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ACROSS SESSIONS
- Subject Index: Since 1995
- Bills & Resolutions: Since 1994
- Summaries: Since 1994
Developed and maintained by the Division of Legislative Automated Systems.
1995 SESSION
LD1103681Patrons--Holland, R.J., Bell, Chichester, Cross, Goode, Hawkins, Holland, C.A., Holland, E.M., Lucas, Maxwell, Miller, K.G., Nolen, Norment, Potts, Reasor, Trumbo and Waddell; Delegates: Callahan, Copeland, Cranwell, Croshaw, Giesen, Hall, Hargrove, Keating, Murphy, Robinson, Tata, Watkins and Woodrum
Be it enacted by the General Assembly of Virginia:
1. That §§ 6.1-249, 6.1-256.1, 6.1-278, 6.1-284.1, 6.1-285, 6.1-286, 6.1-288 and 6.1-291 of the Code of Virginia are amended and reenacted and that the Code of Virginia is amended by adding a section numbered 6.1-272.1 as follows:
§ 6.1-249. Compliance with chapter; license required.
A. No person shall engage in the business of lending in
principal amounts of the then established size of loan
ceiling $6,000 or less, and charge, contract for, or
receive, directly or indirectly, on or in connection with any loan, any
interest, charges, compensation, consideration or expense which in the
aggregate are greater than the rate interest
otherwise permitted by law §6.1-330.55,
except as provided in and authorized by this chapter and without first having
obtained a license from the Commission.
B. However, subject to §§ 6.1-251 and 6.1-281 of this chapter,
the foregoing prohibition in subsection A of this section
shall not be construed to prevent any person, other than a
licensee or other entity conducting business in a licensed consumer
finance office, from making a mortgage loan pursuant to §§ 6.1-330.69
and 6.1-330.70 or §§ 6.1-330.71 and 6.1-330.72 in any principal amount or
from extending credit as described in § 6.1-330.78 in any
amount.
§ 6.1-256.1. Issuance of consumer finance license; purchase of loan contracts.
A. The Commission shall issue and deliver to the applicant a license to make loans in accordance with the provisions of this chapter at the location in this Commonwealth specified in the application if it finds:
1. That the financial responsibility, experience, character and general fitness of the applicant, or of the members if the applicant be a copartnership or association, or of the officers and directors if the applicant be a corporation, are such as calculated to command the confidence of the public and to warrant belief that this business will be operated lawfully, honestly, fairly and efficiently within the purpose of this chapter;
2. That allowing the applicant to engage in business will promote the
convenience and advantage of the community in which the licensed office is to
be located;
32. That the applicant has available, for the operation
of the business at the specified location, liquid assets of at least $50,000
if the specified location is in a city or county with a population of more
than 20,000, or of at least $25,000 if the location is not in a city or
county with a population of more than 20,000; and
43. That all of the prerequisites to obtaining the
license prescribed by § 6.1-254 have been complied with, the foregoing facts
being conditions precedent to the issuance of a license under this chapter.
If any licensee shall sell his outstanding loan contracts and surrender
his license, the Commission shall issue a license to the purchaser of the
contracts to make loans under this chapter in the same community without
reference to whether the convenience and advantage of the community will be
promoted thereby, if the purchaser shall qualify in all other respects for
the issuance of the license .
B. Notwithstanding the provisions of subsection A of this section, if the applicant has an existing license at another location in the Commonwealth, the Commission shall issue and deliver to the applicant a license to make loans in accordance with the provisions of this chapter at the location specified in the application if it finds:
1. That the general fitness of the licensee is such as calculated to command the confidence of the public and to warrant belief that this business will be operated lawfully, honestly, fairly and efficiently within the purpose of this chapter; and
2. That allowing the applicant to engage in business will promote the
convenience and advantage of the community in which the licensed office is to
be located; and
32. That all of the prerequisites to obtaining the
license prescribed by § 6.1-254 have been complied with, the foregoing facts
being conditions precedent to the issuance of a license under this chapter.
C. If any licensee shall sell his its
outstanding loan contracts and surrender his license, the Commission
shall issue a license to the purchaser of the contracts to make loans under
this chapter in the same community without reference to whether the
convenience and advantage of the community will be promoted thereby, if the
purchaser shall qualify in all other respects for the issuance of the
license, the person purchasing such contracts shall, unless
already licensed, obtain a license under this chapter.
§ 6.1-272.1. Rate of interest; maximum term of loan.
A lender licensed under this chapter may charge and receive interest only at such single annual rate as shall be stated in the written loan contract signed by the borrower. The annual rate of interest shall be charged only upon principal balances outstanding from time to time. Interest shall not be charged on an add-on basis and shall not be compounded or paid, deducted or received in advance. For the purpose of calculating interest hereunder, a year may be any period of time consisting of 360 or 365 days. No licensee shall enter into any contract for a loan under this chapter which provides for installments extending more than sixty-one months from the date of the contract.
