As Passed by the House 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-MYERS-GERBERRY-STAPLETON-HOOPS-GOODMAN-TERWILLEGER- 10
JOLIVETTE-SALERNO-WINKLER-CLANCY-BARRETT-AMSTUTZ-ALLEN- 11
PATTON-REDFERN-BRADING-DAMSCHRODER-BUEHRER 12
_________________________________________________________________ 13
A B I L L
To amend sections 1321.20, 1321.51 to 1321.55, 15
1321.57, 1321.58, and 1321.99 of the Revised Code 16
to make revisions in the Small Loan Law and the 17
Mortgage Loan Law, including changes relative to
maximum license or certificate of registration 18
fees, examinations and investigations by the 19
Division of Financial Institutions, permissible 20
charges by registrants, and penalties for 21
violations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 23
Section 1. That sections 1321.20, 1321.51, 1321.52, 25
1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 of the 26
Revised Code be amended to read as follows: 27
Sec. 1321.20. (A) Every person licensed or registered 36
under this chapter shall pay to the superintendent of financial 37
institutions, prior to the last day of June, an annual license or 39
certificate of registration fee. On or about the fifteenth day 40
of April of each year, the superintendent shall determine the 41
license or certificate fees to be charged, pursuant to sections 42
1321.03, 1321.05, 1321.53, and 1321.73 of the Revised Code. Such 43
determination shall be made by dividing the appropriation for the 44
consumer finance section of the division of financial 45
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institutions for the current fiscal year by the number of 46
licenses and certificates issued as of the date of the 47
computation. In no event shall the amount of the fee exceed two 48
THREE hundred fifty dollars, except that the maximum fee which 49
may be charged insurance premium finance companies licensed under 50
section 1321.73 of the Revised Code shall not exceed three 51
hundred seventy-five dollars. Prior to the first day of June of 52
each year, the superintendent shall inform each person licensed 53
or registered under this chapter of the amount of the license or 54
certificate fee for the succeeding fiscal year as determined by 55
this section. 56
(B) Each person licensed under Chapter 4727. of the 58
Revised Code, prior to the last day of June, shall pay to the 59
superintendent a fee equal to twice the amount of the fee 60
determined by the superintendent pursuant to division (A) of this 61
section. However, in no event shall the amount of the fee exceed 62
three hundred dollars. 63
(C) The fee for a license or certificate issued pursuant 65
to Chapter 1321., 4727., or 4728. of the Revised Code after the 66
first day of January in any fiscal year shall be equal to 67
one-half the amount determined according to divisions (A) and (B) 68
of this section or in accordance with section 4728.03 of the 69
Revised Code. 70
(D) If the renewal fees billed by the superintendent 72
pursuant to divisions (A) and (B) of this section are less than 73
the estimated expenditures of the consumer finance section of the 75
division of financial institutions, as determined by the
superintendent, for the following fiscal year, the superintendent 76
may assess each person licensed pursuant to section 1321.04 or 77
registered pursuant to section 1321.53 of the Revised Code at a 78
rate sufficient to equal in the aggregate the difference between 79
the renewal fees billed and the estimated expenditures. Each 80
person shall pay the assessed amount to the superintendent prior 81
to the last day of June. In no case shall the assessment exceed 82
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ten cents per each one hundred dollars of interest (excluding 83
charge-off recoveries), points, loan origination charges, and 84
credit line charges collected by that person during the previous 85
calendar year. If an assessment is imposed under this division, 86
it shall not be less than two hundred fifty dollars per licensee 87
or registrant and shall not exceed thirty thousand dollars less 88
the total renewal fees paid pursuant to division (A) of this 89
section by each licensee or registrant. 90
Sec. 1321.51. As used in sections 1321.51 to 1321.60 of 99
the Revised Code: 100
(A) "Person" means an individual, partnership, 102
association, trust, corporation, or any other legal entity. 103
(B) "Certificate" means a certificate of registration 105
issued under sections 1321.51 to 1321.60 of the Revised Code. 106
(C) "Registrant" means a person to whom one or more 108
certificates have been issued. 109
(D) "Principal amount" means the amount of cash paid to, 111
or paid or payable for the account of, the borrower, AND INCLUDES 113
ANY CHARGE, FEE, OR EXPENSE THAT IS FINANCED BY THE BORROWER AT 115
ORIGINATION OF THE LOAN OR DURING THE TERM OF THE LOAN.
