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As Reported by the Senate Finance and
Financial Institutions Committee
123rd General Assembly
Regular Session
1999-2000 | Sub. S. B. No. 231 |
SENATORS WHITE-RAY
A BILL
To amend sections 1321.20, 1321.51 to 1321.55, 1321.57, 1321.58,
and 1321.99 of the Revised Code to make revisions in the Small
Loan Law and the Mortgage Loan Law, including changes relative to
maximum license or certificate of registration fees,
examinations and investigations by the Division of
Financial Institutions, permissible charges by registrants, and
penalties for violations.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1321.20, 1321.51, 1321.52, 1321.53,
1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 of the Revised
Code be amended to read as follows:
Sec. 1321.20. (A) Every person licensed or registered
under this chapter shall pay to the superintendent of financial
institutions, prior to the last day of June, an
annual license or
certificate of registration fee. On or about the fifteenth day
of April of each year, the superintendent shall determine the
license or certificate fees to be charged, pursuant to sections
1321.03, 1321.05, 1321.53, and 1321.73 of the Revised Code. Such
determination shall be made by dividing the appropriation for the
consumer finance section of the division of financial
institutions for the current fiscal year by the number of licenses and
certificates issued as of the date of the computation. In no event shall the
amount of the fee exceed two THREE
hundred fifty dollars, except that the maximum fee which may be
charged insurance premium finance companies licensed under
section 1321.73 of the Revised Code shall not exceed three
hundred seventy-five dollars. Prior to the first day of June of
each year, the superintendent shall inform each person licensed
or registered under this chapter of the amount of the license or
certificate fee for the succeeding fiscal year as determined by
this section.
(B) Each person licensed under Chapter 4727. of the
Revised Code, prior to the last day of June, shall pay to the
superintendent a fee equal to twice the amount of the fee
determined by the superintendent pursuant to division (A) of this
section. However, in no event shall the amount of the fee exceed
three hundred dollars.
(C) The fee for a license or certificate issued pursuant
to Chapter 1321., 4727., or 4728. of the Revised Code after the
first day of January in any fiscal year shall be equal to
one-half the amount determined according to divisions (A) and (B)
of this section or in accordance with section 4728.03 of the
Revised Code.
(D) If the renewal fees billed by the superintendent
pursuant to divisions (A) and (B) of this section are less than
the estimated expenditures of the consumer finance
section of the division of financial institutions, as determined by the
superintendent, for the following fiscal year, the superintendent may assess
each person licensed pursuant to section 1321.04 or registered pursuant to
section 1321.53 of the Revised Code at a
rate sufficient to equal in the aggregate the difference between
the renewal fees billed and the estimated expenditures. Each
person shall pay the assessed amount to the superintendent prior
to the last day of June. In no case shall the assessment exceed
ten cents per each one hundred dollars of interest (excluding
charge-off recoveries), points, loan origination charges, and
credit line charges collected by that person during the previous
calendar year. If an assessment is imposed under this division,
it shall not be less than two hundred fifty dollars per licensee
or registrant and shall not exceed thirty thousand dollars less
the total renewal fees paid pursuant to division (A) of this
section by each licensee or registrant.
Sec. 1321.51. As used in sections 1321.51 to 1321.60 of
the Revised Code:
(A) "Person" means an individual, partnership,
association, trust, corporation, or any other legal entity.
(B) "Certificate" means a certificate of registration
issued under sections 1321.51 to 1321.60 of the Revised Code.
(C) "Registrant" means a person to whom one or more
certificates have been issued.
(D) "Principal amount" means the amount of cash paid to,
or paid or payable for the account of, the borrower, AND
INCLUDES ANY CHARGE, FEE, OR EXPENSE THAT IS FINANCED
BY THE
BORROWER AT ORIGINATION OF THE LOAN OR DURING THE TERM OF THE LOAN.
(E) "Interest" means all charges payable directly or
indirectly by a borrower to a registrant as a condition to a loan
or an application for a loan, however denominated, but does not
include default charges, deferment charges, insurance charges or
premiums, court costs, loan origination charges, check collection
charges, credit line charges, points, prepayment penalties, or
other fees and charges specifically authorized by law.
(F) "Interest-bearing loan" means a loan in which the debt
is expressed as the principal amount and interest is computed,
charged, and collected on unpaid principal balances outstanding
from time to time.
(G) "Precomputed loan" means a loan in which the debt is a
sum comprising the principal amount and the amount of interest
computed in advance on the assumption that all scheduled payments
will be made when due.
(H) "Actuarial method" means the method of allocating
payments made on a loan between the principal amount and interest
whereby a payment is applied first to the accumulated interest
and the remainder to the unpaid principal amount.
(I) "Applicable charge" means the amount of interest
attributable to each monthly installment period of the loan
contract. The applicable charge is computed as if each
installment period were one month and any charge for extending
the first installment period beyond one month is ignored. In the
case of loans originally scheduled to be repaid in sixty-one
months or less, the applicable charge for any installment period
is that proportion of the total interest contracted for, as the
balance scheduled to be outstanding during that period bears to
the sum of all of the periodic balances, all determined according
to the payment schedule originally contracted for. In all other
cases, the applicable charge for any installment period is that
which would have been made for such period had the loan been made
on an interest-bearing basis, based upon the assumption that all
payments were made according to schedule.
