§ 108 — Rates of interest; installment obligations; personal loan departments

New York § 108

• Jurisdiction: New York
• Law BNK: Banking
• Art. 3: Banks and Trust Companies

Text

§ 108. Rates of interest; installment obligations; personal loan\ndepartments. 1. Except as otherwise provided in this section, no bank or\ntrust company shall take, receive, reserve or charge on any loan or\ndiscount made, or upon any note, bill of exchange or other evidence of\ndebt, negotiable or otherwise, interest, as computed pursuant to this\nsubdivision, at a rate greater than the rate prescribed by the\nsuperintendent of financial services pursuant to section fourteen-a of\nthis chapter, or, if no rate has been so prescribed, six per centum per\nannum, or two dollars if the interest so computed is less than that\namount. Such interest may be taken in advance, reckoning the days for\nwhich the note, bill or evidence of debt has to run. If interest is so\ntaken in advance and the maturity of the debt is accelerated and\njudgment is obtained, or the debt is otherwise paid prior to its normal\ndate of maturity, the bank or trust company shall refund to the obligor\nor his legal representative, as the case may be, the unearned interest\npreviously deducted and the unused portion of any premiums charged for\ninsuring the obligor under a group credit insurance policy, such refund\nto be calculated in accordance with the method described in paragraph\n(e) of subdivision four of this section. A reasonable charge by a bank\nor trust company for the collection of a bona fide bill of exchange,\nnote or other evidence of debt payable at a place other than the place\nwhere purchased, discounted or sold, in addition to the interest, shall\nnot be considered interest for the purpose of any law regulating the\nmaximum rate of interest which may be charged, taken or received.\n Anything contained in this subdivision to the contrary\nnotwithstanding, the charging of interest or discount on a loan or\ndiscount made outside this state at a rate allowed by the laws of the\njurisdiction where such loan is made, or the acquisition by a bank or\ntrust company of a part interest or the entire interest in any loan or\ndiscount heretofore or hereafter made by a bank or trust company or any\nother banking institution, shall not be a violation of this section.\n 2. Any bank or trust company may purchase or otherwise acquire from\nthe payee, owner or holder thereof any obligation in writing to pay in\ninstallments all or part of the price of personal property or that of\nthe performance of services, whether that obligation be a negotiable\npromissory note or other evidence of debt, or any accounts receivable,\nwhether or not they are obligations in writing, or any lease of personal\nproperty, and may lease personal property acquired by it, doing so for\nsuch price or rentals or other consideration and upon such additional\nterms and conditions as may be mutually agreeable.\n 3. Upon advances of money, repayable on demand, to an amount not less\nthan five thousand dollars, made upon documents of title within article\nseven of the uniform commercial code or negotiable instruments within\narticle three or article eight of the uniform commercial code pledged as\ncollateral security for such repayment, any bank or trust company may\nreceive or contract to receive and collect as compensation for making\nsuch advances any sum which may be agreed upon by the parties to such\ntransaction.\n 4. (a) A bank or trust company may operate a personal loan department\nat all or at any one or more of its authorized places of business in\naccordance with the requirements of this subdivision. The records of\nsuch department shall be kept in such form as the superintendent may\nfrom time to time prescribe. The superintendent may, after giving notice\nof the contemplated action and reasonable opportunity to be heard, order\nthat the operation of such department be discontinued if he shall find\nthat the bank or trust company has failed to conform to any requirement\nof this subdivision. The superintendent may forthwith, and for a period\nnot to exceed thirty days pending further investigation, order that the\noperation of any such department be temporarily discontinued if he shall\nhave reasonable cause to believe that the requirements of this\nsubdivision are not having compliance. Such order of discontinuance or\ntemporary discontinuance may apply to one or more of the authorized\nplaces of business of a bank or trust company. The superintendent may\nterminate or modify such orders if he shall be satisfied that such\ndepartment will be operated in accordance with the requirements of this\nsubdivision. No order of discontinuance or temporary order of\ndiscontinuance shall impair or affect the obligation of any preexisting\nlawful loan or advance from a bank or trust company to any borrower.\n (b) A bank or trust company which operates a personal loan department\nmay make loans and charge interest thereon, which may be calculated on\nthe actual unpaid principal balances of the loan or in the case of a\nloan commitment from the date of each advance thereunder for the actual\ntime outstanding, according to a generally accepted actuarial method at\na fixed or variable rate in accordance with the provisions of the\nevidence of the indebtedness, or taken in advance, computed from the\ndate of the loan, or in the case of a loan commitment from the date of\neach advance thereunder, to the date of the last installment payable\nthereunder, at the rate or rates agreed to by the bank or trust company\nand the borrower, with respect to any loan which is repayable at regular\nperiodic intervals of not more than one month over a period from the\ndate of the loan not exceeding (i) thirty-seven months, if the face\namount of the loan is for not more than twelve hundred dollars, or (ii)\nany number of months agreed to by the bank or trust company and the\nborrower, (A) if the face amount of the loan is for more than twelve\nhundred dollars, (B) if the loan is for more than twelve hundred\ndollars, and is made for a commercial or business use or purpose or for\ninvestment in or purchase of an unincorporated business or commercial\nenterprise, (C) if the loan or loan commitment is made for educational\npurposes as specified in subdivision five-b of this section, or (D) if\nthe loan or advance of credit is made for the purpose of financing\nalterations, repairs and improvements upon or in connection with, or as\nthe superintendent may authorize the equipping of existing structures,\nand the building of new structures, upon urban, suburban, or rural real\nproperty (including the restoration, rehabilitation, rebuilding and\nreplacement of such improvements which have been damaged or destroyed