As Introduced 1
123rd General Assembly 4
Regular Session S. B. No. 231 5
1999-2000 6
SENATORS WHITE-RAY 8
_________________________________________________________________ 10
A B I L L
To amend sections 1321.20, 1321.51 to 1321.55, 12
1321.57, 1321.58, and 1321.99 of the Revised Code 13
to make revisions in the Small Loan Law and the 14
Mortgage Loan Law, including changes relative to
maximum license or certificate of registration 15
fees, application of the law, examinations and 16
investigations by the Division of Financial 17
Institutions, permissible charges by registrants,
and penalties for violations. 18
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 20
Section 1. That sections 1321.20, 1321.51, 1321.52, 22
1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 of the 23
Revised Code be amended to read as follows: 24
Sec. 1321.20. (A) Every person licensed or registered 33
under this chapter shall pay to the superintendent of financial 34
institutions, prior to the last day of June, an annual license or 36
certificate of registration fee. On or about the fifteenth day 37
of April of each year, the superintendent shall determine the 38
license or certificate fees to be charged, pursuant to sections 39
1321.03, 1321.05, 1321.53, and 1321.73 of the Revised Code. Such 40
determination shall be made by dividing the appropriation for the 41
consumer finance section of the division of financial 42
institutions for the current fiscal year by the number of 43
licenses and certificates issued as of the date of the 44
computation. In no event shall the amount of the fee exceed two 45
THREE hundred fifty dollars, except that the maximum fee which 46
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may be charged insurance premium finance companies licensed under 47
section 1321.73 of the Revised Code shall not exceed three 48
hundred seventy-five dollars. Prior to the first day of June of 49
each year, the superintendent shall inform each person licensed 50
or registered under this chapter of the amount of the license or 51
certificate fee for the succeeding fiscal year as determined by 52
this section. 53
(B) Each person licensed under Chapter 4727. of the 55
Revised Code, prior to the last day of June, shall pay to the 56
superintendent a fee equal to twice the amount of the fee 57
determined by the superintendent pursuant to division (A) of this 58
section. However, in no event shall the amount of the fee exceed 59
three hundred dollars. 60
(C) The fee for a license or certificate issued pursuant 62
to Chapter 1321., 4727., or 4728. of the Revised Code after the 63
first day of January in any fiscal year shall be equal to 64
one-half the amount determined according to divisions (A) and (B) 65
of this section or in accordance with section 4728.03 of the 66
Revised Code. 67
(D) If the renewal fees billed by the superintendent 69
pursuant to divisions (A) and (B) of this section are less than 70
the estimated expenditures of the consumer finance section of the 72
division of financial institutions, as determined by the
superintendent, for the following fiscal year, the superintendent 73
may assess each person licensed pursuant to section 1321.04 or 74
registered pursuant to section 1321.53 of the Revised Code at a 75
rate sufficient to equal in the aggregate the difference between 76
the renewal fees billed and the estimated expenditures. Each 77
person shall pay the assessed amount to the superintendent prior 78
to the last day of June. In no case shall the assessment exceed 79
ten cents per each one hundred dollars of interest (excluding 80
charge-off recoveries), points, loan origination charges, and 81
credit line charges collected by that person during the previous 82
calendar year. If an assessment is imposed under this division, 83
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it shall not be less than two hundred fifty dollars per licensee 84
or registrant and shall not exceed thirty thousand dollars less 85
the total renewal fees paid pursuant to division (A) of this 86
section by each licensee or registrant. 87
Sec. 1321.51. As used in sections 1321.51 to 1321.60 of 96
the Revised Code: 97
(A) "Person" means an individual, partnership, 99
association, trust, corporation, or any other legal entity. 100
(B) "Certificate" means a certificate of registration 102
issued under sections 1321.51 to 1321.60 of the Revised Code. 103
(C) "Registrant" means a person to whom one or more 105
certificates have been issued. 106
(D) "Principal amount" means the amount of cash paid to, 108
or paid or payable for the account of, the borrower, AND INCLUDES 110
ANY CHARGE, FEE, OR EXPENSE THAT IS FINANCED BY THE BORROWER AT 112
ORIGINATION OF THE LOAN OR DURING THE TERM OF THE LOAN.
