SENATE BILL NO. 71
(By Senators Helmick, Snyder, Chafin, Craigo, Dittmar,
Fanning, Prezioso, Sharpe, Wiedebusch, Wooton, Deem, Kimble
and Scott)
[Originating in the Committee on Banking and Insurance;
reported February 19, 1997.]
A BILL to repeal sections ten and fifteen, article two,
chapter thirty-one-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; to amend
and reenact sections one, two, four, five, nine and
eleven, article seventeen, chapter thirty-one of said
code; to amend and reenact sections four, six and eight,
article two, chapter thirty-one-a of said code; to amend
and reenact section three, article three of said chapter;
to amend and reenact sections nine, fourteen, fourteen-a,
fifteen, thirty and thirty-a, article four of said
chapter; to amend and reenact sections twelve, twelve-a
and twelve-b, article eight of said chapter; to amend and
reenact section five, article one, chapter thirty-one-c
of said code; to amend and reenact section one hundred
four, article three, chapter forty-six-a of said code; to
amend and reenact sections one hundred four, one hundred
seven and one hundred eleven, article four of said chapter; and to amend and reenact section eight, article
twenty-four, chapter forty-seven of said code, all
relating to second mortgage companies; banks and banking;
credit unions; regulated consumer lenders; reverse
mortgages; defining terms; correcting code cite
references; deleting conflicting reporting requirements;
ending report on effect to credit availability of
business franchise tax; clarifying the assignment and
securitization of second mortgages; secondary mortgage
broker bond requirements; permitting second mortgage
lenders to be brokers; conforming provision of account
statements and release of second mortgage liens with
other code sections; provision of payoff statements upon
request in second mortgage loans; sharing and acceptance
of out-of-state bank agency reports; deleting obsolete
provisions on interest rate restrictions; notification
requirements for ATM placement and parity of out-of-state
bank terminals; bank messenger services; financing
certain loan processing fees; loan disclosure
requirements; credit union exam schedule; and reverse
mortgage exemptions.
Be it enacted by the Legislature of West Virginia:
That sections ten and fifteen, article two, chapter
thirty-one-a of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; that sections
one, two, four, five, nine and eleven, article seventeen,
chapter thirty-one of said code be amended and reenacted; that
sections four, six and eight, article two, chapter thirty-one- a of said code be amended and reenacted; that section three,
article three of said chapter be amended and reenacted; that
sections nine, fourteen, fourteen-a, fifteen, thirty and
thirty-a, article four of said chapter be amended and
reenacted; that sections twelve, twelve-a and twelve-b,
article eight of said chapter be amended and reenacted; that
section five, article one, chapter thirty-one-c of said code
be amended and reenacted; that section one hundred four,
article three, chapter forty-six-a of said code be amended and
reenacted; that sections one hundred four, one hundred seven
and one hundred eleven, article four of said chapter be
amended and reenacted; and that section eight, article twenty- four, chapter forty-seven of said code be amended and
reenacted, all to read as follows:
CHAPTER 31. CORPORATIONS.
ARTICLE 17. SECONDARY MORTGAGE LOANS.
§31-17-1. Definitions and general provisions.
As used in this article:
(1) "Secondary mortgage loan" means a loan made to an
individual or partnership which is secured in whole or in part by a mortgage or deed of trust upon any interest in real
property used as a dwelling with accommodations for not more
than four families, which property is subject to the lien of
one or more prior recorded mortgages
, or deeds of trust
or
vendor's liens.
(2) "Person" means an individual, partnership,
association, trust, corporation or any other legal entity, or
any combination thereof.
(3) "Lender" means any person who makes or offers to make
or accepts or offers to accept any secondary mortgage loan in
the regular course of business. A person shall be deemed to be
acting in the regular course of business if he or she makes or
accepts, or offers to make or accept, more than five secondary
mortgage loans in any one calendar year.
(4) "Broker" means any person
acting in the regular
course of business who, for a fee or commission or other
consideration, negotiates or arranges, or who offers to
negotiate or arrange, a secondary mortgage loan between a
lender and a borrower.
A person shall be deemed to be acting
in the regular course of business if he or she negotiates or
arranges, or offers to negotiate or arrange, more than five
secondary mortgage loans in any one calendar year; or if he or
she seeks to charge a borrower or receive from a borrower
money or other valuable consideration in any second mortgage transaction before completing performance of all broker
services that he or she has agreed to perform for the
borrower.
(5) "Brokerage fee" means the fee or commission or other
consideration charged by a broker for the services described
in subdivision (4) of this section.
(6) "Principal" or "principal sum" 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 paragraph (a) of this subdivision; and
(ii) Additional charges permitted by this article.
(7) "Additional charges" means every type of charge
arising out of the making or acceptance of a secondary
mortgage loan, except finance charges, including, but not
limited to, official fees and taxes, reasonable closing costs
and certain documentary charges and insurance premiums and
other charges which definition is to be read in conjunction
with, and permitted by section one hundred nine, article
three, chapter forty-six-a of this code.
(8) "Finance charge" means the sum of all interest and
similar charges payable directly or indirectly by the debtor
imposed or collected by the lender incident to the extension
of credit, as coextensive with the definition of "loan finance
charge" set forth in section one hundred two, article one,
chapter forty-six-a of this code.
(9) "Commissioner" means the commissioner of banking of
this state.
(10) "Applicant" means a person who has applied for a
lender's or broker's license.
(11) "Licensee" means any person duly licensed by the
commissioner under the provisions of this article as a lender
or broker.
(12) "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 article.
§31-17-2. License required for lender or broker; exemptions.
(a) No person shall engage in this state in the business
of lender or broker unless and until he or she shall first
obtain a license to do so from the commissioner, which license
remains unexpired, unsuspended and unrevoked, and no foreign
corporation shall, notwithstanding the provisions of section
seventy-nine-a, article one of this chapter, engage in such
business in this state unless it shall qualify to hold
property and transact business in this state.
(b) The provisions of this article do not apply to loans
made by
banking institutions, trust companies, savings and
loan associations, industrial loan companies, federally
insured depository institutions, regulated consumer lender
licensees, insurance companies,
credit unions or any federally
insured depository institution, or to loans made by any other
lender licensed by and under the supervision of any agency of
the federal government, or to loans made by, or on behalf of,
any agency or instrumentality of this state or federal
government or by a nonprofit community development
organization which loans are subject to federal or state
government supervision and oversight.
Loans made subject to this exemption may be assigned, transferred, sold or otherwise
securitized to any person and shall remain exempt from the
provisions of this article, except as to reporting
requirements in the discretion of the commissioner where the
person is a licensee under this article.
(c) A person or entity designated in subsection (b) of
this section may take assignments of a secondary mortgage loan
from a licensed lender, and the assignments of said loans that
they themselves could have lawfully made as exempt from the
provisions of this article under this section do not make that
person or entity subject to the licensing, bonding, reporting
or other provisions of this article, except as such defense or
claim would be preserved pursuant to section one hundred two,
article two, chapter forty-six-a of this code.
(d) The placement or sale for securitization of a second
mortgage loan into a secondary market by a licensee shall not
subject the secondary market holder to the provisions of this
article: Provided, That either the trustee under such an
arrangement is a licensee, or person or entity entitled to
make exempt loans of that type under this section, or the loan
is held with right of recourse to a licensee, or person or
entity entitled to make exempt loans of that type, who also
either retains the servicing rights to the loan or otherwise
has the servicing done in its name by an agent or third party. §31-17-4. Applications for licenses; requirements; bonds;
fees; renewals.
