LRBs0358/2
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2003 - 2004 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO 2003 ASSEMBLY BILL 792
February 25, 2004 - Offered by Representative Montgomery.
AB792-ASA1,1,6
1An Act to amend 138.052 (2) (a) 2., 138.052 (9), 138.056 (3) (a), chapter 428
2(title), 428.101 (intro.), 428.101 (3), 428.102 (intro.), 428.102 (2), 428.103 (1)
3(intro.) and 428.106; and
to create subchapter I (title) of chapter 428 [precedes
4428.101] and subchapter II of chapter 428 [precedes 428.202] of the statutes;
5relating to: regulating certain consumer mortgage lenders, granting
6rule-making authority, and providing a penalty.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB792-ASA1, s. 1
7Section
1. 138.052 (2) (a) 2. of the statutes is amended to read:
AB792-ASA1,1,128
138.052
(2) (a) 2.
The Except as provided in s. 428.207, the parties may agree
9that if a prepayment is made within 5 years of the date of the loan, then the lender
10shall receive an amount not exceeding 60 days' interest at the contract rate on the
11amount by which the aggregate principal prepayments for a 12-month period
12exceeds 20% of the original amount of the loan.
AB792-ASA1,2,52
138.052
(9) Chapters 421 to
428 427 and subch. I of ch. 428 do not apply to the
3refinancing, modification, extension, renewal or assumption of a loan which had an
4original principal balance in excess of $25,000 if the unpaid principal balance of the
5loan has been reduced to $25,000 or less.
AB792-ASA1, s. 3
6Section
3. 138.056 (3) (a) of the statutes is amended to read:
AB792-ASA1,2,137
138.056
(3) (a) A variable rate loan involving a mobile home transaction or
8using an approved index may be prepaid at any time in whole or in part without
9penalty. Other variable rate loans may be prepaid in whole or part without penalty
10within 30 days after notice of an increase in the interest rate and
, except as provided
11in s. 428.207, with the prepayment penalty under s. 138.052 (2) (a) 2. and 3. if
12prepayment is made before or after the 30-day period. This paragraph controls if
13there is a conflict with s. 138.052 (2) (a).
AB792-ASA1, s. 4
14Section
4. Chapter 428 (title) of the statutes is amended to read:
AB792-ASA1,2,1715
chapter 428
16
first lien real estate
17and other mortgage loans
AB792-ASA1, s. 5
18Section
5. Subchapter I (title) of chapter 428 [precedes 428.101] of the statutes
19is created to read:
AB792-ASA1,2,2221
Subchapter i
22
first lien real estate loans
AB792-ASA1, s. 6
23Section
6. 428.101 (intro.) of the statutes is amended to read:
AB792-ASA1,2,24
24428.101 Applicability. (intro.) This
chapter subchapter applies to:
AB792-ASA1,3,4
1428.101
(3) Loans made on or after November 1, 1981, by a creditor to a
2customer and which are secured by a first lien real estate mortgage or equivalent
3security interest if the amount financed is $25,000 or less
and if the loan is not subject
4to subch. II.
AB792-ASA1, s. 8
5Section
8. 428.102 (intro.) of the statutes is amended to read:
AB792-ASA1,3,6
6428.102 Definitions. (intro.) In this
chapter subchapter:
AB792-ASA1,3,98
428.102
(2) "Creditor" means a person who regularly engages in, arranges for
9or procures from 3rd persons, loans within the scope of this
chapter subchapter.
AB792-ASA1, s. 10
10Section
10. 428.103 (1) (intro.) of the statutes is amended to read:
AB792-ASA1,3,1211
428.103
(1) (intro.) The following limitations shall apply to all loans subject to
12this
chapter subchapter:
AB792-ASA1,3,15
14428.106 Remedies. (1) Violations of this
chapter subchapter may be enforced
15by a customer subject to this section and ss. 425.308 to 425.311.
AB792-ASA1,3,22
16(2) With respect to a loan subject to this
chapter subchapter, if the court as a
17matter of law finds that any aspect of the transaction, any conduct directed against
18the customer, by the creditor, or any result of the transaction is unconscionable, the
19court shall, in addition to the remedies and penalties set forth in this
chapter 20subchapter, and a penalty not to exceed that specified in s. 428.103 (2), refuse to
21enforce the unconscionable aspect of the transaction or so limit the application of any
22unconscionable aspect or conduct to avoid any unconscionable result.
