As Reported by House Financial Institutions Committee 1
123rd General Assembly 4
Regular Session Am. Sub. S. B. No. 231 5
1999-2000 6
SENATORS WHITE-RAY-PRENTISS-WACHTMANN- 9
REPRESENTATIVES SCHULER-D. MILLER-VERICH-OLMAN-ROBINSON-AUSTRIA-
EVANS 10
_________________________________________________________________ 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
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computation. In no event shall the amount of the fee exceed two 46
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
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credit line charges collected by that person during the previous 83
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
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payments made on a loan between the principal amount and interest 134
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
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loan made by the same registrant to the same borrower under 176
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
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OF THE REGISTRANT'S CERTIFICATE AFTER THE DATE REQUIRED BY 229
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
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does not contain all of the information required under division 277
(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
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APPLICATION UNDER DIVISION (A)(4) OF THIS SECTION. IF SUCH A 316
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
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the registrant and is not transferable or assignable. 353
(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 REFUSE TO RENEW any certificate 403
issued under sections 1321.51 to 1321.60 of the Revised Code, OR 404
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IMPOSE A MONETARY FINE, if it finds that the registrant has 406
continued to violate those sections, after receiving notice of 407
the violation or violations from the division, or is in default 408
in the payment of the annual assessment or certificate of 409
registration fee prescribed in section 1321.20 of the Revised 410
Code. The revocation or, suspension, OR REFUSAL TO RENEW shall 411
not impair the obligation of any pre-existing lawful contract 412
made under sections 1321.51 to 1321.60 of the Revised Code. 413
MONETARY FINES IMPOSED UNDER THIS DIVISION SHALL NOT EXCEED 415
TWENTY-FIVE THOUSAND DOLLARS. 416
(C) The superintendent of financial institutions may 419
investigate alleged violations of sections 1321.51 to 1321.60 of 420
the Revised Code, or the rules adopted thereunder, or complaints 421
concerning any such violation. The superintendent may make 423
application to the court of common pleas for an order enjoining 424
any such violation and, upon a showing by the superintendent that 425
a person has committed, or is about to commit, such a violation, 426
the court shall grant an injunction, restraining order, or other 427
appropriate relief.
(D) In conducting an investigation pursuant to this 430
section, the superintendent may compel, by subpoena, witnesses to 431
testify in relation to any matter over which the superintendent 432
has jurisdiction, and may require the production or photocopying 433
of any book, record, or other document pertaining to such matter. 434
If a person fails to file any statement or report, obey any 435
subpoena, give testimony, produce any book, record, or other 436
document as required by such a subpoena, or permit photocopying 437
of any book, record, or other document subpoenaed, the court of 438
common pleas of any county in this state, upon application made 439
to it by the superintendent, shall compel obedience by attachment 440
proceedings for contempt, as in the case of disobedience of the 441
requirements of a subpoena issued from the court, or a refusal to 442
testify therein.
