AB792,5,23 23428.102 Definitions. (intro.) In this chapter subchapter:
AB792, s. 9 24Section 9. 428.102 (2) of the statutes is amended to read:
AB792,6,2
1428.102 (2) "Creditor" means a person who regularly engages in, arranges for
2or procures from 3rd persons, loans within the scope of this chapter subchapter.
AB792, s. 10 3Section 10. 428.103 (1) (intro.) of the statutes is amended to read:
AB792,6,54 428.103 (1) (intro.) The following limitations shall apply to all loans subject to
5this chapter subchapter:
AB792, s. 11 6Section 11. 428.106 of the statutes is amended to read:
AB792,6,8 7428.106 Remedies. (1) Violations of this chapter subchapter may be enforced
8by a customer subject to this section and ss. 425.308 to 425.311.
AB792,6,15 9(2) With respect to a loan subject to this chapter subchapter, if the court as a
10matter of law finds that any aspect of the transaction, any conduct directed against
11the customer, by the creditor, or any result of the transaction is unconscionable, the
12court shall, in addition to the remedies and penalties set forth in this chapter
13subchapter, and a penalty not to exceed that specified in s. 428.103 (2), refuse to
14enforce the unconscionable aspect of the transaction or so limit the application of any
15unconscionable aspect or conduct to avoid any unconscionable result.
AB792,6,21 16(3) Notwithstanding other provisions of this chapter subchapter, a customer
17shall not be entitled to recover the specific penalties provided in ss. 428.103 (2) (a)
18and 428.104 (2) (a) if the person violating this chapter subchapter shows by a
19preponderance of the evidence that the violation was not intentional and resulted
20from a bona fide error notwithstanding the maintenance of procedures reasonably
21adapted to avoid such error.
AB792,7,2 22(4) Any action brought by a customer to enforce rights under sub. (1) shall be
23commenced within one year after the date of the last violation of this chapter
24subchapter, 2 years after consummation of the agreement or one year after the last

1payment, whichever is later. But in no event shall an action be commenced more
2than 6 years after the date of the last violation.
AB792,7,9 3(5) The administrator specified in s. 426.103, solely through the department
4of justice, may on behalf of any customer institute an action to enforce this chapter
5subchapter and to recover the damages and penalties provided for this chapter
6subchapter. In such action the administrator may obtain an order restraining by
7temporary or permanent injunctions any violation of this chapter subchapter. This
8subsection shall not be construed to incorporate or grant to the administrator with
9respect to the enforcement of this chapter subchapter, any of the provisions of ch. 426.
AB792, s. 12 10Section 12. Subchapter II of chapter 428 [precedes 428.202] of the statutes is
11created to read:
AB792,7,1212 chapter 428
AB792,7,1313 subchapter ii
AB792,7,1414 predatory mortgage lending
AB792,7,15 15428.202 Definitions. In this subchapter:
AB792,7,17 16(1) "Bridge loan" means a loan with a maturity of less than 18 months which
17requires only payments of interest until the time that the unpaid balance is due.
AB792,7,19 18(1m) "Business day" has the meaning that is specified under 12 CFR 226.2 (a)
19(6) for purposes of 12 CFR 226.31.
AB792,7,21 20(2) "Covered loan" means a transaction that involves real property located in
21this state and that is subject to 12 CFR 226.32.
AB792,7,23 22(3) "Customer" means an individual to whom a covered loan is offered or made.
23"Customer" does not include a surety, guarantor, cosigner, or endorser.
AB792,7,24 24(4) "Department" means the department of financial institutions.
AB792,8,4
1(5) "Lender" means any person who originates a covered loan and to whom the
2covered loan is initially payable, except that "lender" does not include an assignee
3of a covered loan or any person who, for at least 12 consecutive months, has failed
4to originate any covered loans.
AB792,8,5 5(5m) "Licensed lender" means a person licensed under s. 138.09.
AB792,8,6 6(6) "Loan originator" has the meaning given in s. 224.71 (1r).
