§ 5-501 — Rate of interest; usury forbidden

New York § 5-501

• Jurisdiction: New York
• Law GOB: General Obligations
• Title 5: Interest and Usury; Brokerage On Loans
• Art. 5: Creation, Definition and Enforcement of Contractual Obligations

Text

§ 5-501. Rate of interest; usury forbidden. 1. The rate of interest,\nas computed pursuant to this title, upon the loan or forbearance of any\nmoney, goods, or things in action, except as provided in subdivisions\nfive and six of this section or as otherwise provided by law, shall be\nsix per centum per annum unless a different rate is prescribed in\nsection fourteen-a of the banking law.\n 2. No person or corporation shall, directly or indirectly, charge,\ntake or receive any money, goods or things in action as interest on the\nloan or forbearance of any money, goods or things in action at a rate\nexceeding the rate above prescribed. The amount charged, taken or\nreceived as interest shall include any and all amounts paid or payable,\ndirectly or indirectly, by any person, to or for the account of the\nlender in consideration for making the loan or forbearance as defined by\nthe superintendent of financial services pursuant to subdivision three\nof section fourteen-a of the banking law except such fee as may be fixed\nby the commissioner of taxation and finance as the cost of servicing\nloans made by the property and liability insurance security fund.\n 3. If the rate of interest charged, taken or received on any loan or\nforbearance secured primarily by either (i) an interest in real property\nimproved by a one to six family residence occupied by the owner or (ii)\ncertificates of stock or other evidence of an ownership interest in a\ncorporation or partnership formed for the purpose of the cooperative\nownership of real estate taken as security for a loan under subdivision\nfive of section one hundred three of the banking law, subdivision\neight-a of section two hundred thirty-five of such law or subdivision\ntwo-a of section three hundred eighty of such law, exceeds six per\ncentum per annum,\n a. in the case of a loan referred to by clause (i) of this\nsubdivision, the term of such loan or forbearance may extend five years\nbeyond the maximum maturity of such loan otherwise prescribed by law,\nand\n b. notwithstanding any other provision of law, the unpaid balance of\nthe loan or forbearance may be prepaid, in whole or in part, at any\ntime. If prepayment is made on or after one year from the date the loan\nor forbearance is made, no penalty may be imposed. If prepayment is made\nprior to such time, no penalty may be imposed unless provision therefor\nis expressly made in the loan contract, provided that no penalty may be\nimposed if prohibited by sections six-l and six-m of the banking law. In\nall cases, the right of prepayment shall be stated in the instrument\nevidencing the loan or forbearance, provided, however, that the\nprovisions of this subdivision shall not apply to the extent such\nprovisions are inconsistent with any federal law or regulation.\n 4. Except as otherwise provided by law, interest shall not be charged,\ntaken or received on any loan or forbearance at a rate exceeding such\nrate of interest as may be authorized by law at the time the loan or\nforbearance is made, whether or not the loan or forbearance is made\npursuant to a prior contract or commitment providing for a greater rate\nof interest, provided, however, that no change in the rate of interest\nprescribed in section fourteen-a of the banking law shall affect (a) the\nvalidity of a loan or forbearance made before the date such rate becomes\neffective, or (b) the enforceability of such loan or forbearance in\naccordance with its terms, except that if any loan or forbearance\nprovides for an increase in the rate of interest during the term of such\nloan or forbearance, the increased rate shall not exceed such rate of\ninterest as may have been authorized by law at the time such loan or\nforbearance was made.\n 4-a. Notwithstanding the provisions of subdivision four of this\nsection, a loan or forbearance repayable on demand may provide for\nchanges, reflecting variations in lending rates, from time to time in\nthe rate of interest payable on such loan or forbearance up to the rate\nof interest authorized by law at the time of such change and in such\ncase the rate of interest may be so changed in accordance with the terms\nof the contract or loan commitment relating thereto; provided, however,\nthat the rate of interest charged, taken or received on such a loan or\nforbearance shall not exceed the rate of interest authorized by law as\nit may subsequently be reduced from time to time; and further provided,\nhowever, that in no event shall such a loan or forbearance by subject to\nan authorized rate of interest less than that applicable at the time\nsuch loan or forbearance was made. The provisions of this subdivision\nshall apply only to a loan or forbearance repayable on demand which has\nan initial principal of more than five thousand dollars and which the\nborrower has the right to repay at any time in whole or in part,\ntogether with accrued interest on the principal so repaid, without any\npenalty. With respect to a loan or forbearance covered by this\nsubdivision, the lender shall disclose to the borrower in writing not\nless often than annually the amount of interest accrued or payable as of\nthe date of such disclosure and the manner by which such amount was\ncomputed.\n 5. No law regulating the maximum rate of interest which may be\ncharged, taken or received shall apply to any loan or forbearance\ninsured by the federal housing commissioner or for which a commitment to\ninsure has been made by the federal housing commissioner or to any loan\nor forbearance insured or guaranteed pursuant to the provisions of an\nact of congress entitled "Servicemen's Readjustment Act of 1944."\n 6. a. No law regulating the maximum rate of interest which may be\ncharged, taken or received, except section 190.40 and section 190.42 of\nthe penal law, shall apply to any loan or forbearance in the amount of\ntwo hundred fifty thousand dollars or more, other than a loan or a\nforbearance secured primarily by an interest in real property improved\nby a one or two family residence. A loan of two hundred fifty thousand\ndollars or more which is to be advanced in installments pursuant to a\nwritten agreement by a lender shall be deemed to be a single loan for\nthe total amount which the lender has agreed to advance pursuant to such\nagreement on the terms and conditions provided therein.\n b. No law regulating the maximum rate of interest which may be\ncharged, taken or received, including section 190.40 and section 190.42\nof the penal law, shall apply to any loan or forbearance in the amount\nof two million five hundred thousand dollars or more. Loans or\nforbearances aggregating two million five hundred thousand dollars or\nmore which are to be made or advanced to any one borrower in one or more\ninstallments pursuant to a written agreement by one or more lenders\nshall be deemed to be a single loan or forbearance for the total amount\nwhich the lender or lenders have agreed to advance or make pursuant to\nsuch agreement on the terms and conditions provided therein.\n 7. Except as otherwise expressly provided by law, in the event of\nprepayment in full of a loan, any refund of unearned interest to which\nthe borrower may be entitled may not be computed by a sum of the\nbalances or similar method but must be determined according to a\ngenerally accepted actuarial method.\n