Explanation of Proposed Change.-This section is designed to eliminate subterfuge and to identify the caller for possible violations. By use of the company name, liability could better be determined.

Current Wording.-28-3814 (f) (2) Page 31: the failure to clearly disclose in all communications made to collect or attempt to collect a claim or to obtain or attempt to obtain information about a consumer, that the debt collector is attempting to collect a claim and that any information obtained will be used for that purpose;

Reason for Change.—The language of the bill would cause the invasion of the debtors privacy in attempting to locate the debtor. For example, calling the debtor's landlord to determine if he is still living there would require disclosure of the purpose of the call.

Proposed Change.-28-3814 (f) (2): the failure to clearly disclose in all written communications made to collect or attempt to collect a claim or to obtain or attempt to obtain information about a consumer, that the debt collector is attempting to collect a claim and that any information obtained will be used for that purpose;

Explanation of Proposed Change.-Written communications would preclude schemes of subterfuge in attempting to locate debtors. District of Columbia law would then conform to current FTC regulations.

Current Wording.-28-3814 (j) (1), (2) and (3) Page 34 and 35:

(j) (1). Proof, by substantial evidence, that a debt collector has willfully violated any provision of the foregoing subsections of this section shall constitute a complete defense to any legal action undertaken by any person to enforce the claim that was being collected at the time the violation or violations occurred, and shall be deemed to constitute full satisfaction of a judgment on such claim property obtained before the occurrence of the violation or violations.

(j) (2). In addition to the remedy provided in paragraph (1) of this subsection, a debt collector shall be liable to any person affected by a violation of the foregoing subsections of this section for all damages proximately caused by the violation.

(j) (3). Punitive damages may be awarded to any person affected by a willful violation of the foregoing subsections of this section, when and in such amount as is deemed appropriate by the court and trier of fact.

Reason for Change.—(j) (1), (2) and (3) would in fact perpetrate fraud on the court. The merits of a case would never be reached since a violation of the Act would eliminate the debt. In this situation the retailer would lose his rights on a valid bill no matter how large. This great possibiltiy of fraud was similarly eliminated by legislation in alienation of affection suits in most states.

Proposed Change.-28-3814 (j): A person who willfully engages in any conduct in violation of this section is guilty of a misdemeanor and upon conviction may be sentenced to a fine not exceeding $2000.00 or to imprisonment not to exceed one year or both.

Explanation of Proposed Change.—(j) (1), (2) and (3) remedies for violation would be criminal by the collecting company in its entirety rather than eliminate the debt and give personal liability to the collector. Current law allows for civil redress in the above situations.

Current Wording.-28-3911 Sections 5 and 6 Page 43:

Section 5. The text of section 16-571 of subchapter III of chapter 5 of title 16, District of Columbia Code, is amended to read as follows:

(a) As used in this subchapter, "wages" means that part remaining after the deduction from wages of any amounts required by law to be withheld of:

(1) wages, salary, commissions, or other remuneration for services performed by an employee for his employer, including any such remuneration measured partly or wholly by percentages or share of profits, or by other sums based upon work done or results produced, whether or not the employee is given a drawing account; and

(2) any drawing account made available to an employee by his employer. (b) "Garnishment" means any legal or equitable procedure through which the wages of any individual are required to be withheld for payment of any debt. Section 6. The text of clauses (1), (2) and (3), in the first paragraph of section 16-572 of subchapter III of chapter 5 of title 16, District of Columbia Code, is amended to read as follows:

(1) no attachment if wages are less than $325 due or to become due to the judgment debtor from the employer-garnishee for the pay period or periods ending in any calendar month;

(2) 10 per centum of so much of the wages as exceeds $325 but does not exceed $500 due or to become due to the judgment debtor from the employergarnishee for the pay period or periods ending in any calendar month; plus (3) 25 per centum of so much of the wages as exceeds $500 due or to be come due to the judgment debtor from the employer-garnishee for the pay period of periods ending in any calendar month.

Reason for Change.-Sections 5 and 6 would upon calculation allow a person who grosses $500 per month to practically avoid garnishment. A person making $125 per week would likely net $108.43 per week, leaving his garnishment at $3.28 per week (family of four). One can see a judgment of $500 and its accruing interest would virtually never be paid.