(J) "Broker" means a person who acts as an intermediary or
agent in finding, arranging, or negotiating loans, and charges or
receives a fee for these services.
(K) "Annual percentage rate" means the ratio of the
interest on a loan to the unpaid principal balances on the loan
for any period of time, expressed on an annual basis.
(L) "Point" means a charge equal to one per cent of either
of the following:
(1) The principal amount of a precomputed loan or
interest-bearing loan;
(2) The original credit line of an open-end loan.
(M) "Prepayment penalty" means a charge for prepayment of
a loan at any time prior to five years from the date the loan
contract is executed.
(N) "Refinancing" means a loan the proceeds of which are
used in whole or in part to pay the unpaid balance of a prior
loan made by the same registrant to the same borrower under
sections 1321.51 to 1321.60 of the Revised Code.
(O) "Superintendent of financial institutions" includes
the deputy superintendent for consumer finance as provided in section 1181.21
of the Revised Code.
Sec. 1321.52. (A)(1) No person, on that person's own behalf or
on behalf of any other person, shall do either of the
following
without having first obtained a certificate of registration from the division
of financial institutions:
(a) Advertise, solicit, or hold out that the person is
engaged in the business of making loans secured by a mortgage on a borrower's
real estate
which is other than a first lien on the real estate;
(b) Engage in the business of lending or collecting the person's own
or another person's money, credit, or choses in action
for such loans.
(2) Each person issued a certificate is subject to all the
rules prescribed under sections 1321.51 to 1321.60 of the Revised
Code.
(B) All loans made to persons who at the time are
residents of this state are considered as made within this state
and subject to the laws of this state, regardless of any
statement in the contract or note to the contrary.
(C) A registrant may make unsecured loans, loans secured
by a mortgage on a borrower's real estate which is a first lien
or other than a first lien on the real estate, loans secured by
other than real estate, and loans secured by any combination of
mortgages and security interests, on terms and conditions
provided by sections 1321.51 to 1321.60 of the Revised Code.
(D)(1) IF A LENDER THAT IS SUBJECT TO SECTIONS 1321.51
TO 1321.60
OF THE REVISED CODE MAKES A LOAN IN VIOLATION OF DIVISION
(A)(1)
OF THIS SECTION, THE LENDER HAS NO RIGHT TO COLLECT, RECEIVE, OR RETAIN
ANY INTEREST OR CHARGES ON THAT LOAN.
(2) IF A REGISTRANT APPLIES TO THE DIVISION FOR A RENEWAL OF
THE REGISTRANT'S CERTIFICATE AFTER THE DATE REQUIRED BY DIVISION
(A)(4) OF SECTION
1321.53 OF THE REVISED CODE, BUT PRIOR TO THE FIRST DAY OF
AUGUST OF THAT YEAR, AND THE DIVISION APPROVES THE
APPLICATION, DIVISION (D)(1) OF THIS SECTION DOES NOT APPLY WITH
RESPECT TO ANY LOAN MADE BY THE REGISTRANT WHILE THE REGISTRANT'S
CERTIFICATE WAS EXPIRED.
Sec. 1321.53. (A)(1) An application for a certificate of
registration under sections 1321.51 to 1321.60 of the Revised
Code shall contain an undertaking by the applicant to abide by
those sections. The application shall be in writing, under oath,
and in the form prescribed by the division of
financial institutions,
shall give the location where the business is to be
conducted and the names and addresses of the partners, officers,
or trustees of the applicant, and shall contain any further
relevant information that the division may require. Applicants
that are foreign corporations shall obtain and maintain a license
pursuant to Chapter 1703. of the Revised Code before a
certificate is issued or renewed.
(2) Upon the filing of the application and the payment by the
applicant of two hundred dollars as an investigation fee and an
annual registration fee as determined by the superintendent of
financial institutions pursuant to section
1321.20 of the Revised Code,
the division shall investigate the relevant facts. If the
application involves investigation outside this state, the
applicant may be required by the division to advance sufficient
funds to pay any of the actual expenses of such investigation,
when it appears that these expenses will exceed two hundred
dollars. An itemized statement of any of these expenses which
the applicant is required to pay shall be furnished the applicant
by the division. No certificate shall be issued unless the fees
have been submitted to the division, and no registration fee or
investigation fee will be returned after a certificate has been
issued.
(3) If an application for a
certificate of registration does not contain all of the
information required under division
(A)(1) of this section, and if
such information is not submitted to the division within ninety
days after the application is filed, the superintendent may
consider the application withdrawn and may retain the
investigation fee.
