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ALBANY, N.Y. and BOSTON, Mass. – Even as Congress and the U.S. Senate pursue their own agendas to pass legislation protecting consumers from predatory lending, states continue to advance their own measures. New York and Massachusetts are among the latest to join the club. In New York, predatory lending has been a consumer protection priority for a while and on July 2 the state Senate gave final legislative approval of a bill that cracks down on predatory lending by closing current loopholes in state laws frequently used by predatory lenders. Among the provisions of S.7840, it: provides additional disclosures to consumers; provides for an affirmative defense in the case of foreclosure; requires all high cost-home loans to have a legend on the top of the mortgage indicating that it is a high cost-home loan; provides enforcement powers to the Attorney General and the state Banking Superintendent; and allows for a private right of action against the lender or mortgage broker within six years of the origination of the loan and requires those who violate the law to be liable to the borrower for actual damages and statutory damages. The bill was sent to Gov. George Pataki’s desk for his consideration. In Massachusetts, the Division of Banks wrote to the Clerk of the House of Representatives Steven James on June 21 and proposed amendments to the state’s “Unfair and Deceptive Practices in Consumer Transactions” (209 CMR 40.00). Last year, the Division of Banks promulgated High Cost Home Loan regulations that addressed certain abuses in the predatory lending industry. The Division further promulgated additional consumer protections by defining certain unfair and deceptive practices, and these regulations became effective March 22, 2001. The Divisions said its proposed amendments to 209 CMR 40.00 “is intended to complement the substantive high rate loan consumer protection changes” found in another amendment. The Division’s proposed amendments address 15 areas covered under the federal “Truth in Lending” regulation. Among them are: * the definition of high cost home loan; * high cost home loan disclosures; * lower interest rate and loan fee thresholds; * extended high cost home loan regulations to home secured open-end credit; * prohibited loan flipping; * prohibited balloon mortgages with terms of less than seven years; * prohibited loan modification or deferral fees; * prohibited `packing’ of credit insurance and other products; * prohibited the financing of credit insurance and other products; * prohibited the making of loans where the borrower has no reasonable ability or means of repaying it, based on `verified’ income sources; * imposed advertising limitations on high cost home loans; * prohibited oppressive mandatory arbitration provisions. -

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