HB 1425

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; amending s. 516.15,
7	F.S.; requiring licensees in a nonrecourse loan
8	transaction to submit certain information to major credit
9	reporting agencies; prohibiting a licensee from reporting
10	certain adverse information about the borrower under
11	certain circumstances; providing an effective date.
12
13	Be It Enacted by the Legislature of the State of Florida:
14
15	Section 1.  Section 516.01, Florida Statutes, is amended to
16	read:
17	516.01  Definitions.--As used in this chapter, the term:
18	(1)(3)  "Commission" means the Financial Services
19	Commission.
20	(2)(1)  "Consumer finance borrower" or "borrower" means a
21	person who has incurred either direct or contingent liability to
22	repay a consumer finance loan or a nonrecourse loan.
23	(3)(2)  "Consumer finance loan" means a loan of money,
24	credit, goods, or choses in action, including, except as
25	otherwise specifically indicated, provision of a line of credit,
26	in an amount or to a value of $25,000 or less for which the
27	lender charges, contracts for, collects, or receives interest at
28	a rate greater than 18 percent per annum.
29	(4)(8)  "Control person" means an individual, partnership,
30	corporation, trust, or other organization that possesses the
31	power, directly or indirectly, to direct the management or
32	policies of a company, whether through ownership of securities,
33	by contract, or otherwise. A person is presumed to control a
34	company if, with respect to a particular company, that person:
35	(a)  Is a director, general partner, or officer exercising
36	executive responsibility or having similar status or functions;
37	(b)  Directly or indirectly may vote 10 percent or more of
38	a class of a voting security or sell or direct the sale of 10
39	percent or more of a class of voting securities; or
40	(c)  In the case of a partnership, may receive upon
41	dissolution or has contributed 10 percent or more of the
42	capital.
43	(5)  "Interest" means the cost of obtaining a consumer
44	finance loan and includes any profit or advantage of any kind
45	whatsoever that a lender may charge, contract for, collect,
46	receive, or in anywise obtain, including by means of any
47	collateral sale, purchase, or agreement, as a condition for a
48	consumer finance loan. Charges specifically permitted by this
49	chapter, including commissions received for insurance written as
50	permitted by this chapter, shall not be deemed interest.
51	(6)  "License" means a permit issued under this chapter to
52	make and collect loans in accordance with this chapter at a
53	single place of business.
54	(7)  "Licensee" means a person to whom a license is issued.
55	(8)  "Nonrecourse loan" means a loan of $5,000 or less that
56	is unsecured or may be secured by the personal property of the
57	borrower, that has a term of not more than 3 years, that fully
58	amortizes over the term of the loan, and for which the borrower
59	has no liability beyond the property that is security for the
60	loan if such loan is secured, except in the instance of fraud.
61	(9)(4)  "Office" means the Office of Financial Regulation
62	of the commission.
63	Section 2.  Subsections (2) through (5) of section 516.031,
64	Florida Statutes, are renumbered as subsections (3) through (6),
65	respectively, a new subsection (2) is added to that section, and
66	present paragraph (a) of subsection (3) of that section is
67	amended, to read:
68	516.031  Finance charge; maximum rates.--
69	(2)  NONRECOURSE LOAN.--In a nonrecourse loan transaction,
70	every licensee may charge, contract for, and receive interest
71	not to exceed 48 percent per annum on the outstanding principal
72	balance of the nonrecourse loan plus a monthly administrative
73	fee not to exceed 10 percent per month on the outstanding
74	principal balance of the nonrecourse loan
75	(4)(3)  OTHER CHARGES.--
76	(a)  In addition to the interest, administrative fee,
77	delinquency, and insurance charges herein provided for, no
78	further or other charges or amount whatsoever for any
79	examination, service, commission, or other thing or otherwise
80	shall be directly or indirectly charged, contracted for, or
81	received as a condition to the grant of a loan, except:
82	1.  An amount not to exceed $25 to reimburse a portion of
83	the costs for investigating the character and credit of the
84	person applying for the loan;
85	2.  An annual fee of $25 on the anniversary date of each
86	line-of-credit account;
87	3.  Charges paid for brokerage fee on a loan or line of
88	credit of more than $10,000, title insurance, and the appraisal
89	of real property offered as security when paid to a third party
90	and supported by an actual expenditure;
91	4.  Intangible personal property tax on the loan note or
92	obligation when secured by a lien on real property;
93	5.  The documentary excise tax and lawful fees, if any,
94	actually and necessarily paid out by the licensee to any public
95	officer for filing, recording, or releasing in any public office
96	any instrument securing the loan, which fees may be collected
97	when the loan is made or at any time thereafter;
98	6.  The premium payable for any insurance in lieu of
99	perfecting any security interest otherwise required by the
100	licensee in connection with the loan, if the premium does not
101	exceed the fees which would otherwise be payable, which premium
102	may be collected when the loan is made or at any time
103	thereafter;
104	7.  Actual and reasonable attorney's fees and court costs
105	as determined by the court in which suit is filed;
106	8.  Actual and commercially reasonable expenses of
107	repossession, storing, repairing and placing in condition for
108	sale, and selling of any property pledged as security; or
109	9.  A delinquency charge not to exceed $10 for each payment
110	in default for a period of not less than 10 days, if the charge
111	is agreed upon, in writing, between the parties before imposing
112	the charge.
113
114	Any charges, including interest, in excess of the combined total
115	of all charges authorized and permitted by this chapter
116	constitute a violation of chapter 687 governing interest and
117	usury, and the penalties of that chapter apply. In the event of
118	a bona fide error, the licensee shall refund or credit the
119	borrower with the amount of the overcharge immediately but
120	within 20 days from the discovery of such error.
121	Section 3.  Subsection (5) is added to section 516.15,
122	Florida Statutes, to read:
123	516.15  Duties of licensee.--Every licensee shall:
124	(5)  In a nonrecourse loan transaction, provided the
125	borrower repays the loan pursuant to loan requirements, submit
126	to a major credit reporting agency information confirming the
127	borrower's satisfactory repayment of the loan. The licensee may
128	not report any adverse information about the borrower to a major
129	credit reporting agency relating to such a loan except in the
130	event of fraud on the part of the borrower.
131	Section 4.  This act shall take effect July 1, 2009.

CODING: Words stricken are deletions; words underlined are additions.