Bill Text: IA HF196 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act requiring the licensure of flexible credit lenders, and making civil penalties applicable.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-03-01 - Subcommittee recommends amendment and passage. [HF196 Detail]
Download: Iowa-2017-HF196-Introduced.html
House File 196 - Introduced HOUSE FILE BY PETTENGILL A BILL FOR 1 An Act requiring the licensure of flexible credit lenders, and 2 making civil penalties applicable. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1418YH (2) 87 gh/sc PAG LIN 1 1 Section 1. NEW SECTION. 536B.1 Title. 1 2 This chapter shall be known and may be cited as the "Iowa 1 3 Flexible Loan Act". 1 4 Sec. 2. NEW SECTION. 536B.2 Definitions. 1 5 As used in this chapter, unless the context otherwise 1 6 requires: 1 7 1. "Annual percentage rate" means the measure of the cost 1 8 of credit, expressed as a yearly rate, that relates the amount 1 9 extended to a consumer on a flexible credit loan to the amount 1 10 and timing of payments made, as computed under the federal 1 11 Truth in Lending Act. 1 12 2. "Consumer" means an individual who obtains a flexible 1 13 credit loan. 1 14 3. "Federal Truth in Lending Act" means as defined in 1 15 section 537.1302. 1 16 4. "Finance charge" means the amount payable by a consumer 1 17 incident to or as a condition of the extension of a flexible 1 18 credit loan but excluding other fees allowed under section 1 19 536B.19. 1 20 5. "Flexible credit lender" means a person who advertises to 1 21 make, solicit, or hold the person out to make a flexible credit 1 22 loan to a consumer in this state. 1 23 6. "Flexible credit loan" is a loan in which all of the 1 24 following are applicable: 1 25 a. The debt is incurred for a personal, family, or household 1 26 purpose. 1 27 b. The debt is not less than five hundred dollars and not 1 28 more than two thousand five hundred dollars. 1 29 c. The debt is unsecured. 1 30 d. The debt is payable in substantially equal installment 1 31 payments of principal and interest for the term of the loan. 1 32 e. The debt is subject to prepayment in whole or in part at 1 33 any time without penalty. 1 34 f. The term length of the loan is for a minimum of six 1 35 months and a maximum of twenty=four months. 2 1 7. "Licensee" means a person licensed pursuant to this 2 2 chapter. 2 3 8. "Regularly engaged in the business" means any of the 2 4 following: 2 5 a. Advertising to or making any other solicitation to a 2 6 resident of this state to offer a flexible credit loan within 2 7 this state. 2 8 b. Making three or more flexible credit loans within a 2 9 calendar year to residents of this state. 2 10 9. "Superintendent" means the superintendent of banking 2 11 within the banking division of the department of commerce. 2 12 Sec. 3. NEW SECTION. 536B.3 Exemptions. 2 13 This chapter shall not apply to any of the following: 2 14 1. A person who does business under the authority of a 2 15 law of this state, or any other state while regulated by a 2 16 state agency of that other state, or of the United States, 2 17 relating to banks, savings banks, trust companies, savings and 2 18 loan associations, profit sharing and pension trusts, credit 2 19 unions, insurance companies, or receiverships if the person 2 20 is regulated by the other law or under the jurisdiction of a 2 21 court. 2 22 2. A person who is not regularly engaged in the business of 2 23 making a flexible credit loan. 2 24 3. A person who is licensed pursuant to another law of this 2 25 state to the extent that the person's activities are governed 2 26 by that law. 2 27 4. A consumer loan to the extent provided under chapters 2 28 533D, 535C, 536, 536A, 536C, or 537. 2 29 Sec. 4. NEW SECTION. 536B.4 License ==== application ==== fees. 2 30 1. Unless exempt under section 536B.3, a person shall not 2 31 engage in the business of making a flexible credit loan to a 2 32 resident of this state without first having obtained a license 2 33 as a flexible credit lender from the superintendent. 2 34 2. An applicant for a license shall submit an application 2 35 in writing, under oath, and in the form as prescribed by the 3 1 superintendent. The application shall require any information 3 2 that the superintendent determines is necessary. 3 3 3. At the time of making the application, the applicant 3 4 shall pay to the superintendent a fee of one hundred dollars. 