Bill Text: MI SB0842 | 2015-2016 | 98th Legislature | Introduced

---

Bill Title: Financial institutions; other; loan fees under regulatory loan act; clarify. Amends secs. 1 & 13 of 1939 PA 21 (MCL 493.1 & 493.13).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2016-03-03 - Referred To Committee On Banking And Financial Institutions [SB0842 Detail]

Download: Michigan-2015-SB0842-Introduced.html

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 842

 

 

March 3, 2016, Introduced by Senator ROBERTSON and referred to the Committee on Banking and Financial Institutions.

 

 

 

     A bill to amend 1939 PA 21, entitled

 

"Regulatory loan act,"

 

by amending sections 1 and 13 (MCL 493.1 and 493.13), section 1 as

 

amended by 2002 PA 393 and section 13 as amended by 2001 PA 270.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. (1) This act shall be known and may be cited as the

 

"regulatory loan act".

 

     (2) As used in this act:

 

     (a) "Advertising" means publishing or broadcasting, or causing

 

to be published or broadcast, material that has been prepared for

 

public distribution by means of newspapers, magazines, or

 

electronic media. Advertising does not include a stockholder

 

communication, such as an annual report, interim financial report,

 

registration statement, security, prospectus, application for

 

listing a security on a stock exchange, or proxy materials.

Advertising does not include a communication addressed to a person

 

an individual who has previously executed a loan agreement relative

 

to that person's individual's account.

 

     (b) "Assets" means liquid assets, collectible loans made in

 

accordance with this act, and personal property acquired in the

 

general conduct of business transacted under this act.

 

     (c) "Commissioner" or "director" means the commissioner of the

 

office of financial and insurance services in the department of

 

consumer and industry services.director of the department of

 

insurance and financial services.

 

     (d) "Control person" means a director or executive officer of

 

a licensee or a person an individual who has the authority to

 

participate in the direction, directly or indirectly through 1 or

 

more other persons, individuals, of the management or policies of a

 

licensee.

 

     (e) "Credit services organization" means a credit services

 

organization as defined in section 2 of the credit services

 

protection act, 1994 PA 160, MCL 445.1822.

 

     (f) (e) "Executive officer" means an officer, member, or

 

partner of a licensee, including chief executive officer,

 

president, vice president, chief financial officer, controller,

 

compliance officer, or any other similar position.

 

     (g) (f) "Financial licensing act" means any act listed in

 

section 2 of the consumer financial services act, 1988 PA 161, MCL

 

487.2052.

 

     (h) (g) "License" means a single license that is issued to a

 

single place of business.

 

     (i) (h) "Licensee" means a person that is licensed or required

 

to be licensed under this act.

 

     (j) (i) "Liquid assets" means cash, unrestricted deposits in

 

banks, and readily marketable securities at their then market

 

value.

 

     (k) (j) "Loan" or "regulatory loan" means a loan made by a

 

licensee to an individual for personal, family, or household use.

 

     (l) (k) "Person" means an individual, partnership,

 

association, corporation, limited liability company, or other legal

 

entity.

 

     Sec. 13. (1) A licensee may lend money and may contract for,

 

compute, and receive interest charges on the loan at a rate that

 

does not exceed the rate permitted by the credit reform act, 1995

 

PA 162, MCL 445.1851 to 445.1864. A loan by a licensee may be 1 of

 

the following:

 

     (a) A closed-end loan.

 

     (b) Open-end credit consisting of direct advances from the

 

licensee or checks issued by the licensee. This subdivision does

 

not apply to open-end credit available through the use of a credit

 

card or charge card.

 

     (2) A licensee shall not induce a person an individual to

 

become directly obligated under more than 1 loan contract that is

 

not secured by personal property at the same time.

 

     (3) Charges on loans made under this act shall not be paid,

 

deducted, or received in advance, or compounded. All charges on

 

loans made under this act shall be computed on the unpaid principal

 

balance or portions of the balance, specifically expressed in every

 

obligation signed by the borrower, and computed on the basis of the

 

number of days actually elapsed.

