GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2011
H 2
HOUSE BILL 810
Committee Substitute Favorable 5/31/11
|
Short Title: Consumer Finance Act Amendments. |
(Public) |
|
|
Sponsors: |
|
|
|
Referred to: |
|
|
April 7, 2011
A BILL TO BE ENTITLED
AN ACT TO MAKE VARIOUS AMENDMENTS TO THE NORTH CAROLINA CONSUMER FINANCE ACT to increase CONSUMER ACCESS AND CREDIT MARKET PARITY.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 53-166(a) reads as rewritten:
"(a) Scope. - No
person shall engage in the business of lending in amounts of ten fifteen
thousand dollars ($10,000) ($15,000) or less and contract
for, exact, or receive, directly or indirectly, on or in connection with any
such loan, any charges whether for interest, compensation, consideration, or
expense, or any other purpose whatsoever, which in the aggregate are greater
than permitted by Chapter 24 of the General Statutes, except as provided in and
authorized by this Article, and without first having obtained a license from
the Commissioner. The word "lending" as used in this section, shall include,
but shall not be limited to, endorsing or otherwise securing loans or contracts
for the repayment of loans."
SECTION 2. G.S. 53-172(a) reads as rewritten:
"(a) No licensee shall conduct the business of making loans under this Article within any office, suite, room, or place of business in which any other business is solicited or transacted.
Installment paper dealers as defined in G.S. 105-83, and
the collection by a licensee of loans legally made in North Carolina, or
another state by another government regulated lender or lending agency, agency,
and the collection by a licensee of claims of, or payments to, an insurance
company licensed in North Carolina and arising in any way from an insurance
policy approved by the Commissioner of Insurance shall not be considered as
being any other business within the meaning of this section."
SECTION 3. G.S. 53-173 reads as rewritten:
"§ 53-173. Maximum rate of interest and fee; computation of interest; limitation on interest after judgment; limitation on interest after maturity of the loan.
(a) Maximum Rate of
Interest. - Every licensee under this section may make loans in installments
not exceeding three thousand dollars ($3,000) in amount, at interest rates not
exceeding thirty-six percent (36%) per annum on the outstanding principal
balance of any loan not in excess of six one thousand five hundred
dollars ($600.00) ($1,500) and fifteen percent (15%) per annum on
any remainder of such unpaid principal balance. Interest shall be contracted
for and collected at the single simple interest rate applied to the outstanding
balance that would earn the same amount of interest as the above rates for
payment according to schedule.
…
(g) Limitations on Loans to Individual Borrowers. -
(1) No loan shall be made to a borrower before the 91st day after the origination of an existing loan made under this section, nor with less than fifty percent (50%) of the indebtedness of the existing loan reduced in the current balance, unless the borrower receives the greater of one hundred dollars ($100.00) or twenty percent (20%) in cash in excess of the principal amount of the original loan.
(2) No licensee shall make a loan under this section to repay an existing loan under this section with the licensee without providing a notice, approved by the Commissioner, explaining the benefits of disciplined consistent repayment of installment credit and the potential of increasing costs when obtaining a new loan before final payment.
(3) A licensee under this section must accept and credit semimonthly and weekly payments from borrowers made before regularly scheduled payments are due and also provide, at the time the loan is made, an example of the potential savings that could occur as a result of more frequent payments.
(4) No licensee or an affiliate of such licensee shall make a loan to a borrower under this section if there exists an outstanding loan made under this section or G.S. 53-176 between the licensee and that borrower, unless the existing loan is paid in full from the proceeds of the new loan."
SECTION 4. G.S. 53-176 reads as rewritten:
"§ 53-176. Optional rates, maturities and amounts.
(a) In lieu of
addition to making loans in the amount and at the interest stated in
G.S. 53-173 and for the terms stated in G.S. 53-180, a licensee may at
any time elect to make loans in installments not exceeding ten fifteen
thousand dollars ($10,000) ($15,000) and which shall not be
repayable in less than six months or more than 84 96 months and
which shall not be secured by deeds of trust or mortgages on real estate and
which are repayable in substantially equal consecutive monthly payments and to
charge and collect interest in connection therewith which shall not exceed the
following actuarial rates:
(1) With respect
to a loan not exceeding seven thousand five hundred dollars ($7,500), thirtyThirty
percent (30%) per annum on that part of the unpaid principal balance not
exceeding one five thousand dollars ($1,000)($5,000).
(1a) Twenty-four
percent (24%) per annum on the unpaid principal balance not exceeding ten
thousand dollars ($10,000).and
(1b) eighteen Eighteen
percent (18%) per annum on the remainder of the unpaid principal balance.
Interest shall be contracted for and collected at the single simple interest rate applied to the outstanding balance that would earn the same amount of interest as the above rates for payment according to schedule.
(2) With
respect to a loan exceeding seven thousand five hundred dollars ($7,500),
eighteen percent (18%) per annum on the outstanding principal balance.
