Chapter 1321: SMALL LOANS

1321.01 Small loan definitions.

(A) As used in sections 1321.01 to 1321.19 of the Revised Code:

(1) "Person" includes individuals, partnerships, associations, trusts, corporations, and all other legal entities.

(2) "License" means a license issued under sections 1321.01 to 1321.19 of the Revised Code to make loans at a single place of business.

(3) "Licensee" means a person to whom one or more licenses have been issued.

(4) "Principal amount" means the amount of cash paid to, or paid or payable for the account of, the borrower.

(5) "Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan or an application for a loan, however denominated, but does not include default charges, deferment charges, insurance charges or premiums, court costs, loan origination charges, check collection charges, credit line charges, credit report charges, or other fees and charges specifically authorized by law.

(6) "Interest-bearing loan" means a loan in which the debt is expressed as the principal amount and interest is computed, charged, and collected on unpaid principal balances outstanding from time to time.

(7) "Precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of interest computed in advance on the assumption that all scheduled payments will be made when due.

(8) "Actuarial method" means the method of allocating payments made on a loan between the principal amount and interest whereby a payment is applied first to the accumulated interest and the remainder to the unpaid principal amount.

(9) "Applicable charge" means the amount of interest attributable to each monthly installment period of the loan contract. The applicable charge is computed as if each installment period were one month and any charge for extending the first installment period beyond one month is ignored. In the case of loans originally scheduled to be repaid in sixty-one months or less, the applicable charge for any installment period is that proportion of the total interest contracted for, as the balance scheduled to be outstanding during that period bears to the sum of all of the periodic balances, all determined according to the payment schedule originally contracted for. In all other cases, the applicable charge for any installment period is that which would have been made for such period had the loan been made on an interest-bearing basis at the single rate provided in division (A) of section 1321.13 of the Revised Code, based upon the assumption that all payments were made according to schedule.

(10) "Annual percentage rate" means the ratio of the interest on a loan to the unpaid principal balances on the loan for any period of time, expressed on an annual basis.

(11) "Refinancing" means a loan the proceeds of which are used in whole or in part to pay the unpaid balance of a prior loan made by the same licensee to the same borrower under sections 1321.01 to 1321.19 of the Revised Code.

(12) "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section 1181.21 of the Revised Code.

(B) The division of financial institutions is responsible for the administration of sections 1321.01 to 1321.19 of the Revised Code. Neither the superintendent of the division, nor any deputy, assistant, clerk, examiner, or other person employed by the division to assist in the administration of such sections shall be interested, directly or indirectly, in the business licensed under the sections and any person so interested or who becomes so interested shall not be eligible to hold or retain any such position.

Effective Date: 09-26-1996

1321.02 Exceptions to license requirement.

No person shall engage in the business of lending money, credit, or choses in action in amounts of five thousand dollars or less, or exact, contract for, or receive, directly or indirectly, on or in connection with any such loan, any interest and charges that in the aggregate are greater than the interest and charges that the lender would be permitted to charge for a loan of money if the lender were not a licensee, without first having obtained a license from the division of financial institutions under sections 1321.01 to 1321.19 of the Revised Code.

Sections 1321.01 to 1321.19 of the Revised Code do not apply to any person doing business under and as permitted by any law of this state, another state, or the United States relating to banks, savings banks, savings societies, trust companies, credit unions, savings and loan associations substantially all the business of which is confined to loans on real estate mortgages and evidences of their own indebtedness; to registrants conducting business pursuant to sections 1321.51 to 1321.60 of the Revised Code; to licensees conducting business pursuant to sections 1321.71 to 1321.83 of the Revised Code; to licensees doing business pursuant to sections 1321.35 to 1321.48 of the Revised Code; or to any entity who is licensed pursuant to Title XXXIX of the Revised Code, who makes advances or loans to any person who is licensed to sell insurance pursuant to that Title, and who is authorized in writing by that entity to sell insurance. No person engaged in the business of selling tangible goods or services related thereto may receive or retain a license under sections 1321.01 to 1321.19 of the Revised Code for such place of business.

The first paragraph of this section applies to any person, who by any device, subterfuge, or pretense, charges, contracts for, or receives greater interest, consideration, or charges than that authorized by this section for any such loan or use of money or for any such loan, use, or sale of credit, or who for a fee or any manner of compensation arranges or offers to find or arrange for another person to make any such loan, use, or sale of credit. This section does not preclude the acquiring, directly or indirectly, by purchase or discount, of a bona fide obligation for goods or services when such obligation is payable directly to the person who provided the goods or services.

Any contract of loan in the making or collection of which an act is done by the lender that violates this section is void and the lender has no right to collect, receive, or retain any principal, interest, or charges.

Effective Date: 09-26-1996; 03-30-2006; 2008 HB545 09-01-2008

1321.03 Application for license - fee.

Application for a license shall be in writing, under oath, and in the form prescribed by the division of financial institutions, and shall contain the name and address of the applicant, and, if the applicant is a partnership or association, of every member thereof, and, if a corporation, of each officer and director thereof; also the approximate location where the business is to be conducted and such further relevant information as the division requires. At the time of making such application, the applicant shall pay to the division a license fee as determined by the superintendent of financial institutions pursuant to section 1321.20 of the Revised Code and a nonrefundable investigation fee of two hundred dollars. No license fee or any portion thereof shall be refunded after a license has been issued.

Effective Date: 09-26-1996

1321.04 Investigation by division - notice of filing of application - notice to licensees - license issued - denial of application.

Upon the filing of an application under section 1321.03 of the Revised Code and payment of fees pursuant to section 1321.20 of the Revised Code, the division of financial institutions shall investigate the facts concerning the applicant and the requirements provided for in divisions (A) and (B) of this section.

The division shall approve the application and issue and deliver a license to the applicant if the division finds both of the following:

(A) That the financial responsibility, experience, reputation, and general fitness of the applicant and of the members thereof, if the applicant is a partnership or an association, and of the officers and directors thereof, if the applicant is a corporation, are such as to warrant the belief that the business will be operated lawfully, honestly, and fairly under sections 1321.01 to 1321.19 of the Revised Code and within the purposes of those sections, that the applicant has fully complied with those sections, and that the applicant is qualified to act as a licensed lender;

(B) That the applicant has available for the operation of such business cash or moneys deposited in a readily accessible fund or account of not less than twenty-five thousand dollars.

If the division does not so find, it shall enter an order denying such application and forthwith notify the applicant of the denial, the grounds for the denial, and the applicant's reasonable opportunity to be heard on the action in accordance with Chapter 119. of the Revised Code. In the event of denial, the division shall return the license fee but shall retain the investigation fee.

Effective Date: 09-26-1996

1321.05 Contents of license - annual fee and assessment - current assets.

Each license shall state the address at which the business is to be conducted and shall state fully the name of the licensee. Each license shall be kept conspicuously posted in the place of business of the licensee and is not transferable or assignable.

Each license shall remain in effect until surrendered, revoked, or suspended under section 1321.08 or 3123.47 of the Revised Code. Every licensee shall each year pay to the division of financial institutions a license fee and an assessment as determined by the superintendent pursuant to section 1321.20 of the Revised Code. Payment of such renewal fee shall be according to the provisions of this section and the standard renewal procedure of sections 4745.01 to 4745.03 of the Revised Code. No other or further license fee or assessment shall be required from any such licensee by the state or any political subdivision in the state.

Every licensee shall maintain for each license current assets of at least ten thousand dollars, either in use or readily available for use in the conduct of the business.

Effective Date: 03-22-2001

1321.06 Additional licenses - change of place of business.

Not more than one place of business shall be maintained under the same license issued under sections 1321.01 to 1321.05 of the Revised Code, but the division of financial institutions may issue additional licenses to the same licensee upon compliance with such sections.

No change in the place of business of a licensee to a location outside the original municipal corporation shall be permitted under the same license. When a licensee wishes to change the licensee's place of business within the same municipal corporation, the licensee shall give written notice thereof in advance to the division which shall provide a license for the new address, without cost.

Sections 1321.01 to 1321.19 of the Revised Code do not limit the loans of any licensee to residents of the community in which the licensed place of business is situated.

Effective Date: 09-26-1996

1321.07 Annual examination of licensee - fees and mileage of sheriff and witnesses - subpoena.

At least once each year the division of financial institutions shall make an examination of the business, loans, books, papers, and records of each licensee so far as they pertain to the licensed business, and it may make such an examination more frequently if it is necessary for the proper administration of sections 1321.01 to 1321.19 of the Revised Code.

For the purpose of discovering violations, the division may at any time investigate the business and examine the books, accounts, papers, and records used therein, of:

(A) Licensees;

(B) Other persons engaged in the business described in section 1321.02 of the Revised Code or participating in such business as principal, agent, broker, or otherwise;

(C) Any person whom the division has reasonable cause to believe has violated, is violating, or is about to violate sections 1321.01 to 1321.19 of the Revised Code, whether or not the person claims to act under such sections. For the purpose of this section, any person who advertises, solicits, or holds self out as willing to make, find, or arrange for another person to make loan transactions in the amount or of the value of five thousand dollars or less, is presumed to be engaged in the business described in the first paragraph of section 1321.02 of the Revised Code.

For the purpose of this section, the division shall have and be given free access to the offices and places of business, files, safes, and vaults of all such persons, and may require the attendance of, and examine under oath, any person relative to such loans or such business or to the subject matter of any examination, investigation, or hearing. The division may require the attendance of such witnesses and the production of such books, records, and papers, as may be required either by the division or by any party to a hearing before the division, and for that purpose may issue a subpoena for any witness or a subpoena duces tecum, to compel the production of any books, records, or papers, directed to the sheriff of the county where such witness resides or is found, which shall be served and returned in the same manner as a subpoena in criminal cases is served and returned.

The fees of the sheriff shall be the same as that allowed in the court of common pleas in criminal cases. Witnesses shall be paid the fees and mileage provided for under section 119.094 of the Revised Code. Fees and mileage shall be paid from the funds of the division. No witness subpoenaed at the instance of parties other than the division is entitled to compensation from the state for attendance or travel unless the division certifies that the witness' testimony was material to the subject matter of the hearing.

If any person fails to file any statement or report, or fails to obey any subpoena, or to give testimony, or to answer questions, or to produce any books, records, documents, accounts, or papers as required by the division under sections 1321.01 to 1321.19 of the Revised Code, any court of common pleas, upon application made to it and upon proof being made of such failure, may make an order awarding process of subpoena or subpoena duces tecum out of the court for such witness to appear and testify before the division, and may make an order that any person give testimony and answer questions as required, and produce books, records, documents, accounts, or papers as required. Upon filing such order with the clerk of the court of common pleas, the clerk shall, under the seal of the court, issue process of subpoena to appear before the division at a time and place named therein, and so from day to day until the examination of such person is completed. The subpoena may contain a direction that such witness bring to such examination any books, records, documents, accounts, or papers therein mentioned, and the clerk shall issue, under the seal of the court, such other or further orders in reference to the examination, appearance, and production of books, records, documents, accounts, or papers as the court directs. If any person so summoned by subpoena issued by the clerk fails to obey the subpoena or to answer any directions therein, or to give testimony, or to answer questions as required, or to produce any books, records, documents, accounts, or papers as required, or if any such person fails to obey any order, the court, on motion supported by proof, may order an attachment for contempt to be issued against any person charged with disobeying any order or injunction issued out of the court of common pleas under sections 1321.01 to 1321.19 of the Revised Code. If the person so offending is brought before the court by virtue of such attachment, and if upon a hearing such disobedience appears, the court may order the offender to be committed and kept in close custody until the further order of the court.

Effective Date: 09-26-1996; 2008 HB525 07-01-2009

1321.08 Suspension or revocation of license.

In accordance with Chapter 119. of the Revised Code:

(A) The division of financial institutions shall, upon written notice to the licensee stating the contemplated action and the grounds therefor, and upon reasonable opportunity to be heard, suspend or revoke any license issued by the division if it finds that:

(1) The licensee is in default in the payment of the annual license fee or assessment prescribed in section 1321.20 of the Revised Code or has failed to comply with any order of the division made and entered under division (A) of section 1321.10 of the Revised Code;

(2) The licensee has continued to violate any of the provisions of sections 1321.01 to 1321.19 of the Revised Code or any rule promulgated under division (A) of section 1321.10 of the Revised Code after receiving notice of such violation or violations from the division;

(3) Any fact or condition exists which if it had existed or had been known to exist at the time of the original application for such license, which fact or condition was not then known to the division, clearly would have warranted the division in refusing originally to issue such license.

(B) If the division finds that there exists probable cause for the suspension or revocation of any license under division (A) of this section and that enforcement of sections 1321.01 to 1321.19 of the Revised Code requires immediate suspension of the license pending complete investigation, it may, upon three days' written notice, and hearing, enter an order suspending the license for a period not exceeding thirty days, during which period of suspension no loans may be made under the license, but the licensee may receive payments on existing loans. Upon completion of such investigation the division shall either reinstate the license or further suspend the license for a further period or give the licensee notice of the contemplated revocation of the license, the grounds for the revocation, and the licensee's reasonable opportunity to be heard on the action in accordance with Chapter 119. of the Revised Code.

(C) Any licensee may surrender any license by delivering it to the division with written notice of its surrender. Such surrender shall not affect the licensee's civil or criminal liability for acts committed prior to the surrender.

(D) No revocation or suspension of any license shall impair or affect the obligation of any pre-existing lawful contract between the licensee and any borrower nor shall such action affect the right of the licensee to collect the amounts due under the contract, or to enforce the contract.

(E) The division may reinstate or issue a new license to a person whose license has been revoked if no fact or condition then exists which clearly would have warranted the division in refusing originally to issue the license.

Effective Date: 09-26-1996

1321.09 Licensee to preserve books - annual report.

(A) Every licensee shall keep and use in the licensee's business such books, accounts, and records as will enable the division of financial institutions to determine whether the licensee is complying with sections 1321.01 to 1321.19 of the Revised Code and with the orders and rules made by the division under those sections. Every licensee shall preserve such books, accounts, and records for at least two years after making the final entry on any loan recorded therein. Accounting systems maintained in whole or in part by mechanical or electronic data processing methods that provide information equivalent to that otherwise required are acceptable for this purpose.

As required by the superintendent of financial institutions, every licensee each year shall file a report with the division giving such relevant information concerning the business and operations, during the preceding calendar year, of each licensed place of business conducted by the licensee within the state. If a licensee has more than one place of business within this state it is optional with the licensee to furnish the report for each location, or a composite report for all locations. Such report shall be made under oath in the form prescribed by the division, which shall make and publish annually an analysis and recapitulation of such reports. Such licensee reports are not public records and shall only be used by the division for the purpose of enforcing sections 1321.01 to 1321.19 of the Revised Code or any rules or orders made in compliance with those sections. Such licensee reports may be introduced into evidence or disclosed when and in the manner authorized in section 1181.25 of the Revised Code, or in connection with criminal proceedings.

This section does not prevent the division from releasing to or exchanging with other financial institution regulatory authorities information relating to licensees.

(B) For purposes of this section, "financial institution regulatory authority" includes a regulator of a business activity in which a licensee is engaged, or has applied to engage in, to the extent that the regulator has jurisdiction over a licensee engaged in that business activity. A licensee is engaged in a business activity, and a regulator of that business activity has jurisdiction over the licensee, whether the licensee conducts the activity directly or a subsidiary or affiliate of the licensee conducts the activity.

Effective Date: 06-18-2002

1321.10 Rules and orders - procedure in case of violation - certified statements - prima-facie evidence.

In accordance with Chapter 119. of the Revised Code:

(A) The division of financial institutions may adopt rules and the superintendent of financial institutions may issue specific orders for the enforcement of sections 1321.01 to 1321.19 of the Revised Code. Every ruling, demand, requirement, and similar administrative act may be in the form of a written order. Every rule and order shall be a public record. After promulgation, a copy of every rule shall be mailed to all licensees.

(B) The division may, whenever it has reasonable cause to believe that any person has violated, is violating, or is threatening to or intends to violate sections 1321.01 to 1321.19 of the Revised Code, enter an order requiring the person to desist or to refrain from such violation; and an action may be brought on the relation of the superintendent to enjoin the person from continuing or engaging in such violation or from doing any acts in furtherance thereof. Such action shall be conducted under the direction and supervision of the attorney general. In any such action, an order or judgment may be entered awarding such preliminary or final injunction as is deemed proper. In addition to all other means provided for the enforcement of a restraining order or injunction, the court in which such action is brought may impound and appoint a receiver for the property and business of the defendants including books, papers, documents, and records pertaining thereto or so much thereof as the court finds reasonably necessary to prevent further violations of sections 1321.01 to 1321.19 of the Revised Code, through or by means of the use of said property and business. Such receiver, when appointed and qualified, has such powers and duties as to custody, collection, administration, winding up, and liquidation of the property and business as may be conferred upon the receiver by the court.

(C) Upon application of any person, the division may certify, under the seal of the superintendent, a statement relative to any matter that is the subject of public examination and disclosure. The division may likewise furnish under the seal of the superintendent a certified copy of any order issued by the division, and in any court such certified statements and such certified copies are prima-facie evidence of the facts disclosed therein or of the making of such order.