(E) "Interest" means all charges payable directly or 117
indirectly by a borrower to a registrant as a condition to a loan 118
or an application for a loan, however denominated, but does not 119
include default charges, deferment charges, insurance charges or 120
premiums, court costs, loan origination charges, check collection 121
charges, credit line charges, points, prepayment penalties, or 122
other fees and charges specifically authorized by law. 123
(F) "Interest-bearing loan" means a loan in which the debt 125
is expressed as the principal amount and interest is computed, 126
charged, and collected on unpaid principal balances outstanding 127
from time to time. 128
(G) "Precomputed loan" means a loan in which the debt is a 130
sum comprising the principal amount and the amount of interest 131
computed in advance on the assumption that all scheduled payments 132
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will be made when due. 133
(H) "Actuarial method" means the method of allocating 135
payments made on a loan between the principal amount and interest 136
whereby a payment is applied first to the accumulated interest 137
and the remainder to the unpaid principal amount. 138
(I) "Applicable charge" means the amount of interest 140
attributable to each monthly installment period of the loan 141
contract. The applicable charge is computed as if each 142
installment period were one month and any charge for extending 143
the first installment period beyond one month is ignored. In the 144
case of loans originally scheduled to be repaid in sixty-one 145
months or less, the applicable charge for any installment period 146
is that proportion of the total interest contracted for, as the 147
balance scheduled to be outstanding during that period bears to 148
the sum of all of the periodic balances, all determined according 149
to the payment schedule originally contracted for. In all other 150
cases, the applicable charge for any installment period is that 151
which would have been made for such period had the loan been made 152
on an interest-bearing basis, based upon the assumption that all 153
payments were made according to schedule. 154
(J) "Broker" means a person who acts as an intermediary or 156
agent in finding, arranging, or negotiating loans, and charges or 157
receives a fee for these services. 158
(K) "Annual percentage rate" means the ratio of the 160
interest on a loan to the unpaid principal balances on the loan 161
for any period of time, expressed on an annual basis. 162
(L) "Point" means a charge equal to one per cent of either 164
of the following: 165
(1) The principal amount of a precomputed loan or 167
interest-bearing loan; 168
(2) The original credit line of an open-end loan. 170
(M) "Prepayment penalty" means a charge for prepayment of 172
a loan at any time prior to five years from the date the loan 173
contract is executed. 174
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(N) "Refinancing" means a loan the proceeds of which are 176
used in whole or in part to pay the unpaid balance of a prior 177
loan made by the same registrant to the same borrower under 178
sections 1321.51 to 1321.60 of the Revised Code. 179
(O) "Superintendent of financial institutions" includes 181
the deputy superintendent for consumer finance as provided in 182
section 1181.21 of the Revised Code. 183
Sec. 1321.52. (A)(1) No person, on that person's own 192
behalf or on behalf of any other person, shall do either of the 193
following without having first obtained a certificate of 195
registration from the division of financial institutions: 196
(a) Advertise, solicit, or hold out that the person is 198
engaged in the business of making loans secured by a mortgage on 199
a borrower's real estate which is other than a first lien on the 201
real estate;
(b) Engage in the business of lending or collecting the 203
person's own or another person's money, credit, or choses in 204
action for such loans. 205
(2) Each person issued a certificate is subject to all the 207
rules prescribed under sections 1321.51 to 1321.60 of the Revised 208
Code. 209
(B) All loans made to persons who at the time are 211
residents of this state are considered as made within this state 212
and subject to the laws of this state, regardless of any 213
statement in the contract or note to the contrary. 214
(C) A registrant may make unsecured loans, loans secured 216
by a mortgage on a borrower's real estate which is a first lien 217
or other than a first lien on the real estate, loans secured by 218
other than real estate, and loans secured by any combination of 219
mortgages and security interests, on terms and conditions 220
provided by sections 1321.51 to 1321.60 of the Revised Code. 221
(D)(1) IF A LENDER THAT IS SUBJECT TO SECTIONS 1321.51 TO 224
1321.60 OF THE REVISED CODE MAKES A LOAN IN VIOLATION OF DIVISION 225
(A)(1) OF THIS SECTION, THE LENDER HAS NO RIGHT TO COLLECT, 227
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RECEIVE, OR RETAIN ANY INTEREST OR CHARGES ON THAT LOAN. 228
(2) IF A REGISTRANT APPLIES TO THE DIVISION FOR A RENEWAL 230
OF THE REGISTRANT'S CERTIFICATE AFTER THE DATE REQUIRED BY 231
DIVISION (A)(4) OF SECTION 1321.53 OF THE REVISED CODE, BUT PRIOR 233
TO THE FIRST DAY OF AUGUST OF THAT YEAR, AND THE DIVISION 234
APPROVES THE APPLICATION, DIVISION (D)(1) OF THIS SECTION DOES 235
NOT APPLY WITH RESPECT TO ANY LOAN MADE BY THE REGISTRANT WHILE 236
THE REGISTRANT'S CERTIFICATE WAS EXPIRED. 237
Sec. 1321.53. (A)(1) An application for a certificate of 246
registration under sections 1321.51 to 1321.60 of the Revised 247
Code shall contain an undertaking by the applicant to abide by 248
those sections. The application shall be in writing, under oath, 249
and in the form prescribed by the division of financial 251
institutions, shall give the location where the business is to be 252
conducted and the names and addresses of the partners, officers, 253
or trustees of the applicant, and shall contain any further 254
relevant information that the division may require. Applicants 255
that are foreign corporations shall obtain and maintain a license 256
pursuant to Chapter 1703. of the Revised Code before a 257
certificate is issued or renewed. 258
(2) Upon the filing of the application and the payment by 260
the applicant of two hundred dollars as an investigation fee and 261
an annual registration fee as determined by the superintendent of 262
financial institutions pursuant to section 1321.20 of the Revised 264
Code, the division shall investigate the relevant facts. If the 265
application involves investigation outside this state, the 266
applicant may be required by the division to advance sufficient 267
funds to pay any of the actual expenses of such investigation, 268
when it appears that these expenses will exceed two hundred 269
dollars. An itemized statement of any of these expenses which 270
the applicant is required to pay shall be furnished the applicant 271
by the division. No certificate shall be issued unless the fees 272
have been submitted to the division, and no registration fee or 273
investigation fee will be returned after a certificate has been 274
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issued. 275
(3) If an application for a certificate of registration 278
does not contain all of the information required under division 279
(A)(1) of this section, and if such information is not submitted 281
to the division within ninety days after the application is 282
filed, the superintendent may consider the application withdrawn 283
and may retain the investigation fee. 284
(4) If the division finds that the financial 287
responsibility, experience, character, and general fitness of the 288
applicant are such as to command the confidence of the public and 289
to warrant the belief that the business will be operated honestly 290
and fairly in compliance with and within the purposes of sections 291
1321.51 to 1321.60 of the Revised Code, and that the applicant 292
has the net worth and assets required by division (B) of this 293
section, the division shall thereupon issue a certificate to the 294
applicant. The certificate may be continued from year to year 295
SHALL EXPIRE ON THE FIRST DAY OF JULY NEXT AFTER ITS ISSUE, AND 296
ON THE FIRST DAY OF JULY IN EACH SUCCEEDING YEAR, UNLESS RENEWED 297
by payment of an annual fee, and any assessment, as determined by 298
the superintendent pursuant to section 1321.20 of the Revised 300
Code, on or before the last day of June of each year. No other 301
fee or assessment shall be required of a registrant by the state 302
or any political subdivision of the state.
