Senate Bill No. 366
(By Senators Manchin, Helmick, Blatnik, Chafin, Craigo, Dittmar,
Sharpe, Wagner, Wiedebusch, Wooton, Kimble, Scott and Yoder.)
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[Originating in the Committee on Banking and Insurance;
reported February 5, 1996.]
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A BILL to repeal article seven, chapter thirty-one of the code of
West Virginia, one thousand nine hundred thirty-one, as
amended; to amend and reenact sections two, five and six,
article one, chapter thirty-one-a of said code; to amend and
reenact sections four, five and eight, article two of said
chapter; to amend and reenact sections fourteen and
twenty-two, article four of said chapter; to amend and reenact
section two, article seven of said chapter; to amend article
eight of said chapter by adding thereto a new section,
designated section eight-a; to amend and reenact section
twelve-a of said article; to amend and reenact sections one
hundred two and one hundred three, article one, chapter
forty-six-a of said code; to amend and reenact sections one hundred four and one hundred eleven, article three of said
chapter; to amend and reenact sections one hundred one, one
hundred two, one hundred three, one hundred four, one hundred
five, one hundred seven, one hundred eight, one hundred nine,
one hundred ten, one hundred eleven, one hundred twelve and
one hundred thirteen, article four of said chapter; to further
amend said article by adding thereto a new section, designated
section one hundred ten-a; to amend and reenact sections one
hundred one and one hundred three, article five of said
chapter; to amend and reenact sections one hundred three and
one hundred fifteen, article seven of said chapter; to amend
and reenact section one hundred one, article eight of said
chapter; and to amend and reenact section five-d, article six,
chapter forty-seven of said code, all relating to the
elimination of separate licensing requirements for supervised
lenders and industrial loan companies; limiting the charging
points, loan origination fees, loan investigation fees,
similar charges on certain loans and consumer credit
transactions and the calculation for rebating such charges
upon prepayment; and clarifying the treatment of confidential
banking records.
Be it enacted by the Legislature of West Virginia:
That article seven, chapter thirty-one of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
repealed; that sections two, five and six, article one, chapter
thirty-one-a of said code be amended and reenacted; that sections
four, five and eight, article two of said chapter be amended and
reenacted; that sections fourteen and twenty-two, article four of
said chapter be amended and reenacted; that section two, article
seven of said chapter be amended and reenacted; that article eight
be amended by adding thereto a new section, designated section
eight-a; that section twelve-a of said article be amended and
reenacted; that sections one hundred two and one hundred three,
article one, chapter forty-six-a of said code be amended and
reenacted; that sections one hundred four and one hundred eleven,
article three of said chapter be amended and reenacted; that
sections one hundred one, one hundred two, one hundred three, one
hundred four, one hundred five, one hundred seven, one hundred
eight, one hundred nine, one hundred ten, one hundred eleven, one
hundred twelve and one hundred thirteen, article four of said
chapter be amended and reenacted; that said article be further
amended by adding thereto a new section, designated section one
hundred ten-a; that sections one hundred one and one hundred three,
article five of said chapter be amended and reenacted; that sections one hundred three and one hundred fifteen, article seven
of said chapter be amended and reenacted; that section one hundred
one, article eight of said chapter be amended and reenacted; and
that section five-d, article six, chapter forty-seven of said code
be amended and reenacted, all to read as follows:
CHAPTER 31A. BANKS AND BANKING.
ARTICLE 1. GENERAL PROVISIONS AND DEFINITIONS.
§31A-1-2. Definitions.
As used in this chapter, unless the context in which used
plainly requires a different meaning:
(a) The word "action", in the sense of a judicial proceeding,
means any proceeding in a court of competent jurisdiction in which
rights are adjudicated and determined and shall embrace and include
recoupment, counterclaim, setoff and other related, similar and
summary proceedings;
(b) The words "bank" and "banking institution" mean a
corporation heretofore or hereafter chartered to conduct a banking
business under the laws of West Virginia or an association
heretofore or hereafter authorized to conduct a banking business in
West Virginia under the laws of the United States and having its
principal office in this state and shall embrace and include a
savings bank, savings and loan association, trust company or an institution combining banking and trust company facilities,
functions and services so chartered or authorized to conduct such
business in this state
, and shall include industrial banks
authorized by article seven, chapter thirty-one of this code,
subject to the limitations therein imposed on such industrial banks
and further subject to the limitations imposed thereon in this
article;
(c) The words "bankers' bank" mean a banking institution,
insured by the Federal Deposit Insurance Corporation, the stock of
which is owned exclusively by banks and other depository
institutions, and such banking institution and all subsidiaries
thereof are engaged exclusively in providing services for banks and
other depository institutions and their officers, directors and
employees;
(d) The term "banking business" means the functions, services
and activities contained, detailed and embraced in sections
thirteen and fourteen, article four of this chapter, and as
elsewhere defined by law;
(e) The word "board" means the West Virginia board of banking
and financial institutions;
(f) The words "branch bank" mean an office or other place at
which a bank performs any or all banking business. For purposes of this chapter, a branch bank does not include:
(1) A bank's principal place of business;
(2) Any customer bank communication terminals installed and
operated pursuant to section twelve-b, article eight of this
chapter; and
(3) Any loan origination office authorized by section twelve-
c, article eight of this chapter;
(g) The words "commissioner" or "commissioner of banking" mean
the commissioner of banking of West Virginia;
(h) The word "community" means a city, town or other
incorporated area, or, where not so incorporated, a trading area;
(i) The word "department" means the department of banking of
West Virginia;
(j) The words "deputy commissioner" or "deputy commissioner of
banking" mean the deputy commissioner of banking of West Virginia;
(k) The word "fiduciary" means any trustee, agent, executor,
administrator, curator, committee, guardian or conservator, special
commissioner, receiver, trustee in bankruptcy, assignee for
creditors, or any holder of a similar position of trust or
responsibility;
(l) The words "financial institutions" mean banks, building
and loan associations,
industrial banks, industrial loan companies, supervised lenders regulated consumer lenders, credit unions and
all other similar institutions, whether persons, firms or
corporations, which are by law under the jurisdiction and
supervision of the commissioner of banking;
(m) The word "officer" when referring to any financial
institution, means any person designated as such in the bylaws and
includes, whether or not so designated, any executive officer, the
chairman of the board of directors, the chairman of the executive
committee, and any trust officer, assistant vice president,
assistant treasurer, assistant secretary, assistant trust officer,
assistant cashier, assistant comptroller, or any other person who
performs the duties appropriate to those offices, and the terms
"executive officer" as herein used, when referring to banking
institutions, mean an officer of a bank whose duties involve
regular, active and substantial participation in the daily
operations of such institution and who, by virtue of his position,
has both a voice in the formulation of the policy of the bank and
responsibility for implementation of the policy, such
responsibility of and functions performed by the individual, and
not his title or office, being determinative of whether he is an
"executive officer";
(n) The words "person" or "persons" mean any individual, partnership, society, association, firm, institution, company,
public or private corporation, state, governmental agency, bureau,
department, division or instrumentality, political subdivision,
county commission, municipality, trust, syndicate, estate or any
other legal entity whatsoever, formed, created or existing under
the laws of this state or any other jurisdiction;
(o) "Regulated consumer lender" means a person authorized to
make or take assignments of regulated consumer loans pursuant to
chapter forty-six-a of this code;
(o) (p) The words "safe-deposit box" mean a safe-deposit box,
vault or other safe-deposit receptacle maintained by a lessor bank,
and the rules relating thereto apply to property or documents kept
therein in the bank's vault under the joint control of lessor and
lessee;
(p) (q) The words "state bank" or "state banking institution"
mean a bank chartered under the laws of West Virginia, as
distinguished from a national banking association; and
(q) (r) The words "trust business" mean the functions,
services and activities contained, detailed and embraced in section
fourteen, article four of this chapter, and as elsewhere defined by
law and as may be included within the meaning of the term "banking
business."
§31A-1-5. Lending and investing powers and authority of
fiduciaries, financial institutions, governmental entities and
other persons.
The state of West Virginia, counties, municipalities,
political subdivisions and agencies and instrumentalities of any of
them, fiduciaries, building and loan associations,
industrial loan
companies regulated consumer lenders, insurance companies,
fraternal benefit societies, and other persons lawfully engaging in
the lending and investing business and services shall have and are
hereby authorized and empowered to exercise the same lawful rights
and privileges as are banking institutions under provisions of
sections twenty-seven, twenty-eight and twenty-nine, article four
of this chapter.
§31A-1-6. Deposit insurance required for banking and other
lending depository institutions.
All
building and loan associations established pursuant to
article six, chapter thirty-one, industrial banks established
pursuant to article seven, chapter thirty-one, credit unions
established pursuant to article ten, chapter thirty-one,
members of
the savings and loan association of the state of West Virginia
established pursuant to article eleven, chapter thirty-one and all
banking institutions governed by the provisions of this chapter shall qualify for and obtain federal deposit insurance, or shall
obtain insurance as approved by the commissioner of banking in an
amount equal to that provided by the federal deposit insurance
corporation for eligible institutions.
Each such institution which fails to obtain deposit insurance
as required herein by the first day of July, one thousand nine
hundred seventy-eight shall be prohibited from conducting any
business as a lending institution until such insurance is obtained,
except that the commissioner may grant continuances for compliance
with this section for any institution showing good cause for such
a continuance.
ARTICLE 2. DIVISION OF BANKING.
§31A-2-4. Jurisdiction of commissioner; powers, etc., of
department transferred to commissioner; powers and duties of
commissioner.
(a) Subject to the powers vested in the board by article three
of this chapter, the commissioner shall have supervision and
jurisdiction over state banks (other than those banks excepted by
the provisions of section eleven of this article),
industrial loan
companies regulated consumer lenders, building and loan
associations,
supervised lenders, credit unions, and all other
persons now or hereafter made subject to his supervision or jurisdiction. All powers, duties, rights and privileges vested in
the department are hereby vested in the commissioner. He shall be
the chief executive officer of the department of banking and shall
be responsible for the department's organization, services and
personnel, and for the orderly and efficient administration,
enforcement and execution of the provisions of this chapter and all
laws vesting authority or powers in or prescribing duties or
functions for the department or the commissioner.
(b) The commissioner shall:
(1) Maintain the office for the department at the state
capitol, and there keep a complete record of all the department's
transactions, of the financial conditions of all financial
institutions and such records of the activities of other persons as
the commissioner may deem important. Notwithstanding any other
provision of this code, heretofore or hereafter enacted, the
records relating to the financial condition of any financial
institution and any information contained therein shall be
confidential for the use of the commissioner and authorized
personnel of the department of banking. No person shall divulge
any information contained in any such records except
as hereafter
authorized in response to a valid subpoena or subpoena duces tecum
issued pursuant to law
in a criminal proceeding or in a civil enforcement action brought by state or federal regulatory
authorities.
Subpoenas shall first be directed to the commissioner,
who shall authorize disclosure of relevant records and information
therefrom upon a determination of good cause, imposing terms and
conditions as are deemed necessary to protect the confidential
nature of the records, the financial integrity of the financial
institution or the person to whom the records relate, and the
legitimate privacy interests of any individual named in such
records. Conformity with federal procedures shall be sought where
the institution maintains federal deposit insurance. The
commissioner shall have and may exercise reasonable discretion as
to the time, manner and extent the other records in his office and
the information contained therein shall be available for public
examination.
(2) Require all financial institutions to comply with all the
provisions of this chapter and other applicable laws, or any rule
and regulation promulgated or order issued thereunder.
(3) Investigate all alleged violations of this chapter and all
other laws which he is required to enforce and of any rule and
regulation promulgated or order issued thereunder.