(E) If the superintendent determines that a person is 444
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engaged in, or is believed to be engaged in, activities that may 445
constitute a violation of sections 1321.51 to 1321.60 of the 446
Revised Code, the superintendent may, after notice and a hearing 448
conducted in accordance with Chapter 119. of the Revised Code, 449
issue a cease and desist order. Such an order shall be 450
enforceable in the court of common pleas. 451
Sec. 1321.55. (A) Every registrant shall keep records 460
pertaining to loans made under sections 1321.51 to 1321.60 of the 462
Revised Code. Such records shall be segregated from records 463
pertaining to transactions that are not subject to these sections 464
of the Revised Code. Every registrant shall preserve records 465
pertaining to loans made under sections 1321.51 to 1321.60 of the 467
Revised Code for at least two years after making the final entry 468
on such records. Accounting systems maintained in whole or in 469
part by mechanical or electronic data processing methods that 470
provide information equivalent to that otherwise required are 471
acceptable for this purpose. At least once each year
EIGHTEEN-MONTH CYCLE, the division of financial institutions 473
shall make or cause to be made an examination of records 475
pertaining to loans made under sections 1321.51 to 1321.60 of the 476
Revised Code, for the purpose of determining whether the
registrant is complying with these sections and of verifying the 477
registrant's annual report. 478
(B)(1) As required by the superintendent of financial 480
institutions, each registrant shall file with the division each 482
year a report under oath or affirmation, on forms supplied by the 483
division, concerning the business and operations for the 484
preceding calendar year. Whenever a registrant operates two or 485
more registered offices or whenever two or more affiliated 486
registrants operate registered offices, then a composite report 487
of the group of registered offices may be filed in lieu of 488
individual reports. 489
(2) The division shall publish annually an analysis of the 491
information required under division (B)(1) of this section, but 492
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the individual reports shall not be public records and shall not 493
be open to public inspection. 494
(C) All information obtained by the superintendent or the 497
superintendent's deputies, examiners, assistants, agents, or
clerks by reason of their official position, including 498
information obtained by such persons from the annual report of a 499
registrant or in the course of examining a registrant or 500
investigating an applicant for a certificate, is privileged and 501
confidential. All such information shall remain privileged and 502
confidential for all purposes except when it is necessary for the 504
superintendent and the superintendent's deputies, examiners,
assistants, agents, or clerks to take official action regarding 505
the affairs of the registrant or in connection with criminal 506
proceedings. 507
(D) No person is in violation of sections 1321.51 to 509
1321.60 of the Revised Code for any act taken or omission made in 510
reliance on a written notice, interpretation, or examination 511
report from the superintendent.
Sec. 1321.57. (A) Notwithstanding any other provisions of 520
the Revised Code, a registrant may contract for and receive 521
interest, calculated according to the actuarial method, at a rate 522
or rates not exceeding twenty-one per cent per year on the unpaid 523
principal balances of the loan. Loans may be interest-bearing or 524
precomputed. 525
(B) For purposes of computation of time on 527
interest-bearing and precomputed loans, including, but not 528
limited to, the calculation of interest, a month is considered 529
one-twelfth of a year, and a day is considered one three hundred 530
sixty-fifth of a year when calculation is made for a fraction of 531
a month. A year is as defined in section 1.44 of the Revised 532
Code. A month is that period described in section 1.45 of the 533
Revised Code. ALTERNATIVELY, A REGISTRANT MAY CONSIDER A DAY AS 534
ONE THREE HUNDRED SIXTIETH OF A YEAR AND EACH MONTH AS HAVING 535
THIRTY DAYS.
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(C) With respect to interest-bearing loans: 537
(1)(a) Interest shall be computed on unpaid principal 539
balances outstanding from time to time, for the time outstanding. 540
(b) As an alternative to the method of computing interest 542
set forth in division (C)(1)(a) of this section, a registrant, if 543
the loan contract so provides, may charge and collect interest 544
for the first installment period based on elapsed time from the 545
date of the loan to the first scheduled payment due date, and for 546
each succeeding installment period from the scheduled payment due 547
date to the next scheduled payment due date, regardless of the 548
date or dates the payments are actually made. 549
(c) Whether a registrant computes interest pursuant to 551
division (C)(1)(a) or (b) of this section, each payment shall be 552
applied first to unpaid charges, then to interest, and the 553
remainder to the unpaid principal balance. However, if the 554
amount of the payment is insufficient to pay the accumulated 555
interest, the unpaid interest continues to accumulate to be paid 556
from the proceeds of subsequent payments and is not added to the 557
principal balance. 558
(2) Interest shall not be compounded, COLLECTED, or paid 561
in advance. However, if BOTH OF THE FOLLOWING APPLY:
(a) INTEREST MAY BE CHARGED TO EXTEND THE FIRST MONTHLY 563
INSTALLMENT PERIOD BY NOT MORE THAN FIFTEEN DAYS, AND THE 564
INTEREST CHARGED FOR THE EXTENSION MAY BE ADDED TO THE PRINCIPAL 565
AMOUNT OF THE LOAN. 566
(b) IF part or all of the consideration for a new loan 569
contract is the unpaid principal balance of a prior loan, then 570
the principal amount payable under such THE new loan contract may 571
include any unpaid interest that has accrued. The resulting loan 572
contract shall be deemed a new and separate loan transaction for 573
purposes of this section. The unpaid principal balance of a 574
precomputed loan is the balance due after refund or credit of 575
unearned interest as provided in division (D)(3) of this section. 576
(D) With respect to precomputed loans: 578
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(1) Loans shall be repayable in monthly installments of 580
principal and interest combined, except that the first 581
installment period may exceed one month by not more than fifteen 582
days, and the first installment payment amount may be larger than 583
the remaining payments by the amount of interest charged for the 584
extra days; and provided further that monthly installment payment 585
dates may be omitted to accommodate borrowers with seasonal 586
income. 587
(2) Payments may be applied to the combined total of 589
principal and precomputed interest until maturity of the loan. A 590
registrant may charge interest after the original or deferred 591
maturity of a precomputed loan at the rate specified in division 592
(A) of this section on all unpaid principal balances for the time 593
outstanding. 594
(3) When any loan contract is paid in full by cash, 596
renewal, refinancing, or a new loan, one month or more before the 597
final installment due date, the registrant shall refund, or 598
credit the borrower with, the total of the applicable charges for 599
all fully unexpired installment periods, as originally scheduled 600
or as deferred, that follow the day of prepayment. If the 601
prepayment is made other than on a scheduled installment due 603
date, the nearest scheduled installment due date shall be used in
such computation. If the prepayment occurs prior to the first 604
installment due date, the registrant may retain one-thirtieth of 605
the applicable charge for a first installment period of one month 606
for each day from date of loan to date of prepayment, and shall 607
refund, or credit the borrower with, the balance of the total 608
interest contracted for. If the maturity of the loan is 609
accelerated for any reason and judgment is entered, the 610
registrant shall credit the borrower with the same refund as if 611
prepayment in full had been made on the date the judgment is 612
entered. 613
(4) If the parties agree in writing, either in the loan 615
contract or in a subsequent agreement, to a deferment of wholly 616
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unpaid installments, a registrant may grant a deferment and may 617
collect a deferment charge as provided in this section. A 618
deferment postpones the scheduled due date of the earliest unpaid 619
installment and all subsequent installments as originally 620
scheduled, or as previously deferred, for a period equal to the 621
deferment period. The deferment period is that period during 622
which no installment is scheduled to be paid by reason of the 623
deferment. The deferment charge for a one-month period may not 624
exceed the applicable charge for the installment period 625
immediately following the due date of the last undeferred 626
installment. A proportionate charge may be made for deferment 627
for periods of more or less than one month. A deferment charge 628
is earned pro rata during the deferment period and is fully 629
earned on the last day of the deferment period. If a loan is 630
prepaid in full during a deferment period, the registrant shall 631
make, or credit to the borrower, a refund of the unearned 632
deferment charge in addition to any other refund or credit made 633
for prepayment of the loan in full. 634
(E) A registrant, at the request of the borrower, may 636
obtain, on one or more borrowers, credit life insurance, credit 637
accident and health insurance, and unemployment insurance. The 638
premium or identifiable charge for the insurance may be included 640
in the principal amount of the loan and may not exceed the 641
premium rate filed by the insurer with the superintendent of 642
insurance and not disapproved by the superintendent. If a 643
registrant obtains the insurance at the request of the borrower, 644
the borrower shall have the right to cancel the insurance for a 645
period of twenty-five days after the loan is made. If the 646
borrower chooses to cancel the insurance, the borrower shall give 647
the registrant written notice of this choice and shall return all 648
of the policies or certificates of insurance or notices of 649
proposed insurance to the registrant during such period, and the 650
full premium or identifiable charge for the insurance shall be 651
refunded to the borrower by the registrant. If the borrower 652
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requests, in the notice to cancel the insurance, that this refund 653
be applied to reduce the balance of a precomputed loan, the 654
registrant shall credit the amount of the refund plus the amount 655
of interest applicable to the refund to the loan balance. 656
IF THE REGISTRANT OBTAINS THE INSURANCE AT THE REQUEST OF 658
THE BORROWER, THE REGISTRANT SHALL NOT CHARGE OR COLLECT INTEREST 659