(a) Application for a lender's or broker's license shall
each year be submitted in writing under oath, in the form
prescribed by the commissioner, and shall contain the full
name and address
(both of the residence and place of business)
of the applicant and, if the applicant is a partnership or
association, of every member thereof, and, if a corporation,
of each officer, director and owner of five percent or more of
the capital stock thereof, and such further information as the
commissioner may reasonably require. Any application shall
also disclose the location
in this state at which the business
of lender or broker is to be conducted.
(b) At the time of making application for a lender's
license, the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from
the secretary of state certifying that such applicant has
qualified to hold property and transact business in this
state;
(2) Submit proof that he or she has available for the
operation of the business at the location specified in the
application net assets of at least two hundred fifty thousand
dollars;
(3) File with the commissioner a bond in favor of the state in the amount of one hundred thousand dollars, in such
form and with such conditions as the commissioner may
prescribe, and executed by a surety company authorized to do
business in this state;
(4) Pay to the commissioner a license fee of one thousand
dollars and an investigation fee of two hundred fifty dollars.
If the commissioner shall determine that an investigation
outside this state is required to ascertain facts or
information relative to the applicant or information set forth
in the application, the applicant may be required to advance
sufficient funds to pay the estimated cost of the
investigation. An itemized statement of the actual cost of the
investigation outside this state shall be furnished to the
applicant by the commissioner, and the applicant shall pay or
shall have returned to him or her, as the case may be, the
difference between his or her payment in advance of the
estimated cost and the actual cost of the investigation; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a
corporation, its state of business registration, and a full
and complete disclosure of any litigation or unresolved
complaint filed by a governmental authority or class action
lawsuit on behalf of consumers relating to the operation of
the license applicant.
(c) At the time of making application for a broker's
license, the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from
the secretary of state certifying that the applicant has
qualified to hold property and transact business in this
state;
(2) Submit proof that he or she has available for the
operation of the business at the location specified in the
application net assets of at least ten thousand dollars;
(3) File with the commissioner a bond in favor of the
state in the amount of
one hundred twenty-five thousand
dollars, in such form and with such conditions as the
commissioner may prescribe, and executed by a surety company
authorized to do business in this state;
(4) Pay to the commissioner a license fee of one hundred
dollars and an investigation fee of fifty dollars; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a
corporation, its state of business registration, and a full
and complete disclosure of any litigation or unresolved
complaint filed by a governmental authority or class action
lawsuit on behalf of consumers relating to the operation of
the license applicant.
(d) The aggregate liability of the surety on any bond given pursuant to the provisions of this section shall in no
event exceed the amount of such bond.
(e) Nonresident lenders and brokers licensed under this
article by their acceptance of such license acknowledge that
they are subject to the jurisdiction of the courts of West
Virginia and the service of process pursuant to section one
hundred thirty-seven, article two, chapter forty-six-a of this
code and section thirty-three, article three, chapter fifty- six of this code.
§31-17-5. Refusal or issuance of license.
(a) Upon an applicant's full compliance with the
provisions of section four of this article, the commissioner
shall investigate the relevant facts with regard to the
applicant and his or her application for a lender's or
broker's license, as the case may be. Upon the basis of the
application and all other information before him or her, the
commissioner shall make and enter an order denying the
application and refusing the license sought if the
commissioner finds that:
(1) The applicant does not have available the net assets
required by the provisions of section four of this article;
(2) The applicant, individually, if an individual, or the
partners, if a partnership, or the officers and directors, if
a corporation, is of such character and reputation as reasonably to warrant the belief that the business will not be
operated lawfully and properly in accordance with the
provisions of this article;
(3) The applicant has habitually defaulted on financial
obligations; or
(4) The applicant has done any act or has failed or
refused to perform any duty or obligation for which the
license sought could be suspended or revoked were it then
issued and outstanding.
Otherwise, the commissioner shall issue to the applicant
a lender's or broker's license which shall entitle the
applicant to engage in the business of lender or broker, as
the case may be, during the period, unless sooner suspended or
revoked, for which the license is issued.
(b) Every application for a lender's or broker's license
shall be passed upon and the license issued or refused within
forty-five days after the applicant therefor has fully
complied with the provisions of section four of this article.
Under no circumstances whatever shall
the same person hold
both a lender's and a broker's license a person or licensee
act as a broker and lender in the same transaction. Whenever
an application for a lender's or broker's license is denied
and the license sought is refused, which refusal has become
final, the commissioner shall retain the investigation fee or fees but shall return the license fee to the applicant.
§31-17-9. Disclosure; closing statements; other records
required.
(a) Any licensee or person making on his own behalf, or
as agent, broker or in other representative capacity on behalf
of any other person, a secondary mortgage loan, whether
lawfully or unlawfully, shall at the time of the closing
furnish to the borrower a complete and itemized closing
statement which shall show in detail:
(1) The amount and date of the note or secondary mortgage
loan contract and the date of maturity;
(2) The nature of the security;
(3) The finance charge rate per annum and the itemized
amount of finance charges and additional charges;
(4) The amount financed and total of payments;
(5) Disposition of the principal;
(6) A description of the payment schedule;
(7) The terms on which additional advances, if any, will
be made;
(8) The charge to be imposed for past-due installments;
(9) A description and the cost of insurance required by
the lender or purchased by the borrower in connection with the
secondary mortgage loan;
(10) The name and address of the borrower and of the lender; and
(11) That the borrower may prepay the secondary mortgage
loan in whole or in part on any installment date, and that the
borrower will receive a rebate in full for any unearned
finance charge.
Such detailed closing statement shall be signed by the
lender or his representative, and a completed and signed copy
thereof shall be retained by the lender and made available at
all reasonable times to the borrower, the borrower's successor
in interest to the residential property, or the authorized
agent of the borrower or the borrower's successor, until the
time as the indebtedness shall be satisfied in full.
The commissioner may, from time to time, by rules
prescribe additional information to be included in a closing
statement.
(b) Upon written request from the borrower, the holder of
a secondary mortgage loan instrument shall deliver to the
borrower, within ten days from and after receipt of the
written request, a statement of the borrower's account showing
the date and amount of all payments made or credited to the
account and the total unpaid balance.
Not more than two
statements shall be requested in any twelve-month period.
Charges for providing an account statement may be assessed
only where permitted as set forth by subsection two, section one hundred fourteen, article two, chapter forty-six-a of this
code.
(c) Upon satisfaction of a secondary mortgage loan
obligation in full, the holder of the instrument evidencing or
securing the obligation shall
deliver to the borrower a
recordable release and all writings signed by the borrower
which were incident to applying for and obtaining the
secondary mortgage loan. comply with the requirements of
section one, article twelve, chapter thirty-eight of this code
in the prompt release of the lien which had secured the
secondary mortgage loan obligation.
(d) Upon written request or authorization from the
borrower, the holder of a secondary mortgage loan instrument
shall send or otherwise provide to the borrower or his or her
designee, within two business days after receipt of the
written request or authorization, a payoff statement of the
borrower's account. Except as provided by this subsection, no
charge may be made for providing the payoff statement.
Charges for the actual expenses associated with using a third- party courier delivery or expedited mail delivery service may
be assessed when this type of delivery is requested and
authorized by the borrower, following disclosure to the
borrower of its cost. The payoff information shall be provided
by mail, telephone, courier, facsimile, or other transmission as requested by the borrower or his or her designee.
§31-17-11. Records and reports; examination of records;
analysis.
(a) Every licensee shall maintain at his or her place of
business in this state, if any, or if he or she has no place
of business in this state at his or her principal place of
business outside this state, such books, accounts and records
relating to all transactions within this article as are
necessary to enable the commissioner to enforce the provisions
of this article. All the books, accounts and records shall be
preserved, exhibited to the commissioner and kept available as
provided herein for the reasonable period of time as the
commissioner may by rules require. The commissioner is hereby
authorized to prescribe by rules the minimum information to be
shown in the books, accounts and records.
