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House | July 15, 2015 | Committee Room | Judiciary I

Full MP3 Audio File

Judiciary 1 is now in session. We have the number of our Pages, they are Andrews you can tell us where you are from who is your sponsor and where you go to school. I am from Hornet County my sponsor [xx] and I go to school at Hornet Joe High school. And what year are you on?   I am a [xx]. Okay Rency Britney. I am Rency Britney, I was contacted by Bob Stamberg from Choan County and I will be in the tenth grade. Glad to have you.  Macy Bryant.   Hi am Macy from Durham County and I go to Northern high school I will be a junior this year. Lady Rio Fletcher. I am Rio Fletcher. I am Wake County and I'll be a junior at Rossville High school. Who is your sponsor? Rober[sp?] I'm delighted that we have all girls this makes me feel much better, we expected the boys. Our sergeant at arms is Barrymore BH PAL and David Lit for sales. We have two bills today and, senate bill 679 is a PCS we are going to hear first senate bill 678 Senator Gun we're delighted to have you in our house committee, we hope that you'll be delighted to see us Always, always, always. Goodafternoon, I had to get some water because I had a little bit a Marita old fashioned white bread stuck in my throat, but I have gotten that out. Thank you Mr. Chair how many days are we going for, Six, seven days I'm in that is that correct? Non opes okay. The collection bill, thank you, it's a pleasure to be here. is that correct? Non opes okay. The collection bill, thank you, it's a pleasure to be here. I'm going to give you a very brief highlight on this particular bill on the amend the [xx] laws [xx] just let me say that we've worked on both of these bills for all the stakeholders for many many months and I'm pleased to report to this distinguish group here that the negotiations, the crap in this legislation had support from all aspects and all stakeholder and we really didn't do what I felt like was necessary to make these amendments, but at the same time do what we're all I'll give you the very brief highlights on the debt collector law. Right now North Carolina law is a little more restrictive than the federal law. So here's what senate 678 will do. It will conform North Carolina law more closely to the Federal Fair Debt Collection Practices Act, it'll do basically four things, it will define location information and by the way, let me ask you to refer to your summary they really did a good job, I'll give them a star, we need to give them credit, it's really pretty easy to follow along as I speak, so we don't define what location information is allowed to be requested, and may be requested all the data, it mimics the attempt to get the location information to one per week and not more than three times in a 30 day period unless requested to do so it clarifies that data making contract third party if the contractor parties, if the data and or his attorney gives permission at the beginning of the loan not at the time of default, and I'll make a comment about that in a minute, and it clarifies that a creditor may collect statutory court costs and filing fees just to be equal to what was done in the CFA Amendments. Resident lenders reached out to all the interested parties. There was no opposition that I know of in committee, it was a 48-0 vote on the floor. Here's what I would tell you, that this would gives a

clear roadmap to creditors or creditors to follow, and by the way, these are folks that are collecting that, these are not collection agencies, these are individuals that are trying to collect their own debt. So it will clear the road for creditors to follow the provisions actually will provide better protection for debtors. why would I say something like that? Well, just think about it. The last thing CORL will tell you, the stakeholders to tell you, anybody will tell you the worst thing that can ever happen is for us to allow somebody to go in default, and if you cannot find an individual who may be behind on their payments and contact them to the default, we're doing nothing but hurting that consumer. We want to get that consumer, when we find out there's an issue, so that we can work on how may be we can get that righted and save them from going forth through that as you know terribly embarrassing and sometimes financially devastating defaults. So this bill will clear that up and I'll be glad to answer any questions. I would like to say that, I can call you Dr. Chestnut can't I? Where is he you want to go with mister? McNeil Chestnut is here, and he would also be able to answer any questions that you may have, so I'll be glad to answer those if you have them. are there any questions? Yes sir. Thank you very much Mr. Chair. I cornered the bill sponsor over lunch today with the a concrete question that we were both too busy cramming major sandwiches in our mouths, so the conversation kind of sounded like that. I also should have written this last night, I had a date I had with my wife, I apologize for wasting the committee's time because my failure to work or communicate well over tomato sandwich. In looking at the bill, one question I had is regarding provisions on communicating with a third person and the time frame for that. On page two, specifically I think line four, five, and six. As the Bill Sponsor said, you can't communicate with that third person more than once a week or three times in a third day period. My question is how that provision interacts with the provision on page one, lines 18, 19, and 20, which allow communication to a third party with the written permission of the debtor. So I think one of the questions I have on that interaction is if the debtor gives written permission does that allow the lender to exceed the restrictions on page two lines four, five and six? I think that just gives them permission to go with what is on the ones that you just mentioned. It doesn't come, those are the guidelines that they can make the contacts if they have given permission upfront. Is that correct, Mr. Chestnut? My name is McNeil Chestnut. I represent the [xx] this bill allows them the most important thing probably about this bill is it sets it up with the debtor at the beginning as long as transaction can give permission to or the debtor's attorney can give permission for the creditor to contact whoever they designate as a third party to locate them. And if you you keep it strictly to location information, you don't have to say that you're calling in to collect the debt, you're calling in to try to find Grier Martin where he gave us this number and we haven't heard from him and we need to talk to him. Now they can give you permission to do far more than that but it's what the debtor allows at the beginning of the transaction rather than exist when the law says they go on the default. You're not going to hear from if and when they go on default. Follow up, Mr. Chair? Follow up. And then a couple of other questions after that if you'll permit me. So to be clear, to my first question. Under no circumstances, regardless of permission from the debtor or otherwise could the lender exceed the once per week or three times during a 30 day period to a third party? That's my understanding, yes Sir. Thank you, and then Mr. Chair one other question. Thank you, Sir. With regard to the, and this from the bill sponsor or Mr. Chestnut, whoever wants to answer [xx] and this is on the timing of the permission from the debtor. Would the lender be permitted to have as a condition of obtaining the loans the data granting commission to contact third parties. I don't think so what they do try very hard because a lot people people don't have lime lights anymore. They don't [xx] live in

