NY Banking Law, Article 9-A, licensed lenders

Section 340. Doing business without license prohibited. 341. Application for license; fees; capital requirements. 342. Conditions precedent to issuing license; procedure where application denied. 343. License provisions; separate license for each place of business; change of location. 344. Issuance of license upon acquisition of business of licensed lender. 345. Application for acquisition of control of licensed lender by purchase of stock. 346. Annual license fee. 347. Grounds for revocation or suspension of license; procedure. 348. Superintendent authorized to examine. 349. Licensee`s books and records; reports. 350. Restrictions concerning advertising, liens on real estate, and places where loans made. 351. Restrictions on loans subject to the provisions of this article; interest; other charges. 352. Acts required of licensees; acts prohibited. 353. Limitation on licensee`s charges on certain loans. 354. Restrictions on assignments of compensation for services. 355. Solicitation of loans. 356. Restrictions on certain loans by non-licensees, interests, other charges; loans made outside this state. 357. Insurance. 358. Penalties. 359. Authority of superintendent. 360. Short title. 361. Severability. S 340. Doing business without license prohibited. No person or other entity shall engage in the business of making loans in the principal amount of twenty-five thousand dollars or less for any loan to an individual for personal, family, household, or investment purposes and in a principal amount of fifty thousand dollars or less for business and commercial loans, and charge, contract for, or receive a greater rate of interest than the lender would be permitted by law to charge if he were not a licensee hereunder except as authorized by this article and without first obtaining a license from the superintendent. For the purposes of this section, a person or entity shall be considered as engaging in the business of making loans in New York, and subject to the licensing and other requirements of this article, if it solicits loans in the amounts prescribed by this section within this state and, in connection with such solicitation, makes loans to individuals then resident in this state, except that no person or entity shall be considered as engaging in the business of making loans in this state on the basis of isolated, incidental or occasional transactions which otherwise meet the requirements of this section. Nothing in this article shall apply to licensed collateral loan brokers. S 341. Application for license; fees; capital requirements. 1. (a) As used in this article, the term master license shall mean an original license granted to a person or entity. (b) As used in this article, the term supplemental license shall mean the license granted to a person or entity having a master license for additional licensed locations. 2. An application for a master license shall be in writing, under oath, and in the form prescribed by the superintendent and shall contain such information as the superintendent may require by regulations. The application shall set forth all of the locations at which the applicant seeks to conduct business hereunder. At the time of making the application for a master license, the applicant shall pay to the superintendent the sum of one thousand dollars for each proposed location as a fee for investigating the application and in addition to such investigation fee the sum of one thousand dollars as an annual license fee for each master and supplemental license for a period terminating on the last day of the current calendar year; provided, that if the application is filed after June thirtieth in any year such payment shall be five hundred dollars as such license fee in addition to the said fee for investigation. 3. In addition to the investigation fee and annual license fee every licensee hereunder shall pay to the superintendent the sums provided to be paid under the provisions of section seventeen of the banking law. 4. In connection with an application for a master license, the applicant shall submit an affidavit of financial solvency noting such capitalization requirements and access to such credit as may be prescribed by the regulations of the superintendent. 5. The applicant shall also prove, in form satisfactory to the superintendent, that the applicant has available for the operation of such business at the location or locations specified in the application liquid assets of at least fifty thousand dollars. This amount shall be maintained for the period within which the licensee makes loans in the amounts prescribed in section three hundred forty of this article at such location. 6. If a person or entity holding a master license seeks to open another location for the conduct of activities licensable under this article, the licensee shall first submit written notification of this fact to the superintendent. The notification shall contain the address of the new location and the master license number. An investigation fee of two hundred fifty dollars shall be paid for each additional location together with the annual license fee set forth in subdivision two of this section. Upon receipt of the notification and fees, the superintendent shall issue a temporary supplemental license, valid for a period not exceeding thirty days, pending the final approval of the new location. The superintendent, in his or her sole discretion, may extend the validity of the temporary supplemental license for additional thirty day periods pending investigation, but such extension shall not exceed a total of sixty days. The temporary supplemental license shall, upon written approval by the superintendent, become permanent after thirty days of issuance, or after the expiration of any extension granted by the superintendent, unless the superintendent finds that the opening of the new location by the licensee is not in the public interest, in which case, the superintendent shall send a written denial to the licensee. Upon receipt of such written denial, the temporary supplemental license issued to the licensee shall become void and the licensee shall immediately cease all activity licensable under this article at the location set forth on such license. Failure by the superintendent to approve or deny in writing the making permanent of a temporary supplemental license prior to the expiration of the initial thirty day