(b) Each licensee shall file with the commissioner on or
before the fifteenth day of
April March of each year a report
under oath or affirmation concerning his or her business and
operations in this state for the preceding license year in the
form prescribed by the commissioner, which shall show the
annual volume and outstanding amounts of secondary mortgage
loans, the classification of the secondary mortgage loans by
size and by security, and the gross income from, and expenses
properly chargeable to, such secondary mortgage loans.
(c) The commissioner may, at his or her discretion, make
or cause to be made an examination of the books, accounts and
records of every licensee pertaining to secondary mortgage
loans made in this state under the provisions of this article,
for the purpose of determining whether each licensee is
complying with the provisions hereof and for the purpose of
verifying each licensee's annual report. If the examination is
made outside this state, the licensee shall pay the cost
thereof in like manner as applicants are required to pay the
cost of investigations outside this state.
(d) The commissioner shall publish annually an analysis
of the information furnished in accordance with the provisions
of subsection (b) of this section, but the individual reports
shall not be public records and shall not be open to public
inspection.
CHAPTER 31A. BANKS AND BANKING.
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,
industrial loan companies,
building and loan associations, supervised lenders, regulated consumer lenders, second mortgage lenders and brokers, 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 the code of West
Virginia, 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 the
state or federal regulatory authorities. Subpoenas shall first
be directed to the commissioner, who shall authorize
disclosure of relevant records and information therefrom for
good cause, upon 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 which 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; and
(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;
(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; and
(D) To accept an assurance in writing that the person
will not in the future engage in the conduct alleged by the
commissioner to be unlawful, which conduct could be subject to
an order under the provisions of this chapter. Such assurance
of voluntary compliance shall not be considered an admission
of violation for any purpose, except that if a person giving
such assurance fails to comply with its terms, the assurance
is prima facie evidence that prior to such assurance the
person engaged in conduct described in such assurance;
(16) To seek and obtain from courts, civil penalties against any person who violates this chapter, the rules issued
pursuant thereto, or any orders lawfully entered by the
commissioner or board of banking and financial institutions in
an amount not less than fifty dollars nor more than five
thousand dollars for each violation;
(17) To receive from state banking institutions
applications to change the locations of their principal
offices and to approve or disapprove such applications; and
(18) 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-2-6. Commissioner's examinations of financial
institution; reports; records; communications from
commissioner to institution; examination by federal or
out-of-state agency in lieu of commissioner's
examination.
The commissioner of banking shall make, at least once
every eighteen months, a thorough examination of all the
books, accounts, records and papers of every depository
financial institution. He or she shall carefully examine all
of the assets of each such institution, including its notes, drafts, checks, mortgages, securities deposited to assure the
payment of debts unto it, and all papers, documents and
records showing, or in any manner relating to, its business
affairs, and shall ascertain the full amount and the nature in
detail of all of its assets and liabilities. The commissioner
may also, at his or her discretion, make or cause to be made,
an annual or periodic examination of the books, accounts,
records and papers of other financial institutions under his
or her supervision for the purposes of determining compliance
with applicable consumer and credit lending laws, and
verifying information provided in any license application or
annual report submitted to the commissioner. The commissioner
may also make such examination of any subsidiaries or
affiliates of a financial institution as he or she may deem
necessary to ascertain the financial condition of the
financial institution, the relations between the financial
institution and its subsidiaries and affiliates and the effect
of the relations upon the affairs of such financial
institution. A full report of every examination shall be made
and filed and preserved in the office of the commissioner and
a copy thereof forthwith mailed to the institution examined.
Every institution shall retain all of its records of final
entry for the period of time as required in section thirty- five, article four of this chapter for banking institutions. Unless otherwise covered by assessments or a specific
provision of this code, the cost of examinations made pursuant
to this section shall be borne by the financial institution at
a rate of fifty dollars per each examiner hour expended.
Every official communication from the commissioner to any
institution, or to any officer thereof, relating to an
examination or an investigation of the affairs of the
institution conducted by the commissioner or containing
suggestions or recommendations as to the manner of conducting
the business of the institution, shall be read
to by the board
of directors at the next meeting after the receipt thereof,
and the president, or other executive officer, of the
institution shall forthwith notify the commissioner in writing
of the presentation and reading of the communication and of
any action taken thereon by the institution.
The commissioner of banking, in his or her discretion,
may:
(a) Accept a copy of a reasonably current examination of
any banking institution made by the federal deposit insurance
corporation or the federal reserve system in lieu of an
examination of the banking institution required or authorized
to be made by the laws of this state, and the commissioner may
furnish to the federal deposit insurance corporation or the
federal reserve system or to any official or examiner thereof,
any copy or copies of the commissioner's examinations of and reports on the banking institutions;
(b) accept a copy of a
reasonably current examination of any out-of-state bank or any
West Virginia state bank's out-of-state activities made by
another state's banking regulatory authority in lieu of an
examination of the banking institution required or authorized
to be made by the laws of this state, and the commissioner may
furnish to such other state's banking regulatory authority or
to any official or examiner thereof, any copy or copies of the
commissioner's examinations of and reports on such banking
institutions; but nothing herein shall be construed to limit
the duty and responsibility of banking institutions to comply
with all provisions of law relating to examinations and
reports, nor to limit the powers and authority of the
commissioner of banking with reference to examinations and
reports under existing laws.
The provision or exchange of
examination reports and other records of financial condition
and individuals pursuant to cooperative, coordinating or
information-sharing agreements with other bank supervisory
agencies and persons as permitted by this chapter under an
agreement of confidentiality, shall not constitute a violation
of section four of this article.
§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 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
of the regulated consumer lender shown on the report of
condition of the regulated consumer lender as of the preceding
thirty-first day of December, respectively, as follows:
Total Outstanding Balances
But NotThisOf Excess
OverOverAmountPlusOver
$0$1,000,000$ 800--
1,000,0005,000,000800.0004001,000,000
5,000,00010,000,0002,400.0002005,000,000
10,000,000-4,200.00010010,000,000
If 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
section eight, article one, chapter thirty-one-c of this code
as follows:
Total Assets
But NotThisOf Excess
OverOverAmountPlusOver
$0$100,000100--
100,000500,000300--
500,0001,000,000500--
1,000,0005,000,000500.0004001,000,000
5,000,00010,000,0002,100.0002005,000,000
10,000,000-3,100.00010010,000,000
(4) For each bank holding company, an annual assessment
as provided for in section five eight, 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.
(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 regulated
consumer lender and each state credit union 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 3. BOARD OF BANKING AND FINANCIAL INSTITUTIONS.
§31A-3-3. Hearings and orders; entry of order without notice and hearing.
(a) Subject to the provisions of subsections (e), (f),
(g) and (h) of this section and to the provisions of
subsection (j), section twelve, article eight of this chapter,
notice and hearing shall be provided in advance of the entry
of any order by the board.
(1) Such notice shall be given to the financial
institution or person with respect to whom the hearing is to
be conducted in accordance with the provisions of section two,
article seven, chapter twenty-nine-a of this code, and such
hearing and the administrative procedures in connection
therewith shall be governed by all of the provisions of
article five, chapter twenty-nine-a of this code, and shall be
held at a time and place set by the board, but shall not be
held less than ten or more than thirty days after such notice
is given. A hearing may be continued by the board on its own
motion or for good cause shown.
(2) At any such hearing a party may represent himself or
be represented by an attorney at law admitted to practice
before any circuit court of this state.
