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Abstract for SB 1078
(continuing care contracts)
Sponsors: Cirillo
SB 1078 renames "life care contracts" to "continuing care contracts."
SUMMARY OF PROPOSED STRIKE-EVERYTHING AMENDMENT TO SB 1078:
The proposed strike-everything amendment caps the interest rate on any consumer lender loan at thirty per cent (30%), requires that out-of-state consumer lenders be licensed, eliminates "consumer lender loan
voidability" so that a consumer lender of any type of consumer loan
who charges higher finance charges or fees than legally permitted is
only subject to loss of finance charges, permits a $75 loan
origination fee for secured consumer loans and secured consumer
revolving loans of $1500 or more and allows consumer lenders to charge
the statutorily prescribed dishonored check service fee.
Background
Consumer lender loans:
1) consumer loans - noncommercial loans for a set amount that is not to exceed $10,000;
2) consumer revolving loans - noncommercial loans establishing a line of credit that shall not exceed $10,000;
3) home equity revolving loans - noncommercial loans between $10,000-$25,000 that establish a line of credit secured by
the consumer's residence.
Current law caps the interest rate a consumer lender may charge
depending on the type and amount of the loan. A consumer lender may
receive finance charges on consumer loans that are no more than the
following:
· on a consumer loan of $1,000 or less, a consumer loan rate of thirty-six per cent (36%);
· on a consumer loan of more than $1,000, a consumer loan rate of thirty-six per cent (36%) on the initial $500 and a
consumer loan rate of twenty-four per cent (24%) on that
part of the amount greater than $500.
Provisions:
· Clarifies that "annual percentage rate" does not include a loan points or a loan origination fee.
· Eliminates home equity revolving loans from the definition of consumer lender loans. In doing so, any loan above $10,000 that
is secured by real property is subject to state mortgage banking
laws.
· Requires any loan made at the office of a consumer licensee, even if made under the authority of a mortgage bankers license, be subject to the thirty per cent (30%) interest rate cap for
consumer loans.
· Requires all consumer lenders doing business in this state to be licensed by the state Banking Department.
· Authorizes the superintendent of the Banking Department to deny a consumer lender license if the lender does not have a net worth
of at least $25,000.
· Requires the consumer lender to designate the principal location of the lender's licensed office.
· Specifies that Title 6, Chapter 5, Article 2 (consumer loans) A.R.S. controls the type of finance charges and other fees that
shall be allowed in this state.
· Eliminates the requirement that the superintendent of the Banking Department compile a report of the standard annual percentage
rate for each consumer lender licensee on a quarterly basis.
· Prohibits a consumer lender from making a consumer lender loan that is secured or based on a postdated check.
· Prohibits a consumer lender from taking physical possession of title to a vehicle as security for a consumer lender loan.
· Establishes that a consumer lender who mistakenly contracts for or receives any amount in excess of the fees permitted by the
Arizona consumer lender laws is prohibited from receiving any
finance charges in connection with that consumer loan.
· Creates a thirty per cent (30%) interest rate cap on consumer loans.
· Authorizes a consumer lender to collect a $75 loan origination fee for a secured consumer loan of $1,500 or a secured consumer
revolving loan of $1,500 or more.
· Allows consumer lenders to charge the statutorily prescribed dishonored check service fee. Currently, a consumer lender may
charge a consumer a ten dollar ($10) fee for a bad check.
Prepared by Jon Dinesman, Isaac Gabriel
sb1078.bi 3/25/99 cac
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