(E) "Interest" means all charges payable directly or 114
indirectly by a borrower to a registrant as a condition to a loan 115
or an application for a loan, however denominated, but does not 116
include default charges, deferment charges, insurance charges or 117
premiums, court costs, loan origination charges, check collection 118
charges, credit line charges, points, prepayment penalties, or 119
other fees and charges specifically authorized by law. 120
(F) "Interest-bearing loan" means a loan in which the debt 122
is expressed as the principal amount and interest is computed, 123
charged, and collected on unpaid principal balances outstanding 124
from time to time. 125
(G) "Precomputed loan" means a loan in which the debt is a 127
sum comprising the principal amount and the amount of interest 128
computed in advance on the assumption that all scheduled payments 129
will be made when due. 130
(H) "Actuarial method" means the method of allocating 132
payments made on a loan between the principal amount and interest 133
whereby a payment is applied first to the accumulated interest 134
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and the remainder to the unpaid principal amount. 135
(I) "Applicable charge" means the amount of interest 137
attributable to each monthly installment period of the loan 138
contract. The applicable charge is computed as if each 139
installment period were one month and any charge for extending 140
the first installment period beyond one month is ignored. In the 141
case of loans originally scheduled to be repaid in sixty-one 142
months or less, the applicable charge for any installment period 143
is that proportion of the total interest contracted for, as the 144
balance scheduled to be outstanding during that period bears to 145
the sum of all of the periodic balances, all determined according 146
to the payment schedule originally contracted for. In all other 147
cases, the applicable charge for any installment period is that 148
which would have been made for such period had the loan been made 149
on an interest-bearing basis, based upon the assumption that all 150
payments were made according to schedule. 151
(J) "Broker" means a person who acts as an intermediary or 153
agent in finding, arranging, or negotiating loans, and charges or 154
receives a fee for these services. 155
(K) "Annual percentage rate" means the ratio of the 157
interest on a loan to the unpaid principal balances on the loan 158
for any period of time, expressed on an annual basis. 159
(L) "Point" means a charge equal to one per cent of either 161
of the following: 162
(1) The principal amount of a precomputed loan or 164
interest-bearing loan; 165
(2) The original credit line of an open-end loan. 167
(M) "Prepayment penalty" means a charge for prepayment of 169
a loan at any time prior to five years from the date the loan 170
contract is executed. 171
(N) "Refinancing" means a loan the proceeds of which are 173
used in whole or in part to pay the unpaid balance of a prior 174
loan made by the same registrant to the same borrower under 175
sections 1321.51 to 1321.60 of the Revised Code. 176
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(O) "Superintendent of financial institutions" includes 178
the deputy superintendent for consumer finance as provided in 179
section 1181.21 of the Revised Code. 180
Sec. 1321.52. (A)(1) No person, on that person's own 189
behalf or on behalf of any other person, shall do either ANY of 190
the following without having first obtained a certificate of 192
registration from the division of financial institutions: 193
(a) Advertise, solicit, or hold out that the person is 195
engaged in the business of making loans secured by a mortgage on 196
a borrower's real estate which is other than a first lien on the 198
real estate;
(b) ADVERTISE, SOLICIT, OR HOLD OUT THAT THE PERSON IS 200
ENGAGED IN THE BUSINESS OF MAKING SECURED OR UNSECURED LOANS FOR 201
WHICH THE PERSON CHARGES OR COLLECTS A RATE OF INTEREST IN EXCESS 202
OF THE MAXIMUM RATE PROVIDED IN DIVISION (A) OF SECTION 1343.01 203
OF THE REVISED CODE, UNLESS THE PERSON IS SPECIFICALLY AUTHORIZED 205
BY STATE OR FEDERAL LAW TO CHARGE OR COLLECT THAT RATE;
(c) Engage in the business of lending or collecting the 207
person's own or another person's money, credit, or choses in 208
action for such THE loans DESCRIBED IN DIVISION (A)(1)(a) OR (b) 210
OF THIS SECTION.
(2) Each person issued a certificate is subject to all the 212
rules prescribed under sections 1321.51 to 1321.60 of the Revised 213
Code. 214
(B) All loans made to persons who at the time are 216
residents of this state are considered as made within this state 217
and subject to the laws of this state, regardless of any 218
statement in the contract or note to the contrary. 219
(C) A registrant may make unsecured loans, loans secured 221
by a mortgage on a borrower's real estate which is a first lien 222
or other than a first lien on the real estate, loans secured by 223
other than real estate, and loans secured by any combination of 224
mortgages and security interests, on terms and conditions 225
provided by sections 1321.51 to 1321.60 of the Revised Code. 226
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(D)(1) IF A LENDER THAT IS SUBJECT TO SECTIONS 1321.51 TO 229
1321.60 OF THE REVISED CODE MAKES A LOAN IN VIOLATION OF DIVISION 230
(A)(1) OF THIS SECTION, THE LENDER HAS NO RIGHT TO COLLECT, 232
RECEIVE, OR RETAIN ANY INTEREST OR CHARGES ON THAT LOAN. 233
(2) IF A REGISTRANT APPLIES TO THE DIVISION FOR A RENEWAL 235
OF THE REGISTRANT'S CERTIFICATE AFTER THE DATE REQUIRED BY 236
DIVISION (A)(4) OF SECTION 1321.53 OF THE REVISED CODE, BUT PRIOR 238
TO THE FIRST DAY OF AUGUST OF THAT YEAR, AND THE DIVISION 239
APPROVES THE APPLICATION, DIVISION (D)(1) OF THIS SECTION DOES 240
NOT APPLY WITH RESPECT TO ANY LOAN MADE BY THE REGISTRANT WHILE 241
THE REGISTRANT'S CERTIFICATE WAS EXPIRED. 242
Sec. 1321.53. (A)(1) An application for a certificate of 251
registration under sections 1321.51 to 1321.60 of the Revised 252
Code shall contain an undertaking by the applicant to abide by 253
those sections. The application shall be in writing, under oath, 254
and in the form prescribed by the division of financial 256
institutions, shall give the location where the business is to be 257
conducted and the names and addresses of the partners, officers, 258
or trustees of the applicant, and shall contain any further 259
relevant information that the division may require. Applicants 260
that are foreign corporations shall obtain and maintain a license 261
pursuant to Chapter 1703. of the Revised Code before a 262
certificate is issued or renewed. 263
(2) Upon the filing of the application and the payment by 265
the applicant of two hundred dollars as an investigation fee and 266
an annual registration fee as determined by the superintendent of 267
financial institutions pursuant to section 1321.20 of the Revised 269
Code, the division shall investigate the relevant facts. If the 270
application involves investigation outside this state, the 271
applicant may be required by the division to advance sufficient 272
funds to pay any of the actual expenses of such investigation, 273
when it appears that these expenses will exceed two hundred 274
dollars. An itemized statement of any of these expenses which 275
the applicant is required to pay shall be furnished the applicant 276
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by the division. No certificate shall be issued unless the fees 277
have been submitted to the division, and no registration fee or 278
investigation fee will be returned after a certificate has been 279
issued. 280
(3) If an application for a certificate of registration 283
does not contain all of the information required under division 284
(A)(1) of this section, and if such information is not submitted 286
to the division within ninety days after the application is 287
filed, the superintendent may consider the application withdrawn 288
and may retain the investigation fee. 289
(4) If the division finds that the financial 292
responsibility, experience, character, and general fitness of the 293
applicant are such as to command the confidence of the public and 294
to warrant the belief that the business will be operated honestly 295
and fairly in compliance with and within the purposes of sections 296
1321.51 to 1321.60 of the Revised Code, and that the applicant 297
has the net worth and assets required by division (B) of this 298
section, the division shall thereupon issue a certificate to the 299
applicant. The certificate may be continued from year to year 300
SHALL EXPIRE ON THE FIRST DAY OF JULY NEXT AFTER ITS ISSUE, AND 301
ON THE FIRST DAY OF JULY IN EACH SUCCEEDING YEAR, UNLESS RENEWED 302
by payment of an annual fee, and any assessment, as determined by 303
the superintendent pursuant to section 1321.20 of the Revised 305
Code, on or before the last day of June of each year. No other 306
fee or assessment shall be required of a registrant by the state 307
or any political subdivision of the state.