(b) After any such hearing and consideration of all of
the testimony and evidence, the board shall make and enter an
order deciding the matters with respect to which such hearing
was conducted, which order shall be accompanied by findings of fact and conclusions of law as specified in section three,
article five, chapter twenty-nine-a of this code, and a copy
of such order and accompanying findings and conclusions shall
be served upon all parties to such hearing, and their
attorneys of record, if any.
(c) In the case of an application for the board's
approval to incorporate and organize a banking institution in
this state, as provided in subdivision (3), subsection (b),
section two of this article, the board shall, upon receipt of
any such application, provide notice to all banking
institutions, which in the manner hereinafter provided, have
requested notice of any such action. The request by any such
banking institution to receive such notice shall be in writing
and shall request the board to notify it of the receipt by the
board of any application to incorporate and organize a banking
institution in this state. A banking institution may, within
ten days after receipt of such notice, file a petition to
intervene and shall, if it so files such petition, thereupon
become a party to any hearing relating thereto before the
board.
(d) The board shall have the power and authority to issue
subpoenas and subpoenas duces tecum, administer oaths and
examine any person under oath in connection with any subject
relating to duties imposed upon or powers vested in the board.
(e) Whenever the board shall find that extraordinary
circumstances exist which require immediate action, it may
forthwith without notice or hearing enter an order taking any
action permitted by subdivisions (1), (2), (4) and (5),
subsection (b), section two of this article. Immediately upon
the entry of such order, certified copies thereof shall be
served upon all persons affected thereby and upon demand such
persons shall be entitled to a hearing thereon at the earliest
practicable time.
(f) Whenever the board shall find that the financial
condition of a state banking institution or a national banking
association constitutes an imminent peril to its depositors,
savings account holders, other customers or creditors, it may
forthwith without notice or hearing enter an order taking any
action permitted by subdivisions (7) and (8), subsection (b),
section two of this article. Immediately upon entry of such
order, certified copies thereof shall be served upon all
persons affected thereby and upon demand such persons shall be
entitled to a hearing thereon at the earliest practicable
time.
(g) Whenever the board shall find that the financial
condition of a state banking institution or national banking
association constitutes an imminent peril to its depositors,
savings account holders, other customers or creditors, it may forthwith without compliance with the provisions of section
six or seven, article four of this chapter and without notice
or hearing enter an order approving or disapproving an
application to incorporate a state banking institution which
is being formed to purchase the business and assets or assume
the liabilities of, or both, or merge or consolidate with,
such state banking institution or national banking institution
the financial condition of which constitutes an imminent peril
to its depositors, savings account holders, other customers or
creditors. Immediately upon the entry of such order, certified
copies thereof shall be served upon all persons affected
thereby and upon demand such persons shall be entitled to a
hearing thereon at the earliest practicable time.
(h) Whenever the board shall find that the financial
condition of a state banking institution, national association
or bank holding company constitutes an imminent peril to its
depositors, savings account holders, other customers or
creditors, it may forthwith without compliance with the
provisions of section four five or seven six, article eight-a
of this chapter and without notice of hearing enter an order
approving or disapproving an application by an existing bank
holding company or by an organizing bank holding company to
acquire in whole or in part, directly or indirectly, such
state banking institution, national association or bank holding company. Immediately upon the entry of such order,
certified copies thereof shall be served upon all persons
affected thereby at the earliest practicable time.
(i) Definitions:
(1) The term "imminent peril" means that, because the
banking institution or bank holding company is insolvent or
about to be insolvent, or there is a probability that the
banking institution will not be able to pay its debts when
they become due.
(2) A banking institution or bank holding company is
"about to be insolvent" when it would be unable to meet the
demands of its depositors or is clearly unable, without
impairment of capital, by sale of assets or lawful borrowings
or otherwise, to realize sufficient liquid assets to pay such
debts for which payment is likely, in the immediate future, to
be due and demanded in the ordinary course of business.
(3) A banking institution or bank holding company is
"insolvent" when it is unable to pay its debts to its
depositors and other creditors in the ordinary and usual
course of business.
ARTICLE 4. BANKING INSTITUTIONS AND SERVICES GENERALLY.
§31A-4-9. Fidelity bonds and insurance.
(a) The directors of a state bank shall direct and
require good and sufficient fidelity bonds on all active officers and employees, whether or not they draw salary or
compensation, which bonds shall provide for indemnity to such
bank on account of any losses sustained by it as the result of
any dishonest, fraudulent or criminal act or omission
committed or omitted by them acting independently or in
collusion or combination with any person or persons. Such
bonds may be in individual, schedule or blanket form, and the
premiums therefor shall be paid by the bank.
(b) The directors shall also direct and require suitable
insurance protection to the bank against burglary, robbery,
theft and other similar insurable hazards to which the bank
may be exposed in the operations of its business on the
premises or elsewhere.
(c) The directors shall be responsible for prescribing at
least once in each year the amount or penal sum of such bonds
or policies and the sureties or underwriters thereon, after
giving due and careful consideration to all known elements and
factors constituting such risk or hazard. Such action shall
be recorded in the minutes of the board of directors.
(d) A state bank which is a subsidiary of a bank holding
company as defined in section three one, article eight-a of
this chapter may fulfill the requirements of subsections (a)
and (b) of this section if such fidelity bonds and insurance
protection are obtained on its behalf by the bank holding company: Provided, That the evidence of the existence of such
bonds and insurance protection for the state bank must be
maintained at the main office of the state bank and the
directors of the state bank shall be responsible for reviewing
the adequacy of such bonds and insurance protection annually
and for recording such review in the minutes of the board.
§31A-4-14. Trust powers of banking institutions.
(a) Every state banking institution which files the
reports required in the following section fifteen of this
article and which is not otherwise prohibited by the
commissioner or federal bank regulators from doing so, shall
have and exercise the following powers:
(1) All the powers, rights and privileges of any state
banking institution;
(2) 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;
(3) To act as registrar, transfer agent or dividend or coupon paying agent for any corporation;
(4) 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;
(5) To purchase and sell and take charge of and receive
the rents, issues and profits of any real estate for other
persons or corporations;
(6) 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
(7) To do and perform any act or thing requisite or
necessary in, or incidental to, the exercise of the general
powers herein set forth.
(b) All national banks having their main office 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.
(c) Banks having their main office in another state which
lawfully have a branch in this state pursuant to the
provisions of federal law or articles eight-d or eight-e of
this chapter which have been, or hereafter may be, authorized
under the laws of the United States or the laws of the state
in which such bank is chartered to act as trustee and in other
fiduciary capacities in the state in which their main office
is located shall have all the rights, powers, privileges and
immunities conferred hereunder, provided they comply with the
requirements hereof.
§31A-4-14a. Transfer of fiduciary accounts or relationships
between affiliated subsidiary banks of a bank holding
company.
(a) Notwithstanding any other provision of this code, and unless the will, deed or other instrument creating a trust or
fiduciary account or relationship specifically provides
otherwise, any affiliate subsidiary which is empowered with
and authorized to exercise trust powers, or otherwise performs
fiduciary services for a fee, may, without any order or other
action on the part of any court or otherwise, transfer to any
other affiliate subsidiary exercising or authorized to
exercise trust powers any or all rights, franchises and
interests in its fiduciary accounts or relationships,
including, but not limited to, any or all appointments,
designations and nominations and any other rights, franchises
and interests, as trustee, executor, administrator, guardian,
committee, escrow agent, transfer and paying agent of stocks
and bonds and every other fiduciary capacity; and the
transferee or receiving affiliate subsidiary shall hold and
enjoy all rights of property, franchises and interests in the
same manner and to the same extent as such rights, franchises
and interests were held or enjoyed by the transferor affiliate
subsidiary. As to transfers to an affiliate subsidiary
pursuant to this section, the receiving affiliate subsidiary
shall take, receive, accept, hold, administer and discharge
any grants, gifts, bequests, devises, conveyances, trusts,
powers and appointments made by deed, deed of trust, will,
agreement, order of court or otherwise to, in favor of, or in the name of, the transferor affiliate subsidiary, whether
made, executed or entered before or after such transfer and
whether to vest or become effective before or after such
transfer, as fully and to the same effect as if the receiving
affiliate subsidiary had been named and in such deed, deed of
trust, will, agreement, order or other instrument instead of
such transferor affiliate subsidiary. All acts taken or
performed in its own name or in the name of or on behalf of
the transferor affiliate subsidiary by any receiving affiliate
subsidiary as trustee, agent, executor, administrator,
guardian, depository, registrar, transfer agent or other
fiduciary with respect to fiduciary accounts or relationships
transferred pursuant to this section are as good, valid and
effective as if made by the transferor affiliate subsidiary.
