As Passed by the Senate 1
123rd General Assembly 4
Regular Session Sub. S. B. No. 231 5
1999-2000 6
SENATORS WHITE-RAY-PRENTISS-WACHTMANN 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, examinations and investigations by the 16
Division of Financial Institutions, permissible 17
charges by registrants, and penalties for 18
violations.
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 of the 190
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) Engage in the business of lending or collecting the 200
person's own or another person's money, credit, or choses in 201
action for such loans. 202
(2) Each person issued a certificate is subject to all the 204
rules prescribed under sections 1321.51 to 1321.60 of the Revised 205
Code. 206
(B) All loans made to persons who at the time are 208
residents of this state are considered as made within this state 209
and subject to the laws of this state, regardless of any 210
statement in the contract or note to the contrary. 211
(C) A registrant may make unsecured loans, loans secured 213
by a mortgage on a borrower's real estate which is a first lien 214
or other than a first lien on the real estate, loans secured by 215
other than real estate, and loans secured by any combination of 216
mortgages and security interests, on terms and conditions 217
provided by sections 1321.51 to 1321.60 of the Revised Code. 218
(D)(1) IF A LENDER THAT IS SUBJECT TO SECTIONS 1321.51 TO 221
1321.60 OF THE REVISED CODE MAKES A LOAN IN VIOLATION OF DIVISION 222
(A)(1) OF THIS SECTION, THE LENDER HAS NO RIGHT TO COLLECT, 224
RECEIVE, OR RETAIN ANY INTEREST OR CHARGES ON THAT LOAN. 225
(2) IF A REGISTRANT APPLIES TO THE DIVISION FOR A RENEWAL 227
OF THE REGISTRANT'S CERTIFICATE AFTER THE DATE REQUIRED BY 228
DIVISION (A)(4) OF SECTION 1321.53 OF THE REVISED CODE, BUT PRIOR 230
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TO THE FIRST DAY OF AUGUST OF THAT YEAR, AND THE DIVISION 231
APPROVES THE APPLICATION, DIVISION (D)(1) OF THIS SECTION DOES 232
NOT APPLY WITH RESPECT TO ANY LOAN MADE BY THE REGISTRANT WHILE 233
THE REGISTRANT'S CERTIFICATE WAS EXPIRED. 234
Sec. 1321.53. (A)(1) An application for a certificate of 243
registration under sections 1321.51 to 1321.60 of the Revised 244
Code shall contain an undertaking by the applicant to abide by 245
those sections. The application shall be in writing, under oath, 246
and in the form prescribed by the division of financial 248
institutions, shall give the location where the business is to be 249
conducted and the names and addresses of the partners, officers, 250
or trustees of the applicant, and shall contain any further 251
relevant information that the division may require. Applicants 252
that are foreign corporations shall obtain and maintain a license 253
pursuant to Chapter 1703. of the Revised Code before a 254
certificate is issued or renewed. 255
(2) Upon the filing of the application and the payment by 257
the applicant of two hundred dollars as an investigation fee and 258
an annual registration fee as determined by the superintendent of 259
financial institutions pursuant to section 1321.20 of the Revised 261
Code, the division shall investigate the relevant facts. If the 262
application involves investigation outside this state, the 263
applicant may be required by the division to advance sufficient 264
funds to pay any of the actual expenses of such investigation, 265
when it appears that these expenses will exceed two hundred 266
dollars. An itemized statement of any of these expenses which 267
the applicant is required to pay shall be furnished the applicant 268
by the division. No certificate shall be issued unless the fees 269
have been submitted to the division, and no registration fee or 270
investigation fee will be returned after a certificate has been 271
issued. 272
(3) If an application for a certificate of registration 275
does not contain all of the information required under division 276
(A)(1) of this section, and if such information is not submitted 278
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to the division within ninety days after the application is 279
filed, the superintendent may consider the application withdrawn 280
and may retain the investigation fee. 281
(4) If the division finds that the financial 284
responsibility, experience, character, and general fitness of the 285
applicant are such as to command the confidence of the public and 286
to warrant the belief that the business will be operated honestly 287
and fairly in compliance with and within the purposes of sections 288
1321.51 to 1321.60 of the Revised Code, and that the applicant 289
has the net worth and assets required by division (B) of this 290
section, the division shall thereupon issue a certificate to the 291
applicant. The certificate may be continued from year to year 292
SHALL EXPIRE ON THE FIRST DAY OF JULY NEXT AFTER ITS ISSUE, AND 293
ON THE FIRST DAY OF JULY IN EACH SUCCEEDING YEAR, UNLESS RENEWED 294
by payment of an annual fee, and any assessment, as determined by 295
the superintendent pursuant to section 1321.20 of the Revised 297
Code, on or before the last day of June of each year. No other 298
fee or assessment shall be required of a registrant by the state 299
or any political subdivision of the state.