(c) In addition to all other authority and powers vested in
the commissioner by provisions of this chapter and other applicable laws, the commissioner is authorized and empowered:
(1) To provide for the organization of the department and the
procedures and practices thereof and implement the same by the
promulgation of rules
and regulations and forms as appropriate,
which rules
and regulations shall be promulgated in accordance with
article three, chapter twenty-nine-a of this code;
(2) Employ, direct, discipline, discharge and establish
qualifications and duties for all personnel for the department,
including, but not limited to, examiners, assistant examiners,
conservators and receivers, to establish the amount and condition
of bonds for such thereof as he deems appropriate and to pay the
premiums thereon, and if he so elects, to have all such personnel
subject to and under the classified service of the state personnel
department;
(3) To cooperate with organizations, agencies, committees and
other representatives of financial institutions of the state in
connection with schools, seminars, conferences and other meetings
to improve the responsibilities, services and stability of the
financial institutions;
(4) In addition to the examinations required by section six of
this article, to inspect, examine and audit the books, records,
accounts and papers of all financial institutions at such times as circumstances in his opinion may warrant;
(5) To call for and require all such data, reports and
information from financial institutions under his jurisdiction, at
such times and in such form, content and detail, deemed necessary
by him in the faithful discharge of his duties and responsibilities
in the supervision of the financial institutions;
(6) Subject to the powers vested in the board by article three
of this chapter, to supervise the location, organization, practices
and procedures of financial institutions and, without limitation on
the general powers of supervision thereof, to require financial
institutions to:
(A) Maintain their accounts consistent with such regulations
as he may prescribe and in accordance with generally accepted
accounting practices;
(B) Observe methods and standards which he may prescribe for
determining the value of various types of assets;
(C) Charge off the whole or any part of an asset which at the
time of his action could not lawfully be acquired;
(D) Write down an asset to its market value;
(E) Record or file writings creating or evidencing liens or
other interests in property;
(F) Obtain financial statements from prospective and existing borrowers;
(G) Obtain insurance against damage and loss to real estate
and personal property taken as security;
(H) Maintain adequate insurance against such other risks as he
may deem and determine to be necessary and appropriate for the
protection of depositors and the public;
(I) Maintain an adequate fidelity bond or bonds on its
officers and employees;
(J) Take such other action as may in his judgment be required
of the institution in order to maintain its stability, integrity
and security as required by law and all rules
and regulations
promulgated by him; and
(K) Verify any or all asset or liability accounts.
(7) Subject to the powers vested in the board by article three
of this chapter, to receive from any person or persons and to
consider any request, petition or application relating to the
organization, location, conduct, services, policies and procedures
of any financial institution and to act thereupon in accordance
with any provisions of law applicable thereto;
(8) In connection with the investigations required by
subdivision (3), subsection (b) of this section, to issue subpoenas
and subpoenas duces tecum, administer oaths, examine persons under oath, and hold and conduct hearings, any such subpoenas or
subpoenas duces tecum to be issued, served and enforced in the
manner provided in section one, article five, chapter twenty-nine-a
of this code. Any person appearing and testifying at such a
hearing may be accompanied by an attorney employed by him;
(9) To issue declaratory rulings in accordance with the
provisions of section one, article four, chapter twenty-nine-a of
this code;
(10) To study and survey the location, size and services of
financial institutions, the geographic, industrial, economic and
population factors affecting the agricultural, commercial and
social life of the state, and the needs for reducing, expanding or
otherwise modifying the services and facilities of financial
institutions in the various parts of the state, and to compile and
keep current data thereon to aid and guide him in the
administration of the duties of his office;
(11) To implement all of the provisions of this chapter
(except the provisions of article three) and all other laws which
he is empowered to administer and enforce by the promulgation of
rules
and regulations in accordance with the provisions of article
three, chapter twenty-nine-a of this code;
(12) To implement the provisions of chapter forty-six-a of this code applicable to consumer loans and consumer credit sales by
the promulgation of rules
and regulations in accordance with the
provisions of article three, chapter twenty-nine-a of this code so
long as said rules
and regulations do not conflict with any rules
and regulations promulgated by the state's attorney general;
(13) To foster and encourage a working relationship between
the department of banking and financial institutions, credit,
consumer, mercantile and other commercial and finance groups and
interests in the state in order to make current appraisals of the
quality, stability and availability of the services and facilities
of financial institutions;
(14) To provide to financial institutions and the public
copies of the West Virginia statutes relating to financial
institutions, suggested drafts of bylaws commonly used by financial
institutions, and such other forms and printed materials as may be
found by him to be helpful to financial institutions, their
shareholders, depositors and patrons, and to make reasonable
charges therefor;
(15) To delegate the powers and duties of his office, other
than the powers and duties in this subsection hereinafter excepted,
to qualified department personnel, who shall act under the
direction and supervision of the commissioner and for whose acts he shall be responsible, but the commissioner may delegate to the
deputy commissioner of banking and to no other department personnel
the following powers, duties and responsibilities, all of which are
hereby granted to and vested in the commissioner and for all of
which the commissioner shall likewise be responsible:
(A) To order any person to cease violating any provision or
provisions of this chapter or other applicable law or any rule
and
regulation promulgated or order issued thereunder;
(B) To order any person to cease engaging in any unsound
practice or procedure which may detrimentally affect any financial
institution or depositor thereof; and
(C) To revoke the certificate of authority, permit or license
of any financial institution except a banking institution in
accordance with the provisions of section thirteen of this article;
(16) To receive from state banking institutions applications
to change the locations of their principal offices and to approve
or disapprove such applications; and
(17) To take such other action as he may deem necessary to
enforce and administer the provisions of this chapter (except the
provisions of article three) and all other laws which he is
empowered to administer and enforce, and to apply to any court of
competent jurisdiction for appropriate orders, writs, processes and remedies.
§31A-2-5. Certificate or license to engage in business; filing of
amendments to charter, bylaws and foreign statutes.
(a) No person shall engage or continue in the business of a
financial institution in this state without a license or
certificate to do so issued in accordance with this section, or
other applicable law, which license or certificate remains
unsuspended, unexpired and unrevoked except that a corporation
which proposes to apply for such license or certificate may secure
its charter, adopt bylaws, elect its directors and officers and
perfect its organization.
(b) Application for such license or certificate shall be upon
such forms and contain such information as the commissioner may
prescribe. In connection with such applications every corporate
financial institution shall file a certified copy of its charter
and bylaws, a statement as to the amount of capital that has been
subscribed and paid in and a statement of its financial condition
duly verified under oath by its president or vice president and its
cashier or secretary as the case may be and every financial
institution other than a corporation shall file a verified
statement of its financial condition.
(c) If the application be that of a banking institution, the commissioner of banking shall examine the information, documents
and statements submitted and, if he finds that such banking
institution has adopted bylaws which provide practical, safe, just
and equitable rules and methods for the management of its business
and it has complied in all respects with the provisions of this
chapter and other applicable laws, he shall issue to it a
certificate or license permitting it to engage in business. If the
application be that of a financial institution other than a banking
institution, the commissioner of banking shall examine the
information, documents and statements submitted, and, if he finds
that such financial institution has adequate resources for the
proposed business and has provided practical, safe, just and
equitable rules and methods for the management of its business, and
it has complied in all respects with the provisions of this chapter
and other applicable laws, and that the public convenience and
advantage will be promoted by the issuance of a certificate or
license thereto, he shall issue to it a certificate or license
permitting it to engage in business
: Provided, That any supervised
lender which is operating in good standing in accordance with the
provisions of article four, chapter forty-six-a shall be presumed
to have established that the public convenience and advantage will
be promoted in regard to its application for a certificate of authority to operate as an industrial loan company as defined in
article seven, chapter thirty-one of this code in the same location
for which it is licensed as a supervised lender. Such certificate
or license shall be preserved and
the original or copy thereof
displayed in
all the
place places of business of such banking or
other financial institution
located in this state.
(d) In addition to the requirements of subsection (b) of this
section, every foreign corporation applying for a license or
certificate to engage in the business of a financial institution in
this state shall file with the commissioner of banking a copy of
the laws of the jurisdiction under which it is organized which
pertain to its organization and powers and the conduct of its
business. The commissioner shall examine the information, documents
and statements submitted by such foreign corporation and if he
finds that they provide practical, safe, just and equitable rules
and methods for the management of the business of the corporation,
that it has adequate resources for the proposed business and it has
complied in all respects with the provisions of this chapter and
other applicable laws, and that the public convenience and
advantage will be promoted by the issuance of a license or
certificate thereto, he shall issue to such corporation a
certificate or license permitting it to engage in business in this state, which certificate or license shall authorize such
corporation to engage in the business of the type of financial
institution specified therein, until the thirtieth day of the
following June. Thereafter a new certificate or license shall be
secured annually by any such foreign corporation. The fee for the
original and each additional license or certificate issued to a
foreign corporation shall be one hundred dollars, unless otherwise
provided by statute. A verified statement of the financial
condition of every such foreign corporation shall be filed with the
commissioner before the issuance of each annual certificate or
license. Such certificate or license shall be preserved and
displayed in the place of business of such corporation.
(e) No amendment of the charter or bylaws of any domestic or
foreign corporation engaging in business in this state as a
financial institution shall become effective until the proposed
change shall have been submitted to and approved by the
commissioner of banking; but, if the commissioner does not
disapprove such proposed change within twenty days after it is
received by him, it shall be deemed to have been approved.
A
certified copy of the amendment of any statute of another state
governing such a foreign corporation shall be filed with the
commissioner of banking by such foreign corporation within thirty days after such amendment becomes effective in such other state.
(f) Nothing contained in this code shall authorize any person
to engage in the banking business in this state except corporations
chartered to conduct a banking business under the laws of West
Virginia and which hold a license or certificate to do so issued
under this section or associations authorized to conduct a banking
business in West Virginia under the laws of the United States and
having their principal place of business in this state.
§31A-2-8. Commissioner's assessments and examination fund;
assessments, costs and expenses of examinations; collection.
(a) All moneys collected by the commissioner from financial
institutions and bank holding companies for assessments,
examination fees, investigation fees or other necessary expenses
incurred by the commissioner in administering such duties shall be
paid to the commissioner and paid by the commissioner to the
treasurer of the state to the credit of a special revenue account
to be known as the "Commissioner's Assessment and Examination Fund"
which is hereby established. The assessments and fees paid into
this account shall be appropriated by law and used to pay the costs
and expenses of the division of banking and all incidental costs
and expenses necessary for its operations. At the end of each
fiscal year, if the fund contains a sum of money in excess of twenty percent of the appropriated budget of the division of
banking, the amount of the excess shall be transferred to the
general revenue fund of the state. The Legislature may appropriate
money to start the special revenue account.
(b) The commissioner of banking shall charge and collect from
each state banking institution or other financial institution or
bank holding company and pay into a special revenue account in the
state treasury for the division of banking assessments as follows:
(1) For each state banking institution, a semiannual
assessment payable on the first day of January and the first day of
July, each year, computed upon the total assets of the banking
institution shown on the report of condition of the banking
institution filed as of the preceding thirtieth day of June and the
thirty-first day of December respectively as follows:
Total Assets
But NotOf Excess
OverOverThisOver
MillionMillionAmountPlusMillion
$0$2$0.0016450200
2203,290.0002056282
201006,991.00016450220
10020020,151.000106926100
2001,00030,844.000090476200
1,0002,000103,225.0000740261,000
2,0006,000177,251.0000658012,000
6,00020,000440,454.0000559886,000
20,00040,0001,224,292.00005267020,000
(2) For each
industrial loan company regulated consumer
lender an annual assessment
payable on the first day of July, each
year, computed upon the total outstanding gross loan balances and
installment sales contract balances net of unearned interest shown
on the report of condition of the regulated consumer lender as of
the preceding thirty-first day of December respectively as follows:
as provided for in section thirteen, article seven, chapter thirty-
one of this code, as follows:
Total Assets
But Not This Of Excess
Over Over Amount Plus Over
$ 0 $ 1,000,000 800 - -
1,000,000 5,000,000 800 .000400 1,000,000
5,000,000 10,000,000 2,400 .000200 5,000,000
10,000,000 - 4,200 .000100 10,000,000
If
an industrial loan company's a regulated consumer lender's records or documents are maintained in more than one
location in this state, then eight hundred dollars may be added to
the assessment for each additional location.
(3) For each credit union, an annual assessment as provided
for in section six, article ten, chapter thirty-one of this code as
follows:
Total Assets
Over But Not This Of Excess
Over Amount Plus Over
$ 0 $ 100,000 100 - -
100,000 500,000 300 - -
500,000 1,000,000 500 - -
1,000,000 5,000,000 500 .000400 1,000,000
5,000,000 10,000,000 2,100 .000200 5,000,000
10,000,000 - 3,100 .000100 10,000,000
(4) For each bank holding company, an annual assessment as
provided for in section five, article eight-a of this chapter. The
annual assessment shall not exceed ten dollars per million dollars
in deposits rounded off to the nearest million dollars.
(5) For each supervised lender, an annual assessment as
provided for in section one hundred five, article four, chapter forty-six-a of this code. Such annual assessment shall not exceed
one hundred dollars on the first twenty-five thousand dollars of
total outstanding loan balances and installment sales contract
balances less unearned finance charges plus forty cents per
thousand dollars on the remaining outstanding balances as of the
preceding calendar year-end.
(c) The commissioner shall each December and each June
prepare and send to each state banking institution a statement of
the amount of the assessment due. The commissioner shall, further,
each June, prepare and send to each
industrial loan company,
regulated consumer lender and each state credit union
and each
supervised lender a statement of the amount of the assessment due.