If the division does not so find, it shall enter an order 310
denying the application, and forthwith notify the applicant of 311
the denial, the grounds for the denial, and the applicant's 312
reasonable opportunity to be heard on the action in accordance 313
with Chapter 119. of the Revised Code. In the event of denial, 314
the division shall return the registration fee but retain the 315
investigation fee.
(5) IF THERE IS A CHANGE OF TEN PER CENT OR MORE IN THE 317
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OWNERSHIP OF A REGISTRANT, THE DIVISION MAY MAKE ANY 318
INVESTIGATION NECESSARY TO DETERMINE WHETHER ANY FACT OR 319
CONDITION EXISTS THAT, IF IT HAD EXISTED AT THE TIME OF THE 320
ORIGINAL APPLICATION FOR A CERTIFICATE OF REGISTRATION, THE FACT 321
OR CONDITION WOULD HAVE WARRANTED THE DIVISION TO DENY THE 322
APPLICATION UNDER DIVISION (A)(4) OF THIS SECTION. IF SUCH A 323
FACT OR CONDITION IS FOUND, THE DIVISION MAY, IN ACCORDANCE WITH 324
CHAPTER 119. OF THE REVISED CODE, REVOKE THE REGISTRANT'S 325
CERTIFICATE.
(B) Each registrant that engages in lending under sections 328
1321.51 to 1321.60 of the Revised Code shall maintain both of the 329
following:
(1) A net worth of at least fifty thousand dollars; 331
(2) For each certificate of registration, assets of at 333
least fifty thousand dollars either in use or readily available 334
for use in the conduct of the business. 335
(C) Not more than one place of business shall be 337
maintained under the same certificate, but the division may issue 338
additional certificates to the same registrant upon compliance 339
with sections 1321.51 to 1321.60 of the Revised Code, governing 340
the issuance of a single certificate. No change in the place of 341
business of a registrant to a location outside the original 342
municipal corporation shall be permitted under the same 343
certificate without the approval of a new application, the 344
payment of the registration fee as determined by the 345
superintendent pursuant to section 1321.20 of the Revised Code 346
and, if required by the superintendent, the payment of an 347
investigation fee of two hundred dollars. When a registrant 348
wishes to change its place of business within the same municipal 349
corporation, it shall give written notice of the change in 350
advance to the division, which shall provide a certificate for 351
the new address without cost. If a registrant changes its name, 352
prior to making loans under the new name it shall give written 353
notice of the change to the division, which shall provide a 354
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certificate in the new name without cost. Sections 1321.51 to 355
1321.60 of the Revised Code do not limit the loans of any 356
registrant to residents of the community in which the 357
registrant's place of business is situated. Each certificate 358
shall be kept conspicuously posted in the place of business of 359
the registrant and is not transferable or assignable. 360
(D) Sections 1321.51 to 1321.60 of the Revised Code do not 362
apply to any of the following: 363
(1) Persons lawfully doing business under the authority of 365
any law of this state, another state, or the United States 366
relating to banks, savings banks, trust companies, savings and 367
loan associations, or credit unions; 368
(2) Life, property, or casualty insurance companies 370
licensed to do business in this state; 371
(3) Any person that is a lender making a loan pursuant to 373
sections 1321.01 to 1321.19 of the Revised Code or a business 374
loan as described in division (B)(6) of section 1343.01 of the 375
Revised Code; 376
(4) Any governmental agency or instrumentality, or any 378
entity included under division (B)(3) of section 1343.01 of the 379
Revised Code. 380
(E) No person engaged in the business of selling tangible 382
goods or services related to tangible goods may receive or retain 383
a certificate under sections 1321.51 to 1321.60 of the Revised 384
Code for such place of business. 385
Sec. 1321.54. (A) The division of financial institutions 395
may adopt, in accordance with Chapter 119. of the Revised Code, 397
rules that are necessary for the enforcement of sections 1321.51 398
to 1321.60 of the Revised Code and that are consistent with those 399
sections. Each rule shall contain a reference to the section,
division, or paragraph of the Revised Code to which it applies. 400
The division shall send by regular mail to each registrant a copy 402
of each rule that is adopted pursuant to this section.