Effective Date: 09-26-1996

1321.11 Prohibited statements and representations.

No licensee or other person subject to sections 1321.01 to 1321.19 of the Revised Code shall advertise, display, distribute, or broadcast or cause or permit to be advertised, displayed, distributed, or broadcast, any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for loans made under those sections. The division of financial institutions shall require that charges or rates of charge, whenever stated by a licensee, be stated fully and clearly in such manner as may be deemed necessary to prevent misunderstanding thereof by prospective borrowers.

Effective Date: 09-26-1996

1321.12 Licensee prohibited from certain acts.

No licensee shall conduct the business of making loans under sections 1321.01 to 1321.19 of the Revised Code, within any office, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction therewith, if the division of financial institutions finds, after hearing, that the other business is of such nature that such conduct tends to conceal evasion of those sections or of the rules made under those sections and orders the licensee in writing to desist from the conduct.

No licensee shall conduct the business of making loans under sections 1321.01 to 1321.19 of the Revised Code, under any other name, or at any other place of business within this state than that named in the license.

No licensee shall take a lien upon real estate as security for any loan made under those sections except such lien as is created upon the filing or recording of a certificate of judgment.

Effective Date: 09-26-1996

1321.13 Maximum interest rate - prepayment - insurance.

(A) Notwithstanding any other provisions of the Revised Code, a licensee may contract for and receive interest, calculated according to the actuarial method, at a rate or rates not exceeding twenty-eight per cent per year on that portion of the unpaid principal balance of the loan not exceeding one thousand dollars and twenty-two per cent per year on any part of the unpaid principal balance exceeding one thousand dollars. A licensee may contract for and receive interest at the single annual rate that would earn the same total interest at maturity of the loan, when the loan is paid according to its agreed terms, as would be earned by the application of the graduated rates set forth in this division. Loans may be interest-bearing or precomputed.

(B) For purposes of computation of time on interest-bearing and precomputed loans, including, but not limited to, the calculation of interest, a month is considered one-twelfth of a year, and a day is considered one three hundred sixty-fifth of a year when calculation is made for a fraction of a month. A year is as defined in section 1.44 of the Revised Code. A month is that period described in section 1.45 of the Revised Code.

(C) With respect to interest-bearing loans:

(1) Interest shall be computed on unpaid principal balances outstanding from time to time, for the time outstanding. Each payment shall be applied first to unpaid charges and fees, then to interest, and the remainder to the unpaid principal balance. However, if the amount of the payment is insufficient to pay the accumulated interest, the unpaid interest continues to accumulate to be paid from the proceeds of subsequent payments and is not added to the principal balance. If the maturity of the loan is accelerated for any reason and judgment is entered, the licensee may thereafter charge the same rate or rates of interest as provided in the loan contract.

(2) Interest shall not be compounded. However, if part or all of the consideration for a new loan contract is the unpaid principal balance of a prior loan, then the principal amount payable under the new loan contract may include any unpaid interest that has accrued. The resulting loan contract shall be deemed a new and separate loan transaction for purposes of this section. The unpaid principal balance of a precomputed loan is the balance due after refund or credit of unearned interest as provided in division (D)(3) of this section.

(D) With respect to precomputed loans:

(1) Loans shall be repayable in substantially equal and consecutive monthly installments of principal and interest combined, except that the first installment period may exceed one month by not more than fifteen days, and the first installment payment amount may be larger than the remaining payments by the amount of interest charged for the extra days; and provided further that monthly installment payment dates may be omitted to accommodate borrowers with seasonal income.

(2) Payments may be applied to the combined total of principal and precomputed interest until maturity of the loan. A licensee may charge interest after the original or deferred maturity of a precomputed loan at the rate or rates provided in division (A) of this section on all unpaid principal balances for the time outstanding.

(3) When any loan contract is paid in full by cash, renewal, refinancing, or a new loan, one month or more before the final installment due date, the licensee shall refund, or credit the borrower with, the total of the applicable charges for all fully unexpired installment periods, as originally scheduled or as deferred, that follow the day of prepayment. If the prepayment is made other than on a scheduled installment installment due date, the nearest scheduled installment due date shall be used in such computation. If the prepayment occurs prior to the first installment due date, the licensee may retain one-thirtieth of the applicable charge for a first installment period of one month for each day from date of loan to date of prepayment, and shall refund, or credit the borrower with, the balance of the total interest contracted for. If the maturity of the loan is accelerated for any reason and judgment is entered, the licensee shall credit the borrower with the same refund as if prepayment in full had been made on the date the judgment is entered and may thereafter convert the loan to an interest-bearing loan at the same rate or rates of interest as provided in the loan contract. If the maturity of the loan is accelerated for any reason, the licensee may convert the loan to an interest-bearing loan at the same rate or rates of interest as provided in the loan contract, provided the licensee credits the borrower with the same refund on the precomputed loan as if prepayment in full had been made on the date of the conversion.

(4) If the parties agree in writing, either in the loan contract or in a subsequent agreement, to a deferment of wholly unpaid installments, a licensee may grant a deferment and may collect a deferment charge as provided in this section. A deferment postpones the scheduled due date of the earliest unpaid installment and all subsequent installments as originally scheduled, or as previously deferred, for a period equal to the deferment period. The deferment period is that period during which no installment is scheduled to be paid by reason of the deferment. The deferment charge for a one-month period may not exceed the applicable charge for the installment period immediately following the due date of the last undeferred installment. A proportionate charge may be made for deferment for periods of more or less than one month. A deferment charge is earned prorata during the deferment period and is fully earned on the last day of the deferment period. If a loan is prepaid in full during a deferment period, the licensee shall make, or credit to the borrower, a refund of the unearned deferment charge in addition to any other refund or credit made for prepayment of the loan in full.

(E) A licensee, at the request of the borrower, may obtain, on one or more borrowers, credit life insurance, credit accident and health insurance, and unemployment insurance. The premium or identifiable charge for the insurance may be included in the principal amount of the loan and may not exceed the premium rate filed by the insurer with the superintendent of insurance and not disapproved by him. If a licensee obtains the insurance at the request of the borrower, the borrower shall have the right to cancel the insurance for a period of twenty-five days after the loan is made. If the borrower chooses to cancel the insurance, the borrower shall give the licensee written notice of this choice and shall return all of the policies or certificates of insurance or notices of proposed insurance to the licensee during such period, and the full premium or identifiable charge for the insurance shall be refunded to the borrower by the licensee. If the borrower requests, in the notice to cancel the insurance, that this refund be applied to reduce the balance of a precomputed loan, the licensee shall credit the amount of the refund plus the amount of interest applicable to the refund to the loan balance.

(F) A licensee may require the borrower to provide insurance or a loss payable endorsement covering reasonable risks of loss, damage, and destruction of property used as security for the loan and with the consent of the borrower such insurance may cover property other than that which is security for the loan. The amount and term of required property insurance shall be reasonable in relation to the amount and term of the loan contract and the type and value of the security, and the insurance shall be procured in accordance with the insurance laws of this state. The purchase of this insurance through the licensee or an agent or broker designated by the licensee shall not be a condition precedent to the granting of the loan. If the borrower purchases the insurance from or through the licensee or from another source, the premium may be included in the principal amount of the loan.

(G) In addition to the interest and charges provided for by this section, no further or other amount shall be charged or required by the licensee, except the amounts of fees authorized by law to record, file, or release security interests on a loan and fees for credit reports, which amounts may be included in the principal amount of the loan or collected at any time after the loan is made, and except costs and disbursements to which the licensee may become entitled by law in connection with any suit to collect a loan or any lawful activity to realize on a security interest after default.

(H) If the loan contract or security instrument contains covenants by the borrower to perform certain duties pertaining to insuring or preserving security and the licensee pursuant to the loan contract or security instrument pays for performance of the duties on behalf of the borrower, the licensee may add the amounts paid to the unpaid principal balance of the loan or collect them separately. A charge for interest may be made for sums advanced not exceeding the rate of interest permitted by division (A) of this section. Within a reasonable time after advancing a sum, the licensee shall notify the borrower in writing of the amount advanced, any interest charged with respect to the amount advanced, any revised payment schedule, and shall include a brief description of the reason for the advance.

(I) A licensee may charge and receive loan origination charges not exceeding the following:

(1) On loans in the principal amount of five hundred dollars of less, the greater of fifteen dollars or one per cent of the principal amount of the loan and, on each refinancing made more than six months after the original loan and any previous refinancing, not exceeding fifteen dollars;

(2) On all other loans, the greater of thirty dollars or one per cent of the principal amount of the loan and, on each refinancing, not exceeding thirty dollars. Loan origination charges may be paid by the borrower at the time of the loan or may be included in the principal amount of the loan.

(J) A licensee may charge and receive check collection charges not greater than twenty dollars plus any amount passed on from other financial institutions for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason.

(K) If the loan contract so provides, a licensee may collect a default charge on any installment not paid in full within ten days after its due date. For this purpose, all installments are considered paid in the order in which they become due. Any amounts applied to an outstanding loan balance as a result of voluntary release of a security interest, sale of security on the loan, or cancellation of insurance shall be considered payments on the loan, unless the parties otherwise agree in writing at the time the amounts are applied. The amount of the default charge shall not exceed the greater of five per cent of the scheduled installment or five dollars.

Effective Date: 10-29-1993

1321.131 Agreement or consent for alternative interest rate.

As an alternative to the interest permitted in division (A) of section 1321.13 and in division (B) of section 1321.16 of the Revised Code, a licensee may contract for and receive interest at any rate or rates agreed upon or consented to by the parties to the loan contract or open-end loan agreement, but not exceeding an annual percentage rate of twenty-five per cent.

Effective Date: 02-11-1982

1321.14 Duties of licensee - prohibited activities.

Licensees under section 1321.01 of the Revised Code shall:

(A) At the time any interest-bearing or precomputed loan is made, deliver to the borrower or, if there are two or more borrowers, to one of them, a statement in the English language disclosing in clear and distinct terms the amount and date of the loan, a schedule of payments or a description thereof, the type of the security, if any, for the loan, the name and address of the licensed office and of each borrower, and the agreed rate of interest, or in lieu thereof, a copy of the instrument evidencing the debt signed by the borrower;

(B) For each payment made on account of any such interest-bearing or precomputed loan, give to the person making it a receipt if requested;

(C) Permit payment to be made in advance in any amount on any contract of loan at any time, but the licensee may apply the payment first to all interest and charges due up to the date of the payment;

(D) Upon repayment of the loan in full, mark plainly every obligation signed by any obligor, or a copy of the signed obligation, "paid" or "canceled" and return it and any pledge to the borrower or, if there are two or more borrowers, to one of them; provided that a continuing obligation in whole or in part is not repayment in full thereof.

No licensee shall take any note or promise to pay in which blanks are left to be filled in after execution.

Any licensee or other person who willfully violates section 1321.13 of the Revised Code shall forfeit to the borrower twice the amount of interest contracted for. The maximum rate of interest applicable to any loan transaction that does not comply with all provisions of section 1321.13 of the Revised Code shall be the rate that would be applicable in the absence of sections 1321.01 to 1321.19 of the Revised Code.

No licensee shall pledge or hypothecate any note or security given by any borrower except with a person residing or maintaining a place of business in this state or with a bank authorized to transact business in this state, under an agreement permitting the division of financial institutions to examine the papers so hypothecated.

The tender by the borrower, or at the borrower's request, of an amount equal to the unpaid balance less the required rebate on a precomputed loan shall be accepted by the licensee in full payment of the loan obligation.

A licensee shall not, directly or indirectly, make any payment, or cause to be made any payment, whether in cash or otherwise, to a dealer in tangible goods or services, or to a retail seller as defined in section 1317.01 of the Revised Code, in connection with the making of a loan to a customer, patron, or other person who has done, or is doing, business with the dealer in tangible goods or services, or the retail seller. This section does not prohibit bona fide advertising practices involving only the borrowers.

Effective Date: 10-04-1996

1321.15 Limitation of charges - determination of indebtedness.

(A) No licensee shall knowingly induce or permit any person, jointly or severally, to be obligated, directly or contingently or both, under more than one contract of loan at the same time for the purpose or with the result of obtaining a higher rate of interest or greater charges than would otherwise be permitted upon a single loan made under sections 1321.01 to 1321.19 of the Revised Code.

(B) No licensee shall charge, contract for, or receive, directly or indirectly, interest and charges greater than such licensee would be permitted to charge, contract for, or receive without a license under sections 1321.01 to 1321.19 of the Revised Code on any part of an indebtedness for one or more than one loan of money if the amount of such indebtedness is in excess of five thousand dollars.

(C) For the purpose of the limitations set forth in this section, the amount of any such indebtedness shall be determined by including the entire obligation of any person to the licensee for principal, direct or contingent or both, as borrower, indorser, guarantor, surety for, or otherwise, whether incurred or subsisting under one or more than one contract of loan, except that any contract of indorsement, guaranty, or suretyship that does not obligate the indorser, guarantor, or surety for any charges in excess of eight per cent per annum, is not included in such entire obligation. If a licensee acquires, directly or indirectly, by purchase or discount, bona fide obligations for goods or services owed by the person who received such goods or services to the person who provided such goods or services, then the amount of such purchased or discounted indebtedness to the licensee shall not be included in computing the aggregate indebtedness of such borrower to the licensee for the purpose of the prohibitions set forth in this section.

Effective Date: 07-14-1981; 2008 HB545 09-01-2008

1321.16 Open-end loans by licensee - interest - charges.

(A) A licensee may make open-end loans pursuant to an agreement between the licensee and the borrower whereby:

(1) The licensee may permit the borrower to obtain advances of money from the licensee from time to time or the licensee may advance money on behalf of the borrower from time to time as directed by the borrower.

(2) The amount of each advance and permitted interest, charges, and costs are debited to the borrower's account and payments and other credits are credited to the same account.

(3) The interest and charges are computed on the unpaid balance or balances of the account from time to time.

(4) The borrower has the privilege of paying the account in full at any time or, if the account is not in default, in monthly installments of fixed or determinable amounts as provided in the agreement.

For open-end loans, "billing cycle" means the time interval between periodic billing dates. A billing cycle shall be considered monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from such date.

(B) Notwithstanding any other provisions of the Revised Code, a licensee may contract for and receive interest for open-end loans at a rate or rates not exceeding those provided in division (A) of section 1321.13 of the Revised Code and may compute interest in each billing cycle by either of the following methods:

(1) By multiplying the daily rate or rates by the daily unpaid balance of the account, in which case the daily rates are determined by dividing the annual rates by three hundred sixty-five;

(2) By multiplying the monthly rate or rates by the average daily unpaid balance of the account in the billing cycle, in which case the average daily unpaid balance is the sum of all of the daily unpaid balances each day during the cycle divided by the number of days in the cycle. The monthly rates are determined by dividing the annual rates by twelve.

The billing cycle shall be monthly and the unpaid balance on any day shall be determined by adding to any balance unpaid as of the beginning of that day all advances and permitted interest, charges, and costs and deducting all payments and other credits made or received that day.

(C) In addition to the interest permitted in division (B) of this section, a licensee may charge and receive or add to the unpaid balance any or all of the following:

(1) All charges and costs authorized by divisions (E), (F), (G), (H), and (J) of section 1321.13 of the Revised Code;

(2) An annual credit line charge, for the privilege of maintaining a line of credit, for the first year not exceeding the greater of one per cent of the original credit line or thirty dollars, and for subsequent years not exceeding twenty dollars;

(3) A default charge on any required minimum payment not paid in full within ten days after its due date. For this purpose, all required minimum payments are considered paid in the order in which they become due. The amount of the default charge shall not exceed the greater of five per cent of the required minimum payment or five dollars.

(D) The borrower at any time may pay all or any part of the unpaid balance on the account or, if the account is not in default, the borrower may pay the unpaid balance in installments subject to minimum payment requirements as determined by the licensee and set forth in the open-end loan agreement.

(E) If credit life insurance or credit accident and health insurance is obtained by the licensee and if the insured dies or becomes disabled when there is an outstanding open-end loan indebtedness, the insurance shall be sufficient to pay the unpaid balance on the loan due on the date of the borrower's death in the case of credit life insurance or all minimum payments that become due on the loan during the covered period of disability in the case of credit accident and health insurance. The additional charge for credit life insurance, credit accident and health insurance, or unemployment insurance shall be calculated each billing cycle by applying the current monthly premium rate for the insurance, filed by the insurer with the superintendent of insurance and not disapproved by the superintendent, to the unpaid balances in the borrower's account, using one of the methods specified in division (B) of this section for the calculation of interest. No credit life insurance, credit accident and health insurance, or unemployment insurance written in connection with an open-end loan shall be canceled by the licensee because of delinquency of the borrower in making the required minimum payments on the loan unless one or more such payments is past due for a period of thirty days or more. The licensee shall advance to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited to the borrower's account.

(F) Whenever there is no unpaid balance in an open-end loan account, the account may be terminated by written notice, by the borrower or the licensee, to the other party. If a licensee has taken a security interest in personal property to secure the open-end loan, the licensee shall release the security interest and terminate any financing statement in accordance with section 1309.513 of the Revised Code.