The commissioner shall, annually, during the month of January,
prepare and send to each bank holding company a statement of the
amount of the assessment due.
Assessments shall be prescribed annually, not later than the
fifteenth day of June, by written order of the commissioner, but
shall not exceed the maximums as set forth in subsection (b) of
this section. In setting the assessments the primary consideration
shall be the amount appropriated by the Legislature for the
division of banking for the corresponding annual period.
Reasonable notice of the assessments shall be made to all interested parties. All orders of the commissioner for the purpose
of setting assessments are not subject to the provisions of the
West Virginia administrative procedures act, under chapter
twenty-nine-a of this code.
(d) For making an examination within the state of any other
financial institution for which assessments are not provided by
this code, the commissioner of banking shall charge and collect
from such other financial institution and pay into the special
revenue account for the division of banking the actual and
necessary costs and expenses incurred in connection therewith, as
fixed and determined by the commissioner.
(e) If the records of an institution are located outside
this state, the institution at its option shall make them available
to the commissioner at a convenient location within the state, or
pay the reasonable and necessary expenses for the commissioner or
his or her representatives to examine them at the place where they
are maintained. The commissioner may designate representatives,
including comparable officials of the state in which the records
are located, to inspect them on his or her behalf.
(f) The commissioner of banking may maintain an action for
the recovery of all assessments, costs and expenses in any court of
competent jurisdiction.
ARTICLE 4. BANKING INSTITUTIONS AND SERVICES GENERALLY.
§31A-4-14. Trust powers of banking institutions.
Every state banking institution
, except industrial banks
created and organized pursuant to the provisions of article seven,
chapter thirty-one of this code, which files the reports required
in the following section and which is not otherwise prohibited by
the commissioner or federal bank regulators from doing so, shall
have and exercise the following powers:
(a) All the powers, rights and privileges of any state
banking institution;
(b) To act as trustee, assignee, special commissioner,
general or special receiver, guardian, executor, administrator,
committee, agent, curator, or in any other fiduciary capacity, and
to take, assume, accept and execute trusts of every description not
inconsistent with the constitution and laws of the United States of
America or of this state; and to receive, hold, manage and apply
any sinking fund on the terms and for the purposes specified in the
instrument creating such fund;
(c) To act as registrar, transfer agent or dividend or
coupon paying agent for any corporation;
(d) To make, hold and dispose of investments and establish
common trust funds, and account therefor, pursuant to the provisions of chapter forty-four of this code;
(e) To purchase and sell and take charge of and receive the
rents, issues and profits of any real estate for other persons or
corporations;
(f) To act as trustee or agent in any collateral trust and
in order to secure the payment of any obligations of any person,
firm, private corporation, public corporation, public body or
public agency to receive and hold in trust any items of personal
property (including, without limitation, notes, bonds, debentures,
obligations and certificates for shares of stock) with the right in
case of default to sell and dispose of such personal property and
to collect, settle and adjust any obligations for the payment of
money, and at any sale of such personal property held by it, to
purchase the same for the benefit of all or any of the holders of
the obligations, to secure the payment of which such items of
personal property were pledged and delivered to the trustee or
agent. Any such sale may be made without any proceedings in any
court, and at such times and upon such terms as may be specified in
the instrument or instruments creating the trust, or, in the
absence of any specification of terms, at such time and upon such
terms as the trustee shall deem reasonable; and
(g) To do and perform any act or thing requisite or necessary in, or incidental to, the exercise of the general powers
herein set forth.
All national banks having their principal offices in this
state which have been, or hereafter may be, authorized under the
laws of the United States to act as trustee and in other fiduciary
capacities in the state of West Virginia shall have all the rights,
powers, privileges and immunities conferred hereunder, provided
they comply with the requirements hereof.
§31A-4-22. Reserves required of banking institutions; reports;
penalties.
Each state banking institution
, except industrial banks
created and organized pursuant to the provisions of article seven,
chapter thirty-one of this code, shall at all times maintain on
hand as a reserve in lawful money of the United States of America
an amount equal to at least seven percent of the aggregate of all
of its deposits which are subject to withdrawal on demand and three
percent of its time deposits. Whenever the commissioner of banking
shall determine that the maintenance of sound banking practices or
the prevention of injurious credit expansion or contraction makes
such action advisable, he may by rule
or regulation from time to
time change such requirements as to reserves against demand or time
deposits, or both, but the reserves so prescribed shall in no event be less than those specified in this section nor more than twice
those specified. Whenever such reserve shall fall below that
required, the institution shall not thereafter make any new loan or
investment until the required reserve shall be restored. For the
purpose of computing such reserve, all deposits requiring notice of
thirty days or more for withdrawal and time certificates of deposit
and Christmas savings shall be deemed time deposits, and all
checking accounts, certified checks, cashier's checks, demand
certificates of deposit and balances due other banks shall be
deemed demand deposits. But in lieu of lawful money on hand, four
fifths of such reserve may consist of balances payable on demand
from any national or state bank doing business in this state or
solvent banking institutions in other states. The reserve balances
required herein shall be computed on the basis of average daily net
deposit balances and average daily currency and coin during
biweekly periods. The required reserve balance of each bank shall
be computed at the close of business each day based upon its net
deposit balances and currency and coin at the opening of business
on the same day. The biweekly period shall end at the close of
business on days to be fixed by the commissioner in his promulgated
rules
and regulations. When, however, the reserve computation
period ends with a nonbusiness day, or two or more consecutive nonbusiness days, such nonbusiness day or days may, at the option
of the banking institution, and whether or not it had a deficiency
in reserve balances in such computation period, be included in the
next biweekly computation period.
The commissioner shall, by rule, require regular reports
from such banking institutions, which reports shall be submitted at
such times and contain such information as will enable the
commissioner to adequately supervise the maintenance of reserves
under this section. Penalties for any deficiencies in the required
reserves of any banking institution shall be assessed monthly by
the commissioner on the basis of average daily deficiencies during
each of the computation periods ending in the preceding calendar
month. Such penalties shall be assessed at a rate of two percent
per annum above the lowest rate applicable to borrowings by member
banks from the federal reserve bank of the district in which such
deficient institution is located on the first day of the calendar
month in which the deficiencies occurred. Such penalties shall be
paid by the commissioner into the treasury of the state of West
Virginia and credited to the general fund.
Compliance on the part of any banking institution with the
reserve requirements of the Federal Reserve Act, as amended prior
to the thirty-first day of January, one thousand nine hundred eighty-one, shall be considered full compliance with the provisions
of this section. No such bank may be required to carry or maintain
a reserve other than such as required under terms of the Federal
Reserve Act, as amended prior to the thirty-first day of January,
one thousand nine hundred eighty-one.
ARTICLE 7. REGULATION OF FAILING FINANCIAL INSTITUTIONS.
§31A-7-2. Definitions.
As used in this article:
(a) "Commissioner" means the commissioner of banking of West
Virginia and any authorized deputy or employee thereof;
(b) "Federal law" means all the provisions of Title XII of
the United States Code and all rules and regulations promulgated
pursuant thereto;
(c) "Financial institution" means any bank, building and
loan association, industrial bank,
industrial loan company,
supervised lender, regulated consumer lender, credit union and any
other person, firm or corporation doing business under the
jurisdiction and supervision of the commissioner of banking of West
Virginia;
(d) A financial institution is "about to be insolvent" when
it would be unable to meet the demands of its depositors or to make
adequate provision for the timely payment of its depositors if it were immediately closed for the purpose of liquidation;
(e) A financial institution is "insolvent" when it is unable
to pay its debts to its depositors and other creditors in the
ordinary and usual course of business or when it is in a state of
balance sheet insolvency; and
(f) "Balance sheet insolvency" exists when the assets of a
financial institution are less than its liabilities, exclusive of
capital. For the purposes of ascertaining balance sheet
insolvency, assets shall be valued at their book value, unless the
commissioner of banking determines that the assets are insufficient
to meet liabilities within a reasonable time making probable the
liquidation of assets; and if any such determination is made, the
assets shall be valued at fair market value.
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL REVIEW;
UNLAWFUL ACTS; PENALTIES.
§31A-8-8a. Unauthorized disclosure of information from a financial
institution examination report.
Any person having a duty to the financial institution or to
a state agency to maintain the confidentiality of examination
reports by the division of banking, who willfully and knowingly
makes an unauthorized public disclosure of confidential information
or records from a state-chartered depository financial institution examination report shall be subject to suit by the commissioner or
attorney general for civil penalties of up to one thousand dollars:
Provided, That no such suit shall lie where the person was ordered
to make the disclosure by a court of competent jurisdiction, or
lawfully compelled to make the disclosure as part of a legislative
or executive agency investigation. Officials of the financial
institution or the commissioner may refer matters of possible
wrongdoing discovered by the examination which impact on the
institution's soundness or financial integrity, or which concern
possible criminal conduct to law enforcement officials or other
appropriate governmental regulatory agencies, including appropriate
state bar or ethics officials. Such referrals shall not constitute
public disclosure.
§31A-8-12a. Banking from mobile units prohibited; prohibition not
to include messenger services; limitation of messenger
services.
It is illegal for any banking institution, building and loan
association
industrial loan company or supervised lender or
regulated consumer lender to conduct its business in a facility
that is a mobile unit not permanently attached to the real estate
upon which it is located, except that such mobile units may be used
as temporary banking quarters pending construction of a permanent bank building on the same or adjacent property thereto if a charter
for said bank has previously been approved. This section shall not
be construed or interpreted to prohibit a financial institution
from providing messenger services to its customers by which items
are received by mail, armored car service or other courier or
delivery service for subsequent deposit:
Provided, That all such
messenger services are confined to the territorial boundaries of
the county in which the principal office of such financial
institution is located or within twenty-five miles of the principal
office of such financial institution.
CHAPTER 46A. WEST VIRGINIA CONSUMER CREDIT
AND PROTECTION ACT.
ARTICLE 1. SHORT TITLE, DEFINITIONS AND GENERAL PROVISIONS.
§46A-1-102. General definitions.
In addition to definitions appearing in subsequent articles,
in this chapter:
(1) "Actuarial method" means the method, defined by rules
adopted by the commissioner, of allocating payments made on a debt
between principal or amount financed and loan finance charge or
sales finance charge pursuant to which a payment is applied first
to the accumulated loan finance charge or sales finance charge and
the balance is applied to the unpaid principal or unpaid amount financed.
(2) "Agreement" means the bargain of the parties in fact as
found in their language or by implication from other circumstances
including course of dealing or usage of trade or course of
performance. A "consumer credit agreement" is an agreement where
credit is granted.
(3) "Agricultural purpose" means a purpose related to the
production, harvest, exhibition, marketing, transportation,
processing or manufacture of agricultural products by a natural
person who cultivates, plants, propagates or nurtures the
agricultural products. "Agricultural products" includes
agricultural, horticultural, viticultural and dairy products,
livestock, wildlife, poultry, bees, forest products, fish and
shellfish, and any products thereof, including processed and
manufactured products, and any and all products raised or produced
on farms and any processed or manufactured products thereof.
(4) "Amount financed" means the total of the following items
to the extent that payment is deferred:
(a) The cash price of the goods, services or interest in
land, less the amount of any down payment whether made in cash or
in property traded in;
(b) The amount actually paid or to be paid by the seller pursuant to an agreement with the buyer to discharge a security
interest in or a lien on property traded in; and
(c) If not included in the cash price:
(i) Any applicable sales, use, privilege, excise or
documentary stamp taxes;
(ii) Amounts actually paid or to be paid by the seller for
registration, certificate of title or license fees; and
(iii) Additional charges permitted by this chapter.
(5) "Average daily balance" in a billing cycle for which a
sales finance charge or loan finance charge is made is the sum of
the amount unpaid each day during that cycle divided by the number
of days in that cycle. The amount unpaid on a day is determined by
adding to the balance, if any, unpaid as of the beginning of that
day all purchases and other debits and deducting all payments and
other credits made or received as of that day.
(6) The "cash price" of goods, services or an interest in
land means the price at which the goods, services or interest in
land are offered for sale by the seller to cash buyers in the
ordinary course of business, and may include: (A) Applicable sales,
use, privilege and excise and documentary stamp taxes; (B) the cash
price of accessories or related services such as delivery,
installation, servicing, repairs, alterations and improvements; and (C) amounts actually paid or to be paid by the seller for
registration, certificate of title, or license fees.