If the division does not so find, it shall enter an order 305
denying the application, and forthwith notify the applicant of 306
the denial, the grounds for the denial, and the applicant's 307
reasonable opportunity to be heard on the action in accordance 308
with Chapter 119. of the Revised Code. In the event of denial, 309
the division shall return the registration fee but retain the 310
investigation fee.
(5) IF THERE IS A CHANGE OF TEN PER CENT OR MORE IN THE 312
OWNERSHIP OF A REGISTRANT, THE DIVISION MAY MAKE ANY 313
INVESTIGATION NECESSARY TO DETERMINE WHETHER ANY FACT OR 314
CONDITION EXISTS THAT, IF IT HAD EXISTED AT THE TIME OF THE 315
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ORIGINAL APPLICATION FOR A CERTIFICATE OF REGISTRATION, THE FACT 316
OR CONDITION WOULD HAVE WARRANTED THE DIVISION TO DENY THE 317
APPLICATION UNDER DIVISION (A)(4) OF THIS SECTION. IF SUCH A 318
FACT OR CONDITION IS FOUND, THE DIVISION MAY, IN ACCORDANCE WITH 319
CHAPTER 119. OF THE REVISED CODE, REVOKE THE REGISTRANT'S 320
CERTIFICATE.
(B) Each registrant that engages in lending under sections 323
1321.51 to 1321.60 of the Revised Code shall maintain both of the 324
following:
(1) A net worth of at least fifty thousand dollars; 326
(2) For each certificate of registration, assets of at 328
least fifty thousand dollars either in use or readily available 329
for use in the conduct of the business. 330
(C) Not more than one place of business shall be 332
maintained under the same certificate, but the division may issue 333
additional certificates to the same registrant upon compliance 334
with sections 1321.51 to 1321.60 of the Revised Code, governing 335
the issuance of a single certificate. No change in the place of 336
business of a registrant to a location outside the original 337
municipal corporation shall be permitted under the same 338
certificate without the approval of a new application, the 339
payment of the registration fee as determined by the 340
superintendent pursuant to section 1321.20 of the Revised Code 341
and, if required by the superintendent, the payment of an 342
investigation fee of two hundred dollars. When a registrant 343
wishes to change its place of business within the same municipal 344
corporation, it shall give written notice of the change in 345
advance to the division, which shall provide a certificate for 346
the new address without cost. If a registrant changes its name, 347
prior to making loans under the new name it shall give written 348
notice of the change to the division, which shall provide a 349
certificate in the new name without cost. Sections 1321.51 to 350
1321.60 of the Revised Code do not limit the loans of any 351
registrant to residents of the community in which the 352
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registrant's place of business is situated. Each certificate 353
shall be kept conspicuously posted in the place of business of 354
the registrant and is not transferable or assignable. 355
(D) Sections 1321.51 to 1321.60 of the Revised Code do not 357
apply to any of the following: 358
(1) Persons lawfully doing business under the authority of 360
any law of this state, another state, or the United States 361
relating to banks, savings banks, trust companies, savings and 362
loan associations, or credit unions; 363
(2) Life, property, or casualty insurance companies 365
licensed to do business in this state; 366
(3) Any person that is a lender making a loan pursuant to 368
sections 1321.01 to 1321.19 of the Revised Code or a business 369
loan as described in division (B)(6) of section 1343.01 of the 370
Revised Code; 371
(4) Any governmental agency or instrumentality, or any 373
entity included under division (B)(3) of section 1343.01 of the 374
Revised Code. 375
(E) No person engaged in the business of selling tangible 377
goods or services related to tangible goods may receive or retain 378
a certificate under sections 1321.51 to 1321.60 of the Revised 379
Code for such place of business. 380
Sec. 1321.54. (A) The division of financial institutions 390
may adopt, in accordance with Chapter 119. of the Revised Code, 392
rules that are necessary for the enforcement of sections 1321.51 393
to 1321.60 of the Revised Code and that are consistent with those 394
sections. Each rule shall contain a reference to the section,
division, or paragraph of the Revised Code to which it applies. 395
The division shall send by regular mail to each registrant a copy 397
of each rule that is adopted pursuant to this section.