ON ANY INSURED AMOUNT THAT REMAINS UNPAID AFTER THE INSURED 660
BORROWER'S DATE OF DEATH. 661
(F) A registrant may require the borrower to provide 663
insurance or a loss payable endorsement covering reasonable risks 664
of loss, damage, and destruction of property used as security for 665
the loan and with the consent of the borrower such insurance may 666
cover property other than that which is security for the loan. 667
The amount and term of required property insurance shall be 668
reasonable in relation to the amount and term of the loan 669
contract and the type and value of the security, and the 670
insurance shall be procured in accordance with the insurance laws 671
of this state. The purchase of this insurance through the 672
registrant or an agent or broker designated by the registrant 673
shall not be a condition precedent to the granting of the loan. 674
If the borrower purchases the insurance from or through the 675
registrant or from another source, the premium may be included in 676
the principal amount of the loan. 677
(G) On loans secured by an interest in real estate, all of 679
the following apply: 680
(1) A registrant may charge and receive up to two points, 683
and a prepayment penalty not in excess of one per cent of the 684
original principal amount of the loan. Points may be paid by the 685
borrower at the time of the loan or may be included in the 686
principal amount of the loan. On a refinancing, a registrant may 687
not charge under division (G)(1) of this section either points OF 689
THE FOLLOWING:
(a) POINTS ON THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 691
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN, IF 692
17
THE REFINANCING OCCURS within one year from AFTER the date of a 694
prior THE REFINANCED loan on which points were charged or a; 695
(b) A prepayment penalty. 698
(2) As an alternative to the prepayment penalty described 700
in division (G)(1) of this section, a registrant may contract 701
for, charge, and receive the prepayment penalty described in 702
division (G)(2) of this section for the prepayment of a loan 705
prior to three years after the date the loan contract is 706
executed. This prepayment penalty shall not exceed three per 707
cent of the original principal amount of the loan if the loan is 708
paid in full prior to one year after the date the loan contract 709
is executed. The penalty shall not exceed two per cent of the 710
original principal amount of the loan if the loan is paid in full 711
at any time from one year, but prior to two years, after the date 712
the loan contract is executed. The penalty shall not exceed one 713
per cent of the original principal amount of the loan if the loan 714
is paid in full at any time from two years, but prior to three 715
years, after the date the loan contract is executed. A 717
registrant shall not charge or receive a prepayment penalty under 718
division (G)(2) of this section if any of the following applies: 719
(a) The loan is a refinancing by the same registrant or a 721
registrant to whom the loan has been assigned; 722
(b) The loan is paid in full as a result of the sale of 724
the real estate that secures the loan; 726
(c) The loan is paid in full with the proceeds of an 728
insurance claim against an insurance policy that insures the life 730
of the borrower or an insurance policy that covers loss, damage, 732
or destruction of the real estate that secures the loan. 733
(3) Division (G) of this section is not a limitation on 736
discount points or other charges for purposes of section 737
501(b)(4) of the "Depository Institutions Deregulation and 738
Monetary Control Act of 1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 739
note.
(H)(1) In addition to the interest and charges provided 741
18
for by this section, no further or other amount, whether in the 742
form of broker fees, placement fees, or any other fees 743
whatsoever, shall be charged or received by the registrant, 744
except costs and disbursements to which the registrant may become 745
entitled by law in connection with any suit to collect a loan or 746
any lawful activity to realize on a security interest or mortgage 747
after default, INCLUDING REASONABLE ATTORNEY FEES INCURRED BY THE 749
REGISTRANT AS A RESULT OF THE SUIT OR ACTIVITY AND TO WHICH THE
REGISTRANT BECOMES ENTITLED BY LAW, and except the following 751
additional charges which may be included in the principal amount 752
of the loan or collected at any time after the loan is made: 753
(a) The amounts of fees authorized by law to record, file, 755
or release security interests and mortgages on a loan; 756
(b) With respect to a loan secured by an interest in real 758
estate, the following closing costs, if they are bona fide, 759
reasonable in amount, and not for the purpose of circumvention or 760
evasion of this section: 761
(i) Fees or premiums for title examination, abstract of 763
title, title insurance, surveys, or similar purposes TITLE 765
ENDORSEMENTS, TITLE BINDERS, TITLE COMMITMENTS, HOME INSPECTIONS,
OR PEST INSPECTIONS; SETTLEMENT OR CLOSING COSTS; COURIER FEES; 767
AND ANY FEDERALLY MANDATED FLOOD PLAIN CERTIFICATION FEE; 768
(ii) If not paid to the registrant, an employee of the 770
registrant, or a person related to the registrant, fees for 771
preparation of a mortgage, settlement statement, or other 772
documents, fees for notarizing mortgages and other documents, and 773
appraisal fees, AND FEES FOR ANY FEDERALLY MANDATED INSPECTION OF 774
HOME IMPROVEMENT WORK FINANCED BY A SECOND MORTGAGE LOAN; 775
(c) Fees for credit investigations not exceeding ten 777
dollars.