by\nearthquake, conflagration, tornado, hurricane, cyclone, flood or other\ncatastrophe), by the owners thereof or by lessees of such real property\nunder a lease expiring not less than six months after the maturity of\nthe loan or advance of credit or by lessees under proprietary leases\nfrom corporations or partnerships formed for the purpose of the\ncooperative ownership of real estate. The total unpaid principal\nbalances of any one or more loans made by such bank or trust company to\nthe borrower pursuant to this subdivision shall be determined by\nagreement between such bank or trust company and the borrower. If the\nloan is made for a period of one year or more, provision may be made in\nthe note, instrument or other evidence of debt, for the omission of\npayments during not more than any three specified months in any\ntwelve-month period, but the maximum period of thirty-seven months,\nshall not be exceeded. On any loan with a variable rate of interest made\npursuant to this paragraph, the rate shall be determined at regular\nintervals as set forth in the evidence of indebtedness and in accordance\nwith such regulations as the superintendent of financial services shall\nprescribe but said rate shall not vary more often than once in any three\nmonth period and shall be based on a published index that is (a) readily\navailable, (b) independently verifiable, (c) beyond the control of the\nbank or trust company and (d) approved by the superintendent.\n The superintendent of financial services shall adopt regulations,\nincluding but not limited to: (a) providing for disclosure to the\nborrower by the bank or trust company of the circumstances under which\nthe rate may increase, any limitations on the increase, the effect of an\nincrease and an example of the payment terms that would result from an\nincrease; (b) providing for disclosure to the borrower by the bank or\ntrust company of a history of the fluctuations of the index over a\nreasonable period of time; and (c) providing for notice to the borrower\nfrom the bank or trust company prior to any rate increase or change in\nthe terms of payment.\n (c) The rate of interest authorized by this subdivision shall be\ninclusive of all charges incident to investigating and making any loan.\nNo fee, commission, expense, or other charge whatsoever in addition\nthereto shall be taken, received, reserved, or contracted for, except\n(i) the fees payable to the appropriate public officer to perfect any\nlien or other security interest taken to secure the loan or the premium,\nnot in excess of such filing fee, payable for any insurance in lieu of\nsuch filing; (ii) in case of default, and in accordance with the\nprovisions of the instrument evidencing the obligation, either a fine in\nan amount not to exceed five cents per dollar on any installment which\nhas become due and remained unpaid for a period in excess of ten days,\nbut no such fine shall exceed five dollars and only one fine shall be\ncollected on any such installment regardless of the period during which\nit remains in default, and provided further that should the aggregate of\nsuch fines collected in connection with any loan exceed two per centum\nof such loan, or in any event twenty-five dollars, the bank or trust\ncompany shall refund such excess to the borrower within sixty days after\nthe loan is paid in full, or, subject to an allowance of unearned\ninterest attributable to the amount in default, interest on each amount\npast due at a rate not in excess of the rate provided for in the\ninstrument evidencing the obligation; (iii) the actual expenditures,\nincluding reasonable attorney's fees for necessary court process; and\n(iv) in case the bank or trust company insures a borrower under a credit\nunemployment insurance policy, group life insurance policy, group health\ninsurance policy, group accident insurance policy, or group health and\naccident insurance policy, or requires insurance on personal property\nsecuring any such loan, an amount not in excess of the premiums\nchargeable in accordance with rate schedules then in effect and on file\nwith the superintendent of financial services for such insurance by the\ninsurer. No bank or trust company shall require a borrower to place any\nsum on deposit, or to make deposits in lieu of regular periodic\ninstallment payments, or to do or refrain from doing any other act which\nwould entail additional expense or sacrifice, as a condition precedent\nto granting a loan under the authority of this subdivision except as\nprovided in subdivision five-b of this section. Notwithstanding the\nforegoing, a bank or trust company may, with the prior approval of the\nsuperintendent, offer a loan product that encourages personal savings by\nrequiring a borrower to place a portion of the principal of the loan\ninto an interest-bearing savings account as a condition precedent to\ngranting a loan under the authority of this subdivision. In deciding\nwhether to approve a loan product pursuant to the preceding sentence,\nthe superintendent may consider the recent results of examinations of\nthe bank or trust company, the terms and structure of, and the\nunderwriting criteria and marketing plan for the proposed loan product,\nother loans offered by the bank or trust company, and such other factors\nthe superintendent deems to be relevant. Notwithstanding the provisions\nof this paragraph no refund of excess fines shall be required if it\namounts to less than one dollar.\n (d) In each note, instrument or other evidence of debt given by a\nborrower to evidence a loan under this subdivision, where such loan is\nnot subject to the provisions of the act of congress entitled "Truth in\nLending Act" and the regulations thereunder, as such act and regulations\nmay from time to time be amended, the rate of charge (stating any\nminimum as permitted by this subdivision four), shall be expressed\neither in accordance with the method prescribed by such act of congress\nor: (i) as a rate in dollars per annum discount per one hundred dollars\nface amount of loan, or (ii) as the rate or rates agreed to by the bank\nor trust company and the borrower.