If the division does not so find, it shall enter an order 302
denying the application, and forthwith notify the applicant of 303
the denial, the grounds for the denial, and the applicant's 304
reasonable opportunity to be heard on the action in accordance 305
with Chapter 119. of the Revised Code. In the event of denial, 306
the division shall return the registration fee but retain the 307
investigation fee.
(5) IF THERE IS A CHANGE OF TEN PER CENT OR MORE IN THE 309
OWNERSHIP OF A REGISTRANT, THE DIVISION MAY MAKE ANY 310
INVESTIGATION NECESSARY TO DETERMINE WHETHER ANY FACT OR 311
CONDITION EXISTS THAT, IF IT HAD EXISTED AT THE TIME OF THE 312
ORIGINAL APPLICATION FOR A CERTIFICATE OF REGISTRATION, THE FACT 313
OR CONDITION WOULD HAVE WARRANTED THE DIVISION TO DENY THE 314
APPLICATION UNDER DIVISION (A)(4) OF THIS SECTION. IF SUCH A 315
FACT OR CONDITION IS FOUND, THE DIVISION MAY, IN ACCORDANCE WITH 316
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CHAPTER 119. OF THE REVISED CODE, REVOKE THE REGISTRANT'S 317
CERTIFICATE.
(B) Each registrant that engages in lending under sections 320
1321.51 to 1321.60 of the Revised Code shall maintain both of the 321
following:
(1) A net worth of at least fifty thousand dollars; 323
(2) For each certificate of registration, assets of at 325
least fifty thousand dollars either in use or readily available 326
for use in the conduct of the business. 327
(C) Not more than one place of business shall be 329
maintained under the same certificate, but the division may issue 330
additional certificates to the same registrant upon compliance 331
with sections 1321.51 to 1321.60 of the Revised Code, governing 332
the issuance of a single certificate. No change in the place of 333
business of a registrant to a location outside the original 334
municipal corporation shall be permitted under the same 335
certificate without the approval of a new application, the 336
payment of the registration fee as determined by the 337
superintendent pursuant to section 1321.20 of the Revised Code 338
and, if required by the superintendent, the payment of an 339
investigation fee of two hundred dollars. When a registrant 340
wishes to change its place of business within the same municipal 341
corporation, it shall give written notice of the change in 342
advance to the division, which shall provide a certificate for 343
the new address without cost. If a registrant changes its name, 344
prior to making loans under the new name it shall give written 345
notice of the change to the division, which shall provide a 346
certificate in the new name without cost. Sections 1321.51 to 347
1321.60 of the Revised Code do not limit the loans of any 348
registrant to residents of the community in which the 349
registrant's place of business is situated. Each certificate 350
shall be kept conspicuously posted in the place of business of 351
the registrant and is not transferable or assignable. 352
(D) Sections 1321.51 to 1321.60 of the Revised Code do not 354
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apply to any of the following: 355
(1) Persons lawfully doing business under the authority of 357
any law of this state, another state, or the United States 358
relating to banks, savings banks, trust companies, savings and 359
loan associations, or credit unions; 360
(2) Life, property, or casualty insurance companies 362
licensed to do business in this state; 363
(3) Any person that is a lender making a loan pursuant to 365
sections 1321.01 to 1321.19 of the Revised Code or a business 366
loan as described in division (B)(6) of section 1343.01 of the 367
Revised Code; 368
(4) Any governmental agency or instrumentality, or any 370
entity included under division (B)(3) of section 1343.01 of the 371
Revised Code. 372
(E) No person engaged in the business of selling tangible 374
goods or services related to tangible goods may receive or retain 375
a certificate under sections 1321.51 to 1321.60 of the Revised 376
Code for such place of business. 377
Sec. 1321.54. (A) The division of financial institutions 387
may adopt, in accordance with Chapter 119. of the Revised Code, 389
rules that are necessary for the enforcement of sections 1321.51 390
to 1321.60 of the Revised Code and that are consistent with those 391
sections. Each rule shall contain a reference to the section,
division, or paragraph of the Revised Code to which it applies. 392
The division shall send by regular mail to each registrant a copy 394
of each rule that is adopted pursuant to this section.