AB792,8,7 7(7) "Mortgage banker" has the meaning given in s. 224.71 (3).
AB792,8,8 8(8) "Mortgage broker" has the meaning given in s. 224.71 (4).
AB792,8,9 9(9) "Municipality" means a county, city, village, or town.
AB792,8,10 10(10) "Servicer" has the meaning given in 12 USC 2605 (i) (2).
AB792,8,19 11428.203 Prohibitions on and requirements of lenders and assignees.
12(1) Balloon payments. Except as otherwise provided in this subsection, no lender
13may make a covered loan to a customer that requires, or that permits the lender to
14require, a payment that is more than twice as large as the average of all earlier
15scheduled payments, unless the payment becomes due at least 60 months after the
16date on which the loan is made. This subsection does not apply to a loan under which
17the payment schedule is adjusted to account for seasonal or irregular income of the
18customer or to a bridge loan that the customer obtains for the purpose of facilitating
19the acquisition or construction of a dwelling as the customer's principal dwelling.
AB792,8,23 20(2) Call provision. No lender may make a covered loan to a customer that
21permits the lender or an assignee of the loan to demand payment of the outstanding
22balance before the original maturity date, except that a covered loan may permit a
23lender or assignee to so demand as a result of any of the following:
AB792,8,2424 (a) The customer's failure to make payments required under the loan.
AB792,9,2
1(b) A provision in the loan agreement permitting the lender or assignee to make
2such a demand after the sale of real property that is pledged as security for the loan.
AB792,9,43 (c) Fraud or material misrepresentation by the customer in connection with the
4loan.
AB792,9,65 (d) Any act or omission by the customer that adversely affects the lender's or
6assignee's security for the loan or any right of the lender or assignee in such security.
AB792,9,10 7(3) Negative amortization. No lender may make a covered loan to a customer
8with a payment schedule that causes the principal balance to increase, except that
9this subsection does not prohibit such a payment schedule as a result of a temporary
10forbearance or loan restructuring consented to by the customer.
AB792,9,13 11(4) Increased interest rate. No lender may make a covered loan to a customer
12that imposes or permits the lender or an assignee of the loan to impose an increase
13in the interest rate as a result of the customer's default.
AB792,9,16 14(5) Advance payments. No lender may make a covered loan to a customer that
15includes a payment schedule that consolidates more than 2 scheduled payments and
16pays them in advance out of the proceeds of the loan.
AB792,9,24 17(6) Repayment ability. No lender may engage in a pattern or practice of making
18covered loans to customers who have collateral but who, considering their current
19and expected income, current obligations, and employment status, would be unable
20at the time of application to make the scheduled payments under the loans. In
21assessing a customer's ability to make scheduled payments, a lender may consider
22any expected income of the customer from any source, together with information
23from the customer's credit reports, income tax returns, financial account statements,
24wage statements, and any other source which the lender is authorized to access and

1which may provide the lender with information concerning the customer's income
2and current obligations.
AB792,10,13 3(7) Refinancing of existing covered loan. No lender may make a covered loan
4that refinances an existing covered loan that the lender made to the same customer,
5unless the refinancing takes place at least one year after the date on which the loan
6being refinanced was made or the refinancing is in the interest of the customer. No
7assignee or servicer of a covered loan may make a covered loan that refinances the
8covered loan, unless the refinancing takes place at least one year after the date on
9which the loan being refinanced was made or the refinancing is in the interest of the
10customer. No lender, assignee of a covered loan, or servicer may engage in a pattern
11or practice of arranging for the refinancing of covered loans by affiliates or
12unaffiliated creditors, modifying covered loans, or any other acts for the purpose of
13evading this subsection. This subsection does not apply to bridge loans.
AB792,10,20 14(8) Payments to home improvement contractors. No lender under a covered
15loan made to a customer may pay proceeds of the loan to a person who is under
16contract to make improvements to an existing dwelling, unless the payment is made
17by an instrument that is payable to the customer or jointly to the customer and the
18person who is under contract or, with the consent of the customer, the payment is
19made through a 3rd party in accordance with a written agreement signed by the
20customer, the lender, and the person under contract.