(4) If the division
finds that the financial responsibility,
experience, character, and general fitness of the applicant are
such as to command the confidence of the public and to warrant
the belief that the business will be operated honestly and fairly
in compliance with and within the purposes of sections 1321.51 to
1321.60 of the Revised Code, and that the applicant has the
net worth and assets required by division (B) of this section, the
division shall thereupon issue a certificate to the applicant. The
certificate may be continued from year to year SHALL EXPIRE ON THE
FIRST DAY OF JULY NEXT AFTER ITS ISSUE, AND ON THE FIRST DAY OF
JULY IN EACH SUCCEEDING YEAR, UNLESS RENEWED by payment of an
annual fee, and any assessment, as determined by the
superintendent pursuant to
section 1321.20 of the Revised Code, on or before the last day of
June of each year. No other fee or assessment shall be required
of a registrant by the state or any political subdivision of the state.
If the division does not so find, it shall
enter an order denying the application, and forthwith notify the
applicant of the denial, the grounds for the denial, and the
applicant's reasonable opportunity to be heard on the action in
accordance with Chapter 119. of the Revised Code. In the event
of denial, the division shall return the registration fee but
retain the investigation fee.
(5) IF THERE IS A CHANGE OF TEN PER CENT OR MORE IN THE OWNERSHIP
OF A REGISTRANT, THE DIVISION MAY MAKE ANY INVESTIGATION NECESSARY TO
DETERMINE WHETHER ANY FACT OR CONDITION EXISTS THAT, IF IT HAD
EXISTED AT THE TIME OF THE ORIGINAL APPLICATION FOR A CERTIFICATE OF
REGISTRATION, THE FACT OR CONDITION WOULD HAVE WARRANTED THE
DIVISION TO DENY THE APPLICATION UNDER DIVISION (A)(4) OF THIS
SECTION. IF SUCH A FACT OR CONDITION IS FOUND, THE DIVISION MAY, IN
ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE,
REVOKE THE REGISTRANT'S CERTIFICATE.
(B) Each registrant that engages in lending under
sections 1321.51 to 1321.60 of the Revised Code shall maintain
both of the following:
(1) A net worth of at least fifty thousand dollars;
(2) For each certificate of registration, assets of at least fifty
thousand dollars either in use or readily available for use in the conduct of
the business.
(C) Not more than one place of business shall be
maintained under the same certificate, but the division may issue
additional certificates to the same registrant upon compliance
with sections 1321.51 to 1321.60 of the Revised Code, governing
the issuance of a single certificate. No change in the place of
business of a registrant to a location outside the original
municipal corporation shall be permitted under the same
certificate without the approval of a new application, the
payment of the registration fee as determined by the
superintendent pursuant to section 1321.20 of the Revised Code
and, if required by the superintendent, the payment of an
investigation fee of two hundred dollars. When a registrant
wishes to change its place of business within the same municipal
corporation, it shall give written notice of the change in
advance to the division, which shall provide a certificate for
the new address without cost. If a registrant changes its name,
prior to making loans under the new name it shall give written
notice of the change to the division, which shall provide a
certificate in the new name without cost. Sections 1321.51 to
1321.60 of the Revised Code do not limit the loans of any
registrant to residents of the community in which the
registrant's place of business is situated. Each certificate
shall be kept conspicuously posted in the place of business of
the registrant and is not transferable or assignable.
(D) Sections 1321.51 to 1321.60 of the Revised Code do not
apply to any of the following:
(1) Persons lawfully doing business under the authority of
any law of this state, another state, or the United States
relating to banks, savings banks, trust companies, savings and
loan associations, or credit unions;
(2) Life, property, or casualty insurance companies
licensed to do business in this state;
(3) Any person that is a lender making a loan pursuant to
sections 1321.01 to 1321.19 of the Revised Code or a business
loan as described in division (B)(6) of section 1343.01 of the
Revised Code;
(4) Any governmental agency or instrumentality, or any
entity included under division (B)(3) of section 1343.01 of the
Revised Code.
(E) No person engaged in the business of selling tangible
goods or services related to tangible goods may receive or retain
a certificate under sections 1321.51 to 1321.60 of the Revised
Code for such place of business.
Sec. 1321.54. (A) The division of financial
institutions may
adopt, in accordance with Chapter 119.
of the Revised Code, rules that are necessary for the enforcement of
sections 1321.51 to 1321.60 of the Revised Code and that are consistent with
those sections. Each rule shall contain a reference to the section,
division, or paragraph of the Revised Code to which it applies. The division
shall send by regular mail to each registrant
a copy of each rule that is adopted pursuant to this section.
(B) The division shall, upon written notice to the
registrant stating the contemplated action, the grounds for the action,
and the registrant's reasonable opportunity to be heard on the
action in accordance with Chapter 119. of the
Revised Code, revoke or, suspend, OR FAIL TO RENEW
any certificate issued under
sections 1321.51 to 1321.60 of the Revised Code, OR IMPOSE A MONETARY
FINE, if it finds that
the registrant has continued to violate those sections,
after receiving notice of the violation or violations from the
division, or is in default in the payment of the annual assessment
or certificate of registration fee prescribed in section 1321.20
of the Revised Code. The revocation or, suspension,
OR FAILURE TO RENEW shall not
impair the obligation of any pre-existing lawful contract made
under sections 1321.51 to 1321.60 of the Revised Code.