Proposed Change.-28-3911 Sections 5 and 6: Delete entire Sections and substitute the garnishment section of the Federal Truth in Lending Act of retain present D.C. section on garnishments.

Explanation of Proposed Change.-Congress has, for the rest of the country, seen fit through the Federal Truth in Lending Act to establish federal guidelines for garnishment of wages. It follows that the federal city should not be treated differently than the rest of the country.

LAW OFFICES WILKES & ARTIS, Washington, D.C., December 13, 1971.

Hon. JOHN L. MCMILLAN AND

Hon. ANCHER NELSEN

U.S. House of Representatives, 1307 Longworth Building, Washington, D.C.

GENTLEMEN: I am special counsel for the Mortgage Bankers Association of Metropolitan Washington, Inc. and am writing this letter at the request of Mr. Denzil O. Nichols, President of the Association.

We have examined the language of Section 9 of HR 12115 and believe it will give the relief which is so urgently needed as a result of the Parkwood decision. Aside from mere editorial changes, it is the language which we agreed upon with Neighborhood Legal Services and which they found satisfactory from their standpoint.

Let me again urge immediate enactment of this bill. We know of well over one billion dollars of mortgages which have either been voided or their validity cast into grave doubt by the Parkwood case. We are entirely satisfied that there are many hundreds of millions, and perhaps billions, of dollars of other mortgages in the same situation. These mortgages are held by pension trust funds, charitable organizations, savings and loan associations, commercial banks, life insurance companies, individuals whose life savings are represented thereby and many other persons and organizations.

Unless this Bill is enacted and these mortgages validated in accordance with the original intent of the parties and unless this action is taken at the earliest possible moment, we cannot foresee exactly what will occur but we are certain that the financial repercussions will be disastrous for many, many investors. quite possibly reaching into every state in the Union.

Among the immediate local consequences which have already occurred has been the stopping, in the midst of construction, of a number of projects for low income and elderly persons. It has also drastically curtailed sources of funds for much needed future building projects.

While Section 9 is commonly referred to as the "Mortgage Bankers" portion of the Bill, let me assure you that this is a misnomer. It is true that the failure of obtain relief would probably wipe out the entire mortgage banking industry in the District of Columbia but this would represent only a tiny fraction (estimated at not more than 2%) of the losses which would be entailed. The remaining 98% of the losses would be sustained by the recipients of the pensions from the affected pension trust funds, the beneficiaries of the charitable organizations, the policy holders of the life insurance companies and other individuals located throughout the United States.

Your assistance in preventing this financial debacle is urgently solicited. Our industry is not directly involved in any other portion of the Bill but we have found no objectionable provisions therein.

Respectfully,

LOUIS H. MANN.

AMENDMENTS TO S. 1938 PROPOSED BY HOUSEHOLD FINANCE CORPORATION

(1) Page 37, Line 9: Insert as Section. 28–3902 the following:

"28-3902. Licensing.

(a) No organization shall engage in the business of making loans of money, credit, goods, or things in action in the amount or of the value of $10,000 or less and charge, contract for, or receive on any such loan a greater rate of interest, discount, or consideration therefor than the lender would be permitted by law to charge if he were not a licensee hereunder, except as authorized by this Chapter and without first obtaining a license from the Council.

(b) Application for such license shall be in writing, under oath, and in the form prescribed by the Council, and shall contain the full name and address of the applicant; also the street and number, if any, where the business is to be conducted and such further information as the Council may require. Such applicant at the time of making such application shall pay to the Council the sum of $200 as a fee for investigating the applicant, and the additional sum of $200 as an annual license fee, for a period terminating on the last day of the current calendar year; provided, that if the application is filed after June 30th in any year such license fee shall be 1⁄2 of the annual license fee for such year in addition to the fee for investigation.

(c) Every applicant shall prove, in form satisfactory to the Council, before the license is granted, that it has available for the operation of such business at the location specified in the application, assets of at least $5,000.