period or any extension thereof shall not be deemed an approval. The failure of the superintendent to give written approval or denial of the permanence of the temporary supplemental license prior to expiration of the initial thirty day or any extension thereof shall not be deemed to constitute the approval of a permanent supplemental license. S 342. Conditions precedent to issuing license; procedure where application denied. Upon the filing of such application and the payment of such fees, if the superintendent shall find that the financial responsibility, experience, character, and general fitness of the applicant, and of the members thereof if the applicant be a partnership or association, and of the officers and directors thereof if the applicant be a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purposes of this article, and if the superintendent shall find that the applicant has available for the operation of such business at each specified location liquid assets of at least fifty thousand dollars, the superintendent shall thereupon execute a master license, and if applicable one or more supplemental licenses, to make loans in accordance with the provisions of this article at the location or locations specified in the said application. The superintendent shall transmit one copy of such license or licenses to the applicant and file the same in the office of the department. Each such license shall remain in full force and effect until it is surrendered by the licensee or revoked or suspended as hereinafter provided; if the superintendent shall not so find, a master license shall not be issued and the superintendent shall notify the applicant of the denial. If an application is denied or withdrawn the superintendent shall return to the applicant the sum paid by the applicant as a license fee, retaining the investigation fee to cover the costs of investigating the application. The superintendent shall approve or deny every application for a master license hereunder within ninety days from the filing thereof with the said fees. S 343. License provisions; separate license for each place of business; change of location. 1. A license shall state the address at which the business is to be conducted and shall state fully the name of the licensee, and if the licensee is a partnership or association, the names of the members thereof, and if a corporation, the date and place of its incorporation. A master license shall be kept conspicuously posted in the principal place of business of the licensee and a supplemental license shall be conspicuously posted at the location identified in the license. No master or supplemental license shall be transferable or assignable. 2. A separate license shall be required for each location at which a licensee makes loans under the provisions of this article. The superintendent may issue more than one license to the same licensee. For each new license, the licensee shall comply with all the requirements for obtaining a license as stated in this article. 3. (a) A licensee may change the location of a licensed lender business by giving written notice to the superintendent at least thirty days prior to such change. The licensee shall pay to the superintendent a fee of one hundred fifty dollars for each change of location and shall provide any information which may be required regarding the change of location. (b) The superintendent shall, if satisfied that there is no reasonable objection to such change of location and upon the surrender of the license for the location which is being changed, issue a license containing the information required by subdivision one of this section. If the superintendent shall not be satisfied that such change is in accordance with the purposes of this article, the superintendent shall refuse such change of location and notify the licensee of the determination. S 344. Issuance of license upon acquisition of business of licensed lender. 1. Prior to any acquisition, by merger, consolidation, purchase of assets or otherwise, except by purchase of stock, of the assets or business, or a substantial part thereof, of a licensee under this article, the person desirous of continuing to maintain and operate any place of business theretofore maintained and operated by such licensee and each person who controls such person shall file with the superintendent of banks, for all such places of business, one application, in such form and containing such information, including the information required under section three hundred forty-one of this chapter, as the superintendent may require. At the time of making such application, the applicants shall pay to the superintendent the sum of two hundred fifty dollars, as a processing fee, if the person desirous of continuing to maintain and operate such places of business is already licensed under this article, or the sum of one thousand dollars, if such person is not so licensed, as an investigation fee. If such person is licensed, the superintendent shall amend the license accordingly within thirty days if it is found that the acquisition is in accordance with the purposes of this article. If such person is not licensed, the superintendent shall determine whether the financial responsibility, experience, character, and general fitness of the applicants, and of the members thereof if any applicant be a partnership or association, and of the officers, directors and controlling stockholders thereof if any applicant be a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of this article and the superintendent shall approve or deny such application within ninety days of the filing thereof. If the superintendent disapproves such application, or, if no such application has been made, the license for each such place of business shall become null and void and the applicants or licensee, whoever has possession of each such license, shall forthwith surrender the license theretofore in effect to the superintendent. If the superintendent approves such application, the person being acquired shall surrender to the superintendent the license theretofore in effect for each such place of business and the superintendent shall issue and transmit one copy of a new license to maintain and operate each such place of business to the person desirous of continuing to maintain and operate such place of business and file another in the office of the banking department. As used in this subdivision