(B) The division shall, upon written notice to the 404
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registrant stating the contemplated action, the grounds for the 405
action, and the registrant's reasonable opportunity to be heard 406
on the action in accordance with Chapter 119. of the Revised 408
Code, revoke or, suspend, OR FAIL TO RENEW any certificate issued 409
under sections 1321.51 to 1321.60 of the Revised Code, OR IMPOSE 410
A MONETARY FINE, if it finds that the registrant has continued to 412
violate those sections, after receiving notice of the violation 413
or violations from the division, or is in default in the payment 414
of the annual assessment or certificate of registration fee 415
prescribed in section 1321.20 of the Revised Code. The 416
revocation or, suspension, OR FAILURE TO RENEW shall not impair 418
the obligation of any pre-existing lawful contract made under 419
sections 1321.51 to 1321.60 of the Revised Code.
MONETARY FINES IMPOSED UNDER THIS DIVISION SHALL NOT EXCEED 421
ONE THOUSAND DOLLARS PER VIOLATION OF LAW OR RULE, FOR EACH DAY 422
THE VIOLATION IS COMMITTED, REPEATED, OR CONTINUED. 423
(C) The superintendent of financial institutions may 426
investigate alleged violations of sections 1321.51 to 1321.60 of 427
the Revised Code, or the rules adopted thereunder, or complaints 428
concerning any such violation. The superintendent may make 430
application to the court of common pleas for an order enjoining 431
any such violation and, upon a showing by the superintendent that 432
a person has committed, or is about to commit, such a violation, 433
the court shall grant an injunction, restraining order, or other 434
appropriate relief.
(D) In conducting an investigation pursuant to this 437
section, the superintendent may compel, by subpoena, witnesses to 438
testify in relation to any matter over which the superintendent 439
has jurisdiction, and may require the production or photocopying 440
of any book, record, or other document pertaining to such matter. 441
If a person fails to file any statement or report, obey any 442
subpoena, give testimony, produce any book, record, or other 443
document as required by such a subpoena, or permit photocopying 444
of any book, record, or other document subpoenaed, the court of 445
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common pleas of any county in this state, upon application made 446
to it by the superintendent, shall compel obedience by attachment 447
proceedings for contempt, as in the case of disobedience of the 448
requirements of a subpoena issued from the court, or a refusal to 449
testify therein.
(E) If the superintendent determines that a person is 451
engaged in, or is believed to be engaged in, activities that may 452
constitute a violation of sections 1321.51 to 1321.60 of the 453
Revised Code, the superintendent may, after notice and a hearing 455
conducted in accordance with Chapter 119. of the Revised Code, 456
issue a cease and desist order. Such an order shall be 457
enforceable in the court of common pleas. 458
Sec. 1321.55. (A) Every registrant shall keep records 467
pertaining to loans made under sections 1321.51 to 1321.60 of the 469
Revised Code. Such records shall be segregated from records 470
pertaining to transactions that are not subject to these sections 471
of the Revised Code. Every registrant shall preserve records 472
pertaining to loans made under sections 1321.51 to 1321.60 of the 474
Revised Code for at least two years after making the final entry 475
on such records. Accounting systems maintained in whole or in 476
part by mechanical or electronic data processing methods that 477
provide information equivalent to that otherwise required are 478
acceptable for this purpose. At least once each year
EIGHTEEN-MONTH CYCLE, the division of financial institutions 480
shall make or cause to be made an examination of records 482
pertaining to loans made under sections 1321.51 to 1321.60 of the 483
Revised Code, for the purpose of determining whether the
registrant is complying with these sections and of verifying the 484
registrant's annual report. 485
(B)(1) As required by the superintendent of financial 487
institutions, each registrant shall file with the division each 489
year a report under oath or affirmation, on forms supplied by the 490
division, concerning the business and operations for the 491
preceding calendar year. Whenever a registrant operates two or 492
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more registered offices or whenever two or more affiliated 493
registrants operate registered offices, then a composite report 494
of the group of registered offices may be filed in lieu of 495
individual reports. 496
(2) The division shall publish annually an analysis of the 498
information required under division (B)(1) of this section, but 499
the individual reports shall not be public records and shall not 500
be open to public inspection. 501
(C) All information obtained by the superintendent or the 504
superintendent's deputies, examiners, assistants, agents, or
clerks by reason of their official position, including 505
information obtained by such persons from the annual report of a 506
registrant or in the course of examining a registrant or 507
investigating an applicant for a certificate, is privileged and 508
confidential. All such information shall remain privileged and 509
confidential for all purposes except when it is necessary for the 511
superintendent and the superintendent's deputies, examiners,
assistants, agents, or clerks to take official action regarding 512
the affairs of the registrant or in connection with criminal 513
proceedings. 514
(D) No person is in violation of sections 1321.51 to 516
1321.60 of the Revised Code for any act taken or omission made in 517
reliance on a written notice, interpretation, or examination 518
report from the superintendent.
Sec. 1321.57. (A) Notwithstanding any other provisions of 527
the Revised Code, a registrant may contract for and receive 528
interest, calculated according to the actuarial method, at a rate 529
or rates not exceeding twenty-one per cent per year on the unpaid 530
principal balances of the loan. Loans may be interest-bearing or 531
precomputed. 532
(B) For purposes of computation of time on 534
interest-bearing and precomputed loans, including, but not 535
limited to, the calculation of interest, a month is considered 536
one-twelfth of a year, and a day is considered one three hundred 537
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sixty-fifth of a year when calculation is made for a fraction of 538
a month. ALTERNATIVELY, A REGISTRANT MAY CONSIDER A DAY AS ONE 539
THREE HUNDRED SIXTIETH OF A YEAR AND EACH MONTH AS HAVING THIRTY 540
DAYS. A year is as defined in section 1.44 of the Revised Code. 542
A month is that period described in section 1.45 of the Revised 543
Code.
