood insurance premiums, provided that the conditions in 12 C.F.R. 226.4(d)(2) are met.;
(iii) Bona fide fees paid to a federal or state government agency that insures payment of some portion of a home loan including, but not limited to, the Federal Housing Administration, the Department of Veterans Affairs, the United States Department of Agriculture for rural development loans, or the Georgia Housing and Finance Authority."
"(G) Points and fees shall not include:
(i) Taxes, filing fees, recording, and other charges and fees paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest;
(ii) Bona fide and reasonable fees paid to a person other than the creditor or an affiliate of the creditor for the following: fees for tax payment services; fees for flood certification; fees for pest infestation and flood determination; appraisal fees; fees for inspections performed prior to closing; credit reports; surveys; attorneys´ fees, if the borrower has the right to select the attorney from an approved list or otherwise; notary fees; escrow charges, so long as not otherwise included under subparagraph (A) of this paragraph; title insurance premiums; and fire and hazard insurance and flood insurance premiums, provided that the conditions in 12 C.F.R. 226.4(d)(2) are met
(iii) Bona fide fees paid to a federal or state government agency that insures payment of some portion of a home loan including, but not limited to, the Federal Housing Administration, the Department of Veterans Affairs, the United States Department of Agriculture for rural development loans, or the Georgia Housing and Finance Authority."
SECTION 3.
Said chapter is further amended by striking Code Section
7-6A-6, relating to affirmative claims against creditors, and inserting in its
place the
following:
"7-6A-6.
(a) Notwithstanding any other provision of law, where a home loan was made, arranged, or assigned by a person selling home improvements to the dwelling of a borrower, the borrower may assert against the creditor, any assignee, or
holder in any capacity all affirmative claims and any defenses that the
borrower may have against the seller or home improvement contractor, provided
that this subsection shall not apply to loans other than high-cost home loans
unless applicable law requires a certificate of occupancy, inspection, or
completion to be obtained and said certificate is not
obtained.
(b) Notwithstanding any other provision of law, any person who purchases or is otherwise assigned a high-cost home loan shall be subject to all affirmative claims and any defenses with respect to the loan that the borrower could assert against the original creditor or creditors of the loan, provided that this subsection shall not apply if the purchaser or assignee demonstrates by a preponderance of the evidence that a reasonable person exercising reasonable due diligence could not determine that the mortgage was a high-cost home loan. It shall be presumed that a purchaser or assignee has exercised such due diligence if the purchaser or assignee demonstrates by a preponderance of the evidence that the purchaser or assignee:
(1) Has in place at the time of the acquisition of the subject loan, policies that expressly prohibit its purchase or acceptance of assignment of any high-cost home loan;
(2) Requires by contract that a seller or assignor of the home loan to the purchaser or assignee represents and warrants to the purchaser or assignee that either (A) the seller or assignor will not sell or assign any high-cost home loan to the purchaser or assignee or (B) that such seller or assignor is the beneficiary of such a representation and warranty from a previous seller or assignor; and
(3) Exercises reasonable due diligence at the time of purchase or assignment of the home loan, or within a reasonable period of time from the purchase or assignment of the home loan thereafter, intended to determine that the home loan is not a high-cost home loan; or
(4) Satisfies the requirements in paragraphs (1) and (2) of this subsection and establishes that a reasonable person exercising ordinary due diligence could not determine, based on the documentation required by 15 U.S.C. Section 1601, et seq., and the itemization of the amount financed and other disclosure disbursements, that the loan was a high-cost home loan.
(c) Notwithstanding any other provision of law, but limited to amounts required to reduce or extinguish the borrower´s liability under the home loan plus amounts required to recover costs including reasonable attorneys´ fees, a borrowerof a covered home loan, after notice of acceleration or
foreclosure of the loan or if in default more than 60 days, may assert a
violation of this chapter against any creditor or servicer by way of offset in
an original action, as a claim to enjoin foreclosure, as a defense or
counterclaim to an action to collect amounts owed, or to preserve or obtain
possession of the home secured by the home loan acting only in an
individual capacity may assert against the creditor or any subsequent holder or
assignee of the covered home loan:
(1) Within five years of the closing of a covered home loan, a violation of this chapter in connection with the loan as an origianl action or as a defense, claim, or counterclaim after an action to collect on the home loan or foreclose on the collateral securing the home loan has been initiated, the debt arising from the home loan has been accelerated, or the home loan has become 60 days in default; and
(2) At any time during the term of a high-cost home loan, after an action to collect on the home loan or foreclose on the collateral securing the home loan has been initiated, the debt arising from the home loan has been accelerated, or the home loan has become 60 days in default any defense, claim, or counterclaim.