3 5 Sec. 5. NEW SECTION. 536B.5 Grounds for denial of license. 3 6 The superintendent may deny a license for any of the 3 7 following: 3 8 1. The person is insolvent. 3 9 2. The person has failed to demonstrate the financial 3 10 responsibility, experience, character, and general fitness to 3 11 command the confidence of the community and to warrant the 3 12 belief that the business of the proposed flexible credit lender 3 13 will be honestly and efficiently conducted. 3 14 3. The person has failed to pay the fee required under 3 15 section 536B.4, subsection 3. 3 16 4. The person has failed to demonstrate that the person 3 17 maintains at least twenty=five thousand dollars in assets 3 18 readily available for use in the conduct of the business for 3 19 the licensed office and each licensed branch office. 3 20 5. The person has, either knowingly or without the exercise 3 21 of due care to prevent a violation, violated any provision of 3 22 this Title XIII of the Code or any rule or order adopted or made 3 23 pursuant to this Title XIII. 3 24 Sec. 6. NEW SECTION. 536B.6 Issuance of license ==== form ==== 3 25 posting. 3 26 1. The superintendent shall issue a license to an applicant 3 27 within thirty days after receiving a complete application 3 28 unless the superintendent finds grounds for denying the 3 29 license. 3 30 2. A license issued under this chapter shall be valid for a 3 31 term of one year, beginning on January 1 and ending on December 3 32 31. 3 33 3. A license issued under this chapter shall remain in full 3 34 force until surrendered, revoked, or suspended. 3 35 4. A license issued under this chapter shall not be 4 1 transferable or assignable. 4 2 5. A license issued under this chapter shall remain the 4 3 property of this state. Upon the voluntary surrender of the 4 4 license by the licensee or the revocation of the license by 4 5 the superintendent, the licensee shall immediately deliver the 4 6 license to the superintendent. Surrender or revocation of the 4 7 license shall not affect any other liability of the licensee. 4 8 6. A license issued under this chapter shall be kept 4 9 conspicuously posted at the office of the licensee and any 4 10 licensed branch office where flexible credit loan transactions 4 11 are conducted. 4 12 Sec. 7. NEW SECTION. 536B.7 License location. 4 13 1. A licensee shall designate the principal place of 4 14 business where the licensee shall conduct flexible credit loan 4 15 transactions pursuant to this chapter, which shall be indicated 4 16 on the license as the licensed office location. 4 17 2. a. A licensee may obtain a branch office license from 4 18 the superintendent for each branch office if the licensee wants 4 19 to maintain more than one license location. 4 20 b. A licensee may obtain a branch office license by 4 21 submitting an application in the form as prescribed by the 4 22 superintendent and paying a fee of two hundred fifty dollars 4 23 for each branch office license. 4 24 c. The superintendent shall issue a branch office 4 25 license indicating the address of the branch office if the 4 26 superintendent determines that the applicant is qualified for 4 27 the license. 4 28 3. A licensee shall not conduct flexible credit loan 4 29 transactions under any name or at any place of business other 4 30 than the name and location indicated on the license. However, 4 31 a licensee may do any of the following: 4 32 a. Provide a flexible credit loan by mail or electronic 4 33 means. 4 34 b. Make an accommodation to a consumer at any location upon 4 35 a request by the consumer. 5 1 c. Conduct an administrative, loan servicing, or 5 2 recordkeeping activity at any other location not open to the 5 3 public provided that the superintendent is notified in advance 5 4 of that activity. 5 5 4. A licensee may change the licensed office location or 5 6 licensed branch office location by providing the superintendent 5 7 with written notice, and the superintendent shall amend the 5 8 license accordingly. 