As Reported by the Senate Finance and 2
Financial Institutions Committee 2
123rd General Assembly 5
Regular Session Sub. S. B. No. 231 6
1999-2000 7
SENATORS WHITE-RAY 9
_________________________________________________________________ 11
A B I L L
To amend sections 1321.20, 1321.51 to 1321.55, 13
1321.57, 1321.58, and 1321.99 of the Revised Code 14
to make revisions in the Small Loan Law and the 15
Mortgage Loan Law, including changes relative to
maximum license or certificate of registration 16
fees, examinations and investigations by the 17
Division of Financial Institutions, permissible 18
charges by registrants, and penalties for 19
violations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 21
Section 1. That sections 1321.20, 1321.51, 1321.52, 23
1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 of the 24
Revised Code be amended to read as follows: 25
Sec. 1321.20. (A) Every person licensed or registered 34
under this chapter shall pay to the superintendent of financial 35
institutions, prior to the last day of June, an annual license or 37
certificate of registration fee. On or about the fifteenth day 38
of April of each year, the superintendent shall determine the 39
license or certificate fees to be charged, pursuant to sections 40
1321.03, 1321.05, 1321.53, and 1321.73 of the Revised Code. Such 41
determination shall be made by dividing the appropriation for the 42
consumer finance section of the division of financial 43
institutions for the current fiscal year by the number of 44
licenses and certificates issued as of the date of the 45
computation. In no event shall the amount of the fee exceed two 46
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THREE hundred fifty dollars, except that the maximum fee which 47
may be charged insurance premium finance companies licensed under 48
section 1321.73 of the Revised Code shall not exceed three 49
hundred seventy-five dollars. Prior to the first day of June of 50
each year, the superintendent shall inform each person licensed 51
or registered under this chapter of the amount of the license or 52
certificate fee for the succeeding fiscal year as determined by 53
this section. 54
(B) Each person licensed under Chapter 4727. of the 56
Revised Code, prior to the last day of June, shall pay to the 57
superintendent a fee equal to twice the amount of the fee 58
determined by the superintendent pursuant to division (A) of this 59
section. However, in no event shall the amount of the fee exceed 60
three hundred dollars. 61
(C) The fee for a license or certificate issued pursuant 63
to Chapter 1321., 4727., or 4728. of the Revised Code after the 64
first day of January in any fiscal year shall be equal to 65
one-half the amount determined according to divisions (A) and (B) 66
of this section or in accordance with section 4728.03 of the 67
Revised Code. 68
(D) If the renewal fees billed by the superintendent 70
pursuant to divisions (A) and (B) of this section are less than 71
the estimated expenditures of the consumer finance section of the 73
division of financial institutions, as determined by the
superintendent, for the following fiscal year, the superintendent 74
may assess each person licensed pursuant to section 1321.04 or 75
registered pursuant to section 1321.53 of the Revised Code at a 76
rate sufficient to equal in the aggregate the difference between 77
the renewal fees billed and the estimated expenditures. Each 78
person shall pay the assessed amount to the superintendent prior 79
to the last day of June. In no case shall the assessment exceed 80
ten cents per each one hundred dollars of interest (excluding 81
charge-off recoveries), points, loan origination charges, and 82
credit line charges collected by that person during the previous 83
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calendar year. If an assessment is imposed under this division, 84
it shall not be less than two hundred fifty dollars per licensee 85
or registrant and shall not exceed thirty thousand dollars less 86
the total renewal fees paid pursuant to division (A) of this 87
section by each licensee or registrant. 88
Sec. 1321.51. As used in sections 1321.51 to 1321.60 of 97
the Revised Code: 98
(A) "Person" means an individual, partnership, 100
association, trust, corporation, or any other legal entity. 101
(B) "Certificate" means a certificate of registration 103
issued under sections 1321.51 to 1321.60 of the Revised Code. 104
(C) "Registrant" means a person to whom one or more 106
certificates have been issued. 107
(D) "Principal amount" means the amount of cash paid to, 109
or paid or payable for the account of, the borrower, AND INCLUDES 111
ANY CHARGE, FEE, OR EXPENSE THAT IS FINANCED BY THE BORROWER AT 113
ORIGINATION OF THE LOAN OR DURING THE TERM OF THE LOAN.