(C) With respect to interest-bearing loans: 545
(1)(a) Interest shall be computed on unpaid principal 547
balances outstanding from time to time, for the time outstanding. 548
(b) As an alternative to the method of computing interest 550
set forth in division (C)(1)(a) of this section, a registrant, if 551
the loan contract so provides, may charge and collect interest 552
for the first installment period based on elapsed time from the 553
date of the loan to the first scheduled payment due date, and for 554
each succeeding installment period from the scheduled payment due 555
date to the next scheduled payment due date, regardless of the 556
date or dates the payments are actually made. 557
(c) Whether a registrant computes interest pursuant to 559
division (C)(1)(a) or (b) of this section, each payment shall be 560
applied first to unpaid charges, then to interest, and the 561
remainder to the unpaid principal balance. However, if the 562
amount of the payment is insufficient to pay the accumulated 563
interest, the unpaid interest continues to accumulate to be paid 564
from the proceeds of subsequent payments and is not added to the 565
principal balance. 566
(2) Interest shall not be compounded, COLLECTED, or paid 569
in advance. However, if BOTH OF THE FOLLOWING APPLY:
(a) INTEREST MAY BE CHARGED TO EXTEND THE FIRST MONTHLY 571
INSTALLMENT PERIOD BY NOT MORE THAN FIFTEEN DAYS, AND THE 572
INTEREST CHARGED FOR THE EXTENSION MAY BE ADDED TO THE PRINCIPAL 573
AMOUNT OF THE LOAN. 574
(b) IF part or all of the consideration for a new loan 577
contract is the unpaid principal balance of a prior loan, then 578
the principal amount payable under such THE new loan contract may 579
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include any unpaid interest that has accrued. The resulting loan 580
contract shall be deemed a new and separate loan transaction for 581
purposes of this section. The unpaid principal balance of a 582
precomputed loan is the balance due after refund or credit of 583
unearned interest as provided in division (D)(3) of this section. 584
(D) With respect to precomputed loans: 586
(1) Loans shall be repayable in monthly installments of 588
principal and interest combined, except that the first 589
installment period may exceed one month by not more than fifteen 590
days, and the first installment payment amount may be larger than 591
the remaining payments by the amount of interest charged for the 592
extra days; and provided further that monthly installment payment 593
dates may be omitted to accommodate borrowers with seasonal 594
income. 595
(2) Payments may be applied to the combined total of 597
principal and precomputed interest until maturity of the loan. A 598
registrant may charge interest after the original or deferred 599
maturity of a precomputed loan at the rate specified in division 600
(A) of this section on all unpaid principal balances for the time 601
outstanding. 602
(3) When any loan contract is paid in full by cash, 604
renewal, refinancing, or a new loan, one month or more before the 605
final installment due date, the registrant shall refund, or 606
credit the borrower with, the total of the applicable charges for 607
all fully unexpired installment periods, as originally scheduled 608
or as deferred, that follow the day of prepayment. If the 609
prepayment is made other than on a scheduled installment due 611
date, the nearest scheduled installment due date shall be used in
such computation. If the prepayment occurs prior to the first 612
installment due date, the registrant may retain one-thirtieth of 613
the applicable charge for a first installment period of one month 614
for each day from date of loan to date of prepayment, and shall 615
refund, or credit the borrower with, the balance of the total 616
interest contracted for. If the maturity of the loan is 617
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accelerated for any reason and judgment is entered, the 618
registrant shall credit the borrower with the same refund as if 619
prepayment in full had been made on the date the judgment is 620
entered. 621
(4) If the parties agree in writing, either in the loan 623
contract or in a subsequent agreement, to a deferment of wholly 624
unpaid installments, a registrant may grant a deferment and may 625
collect a deferment charge as provided in this section. A 626
deferment postpones the scheduled due date of the earliest unpaid 627
installment and all subsequent installments as originally 628
scheduled, or as previously deferred, for a period equal to the 629
deferment period. The deferment period is that period during 630
which no installment is scheduled to be paid by reason of the 631
deferment. The deferment charge for a one-month period may not 632
exceed the applicable charge for the installment period 633
immediately following the due date of the last undeferred 634
installment. A proportionate charge may be made for deferment 635
for periods of more or less than one month. A deferment charge 636
is earned pro rata during the deferment period and is fully 637
earned on the last day of the deferment period. If a loan is 638
prepaid in full during a deferment period, the registrant shall 639
make, or credit to the borrower, a refund of the unearned 640
deferment charge in addition to any other refund or credit made 641
for prepayment of the loan in full. 642
(E) A registrant, at the request of the borrower, may 644
obtain, on one or more borrowers, credit life insurance, credit 645
accident and health insurance, and unemployment insurance. The 646
premium or identifiable charge for the insurance may be included 648
in the principal amount of the loan and may not exceed the 649
premium rate filed by the insurer with the superintendent of 650
insurance and not disapproved by the superintendent. If a 651
registrant obtains the insurance at the request of the borrower, 652
the borrower shall have the right to cancel the insurance for a 653
period of twenty-five days after the loan is made. If the 654
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borrower chooses to cancel the insurance, the borrower shall give 655
the registrant written notice of this choice and shall return all 656