(d) The applicant shall also at the same time file with the Council a bond to be approved by it, in which the applicant shall be obligor, in the sum of $5,000 with one or more sureties, whose liabilities as such sureties need not exceed said sum in the aggregate. Said bond shall run to the District of Columbia for the uses of the District and of any person or persons who may have a cause of action against the obligor in said bond under provisions of this Chapter. Such bond shall be conditioned that said obligor will faithfully conform to and abide by the provisions of this Chapter and of all rules, regulations, and directions lawfully made by the Council hereunder and will pay to the District and to any such person or persons any and all monies that may become due or owing to the District or to such person or persons from said obligor under and by virtue of the provisions of this Chapter.

(e) No such license shall be issued unless such organization shall appoint, in writing, the Commissioner and his successors in office or any official who shall hereafter be charged with administration of this Chapter, as attorney upon whom all lawful process against such organization may be served. A copy of such written appointment duly certified and authenticated, shall be filed in the office of the Commissioner. The appointment shall be continued while any liability remains outstanding in the District against any such organization. Service on such Commissioner shall be deemed sufficient service upon any such organization. When summons is served upon the Commissioner as attorney for such organization he shall immediately notify such organization, enclosing said summons, by certified mail giving the hour and date of such service.

(f) Upon filing such application and approval of such bond and payment of such fees, if the Council shall upon investigation find that the financial responsibilities, experience, character, and general fitness of the applicant and of the members thereof (if the applicant be co-partnership or association) and of the officers and directors thereof (if the applicant be a corporation) are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently, within the purposes of this Act, and also, that the applicant has available for the operation of such business at the specified location assets of at least $5,000, it shall thereupon issue and deliver a license to the applicant to make loans in accordance with the provisions of this Chapter at the location specified in the application, the license shall remain in full force and effect until it is surrendered by the licensee or revoked by the Council, as here and after provided; if the Council shall not so find, it shall not issue such license and shall notify the applicant of the denial and return to the applicant the bond and the sum paid by the applicant as a license fee.

The Council shall approve or deny every application for license hereunder within 60 days from the filing thereof with said fees and said approved bond.

No application shall be denied except after the applicant shall have had a notice of a hearing on said application and an opportunity to be heard thereon. If the application is denied, the Council shall, within 20 days thereafter, prepare and keep on file in its office, a written order or deniel thereof, which shall contain its findings with respect thereto and the reasons supporting the denial, and shall send by certified mail a copy thereof to the applicant at the address stated in the application, within 5 days after filing of such order.

(g) Not more than one place of business shall be maintained under the same license, but the Council may issue more than one license to the same licensee upon compliance with all the provisions of this Chapter governing an original issuance of a license, for each such new license. Whenever a licensee shall wish to change its place of business to any location other than within the same building originally stated in its license it shall give written notice thereof to the Council, which shall thereupon attach to the license in writing his approval of the change and the date thereof, which shall be authority for the operation of such business under such license at such new location.

(h) Each licensee shall, on or before the 20th day of each December, pay to the Council the sum of $200 as an annual license fee for the next succeeding calendar year and shall at the same time file with the Council a bond in the same amount and of the same character as required by this Section. In addition to the license fees herein provided for, the reasonable expense of any examination or investigation by the Council shall be borne by the licensee.

(1) The Council shall, upon 5 days' notice to the licensee by certified mail directed to the licensee at the address stated in the license, stating the contemplated action and in general the grounds therefor, and upon reasonable opportunity to be heard prior to such action, revoke any license issued hereunder if it shall find that:

(1) the licensee has failed to pay the annual license fee or to maintain in effect the bond or bonds required under the provisions of this Chapter or to comply with any order, decision, or finding of the Council lawfully made pursuant to and within the authority of this Chapter; or that

(2) the licensee has violated any provision of this Chapter or any rule, regulation, or direction lawfully made by the Council under and within the authority of this Chapter; or

(3) Any fact or condition exists which, if it had existed at the time of original application for such license, clearly would have warranted the Council in refusing originally to issue such license.

The Council may revoke only the particular license with respect to which grounds for revocation may occur or exist, or, if it shall find that such grounds for revocation are of general application to all offices or to more than one office, operated by such licensee, it shall revoke all of the licenses issued to such licensee or such number of licenses as such grounds apply to, as the case may be. Any licensee may surrender any license by delivering to the Council written notice of such surrender, but such surrender shall not affect such licensee's civil or criminal liability for acts committed prior to such surrender, or affect its bond, or entitle such licensee to a return of any part of the annual license fee.