(7) "Closing costs" with respect to a debt secured by an
interest in land include:
(a) Fees or premiums for title examination, title insurance
or similar purposes including surveys;
(b) Fees for preparation of a deed, deed of trust, mortgage,
settlement statement or other documents;
(c) Escrows for future payments of taxes and insurance;
(d) Official fees and fees for notarizing deeds and other
documents;
(e) Appraisal fees; and
(f) Credit reports.
(8) "Code" means the official code of West Virginia, one
thousand nine hundred thirty-one, as amended.
(9) "Commercial facsimile transmission" means the electronic
or telephonic transmission in the state to a facsimile device to
encourage a person to purchase goods, realty or services.
(10) "Commissioner" means the commissioner of banking of
West Virginia.
(11) "Conspicuous": A term or clause is conspicuous when it
is so written that a reasonable person against whom it is to operate ought to have noticed it. Whether a term or clause is
conspicuous or not is for decision by the court.
(12) "Consumer" means a natural person who incurs debt
pursuant to a consumer credit sale or a consumer loan.
(13) (a) Except as provided in paragraph (b), "consumer
credit sale" is a sale of goods, services or an interest in land in
which:
(i) Credit is granted either by a seller who regularly
engages as a seller in credit transactions of the same kind or
pursuant to a seller credit card;
(ii) The buyer is a person other than an organization;
(iii) The goods, services or interest in land are purchased
primarily for a personal, family, household or agricultural
purpose;
(iv) Either the debt is payable in installments or a sales
finance charge is made; and
(v) With respect to a sale of goods or services, the amount
financed does not exceed twenty-five thousand dollars.
(b) "Consumer credit sale" does not include a sale in which
the seller allows the buyer to purchase goods or services pursuant
to a lender credit card or similar arrangement.
(14) (a) "Consumer lease" means a lease of goods:
(i) Which a lessor regularly engaged in the business of
leasing makes to a person, other than an organization, who takes
under the lease primarily for a personal, family, household or
agricultural purpose;
(ii) In which the amount payable under the lease does not
exceed twenty-five thousand dollars; and
(iii) Which is for a term exceeding four months.
(b) "Consumer lease" does not include a lease made pursuant
to a lender credit card or similar arrangement.
(15) "Consumer loan" is a loan made by a person regularly
engaged in the business of making loans in which:
(a) The debtor is a person other than an organization;
(b) The debt is incurred primarily for a personal, family,
household or agricultural purpose;
(c) Either the debt is payable in installments or a loan
finance charge is made; and
(d) Either the principal does not exceed twenty-five
thousand dollars or the debt is secured by an interest in land.
(16) "Cosigner" means a natural person who assumes liability
for the obligation on a consumer credit sale or consumer loan
without receiving goods, services or money in return for the
obligation or, in the case of a revolving charge account or revolving loan account of a consumer, without receiving the
contractual right to obtain extensions of credit under the account.
The term cosigner includes any person whose signature is requested
as a condition to granting credit to a consumer or as a condition
for forbearance on collection of a consumer's obligation that is in
default. The term cosigner does not include a spouse whose
signature is required to
perfect a security interest. A person who
meets the definition in this paragraph is a "cosigner" whether or
not the person is designated as such on the credit obligation.
(17) "Credit" means the privilege granted by a creditor to
a debtor to defer payment of debt or to incur debt and defer its
payment.
(18) "Earnings" means compensation paid or payable to an
individual or for his account for personal services rendered or to
be rendered by him, whether denominated as wages, salary,
commission, bonus or otherwise, and includes periodic payments
pursuant to a pension, retirement or disability program.
(19) "Facsimile device" means a machine that receives and
copies reproductions or facsimiles of documents or photographs that
have been transmitted electronically or telephonically over
telecommunications lines.
(20) "Federal Consumer Credit Protection Act" means the "Consumer Credit Protection Act" (Public Law 90-321; 82 Stat. 146),
as amended, and includes regulations issued pursuant to that act.
(21) "Goods" includes goods not in existence at the time the
transaction is entered into and gift and merchandise certificates,
but excludes money, chattel paper, documents of title and
instruments.
(22) "Home solicitation sale" means a consumer credit sale
in excess of twenty-five dollars in which the buyer receives a
solicitation of the sale at a place other than the seller's
business establishment at a fixed location and the buyer's
agreement or offer to purchase is there given to the seller or a
person acting for the seller. The term does not include a sale
made pursuant to a preexisting open-end credit account with the
seller in existence for at least three months prior to the
transaction, a sale made pursuant to prior negotiations between the
parties at the seller's business establishment at a fixed location,
a sale of motor vehicles, mobile homes or farm equipment or a sale
which may be rescinded under the Federal Truth in Lending Act
(being Title I of the Federal Consumer Credit Protection Act). A
sale which would be a home solicitation sale if credit were
extended by the seller is a home solicitation sale although the
goods or services are paid for, in whole or in part, by a consumer loan in which the creditor is subject to claims and defenses
arising from the sale.
(23) Except as otherwise provided, "lender" includes an
assignee of the lender's right to payment but use of the term does
not in itself impose on an assignee any obligation of the lender.
(24) "Lender credit card or similar arrangement" means an
arrangement or loan agreement, other than a seller credit card,
pursuant to which a lender gives a debtor the privilege of using a
credit card, letter of credit, or other credit confirmation or
identification in transactions out of which debt arises:
(a) By the lender's honoring a draft or similar order for
the payment of money drawn or accepted by the consumer;
(b) By the lender's payment or agreement to pay the
consumer's obligations; or
(c) By the lender's purchase from the obligee of the
consumer's obligations.
(25) "Loan" includes:
(a) The creation of debt by the lender's payment of or
agreement to pay money to the consumer or to a third party for the
account of the consumer other than debts created pursuant to a
seller credit card;
(b) The creation of debt by a credit to an account with the lender upon which the consumer is entitled to draw immediately;
(c) The creation of debt pursuant to a lender credit card or
similar arrangement; and
(d) The forbearance of debt arising from a loan.
(26) (a) "Loan finance charge" means the sum of: (i) All
charges payable directly or indirectly by the debtor and imposed
directly or indirectly by the lender as an incident to the
extension of credit, including any of the following types of
charges which are applicable: Interest or any amount payable under
a point, discount, or other system of charges, however denominated,
premium or other charge for any guarantee or insurance protecting
the lender against the consumer's default or other credit loss; and
(ii) charges incurred for investigating the collateral or credit
worthiness of the consumer or for commissions or brokerage for
obtaining the credit, irrespective of the person to whom the
charges are paid or payable, unless the lender had no notice of the
charges when the loan was made. The term does not include charges
as a result of default, additional charges, delinquency charges or
deferral charges.
(b) If a lender makes a loan to a consumer by purchasing or
satisfying obligations of the consumer pursuant to a lender credit
card or similar arrangement, and the purchase or satisfaction is made at less than the face amount of the obligation, the discount
is not part of the loan finance charge.
(27) "Merchandise certificate" or "gift certificate" means
a writing issued by a seller or issuer of a seller credit card, not
redeemable in cash and usable in its face amount in lieu of cash in
exchange for goods or services.
(28) "Official fees" means:
(a) Fees and charges prescribed by law which actually are or
will be paid to public officials for determining the existence of
or for perfecting, releasing, terminating or satisfying a security
interest related to a consumer credit sale or consumer loan; or
(b) Premiums payable for insurance or fees escrowed in a
special account for the purpose of funding self-insurance or its
equivalent in lieu of perfecting a security interest otherwise
required by the creditor in connection with the sale, lease or
loan, if such premium or fee does not exceed the fees and charges
described in paragraph (a) which would otherwise be payable.
(29) "Organization" means a corporation, government or
governmental subdivision or agency, trust, estate, partnership,
cooperative or association.
(30) "Payable in installments" means that payment is
required or permitted by agreement to be made in: (a) Two or more periodic payments, excluding a down payment, with respect to a debt
arising from a consumer credit sale pursuant to which a sales
finance charge is made; (b) four or more periodic payments,
excluding a down payment, with respect to a debt arising from a
consumer credit sale pursuant to which no sales finance charge is
made: or (c) two or more periodic payments with respect to a debt
arising from a consumer loan. If any periodic payment other than
the down payment under an agreement requiring or permitting two or
more periodic payments is more than twice the amount of any other
periodic payment, excluding the down payment, the consumer credit
sale or consumer loan is "payable in installments".
(31) "Person" or "party" includes a natural person or an
individual, and an organization.
(32) "Person related to" with respect to an individual means
(a) The spouse of the individual; (b) a brother, brother-in-law,
sister or sister-in-law of the individual;
(c) an ancestor or
lineal descendant of the individual or his spouse; and (d) any
other relative, by blood or marriage, of the individual or his
spouse who shares the same home with the individual. "Person
related to" with respect to an organization means: (a) A person
directly or indirectly controlling, controlled by or under common
control with the organization; (b) an officer or director of the organization or a person performing similar functions with respect
to the organization or to a person related to the organization; (c)
the spouse of a person related to the organization; and (d) a
relative by blood or marriage of a person related to the
organization who shares the same home with him.
(33) "Precomputed loan." A loan, refinancing or
consolidation is "precomputed" if:
(A) The debt is expressed as a sum comprising the principal
and the amount of the loan finance charge computed in advance; or
(B) The loan is expressed in terms of the principal amount;
the loan installment payments are a scheduled, fixed amount
including principal and interest and assume payment on the
installment due date; and interest payments will not vary or result
in an adjustment during the term of the loan or at its final
payment as a result of the actual installment payment dates.
(34) "Precomputed sale" A sale, refinancing or
consolidation is "precomputed" if:
(A) The debt is expressed as a sum comprising the amount
financed and the amount of the sales finance charge computed in
advance; or
(B) The debt is expressed in terms of the principal amount;
the debt installment payments are a scheduled, fixed amount including principal and interest and assume payment on the
installment due date; and interest payments will not vary or result
in an adjustment during the term of the debt or at its final
payment as a result of the actual installment payment dates.
(35) "Presumed" or "presumption" means that the trier of
fact must find the existence of the fact presumed unless and until
evidence is introduced which would support a finding of its
nonexistence.
(36) "Principal" of a loan means the total of:
(a) The net amount paid to, receivable by or paid or payable
for the account of the debtor;
(b) The amount of any discount excluded from the loan
finance charge; and
(c) To the extent that payment is deferred:
(i) Amounts actually paid or to be paid by the lender for
registration, certificate of title, or license fees if not included
in (a); and
(ii) Additional charges permitted by this chapter.
(37)
"Regulated consumer lender" means a person authorized
to make or take assignments of regulated consumer loans.
(38)
"Regulated consumer loan" means a consumer loan,
including a loan made pursuant to a revolving loan account, in which the rate of the loan finance charge exceeds eighteen percent
per year as determined according to the actuarial method, except
where the loan qualifies for federal law preemption from state
interest rate limitations, including federal law bank parity
provisions, or where the lender is specifically permitted by state
law other than article four of this chapter to make the loan at
that rate without a requirement the lender hold a regulated
consumer lender license.
(37) (
39) "Revolving charge account" means an agreement
between a seller and a buyer by which: (a) The buyer may purchase
goods or services on credit or a seller credit card; (b) the
balances of amounts financed and the sales finance and other
appropriate charges are debited to an account; (c) a sales finance
charge if made is not precomputed but is computed periodically on
the balances of the account from time to time; and (d) there is the
privilege of paying the balances in installments.
(38) (
40) "Revolving loan account" means an arrangement
between a lender and a consumer including, but not limited to, a
lender credit card or similar arrangement, pursuant to which: (a)
The lender may permit the consumer to obtain loans from time to
time; (b) the unpaid balances of principal and the loan finance and
other appropriate charges are debited to an account; (c) a loan finance charge if made is not precomputed but is computed
periodically on the outstanding unpaid balances of the principal of
the consumer's account from time to time; and (d) there is the
privilege of paying the balances in installments.
(39) (
41) "Sale of goods" includes any agreement in the form
of a bailment or lease of goods if the bailee or lessee agrees to
pay as compensation for use a sum substantially equivalent to or in
excess of the aggregate value of the goods involved and it is
agreed that the bailee or lessee will become, or for no other or a
nominal consideration has the option to become, the owner of the
goods upon full compliance with his obligations under the
agreement.
(40) (
42) "Sale of an interest in land" includes a lease in
which the lessee has an option to purchase the interest and all or
a substantial part of the rental or other payments previously made
by him are applied to the purchase price.
(41) (
43) "Sale of services" means furnishing or agreeing to
furnish services and includes making arrangements to have services
furnished by another.