(B) The division shall, upon written notice to the 399
registrant stating the contemplated action, the grounds for the 400
action, and the registrant's reasonable opportunity to be heard 401
on the action in accordance with Chapter 119. of the Revised 403
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Code, revoke or, suspend, OR REFUSE TO RENEW any certificate 405
issued under sections 1321.51 to 1321.60 of the Revised Code, OR 406
IMPOSE A MONETARY FINE, if it finds that the registrant has 408
continued to violate those sections, after receiving notice of 409
the violation or violations from the division, or is in default 410
in the payment of the annual assessment or certificate of 411
registration fee prescribed in section 1321.20 of the Revised 412
Code. The revocation or, suspension, OR REFUSAL TO RENEW shall 413
not impair the obligation of any pre-existing lawful contract 414
made under sections 1321.51 to 1321.60 of the Revised Code. 415
MONETARY FINES IMPOSED UNDER THIS DIVISION SHALL NOT EXCEED 417
TWENTY-FIVE THOUSAND DOLLARS. 418
(C) The superintendent of financial institutions may 421
investigate alleged violations of sections 1321.51 to 1321.60 of 422
the Revised Code, or the rules adopted thereunder, or complaints 423
concerning any such violation. The superintendent may make 425
application to the court of common pleas for an order enjoining 426
any such violation and, upon a showing by the superintendent that 427
a person has committed, or is about to commit, such a violation, 428
the court shall grant an injunction, restraining order, or other 429
appropriate relief.
(D) In conducting an investigation pursuant to this 432
section, the superintendent may compel, by subpoena, witnesses to 433
testify in relation to any matter over which the superintendent 434
has jurisdiction, and may require the production or photocopying 435
of any book, record, or other document pertaining to such matter. 436
If a person fails to file any statement or report, obey any 437
subpoena, give testimony, produce any book, record, or other 438
document as required by such a subpoena, or permit photocopying 439
of any book, record, or other document subpoenaed, the court of 440
common pleas of any county in this state, upon application made 441
to it by the superintendent, shall compel obedience by attachment 442
proceedings for contempt, as in the case of disobedience of the 443
requirements of a subpoena issued from the court, or a refusal to 444
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testify therein.
(E) If the superintendent determines that a person is 446
engaged in, or is believed to be engaged in, activities that may 447
constitute a violation of sections 1321.51 to 1321.60 of the 448
Revised Code, the superintendent may, after notice and a hearing 450
conducted in accordance with Chapter 119. of the Revised Code, 451
issue a cease and desist order. Such an order shall be 452
enforceable in the court of common pleas. 453
Sec. 1321.55. (A) Every registrant shall keep records 462
pertaining to loans made under sections 1321.51 to 1321.60 of the 464
Revised Code. Such records shall be segregated from records 465
pertaining to transactions that are not subject to these sections 466
of the Revised Code. Every registrant shall preserve records 467
pertaining to loans made under sections 1321.51 to 1321.60 of the 469
Revised Code for at least two years after making the final entry 470
on such records. Accounting systems maintained in whole or in 471
part by mechanical or electronic data processing methods that 472
provide information equivalent to that otherwise required are 473
acceptable for this purpose. At least once each year
EIGHTEEN-MONTH CYCLE, the division of financial institutions 475
shall make or cause to be made an examination of records 477
pertaining to loans made under sections 1321.51 to 1321.60 of the 478
Revised Code, for the purpose of determining whether the
registrant is complying with these sections and of verifying the 479
registrant's annual report. 480
(B)(1) As required by the superintendent of financial 482
institutions, each registrant shall file with the division each 484
year a report under oath or affirmation, on forms supplied by the 485
division, concerning the business and operations for the 486
preceding calendar year. Whenever a registrant operates two or 487
more registered offices or whenever two or more affiliated 488
registrants operate registered offices, then a composite report 489
of the group of registered offices may be filed in lieu of 490
individual reports. 491
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(2) The division shall publish annually an analysis of the 493
information required under division (B)(1) of this section, but 494
the individual reports shall not be public records and shall not 495
be open to public inspection. 496
(C) All information obtained by the superintendent or the 499
superintendent's deputies, examiners, assistants, agents, or
clerks by reason of their official position, including 500
information obtained by such persons from the annual report of a 501
registrant or in the course of examining a registrant or 502
investigating an applicant for a certificate, is privileged and 503
confidential. All such information shall remain privileged and 504
confidential for all purposes except when it is necessary for the 506
superintendent and the superintendent's deputies, examiners,
assistants, agents, or clerks to take official action regarding 507
the affairs of the registrant or in connection with criminal 508
proceedings. 509
(D) No person is in violation of sections 1321.51 to 511
1321.60 of the Revised Code for any act taken or omission made in 512
reliance on a written notice, interpretation, or examination 513
report from the superintendent.
Sec. 1321.57. (A) Notwithstanding any other provisions of 522
the Revised Code, a registrant may contract for and receive 523
interest, calculated according to the actuarial method, at a rate 524
or rates not exceeding twenty-one per cent per year on the unpaid 525
principal balances of the loan. Loans may be interest-bearing or 526
precomputed. 527
(B) For purposes of computation of time on 529
interest-bearing and precomputed loans, including, but not 530
limited to, the calculation of interest, a month is considered 531
one-twelfth of a year, and a day is considered one three hundred 532
sixty-fifth of a year when calculation is made for a fraction of 533
a month. A year is as defined in section 1.44 of the Revised 534
Code. A month is that period described in section 1.45 of the 535
Revised Code. ALTERNATIVELY, A REGISTRANT MAY CONSIDER A DAY AS 536
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ONE THREE HUNDRED SIXTIETH OF A YEAR AND EACH MONTH AS HAVING 537
THIRTY DAYS.