the same place for a long period of time, they got cell phones and they will tend to move around and what they want is again in the loan transaction, if you give them a contact party or any time during the loan transaction they can amend and give you authority or their attorney to [xx] Mr. Chair. Follow up. And so just to clarify if this bill passes in it's current form, it would be against the law still for a lender to require the red commission of data to contact third parties as a condition of granting the law. That will not be a condition of granting the law loans to grant on a basis if you have the credit worthiness, the collateral, and the basis to get the loan. Follow up Mr. Chair. Follow up. So to be in credit it would be illegal for a creditor or a lender to require that. I think it will be, yes sir. Okay. Apologies Mr. Chair for focus. I have questions I think this is the question for Mr. Tasman thank you Mr. Chair, could you explain how you would envision the lender obtaining the written permission of the debtor, exactly will that be at the loan? Well, it should be at the time the loan is closed, here we get sort of written statement from them, that if you can't reach me you can call my home, call my dad, call my brother, that will give you the contact name and information number at the time, and the reason that you want to try to work the loan poor fellow is so they don't go in default because that's the worst thing that can happen to them. And another question Mr Chair. Thank you Mr. Chestnut. Then can you talk a little bit more about, we were talking about location information. And I read that initially meaning that the communication between the lender and the third party would be limited to just the location information. But then I think I understood your comments earlier to say that if the creditor I'm sorry, if the borrower gives permission that actually the lender could contact the third party and divulges more information such as No, do you contact the third party, Representative Martin, to attempt to locate somebody. if you go outside that ram and go into collecting then all of the other protections of debt collector come into play. And you've got to tell somebody you're calling The purpose of this call is to collect the debt. This bill addresses location information. Thank you very much so to be clear, regardless of whatever the scope of the written information of the data appears to be, even if the data is appears to grant information to the lender to talk to a third party about more than location under the law, the lender still could only ask third party about location. Is that correct? As I understand the the Fedex collection act, you're asking for location information only here, if they go beyond that scope then they declaration practice Act comes into play in North Carolina is a little tighter than the Federal law on that. So I want to clarify that, so to be clear if this law passes regardless of what that written information data says the lender could only ask a third party about location? Yes, sir, That's what this bill addresses, location information. Thank you. At the beginning of the long transaction not when they go on default. Thank you. Any other question? For a motion at the appropriate time. Rep. [xx]. Oh yes. For the bill sponsor. On page 1 line 29, it speaks of good faith and in particular communication. Could you give me an example of a particular communication? What is exactly in that [xx]? Let me begin with a copy of the bill handy. I am sorry. I am sorry Rep. Robinson, what page are you on? On just page 1 line [xx]. It says the debt collector has a good faith to believe that the exceptions set for the in this subdivision applies to a particular communication. Well if if they've, I'm sorry excuse me. [xx] I represent the [xx]. That is a well defined term incredible law, this saved

