HB 895 — Consumer Finance Loans

F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 895 2021 A bill to be entitled An act relating to consumer finance loans;

revising references to implementing regulations of the federal Truth in Lending Act;

PageSection 11. of 11 CODING:

Subsection (1) of section 516.03, Florida Page 1 of 9 CODING:

hb0895-02-c2hb0895-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 895 2021 SectionStatutes, 1.is amended to read:

Subsection (1) of section 516.03, Florida Statutes, is amended to read:

Applications, except Pagefor 2applications ofto 11renew CODING:or reactivate a license, must also be accompanied by a nonrefundable investigation fee of $200.

An Page 2 of 9 CODING:

hb0895-02-c2hb0895-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 895 2021 forapplication applicationsis toconsidered renewreceived orfor reactivatepurposes a license, must also be accompanied by a nonrefundable investigation fee of $200.s.

An application is considered received for purposes of s.

SubsectionsSubsection (1)(6) andis (2)added ofto section 516.031, Florida Statutes, are amended, and subsection (6) is added to that section, to read:

maximum rates.— (1)(6) INTERESTPREPAYMENT RATES.—APENALTIES PROHIBITED.—A licensee may lendnot anyrequire suma borrower to pay a prepayment penalty for paying all or part of moneythe uploan toprincipal $25,000.before the date on which the payment is due.

A licensee may not take a security interest secured by land on any loan less than $1,000.

The licensee may charge, contract for, and receive thereon interest charges as provided and authorized by this section.

The maximum interest rate shall be 30 percent per annum, computed on the first $3,000 of the principal amount;

24 percent per annum on that part of the principal amount exceeding $3,000 and up to $4,000;

and 18 percent per annum on that part of the principal amount exceeding $4,000 and up to $25,000.

The original principal amount as used Page 3 of 11 CODING:

Words stricken are deletions;

words underlined are additions.

hb0895-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 895 2021 in this section is the same as the amount financed as defined by the federal Truth in Lending Act and Regulation Z of the Consumer Financial Protection Bureau Board of Governors of the Federal Reserve System.

In determining compliance with the statutory maximum interest and finance charges set forth herein, the computations used shall be simple interest and not add-on interest or any other computations.

If two or more interest rates are applied to the principal amount of a loan, the licensee may charge, contract for, and receive interest at that single annual percentage rate which, if applied according to the actuarial method to each of the scheduled periodic balances of principal, would produce at maturity the same total amount of interest as would result from the application of the two or more rates otherwise permitted, based upon the assumption that all payments are made as agreed.

(2) ANNUAL PERCENTAGE RATE UNDER FEDERAL TRUTH IN LENDING ACT.—The annual percentage rate of finance charge which may be contracted for and received under any loan contract made by a licensee under this chapter may equal, but not exceed, the annual percentage rate which must be computed and disclosed as required by the federal Truth in Lending Act and Regulation Z of the Consumer Financial Protection Bureau Board of Governors of the Federal Reserve System.

The maximum annual percentage rate of finance charge which may be contracted for and received is 12 times the maximum monthly rate, and the maximum monthly rate Page 4 of 11 CODING:

Words stricken are deletions;

words underlined are additions.

hb0895-02-c2 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HB 895 2021 shall be computed on the basis of one-twelfth of the annual rate for each full month.

The commission shall by rule establish the rate for each day in a fraction of a month when the period for which the charge is computed is more or less than 1 month.

(6) PREPAYMENT PENALTIES PROHIBITED.—A licensee may not require a borrower to pay a prepayment penalty for paying all or part of the loan principal before the date on which the payment is due.

2.Page 3 of 9 CODING:

A company with at least one currently licensed location must provide to the office a rider or surety bond, in the amount of at least $5,000 for each additional license, issued by a bonding company or insurance company authorized to do business in this state.

However, in no event may the aggregate amount of the surety bond required for a company with multiple licenses exceed $100,000.

(b) In lieu of a surety bond, the applicant or the Page 5 of 11 CODING:

hb0895-02-c2hb0895-01-c1 F L O R I D A H O U S E O F R E P R E S E N T A T I V E S CS/CS/HBCS/HB 895 2021 licensee2. may provide evidence of a certificate of deposit or an irrevocable letter of credit in the same amount of the surety bond required under paragraph (a).

A company with at least one currently licensed location must provide to the office a rider or surety bond, in the amount of at least $5,000 for each additional license, issued by a bonding company or insurance company authorized to do business in this state.

However, in no event may the aggregate amount of the surety bond required for a company with multiple licenses exceed $100,000.

(b) In lieu of a surety bond, the applicant or the licensee may provide evidence of a certificate of deposit or an irrevocable letter of credit in the same amount of the surety bond required under paragraph (a).

The office, or any claimant, may bring an action in a court of competentPage jurisdiction4 on the surety bond, certificate of deposit,9 orCODING: letter of credit.

The surety bond, certificate of deposit, or letter of credit must be payable on a pro rata basis, but the aggregate amount may not exceed the amount of the surety bond, certificate of deposit, or letter of credit.