Effective Date: 07-01-2001

1321.17 Provisions applicable to all loans.

No loan made outside this state for which a greater rate of interest, consideration, or charges than is authorized by sections 1321.01 to 1321.19 of the Revised Code has been charged, contracted for, or received is enforceable in this state and every person participating therein in this state is subject to sections 1321.01 to 1321.19 of the Revised Code; provided that this section does not apply to loans legally made in any state under and in accordance with a regulatory loan law similar in principle to such sections. All loan contracts made with residents of this state are considered as made within this state and subject to the laws of this state, regardless of any statement in the contract or note to the contrary, except as to licensing if the lender is licensed under and in accordance with a regulatory loan law similar in principle to such sections. A loan in an amount of five thousand dollars or less made to a borrower residing in this state at the time the loan is made by a lender whose office is located outside this state and whose primary business consists of making loans by mail is not enforceable in this state for a greater rate of interest, consideration, or charges than is authorized by sections 1321.01 to 1321.19 of the Revised Code.

Effective Date: 07-14-1981

1321.18 Complaint for reversal, rescission, or modification of order of division - procedure.

In addition to any other remedy that may be available, any licensee and any person alleging to be aggrieved by an order or action of the division of financial institutions, within thirty days from the entry of the order complained of, or within sixty days of the action complained of if there is no order, may file a complaint against the superintendent of financial institutions in the court of common pleas of Franklin county. Such complaint may pray for reversal, rescission, or modification of the order or action complained of, and for such other relief as may be appropriate, and it shall allege the facts relied upon to obtain any such relief. When the complaint has been filed, summons forthwith shall be issued and shall be served upon the superintendent, either by personal service or by certified mail addressed to the superintendent's office in the department of commerce. The summons is returnable within five days from its date and in all other respects it is made as in civil actions. All allegations of the complaint shall be deemed denied without further pleading, and the court, upon application by either party, shall advance the cause and hear it without delay. Mere technical irregularities in the procedure had before the division shall be disregarded, and the burden of proof is on the complainant to show that the division, in issuing the order or in taking the action complained of, exceeded or abused its discretion. Any party to the action may summon witnesses and compel their attendance as in any criminal action, and may introduce evidence in addition to that relied upon by the division.

An action under this section is a special proceeding and may be appealed by either party pursuant to the Rules of Appellate Procedure and, to the extent not in conflict with those rules, Chapter 2505. of the Revised Code.

Effective Date: 09-26-1996

1321.19 Cancellation or alteration of license.

Sections 1321.01 to 1321.19, inclusive, of the Revised Code may be modified, amended, or repealed so as to effect a cancellation or alteration of any license or right of a licensee, provided that such cancellation or alteration shall not impair or affect the obligation of any pre-existing contract between any licensee and any borrower, nor the right of the licensee to collect principal, interest, and charges as set forth in said obligation.

Effective Date: 10-01-1953

1321.20 Annual license or certificate of registration fee.

(A) Every person licensed or registered under this chapter shall pay to the superintendent of financial institutions, prior to the last day of June, an annual license or certificate of registration fee. On or about the fifteenth day of April of each year, the superintendent shall determine the license or certificate fees to be charged, pursuant to sections 1321.03 , 1321.05 , and 1321.73 of the Revised Code. Such determination shall be made by dividing the appropriation for the consumer finance section of the division of financial institutions for the current fiscal year by the number of licenses and certificates issued as of the date of the computation. In no event shall the amount of the fee exceed three hundred dollars, except that the maximum fee which may be charged insurance premium finance companies licensed under section 1321.73 of the Revised Code shall not exceed three hundred seventy-five dollars. Prior to the first day of June of each year, the superintendent shall inform each person licensed or registered under this chapter of the amount of the license or certificate fee for the succeeding fiscal year as determined by this section.

(B)

(1) Each person licensed under Chapter 4727. of the Revised Code who is subject to annual license renewal under division (E)(1) of section 4727.03 of the Revised Code shall, prior to the last day of June, pay to the superintendent a fee equal to twice the amount of the fee determined by the superintendent pursuant to division (A) of this section. However, in no event shall the amount of the fee exceed three hundred dollars.

(2) Each person licensed under Chapter 4727. of the Revised Code who is subject to biennial license renewal under division (E)(2) of section 4727.03 of the Revised Code shall, prior to the date the license expires, pay to the superintendent a fee equal to four times the amount of the fee determined by the superintendent pursuant to division (A) of this section. However, in no event shall the amount of the fee exceed six hundred dollars.

(C) The fee for a license or certificate issued pursuant to Chapter 4727. or 4728. of the Revised Code after the first day of January of the year the license or certificate expires shall be equal to one-half the amount determined according to divisions (A) and (B) of this section or in accordance with section 4728.03 of the Revised Code.

(D) If the renewal fees billed by the superintendent pursuant to divisions (A) and (B) of this section are less than the estimated expenditures of the consumer finance section of the division of financial institutions, as determined by the superintendent, for the following fiscal year, the superintendent may assess each person licensed pursuant to section 1321.04 of the Revised Code at a rate sufficient to equal in the aggregate the difference between the renewal fees billed and the estimated expenditures. Each person shall pay the assessed amount to the superintendent prior to the last day of June. In no case shall the assessment exceed ten cents per each one hundred dollars of interest (excluding charge-off recoveries), points, loan origination charges, and credit line charges collected by that person during the previous calendar year. If an assessment is imposed under this division, it shall not be less than two hundred fifty dollars per licensee or registrant and shall not exceed thirty thousand dollars less the total renewal fees paid pursuant to division (A) of this section by each licensee or registrant.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000; 05-06-2005

1321.21 Division of consumer finance fund.

All fees, charges, penalties, and forfeitures collected under Chapters 1321., 1322., 4712., 4727., and 4728., sections 1315.21 to 1315.30 , and sections 1349.25 to 1349.37 of the Revised Code shall be paid to the superintendent of financial institutions and shall be deposited by the superintendent into the state treasury to the credit of the consumer finance fund, which is hereby created. The fund may be expended or obligated by the superintendent for the defrayment of the costs of administration of Chapters 1321., 1322., 4712., 4727., and 4728., sections 1315.21 to 1315.30 , and sections 1349.25 to 1349.37 of the Revised Code by the division of financial institutions. All actual and necessary expenses incurred by the superintendent, including any services rendered by the department of commerce for the division's administration of Chapters 1321., 1322., 4712., 4727., and 4728., sections 1315.21 to 1315.30 , and sections 1349.25 to 1349.37 of the Revised Code, shall be paid from the fund. The fund shall be assessed a proportionate share of the administrative costs of the department and the division. The proportionate share of the administrative costs of the division of financial institutions shall be determined in accordance with procedures prescribed by the superintendent and approved by the director of budget and management. Such assessment shall be paid from the consumer finance fund to the division of administration fund or the financial institutions fund.

Periodically, in accordance with a schedule the director establishes by rule, but at least once every three months, the director of budget and management shall transfer five per cent of all charges, penalties, and forfeitures received into the consumer finance fund to the financial literacy education fund created under section 121.085 of the Revised Code.

Effective Date: 09-26-2003; 2008 HB545 09-01-2008

1321.211 [Repealed].

Effective Date: 07-30-1993

1321.31 Assignment of personal earnings - limitations - priority.

No assignment of, or order for, wages or salary is valid unless made in writing by the person by whom the said wages or salary are earned and no assignment of, or order for, wages or salary made by a married person is valid unless the written consent of the husband or wife of the person making such assignment or order is attached to such assignment or order. No assignment of or order for, wages or salary of a minor is valid unless the written consent of a parent or the guardian of such minor is attached to such order or assignment. No assignment of, or order for, wages or salary is valid for more than twenty-five per cent of the earnings, wages, or salary of any married person. No such assignment is valid for more than fifty per cent of the earnings, wages, or salary of any unmarried person.

Assignments of wages have priority as to each other from the time they are filed with the employer of the assignor, and the balance due any married person after twenty-five per cent has been so assigned, or due any unmarried person after fifty per cent has been so assigned is not subject to further assignment.

Effective Date: 10-01-1953

1321.32 Assignment of wages invalid - exception.

Notwithstanding section 1321.31 of the Revised Code, no assignment of, or order for wages or salary is valid unless the wages assigned or ordered are to be paid for the support of the employee's spouse or minor child in complying with an order of a court of record for the support of the employee's spouse or minor child. This section does not affect or invalidate any contract or agreement between employers and their employees, or as between employers, employees, and any labor union as to any checkoff on the wages of such employees as may be agreed upon. This section and section 4113.16 of the Revised Code shall not affect or invalidate any deduction from the wages or salary made in accordance with a payroll deduction plan agreed upon between the employer and employee provided that the same be revocable at any time by the employee upon notice to the employer up to the time of payment thereof.

Effective Date: 10-16-1959

1321.33 Wage assignments for support of spouse or children.

The limitations and regulations of sections 1321.01 to 1321.19 and 1321.31 of the Revised Code do not apply to assignments of, or orders for, wages for the support of a spouse or children when such assignments or orders are made to comply with an order of a court of record. The employee may assign whatever portion of his earnings that may be required to comply with the court order for support.

Effective Date: 01-01-1979

1321.35 Short-term lenders definitions.

As used in sections 1321.35 to 1321.48 of the Revised Code:

(A) "Short-term loan" means a loan made pursuant to sections 1321.35 to 1321.48 of the Revised Code.

(B) "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section 1181.21 of the Revised Code.

(C) "Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including fees, loan origination charges, service charges, renewal charges, credit insurance premiums, and any ancillary product sold in connection with a loan made pursuant to sections 1321.35 to 1321.48 of the Revised Code.

(D) "Annual percentage rate" has the same meaning as in the "Truth in Lending Act," 82 Stat. 149 (1980), 15 U.S.C. 1606 , as implemented by regulations of the board of governors of the federal reserve system. All fees and charges shall be included in the computation of the annual percentage rate. Fees and charges for single premium credit insurance and other ancillary products sold in connection with the credit transaction shall be included in the calculation of the annual percentage rate.

Effective Date: 2008 HB545 09-01-2008

1321.36 Short term lender license required - out-of-state transactions.

(A) No person shall engage in the business of making short-term loans to a borrower in Ohio, or, in whole or in part, make, offer, or broker a loan, or assist a borrower in Ohio to obtain such a loan, without first having obtained a license from the superintendent of financial institutions under sections 1321.35 to 1321.48 of the Revised Code. No licensee shall make, offer, or broker a loan, or assist a borrower to obtain such a loan, when the borrower is not physically present in the licensee's business location.

(B) No person not located in Ohio shall make a short-term loan to a borrower in Ohio from an office not located in Ohio. Nothing in this section prohibits a business not located or licensed in Ohio from lending funds to Ohio borrowers who physically visit the out-of-state office of the business and obtain the disbursement of loan funds at that location. No person shall make, offer, or broker a loan, or assist a borrower to obtain a loan, via the telephone, mail, or internet.

Effective Date: 2008 HB545 09-01-2008

1321.37 Application for license - investigation - bond.

(A) Application for an original or renewal license to make short-term loans shall be in writing, under oath, and in the form prescribed by the superintendent of financial institutions, and shall contain the name and address of the applicant, the location where the business of making loans is to be conducted, and any further information as the superintendent requires. At the time of making an application for an original license, the applicant shall pay to the superintendent a nonrefundable investigation fee of two hundred dollars. No investigation fee or any portion thereof shall be refunded after an original license has been issued. The application for an original or renewal license shall be accompanied by an original or renewal license fee, for each business location of one thousand dollars, except that applications for original licenses issued on or after the first day of July for any year shall be accompanied by an original license fee of five hundred dollars, and except that an application for an original or renewal license, for a nonprofit corporation that is incorporated under Chapter 1702. of the Revised Code, shall be accompanied by an original or renewal license fee, for each business location, that is one-half of the fee otherwise required. All fees paid to the superintendent pursuant to this division shall be deposited into the state treasury to the credit of the consumer finance fund.

(B) Upon the filing of an application for an original license and, with respect to an application filed for a renewal license, on a schedule determined by the superintendent by rule adopted pursuant to section 1321.43 of the Revised Code, and the payment of fees in accordance with division (A) of this section, the superintendent shall investigate the facts concerning the applicant and the requirements provided by this division. The superintendent shall request the superintendent of the bureau of criminal identification and investigation, or a vendor approved by the bureau, to conduct a criminal records check based on the applicant's fingerprints in accordance with section 109.572 of the Revised Code. Notwithstanding division (K) of section 121.08 of the Revised Code, the superintendent of financial institutions shall request that criminal record information from the federal bureau of investigation be obtained as part of the criminal records check. The superintendent of financial institutions shall conduct a civil records check. The superintendent shall approve an application and issue an original or renewal license to the applicant if the superintendent finds all of the following:

(1) The financial responsibility, experience, reputation, and general fitness of the applicant are such as to warrant the belief that the business of making loans will be operated lawfully, honestly, and fairly under sections 1321.35 to 1321.48 of the Revised Code and within the purposes of those sections; that the applicant has fully complied with those sections and any rule or order adopted or issued pursuant to section 1321.43 of the Revised Code; and that the applicant is qualified to engage in the business of making loans under sections 1321.35 to 1321.48 of the Revised Code.

(2) The applicant is financially sound and has a net worth of not less than one hundred thousand dollars, or in the case of a nonprofit corporation that is incorporated under Chapter 1702. of the Revised Code, a net worth of not less than fifty thousand dollars. The applicant's net worth shall be computed according to generally accepted accounting principles.

(3) The applicant has never had revoked a license to make loans under sections 1321.35 to 1321.48 of the Revised Code, under former sections 1315.35 to 1315.44 of the Revised Code, or to do business under sections 1315.21 to 1315.30 of the Revised Code.

(4) Neither the applicant nor any senior officer, or partner of the applicant, has pleaded guilty to or been convicted of any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, or drug trafficking, or any criminal offense involving money or securities or any violation of an existing or former law of this state, any other state, or the United States that substantially is equivalent to a criminal offense described in that division. However, if the applicant or any of those other persons has pleaded guilty to or been convicted of any such offense other than theft, the superintendent shall not consider the offense if the applicant has proven to the superintendent, by a preponderance of the evidence, that the applicant's or other person's activities and employment record since the conviction show that the applicant or other person is honest, truthful, and of good reputation, and there is no basis in fact for believing that the applicant or other person will commit such an offense again.

(5) Neither the applicant nor any senior officer, or partner of the applicant, has been subject to any adverse judgment for conversion, embezzlement, misappropriation of funds, fraud, misfeasance or malfeasance, or breach of fiduciary duty, or if the applicant or any of those other persons has been subject to such a judgment, the applicant has proven to the superintendent, by a preponderance of the evidence, that the applicant's or other person's activities and employment record since the judgment show that the applicant or other person is honest, truthful, and of good reputation, and there is no basis in fact for believing that the applicant or other person will be subject to such a judgment again.

(C) If the superintendent finds that the applicant does not meet the requirements of division (B) of this section, or the superintendent finds that the applicant knowingly or repeatedly contracts with or employs persons to directly engage in lending activities who have been convicted of a felony crime listed in division (B)(5) of this section, the superintendent shall issue an order denying the application for an original or renewal license and giving the applicant an opportunity for a hearing on the denial in accordance with Chapter 119. of the Revised Code. The superintendent shall notify the applicant of the denial, the grounds for the denial, and the applicant's opportunity for a hearing. If the application is denied, the superintendent shall return the annual license fee but shall retain the investigation fee.

(D) No person licensed under sections 1321.35 to 1321.48 of the Revised Code shall conduct business in this state unless the licensee has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the superintendent and in the penal sum of at least one hundred thousand dollars, or in the case of a nonprofit corporation that is incorporated under Chapter 1702. of the Revised Code, in the amount of fifty thousand dollars. The term of the bond shall coincide with the term of the license. The licensee shall file a copy of the bond with the superintendent. The bond shall be for the exclusive benefit of any borrower injured by a violation by a licensee or any employee of a licensee, of any provision of sections 1321.35 to 1321.48 of the Revised Code.

Amended by 129th General AssemblyFile No.127, HB 487, §101.01, eff. 1/1/2013.

Effective Date: 2008 HB545 09-01-2008

1321.38 License contents - place of business.

(A) A license issued by the superintendent of financial institutions pursuant to sections 1321.35 to 1321.48 of the Revised Code shall state the address at which the business of making loans is to be conducted and shall state the full name of the business. Each license issued shall be conspicuously posted in the place of business and is not transferable or assignable.

(B)

(1) Not more than one place of business shall be maintained under the same license issued under sections 1321.35 to 1321.48 of the Revised Code, but the superintendent may issue additional licenses to the same applicant upon compliance with those sections.

(2) No change in the place of business of a licensee to a location outside the original municipal corporation shall be permitted under the same license. When a licensee wishes to change its place of business within the same municipal corporation, written notice thereof shall be given in advance to the superintendent who shall provide without cost a license pursuant to sections 1321.35 to 1321.48 of the Revised Code for the new address.

