ANNE C. WALKER, Chief Clerk
AN ACT
To amend chapter 407, RSMo, relating to merchandising practices for certain home improvement loans by adding thereto one new section relating to the same subject, with a penalty provision.
Section A. Chapter 407, RSMo, is amended by adding thereto one new section, to be known as section 407.1090, to read as follows:
407.1090. 1. This section shall be known and may be cited as the "Unfair Home Improvement Loans Act".
2. For the purposes of this section, the following terms mean:
(1) "Consumer", an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family or household purposes;
(2) "Goods", tangible chattel bought or leased for use primarily for personal, family or household purposes, including certificates or coupons exchangeable for such goods and including goods which, at the time of the sale or subsequently, are to be so affixed to real property as to become a part of real property whether or not severable therefrom;
(3) "Home solicitation", any transaction made at the consumer's primary residence, except those transactions initiated by the consumer. A consumer response to an advertisement is not a home solicitation;
(4) "Person", an individual, partnership, corporation, limited liability company, association or other group, however organized;
(5) "Services", work, labor and services for other than a commercial or business purpose and including services furnished in connection with the sale or repair of goods;
(6) "Transaction", an agreement between a consumer and any other person, whether or not the agreement is a contract enforceable by action, and includes the making of, and the performance pursuant to, such agreement.
3. The following unfair method of competition and unfair or deceptive act or practice undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer is unlawful:
(1) The home solicitation of a consumer during which a loan is made encumbering the primary residence of such consumer for the purposes of paying for home improvements when the transaction violates federal consumer credit protection laws and federal Trade Commission regulations that prohibit:
(a) The extension of mortgage credit secured by the consumer's dwelling without regard for the consumer's repayment ability;
(b) Payment under a home improvement contract from amounts extended as credit under a mortgage, except:
a. In the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or
b. At the election of the consumer, by a third party escrow agent in the form of a written agreement signed by the consumer, creditor, and contractor before the date of payment; and
(c) The sale or assignment of certain mortgages without the provision of a notice stating that the mortgage is subject to special rules pursuant to the federal Truth in Lending Act.
4. A third party shall not be liable pursuant to this section, unless:
(1) There was an agency relationship between the party who engaged in the home solicitation and the third party; or
(2) The third party had actual knowledge of, or participated in the unfair or deceptive transaction. A third party who is a holder in due course under a home solicitation transaction shall not be liable pursuant to this section.
5. Any person who violates the provisions of this section is guilty of a class A misdemeanor. In addition to any
fines, penalties or sentences imposed by law, any person who is convicted of, or pleads guilty or nolo contendere to a
violation of this section shall be required to make restitution.
Missouri House of Representatives