MONETARY FINES IMPOSED UNDER THIS DIVISION SHALL NOT EXCEED TWENTY-FIVE
THOUSAND DOLLARS.
(C) The superintendent of financial
institutions may investigate alleged
violations of sections 1321.51 to 1321.60 of the Revised
Code, or the rules adopted thereunder, or complaints concerning any such
violation. The
superintendent may make application to the court of common pleas
for an order enjoining any such violation and, upon a showing by
the superintendent that a person has committed, or is about to
commit, such a violation, the court shall grant an injunction,
restraining order, or other appropriate relief.
(D) In conducting an
investigation pursuant to this section, the superintendent may
compel, by subpoena, witnesses to testify in relation to any
matter over which the superintendent has jurisdiction, and may
require the production or photocopying of any book, record, or
other document pertaining to such matter. If a person fails to
file any statement or report, obey any subpoena, give testimony,
produce any book, record, or other document as required by such
a subpoena, or permit photocopying of any book, record, or other
document subpoenaed, the court of common pleas of any county in
this state, upon application made to it by the superintendent,
shall compel obedience by attachment proceedings for contempt,
as in the case of disobedience of the requirements of a subpoena
issued from the court, or a refusal to testify therein.
(E) If the superintendent determines that a person is engaged in, or is
believed to be engaged in, activities that may constitute a
violation of sections 1321.51 to 1321.60 of the
Revised Code, the superintendent may,
after notice and a hearing conducted in accordance with
Chapter 119. of the Revised Code, issue a cease and desist
order. Such an order shall be enforceable in the court of
common pleas.
Sec. 1321.55. (A) Every registrant shall keep records
pertaining to loans made under
sections 1321.51 to 1321.60 of the Revised Code. Such records
shall be segregated from records pertaining to transactions
that are not subject to these sections of the Revised Code. Every
registrant shall preserve records pertaining to loans made under sections
1321.51 to 1321.60 of
the Revised Code for at least two years after making the final
entry on such records. Accounting systems maintained in whole
or in part by mechanical or electronic data processing methods
that provide information equivalent to that otherwise required
are acceptable for this purpose. At least once each year
EIGHTEEN-MONTH CYCLE, the
division of financial institutions shall make
or cause to be made an
examination of records pertaining to loans made under sections 1321.51 to
1321.60 of the Revised Code, for the purpose of determining whether the
registrant is complying with these sections and of verifying the
registrant's annual report.
(B)(1) As required by the superintendent of financial institutions, each
registrant shall file with the
division each year a
report under oath or affirmation, on forms supplied by the
division, concerning the business and operations for the
preceding calendar year. Whenever a registrant operates two or
more registered offices or whenever two or more affiliated
registrants operate registered offices, then a composite report
of the group of registered offices may be filed in lieu of
individual reports.
(2) The division shall publish annually an analysis of the
information required under division (B)(1) of this section, but
the individual reports shall not be public records and shall not
be open to public inspection.
(C) All information obtained by the superintendent
or the superintendent's deputies, examiners, assistants, agents, or
clerks by reason of their official position, including
information obtained by such persons from the annual report of a
registrant or in the course of examining a registrant or
investigating an applicant for a certificate, is privileged and
confidential. All such information shall remain privileged and
confidential for all purposes except when it is necessary for
the superintendent and the superintendent's deputies, examiners,
assistants, agents, or clerks to take official action regarding
the affairs of the registrant or in connection with criminal
proceedings.
(D) No person is in violation of sections 1321.51 to 1321.60 of the Revised
Code for any act taken or omission made in reliance on a written notice,
interpretation, or examination report from the superintendent.
Sec. 1321.57. (A) Notwithstanding any other provisions of
the Revised Code, a registrant may contract for and receive
interest, calculated according to the actuarial method, at a rate
or rates not exceeding twenty-one per cent per year on the unpaid
principal balances of the loan. Loans may be interest-bearing or
precomputed.
(B) For purposes of computation of time on
interest-bearing and precomputed loans, including, but not
limited to, the calculation of interest, a month is considered
one-twelfth of a year, and a day is considered one three hundred
sixty-fifth of a year when calculation is made for a fraction of
a month. A year is as defined in section 1.44 of the Revised
Code. A month is that period described in section 1.45 of the
Revised Code. ALTERNATIVELY, A REGISTRANT MAY CONSIDER A DAY AS ONE THREE
HUNDRED SIXTIETH OF A YEAR AND EACH MONTH AS HAVING THIRTY DAYS.
(C) With respect to interest-bearing loans:
(1)(a) Interest shall be computed on unpaid principal
balances outstanding from time to time, for the time outstanding.
