As Introduced

127th General Assembly Regular Session 2007-2008

H. B. No. 358

Representative Yates 

Cosponsors: Representatives Barrett, Bolon, Celeste, Chandler, Dyer, Fende, Harwood, Heard, Luckie, Mallory, Williams, B. 

---

A BILL

To amend sections 1315.39, 1315.40, 1315.41, and

1

1343.01 of the Revised Code to modify the

2

provisions for making a loan under the

3

Check-Cashing Business Loan law.

4

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1315.39, 1315.40, 1315.41, and	5
1343.01 of the Revised Code be amended to read as follows:	6

Sec. 1315.39. (A) A check-cashing business licensed under	7
sections 1315.35 to 1315.44 of the Revised Code may engage in the	8
business of making loans provided that each loan meets all of the	9
following conditions:	10

(1)(A) The total amount of the loan does not exceed eight	11
hundred dollars.	12

(2)(B) The duration of the loan does not exceed six months.

13

(3)(C) The interest on the loan is calculated in compliance	14
with, and does not exceed the amount permitted by, division (B) of	15
this section 2905.22 of the Revised Code and is calculated to	16
include any loan origination fee and all other fees and charges	17
contracted for under the loan contract.	18

(4)(D) The loan is made pursuant to a written loan contract	19
that sets forth the terms and conditions of the loan, and	20
discloses in a clear and concise manner all of the following:	21

(a)(1) The total amount of fees and charges the borrower will	22
be required to pay in connection with the loan pursuant to the	23
loan contract;	24

(b)(2) The rate of interest contracted for under the loan	25
contract, calculated both as an annual percentage rate based	26
solely on the principal of the loan and as an annual percentage	27
rate based on the sum of the principal of the loan and the loan	28
origination fee, check collection charge, and all other fees or	29
charges contracted for under the loan contract;	30

(c)(3) The total amount of each payment, when each payment is	31
due, and the total number of payments that the borrower will be	32
required to make under the loan contract;	33

(d)(4) A statement, printed in boldface type of the minimum	34
size of ten points, as follows: "WARNING: The rate of interest	35
charged on this loan is higher than the average rate of interest	36
charged by financial institutions on substantially similar	37
loans."	38

(5)(E) The loan is not being made to a borrower for purposes	39
of retiring an existing loan between the check-cashing business	40
and that borrower, which existing loan was made pursuant to	41
sections 1315.35 to 1315.44 of the Revised Code.	42

(B) A check-cashing business may contract for and receive	43
interest at a rate of five per cent per month or fraction of a	44
month on the unpaid principal of a loan made under sections	45
1315.35 to 1315.44 of the Revised Code. Any unearned interest	46
shall not be deducted from the proceeds of the loan or paid in	47
advance, and interest shall be computed on the unpaid balance and	48
shall not be compounded. If, after the first month of the loan	49
contract, the loan is paid in full before the final date on which	50
payment is due on the loan pursuant to the loan contract, the	51
licensee shall refund or credit the borrower with the amount of	52
the unearned interest for the unexpired period of the loan	53
contract that follows the date of the borrower's payment in full.	54

Sec. 1315.40.  In addition to the interest authorized to be	55
contracted for and received pursuant to section 1315.39 of the	56
Revised Code, a check-cashing business licensed pursuant to	57
sections 1315.35 to 1315.44 of the Revised Code may charge,	58
collect, and receive the following fees and charges in connection	59
with a loan made under sections 1315.35 to 1315.44 of the Revised	60
Code:	61

(A) Loan origination fees not exceeding an amount equal to	62
five dollars per fifty dollars up to five hundred dollars of the	63
amount of the loan and three dollars and seventy-five cents per	64
fifty dollars of the amount of the loan between five hundred one	65
and eight hundred dollars;	66

(B) CheckOne check collection chargescharge per loan not	67
exceeding an amount equal to twenty dollars plus any amount passed	68
on from other financial institutions for each check, negotiable	69
order of withdrawal, share draft, or other negotiable instrument	70
returned or dishonored for any reason, provided that the terms and	71
conditions upon which check collection charges will be charged to	72
the borrower are set forth in the written loan contract described	73
in division (A)(4)(D) of section 1315.39 of the Revised Code;	74

(C)(B) Damages, costs, and disbursements to which the	75
check-cashing business may become entitled to by law in connection	76
with any civil action to collect a loan after default.	77

Sec. 1315.41.  No check-cashing business licensed pursuant to	78
sections 1315.35 to 1315.44 of the Revised Code shall do any of	79
the following:	80

(A) Violate section 1315.36 of the Revised Code;

81

(B) Make a loan that does not comply with division (A) of	82
section 1315.39 of the Revised Code;	83

