WEST virginia legislature
2019 regular session
House Bill 3061
By Delegates Nelson, Criss, Westfall, Skaff and Harman
[Introduced February 12,
to the Committee on Banking and Insurance then the Judiciary.]
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 the person
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
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
$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
$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 debt during such 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 subdivisions (a) and (b) of this subsection, 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 subsections (2) and (4) of this section, a
regulated consumer lender may on a loan not secured by real estate of
$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.