(B) The division shall, upon written notice to the 396
registrant stating the contemplated action, the grounds for the 397
action, and the registrant's reasonable opportunity to be heard 398
on the action in accordance with Chapter 119. of the Revised 400
Code, revoke or, suspend, OR FAIL TO RENEW any certificate issued 401
under sections 1321.51 to 1321.60 of the Revised Code, OR IMPOSE 402
A MONETARY FINE, if it finds that the registrant has continued to 404
violate those sections, after receiving notice of the violation 405
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or violations from the division, or is in default in the payment 406
of the annual assessment or certificate of registration fee 407
prescribed in section 1321.20 of the Revised Code. The 408
revocation or, suspension, OR FAILURE TO RENEW shall not impair 410
the obligation of any pre-existing lawful contract made under 411
sections 1321.51 to 1321.60 of the Revised Code.
MONETARY FINES IMPOSED UNDER THIS DIVISION SHALL NOT EXCEED 413
TWENTY-FIVE THOUSAND DOLLARS. 414
(C) The superintendent of financial institutions may 417
investigate alleged violations of sections 1321.51 to 1321.60 of 418
the Revised Code, or the rules adopted thereunder, or complaints 419
concerning any such violation. The superintendent may make 421
application to the court of common pleas for an order enjoining 422
any such violation and, upon a showing by the superintendent that 423
a person has committed, or is about to commit, such a violation, 424
the court shall grant an injunction, restraining order, or other 425
appropriate relief.
(D) In conducting an investigation pursuant to this 428
section, the superintendent may compel, by subpoena, witnesses to 429
testify in relation to any matter over which the superintendent 430
has jurisdiction, and may require the production or photocopying 431
of any book, record, or other document pertaining to such matter. 432
If a person fails to file any statement or report, obey any 433
subpoena, give testimony, produce any book, record, or other 434
document as required by such a subpoena, or permit photocopying 435
of any book, record, or other document subpoenaed, the court of 436
common pleas of any county in this state, upon application made 437
to it by the superintendent, shall compel obedience by attachment 438
proceedings for contempt, as in the case of disobedience of the 439
requirements of a subpoena issued from the court, or a refusal to 440
testify therein.
(E) If the superintendent determines that a person is 442
engaged in, or is believed to be engaged in, activities that may 443
constitute a violation of sections 1321.51 to 1321.60 of the 444
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Revised Code, the superintendent may, after notice and a hearing 446
conducted in accordance with Chapter 119. of the Revised Code, 447
issue a cease and desist order. Such an order shall be 448
enforceable in the court of common pleas. 449
Sec. 1321.55. (A) Every registrant shall keep records 458
pertaining to loans made under sections 1321.51 to 1321.60 of the 460
Revised Code. Such records shall be segregated from records 461
pertaining to transactions that are not subject to these sections 462
of the Revised Code. Every registrant shall preserve records 463
pertaining to loans made under sections 1321.51 to 1321.60 of the 465
Revised Code for at least two years after making the final entry 466
on such records. Accounting systems maintained in whole or in 467
part by mechanical or electronic data processing methods that 468
provide information equivalent to that otherwise required are 469
acceptable for this purpose. At least once each year
EIGHTEEN-MONTH CYCLE, the division of financial institutions 471
shall make or cause to be made an examination of records 473
pertaining to loans made under sections 1321.51 to 1321.60 of the 474
Revised Code, for the purpose of determining whether the
registrant is complying with these sections and of verifying the 475
registrant's annual report. 476
(B)(1) As required by the superintendent of financial 478
institutions, each registrant shall file with the division each 480
year a report under oath or affirmation, on forms supplied by the 481
division, concerning the business and operations for the 482
preceding calendar year. Whenever a registrant operates two or 483
more registered offices or whenever two or more affiliated 484
registrants operate registered offices, then a composite report 485
of the group of registered offices may be filed in lieu of 486
individual reports. 487
(2) The division shall publish annually an analysis of the 489
information required under division (B)(1) of this section, but 490
the individual reports shall not be public records and shall not 491
be open to public inspection. 492
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(C) All information obtained by the superintendent or the 495
superintendent's deputies, examiners, assistants, agents, or
clerks by reason of their official position, including 496
information obtained by such persons from the annual report of a 497
registrant or in the course of examining a registrant or 498
investigating an applicant for a certificate, is privileged and 499
confidential. All such information shall remain privileged and 500
confidential for all purposes except when it is necessary for the 502
superintendent and the superintendent's deputies, examiners,
assistants, agents, or clerks to take official action regarding 503
the affairs of the registrant or in connection with criminal 504
proceedings. 505
(D) No person is in violation of sections 1321.51 to 507
1321.60 of the Revised Code for any act taken or omission made in 508
reliance on a written notice, interpretation, or examination 509
report from the superintendent.