Effective Date: 2008 HB545 09-01-2008

1321.39 Short-term loan requirements and restrictions.

A licensee under sections 1321.35 to 1321.48 of the Revised Code may engage in the business of making loans provided that each loan meets all of the following conditions:

(A) The total amount of the loan does not exceed five hundred dollars.

(B) The duration of the loan, as specified in the loan contract required under division (C) of this section, is not less than thirty-one days.

(C) The loan is made pursuant to a written loan contract that sets forth the terms and conditions of the loan. A copy of the loan contract shall be provided to the borrower. The loan contract shall disclose in a clear and concise manner all of the following:

(1) The total amount of fees and charges the borrower will be required to pay in connection with the loan pursuant to the loan contract;

(2) The total amount of each payment, when each payment is due, and the total number of payments that the borrower will be required to make under the loan contract;

(3) A statement, printed in boldface type of the minimum size of ten points, as follows: "WARNING: The cost of this loan is higher than the average cost charged by financial institutions on substantially similar loans."

(4) A statement, printed in a minimum font size of ten points, which informs the borrower that complaints regarding the loan or lender may be submitted to the department of commerce division of financial institutions and includes the correct telephone number and mailing address for the department;

(5) Any disclosures required under the "Truth in Lending Act," 82 Stat. 146 (1974), 15 U.S.C. 1601 , et seq.;

(6) The rate of interest contracted for under the loan contract as an annual percentage rate based on the sum of the principal of the loan and the loan origination fee, check collection charge, and all other fees or charges contracted for under the loan contract.

(D) The loan contract includes a provision that offers the borrower an optional extended payment plan that may be invoked by the borrower at any time before the maturity date of the loan. To invoke the extended payment plan, the borrower shall return to the office where the loan was made and sign an amendment to the original loan agreement reflecting the extended terms of the loan. The extended payment plan shall allow the borrower to repay the balance by not less than sixty days from the original maturity date. No additional fees or charges may be applied to the loan upon the borrower entering the extended payment plan. The person originating the loan for the licensee shall identify verbally to the borrower the contract provision regarding the extended payment plan, and the borrower shall verify that the provision has been identified by initialing the contract adjacent to the provision.

Effective Date: 2008 HB545 09-01-2008

1321.40 Permissible short-term loan fees.

A person licensed pursuant to sections 1321.35 to 1321.48 of the Revised Code may charge, collect, and receive the following fees and charges in connection with a short-term loan:

(A) Interest calculated in compliance with 15 U.S.C. 1606 , and not exceeding an annual percentage rate greater than twenty-eight per cent;

(B) One check collection charge per loan not exceeding an amount equal to twenty dollars plus any amount passed on from other financial institutions for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason, provided that the terms and conditions upon which check collection charges will be charged to the borrower are set forth in the written loan contract described in division (C) of section 1321.39 of the Revised Code;

(C) Damages, costs, and disbursements to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default.

Effective Date: 2008 HB545 09-01-2008

1321.41 Short-term loan prohibitions.

No person licensed pursuant to sections 1321.35 to 1321.48 of the Revised Code shall do any of the following:

(A) Violate section 1321.36 of the Revised Code;

(B) Make a loan that does not comply with section 1321.39 of the Revised Code;

(C) Charge, collect, or receive, directly or indirectly, any additional fees, interest, or charges in connection with a loan, other than fees and charges permitted by section 1321.40 of the Revised Code and costs or disbursements to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default;

(D) Collect treble damages pursuant to division (A)(1)(b)(ii) of section 2307.61 of the Revised Code in connection with any civil action to collect a loan after a default due to a check, negotiable order of withdrawal, share draft, or other negotiable instrument that was returned or dishonored for insufficient funds;

(E) Make a short-term loan to a borrower if there exists an outstanding loan between the licensee and that borrower, if a loan between any licensee and that borrower was terminated on the same business day, if the borrower has more than one outstanding loan, if the loan would obligate the borrower to repay a total amount of more than five hundred dollars to licensees, or indebt the borrower, to licensees, for an amount that is more than twenty-five per cent of the borrowers gross monthly salary not including bonus, overtime, or other such compensation, based on a payroll verification statement presented by the borrower;

(F) Bring or threaten to bring an action or complaint against the borrower for the borrower's failure to comply with the terms of the loan contract solely due to the check, negotiable order of withdrawal, share draft, or negotiable instrument being returned or dishonored for insufficient funds. Nothing herein prohibits such conduct, action, or complaint if the borrower has intentionally engaged in fraud by, including but not limited to, closing or using any closed or false account to evade payment;

(G) Make a short-term loan to a borrower for purposes of retiring an existing short-term loan between any licensee and that borrower;

(H) Require the borrower to waive the borrower's right to legal recourse under any otherwise applicable provision of state or federal law;

(I) Accept the title of a vehicle, real property, physical assets, or other collateral as security for the obligation;

(J) Engage in any device or subterfuge to evade the requirements of sections 1321.35 to 1321.48 of the Revised Code including assisting a borrower to obtain a loan on terms that would be prohibited by sections 1321.35 to 1321.48 of the Revised Code, making loans disguised as personal property sales and leaseback transactions, or disguising loan proceeds as cash rebates for the pretextual installment sale of goods or services;

(K) Assess or charge a borrower a fee for prepaying the loan in full prior to the maturity date;

(L) Fail to comply with section 1321.45 of the Revised Code;

(M) Recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested;

(N) Make a loan to a borrower that has received two loans within the previous ninety days from licensees, unless the borrower has completed during that period a financial literacy program approved by the superintendent;

(O) Draft funds electronically from any depository financial institution in this state, or bill any credit card issued by such an institution. Nothing in this division shall prohibit the conversion of a negotiable instrument into an electronic form for processing through the automated clearing house system.

(P) Make, publish, or otherwise disseminate, directly or indirectly, any misleading or false advertisement, or engage in any other deceptive trade practice;

(Q) Offer any incentive to a borrower in exchange for the borrower taking out multiple loans over any period of time, or provide a short-term loan at no charge or at a discounted charge as compensation for any previous or future business.

(R) Make a loan to a borrower if the borrower has received a total of four or more loans, from licensees, in the calendar year.

(S) Present a check, negotiable order of withdrawal, share draft, or other negotiable instrument, that has been previously presented by the licensee and subsequently returned or dishonored for any reason, without prior written approval from the borrower.

(T) Change the check number, or in any other way alter a check, negotiable order of withdrawal, or share draft, prior to submitting such check, negotiable order of withdrawal, or share draft for processing through the automated clearing house system, or submit false information about any check, negotiable order of withdrawal, or share draft to the automated clearing house system.

Effective Date: 2008 HB545 09-01-2008

1321.42 Refusal, suspension, or revocation of license - fines.

(A) The superintendent of financial institutions shall, in accordance with Chapter 119. of the Revised Code, suspend or revoke a license issued pursuant to sections 1321.35 to 1321.48 of the Revised Code, if the superintendent determines that either of the following applies:

(1) The licensee has failed to comply with any order issued by the superintendent pursuant to section 1321.43 of the Revised Code.

(2) Any fact or condition exists that if it had existed or had been known to exist at the time of original or renewal licensure pursuant to sections 1321.35 to 1321.48 of the Revised Code, the fact or condition clearly would have warranted the superintendent to refuse to issue a license pursuant to those sections.

(B) The superintendent may make any investigation and conduct any hearing the superintendent considers necessary to determine whether any person has violated sections 1321.35 to 1321.48 of the Revised Code, or any rule or order adopted or issued under section 1321.43 of the Revised Code, or has otherwise engaged in conduct that would justify the suspension, revocation, or refusal of an original or renewal license or the imposition of a fine.

The superintendent may impose a monetary fine of not more than one thousand dollars for each such violation.

(C) In making any investigation or conducting any hearing pursuant to this section, the superintendent, or any person designated by the superintendent, at any time may compel by subpoena witnesses, may take depositions of witnesses residing without the state in the manner provided for in civil actions, pay any witnesses the fees and mileage for their attendance provided under section 119.094 of the Revised Code, and administer oaths. The superintendent also may compel by order or subpoena duces tecum the production of, and examine, all relevant books, records, accounts, and other documents. If a person does not comply with a subpoena or subpoena duces tecum, the superintendent may apply to the court of common pleas of Franklin county for an order compelling the person to comply with the subpoena or subpoena duces tecum or, for failure to do so, an order to be held in contempt of court.

(D) In connection with any investigation under this section, the superintendent may file an action in the court of common pleas of Franklin county or the court of common pleas of the county in which the person who is the subject of the investigation resides, or is engaging in or proposing to engage in actions in violation of sections 1321.35 to 1321.48 of the Revised Code, to obtain an injunction, temporary restraining order, or other appropriate relief.

Effective Date: 2008 HB545 09-01-2008; 2008 HB525 07-01-2009

1321.421 Examination of licensee's records.

As often as the superintendent considers it necessary, the superintendent may examine the records of a licensee, but in any case, the superintendent shall examine the records of a licensee at least annually.

Effective Date: 2008 HB545 09-01-2008

1321.422 Required licensee records and reports.

(A) Every licensee shall keep and use in the licensee's business such books, accounts, records, and loan documents as will enable the division of financial institutions to determine whether the licensee is complying with sections 1321.35 to 1321.48 of the Revised Code and with the orders and rules made by the division under those sections. Such books, accounts, records, and loan documents shall be segregated from those pertaining to transactions that are not subject to sections 1321.35 to 1321.48 of the Revised Code. Every licensee shall preserve the books, accounts, records, and loan documents pertaining to loans made under sections 1321.35 to 1321.48 of the Revised Code for at least two years after making the final entry on, or final revision of any loan document relative to, any loan recorded therein. Accounting systems maintained in whole or in part by mechanical or electronic data processing methods that provide information equivalent to that otherwise required are acceptable for this purpose.

(B)

(1) As required by the superintendent of financial institutions, each licensee shall file with the division each year a report under oath or affirmation, on forms supplied by the division, concerning the business and operation for the preceding calendar year. If a licensee has more than one place of business in this state, the licensee shall furnish a report for each location.

(2) The division shall publish annually an analysis of the information required under division (B)(1) of this section, but the individual reports shall not be public records and shall not be open to public inspection.

Effective Date: 2008 HB545 09-01-2008

1321.43 Implementing rules and enforcement orders.

The superintendent of financial institutions, in accordance with Chapter 119. of the Revised Code, may adopt rules and issue specific orders to enforce and carry out the purposes of sections 1321.35 to 1321.48 of the Revised Code. The superintendent shall issue a rule defining "senior officer" for the purpose of section 1321.37 of the Revised Code. The superintendent may adopt, amend, and repeal substantive rules defining with reasonable specificity acts or practices that violate section 1321.45 of the Revised Code.

Effective Date: 2008 HB545 09-01-2008

1321.44 Violations as unfair or deceptive acts - criminal proceedings.

(A) A violation of section 1321.41 of the Revised Code is deemed an unfair or deceptive act or practice in violation of section 1345.02 of the Revised Code. A borrower injured by a violation of section 1321.41 of the Revised Code shall have a cause of action and be entitled to the same relief available to a consumer under section 1345.09 of the Revised Code, and all powers and remedies available to the attorney general to enforce sections 1345.01 to 1345.13 of the Revised Code are available to the attorney general to enforce section 1321.41 of the Revised Code.

(B) The superintendent of financial institutions or a borrower may bring directly an action to enjoin a violation of sections 1321.35 to 1321.48 of the Revised Code. The prosecuting attorney of the county in which the action may be brought may bring an action to enjoin a violation of sections 1321.35 to 1321.48 of the Revised Code only if the prosecuting attorney first presents any evidence of the violation to the attorney general and, within a reasonable period of time, the attorney general has not agreed to bring the action.

(C) The superintendent may initiate criminal proceedings under sections 1321.35 to 1321.48 of the Revised Code by presenting any evidence of criminal violation to the prosecuting attorney of the county in which the offense may be prosecuted. If the prosecuting attorney does not prosecute the violations, or at the request of the prosecuting attorney, the superintendent shall present any evidence of criminal violations to the attorney general, who may proceed in the prosecution with all the rights, privileges, and powers conferred by law on prosecuting attorneys, including the power to appear before grand juries and to interrogate witnesses before such grand juries. These powers of the attorney general are in addition to any other applicable powers of the attorney general.

(D) The prosecuting attorney of the county in which an alleged offense may be prosecuted may initiate criminal proceedings under sections 1321.35 to 1321.48 of the Revised Code.

(E) In order to initiate criminal proceedings under sections 1321.35 to 1321.48 of the Revised Code, the attorney general first shall present any evidence of criminal violations to the prosecuting attorney of the county in which the alleged offense may be prosecuted. If, within a reasonable period of time, the prosecuting attorney has not agreed to prosecute the violations, the attorney general may proceed in the prosecution with all the rights, privileges, and powers described in division (B) of this section.

(F) When a judgment under this section becomes final, the clerk of court shall mail a copy of the judgment, including supporting opinions, to the superintendent.

Effective Date: 2008 HB545 09-01-2008

1321.45 Prohibited debt collector communications and conduct.

(A)

(1) "Debt collector" means a licensee, officer, employee, or agent of a licensee, or any person acting as a debt collector for a licensee, or any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt resulting from a short-term loan made by a licensee.

(2) "Borrower" means a person who has an outstanding or delinquent short-term loan. For the purpose of this section, the term "borrower" includes the borrower's spouse, parent, if the borrower is a minor, guardian, executor, or administrator.

(3) "Communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.

(4) "Consumer reporting agency" means any person that, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties and that uses any means or facility for the purpose of preparing or furnishing consumer reports.

(5) "Location information" means a consumer's residence, telephone number, or place of employment.

(B) When communicating with any person other than the borrower for the purpose of acquiring location information about the borrower, the debt collector shall identify self, state that the purpose for the communication is to confirm or correct location information concerning a person, and, only if expressly requested, identify the debt collector's employer. The debt collector shall not do any of the following:

(1) State that the person for whom location information is being sought is a borrower or owes any debt;

(2) Communicate with any person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(3) Communicate by post card;

(4) Use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the communication relates to the collection of a debt;

(5) After the debt collector knows the borrower is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.

(C) A debt collector, without the prior consent of the borrower given directly to the debt collector or without the express permission of a court of competent jurisdiction, may not communicate with a borrower in connection with the collection of any debt:

(1) At any unusual time or place or a time or place known or which should be known to be inconvenient to the borrower. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a borrower is after eight a.m. eastern standard time and before nine p.m. eastern standard time at the borrower's location.

(2) If the debt collector knows the borrower is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the borrower;

(3) At the borrower's place of employment if the debt collector knows or has reason to know that the borrower's employer prohibits the borrower from receiving such communication.

(D) A debt collector, when communicating with a third party without the prior consent of the borrower given directly to the debt collector, or without the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, may not communicate, in connection with the collection of any debt, with any person other than the borrower, the borrower's attorney, a consumer reporting agency if otherwise permitted by law, or the attorney of the debt collector.

(E) If a borrower provides written notification, to a person licensed under section 1321.35 to 1321.48 of the Revised Code or a debt collector, that the borrower refuses to pay a debt or that the borrower wishes the debt collector to cease further communication with the borrower, the debt collector shall not communicate further with the borrower with respect to such debt, except:

(1) To advise the borrower that the debt collector's further efforts are being terminated;

(2) To notify the borrower that the debt collector or licensee may invoke specified remedies that are ordinarily invoked by such debt collector or licensee;

(3) Where applicable, to notify the borrower that the debt collector or licensee intends to invoke a specified remedy. If such notice from the borrower is made by mail, notification shall be complete upon receipt.

(F) A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt, including, but not limited to, any of the following:

(1) Using or threatening to use violence or other criminal means to harm the physical person, reputation, or property of any person;

(2) Using obscene or profane language or language the natural consequence of which is to abuse the hearer or reader;

(3) Publication of a list of borrowers who allegedly refuse to pay debts, except to a consumer-reporting agency;

(4) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(G) A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt, including, but not limited to, any of the following:

(1) Falsely representing or implying that the debt collector is vouched for, bonded by, or affiliated with the United States or any state, including the use of any badge, uniform, or facsimile thereof;

(2) Falsely representing the character, amount, or legal status of any debt, or any services rendered, or compensation which may be lawfully received by any debt collector for the collection of a debt;

(3) Falsely representing or implying that any individual is an attorney or that any communication is from an attorney;

(4) Representing or implying that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector intends to take such action;

(5) Threatening to take any action that cannot legally be taken or that is not intended to be taken;

(6) Falsely representing or implying that a sale, referral, or other transfer of any interest in a debt shall cause the borrower to lose any claim or defense to payment of the debt;

(7) Falsely representing or implying that the borrower committed any crime or other conduct in order to disgrace the borrower;

(8) Communicating or threatening to communicate to any person credit information that is known or that should be known to be false, including the failure to communicate that a disputed debt is disputed;

(9) Using or distributing any written communication that simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any state, or that creates a false impression as to its source, authorization, or approval;

(10) Using any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower;

(11) Failing to disclose in the initial written communication with the borrower, and in addition, if the initial communication with the borrower is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that division (G)(11) of this section shall not apply to a formal pleading made in connection with a legal action;

(12) Falsely representing or implying that accounts have been turned over to innocent purchasers for value;

(13) Falsely representing or implying that documents are legal process;

(14) Using any business, company, or organization name other than the true name of the debt collector's business, company, or organization;

(15) Falsely representing or implying that documents are not legal process forms or do not require action by the consumer;

(16) Falsely representing or implying that a debt collector operates or is employed by a consumer reporting agency.