(C) With respect to interest-bearing loans: 539
(1)(a) Interest shall be computed on unpaid principal 541
balances outstanding from time to time, for the time outstanding. 542
(b) As an alternative to the method of computing interest 544
set forth in division (C)(1)(a) of this section, a registrant, if 545
the loan contract so provides, may charge and collect interest 546
for the first installment period based on elapsed time from the 547
date of the loan to the first scheduled payment due date, and for 548
each succeeding installment period from the scheduled payment due 549
date to the next scheduled payment due date, regardless of the 550
date or dates the payments are actually made. 551
(c) Whether a registrant computes interest pursuant to 553
division (C)(1)(a) or (b) of this section, each payment shall be 554
applied first to unpaid charges, then to interest, and the 555
remainder to the unpaid principal balance. However, if the 556
amount of the payment is insufficient to pay the accumulated 557
interest, the unpaid interest continues to accumulate to be paid 558
from the proceeds of subsequent payments and is not added to the 559
principal balance. 560
(2) Interest shall not be compounded, COLLECTED, or paid 563
in advance. However, if BOTH OF THE FOLLOWING APPLY:
(a) INTEREST MAY BE CHARGED TO EXTEND THE FIRST MONTHLY 565
INSTALLMENT PERIOD BY NOT MORE THAN FIFTEEN DAYS, AND THE 566
INTEREST CHARGED FOR THE EXTENSION MAY BE ADDED TO THE PRINCIPAL 567
AMOUNT OF THE LOAN. 568
(b) IF part or all of the consideration for a new loan 571
contract is the unpaid principal balance of a prior loan, then 572
the principal amount payable under such THE new loan contract may 573
include any unpaid interest that has accrued. The resulting loan 574
contract shall be deemed a new and separate loan transaction for 575
purposes of this section. The unpaid principal balance of a 576
precomputed loan is the balance due after refund or credit of 577
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unearned interest as provided in division (D)(3) of this section. 578
(D) With respect to precomputed loans: 580
(1) Loans shall be repayable in monthly installments of 582
principal and interest combined, except that the first 583
installment period may exceed one month by not more than fifteen 584
days, and the first installment payment amount may be larger than 585
the remaining payments by the amount of interest charged for the 586
extra days; and provided further that monthly installment payment 587
dates may be omitted to accommodate borrowers with seasonal 588
income. 589
(2) Payments may be applied to the combined total of 591
principal and precomputed interest until maturity of the loan. A 592
registrant may charge interest after the original or deferred 593
maturity of a precomputed loan at the rate specified in division 594
(A) of this section on all unpaid principal balances for the time 595
outstanding. 596
(3) When any loan contract is paid in full by cash, 598
renewal, refinancing, or a new loan, one month or more before the 599
final installment due date, the registrant shall refund, or 600
credit the borrower with, the total of the applicable charges for 601
all fully unexpired installment periods, as originally scheduled 602
or as deferred, that follow the day of prepayment. If the 603
prepayment is made other than on a scheduled installment due 605
date, the nearest scheduled installment due date shall be used in
such computation. If the prepayment occurs prior to the first 606
installment due date, the registrant may retain one-thirtieth of 607
the applicable charge for a first installment period of one month 608
for each day from date of loan to date of prepayment, and shall 609
refund, or credit the borrower with, the balance of the total 610
interest contracted for. If the maturity of the loan is 611
accelerated for any reason and judgment is entered, the 612
registrant shall credit the borrower with the same refund as if 613
prepayment in full had been made on the date the judgment is 614
entered. 615
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(4) If the parties agree in writing, either in the loan 617
contract or in a subsequent agreement, to a deferment of wholly 618
unpaid installments, a registrant may grant a deferment and may 619
collect a deferment charge as provided in this section. A 620
deferment postpones the scheduled due date of the earliest unpaid 621
installment and all subsequent installments as originally 622
scheduled, or as previously deferred, for a period equal to the 623
deferment period. The deferment period is that period during 624
which no installment is scheduled to be paid by reason of the 625
deferment. The deferment charge for a one-month period may not 626
exceed the applicable charge for the installment period 627
immediately following the due date of the last undeferred 628
installment. A proportionate charge may be made for deferment 629
for periods of more or less than one month. A deferment charge 630
is earned pro rata during the deferment period and is fully 631
earned on the last day of the deferment period. If a loan is 632
prepaid in full during a deferment period, the registrant shall 633
make, or credit to the borrower, a refund of the unearned 634
deferment charge in addition to any other refund or credit made 635
for prepayment of the loan in full. 636
(E) A registrant, at the request of the borrower, may 638
obtain, on one or more borrowers, credit life insurance, credit 639
accident and health insurance, and unemployment insurance. The 640
premium or identifiable charge for the insurance may be included 642
in the principal amount of the loan and may not exceed the 643
premium rate filed by the insurer with the superintendent of 644
insurance and not disapproved by the superintendent. If a 645
registrant obtains the insurance at the request of the borrower, 646
the borrower shall have the right to cancel the insurance for a 647
period of twenty-five days after the loan is made. If the 648
borrower chooses to cancel the insurance, the borrower shall give 649
the registrant written notice of this choice and shall return all 650
of the policies or certificates of insurance or notices of 651
