We have been following SB 448, the “Small Business Borrower Protection Act” passed by the Georgia Senate on February 27, 2012, with great interest. The bill was revised by the House Committee on Banks and Banking. Despite reports that the House Rules Committee was to submit the revised bill for vote by the Georgia House, the General Assembly’s legislative session ended yesterday without a vote.

As originally enacted, SB 448 would have greatly limited the ability of a third party loan purchaser to recover against a guarantor. The bill would have limited a loan purchaser’s recovery against a guarantor to the lesser of (i) the actual amount paid for the debt obligation, plus non-default interest at the time of purchase, or (ii) the maximum amount permitted to be collected under the guaranty. In any collection action, the successor creditor would be required to prove the amount it paid for the debt obligation. The Senate version of the bill was to have applied retroactively to loan sales and judgment transfers but would not have applied to federally insured institutions.