\n (e) A borrower may prepay the loan in full or, with the consent of the\nbank or trust company, may refinance the loan. If the interest is\ncalculated on the actuarial basis, or if the evidence of the\nindebtedness provides that the rate of interest may vary from time to\ntime, a borrower may prepay the loan in full without penalty. If the\ninterest was taken in advance, in the event of such prepayment or\nrefinancing, the bank or trust company shall refund: (1) the unearned\nportion of the interest to the borrower the amount of which portion\nshall be determined according to a generally accepted actuarial method;\nprovided, however, that if the amount of interest previously deducted\n(i) was less than ten dollars, no refund shall be required; or (ii)\nexceeded the sum of ten dollars and the earned interest is less than\nthat amount, the bank or trust company may retain such an additional\namount as will bring the earned interest to the sum of ten dollars and\nrefund the remainder, and provided further, that unless the loan is\nrefinanced, no refund shall be required if it amounts to less than one\ndollar; and (2) if a charge was made to the borrower for premiums for\ninsuring the borrower under a credit unemployment insurance policy,\ngroup life insurance policy, or under a group health, group accident or\ngroup health and accident insurance policy, the excess of the charge to\nthe borrower therefor over the premiums paid or payable by the bank or\ntrust company, if such premiums were paid or payable by the bank or\ntrust company periodically, or the refund for such insurance premium\nreceived or receivable by the bank or trust company, if such premium was\npaid or payable in a lump sum by the bank or trust company, provided\nthat no such refund shall be required if it amounts to less than one\ndollar. In the event (i) the maturity of the loan is accelerated due to\nthe default of the borrower or otherwise and judgment is obtained, or\n(ii) repayment is made pursuant to any such insurance policy, the\nborrower or his legal representative, as the case may be, shall be\nentitled to the same refund as if the loan had been prepaid in full on\nthe date of acceleration or repayment.\n (f) A bank or trust company may, upon agreement with the borrower,\nextend the scheduled due date or defer the scheduled payment of all or\nany part of any installment or installments payable under the loan. The\nagreement for such extension or deferment must be in writing and signed\nby the borrower. The bank or trust company may charge and contract for\nthe payment of an extension or deferral charge by the borrower and\ncollect and receive the same, at the rate or rates agreed to by the bank\nor trust company and the borrower, on the amount of the installment or\ninstallments, or part thereof, extended or deferred for the period of\nextension or deferral. Such period shall not exceed the period from the\ndate when such extended or deferred installment or installments, or part\nthereof, would have been payable in the absence of such extension or\ndeferral, to the date when such installment or installments, or part\nthereof, are made payable under the agreement of extension or deferment;\nexcept that a minimum charge of one dollar for the period of extension\nor deferral may be made in any case where the extension or deferral\ncharge, when computed at such rate, amounts to less than one dollar.\nSuch agreement may also provide for the payment by the borrower of the\nadditional cost to the bank or trust company of premiums for continuing\nin force, until the end of such period of extension or deferral, any\ninsurance coverages provided in connection with the loan subject to the\nother provisions of this subdivision.\n (g) If the borrower is obligated in connection with the loan to\nmaintain insurance on a motor vehicle securing the loan and if\nsubsequent to the making of the loan the borrower fails to maintain the\ninsurance, the bank or trust company may make advances to procure the\nequivalent limits of insurance for either the interests of the borrower\nand the bank or trust company or of either of them, and any amount so\nadvanced may be the subject of an interest charge from the date of such\nadvance as though such amount was part of the unpaid principal balance\nof the loan. Each amount so advanced shall be secured by the personal\nproperty if so provided in the security agreement covering the personal\nproperty and if the bank or trust company notifies the borrower in\nwriting of the advance of such amount and of his or her option to repay\nsuch amount in any one of the following ways:\n (1) Full payment within ten days from the date of giving or mailing\nthe notice;\n (2) Full amortization during the term of the insurance or the\nremaining term of the loan, at the option of the bank or trust company;\n (3) If offered by the bank or trust company, as a final balloon\npayment payable one month after the last scheduled payment in connection\nwith the loan;\n (4) If offered by the bank or trust company, full amortization after\nthe term of the loan, to be payable in instalments which do not exceed\nthe average instalment payable in connection with the loan; or\n (5) If offered by the bank or trust company, any other amortization\nplan.\n If the borrower neither pays in full the amount so advanced nor\nnotifies the bank or trust company in writing of his or her choice\nregarding amortization options before the expiration of ten days from\nthe date of giving or mailing of the notice by the bank or trust\ncompany, the bank or trust company shall amortize the amount so advanced\npursuant to subparagraph two of this paragraph.\n 5. (a) A bank or trust company which operates a personal loan\ndepartment pursuant to paragraph (a) of subdivision four hereof may\nestablish credits under written agreements with borrowers, pursuant to\nwhich one or more loans or advances to or for the account of a borrower\nmay be made from time to time, by means of honoring one or more checks\nor other written, electronic or telephonic orders or requests of the\nborrower and may charge interest on such loans and advances at the rate\npermitted by paragraph (b) of this subdivision, provided such loans and\nadvances comply with the provisions of this subdivision. This\nsubdivision does not authorize any bank or trust company to make any\nloan or advance in connection with the purchase or lease of goods or\nservices by means of a credit card as defined in section five hundred\neleven of the general business law, except for a loan or advance\nresulting from the use of a card which may be used to access a deposit\naccount and line of credit associated with that account. The records of\nsuch loans and advances shall be kept in such form as the superintendent\nmay from time to time prescribe.