(42) (
44)"Sales finance charge" means the sum of: (a) All
charges payable directly or indirectly by the buyer and imposed
directly or indirectly by the seller or issuer of a seller credit card as an incident to the extension of credit, including any of
the following types of charges which are applicable: Time-price
differential, however denominated, including service, carrying or
other charge, premium or other charge for any guarantee or
insurance protecting the seller against the buyer's default or
other credit loss; and (b) charges incurred for investigating the
collateral or credit worthiness of the buyer or for commissions or
brokerage for obtaining the credit, irrespective of the person to
whom the charges are paid or payable; unless the seller had no
notice of the charges when the credit was granted. The term does
not include charges as a result of default, additional charges,
delinquency charges or deferral charges. If the seller or issuer
of a seller credit card purchases or satisfies obligations of the
consumer and the purchase or satisfaction is made at less than the
face amount of the obligation, the discount is not part of the
sales finance charge.
(43) (
45) Except as otherwise provided, "seller" includes an
assignee of the seller's right to payment but use of the term does
not in itself impose on an assignee any obligation of the seller.
(44) (
46) "Seller credit card" means an arrangement pursuant
to which a person gives to a buyer or lessee the privilege of using
a credit card, letter of credit, or other credit confirmation or identification primarily for the purpose of purchasing or leasing
goods or services from that person, that person and any other
person or persons, a person related to that person, or others
licensed or franchised or permitted to do business under his
business name or trade name or designation or on his behalf.
(45) (
47) "Services" includes: (a) Work, labor and other
personal services; (b) privileges with respect to transportation,
use of vehicles, hotel and restaurant accommodations, education,
entertainment, recreation, physical culture, hospital
accommodations, funerals, cemetery accommodations, and the like;
and (c) insurance.
(46) (
48) "Supervised financial organization" means
a any
organization, corporation, or person, other than
a supervised
lender or an insurance company or other organization primarily
engaged in an insurance business
, which is required under state law
to register or obtain a license from the commissioner of banking
before conducting business in this state, or which is authorized
under federal law or the laws of this state to make consumer loans
without a license from the commissioner of banking, provided such
loans are subject to supervision and examination by an official or
agency of the United States.
(a) Organized, chartered or holding an authorization certificate under the laws of this state or of the United States
which authorizes the person to make consumer loans; and
(b) Subject to supervision and examination with respect to
such loans by an official or agency of this state or of the United
States.
(47) "Supervised lender" means a person authorized to make
or take assignments of supervised loans.
(48) "Supervised loan" means a consumer loan made by other
than a supervised financial organization, including a loan made
pursuant to a revolving loan account, where the principal does not
exceed two thousand dollars, and in which the rate of the loan
finance charge exceeds eight percent per year as determined
according to the actuarial method.
§46A-1-103. Effect of chapter on powers of persons making consumer
credit sales and consumer loans, and others; consumer
protection generally.
(1) This chapter prescribes maximum charges for all
creditors, except lessors and those excluded, making consumer
credit sales and consumer loans, and sales and loans made subject
to the provisions of this chapter by agreement, and except as
otherwise provided by this chapter displaces any existing
limitations and provisions regulating maximum interest and charges, minimum charges, additional charges, delinquency charges, deferral
charges, allocation of charges and methods of computing rebates
upon prepayment, refinancing or consolidation with respect to
consumer credit sales and consumer loans, and the debtors' remedies
and penalties provided by this chapter displace all existing
provisions relating to remedies, penalties and forfeitures for
usury and usurious contracts as to transactions covered by this
chapter
: Provided, That this chapter shall not displace those
provisions of subdivision (6), subsection (a), section eleven,
article seven, chapter thirty-one of this code relating to
additional charges which may be imposed and collected by industrial
loan companies.
(2) Except as provided in subsection (1) of this section or
elsewhere in this chapter, this chapter does not displace powers or
limitation on powers which supervised financial organizations
and
supervised lenders are authorized to exercise under the laws of the
United States or other laws of this state in effect after the
operative date of this chapter.
(3) This chapter also prescribes in
various articles
six and
seven protective measures for consumers in transactions not
necessarily involving consumer credit.
ARTICLE 3. FINANCE CHARGES AND RELATED PROVISIONS.
§46A-3-104. Finance charge for loans other than loans made
pursuant to revolving loan accounts; finance charge on
assigned contracts; exceptions.
(1) With respect to a consumer loan, other than a consumer
loan made pursuant to a revolving loan account: (a) A bank, as
defined in section two, article one, chapter thirty-one-a of this
code, may contract for and receive a loan finance charge not
exceeding the charge or interest permitted by the provisions of
section sixteen, article ten, chapter thirty-one, section thirty,
article four, chapter thirty-one-a or section five, section five-a
or section five-b, article six, chapter forty-seven of this code;
(b)
an industrial loan company, as defined in section three,
article seven, chapter thirty-one of this code, a regulated
consumer lender may contract for and receive a loan finance charge
not exceeding the aggregate of the interest and charges permitted
by
subdivisions (5) and (6), subsection (a), section eleven,
article seven, chapter thirty-one section one hundred seven,
article four, chapter forty-six-a of this code or
by the provisions
of section five,
section five-a or section five-b, article six,
chapter forty-seven of this code;
(c) a building and loan
association, as defined in section two, article six, chapter
thirty-one of this code, may contract for and receive a loan finance charge not exceeding the charge or interest permitted by
the provisions of section seventeen, article six, chapter thirty-
one of this code, or by the provisions of section five, article
six, chapter forty-seven of this code; (d) (c) a credit union, as
defined in section one, article ten, chapter thirty-one of this
code, may contract for and receive a loan finance charge not
exceeding the charge or interest permitted by the provisions of
section sixteen, article ten, chapter thirty-one of this code, or
by the provisions of section five, article six, chapter forty-seven
of this code; and
(e) (d) any other lender
, other than a supervised
lender, may contract for and receive a loan finance charge not
exceeding the charge or interest permitted by the provisions of
section five, section five-a or section five-b, article six,
chapter forty-seven of this code.
(2) As an alternative to the loan finance charge allowed by
subsection (1) of this section, from the effective date of this
subsection until and including the first day of July, one thousand
nine hundred eighty-two a lender, other than a supervised lender,
may contract for and receive a loan finance charge not exceeding
eighteen percent per annum calculated according to the actuarial
method.
(3)(2) This section does not limit or restrict the manner of calculating the loan finance charge, whether by way of add-on,
discount or otherwise, so long as the rate of loan finance charge
does not exceed that permitted by this section.
(4) Notwithstanding any provision of this section to the
contrary, with respect to a consumer loan involving a motor vehicle
or a mobile home or with respect to a consumer loan to finance the
sale from one seller of both a mobile home and the real estate upon
which such mobile home is or will be located, or with respect to a
consumer loan where a security interest in real estate owned by the
borrower is given to the lender as collateral for such loan, a
lender may from the effective date of this section and until and
including the first day of July, one thousand nine hundred eighty-
two, contract for and receive a loan finance charge not exceeding
eighteen percent per year on the unpaid balance calculated
according to the actuarial method: Provided, That the quantity of
real estate involved in such consumer loan transactions involving
a mobile home and real estate where such finance charge is
contracted for and received shall not exceed one acre.
(5)(3) 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 section one hundred
eleven of this article.
(6)(4) Notwithstanding subsection (1) of this section, the
lender may contract for and receive a minimum loan finance charge
of not more than five dollars when the amount loaned does not
exceed seventy-five dollars, or seven dollars and fifty cents when
the amount loaned exceeds seventy-five dollars.
(7)(5) An assignee of a consumer credit sale contract may
collect, receive or enforce the sales finance charge provided in
said contract, and any such charge so collected, received or
enforced by an assignee shall not be deemed usurious or in
violation of this chapter or any other provision of this code if
such sales finance charge does not exceed the limits permitted to
be charged by a seller under the provisions of this chapter.
(8)(6) Notwithstanding subsection
(7) (5) of this section,
a resident lender who is the assignee of a consumer credit sales
contract
executed from a credit grantor in another state, and said
contract was executed in such other state to finance a retail
purchase made by the consumer when the consumer was in that other
state, may collect, receive or enforce the sales finance charge
and
other charges including late fees provided in said contract under the laws of the state where executed. Such charge shall not be
deemed to be usurious or in violation of the provisions of this
chapter or any other provisions of this code.
§46A-3-111. Application of payments on account; rebate upon
prepayment, refinancing or consolidation; judgments and
interest on judgments.
(1) When a consumer credit sale or consumer loan is
precomputed all payments on account shall be applied to
installments in the order in which they fall due, except as
provided in subsection (3), section one hundred twelve of this
article. When the total amount is payable in substantially equal
consecutive monthly installments, the portion of the sales finance
charge or loan finance charge attributable to any particular
monthly installment period shall be that proportion of the sales
finance charge or loan finance charge originally contracted for, as
the balance scheduled to be outstanding on the last day of the
monthly installment period before deducting the payment, if any,
scheduled to be made on that day bears to the sum of all the
monthly installment balances under the original schedule of
payments. (This method of allocation is the sum of the digits
method, commonly referred to as the "Rule of 78.")
(2) Upon prepayment in full of a precomputed consumer credit sale or consumer loan by cash, a new loan, refinancing,
consolidation or otherwise, the creditor shall rebate to the
consumer that portion of the sales finance charge or loan finance
charge in the manner specified in section five-d, article six,
chapter forty-seven of this code:
Provided, That no rebate of less
than one dollar need be made.
(3)
Upon prepayment in full of a precomputed or
nonprecomputed consumer credit sale or consumer loan by cash,
execution of a new loan, refinancing, consolidation or otherwise,
except where the loan is a purchase money loan secured by a first
lien mortgage on residential property or is made by a
federally-insured depository institution, the creditor shall rebate
to the consumer that portion of the unearned prepaid finance
charges attributable to loan or credit investigations fees,
origination fees or points in the manner specified in subsection
(c), section five-d, article six, chapter forty-seven of this code:
Provided, however, That no rebate of less than one dollar need be
made: Provided further, That if the loan was made in furtherance
of aiding or abetting a person to whom the loan is assigned to
evade this rebate, then the rebate required herein shall apply.
(3) (4) If the maturity of a precomputed consumer credit
sale or consumer loan is accelerated for any reason and judgment is obtained, the debtor is entitled to the same rebate as if the
payment had been made on the date judgment is entered and such
judgment shall bear interest until paid at the rate of ten percent
per annum.
ARTICLE 4. REGULATED CONSUMER LENDERS
SUPERVISED LENDERS.
§46A-4-101. Authority to make
supervised loans regulated consumer
loans.
Unless a person has first obtained a license from the
commissioner authorizing him to make
supervised loans regulated
consumer loans, he shall not engage in the business of:
(1) Making
supervised loans regulated consumer loans, or
(2) Taking assignments of and undertaking direct collection
of payments from or enforcement of rights against consumers arising
from
supervised loans regulated consumer loans.
§46A-4-102. License to make
supervised loans regulated consumer
loans.
(1) The commissioner shall receive and act on all
applications for licenses to make
supervised loans regulated
consumer loans under this chapter. Applications shall be under
oath, be filed in the manner prescribed by the commissioner, and
contain the information the commissioner requires
by rule to make
an evaluation of the financial responsibility, experience, character and fitness of the applicant, and the findings required
of him before he may issue a license. At the time of the filing of
the application, the sum of
two hundred fifty seven hundred fifty
dollars shall be paid to the commissioner as an investigation fee.
(2) No license shall be issued to a supervised financial
organization other than to one
licensed under the provisions of the
"West Virginia Industrial Bank and Industrial Loan Company Act" as
contained in article seven, chapter thirty-one of this code,
primarily engaged in the business of making consumer loans through
offices located within this state, or to one licensed under the
provisions of the West Virginia secondary mortgage loan act as
contained in article seventeen, chapter thirty-one of this code or
to any banking institution as defined by the provisions of section
two, article one, chapter thirty-one-a of this code.
No license
will be granted to any office located outside this state:
Provided, That the limitation of licensing contained in this
subsection shall not prevent any supervised financial organization
from making supervised loans regulated consumer loans when the
applicable state or federal statute, law, or rule
or regulation
permits. No license shall be issued to any person unless the
commissioner, upon investigation, finds that the financial
responsibility, experience, character and fitness of the applicant, and of the members thereof (if the applicant is a copartnership or
association) and of the officers and directors thereof (if the
applicant is a corporation), are such as to command the confidence
of the community and to warrant belief that the business will be
operated honestly, fairly and efficiently, within the purposes of
this chapter, and the applicant has available for the operation of
the business at
least ten thousand dollars in capital and has, for
each the specified location
of operation, assets of at least two
thousand dollars
, and that allowing the applicant to engage in
business will promote the convenience and advantage of the
community in which the business of the applicant is to be
conducted: Provided, That any industrial loan company which is
operating in good standing in accordance with the provisions of
article four, chapter forty-six-a of this code shall be presumed to
have established that the public convenience and advantage will be
promoted in regard to its application for a license to make
supervised loans in the same location for which it is licensed as
an industrial loan company.
