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President
Signs
Predatory
Lending
Bill
On
October
17,
President
George
Bush
signed
the
National
Defense
Authorization
Act,
one
provision
of
which
deals
with
short
term
loans
to
military
families.
This
legislation
is
also
known
as
Chapter
49
of
Title
10,
U.S.
Code,
Section
987
and
will
go
into
effect
October
1,
2007
or
when
Department
of
Defense
regulations
are
made
official,
whichever
comes
first.
This
legislation
is
designed
to
lessen
the
grip
of
predatory
lending
practices
on
service
members
and
their
families.
Some
of
its
key
points
include:
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Interest
rate
is
capped
at
36percent
APR.
This
includes
all
fees,
service
charges,
renewal
charges,
credit
insurance
premiums,
any
ancillary
product
sold
with
any
extension
of
credit
to
a
service
member
or
the
service
member’s
dependent
and
charges
attached
to
the
loan.
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Unlawful
for
creditor
to
roll
over,
renew,
or
refinance
a
PDL.
Cannot
require
borrower
to
waive
any
right
to
legal
recourse
or
submit
to
arbitration.
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Creditor
cannot
require
access
to
accounts,
repayment
by
allotment,
or
the
title
of
a
vehicle
as
security.
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Any
credit
agreement,
promissory
note
or
other
contract
prohibited
under
this
law
is
void
from
inception.
Any
creditor
who
violates
this
law
shall
be
fined
/or
imprisoned.
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This
bill
covers
consumer
credit,
“including
consumer
credit
originated
or
extended
through
the
internet.”
However,
it
doesn’t
cover
foreign
internet
lenders
outside
the
United
States,
and
doesn’t
apply
to
residential
mortgages
or
purchase
of
a
car
or
other
personal
property.
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