HCS HB 1144 -- MERCHANDISING PRACTICES FOR CERTAIN HOME
IMPROVEMENT LOANS (Scheve)

This substitute 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 the prescribed way; or

(3)  selling or assigning certain mortgages without furnishing
notice that the mortgage is subject to special laws, rules, or
regulations provided by law.

The substitute 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 substitute is guilty
of a class D felony and will be required to make restitution.

FISCAL NOTE:  Cost to General Revenue of less than $100,000 in
FY 2001, FY 2002, and FY 2003.

HCS HB 1144 -- HOME IMPROVEMENT LOANS

SPONSOR:  Schilling (Scheve)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Consumer
Protection and Housing by a vote of 19 to 0.

This substitute 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 the prescribed way; or

(3)  selling or assigning certain mortgages without furnishing
notice that the mortgage is subject to special laws, rules, or
regulations provided by law.

The substitute 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 substitute is guilty
of a class D felony and will be required to make restitution.

FISCAL NOTE:  Cost to General Revenue Fund of less than $100,000
in FY 2001, FY 2002, and FY 2003.

PROPONENTS:  Supporters say that the bill provides consumer
protection from unscrupulous persons making loans for home
improvements.

Testifying for the bill were Representative Scheve; and AARP.

OPPONENTS:  There was no opposition voiced to the committee.

Donna Schlosser, Legislative Analyst

HB 1144 -- Merchandising Practices for Certain Home Improvement
Loans

Co-Sponsors:  Scheve, McClelland

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 and where the practice violates the federal
Truth in Lending Act 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 the prescribed way; 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.