of the policies or certificates of insurance or notices of 657
proposed insurance to the registrant during such period, and the 658
full premium or identifiable charge for the insurance shall be 659
refunded to the borrower by the registrant. If the borrower 660
requests, in the notice to cancel the insurance, that this refund 661
be applied to reduce the balance of a precomputed loan, the 662
registrant shall credit the amount of the refund plus the amount 663
of interest applicable to the refund to the loan balance. 664
IF THE REGISTRANT OBTAINS THE INSURANCE AT THE REQUEST OF 666
THE BORROWER, THE REGISTRANT SHALL NOT CHARGE OR COLLECT INTEREST 667
ON ANY INSURED AMOUNT THAT REMAINS UNPAID AFTER THE BORROWER'S 668
DATE OF DEATH. 669
(F) A registrant may require the borrower to provide 671
insurance or a loss payable endorsement covering reasonable risks 672
of loss, damage, and destruction of property used as security for 673
the loan and with the consent of the borrower such insurance may 674
cover property other than that which is security for the loan. 675
The amount and term of required property insurance shall be 676
reasonable in relation to the amount and term of the loan 677
contract and the type and value of the security, and the 678
insurance shall be procured in accordance with the insurance laws 679
of this state. The purchase of this insurance through the 680
registrant or an agent or broker designated by the registrant 681
shall not be a condition precedent to the granting of the loan. 682
If the borrower purchases the insurance from or through the 683
registrant or from another source, the premium may be included in 684
the principal amount of the loan. 685
(G) On loans secured by an interest in real estate, all of 687
the following apply: 688
(1) A registrant may charge and receive up to two points, 691
and a prepayment penalty not in excess of one per cent of the 692
original principal amount of the loan. Points may be paid by the 693
17
borrower at the time of the loan or may be included in the 694
principal amount of the loan. On a refinancing, a registrant may 695
not charge under division (G)(1) of this section either points OF 697
THE FOLLOWING:
(a) POINTS ON THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 699
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN, IF 700
THE REFINANCING OCCURS within one year from AFTER the date of a 702
prior THE REFINANCED loan on which points were charged or a; 703
(b) A prepayment penalty. 706
(2) As an alternative to the prepayment penalty described 708
in division (G)(1) of this section, a registrant may contract 709
for, charge, and receive the prepayment penalty described in 710
division (G)(2) of this section for the prepayment of a loan 713
prior to three years after the date the loan contract is 714
executed. This prepayment penalty shall not exceed three per 715
cent of the original principal amount of the loan if the loan is 716
paid in full prior to one year after the date the loan contract 717
is executed. The penalty shall not exceed two per cent of the 718
original principal amount of the loan if the loan is paid in full 719
at any time from one year, but prior to two years, after the date 720
the loan contract is executed. The penalty shall not exceed one 721
per cent of the original principal amount of the loan if the loan 722
is paid in full at any time from two years, but prior to three 723
years, after the date the loan contract is executed. A 725
registrant shall not charge or receive a prepayment penalty under 726
division (G)(2) of this section if any of the following applies: 727
(a) The loan is a refinancing by the same registrant or a 729
registrant to whom the loan has been assigned; 730
(b) The loan is paid in full as a result of the sale of 732
the real estate that secures the loan; 734
(c) The loan is paid in full with the proceeds of an 736
insurance claim against an insurance policy that insures the life 738
of the borrower or an insurance policy that covers loss, damage, 740
or destruction of the real estate that secures the loan. 741
18
(3) Division (G) of this section is not a limitation on 744
discount points or other charges for purposes of section 745
501(b)(4) of the "Depository Institutions Deregulation and 746
Monetary Control Act of 1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 747
note.
(H)(1) In addition to the interest and charges provided 749
for by this section, no further or other amount, whether in the 750
form of broker fees, placement fees, or any other fees 751
whatsoever, shall be charged or received by the registrant, 752
except costs and disbursements to which the registrant may become 753
entitled by law in connection with any suit to collect a loan or 754
any lawful activity to realize on a security interest or mortgage 755
after default, INCLUDING REASONABLE ATTORNEY FEES INCURRED BY THE 757
REGISTRANT AS A RESULT OF THE SUIT OR ACTIVITY, and except the
following additional charges which may be included in the 759
principal amount of the loan or collected at any time after the 760
loan is made:
(a) The amounts of fees authorized by law to record, file, 762
or release security interests and mortgages on a loan; 763
(b) With respect to a loan secured by an interest in real 765
estate, the following closing costs, if they are bona fide, 766
reasonable in amount, and not for the purpose of circumvention or 767
evasion of this section: 768
(i) Fees or premiums for title examination, abstract of 770
title, title insurance, OR surveys, or similar purposes TITLE 772
ENDORSEMENT FEES, TITLE BINDERS, TITLE COMMITMENT FEES,
SETTLEMENT OR CLOSING FEES, COURIER FEES, AND ANY FEDERALLY 773
MANDATED FLOOD PLAIN CERTIFICATION FEE; 774
(ii) If not paid to the registrant, an employee of the 776
registrant, or a person related to the registrant, fees for 777
preparation of a mortgage, settlement statement, or other 778
documents, fees for notarizing mortgages and other documents, and 779
appraisal fees, AND FEES FOR ANY FEDERALLY MANDATED INSPECTION OF 780
HOME IMPROVEMENT WORK FINANCED BY A SECOND MORTGAGE LOAN; 781
19
(c) Fees for credit investigations not exceeding ten 783
dollars.