Sec. 1321.57. (A) Notwithstanding any other provisions of 518
the Revised Code, a registrant may contract for and receive 519
interest, calculated according to the actuarial method, at a rate 520
or rates not exceeding twenty-one per cent per year on the unpaid 521
principal balances of the loan. Loans may be interest-bearing or 522
precomputed. 523
(B) For purposes of computation of time on 525
interest-bearing and precomputed loans, including, but not 526
limited to, the calculation of interest, a month is considered 527
one-twelfth of a year, and a day is considered one three hundred 528
sixty-fifth of a year when calculation is made for a fraction of 529
a month. A year is as defined in section 1.44 of the Revised 530
Code. A month is that period described in section 1.45 of the 531
Revised Code. ALTERNATIVELY, A REGISTRANT MAY CONSIDER A DAY AS 532
ONE THREE HUNDRED SIXTIETH OF A YEAR AND EACH MONTH AS HAVING 533
THIRTY DAYS.
(C) With respect to interest-bearing loans: 535
(1)(a) Interest shall be computed on unpaid principal 537
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balances outstanding from time to time, for the time outstanding. 538
(b) As an alternative to the method of computing interest 540
set forth in division (C)(1)(a) of this section, a registrant, if 541
the loan contract so provides, may charge and collect interest 542
for the first installment period based on elapsed time from the 543
date of the loan to the first scheduled payment due date, and for 544
each succeeding installment period from the scheduled payment due 545
date to the next scheduled payment due date, regardless of the 546
date or dates the payments are actually made. 547
(c) Whether a registrant computes interest pursuant to 549
division (C)(1)(a) or (b) of this section, each payment shall be 550
applied first to unpaid charges, then to interest, and the 551
remainder to the unpaid principal balance. However, if the 552
amount of the payment is insufficient to pay the accumulated 553
interest, the unpaid interest continues to accumulate to be paid 554
from the proceeds of subsequent payments and is not added to the 555
principal balance. 556
(2) Interest shall not be compounded, COLLECTED, or paid 559
in advance. However, if BOTH OF THE FOLLOWING APPLY:
(a) INTEREST MAY BE CHARGED TO EXTEND THE FIRST MONTHLY 561
INSTALLMENT PERIOD BY NOT MORE THAN FIFTEEN DAYS, AND THE 562
INTEREST CHARGED FOR THE EXTENSION MAY BE ADDED TO THE PRINCIPAL 563
AMOUNT OF THE LOAN. 564
(b) IF part or all of the consideration for a new loan 567
contract is the unpaid principal balance of a prior loan, then 568
the principal amount payable under such THE new loan contract may 569
include any unpaid interest that has accrued. The resulting loan 570
contract shall be deemed a new and separate loan transaction for 571
purposes of this section. The unpaid principal balance of a 572
precomputed loan is the balance due after refund or credit of 573
unearned interest as provided in division (D)(3) of this section. 574
(D) With respect to precomputed loans: 576
(1) Loans shall be repayable in monthly installments of 578
principal and interest combined, except that the first 579
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installment period may exceed one month by not more than fifteen 580
days, and the first installment payment amount may be larger than 581
the remaining payments by the amount of interest charged for the 582
extra days; and provided further that monthly installment payment 583
dates may be omitted to accommodate borrowers with seasonal 584
income. 585
(2) Payments may be applied to the combined total of 587
principal and precomputed interest until maturity of the loan. A 588
registrant may charge interest after the original or deferred 589
maturity of a precomputed loan at the rate specified in division 590
(A) of this section on all unpaid principal balances for the time 591
outstanding. 592
(3) When any loan contract is paid in full by cash, 594
renewal, refinancing, or a new loan, one month or more before the 595
final installment due date, the registrant shall refund, or 596
credit the borrower with, the total of the applicable charges for 597
all fully unexpired installment periods, as originally scheduled 598
or as deferred, that follow the day of prepayment. If the 599
prepayment is made other than on a scheduled installment due 601
date, the nearest scheduled installment due date shall be used in
such computation. If the prepayment occurs prior to the first 602
installment due date, the registrant may retain one-thirtieth of 603
the applicable charge for a first installment period of one month 604
for each day from date of loan to date of prepayment, and shall 605
refund, or credit the borrower with, the balance of the total 606
interest contracted for. If the maturity of the loan is 607
accelerated for any reason and judgment is entered, the 608
registrant shall credit the borrower with the same refund as if 609
prepayment in full had been made on the date the judgment is 610
entered. 611
(4) If the parties agree in writing, either in the loan 613
contract or in a subsequent agreement, to a deferment of wholly 614
unpaid installments, a registrant may grant a deferment and may 615
collect a deferment charge as provided in this section. A 616
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deferment postpones the scheduled due date of the earliest unpaid 617
installment and all subsequent installments as originally 618
scheduled, or as previously deferred, for a period equal to the 619
deferment period. The deferment period is that period during 620
which no installment is scheduled to be paid by reason of the 621
deferment. The deferment charge for a one-month period may not 622