one, (a) the term "person" includes an individual, partnership, corporation, association or any other organization and (b) the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether by means of the ownership of the voting stock or equity interests of such person or of one or more persons controlling such persons, by means of a contractual arrangement, or otherwise. Control shall be presumed to exist if any person directly or indirectly owns, controls or holds with the power to vote ten per centum or more of the voting stock or equity interests of the person desirous of continuing to maintain and operate a licensee`s place of business or of any entity which directly or indirectly controls such person. The superintendent may, upon the application of a licensee or any such person or entity, determine whether or not the ownership, control or holding of such voting stock or equity interests constitutes or would constitute control for purposes of this subdivision. 2. The transfer by operation of law to a legal representative, as hereinafter defined, of the assets or business of a licensee under this article, or a substantial part thereof, shall not, to the extent hereinafter provided, be deemed an acquisition within the meaning of this section. Such legal representative, if duly qualified to act in this state, may continue to maintain and operate any place of business theretofore maintained and operated by such licensee, subject to all the provisions of this chapter including the payment of license fees, for a period of not more than six months from the date of his qualification as legal representative and for such additional period of time as the superintendent may prescribe in writing. During such period, the legal representative shall be deemed a licensee under this article. The appointment and qualification of a successor to the legal representative shall not, without the approval of the superintendent, operate to extend such period. Each such legal representative shall promptly following his appointment file with the superintendent a certificate or duly certified copy of an order of the court to evidence his authority to acquire the assets of the licensee and to maintain and operate the business thereof. If a legal representative desires to continue to maintain and operate any place of business theretofore maintained and operated by the licensee he shall, prior to the expiration of such six month period or any extension thereof prescribed by the superintendent, file an application pursuant to this section and comply with all of the provisions of this chapter. The investigation fee payable upon filing such application shall be one thousand dollars. The term "legal representative," for the purposes of this section, shall mean one duly appointed by a court of competent jurisdiction as an executor, administrator, trustee, committee, conservator or receiver, including one who succeeds a legal representative and one acting in an ancillary capacity thereto in accordance with the provisions of such court appointment. If any provision of this section, or the application of such provision to any individual, company, corporation or circumstance, shall be held invalid, the remainder of this section, and the application thereof to anyone other than the one to which it is held invalid, shall not be affected thereby. S 345. Application for acquisition of control of licensed lender by purchase of stock. 1. Prior to the acquisition of control of a licensee under this article by means of the acquisition of the capital stock or equity interests in such licensee or in any person who directly or indirectly controls such licensee, the person desirous of acquiring such capital stock or other equity interests shall make written application to the superintendent. Such application shall be in such form and shall contain such information, including the information required under section three hundred forty-one of this chapter, as the superintendent may require and such applicant, at the time of making such application if not licensed, shall pay to the superintendent the sum of one thousand dollars as an investigation fee. If such licensee is licensed, upon payment of a processing fee of two hundred fifty dollars, the superintendent shall approve the acquisition if it is found that such acquisition is in accordance with the purposes of this article. If such person is not licensed, the superintendent shall determine whether the financial responsibility, experience, character, and general fitness of the applicant, and of the members thereof if the applicant be a partnership or association, and of the officers, directors and controlling stockholders thereof if the applicant be a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purpose of this article. Unless the superintendent shall have denied such application in writing within ninety days of the filing thereof such application shall be deemed approved. If no such application has been made, the license for each place of business maintained and operated by the licensee shall, at the discretion of the superintendent, become null and void and each such license shall be surrendered to the superintendent. In addition, the superintendent may, in a proceeding after notice and a hearing, require any person who has failed to make application pursuant to this subdivision to pay the people of this state a penalty in a sum not exceeding one hundred dollars for each day of said violation; provided, however, that the aggregate penalty against any person with respect to any licensee shall not exceed fifteen thousand dollars. As used in this subdivision, (a) the term "person" includes an individual, partnership, corporation, association or any other organization and (b) the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether by means of the ownership of the voting stock or equity interests of such person or of one or more persons controlling such person, by means of a contractual arrangement, or otherwise. Control shall be presumed to exist if any person directly or indirectly owns, controls or holds with the power to vote ten per centum or more of the voting stock or equity interests of the person desirous of continuing to maintain and operate a licensee`s place of business or of any entity which directly or indirectly controls such person. The superintendent may, upon the application of a licensee or any such person or entity, determine whether or not the ownership, control or holding of such voting stock or equity interests constitutes or would constitute control for purposes of this subdivision. 