(b) For purposes of this section, the term "affiliate
subsidiary" means any two or more subsidiaries (as the term
"subsidiary" is defined in section two one, article eight-a of
this chapter) which are "banks" or "banking institutions" (as
those terms are defined in section two, article one of this
chapter) and which have a common bank holding company as their
parent company. For purposes of this section, the term "bank
holding company" shall have the meaning set forth in section
one, article eight-a of this chapter.
(c) At least thirty days before any transfer authorized by this section, the transferor affiliate subsidiary shall
send a statement of intent to transfer together with the name
and address of the transferee or receiving affiliated
subsidiary by regular United States mail to the most recent
known address of all persons who appear in the records of the
transferor affiliate subsidiary as having a vested present
interest in the trust, fiduciary account or relationship to be
transferred.
(d) This section shall be applicable to both domestic and
foreign bank holding company affiliate subsidiaries.
§31A-4-15. Certificate showing unimpaired capital to be filed
before exercising trust powers; penalties; notice of
failure to comply
.
No banking institution shall exercise any of the trust
powers mentioned in the preceding section this article until
it shall have filed with the commissioner of banking an annual
report of trust assets each calendar year as filed with
federal regulators. If any such banking institution shall
exercise, or attempt to exercise, any such powers or rights
without having complied with the requirements of this section
as to the filing of such report, it shall be guilty of a
misdemeanor, and, upon conviction thereof, shall be fined not
more than five hundred dollars; and in every such case,
whether or not there shall have been a prosecution or conviction of the company so offending, the commissioner of
banking, being satisfied of the facts, may publish a notice of
the fact that it has failed to comply with the requirements of
this section and is therefore not entitled to exercise the
trust powers and rights mentioned in the preceding section.
In the event a notice is published as aforesaid, it shall be
published as a Class II legal advertisement in compliance with
the provisions of article three, chapter fifty-nine of this
code, and the publication area for such publication shall be
the county in which such institution is located.
§31A-4-30. Charges and interest allowed in certain cases;
negotiability of installment notes.
In addition to the interest rate provided in article six,
chapter forty-seven of this code and elsewhere by law, a
banking institution may charge interest together with other
finance charges at a rate of eighteen percent per annum or
less calculated according to the actuarial method, or one and
one-half percent per month, computed on unpaid balances.
Additional charges in connection with consumer loans are
limited as provided in section one hundred nine, article
three, chapter forty-six-a of this code. Loans may be made on
a precomputed basis: and collect a reasonable amount to
cover the expenses incurred in procuring reports and
information respecting loans and the value of and title to property offered as security therefor, and a charge of three
dollars may be made for any loan or forbearance of money or
other thing where the interest at the rate of six percent per
annum would not amount to that sum and the same shall not be
a usurious charge or rate of interest. Except in cases where
it is otherwise specially provided by law, any banking
institution authorized to do, and doing business in this
state, may contract for and charge interest for a secured or
unsecured loan, repayable in installments at a rate not in
excess of: (a) Six percent per annum upon the principal amount
of the loan, for the entire period of the loan, and add such
charge to the principal amount of the loan; or (b) six percent
per annum upon the face amount of the instruments evidencing
the obligation to repay the loan, for the entire period of the
loan, and deduct such charge in advance but in no case shall
the interest on such a discount loan exceed an annual
percentage rate of fifteen percent per annum calculated
according to the actuarial method: Provided, That upon
prepayment in full of a precomputed loan, the bank shall
rebate the unearned portion of such finance charge charges as
specified in section five-d, article six, chapter forty-seven
of this code. Any note evidencing any such installment loan
may provide that the entire unpaid balance thereof at the
option of the holder shall become due and payable upon default in the payment of any stipulated installment without impairing
the negotiability of such note if otherwise negotiable.
§31A-4-30a. Alternative maximum interest rate on loans by
banks chartered under state law.
(a) The Legislature hereby finds and declares that:
(1) Under federal banking laws, national banking
associations are permitted to charge interest on loans at a
rate not exceeding one percent in excess of the discount rate
on ninety-day commercial paper in effect at the federal
reserve bank in the federal reserve district where the
national banking association is located;
(2) Banks chartered under the laws of West Virginia are
unable should be able to charge interest on a comparable
basis, and hence may from time to time be avoid being placed
at a competitive disadvantage in relation to national banking
associations having their principal offices in the state;
(3) It is in the best interest of the citizens of this
state to preserve the state banking system and to that end,
and in order to foster equitable competition as to interest
rates, to provide a means by which banks chartered under the
laws of West Virginia, as an alternative, to the interest
rates authorized by any other provisions of this code, may, if
authorized by the commissioner of banking, charge interest at
a rate comparable to the rate now permitted to national banking associations; Therefore,
(4) Such alternative interest rate should be prescribed
from time to time by the commissioner of banking, taking into
account the interest rate permitted to be charged by national
banking associations having their principal offices in the
state and conditions then prevailing so as to permit and
encourage competition in interest rates between the banks of
West Virginia.
(b) In view of the foregoing findings, it is the purpose
of this section to authorize and direct the commissioner of
banking to prescribe from time to time the maximum interest
rates on loans of money made by persons or by banks chartered
under the laws of West Virginia, as an alternative to the
interest rates authorized by any other provisions of this
code, and to authorize such persons or banks to charge up to
the maximum interest rates so fixed.
(c) The commissioner of banking is hereby authorized and
directed to find and determine from time to time whether the
maximum rate of interest which may be charged by national
banking associations having their principal offices in the
state is greater than the maximum rate of interest which may
be charged by persons or by banks chartered under the laws of
West Virginia, as an alternative to the interest rates
authorized by any other provisions of this code, which maximum rate of interest shall not exceed one percent in excess of the
discount rate on ninety-day commercial paper in effect at the
federal reserve bank in the federal reserve district where
such banks or persons are located, such finding and
determination to be made and such maximum rate prescribed
within two business days after the effective date of any
change in such discount rate.
(d) Each time the discount rate shall change at a federal
reserve bank in a federal reserve district in which a bank
chartered under the laws of West Virginia is located, the
commissioner of banking shall, in accordance with the
provisions of subsection (c) of this section, make the
required finding and determination and prescribe the maximum
rate of interest which may be charged by persons or by state- chartered banks located in such federal reserve district for
loans made pursuant to the provisions of this section, and
shall cause such maximum rate of interest to be issued to the
public, such maximum rate of interest to be effective
immediately.
(e) Notwithstanding any other provisions of this section,
the commissioner of banking shall on the effective date of
this section or, if such day is a Saturday, Sunday or legal
holiday, on the next succeeding business day make the finding
and determination required by subsection (c) of this section and prescribe by order and issue to the public said maximum
rate of interest for persons and state-chartered banks located
in such district which shall be effective until the
commissioner of banking shall next issue an order prescribing
such maximum rate of interest.