(2) Division (H)(1) of this section does not limit the 785
rights of registrants to engage in other transactions with 786
borrowers, provided the transactions are not a condition of the 787
loan. 788
(I) If the loan contract or security instrument contains 790
covenants by the borrower to perform certain duties pertaining to 791
insuring or preserving security and the registrant pursuant to 792
the loan contract or security instrument pays for performance of 793
the duties on behalf of the borrower, the registrant may add the 794
amounts paid to the unpaid principal balance of the loan or 795
collect them separately. A charge for interest may be made for 796
sums advanced not exceeding the rate of interest permitted by 797
division (A) of this section. Within a reasonable time after 798
advancing a sum, the registrant shall notify the borrower in 799
writing of the amount advanced, any interest charged with respect 800
to the amount advanced, any revised payment schedule, and shall 801
include a brief description of the reason for the advance. 802
(J)(1) In addition to points authorized under division (G) 805
of this section, a registrant may charge and receive, on THE
FOLLOWING: 806
(a) WITH RESPECT TO SECURED loans in: IF the principal 809
amount of THE LOAN IS less than five hundred dollars, loan 811
origination charges not exceeding fifteen dollars; on loans in IF 813
the principal amount of THE LOAN IS at least five hundred dollars 814
but less than one thousand dollars, loan origination charges not 816
exceeding thirty dollars; on loans in IF the principal amount of 818
THE LOAN IS at least one thousand dollars but less than two 819
thousand dollars, loan origination charges not exceeding 820
sixty-five ONE HUNDRED dollars; and on loans in IF the principal 822
amount of THE LOAN IS at least two thousand dollars BUT LESS THAN 823
FIVE THOUSAND DOLLARS, loan origination charges not exceeding the 824
greater of one TWO hundred fifty dollars or one per cent of; AND 825
20
IF the principal amount of the loan IS AT LEAST FIVE THOUSAND 826
DOLLARS, LOAN ORIGINATION CHARGES NOT EXCEEDING THE GREATER OF 827
TWO HUNDRED FIFTY DOLLARS OR ONE PER CENT OF THE PRINCIPAL AMOUNT 828
OF THE LOAN. However, on 829
(b) WITH RESPECT TO unsecured loans in: IF the principal 832
amount of THE LOAN IS LESS THAN FIVE HUNDRED DOLLARS, LOAN 833
ORIGINATION CHARGES NOT EXCEEDING FIFTEEN DOLLARS; IF THE 834
PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST FIVE HUNDRED DOLLARS BUT 835
LESS THAN ONE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES NOT 836
EXCEEDING THIRTY DOLLARS; IF THE PRINCIPAL AMOUNT OF THE LOAN IS 837
AT LEAST ONE THOUSAND DOLLARS BUT less than five thousand 840
dollars, the loan origination charge shall CHARGES not exceed 842
EXCEEDING one hundred dollars; AND IF THE PRINCIPAL AMOUNT OF THE 843
LOAN IS AT LEAST FIVE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES 844
NOT EXCEEDING TWO HUNDRED FIFTY DOLLARS. A
(2) IF A REFINANCING OCCURS WITHIN NINETY DAYS AFTER THE 846
DATE OF THE REFINANCED LOAN, A registrant may not impose loan 848
origination charges on a borrower more frequently than once in 849
any ninety-day period THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 850
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN. 851
Loan
(3) LOAN origination charges may be paid by the borrower 853
at the time of the loan or may be included in the principal 854
amount of the loan. 855
(K) A registrant may charge and receive check collection 857
charges not greater than twenty dollars plus any amount passed on 859
from other financial institutions for each check, negotiable 860
order of withdrawal, share draft, or other negotiable instrument 861
returned or dishonored for any reason. 862
(L) If the loan contract so provides, a registrant may 864
collect a default charge on any installment not paid in full 865
within ten days after its due date. For this purpose, all 866
installments are considered paid in the order in which they 867
become due. Any amounts applied to an outstanding loan balance 868
21
as a result of voluntary release of a security interest, sale of 869
security on the loan, or cancellation of insurance shall be 870
considered payments on the loan, unless the parties otherwise 871
agree in writing at the time the amounts are applied. The amount 872
of the default charge shall not exceed the greater of five per 873
cent of the scheduled installment or fifteen dollars. 874
Sec. 1321.58. (A) A registrant may make open-end loans 883
pursuant to an agreement between the registrant and the borrower 884
whereby: 885
(1) The registrant may permit the borrower to obtain 887
advances of money from the registrant from time to time or the 888
registrant may advance money on behalf of the borrower from time 889
to time as directed by the borrower. 890
(2) The amount of each advance and permitted interest, 892
charges, and costs are debited to the borrower's account and 893
payments and other credits are credited to the same account. 894
(3) The interest and charges are computed on the unpaid 896
balance or balances of the account from time to time. 897
(4) The borrower has the privilege of paying the account 899
in full at any time or, if the account is not in default, in 900
installments of determinable amounts as provided in the 901
agreement. 902
For open-end loans, "billing cycle" means the time interval 904
between periodic billing dates. A billing cycle shall be 905
considered monthly if the closing date of the cycle is the same 906
date each month or does not vary by more than four days from such 907
date. 908
(B) Notwithstanding any other provisions of the Revised 910
Code, a registrant may contract for and receive interest for 911
open-end loans at a rate or rates not exceeding twenty-one per 912
cent per year and may compute interest in each billing cycle by 913
either of the following methods: 914
(1) By multiplying the daily rate by the daily unpaid 916
balance of the account, in which case the daily rate is 917
22
determined by dividing the annual rate by three hundred 918
sixty-five; 919
(2) By multiplying the monthly rate by the average daily 921
unpaid balance of the account in the billing cycle, in which case 922
the average daily unpaid balance is the sum of all of the daily 923
unpaid balances each day during the cycle divided by the number 924
of days in the cycle. The monthly rate is determined by dividing 925
the annual rate by twelve. 926
The billing cycle shall be monthly and the unpaid balance 928
on any day shall be determined by adding to any balance unpaid as 929
of the beginning of that day all advances and permitted interest, 930
charges, and costs and deducting all payments and other credits 931
made or received that day. 932
(C) In addition to the interest permitted in division (B) 934
of this section, a registrant may charge and receive or add to 935
the unpaid balance any or all of the following: 936
(1) All charges and costs authorized by divisions (E), 938
(F), (G), (H), (I), and (K) of section 1321.57 of the Revised 939
Code; 940
(2) An annual credit line charge, for the privilege of 942
maintaining a line of credit, for AS FOLLOWS: 943
(a) FOR the first year: 945
(i) IF THE ORIGINAL CREDIT LINE IS LESS THAN FIVE THOUSAND 947
DOLLARS, AN AMOUNT NOT EXCEEDING ONE HUNDRED FIFTY DOLLARS; 948
(ii) IF THE ORIGINAL CREDIT LINE IS AT LEAST FIVE THOUSAND 950
DOLLARS, AN AMOUNT not exceeding the greater of one per cent of 952
the original credit line or one TWO hundred fifty dollars, and 954
for.