me you got to have some reasonable belief that the person you're contacting is regarding this particular credit. It's defined by Case Law. Alright, I think at this time we are going to have a [xx] stay up go over the bill because there may be some questions that she would like to bring to the committee. information about consumers place removed, getting telephone numbers used by the consumer and information about consumers place of headquarter [xx] cannot unreasonably classify information about a death, [xx] with in session. The first is in the [xx] information of the data or the attorney given after the [xx] the persons employed by the [xx] or for credit reporting agency, [xx] to a foul for a person who [xx] [xx] greater, better and better in regard to the same couple here and for the sole purpose of locating the data if no indication of advancement is made. The bill would be changing those four reasons that contact a third party or sabotage information about the consumer's death. To [xx] you can contact the third party with the written information [xx] of his carrying, the bill doesn't specify the document information has to be given at the beginning of the loan. It could be given at any point during the terminal length. The second reason there's no change to the third reason, the one that Representative Robinson was asking about clarifies that except where [xx] contact is found or parent guardian of the spouse and having [xx] belief that the person they're talking is the parent or the guardian this still okay they didn't actually talk to the parent or the guardian or the spouse and fourthly it allow the debt collector to for the sole purpose of obtaining location information [xx] with her party. When doing that, the debt collector has to identify himself for [xx] stating that they are attempting to confirm or correct location information. Not say that the general oath is that and likely not communicate with that particular person, the third party, more than once per week or a total of three times during any 30 day period. This [xx] are four separate reasons that debt collector can make the contract with a third party. They're usually exclusive with respect to that written information in the [xx] or his attorney it's not living into three [xx] with any validate theory Mr. Chairman, could you re-explain that to me? what's going on. I believe the ultimate question is the exceptions when the debt collectors can contact the third party about the debtor those exceptions are faulty about the debtor. Those exceptions are for separate reasons and they are not controlled by each other So, without written permission, the written permission to contact a third party is what would control communication. [xx] so you're saying, as I understand it, you're saying that the calls of this bill, if you wanted to call the [xx] more than three times you'd be able to do that. Is that right? Yes [xx] given written permission to contact a particular third party. And, you were on the impression, I believe that it only allowed three times, is that correct?  McNeil. Just that I was talking strictly to the location information. But she's correct if they give you permission to contact these other third parties, but they have to give you permission otherwise you can't. Representative Jackson. Thank you Mr. Chairman does the person being contacted, the third party have to give you permission? Because someone else can give you permission to call me in excess of three times every thirty days. Is that what we're saying? Yes, I believe that's what we're saying.

[xx] Thank you Mr. Chairman and I've got a question about the allowance that is given. Does this now say that The way I read it is that we are now giving you permission to contact this third parties when I give written permission to contact the third parties, it's not limited to contact them only after I default you can contact them any time, it doesn't have to be related to me being late or defaulting you could just, is that correct? So at anytime I contact this third party. Yes, the purpose of this about going back to my early comment was the worst thing, the worst thing we can do for a consumer and a person in debt is to let go into default. I know that I've been called by a bank to be quite honestly before. When if you are little late on payment, you would like to be reminded of that, or if you are struggling on the payment would you not like to have a way to try to work it among the lender and the creditor. The lender and creditor to work this out so without that representative of what we are in fact doing is say, fine go in default, we will go ahead and make sure that you got that credit on you for a while, we like to get in a position to help that consumer get back on track and the only way you can get a consumer back on track is you got to be able to find him so you can communicate. Follow up, and so by this, authorization to communicate with there are parties both before and after default there are a number of times you can contact that individual if are these more than one person then you can contact each one of those individuals. [xx], relative to, your answer is yes. Yes Sir, relative to a lot of location. They List. Yes, if they list you down there it's up to them to decide who to tell you to come, and you may need to contact someone not just to call the vault. The collateral could be in question, they have moved out of the area, someone told they're no longer living here, and you need to try to get up with him and maintain contact with him.  Representative Stam Paul, Yes, sure thank you, Mr. Chairman, in another life I was getting stronger at long this is as a matter of fact I was known The Lone Ranger. Have you been a Lone Ranger? Never mind It is very important to know that lenders are really very willing to work with folks who owe them a great deal of debt if they know where they are and if there is a line of communication open. I used tell the folks who are my clients so as long as I can get a hold of you when you got a problem when you can get a hold me, we got no problem. But when I can't find you, you're going to have a big problem, and it is destroyed unfortunately sadly or impacted negatively so many people as a result of that, so communication this bill is another way of trying to enhance the communications between the lender and the lendee also I would be interested to hear Mr Chairman and [xx] perhaps someone has already done this, but if there is someone in the audience that it's supposed to this particular legislation I'd like to hear from them as well,  please thank you. We will certainly allow comment on the progress before we do I want to ask a question to representative.  Thank you Mr. Chairman just one other question about the communications before does this allow me then to form of if I'm extending you a loan that I can call you and say "look, we did get this new loan and insurance product and [xx] that I can call you and say, you. I can call all of my friend and say, look we have got the new insurance product and I'm calling you to sell you this product that go on with your loan. I want to be a little more careful when asking that, but I think, I think you can call anytime you want to. You can call the creditor, you can call the debtor any time they want. What we [xx] when there is no longer contact between the debtor and the creditor, you can contact your debtor

