Ohio Amends Provisions Regarding Unconscionable Acts or Practices Relating to Residential Mortgages
Ohio has modified provisions regarding unconscionable acts or practices as they relate to residential mortgages. Ohio Revised Code Section 1345.02(A) states “No supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction. Such an unfair or deceptive act or practice by a supplier violates this section whether it occurs before, during, or after the transaction.” An example of a deceptive act applicable to a consumer transaction in connection with a residential mortgage is knowingly failing to provide state or federal disclosures, or knowingly making a misrepresentation on a disclosure. Ohio has added part G to this amended section and stated that “the failure of a supplier to obtain or maintain any registration, license, bond, or insurance required by state law or local ordinance for the supplier to engage in the supplier’s trade or profession is an unfair or deceptive act or practice.”
Additionally, Ohio Revised Code Section 1345.031 now specifically defines unconscionable acts in a consumer transaction in connection with the origination of a residential mortgage whereas before this section previously excluded origination. The amendments to this section did not change or add to the substantive definitions of the unconscionable acts however certain practices in section 1345.031 are now also considered practices that constitute an unconscionable act or practice in connection with a consumer transaction under section 1345.03 of the Revised Code which typically does not apply to a consumer transaction in connection with the origination of a residential mortgage. These practices are:
- “Recommending or encouraging a consumer to default on a mortgage or any consumer transaction or revolving credit loan agreement”
- “Charging a late fee more than once with respect to a single late payment…”
- “Attempting to enforce, by means not limited to a court action, a prepayment penalty in violation of division (C)(2) of section 1343.011 of the Revised Code”
Senate Bill 227 includes many amendments and the full text of the Senate Bill and can be found here: https://www.legislature.ohio.gov/legislation/legislation-summary?id=GA131-SB-227
These provisions are effective on April 5, 2017.
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