(2) Division (H)(1) of this section does not limit the 779
rights of registrants to engage in other transactions with 780
borrowers, provided the transactions are not a condition of the 781
loan. 782
19
(I) If the loan contract or security instrument contains 784
covenants by the borrower to perform certain duties pertaining to 785
insuring or preserving security and the registrant pursuant to 786
the loan contract or security instrument pays for performance of 787
the duties on behalf of the borrower, the registrant may add the 788
amounts paid to the unpaid principal balance of the loan or 789
collect them separately. A charge for interest may be made for 790
sums advanced not exceeding the rate of interest permitted by 791
division (A) of this section. Within a reasonable time after 792
advancing a sum, the registrant shall notify the borrower in 793
writing of the amount advanced, any interest charged with respect 794
to the amount advanced, any revised payment schedule, and shall 795
include a brief description of the reason for the advance. 796
(J)(1) In addition to points authorized under division (G) 799
of this section, a registrant may charge and receive, on THE
FOLLOWING: 800
(a) WITH RESPECT TO SECURED loans in: IF the principal 803
amount of THE LOAN IS less than five hundred dollars, loan 805
origination charges not exceeding fifteen dollars; on loans in IF 807
the principal amount of THE LOAN IS at least five hundred dollars 808
but less than one thousand dollars, loan origination charges not 810
exceeding thirty dollars; on loans in IF the principal amount of 812
THE LOAN IS at least one thousand dollars but less than two 813
thousand dollars, loan origination charges not exceeding 814
sixty-five ONE HUNDRED dollars; and on loans in IF the principal 816
amount of THE LOAN IS at least two thousand dollars BUT LESS THAN 817
FIVE THOUSAND DOLLARS, loan origination charges not exceeding the 818
greater of one TWO hundred fifty dollars or one per cent of; AND 819
IF the principal amount of the loan IS AT LEAST FIVE THOUSAND 820
DOLLARS, LOAN ORIGINATION CHARGES NOT EXCEEDING THE GREATER OF 821
TWO HUNDRED FIFTY DOLLARS OR ONE PER CENT OF THE PRINCIPAL AMOUNT 822
OF THE LOAN. However, on 823
(b) WITH RESPECT TO unsecured loans in: IF the principal 826
amount of THE LOAN IS LESS THAN FIVE HUNDRED DOLLARS, LOAN 827
20
ORIGINATION CHARGES NOT EXCEEDING FIFTEEN DOLLARS; IF THE 828
PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST FIVE HUNDRED DOLLARS BUT 829
LESS THAN ONE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES NOT 830
EXCEEDING THIRTY DOLLARS; IF THE PRINCIPAL AMOUNT OF THE LOAN IS 831
AT LEAST ONE THOUSAND DOLLARS BUT less than five thousand 834
dollars, the loan origination charge shall CHARGES not exceed 836
EXCEEDING one hundred dollars; AND IF THE PRINCIPAL AMOUNT OF THE 837
LOAN IS AT LEAST FIVE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES 838
NOT EXCEEDING THE GREATER OF TWO HUNDRED FIFTY DOLLARS OR ONE PER 839
CENT OF THE PRINCIPAL AMOUNT OF THE LOAN. A
(2) IF A REFINANCING OCCURS WITHIN NINETY DAYS AFTER THE 841
DATE OF THE REFINANCED LOAN, A registrant may not impose loan 843
origination charges on a borrower more frequently than once in 844
any ninety-day period THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 845
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN. 846
Loan
(3) LOAN origination charges may be paid by the borrower 848
at the time of the loan or may be included in the principal 849
amount of the loan. 850
(K) A registrant may charge and receive check collection 852
charges not greater than twenty dollars plus any amount passed on 854
from other financial institutions for each check, negotiable 855
order of withdrawal, share draft, or other negotiable instrument 856
returned or dishonored for any reason. 857