(f) (4) As an alternative to the interest rate
authorized by any other provisions of this code, any person
may or any bank now or hereafter chartered under the laws of
West Virginia may, after the effective date of this section,
on any loan of money, contract in writing for the payment of
interest at a rate, including points expressed as a percentage
of the loan divided by the number of years of the loan
contract, not to exceed the then effective maximum rate
prescribed by the commissioner of banking pursuant to the
provisions of this section one percent in excess of the
discount rate on ninety-day commercial paper in effect at the
federal reserve bank in the federal reserve district where the
state bank is located..
(g) (b) For the purpose of subsection (f) (a) of this
section, the term "points" is defined as the amount of money,
or other consideration, received by any person or by such
banks, from whatever source, as a consideration for making the
loan and not otherwise expressly permitted by statute.
(h) (c) A commitment to make a loan pursuant to this section which provides for consummation within some future
time may be consummated pursuant to the provisions, including
interest rate, of such commitment notwithstanding the fact
that the maximum rate of interest at the time the loan
contract is entered into is less than a commitment rate of
interest: Provided, That the commitment rate of interest does
not exceed the maximum interest rate in effect on the date the
commitment was issued: Provided, however, That the commitment
when agreed to by the borrower constitutes a legally binding
obligation on the part of such person or such bank to make
such a loan within a specified time period in the future at a
rate of interest not exceeding the maximum rate of interest
effective as of the date of commitment, and the commitment
does not include any condition for increase of the interest
rate at the time of loan consummation even though the maximum
rate of interest is then higher.
(i) (d) Nothing contained in this section shall prohibit
the parties to any loan transaction from contracting for a
rate of interest authorized by any other provision of this
code.
ARTICLE 8. HEARINGS; ADMINISTRATIVE PROCEDURES; JUDICIAL
REVIEW; UNLAWFUL ACTS; PENALTIES.
§31A-8-12.Procedure for authorization of branch banks;
temporary offices at colleges and universities; limitations and restrictions; examinations and
hearings; standards of review; penalties for
violation of section.
(a) No banking institution shall engage in business in
this state at any place other than at its principal office in
this state, at a branch bank in this state, at a customer bank
communication terminal permitted by section twelve-b of this
article or at any loan origination office permitted by section
twelve-c of this article:
(1) Acceptance of a deposit or allowing a withdrawal at
the banking offices of any subsidiary affiliate, as defined in
section two one, article eight-a of this chapter, for credit
or debit to the customer's account at any other subsidiary of
the same bank holding company is permissible and does not
constitute branch banking. In addition, the conduct of
activity at branch offices as an agent for any bank subsidiary
of the same bank holding company shall be permitted to the
same extent allowed by federal law for national banks pursuant
to 12 U.S.C. §1828, and does not constitute branch banking;
nor shall such activity constitute a violation of section
forty-two, article four of this chapter: Provided, That no
banking institution may utilize that agency relationship to
evade state consumer protection laws, including usury laws, or
any other applicable laws of this state, or to conduct any activity that is not financially-related, as that term is
defined by section two, article eight-c of this chapter;
(2) A banking institution located in a county where there
is also a higher educational institution as defined in section
two, article one, chapter eighteen-b of this code, may
establish a temporary business office on the campus of any
such educational institution located in such county for the
limited purposes of opening accounts and accepting deposits
for a period not in excess of four business days per semester,
trimester or quarter: Provided, That prior to opening any
temporary office, a banking institution must first obtain
written permission from the institution of higher education.
The term "business days", for the purpose of this subsection,
means days exclusive of Saturdays, Sundays and legal holidays
as defined in section one, article two, chapter two of this
code;
(3) Any banking institution which on the first day of
January, one thousand nine hundred eighty-four, was authorized
to operate an off-premises walk-in or drive-in facility,
pursuant to the law then in effect, may, as of the seventh day
of June, one thousand nine hundred eighty-four, operate such
facility as a branch bank and it shall not be necessary, for
the continued operation of such branch bank, to obtain
additional approvals, notwithstanding the provisions of subsection (d) of this section and subdivision (6), subsection
(b), section two, article three of this chapter.
(b) Except for a bank holding company, it shall be
unlawful for any individual, partnership, society,
association, firm, institution, trust, syndicate, public or
private corporation, or any other legal entity, or combination
of entities acting in concert, to directly or indirectly own,
control or hold with power to vote, twenty-five percent or
more of the voting shares of each of two or more banks, or to
control in any manner the election of a majority of the
directors of two or more banks.
(c) A banking institution may establish branch banks
either by:
(1) The construction, lease or acquisition of branch bank
facilities within any county of this state; or
(2) The purchase of the business and assets and
assumption of the liabilities of, or merger or consolidation
with, another banking institution.
(d) Notwithstanding any other provision of this chapter
to the contrary, subject to and in furtherance of the board's
authority under the provisions of subdivision (6), subsection
(b), section two, article three of this chapter, and
subsection (g) of this section, the board may approve or
disapprove the application of any state banking institution to establish a branch bank.
(e) The main office or a branch of a West Virginia state
banking institution may not be relocated without the approval
by order of the commissioner.
(f) Any banking institution which is authorized to
establish branch banks pursuant to this section may provide
the same banking services and exercise the same powers at each
such branch bank as may be provided and exercised at its
principal banking house.
(g) The board shall, upon receipt of any application to
establish a branch bank, provide notice of such application to
all banking institutions. A banking institution may, within
ten days after receipt of such notice, file a petition to
intervene and shall, if it so files such petition, thereupon
become a party to any hearing relating thereto before the
board.
(h) The commissioner shall prescribe the form of the
application for a branch bank and shall collect an examination
and investigation fee of one thousand dollars for each filed
application for a branch bank that is to be established by the
construction, lease or acquisition of a branch bank facility,
and two thousand five hundred dollars for a branch bank that
is to be established by the purchase of the business and
assets and assumption of the liabilities of, or merger or consolidation with another banking institution.
Notwithstanding the above, if the merger or consolidation is
between an existing banking institution and a bank newly
incorporated solely for the purpose of facilitating the
acquisition of the existing banking institution, the
commissioner shall collect an examination and investigation
fee of five hundred dollars. The board shall complete the
examination and investigation within ninety days from the date
on which such application and fee are received, unless the
board requests in writing additional information and
disclosures concerning the proposed branch bank from the
applicant banking institution, in which event such ninety-day
period shall be extended for an additional period of thirty
days plus the number of days between the date of such request
and the date such additional information and disclosures are
received.
(i) Upon completion of the examination and investigation
with respect to such application, the board shall, if a
hearing be required pursuant to subsection (j) of this
section, forthwith give notice and hold a hearing pursuant to
the following provisions:
(1) Notice of such hearing shall be given to the banking
institution with respect to which the hearing is to be
conducted in accordance with the provisions of section two, article seven, chapter twenty-nine-a of this code, and such
hearing and the administrative procedures in connection
therewith shall be governed by all of the provisions of
article five, chapter twenty-nine-a of this code, and shall be
held at a time and place set by the board but shall not be
less than ten nor more than thirty days after such notice is
given;
(2) At any such hearing a party may represent himself or
be represented by an attorney at law admitted to practice
before any circuit court of this state;
(3) After such hearing and consideration of all the
testimony and evidence, the board shall make and enter an
order approving or disapproving the application, which order
shall be accompanied by findings of fact and conclusions of
law as specified in section three, article five, chapter
twenty-nine-a of this code, and a copy of such order and
accompanying findings and conclusions shall be served upon all
parties to such hearing, and their attorneys of record, if
any.
