Senate District 31
Jay Hottinger
Hottinger Announces Passage of Fairness in Lending Act
July 10, 2018
COLUMBUS—State Senator Jay Hottinger (R-Newark) today announced Senate passage of the “Fairness in Lending Act,” substitute House Bill 123, ensuring short-term loans are available and affordable and Ohioans are protected from predatory lending practices.
Payday loans in Ohio are some of the most expensive in the nation with fees and interest rates significantly higher than neighboring states. Ohioans voted in 2008 to reform lending practices and regulations, but a loophole in the law allowed lenders to avoid capped interest rates.
Since receiving the bill from the Ohio House last month, the Senate has held seven committee meetings, hearing several hours of testimony from consumer advocates, lenders and industry experts. The Senate worked to find a compromise, providing both added protections for consumers and expanded access to credit for those needing it.
 “I appreciate the thoughtful work of all those who participated in the deliberation of this bill to ensure loans are affordable by reducing the cost and enhancing consumer protections," said Senator Hottinger.
Major provision within the substitute bill include:

  • Limiting loans made under the Short-term Loan Law to 30-day intervals, a maximum loan term of 12 months, and a maximum principal of $1,000.  It also prohibits borrowers from having more than $2,500 in outstanding principal at any one time.

  • Requiring loans of 90 days or less to be means-tested so that the monthly payment is not more than 7% of a borrower’s monthly net income or 6% of their monthly gross.

  • Capping the monthly maintenance fee for a loan to be the lesser of 10% of the original principal or $30, and requiring monthly payments to be substantially equal and consisting of a combination of principal and interest.

  • Permitting a one-time, 2% loan origination fee on loans $500 or above, capping the total cost of the loan (all fees + maximum 28% interest) at 60% of the original principal, and limiting check cashing fees to $10.

  • Permitting a borrower to rescind a loan within 72 hours by returning the principal, and clarifying that a third party may pay off all or part of a loan. 

  • Prohibiting harassing phone calls from lenders.

  • Closing the credit service organization (CSO) loophole by prohibiting CSOs to extend credit with a principal of less than $5,000, a term of less than a year, or an annual percentage rate over 28%, and prohibiting lenders licensed under the small loan law and the general loan law from extending credit with a principal of less than $1,000 or a loan term of less than year.

The bill passed with bipartisan support and now returns to the Ohio House for a concurrence vote before moving to the governor for consideration.
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