\n (b) Such agreement may provide for interest on the unpaid aggregate\nprincipal amount of such loans and advances from time to time\noutstanding at the rate or rates agreed to by the bank or trust company\nand the borrower, as computed pursuant to this section, including, in\naccordance with the provisions of the agreement, rates that may vary\nfrom time to time reckoned on each loan or advance from the date\nthereof, calculated on any of the following bases: (i) on the unpaid\nprincipal amount of such loans and advances from time to time\noutstanding, or (ii) for each month on an average balance outstanding\ndetermined by dividing by two the sum of the balances of unpaid\nprincipal of such loans and advances outstanding on two dates during\nsuch month, as specified in such agreement; the first of which dates\nbeing not later than the fifteenth day of such month and the second\nbeing not earlier than the sixteenth day of such month and not less than\nten nor more than twenty days after the first date, or (iii) for each\nmonth on a fixed amount selected from a schedule, which fixed amount may\nexceed the average daily balance under (i) above, or the average balance\nif determined under (ii) above, by a differential of not more than five\ndollars, provided the same fixed amount is also used for computing\ninterest for any month for which such balance exceeds said fixed amount\nby any amount up to at least the same differential. For purposes of this\nsubdivision, a month may but need not be a calendar month, and a bank or\ntrust company computing interest on a daily basis may charge for each\nday one thirtieth of the monthly interest rate. No amendment to any\nagreement shall take effect unless at least 30 days prior to the\neffective date of such amendment, imposition or increase, a written\nnotice has been mailed or delivered to the borrower that clearly and\nconspicuously describes such amendment, imposition or increase and the\nindebtedness to which it applies and if the amendment has the effect of\nincreasing the rate of interest, either (a) the notice states that the\nincurrence by the borrower or another person authorized by him of any\nfurther indebtedness under the plan to which the agreement relates on or\nafter the effective date of such change specified in the notice shall\nconstitute acceptance of such change, and either the borrower agrees in\nwriting to such change or the borrower or another person authorized by\nhim incurs such further indebtedness on or after the effective date of\nthe change stated in the notice, or (b) the notice advises the borrower\nthat he has thirty days from the earlier of the mailing or delivery of\nthe notice to advise the bank or trust company in writing that he does\nnot accept such amendment, provided that such notice contains an address\nto which the borrower may send notice of his election not to accept the\namendment and also provided that the notice specifies that the amendment\nwill take effect absent receipt of the borrower's written objection to\nthe amendment. Any borrower who has received a notice pursuant to clause\n(a) who does not agree in writing to the amendment and no further\nindebtedness is incurred under the plan to which the agreement relates,\nand any borrower who gives a timely notice, pursuant to clause (b),\nelecting not to accept the amendment shall be permitted to pay his\noutstanding indebtedness in accordance with the terms of the agreement\nbut the bank or trust company may terminate the amount of credit\navailable to the borrower and may require the borrower to return all\ncredit cards and checks issued in connection with the agreement. If such\na borrower subsequently obtains credit under the agreement, such use\nshall constitute acceptance of the change of terms and shall be deemed\nto have been accepted and shall become effective as to the borrower as\nof the date such change would have become effective but for the giving\nof notice by the borrower. If notice is given pursuant to clause (b) and\nthe borrower does not timely object in writing to the amendment, such\namendment shall become effective without action on the part of the\nborrower; provided that in no event shall any such amendment or increase\ntake effect with respect to (i) the unpaid aggregate principal amount of\nloans or advances representing indebtedness outstanding prior to January\n1, 1981 and (ii) the unpaid aggregate principal amount of loans or\nadvances representing indebtedness incurred, under or pursuant to an\nagreement in effect on December 1, 1980, between January 1, 1981, and\nthe effective date of such amendment or increase specified in the first\nnotice mailed or delivered pursuant to clause (a). Indebtedness\noutstanding prior to January 1, 1981, for purpose of clause (i) above\nand indebtedness outstanding prior to the effective date of an increase\nfor purposes of clause (ii) above shall be determined on the basis of\ncrediting payments and other credits first to that portion of any such\nindebtedness representing interest charges, insurance premiums, service\ncharges and fines and then to that portion representing the principal\namount of loans or advances in the order in which made. The provisions\nof this paragraph permitting an increase in a rate of interest shall not\napply in the case of an agreement which expressly prohibits changing of\ninterest rates or which provides limitations on changing of interest\nrates which are more restrictive than the requirements of this\nparagraph. An amendment to an agreement deleting a provision that the\nrate of interest may vary from time to time may not become effective\nwithin one year from the later of the effective date of the agreement or\nthe effective date of an amendment to an agreement adding a variable\nrate provision. On any loans or advances with rates of interest that may\nvary from time to time made pursuant to this paragraph, such variable\nrates of interest shall be determined at regular intervals as set forth\nin the agreement and in accordance with such regulations as the\nsuperintendent of financial services shall prescribe but said rate shall\nnot vary more often than once in any three month period and shall be\nbased on a published index that is (a) readily available, (b)\nindependently verifiable, (c) beyond the control of the bank or trust\ncompany and (d) approved by the superintendent, (e) such loan rate shall\nbe based on the index values, or the index numbers plus or minus\nadditional percentage points provided, however, that variations in the\nrate must correspond directly to the movements of the index values plus\nor minus additional percentage points only. Once such rate is\nestablished no lending institution may add any factors to increase the\nrate other than variations in the established index without the prior\napproval of the superintendent of financial services. For purposes of\nthis paragraph, an adjustment in the rate of interest as a consequence\nof movement in the selected index shall not constitute an amendment to\nthat agreement. A reduction in the grace period for the assessment of a\nfee on any installment not paid when due, shall be considered an\namendment to an agreement as set forth in this paragraph.