The American Fintech Council (AFC) has voiced its concerns regarding Senate Bill 784 (SB 784) in a letter to the California Senate Judiciary Committee. According to AFC, the proposed legislation could significantly restrict Californians' access to responsible home improvement loans, posing a threat to the state's financial ecosystem.
Phil Goldfeder, Chief Executive Officer of AFC, stated, "This legislation threatens to damage California’s financial ecosystem and drastically reduce access to affordable capital. SB 784 would create roadblocks for Californians looking to finance crucial home improvement projects and, if passed, will lead to higher prices and harm the very consumers the legislation intends to help."
The AFC highlighted specific provisions of the bill as points of concern. These include requirements for lenders to confirm project completion through permits and both written and oral consent from borrowers before repayment can be sought. Additionally, consumers are not obligated to repay under a home improvement loan until lenders complete specified actions. Such conditions could increase lender risk and lead to stricter lending terms.
Further issues arise from the bill's increase in lender liability beyond what is outlined in the federal Holder Rule, potentially discouraging lenders and reducing competition within California. Provisions requiring outdated communication methods between lenders and borrowers, like hard copies and verbal consent, could place modern fintech lenders at a disadvantage.
Ashley Urisman, Director of State Government Affairs at AFC, expressed similar concerns, saying, "Responsible fintech lenders have democratized financial services and increased access to affordable loans for families who have been historically underserved by traditional lenders. Decreasing the availability of these products and services would severely limit safe loan options for these populations, at best exposing them to higher prices and at worst prohibiting them entirely from financing projects critical to maintaining their homes."
The AFC represents a wide array of financial technology companies and innovative banks, advocating for a transparent and inclusive financial system. The Council aims to foster competition and promote innovations that serve underserved communities and geographies.