(b) FOR subsequent years AN AMOUNT not exceeding the 956
greater of one-half per cent of the credit line on the 957
anniversary date or fifty dollars;. 958
(3) A default charge on any required minimum payment not 961
paid in full within ten days after its due date. For this
purpose, all required minimum payments are considered paid in the 963
23
order in which they become due. The amount of the default charge 964
shall not exceed the greater of five per cent of the required 965
minimum payment or fifteen dollars.
(D) The borrower at any time may pay all or any part of 967
the unpaid balance on the account or, if the account is not in 968
default, the borrower may pay the unpaid balance in installments 969
subject to minimum payment requirements as determined by the 970
registrant and set forth in the open-end loan agreement. 971
(E) If credit life insurance or credit accident and health 973
insurance is obtained by the registrant and if the insured dies 974
or becomes disabled when there is an outstanding open-end loan 975
indebtedness, the insurance shall be sufficient to pay the unpaid 976
balance on the loan due on the date of the borrower's death in 977
the case of credit life insurance or all minimum payments that 978
become due on the loan during the covered period of disability in 979
the case of credit accident and health insurance. The additional 980
charge for credit life insurance, credit accident and health 981
insurance, or unemployment insurance shall be calculated each 982
billing cycle by applying the current monthly premium rate for 983
the insurance, filed by the insurer with the superintendent of 984
insurance and not disapproved by the superintendent, to the 985
unpaid balances in the borrower's account, using one of the 987
methods specified in division (B) of this section for the 988
calculation of interest. No credit life insurance, credit 989
accident and health insurance, or unemployment insurance written 990
in connection with an open-end loan shall be canceled by the 991
registrant because of delinquency of the borrower in making the 992
required minimum payments on the loan unless one or more such 993
payments is past due for a period of thirty days or more. The 994
registrant shall advance to the insurer the amounts required to 995
keep the insurance in force during such period, which amounts may 996
be debited to the borrower's account.
(F) Whenever there is no unpaid balance in an open-end 998
loan account, the account may be terminated by written notice, by 999
24
the borrower or the registrant, to the other party. If a 1,000
registrant has taken a mortgage on real property to secure the 1,001
open-end loan, the registrant shall deliver, within thirty days 1,002
following termination of the account, a release of the mortgage 1,003
to the borrower. If a registrant has taken a security interest 1,004
in personal property to secure the open-end loan, the registrant 1,005
shall release the security interest and terminate any financing 1,006
statement in accordance with section 1309.41 of the Revised Code. 1,007
Sec. 1321.99. (A) Whoever violates section 1321.02 of the 1,016
Revised Code shall be fined not less than one hundred nor more 1,017
than five hundred dollars for a first offense; for each 1,018
subsequent offense such person shall be fined not less than two 1,019
hundred nor more than one thousand dollars or imprisoned not more 1,020
than six months, or both IS GUILTY OF A FELONY OF THE FIFTH 1,021
DEGREE.
(B) Whoever violates section 1321.13 of the Revised Code 1,023
shall be fined not less than one hundred nor more than five 1,024
hundred dollars or imprisoned not more than six months, or both. 1,025
(C) Whoever violates section 1321.14 of the Revised Code 1,027
shall be fined not less than fifty nor more than two hundred 1,028
dollars for a first offense; for a second offense such person 1,029
shall be fined not less than two hundred nor more than five 1,030
hundred dollars and imprisoned for not more than six months. 1,031
(D) Whoever willfully violates section 1321.57, 1321.58, 1,033
1321.59, or 1321.60 of the Revised Code shall be fined not less 1,034
than one nor more than five hundred dollars. 1,035
(E) Whoever violates section 1321.52 of the Revised Code 1,037
is guilty of a felony of the fifth degree. 1,038
(F) Whoever violates division (A) of section 1321.73 of 1,040
the Revised Code shall be fined not more than five hundred 1,041
dollars or imprisoned not more than six months, or both. 1,042
Section 2. That existing sections 1321.20, 1321.51, 1,044
1321.52, 1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 1,045
of the Revised Code are hereby repealed. 1,046