(b) As an alternative to the method of computing interest
set forth in division (C)(1)(a) of this section, a registrant, if
the loan contract so provides, may charge and collect interest
for the first installment period based on elapsed time from the
date of the loan to the first scheduled payment due date, and for
each succeeding installment period from the scheduled payment due
date to the next scheduled payment due date, regardless of the
date or dates the payments are actually made.
(c) Whether a registrant computes interest pursuant to
division (C)(1)(a) or (b) of this section, each payment shall be
applied first to unpaid charges, then to interest, and the
remainder to the unpaid principal balance. However, if the
amount of the payment is insufficient to pay the accumulated
interest, the unpaid interest continues to accumulate to be paid
from the proceeds of subsequent payments and is not added to the
principal balance.
(2) Interest shall not be compounded, COLLECTED, or
paid in advance. However, if BOTH OF THE FOLLOWING APPLY:
(a)INTEREST MAY BE CHARGED TO EXTEND THE FIRST MONTHLY
INSTALLMENT PERIOD BY NOT MORE THAN FIFTEEN DAYS, AND THE INTEREST
CHARGED FOR THE EXTENSION MAY BE ADDED TO THE PRINCIPAL AMOUNT OF THE
LOAN.
(b) IF
part or all of the consideration for a new loan contract is the unpaid
principal balance of a prior loan, then the principal amount
payable under such THE new loan contract may include any unpaid
interest that has accrued. The resulting loan contract shall be
deemed a new and separate loan transaction for purposes of this
section. The unpaid principal balance of a precomputed loan is
the balance due after refund or credit of unearned interest as
provided in division (D)(3) of this section.
(D) With respect to precomputed loans:
(1) Loans shall be repayable in monthly installments of
principal and interest combined, except that the first
installment period may exceed one month by not more than fifteen
days, and the first installment payment amount may be larger than
the remaining payments by the amount of interest charged for the
extra days; and provided further that monthly installment payment
dates may be omitted to accommodate borrowers with seasonal
income.
(2) Payments may be applied to the combined total of
principal and precomputed interest until maturity of the loan. A
registrant may charge interest after the original or deferred
maturity of a precomputed loan at the rate specified in division
(A) of this section on all unpaid principal balances for the time
outstanding.
(3) When any loan contract is paid in full by cash,
renewal, refinancing, or a new loan, one month or more before the
final installment due date, the registrant shall refund, or
credit the borrower with, the total of the applicable charges for
all fully unexpired installment periods, as originally scheduled
or as deferred, that follow the day of prepayment. If the
prepayment is made other than on a scheduled installment
due date, the nearest scheduled installment due date shall be used in
such computation. If the prepayment occurs prior to the first
installment due date, the registrant may retain one-thirtieth of
the applicable charge for a first installment period of one month
for each day from date of loan to date of prepayment, and shall
refund, or credit the borrower with, the balance of the total
interest contracted for. If the maturity of the loan is
accelerated for any reason and judgment is entered, the
registrant shall credit the borrower with the same refund as if
prepayment in full had been made on the date the judgment is
entered.
(4) If the parties agree in writing, either in the loan
contract or in a subsequent agreement, to a deferment of wholly
unpaid installments, a registrant may grant a deferment and may
collect a deferment charge as provided in this section. A
deferment postpones the scheduled due date of the earliest unpaid
installment and all subsequent installments as originally
scheduled, or as previously deferred, for a period equal to the
deferment period. The deferment period is that period during
which no installment is scheduled to be paid by reason of the
deferment. The deferment charge for a one-month period may not
exceed the applicable charge for the installment period
immediately following the due date of the last undeferred
installment. A proportionate charge may be made for deferment for
periods of more or less than one month. A deferment charge is
earned pro rata during the deferment period and is fully earned
on the last day of the deferment period. If a loan is prepaid in
full during a deferment period, the registrant shall make, or
credit to the borrower, a refund of the unearned deferment charge
in addition to any other refund or credit made for prepayment of
the loan in full.
(E) A registrant, at the request of the borrower, may
obtain, on one or more borrowers, credit life insurance, credit
accident and health insurance, and unemployment insurance. The premium
or identifiable charge for the insurance
may be included in the principal amount of the loan and may not
exceed the premium rate filed by the insurer with the
superintendent of insurance and not disapproved by the
superintendent. If a
registrant obtains the insurance at the request of the borrower,
the borrower shall have the right to cancel the insurance for a
period of twenty-five days after the loan is made. If the
borrower chooses to cancel the insurance, the borrower shall give
the registrant written notice of this choice and shall return all
of the policies or certificates of insurance or notices of
proposed insurance to the registrant during such period, and the
full premium or identifiable charge for the insurance shall be
refunded to the borrower by the registrant. If the borrower
requests, in the notice to cancel the insurance, that this refund
be applied to reduce the balance of a precomputed loan, the
registrant shall credit the amount of the refund plus the amount
of interest applicable to the refund to the loan balance.
IF THE REGISTRANT OBTAINS THE INSURANCE AT THE REQUEST OF THE
BORROWER, THE REGISTRANT SHALL NOT CHARGE OR COLLECT INTEREST ON ANY
INSURED AMOUNT THAT REMAINS UNPAID AFTER THE BORROWER'S DATE OF
DEATH.