(H) A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt, including, but not limited to, any of the following:

(1) Collecting any amount, including any interest, fee, charge, or expense incidental to the principal obligation, unless the amount is expressly authorized by the agreement creating the debt or permitted by law;

(2) Accepting from any person a check or other payment instrument postdated by more than five days unless the person is notified in writing of the debt collector's intent to deposit the check or instrument not more than ten nor less than three business days prior to deposit;

(3) Soliciting any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution;

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on the check or instrument;

(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. The charges include, but are not limited to, collect telephone calls and telegram fees;

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if there is no present right to possession of the property claimed as collateral through an enforceable security interest, there is no present intention to take possession of the property, or the property is exempt by law from dispossession or disablement;

(7) Communicating with a borrower regarding a debt by post card;

(8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a borrower by use of the mails or by telegram, except that a debt collector may use the collector's business name if the name does not indicate that the collector is in the debt collection business;

(9) Designing, compiling, and furnishing any form knowing that the form would be used to create the false belief in a borrower that a person other than the licensee is participating in the collection of or in an attempt to collect a debt the borrower allegedly owes the creditor, when in fact the person is not so participating.

(I) In addition to the requirements of this section, a debt collector shall follow the practices set forth in the federal "Fair Debt Collection Practices Act," 91 Stat. 874 (1977), sections 15 U.S.C. 1692b , 15 U.S.C. 1692c , 15 U.S.C. 1692d , 15 U.S.C. 1692e , and 15 U.S.C. 1692f , as those sections of federal law exist on the effective date of this section. In the event of a conflict between described practices in the federal act and described practices in this section, this section shall prevail.

Effective Date: 2008 HB545 09-01-2008

1321.46 Statewide database used to determine borrower eligibility.

(A) If more than four hundred persons are licensed under sections 1321.35 to 1321.48 of the Revised Code at any point after September 1, 2009, the superintendent of financial institutions shall develop and make a statewide common database, as implemented by the superintendent, accessible at all times to persons licensed under sections 1321.35 to 1321.48 of the Revised Code and to the superintendent through an internet connection. Licensees shall use the database to determine if a borrower is eligible for a loan. Licensees shall submit the required data in a format as the superintendent prescribes by rule, and verify eligibility before entering into each loan transaction.

(B) If a statewide common database is developed pursuant to division (A) of this section, the superintendent shall adopt rules to administer and enforce this section and to ensure that the database is used by licensees in accordance with this section, including:

(1) A rule requiring that data are retained in the database only as required to ensure licensee compliance with this section;

(2) A rule requiring that identifying borrower information is deleted from the database on a regular and routine basis, twelve months after the transaction is closed;

(3) A rule authorizing the archiving of deleted data, should the superintendent determine that archiving is necessary for the enforcement of this section;

(4) A rule prohibiting the database from ranking the credit worthiness of a borrower and limiting the database so that it may only be used to determine a borrower's eligibility or ineligibility for a loan based on the provisions of this chapter;

(5) A rule requiring that data collected pursuant to this section be used only as prescribed in this section and for no other purpose;

(6) A rule authorizing the database operator to impose a per transaction fee to be paid by the licensee for data required to be submitted;

(7) A rule prohibiting the database operator from including, in the database, the social security number of any borrower.

(C) The database operator, whether the superintendent or a third party selected by the superintendent pursuant to Chapter 125. of the Revised Code, shall do all of the following:

(1) Establish and maintain a process for responding to transaction verification requests due to technical difficulties with the database that prevent the licensee from accessing the database through the internet;

(2) Provide accurate and secure receipt, transmission, and storage of borrower data;

(3) Designate a transaction as closed within one business day of receiving notification from a licensee;

(4) Take all reasonable measures to ensure the confidentiality of the database and to prevent identity theft.

(D) A licensee may rely on the information contained in the database as accurate and is not subject to any administrative penalty or civil liability as a result of relying on inaccurate information contained in the database.

(E) With respect to the database prescribed in division (A) of this section, any information submitted for incorporation into the database, information in the database itself, or archived information as maintained by the superintendent pursuant to this section is not a public record under section 149.43 of the Revised Code.

(F) If approved by the superintendent, the database operator may impose a per transaction fee for the actual costs of entering, accessing, and maintaining data in the database. The fee shall be payable to the database operator in a manner prescribed by the superintendent. A licensee may not charge a customer all or part of the fee.

Effective Date: 2008 HB545 09-01-2008

1321.461 Alternative borrower database.

(A) If a statewide common database is not developed under section 1321.46 of the Revised Code, each licensee shall subscribe to, report to, and use an electronic database tracking service that permits the licensee to determine whether the borrower has an outstanding unpaid check or debit authorization that is, or reasonably appears to be, connected to a short-term loan. In the absence of an electronic database tracking service, each licensee shall require a borrower to sign a written declaration confirming that, pursuant to section 1321.41 of the Revised Code, the borrower is eligible to receive a loan.

(B) The records of a licensee and any electronic database tracking service shall be subject to review and examination by the division of financial institutions to determine whether the licensee is complying with this section and other applicable provisions of sections 1321.35 to 1321.48 of the Revised Code.

Effective Date: 2008 HB545 09-01-2008

1321.47 Additional duties of licensees - civil action by borrower.

(A) A person licensed, and any person required to be licensed under sections 1321.35 to 1321.48 of the Revised Code, in addition to duties imposed by other statutes or common law, shall do all of the following:

(1) Follow reasonable and lawful instructions from the borrower;

(2) Act with reasonable skill, care, and diligence;

(3) Act in good faith and fair dealing in any transaction or practice or course of business in connection with a short-term loan.

(B) The duties and standards of care created in this section may not be waived or modified.

(C) A borrower injured by a violation of this section may bring an action for recovery of damages. Damages awarded shall not be less than all compensation paid directly or indirectly to a licensee from any source, plus reasonable attorney's fees and court costs. The borrower may be awarded punitive damages.

Effective Date: 2008 HB545 09-01-2008

1321.48 Reports by superintendent - confidentiality of information.

(A) The superintendent of financial institutions shall report semiannually to the governor and the general assembly on the operations of the division of financial institutions with respect to the following:

(1) Enforcement actions instituted by the superintendent for a violation of or failure to comply with any provision of sections 1321.35 to 1321.48 of the Revised Code, and the final dispositions of each such enforcement action;

(2) Suspensions, revocations, or refusals to issue or renew licenses under sections 1321.35 to 1321.48 of the Revised Code.

(B) The information required under divisions (A)(1) and (2) of this section does not include information that, pursuant to division (C) of this section, is confidential.

(C) The following information is confidential:

(1) Examination information, and any information leading to or arising from an examination;

(2) Investigation information, and any information arising from or leading to an investigation.

(D) The information described in division (A)(1) of this section shall remain confidential for all purposes except when it is necessary for the superintendent to take official action regarding the affairs of a licensee, or in connection with criminal or civil proceedings to be initiated by a prosecuting attorney or the attorney general. This information also may be introduced into evidence or disclosed when, and in the manner, authorized by section 1181.25 of the Revised Code.

(E) All application information, except social security numbers, employer identification numbers, financial account numbers, the identity of the institution where financial accounts are maintained, personal financial information, fingerprint cards and the information contained on such cards, and criminal background information, is a public record as defined in section 149.43 of the Revised Code.

(F) This section does not prevent the division from releasing information relating to licensees to the attorney general for purposes of that office's administration of Chapter 1345. of the Revised Code. Information the division releases to the attorney general pursuant to this section remains privileged and confidential, and the attorney general may not disclose the information except by introduction into evidence in connection with the attorney general's administration of Chapter 1345. of the Revised Code or as authorized by the superintendent.

Effective Date: 2008 HB545 09-01-2008

1321.51 Second mortgage loan definitions.

As used in sections 1321.51 to 1321.60 of the Revised Code:

(A) "Person" means an individual, partnership, association, trust, corporation, or any other legal entity.

(B) "Certificate" means a certificate of registration issued under sections 1321.51 to 1321.60 of the Revised Code.

(C) "Registrant" means a person to whom one or more certificates of registration have been issued under sections 1321.51 to 1321.60 of the Revised Code.

(D) "Principal amount" means the amount of cash paid to, or paid or payable for the account of, the borrower, and includes any charge, fee, or expense that is financed by the borrower at origination of the loan or during the term of the loan.

(E) "Interest" means all charges payable directly or indirectly by a borrower to a registrant as a condition to a loan or an application for a loan, however denominated, but does not include default charges, deferment charges, insurance charges or premiums, court costs, loan origination charges, check collection charges, credit line charges, points, prepayment penalties, or other fees and charges specifically authorized by law.

(F) "Interest-bearing loan" means a loan in which the debt is expressed as the principal amount and interest is computed, charged, and collected on unpaid principal balances outstanding from time to time.

(G) "Precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of interest computed in advance on the assumption that all scheduled payments will be made when due.

(H) "Actuarial method" means the method of allocating payments made on a loan between the principal amount and interest whereby a payment is applied first to the accumulated interest and the remainder to the unpaid principal amount.

(I) "Applicable charge" means the amount of interest attributable to each monthly installment period of the loan contract. The applicable charge is computed as if each installment period were one month and any charge for extending the first installment period beyond one month is ignored. In the case of loans originally scheduled to be repaid in sixty-one months or less, the applicable charge for any installment period is that proportion of the total interest contracted for, as the balance scheduled to be outstanding during that period bears to the sum of all of the periodic balances, all determined according to the payment schedule originally contracted for. In all other cases, the applicable charge for any installment period is that which would have been made for such period had the loan been made on an interest-bearing basis, based upon the assumption that all payments were made according to schedule.

(J) "Broker" means a person who acts as an intermediary or agent in finding, arranging, or negotiating loans, other than residential mortgage loans, and charges or receives a fee for these services.

(K) "Annual percentage rate" means the ratio of the interest on a loan to the unpaid principal balances on the loan for any period of time, expressed on an annual basis.

(L) "Point" means a charge equal to one per cent of either of the following:

(1) The principal amount of a precomputed loan or interest-bearing loan;

(2) The original credit line of an open-end loan.

(M) "Prepayment penalty" means a charge for prepayment of a loan at any time prior to five years from the date the loan contract is executed.

(N) "Refinancing" means a loan the proceeds of which are used in whole or in part to pay the unpaid balance of a prior loan made by the same registrant to the same borrower under sections 1321.51 to 1321.60 of the Revised Code.

(O) "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section 1181.21 of the Revised Code.

(P)

(1) "Mortgage loan originator" means an individual who for compensation or gain, or in anticipation of compensation or gain, does any of the following:

(a) Takes or offers to take a residential mortgage loan application;

(b) Assists or offers to assist a borrower in obtaining or applying to obtain a residential mortgage loan by, among other things, advising on loan terms, including rates, fees, and other costs;

(c) Offers or negotiates terms of a residential mortgage loan;

(d) Issues or offers to issue a commitment for a residential mortgage loan to a borrower.

(2) "Mortgage loan originator" does not include any of the following:

(a) An individual who performs purely administrative or clerical tasks on behalf of a mortgage loan originator;

(b) A person licensed pursuant to Chapter 4735. of the Revised Code, or under the similar law of another state, who performs only real estate brokerage activities permitted by that license, provided the person is not compensated by a mortgage lender, mortgage broker, mortgage loan originator, or by any agent thereof;

(c) A person solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. 101 , in effect on January 1, 2009;

(d) A person acting solely as a loan processor or underwriter, who does not represent to the public, through advertising or other means of communicating, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the person can or will perform any of the activities of a mortgage loan originator;

(e) A loan originator licensed under sections 1322.01 to 1322.12 of the Revised Code, when acting solely under that authority;

(f) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or another mortgage loan originator, or by any agent thereof;

(g) Any person engaged in the retail sale of manufactured homes, mobile homes, or industrialized units if, in connection with financing those retail sales, the person only assists the borrower by providing or transmitting the loan application and does not do any of the following:

(i) Offer or negotiate the residential mortgage loan rates or terms;

(ii) Provide any counseling with borrowers about residential mortgage loan rates or terms;

(iii) Receive any payment or fee from any company or individual for assisting the borrower obtain or apply for financing to purchase the manufactured home, mobile home, or industrialized unit;

(iv) Assist the borrower in completing the residential mortgage loan application.

(3) An individual acting exclusively as a servicer engaging in loss mitigation efforts with respect to existing mortgage transactions shall not be considered a mortgage loan originator for purposes of sections 1321.51 to 1321.60 of the Revised Code until July 1, 2011, unless such delay is denied by the United States department of housing and urban development.

(Q) "Residential mortgage loan" means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real estate upon which is constructed or intended to be constructed a dwelling. For purposes of this division, "dwelling" has the same meaning as in the "Truth in Lending Act," 82 Stat. 146, 15 U.S.C. 1602 .

(R) "Nationwide mortgage licensing system and registry" means a mortgage licensing system developed and maintained by the conference of state bank supervisors and the American association of residential mortgage regulators, or their successor entities, for the licensing and registration of mortgage loan originators, or any system established by the secretary of housing and urban development pursuant to the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101 .

(S) "Registered mortgage loan originator" means an individual to whom both of the following apply:

(1) The individual is a mortgage loan originator and an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the farm credit administration.

(2) The individual is registered with, and maintains a unique identifier through, the nationwide mortgage licensing system and registry.

(T) "Administrative or clerical tasks" means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry, and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan.

(U) "Federal banking agency" means the board of governors of the federal reserve system, the comptroller of the currency, the director of the office of thrift supervision, the national credit union administration, and the federal deposit insurance corporation.

(V) "Loan processor or underwriter" means an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensed mortgage loan originator or registered mortgage loan originator. For purposes of this division, to "perform clerical or support duties" means to do all of the following activities:

(1) Receiving, collecting, distributing, and analyzing information common for the processing or underwriting of a residential mortgage loan;

(2) Communicating with a borrower to obtain the information necessary for the processing or underwriting of a loan, to the extent the communication does not include offering or negotiating loan rates or terms or counseling borrowers about residential mortgage loan rates or terms.

(W) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including all of the following:

(1) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

(2) Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

(3) Negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing for any such transaction;

(4) Engaging in any activity for which a person engaged in that activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law;

(5) Offering to engage in any activity, or to act in any capacity, described in division (W) of this section.

(X) "Licensee" means any person that has been issued a mortgage loan originator license under sections 1321.51 to 1321.60 of the Revised Code.

(Y) "Unique identifier" means a number or other identifier that permanently identifies a mortgage loan originator and is assigned by protocols established by the nationwide mortgage licensing system and registry or federal banking agencies to facilitate electronic tracking of mortgage loan originators and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against mortgage loan originators.

(Z) "State" in the context of referring to states in addition to Ohio means any state of the United States, the district of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific islands, the virgin islands, and the northern Mariana islands.

(AA) "Depository institution" has the same meaning as in section 3 of the "Federal Deposit Insurance Act," 64 Stat. 873, 12 U.S.C. 1813 , and includes any credit union.

(BB) "Bona fide third party" means a person that is not an employee of, related to, or affiliated with, the registrant, and that is not used for the purpose of circumvention or evasion of sections 1321.51 to 1321.60 of the Revised Code.

(CC) "Nontraditional mortgage product" means any mortgage product other than a thirty-year fixed rate mortgage.

(DD) "Employee" means an individual for whom a registrant or applicant, in addition to providing a wage or salary, pays social security and unemployment taxes, provides workers' compensation coverage, and withholds local, state, and federal income taxes. "Employee" also includes any individual who acts as a mortgage loan originator or operations manager of the registrant, but for whom the registrant is prevented by law from making income tax withholdings.

(EE) "Primary point of contact" means the employee or owner designated by the registrant or applicant to be the individual who the division of financial institutions can contact regarding compliance or licensing matters relating to the registrant's or applicant's business or lending activities secured by an interest in real estate.

(FF) "Consumer reporting agency" has the same meaning as in the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C. 1681a , as amended.

(GG) "Mortgage broker" has the same meaning as in section 1322.01 of the Revised Code.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000

1321.52 Registering second mortgage lenders and brokers.

(A)

(1) No person, on that person's own behalf or on behalf of any other person, shall do any of the following without having first obtained a certificate of registration from the division of financial institutions:

(a) Advertise, solicit, or hold out that the person is engaged in the business of making residential mortgage loans secured by a mortgage on a borrower's real estate which is other than a first lien on the real estate;

(b) Engage in the business of lending or collecting the person's own or another person's money, credit, or choses in action for non-first lien residential mortgage loans;

(c) Employ or compensate mortgage loan originators licensed or who should be licensed under sections 1321.51 to 1321.60 of the Revised Code to conduct the business of making residential mortgage loans;

(d) Make loans in this state of the type set forth in division (C) of this section that are unsecured or are secured by other than real property, which loans are for more than five thousand dollars at a rate of interest greater than permitted by section 1343.01 or other specific provisions of the Revised Code.