anytime to for whatever you need to or want to contact and you do that now. Yes Sir. As many times as you want. Yeah, I think that's [xx]. Thank you Mr. Chair, I thought I had an understanding interaction of the two provisional reference to my my first question, and now I don't, so I want to delve into that further. I think Representative [XX] I'm sorry, the lone ranger now we know, I think it's point well taken about the importance of communication, how that benefits everyone involved in the transaction and so it seems to me that I guess that's paragraph D beginning on line 31 on page 1 on through I guess line 6 on page 2 how that provision facilitates sort of communication that benefit everyone. I take this as the discussion to be heard on the frequency with which that has permitted the contractors with third party without a doubt, you point four second it, is the usual benefit there. But I'm having trouble figuring out what the benefit is of paragraph A then on lines 18 through 20, what is the purpose of that communication with third parties? Cross that again representative. Yeah, page 1 lines 18-20 the third parties with the written information of the data or his attorney. Specifically what's the question Aston. Yeah, what's the purpose of those changes.  Mr. Geoffrey if you want to answer that? Sir I need Thank you. I need just to take a quick look page one, line 18-20. is clarifying the kind of law, that the third party with written permission of the dead or his attorney. That's the people who can give the permission to contact a third party. Well I understand you what it does, and it's quite a bit beyond a mere clarification. What I want to know is why is that needed you got to have permission because the debt collector actual great risk is to always contacting parties for somebody who owes you money you got you either got to go to the data or attorney and we're asking if this term, any term during the [xx] particularly the beginning to get these permission to make those contacts, otherwise there's severe ratification [xx] practices and damages for violating the Fair Debt Collection Practices Act. Follow up Mr. Chair? Follow up. My question simply, why is this needed? And I don't see what purpose this particular for business strategy, I think what it does but I don't understand why [xx] To get written permissions so it's in the files so if you have a lawsuit, the lenders are examined by the commissioner bank, they look for this information in a file. Follow Mr. Chair? Follow up. Those wallets as it stands now require written permission, so that can't be the purpose of this changes. You get that permission at the beginning of a long transaction now as opposed to when they go on default, you can adapt a rest assured, then I go on give you this permission when they go into default. I don't hire fancy to question Representative [xx], I truly don't. Okay I'll try to clarify my question. What sort of communication is inflated with a third party, what benefit is that to either the borrow or the lender? Is yours right, absolutely. Find him, find her, where if you would the, without being able to locate a debtor who is struggling or possibly heading towards default. This profited provision will allow a third party to be contacted provided the debtor has given you permission to do so. What we don't want to happen in the real world which is what we actually living in,  is for us not to be able to find a debtor and it only relates to location of that persons or we can fund them the help them out relative to the debt that they may be struggling out. Follow up. Mr. Chair I think maybe there's a question for [xx] as I understand it the scope of the prison we're talking about in outlines 18 through 20 will be gone location information, is that correct? I'm not very versed in that [xx] subdivision

A because of division A, with a wow [xx] and with [xx] to errand for written information for the debt collector to contact any party for any release. The language born in [xx] DC was 31 proper phase require new information, use the debt collector authority to contact any third party [xx] of obtained location, so if a debt collector has reason to talk to a third party over van, location information, you still need some subdivision aid. It's the [xx] it's always looking third party for location information Thanks very much Mr. Chair so that will help to clarify the question when I asked them reason Why this provision [xx] of Mr. Chest and the Bill sponsor said to fund the data, which I think everyone in this room agrees is absolutely a good that's good for everybody and I think it's, we want to try facilitate that, we already got a provision that does that, it's on page two and infact it's just this provision on page one, 18 through 20 goes well beyond location so the two folks have asked that location information is what we need. We need to if that's going to [xx] forth then why don't we just strike out the changes on line 18 through 20 and we can still move ahead with finding them. Is there some reason that you all haven't mentioned to me yet. If I could, maybe I read it completely wrong but if everybody direct your attention to line 14 where I think this is the heart of where we're trying to get at and we're kind of wrapped up on all these subparagraphs. debt collector shell, unreasonable publicized information regarding a consumers death. If I lend somebody money I wil not unreasonably tell people that you owe me money or that you're late or anything else. And that's a restriction on the lender then line 15 says, such unreasonable publication includes, then goes on to all the things we've been discussing here for a minute. So the way I all of section two is that this isn't about a person's privacy necessary, maybe I'm misunderstanding your line of question, but this whole section to is the restriction on the lender about providing other people information. And with that in mind, that if for some reason I have to find Mr. Smith who's fallen of the face of the Earth, that section A there sub-paragraph A whatever that is, to third parties means I can't tell ABC company where I think the guy works that Mr. Smith isn't paying the money he owes me. So it's a restriction on the lender. This isn't infringing on consumers. It's not information to third parties. That's the way I read this, so I'm not quite understanding where the previous line of debates has been going. And if I may add that only occurs, Rep. Martin, if you or your attorney get written permission for that to occur. If you don't get permission, it's not going to happen. Rep. Martin. Thank you very much, Mr. Chair. So I think Rep. Szoka has hopefully thought will help focus the debate a little bit also but under current law, after defaults with written permission, the creditor can contact the whoever you were still talking and thinking in terms of finding them and location information. I still haven't heard anyone articulate what sort of communication with a third party the creditor needs to have beyond location. If there's something I'm missing, tell me. But what if the creditor the need to find out from a third party other than location that requires the change in the section. My name is Ken Canyon. I'm representing [xx] services. Appreciation. We represent [xx] in this particular business we have many things that we need to discuss with the customer. It could be automobile insurance and exploration that we got from the insurance company that their insurance had expired when we have a lean on the vehicle. Sometimes customers are away for certain periods of time and I'm thinking on the coast and Louisiana so forth they are on their weeks or either, truck drivers and sometimes they have a hard time communicating. So it would be up to a [xx] to give permission for them to discuss the account with someone, and that happens all the time with say married couples when

