House Bill 1453

AN ACT TO AMEND SECTION 75-17-21, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ALTERNATE CHARGES THAT MAY BE MADE BY LICENSEES UNDER THE SMALL LOAN REGULATORY LAW AND SMALL LOAN PRIVILEGE TAX LAW ON LOANS OF $200.00 TO $1,000.00; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 75-17-21, Mississippi Code of 1972, is amended as follows:

75-17-21. (1) Notwithstanding any provision of law to the contrary, the maximum finance charge that may be contracted for and received for any loan or extension of credit made by a licensee under the Small Loan Regulatory Law (Sections 75-67-101 through 75-67-135) and the Small Loan Privilege Tax Law (Sections 75-67-201 through 75-67-243) may result in a yield not to exceed the following annual percentage rates calculated according to the actuarial method:

(a) Thirty-six percent (36%) per annum for the portion of the unpaid balance of the amount financed that is not greater than One Thousand Dollars ($1,000.00);

(b) Thirty-three percent (33%) per annum for the portion of the unpaid balance of the amount financed in excess of One Thousand Dollars ($1,000.00) but not greater than Two Thousand Five Hundred Dollars ($2,500.00);

(c) Twenty-four percent (24%) per annum for the portion of the unpaid balance of the amount financed in excess of Two Thousand Five Hundred Dollars ($2,500.00) but not greater than Five Thousand Dollars ($5,000.00);

(d) Fourteen percent (14%) per annum for the portion of the unpaid balance of the amount financed in excess of Five Thousand Dollars ($5,000.00).

(2) As an alternative and in lieu of the rates established in paragraphs (a), (b), (c) and (d) of subsection (1), on loans in an amount of Twenty-five Thousand Dollars ($25,000.00) or more, a licensee may contract for and receive a maximum finance charge which will result in a yield not to exceed an annual percentage rate, calculated according to the actuarial method, of eighteen percent (18%) per annum on the unpaid balance of the amount financed.

(3) A licensee may contract for and charge a closing fee as follows:

(a) For loans in the amount of Ten Thousand Dollars ($10,000.00) or less, four percent (4%) of the total payments due on the loan or Twenty-five Dollars ($25.00), whichever is greater;

(b) For loans in an amount greater than Ten Thousand Dollars ($10,000.00), a maximum charge of Five Hundred Dollars ($500.00).

The closing fee shall not be part of the finance charge.

(4) The rates set forth in paragraph (a) of subsection (1) may be increased by the number of percentage points by which the discount rate, excluding any surcharge thereon, on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where the lender is located exceeds eight percent (8%), and the rates set forth in paragraphs (b), (c) and (d) of subsection (1) may be increased by the number of percentage points by which the discount rate, excluding any surcharge thereon, on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where the lender is located exceeds ten percent (10%).

(5) (a) As an alternative to, and in lieu of, the finance charge established in paragraph (a) of subsection (1) and the fee established in paragraph (a) of subsection (3), on loans of an amount not less than Two Hundred Dollars ($200.00) but not more than One Thousand Dollars ($1,000.00), a licensee may charge for making the loan an acquisition charge not to exceed ten percent (10%) of the amount of the principal and an installment account handling charge not to exceed the following:

(i) Twelve Dollars ($12.00) per month on a loan of an amount not less than Two Hundred Dollars ($200.00) but not more than Three Hundred Dollars ($300.00);

(ii) Fourteen Dollars ($14.00) per month on a loan of an amount greater than Three Hundred Dollars ($300.00) but not more than Four Hundred Dollars ($400.00);

(iii) Sixteen Dollars ($16.00) per month on a loan of an amount greater than Four Hundred Dollars ($400.00) but not more than Five Hundred Dollars ($500.00);

(iv) Seventeen Dollars ($17.00) per month on a loan of an amount greater than Five Hundred Dollars ($500.00) but not more than Eight Hundred Dollars ($800.00);

(v) Twenty Dollars ($20.00) per month on a loan of an amount greater than Eight Hundred Dollars ($800.00) on the loan but not more than One Thousand Dollars ($1,000.00).

However, the scheduled payments must be in amounts that are equal to or greater than Forty Dollars ($40.00) per month, inclusive of the installment account handling charge. The acquisition charge and the installment account handling charge may be calculated for the term of the contract and added to the amount of the principal. The acceptance or payment of charges on loans made under this subsection shall not be deemed to constitute payment, deduction or receipt thereof in advance nor compounding under this subsection.

(b) On any loan on which the charges authorized under this subsection are made:

(i) The minimum term shall be three (3) months and the maximum term shall be twelve (12) months;

(ii) The loan charges may not be imposed on a loan to a borrower who has more than one (1) loan outstanding with the licensee and upon which loan charges were imposed;

(iii) Upon the prepayment of the loan in full, the installment account handling charge shall be subject to Section 75-17-11, but the acquisition charge shall not be subject to refund;

(iv) No insurance charge, service contract fee or club membership fee shall be permitted; and

(v) No licensee shall file a claim against a decedent borrower's estate for any unpaid indebtedness for a loan whose charges include an acquisition charge or an installment account handling charge.

(6) The finance charges authorized in this section are the maximum rates that may be contracted for or received for any loan or extension of credit made by a licensee under the Small Loan Regulatory Law (Sections 75-67-101 through 75-67-135), and the Small Loan Privilege Tax Law (Sections 75-67-201 through 75-67-243). Nothing in this section shall prohibit lending money or handling, negotiating or arranging loans for a finance charge that is less than that specified in this section. This section does not limit or restrict the manner of contracting for the finance charge, whether by way of add-on, discount or otherwise, so long as * * * the finance charge does not exceed that permitted by this section.

SECTION 2. This act shall take effect and be in force from and after July 1, 2007.