Press Releases

For Immediate Release
April 16, 2004 Contact: Cheryl Weiss
(608) 264-7875

Predatory Lending Bill Signed into Law

Governor Doyle signs bill increasing restrictions on lenders who make high cost mortgage loans

(Madison) - Governor Doyle drew applause from industry representatives and consumer advocates when he signed Assembly Bill 792, the predatory lending bill. The Secretary of the Department of Financial Institutions, Lorrie Keating Heinemann, congratulated the Governor saying, "Assembly Bill 792 is a great example of meaningful legislation combating an issue that negatively impacts our communities," and added, "I am so pleased that all the interested parties worked with the legislators to deliver this bill to Governor Doyle."

Among other provisions, Assembly Bill 792:

  • Increases the number of loans that fall under the new restrictions by expanding the definition of a "high cost mortgage loan";

  • Requires a lender to consider a borrower's ability to repay the high cost loan, not merely the equity in their home;

  • Limits prepayment penalties to within the first 36 months of the loan and requires the option of a loan without a prepayment penalty;

  • Prohibits balloon payments, the financing of single premium credit insurance, the refinancing of zero interest loans, loan flipping and the enforcement of security interests on household goods;

  • Provides parity for state-chartered, federally insured depository institutions.

"Homeowners are the cornerstone of our economy and these new restrictions help prevent them from being taken advantage of," Keating Heinemann added.

Governor Doyle also vetoed Assembly Bill 665, which made some changes to the regulations of the payday lending industry. Secretary Keating Heinemann stated, "We did not feel that AB 665 would be an effective piece of legislation" and added, "many states have found a way to protect consumers from getting trapped into long-term payday debt while maintaining a profitable payday lending sector. We can achieve that type of compromise in Wisconsin."

Wisconsin is one of only a few states that do not have stricter regulations on the payday lending industry. For example, Assembly Bill 665 included a maximum loan amount of $5,000 whereas the average maximum amount across other states with payday lending laws is around $500. The bill included a limit on loan rollovers but not an enforcement mechanism for that limit or a limit on the number of loans a borrower may have out at one time.

Also enacted were:

-- Assembly Bill 793, which exempts all intangible property, such as bank accounts, of a nonresident decedent from Wisconsin's estate tax.

-- Assembly Bill 890, which allows members of a nonprofit corporations to meet and vote by electronic communications.

-- Assembly Bill 279, which sets competency exam and continuing education requirements for loan originators.

-- Senate Bill 320, which puts in place safeguards in annuity transactions involving senior citizens.

-- Senate Bill 326, which bans the deceptive or misleading use of logos from a state bank, savings and loan or credit union in marketing materials.

-- Senate Bill 381, which allows state banking regulators to accept federal regulatory examinations of state savings banks, as allowed in current law for other state-chartered institutions.

-- Senate Bill 492, which the "Uniform Prudent Investor Act" in Wisconsin giving personal representatives, trustees, conservators and guardians of estates more investment flexibility.