(E) "Interest" means all charges payable directly or 115
indirectly by a borrower to a registrant as a condition to a loan 116
or an application for a loan, however denominated, but does not 117
include default charges, deferment charges, insurance charges or 118
premiums, court costs, loan origination charges, check collection 119
charges, credit line charges, points, prepayment penalties, or 120
other fees and charges specifically authorized by law. 121
(F) "Interest-bearing loan" means a loan in which the debt 123
is expressed as the principal amount and interest is computed, 124
charged, and collected on unpaid principal balances outstanding 125
from time to time. 126
(G) "Precomputed loan" means a loan in which the debt is a 128
sum comprising the principal amount and the amount of interest 129
computed in advance on the assumption that all scheduled payments 130
will be made when due. 131
(H) "Actuarial method" means the method of allocating 133
payments made on a loan between the principal amount and interest 134
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whereby a payment is applied first to the accumulated interest 135
and the remainder to the unpaid principal amount. 136
(I) "Applicable charge" means the amount of interest 138
attributable to each monthly installment period of the loan 139
contract. The applicable charge is computed as if each 140
installment period were one month and any charge for extending 141
the first installment period beyond one month is ignored. In the 142
case of loans originally scheduled to be repaid in sixty-one 143
months or less, the applicable charge for any installment period 144
is that proportion of the total interest contracted for, as the 145
balance scheduled to be outstanding during that period bears to 146
the sum of all of the periodic balances, all determined according 147
to the payment schedule originally contracted for. In all other 148
cases, the applicable charge for any installment period is that 149
which would have been made for such period had the loan been made 150
on an interest-bearing basis, based upon the assumption that all 151
payments were made according to schedule. 152
(J) "Broker" means a person who acts as an intermediary or 154
agent in finding, arranging, or negotiating loans, and charges or 155
receives a fee for these services. 156
(K) "Annual percentage rate" means the ratio of the 158
interest on a loan to the unpaid principal balances on the loan 159
for any period of time, expressed on an annual basis. 160
(L) "Point" means a charge equal to one per cent of either 162
of the following: 163
(1) The principal amount of a precomputed loan or 165
interest-bearing loan; 166
(2) The original credit line of an open-end loan. 168
(M) "Prepayment penalty" means a charge for prepayment of 170
a loan at any time prior to five years from the date the loan 171
contract is executed. 172
(N) "Refinancing" means a loan the proceeds of which are 174
used in whole or in part to pay the unpaid balance of a prior 175
loan made by the same registrant to the same borrower under 176
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sections 1321.51 to 1321.60 of the Revised Code. 177
(O) "Superintendent of financial institutions" includes 179
the deputy superintendent for consumer finance as provided in 180
section 1181.21 of the Revised Code. 181
Sec. 1321.52. (A)(1) No person, on that person's own 190
behalf or on behalf of any other person, shall do either of the 191
following without having first obtained a certificate of 193
registration from the division of financial institutions: 194
(a) Advertise, solicit, or hold out that the person is 196
engaged in the business of making loans secured by a mortgage on 197
a borrower's real estate which is other than a first lien on the 199
real estate;
(b) Engage in the business of lending or collecting the 201
person's own or another person's money, credit, or choses in 202
action for such loans. 203
(2) Each person issued a certificate is subject to all the 205
rules prescribed under sections 1321.51 to 1321.60 of the Revised 206
Code. 207
(B) All loans made to persons who at the time are 209
residents of this state are considered as made within this state 210
and subject to the laws of this state, regardless of any 211
statement in the contract or note to the contrary. 212
(C) A registrant may make unsecured loans, loans secured 214
by a mortgage on a borrower's real estate which is a first lien 215
or other than a first lien on the real estate, loans secured by 216
other than real estate, and loans secured by any combination of 217
mortgages and security interests, on terms and conditions 218
provided by sections 1321.51 to 1321.60 of the Revised Code. 219
(D)(1) IF A LENDER THAT IS SUBJECT TO SECTIONS 1321.51 TO 222
1321.60 OF THE REVISED CODE MAKES A LOAN IN VIOLATION OF DIVISION 223
(A)(1) OF THIS SECTION, THE LENDER HAS NO RIGHT TO COLLECT, 225
RECEIVE, OR RETAIN ANY INTEREST OR CHARGES ON THAT LOAN. 226
(2) IF A REGISTRANT APPLIES TO THE DIVISION FOR A RENEWAL 228
OF THE REGISTRANT'S CERTIFICATE AFTER THE DATE REQUIRED BY 229
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DIVISION (A)(4) OF SECTION 1321.53 OF THE REVISED CODE, BUT PRIOR 231
TO THE FIRST DAY OF AUGUST OF THAT YEAR, AND THE DIVISION 232
APPROVES THE APPLICATION, DIVISION (D)(1) OF THIS SECTION DOES 233
NOT APPLY WITH RESPECT TO ANY LOAN MADE BY THE REGISTRANT WHILE 234
THE REGISTRANT'S CERTIFICATE WAS EXPIRED. 235
Sec. 1321.53. (A)(1) An application for a certificate of 244
registration under sections 1321.51 to 1321.60 of the Revised 245
Code shall contain an undertaking by the applicant to abide by 246
those sections. The application shall be in writing, under oath, 247
and in the form prescribed by the division of financial 249
institutions, shall give the location where the business is to be 250
conducted and the names and addresses of the partners, officers, 251
or trustees of the applicant, and shall contain any further 252
relevant information that the division may require. Applicants 253
that are foreign corporations shall obtain and maintain a license 254
pursuant to Chapter 1703. of the Revised Code before a 255
certificate is issued or renewed. 256
(2) Upon the filing of the application and the payment by 258
the applicant of two hundred dollars as an investigation fee and 259
an annual registration fee as determined by the superintendent of 260
financial institutions pursuant to section 1321.20 of the Revised 262
Code, the division shall investigate the relevant facts. If the 263
application involves investigation outside this state, the 264
applicant may be required by the division to advance sufficient 265
funds to pay any of the actual expenses of such investigation, 266
when it appears that these expenses will exceed two hundred 267
dollars. An itemized statement of any of these expenses which 268
the applicant is required to pay shall be furnished the applicant 269
by the division. No certificate shall be issued unless the fees 270
have been submitted to the division, and no registration fee or 271
investigation fee will be returned after a certificate has been 272
issued. 273
(3) If an application for a certificate of registration 276
does not contain all of the information required under division 277
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(A)(1) of this section, and if such information is not submitted 279
to the division within ninety days after the application is 280
filed, the superintendent may consider the application withdrawn 281
and may retain the investigation fee. 282
(4) If the division finds that the financial 285
responsibility, experience, character, and general fitness of the 286
applicant are such as to command the confidence of the public and 287
to warrant the belief that the business will be operated honestly 288
and fairly in compliance with and within the purposes of sections 289
1321.51 to 1321.60 of the Revised Code, and that the applicant 290
has the net worth and assets required by division (B) of this 291
section, the division shall thereupon issue a certificate to the 292
applicant. The certificate may be continued from year to year 293
SHALL EXPIRE ON THE FIRST DAY OF JULY NEXT AFTER ITS ISSUE, AND 294
ON THE FIRST DAY OF JULY IN EACH SUCCEEDING YEAR, UNLESS RENEWED 295
by payment of an annual fee, and any assessment, as determined by 296
the superintendent pursuant to section 1321.20 of the Revised 298
Code, on or before the last day of June of each year. No other 299
fee or assessment shall be required of a registrant by the state 300
or any political subdivision of the state.
