HOME LOAN PROTECTION ACT

The subprime (that is, non-prime or below “A” rated credit) mortgage lending industry

has grown significantly in recent years, expanding from a $35 billion industry in 1994

into a $140 billion industry in 2000. Subprime mortgages currently represent 13

percent of total mortgage originations, an increase from four percent of originations in

1994. A recent study found that older borrowers were three times more likely to hold

a subprime mortgage than borrowers younger than 35 years of age.1

A combination of factors account for the growth in the subprime mortgage lending

industry. These factors include: increased home equity and homeownership,

particularly in minority and low-income communities; federal preemption and

deregulation of state usury ceilings; elimination of the consumer loan tax deduction;

and increased availability of capital through securitization.

There is increasing concern about subprime lending for several reasons, including

growing evidence of abusive lending practices in the subprime lending market.

Practices such as charging exorbitant fees and interest rates often occur when

subprime borrowers are unsure about their credit history and loan eligibility or are

unaware of mortgage details (balloon payments and prepayment penalties, for

example).

HOME LOAN AND MORTGAGE DISCLOSURE ACT 63 OF 2000

  HOME LOAN AND MORTGAGE DISCLOSURE ACT 63 OF 2000

[ASSENTED TO 8 DECEMBER 2000]

[DATE OF COMMENCEMENT: TO BE PROCLAIMED]

(English text signed by the President)

ACT

To promote fair lending practices, which require disclosure by financial

institutions of information regarding the provision of home loans; to establish an

Office of Disclosure; and to provide for matters connected therewith.

Preamble

WHEREAS, in terms of section 9 of the Constitution-

(a) everyone is equal before the law and has the right to

equal protection and benefit of the law;

(b) equality includes the full and equal enjoyment of all

rights and freedoms;

(c) legislative and other measures, designed to protect or

advance persons, or categories of persons, disadvantaged

by unfair discrimination, may be taken to promote the

achievement of equality;

(d) the state may not unfairly discriminate directly or

indirectly against anyone on one or more grounds, including

race, gender, sex, pregnancy, marital status, ethnic or

social origin, colour, sexual orientation, age, disability,

religion, conscience, belief, culture, language and birth;

(e) no person may unfairly discriminate directly or indirectly

against anyone on one or more grounds listed in paragraph

(d); and

(f) discrimination on one or more of the grounds listed in

paragraph (d) is unfair unless it is established that the

discrimination is fair;