2. For a period of six months from the date of qualification thereof and for such additional period of time as the superintendent may prescribe in writing, the provisions of subdivision one of this section shall not apply to a transfer of control by operation of law to the legal representative, as hereinafter defined, of one who has control of a licensee. Thereafter, such legal representative shall comply with the provisions of subdivision one of this section. The provisions of subdivision one of this section shall be applicable to an application made under such section by a legal representative. The term "legal representative," for the purposes of this section, shall mean one duly appointed by a court of competent jurisdiction to act as executor, administrator, trustee, committee, conservator or receiver, including one who succeeds a legal representative and one acting in an ancillary capacity thereto in accordance with the provisions of such court appointment. If any provision of this section, or the application of such provision to any individual, company, corporation or circumstance, shall be held invalid, the remainder of this section, and the application thereof to anyone other than one to which it is held invalid, shall not be affected thereby. S 346. Annual license fee. Every licensee shall, on or before the twentieth day of each December, pay to the superintendent the annual license fee for the next succeeding calendar year. S 347. Grounds for revocation or suspension of license; procedure. The superintendent may suspend or revoke any license issued hereunder if the superintendent shall find that: (a) The licensee has failed to pay any sum of money lawfully demanded by the superintendent or to comply with any demand, ruling, or requirement of the superintendent; (b) The licensee has violated any provisions of this article, the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended, or of any rule or regulation lawfully made by the superintendent; (c) Any fact or condition exists which, if it had existed at the time of the original application for such license, clearly would have warranted the superintendent in refusing originally to issue such license; (d) The licensee has engaged in the business of a sales finance company and has done or failed to do any act, except the failure to pay the fees required, which would be grounds for the suspension or revocation of its license pursuant to section four hundred ninety-five of this chapter were it required to obtain such a license. The superintendent may on good cause shown, without notice or hearing, suspend any license for a period not exceeding thirty days, pending investigation. The superintendent may revoke or suspend only the particular license with respect to which grounds for revocation or suspension may occur or exist, or, if the superintendent shall find that such grounds for revocation or suspension are of general application to all offices, or to more than one office, operated by such licensee, the superintendent shall revoke or suspend all of the licenses issued to such licensee or such number of licenses as such grounds apply to, as the case may be. Any licensee may surrender any license by delivering to the superintendent written notice that the licensee thereby surrenders such license, but such surrender shall not affect such licensee`s civil or criminal liability for acts committed prior to such surrender. No revocation or suspension or surrender of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any borrower. Every license issued hereunder shall remain in force and effect until it shall have been surrendered, revoked, or suspended in accordance with the provisions of this article, but the superintendent shall have authority to reinstate suspended licenses or to issue new licenses to a licensee whose license or licenses shall have been revoked if no fact or condition then exists which clearly would have warranted the superintendent in refusing originally to issue such license under this article. Whenever the superintendent shall revoke or suspend a license issued pursuant to this article, the superintendent shall execute a written order to that effect. The superintendent shall file one copy of such order in the office of the department and serve a copy upon the licensee, which order may be reviewed in the manner provided by article seventy-eight of the civil practice law and rules. Such special proceeding for review as authorized by this section must be commenced within thirty days from the date of such order of suspension or revocation. S 348. Superintendent authorized to examine. For the purpose of discovering violations of this article or securing information lawfully required hereunder, the superintendent may at any time, and as often as may be determined, either personally or by a person duly designated by the superintendent, investigate the loans and business and examine the books, accounts, records, and files used therein of every licensee. For that purpose the superintendent and duly designated representatives shall have free access to the offices and place of business, books, accounts, papers, records, files, safes and vaults of all such licensees. The superintendent shall have authority to require the attendance of and to examine under oath all persons whomsoever whose testimony may be required relative to such loans or such business. S 349. Licensee`s books and records; reports. The licensee shall keep and use in its business such books, accounts, and records as will enable the superintendent to determine whether such licensee is complying with the provisions of this article and with the rules and regulations lawfully made by the superintendent hereunder. Every licensee shall preserve such books, accounts, and records, including cards used in the card system, if any, for at least two years after making the final entry on any loan recorded therein. Preservation of photographic reproduction thereof or records in photographic form, including an optical disk storage system and the use of electronic data processing equipment that provides comparable records to those otherwise required and which are available for examination upon request shall constitute compliance with the requirements of this section.

