WEST virginia legislature
2018 regular session
Introduced
Senate Bill 398
By Senators Gaunch, Cline, and Plymale
[Introduced
January 26, 2018; Referred
to the Committee on Banking and Insurance]
A BILL to amend and reenact §46A-4-101 and §46A-4-107 of the Code of West Virginia, 1931, as amended, all relating to requirements for making consumer loans in West Virginia; modifying the authority to make regulated consumer loans; providing that a person must first obtain a license from the Commissioner of Banking authorizing him or her to make regulated consumer loans before engaging in the business of making regulated consumer loans, taking assignments of, or undertaking direct collection of, payments from or enforcement of rights against consumers arising from regulated consumer loans; and adjusting threshold amounts of consumer loans for which certain finance charges can be imposed.
Be it enacted by the Legislature of West Virginia:
ARTICLE 4. REGULATED CONSUMER LENDERS.
§46A-4-101. Authority to make loans.
Unless a person has first obtained a license from the
commissioner authorizing him or her to make regulated consumer loans, he
shall or she may not engage in the business of:
(1) Making regulated consumer loans; or
(2) Taking assignments of, and or
undertaking direct collection of, payments from or enforcement of rights
against consumers arising from regulated consumer loans.
§46A-4-107. Loan finance charge for regulated consumer lenders.
(1) With respect to a regulated consumer loan, including a revolving loan account, a regulated consumer lender may contract for and receive a loan finance charge not exceeding that permitted by this section.
(2) On a loan of $2,000 $3,500 or less which
is unsecured by real property, the loan finance charge, calculated according to
the actuarial method, may not exceed 31 percent per
year on the unpaid balance of the principal amount.
(3) On a loan of greater than $2,000 $3,500 to a
loan of $15,000 or which is secured by real property, the loan finance
charge, calculated according to the actuarial method, may not exceed 27 percent
per year on the unpaid balance of the principal amount: Provided, That
the loan finance charge on any loan greater than $10,000 $15,000
may not exceed 18 percent per year on the unpaid balance of the principal
amount. Loans made by regulated consumer lenders shall be subject to the
restrictions and supervision set forth in this article irrespective of their
rate of finance charges.
(4) Where the loan is nonrevolving and is greater than $2,000
$3,500, the permitted finance charge may include a charge of not more
than a total of two percent of the amount financed for any origination fee,
points or investigation fee: Provided, That where any loan, revolving or
nonrevolving, is secured by real estate, the permitted finance charge may
include a charge of not more than a total of five percent of the amount
financed for any origination fee, points or investigation fee. In any loan
secured by real estate, the charges may not be imposed again by the same or
affiliated lender in any refinancing of that loan made within 24 months thereof, unless these earlier charges
have been rebated by payment or credit to the consumer under the actuarial
method or the total of the earlier and proposed charges does not exceed five
percent of the amount financed. Charges permitted under this subsection shall
be included in the calculation of the loan finance charge. The financing of the
charges may be is permissible and may does not
constitute charging interest on interest. In a revolving home equity loan, the
amount of the credit line extended shall is, for purposes of this
subsection, constitute the amount financed. Other than herein provided,
no points, origination fee, investigation fee, or other similar prepaid finance
charges attributable to the lender or its affiliates may be levied. Except as
provided for by §46A-3-109 of this code, no additional charges may be made; nor
may any charge permitted by this section be assessed unless the loan is made.
To the extent that this section overrides the preemption on limiting points and
other charges on first lien residential mortgages contained in Section 501 of
the United States Depository Institutions Deregulation and Monetary Control Act
of 1980, the state law limitations contained in this section shall
apply. If the loan is precomputed:
(a) The loan finance charge may be calculated on the assumption that all scheduled payments will be made when due; and
(b) The effect of prepayment, refinancing, or consolidation is governed by the provisions on rebate upon prepayment, refinancing, or consolidation contained in §46A-3-111 of this code.
(5) For the purposes of this section, the term of a loan commences on the date the loan is made. Differences in the lengths of months are disregarded and a day may be counted as one thirtieth of a month. Subject to classifications and differentiations the licensee may reasonably establish, a part of a month in excess of 15 days may be treated as a full month if periods of 15 days or less are disregarded and if that procedure is not consistently used to obtain a greater yield than would otherwise be permitted.
(6) With respect to a revolving loan account:
(a) A charge may be made by a regulated consumer lender in each monthly billing cycle which is one twelfth of the maximum annual rates permitted by this section computed on an amount not exceeding the greatest of:
(i) The average daily balance of the debt; or
(ii) The balance of the debt at the beginning of the first
day of the billing cycle, less all payments on and credits to such the
debt during such the billing cycle and excluding all additional
borrowings during the billing cycle.
For the purpose of this subdivision, a billing cycle is monthly if the billing statement dates are on the same day each month or do not vary by more than four days therefrom.
(b) If the billing cycle is not monthly, the maximum loan finance charge which may be made by a regulated consumer lender is that percentage which bears the same relation to an applicable monthly percentage as the number of days in the billing cycle bears to 30.
(c) Notwithstanding §46A-4-107(6)(a) and §46A-4-107(6)(b) of this code, if there is an unpaid balance on the date as of which the loan finance charge is applied, the licensee may contract for and receive a charge not exceeding 50 cents if the billing cycle is monthly or longer or the pro rata part of 50 cents which bears the same relation to 50 cents as the number of days in the billing cycle bears to 30 if the billing cycle is shorter than monthly, but no charge may be made pursuant to this subdivision if the lender has made an annual charge for the same period as permitted by the provisions on additional charges.
(7) As an alternative to the loan finance charges allowed
by §46A-4-107(2) and §46A-4-107(4) of this code, a regulated consumer lender
may, on a loan not secured by real estate of $2,000 $3,500 or
less, contract for and receive interest at a rate of up to 31 percent per year on the unpaid balance of
the principal amount, together with a nonrefundable loan processing fee of not
more than two percent of the amount financed: Provided, That no other
finance charges are imposed on the loan. The processing fee permitted under
this subsection shall be included in the calculation of the loan finance charge
and the financing of the fee shall be permissible and may not constitute
charging interest on interest.
(8) Notwithstanding any contrary provision in this section, a licensed regulated consumer lender who is the assignee of a nonrevolving consumer loan unsecured by real property located in this state, which loan contract was applied for by the consumer when he or she was in another state, and which was executed and had its proceeds distributed in that other state, may collect, receive and enforce the loan finance charge and other charges, including late fees, provided in the contract under the laws of the state where executed: Provided, That the consumer was not induced by the assignee or its in-state affiliates to apply and obtain the loan from an out-of-state source affiliated with the assignee in an effort to evade the consumer protections afforded by this chapter. Such charges may not be considered to be usurious or in violation of the provisions of this chapter or any other provisions of this code.
NOTE: The purpose of this bill is to adjust limits on consumer loans in West Virginia for which certain finance charges may be imposed and clarify that a person must first obtain a license from the Division of Financial Institutions before engaging in the business of consumer loans.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.