(F) A registrant may require the borrower to provide
insurance or a loss payable endorsement covering reasonable risks
of loss, damage, and destruction of property used as security for
the loan and with the consent of the borrower such insurance may
cover property other than that which is security for the loan. The amount and
term of required property insurance shall be
reasonable in relation to the amount and term of the loan
contract and the type and value of the security, and the
insurance shall be procured in accordance with the insurance laws
of this state. The purchase of this insurance through the
registrant or an agent or broker designated by the registrant
shall not be a condition precedent to the granting of the loan. If the
borrower purchases the insurance from or through the
registrant or from another source, the premium may be included in
the principal amount of the loan.
(G) On loans secured by an interest in real estate, all of the
following apply:
(1) A
registrant may charge and receive up to two points, and a
prepayment penalty not in excess of one per cent of the original
principal amount of the loan. Points may be paid by the borrower
at the time of the loan or may be included in the principal
amount of the loan. On a refinancing, a registrant may not
charge under division (G)(1) of this section
either points OF THE FOLLOWING:
(a) POINTS ON THE PORTION OF THE PRINCIPAL AMOUNT THAT IS APPLIED
TO THE UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN, IF THE REFINANCING
OCCURS within one year from AFTER the
date of a prior THE REFINANCED loan on which points were charged
or a;
(b) A prepayment
penalty.
(2) As an alternative to the prepayment penalty described in
division (G)(1) of this section, a registrant may contract for,
charge, and receive the prepayment penalty described in division
(G)(2) of this section for the prepayment of
a
loan prior to three years after the date the loan contract
is executed. This prepayment
penalty shall not exceed three per cent of
the original principal amount of the loan if the loan is paid in full
prior to one year after the date the loan contract is executed. The
penalty shall not exceed two per cent of the original principal amount
of the loan if the loan is paid in full at any time from one year,
but prior to two years, after the date the loan contract is
executed. The penalty shall not exceed one per cent of the
original principal amount of the loan if the loan is paid in full at any
time from two years, but prior to three years, after the date the loan
contract
is executed. A registrant shall not charge or receive a prepayment penalty
under division (G)(2) of this section if any of the following
applies:
(a) The loan is a refinancing by the same registrant or a
registrant to whom the loan has been assigned;
(b) The loan is paid in full as a result of the sale of
the real
estate that secures the loan;
(c) The loan is paid in full with the proceeds of an
insurance
claim against an insurance policy that insures the life of the borrower or an
insurance policy that
covers loss, damage, or destruction of the real estate that secures
the loan.
(3) Division (G) of this section
is not a limitation on discount points or
other charges for purposes of section 501(b)(4) of the
"Depository Institutions Deregulation and Monetary Control Act of
1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 note.
(H)(1) In addition to the interest and charges provided
for by this section, no further or other amount, whether in the
form of broker fees, placement fees, or any other fees whatsoever,
shall be charged or received by the registrant,
except costs and disbursements to which the registrant may become
entitled by law in connection with any suit to collect a loan or
any lawful activity to realize on a security interest or mortgage
after default, INCLUDING REASONABLE ATTORNEY FEES INCURRED BY
THE REGISTRANT AS A RESULT OF THE SUIT OR ACTIVITY, and except the
following additional charges
which may be included in the principal amount of the loan or collected at
any time after the loan is made:
(a) The amounts of fees authorized by law to record, file,
or release security interests and mortgages on a loan;
(b) With respect to a loan secured by an interest in real
estate, the following closing costs, if they are bona fide,
reasonable in amount, and not for the purpose of circumvention or
evasion of this section:
(i) Fees or premiums for title examination, abstract of
title, title insurance, surveys, or similar purposes
TITLE ENDORSEMENTS, TITLE BINDERS, TITLE COMMITMENTS, HOME INSPECTIONS, OR
PEST INSPECTIONS; SETTLEMENT OR
CLOSING COSTS; COURIER FEES; AND ANY FEDERALLY MANDATED FLOOD
PLAIN CERTIFICATION FEE;
(ii) If not paid to the registrant, an employee of the
registrant, or a person related to the registrant, fees for
preparation of a mortgage, settlement statement, or other
documents, fees for notarizing mortgages and other documents, and
appraisal fees, AND FEES FOR ANY FEDERALLY MANDATED INSPECTION OF
HOME IMPROVEMENT WORK FINANCED BY A SECOND MORTGAGE LOAN;
(c) Fees for credit investigations not exceeding ten dollars.
(2) Division (H)(1) of this section does not limit the
rights of registrants to engage in other transactions with
borrowers, provided the transactions are not a condition of the
loan.