No revocation or surrender of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any borrower.

Every license issued hereunder shall remain in force and effect until the same shall have been revoked or surrendered, in accordance with the provisions of this Chapter, but the Council shall have authority on its own motion to issue new licenses to a licensee whose license or licenses shall have been revoked if no fact or condition then exists which clearly would have warranted the Council in refusing originally to issue such license under this Chapter.

No license shall be revoked except after the licensee shall have had notice of a hearing thereon and an opportunity to be heard thereat. When any license is so revoked, the Council shall, within 20 days thereafter, prepare and keep on file in its office, a written order or decision of revocation, which shall contain its findings with respect thereto and the reason supporting the revocation and shall send by certified mail a copy thereof to the licensee at the address stated in the license within 5 days after the filing in its office of such order, findings, or decision. (2) Page 37, Line 9, redesignate subparagraph 28-3902 as subparagraph 283903; Line 10, before the word "Notwithstanding" add the paragraph designation

"(a)"; on Lines 13 and 14 strike the words ", including, without limitation," and insert the words, "concerning the following:"; strike all of Lines 18, 19, 20, and 21; redesignate paragraphs (6) and (7) on Lines 22, 23, and 24 as paragraphs (3) and (4); on Page 38, Line 4, strike all of paragraph (8).

(3) Page 38, Line S, redesignate subparagraph 28-3903 as subparagraph 283904; on Line 20 strike the period after the word “debtors” and add the following": "provided however, such maximum finance charges shall be determined and fixed at a level or levels none of which, if expressed as an annual percentage rate, is less than 18% per annum on the unpaid balances.

(4) Page 39, Line 8, redesignate subparagraph 28-3904 as paragraph (b) under new section 28-3903.

(5) Page 39, Line 15, strike all of subparagraph 28–3905.

(6) Page 39, Line 15, insert as subparagraph 28-3905 the following:

28-3905. Additional Charges.

(a) In addition to the loan finance charge permitted by this Part, a lender may contract for and receive the following additional charges in connection with a consumer loan:

(1) official fees and taxes;

(2) charges for insurance as described in subsection (b);

(3) charges for other benefits, including insurance, conferred on the debtor, if the benefits are of value to him and if the charges are reasonable in relation to the benefits and are of a type which is not for credit. (b) An additional charge may be made for insurance written in connection with the loan, other than insurance protecting the lender against the debtor's default or other credit loss,

(1) with respect to insurance against loss of or damage to property, or against liability, if the lender furnishes a clear and specific statement in writing to the debtor, setting forth the cost of the insurance if obtained from or through the lender, and stating that the debtor may choose the person through whom the insurance is to be obtained; and,

(2) with respect to consumer credit insurance providing life, accident, or health coverage, if the insurance coverage is not a factor in the approval by the lender of the extension of credit, and this fact is clearly disclosed in writing to the debtor, and if, in order to obtain the insurance in connection with the extension of credit, the debtor gives specific affirmative written indication of his desire to do so after written disclosure to him of the cost thereof.

(7) Page 40, Line 13, strike all of subparagraph 28-3907.

(8) Page 41, Line 10, redesignate subparagraph 28-3908 as subparagraph 28-3907; on Line 14, after the word "bring" insert the words "an individual"; on Line 15, strike the words "authorized by" and insert the words "furnished pursuant to" and redesignate subparagraph 28-3907, Line 15, as subparagraph 28-3902.

(9) Page 41, Line 23, strike all of subparagraph 28-3909.

(10) Page 42, Line 7, redesignate subparagraph 28-3910 as subparagraph 28-3908.

(11) Page 42, Line 21, strike all of subparagraph 28-3911.

These amendments are necessary to assure that the District of Columbia City Council's regulations on licensing, maximum loans, rates, and insurance will conform with the laws of other states, the Uniform Consumer Credit Code, and the Truth in Lending Law.

Lenders will be assured of adequate licensing provisions, a maximum loan ceiling of $10,000 and a minimum rate of 18% simple annual interest (as compared with a $25,000 loan ceiling authorized for banks and the 18% rate for retail installment sales.