HB 96 -- Home Improvement Loans

Sponsor:  Scheve

This bill outlaws certain unfair or deceptive practices relating
to home improvement loans.  Prohibited are home solicitations
where a home improvement loan is made encumbering the person's
home to pay the loan by:

(1)  Extending credit under a mortgage for home improvements
secured by the dwelling without regard for repayment ability;

(2)  Paying a contractor from the proceeds of a mortgage in a
way other than prescribed; or

(3)  Selling or assigning certain mortgages without furnishing
notice that the mortgage is subject to special rules under the
federal Truth in Lending Act.

The bill exempts third parties from liability, except where
there was an agency relationship between the solicitor and the
third party or where the third party had actual knowledge of or
participated in the unfair or deceptive transaction.  Third
party holders in due course under a home solicitation
transaction will not be liable.

Any person violating the provisions of the bill is guilty of a
class A misdemeanor and will be required to make restitution.

The bill also repeals the current audit procedure of a mortgage
broker's books and requires a mortgage broker applying for a
license to file a surety bond or irrevocable letter of credit in
the amount of $100,000 to secure the obligations of the broker
and its agents in connection with servicing a mortgage.

Missouri House of Representatives
Last Updated September 13, 2001 at 2:00 pm