exceed the applicable charge for the installment period 623
immediately following the due date of the last undeferred 624
installment. A proportionate charge may be made for deferment 625
for periods of more or less than one month. A deferment charge 626
is earned pro rata during the deferment period and is fully 627
earned on the last day of the deferment period. If a loan is 628
prepaid in full during a deferment period, the registrant shall 629
make, or credit to the borrower, a refund of the unearned 630
deferment charge in addition to any other refund or credit made 631
for prepayment of the loan in full. 632
(E) A registrant, at the request of the borrower, may 634
obtain, on one or more borrowers, credit life insurance, credit 635
accident and health insurance, and unemployment insurance. The 636
premium or identifiable charge for the insurance may be included 638
in the principal amount of the loan and may not exceed the 639
premium rate filed by the insurer with the superintendent of 640
insurance and not disapproved by the superintendent. If a 641
registrant obtains the insurance at the request of the borrower, 642
the borrower shall have the right to cancel the insurance for a 643
period of twenty-five days after the loan is made. If the 644
borrower chooses to cancel the insurance, the borrower shall give 645
the registrant written notice of this choice and shall return all 646
of the policies or certificates of insurance or notices of 647
proposed insurance to the registrant during such period, and the 648
full premium or identifiable charge for the insurance shall be 649
refunded to the borrower by the registrant. If the borrower 650
requests, in the notice to cancel the insurance, that this refund 651
be applied to reduce the balance of a precomputed loan, the 652
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registrant shall credit the amount of the refund plus the amount 653
of interest applicable to the refund to the loan balance. 654
IF THE REGISTRANT OBTAINS THE INSURANCE AT THE REQUEST OF 656
THE BORROWER, THE REGISTRANT SHALL NOT CHARGE OR COLLECT INTEREST 657
ON ANY INSURED AMOUNT THAT REMAINS UNPAID AFTER THE BORROWER'S 658
DATE OF DEATH. 659
(F) A registrant may require the borrower to provide 661
insurance or a loss payable endorsement covering reasonable risks 662
of loss, damage, and destruction of property used as security for 663
the loan and with the consent of the borrower such insurance may 664
cover property other than that which is security for the loan. 665
The amount and term of required property insurance shall be 666
reasonable in relation to the amount and term of the loan 667
contract and the type and value of the security, and the 668
insurance shall be procured in accordance with the insurance laws 669
of this state. The purchase of this insurance through the 670
registrant or an agent or broker designated by the registrant 671
shall not be a condition precedent to the granting of the loan. 672
If the borrower purchases the insurance from or through the 673
registrant or from another source, the premium may be included in 674
the principal amount of the loan. 675
(G) On loans secured by an interest in real estate, all of 677
the following apply: 678
(1) A registrant may charge and receive up to two points, 681
and a prepayment penalty not in excess of one per cent of the 682
original principal amount of the loan. Points may be paid by the 683
borrower at the time of the loan or may be included in the 684
principal amount of the loan. On a refinancing, a registrant may 685
not charge under division (G)(1) of this section either points OF 687
THE FOLLOWING:
(a) POINTS ON THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 689
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN, IF 690
THE REFINANCING OCCURS within one year from AFTER the date of a 692
prior THE REFINANCED loan on which points were charged or a; 693
17
(b) A prepayment penalty. 696
(2) As an alternative to the prepayment penalty described 698
in division (G)(1) of this section, a registrant may contract 699
for, charge, and receive the prepayment penalty described in 700
division (G)(2) of this section for the prepayment of a loan 703
prior to three years after the date the loan contract is 704
executed. This prepayment penalty shall not exceed three per 705
cent of the original principal amount of the loan if the loan is 706
paid in full prior to one year after the date the loan contract 707
is executed. The penalty shall not exceed two per cent of the 708
original principal amount of the loan if the loan is paid in full 709
at any time from one year, but prior to two years, after the date 710
the loan contract is executed. The penalty shall not exceed one 711
per cent of the original principal amount of the loan if the loan 712
is paid in full at any time from two years, but prior to three 713
years, after the date the loan contract is executed. A 715
registrant shall not charge or receive a prepayment penalty under 716
division (G)(2) of this section if any of the following applies: 717
(a) The loan is a refinancing by the same registrant or a 719
registrant to whom the loan has been assigned; 720
(b) The loan is paid in full as a result of the sale of 722
the real estate that secures the loan; 724
(c) The loan is paid in full with the proceeds of an 726
insurance claim against an insurance policy that insures the life 728
of the borrower or an insurance policy that covers loss, damage, 730
or destruction of the real estate that secures the loan. 731
(3) Division (G) of this section is not a limitation on 734
discount points or other charges for purposes of section 735
501(b)(4) of the "Depository Institutions Deregulation and 736
Monetary Control Act of 1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 737
note.