\n The superintendent of financial services shall adopt regulations with\nrespect to agreements that provide for a variable rate of interest,\nincluding but not limited to: (a) providing for disclosure to the\nborrower by the bank or trust company of the circumstances under which\nthe rate may increase, any limitations on the increase, the effect of an\nincrease and an example of the payment terms that would result from an\nincrease; (b) providing for disclosure to the borrower by the bank or\ntrust company of a history of the fluctuations of the index over a\nreasonable period of time; and (c) providing for notice to the borrower\nfrom the bank or trust company prior to any rate increase or change in\nthe terms of payment. The regulations shall allow a bank or trust\ncompany after choosing an approved index to choose a spread and a\nminimum and maximum rate of interest at its discretion.\n A written agreement, whether it provides for a fixed or variable\ninterest rate, may provide for an introductory rate of interest at\neither a fixed or a variable rate, provided that the terms of such\nintroductory rate, including, if applicable, the date on which the\nintroductory rate shall terminate, are disclosed to the borrower. Such\ndisclosure shall be contained on an application form or pre-approved\nwritten solicitation as specified pursuant to subdivisions one and one-a\nof section five hundred twenty of the general business law. A change in\nthe interest rate upon expiration of an introductory rate shall not be\nconsidered a variable rate or a change in terms. The interest rate in\neffect after expiration of an introductory rate may apply to all amounts\ndue under the agreement regardless of when incurred and disclosure of\nthe same shall be provided to the borrower in the written agreement.\n Any interest charge, whether assessed by a fixed or variable rate, may\nbe reduced on such terms as the bank or trust company may determine,\nprovided that the terms of such reduction, including, if applicable, the\ndate on which the reduction will terminate, are disclosed to the\nborrower on the written notice announcing the reduction, prior to the\neffective date of the reduction. A new method of determining an interest\ncharge is a reduction in the interest charge if the charge determined\nunder the new method never exceeds the charge under the original method.\nThe original interest charge or original method of determining the\ninterest charge may be applied after the reduction ends to the entire\noutstanding indebtedness, including any indebtedness incurred when a\nreduced interest charge applied and disclosure of the same shall be\nprovided to the borrower in the written notice announcing the reduction.\nA reduction to an interest charge, including the resumption of the\noriginal interest charge or the original method of determining the\ninterest charge, shall not be considered an amendment of the agreement\nfor purposes of this paragraph.\n (c) The aggregate unpaid principal amount of all such loans and\nadvances to a borrower made pursuant to this subdivision by a bank or\ntrust company at any one time outstanding shall be determined by\nagreement between such bank or trust company and the borrower except to\nthe extent that such loans or advances are made pursuant to a written\nagreement providing for establishing credits for a primarily commercial\nor business use or purpose or for investment in or purchase of an\ninterest in an unincorporated business or commercial enterprise.\n (d) The aggregate unpaid principal amount of all loans and advances\noutstanding at any time pursuant to this subdivision shall be repayable\nat regular periodic intervals of not more than one month and for such\nterm as agreed upon by such bank or trust company and the borrower;\nprovided, however, that nothing herein shall prohibit a bank or trust\ncompany from providing in any agreement for the omission of payments for\nthree consecutive specified months during any consecutive twelve month\nperiod. The initial installment of any loan or advance may be deferred\nfor a period of not more than sixty-five days from the date of such loan\nor advance; provided, however, that the installments payable during any\nsuch period on any prior loans or advances shall not be affected by any\nsuch deferment. Provided, however, that an agreement may require a\nminimum installment as agreed upon by the parties.\n The borrower may at any time prepay the amount owing in part or in\nfull, with interest to the date of prepayment.\n Notwithstanding the foregoing provisions of this paragraph, each\ninstallment or other amount paid by the borrower to the bank or trust\ncompany may be applied to interest, insurance premiums, service charges,\nfines and principal in the order named, or in any such manner as the\nagreement may provide. The term "installment" may be deemed to include\nor exclude amounts to be applied to interest, insurance premiums,\nservice charges and fines.\n (e) The fees and charges authorized by this paragraph and paragraph\n(b) of this subdivision shall be inclusive of all charges to the\nborrower incident to investigating and making any such loan or advance.\nNo fee, commission, expense, or other charge to the borrower whatsoever\nshall be taken, received, reserved, or contracted for, except as\nprovided in this subdivision. In addition to the interest charge\npermitted under paragraph (b) of this subdivision, the bank or trust\ncompany may charge, receive and collect any one or more of the fees and\ncharges described in this paragraph, provided that any such fee or\ncharge is set forth in the written agreement with the borrower. The bank\nor trust company may contract with the borrower for the payment by the\nborrower of: (i) a service charge either as a percentage or an amount\nupon each such check or other written, electronic or telephonic order or\nrequest which is approved; (ii) a charge in an amount or percentage for\neach check or other written, electronic or telephonic order or request\nto obtain money from a credit line that cannot be approved since the\nborrower is in violation of the terms of the agreement or payment of\nsuch order or request would cause borrower to be in violation of the\nterms of the agreement; (iii) a fee for any installment which is not\npaid on or before the date on which it is due. A bank or trust company\nthat imposes the charge described in this subparagraph without allowing\na grace period of at least ten days must credit any cash payment made by\na borrower to a teller at a branch where deposits are accepted by the\nbank or trust company, as of the date of receipt of the payment; (iv)\nthe actual expenditures, including reasonable attorneys' fees for\nnecessary court process; (v) in case the bank or trust company insures a\nborrower in accordance with applicable insurance law, including but not\nlimited to under a credit unemployment insurance policy, group life\ninsurance