they are not joint to talk about various things of the account, so, what needs to be distinguished is we can call the customer regarding a multitude of things, keep that seperate from tagged in a third party regarding locational, and I hope that sheds a little light on it. Thank you Mister, well we've got a separate provision for spouses in this registration here, so I'm still not clear and you talk about communication with the [xx], I'm still not clear what information the lender needs the armed location. From a third party. From a third can you distinguish that just a little bit further down, I mean that you are talking about why there is need to talk to the third party about insurance on a vehicle, or where the vehicle is located or, I mean. So, yeah maybe I need understand that more. We've got a provision on page 2 dealing with location statute, or the Bill rather addresses location. I'm trying to understand and more about what sort of information a lender needs, what additional information, the third quotation a lender needs to get from a third party such that paragraph A and line 228 on page [xx]. Once again I want to get back to it. There's a multitude of reasons and sometimes I may designate my brother bit if they can't get in touch with me, and we work on a firm or whatever we do. If you need to talk to someone about my account or anything, please call and I'll designate writing my brother, and that's what that really comes down to. It's designating the ability to someone, for someone to discuss your account with them and with the borrowers permission. Thank you so much Mr. Chairman. Would it be legal for a lender under provision a with a written permission to debtor to contact the debtor's employer If I give that permission. If I give the permission. Yes Sir. Now there's a course unless they give written permission. and one of the things that I was suggesting to the Chair you can defile another insurance company because you are a reign holder and the insurance expires Bill floating out here right now that a car will be seized if the insurance expires, and the borrowers are he's on road. I can't reach him, but he's given me authority to get in touch with any number third parties to resolve this issue. We can call him, otherwise we you can't call them. The car gets seized, it's an attempt to work the loan portfolio Thank you [xx]. These are the sort of answers I'm looking for, and it's helping me understand the need of the creditor and additional information they may need. I do have still some concerns that this provision is way too broad, and I wonder if you all would be willing to talk further about stress provisions that enumerate those purposes, whether it's for insurance purposes, which makes perfect sense to me designation of a family member to receive communications on behalf of the borrower, that sort of thing rather than leaving it as open ended as it is now, which I do think leaves open to abuse by those few unscrupulous folks that might try to call employers under the protection of this provision but in actual reality they're just trying to put some leverage or otherwise on the borrower. Before we do that, is there anybody in the audience who want to speak on the bill either for or against it. Representative Roberts. Just wondering after all this discussion does the third party have any recourse if they don't want to be contacted, I don't want to be called three times a month. [xx] [xx] I apologize. I thought I understood this, but I'm getting confused by all  Going back to line 14 that Representative Zocka[sp?] mentioned [xx] reasonable for provocation includes but is not limited to the following and then down the line 17 it says, Except. So, does that mean A, B, C and D are exceptions? To unreasonable so if you do anything at A through D, it is not considered unreasonable. Is that right Mr. Archie? Thats correct. Okay so then may they