Each licensee shall annually on or before the first day of April file a report with the superintendent giving such information as the superintendent may require concerning the business and operations during the preceding calendar year of each licensed place of business conducted by such licensee within the state under authority of this article. Such report shall be subscribed and affirmed as true by the licensee under the penalties of perjury and shall be in the form prescribed by the superintendent who shall make and publish annually a consolidated statement of condition showing the combined assets and liabilities of all licensed lenders. Such consolidated statement of condition shall be based upon the information contained in such reports. In addition to annual reports, the superintendent may require such additional regular or special reports as may be deemed necessary to the proper supervision of licensees under this article. Such additional reports shall be in the form prescribed by the superintendent and shall be subscribed and affirmed as true under the penalties of perjury. S 350. Restrictions concerning advertising, liens on real estate, and places where loans made. 1. (a) No licensee or other entity shall advertise, print, display, publish, distribute, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, or broadcasted, in any manner whatsoever any statement or representation with regard to the rates, terms, or conditions for the loaning of money, credit, goods, or things in action which is false, misleading or deceptive, or in violation of chapter three of the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended. (b) No licensee shall make, directly or indirectly, orally or in writing, by any method, practice or device, any representation that it is licensed under this chapter, except a representation that such licensee is licensed as a licensed lender by the New York state banking department. 2. No licensee shall take a lien upon real estate as security for any loan under the provisions of this article, except such lien as is created by law upon the recording of a judgment. 3. No licensee shall conduct the business of making loans under the provisions of this article within any office, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction therewith, except (a) a licensee may, after obtaining any required license, conduct on its premises businesses authorized under articles eleven-B, twelve-B, twelve-D and thirteen-B of this chapter, or (b) as may be authorized in writing by the superintendent upon a finding that such other business would not result in evasions of this article or of the rules and regulations lawfully made hereunder. 4. No licensee shall transact such business or make any loan provided for by this article under any other name or at any other place of business than that named in the license, except as provided by regulations of the superintendent. S 351. Restrictions on loans subject to the provisions of this article; interest; other charges. 1. Every licensee hereunder may loan any sum of money not exceeding the maximum principal amounts prescribed in section three hundred forty of this article, and may charge, contract for, and receive thereon interest at the rate or rates agreed to by the licensee and the borrower. Such interest may either (a) be calculated on the actual unpaid principal balances of the loan or in the case of a loan commitment from the date of each advance thereunder for the actual time outstanding, according to a generally accepted actuarial method at a fixed or variable rate and in accordance with the provisions of the evidence of the indebtedness or (b) precomputed under subdivision five of this section. 2. On any loan with a variable rate of interest made pursuant to this subdivision, the rate shall be determined at regular intervals as set forth in the evidence of indebtedness and in accordance with such regulations as the banking board shall prescribe but said rate shall not vary more often than once in any three month period and shall be based on a published index that is (a) readily available, (b) independently verifiable, (c) beyond the control of the licensee, and (d) approved by the superintendent. The banking board shall adopt regulations, including but not limited to: (i) providing for disclosure to the borrower by the licensee of the circumstances under which the rate may increase, any limitations on the increase, the effect of an increase and an example of the payment terms that would result from an increase; (ii) providing for disclosure to the borrower by the licensee of a history of the fluctuations of the index over a reasonable period of time; and (iii) providing for notice to the borrower from the licensee prior to any rate increase or change in the terms of payment. 3. Loans may be granted under an open end or closed end loan agreement providing for a fixed or variable rate. 4. Interest, consideration, or charges for the use of money shall not be deducted or received in advance and shall be computed on unpaid principal balances. Such interest, consideration, or charges shall not be compounded; provided that, if part or all of the principal amount of any loan contract is the unpaid principal balance of a prior loan, the unpaid interest, consideration or charges for the use of money on such prior loan which have accrued within sixty days before the making of such loan contract may be incorporated as interest bearing principal in the principal amount of such loan contract, and for the purposes of this subdivision any such new loan shall be deemed a separate loan transaction. 