Bill Text: AZ HB2526 | 2014 | Fifty-first Legislature 2nd Regular | Engrossed
Bill Title: Consumer lender loans
Spectrum: Bipartisan Bill
Status: (Passed) 2014-04-17 - Chapter 96 [HB2526 Detail]
Download: Arizona-2014-HB2526-Engrossed.html
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House Engrossed |
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State of Arizona House of Representatives Fifty-first Legislature Second Regular Session 2014
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HOUSE BILL 2526 |
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AN ACT
amending sections 6‑611, 6‑632 and 6‑635, Arizona Revised Statutes; amending title 6, chapter 5, article 2, Arizona Revised Statutes, by adding section 6‑639; relating to consumer lender loans.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 6-611, Arizona Revised Statutes, is amended to read:
6-611. Prohibited acts
A. A licensee shall not knowingly advertise, display, distribute, broadcast or televise, or cause or permit to be advertised, displayed, distributed, broadcast or televised, in any manner, any false, misleading or deceptive statement or representation with regard to the rates, terms or conditions for a consumer lender loan. To the extent applicable, all advertising shall comply with the advertising requirements of the truth in lending act.
B. Except as
otherwise provided in this subsection, a licensee shall not pay a
fee, commission or bonus or give anything of value to any merchant, dealer,
consumer or other person for the purpose of
attracting applications for consumer lender loans or as consideration
for referring consumer lender loan business, other than the fees permitted
pursuant to the real estate settlement procedures act (12 United States Code
sections 2601 through 2617), as amended, and the regulations promulgated under
that act (24 Code of Federal Regulations part 3500), as amended, or to persons exempt from licensing
pursuant to section 6‑602 in connection with any consumer loan or
consumer revolving loan that is secured by the consumer's principal residence
or any home equity revolving loan. A
licensee may not give a consumer any prize, good, ware, merchandise or tangible
property of an aggregate value of more than twenty‑five dollars.
Sec. 2. Section 6-632, Arizona Revised Statutes, is amended to read:
6-632. Finance charges
A. A licensee may contract for and receive finance charges on consumer loans that are not more than the following amounts:
1. On a consumer loan in an original principal amount of one three thousand dollars or less, a consumer loan rate of thirty‑six per cent.
2. On a consumer loan in an original principal amount of more than one three thousand dollars, either:
(a) A consumer loan rate of thirty‑six per cent on the initial five hundred three thousand dollars of the original principal amount, and a consumer loan rate of twenty‑four per cent on that part of the principal amount greater than five hundred three thousand dollars.
(b) The single blended consumer loan rate that results from the total amount of finance charges that the licensee would receive through the scheduled maturity of the consumer loan at the consumer loan rates that otherwise would be applicable pursuant to subdivision (a) of this paragraph to the different portions of the unpaid principal balance, assuming that the consumer loan will be paid according to its agreed terms.
B. A licensee may contract for and receive periodic finance charges on consumer revolving loans and home equity revolving loans that are not more than the following amounts:
1. On consumer revolving loans with credit limits of one three thousand dollars or less, a periodic rate corresponding to an annual percentage rate of thirty‑six per cent on the outstanding balance each monthly billing cycle.
2. On consumer revolving loans with credit limits of more than one three thousand dollars and home equity revolving loans, either:
(a) A periodic rate corresponding to an annual percentage rate of thirty‑six per cent on that portion of the outstanding balance each monthly billing cycle that is not more than five hundred three thousand dollars and a periodic rate corresponding to an annual percentage rate of twenty‑four per cent on that portion of the outstanding balance each monthly billing cycle that is more than five hundred three thousand dollars.
(b) A periodic rate corresponding to the single blended annual percentage rate that would result in a periodic finance charge during a monthly billing cycle that is not more than the finance charges that result from the application of the multiple periodic rates authorized by subdivision (a) of this paragraph.
C. A licensee may charge a fixed or variable rate of periodic finance charges on a consumer revolving loan or a home equity revolving loan, as provided by the agreement that establishes the consumer revolving loan or home equity revolving loan. The licensee shall not base a variable rate of periodic finance charges on an index that is under the control of the licensee. Unless the consumer can readily verify the index on which an adjustment in the rate of periodic finance charges is based, the licensee shall provide conspicuous notice of the rate adjustment at least one monthly billing cycle before the effective date of the rate adjustment. The licensee may include a rate adjustment notice on or with a periodic statement to the consumer. The corresponding annual percentage rate of periodic finance charges may not increase or decrease more than three percentage points in any period of twelve consecutive months, and the corresponding annual percentage rate of periodic finance charges may not increase or decrease more than seven percentage points above or below the initial annual percentage rate of periodic finance charges at the time the consumer revolving loan or home equity revolving loan is established.
