Consumer advocates and business interests are clashing on legislation that would extend the state's Consumer Sales Practices Act to much of Ohio's mortgage-lending industry.

The measure, sponsored by state Sen. Joy Padgett, a Coshocton Republican, "will do more to prevent predatory lending and give victims access to recovery than anything this body has adopted before," said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio.

Speaking Tuesday to the Senate Finance Committee, which is expected to approve the bill and forward it to the full Senate for consideration today, Faith said the measure is needed.

But the Ohio Chamber of Commerce opposes the measure, particularly a provision that would force mortgage brokers and lenders to act in the best interest of their borrowing clients instead of their businesses' shareholders.

"In our view, this proposed new duty to act in the best financial interest of their clients or borrowers significantly alters the primary duty of loyalty that is already owed by a company ... to its shareholders," said a letter released from the chamber to senators on the finance committee.

Padgett, who sits on the finance panel, said she expects the committee to make minor changes to the bill.

Predatory lending

The measure comes amid concerns of so-called "predatory lending," described as deceptive, high-cost home loans with excessive interest rates, fees and penalties.

Predatory lending has grown with below-prime loans, which are offered at a higher cost than conventional loans to customers who have had credit problems, industry critics say.

According to a legislative analysis, the bill would modify the application of the Consumer Sales Practices Act to include mortgage brokers and loan officers employed by nondepository lending institutions.

The measure also would prohibit the appraisal of real estate without state certification or licensing and would require that national criminal background checks be performed on all mortgage broker, loan officer or real estate applicants.

Bipartisan support

Padgett praised the bipartisan cooperation on the measure.

Senate Democrats say they are seeking some minor changes to the bill, but are otherwise supportive.

"I think we need to get help to people who are being hurt," said state Sen. Charles Wilson, a St. Clairsville Democrat who also sits on the finance committee.

Gov. Bob Taft has supported the thrust of the measure.

In his State of the State address earlier this year, Taft called for legislative passage of a measure that would protect home buyers by licensing appraisers, enhancing disclosure and banning deceptive sales practices.

Through a spokeswoman, House Speaker Jon Husted, a Kettering Republican, said he is committed to passing a bill to fight predatory lending, and Republicans, who control the House, are discussing such a measure.

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