NV Law Won't Assign Liability
A new predatory lending law went into effect in Nevada on Oct. 1, several days after Standard & Poor's said that it will continue to rate structured finance transactions governed by the act.
The law pleased both consumer groups and industry interests even though neither worked closely on its drafting.
"Obviously, if there was a choice between no bill and the bill, many (mortgage lenders) would prefer
no bill. But I also think there is a recognition that predatory lending is happening," said Barbara Buckley, the Democratic assembly member who sponsored the bill. She added that passing a law now is a way of "protecting against even more onerous legislation that could follow."
And while the law is lacking some of the more controversial provisions that consumer advocates have pushed for in other states, Larry Spitler, AARP's assistant state director for Nevada, said that his group was behind it.
The relatively strict AARP model bill was not used in developing AB 284. In comparison to the AARP model, Nevada's legislation is fairly tame.
The main provisions of the law are intended to stop equity stripping, unnecessary refinancing, and the packaging of credit insurance for certain home loans. The trigger for restrictions is the same as the federal HOEPA guidelines, 8% above the corresponding treasury rate.
Assignee liability, which has been the single issue causing the most uproar as states around the country pass predatory lending legislation, was not an issue in Nevada.
It does not contain the type of assignee liability that concerns rating agencies, and S&P will rate loan pools including Nevada home loans with no credit enhancement.
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