proposed insurance to the registrant during such period, and the 652
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full premium or identifiable charge for the insurance shall be 653
refunded to the borrower by the registrant. If the borrower 654
requests, in the notice to cancel the insurance, that this refund 655
be applied to reduce the balance of a precomputed loan, the 656
registrant shall credit the amount of the refund plus the amount 657
of interest applicable to the refund to the loan balance. 658
IF THE REGISTRANT OBTAINS THE INSURANCE AT THE REQUEST OF 660
THE BORROWER, THE REGISTRANT SHALL NOT CHARGE OR COLLECT INTEREST 661
ON ANY INSURED AMOUNT THAT REMAINS UNPAID AFTER THE INSURED 662
BORROWER'S DATE OF DEATH. 663
(F) A registrant may require the borrower to provide 665
insurance or a loss payable endorsement covering reasonable risks 666
of loss, damage, and destruction of property used as security for 667
the loan and with the consent of the borrower such insurance may 668
cover property other than that which is security for the loan. 669
The amount and term of required property insurance shall be 670
reasonable in relation to the amount and term of the loan 671
contract and the type and value of the security, and the 672
insurance shall be procured in accordance with the insurance laws 673
of this state. The purchase of this insurance through the 674
registrant or an agent or broker designated by the registrant 675
shall not be a condition precedent to the granting of the loan. 676
If the borrower purchases the insurance from or through the 677
registrant or from another source, the premium may be included in 678
the principal amount of the loan. 679
(G) On loans secured by an interest in real estate, all of 681
the following apply: 682
(1) A registrant may charge and receive up to two points, 685
and a prepayment penalty not in excess of one per cent of the 686
original principal amount of the loan. Points may be paid by the 687
borrower at the time of the loan or may be included in the 688
principal amount of the loan. On a refinancing, a registrant may 689
not charge under division (G)(1) of this section either points OF 691
THE FOLLOWING:
17
(a) POINTS ON THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 693
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN, IF 694
THE REFINANCING OCCURS within one year from AFTER the date of a 696
prior THE REFINANCED loan on which points were charged or a; 697
(b) A prepayment penalty. 700
(2) As an alternative to the prepayment penalty described 702
in division (G)(1) of this section, a registrant may contract 703
for, charge, and receive the prepayment penalty described in 704
division (G)(2) of this section for the prepayment of a loan 707
prior to three years after the date the loan contract is 708
executed. This prepayment penalty shall not exceed three per 709
cent of the original principal amount of the loan if the loan is 710
paid in full prior to one year after the date the loan contract 711
is executed. The penalty shall not exceed two per cent of the 712
original principal amount of the loan if the loan is paid in full 713
at any time from one year, but prior to two years, after the date 714
the loan contract is executed. The penalty shall not exceed one 715
per cent of the original principal amount of the loan if the loan 716
is paid in full at any time from two years, but prior to three 717
years, after the date the loan contract is executed. A 719
registrant shall not charge or receive a prepayment penalty under 720
division (G)(2) of this section if any of the following applies: 721
(a) The loan is a refinancing by the same registrant or a 723
registrant to whom the loan has been assigned; 724
(b) The loan is paid in full as a result of the sale of 726
the real estate that secures the loan; 728
(c) The loan is paid in full with the proceeds of an 730
insurance claim against an insurance policy that insures the life 732
of the borrower or an insurance policy that covers loss, damage, 734
or destruction of the real estate that secures the loan. 735
(3) Division (G) of this section is not a limitation on 738
discount points or other charges for purposes of section 739
501(b)(4) of the "Depository Institutions Deregulation and 740
Monetary Control Act of 1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 741
18
note.
(H)(1) In addition to the interest and charges provided 743
for by this section, no further or other amount, whether in the 744
form of broker fees, placement fees, or any other fees 745
whatsoever, shall be charged or received by the registrant, 746
except costs and disbursements to which the registrant may become 747
entitled by law in connection with any suit to collect a loan or 748
any lawful activity to realize on a security interest or mortgage 749
after default, INCLUDING REASONABLE ATTORNEY FEES INCURRED BY THE 751
REGISTRANT AS A RESULT OF THE SUIT OR ACTIVITY AND TO WHICH THE
REGISTRANT BECOMES ENTITLED BY LAW, and except the following 753
additional charges which may be included in the principal amount 754
of the loan or collected at any time after the loan is made: 755
(a) The amounts of fees authorized by law to record, file, 757
or release security interests and mortgages on a loan; 758
(b) With respect to a loan secured by an interest in real 760
estate, the following closing costs, if they are bona fide, 761
reasonable in amount, and not for the purpose of circumvention or 762
evasion of this section: 763
(i) Fees or premiums for title examination, abstract of 765
title, title insurance, surveys, or similar purposes TITLE 767
ENDORSEMENTS, TITLE BINDERS, TITLE COMMITMENTS, HOME INSPECTIONS,
OR PEST INSPECTIONS; SETTLEMENT OR CLOSING COSTS; COURIER FEES; 769
AND ANY FEDERALLY MANDATED FLOOD PLAIN CERTIFICATION FEE; 770
(ii) If not paid to the registrant, an employee of the 772
registrant, or a person related to the registrant, fees for 773
preparation of a mortgage, settlement statement, or other 774
documents, fees for notarizing mortgages and other documents, and 775
appraisal fees, AND FEES FOR ANY FEDERALLY MANDATED INSPECTION OF 776
HOME IMPROVEMENT WORK FINANCED BY A SECOND MORTGAGE LOAN; 777
(c) Fees for credit investigations not exceeding ten 779
dollars.
