SB 331 — Consumer Finance Act Amendments.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2023 S 21 SENATE BILL 331 Finance Committee Substitute Adopted 4/4/23 Short Title:

Senators Perry and Britt (Primary Sponsors).

Rules and Operations of the Senate March 21, 2023 A BILL TO BE ENTITLED AN ACT TO AMEND THE NORTH CAROLINA CONSUMER FINANCE ACT.

The term includes a payment using an *S331-v-2**S331-v-1* General Assembly Of North Carolina Session 2023 automated clearing house (ACH) transaction, a credit or debit card, a mobile wallet, a unified payments interface (UPI), internet banking, or mobile banking.

– Any contract of loan, the making making, servicing, or collecting of which violates any provision of this Article, or rule thereunder, adopted under it, except as a result of accidental or bona fide error of computation is void, and the licensee or any Page 2 Senate Bill 331-Second331-First Edition General Assembly Of North Carolina Session 2023 other party in violation shall not collect, receive, or retain any principal or charges whatsoever with respect to the loan.

The requirements and standards of this subsection and subsection subdivision (a)(2) of this section shall be maintained throughout the period of the license and Senate Bill 331-Second331-First Edition Page 3 General Assembly Of North Carolina Session 2023 failure to maintain such these requirements or and standards shall be are grounds for the revocation of a license under the provisions of G.S.

Page 4 Senate Bill 331-Second331-First Edition General Assembly Of North Carolina Session 2023 (c) No revocation, suspension suspension, or surrender of any license shall impair or affect impairs or affects the obligation of any preexisting lawful contract between the licensee and any obligor.

Such The interest shall not be compounded but interest on loans shall (i) be computed and paid only as a percentage of the unpaid principal balance or portion thereof of the amount financed and (ii) computed on the basis of the number of days actually elapsed;

provided, however, if part or all of the consideration for a loan contract is the unpaid principal balance of a prior loan, then the principal amount payable amount financed under the loan contract may include any unpaid interest on the prior loan which have that has accrued within 90 days beforebeforethe themakingofthenewloan makingof the new loan contract.

ForForthe thepurposeofcomputing purpose of computing interest, a day shall equal equals 1/365th of a year.

Senate Bill 331-Second331-First Edition Page 5 General Assembly Of North Carolina Session 2023 (b1) Application of Payments.

(a) A licensee maymake installment loans in aggregate with loan amounts not exceeding fifteen thousand dollars($15,000) and whichshall not betwenty-fivethousanddollars($25,000),betwenty-fivethousanddollars ($25,000), that are not repayable in fewer than 12 months or more than 96 months and which shall not be months, that are not secured by deeds of trust or mortgages on real estate and which estate, and that are repayable in substantially equal consecutive monthly payments and to payments.

(1) With respect to a loan with a loan amount at origination not exceeding ten thousand dollars ($10,000), thirty percent (30%) twelve thousand dollars ($12,000), thirty-threethirty-six percent (33%)(36%) per annum on that part of the unpaid principal balance not exceeding four thousand dollars ($4,000), twenty-four percent (24%) per annum on that part of the unpaid principal balance exceeding four thousand dollars ($4,000) but not exceeding eight thousand dollars ($8,000), and eighteen percent (18%) per annum on that part of the remainder of the unpaid principal balance.

Interest shall be contracted for and collected at the single applicable simple interest rate applied to the outstanding balance that would earn the same amount of interest as the above rates for payment according to schedule.unpaidschedule.amount portion of the amount financed.

(b) In addition to the interest permitted in this section, a licensee may assess at closing a fee for processing the loan as agreed upon by the parties, not to exceed twenty-five dollars ($25.00) for loans up to two thousand five hundred dollars ($2,500) thirty dollars ($30.00) for loan amounts up to three thousand dollars ($3,000) and one percent (1%) of the cash advance for loans above two thousand five hundred dollars ($2,500), not to exceed a total fee of forty dollars ($40.00), provided that such amount financed, exclusive of the loan processing fee, for loan amounts more than three thousand dollars ($3,000),($3,000). not to exceed a total fee of one hundred fifty dollars ($150.00).