(2) Each person issued a certificate of registration or license is subject to all the rules prescribed under sections 1321.51 to 1321.60 of the Revised Code.

(B)

(1) All loans made to persons who at the time are residents of this state are considered as made within this state and subject to the laws of this state, regardless of any statement in the contract or note to the contrary, except as follows:

(a) If the loan is primarily secured by a lien on real property in another state and is arranged by a mortgage loan originator licensed by that state, the borrower may by choice of law designate that the transaction be governed by the law where the real property is located if the other state has consumer protection laws covering the borrower that are applicable to the transaction.

(b) If the loan is for the purpose of purchasing goods acquired by the borrower when the borrower is outside of this state, the loan may be governed by the laws of the other state.

(2) Nothing in division (B)(1) of this section prevents a choice of law or requires registration or licensure of persons outside of this state in a transaction involving the solicitation of residents of this state to obtain non-real estate secured loans that require the borrowers to physically visit a lender's out-of-state office to apply for and obtain the disbursement of loan funds.

(C) A registrant may make unsecured loans, loans secured by a mortgage on a borrower's real estate which is a first lien or other than a first lien on the real estate, loans secured by other than real estate, and loans secured by any combination of mortgages and security interests, on terms and conditions provided by sections 1321.51 to 1321.60 of the Revised Code.

(D)

(1) If a lender that is subject to sections 1321.51 to 1321.60 of the Revised Code makes a loan in violation of division (A)(1) of this section, the lender has no right to collect, receive, or retain any interest or charges on that loan.

(2) If a registrant applies to the division for a renewal of the registrant's certificate after the date required by division (A)(7) of section 1321.53 of the Revised Code, but prior to the first day of February of that year, and the division approves the application, division (D)(1) of this section does not apply with respect to any loan made by the registrant while the registrant's certificate was expired.

(3) If a person's registration under sections 1321.51 to 1321.60 of the Revised Code terminates due to nonrenewal or otherwise but the person continues to engage in the business of collecting or servicing non-first lien residential mortgage loans in violation of division (A)(1) of this section, the superintendent of financial institutions may take administrative action, including action on any subsequent application for a certificate of registration. In addition, no late fee, bad check charge except as incurred, charge related to default or cost to realize on its security interest, or prepayment penalty on non-first lien residential mortgage loans shall be collected or retained by a person who is in violation of division (A)(1)(b) of this section for the period of time in which the person was in violation. Nothing in division (D)(3) of this section prevents or otherwise precludes any other actions or penalties provided by law or modifies a defense of holder in due course that a subsequent purchaser servicing the residential mortgage loan may raise.

(E)

(1) No individual shall engage in the business of a mortgage loan originator without first obtaining and maintaining annually a license pursuant to section 1321.532 of the Revised Code from the division of financial institutions. A mortgage loan originator shall be employed or associated with a registrant or entity exempt from registration under sections 1321.51 to 1321.60 of the Revised Code, but shall not be employed by or associated with more than one registrant or exempt entity at any one time.

(2) An individual acting under the individual's authority as a registered mortgage loan originator shall not be required to be licensed under division (E)(1) of this section.

(3) An individual who holds a valid temporary mortgage loan originator license issued pursuant to section 1321.537 of the Revised Code may engage in the business of a mortgage loan originator in accordance with sections 1321.51 to 1321.60 of the Revised Code during the term of the temporary license.

(F)

(1) Each licensee shall register with, and maintain a valid unique identifier issued by, the nationwide mortgage licensing system and registry.

(2) No person shall use a licensee's unique identifier for any purpose other than as set forth in the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101 .

(G)

(1) If a person that is subject to sections 1321.51 to 1321.60 of the Revised Code makes a loan in violation of division (A)(1)(d) of this section and subsequently sells or assigns that loan, the person is liable to the borrower for any interest paid on that loan to the holder or assignee in excess of the rate that would be applicable in the absence of sections 1321.51 to 1321.60 of the Revised Code, in addition to any interest or charges paid on that loan to the unauthorized lender as provided by division (D)(1) of this section.

(2) If a person that is subject to sections 1321.51 to 1321.60 of the Revised Code makes a residential mortgage loan in violation of division (A)(1)(b) or (c) of this section and subsequently sells or assigns that loan, the lender is liable to the borrower for any interest paid on that loan to the holder or assignee in excess of the rate set forth in division (B)(4) of section 1343.01 of the Revised Code, in addition to any interest or charges paid on that loan to the unauthorized lender as provided by division (D)(1) of this section.

Amended by 129th General AssemblyFile No.167, SB 333, §1, eff. 3/22/2013.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000

1321.521 Expansion of definition of mortgage loan originator.

The superintendent of financial institutions may, by rule, expand the definition of mortgage loan originator in section 1321.51 of the Revised Code by adding individuals or may exempt additional individuals or persons from that definition, if the superintendent finds that the addition or exemption is consistent with the purposes fairly intended by the policy and provisions of sections 1321.51 to 1321.60 of the Revised Code and the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101 .

Rules authorized by this section shall be adopted in accordance with Chapter 119. of the Revised Code.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.522 Application for exemption from registration forcredit union service organization.

(A) A credit union service organization seeking exemption from registration pursuant to division (D)(6) of section 1321.53 of the Revised Code shall submit an application to the superintendent of financial institutions along with a nonrefundable fee of three hundred fifty dollars for each location of an office to be maintained by the organization. The application shall be in a form prescribed by the superintendent and shall include all of the following:

(1) The organization's business name and state of incorporation;

(2) The names of the owners, officers, or partners having control of the organization;

(3) An attestation to all of the following:

(a) That the organization and its owners, officers, or partners identified in division (A)(2) of this section have not had a mortgage lender certificate of registration or mortgage loan originator license, or any comparable authority, revoked in any governmental jurisdiction;

(b) That the organization and its owners, officers, or partners identified in division (A)(2) of this section have not been convicted of, or pleaded guilty or nolo contendere to, any of the following in a domestic, foreign, or military court:

(i) During the seven-year period immediately preceding the date of application for exemption, a misdemeanor involving theft or any felony;

(ii) At any time prior to the date of application for exemption, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.

(c) That, with respect to financing residential mortgage loans, the organization conducts business with residents of this state or secures its loans with property located in this state.

(4) The names of all mortgage loan originators or licensees under the organization's control and direction;

(5) An acknowledgment of understanding that the organization is subject to the regulatory authority of the division of financial institutions;

(6) Any further information that the superintendent may require.

(B)

(1) If the superintendent determines that the credit union service organization honestly made the attestation required under division (A)(3) of this section and otherwise qualifies for exemption, the superintendent shall issue a letter of exemption. Additional certified copies of a letter of exemption shall be provided upon request and the payment of seventy-five dollars per copy.

(2) If the superintendent determines that the organization does not qualify for exemption, the superintendent shall issue a notice of denial, and the organization may request a hearing in accordance with Chapter 119. of the Revised Code.

(C) All of the following conditions apply to any credit union service organization holding a valid letter of exemption:

(1) The organization shall be subject to examination in the same manner as a registrant with respect to the conduct of the organization's mortgage loan originators. In conducting any out-of-state examination, the organization shall be responsible for paying the costs of the division in the same manner as a registrant.

(2) The organization shall have an affirmative duty to supervise the conduct of its mortgage loan originators, and to cooperate with investigations by the division with respect to that conduct, in the same manner as is required of registrants.

(3) The organization shall keep and maintain records of all transactions relating to the conduct of its mortgage loan originators in the same manner as is required of registrants.

(4) The organization may provide the surety bond for its mortgage loan originators in the same manner as is permitted for registrants.

(D) A letter of exemption expires annually on the thirty-first day of December and may be renewed on or before that date by submitting an application that meets the requirements of division (A) of this section and a nonrefundable renewal fee of three hundred fifty dollars for each location of an office to be maintained by the credit union service organization.

(E) The superintendent may issue a notice to revoke or suspend a letter of exemption if the superintendent finds that the letter was obtained through a false or fraudulent representation of a material fact, or the omission of a material fact, required by law, or that a condition for exemption is no longer being met. Prior to issuing an order of revocation or suspension, the credit union service organization shall be given an opportunity for a hearing in accordance with Chapter 119. of the Revised Code.

(F) All information obtained by the division pursuant to an examination or investigation under this section shall be subject to the confidentiality requirements set forth in section 1321.55 of the Revised Code.

(G) All money collected under this section shall be deposited into the state treasury to the credit of the consumer finance fund created in section 1321.21 of the Revised Code.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.53 Application for certificate of registration.

(A)

(1) An application for a certificate of registration under sections 1321.51 to 1321.60 of the Revised Code shall contain an undertaking by the applicant to abide by those sections. The application shall be in writing, under oath, and in the form prescribed by the division of financial institutions, and shall contain any information that the division may require. Applicants that are foreign corporations shall obtain and maintain a license pursuant to Chapter 1703. of the Revised Code before a certificate is issued or renewed.

(2) Upon the filing of the application and the payment by the applicant of a nonrefundable two-hundred-dollar investigation fee, a nonrefundable three-hundred-dollar annual registration fee, and any additional fee required by the nationwide mortgage licensing system and registry, the division shall investigate the relevant facts. If the application involves investigation outside this state, the applicant may be required by the division to advance sufficient funds to pay any of the actual expenses of such investigation, when it appears that these expenses will exceed two hundred dollars. An itemized statement of any of these expenses which the applicant is required to pay shall be furnished to the applicant by the division. No certificate shall be issued unless all the required fees have been submitted to the division.

(3) All applicants making loans secured by an interest in real estate shall designate an employee or owner of the applicant as the applicant's primary point of contact. While acting as the primary point of contact, the employee or owner shall not be employed by any other registrant or mortgage broker.

(4) The investigation undertaken upon application shall include both a civil and criminal records check of the applicant including any individual whose identity is required to be disclosed in the application. Where the applicant is a business entity the superintendent shall have the authority to require a civil and criminal background check of those persons that in the determination of the superintendent have the authority to direct and control the operations of the applicant.

(5)

(a) Notwithstanding division (K) of section 121.08 of the Revised Code, the superintendent of financial institutions shall obtain a criminal history records check and, as part of that records check, request that criminal record information from the federal bureau of investigation be obtained. To fulfill this requirement, the superintendent shall do either of the following:

(i) Request the superintendent of the bureau of criminal identification and investigation, or a vendor approved by the bureau, to conduct a criminal records check based on the applicant's fingerprints or, if the fingerprints are unreadable, based on the applicant's social security number, in accordance with section 109.572 of the Revised Code;

(ii) Authorize the nationwide mortgage licensing system and registry to request a criminal history background check as set forth in division (C) of section 1321.531 of the Revised Code.

(b) Any fee required under division (C)(3) of section 109.572 of the Revised Code or by the nationwide mortgage licensing system and registry shall be paid by the applicant.

(6) If an application for a certificate of registration does not contain all of the information required under division (A) of this section, and if such information is not submitted to the division or to the nationwide mortgage licensing system and registry within ninety days after the superintendent or the nationwide mortgage licensing system and registry requests the information in writing, including by electronic transmission or facsimile, the superintendent may consider the application withdrawn.

(7) If the division finds that the financial responsibility, experience, character, and general fitness of the applicant command the confidence of the public and warrant the belief that the business will be operated honestly and fairly in compliance with the purposes of sections 1321.51 to 1321.60 of the Revised Code and the rules adopted thereunder, and that the applicant has the requisite bond or applicable net worth and assets required by division (B) of this section, the division shall thereupon issue a certificate of registration to the applicant. The superintendent shall not use a credit score as the sole basis for a registration denial.

(a)

(i) Certificates of registration issued on or after July 1, 2010, shall annually expire on the thirty-first day of December, unless renewed by the filing of a renewal application and payment of a three-hundred-dollar nonrefundable annual registration fee, any assessment as determined by the superintendent pursuant to division (A)(7)(a)(ii) of this section, and any additional fee required by the nationwide mortgage licensing system and registry, on or before the last day of December of each year. No other fee or assessment shall be required of a registrant by the state or any political subdivision of this state.

(ii) If the renewal fees billed by the superintendent pursuant to division (A)(7)(a)(i) of this section are less than the estimated expenditures of the consumer finance section of the division of financial institutions, as determined by the superintendent, for the following fiscal year, the superintendent may assess each registrant at a rate sufficient to equal in the aggregate the difference between the renewal fees billed and the estimated expenditures. Each registrant shall pay the assessed amount to the superintendent prior to the last day of June. In no case shall the assessment exceed ten cents per each one hundred dollars of interest (excluding charge-off recoveries), points, loan origination charges, and credit line charges collected by that registrant during the previous calendar year. If such an assessment is imposed, it shall not be less than two hundred fifty dollars per registrant and shall not exceed thirty thousand dollars less the total renewal fees paid pursuant to division (A)(7)(a)(i) of this section by each registrant.

(b) Registrants shall timely file renewal applications on forms prescribed by the division and provide any further information that the division may require. If a renewal application does not contain all of the information required under this section, and if that information is not submitted to the division or to the nationwide mortgage licensing system and registry within ninety days after the superintendent or the nationwide mortgage licensing system and registry requests the information in writing, including by electronic transmission or facsimile, the superintendent may consider the application withdrawn.

(c) Renewal shall not be granted if the applicant's certificate of registration is subject to an order of suspension, revocation, or an unpaid and past due fine imposed by the superintendent.

(d) If the division finds the applicant does not meet the conditions set forth in this section, it shall issue a notice of intent to deny the application, and forthwith notify the applicant of the denial, the grounds for the denial, and the applicant's reasonable opportunity to be heard on the action in accordance with Chapter 119. of the Revised Code.

(8) If there is a change of five per cent or more in the ownership of a registrant, the division may make any investigation necessary to determine whether any fact or condition exists that, if it had existed at the time of the original application for a certificate of registration, the fact or condition would have warranted the division to deny the application under division (A)(7) of this section. If such a fact or condition is found, the division may, in accordance with Chapter 119. of the Revised Code, revoke the registrant's certificate.

(B) Each registrant that engages in lending under sections 1321.51 to 1321.60 of the Revised Code shall, if not otherwise required to be bonded pursuant to section 1321.533 of the Revised Code, maintain both of the following:

(1) A net worth of at least fifty thousand dollars;

(2) For each certificate of registration, assets of at least fifty thousand dollars either in use or readily available for use in the conduct of the business.

(C) Not more than one place of business shall be maintained under the same certificate, but the division may issue additional certificates to the same registrant upon compliance with sections 1321.51 to 1321.60 of the Revised Code, governing the issuance of a single certificate. No change in the place of business of a registrant to a location outside the original municipal corporation shall be permitted under the same certificate without the approval of a new application, the payment of the registration fee and, if required by the superintendent, the payment of an investigation fee of two hundred dollars. When a registrant wishes to change its place of business within the same municipal corporation, it shall give written notice of the change in advance to the division, which shall provide a certificate for the new address without cost. If a registrant changes its name, prior to making loans under the new name it shall give written notice of the change to the division, which shall provide a certificate in the new name without cost. Sections 1321.51 to 1321.60 of the Revised Code do not limit the loans of any registrant to residents of the community in which the registrant's place of business is situated. Each certificate shall be kept conspicuously posted in the place of business of the registrant and is not transferable or assignable.

(D) Sections 1321.51 to 1321.60 of the Revised Code do not apply to any of the following:

(1) Entities chartered and lawfully doing business under the authority of any law of this state, another state, or the United States as a bank, savings bank, trust company, savings and loan association, or credit union, or a subsidiary of any such entity, which subsidiary is regulated by a federal banking agency and is owned and controlled by such a depository institution;

(2) Life, property, or casualty insurance companies licensed to do business in this state;

(3) Any person that is a lender making a loan pursuant to sections 1321.01 to 1321.19 of the Revised Code or a business loan as described in division (B)(6) of section 1343.01 of the Revised Code;

(4) Any political subdivision, or any governmental or other public entity, corporation, instrumentality, or agency, in or of the United States or any state of the United States, or any entity described in division (B)(3) of section 1343.01 of the Revised Code;

(5) A college or university, or controlled entity of a college or university, as those terms are defined in section 1713.05 of the Revised Code;

(6) A credit union service organization, provided the organization utilizes services provided by registered mortgage loan originators or the organization complies with section 1321.522 of the Revised Code and holds a valid letter of exemption issued by the superintendent.

(E) No person engaged in the business of selling tangible goods or services related to tangible goods may receive or retain a certificate under sections 1321.51 to 1321.60 of the Revised Code for such place of business.

Amended by 129th General AssemblyFile No.127, HB 487, §101.01, eff. 1/1/2013.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000

1321.531 Application for mortgage loan originator license.

(A) An application for a mortgage loan originator license shall be in writing, under oath, and in the form prescribed by the superintendent of financial institutions. The application shall be accompanied by a nonrefundable application fee of one hundred fifty dollars and all other required fees, including any fees required by the nationwide mortgage licensing system and registry.