 

     (4) In addition to the interest and charges provided for in

 

this act, a loan processing fee not to that does not exceed 5% of

 

the principal, up to $250.00, may be charged for each closed-end

 

loan made, and may be included in the principal of the loan. The

 

$250.00 limit on the loan processing fee shall be adjusted every 2

 

years to reflect the percentage change in the United States

 

consumer price index for the 2 immediately preceding calendar

 

years, rounded to the nearest hundred dollars. As used in this

 

subsection, "United States consumer price index" means the United

 

States consumer price index for all urban consumers in the United

 

States city average, as defined and reported by the United States

 

department of labor, bureau of labor statistics, Department of

 

Labor, Bureau of Labor Statistics and after certification by the

 

commissioner. director.

 

     (5) A licensee may require the borrower to pay the late

 

charges permitted by the credit reform act, 1995 PA 162, MCL

 

445.1851 to 445.1864. A licensee shall not induce or permit a

 

person an individual to become obligated, directly or contingently,

 

under more than 1 loan contract that is not secured by personal

 

property at the same time for the purpose or with the result of

 

obtaining a loan processing fee that is not otherwise permitted by

 

under this section. No other amount shall be

 

     (6) Except for the fees described in this section or otherwise

 

authorized under this act, a licensee shall not directly or

 

indirectly charged, contracted for, or received, charge, contract

 

for, or receive any other amount from a borrower, except the lawful

 

fees, if any, actually and necessarily paid by the licensee to a

 

governmental entity for the filing, recording, or releasing of

 

either any of the following:

 

     (a) A financing statement or an instrument securing the loan,

 

or both.

 

     (b) A record noting or releasing a lien or transferring a

 

certificate of title under the Michigan vehicle code, 1949 PA 300,

 

MCL 257.1 to 257.923.

 

     (7) (5) The fees permitted under this section may be collected

 

at any time on or after the date the loan is made.

 

     (8) (6) A licensee may charge a handling fee for the return of

 

an unpaid and dishonored check, draft, negotiable order, or similar

 

instrument given to the licensee in full or partial repayment of a

 

loan as authorized by the credit reform act, 1995 PA 162, MCL

 

445.1851 to 445.1864.

 

     (9) (7) A licensee may recover from the borrower the costs and

 

expenses of retaking, holding, repairing, preparing for sale, and

 

selling any personal property in accordance with sections 9609 and

 

9615 of the uniform commercial code, 1962 PA 174, MCL 440.9609 and

 

440.9615.

 

     (10) (8) A licensee may charge a reasonable annual fee for the

 

privilege of receiving open-end credit from the licensee.

 

     (11) (9) A licensee may charge a reasonable fee per payment if

 

a borrower makes a payment or payments by authorizing a licensee

 

verbally or in writing to execute a debit or otherwise process a

 

payment, through automated clearing procedures, drawn on the

 

borrower's deposit account. This subsection shall not be construed

 

to permit the imposition of a fee in cases where the borrower, at

 

the time of consummation of the loan, authorizes the licensee to

 

effect all periodic installment payments by way of electronic

 

automated clearing procedures drawn on the borrower's deposit

 

account.

 

     (12) (10) In addition to the penalties provided by under this

 

act, a violation of this act with respect to a particular

 

regulatory loan transaction is also subject to the penalty and

 

remedy provisions of the credit reform act, 1995 PA 162, MCL

 

445.1851 to 445.1864.

 

     (13) If the fee or charge is not paid to the licensee, a fee

 

or charge by a third party, including, but not limited to, a credit

 

services organization, in connection with a regulatory loan

 

transaction is not considered a fee or charge by a licensee and the

 

assessment of that fee or charge is not a violation of this act by

 

the licensee.

 

     (14) (11) As used in this section, "open-end credit" means

 

credit that is not secured by an interest in real property and is

 

extended under a plan in which both of the following apply:

 

     (a) The licensee reasonably contemplates repeated

 

transactions.

 

     (b) The amount of credit that may be extended to the borrower

 

during the term of the plan is generally made available to the

 

extent that any part of the outstanding balance is repaid.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.