Page 6 Senate Bill 331-Second Edition General Assembly Of North Carolina Session 2023 (e) The due date of the first monthly payment shall not be more than 45 days following the disbursement of funds under any such the installment loan.

A borrower under this section Page 6 Senate Bill 331-First Edition General Assembly Of North Carolina Session 2023 may prepay all or any part of a loan made under this section the loan without penalty.

… "§ 53-177.53-176.2.

Inflation adjustment for loan amounts and certain loan fees.

(a) In this section, "CPI-U" means the Consumer Price Index for All Urban Consumers published bythe Bureau of Labor Statisticsofthe UnitedStates Department of Labor.The CPI-U for calendar year 2023 is the Reference Base Index.

(b) Beginning on January 1, 2024, the Commissioner shall annually adjust the dollar amount for the loan amounts established in G.S.

53-176, the non-percentage-based loan processing fee allowed in G.S.

53-176(b), and the late payment fee allowed in G.S.

53-177(b) based on the annual percentage change in CPI-U that was reported on the preceding June 1.

The resulting inflation-adjusted amounts become effective on the date of the adjustment and remain in effect for one calendar year until the next adjustment is made.

The adjusted loan amounts established in G.S.

53-176 shall be rounded to the nearest five hundred dollars ($500.00), and the adjusted loan fees shall be rounded to the nearest five dollars ($5.00).

(c) The Commissioner shall publish the adjusted loan amount categories and loan fees and the formula by which the adjustments were calculated on the Commissioner's website.

Additionally, the Commissioner shall provide each licensee a notice of the adjustments, shall publish the adjustments in the North Carolina Register, and shall notify the Revisor of Statutes who shall adjust the amounts in the General Statutes.

"§ 53-177.

(2) No licensee may shall charge a late payment fee in an amount greater than fifteen dollars ($15.00) eighteentwenty dollars ($18.00)($20.00) nor charge a late payment fee more than once with respect to a single late payment.

(3) If a late payment fee has been once imposed with respect to a particular late payment, no such late payment fee shall be imposed with respect to anyfuture payment which thatwouldhavebeentimelyandsufficientthat wouldhavebeentimelyandsufficient but fortheprevious default.

Senate Bill 331-First Edition Page 7 General Assembly Of North Carolina Session 2023 (4) A licensee may apply a borrower's most recent payment to the oldest installment due.

Senate Bill 331-Second Edition Page 7 General Assembly Of North Carolina Session 2023 (7) If a licensee refinances a loan, a licensee may include in the amount financed late payment fees for each installment payment that was, as of the date of the refinancing, past due for 10 days or more.

Page 8 Senate Bill 331-First Edition General Assembly Of North Carolina Session 2023 … "§ 53-180.

… Page 8 Senate Bill 331-Second Edition General Assembly Of North Carolina Session 2023 (d) Prohibitions on Discrimination.

Senate Bill 331-First Edition Page 9 General Assembly Of North Carolina Session 2023 (7) The amount collected or paid for filing or other fees allowed by this Article;Article.

– Each licensee doing business in North Carolina shall make readily available to the borrower at each place of business such full and accurate schedule of charges and insurance premiums, Senate Bill 331-Second Edition Page 9 General Assembly Of North Carolina Session 2023 including refunds and rebates, on all classes of loans currently being made by such licensee, as the Commissioner shall prescribe, and a copy thereof shall be filed in the office of the Commissioner of Banks.

provided that, upon such requirements as may be imposed by Page 10 Senate Bill 331-First Edition General Assembly Of North Carolina Session 2023 the Commissioner of Banks, Commissioner.

These books and records of each licensed office shall beclearlysegregated.When alicenseemaintains its books andrecordsoutsideofNorthand recordsoutsideofNorth Carolina, the licensee shall make them available for examination at the place where they are maintained and shall pay for all reasonable and necessary expenses incurred by the Commissioner in conducting such an examination.