If the division does not so find, it shall enter an order 303
denying the application, and forthwith notify the applicant of 304
the denial, the grounds for the denial, and the applicant's 305
reasonable opportunity to be heard on the action in accordance 306
with Chapter 119. of the Revised Code. In the event of denial, 307
the division shall return the registration fee but retain the 308
investigation fee.
(5) IF THERE IS A CHANGE OF TEN PER CENT OR MORE IN THE 310
OWNERSHIP OF A REGISTRANT, THE DIVISION MAY MAKE ANY 311
INVESTIGATION NECESSARY TO DETERMINE WHETHER ANY FACT OR 312
CONDITION EXISTS THAT, IF IT HAD EXISTED AT THE TIME OF THE 313
ORIGINAL APPLICATION FOR A CERTIFICATE OF REGISTRATION, THE FACT 314
OR CONDITION WOULD HAVE WARRANTED THE DIVISION TO DENY THE 315
APPLICATION UNDER DIVISION (A)(4) OF THIS SECTION. IF SUCH A 316
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FACT OR CONDITION IS FOUND, THE DIVISION MAY, IN ACCORDANCE WITH 317
CHAPTER 119. OF THE REVISED CODE, REVOKE THE REGISTRANT'S 318
CERTIFICATE.
(B) Each registrant that engages in lending under sections 321
1321.51 to 1321.60 of the Revised Code shall maintain both of the 322
following:
(1) A net worth of at least fifty thousand dollars; 324
(2) For each certificate of registration, assets of at 326
least fifty thousand dollars either in use or readily available 327
for use in the conduct of the business. 328
(C) Not more than one place of business shall be 330
maintained under the same certificate, but the division may issue 331
additional certificates to the same registrant upon compliance 332
with sections 1321.51 to 1321.60 of the Revised Code, governing 333
the issuance of a single certificate. No change in the place of 334
business of a registrant to a location outside the original 335
municipal corporation shall be permitted under the same 336
certificate without the approval of a new application, the 337
payment of the registration fee as determined by the 338
superintendent pursuant to section 1321.20 of the Revised Code 339
and, if required by the superintendent, the payment of an 340
investigation fee of two hundred dollars. When a registrant 341
wishes to change its place of business within the same municipal 342
corporation, it shall give written notice of the change in 343
advance to the division, which shall provide a certificate for 344
the new address without cost. If a registrant changes its name, 345
prior to making loans under the new name it shall give written 346
notice of the change to the division, which shall provide a 347
certificate in the new name without cost. Sections 1321.51 to 348
1321.60 of the Revised Code do not limit the loans of any 349
registrant to residents of the community in which the 350
registrant's place of business is situated. Each certificate 351
shall be kept conspicuously posted in the place of business of 352
the registrant and is not transferable or assignable. 353
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(D) Sections 1321.51 to 1321.60 of the Revised Code do not 355
apply to any of the following: 356
(1) Persons lawfully doing business under the authority of 358
any law of this state, another state, or the United States 359
relating to banks, savings banks, trust companies, savings and 360
loan associations, or credit unions; 361
(2) Life, property, or casualty insurance companies 363
licensed to do business in this state; 364
(3) Any person that is a lender making a loan pursuant to 366
sections 1321.01 to 1321.19 of the Revised Code or a business 367
loan as described in division (B)(6) of section 1343.01 of the 368
Revised Code; 369
(4) Any governmental agency or instrumentality, or any 371
entity included under division (B)(3) of section 1343.01 of the 372
Revised Code. 373
(E) No person engaged in the business of selling tangible 375
goods or services related to tangible goods may receive or retain 376
a certificate under sections 1321.51 to 1321.60 of the Revised 377
Code for such place of business. 378
Sec. 1321.54. (A) The division of financial institutions 388
may adopt, in accordance with Chapter 119. of the Revised Code, 390
rules that are necessary for the enforcement of sections 1321.51 391
to 1321.60 of the Revised Code and that are consistent with those 392
sections. Each rule shall contain a reference to the section,
division, or paragraph of the Revised Code to which it applies. 393
The division shall send by regular mail to each registrant a copy 395
of each rule that is adopted pursuant to this section.