(H)(1) In addition to the interest and charges provided 739
for by this section, no further or other amount, whether in the 740
form of broker fees, placement fees, or any other fees 741
18
whatsoever, shall be charged or received by the registrant, 742
except costs and disbursements to which the registrant may become 743
entitled by law in connection with any suit to collect a loan or 744
any lawful activity to realize on a security interest or mortgage 745
after default, INCLUDING REASONABLE ATTORNEY FEES INCURRED BY THE 747
REGISTRANT AS A RESULT OF THE SUIT OR ACTIVITY, and except the
following additional charges which may be included in the 749
principal amount of the loan or collected at any time after the 750
loan is made:
(a) The amounts of fees authorized by law to record, file, 752
or release security interests and mortgages on a loan; 753
(b) With respect to a loan secured by an interest in real 755
estate, the following closing costs, if they are bona fide, 756
reasonable in amount, and not for the purpose of circumvention or 757
evasion of this section: 758
(i) Fees or premiums for title examination, abstract of 760
title, title insurance, surveys, or similar purposes TITLE 762
ENDORSEMENTS, TITLE BINDERS, TITLE COMMITMENTS, HOME INSPECTIONS,
OR PEST INSPECTIONS; SETTLEMENT OR CLOSING COSTS; COURIER FEES; 764
AND ANY FEDERALLY MANDATED FLOOD PLAIN CERTIFICATION FEE; 765
(ii) If not paid to the registrant, an employee of the 767
registrant, or a person related to the registrant, fees for 768
preparation of a mortgage, settlement statement, or other 769
documents, fees for notarizing mortgages and other documents, and 770
appraisal fees, AND FEES FOR ANY FEDERALLY MANDATED INSPECTION OF 771
HOME IMPROVEMENT WORK FINANCED BY A SECOND MORTGAGE LOAN; 772
(c) Fees for credit investigations not exceeding ten 774
dollars.
(2) Division (H)(1) of this section does not limit the 776
rights of registrants to engage in other transactions with 777
borrowers, provided the transactions are not a condition of the 778
loan. 779
(I) If the loan contract or security instrument contains 781
covenants by the borrower to perform certain duties pertaining to 782
19
insuring or preserving security and the registrant pursuant to 783
the loan contract or security instrument pays for performance of 784
the duties on behalf of the borrower, the registrant may add the 785
amounts paid to the unpaid principal balance of the loan or 786
collect them separately. A charge for interest may be made for 787
sums advanced not exceeding the rate of interest permitted by 788
division (A) of this section. Within a reasonable time after 789
advancing a sum, the registrant shall notify the borrower in 790
writing of the amount advanced, any interest charged with respect 791
to the amount advanced, any revised payment schedule, and shall 792
include a brief description of the reason for the advance. 793
(J)(1) In addition to points authorized under division (G) 796
of this section, a registrant may charge and receive, on THE
FOLLOWING: 797
(a) WITH RESPECT TO SECURED loans in: IF the principal 800
amount of THE LOAN IS less than five hundred dollars, loan 802
origination charges not exceeding fifteen dollars; on loans in IF 804
the principal amount of THE LOAN IS at least five hundred dollars 805
but less than one thousand dollars, loan origination charges not 807
exceeding thirty dollars; on loans in IF the principal amount of 809
THE LOAN IS at least one thousand dollars but less than two 810
thousand dollars, loan origination charges not exceeding 811
sixty-five ONE HUNDRED dollars; and on loans in IF the principal 813
amount of THE LOAN IS at least two thousand dollars BUT LESS THAN 814
FIVE THOUSAND DOLLARS, loan origination charges not exceeding the 815
greater of one TWO hundred fifty dollars or one per cent of; AND 816
IF the principal amount of the loan IS AT LEAST FIVE THOUSAND 817
DOLLARS, LOAN ORIGINATION CHARGES NOT EXCEEDING THE GREATER OF 818
TWO HUNDRED FIFTY DOLLARS OR ONE PER CENT OF THE PRINCIPAL AMOUNT 819
OF THE LOAN. However, on 820
(b) WITH RESPECT TO unsecured loans in: IF the principal 823
amount of THE LOAN IS LESS THAN FIVE HUNDRED DOLLARS, LOAN 824
ORIGINATION CHARGES NOT EXCEEDING FIFTEEN DOLLARS; IF THE 825
PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST FIVE HUNDRED DOLLARS BUT 826
20
LESS THAN ONE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES NOT 827
EXCEEDING THIRTY DOLLARS; IF THE PRINCIPAL AMOUNT OF THE LOAN IS 828
AT LEAST ONE THOUSAND DOLLARS BUT less than five thousand 831
dollars, the loan origination charge shall CHARGES not exceed 833
EXCEEDING one hundred dollars; AND IF THE PRINCIPAL AMOUNT OF THE 834