(3) Upon written rquest, the applicant is entitled to a
hearing on the question of his qualifications for a license if: (a)
The commissioner has notified the applicant in writing that his
application has been denied; or (b) the commissioner has not issued a license within sixty days after the application for the license
was filed. A request for a hearing may not be made more than
fifteen days after the commissioner has mailed a writing to the
applicant notifying him that the application has been denied and
stating in substance the commissioner's findings supporting denial
of the application.
(4) Not more than one place of business shall be maintained
under the same license, but the commissioner may issue more than
one license to the same licensee upon compliance with all the
provisions of this article governing an original issuance of a
license, for each such new license. Each license shall remain in
full force and effect until surrendered,
forfeited, suspended or
revoked.
(5) Upon giving the commissioner at least fifteen days'
prior written notice, a licensee may: (a) Change the location of
any place of business located within a municipality to any other
location within that same municipality; or (b) change the location
of any place of business located outside of a municipality to a
location no more than five miles from the originally licensed
location, but in no case may a licensee move any place of business
located outside a municipality to a location within a municipality.
A licensee may not move the location of any place of business located within a municipality to any other location outside of that
municipality.
(6) A licensee may conduct the business of making
supervised
loans regulated consumer loans only at or from a place of business
for which he holds a license and not under any other name than that
stated in the license.
A sale or lease in which credit is granted
pursuant to a lender credit card does not violate this subsection.
(7) A license issued under the provisions of this section
shall not be transferable or assignable.
(8) A licensee must be incorporated under the laws of this
state. The licensee may, however, be a subsidiary of an out-of-
state company or financial institution.
§46A-4-103. Revocation,or suspension or forfeiture of license.
(1) The commissioner may issue to a person licensed to make
supervised loans regulated consumer loans an order to show cause
why his license should not be revoked
or should not be suspended
for a period not in excess of six months. The order shall state
the place for a hearing and set a time for the hearing that is no
less than ten days from the date of the order. After the hearing
the commissioner shall revoke or suspend the license if he finds
that:
(a) The licensee has repeatedly and willfully violated this chapter or any rule or order lawfully made or issued pursuant to
this article;
or
(b) The licensee has failed to remit his required annual
assessment or to maintain his status as a business in good standing
with the office of the secretary of state, notwithstanding
notification in writing by the commissioner sent by certified mail
to the licensee's last known address providing for thirty days to
rectify such failure;
(c) The licensee has forfeited his license by failing to
remain open for regulated consumer lending business in conformity
with the rules or order of the commissioner; or
(b)(d) Facts or conditions exist which would clearly have
justified the commissioner in refusing to grant a license had these
facts or conditions been known to exist at the time the application
for the license was made.
(2) No revocation or suspension of a license
under this
article is lawful unless prior to institution of proceedings by the
commissioner notice is given to the licensee of the facts or
conduct which warrant the intended action, and the licensee is
given an opportunity to show compliance with all lawful
requirements for retention of the license.
(3) If the commissioner finds that probable cause for revocation of a license exists and that enforcement of this article
requires immediate suspension of the license pending investigation,
he may, after a hearing upon five days' written notice, enter an
order suspending the license for not more than thirty days.
(4) Nothing in this section limits the authority of the
commissioner to take action against a regulated consumer lender
pursuant to chapter thirty-one-a of this code.
(4)(5) Whenever the commissioner revokes or suspends a
license, he shall enter an order to that effect and forthwith
notify the licensee of the revocation or suspension. Within five
days after the entry of the order he shall mail by registered or
certified mail or deliver to the licensee a copy of the order and
the findings supporting the order.
(5)(6) Any person holding a license to make
supervised loans
regulated consumer loans may relinquish the license by notifying
the commissioner in writing of its relinquishment, but this
relinquishment shall not affect his liability for acts previously
committed.
(6)(7) No revocation, suspension
, forfeiture or
relinquishment of a license shall impair or affect the obligation
of any preexisting lawful contract between the licensee and any
consumer.
(7)(8) The commissioner may reinstate a license, terminate
a suspension or grant a new license to a person whose license has
been revoked or suspended if no fact or condition then exists which
clearly would have justified the commissioner in refusing to grant
a license.
§46A-4-104. Records; annual reports.
(1) Every licensee shall maintain records in conformity with
generally accepted accounting principles and practices in a manner
which will enable the commissioner to determine whether the
licensee is complying with the provisions of this article. The
record-keeping system of a licensee shall be sufficient if he makes
the required information reasonably available. The records need
not be kept in the place of business where
supervised loans
regulated consumer loans are made, if the commissioner is given
free access to the records wherever located. The records
pertaining to any loan need not be preserved for more than two
years after making the final entry relating to the loan, but in the
case of a revolving loan account such two-year period is measured
from the date of each entry.
(2) On or before the fifteenth day of
April February each
year, every licensee shall file with the commissioner a composite
annual report in the form prescribed by the commissioner relating to all
supervised loans regulated consumer loans made by him. The
commissioner shall consult with comparable officials in other
states for the purpose of making the kinds of information required
in annual reports uniform among the states. Information contained
in annual reports shall be confidential and may be published only
in composite form.
§46A-4-105. Examinations; assessments and investigations.
(1) The commissioner shall examine
annually at least every
eighteen months the loans, business and records of every licensee.
In addition, for the purpose of discovering violations of this
article or securing information lawfully required, the attorney
general or the commissioner may at any time investigate the loans,
business and records of any
supervised lender regulated consumer
lender. For these purposes he shall have free and reasonable
access to the offices, places of business and records of the
lender.
(2) If the lender's records are located outside this state,
the lender at his option shall make them available to the
commissioner at a convenient location within this state, or pay the
reasonable and necessary expenses for the commissioner or his
representatives to examine them at the place where they are
maintained. The commissioner may designate representatives, including comparable officials of the state in which the records
are located, to inspect them on his behalf.
(3) For the purposes of this section, the commissioner may
administer oaths or affirmations, and upon his own motion or upon
request of any party, may subpoena witnesses, compel their
attendance, adduce evidence, and require the production of any
matter which is relevant to the investigation, including the
existence, description, nature, custody, condition and location of
any books, documents or other tangible things and the identity and
location of persons having knowledge of relevant facts, or any
other matter reasonably calculated to lead to the discovery of
admissible evidence.
(4) Upon failure without lawful excuse to obey a subpoena or
to give testimony and upon reasonable notice to all persons
affected thereby, the commissioner may apply to any circuit court
of this state for an order compelling compliance.
(5) The commissioner of banking shall charge and collect
from each
supervised lender regulated consumer lender and pay into
a special revenue account in the state treasury for the department
of banking an annual assessment payable on the first day of July
computed upon the total
outstanding loan balances and installment
sales contract balances less unearned finance charges as of the preceding calendar year-end outstanding gross loan balances and
installment sales contract balances net of unearned interest as is
set out in section eight, article two, chapter thirty-one-a of this
code.
§46A-4-107. Loan finance charge for
supervised lenders regulated
consumer lenders.
(1) With respect to a
supervised loan regulated consumer
loan, including a revolving loan account, a
supervised lender
regulated consumer lender may contract for and receive a loan
finance charge not exceeding that permitted by this section.
(2)
On a loan of two thousand dollars or less which is
unsecured by real property, the The loan finance charge, calculated
according to the actuarial method, may not exceed
the total of:
thirty-one percent per year on the unpaid balance of the principal
amount.
(a) Thirty-six percent per year on that part of the unpaid
balances of the principal which is two hundred dollars or less;
(b) Twenty-four percent per year on that part of the unpaid
balances of the principal which is more than two hundred dollars
but does not exceed twelve hundred dollars; and
(c) Eighteen percent per year on that part of the unpaid
balances of the principal which is more than twelve hundred dollars.
(3) On a loan of greater than two thousand dollars or which
is secured by real property, the loan finance charge, calculated
according to the actuarial method, may not exceed twenty-seven
percent per year on the unpaid balance of the principal amount:
Provided, That the loan finance charge on any loan greater than ten
thousand dollars may not exceed eighteen 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.
(3) (4) Where the loan is non-revolving and is greater than
two thousand dollars, the loan 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 non-revolving, is secured by real
property, the loan 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 property, such additional loan finance charges may not be
imposed by the same or affiliated lender in any refinancing of
that loan made within twenty-four months thereof, unless said earlier charges have been rebated by payment or credit to the
consumer under the actuarial method, or the total of the earlier
and proposed current 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 such charges shall be permissible and shall not
constitute charging interest on interest. In a revolving home
equity loan, the amount of the credit line extended shall 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 in
section one hundred nine, article three, chapter forty-six-a 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 such 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.
This
section does not limit or restrict the manner of calculating the
loan finance charge, whether by way of add-on, discount or otherwise, so long as the rate of the loan finance charge does not
exceed that permitted by this section.
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 section one hundred
eleven, article three of this chapter.
(4)(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
fifteen days may be treated as a full month if periods of fifteen
days or less are disregarded and if that procedure is not
consistently used to obtain a greater yield than would otherwise be
permitted.
(5) Subject to classifications and differentiations the
lender may reasonably establish, he may make the same loan finance
charge on all principal amounts within a specified range. A loan
finance charge so made does not violate subsection (2) if:
(a) When applied to the median amount within each range, it
does not exceed the maximum permitted by subsection (2), and
(b) When applied to the lowest amount within each range, it
does not produce a rate of loan finance charge exceeding the rate
calculated according to subdivision (a) of this subsection (5) by
more than eight percent of the rate calculated according to said
subdivision (a).
(6) With respect to a revolving loan account:
(a) A charge may be made by a
supervised lender 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 greater 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 such billing cycle.
, or
(iii) Subject to subsection (5), the median amount within a
specified range within which the average daily balance of the debt
or 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 such billing cycle, is included. 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
supervised lender 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 thirty.
(c) Notwithstanding subdivisions (a) and (b) of this
subsection
six, 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 fifty cents if the billing
cycle is monthly or longer, or the pro rata part of fifty cents
which bears the same relation to fifty cents as the number of days
in the billing cycle bears to thirty 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
charge charges
allowed by
section one-hundred-seven, sub-section subsections (2)
and (4) of this
article section,
from the effective date of this subsection until and including the first day of July, one thousand
nine hundred eighty-two, with respect to a supervised loan,
including a revolving loan account, a
supervised regulated consumer
lender may
on a loan of one thousand two hundred dollars or less
contract for and receive
a loan finance charge, calculated
according to the actuarial method, which may not exceed the total
of: interest at a rate of up to thirty-one percent per year on the
unpaid balance of the principal amount, together with a non-
refundable loan processing fee of not more than two percent of the
amount financed: Provided, That no other finance charges are
imposed on the loan.
(a) Thirty-six percent per year on that part of the unpaid
balances of the principal which is five hundred dollars or less;
(b) Twenty-four percent per year on that part of the unpaid
balances of the principal which is more than five hundred dollars
but does not exceed fifteen hundred one dollars; and
(c) Eighteen percent per year on that part of the unpaid
balances of the principal which is more than fifteen hundred one
dollars.
§46A-4-108. Use of multiple loan agreements.
A
supervised lender regulated consumer lender may not use
multiple loan agreements with intent to obtain a higher loan
finance charge than would otherwise be permitted by the provisions
of this article. A
supervised lender regulated consumer lender
uses multiple loan agreements if, with intent to obtain a higher
loan finance charge than would otherwise be permitted, he allows
any person, or husband and wife, to become obligated in any way
under more than one loan agreement with the
supervised lender
regulated consumer lender for a
supervised regulated consumer loan under this article.
The excess amount of the loan finance charge provided for in
agreements in violation of this section is an excess charge for the
purposes of the provisions on effect of violations on rights of
parties.
§46A-4-109. Restrictions on interest in land as security;
assignment of earnings to
supervised lender regulated
consumer lender prohibited; when security interest on
household furniture goods not valid; prohibitions as to
renegotiation of loan discharged in bankruptcy.
(1)
A supervised lender may not contract for an interest in
land as security. No consumer loan of two thousand dollars or less
may be secured by an interest in real property, other than a
purchase money loan for such property, unless the lender is
licensed in this state as a regulated consumer lender or as a
secondary mortgage lender, or is a federally insured depository
institution permitted to make loans in this state. A security
interest taken in violation of this subsection is void.