(d) It shall be a violation of this chapter for any person to attempt in bad faith to avoid the application of this chapter by dividing any loan transaction into separate parts or structuring a home loan transaction as an open-end loan for the purpose of evading the provisions of this chapter when the loan would have been a high-cost home loan if the loan had been structured as a closed-end loan or engaging in any other subterfuge with the intent of evading any provision of this chapter.
(e) Nothing in this Code section shall be construed to limit the substantive rights, remedies, or procedural rights available to a borrower against any creditor, assignee, or holder under any other law. The limitations on assignee liability in subsection (b) of this Code section shall not apply to the assignee liability in subsection (c) of this Code section."
"7-6A-6.
(a) Notwithstanding any other provision of law, where a home loan was made, arranged, or assigned by a person selling home improvements to the dwelling of a borrower, the borrower may assert against the creditor
(b) Notwithstanding any other provision of law, any person who purchases or is otherwise assigned a high-cost home loan shall be subject to all affirmative claims and any defenses with respect to the loan that the borrower could assert against the original creditor or creditors of the loan, provided that this subsection shall not apply if the purchaser or assignee demonstrates by a preponderance of the evidence that a reasonable person exercising reasonable due diligence could not determine that the mortgage was a high-cost home loan. It shall be presumed that a purchaser or assignee has exercised such due diligence if the purchaser or assignee demonstrates by a preponderance of the evidence that the purchaser or assignee:
(1) Has in place at the time of the acquisition of the subject loan, policies that expressly prohibit its purchase or acceptance of assignment of any high-cost home loan;
(2) Requires by contract that a seller or assignor of the home loan to the purchaser or assignee represents and warrants to the purchaser or assignee that either (A) the seller or assignor will not sell or assign any high-cost home loan to the purchaser or assignee or (B) that such seller or assignor is the beneficiary of such a representation and warranty from a previous seller or assignor; and
(3) Exercises reasonable due diligence at the time of purchase or assignment of the home loan, or within a reasonable period of time from the purchase or assignment of the home loan thereafter, intended to determine that the home loan is not a high-cost home loan; or
(4) Satisfies the requirements in paragraphs (1) and (2) of this subsection and establishes that a reasonable person exercising ordinary due diligence could not determine, based on the documentation required by 15 U.S.C. Section 1601, et seq., and the itemization of the amount financed and other disclosure disbursements, that the loan was a high-cost home loan.
(c) Notwithstanding any other provision of law, but limited to amounts required to reduce or extinguish the borrower´s liability under the home loan plus amounts required to recover costs including reasonable attorneys´ fees, a borrower
(1) Within five years of the closing of a covered home loan, a violation of this chapter in connection with the loan as an origianl action or as a defense, claim, or counterclaim after an action to collect on the home loan or foreclose on the collateral securing the home loan has been initiated, the debt arising from the home loan has been accelerated, or the home loan has become 60 days in default; and
(2) At any time during the term of a high-cost home loan, after an action to collect on the home loan or foreclose on the collateral securing the home loan has been initiated, the debt arising from the home loan has been accelerated, or the home loan has become 60 days in default any defense, claim, or counterclaim.
(d) It shall be a violation of this chapter for any person to attempt in bad faith to avoid the application of this chapter by dividing any loan transaction into separate parts or structuring a home loan transaction as an open-end loan for the purpose of evading the provisions of this chapter when the loan would have been a high-cost home loan if the loan had been structured as a closed-end loan or engaging in any other subterfuge with the intent of evading any provision of this chapter.
(e) Nothing in this Code section shall be construed to limit the substantive rights, remedies, or procedural rights available to a borrower against any creditor, assignee, or holder under any other law. The limitations on assignee liability in subsection (b) of this Code section shall not apply to the assignee liability in subsection (c) of this Code section."
SECTION 4.
Said chapter is further amended by adding a new Code Section
7-6A-12 to read as
follows:
"7-6A-12.
The provisions of this chapter shall not apply to any loan originated by any bank, trust company, savings and loan, savings bank, or credit union, respectively, that is chartered under the laws of this state or, if chartered by another state, abides by other provisions of Georgia law to the extent federal law precludes or preempts or has been determined to preclude or preempt the application of the provisions of this chapter to any federally chartered bank, trust company, savings and loan, savings bank, or credit union, respectively; provided, however, that the loan is not originated or brokered by an independent mortgage broker."
"7-6A-12.
The provisions of this chapter shall not apply to any loan originated by any bank, trust company, savings and loan, savings bank, or credit union, respectively, that is chartered under the laws of this state or, if chartered by another state, abides by other provisions of Georgia law to the extent federal law precludes or preempts or has been determined to preclude or preempt the application of the provisions of this chapter to any federally chartered bank, trust company, savings and loan, savings bank, or credit union, respectively; provided, however, that the loan is not originated or brokered by an independent mortgage broker."
SECTION 5.
All laws and parts of laws in conflict with this Act are
repealed.