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North Carolina Legislative Update September 2015

September 24, 2015
Consumer Finance
Payday Loans
Bill Law

The 2015 NC General Assembly adjourned yesterday, months after we first expected them to wrap-up their session. They will reconvene for the short session on April 25, 2016.

Because of your calls and letters, three very dangerous bills did not pass:

Bad Bills That Failed

High-Cost Lending - SB 681 (Died)

Bill To Legalize 80 To 125% Loans Never Made It Out Of Committee
Thanks to all of you who took fast and aggressive action to oppose Senate Bill 681, this bill to invite high-cost lenders back into our state died in the Senate Commerce Committee. SB 681, "The Consumer Access to Credit Act”, would have doubled and in some cases tripled the interest rate on consumer installment loans. Though SB 681 did not pass either chamber before the crossover deadline, industry lobbyists continued to work to keep it alive by trying to convince key groups to drop their opposition. They were not successful.

Current state law caps annual percentage rates at around 40% APR (30% interest on the smallest loans and a small origination fee). Under this bill, we would have seen loans with annual percentage rates (APRs) as high as 80% to 125%. By defeating SB 681, we have saved North Carolina families from being trapped in high cost debt.

This bill was opposed by a number of military, veterans, religious and community organizations. A partial list of individuals and groups opposing include: The North Carolina Commander’s Council representing all the Commanders on North Carolina military bases, the NC Military Affairs Commission, the NC Veterans Council, the Navy- Marine Corps Relief Society- Camp Lejeune, the Bishop of the NC Conference of the United Methodist Church, the Episcopal Bishops of North Carolina, the Southern Conference of the United Church of Christ, the NC Council of Churches, Habitat for Humanity of North Carolina, AARP NC, NAACP NC, and the NC Assets Alliance. Thanks to the strong opposition of these and many other groups, SB 681 died in Committee without a vote.

Learn more about SB 681.

Debt Buyer Abuses - SB 511/HB 541 (Died)

Bills To Roll Back Protections Against Debt Buyer Abuses Died
Under a North Carolina law passed in 2009, it is illegal for companies that buy consumer debts to sue the customer if they cannot prove they are suing the right person for the right amount, on a debt that is actually owed. Senate Bill 511 and its companion bill House Bill 541, "Proof Required for Debt/Fees," would have rolled back these protections against debt buyer abuses. These bills did not pass either chamber.

SB 511 received a favorable report from the Senate Judiciary I Committee, but failed to pass the Senate before the crossover deadline. A fee was added to its companion bill, HB 541, so that under House rules it could be considered after the crossover deadline. The bill, referred to the House Finance Committee, was not brought up for a Committee vote.

Before 2009, debt buyers flooded the courts with boiler plate lawsuits, often suing the wrong person for the wrong amount, and often making only half-hearted attempts to notify consumers they were being sued. When consumers didn’t come to court, the debt buyer got a default judgment against them, which prevented the consumer from getting any other credit until the debt buyer was paid.

Strong opposition to rolling back our 2009 protections against debt buyer abuses stopped these bills on the Senate floor and later in the House Finance Committee.

Learn more about HB 541.

Manufactured Home Dealer Abuses - SB 491 (Passed Senate, Failed in House Committee)

Bill To Roll Back Protections Against Manufactured Home Dealer Abuses Fails In House Committee
Senate Bill 491, "Manufactured Home Purchase Agreement Change", passed the Senate under the radar in April. After being referred to several House committees, it was referred to the House Judiciary IV Committee, where it never came up for discussion.

SB 491 would have gutted existing protections against common manufactured home dealer abuses. For example, this bill eliminates protections that require manufactured home dealers to:

  • Promptly return all payments made by the buyer if the dealer reneges on the terms of a signed contract,
  • Promptly return all payments if the buyer exercises their 3-day right to rescind,
  • Record in writing all payments made by the buyer, and
  • Require that financing terms be included in the purchase agreement. Without this, if the financing falls through, buyers will be stuck in the contract and be more vulnerable to predatory lending tactics or losing their deposit.

Strong opposition to rolling back our protections against manufactured home dealer abuses helped stop this bill in the House Judiciary IV Committee.

Learn more about SB 491.

Mortgage Broker Regulation HB 104 & HB 105 (Died)

Bills To Reduce Protections Against Mortgage Broker Abuses Died
House Bill 104, "Eliminate Audited Financial Statements Req." would have eliminated the requirement that mortgage brokers provide audited financial statements to their regulator, the NC Commissioner of Banks. House Bill 105, “Reduce Mortgage Lender Surety Bonds” would have significantly reduced the required amount for surety bonds held by mortgage brokers. These bills, discussed by an earlier study committee, were assigned to the House Banking Committee.

Some members of this committee opposed the proposal to eliminate the requirement of audited financial statements, and this bill, HB 104, did not come up for a vote. HB 105, the bill to reduce surety bond amounts, received a favorable vote in the committee, but for technical reasons, the objections to HB 104 held up HB 105 as well.

Neither bill made it on the list of bills that met crossover.

Learn more about HB 104 or learn more about HB 105.

Wage Garnishment - SB 632 & HB 716 (Died)

Wage Garnishment Put Into Study Committee Bill that Died
North Carolina already allows wage garnishment for certain judgments like child support. Senate Bill 632, "Civil Judgment/ Allow Wage Garnishment," would have drastically expanded wage garnishment for other judgments, putting struggling families at severe financial risk. This bill would have reversed 145 years of state policy, allowing creditors like credit card companies to garnish up to 25% of a debtor’s disposable income each paycheck.

In addition to pushing families into poverty and bankruptcy, this bill would have put employers in the business of debt collection, wasting their time and money garnishing wages. It also would have reduced the incentive of high-cost lenders to carefully underwrite their loans, since they will be standing first in line if the borrower defaults.

When SB 632 did not meet the crossover deadline, House Bill 716, "LRC Study Wage Garnishment," was introduced to require a Legislative Research Commission to study how to implement wage garnishment in our state. As a study bill, it was not required to meet the crossover deadline. HB 716 died in committee.

Learn more about HB 716 or learn more about SB 632.

Troublesome Budget Change

Budget Change Threatens NC Human Relations Commission & State Fair Housing Act

Final Budget Puts NC Human Relations Commission On Watch List
A provision in the Senate budget bill, which passed by a wide margin in mid-June, would have repealed the State Fair Housing Act and eliminated the NC Human Relations Commission, the body charged with investigating and enforcing this state law.

Though the final budget does not go that far, it only authorizes one year of automatic (recurring) funding for the NC Human Relations Commission, and puts the Commission on a watch list for budget cuts in the future.

Policy Watch Investigates summarizes the importance of the State Fair Housing Act in prohibiting discrimination:

The State Fair Housing Act prohibits discrimination when it comes to buying, selling and renting homes, as well as building and retrofitting homes to accommodate those with disabilities and when it comes to government decisions about land use designations and affordable housing policies. The N.C. Human Relations Commission is authorized to investigate complaints of housing discrimination, and seek resolution through settlements or the courts.

Federal fair housing rules would still apply, but North Carolina residents would have to go through a federal Housing and Urban Development office, a process that fair housing advocates say tends to be lengthy and could delay resolutions for citizens.

For more information about this issue, read:

Thank you so much for all you do to keep North Carolinians safe from predatory lenders. With your swift and strong opposition, we were able to hold the line against many attempts to rollback our state consumer protections.