(I) If the loan contract or security instrument contains
covenants by the borrower to perform certain duties pertaining to
insuring or preserving security and the registrant pursuant to
the loan contract or security instrument pays for performance of
the duties on behalf of the borrower, the registrant may add the
amounts paid to the unpaid principal balance of the loan or
collect them separately. A charge for interest may be made for
sums advanced not exceeding the rate of interest permitted by
division (A) of this section. Within a reasonable time after
advancing a sum, the registrant shall notify the borrower in
writing of the amount advanced, any interest charged with respect
to the amount advanced, any revised payment schedule, and shall
include a brief description of the reason for the advance.
(J)(1) In addition to points authorized under division
(G) of this section, a registrant may charge and receive, on THE
FOLLOWING:
(a) WITH RESPECT TO SECURED loans
in: IF the principal amount of THE LOAN IS less
than five hundred
dollars, loan
origination charges not exceeding fifteen dollars; on loans in
IF the
principal amount of THE LOAN IS at least five hundred dollars but less
than one thousand
dollars, loan origination charges not exceeding thirty dollars; on loans
in IF
the principal amount of THE LOAN IS at least one thousand dollars but
less than two
thousand dollars, loan origination charges not exceeding sixty-five
ONE HUNDRED dollars;
and on loans in IF the principal amount of THE LOAN IS at
least two thousand dollars BUT LESS THAN FIVE THOUSAND DOLLARS, loan
origination charges not exceeding the greater of one TWO hundred
fifty dollars or one per cent of; AND IF the
principal amount of the loan IS AT LEAST FIVE THOUSAND DOLLARS, LOAN
ORIGINATION CHARGES NOT EXCEEDING THE GREATER OF TWO HUNDRED FIFTY DOLLARS OR
ONE PER CENT OF THE PRINCIPAL AMOUNT OF THE LOAN. However,
on
(b) WITH RESPECT TO unsecured loans in:
IF the principal amount of
THE LOAN IS LESS THAN FIVE HUNDRED DOLLARS, LOAN ORIGINATION
CHARGES NOT EXCEEDING FIFTEEN DOLLARS; IF THE PRINCIPAL AMOUNT OF THE
LOAN IS AT LEAST FIVE HUNDRED DOLLARS BUT LESS THAN ONE THOUSAND
DOLLARS, LOAN ORIGINATION CHARGES NOT EXCEEDING THIRTY DOLLARS; IF
THE PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST ONE THOUSAND DOLLARS
BUT
less than
five thousand dollars, the loan origination charge shall
CHARGES not
exceed EXCEEDING one hundred dollars; AND IF THE
PRINCIPAL AMOUNT OF THE LOAN IS AT LEAST FIVE THOUSAND DOLLARS, LOAN
ORIGINATION CHARGES NOT EXCEEDING TWO HUNDRED FIFTY DOLLARS. A
(2) IF A REFINANCING OCCURS WITHIN NINETY DAYS AFTER THE DATE OF
THE REFINANCED LOAN, A registrant
may not impose loan origination
charges on a borrower more frequently than once in any ninety-day
period THE PORTION OF THE PRINCIPAL AMOUNT THAT IS APPLIED TO THE
UNPAID PRINCIPAL AMOUNT OF THE REFINANCED LOAN. Loan
(3) LOAN origination charges may be paid by the borrower at
the time of the loan or may be included in the principal amount
of the loan.
(K) A registrant may charge and receive check collection
charges not greater than twenty dollars plus any amount
passed on
from other financial institutions for each check, negotiable
order of withdrawal, share draft, or other negotiable instrument
returned or dishonored for any reason.
(L) If the loan contract so provides, a registrant may collect a default
charge on any installment not paid in full within ten days after its
due date. For this purpose, all installments are considered
paid in the order in which they become due. Any amounts applied
to an outstanding loan balance as a result of voluntary release
of a security interest, sale of security on the loan, or
cancellation of insurance shall be considered payments on the
loan, unless the parties otherwise agree in writing at the time
the amounts are applied. The amount of the default charge shall
not exceed the greater of five per cent of the scheduled
installment or fifteen dollars.
Sec. 1321.58. (A) A registrant may make open-end loans
pursuant to an agreement between the registrant and the borrower
whereby:
(1) The registrant may permit the borrower to obtain
advances of money from the registrant from time to time or the
registrant may advance money on behalf of the borrower from time
to time as directed by the borrower.
(2) The amount of each advance and permitted interest,
charges, and costs are debited to the borrower's account and
payments and other credits are credited to the same account.
(3) The interest and charges are computed on the unpaid
balance or balances of the account from time to time.
(4) The borrower has the privilege of paying the account
in full at any time or, if the account is not in default, in
installments of determinable amounts as provided in the
agreement.
For open-end loans, "billing cycle" means the time interval
between periodic billing dates. A billing cycle shall be
considered monthly if the closing date of the cycle is the same
date each month or does not vary by more than four days from such
date.
(B) Notwithstanding any other provisions of the Revised
Code, a registrant may contract for and receive interest for
open-end loans at a rate or rates not exceeding twenty-one per
cent per year and may compute interest in each billing cycle by
either of the following methods:
(1) By multiplying the daily rate by the daily unpaid
balance of the account, in which case the daily rate is
determined by dividing the annual rate by three hundred
sixty-five;
(2) By multiplying the monthly rate by the average daily
unpaid balance of the account in the billing cycle, in which case
the average daily unpaid balance is the sum of all of the daily
unpaid balances each day during the cycle divided by the number
of days in the cycle. The monthly rate is determined by dividing
the annual rate by twelve.