(B) The division shall, upon written notice to the 397
registrant stating the contemplated action, the grounds for the 398
action, and the registrant's reasonable opportunity to be heard 399
on the action in accordance with Chapter 119. of the Revised 401
Code, revoke or, suspend, OR FAIL TO RENEW any certificate issued 402
under sections 1321.51 to 1321.60 of the Revised Code, OR IMPOSE 403
A MONETARY FINE, if it finds that the registrant has continued to 405
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violate those sections, after receiving notice of the violation 406
or violations from the division, or is in default in the payment 407
of the annual assessment or certificate of registration fee 408
prescribed in section 1321.20 of the Revised Code. The 409
revocation or, suspension, OR FAILURE TO RENEW shall not impair 411
the obligation of any pre-existing lawful contract made under 412
sections 1321.51 to 1321.60 of the Revised Code.
MONETARY FINES IMPOSED UNDER THIS DIVISION SHALL NOT EXCEED 414
TWENTY-FIVE THOUSAND DOLLARS. 415
(C) The superintendent of financial institutions may 418
investigate alleged violations of sections 1321.51 to 1321.60 of 419
the Revised Code, or the rules adopted thereunder, or complaints 420
concerning any such violation. The superintendent may make 422
application to the court of common pleas for an order enjoining 423
any such violation and, upon a showing by the superintendent that 424
a person has committed, or is about to commit, such a violation, 425
the court shall grant an injunction, restraining order, or other 426
appropriate relief.
(D) In conducting an investigation pursuant to this 429
section, the superintendent may compel, by subpoena, witnesses to 430
testify in relation to any matter over which the superintendent 431
has jurisdiction, and may require the production or photocopying 432
of any book, record, or other document pertaining to such matter. 433
If a person fails to file any statement or report, obey any 434
subpoena, give testimony, produce any book, record, or other 435
document as required by such a subpoena, or permit photocopying 436
of any book, record, or other document subpoenaed, the court of 437
common pleas of any county in this state, upon application made 438
to it by the superintendent, shall compel obedience by attachment 439
proceedings for contempt, as in the case of disobedience of the 440
requirements of a subpoena issued from the court, or a refusal to 441
testify therein.
(E) If the superintendent determines that a person is 443
engaged in, or is believed to be engaged in, activities that may 444
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constitute a violation of sections 1321.51 to 1321.60 of the 445
Revised Code, the superintendent may, after notice and a hearing 447
conducted in accordance with Chapter 119. of the Revised Code, 448
issue a cease and desist order. Such an order shall be 449
enforceable in the court of common pleas. 450
Sec. 1321.55. (A) Every registrant shall keep records 459
pertaining to loans made under sections 1321.51 to 1321.60 of the 461
Revised Code. Such records shall be segregated from records 462
pertaining to transactions that are not subject to these sections 463
of the Revised Code. Every registrant shall preserve records 464
pertaining to loans made under sections 1321.51 to 1321.60 of the 466
Revised Code for at least two years after making the final entry 467
on such records. Accounting systems maintained in whole or in 468
part by mechanical or electronic data processing methods that 469
provide information equivalent to that otherwise required are 470
acceptable for this purpose. At least once each year
EIGHTEEN-MONTH CYCLE, the division of financial institutions 472
shall make or cause to be made an examination of records 474
pertaining to loans made under sections 1321.51 to 1321.60 of the 475
Revised Code, for the purpose of determining whether the
registrant is complying with these sections and of verifying the 476
registrant's annual report. 477
(B)(1) As required by the superintendent of financial 479
institutions, each registrant shall file with the division each 481
year a report under oath or affirmation, on forms supplied by the 482
division, concerning the business and operations for the 483
preceding calendar year. Whenever a registrant operates two or 484
more registered offices or whenever two or more affiliated 485
registrants operate registered offices, then a composite report 486
of the group of registered offices may be filed in lieu of 487
individual reports. 488
(2) The division shall publish annually an analysis of the 490
information required under division (B)(1) of this section, but 491
the individual reports shall not be public records and shall not 492
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be open to public inspection. 493
(C) All information obtained by the superintendent or the 496
superintendent's deputies, examiners, assistants, agents, or
clerks by reason of their official position, including 497
information obtained by such persons from the annual report of a 498
registrant or in the course of examining a registrant or 499
investigating an applicant for a certificate, is privileged and 500
confidential. All such information shall remain privileged and 501
confidential for all purposes except when it is necessary for the 503
superintendent and the superintendent's deputies, examiners,
assistants, agents, or clerks to take official action regarding 504
the affairs of the registrant or in connection with criminal 505
proceedings. 506
(D) No person is in violation of sections 1321.51 to 508
1321.60 of the Revised Code for any act taken or omission made in 509
reliance on a written notice, interpretation, or examination 510
report from the superintendent.
Sec. 1321.57. (A) Notwithstanding any other provisions of 519
the Revised Code, a registrant may contract for and receive 520
interest, calculated according to the actuarial method, at a rate 521
or rates not exceeding twenty-one per cent per year on the unpaid 522
principal balances of the loan. Loans may be interest-bearing or 523
precomputed. 524
(B) For purposes of computation of time on 526
interest-bearing and precomputed loans, including, but not 527
limited to, the calculation of interest, a month is considered 528
one-twelfth of a year, and a day is considered one three hundred 529
sixty-fifth of a year when calculation is made for a fraction of 530
a month. A year is as defined in section 1.44 of the Revised 531
Code. A month is that period described in section 1.45 of the 532
Revised Code. ALTERNATIVELY, A REGISTRANT MAY CONSIDER A DAY AS 533
ONE THREE HUNDRED SIXTIETH OF A YEAR AND EACH MONTH AS HAVING 534
THIRTY DAYS.