are under A, you can call the third party with [xx] data or attorney ant time, but anyway and then under D, you can call anybody whether they're [xx] or not for the sole purpose of obtaining location information, anybody. It doesn't have to be somebody that the debtor put down as a contact, you could contact anybody. Okay. With permission? That's not right [xx] Yes, I understand. [xx] Representative Blackwell. Thank you Mr. Chair. I'd just like to make a comment I'm, you may or may not know, I'm in the lending industry myself for mortgages and I also have sat upon the Board of the Local Credit Union, and there is no benefit to lenders to call random people authorized or not just to do it. I mean time is money. I appreciate the concerns of trying to make the legislations, it's correct and it's right as it is, but in terms of fearing that some lender is going to make calls to third parties or to some random people about somebody, there's a body of law both federal and state that already prevents that. This in my view, and maybe because I'm a little closer to this industry than alot other folks, this is just to me kind of minor clarifications and in fact when I read section two, more of a protection for consumers. I wouldn't have any concerns about any lender anywhere, who's going to be in business for more than today and tomorrow about abusing any of this because it doesn't make economic sense for people to just randomly call people or people in their database who are paying on time or again maybe I'm too close to this industry myself but I just see the bill overall as a minor changes to make the law better and actually to protect consumers better. Are there any other questions or anything by the members or any comments? Representative [xx]. My questions are done so it's just a comment, there are a couple of things in this bill that I do like particularly I think the provisions Representative Steinberg that the letter [xx] talked about, I've envisioned you with the mat[sp?] itself, the provisions that I think we all agree worked with incentive to keeping that connection between a lender and a borrow that works for everybody's benefit and I think there may be details and [xx] that could be quick but that is good for society, good for everybody involved in the transaction but on page one, we are going way beyond clarifications here and I think it's very clear that we are reducing the protections to you can have an argument whether that is always a next state but I don't think there is an argument that those protections are being reduced because as the law currents stands now, the written permission of the debtor can only be given after there is a default. If this bill passes that written permission can be even in advance and I think they way that is going to play out probably in some circumstances as the loan [xx] into the whole the documents and the documents given this time will be part of the [xx] there will be no representation it's required, but it's going to be there and it's going to be signed used to do concerts for a living. I have done a hundred albums and when I get to a bar house which I understand is not covered here, I just started signing documents in front of me. Maybe [xx] responded is smarter than I'm and that's possible. I do think we are taking a step back it's with helpful to my question is answered and I agree with the need of soltate communication with insures and other things. That makes sense and I think I can support if it had some more specific enumerations of that need, and it wasn't so open ended and. So I'm going to vote against it today, but I would be very happy to have discussions going further about getting to the point where I can support it in a way that it'll benefit lenders and borrowers Thank you Mr. Chair for indulging my question. Before [xx] motion Mr. Chair I make a motion for favourable recommendations for centre bill 678. Further discussion or debate. All those in favour say aye, "Aye" Oppose no, "no" the bill passes, do you have another bill?

a companion bill, and this is Senate Bill 679 and Representative Hardister move the P. C. S for senate bill 639b in front of the committee All in favor say aye., "aye" You may explain the bill. Thank you Mr. Chair [xx] as we know we pass 13 some CFA amendment bill this [xx] CFA technical and [xx] charging bill and is clearly is that let make sure in quick upfront to let you know that this does not in any way address rent fees or interest rates passed through the senate with a margin of 40 to seven, great discussion and was really pleased with that. I want you to know that we have worked Commissioner Banks, they had a lot of input in this and the reason we have a PCS was ongoing debate with our Commander Council at the military and those were some extra provisions they wanted to add so I can tell you just right up front before we take about the bill that we have [xx] a letter from the Military Council and it says and I'll just read the first paragraph, on behalf of the North Carolina Commanders Council I wanted to provide you with an update on where the council stands regards to the amendments to the senate bill. The council has no objection to the bill as amended so I appreciate all the stakeholders who gave us input on this bill, once again I would ask you to follow your summary which I think does a good job, and I will hit the highlights, and we will open it up for questions and Miss chair if that's okay. Section one and two, there's two things happened there, it confirms the standing practice that lenders may recover statutory court costs upon picking up a voluntary dismissal of a collection action at the request of the borrower to avoid a judgement. It also allows lenders to recover reasonable and bonafide costs in bringing an action, reasonable out of pocket expenses. Section 2 of the bill, clarifies that a Consumer Finance Lender may not receive any charge or interest except as provided by the CFA, the Commissioner of Banks or the statute. Section 3, eliminates the outdated conflicting references to a multiple loan, office limitations, dual loan limitations are already covered in existing law. Section 4 does two things. It clarifies the definition of military service member with the rank of E4 or below by a reference to a covered member, and all protections for loans to a covered member remain intact. Section 4 also clarifies reasonable precautions to identify military members. I'm not going to, you can read what but that includes for non military borrower was just a verification of income and finally section five makes a technical correction to the maximum loan amount and the outdated statutory references that had changed previously and we needed to go back and make a true clarifying through technical change there. Once again this bill had bipartisan sponsorship, it had bipartisan support and Mr. McNeil Chestnut is here if you have questions above my pay scale, his is larger than mine. Are there any questions or anyone in this audience wants to speak on this bill? Yes sir, I 'll start with a question for the bill sponsor, the letter that you read from the gentleman, could you just tell me the date because I don't have the letter? I just want to make sure it was after these most recent changes. [xx] here you go. May 15th, that is the PCS was additional language that they had asked us to put in there and if you want me to tell you where I made the fumble through this, but I think I can actually come up with where that is. Where it says on page two, it talks about commanding officer, executive officer, we've edited at that at their request. Used to say company level commander or equivalent as a need they had asked us to do that, and also I think one thing they wanted to get in it was on page three I believe 15 through 17 [xx] may include a [xx] of certificate from the department of defense manpower debtor Senator D. M. D. C with that in there so yes, with that they've got the equipment [xx] The rest of my question for [xx] do