policy, group health insurance policy, group accident\ninsurance policy, or group health and accident insurance policy, an\namount for each month which, notwithstanding any other law, may be\ncomputed on the amount of the borrower's entire unpaid indebtedness\nunder this subdivision except in the case of a loan or loan commitment\nmade under this subdivision for educational purposes as specified in\nsubdivision five-b of this section, and then on an amount no greater\nthan the unpaid balance of the borrower's scheduled periodic payments,\nwhether due or not due, upon the loan or loan commitment, at a rate not\nin excess of the premiums chargeable for such month in accordance with\nrate schedules then in effect and on file with the superintendent of\nfinancial services for such insurance by the insurer; (vi) if loans or\nadvances may be obtained by use of a credit card issued by the bank or\ntrust company to the borrower, an annual fee for membership in the\ncredit card plan. If the borrower has requested the issuance of a credit\ncard, the fee for the first year may be charged by the bank or trust\ncompany at any time. The bank or trust company shall in each subsequent\nyear in which an annual fee is payable, send the borrower in or with the\nstatement for the monthly billing period before that in which the fee is\nto be billed, a notice that the annual fee will be billed in the next\nmonthly statement. A borrower who is not delinquent or otherwise in\nbreach of any term of the agreement with the bank or trust company shall\nhave the right during the first six months after the annual fee is\nbilled to notify the bank or trust company in writing, at its address on\nthe credit agreement, to terminate the borrower's account and request a\nrefund of the unused portion of the annual fee previously paid. Upon\nreceipt of the termination notice and refund request from such borrower,\nthe bank or trust company shall refund to the borrower the unused pro\nrata share of any annual fee previously paid as of the first billing\nstatement date after receipt of the termination notice; and (vii) an\noverlimit charge which may be imposed whenever the specified credit\nlimit is exceeded but not more than once in a monthly billing cycle. If\nthe overlimit charge is imposed, the credit limit must be disclosed on\nthe monthly billing statement; and (viii) a returned payment charge, in\nthe amount set forth in section 5-328 of the general obligations law,\nfor any check or other method of payment that is returned unpaid,\nexcluding payment made by automated teller machine or other electronic\nmedia; (ix) a charge for replacement of lost or stolen credit cards,\nwhich charge shall be applied only where a borrower has suffered a lost\nor stolen credit card after two replacements thereof; (x) a charge for\nadditional credit cards for the borrower's account; and (xi) a charge\nfor copies of sales slips, cash advance slips, monthly statements and\nother documents when such copies are not required by federal or state\nlaw governing billing error disputes.\n The fees and charges set forth in this paragraph shall not be\nconsidered in applying sections 190.40 and 190.42 of the penal law. For\npurposes of 12 U.S.C. §§ 85, 1831d, 1463(g) and 1785(g), the fees and\ncharges permitted under this paragraph are interest under New York law,\nand all terms, conditions, and other provisions of a written agreement\nbetween a bank or trust company and a borrower, including without\nlimitation, fees and charges, provisions related to the method of\ndetermining the outstanding balance on which an interest charge is\nimposed and circumstances in which an interest charge may be avoided,\nare material to the determination of the interest rate under New York\nlaw.\n (f) No bank or trust company shall require a borrower to keep any sum\non deposit, or to make deposits in lieu of regular periodic installment\npayments, or to do or refrain from doing any other act which would\nentail additional expense or sacrifice, as a condition precedent to the\nentering into of the agreement or granting of a loan or advance under\nthe authority of this subdivision, except as provided in subdivision\nfive-b of this section, provided, however, that nothing herein shall be\nconstrued to prohibit a borrower from agreeing that such loans and\nadvances may be disbursed by crediting a demand deposit account to be\nopened or maintained by the borrower on the same terms as are offered\ngenerally by the bank or trust company to all or any class or classes of\ndemand deposit customers, and provided further, that a bank or trust\ncompany may require a pledge to such bank or trust company of a\nspecifically identified interest-bearing deposit account at such bank or\ntrust company as collateral security for a loan made by such bank or\ntrust company under the authority of this subdivision.\n 5-a. A bank or trust company may make loans secured by mobile home\nchattel paper evidencing a monetary obligation incurred to finance the\npurchase of a mobile home located at the time of such purchase, or to be\nlocated within ninety days, at a semipermanent site within the state or\nin a contiguous state and to be maintained as a residence of the\nborrower, the borrower's spouse, child, grandchild, parent or\ngrandparent.\n (1) For this subdivision:\n (i) "mobile home chattel paper" means written evidence of both a\nmonetary obligation and a security interest of first priority in a\nmobile home and any equipment installed or to be installed therein; and\n (ii) "mobile home" or "manufactured home" means a structure,\ntransportable in one or more sections, which in the traveling mode, is\neight body feet or more in width or forty body feet or more in length,\nor when erected on site, is three hundred twenty or more square feet,\nand which is built on a permanent chassis and designed to be used as a\ndwelling with or without a permanent foundation when connected to\nrequired utilities, and includes the plumbing, heating, air-conditioning\nand electrical systems contained therein.\n (2) If the loan is for the purpose of financing the purchase of a new\nmobile home,\n (i) it shall mature not later than two hundred forty months after the\ndate thereof, and\n (ii) the amount advanced shall not exceed one hundred per cent of the\nsum of (a) the manufacturer's invoice price of such mobile home\n(including any installed equipment), excluding freight, plus (b) the\ninvoice price of the manufacturer of any new equipment installed or to\nbe installed by the dealer, excluding freight.\n (3) If the loan is for the purpose of financing the purchase of a used\nmobile home,\n (i) it shall mature not later than two hundred forty months after the\ndate of the loan, and\n (ii) the amount advanced shall not exceed one hundred per cent of the\npurchase price of the used mobile home actually paid or the wholesale\nvalue of such mobile home (including any installed equipment) as\nestablished in the dealer's market, whichever is the lower.