(Columbia) May 15, 2003 - The General Assembly on Thursday approved a compromise bill that targets high-interest loans and some other lending practices. The bill now goes to Governor Mark Sanford for his consideration.

Here's the typical predatory lending nightmare. A homeowner gets a call, offering a loan to do some home repairs and as a bonus there's enough cash left for a fabulous vacation.

Sounds great, but then the interest rate on the final paperwork is much higher than promised. The loan puts the home's equity in jeopardy and there's no mention of the huge balloon payments or the credit life insurance policy.

All of a sudden the family is in danger of losing their home.

The bill would give consumers protection for first mortgages for the first time since 1982. It would require mortgage brokers to work in the consumers' interest and define how much can be charged in lending fees before a loan is deemed "high-cost."

The bill would require free credit counseling for consumers seeking "high-cost" loans. The legislation says the lender of a high-cost home loan may not finance points and fees of more than 2.5 percent of the total loan.

The bill outlaws practices such as "flipping," in which loans are refinanced repeatedly to generate surcharges for lenders.

Sue Berkowitz, who has worked on the legislation since 1999, says the legislation is as strong as predatory lending laws in North Carolina, New Jersey and New Mexico. Berkowitz is director of the South Carolina Appleseed Legal Justice Center in Columbia.

Reported by Judi Gatson
Updated 5:36pm by BrettWitt with AP