you expect to as an attorney two words will always [xx] Romanian sound, and the original bill had the word may in section one and the new version [xx] has now changed it to shall, and I just wonder what was the perfect for that changes public staff or a policy shield. Could you tell me more time this is all good? It may [xx] August 15th because may recover, but then on line 15 of the PTS it says the lender shall obtain and they're being more specific on my question, it appears to me that under section one if the lender stooged the wrong person and the long part called that the payee. You pressed in my thumb, you speak with Bob and I would just [xx] and the [xx] Absolutely, we'll dismiss it in the right purpose. It appears bad, feels that you, the PTS is horrendous still have to do the following version because it doesn't say the lender may do it says the lender shall. The may to shall was requirement of the military Representative Jackson it may obtain in writing, they said with permission shall obtain right on the bar the acknowledgement, is something they required and we didn't have objection to it since you have to get a written statement from them, then the bar will be liable statutory court cost and in the original bona fide the cost, incur the cost of bringing the action. That to [xx] you cannot recover attorney's fees, period and a consumer finance loan transaction. But the military wanted that additional language in there and we put it in there, and nothing in this section shall be construed to authorize collection, and it also it does not apply at bar in writing liaison the Department of Defense which is what you're time barred, you have sued the wrong party. I'm Jack Jones not Jack Jones Junior. Follow up. Before you do Representative McNeill. I just want to point out that if you down to line 18 the may is still there, it does not change it in order for their probation that we are talking about to occur I would have to respond in writing, I have to answer your companion, I couldn't just call to tell you I have to answer your complain in order for you to say yes you are right and will dismiss it, I will then have to find reliable for cool cap, they don't have, they are not liable for suing the wrong party, you can't [xx] for choosing the wrong party understand that that is what you want me to do but am asking is that what should have?, because this sounds a little shell is that to render the option what I read it, it says, when the shell of the I think the argument remain that if you have chosen the wrong party you have to lose more, and required to when there was obtained in writing proper order worth the acknowledgement always in four hours. Follow up. So what is the bore with cooperate provides that, with detrimental will be able to send the act. of all. If the windows of I didn't figure that with technology.  Any other questions, representative Mark. Thank you when representative Jackson said two words that attorneys look for main shell I thought the two were attorneys fee, and if you have a question about that it made but first of all I wanted to express my gratitude both to the bill sponsor and the industry for the work that they've done with the commander's council on this. we talk about being military friendly in the state but that's action, your actions in all of actions works with the commanders