(2) Division (H)(1) of this section does not limit the 781
rights of registrants to engage in other transactions with 782
19
borrowers, provided the transactions are not a condition of the 783
loan. 784
(I) If the loan contract or security instrument contains 786
covenants by the borrower to perform certain duties pertaining to 787
insuring or preserving security and the registrant pursuant to 788
the loan contract or security instrument pays for performance of 789
the duties on behalf of the borrower, the registrant may add the 790
amounts paid to the unpaid principal balance of the loan or 791
collect them separately. A charge for interest may be made for 792
sums advanced not exceeding the rate of interest permitted by 793
division (A) of this section. Within a reasonable time after 794
advancing a sum, the registrant shall notify the borrower in 795
writing of the amount advanced, any interest charged with respect 796
to the amount advanced, any revised payment schedule, and shall 797
include a brief description of the reason for the advance. 798
(J)(1) In addition to points authorized under division (G) 801
of this section, a registrant may charge and receive, on THE
FOLLOWING: 802
(a) WITH RESPECT TO SECURED loans in: IF the principal 805
amount of THE LOAN IS less than five hundred dollars, loan 807
origination charges not exceeding fifteen dollars; on loans in IF 809
the principal amount of THE LOAN IS at least five hundred dollars 810
but less than one thousand dollars, loan origination charges not 812
exceeding thirty dollars; on loans in IF the principal amount of 814
THE LOAN IS at least one thousand dollars but less than two 815
thousand dollars, loan origination charges not exceeding 816
sixty-five ONE HUNDRED dollars; and on loans in IF the principal 818
amount of THE LOAN IS at least two thousand dollars BUT LESS THAN 819
FIVE THOUSAND DOLLARS, loan origination charges not exceeding the 820
greater of one TWO hundred fifty dollars or one per cent of; AND 821
IF the principal amount of the loan IS AT LEAST FIVE THOUSAND 822
DOLLARS, LOAN ORIGINATION CHARGES NOT EXCEEDING THE GREATER OF 823
TWO HUNDRED FIFTY DOLLARS OR ONE PER CENT OF THE PRINCIPAL AMOUNT 824
OF THE LOAN. However, on 825
20
(b) WITH RESPECT TO unsecured loans in: IF the principal 828
amount of THE LOAN IS LESS THAN FIVE HUNDRED DOLLARS, LOAN 829
ORIGINATION CHARGES NOT EXCEEDING FIFTEEN DOLLARS; IF THE 830
PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST FIVE HUNDRED DOLLARS BUT 831
LESS THAN ONE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES NOT 832
EXCEEDING THIRTY DOLLARS; IF THE PRINCIPAL AMOUNT OF THE LOAN IS 833
AT LEAST ONE THOUSAND DOLLARS BUT less than five thousand 836
dollars, the loan origination charge shall CHARGES not exceed 838
EXCEEDING one hundred dollars; AND IF THE PRINCIPAL AMOUNT OF THE 839
LOAN IS AT LEAST FIVE THOUSAND DOLLARS, LOAN ORIGINATION CHARGES 840
NOT EXCEEDING THE GREATER OF TWO HUNDRED FIFTY DOLLARS OR ONE PER 841
CENT OF THE PRINCIPAL AMOUNT OF THE LOAN. A
(2) IF A REFINANCING OCCURS WITHIN NINETY DAYS AFTER THE 843
DATE OF THE REFINANCED LOAN, A registrant may not impose loan 845
origination charges on a borrower more frequently than once in 846
any ninety-day period THE PORTION OF THE PRINCIPAL AMOUNT THAT IS 847
APPLIED TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN. 848
Loan
(3) LOAN origination charges may be paid by the borrower 850
at the time of the loan or may be included in the principal 851
amount of the loan. 852
(K) A registrant may charge and receive check collection 854
charges not greater than twenty dollars plus any amount passed on 856
from other financial institutions for each check, negotiable 857
order of withdrawal, share draft, or other negotiable instrument 858
returned or dishonored for any reason. 859
(L) If the loan contract so provides, a registrant may 861
collect a default charge on any installment not paid in full 862
within ten days after its due date. For this purpose, all 863
installments are considered paid in the order in which they 864
become due. Any amounts applied to an outstanding loan balance 865
as a result of voluntary release of a security interest, sale of 866
security on the loan, or cancellation of insurance shall be 867
considered payments on the loan, unless the parties otherwise 868
21
agree in writing at the time the amounts are applied. The amount 869
of the default charge shall not exceed the greater of five per 870
cent of the scheduled installment or fifteen dollars. 871
Sec. 1321.58. (A) A registrant may make open-end loans 880
pursuant to an agreement between the registrant and the borrower 881
whereby: 882
(1) The registrant may permit the borrower to obtain 884
advances of money from the registrant from time to time or the 885
registrant may advance money on behalf of the borrower from time 886
to time as directed by the borrower. 887
(2) The amount of each advance and permitted interest, 889
charges, and costs are debited to the borrower's account and 890
payments and other credits are credited to the same account. 891
(3) The interest and charges are computed on the unpaid 893
balance or balances of the account from time to time. 894
(4) The borrower has the privilege of paying the account 896
in full at any time or, if the account is not in default, in 897
installments of determinable amounts as provided in the 898
agreement. 899
For open-end loans, "billing cycle" means the time interval 901
between periodic billing dates. A billing cycle shall be 902
considered monthly if the closing date of the cycle is the same 903
date each month or does not vary by more than four days from such 904
date. 905
(B) Notwithstanding any other provisions of the Revised 907
Code, a registrant may contract for and receive interest for 908
open-end loans at a rate or rates not exceeding twenty-one per 909
cent per year and may compute interest in each billing cycle by 910
either of the following methods: 911
(1) By multiplying the daily rate by the daily unpaid 913
balance of the account, in which case the daily rate is 914
determined by dividing the annual rate by three hundred 915
sixty-five; 916
(2) By multiplying the monthly rate by the average daily 918
22
unpaid balance of the account in the billing cycle, in which case 919
the average daily unpaid balance is the sum of all of the daily 920
unpaid balances each day during the cycle divided by the number 921
of days in the cycle. The monthly rate is determined by dividing 922
the annual rate by twelve. 923
The billing cycle shall be monthly and the unpaid balance 925
on any day shall be determined by adding to any balance unpaid as 926
of the beginning of that day all advances and permitted interest, 927
charges, and costs and deducting all payments and other credits 928
made or received that day. 929
(C) In addition to the interest permitted in division (B) 931
of this section, a registrant may charge and receive or add to 932
the unpaid balance any or all of the following: 933
(1) All charges and costs authorized by divisions (E), 935
(F), (G), (H), (I), and (K) of section 1321.57 of the Revised 936
Code; 937
(2) An annual credit line charge, for the privilege of 939
maintaining a line of credit, for AS FOLLOWS: 940
(a) FOR the first year: 942
(i) IF THE ORIGINAL CREDIT LINE IS LESS THAN FIVE THOUSAND 944
DOLLARS, AN AMOUNT NOT EXCEEDING ONE HUNDRED FIFTY DOLLARS; 945
(ii) IF THE ORIGINAL CREDIT LINE IS AT LEAST FIVE THOUSAND 947
DOLLARS, AN AMOUNT not exceeding the greater of one per cent of 949
the original credit line or one TWO hundred fifty dollars, and 951
for.
