Agreement Reached to Expand Crackdown on Predatory Lending in National Defense Authorization Act
Agreement Reached to Expand Crackdown on Predatory Lending in National Defense Authorization Act
House Armed Services Committee (HASC) Chairman Duncan Hunter has written Congressman Geoff Davis to inform him that several of his proposals to crack down on predatory lending have been agreed to as part of the conference report on the National Defense Authorization Act that is expected to be completed on Monday, September 25, 2006. The letter is attached.
Commenting on the conference report on the National Defense Authorization Act, Majority Leader John Boehner stated, "This is a stronger bill because of Geoff Davis. Congressman Davis used his seat on the conference committee to strengthen protections for our men and women in uniform. His Financial Services Committee experience and knowledge of banking issues was instrumental in making sure our servicemembers are protected from predatory lenders, and that section of the bill is much more meaningful and comprehensive because of his work."
Congressman Davis stated, "As a former Army enlisted soldier and officer, I support our nation's sevicemembers 100%. I worked with my fellow conferees to develop language that protects the financial futures of our military men and women. As our troops are deployed, they are often faced with difficult financial decisions for themselves and their families. Ensuring that lenders cannot prey on their financial vulnerability is extremely important to me. I want to extend my sincere thanks to Chairman Hunter and my fellow conferees for working with me to strengthen these financial provisions contained in the National Defense Authorization Act. This agreement expands on the provision's original definition of interest' to include all fees and ancillary products used by many predatory lenders in connection with an extension of credit. The expanded definition makes the cap on the annual percentage rate (APR) of interest more meaningful. The conference agreement will prevent installment loan lenders from escaping regulation by charging excessive fees and selling unnecessary products in connection with the extension of credit that are not included in the calculation of APR under the Truth in Lending Act."
Proposals by Davis to expand the Senate language that have been agreed to in conference include:
* Providing unambiguous coverage to any servicemember on active duty regardless of deployment status;
* Including all fees charged in connection with the extension of credit, including credit insurance, premiums, or any ancillary products sold in connection with a loan, in the definition of interest' to make the cap on the allowable annual percentage rate (APR) comprehensive;
* Prohibiting creditors from extending credit if the borrower's legal rights are waived;
* Prohibiting creditors from extending credit if the creditor requires an allotment (automatic withdrawal) as a condition of the extension of credit;
* Prohibiting creditors from extending credit if the borrower is prohibited from prepaying the loan or charged a fee for prepaying; and
* Prohibiting "rollovers."
http://geoffdavis.house.gov/Read.aspx?ID=387