council ensure that when the government makes the road we really are the military so thank you all very much for all the effort you put into that it's really paid off and makes a difference back to representative Jackson's two favorite words or every other attorney's favorite words, attorney's fees. I'm glad had to see a provision in here, I guess from line 19 and 20 on page one nothing in this section in this section shall be construed to authorize the collection of attorney's fees. has the mother language that I'm a little bit confused but otherwise prohibited by and it's got a statutory reference there and I try to run that down but the question that I hope will simplify that is under are there any circumstances by which the collection of attorney's fees would be authorized. The statute I think the problem is a better way is the statute that it's being referenced, specified that will respect to a run that it under that particular article, the agreement cannot provide for payment by the law or attorney other than that, the judge can always. I don't think I have got the answer to your question? [xx] and I have looked at it, the 53-180E it starts saying especially a pretty broad probation on the collection of attorney's fee Okay, my opinion is that I don't think you'll collect attorney's fee but I am not an expert. Representative McNeil. I just want to ask a question I've heard and some I see here from a banking industry, but I have heard that the provision on these precautions about military personnel was calls on a lot of extra paperwork on loans of the extra work that they were having to go through to ensure that somebody was in the military is somebody here from the banking industry that they can answer that, because I've heard there was calls on extra work. Anybody answer that question? Yes, Sir. McNeil Chestnut that I represented the [xx] this only deals with consumer finance loans, thesere not bank loans, but we have got some clarification finally in this bill. When you passed the bill in 2013, it was never intended that the military check the [xx] on everybody that walked in the door, The Commissioners took that and is clarified in here that if you have a existing relationship with your customer, who you know not to be on the military you don't have to run a military background check on them. If you deal with John Smith who works for ABC Chevrolet Company down the street, and you know he's been your customer for 40 years you don't have to put in there, we did put a couple of things to satisfy the military on the reasonable restrictions, they want to use the full [xx] to power and defense manpower development center website or a lead [xx] statement, because if you're in the military you're going to get paid [xx] that's the only way you're going to get paid. Representative [xx]. Thank you, Mr. Chair I'd be happy to make a motion in a proper time but for staff I didn't know there is a grammar mistake on page one, line 17, the word in is written twice after the word incurred, thought I point that out.   [xx] Rep [xx] Thank you Mr. Chair, and I had a couple of questions actually on those reasonable precautions provisions. So when we talk about taken reasonable precautions, and I agree it makes perfect sense that when the 60 year old person comes in that you know works at the [xx] down the street, you don't need to get on DMVC or check them. That's great and will reduce the burden on the industry, I hope. But I wanted to explore a little bit more what reasonable precaution might or might not mean. Would a borrower's self certification, a document signed by the borrower saying, I ain't in the military, if that's all that the lender has, could that constitute a reasonable precaution? No, sir. The statute requires him to have a most recent pay stub or a recent pay voucher, a copy of their cheque or cheque stub, to show that they work and they work because that's how the lender's going to verify their income to begin with. Follow up? Follow up.

Thank you, Mr. Chair. Where does the statue require a pay stub or the other documentation you mentioned? It's on line 23 which provides the verification for [xx] most recent payroll statement or verification income clearly indicating the borrower is not a common military status member. The fact factor mind as Mr. Chair so is it accurate to say then absence that's continually relationships that we talked about, that the only documentation that would be acceptable with the either of that certificate from VMDC or a clear indication from their paste otherwise either that they are not in the military or if they are in the military, they are at a higher pay grade than before. Thank you, even MDC does not give you their ranking pay grade, that's why the LES is a better document, it gives you the pay grade rate and income and it's up to the lender sometimes that DMD sub website is down for hours at a time, and they can get two and so they got an analysis[sp?], the most recent analysis you got proof and then let's go to status right there. Follow up. Thank you sir, so my question is beyond the [xx] related documents or the certificate for D. N. D. C or the [xx] of the screen short. What other documentation would need to read or is there other [xx]. We had it and it was acceptable to the military or other method approved by the Commissioner of Banks, and remember this [xx] is examined very frequently about the commissioner of banks full compliance with the North Carolina law. Yes [xx]. Thank you Mr. Chair, it's about another provision, we talked a little bit about attorney [xx] could someone talk a little bit more about how the other fees that could be collected, is it permissible for those to be wrapped into a refinance of the loan for which then interest could be charged? What kind of fee are you referring to if I may ask Representative [xx]? So I'm on page one, if I may Mr. Chair, sorry, page one line 18 Linda May recover the statutory call costing incurred as well as in other reasonable and bonafide cost incurred in the cost of bringing the action The language we use reasonable and bonafide cost came from the commissioner of bank's office, they have to be real the best example would be telling calls and the storage charge if a vehicle is seized. Thank you [xx]. If there's anyone from the Commissioner Banks? Can I toss the question at them? Yes Sir, my name is Kina[sp?] Craggier and I'm here on behalf of the office of [xx]   If I may Mr. Chair, I think the question is do you have an understanding whether or not those were the fees, whether it'd be permissible from the lender with the concern of the borrower to lend those and have those cars payed for by the land proceeds and then have interest charged to the borrower for payments.  Our understanding of that provision is that those fees will not be allowed. No other charges and interest and if you look at section 53.78 it prohibits further charges. Thank you Mr. Chair. We will pick from the bottom of the bill but before we do, I want to make one comment, when you or him this [xx] Rep. Stain-burg has been in and you reposes the car and the car is taken to a storage lot and that storage lot charges $50 a day to store the car doesn't take long for borrower who is already upside down to be at a position to where he can't recover it's going to be to much a dept on a $4000 car and I'm hopping that this committee at some point and time will have a bill we could have a committee bill that [xx] storage charges on our toes to say $20 a day at all will be reasonable. I just want to make that comment because it's unfair totally unfair for somebody to have their car picked taking to a storage locks, take 13 days and they cost $1000 and that happens on a lot of occasions. Representative you have a motion. Yes sir Mr. Chair, I move for favorable on PCS for senate bill 679.

with the changes by the staff is to grammatical errors. All in favor of the motion [xx] will say aye, "Aye", Opposed no