(j) No state banking institution may establish a branch
bank until the board, following an examination, investigation,
notice and hearing, enters an order approving an application
for that branch bank: Provided, That no such hearing shall be
required with respect to any application to establish a branch bank which is approved by the board unless a banking
institution has timely filed a petition to intervene pursuant
to subsection (g) of this section. The order shall be
accompanied by findings of fact that:
(1) Public convenience and advantage will be promoted by
the establishment of the proposed branch bank;
(2) Local conditions assure reasonable promise of
successful operation of the proposed branch bank and of those
banks and branches thereof already established in the
community;
(3) Suitable physical facilities will be provided for the
branch bank;
(4) The applicant state-chartered banking institution
satisfies such reasonable and appropriate requirements as to
sound financial condition as the commissioner or board may
from time to time establish by regulation;
(5) The establishment of the proposed branch bank would
not result in a monopoly, nor be in furtherance of any
combination or conspiracy to monopolize the business of
banking in any section of this state; and
(6) The establishment of the proposed branch bank would
not have the effect in any section of the state of
substantially lessening competition, nor tend to create a
monopoly or in any other manner be in restraint of trade, unless the anticompetitive effects of the establishment of
that proposed branch bank are clearly outweighed in the public
interest by the probable effect of the establishment of the
proposed branch bank in meeting the convenience and needs of
the community to be served by that proposed branch bank.
If the branch results from the merger or acquisition of
banking institutions, the findings of fact required in
subdivisions (1) through (3) of this subsection may be based
on the performance and suitability of the previous banking
offices.
(k) Any party who is adversely affected by the order of
the board shall be entitled to judicial review thereof in the
manner provided in section four, article five, chapter twenty- nine-a of this code. Any such party adversely affected by a
final judgment of a circuit court following judicial review as
provided in the foregoing sentence may seek review thereof by
appeal to the supreme court of appeals in the manner provided
in article six, chapter twenty-nine-a of this code.
(l) Pursuant to the resolution of its board of directors
and with the prior written approval of the commissioner, a
state banking institution may discontinue the operation of a
branch bank upon at least thirty days prior public notice
given in such form and manner as the commissioner prescribes.
(m) Any violation of any provision of this section shall constitute a misdemeanor offense punishable by applicable
penalties as provided in section fifteen of this article.
§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, or regulated consumer lender or other
depository institution 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 an office of such financial
institution is located or within twenty-five fifty miles of
the principal an office of such financial institution.
§31A-8-12b. Installation and operation of customer bank
communication terminals permitted.
(a) Any banking institution as defined in section two,
article one of this chapter, individually or jointly with one
or more other banking institutions or other federally insured
financial institutions having their principal offices in this
state, or any combination thereof, may upon thirty ten days
prior written notice filed with the commissioner, install,
operate and engage in banking business by means of one or more
customer bank communication terminals. Any banking
institution which installs and operates a customer bank
communication terminal:
(1) Shall make such customer bank communication terminal
available for use by other banking institutions; and
(2) May make such customer bank communication terminal
available for use by other federally insured financial
institutions, all in accordance with regulations promulgated
by the commissioner. Such customer bank communication
terminals shall not be considered to be branch banks or branch
offices, agencies or places of business or off-premises walk- in or drive-in banking facilities; nor shall the operation of
such customer bank communication terminals to communicate with
and permit financial transactions to be carried out through a
nonexclusive access interchange system be considered to make
any banking institution which is part of such a nonexclusive
access interchange system to have illegal branch banks or branch offices, agencies or places of business or off-premises
walk-in or drive-in banking facilities.
(b) Notwithstanding the provisions of subdivision (1),
subsection (a) of this section, a customer bank communication
terminal located on the premises of the principal office or
branch bank of a banking institution or on the premises of an
authorized off-premises facility need not be made available
for use by any other banking institution or its customers.
(c) For purposes of this section, "customer bank
communication terminal" means any electronic device or machine
owned, leased, or operated by a bank, together with all
associated equipment, structures and systems, including,
without limitation, point of sale terminals, through or by
means of which a customer and a banking institution may engage
in any banking transactions, whether transmitted to the
banking institution instantaneously or otherwise, including,
without limitation, the receipt of deposits of every kind, the
receipt and dispensing of cash, requests to withdraw money
from an account or pursuant to a previously authorized line of
credit, receiving payments payable at the bank or otherwise
transmitting instructions to receive, transfer or pay funds
for a customer's benefit. Personal computers, telephones and
associated equipment which enable a bank customer to conduct
banking transactions at their home or office through links to their bank's computer or telephone network, do not constitute
a "customer bank communication terminal" under this section.
All transactions initiated through a customer bank
communication terminal shall be subject to verification by the
banking institution.
(d) No person, other than: (1) A banking institution
authorized to engage in the banking business in this state; or
(2) a credit union authorized to conduct business in this
state, may operate any automatic teller machine ("ATM") or
automatic loan machine ("ALM") located in this state:
Provided, That ATM terminals of out-of-state state banks not
having branches in this state shall be allowed to operate to
the same extent as a West Virginia bank if a national bank
from that state not having branches in West Virginia could do
so through a federal preemption of state law.
(e) For the purposes of this section, "point of sale
terminal" means a customer bank communication terminal used
for the primary purpose of either transferring funds to or
from one or more deposit accounts in a banking institution or
segregating funds in one or more deposit accounts in a banking
institution for future transfer, or both, in order to execute
transactions between a person and his customers incident to
sales, including, without limitation, devices and machines
which may be used to implement and facilitate check guaranty and check authorization programs.
(f) Nothing in this section prevents point of sale
terminals and associated equipment from being owned, leased or
operated by nonbanking entities: Provided, That such persons
may not engage in the business of banking by using point of
sale devices. The use of a point of sale terminal to enable a
customer or other person to withdraw and obtain cash of more
than fifty dollars in excess of the sales transaction purchase
amount, will be presumed to constitute engaging in the
business of banking.
(g) Except for customer bank communication terminals
located on the premises of the principal office or a branch
bank of the banking institution or on the premises of an
authorized off-premises walk-in or drive-in banking facility,
a customer bank communication terminal shall be unattended or
attended by persons not employed by any banking institution
utilizing the terminal: Provided, That:
(1) Employees of the banking institution may be present
at such terminal not located on the premises of an authorized
off-premises facility solely for the purposes of installing,
maintaining, repairing and servicing same; and
(2) A banking institution may provide an employee to
instruct and assist customers in the operation thereof:
Provided, That such employee shall not engage in any other banking activity.
(h) The commissioner shall prescribe by regulation the
procedures and standards regarding the installation and
operation of customer bank communication terminals, including,
without limitation, the procedure for the sharing thereof.
CHAPTER 31C. CREDIT UNIONS.
ARTICLE 1. SUPERVISION AND REGULATION.
§31C-1-5. Examinations.
(a) The commissioner shall
annually examine, or cause to
be examined, each credit union
at least once every eighteen
months. A credit union and any of its officers and agents
shall be required to give the commissioner, or the
commissioner's representatives, full access to all books,
papers, securities, records and other sources of information
under their control.
(b) A report of such examination shall be forwarded to
the credit union's board of directors within thirty days after
completion. Said report shall contain comments relative to the
management of the affairs of the credit union and the general
condition of its assets. Within thirty days after the receipt
of such report, the directors and committee members shall meet
to consider matters contained in the report. Every official
communication from the commissioner to any such institution,
or to any officer thereof, relating to an examination or an investigation of the affairs of such institution conducted by
the commissioner or containing suggestions or recommendations
as to the manner of conducting the business of the
institution, shall be read to the board of directors at the
next meeting after the receipt thereof, and the president, or
other executive officer, of the institution shall within
fourteen days of such meeting notify the commissioner in
writing of the presentation and reading of the communication
and of any action taken thereon by the institution.
