Bill Text: WV HB4590 | 2016 | Regular Session | Introduced
Bill Title: Relating to the requirements for making regulated consumer loans
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2016-02-17 - To House Banking and Insurance [HB4590 Detail]
Download: West_Virginia-2016-HB4590-Introduced.html
WEST virginia Legislature
2016 regular session
Introduced
House Bill 4590
By Delegate Walters
[Introduced February 17,
2016; Referred
to the Committee on Banking and Insurance then Finance.]
A BILL to amend and reenact §46A-4-101 and §46A-4-107 of the Code of West Virginia, 1931, as amended, all relating to the requirements for making regulated consumer loans; clarifying authority to take assignment or undertake certain actions to collect or enforce a regulated consumer loan; and adjusting finance charge rate brackets.
Be it enacted by the Legislature of West Virginia:
That §46A-4-101 and §46A-4-107 of the Code of West Virginia, 1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 4. REGULATED CONSUMER LENDERS.
§46A-4-101. Authority to make loans.
Unless a person has first
obtained a license from the commissioner authorizing him or her to make
regulated consumer loans, he shall or she may not engage in the
business of:
(1) Making regulated consumer loans; or
(2) Taking assignments of and
or undertaking direct collection of payments from or enforcement of
rights against consumers arising from regulated consumer loans.
§46A-4-107. Loan finance charge for regulated consumer lenders.
(1) With respect to a regulated consumer loan, including a revolving loan account, a regulated consumer lender may contract for and receive a loan finance charge not exceeding that permitted by this section.
(2) On a loan of $2,000
$5,000 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 $2,000 $5,000 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 $10,000
$15,000 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 $2,000 $5,000, the permitted
finance charge may include a charge of not more than a total of two percent of
the amount financed for any origination fee, points or investigation fee: Provided,
That where any loan, revolving or nonrevolving, is secured by real estate, the
permitted finance charge may include a charge of not more than a total of five
percent of the amount financed for any origination fee, points or investigation
fee. In any loan secured by real estate, the charges may not be imposed again
by the same or affiliated lender in any refinancing of that loan made within
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 the charges may be permissible
and may 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 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 the billing cycle.
For the purpose of this subdivision, a billing cycle is monthly if the billing statement dates are on the same day each month or do not vary by more than four days therefrom.
(b) If the billing cycle is not monthly, the maximum loan finance charge which may be made by a regulated consumer lender is that percentage which bears the same relation to an applicable monthly percentage as the number of days in the billing cycle bears to 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 50¢ if the billing cycle is monthly or longer or the pro rata part of 50¢ which bears the same relation to 50¢ 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 not secured by real estate of $2,000
$5,000 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 may not constitute charging interest on
interest.
(8) Notwithstanding any contrary provision in this section, a licensed regulated consumer lender who is the assignee of a nonrevolving consumer loan unsecured by real property located in this state, which loan contract was applied for by the consumer when he or she was in another state, and which was executed and had its proceeds distributed in that other state, may collect, receive and enforce the loan finance charge and other charges, including late fees, provided in the contract under the laws of the state where executed: Provided, That the consumer was not induced by the assignee or its in-state affiliates to apply and obtain the loan from an out-of-state source affiliated with the assignee in an effort to evade the consumer protections afforded by this chapter. Such charges may not be considered to be usurious or in violation of the provisions of this chapter or any other provisions of this code.
NOTE: The purpose of this bill is to clarify authority to take assignment or undertake certain actions to collect or enforce regulated consumer loans. It also adjusts finance charge rate brackets that apply to regulated consumer loans.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