(C) Charge, collect, or receive, directly or indirectly, any	84
additional fees or charges in connection with a loan, other than	85
fees and charges permitted by sections 1315.39 and 1315.40 of the	86
Revised Code and costs or disbursements to which the check-cashing	87
business may become entitled to by law in connection with any	88
civil action to collect a loan after default;	89

(D) Collect treble damages pursuant to division (A)(1)(b)(ii)	90
of section 2307.61 of the Revised Code in connection with any	91
civil action to collect a loan after a default due to a check,	92
negotiable order of withdrawal, share draft, or other negotiable	93
instrument that was returned or dishonored for insufficient funds;	94

(E) Make a loan to a borrower if there exists an outstanding	95
loan between the check-cashing business and that borrower and if	96
the outstanding loan was made pursuant to sections 1315.35 to	97
1315.43 of the Revised Code;	98

(F) Accept a check or other method of access to a deposit	99
account maintained by the borrower, or the title of a vehicle as	100
security for the obligation.	101

Sec. 1343.01.  (A) The parties to a bond, bill, promissory	102
note, or other instrument of writing for the forbearance or	103
payment of money at any future time, may stipulate therein for the	104
payment of interest upon the amount thereof at any rate not	105
exceeding eight per cent per annum payable annually, except as	106
authorized in division (B) of this section.	107

(B) Any party may agree to pay a rate of interest in excess	108
of the maximum rate provided in division (A) of this section when:	109

(1) The original amount of the principal indebtedness	110
stipulated in the bond, bill, promissory note, or other instrument	111
of writing exceeds one hundred thousand dollars;	112

(2) The payment is to a broker or dealer registered under the	113
"Securities Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78A, as	114
amended, for carrying a debit balance in an account for a customer	115
if such debit balance is payable on demand and secured by stocks,	116
bonds or other securities;	117

(3) The instrument evidences a loan secured by a mortgage or	118
deed of trust on real estate where the loan has been approved,	119
insured, guaranteed, purchased, or for which an offer or	120
commitment to insure, guarantee, or purchase has been received, in	121
whole or in part, by the federal government or any agency or	122
instrumentality thereof, the federal national mortgage	123
association, the federal home loan mortgage corporation, or the	124
farmers home administration, all of which is authorized pursuant	125
to the "National Housing Act," 12. U.S.C. 1701; the "Serviceman's	126
Readjustment Act," 38 U.S.C. 1801; the "Federal Home Loan Bank	127
Act," 12 U.S.C. 1421; and the "Rural Housing Act," 42 U.S.C. 1471,	128
amendments thereto, reenactments thereof, enactments parallel	129
thereto, or in substitution therefor, or regulations issued	130
thereunder; or by the state or any agency or instrumentality	131
thereof authorized pursuant to Chapter 122. of the Revised Code,	132
or rules issued thereunder.	133

(4) The instrument evidences a loan secured by a mortgage,	134
deed of trust, or land installment contract on real estate which	135
does not otherwise qualify for exemption from the provisions of	136
this section, except that such rate of interest shall not exceed	137
eight per cent in excess of the discount rate on ninety-day	138
commercial paper in effect at the federal reserve bank in the	139
fourth federal reserve district at the time the mortgage, deed of	140
trust, or land installment contract is executed.	141

(5) The instrument is payable on demand or in one installment	142
and is not secured by household furnishings or other goods used	143
for personal, family, or household purposes, or the instrument is	144
payable in any number of installments and is a written loan	145
contract made under sections 1315.35 to 1315.44 of the Revised	146
Code.	147

(6)(a) The loan is a business loan to a business association	148
or partnership, a person owning and operating a business as a sole	149
proprietor; any persons owning and operating a business as joint	150
venturers, joint tenants, or tenants in common; any limited	151
partnership; or any trustee owning or operating a business or	152
whose beneficiaries own or operate a business, except that:	153

(i) Any loan which is secured by an assignment of an	154
individual obligor's salary, wages, commissions, or other	155
compensation for services or by histhe individual obligor's	156
household furniture or other goods used for histhe individual	157
obligor's personal, family, or household purposes shall be deemed	158
not a loan within the meaning of division (B)(6) of this section;	159

(ii) Any loan which otherwise qualifies as a business loan	160
within the meaning of division (B)(6) of this section shall not be	161
deemed disqualified because of the inclusion, with other security	162
consisting of business assets of any such obligor, of real estate	163
occupied by an individual obligor solely as histhe individual	164
obligor's residence.	165

(b) As used in division (B)(6)(a) of this section, "business"	166
means a commercial, agricultural, or industrial enterprise which	167
is carried on for the purpose of investment or profit. "Business"	168
does not mean the ownership or maintenance of real estate occupied	169
by an individual obligor solely as histhe individual obligor's	170
residence.	171

Section 2. That existing sections 1315.39, 1315.40, 1315.41,	172
and 1343.01 of the Revised Code are hereby repealed.	173