LOAN IS AT LEAST FIVE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES 835
NOT EXCEEDING TWO HUNDRED FIFTY DOLLARS. A
(2) IF A REFINANCING OCCURS WITHIN NINETY DAYS AFTER THE 837
DATE OF THE REFINANCED LOAN, A registrant may not impose loan 839
origination charges on a borrower more frequently than once in 840
any ninety-day period THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 841
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN. 842
Loan
(3) LOAN origination charges may be paid by the borrower 844
at the time of the loan or may be included in the principal 845
amount of the loan. 846
(K) A registrant may charge and receive check collection 848
charges not greater than twenty dollars plus any amount passed on 850
from other financial institutions for each check, negotiable 851
order of withdrawal, share draft, or other negotiable instrument 852
returned or dishonored for any reason. 853
(L) If the loan contract so provides, a registrant may 855
collect a default charge on any installment not paid in full 856
within ten days after its due date. For this purpose, all 857
installments are considered paid in the order in which they 858
become due. Any amounts applied to an outstanding loan balance 859
as a result of voluntary release of a security interest, sale of 860
security on the loan, or cancellation of insurance shall be 861
considered payments on the loan, unless the parties otherwise 862
agree in writing at the time the amounts are applied. The amount 863
of the default charge shall not exceed the greater of five per 864
cent of the scheduled installment or fifteen dollars. 865
Sec. 1321.58. (A) A registrant may make open-end loans 874
pursuant to an agreement between the registrant and the borrower 875
21
whereby: 876
(1) The registrant may permit the borrower to obtain 878
advances of money from the registrant from time to time or the 879
registrant may advance money on behalf of the borrower from time 880
to time as directed by the borrower. 881
(2) The amount of each advance and permitted interest, 883
charges, and costs are debited to the borrower's account and 884
payments and other credits are credited to the same account. 885
(3) The interest and charges are computed on the unpaid 887
balance or balances of the account from time to time. 888
(4) The borrower has the privilege of paying the account 890
in full at any time or, if the account is not in default, in 891
installments of determinable amounts as provided in the 892
agreement. 893
For open-end loans, "billing cycle" means the time interval 895
between periodic billing dates. A billing cycle shall be 896
considered monthly if the closing date of the cycle is the same 897
date each month or does not vary by more than four days from such 898
date. 899
(B) Notwithstanding any other provisions of the Revised 901
Code, a registrant may contract for and receive interest for 902
open-end loans at a rate or rates not exceeding twenty-one per 903
cent per year and may compute interest in each billing cycle by 904
either of the following methods: 905
(1) By multiplying the daily rate by the daily unpaid 907
balance of the account, in which case the daily rate is 908
determined by dividing the annual rate by three hundred 909
sixty-five; 910
(2) By multiplying the monthly rate by the average daily 912
unpaid balance of the account in the billing cycle, in which case 913
the average daily unpaid balance is the sum of all of the daily 914
unpaid balances each day during the cycle divided by the number 915
of days in the cycle. The monthly rate is determined by dividing 916
the annual rate by twelve. 917
22
The billing cycle shall be monthly and the unpaid balance 919
on any day shall be determined by adding to any balance unpaid as 920
of the beginning of that day all advances and permitted interest, 921
charges, and costs and deducting all payments and other credits 922
made or received that day. 923
(C) In addition to the interest permitted in division (B) 925
of this section, a registrant may charge and receive or add to 926
the unpaid balance any or all of the following: 927
(1) All charges and costs authorized by divisions (E), 929
(F), (G), (H), (I), and (K) of section 1321.57 of the Revised 930
Code; 931
(2) An annual credit line charge, for the privilege of 933
maintaining a line of credit, for AS FOLLOWS: 934
(a) FOR the first year: 936
(i) IF THE ORIGINAL CREDIT LINE IS LESS THAN FIVE THOUSAND 938
DOLLARS, AN AMOUNT NOT EXCEEDING ONE HUNDRED FIFTY DOLLARS; 939
(ii) IF THE ORIGINAL CREDIT LINE IS AT LEAST FIVE THOUSAND 941
DOLLARS, AN AMOUNT not exceeding the greater of one per cent of 943
the original credit line or one TWO hundred fifty dollars, and 945
for.