(L) If the loan contract so provides, a registrant may 859
collect a default charge on any installment not paid in full 860
within ten days after its due date. For this purpose, all 861
installments are considered paid in the order in which they 862
become due. Any amounts applied to an outstanding loan balance 863
as a result of voluntary release of a security interest, sale of 864
security on the loan, or cancellation of insurance shall be 865
considered payments on the loan, unless the parties otherwise 866
agree in writing at the time the amounts are applied. The amount 867
of the default charge shall not exceed the greater of five per 868
21
cent of the scheduled installment or fifteen dollars. 869
Sec. 1321.58. (A) A registrant may make open-end loans 878
pursuant to an agreement between the registrant and the borrower 879
whereby: 880
(1) The registrant may permit the borrower to obtain 882
advances of money from the registrant from time to time or the 883
registrant may advance money on behalf of the borrower from time 884
to time as directed by the borrower. 885
(2) The amount of each advance and permitted interest, 887
charges, and costs are debited to the borrower's account and 888
payments and other credits are credited to the same account. 889
(3) The interest and charges are computed on the unpaid 891
balance or balances of the account from time to time. 892
(4) The borrower has the privilege of paying the account 894
in full at any time or, if the account is not in default, in 895
installments of determinable amounts as provided in the 896
agreement. 897
For open-end loans, "billing cycle" means the time interval 899
between periodic billing dates. A billing cycle shall be 900
considered monthly if the closing date of the cycle is the same 901
date each month or does not vary by more than four days from such 902
date. 903
(B) Notwithstanding any other provisions of the Revised 905
Code, a registrant may contract for and receive interest for 906
open-end loans at a rate or rates not exceeding twenty-one per 907
cent per year and may compute interest in each billing cycle by 908
either of the following methods: 909
(1) By multiplying the daily rate by the daily unpaid 911
balance of the account, in which case the daily rate is 912
determined by dividing the annual rate by three hundred 913
sixty-five; 914
(2) By multiplying the monthly rate by the average daily 916
unpaid balance of the account in the billing cycle, in which case 917
the average daily unpaid balance is the sum of all of the daily 918
22
unpaid balances each day during the cycle divided by the number 919
of days in the cycle. The monthly rate is determined by dividing 920
the annual rate by twelve. 921
The billing cycle shall be monthly and the unpaid balance 923
on any day shall be determined by adding to any balance unpaid as 924
of the beginning of that day all advances and permitted interest, 925
charges, and costs and deducting all payments and other credits 926
made or received that day. 927
(C) In addition to the interest permitted in division (B) 929
of this section, a registrant may charge and receive or add to 930
the unpaid balance any or all of the following: 931
(1) All charges and costs authorized by divisions (E), 933
(F), (G), (H), (I), and (K) of section 1321.57 of the Revised 934
Code; 935
(2) An annual credit line charge, for the privilege of 937
maintaining a line of credit, for AS FOLLOWS: 938
(a) FOR the first year: 940
(i) IF THE ORIGINAL CREDIT LINE IS LESS THAN FIVE THOUSAND 942
DOLLARS, AN AMOUNT NOT EXCEEDING ONE HUNDRED FIFTY DOLLARS; 943
(ii) IF THE ORIGINAL CREDIT LINE IS AT LEAST FIVE THOUSAND 945
DOLLARS, AN AMOUNT not exceeding the greater of one per cent of 947
the original credit line or one TWO hundred fifty dollars, and 949
for.