(b) FOR subsequent years AN AMOUNT not exceeding the 953
greater of one-half per cent of the credit line on the 954
anniversary date or fifty dollars;. 955
(3) A default charge on any required minimum payment not 958
paid in full within ten days after its due date. For this
purpose, all required minimum payments are considered paid in the 960
order in which they become due. The amount of the default charge 961
shall not exceed the greater of five per cent of the required 962
minimum payment or fifteen dollars.
23
(D) The borrower at any time may pay all or any part of 964
the unpaid balance on the account or, if the account is not in 965
default, the borrower may pay the unpaid balance in installments 966
subject to minimum payment requirements as determined by the 967
registrant and set forth in the open-end loan agreement. 968
(E) If credit life insurance or credit accident and health 970
insurance is obtained by the registrant and if the insured dies 971
or becomes disabled when there is an outstanding open-end loan 972
indebtedness, the insurance shall be sufficient to pay the unpaid 973
balance on the loan due on the date of the borrower's death in 974
the case of credit life insurance or all minimum payments that 975
become due on the loan during the covered period of disability in 976
the case of credit accident and health insurance. The additional 977
charge for credit life insurance, credit accident and health 978
insurance, or unemployment insurance shall be calculated each 979
billing cycle by applying the current monthly premium rate for 980
the insurance, filed by the insurer with the superintendent of 981
insurance and not disapproved by the superintendent, to the 982
unpaid balances in the borrower's account, using one of the 984
methods specified in division (B) of this section for the 985
calculation of interest. No credit life insurance, credit 986
accident and health insurance, or unemployment insurance written 987
in connection with an open-end loan shall be canceled by the 988
registrant because of delinquency of the borrower in making the 989
required minimum payments on the loan unless one or more such 990
payments is past due for a period of thirty days or more. The 991
registrant shall advance to the insurer the amounts required to 992
keep the insurance in force during such period, which amounts may 993
be debited to the borrower's account.
(F) Whenever there is no unpaid balance in an open-end 995
loan account, the account may be terminated by written notice, by 996
the borrower or the registrant, to the other party. If a 997
registrant has taken a mortgage on real property to secure the 998
open-end loan, the registrant shall deliver, within thirty days 999
24
following termination of the account, a release of the mortgage 1,000
to the borrower. If a registrant has taken a security interest 1,001
in personal property to secure the open-end loan, the registrant 1,002
shall release the security interest and terminate any financing 1,003
statement in accordance with section 1309.41 of the Revised Code. 1,004
Sec. 1321.99. (A) Whoever violates section 1321.02 of the 1,013
Revised Code shall be fined not less than one hundred nor more 1,014
than five hundred dollars for a first offense; for each 1,015
subsequent offense such person shall be fined not less than two 1,016
hundred nor more than one thousand dollars or imprisoned not more 1,017
than six months, or both IS GUILTY OF A FELONY OF THE FIFTH 1,018
DEGREE.
(B) Whoever violates section 1321.13 of the Revised Code 1,020
shall be fined not less than one hundred nor more than five 1,021
hundred dollars or imprisoned not more than six months, or both. 1,022
(C) Whoever violates section 1321.14 of the Revised Code 1,024
shall be fined not less than fifty nor more than two hundred 1,025
dollars for a first offense; for a second offense such person 1,026
shall be fined not less than two hundred nor more than five 1,027
hundred dollars and imprisoned for not more than six months. 1,028
(D) Whoever willfully violates section 1321.57, 1321.58, 1,030
1321.59, or 1321.60 of the Revised Code shall be fined not less 1,031
than one nor more than five hundred dollars. 1,032
(E) Whoever violates section 1321.52 of the Revised Code 1,034
is guilty of a felony of the fifth degree. 1,035
(F) Whoever violates division (A) of section 1321.73 of 1,037
the Revised Code shall be fined not more than five hundred 1,038
dollars or imprisoned not more than six months, or both. 1,039
Section 2. That existing sections 1321.20, 1321.51, 1,041
1321.52, 1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 1,042
of the Revised Code are hereby repealed. 1,043