5 9 5. a. A licensee may conduct flexible credit loan 5 10 transactions from within any licensed office location or 5 11 licensed branch office location in which any other business not 5 12 licensed pursuant to this Title XIII of the Code is solicited 5 13 or engaged in, or in conjunction with any other business not 5 14 licensed pursuant to this Title XIII. 5 15 b. If the superintendent determines that the other business 5 16 is of such a nature or is being conducted in such a manner 5 17 as to conceal an evasion or violation of this Title XIII of 5 18 the Code or any rules adopted pursuant to this Title XIII, 5 19 or is otherwise being conducted in an unlawful manner, the 5 20 superintendent may restrict the licensee from conducting its 5 21 business as a flexible credit lender in conjunction with that 5 22 other business. 5 23 Sec. 8. NEW SECTION. 536B.8 Renewal of license. 5 24 1. A license issued pursuant to this chapter shall be 5 25 renewed annually. A licensee may renew a license by submitting 5 26 an application in the form as prescribed by the superintendent 5 27 no later than December 1 and paying a renewal fee of two 5 28 hundred fifty dollars. 5 29 2. The superintendent may assess a late fee of ten dollars 5 30 per day for applications submitted and accepted for processing 5 31 after December 1. 5 32 3. The license of a licensee who has not filed a renewal 5 33 application or paid the renewal fee by December 31 shall 5 34 expire and the licensee shall not act as a flexible credit 5 35 lender until the license is renewed or a new license is issued 6 1 pursuant to this chapter. 6 2 Sec. 9. NEW SECTION. 536B.9 Grounds for denial of license 6 3 renewal ==== suspension ==== revocation. 6 4 1. The superintendent may deny the renewal of a license or 6 5 suspend or revoke a license if the superintendent determines 6 6 any of the following: 6 7 a. The licensee is insolvent. 6 8 b. The licensee is not a person of honesty, truthfulness, 6 9 and good character, as determined by rule. 6 10 c. The licensee has failed to pay the annual renewal fees. 6 11 d. The licensee has failed to file an annual report as 6 12 required by this chapter when the report was due or within 6 13 any extension of time provided by the superintendent for good 6 14 cause. 6 15 e. The licensee has failed to demonstrate that the licensee 6 16 maintains at least twenty=five thousand dollars in assets 6 17 readily available for use in the conduct of the business for 6 18 the licensed office and each licensed branch office. 6 19 2. The superintendent may also deny the renewal of a license 6 20 or suspend or revoke a license if the superintendent determines 6 21 a fact or condition exists which would have warranted the 6 22 superintendent to refuse to originally issue the license. 6 23 Sec. 10. NEW SECTION. 536B.10 Records == examination by 6 24 superintendent == fees. 6 25 1. A licensee shall keep such books, accounts, and records 6 26 as the superintendent may require in order to determine whether 6 27 the licensee is complying with the provisions of this chapter 6 28 and with the rules adopted by the superintendent under this 6 29 chapter. 6 30 2. A licensee shall preserve for at least two years after 6 31 making the last entry on any flexible credit loan all books, 6 32 accounts, and records pertaining to the loan. A licensee who 6 33 uses an electronic recordkeeping system shall not be required 6 34 to keep a written copy of the books, accounts, and records 6 35 if the licensee is able to generate all of the information 7 1 required under this section in a timely manner for examination 7 2 or other purposes. 7 3 3. A licensee shall make any books, accounts, and records 7 4 kept outside of this state available to the superintendent 7 5 within three business days upon request by the superintendent. 7 6 The superintendent may examine such books, accounts, and 7 7 records at the office of the licensee located outside of this 7 8 state. 7 9 4. A licensee shall provide to the superintendent or the 7 10 superintendent's duly authorized representative access, during 7 11 normal business hours, to the licensee's offices, files, safes, 7 12 and vaults regarding the flexible credit lending business or 7 13 regarding the subject matter of any examination, investigation, 7 14 or hearing regarding the licensee. 7 15 5. a. A licensee required to provide the superintendent 7 16 with access to its records pursuant to this section shall 7 17 pay the cost of the examination or investigation. The 7 18 superintendent shall determine the cost of the examination or 7 19 investigation based upon the actual cost of the operation of 7 20 the finance bureau of the banking division of the department of 7 21 commerce, including the proportionate share of administrative 7 22 expenses in the operation of the banking division attributable 7 23 to the finance bureau as determined by the superintendent, 7 24 incurred in the discharge of duties imposed upon the 7 25 superintendent by this chapter. 