First, the Model Act requires creditors to obtain a completion certificate from an independent inspector certifying that the home improvements have been satisfactorily completed, before the creditor may make the final payment to a home improvement contractor. Second, the Model Act permits a consumer to make payments on a loan into an escrow account if the work has not been satisfactorily completed or if the home improvements are not as warranted. The lender can release the money from the escrow account by obtaining an independent inspector's opinion certifying that the home improvements have been completed in a workmanlike manner. The lender has the option to either resolve the home improvement problems, or bear the cost. Finally, the Model Act provides a consumer with a private right of action, including the ability to recover actual damages, statutory damages, punitive damages, costs, and attorney fees.
Intentional violations are punishable by criminal prosecution as well.
Homeownership by Americans reached a record 66.7 percent in 1999, and represents a key wealth-building opportunity for families, especially those with lower incomes. The stripping of wealth through predatory home equity loans threatens to reverse these gains and destabilize neighborhoods. The strong consumer protections included in the Home Improvement Financing Model Act can benefit all persons who obtain financing for home improvements through contractors. Such protections can be of great value to the millions of older persons who desire to remain active in their communities and age in place. The study was conducted by Princeton Survey Research Associates.