D. Except as permitted by subsection E of this section, prepaid finance charges commonly referred to as points are prohibited.
E. In addition to the finance charges authorized in subsections A, B and C of this section, a licensee may contract for and receive, and collect finance charges on, nonrefundable prepaid finance charges or fees commonly referred to as points in an amount of not more than:
1. Four per cent of the original principal amount of a consumer loan of at least five thousand dollars secured by the consumer's principal residence.
2. Four per cent of the agreed on credit limit of a home equity revolving loan.
F. If a consumer loan, consumer revolving loan or home equity revolving loan is in existence before the effective date of this amendment to this section and is modified or restructured after the effective date of this amendment to this section and the total new cash advances do not exceed one hundred dollars, a licensee may not contract for and receive periodic finance charges at an annual percentage rate that is higher than the annual percentage rate that existed before the effective date of this amendment to this section.
Sec. 3. Section 6-635, Arizona Revised Statutes, is amended to read:
6-635. Other allowable fees; annual reporting
A. In addition to the finance charges authorized by section 6‑632, a licensee may contract for and receive, and collect finance charges on, the following fees:
1. A delinquency charge in an amount equal to five per cent of the amount of any installment not paid in full within seven days after its due date.
2. The actual costs of charges that are paid to a third party who is not an employee of the licensee and that are incurred in making consumer lender loans secured in whole or in part by real property, including the charges for a preliminary title search, title examination and report, title insurance premiums, property survey and appraisal fees.
3. Lawful fees for the acknowledging, filing and recording, continuing or releasing in any public office of any instrument or financing statement evidencing or perfecting a lien or security interest in real or personal property securing a consumer lender loan or the premiums paid for insurance in lieu of filing or recording that shall not exceed the filing or recording fee.
4. A loan origination fee of not more than five per cent of a closed end consumer loan or the agreed credit limit of a consumer revolving loan but in no event in an amount that is more than seventy‑five one hundred fifty dollars. A licensee shall not charge a loan origination fee:
(a) For the refinancing of a closed end consumer loan or the renegotiating of an agreed credit limit of a consumer revolving loan if the refinancing or renegotiating occurs within one year of the collection of a prior loan origination fee.
(b) If the licensee charges prepaid finance charges pursuant to section 6‑632, subsection E, paragraph 1.
5. Deferral fees authorized in section 6‑634 for precomputed consumer loans.
6. Insurance premiums as provided in section 6‑636.
7. Court costs.
8. Reasonable attorney fees if the consumer lender loan is referred for collection to an attorney other than a salaried employee of the licensee.
9. Costs, expenses and fees authorized in section 33‑813, subsection B for reinstatement of a deed of trust encumbering real property that secures a consumer lender loan.
10. Costs and expenses of exercising the power of sale in a deed of trust encumbering real property that secures a consumer lender loan and costs and expenses of a sale that are included in a credit bid or that are applied from the proceeds of a trustee's sale pursuant to section 33‑812, including the payment of trustee fees and reasonable attorney fees actually incurred.
11. Costs and expenses of retaking, holding, preparing for sale and selling any personal property in accordance with title 47, chapter 9, article 6.
B. If a licensee receives a check, draft, negotiable order of withdrawal or similar instrument drawn on a depository institution that is offered by a consumer in full or partial payment on a consumer lender loan and the instrument is not paid or is dishonored by the depository institution, the licensee may charge and collect from the consumer a dishonored check service fee pursuant to section 44‑6852.
C. In addition to the finance charges and fees provided in this article, the licensee shall not directly or indirectly charge, contract for or receive any further or other amount in connection with a consumer lender loan.
D. In conjunction with the reporting requirements prescribed in section 6‑609, on or before October 1, 2003 and every each year thereafter, a licensee shall report to the superintendent the number of closed end consumer loans and consumer revolving loans under one thousand dollars made in the prior two years.
Sec. 4. Title 6, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 6-639, to read:
6-639. Loans from theft or fraud; consumer not responsible; correction of credit information
A licensee may not hold a person responsible for any loan amount that is incurred as a result of a violation of section 13‑2008, 13‑2009, 13‑2010 or 13-2310. Within thirty days after a licensee is aware that a loan is a result of a violation of section 13-2008, 13-2009, 13-2010 or 13-2310, the licensee shall immediately correct any derogatory credit information that is reported to a consumer reporting agency as defined in section 44‑1691 and that is the result of the violation.
