April 12, 2002 News Feed 
 
(Please feel free to personalize) 
 
Greetings, this is Rep. _____________. 
 
It was a busy, and somewhat rushed final day on the House floor as 
 
members addressed a number of Senate items and a plethora of House measures 
 
returning from the Senate bearing amendments. Lawmakers spent the better part 
 
of the day either agreeing or disagreeing to the Senate alterations and working out 
 
their differences in conference committees. 
 
Today brought the final resolution for two of the highest profile issues of the 
 
2002 session; predatory lending, and natural gas deregulation. 
 
First up this morning was the conference committee compromise on HB 
 
1361, the Governor's legislative attempt to end the practice of predatory lending 
 
within Georgia. The legislative package sets up a couple of triggers by which a 
 
loan could be deemed as "high cost." The first trigger would be implemented if the 
 
lender charges an interest rate that is higher than 10 percentage points above the 
 
U.S. Treasury yield, or approximately 13 percent. The second trigger would be 
 
pulled if the fees and points charged to the borrower total more than 7 percent of 
 
the total loan. 
 
When such loans are flagged as "high cost," the lenders and brokers offering 
 
the loan would then be barred from: 
 
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Including prepayment fees with the exception of the first two years of 
 
the loan 
 
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Setting up a payment plan whose payments do not decrease the full 
 
amount of interest due 
 
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Padding their profits by increasing interest rates after default 
 
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Approving a loan unless the borrower has been counseled by a third- 
 
party nonprofit organization on the advisability of the loan 
 
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Approving a loan in which the borrower's total monthly debts, 
 
including the loan amount, would exceed 50 percent of the borrower's 
 
monthly gross income 
 
The bill also places four limitations on all home loans offered within 
 
Georgia's borders. First, lending agencies were banned from requiring borrowers 
 
to purchase an expensive form of insurance known as Single Premium Credit 
 
Insurance. Instead, a much less expensive monthly version which offers debt 
 
coverage is permitted. 
 
Secondly, lending institutions would be forbidden to encourage consumers 
 
to default on existing loans. 
 
Third, late payment fees may not be double counted or allowed to multiply 
 
on a single late payment. 
 
Finally, lenders and brokers would be forbidden from charging unreasonable 
 
fees and restricting access to account balance information and payoff amounts. 
 
During its first trip through the House, HB 1361 picked up a number of 
 
amendments which House members felt brought balance to the proposal. Senate 
 
lawmakers, however, removed most of those amendments, virtually returning the 
 
bill to its original form. 
 
A conference committee of House and Senate members was appointed to 
 
find a compromise between the two versions. Conferees ceded to the House 
 
position on many of the amendments in question. Worries arose that some of the 
 
language could have the unintentional consequence of leaving many sub-prime 
 
borrowers without legal options to raise capital or purchase homes. This concern 
 
led conferees to retain the House provision excluding certain points resulting from 
 
fees not being paid to the lender, or any affiliate of the lender, from the equation to 
 
 determine whether a loan is deemed 'high cost.' A reluctance to tie up the courts with foreclosure hearings also led the negotiators to agree with a house amendment removing the 'day-in-court' language mandating all 'high cost' loan foreclosures be conducted through the courts. In an abundance of caution, however, conferees added two weeks to the non-judicial foreclosure process by requiring a notice of foreclosure be sent to the borrower via certified mail 14 days prior to running a foreclosure notice. 
Other House changes were lost in committee negotiations. One such example was an amendment which would have prohibited lenders from approving loans for persons whose total debt load, including the new loan payments, exceeds 48 percent of their gross monthly income. Again, not wishing to hurt the very people the legislation was designed to protect, House and Senate conferees raised that limit to 50 percent. 
As to the right of rescission, House lawmakers had established a three year window from the consummation of the loan in which a borrower could pursue their right to sue a lender for violations of the predatory lending laws. While Senate legislators had extended that to fifteen years, negotiators agreed upon a five year limit. 
Supporters of the compromise touted it as a middle ground approach which protects the homes and life savings of Georgia's citizens against the pirate tactics of predatory lenders, while ensuring that persons with less-than-perfect credit histories still have legal options to borrow money. A majority of members agreed, passing the conference committee report on HB 1361 by a vote of 165-4. 
The other high profile issue on today's calendar was the conference committee's recommendation for HB 1568, which is the Governor's attempt to clear up the problems stemming from the deregulaiton of the natural gas industry. Most notably, the final version creates a "provider of last resort" -- one regulated 
 
 gas company that would be required to accept low income customers. These 
 
economically less fortunate citizens would also receive protection from natural gas 
 
rate spikes thanks to help from the state universal fund and low-income assistance 
 
funds. Finally, the "provider of last resort" would be required to provide service 
 
for persons who have previously been disconnected for not paying their natural gas 
 
bills. 
 
Other aspects of the compromise package include: 
 
$ 
 
Allows EMCs non profit electricity providers to enter into the 
 
natural gas market. It is hoped this increased competition will drive natural 
 
gas prices down throughout the state. 
 
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Creates a Natural Gas Consumer's Bill of Rights which would protect 
 
consumers from fraudulent business practices and guarantee reliable, safe, 
 
affordable gas service with accurate and timely billing. 
 
$ 
 
Would give PSC authority to intervene if marketers are charging 
 
obviously overinflated prices or if three or fewer marketers control more 
 
than 90 percent of the market in any region. 
 
$ 
 
Shifts a portion of the gas distribution expenses from regular citizens 
 
to large industrial consumers through the use of a limited surcharge. 
 
$ 
 
Strictly limits the use of estimated billing by the gas companies 
 
Throughout the life of this issue there have been detractors on both sides of 
 
the fence, with some saying it does not go far enough, and others calling for a 
 
hands-off approach which would allow the market to correct itself. In the end, 
 
however, most members saw the conference committee's compromise position on 
 
HB 1568 as a balanced solution which allows for market correction while 
 
implementing a safety net to ensure no Georgian is left out in the cold. The 
 
conference committee recommendations passed by a vote of 159-3. 
 
Other measures receiving final approval today include: 
 
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HB 498-- restructures the regional mental health/mental retardation 
 
service boards into planning entities, and creates a more direct 
 
funding mechanism for community service boards. 
 
$ 
 
HB 1200-- encourages innovative approaches to education by 
 
facilitating the creation of charter schools throughout the state. 
 
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HB 1444-- removes the sunset provision for bills which allowed 
 
doctors, dentists, and nurses to volunteer their services at free clinics. 
 
$ 
 
HB 945-- authorizes the issuance of a special license plate. The 
 
proceeds of which will fund a statewide dog and cat sterilization 
 
program. 
 
With most issues nailed down, Speaker Tom Murphy slammed the final 
 
gavel at 3:44 p.m. Thus ending what had turned out to be the longest session in at 
 
least three decades. 
 
Reporting from your state capitol this is Rep._________. If you have any 
 
questions or comments please do not hesitate to call me at (404) 656 ( 
 
).