Amendments to Idaho Residential Mortgage Practices Act and Credit Code in Effect

BOISE, Idaho – Amendments to the state’s Residential Mortgage Practices Act and the Credit Code that can have significant effects on mortgage brokers and lenders in the state, were effective July 1. Among some of the changes, real estate brokers and salespersons who, as part of the services they receive compensation for, assist homebuyers in applying for a mortgage are now required to obtain a mortgage broker license from the Department of Finance. This was not previously required. The amendments also provide greater enforcement authority for the department for violation of federal mortgage laws to help the department fight predatory lending and eliminate requiring mortgage brokers to maintain a separate bank account for certain fees before closing. In addition, the amendments to the mortgage law prohibits cities and counties from enacting laws for activities such as predatory lending, that are under the Department of Finance jurisdiction. According to Gavin Gee, director of the state’s Department of Finance, “these local laws create havoc with lenders who are, as a result, subjected to not only the varying laws of each state in which they do business, but also the differing city and county laws.” In another significant amendment, payday lenders in the state are now required to obtain a separate license as a payday lender and restrict their business procedures and practices. Payday lenders were previously regulated under the code, they were not required to have a separate license. Payday loans also: may no longer be renewed more than three times; no charges other than the fee can be added to the loan;, clear disclosures must be made to the borrower about the cost of the loan and additional fees that will be charged if the loan isn’t repaid as previously agreed; no charges other than the fee can be added to the loan; borrowers have the right to rescind the loan, at no cost, for one day after the loan is made. While recognizing that payday loans provide an additional source of credit for consumers, Gee said “borrowers should weigh the cost of these loans against their convenience. This new law will help borrowers made informed decisions about whether to obtain credit from a payday lender, and will provide greater consumer protection against unconscionable lending practices.” Regarding the state’s Credit Code, the changes to the law allow banks to designate a particular branch office to accept all garnishments on the bank.