(b) In addition to the interest permitted in this section, a licensee may assess at closing a fee for processing the loan as agreed upon by the parties, not to exceed twenty-five dollars ($25.00) for loans up to two thousand five hundred dollars ($2,500) and one percent (1%) of the cash advance for loans above two thousand five hundred dollars ($2,500), not to exceed a total fee of forty dollars ($40.00), provided that such charges may not be assessed more than twice in any 12-month period.
(c) The provisions of G.S. 53-173(b), (c) and (d) and G.S. 53-180(b), (c), (d), (e), (f), (g), (h) and (i) shall apply to loans made pursuant to this section.
(d) Any
licensee under this Article shall have the right to elect to make loans in
accordance with this section by the filing of a written statement to that
effect with the Commissioner and no sooner than 30 days from the date of such
notification begin making loans regulated by this section. After such election
a licensee may continue to make loans in accordance with this section unless
the licensee notifies the Commissioner in writing of its intention to terminate
such election on a date not sooner than 30 days from the notification.
(e) The due date of the first monthly payment shall not be more than 45 days following the disbursement of funds under any such installment loan. A borrower under this section may prepay all or any part of a loan made under this section without penalty. Except as otherwise provided for pursuant to G.S. 75-20(a), no more than twice in a 12-month period, a borrower may cancel a loan with the same licensee within three business days after disbursement of the loan proceeds without incurring or paying interest so long as the amount financed, minus any fees or charges, is returned to and received by the licensee within that time.
(f) No
individual, partnership, or corporate licensee and no corporation which is the
parent, subsidiary or affiliate of a corporate licensee that is making loans
under this Article except as authorized in this section, shall be permitted to
make loans under the provisions of this section. Any corporate licensee or
individual or partnership licensee that elects to make loans in accordance with
the provisions of this section shall be bound by that election with respect to
all of its offices and locations in this State and all offices and locations in
this State of its parent, subsidiary or affiliated corporate licensee, or with
respect to all of his or their offices and locations in this State."
SECTION 5. G.S. 53-177 reads as rewritten:
"§ 53-177.
Recording fees.Fees.
(a) Recording
Fees. - The licensee may collect from the borrower the amount of any fees
necessary to file or record its security interest with any public official or
agency of a county or the State as may be required pursuant to Article 9 of
Chapter 25 of the General Statutes or G.S. 20-58 et seq. Upon full
disclosure to the borrower on how the fees will be applied, such fees may
either (i) be paid by the licensee to such public official or agency of the
county or State, or (ii) in lieu of recording or filing, applied by the
licensee to purchase nonfiling or nonrecording insurance on the instrument
securing the loan, or (iii) be retained by a licensee that elects to self
insure against the loss of a security interest by reason of not filing or
recording its security instrument: Provided, provided, however, the
amount collected by the licensee from the borrower for the purchase of a
nonfiling or nonrecording insurance policy, or for self insurance,
policy shall be the premium amount for such insurance as fixed by the
Commissioner of Insurance. Such premium shall be at least one dollar ($1.00)
less than the cost of recording or filing a security interest. Provided
further, a licensee shall not collect or permit to be collected any notary fee
in connection with any loan made under this Article, nor may a licensee collect
any fee from the borrower for the cost of releasing a security interest except
such fee as actually paid to any public official or agency of the county or
State for such purpose.
(b) Late Fees. -
(1) A licensee may charge a late payment charge for any payment which remains past due for 10 days or more after the due date.
(2) No licensee may charge a late payment charge:
a. For loans made pursuant to G.S. 53-173, greater than ten dollars ($10.00).
b. For loans made pursuant to G.S. 53-176, greater than fifteen dollars ($15.00).
c. More than once with respect to a single late payment.
(c) Third-Party Payment Fees. - The licensee may collect any actual charges paid by the licensee related to payments submitted by the borrower or at the borrower's request through electronic or other means not affiliated with the licensee.
(d) Deferral Charges. - A licensee may, by agreement with the borrower, collect a deferral charge and defer the due date of all or any part of one or more installments under an existing loan contract as permitted in the provisions of G.S. 25A-30."
SECTION 6. G.S. 53-179 reads as rewritten:
"§ 53-179. Multiple-office loan limitations.
A licensee shall not grant a loan in one office to any
borrower who already has a loan in another office operated by the same entity
or by an affiliate, parent, subsidiary or under the same ownership, management
or control, whether partial or complete. This section shall apply to intrastate
and interstate operations. A licensee shall take every reasonable precaution to
prevent granting loans in violation of this section. Such Subject to
the limitation contained in G.S. 53-173(g)(4), loans granted
inadvertently resulting in a total liability of three thousand dollars ($3,000)
or less, shall be adjusted to the rates applicable under the Article to a
single loan of equivalent amount, and when the total liability on such loans is
in excess of three thousand dollars ($3,000), interest shall be adjusted to
simple interest at eight percent (8%) per annum on the entire obligation."
SECTION 7. This act becomes effective October 1, 2011.