AB792,10,22 21(9) Unregistered mortgage bankers and brokers. No lender may knowingly
22contract with any person for the performance of duties in violation of s. 224.72 (1m).
AB792,11,2 23428.204 False statements. No lender, licensed lender, loan originator,
24mortgage banker, or mortgage broker may knowingly make, propose, or solicit

1fraudulent, false, or misleading statements on any document relating to a covered
2loan.
AB792,11,7 3428.206 Recommending default. No lender, licensed lender, loan originator,
4mortgage banker, or mortgage broker may recommend or encourage an individual
5to default on an existing loan or other obligation before and in connection with the
6making of a covered loan that refinances all or any portion of that existing loan or
7obligation.
AB792,11,11 8428.207 Prepayment. (1) Except as provided in sub. (2), a customer may
9prepay a covered loan at any time without penalty if the payment is made in the
10context of a refinancing of the covered loan and if the covered loan is held by the
11refinancing lender.
AB792,11,14 12(2) Subsection (1) does not prohibit the servicer of a covered loan from imposing
13a prepayment penalty, unless the servicer is also the lender that holds the loan at the
14time of the refinancing.
AB792,11,17 15428.208 Disclosure to customers. At least 3 business days before making
16a covered loan to a customer, a lender shall ensure that the customer has been given
17the following notice, in writing and in a clear and conspicuous format:
AB792,11,1818 DISCLOSURE TO BORROWER
AB792,11,2519 A. If you obtain this loan, the lender will have a mortgage on your home. You
20could lose your home and any money that you have put into it if you do not meet your
21obligations under this loan. Mortgage loan rates and closing costs and fees vary
22based on many factors, including your particular credit and financial circumstances,
23your earnings history, your employment status, the loan-to-value ratio of the
24requested loan, and the type of property that will secure your loan. The loan rate and
25fees could also vary based on which lender you select.
AB792,12,4
1B. As a consumer you should shop around and compare loan rates and fees.
2You should also consider consulting a qualified independent credit counselor or other
3experienced financial adviser regarding the rate, fees, and provisions of this
4mortgage loan before you proceed.
AB792,12,125 C. You are not required to complete this loan agreement merely because you
6have received these disclosures or have signed a loan application. If you proceed with
7this mortgage loan, you should also remember that you may face serious financial
8risks if you use this loan to pay off credit card debts or other debts in connection with
9this transaction and then subsequently incur significant new debt. If you continue
10to accumulate debt after this loan is made and then experience financial difficulties,
11you could lose your home and any equity that you have in it if you do not meet your
12mortgage loan obligations.
AB792,12,1613 D. Property taxes and homeowner's insurance are your responsibility. Some
14lenders may require you to escrow money for these payments. However, not all
15lenders provide escrow services for these payments. You should ask your lender
16about these services.
AB792,12,1917 E. Your payments on existing debts contribute to your credit ratings. You
18should not accept any advice to ignore your regular payments to your existing
19creditors.
AB792,12,22 20428.209 Municipal authority. (1) Authority limited. No municipality may
21enact an ordinance or adopt a resolution regulating a matter specifically governed
22by this subchapter or by a rule promulgated under this subchapter.
AB792,13,2 23(2) Retroactive effect. If a municipality has in effect on the effective date of
24this subsection .... [revisor inserts date], an ordinance or resolution that is

1inconsistent with sub. (1), the ordinance or resolution does not apply and may not be
2enforced.
AB792,13,4 3428.210 Administration and penalties. (1) Rules. The department may
4promulgate rules for the administration of this subchapter.