5. When a closed-end loan agreement requires repayment in substantially equal and consecutive monthly installments of principal and interest combined, the interest may be precomputed at the agreed rate on scheduled unpaid principal balances according to the terms of the agreement and added to the principal amount of the loan. Every payment may be applied to the combined total of principal and precomputed interest until the loan agreement is fully paid and the acceptance or payment of interest on loans made under the provisions of this subdivision shall not be deemed to constitute payment, deduction or receipt thereof in advance nor compounding under subdivision four of this section. Such precomputed interest shall be subject to the following adjustments: (a) If the loan agreement is prepaid in full by cash, a new loan, refinancing or otherwise before the final installment date, the borrower shall receive a refund of (i) the unearned portion of the interest the amount of which portion shall be determined according to a generally accepted actuarial method; provided, however, that if the amount of precomputed interest (A) is less than ten dollars, no refund shall be required; or (B) exceeds the sum of ten dollars and the earned interest is less than that amount, the licensee may retain such an additional amount as will bring the earned interest to ten dollars and refund the remainder, and provided further, that unless the loan is refinanced, no refund shall be required if it amounts to less than one dollar; and (ii) if a charge was made to the borrower for credit related insurance for insuring the borrower the excess of the charge to the borrower therefor over the insurance charges paid or payable by the licensee, if such insurance charges were paid or payable by the licensee periodically, or the refund for such insurance charges received or receivable by the licensee, if such premium was paid or payable in a lump sum by the licensee, provided that no such refund shall be required if it amounts to less than one dollar. In the event (i) the maturity of the loan is accelerated due to the default of the borrower or otherwise and judgment is obtained, or (ii) repayment is made pursuant to any credit related insurance policy for which a charge was made to the borrower for the premium thereon, the borrower or legal representative, as the case may be, shall be entitled to the same refund of interest and insurance charges as if the loan had been prepaid in full on the date of acceleration or repayment. (b) (i) In the event of default of more than ten days in the payment of any scheduled installment, the licensee may charge and collect a default charge not exceeding five percent of the installment in default. This charge may not be collected more than once for the same default and may be collected at the time of such default or at any time thereafter. (ii) After the final due date or upon acceleration of maturity for default, the licensee may charge interest at the original agreed rate on actual unpaid balances if the loan agreement so provides. (c) If payment of all unpaid installments on which no default charge has been charged and collected is deferred one or more full months, and if the loan agreement so provides, the licensee may charge and collect an amount which shall be equal to the difference between the refund that would be required for prepayment in full as of the scheduled due date of the first deferred installment and the amount which would be required for prepayment in full as of one month prior to said date, multiplied by the number of months in the deferment period. The deferment period is that period in which no scheduled payment has been made and in which no payment is required by reason of the deferment. Such charge may be collected at the time of deferment or may be collected at any time thereafter. If a refund of precomputed interest is required during a deferment period the borrower shall also receive a refund of the deferment charge for the number of months remaining in said period, for which purpose a portion of a month exceeding fifteen days shall be deemed a month. (d) If two or more installments or parts thereof are in default for five days or more, the licensee may, if the loan agreement so provides, elect to convert the loan from a precomputed one to one in which interest is paid on actual unpaid balances. In this event, the licensee shall make the same refund of interest as if the loan were prepaid in full on the scheduled payment due date preceding the date of conversion and thereafter may charge interest at the agreed rate, by the actuarial method, on actual unpaid balances for the time actually outstanding. 6. * (a) In addition to the interest, consideration, or charges above specified, no further or other charge or amount whatsoever for any examination, service, brokerage, commission, expense, fee, or bonus or other thing or otherwise shall be directly or indirectly charged, contracted for, or received, except the premium or identifiable charge for insurance authorized by section three hundred fifty-seven of this article; the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing, recording, or releasing in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter or non-filing insurance premiums not in excess of seven dollars in lieu of filing, recording or releasing any such instrument; an annual fee on open end loans authorized by the superintendent and made pursuant to subdivision three of this section, provided, however, that no such fee shall exceed an amount equal to one percent of the amount of the loan or fifty dollars, whichever is less; and a fee, not to exceed the amount set forth in section 5-328 of the general obligations law, for return by a depository institution of a dishonored check, negotiable order of withdrawal, or share draft. * NB Effective until June 30, 2005 * (a) In addition to the interest, consideration, or charges above specified, no further or other charge or amount whatsoever for any examination, service, brokerage, commission, expense, fee, or bonus or other thing or otherwise shall be directly or indirectly charged, contracted for, or received, except the premium or identifiable charge for insurance authorized by section three hundred fifty-seven of this article; the lawful fees, if any, actually and necessarily paid out by the licensee to any public officer for filing, recording, or releasing in any public office any instrument securing the loan, which fees may be collected when the loan is made or at any time thereafter or non-filing insurance premiums not in excess of seven dollars in lieu of filing, recording or releasing any such instrument; and a fee, not to exceed the amount set forth in section 5-328 of the general obligations law, for return by a depository institution of a dishonored check, negotiable order of withdrawal, or share draft. * NB