Provided,
That this subsection shall not be construed as prohibiting one
licensed to make loans under the provisions of the "West Virginia
Industrial Bank and Industrial Loan Company Act" as set forth in
the provisions of article seven, chapter thirty-one of this code,
or the West Virginia secondary mortgage loan act as set forth in the provisions of article seventeen, chapter thirty- one, from
taking an interest in land as security for loans made pursuant to
either of those acts.
(2) Notwithstanding the provisions of section one hundred
sixteen, article two of this chapter, no
supervised lender
regulated consumer lender shall take any assignment of or order for
payment of any earnings to secure any loan made by any
supervised
lender regulated consumer lender under this article. An assignment
or order taken in violation of this subsection is void.
This
subsection does not prohibit a court from ordering a garnishment to
affect recovery of moneys owed by a borrower to a lender as part of
a judgment in favor of said lender.
(3)
Other than for a purchase money lien, no No supervised
lender regulated consumer lender may take a security interest in
household
furniture then goods in the possession and use of the
borrower
. unless Where federal law permits a security interest in
certain non-purchase items deemed not to be household goods, the
security agreement creating such security interest
must be in
writing, signed in person by the borrower, and if the borrower is
married, signed in person by both husband and wife:
Provided, That
the signature of both husband and wife shall not be required when
they have been living separate and apart for a period of at least five months prior to the making of such security agreement. A
security interest taken in violation of this subsection is void.
(4) A
supervised lender regulated consumer lender may not
renegotiate the original loan, or any part thereof, or make a new
contract covering the original loan, or any part thereof, with any
borrower, who has received a discharge in bankruptcy of the
original loan or any balance due thereon at the time of said
discharge from any court of the United States of America exercising
jurisdiction in insolvency and bankruptcy matters, unless said
supervised lender regulated consumer lender shall pay to and
deliver to the borrower the full amount of the loan shown on said
note, promise to pay, or security, less any deductions for charges
herein specifically authorized.
§46A-4-110. Conduct of business other than making loans.
(1) No licensee shall conduct the business of making loans
under the provisions of this article within any office, room or
place of business in which any other business is solicited or
engaged in, or in association or conjunction therewith, except as
may be authorized in writing by the commissioner upon his finding
that the character of such other business is
sufficiently related
to that of a financial institution and is such that the granting of
such authority would not facilitate evasions of this article or of the rules
and regulations lawfully made hereunder:
Provided, That
nothing herein shall prohibit the licensee from purchasing
installment sales contracts or the sale or provision of insurance
authorized by section one hundred nine, article three of this
chapter, or from making loans authorized under the provisions of
the West Virginia secondary mortgage loan act as set forth in
article seventeen, chapter thirty-one of this code
, or from making
loans authorized under the provisions of the "West Virginia
Industrial Bank and Industrial Loan Company Act" as set forth in
article seven, chapter thirty-one of this code , or from engaging
in any business previously approved by the commissioner prior to
the first day of September, one thousand nine hundred ninety-six.
(2) A licensee may purchase, hold and convey real property:
(a) As necessary for the convenient transaction of its
business;
(b) As is mortgaged to it in good faith by way of security
for loans made by or money due to such regulated consumer lender;
(c) As is conveyed to it in satisfaction of debts previously
contracted in the course of its dealings; or
(d) As is acquired by the sale on execution or judgment or
decree of any court in its favor.
(3) A licensee shall not purchase, hold or convey any real property in any other case or for any other purpose whatever. Real
property shall be conveyed only by authority of the board of
directors of any such regulated consumer lender. No real property
acquired upon foreclosure in the cases contemplated in subdivision
(b), or acquired under subdivisions (c) and (d) of this subsection
shall be held for longer than ten years, unless such period be
extended by the commissioner of banking.
§46A-4-110a. Prohibited conduct.
(1) A regulated consumer lender shall not:
(a) Accept or receive deposits or sell or offer for sale
its secured or unsecured evidences or certificates of indebtedness;
or
(b) Pay any fees, bonuses, commissions, rewards or other
consideration to any person, firm or corporation for the privilege
of using any plan of operation, scheme or device for the
organization or carrying on of business under this article, or the
use of any name, trademark or copyright to be so used: Provided,
That nothing herein shall prevent a regulated consumer lender from
agreeing in connection with a loan to pay a broker fee, finder's
fee, or dealer participation fee, or to split the origination fee
or points paid: Provided, however, That the fee or fee splitting
arrangement is disclosed to the borrower and, where proper, is included in the finance charge.
(2) Unless preempted by federal law, no consumer loan made
by a regulated consumer lender may contain any scheduled balloon
payment, nor may any regulated consumer lender loan contain terms
of repayment which result in negative amortization: Provided, That
nothing herein shall prevent unequal payment schedules resulting
from a variable rate loan or a revolving line of credit.
(3) A regulated consumer lender may not make revolving
loans for the retail purchase of consumer goods and services by use
of a lender credit card.
§46A-4-111 Maximum interest when loan is in excess of sixteen
hundred dollars.
No licensee shall directly or indirectly charge, contract
for, or receive any interest, discount or consideration greater
than six percent per annum upon the loan, use or forbearance of
money, goods or things in action, or upon the loan, use or sale of
credit, when the amount or value thereof is more than sixteen
hundred dollars. The foregoing prohibition shall also apply to any
licensee who permits any person, as borrower or as endorser,
guarantor or surety for any borrower, or otherwise, to owe directly
or contingently, or both, to the licensee at any time the sum of
more than sixteen hundred dollars for principal.
§46A-4-111. Substantial benefit upon refinancing of a loan at
higher rate.
(1) Any nonrevolving consumer loan or other credit that is
refinanced and consolidated with a new loan under this article
after the first day of September, one thousand nine hundred
ninety-six at a higher finance rate than allowed merchants by
section one hundred one, article three of this chapter must either
provide the consumer with a substantial benefit or provide the
disclosures set forth in this section. A substantial benefit
accrues to the consumer if the transaction:
(a) provides the consumer at least five hundred dollars in
new funds for the consumer's own use, excluding any charges
connected with the loan; or
(b) provides the consumer with new funds in an amount equal
to the original amount of the loan or credit.
(2) If no substantial benefit is provided, the lender must
comply with the following requirements, except where such an
agreement would violate section one hundred eight of this article:
(a) The lender must in a fixed rate transaction give the
following disclosures in writing to the borrower prior to the
execution of the new agreement:
"If you do agree to consolidate your existing obligation, you will be paying an annual percentage rate of _____% on the
existing balance of $_____, instead of the rate of ______% which
you are now paying.
I acknowledge receipt of this information __________
(initials of borrower)."
(b) The lender must allow the borrower the choice of
repaying his or her existing loan or credit balance at the
originally agreed-upon rate and obtaining any additional extension
of credit under a separate agreement, notwithstanding any law other
than section one hundred eight of this article which may limit the
borrower's ability to have multiple loan agreements with the same
lender.
(c) The lender, where it holds the prior agreement, must
refund or credit to the borrower's account any unearned finance
charge and any returned insurance premiums upon cancellation of the
insurance sold in connection with the prior agreement.
(d) The lender shall, where applicable, provide the borrower
prior to the loan's execution, conspicuous written notice of the
provisions of subdivisions (a), (b) and (c) of this subsection.
(e) The commissioner may provide and require a modified
disclosure form for similar transactions involving adjustable or
variable rates, and where applicable, prior to the loan's execution, the borrower must be given conspicuous written notice of
the provisions of subdivisions (b) and (c) of this subsection,
together with the disclosure form as may be required by this
subsection.
(f) Nothing in this section shall prohibit the receipt of
goods or services by the borrower at the time the consolidated loan
agreement is made, nor shall this section prohibit or pertain to
any loan where the refinancing results in the consumer paying a
lower loan finance charge rate.
§46A-4-112. Code references to
small loans and small loan
companies; supervised lenders and industrial loan companies;
authority of the commissioner.
All references in other chapters of this code to
supervised
loans, supervised lenders, industrial loans, industrial loan
companies, and licensees thereof, as well as to article seven,
chapter thirty-one small loans, small loan lenders, small loan
licensees and to article seven-a, chapter forty-seven of this
Code
code, shall, after the operative date of this chapter, and despite
the repeal of said statute, be read, construed and understood to
mean and to have reference, respectively, to
supervised loan,
supervised lenders, supervised lender regulated consumer loans,
regulated consumer lenders,
regulated consumer lender licensees, and to this article.
All authority vested by this chapter in the commissioner
shall be deemed to be in addition to, and not in limitation of, the
authority vested in the commissioner of banking by provisions
contained in other chapters of this code.
§46A-4-113. Continuation of licensing.
All persons licensed under the provisions of
article seven-
a, chapter forty-seven of this code, article seven, chapter
thirty-one of this code, or as supervised lenders under the prior
provisions of this article on the operative date of this chapter,
are licensed to make
supervised loans regulated consumer loans
under the provisions of this article, and all provisions of this
article shall after the operative date of this chapter apply to the
persons so previously licensed, including, without limitation, the
provisions governing notification contained in article seven of
this chapter.
The commissioner may, but is not required to, deliver
evidence of licensing to the persons so previously licensed.
Persons holding both supervised lender and industrial loan company
licenses or operating such a licensed business in the same office
will be combined and provided a single regulated lender license.
ARTICLE 5. CIVIL LIABILITY AND CRIMINAL PENALTIES.
§46A-5-101. Effect of violations on rights of parties; limitation
of actions.
(1) If a creditor has violated the provisions of this
chapter applying to collection of excess charges, security in sales
and leases, disclosure with respect to consumer leases, receipts,
statements of account and evidences of payment, limitations on
default charges, assignment of earnings, authorizations to confess
judgment, illegal, fraudulent or unconscionable conduct, any
prohibited debt collection practice, or restrictions on interest in
land as security, assignment of earnings to
supervised lender
regulated consumer lender, security agreement on household
furniture goods for benefit of
supervised lender regulated consumer
lender, and renegotiation by
supervised lender regulated consumer
lender of loan discharged in bankruptcy, the consumer has a cause
of action to recover actual damages and in addition a right in an
action to recover from the person violating this chapter a penalty
in an amount determined by the court not less than one hundred
dollars nor more than one thousand dollars. With respect to
violations arising from consumer credit sales or consumer loans
made pursuant to revolving charge accounts or revolving loan
accounts, or from sales as defined in article six of this chapter,
no action pursuant to this subsection may be brought more than four years after the violations occurred. With respect to violations
arising from other consumer credit sales or consumer loans, no
action pursuant to this subsection may be brought more than one
year after the due date of the last scheduled payment of the
agreement.
(2) If a creditor has violated the provisions of this
chapter respecting authority to make
supervised loans regulated
consumer loans, the loan is void and the consumer is not obligated
to pay either the principal or the loan finance charge. If he has
paid any part of the principal or of the finance charge, he has a
right to recover in an action the payment from the person violating
this chapter or from an assignee of that person's rights who
undertakes direct collection of payments or enforcement of rights
arising from the debt. With respect to violations arising from
supervised loans regulated consumer loans made pursuant to
revolving loan accounts, no action pursuant to this subsection may
be brought more than four years after the violation occurred. With
respect to violations arising from other
supervised loans regulated
consumer loans, no action pursuant to this subsection may be
brought more than one year after the due date of the last scheduled
payment of the agreement pursuant to which the charge was paid.
(3) A consumer is not obligated to pay a charge in excess of that allowed by this chapter, and if he has paid an excess charge
he has a right to a refund. A refund may be made by reducing the
consumer's obligation by the amount of the excess charge. If the
consumer has paid an amount in excess of the lawful obligation
under the agreement, the consumer may recover in an action the
excess amount from the person who made the excess charge or from an
assignee of that person's rights who undertakes direct collection
of payments from or enforcement of rights against the consumer
arising from the debt.
(4) If a creditor has contracted for or received a charge in
excess of that allowed by this chapter, the consumer may, in
addition to recovering such excess charge, also recover from the
creditor or the person liable in an action a penalty in an amount
determined by the court not less than one hundred dollars nor more
than one thousand dollars. With respect to excess charges arising
from consumer credit sales or consumer loans made pursuant to
revolving charge accounts or revolving loan accounts, no action
pursuant to this subsection may be brought more than four years
after the time the excess charge was made. With respect to excess
charges arising from other consumer credit sales or consumer loans
no action pursuant to this subsection may be brought more than one
year after the due date of the last scheduled payment of the agreement pursuant to which the charge was made.
(5) Except as otherwise provided, a violation of this
chapter does not impair rights on a debt.
(6) If an employer discharges an employee in violation of
the provisions prohibiting discharge, the employee may within
ninety days bring a civil action for recovery of wages lost as a
result of the violation and for an order requiring the
reinstatement of the employee. Damages recoverable shall not
exceed lost wages for six weeks.