(C) With respect to interest-bearing loans: 536
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(1)(a) Interest shall be computed on unpaid principal 538
balances outstanding from time to time, for the time outstanding. 539
(b) As an alternative to the method of computing interest 541
set forth in division (C)(1)(a) of this section, a registrant, if 542
the loan contract so provides, may charge and collect interest 543
for the first installment period based on elapsed time from the 544
date of the loan to the first scheduled payment due date, and for 545
each succeeding installment period from the scheduled payment due 546
date to the next scheduled payment due date, regardless of the 547
date or dates the payments are actually made. 548
(c) Whether a registrant computes interest pursuant to 550
division (C)(1)(a) or (b) of this section, each payment shall be 551
applied first to unpaid charges, then to interest, and the 552
remainder to the unpaid principal balance. However, if the 553
amount of the payment is insufficient to pay the accumulated 554
interest, the unpaid interest continues to accumulate to be paid 555
from the proceeds of subsequent payments and is not added to the 556
principal balance. 557
(2) Interest shall not be compounded, COLLECTED, or paid 560
in advance. However, if BOTH OF THE FOLLOWING APPLY:
(a) INTEREST MAY BE CHARGED TO EXTEND THE FIRST MONTHLY 562
INSTALLMENT PERIOD BY NOT MORE THAN FIFTEEN DAYS, AND THE 563
INTEREST CHARGED FOR THE EXTENSION MAY BE ADDED TO THE PRINCIPAL 564
AMOUNT OF THE LOAN. 565
(b) IF part or all of the consideration for a new loan 568
contract is the unpaid principal balance of a prior loan, then 569
the principal amount payable under such THE new loan contract may 570
include any unpaid interest that has accrued. The resulting loan 571
contract shall be deemed a new and separate loan transaction for 572
purposes of this section. The unpaid principal balance of a 573
precomputed loan is the balance due after refund or credit of 574
unearned interest as provided in division (D)(3) of this section. 575
(D) With respect to precomputed loans: 577
(1) Loans shall be repayable in monthly installments of 579
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principal and interest combined, except that the first 580
installment period may exceed one month by not more than fifteen 581
days, and the first installment payment amount may be larger than 582
the remaining payments by the amount of interest charged for the 583
extra days; and provided further that monthly installment payment 584
dates may be omitted to accommodate borrowers with seasonal 585
income. 586
(2) Payments may be applied to the combined total of 588
principal and precomputed interest until maturity of the loan. A 589
registrant may charge interest after the original or deferred 590
maturity of a precomputed loan at the rate specified in division 591
(A) of this section on all unpaid principal balances for the time 592
outstanding. 593
(3) When any loan contract is paid in full by cash, 595
renewal, refinancing, or a new loan, one month or more before the 596
final installment due date, the registrant shall refund, or 597
credit the borrower with, the total of the applicable charges for 598
all fully unexpired installment periods, as originally scheduled 599
or as deferred, that follow the day of prepayment. If the 600
prepayment is made other than on a scheduled installment due 602
date, the nearest scheduled installment due date shall be used in
such computation. If the prepayment occurs prior to the first 603
installment due date, the registrant may retain one-thirtieth of 604
the applicable charge for a first installment period of one month 605
for each day from date of loan to date of prepayment, and shall 606
refund, or credit the borrower with, the balance of the total 607
interest contracted for. If the maturity of the loan is 608
accelerated for any reason and judgment is entered, the 609
registrant shall credit the borrower with the same refund as if 610
prepayment in full had been made on the date the judgment is 611
entered. 612
(4) If the parties agree in writing, either in the loan 614
contract or in a subsequent agreement, to a deferment of wholly 615
unpaid installments, a registrant may grant a deferment and may 616
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collect a deferment charge as provided in this section. A 617
deferment postpones the scheduled due date of the earliest unpaid 618
installment and all subsequent installments as originally 619
scheduled, or as previously deferred, for a period equal to the 620
deferment period. The deferment period is that period during 621
which no installment is scheduled to be paid by reason of the 622
deferment. The deferment charge for a one-month period may not 623
exceed the applicable charge for the installment period 624
immediately following the due date of the last undeferred 625
installment. A proportionate charge may be made for deferment 626
for periods of more or less than one month. A deferment charge 627
is earned pro rata during the deferment period and is fully 628
earned on the last day of the deferment period. If a loan is 629
prepaid in full during a deferment period, the registrant shall 630
make, or credit to the borrower, a refund of the unearned 631
deferment charge in addition to any other refund or credit made 632
for prepayment of the loan in full. 633
(E) A registrant, at the request of the borrower, may 635
obtain, on one or more borrowers, credit life insurance, credit 636
accident and health insurance, and unemployment insurance. The 637
premium or identifiable charge for the insurance may be included 639
in the principal amount of the loan and may not exceed the 640
premium rate filed by the insurer with the superintendent of 641
insurance and not disapproved by the superintendent. If a 642
registrant obtains the insurance at the request of the borrower, 643
the borrower shall have the right to cancel the insurance for a 644
period of twenty-five days after the loan is made. If the 645
borrower chooses to cancel the insurance, the borrower shall give 646
the registrant written notice of this choice and shall return all 647