AB792,13,17 5(2) Investigations. (a) At any time that the department has reason to believe
6that a person has engaged in or is about to engage in an act that violates this
7subchapter, the department may investigate. In performing an investigation under
8this paragraph, the department may administer oaths or affirmations, subpoena
9witnesses, compel their attendance, adduce evidence, and require the production of
10any matter, including the existence, description, nature, custody, condition, and
11location of any books, documents, or other tangible things, and the identity and
12location of persons having knowledge of relevant facts, or any other matter
13reasonably calculated to lead to the discovery of admissible evidence. The
14department may access and examine such books, documents, or other tangible
15things. In any civil action brought on behalf of the department based on evidence
16obtained in such an investigation, the department may recover the costs of
17performing the investigation if the department prevails in the action.
AB792,13,2018 (b) If 5 or more persons file a verified complaint with the department alleging
19that a person has violated this subchapter, the department shall immediately
20commence an investigation pursuant to par. (a).
AB792,14,221 (c) If the records of a person who is subject to an investigation pursuant to par.
22(a) are located outside of this state, the person at the person's option shall either
23make them available to the department at a convenient location within this state or
24pay the reasonable and necessary expenses for the department to examine them at
25the place where they are located. The department may designate representatives,

1including comparable officials of the state in which the records are located, to inspect
2them on the department's behalf.
AB792,14,63 (d) At the request of the department of financial institutions and upon
4reasonable notice to all affected persons, the department of justice may apply to any
5court of record for an order compelling compliance if a person fails to obey a subpoena
6or to give testimony pursuant to par. (a).
AB792,14,16 7(3) Enforcement and penalties. (a) The department may serve a notice of a
8hearing that complies with s. 227.44 (1) and (2) on a person if the department
9reasonably suspects that the person has violated this subchapter. The department
10may receive complaints alleging violations of this subchapter. A hearing conducted
11pursuant to a notice under this paragraph shall be conducted in the manner specified
12for a contested case, as defined in s. 227.01 (3), under ss. 227.44 to 227.50. Except as
13provided in sub. (4), if the person fails to appear at the hearing or if upon the record
14made at the hearing the department finds that a violation has been established, the
15department may issue and serve on the person an order specifying any of the
16following:
AB792,14,1817 1. That the person must cease and desist from the violation or practice and
18make restitution for any actual damages suffered by a customer.
AB792,14,2119 2. That the person must forfeit not more than $1,000 per violation or, if the
20person willfully or knowingly violated this subchapter, not less than $1,000 nor more
21than $10,000 per violation.
AB792,14,2222 3. That the person must pay to the department the costs of its investigation.
AB792,14,2423 4. That a license, registration, or certification issued by the department to the
24person is suspended or revoked or will not be renewed.
AB792,15,3
15. That any individual who is responsible for the violation must be removed
2from working in any capacity related to the violation or related to activities regulated
3by the department.
AB792,15,44 6. Any additional conditions that the department considers reasonable.
AB792,15,65 (b) An order under par. (a) is effective upon service on the person and may be
6appealed under s. 220.035.
AB792,15,87 (c) The department of justice, at the request of the department of financial
8institutions, may bring an action to enforce an order issued under par. (a).
AB792,15,10 9(4) Safe harbor. It is a defense to any alleged violation of this subchapter if
10the person alleged to have committed the violation establishes all of the following:
AB792,15,1111 (a) That the person acted in good faith while committing the violation.
AB792,15,1712 (b) That, no later than 60 days after the discovery of the violation and before
13any investigation or other enforcement action by the department under this section,
14the person notified the affected customer of the violation and either made
15appropriate adjustments to the loan to bring the loan into compliance with this
16subchapter or changed the terms of the loan in a manner beneficial to the customer
17so that the loan is no longer a covered loan.
AB792, s. 13 18Section 13. Initial applicability.
AB792,15,2119 (1) This act first applies to loans for which applications are received by a lender,
20as defined in section 428.202 (5) of the statutes, as created by this act, on the effective
21date of this subsection.
AB792, s. 14 22Section 14. Effective date.
AB792,15,2423 (1) This act takes effect on the first day of the 10th month beginning after
24publication.
AB792,15,2525 (End)
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