The billing cycle shall be monthly and the unpaid balance
on any day shall be determined by adding to any balance unpaid as
of the beginning of that day all advances and permitted interest,
charges, and costs and deducting all payments and other credits
made or received that day.
(C) In addition to the interest permitted in division (B)
of this section, a registrant may charge and receive or add to
the unpaid balance any or all of the following:
(1) All charges and costs authorized by divisions (E),
(F), (G), (H), (I), and (K) of section 1321.57 of the Revised
Code;
(2) An annual credit line charge, for the privilege of
maintaining a line of credit, for AS FOLLOWS:
(a) FOR the first year:
(i) IF THE ORIGINAL CREDIT LINE IS LESS THAN FIVE THOUSAND
DOLLARS, AN AMOUNT NOT EXCEEDING ONE HUNDRED FIFTY DOLLARS;
(ii) IF THE ORIGINAL CREDIT LINE IS AT LEAST FIVE THOUSAND
DOLLARS, AN AMOUNT not exceeding
the greater of one per cent of the original credit line or
one TWO
hundred fifty dollars, and for.
(b) FOR subsequent years AN AMOUNT not exceeding the
greater of one-half per cent of the credit line on the
anniversary date or fifty dollars;.
(3) A default charge on any required minimum payment
not paid in full within ten days after its due date. For this
purpose, all required minimum payments are considered paid in
the order in which they become due. The amount of the default
charge shall not exceed the greater of five per cent of the
required minimum payment or fifteen dollars.
(D) The borrower at any time may pay all or any part of
the unpaid balance on the account or, if the account is not in
default, the borrower may pay the unpaid balance in installments
subject to minimum payment requirements as determined by the
registrant and set forth in the open-end loan agreement.
(E) If credit life insurance or credit accident and health
insurance is obtained by the registrant and if the insured dies
or becomes disabled when there is an outstanding open-end loan
indebtedness, the insurance shall be sufficient to pay the unpaid
balance on the loan due on the date of the borrower's death in
the case of credit life insurance or all minimum payments that
become due on the loan during the covered period of disability in
the case of credit accident and health insurance. The additional
charge for credit life insurance, credit accident and health
insurance, or unemployment insurance shall be calculated each
billing cycle by applying the current monthly premium rate for
the insurance, filed by the insurer with the superintendent of
insurance and not disapproved by the superintendent, to the
unpaid balances in
the borrower's account, using one of the methods specified in
division (B) of this section for the calculation of interest. No
credit life insurance, credit accident and health insurance, or
unemployment insurance written in connection with an open-end
loan shall be canceled by the registrant because of delinquency
of the borrower in making the required minimum payments on the
loan unless one or more such payments is past due for a period of
thirty days or more. The registrant shall advance to the insurer
the amounts required to keep the insurance in force during such
period, which amounts may be debited to the borrower's account.
(F) Whenever there is no unpaid balance in an open-end
loan account, the account may be terminated by written notice, by
the borrower or the registrant, to the other party. If a
registrant has taken a mortgage on real property to secure the
open-end loan, the registrant shall deliver, within thirty days
following termination of the account, a release of the mortgage
to the borrower. If a registrant has taken a security interest
in personal property to secure the open-end loan, the registrant
shall release the security interest and terminate any financing
statement in accordance with section 1309.41 of the Revised Code.
Sec. 1321.99. (A) Whoever violates section 1321.02 of the
Revised Code shall be fined not less than one hundred nor more
than five hundred dollars for a first offense; for each
subsequent offense such person shall be fined not less than two
hundred nor more than one thousand dollars or imprisoned not more
than six months, or both IS GUILTY OF A FELONY OF THE FIFTH DEGREE.
(B) Whoever violates section 1321.13 of the Revised Code
shall be fined not less than one hundred nor more than five
hundred dollars or imprisoned not more than six months, or both.
(C) Whoever violates section 1321.14 of the Revised Code
shall be fined not less than fifty nor more than two hundred
dollars for a first offense; for a second offense such person
shall be fined not less than two hundred nor more than five
hundred dollars and imprisoned for not more than six months.
(D) Whoever willfully violates section 1321.57, 1321.58,
1321.59, or 1321.60 of the Revised Code shall be fined not less
than one nor more than five hundred dollars.
(E) Whoever violates section 1321.52 of the Revised Code
is guilty of a felony of the fifth degree.
(F) Whoever violates division (A) of section 1321.73 of
the Revised Code shall be fined not more than five hundred
dollars or imprisoned not more than six months, or both.
Section 2. That existing sections 1321.20, 1321.51, 1321.52,
1321.53, 1321.54, 1321.55, 1321.57, 1321.58, and 1321.99 of the
Revised Code are hereby repealed.
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