of the policies or certificates of insurance or notices of 648
proposed insurance to the registrant during such period, and the 649
full premium or identifiable charge for the insurance shall be 650
refunded to the borrower by the registrant. If the borrower 651
requests, in the notice to cancel the insurance, that this refund 652
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be applied to reduce the balance of a precomputed loan, the 653
registrant shall credit the amount of the refund plus the amount 654
of interest applicable to the refund to the loan balance. 655
IF THE REGISTRANT OBTAINS THE INSURANCE AT THE REQUEST OF 657
THE BORROWER, THE REGISTRANT SHALL NOT CHARGE OR COLLECT INTEREST 658
ON ANY INSURED AMOUNT THAT REMAINS UNPAID AFTER THE BORROWER'S 659
DATE OF DEATH. 660
(F) A registrant may require the borrower to provide 662
insurance or a loss payable endorsement covering reasonable risks 663
of loss, damage, and destruction of property used as security for 664
the loan and with the consent of the borrower such insurance may 665
cover property other than that which is security for the loan. 666
The amount and term of required property insurance shall be 667
reasonable in relation to the amount and term of the loan 668
contract and the type and value of the security, and the 669
insurance shall be procured in accordance with the insurance laws 670
of this state. The purchase of this insurance through the 671
registrant or an agent or broker designated by the registrant 672
shall not be a condition precedent to the granting of the loan. 673
If the borrower purchases the insurance from or through the 674
registrant or from another source, the premium may be included in 675
the principal amount of the loan. 676
(G) On loans secured by an interest in real estate, all of 678
the following apply: 679
(1) A registrant may charge and receive up to two points, 682
and a prepayment penalty not in excess of one per cent of the 683
original principal amount of the loan. Points may be paid by the 684
borrower at the time of the loan or may be included in the 685
principal amount of the loan. On a refinancing, a registrant may 686
not charge under division (G)(1) of this section either points OF 688
THE FOLLOWING:
(a) POINTS ON THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 690
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN, IF 691
THE REFINANCING OCCURS within one year from AFTER the date of a 693
17
prior THE REFINANCED loan on which points were charged or a; 694
(b) A prepayment penalty. 697
(2) As an alternative to the prepayment penalty described 699
in division (G)(1) of this section, a registrant may contract 700
for, charge, and receive the prepayment penalty described in 701
division (G)(2) of this section for the prepayment of a loan 704
prior to three years after the date the loan contract is 705
executed. This prepayment penalty shall not exceed three per 706
cent of the original principal amount of the loan if the loan is 707
paid in full prior to one year after the date the loan contract 708
is executed. The penalty shall not exceed two per cent of the 709
original principal amount of the loan if the loan is paid in full 710
at any time from one year, but prior to two years, after the date 711
the loan contract is executed. The penalty shall not exceed one 712
per cent of the original principal amount of the loan if the loan 713
is paid in full at any time from two years, but prior to three 714
years, after the date the loan contract is executed. A 716
registrant shall not charge or receive a prepayment penalty under 717
division (G)(2) of this section if any of the following applies: 718
(a) The loan is a refinancing by the same registrant or a 720
registrant to whom the loan has been assigned; 721
(b) The loan is paid in full as a result of the sale of 723
the real estate that secures the loan; 725
(c) The loan is paid in full with the proceeds of an 727
insurance claim against an insurance policy that insures the life 729
of the borrower or an insurance policy that covers loss, damage, 731
or destruction of the real estate that secures the loan. 732
(3) Division (G) of this section is not a limitation on 735
discount points or other charges for purposes of section 736
501(b)(4) of the "Depository Institutions Deregulation and 737
Monetary Control Act of 1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 738
note.
(H)(1) In addition to the interest and charges provided 740
for by this section, no further or other amount, whether in the 741
18
form of broker fees, placement fees, or any other fees 742
whatsoever, shall be charged or received by the registrant, 743
except costs and disbursements to which the registrant may become 744
entitled by law in connection with any suit to collect a loan or 745
any lawful activity to realize on a security interest or mortgage 746
after default, INCLUDING REASONABLE ATTORNEY FEES INCURRED BY THE 748
REGISTRANT AS A RESULT OF THE SUIT OR ACTIVITY, and except the
following additional charges which may be included in the 750
principal amount of the loan or collected at any time after the 751
loan is made:
(a) The amounts of fees authorized by law to record, file, 753
or release security interests and mortgages on a loan; 754
(b) With respect to a loan secured by an interest in real 756
estate, the following closing costs, if they are bona fide, 757
reasonable in amount, and not for the purpose of circumvention or 758
evasion of this section: 759
(i) Fees or premiums for title examination, abstract of 761
title, title insurance, surveys, or similar purposes TITLE 763
ENDORSEMENTS, TITLE BINDERS, TITLE COMMITMENTS, HOME INSPECTIONS,
OR PEST INSPECTIONS; SETTLEMENT OR CLOSING COSTS; COURIER FEES; 765
AND ANY FEDERALLY MANDATED FLOOD PLAIN CERTIFICATION FEE; 766
(ii) If not paid to the registrant, an employee of the 768
registrant, or a person related to the registrant, fees for 769
preparation of a mortgage, settlement statement, or other 770
documents, fees for notarizing mortgages and other documents, and 771
appraisal fees, AND FEES FOR ANY FEDERALLY MANDATED INSPECTION OF 772
HOME IMPROVEMENT WORK FINANCED BY A SECOND MORTGAGE LOAN; 773
(c) Fees for credit investigations not exceeding ten 775
dollars.