(7) A creditor has no liability for a penalty under
subsection (1) or (4) of this section if within fifteen days after
discovering an error, and prior to the institution of an action
under this section or the receipt of written notice of the error,
the creditor notifies the person concerned of the error and
corrects the error. If the violation consists of a prohibited
agreement, giving the consumer a corrected copy of the writing
containing the error is sufficient notification and correction. If
the violation consists of an excess charge, correction shall be
made by an adjustment or refund.
(8) If the creditor establishes by a preponderance of
evidence that a violation is unintentional or the result of a bona
fide error of fact notwithstanding the maintenance of procedures reasonably adapted to avoid any such violation or error, no
liability is imposed under subsections (1), (2) and (4) of this
section, and the validity of the transaction is not affected.
§46A-5-103. Willful violations.
(1) A
supervised lender regulated consumer lender who
willfully makes charges in excess of those permitted by the
provisions of article four of this chapter, pertaining to
supervised lenders regulated consumer lenders, shall be guilty of
a misdemeanor, and, upon conviction, shall be fined not more than
five thousand dollars, or imprisoned not more than one year, or
both fined and imprisoned.
(2) A person who willfully engages in the business of making
supervised loans regulated consumer loans without a license in
violation of the provisions of article four of this chapter
applying to authority to make
supervised loans regulated consumer
loans shall be guilty of a misdemeanor, and, upon conviction, shall
be fined not more than five thousand dollars, or imprisoned not
more than one year, or both fined and imprisoned.
(3) A person who willfully engages in the business of making
consumer credit sales or consumer loans, or of taking assignments
of rights against consumers arising therefrom and undertakes direct
collection of payments or enforcement of these rights, without complying with the provisions of section one hundred fifteen,
article seven of this chapter, concerning notification, shall be
guilty of a misdemeanor, and, upon conviction, shall be fined not
more than one hundred dollars.
(4) Any person who willfully violates any of the provisions
of sections one hundred twenty-three through one hundred twenty-
eight, inclusive, article two of this chapter, by committing any of
the specifically described and enumerated acts contained therein,
shall be guilty of a misdemeanor, and, upon conviction thereof,
shall be fined not more than one thousand dollars, or imprisoned in
the county jail not more than one year, or both fined and
imprisoned.
ARTICLE 7. ADMINISTRATION.
§46A-7-103. Division of administrative powers; investigation and
administration.
(1) With respect to
regulated consumer lenders and other
supervised financial organizations, the powers of examination and
investigation and administrative enforcement shall be exercised by
the official or agency to whose supervision the organization is
subject. All other powers of the attorney general under this
chapter may be exercised by him with respect to
a supervised any
financial organization
whether or not a supervised financial organization. Notwithstanding the first sentence of this
subsection and notwithstanding subsection (3) of this section, the
attorney general may pursue any investigation, prosecute any suit
and take any other proper action relating to the enforcement of any
consumer protection provision in this chapter.
(2) If the attorney general receives a complaint or other
information concerning noncompliance with this chapter by
a any
supervised financial organization, he shall inform the official or
agency having supervisory authority over the organization
concerned. The attorney general may request information about
supervised financial organizations from the officials or agencies
supervising them.
(3) The attorney general and any official or agency of this
state having supervisory authority over
supervised any financial
organization are authorized and directed to consult and assist one
another in maintaining compliance with this chapter. They may
jointly pursue investigations, prosecute actions, and take other
official actions, as they deem appropriate, if either of them
otherwise is empowered to take the action.
§46A-7-115. Notification.
(1) Every person engaged in this state in making consumer
credit sales or consumer loans
, including any person subject to the provisions of section five-a, article twenty-three, chapter eleven
of this code as a result of his consumer lending practices or any
person who regularly purchases retail installment contracts or
other consumer paper from a business which with it is affiliated,
and every person having an office or place of business in this
state who takes assignments of and undertakes direct collection of
payments from or enforcement of rights against debtors arising from
such sales or loans shall file notification with the state tax
department within thirty days after commencing business in this
state, and, thereafter, on or before the thirty-first day of
January of each year. A notification shall be deemed to be in
compliance with this section if the information hereinafter
required is given in an application for a business registration
certificate provided for in section four, article twelve, chapter
eleven of this code. The state tax commissioner shall make any
information required by this section available to the attorney
general or commissioner upon request. The notification shall state:
(a) Name of the person;
(b) Name in which business is transacted if different from
(a);
(c) Address of principal office, which may be outside this
state;
(d) Address of all
of its offices
or retail stores, if any,
in this state at which
consumer credit sales or consumer loans are
made, or in the case of a
lender credit card, a description of its
affiliation to any store chain, or national or regional credit card
acceptance system, or in the case of a person taking assignments of
obligations, the offices or places of business within this state at
which business is transacted;
(e) If consumer credit sales or consumer loans
, including
loans secured by real property, are made otherwise than at
a its
retail store or office in this state, a brief description of the
manner in which they are made;
(f) Address of designated agent upon whom service of process
may be made in this state; and
(g) Whether
supervised loans regulated consumer loans are
made.
(2) If information in a notification becomes inaccurate
after filing, accurate information must be filed within thirty
days.
(3) The provisions of this section are not applicable to a
seller whose credit sales consist entirely of sales made pursuant
to a seller's credit card so long as the issuer of the card has
fully complied with the provisions of this section,
nor are the provisions of this section applicable to a person whose consumer
lending in West Virginia is incidental and confined to access
through a nonproprietary automatic teller machine or similar
electronic communication terminal.
ARTICLE 8. OPERATIVE DATE AND PROVISIONS FOR TRANSITION.
§46A-8-101. Time of becoming operative; provisions for transition;
enforceability of prior transactions.
(1) Except as otherwise provided in this section, this
chapter shall become operative at 12:01 a. m. on the first day of
September, one thousand nine hundred seventy-four.
(2) Notwithstanding the provisions of subsection (1) of this
section, in order to allow sufficient time to prepare for the
implementation and operation of this chapter and to act on
applications for licenses to make
supervised loans regulated
consumer loans under this chapter
as amended prior to the operative
date of such chapter, the provisions of article four of this
chapter, relating to
supervised lenders regulated consumer lenders,
and the provisions of article seven of this chapter, relating to
their administration, shall, to the extent necessary, become
operative for such purposes at 12:01 a. m. on
July first the first
day of September, one thousand nine hundred
seventy-four ninety-
six.
(3) Transactions entered into before this chapter becomes
operative and the rights, duties and interests flowing from them
thereafter may be terminated, completed, consummated or enforced as
required or permitted by any statute, rule of law or other law
amended, repealed or modified by this chapter as though the repeal,
amendment or modification had not occurred, but this chapter
applies to:
(a) Refinancings and consolidations made after this chapter
becomes operative of consumer credit sales, consumer leases and
consumer loans whenever made;
(b) Consumer credit sales or consumer loans made after this
chapter becomes operative pursuant to revolving charge accounts or
revolving loan accounts entered into, arranged or contracted for
before this chapter becomes operative; and
(c) All consumer credit transactions made before this
chapter becomes operative insofar as this chapter limits the
remedies of creditors.
CHAPTER 47. REGULATION OF TRADE.
ARTICLE 6. MONEY AND INTEREST.
§ 47-6-5d Rebate upon prepayment, refinancing, consolidation or
otherwise; liability and penalties for excess charges.
(a) Upon prepayment in full of a precomputed loan, credit sale or transaction, forbearance or similar transaction repayable
according to its original terms over a period of thirty-six months
or less, the creditor shall rebate that portion of the finance
charge attributable to the prepaid periodic installment periods.
When the total is payable in substantially equal consecutive
monthly installments, the portion of such finance charge
attributable to any particular monthly installment period shall be
that proportion of charge originally contracted for, as the balance
scheduled to be outstanding on the last day of the monthly
installment period before deducting the payment, if any, scheduled
to be made on that day bears to the sum of all the monthly
installment balances under the original schedule of payments.
(This method of allocation is the sum of the digits method,
commonly referred to as the "Rule of 78".) For prepayment in full
of a precomputed loan, credit sale or transaction, forbearance or
similar transaction: (i) Repayable according to its original terms
over a period of thirty-six months or less; (ii) in which unequal
or irregular or other than substantially equal consecutive monthly
installments are payable, the commissioner of banking shall
prescribe by rule the method or procedure for the allocation of
charges and the calculation or rebates consistent with the Rule of
78.
(b) Upon prepayment in full of a precomputed loan, credit
sale or transaction, forbearance or similar transaction, repayable
by its original terms over a period of greater than thirty-six
months, an amount shall be rebated of not less than the unearned
portion of the finance charge calculated by applying the rate of
finance charge which was required by applicable law to be disclosed
in the transaction according to the actuarial method to the unpaid
balance for the time remaining as originally scheduled or as
extended by deferral or otherwise for the period following
prepayment. In instances where no rate of finance charge was
required by law or otherwise to be disclosed, the unearned portion
of the finance charge shall be calculated by applying the finance
charge which was charged in the transaction according to the
actuarial method to the unpaid balance for the time remaining as
originally scheduled or as extended by deferral or otherwise for
the period following prepayment.
(c)
Unearned prepaid finance charges upon prepayment
includes all prepaid finance charges for points, loan or credit
origination fees or loan or credit investigation fees retained by
the lender or creditor or its affiliates: Provided, That (i) in
calculating the rebate for a consumer loan or credit sale unsecured
by real property where such prepaid finance charges have been imposed, the lender or creditor may deduct such charges up to a
maximum of two percent of the amount financed; and (ii) in
calculating the rebate for a consumer loan or credit sale secured
by real property where such prepaid finance charges have been
imposed, the lender or creditor may deduct such charges up to a
maximum of five percent of the amount financed: Provided, however,
That no such deduction totalling more than five percent of the
amount financed may be made by the same lender within a twenty-four
month period as a result of a refinancing. Upon prepayment in full
of a consumer loan or credit sale, any unearned prepaid finance
charges may be rebated by using the Rule of 78 where the original
loan term is thirty-six months or less. Where the original loan
term is greater than thirty-six months, any such charges shall be
rebated by using the actuarial method. To the extent that this
section overrides the preemption on limiting points and other such
charges on first lien residential mortgages for non-purchase money
loans 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:
Provided, further, That this subsection does not apply to loans
made by federally-insured depository institutions.
(d)
(c) For purposes of the rebate of unearned finance charges as required by this section, a prepayment in full shall
include repayment by a new loan, extension of credit, refinancing,
consolidation, forbearance or otherwise.
The term "loan or credit
investigation fees" does not include the reasonable costs of credit
reports paid to third parties as part of the bona fide closing
costs in real estate transactions, where such costs are not
included as part of the finance charge.
(d) (e) As an alternative to the Rule of 78 method of
rebate of determining the unearned finance charge required by this
section, a creditor may rebate unearned finance charges under any
other method which gives a greater rebate to the debtor than the
rebate determined by the Rule of 78.
(e) (f) The provisions governing rebates as set forth in
this section shall apply to all transactions entered in to on or
after the first day of September, one thousand nine hundred eighty-
one. For transactions entered into prior to the first day of
September, one thousand nine hundred eighty-one, the provisions in
effect prior to the effective date of this section [the tenth day
of April, one thousand nine hundred eighty-one] of the respective
chapters of this code shall be utilized to determine the rebate of
unearned finance charges.
(f) (g) For consumer credit sales or consumer loans subject to the provisions of chapter forty-six-a of this code the
provisions of article five, chapter forty-six-a, govern the
imposition of liability and penalties for charging interest or a
finance charge in excess of the maximum rate allowed under the
provisions of this section. In all other instances, the provisions
of this article govern the imposition of liability and penalties
for charging interest or a finance charge in excess of the maximum
allowed under this section.
NOTE: The purpose of this bill is to eliminate separate
licensing requirements for supervised and industrial loan companies
by combining them into one new regulated consumer lender license;
eliminate step rates and simplify interest rate ceilings for
consumer loans; limit the amount of points allowed in loans by
regulated lenders except in purchase money mortgage transactions;
provide disclosures for consumers seeking loan consolidation at a
finance rate higher than that generally permitted consumer sales
credit transactions; clarify the ability of licensed lenders to
collect and pay finder fees; clarify the process for disclosing
subpoenaed bank records and exam reports; clarify the ability of
banks to charge the same finance rate as credit unions; clarify,
revise and make consistent notification filing requirements for
consumer lenders and creditors.
Strike-throughs indicate language that would be stricken
from present law, and underscoring indicates new language that
would be added.
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