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.