| 1 | A bill to be entitled |
| 2 | An act relating to nonrecourse loans; amending s. 516.01, |
| 3 | F.S.; providing a definition; amending s. 516.031, F.S.; |
| 4 | authorizing licensees to charge and receive interest and a |
| 5 | monthly administrative fee in nonrecourse loan |
| 6 | transactions; providing limitations; providing an |
| 7 | effective date. |
| 8 |
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| 9 | Be It Enacted by the Legislature of the State of Florida: |
| 10 |
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| 11 | Section 1. Section 516.01, Florida Statutes, is amended to |
| 12 | read: |
| 13 | 516.01 Definitions.--As used in this chapter, the term: |
| 14 | (1)(3) "Commission" means the Financial Services |
| 15 | Commission. |
| 16 | (2)(1) "Consumer finance borrower" or "borrower" means a |
| 17 | person who has incurred either direct or contingent liability to |
| 18 | repay a consumer finance loan or a nonrecourse loan. |
| 19 | (3)(2) "Consumer finance loan" means a loan of money, |
| 20 | credit, goods, or choses in action, including, except as |
| 21 | otherwise specifically indicated, provision of a line of credit, |
| 22 | in an amount or to a value of $25,000 or less for which the |
| 23 | lender charges, contracts for, collects, or receives interest at |
| 24 | a rate greater than 18 percent per annum. |
| 25 | (4)(8) "Control person" means an individual, partnership, |
| 26 | corporation, trust, or other organization that possesses the |
| 27 | power, directly or indirectly, to direct the management or |
| 28 | policies of a company, whether through ownership of securities, |
| 29 | by contract, or otherwise. A person is presumed to control a |
| 30 | company if, with respect to a particular company, that person: |
| 31 | (a) Is a director, general partner, or officer exercising |
| 32 | executive responsibility or having similar status or functions; |
| 33 | (b) Directly or indirectly may vote 10 percent or more of |
| 34 | a class of a voting security or sell or direct the sale of 10 |
| 35 | percent or more of a class of voting securities; or |
| 36 | (c) In the case of a partnership, may receive upon |
| 37 | dissolution or has contributed 10 percent or more of the |
| 38 | capital. |
| 39 | (5) "Interest" means the cost of obtaining a consumer |
| 40 | finance loan and includes any profit or advantage of any kind |
| 41 | whatsoever that a lender may charge, contract for, collect, |
| 42 | receive, or in anywise obtain, including by means of any |
| 43 | collateral sale, purchase, or agreement, as a condition for a |
| 44 | consumer finance loan. Charges specifically permitted by this |
| 45 | chapter, including commissions received for insurance written as |
| 46 | permitted by this chapter, shall not be deemed interest. |
| 47 | (6) "License" means a permit issued under this chapter to |
| 48 | make and collect loans in accordance with this chapter at a |
| 49 | single place of business. |
| 50 | (7) "Licensee" means a person to whom a license is issued. |
| 51 | (8) "Nonrecourse loan" means a loan of $5,000 or less that |
| 52 | is unsecured or may be secured by the personal property of the |
| 53 | borrower, that has a term of not more than 3 years, that fully |
| 54 | amortizes over the term of the loan, and for which the borrower |
| 55 | has no liability beyond the property that is security for the |
| 56 | loan if such loan is secured, except in the instance of fraud. |
| 57 | (9)(4) "Office" means the Office of Financial Regulation |
| 58 | of the commission. |
| 59 | Section 2. Subsections (2) through (5) of section 516.031, |
| 60 | Florida Statutes, are renumbered as subsections (3) through (6), |
| 61 | respectively, a new subsection (2) is added to that section, and |
| 62 | present paragraph (a) of subsection (3) of that section is |
| 63 | amended, to read: |
| 64 | 516.031 Finance charge; maximum rates.-- |
| 65 | (2) NONRECOURSE LOAN.--In a nonrecourse loan transaction, |
| 66 | every licensee may charge, contract for, and receive interest |
| 67 | not to exceed 48 percent per annum on the outstanding principal |
| 68 | balance of the nonrecourse loan plus a monthly administrative |
| 69 | fee not to exceed 10 percent per month on the outstanding |
| 70 | principal balance of the nonrecourse loan |
| 71 | (4)(3) OTHER CHARGES.-- |
| 72 | (a) In addition to the interest, administrative fee, |
| 73 | delinquency, and insurance charges herein provided for, no |
| 74 | further or other charges or amount whatsoever for any |
| 75 | examination, service, commission, or other thing or otherwise |
| 76 | shall be directly or indirectly charged, contracted for, or |
| 77 | received as a condition to the grant of a loan, except: |
| 78 | 1. An amount not to exceed $25 to reimburse a portion of |
| 79 | the costs for investigating the character and credit of the |
| 80 | person applying for the loan; |
| 81 | 2. An annual fee of $25 on the anniversary date of each |
| 82 | line-of-credit account; |
| 83 | 3. Charges paid for brokerage fee on a loan or line of |
| 84 | credit of more than $10,000, title insurance, and the appraisal |
| 85 | of real property offered as security when paid to a third party |
| 86 | and supported by an actual expenditure; |
| 87 | 4. Intangible personal property tax on the loan note or |
| 88 | obligation when secured by a lien on real property; |
| 89 | 5. The documentary excise tax and lawful fees, if any, |
| 90 | actually and necessarily paid out by the licensee to any public |
| 91 | officer for filing, recording, or releasing in any public office |
| 92 | any instrument securing the loan, which fees may be collected |
| 93 | when the loan is made or at any time thereafter; |
| 94 | 6. The premium payable for any insurance in lieu of |
| 95 | perfecting any security interest otherwise required by the |
| 96 | licensee in connection with the loan, if the premium does not |
| 97 | exceed the fees which would otherwise be payable, which premium |
| 98 | may be collected when the loan is made or at any time |
| 99 | thereafter; |
| 100 | 7. Actual and reasonable attorney's fees and court costs |
| 101 | as determined by the court in which suit is filed; |
| 102 | 8. Actual and commercially reasonable expenses of |
| 103 | repossession, storing, repairing and placing in condition for |
| 104 | sale, and selling of any property pledged as security; or |
| 105 | 9. A delinquency charge not to exceed $10 for each payment |
| 106 | in default for a period of not less than 10 days, if the charge |
| 107 | is agreed upon, in writing, between the parties before imposing |
| 108 | the charge. |
| 109 |
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| 110 | Any charges, including interest, in excess of the combined total |
| 111 | of all charges authorized and permitted by this chapter |
| 112 | constitute a violation of chapter 687 governing interest and |
| 113 | usury, and the penalties of that chapter apply. In the event of |
| 114 | a bona fide error, the licensee shall refund or credit the |
| 115 | borrower with the amount of the overcharge immediately but |
| 116 | within 20 days from the discovery of such error. |
| 117 | Section 3. This act shall take effect July 1, 2009. |