7 26 b. Failure to pay the examination or investigation fee 7 27 within thirty days of receipt of demand from the superintendent 7 28 shall subject the licensee to a late fee of up to five percent 7 29 of the amount of the examination or investigation fee for each 7 30 day the payment is delinquent. 7 31 Sec. 11. NEW SECTION. 536B.11 Annual report by licensee. 7 32 1. A licensee shall annually on or before April 1 file a 7 33 report with the superintendent giving such relevant information 7 34 as the superintendent reasonably may require concerning 7 35 the business and operations during the twelve=month period 8 1 ending the preceding December 31. Upon good cause shown by a 8 2 licensee, the superintendent may extend the time for filing the 8 3 report for a period not to exceed sixty days. 8 4 2. The annual report shall include a licensee's average 8 5 annual percentage rate and average loan amount during the 8 6 twelve=month period ending the preceding December 31. 8 7 3. a. If a licensee fails to file an annual report under 8 8 this section on or before April 1 or within any extension 8 9 of time provided by the superintendent for good cause, the 8 10 superintendent or any person designated by the superintendent 8 11 may examine the books, accounts, and records of the licensee, 8 12 prepare the annual report, and charge the licensee an 8 13 examination fee as established by rule. The fee shall be based 8 14 on the actual cost of the examination or investigation. 8 15 b. If a licensee fails to file an annual report within the 8 16 specified time and has not received an extension, the licensee 8 17 shall be subject to a civil penalty not to exceed five dollars 8 18 per day until the licensee has filed the annual report. The 8 19 licensee shall pay the penalty to the superintendent within 8 20 thirty days after the penalty is levied. 8 21 Sec. 12. NEW SECTION. 536B.12 Surrender of license. 8 22 A licensee may surrender a flexible credit loan license 8 23 by delivering to the superintendent written notice that the 8 24 license is surrendered. The surrender does not affect the 8 25 licensee's civil or criminal liability for acts committed 8 26 prior to such surrender or entitle such licensee to a return 8 27 of any part of the annual license fee. The superintendent 8 28 may establish procedures for the disposition of the books, 8 29 accounts, and records of the licensee and may require such 8 30 action as deemed necessary for the protection of consumers that 8 31 have flexible credit loans that are outstanding at the time of 8 32 surrender of the license. 8 33 Sec. 13. NEW SECTION. 536B.13 Impairment of preexisting 8 34 loan. 8 35 1. The revocation, suspension, surrender, expiration, or 9 1 alteration of a license provided under this chapter shall not 9 2 impair or affect any of the following: 9 3 a. The obligation of a preexisting flexible credit loan 9 4 between a flexible credit lender and a consumer. 9 5 b. The ability or right of a flexible credit lender to 9 6 service a preexisting flexible credit loan from outside this 9 7 state. 9 8 2. If this chapter or any part of this chapter is modified, 9 9 amended, or repealed, resulting in a cancellation or alteration 9 10 of any flexible credit lender license or right of a licensee 9 11 under this chapter, that cancellation or alteration shall not 9 12 impair or affect the obligation of any preexisting contract 9 13 between a flexible credit lender and any consumer. 9 14 Sec. 14. NEW SECTION. 536B.14 Restrictions. 9 15 1. A licensee shall not knowingly advertise, display, 9 16 distribute, broadcast, or televise, or cause or allow to be 9 17 advertised, displayed, distributed, broadcast, or televised, in 9 18 any manner, any false, misleading, or deceptive statement or 9 19 representation with regard to the rates, terms, or conditions 9 20 of a flexible credit loan. To the extent applicable, all 9 21 advertising shall comply with the advertising requirements 9 22 specified in the federal Truth in Lending Act. 9 23 2. a. A licensee shall not provide a flexible credit loan 9 24 with an annual percentage rate greater than that provided in 10 9 25 U.S.C. {987(b), to any of the following: 9 26 (1) A member of the United States armed forces who is on 9 27 active duty under a call or order that does not specify a 9 28 period of thirty days or less. 9 29 (2) A person on active national guard duty or armed forces 9 30 military reserve active duty. 9 31 (3) A dependent as defined in 10 U.S.C. {987(i). 