§ 6.1-278. Additional interest prohibited; exception.
In addition to the charges interest permitted under
other sections of this chapter, no further or other amount whatsoever for any
examination service, brokerage, commission, fine, notarial fee, or other
thing or otherwise shall be directly or indirectly charged, contracted for,
collected, or received, except: (i) insurance premiums actually paid out by
the licensee to any insurance company or agent duly authorized to do business
in this Commonwealth for insurance for the protection and benefit of the
borrower written in connection with any loan, and (ii) the actual cost of
recordation fees or on loans over $100 the amount of the lawful premiums, no
greater than such fees, actually paid for insurance against the risk of not
recording any instrument securing the loan and may charge a handling fee not
to exceed $15 for each check returned to the licensee because the drawer had
no account or insufficient funds in the payor bank.
6.1-284.1. What note or other instrument shall show.
No licensee shall take any note, promise to pay, or instrument of security in
which blanks are left to be filled in after execution, or that does not give
the amount of the loan, a clear description of the installment payments
required, and the annual percentage rate of interest
charged. A disclosure pursuant to Federal Regulation Z (12 CFR
Part 226) shall constitute compliance with the disclosure requirements of
this chapter. A licensee may also include the disclosures required
by Federal Reserve Board Regulation Z, 12 CFR Part 226, in the note, promise
to pay, or instrument of security.
§ 6.1-285. Installment payments.
No licensee shall enter into any contract of loan under this chapter
providing for installment payments extending more than the number of calendar
months from the scheduled date of making the contract pursuant to the
provisions of § 6.1-271.1 (b) 6.1-272.1. Every contract
shall provide for repayment of the amount loaned in substantially equal
monthly installments, either of principal and
interest or of principal and charges in the aggregate, at
approximately equal periodic intervals of time . But nothing contained
in this chapter shall prevent a loan being considered a new loan because the
proceeds of the loan are used to pay an existing contract ,or prevent a
licensee from entering into a loan contract providing for an odd first
payment period of up to 45 days and an odd first payment greater than other
monthly payments because of such odd first payment period.
§ 6.1-286. Limitation on borrower's or surety's indebtedness.
A. No licensee shall permit any person, as borrower, or as
endorser, guarantor or surety for any borrower, or otherwise, or any
husband and wife, jointly or severally, to become obligated, directly
or contingently, or both, (a) to the licensee at any time in a sum
of more than the then established size of loan ceiling
$6,000 in principal, nor (b) under more than one contract of loan
at the same time for the purpose of obtaining a higher rate of charge than
would otherwise be permitted by this chapter; provided,;
however, if a licensee purchases all, or substantially all, the loan
contracts of another licensee and has at the time of the purchase loan
contracts with one or more of the borrowers whose loans are purchased, the
purchaser shall be entitled to collect the principal and charges
interest according to the terms of each loan contract, but
the purchaser shall not refinance or make a new loan to any such borrower
except in accordance with the provisions of this chapter.
B. If two or more licensees are under the same ownership, or under common control, then such of their offices as are located in the same political subdivision of the Commonwealth, or within five miles of each other, shall be treated as one licensee for the purpose of this section.
§ 6.1-288. Wage purchases.
The payment of the then established size of loan
ceiling,$6,000 or less in money, credit, goods or things in
action, as consideration for any sale or assignment of, or order for, the
payment of wages, salary, commission, or other compensation for services,
whether earned or to be earned, shall for the purposes of this chapter be
deemed a loan of money secured by the sale, assignment or order, and
the. The amount by which the compensation so sold, assigned
or ordered paid exceeds the amount of consideration actually paid shall for
the purpose of this chapter be deemed interest or charges upon the
loan from the date of the payment to the date the compensation is payable,
which amount shall not, in any case, be more than is sufficient to yield, to
the licensee making the loan, interest on his investment at the
annual rate of ten per centum per annum percent.
Such transaction shall in all other respects be governed by and subject to
the provisions of this chapter.
§ 6.1-291. Collection of loans made outside Commonwealth.
No loan made outside this Commonwealth in the amount of the then
established size of loan ceiling $6,000 or less for which
the greater rates of interest, consideration or charges, than is permitted by
the law applicable to such loan in the state in which the loan was made, has
been charged, contracted for, or received shall be collected in this
Commonwealth and every. Every person in anywise
participating in an effort to enforce the collection of such loan in this
Commonwealth shall be subject to the provisions of this chapter.
2. That §§ 6.1-271, 6.1-271.1, 6.1-277 and 6.1-287 of the Code of Virginia are repealed.