(b) FOR subsequent years AN AMOUNT not exceeding the 951
greater of one-half per cent of the credit line on the 952
anniversary date or fifty dollars;. 953
(3) A default charge on any required minimum payment not 956
paid in full within ten days after its due date. For this
purpose, all required minimum payments are considered paid in the 958
order in which they become due. The amount of the default charge 959
shall not exceed the greater of five per cent of the required 960
minimum payment or fifteen dollars.
(D) The borrower at any time may pay all or any part of 962
the unpaid balance on the account or, if the account is not in 963
23
default, the borrower may pay the unpaid balance in installments 964
subject to minimum payment requirements as determined by the 965
registrant and set forth in the open-end loan agreement. 966
(E) If credit life insurance or credit accident and health 968
insurance is obtained by the registrant and if the insured dies 969
or becomes disabled when there is an outstanding open-end loan 970
indebtedness, the insurance shall be sufficient to pay the unpaid 971
balance on the loan due on the date of the borrower's death in 972
the case of credit life insurance or all minimum payments that 973
become due on the loan during the covered period of disability in 974
the case of credit accident and health insurance. The additional 975
charge for credit life insurance, credit accident and health 976
insurance, or unemployment insurance shall be calculated each 977
billing cycle by applying the current monthly premium rate for 978
the insurance, filed by the insurer with the superintendent of 979
insurance and not disapproved by the superintendent, to the 980
unpaid balances in the borrower's account, using one of the 982
methods specified in division (B) of this section for the 983
calculation of interest. No credit life insurance, credit 984
accident and health insurance, or unemployment insurance written 985
in connection with an open-end loan shall be canceled by the 986
registrant because of delinquency of the borrower in making the 987
required minimum payments on the loan unless one or more such 988
payments is past due for a period of thirty days or more. The 989
registrant shall advance to the insurer the amounts required to 990
keep the insurance in force during such period, which amounts may 991
be debited to the borrower's account.
(F) Whenever there is no unpaid balance in an open-end 993
loan account, the account may be terminated by written notice, by 994
the borrower or the registrant, to the other party. If a 995
registrant has taken a mortgage on real property to secure the 996
open-end loan, the registrant shall deliver, within thirty days 997
following termination of the account, a release of the mortgage 998
to the borrower. If a registrant has taken a security interest 999
24
in personal property to secure the open-end loan, the registrant 1,000
shall release the security interest and terminate any financing 1,001
statement in accordance with section 1309.41 of the Revised Code. 1,002
Sec. 1321.99. (A) Whoever violates section 1321.02 of the 1,011
Revised Code shall be fined not less than one hundred nor more 1,012
than five hundred dollars for a first offense; for each 1,013
subsequent offense such person shall be fined not less than two 1,014
hundred nor more than one thousand dollars or imprisoned not more 1,015
than six months, or both IS GUILTY OF A FELONY OF THE FIFTH 1,016
DEGREE.
(B) Whoever violates section 1321.13 of the Revised Code 1,018
shall be fined not less than one hundred nor more than five 1,019
hundred dollars or imprisoned not more than six months, or both. 1,020
(C) Whoever violates section 1321.14 of the Revised Code 1,022
shall be fined not less than fifty nor more than two hundred 1,023
dollars for a first offense; for a second offense such person 1,024
shall be fined not less than two hundred nor more than five 1,025
hundred dollars and imprisoned for not more than six months. 1,026
(D) Whoever willfully violates section 1321.57, 1321.58, 1,028
1321.59, or 1321.60 of the Revised Code shall be fined not less 1,029
than one nor more than five hundred dollars. 1,030
(E) Whoever violates section 1321.52 of the Revised Code 1,032
is guilty of a felony of the fifth degree. 1,033
(F) Whoever violates division (A) of section 1321.73 of 1,035
the Revised Code shall be fined not more than five hundred 1,036
dollars or imprisoned not more than six months, or both. 1,037
Section 2. That existing sections 1321.20, 1321.51, 1,039
1321.52, 1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 1,040
of the Revised Code are hereby repealed. 1,041