9 32 b. A licensee shall not provide a flexible credit loan 9 33 to a consumer unless the consumer has signed a statement, to 9 34 be included as part of the loan, attesting to whether or not 9 35 the consumer is a military member or a dependent as defined 10 1 in 10 U.S.C. {987(i). The statement shall be in the form as 10 2 prescribed by the superintendent by rule. 10 3 c. A flexible credit loan made in violation of 10 U.S.C. 10 4 {987 is void and its terms and conditions unenforceable. 10 5 Sec. 15. NEW SECTION. 536B.15 Rules. 10 6 The superintendent may adopt rules to administer this 10 7 chapter. 10 8 Sec. 16. NEW SECTION. 536B.16 Noncompliance. 10 9 1. A flexible credit loan that is provided by a person who 10 10 is required to be licensed under this chapter but who is not 10 11 licensed is void and its terms and conditions unenforceable. 10 12 2. Except as provided in subsection 1 and section 536B.14, 10 13 subsection 2, failure to comply with this chapter shall not 10 14 affect the validity or enforceability of a flexible credit 10 15 loan. 10 16 Sec. 17. NEW SECTION. 536B.17 Disclosures. 10 17 1. To the extent applicable, a licensee shall comply with 10 18 the disclosure requirements as set forth in the federal Truth 10 19 in Lending Act. 10 20 2. A licensee shall conspicuously display a sign printed 10 21 in at least twelve=point bold font type at each desk in the 10 22 licensed office and licensed branch office where flexible 10 23 credit loan transactions are conducted with the following 10 24 disclosure: 10 25 Notice: Before signing any loan documents or otherwise 10 26 committing to a loan, you may take copies of those documents 10 27 away from the flexible credit lender's place of business for 10 28 review. 10 29 3. A licensee providing electronic flexible credit loans 10 30 shall conspicuously display the following disclosure on the 10 31 licensee's internet site: 10 32 Notice: Before signing any loan documents or otherwise 10 33 committing to a loan, please read our terms and conditions 10 34 carefully. 10 35 4. A licensee who fails to provide disclosures as required 11 1 under this section shall be subject to a civil penalty not to 11 2 exceed three hundred dollars for each violation. 11 3 Sec. 18. NEW SECTION. 536B.18 Finance charge. 11 4 1. A licensee may charge a finance charge on a flexible 11 5 credit loan at a rate not to exceed seventeen percent per 11 6 month. 11 7 2. This section does not authorize the compounding of a 11 8 finance charge. 11 9 Sec. 19. NEW SECTION. 536B.19 Other fees and charges. 11 10 1. In addition to a finance charge authorized under section 11 11 536B.18, a licensee may collect any of the following fees or 11 12 charges: 11 13 a. A delinquency charge if an installment is not paid in 11 14 full within seven days, equal to five percent of the amount of 11 15 the installment. 11 16 b. Court costs and reasonable attorney fees if the flexible 11 17 credit loan is referred for collection to an attorney other 11 18 than an employee of the licensee. 11 19 c. A dishonored check service fee if a licensee receives 11 20 a check, draft, negotiable order of withdrawal, or similar 11 21 instrument that is not paid or is not honored by a depository 11 22 institution, equal to the actual charges assessed by the 11 23 depository institution. 11 24 2. A licensee shall not directly or indirectly charge, 11 25 contract for, or receive any other amount in connection with a 11 26 flexible credit loan except as provided in this chapter. 11 27 EXPLANATION 11 28 The inclusion of this explanation does not constitute agreement with 11 29 the explanation's substance by the members of the general assembly. 11 30 This bill creates new Code chapter 536B to require licensure 11 31 of persons who wish to provide flexible credit loans to 11 32 residents of the state. 11 33 The bill defines "flexible credit loan" to mean a loan that 11 34 is incurred for a personal, family, or household purpose, is 11 35 not less than $500 and not more than $2,500, is unsecured, 12 1 is payable in substantially equal installment payments of 12 2 principal and interest for the term of the loan, is subject to 12 3 prepayment in whole or in part at any time without penalty, and 12 4 is for a term length of a minimum of 6 months and a maximum of 12 5 24 months. 