Effective June 30, 2005 (b) Any licensee which knowingly receives, reserves or charges a greater rate of interest than that authorized by this section shall forfeit the entire interest which the note, or other evidence of debt carries with it, or which has been agreed to be paid thereon, and if a greater rate of interest has been paid, the person paying the same or his legal representative may recover from the licensee twice the entire amount of interest thus paid. * (c) In addition to other such information as the superintendent may require, any licensee which charges an annual fee on open end loan accounts shall annually report, in a manner and form prescribed by the superintendent, information to the department on open end loan borrowers, which shall include: average annual income of borrowers at the time of the loan, average amount of loans outstanding at the end of each calendar year, average interest charged, average amount of annual fees, and geographic distribution of loans made by the licensee. * NB Repealed June 30, 2005 S 352. Acts required of licensees; acts prohibited. Every licensee shall: Deliver to the borrower at the time any loan is made or prior to the first advance under an open-end loan agreement a statement, in the English language showing in clear and distinct terms the name and address of the borrower and of the licensee and all items required to be disclosed by the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended. For each cash payment made on account of any closed-end loan, give to the person making it at the time the payment is made, a plain and complete receipt containing the information required by regulations of the superintendent. Permit payment to be made in advance in any amount on any loan agreement at any time, but the licensee may initially apply such payment to all interest and other charges due to the date of such payment. Upon repayment of the loan in full, mark indelibly every obligation signed by the borrower or a copy thereof with the word "paid" or "cancelled", and release any mortgage or security agreement no longer securing an obligation of the borrower, restore any pledge, cancel and return any note or a copy thereof, and cancel and return any assignment or a copy thereof given to the licensee by the borrower. An open-end loan shall not be deemed to be repaid in full for this purpose unless any balance is paid in full and the borrower relinquishes all power to receive further advances under the contract and makes a written request for the release of all collateral for the loan. Every licensee which holds collateral of a borrower shall be fully liable for the return of the collateral upon payment of the indebtedness in full. No licensee shall take any confession of judgment or any power of attorney running to himself or to any third person to confess judgment or to appear for the borrower in a judicial proceeding. No licensee shall take any instrument in which blanks are left to be filled in after execution. S 353. Limitation on licensee`s charges on certain loans. No licensee shall directly or indirectly charge, contract for, or receive any interest, discount, or consideration upon the loan, use, or forbearance of money, goods, or things in action, or upon the loan, use, or sale of credit, of the amount or value of more than the maximum amounts prescribed in section three hundred forty of this article greater than the rate permitted by section 5-501 of the general obligations law. The foregoing prohibition shall also apply to any licensee which permits any person, as borrower or as endorser, guarantor, or surety for any borrower or otherwise, to owe directly or contingently or both to the licensee at any time more than the maximum amounts prescribed in section three hundred forty of this article. S 354. Restrictions on assignments of compensation for services. 1. A licensee shall not take an assignment of unearned wages or other earnings unless: (a) the assignment by its terms is revocable at the will of the borrower; or (b) the assignment is a payroll deduction plan. 2. No assignment of wages or other earnings given to secure any loan hereunder shall be valid unless the amount of such loan is paid to the borrower simultaneously with its execution. S 355. Solicitation of loans. 1. Any loan made by a person not licensed under this article to a resident of this state, in the amount, not exceeding the maximum amounts prescribed in section three hundred forty of this article, where solicitation of the loan was made within this state, and where the interest, discount, consideration or other charge contracted for or received exceeds that permitted to a licensee under the laws of this state shall be void, and the lender shall have no right to collect or receive any principal, interest or charge whatsoever. No action to enforce a loan made in violation of this subdivision may be maintained, even though the amount demanded to be paid in such action does not exceed that permitted to a licensee under the laws of this state. 2. For purposes of this article, solicitation of a loan shall include any solicitation, request or inducement to enter into a loan made by means of or through a direct mailing, television or radio announcement or advertisement, advertisement in a newspaper, magazine, leaflet or pamphlet distributed within this state, or visual display within this state, whether or not such solicitation, request or inducement constitutes an offer to enter into a contract. S 356. Restrictions on certain loans by non-licensees, interests, other charges; loans made outside this state. No person or other entity, other than a licensee under this article, shall directly or indirectly charge, contract for, or receive any interest, discount, or consideration greater than the person or other entity would be permitted by law to charge if it were not a licensee hereunder upon a loan not exceeding the maximum amounts prescribed in section three hundred forty of this article. The foregoing prohibition shall apply to any person or other entity who or which, by any device, subterfuge, or pretense whatsoever shall charge, contract for, or receive greater interest, consideration, or charges than is authorized by the laws of this state for any such