(2) Division (H)(1) of this section does not limit the 777
rights of registrants to engage in other transactions with 778
borrowers, provided the transactions are not a condition of the 779
loan. 780
(I) If the loan contract or security instrument contains 782
19
covenants by the borrower to perform certain duties pertaining to 783
insuring or preserving security and the registrant pursuant to 784
the loan contract or security instrument pays for performance of 785
the duties on behalf of the borrower, the registrant may add the 786
amounts paid to the unpaid principal balance of the loan or 787
collect them separately. A charge for interest may be made for 788
sums advanced not exceeding the rate of interest permitted by 789
division (A) of this section. Within a reasonable time after 790
advancing a sum, the registrant shall notify the borrower in 791
writing of the amount advanced, any interest charged with respect 792
to the amount advanced, any revised payment schedule, and shall 793
include a brief description of the reason for the advance. 794
(J)(1) In addition to points authorized under division (G) 797
of this section, a registrant may charge and receive, on THE
FOLLOWING: 798
(a) WITH RESPECT TO SECURED loans in: IF the principal 801
amount of THE LOAN IS less than five hundred dollars, loan 803
origination charges not exceeding fifteen dollars; on loans in IF 805
the principal amount of THE LOAN IS at least five hundred dollars 806
but less than one thousand dollars, loan origination charges not 808
exceeding thirty dollars; on loans in IF the principal amount of 810
THE LOAN IS at least one thousand dollars but less than two 811
thousand dollars, loan origination charges not exceeding 812
sixty-five ONE HUNDRED dollars; and on loans in IF the principal 814
amount of THE LOAN IS at least two thousand dollars BUT LESS THAN 815
FIVE THOUSAND DOLLARS, loan origination charges not exceeding the 816
greater of one TWO hundred fifty dollars or one per cent of; AND 817
IF the principal amount of the loan IS AT LEAST FIVE THOUSAND 818
DOLLARS, LOAN ORIGINATION CHARGES NOT EXCEEDING THE GREATER OF 819
TWO HUNDRED FIFTY DOLLARS OR ONE PER CENT OF THE PRINCIPAL AMOUNT 820
OF THE LOAN. However, on 821
(b) WITH RESPECT TO unsecured loans in: IF the principal 824
amount of THE LOAN IS LESS THAN FIVE HUNDRED DOLLARS, LOAN 825
ORIGINATION CHARGES NOT EXCEEDING FIFTEEN DOLLARS; IF THE 826
20
PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST FIVE HUNDRED DOLLARS BUT 827
LESS THAN ONE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES NOT 828
EXCEEDING THIRTY DOLLARS; IF THE PRINCIPAL AMOUNT OF THE LOAN IS 829
AT LEAST ONE THOUSAND DOLLARS BUT less than five thousand 832
dollars, the loan origination charge shall CHARGES not exceed 834
EXCEEDING one hundred dollars; AND IF THE PRINCIPAL AMOUNT OF THE 835
LOAN IS AT LEAST FIVE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES 836
NOT EXCEEDING TWO HUNDRED FIFTY DOLLARS. A
(2) IF A REFINANCING OCCURS WITHIN NINETY DAYS AFTER THE 838
DATE OF THE REFINANCED LOAN, A registrant may not impose loan 840
origination charges on a borrower more frequently than once in 841
any ninety-day period THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 842
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN. 843
Loan
(3) LOAN origination charges may be paid by the borrower 845
at the time of the loan or may be included in the principal 846
amount of the loan. 847
(K) A registrant may charge and receive check collection 849
charges not greater than twenty dollars plus any amount passed on 851
from other financial institutions for each check, negotiable 852
order of withdrawal, share draft, or other negotiable instrument 853
returned or dishonored for any reason. 854
(L) If the loan contract so provides, a registrant may 856
collect a default charge on any installment not paid in full 857
within ten days after its due date. For this purpose, all 858
installments are considered paid in the order in which they 859
become due. Any amounts applied to an outstanding loan balance 860
as a result of voluntary release of a security interest, sale of 861
security on the loan, or cancellation of insurance shall be 862
considered payments on the loan, unless the parties otherwise 863
agree in writing at the time the amounts are applied. The amount 864
of the default charge shall not exceed the greater of five per 865
cent of the scheduled installment or fifteen dollars. 866
Sec. 1321.58. (A) A registrant may make open-end loans 875
21
pursuant to an agreement between the registrant and the borrower 876
whereby: 877
(1) The registrant may permit the borrower to obtain 879
advances of money from the registrant from time to time or the 880
registrant may advance money on behalf of the borrower from time 881
to time as directed by the borrower. 882
(2) The amount of each advance and permitted interest, 884
charges, and costs are debited to the borrower's account and 885
payments and other credits are credited to the same account. 886
(3) The interest and charges are computed on the unpaid 888
balance or balances of the account from time to time. 889
(4) The borrower has the privilege of paying the account 891
in full at any time or, if the account is not in default, in 892
installments of determinable amounts as provided in the 893
agreement. 894
For open-end loans, "billing cycle" means the time interval 896
between periodic billing dates. A billing cycle shall be 897
considered monthly if the closing date of the cycle is the same 898
date each month or does not vary by more than four days from such 899
date. 900
(B) Notwithstanding any other provisions of the Revised 902
Code, a registrant may contract for and receive interest for 903
open-end loans at a rate or rates not exceeding twenty-one per 904
cent per year and may compute interest in each billing cycle by 905
either of the following methods: 906
(1) By multiplying the daily rate by the daily unpaid 908
balance of the account, in which case the daily rate is 909
determined by dividing the annual rate by three hundred 910
sixty-five; 911
(2) By multiplying the monthly rate by the average daily 913
unpaid balance of the account in the billing cycle, in which case 914
the average daily unpaid balance is the sum of all of the daily 915
unpaid balances each day during the cycle divided by the number 916
of days in the cycle. The monthly rate is determined by dividing 917
22
the annual rate by twelve. 918
The billing cycle shall be monthly and the unpaid balance 920
on any day shall be determined by adding to any balance unpaid as 921
of the beginning of that day all advances and permitted interest, 922
charges, and costs and deducting all payments and other credits 923
made or received that day. 924
(C) In addition to the interest permitted in division (B) 926
of this section, a registrant may charge and receive or add to 927
the unpaid balance any or all of the following: 928
(1) All charges and costs authorized by divisions (E), 930
(F), (G), (H), (I), and (K) of section 1321.57 of the Revised 931
Code; 932
(2) An annual credit line charge, for the privilege of 934
maintaining a line of credit, for AS FOLLOWS: 935
(a) FOR the first year: 937
(i) IF THE ORIGINAL CREDIT LINE IS LESS THAN FIVE THOUSAND 939
DOLLARS, AN AMOUNT NOT EXCEEDING ONE HUNDRED FIFTY DOLLARS; 940
(ii) IF THE ORIGINAL CREDIT LINE IS AT LEAST FIVE THOUSAND 942
DOLLARS, AN AMOUNT not exceeding the greater of one per cent of 944
the original credit line or one TWO hundred fifty dollars, and 946
for.