(B) The superintendent may establish relationships or enter into contracts with the nationwide mortgage licensing system and registry, or any entities designated by it, to collect and maintain records and process transaction fees or other fees related to mortgage loan originator licensees or other persons subject to or involved in their licensure.

(C) In connection with applying for a mortgage loan originator license, the applicant shall furnish to the nationwide mortgage licensing system and registry the following information concerning the applicant's identity:

(1) The applicant's fingerprints for submission to the federal bureau of investigation, and any other governmental agency or entity authorized to receive such information, for purposes of a state, national, and international criminal history background check;

(2) Personal history and experience in a form prescribed by the nationwide mortgage licensing system and registry, along with authorization for the superintendent and the nationwide mortgage licensing system and registry to obtain the following:

(a) An independent credit report from a consumer reporting agency;

(b) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction.

(D) In order to effectuate the purposes of divisions (C)(1) and (C)(2)(b) of this section, the superintendent may use the conference of state bank supervisors, or a wholly owned subsidiary, as a channeling agent for requesting information from and distributing information to the United States department of justice or any other governmental agency. The superintendent may also use the nationwide mortgage licensing system and registry as a channeling agent for requesting information from and distributing information to any source related to matters subject to divisions (C)(2)(a) and (b) of this section.

(E) Upon the filing of the application, payment of the application fee, and payment of any additional fee, including any fee required by the nationwide mortgage licensing system and registry, the superintendent shall investigate the applicant as set forth in division (E) of this section.

(1)

(a) Notwithstanding division (K) of section 121.08 of the Revised Code, the superintendent shall obtain a criminal history records check and, as part of that records check, request that criminal record information from the federal bureau of investigation be obtained. To fulfill this requirement, the superintendent shall do either of the following:

(i) Request the superintendent of the bureau of criminal identification and investigation, or a vendor approved by the bureau, to conduct a criminal records check based on the applicant's fingerprints or, if the fingerprints are unreadable, based on the applicant's social security number in accordance with section 109.572 of the Revised Code;

(ii) Authorize the nationwide mortgage licensing system and registry to request a criminal history background check as set forth in division (C) of this section.

(b) Any fee required under division (C)(3) of section 109.572 of the Revised Code or by the nationwide mortgage licensing system and registry shall be paid by the applicant.

(2) The superintendent of financial institutions shall conduct a civil records check.

(3) If, in order to issue a license to an applicant, additional investigation by the superintendent outside this state is necessary, the superintendent may require the applicant to advance sufficient funds to pay the actual expenses of the investigation, if it appears that these expenses will exceed one hundred dollars. The superintendent shall provide the applicant with an itemized statement of the actual expenses that the applicant is required to pay.

(F) If an application for a mortgage loan originator license does not contain all of the information required under this section, and if that information is not submitted to the superintendent or to the nationwide mortgage licensing system and registry within ninety days after the superintendent or the nationwide mortgage licensing system and registry requests the information in writing, including by electronic transmission or facsimile, the superintendent may consider the application withdrawn.

Amended by 129th General AssemblyFile No.127, HB 487, §101.01, eff. 1/1/2013.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.532 Issuance of mortgage loan originator license.

(A) Upon the conclusion of the investigation required under division (E) of section 1321.531 of the Revised Code, the superintendent of financial institutions shall issue a mortgage loan originator license to the applicant if the superintendent finds that all of the following conditions are met:

(1) The application is accompanied by the application fee and any additional fee required by the nationwide mortgage licensing system and registry.

If a check or other draft instrument is returned to the superintendent for insufficient funds, the superintendent shall notify the licensee by certified mail, return receipt requested, that the license issued in reliance on the check or other draft instrument will be canceled unless the licensee, within thirty days after receipt of the notice, submits the application fee and a one-hundred-dollar penalty to the superintendent. If the licensee does not submit the application fee and penalty within that time period, or if any check or other draft instrument used to pay the fee or penalty is returned to the superintendent for insufficient funds, the license shall be canceled immediately without a hearing, and the licensee shall cease activity as a mortgage loan originator.

(2) The applicant complies with sections 1321.51 to 1321.60 of the Revised Code.

(3) The applicant has not had a mortgage loan originator license, or comparable authority, revoked in any governmental jurisdiction.

(4) The applicant has not been convicted of, or pleaded guilty or nolo contendere to, any of the following in a domestic, foreign, or military court:

(a) During the seven-year period immediately preceding the date of application for licensure, a misdemeanor involving theft or any felony;

(b) At any time prior to the date of application for licensure, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.

(5) Based on the totality of the circumstances and information submitted in the application, the applicant has proven to the division of financial institutions, by a preponderance of the evidence, that the applicant is of good business repute, appears qualified to act as a mortgage loan originator, and has fully complied with sections 1321.51 to 1321.60 of the Revised Code and rules adopted thereunder, and that the applicant meets all of the conditions for issuing a mortgage loan originator license.

(6) The applicant successfully completed the written test required under section 1321.535 of the Revised Code and the education requirements set forth in section 1321.534 of the Revised Code.

(7) The applicant is covered under a valid bond in compliance with section 1321.533 of the Revised Code.

(8) The applicant's financial responsibility, character, and general fitness command the confidence of the public and warrant the belief that the mortgage loan originator will operate honestly and fairly in compliance with the purposes of sections 1321.51 to 1321.60 of the Revised Code. The superintendent shall not use a credit score as the sole basis for a license denial.

(B) The license issued under division (A) of this section may be renewed annually on or before the thirty-first day of December if the superintendent finds that all of the following conditions are met:

(1) The renewal application is accompanied by a nonrefundable renewal fee of one hundred fifty dollars, and any additional fee required by the nationwide mortgage licensing system and registry. If a check or other draft instrument is returned to the superintendent for insufficient funds, the superintendent shall notify the licensee by certified mail, return receipt requested, that the license renewed in reliance on the check or other draft instrument will be canceled unless the licensee, within thirty days after receipt of the notice, submits the renewal fee and a one-hundred-dollar penalty to the superintendent. If the licensee does not submit the renewal fee and penalty within that time period, or if any check or other draft instrument used to pay the fee or penalty is returned to the superintendent for insufficient funds, the license shall be canceled immediately without a hearing, and the licensee shall cease activity as a mortgage loan originator.

(2) The applicant has completed at least eight hours of continuing education as required under section 1321.536 of the Revised Code.

(3) The applicant meets the conditions set forth in divisions (A)(2) to (8) of this section.

(4) The applicant's license is not subject to an order of suspension or an unpaid and past due fine imposed by the superintendent.

(C)

(1) Subject to division (C)(2) of this section, if a license renewal application or fee, including any additional fee required by nationwide mortgage licensing system and registry, is received by the superintendent after the thirty-first day of December, the license shall not be considered renewed, and the applicant shall cease activity as a mortgage loan originator.

(2) Division (C)(1) of this section shall not apply if the applicant, no later than the thirty-first day of January, submits the renewal application and fee, including any additional fee required by nationwide mortgage licensing system and registry, and a one-hundred-dollar penalty to the superintendent.

(D) Mortgage loan originator licenses issued on or after July 1, 2010, shall annually expire on the thirty-first day of December.

(E) If a renewal application does not contain all of the information required under this section, and if that information is not submitted to the superintendent or to the nationwide mortgage licensing system and registry within ninety days after the superintendent or the nationwide mortgage licensing system and registry requests the information in writing, including by electronic transmission or facsimile, the superintendent may consider the application withdrawn.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.533 Maintenance of net worth and assets; Corporate surety bond.

(A)

(1) A registrant engaged in residential mortgage loan activity shall not conduct business in this state, unless the registrant has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state.

(a) The bond shall be in favor of the superintendent of financial institutions.

(b) The bond shall be in the penal sum of one-half per cent of the aggregate loan amount of residential mortgage loans originated in the immediately preceding calendar year, but not exceeding one hundred fifty thousand dollars. Under no circumstances, however, shall the bond be less than fifty thousand dollars and an additional penal sum of ten thousand dollars for each location, in excess of one, at which the registrant conducts business.

(c) The term of the bond shall coincide with the term of registration.

(d) A copy of the bond shall be filed with the superintendent.

(e) The bond shall be for the exclusive benefit of any borrower injured by a violation by an employee, licensee, or registrant of any provision of sections 1321.51 to 1321.60 of the Revised Code or the rules adopted thereunder.

(f) The aggregate liability of the corporate surety for any and all breaches of the conditions of the bond shall not exceed the penal sum of the bond.

(2) An individual licensed as a mortgage loan originator and employed or associated with an exempt entity as set forth in division (D) of section 1321.53 of the Revised Code shall not conduct business in this state, unless either the licensee or the exempt entity on the licensee's behalf has obtained and maintains in effect at all times a corporate surety bond issued by a bonding company or insurance company authorized to do business in this state.

(a) The bond shall be in favor of the superintendent.

(b) The bond shall be in the penal sum of one-half per cent of the aggregate loan amount of residential mortgage loans originated in the immediately preceding calendar year, but not exceeding one hundred thousand dollars. Under no circumstances, however, shall the bond be less than fifty thousand dollars.

(c) The term of the bond shall coincide with the term of licensure.

(d) A copy of the bond shall be filed with the superintendent.

(e) The bond shall be for the exclusive benefit of any borrower injured by a violation by the licensee of any provision of sections 1321.51 to 1321.60 of the Revised Code or the rules adopted thereunder.

(f) The aggregate liability of the corporate surety for any and all breaches of the conditions of the bond shall not exceed the penal sum of the bond.

(g) Licensees covered by a corporate surety bond obtained by a registrant or exempt entity they are employed by or associated with shall not be required to obtain an individual bond.

(B)

(1) The registrant or licensee shall give notice to the superintendent by certified mail of any action that is brought by a borrower against the licensee, registrant, or any mortgage loan originator of the registrant alleging injury by a violation of any provision of sections 1321.51 to 1321.60 of the Revised Code, and of any judgment that is entered against the licensee, registrant, or mortgage loan originator of the registrant by a borrower injured by a violation of any provision of sections 1321.51 to 1321.60 of the Revised Code. The notice shall provide details sufficient to identify the action or judgment, and shall be filed with the superintendent within ten days after the commencement of the action or notice to the registrant or licensee of entry of a judgment. An exempt entity securing bonding for the licensees in their employ shall report those actions by a borrower in the same manner as is required of registrants.

(2) A corporate surety, within ten days after it pays any claim or judgment, shall give notice to the superintendent by certified mail of the payment, with details sufficient to identify the person and the claim or judgment paid.

(C) Whenever the penal sum of the corporate surety bond is reduced by one or more recoveries or payments, the registrant or separately bonded licensee shall furnish a new or additional bond under this section, so that the total or aggregate penal sum of the bond or bonds equals the sum required by this section, or shall furnish an endorsement executed by the corporate surety reinstating the bond to the required penal sum of it.

(D) The liability of the corporate surety on the bond to the superintendent and to any borrower injured by a violation of any provision of sections 1321.51 to 1321.60 of the Revised Code shall not be affected in any way by any misrepresentation, breach of warranty, or failure to pay the premium, by any act or omission upon the part of the registrant or licensee, by the insolvency or bankruptcy of the registrant or licensee, or by the insolvency of the registrant's or licensee's estate. The liability for any act or omission that occurs during the term of the corporate surety bond shall be maintained and in effect for at least two years after the date on which the corporate surety bond is terminated or canceled.

(E) The corporate surety bond shall not be canceled by the registrant, the licensee, or the corporate surety except upon notice to the superintendent by certified mail, return receipt requested. The cancellation shall not be effective prior to thirty days after the superintendent receives the notice.

(F) No registrant or licensee shall fail to comply with this section. Any registrant or licensee that fails to comply with this section shall cease all mortgage lender or mortgage loan originator activity in this state until the registrant or licensee has complied with this section.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.534 Evidence of pre-licensing instruction.

(A) Mortgage loan originator applicants shall submit evidence acceptable to the superintendent of financial institutions that, except as set forth in division (D) of this section, the applicant has successfully completed at least twenty hours of pre-licensing instruction in a course or program of study reviewed and approved by the nationwide mortgage licensing system and registry.

(B) A person having successfully completed the pre-licensing education requirements reviewed and approved by the nationwide mortgage licensing system and registry for any state within the previous five years shall be granted credit toward completion of the pre-licensing education requirements of this state.

(C) Review and approval of a pre-licensing education course shall include review and approval of the course provider.

(D) Notwithstanding division (A) of this section, if the nationwide mortgage licensing system and registry fails to have in place an approval program to ensure that all pre-licensing education courses meet the criteria set forth in division (A) of this section, the superintendent shall require, until that program is in place, evidence that the applicant has successfully completed twenty hours of instruction in a course or program of study approved by the superintendent that consists of at least all of the following:

(1) Four hours of instruction concerning state and federal mortgage lending laws, which shall include no less than two hours on this chapter;

(2) Four hours of instruction concerning the Ohio consumer sales practices act, Chapter 1345. of the Revised Code, as it applies to registrants and licensees;

(3) Four hours of instruction concerning the loan application and closing process;

(4) Two hours of instruction concerning the underwriting process;

(5) Two hours of instruction concerning the secondary market for mortgage loans;

(6) Two hours of instruction covering basic mortgage financing concepts and terms;

(7) Two hours of instruction concerning the ethical responsibilities of a licensee, including with respect to confidentiality, consumer counseling, and the duties and standards of care created in section 1321.593 of the Revised Code.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.535 Written test.

(A) Each applicant for a mortgage loan originator license shall submit to a written test that is developed and approved by the nationwide mortgage licensing system and registry and administered by a test provider approved by the nationwide mortgage licensing system and registry based upon reasonable standards.

(1) The test shall adequately measure the applicant's knowledge and comprehension in appropriate subject matters, including ethics and federal and state law related to mortgage origination, fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

(2) An individual shall not be considered to have passed the test unless the individual achieves a test score of at least seventy-five per cent correct answers on all questions and at least seventy-five per cent correct answers on all questions relating to Ohio mortgage lending laws and the Ohio consumer sales practices act, Chapter 1345. of the Revised Code, as it applies to registrants and licensees.

(3) An individual may retake the test three consecutive times provided the period between taking the tests is at least thirty days.

(4) After failing three consecutive tests, an individual shall be required to wait at least six months before taking the test again.

(5) If a mortgage loan originator fails to maintain a valid license for a period of five years or longer, the individual shall be required to retake the test. For this purpose, any time during which the individual is a registered mortgage loan originator shall not be taken into account.

(B) Notwithstanding division (A) of this section, if the nationwide mortgage licensing system and registry fails to have in place a testing process that meets the criteria set forth in that division, the superintendent shall require, until that process is in place, evidence that the mortgage loan originator applicant passed a written test acceptable to the superintendent.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.536 Continuing education requirement.

(A) Each mortgage loan originator licensee shall complete at least eight hours of continuing education every calendar year. To fulfill this requirement, the eight hours of continuing education must be offered in a course or program of study that includes all of the following:

(1) Three hours of applicable federal law and regulations;

(2) Two hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues;

(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace.

(B) Continuing education courses shall be reviewed and approved by the nationwide mortgage licensing system and registry based upon reasonable standards.

(C) The following conditions shall apply to the continuing education required by this section:

(1) An individual cannot take the same approved course in the same or successive years to meet the annual requirement for continuing education.

(2) An individual can only receive credit for a continuing education course in the year in which the course is taken, unless the individual is making up a deficiency in continuing education as permitted by rule or order of the superintendent of financial institutions.

(3) An individual who subsequently becomes unlicensed must complete the continuing education requirement for the last year in which the license was held prior to the issuance of a new or renewed license.

(4) A licensee who is approved as an instructor of an approved continuing education course may receive credit for the licensee's own annual continuing education requirement at the rate of two credit hours for every one hour taught.

(5) A person having successfully completed a continuing education course approved by the nationwide mortgage licensing system and registry for any state shall receive credit toward completion of the continuing education requirement of this state.

(D) Notwithstanding division (B) of this section, until the nationwide mortgage licensing system and registry implements a review and approval process, the superintendent shall require evidence that the licensee has successfully completed at least eight hours of continuing education in a course or program of study approved by the superintendent.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.537 Temporary mortgage loan originator license for out-of-state loan originators.

(A) As used in this section:

(1) "Out-of-state mortgage loan originator" means an individual to whom both of the following apply:

(a) The individual holds a valid mortgage loan originator license, or comparable authority, issued pursuant to the law of any other state of the United States.

(b) The individual is registered, fingerprinted, and maintains a unique identifier through the nationwide mortgage licensing system and registry.

(2) "Sponsor" means a registrant or entity described in division (D) of section 1321.53 of the Revised Code that employs or is associated with an applicant for a temporary mortgage loan originator license and, during the term of the applicant's temporary license, covers the applicant under its corporate surety bond or requires the applicant to obtain and maintain a corporate surety bond.