12 6 The bill exempts the following persons from the requirements 12 7 of the bill: a person who does business under any law relating 12 8 to banks, savings banks, trusts, savings and loan associations, 12 9 profit sharing and pension trusts, credit unions, insurance 12 10 companies, or receiverships, a person who is not regularly 12 11 engaged in the business of making flexible credit loans, as 12 12 defined in the bill, a person who is licensed pursuant to 12 13 another Iowa Code chapter to the extent that the person's 12 14 activities are governed by that Code chapter, or a consumer 12 15 loan provided under Code chapters 533D, 535C, 536, 536A, 536C, 12 16 or 537. 12 17 The bill prohibits a person from engaging in the business 12 18 of making flexible credit loans to a resident in this state 12 19 without first obtaining a license from the superintendent 12 20 of the banking division in the department of commerce. An 12 21 applicant for a license must submit an application in the form 12 22 prescribed by the superintendent and pay a fee of $100. 12 23 The bill allows the superintendent to deny a license if the 12 24 applicant is insolvent, has failed to demonstrate the financial 12 25 responsibility, experience, character, and general fitness 12 26 required, as determined by rule, has failed to pay the $100 12 27 fee, or has failed to demonstrate the availability of at least 12 28 $25,000 in assets for use in the conduct of the business for 12 29 the licensed office and each licensed branch office. 12 30 The bill requires the superintendent to issue a license 12 31 within 30 days of receiving an application unless grounds exist 12 32 for denying it. A license is valid for one year, from January 12 33 1 to December 31, remains in full force until surrendered, 12 34 revoked, or suspended, and is not transferable. A license 12 35 remains the property of the state and must be immediately 13 1 returned to the superintendent if a licensee voluntarily 13 2 surrenders it. A license must be posted conspicuously in the 13 3 office of the licensee and any licensed branch offices. 13 4 The bill requires a licensee to designate the principal 13 5 place of business to be indicated on the license. A licensee 13 6 wishing to maintain more than one place of business may 13 7 obtain a branch office license by submitting an application 13 8 as prescribed by the superintendent and paying a $250 fee. 13 9 A licensee is prohibited from conducting flexible credit 13 10 loan transactions under any name or location different than 13 11 what is indicated on the license, provided, however, that 13 12 a licensee may provide loans by mail or electronic means, 13 13 make an accommodation to a consumer at any location upon 13 14 the consumer's request, or conduct an administrative, loan 13 15 servicing, or recordkeeping activity at any other location if 13 16 the superintendent is notified. A licensee can change the 13 17 license location by giving the superintendent written notice to 13 18 amend the license. 13 19 The bill authorizes a licensee to conduct flexible credit 13 20 loan transactions from any licensed office location where other 13 21 business activities unrelated to flexible credit lending occur. 13 22 However, the superintendent may prohibit a licensee from 13 23 conducting business as a flexible credit lender in conjunction 13 24 with, or at the location of, such other business if the other 13 25 business is being conducted in an unlawful manner. 13 26 The bill allows a licensee to obtain a renewal license by 13 27 submitting an application as prescribed by the superintendent 13 28 no later than December 1 and paying a $250 fee. A renewal 13 29 application submitted after December 1 is subject to a $10 late 13 30 fee for each day it is late. A license of a licensee who has 13 31 not filed a renewal or paid the fee by December 31 expires. 13 32 The bill allows the superintendent to deny a renewal license 13 33 or suspend or revoke a license if the licensee is insolvent, 13 34 is not a person of honesty, truthfulness, and good character, 13 35 as determined by rule, has failed to pay the renewal fee, has 14 1 failed to file an annual report, or has failed to demonstrate 14 2 the availability of at least $25,000 in assets for use in the 14 3 conduct of the business for each office. The superintendent 14 4 may deny a renewal license or suspend or revoke a license if a 14 5 fact or condition exists to have warranted the superintendent 14 6 to refuse to originally issue the license. 