Subcommittee pauses debate on SB787 after extensive consumer‑protection questioning

Lawmakers heard competing views on SB787, a bill that would define "bridge loans" as short-term consumer loans tied to the acquisition or construction of owner-occupied residential property and would exempt those loans from a state refinancing requirement for loans with balloon payments.

Michael Stidham, director of regulatory affairs at Rocket Mortgage, said South Carolina is the only state where his company cannot offer bridge loans because the state's existing requirement that lenders refinance balloon-payment loans on terms no less favorable than the original transaction is overly broad. Stidham described bridge loans as temporary, interest-only financing designed to let a buyer purchase a home while their previous home is still on the market; he said Rocket's product typically uses a six-month term and reported two one-month extension requests and zero delinquencies or defaults in the last 12 months.

Members raised a series of consumer-protection concerns. Representative Pedalino asked whether balloon payments could come due before a borrower's old home sells; Stidham confirmed the possibility and said Rocket stays in contact with borrowers, may offer extensions, and in practice has allowed some refinancing or extension. Multiple members, including Representative Williams and Representative Smith, described housing-affordability pressures and worried that loan holders who face unemployment or market downturns could face foreclosure. Stidham said Rocket works to avoid foreclosure and holds short-term bridge loans on its own books rather than immediately securitizing them.

Regulators and consumer advocates urged tighter language. Ron Bodvak, commissioner of the consumer finance division at the State Board of Financial Institutions, warned the bill was "broadly written" and could increase foreclosure risk across the industry; the State Treasurer's Office's counsel raised similar concerns. Carrie Leibbacker, administrator and consumer advocate at the Department of Consumer Affairs, said the department proposed narrowing the definition and recommended a 12-month cap (many states use 12 months), stronger extension or refinance mechanisms, and tighter foreclosure-related protections.

The subcommittee did not vote on SB787. The chair noted that under House rules the panel could not take action after the allotted time; members moved to adjourn and the hearing ended with SB787 pending further negotiation and possible amendment.