On May 24, 2006, the Ohio General Assembly passed new legislation to address various newspaper reports of alleged “predatory” lending practices throughout the state of Ohio. This latest legislative effort comes four years after the Ohio General Assembly enacted the Mortgage Brokers Licensure Act (Senate Bill 76) and Predatory Lending legislation (House Bill 386).

The primary focus of the legislation was to give the Ohio Attorney General direct enforcement authority over certain lending activities. The new law went into effect January 1, 2007.

In summary, the bill:

• Expands the application of the Consumer Sales Practices Act to include certain consumer transactions in connection with a residential mortgage.
• Generally prohibits the appraisal of real estate for a mortgage loan without state certification or licensure.
• Prohibits any person from corrupting or improperly influencing the independent judgment of a real estate appraiser with respect to the value of the dwelling offered as security for a mortgage loan.
• Requires that a national criminal background check be conducted on all applicants for a real estate appraiser certificate or license, a mortgage broker certificate of registration, or a loan officer license.
• Modifies the Mortgage Brokers/Loan Officers Law, including with respect to prelicensure education and examination, disclosure of information, record-keeping, prohibited acts, duties and standard of care, pre-hearing suspensions, and enforcement.
• Modifies the Mortgage Loan Law with respect to prepayment penalties and enforcement.
• Expands the application of the Consumer Credit Mortgage Loan Law.
• Modifies the General Usury Statute to prohibit penalties for the prepayment or refinancing of certain residential mortgage obligations.
• Makes revisions to the Title Insurance Law, including with respect to escrow and other accounts, annual independent reviews of such accounts, closing and settlement protection, notice, and record keeping, and deems certain actions by a title insurance agent unfair and deceptive acts or practices in violation of the Consumer Sales Practices Act.
• Permits the Superintendents of Financial Institutions and Real Estate, for purposes of enforcement, to share confidential information about mortgage brokers and loan officers, real estate brokers and salespersons, and real estate appraisers with each other, the Superintendent of Insurance, the Attorney General, and local law enforcement agencies and prosecutors.
• Creates the Consumer Finance Education Board.
• Makes other changes with respect to residential mortgage lending.