14 7 The bill requires a licensee to keep records for the 14 8 superintendent to determine whether the licensee is complying 14 9 with the bill for at least two years. A licensee must make 14 10 all records kept outside of the state available to the 14 11 superintendent within three business days upon request. A 14 12 licensee must provide the superintendent with access to 14 13 the licensee's records during normal business hours. A 14 14 licensee subjected to an examination of its records by the 14 15 superintendent must pay a fee determined by the actual cost of 14 16 the examination. A licensee who fails to pay the fee within 30 14 17 days must pay a late fee of up to 5 percent of the amount of the 14 18 fee for each day the payment is delinquent. 14 19 The bill requires a licensee to provide the superintendent 14 20 with an annual report on or before April 1, which may be 14 21 extended for no more than 60 days upon showing good cause. The 14 22 report must include the licensee's average annual percentage 14 23 rate, as defined in the bill, and average loan amount during 14 24 the 12=month period ending the preceding December 31. The 14 25 superintendent may examine the records of a licensee who has 14 26 failed to file an annual report, prepare the annual report, and 14 27 charge a fee based on the cost of the examination. A licensee 14 28 who has failed to file an annual report without an extension is 14 29 also subject to a civil penalty not to exceed $5 for each day 14 30 until the report is filed, which must be paid within 30 days of 14 31 being charged. 14 32 The bill provides that the revocation, suspension, 14 33 surrender, cancellation, or alteration of a license will not 14 34 impair or affect the validity of a preexisting flexible credit 14 35 loan or the ability of a lender to service a preexisting loan 15 1 outside of this state. 15 2 The bill restricts a licensee from advertising in any false 15 3 or misleading manner with regards to the rates or terms of a 15 4 flexible credit loan and requires a licensee to comply with 15 5 the advertising requirements in the federal Truth in Lending 15 6 Act. A licensee cannot provide a flexible credit loan to a 15 7 military member or dependent, as defined in 10 U.S.C. {987(i), 15 8 with an annual percentage rate greater than that provided in 15 9 10 U.S.C. {987(b). Before a licensee may provide a flexible 15 10 credit loan, the consumer must sign a statement attesting to 15 11 whether or not the consumer is a military member or dependent. 15 12 A loan made in violation of 10 U.S.C. {987 is void and its terms 15 13 and conditions unenforceable. 15 14 The bill provides that a flexible credit loan provided 15 15 by a person who is required to be licensed under new Code 15 16 chapter 536B but who is not licensed is void and its terms and 15 17 conditions unenforceable. However, any other noncompliance 15 18 with new Code chapter 536B, except pertaining to military 15 19 members and their dependents, will not affect the validity of 15 20 a flexible credit loan. 15 21 The bill requires a licensee to comply with the disclosure 15 22 requirements in the federal Truth in Lending Act. A licensee 15 23 must display a disclosure sign, as described in the bill, at 15 24 each desk in the licensed office and each licensed branch 15 25 office and on the licensee's internet site if the licensee 15 26 provides electronic flexible credit loans. A licensee who 15 27 fails to do so is subject to a civil penalty not to exceed $300 15 28 for each violation. 15 29 The bill allows a licensee to charge a finance charge, 15 30 as defined in the bill, on a flexible credit loan at a rate 15 31 not to exceed 17 percent per month. However, a licensee is 15 32 not permitted to compound a finance charge. In addition to 15 33 this, a licensee may collect a delinquency charge, court costs 15 34 and reasonable attorney fees, and a dishonored check service 15 35 fee, as described in the bill. A licensee is prohibited 16 1 from collecting any other charges or fees in connection with 16 2 conducting flexible credit loan transactions. LSB 1418YH (2) 87 gh/sc