\n (4) The loan shall be payable in equal or substantially equal monthly\ninstallments calculated from the date of the loan. Interest, which may\nbe taken in advance, may be charged thereon, computed from the date of\nthe loan to the date of the last installment payable thereunder, if the\nloan has a maturity (i) not exceeding thirty-seven months, at a rate not\nto exceed six dollars per annum discount per one hundred dollars of the\nface amount or ten dollars if the interest so computed is less than that\namount, or (ii) exceeding thirty-seven months, at a rate not to exceed\nfive dollars per annum discount per one hundred dollars of the face\namount or ten dollars, if the interest so computed is less than that\namount; provided that the interest which may be charged, if it exceeds\nten dollars, shall not exceed one per cent per month on the unpaid\nprincipal balance.\n (5) The authorized interest shall include all charges incident to\ninvestigating and making any loan. No fee, commission, expense, or other\ncharge shall be permitted except that the bank or trust company may\ncontract to charge the borrower (i) the fees payable to a public officer\nto perfect any lien or other security interest taken to secure the loan,\nor the premium, not in excess of such fee, payable for any insurance in\nlieu of such filing; (ii) in case of default, and in accordance with the\ninstrument evidencing the obligation, either a fine in an amount not to\nexceed five per cent on any installment which has become due and\nremained unpaid for a period in excess of ten days, but no such fine\nshall exceed five dollars and only one fine shall be collected on any\nsuch installment regardless of the duration of the default, and provided\nfurther that should the aggregate of such fines collected in connection\nwith any loan exceed two per cent of such loan or twenty-five dollars\nthe bank or trust company shall refund such excess within sixty days\nafter the loan is paid in full, or, subject to an allowance of unearned\ninterest attributable to the amount in default, interest on each amount\npast due at a rate not in excess of one per cent per month during the\nperiod of delinquency; (iii) the actual expenditures, including\nreasonable attorney's fees for necessary court process, and (iv) in case\nthe bank or trust company insures a borrower under a credit unemployment\ninsurance policy, group life, health, accident, or health and accident\ninsurance policy, or requires insurance on the property securing such\nloan, an amount not in excess of the premiums lawfully chargeable. No\nbank or trust company shall require a borrower to place any sum on\ndeposit, or to make deposits in lieu of regular periodic installment\npayments, or to do or refrain from doing any other act which would\nentail additional expense or sacrifice, as a condition of a mobile home\nloan, as the superintendent may from time to time approve. No refund or\nexcess fines shall be required if it amounts to less than one dollar.\n (6) A borrower may prepay the loan in full or, with the consent of the\nbank or trust company, may refinance the loan. In such event, the bank\nor trust company shall refund: (1) the unearned portion of the interest\nto the borrower the amount of which portion shall be determined\naccording to a generally accepted actuarial method; provided that if the\ninterest previously deducted (i) was less than ten dollars, no refund\nshall be required; or (ii) exceeded ten dollars and the earned interest\nis less than that amount, the bank or trust company may retain such an\nadditional amount as will bring the earned interest to ten dollars and\nrefund the remainder, and provided further, that unless the loan is\nrefinanced, no refund shall be required if it amounts to less than one\ndollar; and (2) if a charge was made to the borrower for premiums for\ninsuring the borrower under a credit unemployment insurance policy,\ngroup life insurance policy, or under a group health, group accident or\ngroup health and accident insurance policy, the excess of the charge to\nthe borrower therefor over the premiums paid or payable by the bank, if\nsuch premiums were paid or payable by the bank or trust company\nperiodically, or the refund for such insurance premium received or\nreceivable by the bank or trust company, if such premium was paid or\npayable in a lump sum by the bank or trust company. No such refund need\nbe made if it amounts to less than one dollar. In the event (i) the\nmaturity of the loan is accelerated due to the default of the borrower\nor otherwise and judgment is obtained, or (ii) repayment is made\npursuant to any such insurance policy, the borrower or his legal\nrepresentative, as the case may be, shall be entitled to the same refund\nas if the loan had been prepaid in full on the date of acceleration or\nrepayment.\n (7) As a condition of any loan made pursuant hereto, the borrower\nshall certify that the mobile home, for the purchase of which the loan\nis made, is intended to be maintained in the state or in a contiguous\nstate as a residence of the borrower, the borrower's spouse, child,\ngrandchild, parent or grandparent. If the mobile home shall not be so\nmaintained on the ninetieth day next succeeding the date of the loan or\nif it is relocated so as to no longer be located in the state or a\ncontiguous state at any time before the first anniversary of the loan,\nthe loan and all authorized charges shall become immediately due and\npayable subject only to the refund provisions of paragraph six and the\nborrower may, if the contract so provides, be required to pay as an\nadditional authorized charge, a penalty in an amount not to exceed two\nper cent of the face amount of the loan.\n (8) No investment shall be made by a bank or trust company pursuant to\nthis subdivision if the total amount invested by it pursuant to this\nsubdivision exceeds, or by the making of such investment will exceed, an\namount equal to fifteen per cent of the assets of the bank or trust\ncompany.