loan, use, or forbearance of money, goods, or things in action or for any such loan, use, or sale of credit. Any loan in an amount not exceeding the maximum amounts prescribed in section three hundred forty of this article for which a greater rate of interest, consideration, or charges than is permitted by the laws of this state has been charged, contracted for, or received, wherever made, shall not be enforced in this state and every person or other entity participating therein in this state shall be subject to the provisions of this article. An action to enforce any such loan made in any other state to a person then a resident of that state, who now resides in this state may be maintained in this state if the amount of interest, discount, consideration or other charge for such loan, demanded to be paid in such action, does not exceed that permitted to a licensee by section three hundred fifty-one of this article for a loan of the same amount repayable in the same manner. S 357. Insurance. 1. The licensee may require a borrower, on loans of two hundred and fifty dollars or more, excluding insurance premiums and precomputed interest, to insure tangible personal property, except household goods, taken as security for a loan against any substantial risk of loss, damage or destruction for an amount not to exceed the lesser of the reasonable value of the property insured or the principal amount of the loan, and for the customary insurance term approximating the term of the loan contract. The policy may insure the interest of the borrower as well as the interest of the licensee. A policy covering a motor vehicle securing the loan may also insure the borrower against liability for bodily injury and property damage, but such liability insurance shall be at the option of the borrower and shall not be required by the licensee. The premiums for all such insurance shall not exceed the premiums chargeable in accordance with rate filings made with the superintendent of insurance for such insurance by the insurer. Such insurance shall be written by, or through, a duly licensed insurance agent or broker, or shall be provided directly by a company qualified to do business in this state. 2. For purposes of this section, the term "household goods" shall mean clothing, furniture, appliances, one radio and one television, linens, china, crockery, kitchenware, and personal effects (including wedding rings) owned by the consumer and his or her dependents, but shall not include works of art, other electronic entertainment equipment, items acquired as antiques, and other jewelry. 3. When a licensee provides credit life insurance, credit accident and health insurance, or credit unemployment insurance, or credit property insurance pursuant to section two thousand three hundred forty of the insurance law, or any combination thereof with respect to one or more borrowers, such licensee may collect from the borrower a premium or identifiable charge which shall not exceed the premium rates or identifiable charges chargeable in accordance with rate filings made with the superintendent of insurance for such insurance by the insurer, subject to a refund of the insurance charge computed as provided in paragraph (a) of subdivision five of section three hundred fifty-one of this article, in the event of prepayment by cash, a new loan, refinancing or otherwise. Only one such amount may be collected in connection with any loan contract irrespective of the number of obligors and only one obligor need be insured. 4. The insurance authorized by this section, with the exception of insurance provided under group insurance policies, may be written by or arranged through the licensee or an affiliate, associate or employee of the licensee only if such licensee, affiliate, associate or employee is a duly licensed insurance agent or broker, provided, however, no licensee shall decline new or existing insurance which meets or exceeds the standards set forth in this section, nor prevent any borrower from obtaining such insurance coverage from other sources. 5. If a borrower procures such insurance by or through a licensee, the statement required by section three hundred fifty-two of this article shall disclose the cost or rate of charge to the borrower and the type of insurance, and the licensee shall cause to be delivered to the borrower a copy of the policy, certificate, or other evidence therefor within a reasonable time. 6. The insurance authorized by this section and all benefits or returns therefrom accruing to the licensee or to any affiliate, associate or employee of the licensee shall not be prohibited by any other provision of this article. 7. No insurance shall be required, requested, sold or offered for sale in connection with any loan made under this article, except as and to the extent authorized by this section or as provided in subdivision six of section three hundred fifty-one of this article. If the borrowers on any loan are husband and wife, joint credit life insurance and joint credit accident and health insurance may be issued on such loan pursuant to this section. S 358. Penalties. Any person or other entity including the officers, directors, agents, and employees thereof, which shall violate or participate in the violation of any of the provisions of section three hundred forty of this chapter shall be guilty of a misdemeanor. S 359. Authority of superintendent. The superintendent is hereby authorized and empowered to make such general rules and regulations, and such specific rulings, demands, and findings as may be necessary for the proper conduct of the business authorized and licensed under and for the enforcement of this article, in addition hereto and not inconsistent herewith. S 360. Short title. This article shall be known and may be cited as the New York licensed lender law. S 361. Severability. If any provision of this article or the application thereof to any person or circumstances is held to be invalid, such invalidity shall not affect other provisions or applications of this article which can be given effect without the invalid provision or application, and to this end the provisions of this article are severable.

New York Banking Law

Article 9, Licensed Lenders

Article 5-B, Continued . . .