(c) In lieu of making an examination of a credit union,
the commissioner may accept an examination or audit report of
the condition of the credit union made by the national credit
union administration.
CHAPTER 46A. WEST VIRGINIA CONSUMER CREDIT
AND PROTECTION ACT.
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 thirty, article four, chapter
thirty-one-a or by the provisions of section five, five-a or
five-b, article six, chapter forty-seven of this code, or that
allowed under section
sixteen, article ten, chapter thirty-one
two, article seven, chapter thirty-one-c of this code; (b) a
regulated consumer lender may contract for and receive a loan
finance charge not exceeding the aggregate of the interest and
charges permitted by section one hundred seven, article four,
chapter forty-six-a of this code or by the provisions of
section five, five-a or five-b, article six, chapter forty- seven of this code; (c) a credit union, as defined in section
one, article
ten one, chapter thirty-one
-c 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 two, article seven,
chapter thirty-one-c of this code, or by the provisions of
section five, article six, chapter forty-seven of this code;
and (d) any other lender may contract for and receive a loan
finance charge not exceeding the charge or interest permitted
by the provisions of section five, five-a or five-b, article
six, chapter forty-seven of this code.
(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.
(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.
(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.
(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.
(6) Notwithstanding subsection (5) of this section, a resident lender who is the assignee of a consumer credit sales
contract 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.
ARTICLE 4. REGULATED CONSUMER LENDERS.
§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 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 February each year,
every licensee shall file with the commissioner a composite
annual report in the form prescribed by the commissioner
relating to all regulated consumer loans made by him
and
showing in detail the actual financial condition and the
amount of the assets and liabilities of such financial
institution. 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-4-107. Loan finance charge for regulated consumer
lenders.
(1) With respect to a regulated consumer loan, including
a revolving loan account, a regulated consumer lender may
contract for and receive a loan finance charge not exceeding
that permitted by this section.
(2) On a loan of two thousand dollars or less, which is
unsecured by real property, the loan finance charge,
calculated according to the actuarial method, may not exceed
thirty-one percent per year on the unpaid balance of the
principal amount.
(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.
(4) Where the loan is nonrevolving and is greater than
two thousand dollars, the permitted finance charge may include
a charge of not more than a total of two percent of the amount
financed for any origination fee, points or investigation fee:
Provided, That where any loan, revolving or nonrevolving, is
secured by real estate, the permitted finance charge may
include a charge of not more than a total of five percent of
the amount financed for any origination fee, points or
investigation fee. In any loan secured by real estate, such
charges may not be imposed again by the same or affiliated
lender in any refinancing of that loan made within twenty-four
months thereof, unless these earlier charges have been rebated
by payment or credit to the consumer under the actuarial
method, or the total of the earlier and proposed charges does not exceed five percent of the amount financed. Charges
permitted under this subsection shall be included in the
calculation of the loan finance charge. The financing of 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 for
by section one hundred nine, article three of this chapter, 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. 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.
(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.
(6) With respect to a revolving loan account:
(a) A charge may be made by a regulated consumer lender
in each monthly billing cycle which is one twelfth of the
maximum annual rates permitted by this section computed on an
amount not exceeding the greatest of:
(i) The average daily balance of the debt; or
(ii) The balance of the debt at the beginning of the
first day of the billing cycle, less all payments on and
credits to such debt during such billing cycle and excluding
all additional borrowings during such billing cycle.
For the purpose of this subdivision a billing cycle is monthly
if the billing statement dates are on the same day each month
or do not vary by more than four days therefrom.
(b) If the billing cycle is not monthly, the maximum loan
finance charge which may be made by a regulated consumer
lender is that percentage which bears the same relation to an
applicable monthly percentage as the number of days in the
billing cycle bears to thirty.
(c) Notwithstanding subdivisions (a) and (b) of this
subsection, if there is an unpaid balance on the date as of
which the loan finance charge is applied, the licensee may
contract for and receive a charge not exceeding 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 charges allowed
by subsections (2) and (4) of this section, a regulated
consumer lender may on a loan of one thousand two hundred
dollars or less contract for and receive interest at a rate of
up to thirty-one percent per year on the unpaid balance of the
principal amount, together with a nonrefundable loan
processing fee of not more than two percent of the amount
financed:
Provided, That no other finance charges are imposed on the loan.
The processing fee permitted under this
subsection shall be included in the calculation of the loan
finance charge and the financing of the fee shall be
permissible and shall not constitute charging interest on
interest.
(8) Notwithstanding any contrary provision in this
section, a licensed regulated consumer lender who is the
assignee of a nonrevolving consumer loan unsecured by real
property located in this state, which loan contract was
applied for by the consumer when he or she was in another
state, and which was executed and had its proceeds distributed
in that other state, may collect, receive and enforce the loan
finance charge and other charges, including late fees,
provided in said contract under the laws of the state where
executed:
Provided, That the consumer was not induced by the
assignee or its in-state affiliates to apply and obtain the
loan from an out-of-state source affiliated with the assignee
in an effort to evade the consumer protections afforded by
this chapter. Such charges shall not be deemed to be usurious
or in violation of the provisions of this chapter or any other
provisions of this code.
§46A-4-111. Substantial benefit upon refinancing of a loan at
higher rate.
(1) Any nonrevolving consumer loan or
consumer credit
sale 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/credit balance at the
originally agreed upon rate and obtaining any additional
extension of credit as 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 section; and
(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
the same or a lower finance charge rate.
CHAPTER 47. REGULATION OF TRADE.
ARTICLE 24. THE REVERSE MORTGAGE ENABLING ACT.
§47-24-8. Regulatory authority and exemptions.
(a) All reverse mortgage loans subject to this article
shall be under the jurisdiction and supervision of the
commissioner of banking, and subject to the regulatory
authority and penalties set forth in chapter thirty-one-a of
this code.
(b) The commissioner of banking shall have the authority
to promulgate rules in order to affect compliance with the
provisions of this article.
(c) Persons making reverse mortgage loans through a
program authorized by and under the supervision of a federal
governmental agency or through a federally sponsored mortgage
enterprise are exempt from the provisions of this article, and
may make reverse mortgages notwithstanding any provisions to
the contrary in this code:
Provided, That such loans are sold
to those agencies or enterprises within forty-five days of loan closing and that the commissioner of banking certifies
that the program provides consumers with protections against
abusive practices.
Loans under this subsection may, like
other reverse mortgage loans, also be made or acquired without
regard to relevant interpretations of law to the same extent
as provided in section five of this article.
____________
(NOTE: The purpose of this bill is to make various
miscellaneous changes to the West Virginia banking code and
other code provisions in an effort to properly reflect code
cite references, clarify, modernize, and address issues which
have arisen but which are not adequately covered under the
current code. In particular the bill replaces incorrect code
cite references; deletes conflicting reporting requirements;
ends report of the commissioner on the effect to credit
availability of the business franchise tax; clarifies the
assignment and securitization of second mortgages; reduces
secondary mortgage broker bond requirements; permits second
mortgage lenders to be brokers; conforms the provision of
account statements and release of second mortgage liens with
other code sections; requires provision of payoff statements
upon request in second mortgage loans; directly addresses the
sharing and acceptance of out-of-state bank agency reports;
deletes obsolete provisions on bank interest rate
restrictions; lessens notification requirements for ATM
placement and provides parity to out-of-state bank terminals;
expands area for bank messenger services; clarifies the
treatment of certain loan processing fees by regulated
consumer lenders; clarifies the triggering of certain loan
disclosure requirements by regulated consumer lenders;
modifies the credit union examination schedule; and clarifies
safe harbor provisions for exempted reverse mortgages.
Strike-throughs indicate language that would be stricken
from present law, and underscoring indicates new language that
would be added.)