AB792-ASA1,4,3
23(3) Notwithstanding other provisions of this
chapter subchapter, a customer
24shall not be entitled to recover the specific penalties provided in ss. 428.103 (2) (a)
25and 428.104 (2) (a) if the person violating this
chapter subchapter shows by a
1preponderance of the evidence that the violation was not intentional and resulted
2from a bona fide error notwithstanding the maintenance of procedures reasonably
3adapted to avoid such error.
AB792-ASA1,4,8
4(4) Any action brought by a customer to enforce rights under sub. (1) shall be
5commenced within one year after the date of the last violation of this
chapter 6subchapter, 2 years after consummation of the agreement or one year after the last
7payment, whichever is later. But in no event shall an action be commenced more
8than 6 years after the date of the last violation.
AB792-ASA1,4,15
9(5) The administrator specified in s. 426.103, solely through the department
10of justice, may on behalf of any customer institute an action to enforce this
chapter 11subchapter and to recover the damages and penalties provided for this
chapter 12subchapter. In such action the administrator may obtain an order restraining by
13temporary or permanent injunctions any violation of this
chapter subchapter. This
14subsection shall not be construed to incorporate or grant to the administrator with
15respect to the enforcement of this
chapter subchapter, any of the provisions of ch. 426.
AB792-ASA1, s. 12
16Section
12. Subchapter II of chapter 428 [precedes 428.202] of the statutes is
17created to read:
AB792-ASA1,4,1919
subchapter ii
AB792-ASA1,4,2120
responsible high cost
21
mortgage lending
AB792-ASA1,4,22
22428.202 Definitions. In this subchapter:
AB792-ASA1,4,24
23(1) "Bridge loan" means a loan with a maturity of less than 18 months which
24requires only payments of interest until the time that the unpaid balance is due.
AB792-ASA1,5,2
1(1m) "Business day" has the meaning that is specified under
12 CFR 226.2 (a)
2(6) for purposes of
12 CFR 226.31.
AB792-ASA1,5,4
3(2) "Covered loan" means a consumer credit mortgage loan transaction other
4than an open-end credit plan or reverse mortgage in which all of the following apply:
AB792-ASA1,5,55
(a) The customer is a natural person.
AB792-ASA1,5,76
(b) The debt is incurred by the customer primarily for personal, family, or
7household purposes.
AB792-ASA1,5,108
(c) The loan is secured by a mortgage on, or an equivalent security interest in,
9residential real property, and the residential real property is or will be occupied by
10the customer as the customer's principal dwelling.
AB792-ASA1,5,1111
(d) The terms of the loan provide any of the following:
AB792-ASA1,5,1412
1. That the loan transaction, at the time that the loan is consummated, is
13considered a mortgage under
15 USC 1602 (aa) and regulations adopted thereunder,
14including
12 CFR 226.32.
AB792-ASA1,5,1615
2. That total points and fees payable by the customer at or before the loan
16closing exceed 6 percent of the total loan amount.
AB792-ASA1,5,18
17(3) "Customer" means an individual to whom a covered loan is offered or made.
18"Customer" does not include a surety, guarantor, cosigner, or endorser.
AB792-ASA1,5,19
19(4) "Department" means the department of financial institutions.
AB792-ASA1,5,23
20(5) "Lender" means any person who originates a covered loan and to whom the
21covered loan is initially payable, except that "lender" does not include an assignee
22of a covered loan or any person who, for at least 12 consecutive months, has failed
23to originate any covered loans.
AB792-ASA1,5,24
24(5m) "Licensed lender" means a person licensed under s. 138.09.
AB792-ASA1,5,25
25(6) "Loan originator" has the meaning given in s. 224.71 (1r).
AB792-ASA1,6,1
1(6m) "Local governmental unit" has the meaning given in s. 16.97 (7).
AB792-ASA1,6,2
2(7) "Mortgage banker" has the meaning given in s. 224.71 (3).
AB792-ASA1,6,3
3(8) "Mortgage broker" has the meaning given in s. 224.71 (4).