(b) FOR subsequent years AN AMOUNT not exceeding the 947
greater of one-half per cent of the credit line on the 948
anniversary date or fifty dollars;. 949
(3) A default charge on any required minimum payment not 952
paid in full within ten days after its due date. For this
purpose, all required minimum payments are considered paid in the 954
order in which they become due. The amount of the default charge 955
shall not exceed the greater of five per cent of the required 956
minimum payment or fifteen dollars.
(D) The borrower at any time may pay all or any part of 958
the unpaid balance on the account or, if the account is not in 959
default, the borrower may pay the unpaid balance in installments 960
subject to minimum payment requirements as determined by the 961
registrant and set forth in the open-end loan agreement. 962
23
(E) If credit life insurance or credit accident and health 964
insurance is obtained by the registrant and if the insured dies 965
or becomes disabled when there is an outstanding open-end loan 966
indebtedness, the insurance shall be sufficient to pay the unpaid 967
balance on the loan due on the date of the borrower's death in 968
the case of credit life insurance or all minimum payments that 969
become due on the loan during the covered period of disability in 970
the case of credit accident and health insurance. The additional 971
charge for credit life insurance, credit accident and health 972
insurance, or unemployment insurance shall be calculated each 973
billing cycle by applying the current monthly premium rate for 974
the insurance, filed by the insurer with the superintendent of 975
insurance and not disapproved by the superintendent, to the 976
unpaid balances in the borrower's account, using one of the 978
methods specified in division (B) of this section for the 979
calculation of interest. No credit life insurance, credit 980
accident and health insurance, or unemployment insurance written 981
in connection with an open-end loan shall be canceled by the 982
registrant because of delinquency of the borrower in making the 983
required minimum payments on the loan unless one or more such 984
payments is past due for a period of thirty days or more. The 985
registrant shall advance to the insurer the amounts required to 986
keep the insurance in force during such period, which amounts may 987
be debited to the borrower's account.
(F) Whenever there is no unpaid balance in an open-end 989
loan account, the account may be terminated by written notice, by 990
the borrower or the registrant, to the other party. If a 991
registrant has taken a mortgage on real property to secure the 992
open-end loan, the registrant shall deliver, within thirty days 993
following termination of the account, a release of the mortgage 994
to the borrower. If a registrant has taken a security interest 995
in personal property to secure the open-end loan, the registrant 996
shall release the security interest and terminate any financing 997
statement in accordance with section 1309.41 of the Revised Code. 998
24
Sec. 1321.99. (A) Whoever violates section 1321.02 of the 1,007
Revised Code shall be fined not less than one hundred nor more 1,008
than five hundred dollars for a first offense; for each 1,009
subsequent offense such person shall be fined not less than two 1,010
hundred nor more than one thousand dollars or imprisoned not more 1,011
than six months, or both IS GUILTY OF A FELONY OF THE FIFTH 1,012
DEGREE.
(B) Whoever violates section 1321.13 of the Revised Code 1,014
shall be fined not less than one hundred nor more than five 1,015
hundred dollars or imprisoned not more than six months, or both. 1,016
(C) Whoever violates section 1321.14 of the Revised Code 1,018
shall be fined not less than fifty nor more than two hundred 1,019
dollars for a first offense; for a second offense such person 1,020
shall be fined not less than two hundred nor more than five 1,021
hundred dollars and imprisoned for not more than six months. 1,022
(D) Whoever willfully violates section 1321.57, 1321.58, 1,024
1321.59, or 1321.60 of the Revised Code shall be fined not less 1,025
than one nor more than five hundred dollars. 1,026
(E) Whoever violates section 1321.52 of the Revised Code 1,028
is guilty of a felony of the fifth degree. 1,029
(F) Whoever violates division (A) of section 1321.73 of 1,031
the Revised Code shall be fined not more than five hundred 1,032
dollars or imprisoned not more than six months, or both. 1,033
Section 2. That existing sections 1321.20, 1321.51, 1,035
1321.52, 1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 1,036
of the Revised Code are hereby repealed. 1,037