(b) FOR subsequent years AN AMOUNT not exceeding the 948
greater of one-half per cent of the credit line on the 949
anniversary date or fifty dollars;. 950
(3) A default charge on any required minimum payment not 953
paid in full within ten days after its due date. For this
purpose, all required minimum payments are considered paid in the 955
order in which they become due. The amount of the default charge 956
shall not exceed the greater of five per cent of the required 957
minimum payment or fifteen dollars.
(D) The borrower at any time may pay all or any part of 959
the unpaid balance on the account or, if the account is not in 960
default, the borrower may pay the unpaid balance in installments 961
subject to minimum payment requirements as determined by the 962
23
registrant and set forth in the open-end loan agreement. 963
(E) If credit life insurance or credit accident and health 965
insurance is obtained by the registrant and if the insured dies 966
or becomes disabled when there is an outstanding open-end loan 967
indebtedness, the insurance shall be sufficient to pay the unpaid 968
balance on the loan due on the date of the borrower's death in 969
the case of credit life insurance or all minimum payments that 970
become due on the loan during the covered period of disability in 971
the case of credit accident and health insurance. The additional 972
charge for credit life insurance, credit accident and health 973
insurance, or unemployment insurance shall be calculated each 974
billing cycle by applying the current monthly premium rate for 975
the insurance, filed by the insurer with the superintendent of 976
insurance and not disapproved by the superintendent, to the 977
unpaid balances in the borrower's account, using one of the 979
methods specified in division (B) of this section for the 980
calculation of interest. No credit life insurance, credit 981
accident and health insurance, or unemployment insurance written 982
in connection with an open-end loan shall be canceled by the 983
registrant because of delinquency of the borrower in making the 984
required minimum payments on the loan unless one or more such 985
payments is past due for a period of thirty days or more. The 986
registrant shall advance to the insurer the amounts required to 987
keep the insurance in force during such period, which amounts may 988
be debited to the borrower's account.
(F) Whenever there is no unpaid balance in an open-end 990
loan account, the account may be terminated by written notice, by 991
the borrower or the registrant, to the other party. If a 992
registrant has taken a mortgage on real property to secure the 993
open-end loan, the registrant shall deliver, within thirty days 994
following termination of the account, a release of the mortgage 995
to the borrower. If a registrant has taken a security interest 996
in personal property to secure the open-end loan, the registrant 997
shall release the security interest and terminate any financing 998
24
statement in accordance with section 1309.41 of the Revised Code. 999
Sec. 1321.99. (A) Whoever violates section 1321.02 of the 1,008
Revised Code shall be fined not less than one hundred nor more 1,009
than five hundred dollars for a first offense; for each 1,010
subsequent offense such person shall be fined not less than two 1,011
hundred nor more than one thousand dollars or imprisoned not more 1,012
than six months, or both IS GUILTY OF A FELONY OF THE FIFTH 1,013
DEGREE.
(B) Whoever violates section 1321.13 of the Revised Code 1,015
shall be fined not less than one hundred nor more than five 1,016
hundred dollars or imprisoned not more than six months, or both. 1,017
(C) Whoever violates section 1321.14 of the Revised Code 1,019
shall be fined not less than fifty nor more than two hundred 1,020
dollars for a first offense; for a second offense such person 1,021
shall be fined not less than two hundred nor more than five 1,022
hundred dollars and imprisoned for not more than six months. 1,023
(D) Whoever willfully violates section 1321.57, 1321.58, 1,025
1321.59, or 1321.60 of the Revised Code shall be fined not less 1,026
than one nor more than five hundred dollars. 1,027
(E) Whoever violates section 1321.52 of the Revised Code 1,029
is guilty of a felony of the fifth degree. 1,030
(F) Whoever violates division (A) of section 1321.73 of 1,032
the Revised Code shall be fined not more than five hundred 1,033
dollars or imprisoned not more than six months, or both. 1,034
Section 2. That existing sections 1321.20, 1321.51, 1,036
1321.52, 1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 1,037
of the Revised Code are hereby repealed. 1,038