\n (9) Subject to such limitations and conditions as the superintendent\nof financial services may prescribe by general regulation, a bank or\ntrust company may make a loan pursuant to this subdivision which the\nfederal housing administrator has insured or has made a commitment to\ninsure and may receive and hold such debentures as are issued by the\nfederal housing administrator in payment of such insurance, or which is\nguaranteed pursuant to the provisions of the act of congress entitled\nthe "Servicemen's Readjustment Act of 1944." No law of this state\nprescribing or limiting the interest rate upon loans or advances of\ncredit or prescribing a penalty for violation thereof or prescribing the\nnature, amount or form of security or requiring security upon which\nloans or advances of credit may be made or prescribing or limiting the\nperiod for which loans or advances of credit may be made or limiting the\namount of any class of loans, advances of credit or purchases which may\nbe made shall be deemed to apply to loans, advances of credit or\npurchases made or to loans acquired by purchase pursuant to this\nparagraph.\n 5-b. Notwithstanding any inconsistent provision of this section, a\nbank or trust company may make loans for the purpose of defraying the\ncost of education of one or more students at a university or college, or\nat an elementary or secondary school providing education required of\nminors which may provide for (i) payment of origination fees, or\nguarantee fees in such amounts as the superintendent may from time to\ntime approve; (ii) capitalization of interest, provided that the\nborrower has the option to avoid capitalization by paying such interest\nwithout penalty; and (iii) deferral and forbearance of payments under\ncircumstances for which such deferral or forbearance could be granted\nfor loans made pursuant to Title IV of the Higher Education Act of 1965\n(20 USC 1070 et seq.).\n 6. The knowingly taking, receiving, reserving or charging a greater\nrate of interest than that authorized by this section as computed by\nthis section, shall be held and adjudged a forfeiture of the entire\ninterest which the note, bill of exchange or other evidence of debt\ncarries with it, or which has been agreed to be paid thereon, and if a\ngreater rate of interest has been paid, the person paying the same or\nhis legal representative may recover from the bank or trust company\ntwice the entire amount of the interest thus paid.\n 7. Upon an advance of money, whether or not repayable on demand, to an\namount not less than five thousand dollars, made upon documents of title\nwithin article seven of the uniform commercial code or negotiable\ninstruments within article three or article eight of the uniform\ncommercial code pledged as collateral security for such repayment, any\nbank or trust company may receive or contract to receive and collect as\ncompensation for making such advance any sum which may be agreed upon by\nthe parties to such transaction; provided that such advance is (a) to or\nfor any partner of a firm which is a member firm of a national\nsecurities exchange registered with the securities and exchange\ncommission as a national securities exchange under the federal\nsecurities exchange act of 1934, as amended, to enable such partner to\nmake a contribution of capital to such firm or to purchase stock of an\naffiliated corporation of such firm, provided that such partner is\nactively engaged in the business of such firm and devotes the major\nportion of his time thereto, or (b) to or for any person who is or will\nbecome a holder of stock of a corporation which is a member corporation\nof such a national securities exchange to enable such person to purchase\nstock of such corporation or to purchase stock of an affiliated\ncorporation of such corporation, provided that such person is actively\nengaged in the business of such corporation and devotes the major\nportion of his time thereto.\n 8. (a) The superintendent shall have the power to prescribe by\nregulation (i) the maximum charge which may be imposed in this state by\na bank or trust company in connection with a check or other written\norder drawn upon it on insufficient funds, irrespective of whether the\ninstrument is paid, accepted, or returned by the bank, and (ii) the\nmaximum charge which may be imposed in this state by a bank or trust\ncompany in connection with a check or other written order received by it\nfor deposit or collection and subsequently dishonored and returned for\nany reason by the drawee.\n (b) No bank or trust company shall, in connection with the payment,\nacceptance or return of such check or order, impose any fee, fine,\ncommission or other charge, however designated, in addition to the\nmaximum charge established therefore by the superintendent of financial\nservices pursuant to paragraph (a) of this subdivision, except that\nnothing herein expressed shall prevent a bank or trust company from\ntaking, receiving, reserving or charging interest, as authorized by law\nin connection with credit extended in connection with the payment of\nsuch check or order or from imposing any charge in accordance with a\nwritten agreement established in accordance with the provisions of\nsubdivision five of this section. A bank or trust company may, as an\naccommodation to its customers, pay, accept, or return a check or order\nwithout charge, or at a lesser charge than the maximum charge\nestablished by the superintendent of financial services.\n (c) In prescribing a maximum charge pursuant to paragraph (a) of this\nsubdivision, the superintendent shall consider the following factors:\n(i) the cost of processing an overdraft or returned check or order, as\nthe case may be, (ii) the charge necessary to deter overdrafts or\nreturned checks or orders, as the case may be, and (iii) such other\neconomic or cost factors that the superintendent shall deem to be\nappropriate. Prior to the superintendent's prescribing any such maximum\ncharge, the superintendent shall issue a written determination as to\nsuch maximum charge, reciting the cost and other data upon which the\ndetermination is based.\n (d) The superintendent of financial services may promulgate such\nregulations as he or she deems necessary and proper to implement and\ndefine the provisions of this subdivision. The superintendent of\nfinancial services may prescribe maximum charges from time to time, but\nnot more often than once in any six month period, and shall provide\nreasonable notice to the public of any change in such maximum charges,\nof the effective date of such change, which shall not be less than seven\ndays following the adoption of such change by the superintendent of\nfinancial services, and of any rule or regulation adopted pursuant to\nthis subdivision.\n 9. A bank or trust company may, in the case of business or\nagricultural loans in the amount of twenty-five thousand dollars or\nmore, take, receive, reserve, and charge on any loan or discount made,\nor upon any note, bill of exchange, or other evidence of debt, interest\nat a rate of not more than five per centum in excess of the discount\nrate on ninety-day commercial paper in effect at the Federal Reserve\nBank of New York, and such interest may be taken in advance, reckoning\nthe days for which the note, bill, or other evidence of debt has to run.\n