Borrowers get new protection

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Two Greenville lawmakers, Sen. David Thomas and Rep. Harry Cato, both Republicans, showed admirable leadership by fending off immense industry pressure to limit the reach of this bill.

Gov. Mark Sanford should sign this legislation into law as it redefines acceptable practices in mortgage financing and car-title lending.

In mortgage financing, the bill outlaws the practice of flipping, defines and puts limits on fees and points for high-cost loans, restricts financing of some insurance products and requires lenders to disclose their profits to borrowers. It will also require borrowers to receive credit counseling on high-cost loans.

The Legislature has effectively raised the chances that borrowers in the future will be empowered to make informed decisions. But more significantly, by outlawing flipping and capping points and fees of high-cost loans, the Legislature is removing the tools of abuse that result in borrowers in this state often paying exorbitant prices for credit and unwittingly stripping their homes of equity. Sometimes the outcome is worse. Flipping, for example, defined as repeated refinancing without a tangible net benefit to the borrower, devours equity and increases debt. This unmanageable debt often leads to foreclosure.

There is one disappointment: The new restrictions on car-title lending are weak. Under the bill, borrowers can only "renew" a title loan six times. It places a limit where none existed. But by the time a borrower refinances six times, he's already paid at an enormous interest rate. The new limit may reduce the number of repossessions.

The intent of antipredatory lending laws are not to limit subprime lenders. In a poor state such as South Carolina, subprime lenders provide access to credit for borrowers who would not otherwise qualify for loans.

This law is meant to end practices that shock the conscience and to stop those lenders who unscrupulously refinance homeowners with the intent of simply generating fees. Those lenders who overcharge for credit are robbing the most vulnerable South Carolinians of hard-earned dollars.

The state has an obligation to ensure that those tools of abuse are retired for good. And it is right to require that each credit-seeking consumer is an informed consumer.