I 
111TH CONGRESS 
2D SESSION 
H. R. 5689 
To amend the Truth in Lending Act to provide an interest rate cap and 
other requirements for creditors making covered loans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 1, 2010 
Ms. GIFFORDS (for herself and Mr. POLIS of Colorado) introduced the 
following bill; which was referred to the Committee on Financial Services 
A BILL 
To amend the Truth in Lending Act to provide an interest 
rate cap and other requirements for creditors making 
covered loans, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Predatory Lending 
Sunset Act’’. 
SEC. 2. COVERED LENDING. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended— 
(1) by redesignating the second section 129 (as 
so designated by section 201(b) of the Helping Fam-
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ilies Save Their Homes Act of 2009) as section 
129A; and 
(2) by inserting after section 129A, as so redes-
ignated, the following new section: 
‘‘SEC. 129B. COVERED LENDING. 
‘‘(a) MAXIMUM INTEREST RATE.—The maximum in-
terest rate a creditor may charge on a covered loan shall 
be the rate equal to an annual percentage rate of 36 per-
cent. 
‘‘(b) PROHIBITION ON USING CERTAIN MEANS OF 
ACCESS FOR SECURITY.—It shall be unlawful for any 
creditor to extend a covered loan with respect to which 
the creditor uses, as security for the obligation or as a 
condition of extending the credit— 
‘‘(1) a check or other method of access to a de-
posit, savings, or other financial account maintained 
by the borrower; or 
‘‘(2) the title of a vehicle. 
‘‘(c) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
‘‘(1) ANNUAL
PERCENTAGE
RATE.—Notwith-
standing the manner described in section 107 for de-
termining the annual percentage rate, the term ‘an-
nual percentage rate’ means all charges payable di-
rectly or indirectly incident to, ancillary to, or as a 
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condition of the extension of a covered loan, includ-
ing— 
‘‘(A) all fees which constitute a finance 
charge; and 
‘‘(B) any other payments, fees or charges, 
including but not limited to application, mem-
bership and administrative fees, compensating a 
creditor for making the covered loan. 
‘‘(2) COVERED
LOAN.—The term ‘covered 
loan’— 
‘‘(A) means a consumer credit transaction 
that— 
‘‘(i) is unsecured by any interest in 
the consumer’s personal property; 
‘‘(ii) is in an amount that does not ex-
ceed $3,000 or, in the case of a line of 
credit, a credit limit that does not exceed 
$3,000; 
‘‘(iii) in the case of a closed end credit 
transaction, has a term of 91 days or less; 
and 
‘‘(iv) in the case of an open end credit 
transaction— 
‘‘(I) has an amortization period 
of 91 days or less; or 
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‘‘(II) in the case of a line of cred-
it, the amount due in the first 91 
days, including finance charges, fees, 
service charges, renewals, credit insur-
ance premiums, and any other charge 
or premium with respect to the exten-
sion of credit, exceed 25 percent of 
the credit limit of the line of credit; 
and 
‘‘(B) does not include a non-recourse ex-
tension of credit— 
‘‘(i) extended by a pawn broker cred-
itor; and 
‘‘(ii) secured by a possessory security 
interest in tangible goods physically deliv-
ered by the consumer to the pawn broker 
creditor, for which the consumer does not 
provide a written or electronic promise, 
order, or authorization to pay, or in any 
other manner authorize a debit of a de-
posit account, prior to or contempora-
neously with the disbursement of the origi-
nal proceeds and the creditor takes no se-
curity other than the goods and makes no 
effort to collect the credit. 
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‘‘(3) CREDITOR.—Notwithstanding the defini-
tion of the term ‘creditor’ in section 103, the term 
‘creditor’— 
‘‘(A) means a person who makes or offers 
covered loans; and 
‘‘(B) includes— 
‘‘(i) any affiliate of a creditor that of-
fers or makes a covered loan, buys a whole 
or partial interest in a covered loan, ar-
ranges a covered loan for a third party, or 
acts as an agent for a third party in mak-
ing a covered loan, regardless of whether 
approval, acceptance, or ratification by the 
third party is necessary to create a legal 
obligation for the third party; and 
‘‘(ii) any other person or entity that is 
engaged in a transaction that is in sub-
stance a disguised covered loan or a sub-
terfuge for the purpose of avoiding the re-
quirements of this section.’’. 
(b) CLOSING THE SINGLE PAYMENT LOOPHOLE.— 
Section 903(9) of the Electronic Fund Transfer Act (15 
U.S.C. 1693a(9)) is amended by striking ‘‘to recur at sub-
stantially regular intervals’’. 
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(c) REMOTELY CREATED CHECKS PROHIBITED.— 
Section 905 of the Electronic Fund Transfer Act (15 
U.S.C. 1693c) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) REMOTELY CREATED CHECKS PROHIBITED.— 
‘‘(1) IN
GENERAL.—No person shall deposit, 
pay, obtain payment with respect to, or otherwise 
negotiate a remotely created check. 
‘‘(2) REMOTELY CREATED CHECK DEFINED.— 
For purposes of this subsection, the term ‘remotely 
created check’ means a check that— 
‘‘(A) is not created by the financial institu-
tion that holds the customer account from 
which the check is to be paid; and 
‘‘(B) does not bear a signature applied, or 
purported to be applied, by the person from 
whose account the check is to be paid.’’. 
(d) TREATMENT OF STATE LAW.—No provision of 
this Act or any amendment made by this Act shall be con-
strued as— 
(1) preempting any provision of State law, to 
the extent that such State law provides greater pro-
tection to consumers than is provided under such 
provision; 
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(2) preventing any State from enacting any 
provision of law that provides greater protection to 
consumers than is provided under such provision; 
(3) authorizing covered loans to be made in a 
State where they are otherwise not permitted under 
State law; or 
(4) authorizing an extension of credit at an an-
nual percentage rate that would be prohibited by ap-
plicable State law. 
(e) UNENFORCEABILITY OF CONTRACTS.—No con-
tract made in violation of this Act or any amendment 
made by this Act may be enforced with respect to any con-
sumer. 
(f) DEFINITIONS.—For purposes of this Act, the 
terms ‘‘consumer’’ and ‘‘covered loan’’ shall have the 
meaning given those terms under the Truth in Lending 
Act. 
(g) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after section 129 the follow new items: 
‘‘129A. Duty of servicers of residential mortgages. 
‘‘129B. Covered lending.’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this Act shall take effect at the end of the 180-day period 
beginning on the date of the enactment of this Act and 
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shall apply to all covered loans initiated on or after such 
date. 
Æ 
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