Lenders required to pause monthly payments on seized property, and lenders prohibited from reporting failure to make monthly payments on seized property.

2025-2026 Regular Session Introduced by Leigh Finke and 3 co-sponsors

Lenders must pause payments on seized property and stop reporting missed payments to credit bureaus during seizure, shielding borrowers from credit harm.

Introduction and first reading, referred to Commerce Finance and Policy

#consumerprotection #crimevictims

Overview

HF 2564, introduced on March 20, 2025, and referred to the Commerce Finance and Policy committee, seeks to provide protections for consumers related to collateral that has been seized due to loan defaults. The bill’s stated purpose aligns with consumer protection and crime victims’ interests. A companion bill exists in the Senate as SF 1797.

Purpose and intent

The bill aims to shield borrowers from ongoing financial obligations and adverse credit consequences while property is seized or held as collateral.

It seeks to prevent lenders from reporting to credit bureaus or other reporting channels that a borrower failed to make monthly payments for property that is seized, thereby reducing negative credit impact during the seizure period.

By mandating a pause on monthly payments during seizure and restricting negative reporting, the bill intends to provide temporary relief to victims or borrowers while the seized property is repossessed or otherwise processed.

Key provisions (as indicated by bill title and summary)

Lenders would be required to pause monthly payments on seized property for the period in which the property is seized or held.

Lenders would be prohibited from reporting the borrower’s failure to make monthly payments on seized property during the seizure period.

The bill does not, in the available summary, specify the exact duration of the payment pause, the types of loans covered (e.g., auto, mortgage, consumer loans), how “seizure” is defined, or whether interest or fees would continue to accrue during the pause. The full text would define these details.

Who is affected

Borrowers whose property is seized (e.g., collateral tied to an outstanding loan) stand to benefit from a temporary pause in payments and from protections against negative credit reporting during the seizure period.

Lenders and loan servicers would be responsible for implementing the pause and adjusting reporting practices accordingly.

Procedural and timeline aspects

Status: Introduction and first reading; referred to the Commerce Finance and Policy committee.

Next steps in the legislative process typically include a committee hearing, potential amendments, and votes in committee, followed by floor consideration in the House. If advanced, the bill would move to the other chamber.

The companion Senate bill is SF 1797, indicating parallel consideration across chambers.

Considerations and questions to watch

How “seized property” and the duration of the pause are defined in the final text.

Which loan types are covered and whether there are carve-outs (e.g., mortgage vs. auto vs. other consumer loans).

How interest, fees, and accrual are treated during the pause.

The impact on lenders’ administrative costs and credit reporting systems.

Effective date and any transitional provisions for existing loans.

This summary reflects the publicly available information up to the first reading; the full bill text would provide precise definitions and operational details.

Bill