(B) The superintendent of financial institutions may, in accordance with this section, issue to an out-of-state mortgage loan originator a temporary mortgage loan originator license that enables the licensee to engage in the business of a mortgage loan originator while the individual completes the requirements necessary to meet the conditions set forth in section 1321.532 of the Revised Code for a mortgage loan originator license. A temporary mortgage loan originator license shall be valid for a term of not more than one hundred twenty days from the date of issuance. A temporary mortgage loan originator license may not be renewed.

(C) An application for a temporary mortgage loan originator license shall be in writing, under oath, and in a form that meets the requirements of the nationwide mortgage licensing system and registry. The application shall be accompanied by a nonrefundable application fee, the amount of which shall be determined by the superintendent in rule, and a certification that, as of the date of application, the applicant meets the following conditions:

(1) The applicant has at least two years of experience in the field of residential mortgage lending in the five years immediately preceding the date of application for the temporary mortgage loan originator license.

(2) The applicant has not previously applied for a temporary mortgage loan originator license in this state.

(3) The applicant has not had a mortgage loan originator license, or comparable authority, revoked in any governmental jurisdiction. For purposes of division (C)(3) of this section, a subsequent formal vacation of such a revocation shall not be considered a revocation.

(4) The applicant has not been convicted of, or pleaded guilty or nolo contendere to, any of the following in a domestic, foreign, or military court:

(a) During the seven-year period immediately preceding the date of application, a misdemeanor involving theft or any felony;

(b) At any time prior to the date of application, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.

For purposes of division (C)(4) of this section, any conviction for which the applicant has received a pardon shall not be considered a conviction.

(D) The superintendent shall issue a temporary mortgage loan originator license to the applicant if the superintendent finds that all of the following conditions are met:

(1) The application is accompanied by the application fee and the certification described in division (C) of this section.

(2) The applicant is registered, fingerprinted, and has a valid unique identifier through the nationwide mortgage licensing system and registry as of the date of application.

(3) The applicant has authorized the nationwide mortgage licensing system and registry to obtain a credit report for submission to the superintendent.

(4) The applicant has a sponsor that certifies employment of, or association with, the applicant and has signed the application.

(E) The sponsor of a temporary licensee shall have an affirmative duty to supervise the conduct of each temporary mortgage loan originator in the same manner as is required of its other licensees. If the temporary licensee's employment or association with the sponsor is terminated, the sponsor shall notify the division of financial institutions of the termination through the nationwide mortgage licensing system and registry. Upon the division's receipt of the notice, the sponsor shall no longer be held responsible for the conduct of the temporary licensee.

(F) The superintendent may, in accordance with Chapter 119. of the Revised Code, adopt rules necessary for the implementation and operation of this section.

Added by 129th General AssemblyFile No.167, SB 333, §1, eff. 3/22/2013.

1321.538 Adoption of rules to conform to federal law regarding temporary licenses for registered mortgage loan originators.

If the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101 , as amended, is modified after the effective date of this section, or any regulation, statement, or position is adopted under that act, to permit states to issue a temporary mortgage loan originator license to a registered mortgage loan originator, the superintendent shall, in accordance with section 111.15 of the Revised Code, adopt rules the superintendent considers necessary and appropriate to issue a temporary license to a registered mortgage loan originator.

Added by 129th General AssemblyFile No.167, SB 333, §1, eff. 3/22/2013.

1321.54 Rules - investigations.

(A) The division of financial institutions may adopt, in accordance with Chapter 119. of the Revised Code, rules that are necessary for the enforcement or administration of sections 1321.51 to 1321.60 of the Revised Code and that are consistent with those sections and rules to carry out the purposes of those sections.

(B)

(1) The division may, upon written notice to the registrant or licensee stating the contemplated action, the grounds for the action, and the registrant's or licensee's reasonable opportunity to be heard on the action in accordance with Chapter 119. of the Revised Code, revoke, suspend, or refuse to renew any certificate or license issued under sections 1321.51 to 1321.60 of the Revised Code if it finds any of the following:

(a) A violation of or failure to comply with any provision of sections 1321.51 to 1321.60 of the Revised Code or the rules adopted thereunder, any federal lending law, or any other law applicable to the business conducted under a certificate of registration or license;

(b) The person has been convicted of or pleaded guilty or nolo contendere to any criminal felony offense in a domestic, foreign, or military court;

(c) The person has been convicted of or pleaded guilty or nolo contendere to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, breach of trust, dishonesty, or drug trafficking, or any criminal offense involving money or securities, in a domestic, foreign, or military court;

(d) The person's mortgage lender certificate of registration or mortgage loan originator license, or comparable authority, has been revoked in any governmental jurisdiction.

(2) In addition to, or in lieu of, any revocation, suspension, or denial, the division may impose a monetary fine after administrative hearing or in settlement of matters subject to claims under division (B)(1)(a) of this section.

(3) Subject to division (D)(3) of section 1321.52 of the Revised Code, the revocation, suspension, or refusal to renew shall not impair the obligation of any pre-existing lawful contract made under sections 1321.51 to 1321.60 of the Revised Code; provided, however, that a prior registrant shall make good faith efforts to promptly transfer the registrant's collection rights to another registrant or person exempt from registration, or be subject to additional monetary fines and legal or administrative action by the division. Nothing in division (B)(3) of this section shall limit a court's ability to impose a cease and desist order preventing any further business or servicing activity.

(C)

(1) The superintendent of financial institutions may impose a fine for a violation of sections 1321.51 to 1321.60 of the Revised Code or any rule adopted thereunder. All fines collected pursuant to this section shall be paid to the treasurer of state to the credit of the consumer finance fund created in section 1321.21 of the Revised Code. In determining the amount of a fine to be imposed pursuant to this section, the superintendent may consider all of the following to the extent it is known to the division of financial institutions:

(a) The seriousness of the violation;

(b) The registrant's or licensee's good faith efforts to prevent the violation;

(c) The registrant's or licensee's history regarding violations and compliance with division orders;

(d) The registrant's or licensee's financial resources;

(e) Any other matters the superintendent considers appropriate in enforcing sections 1321.51 to 1321.60 of the Revised Code.

(2) Monetary fines imposed under this division shall not exceed twenty-five thousand dollars and do not preclude any criminal fine imposed pursuant to section 1321.99 of the Revised Code.

(D) The superintendent may investigate alleged violations of sections 1321.51 to 1321.60 of the Revised Code, or the rules adopted thereunder, or complaints concerning any such violation. The superintendent may make application to the court of common pleas for an order enjoining any violation and, upon a showing by the superintendent that a person has committed, or is about to commit, a violation, the court shall grant an injunction, restraining order, or other appropriate relief. The superintendent, in making application to the court of common pleas for an order enjoining a person from acting as a registrant or mortgage loan originator in violation of division (A) or (E) of section 1321.52 of the Revised Code, may also seek and obtain civil penalties for that unregistered or unlicensed conduct in an amount not to exceed five thousand dollars per violation.

(E) In conducting an investigation pursuant to this section, the superintendent may compel, by subpoena, witnesses to testify in relation to any matter over which the superintendent has jurisdiction, and may require the production or photocopying of any book, record, or other document pertaining to such matter. If a person fails to file any statement or report, obey any subpoena, give testimony, produce any book, record, or other document as required by such a subpoena, or permit photocopying of any book, record, or other document subpoenaed, the court of common pleas of any county in this state, upon application made to it by the superintendent, shall compel obedience by attachment proceedings for contempt, as in the case of disobedience of the requirements of a subpoena issued from the court, or a refusal to testify therein.

(F) If the superintendent determines that a person is engaged in, or is believed to be engaged in, activities that may constitute a violation of sections 1321.51 to 1321.60 of the Revised Code or the rules adopted thereunder, the superintendent may, after notice and a hearing conducted in accordance with Chapter 119. of the Revised Code, issue a cease and desist order. The superintendent, in taking administrative action to enjoin a person from acting as a registrant or mortgage loan originator in violation of division (A) or (E) of section 1321.52 of the Revised Code, may also seek and impose fines for those violations in an amount not to exceed five thousand dollars per violation. Such an order shall be enforceable in the court of common pleas.

(G) The superintendent shall regularly report violations of sections 1321.51 to 1321.60 of the Revised Code, as well as enforcement actions and other relevant information, to the nationwide mortgage licensing system and registry pursuant to division (E) of section 1321.55 of the Revised Code.

(H)

(1) To protect the public interest, the superintendent may, without a prior hearing, do any of the following:

(a) Suspend the certificate of registration or license of a person who is convicted of or pleads guilty or nolo contendere to a criminal violation of sections 1321.51 to 1321.60 of the Revised Code or any criminal offense described in division (B)(1)(b) or (c) of this section;

(b) Suspend the certificate of registration or license of a person who violates division (F) of section 1321.533 of the Revised Code;

(c) Suspend the certificate of registration or license of a person who fails to comply with a request made by the superintendent under this section or section 1321.55 of the Revised Code to inspect qualifying education transcripts located at the registrant's or licensee's place of business.

(2) The superintendent may, in accordance with Chapter 119. of the Revised Code, subsequently revoke any registration or license suspended under division (H)(1) of this section.

(3) The superintendent shall, in accordance with Chapter 119. of the Revised Code, adopt rules establishing the maximum amount of time a suspension under division (H)(1) of this section may continue before a hearing is conducted.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000

1321.541 Actions to enforce second mortgage loan provisions.

(A) The attorney general may directly bring an action to enjoin a violation of sections 1321.51 to 1321.60 of the Revised Code with the same rights, privileges, and powers as those described in section 1345.06 of the Revised Code. The prosecuting attorney of the county in which the action may be brought may bring an action to enjoin a violation of sections 1321.51 to 1321.60 of the Revised Code only if the prosecuting attorney first presents any evidence of the violation to the attorney general and, within a reasonable period of time, the attorney general has not agreed to bring the action.

(B)

(1) The prosecuting attorney of the county in which an alleged offense may be prosecuted may initiate criminal proceedings under sections 1321.51 to 1321.60 of the Revised Code.

(2) In order to initiate criminal proceedings under sections 1321.51 to 1321.60 of the Revised Code, the attorney general shall first present any evidence of criminal violations to the prosecuting attorney of the county in which the alleged offense may be prosecuted. If, within a reasonable period of time, the prosecuting attorney has not agreed to prosecute the violations, the attorney general may proceed in the prosecution with all the rights, privileges, and powers conferred by law on prosecuting attorneys, including the power to appear before grand juries and to interrogate witnesses before such grand juries.

(C) These powers of the attorney general shall be in addition to any other applicable powers of the attorney general.

Effective Date: 01-01-2007

1321.55 Records and reports.

(A) Every registrant shall keep records pertaining to loans made under sections 1321.51 to 1321.60 of the Revised Code. Such records shall be segregated from records pertaining to transactions that are not subject to these sections of the Revised Code. Every registrant shall preserve records pertaining to loans made under sections 1321.51 to 1321.60 of the Revised Code for at least two years after making the final entry on such records. Accounting systems maintained in whole or in part by mechanical or electronic data processing methods that provide information equivalent to that otherwise required are acceptable for this purpose. At least once each eighteen-month cycle, the division of financial institutions shall make or cause to be made an examination of records pertaining to loans made under sections 1321.51 to 1321.60 of the Revised Code, for the purpose of determining whether the registrant is complying with these sections and of verifying the registrant's annual report.

(B)

(1) As required by the superintendent of financial institutions, each registrant shall file with the division each year a report under oath or affirmation, on forms supplied by the division, concerning the business and operations for the preceding calendar year. Whenever a registrant operates two or more registered offices or whenever two or more affiliated registrants operate registered offices, then a composite report of the group of registered offices may be filed in lieu of individual reports.

(2) The division shall publish annually an analysis of the information required under division (B)(1) of this section, but the individual reports shall not be public records and shall not be open to public inspection.

(3) Each mortgage licensee shall submit to the nationwide mortgage licensing system and registry call reports or other reports of condition, which shall be in such form and shall contain such information as the nationwide mortgage licensing system and registry may require.

(C)

(1) The following information is confidential:

(a) Examination information, and any information leading to or arising from an examination;

(b) Investigation information, and any information arising from or leading to an investigation.

(2) The information described in division (C)(1) of this section shall remain confidential for all purposes except when it is necessary for the superintendent to take official action regarding the affairs of a registrant or licensee, or in connection with criminal or civil proceedings to be initiated by a prosecuting attorney or the attorney general. This information may also be introduced into evidence or disclosed when and in the manner authorized by section 1181.25 of the Revised Code.

(D) All application information, except social security numbers, employer identification numbers, financial account numbers, the identity of the institution where financial accounts are maintained, personal financial information, fingerprint cards and the information contained on such cards, and criminal background information, is a public record as defined in section 149.43 of the Revised Code.

(E) This section does not prevent the division of financial institutions from releasing to or exchanging with other financial institution regulatory authorities information relating to registrants and licensees. For this purpose, a "financial institution regulatory authority" includes a regulator of a business activity in which a registrant or licensee is engaged, or has applied to engage in, to the extent that the regulator has jurisdiction over a registrant or licensee engaged in that business activity. A registrant or licensee is engaged in a business activity, and a regulator of that business activity has jurisdiction over the registrant or licensee, whether the registrant or licensee conducts the activity directly or a subsidiary or affiliate of the registrant or licensee conducts the activity.

(1) Any confidentiality or privilege arising under federal or state law with respect to any information or material provided to the nationwide mortgage licensing system and registry shall continue to apply to the information or material after the information or material has been provided to the nationwide mortgage licensing system and registry. The information and material so provided may be shared with all state and federal regulatory officials with mortgage industry oversight authority without the loss of confidentiality or privilege protections provided by federal law or the law of any state. Information or material described in division (E)(1) of this section to which confidentiality or privilege applies shall not be subject to any of the following:

(a) Disclosure under any federal or state law governing disclosure to the public of information held by an officer or an agency of the federal government or of the respective state;

(b) Subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless the person to whom such information or material pertains waives, in whole or in part and at the discretion of the person, any privilege held by the nationwide mortgage licensing system and registry with respect to that information or material.

(2) The superintendent, in order to promote more effective regulation and reduce regulatory burden through supervisory information sharing, may enter into sharing arrangements with other governmental agencies, the conference of state bank supervisors, and the American association of residential mortgage regulators.

(3) Any state law, including section 149.43 of the Revised Code, relating to the disclosure of confidential supervisory information or any information or material described in division (C)(1) or (E)(1) of this section that is inconsistent with this section shall be superseded by the requirements of this section.

(F) This section shall not apply with respect to information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, mortgage loan originators that is included in the nationwide mortgage licensing system and registry for access by the public.

(G) This section does not prevent the division from releasing information relating to registrants and licensees to the attorney general, to the superintendent of real estate and professional licensing for purposes relating to the administration of Chapters 4735. and 4763. of the Revised Code, to the superintendent of insurance for purposes relating to the administration of Chapter 3953. of the Revised Code, to the commissioner of securities for purposes relating to the administration of Chapter 1707. of the Revised Code, or to local law enforcement agencies and local prosecutors. Information the division releases pursuant to this section remains confidential.

(H) The superintendent of financial institutions shall, by rule adopted in accordance with Chapter 119. of the Revised Code, establish a process by which mortgage loan originators may challenge information provided to the nationwide mortgage licensing system and registry by the superintendent.

(I) No person, in connection with any examination or investigation conducted by the superintendent under sections 1321.51 to 1321.60 of the Revised Code, shall knowingly do any of the following:

(1) Circumvent, interfere with, obstruct, or fail to cooperate, including making a false or misleading statement, failing to produce records, or intimidating or suborning any witness;

(2) Withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information;

(3) Tamper with, alter, or manufacture any evidence.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 06-18-2002

1321.551 Evading second mortgage loan requirements.

(A) No registrant shall conduct the business of making loans under sections 1321.51 to 1321.60 of the Revised Code in any office, room, or place of business in which any other business is solicited or engaged in, or in association or conjunction with any other such business, if the superintendent of financial institutions finds, pursuant to a hearing conducted in accordance with Chapter 119. of the Revised Code, that the other business is of such a nature that the conduct tends to conceal evasion of sections 1321.51 to 1321.60 of the Revised Code or of the rules adopted under those sections, and orders the registrant in writing to desist from the conduct.

(B) The business of a mortgage loan originator shall principally be transacted at an office of the registrant with whom the licensee is employed or associated, which office is registered, if applicable, in accordance with division (A)(1) of section 1321.52 of the Revised Code. Each original mortgage loan originator license shall be deposited with and maintained at the registrant's main office. A copy of the mortgage loan originator license shall be maintained and displayed at the office where the mortgage loan originator principally transacts business.

(C) If a mortgage loan originator's employment or association is terminated for any reason, the registrant shall return the original mortgage loan originator license to the superintendent within five business days after the termination. The licensee may request the transfer of the license to another registrant by submitting a transfer application, along with a fifteen dollar fee and any fee required by the national mortgage licensing system and registry, to the superintendent, or may request in writing that the superintendent hold the license in escrow. A licensee whose license is held in escrow shall cease activity as a mortgage loan originator. A licensee whose license is held in escrow shall be required to apply for renewal annually and to comply with the annual continuing education requirement.

(D) A registrant may employ or be associated with a mortgage loan originator on a temporary basis pending the transfer of the mortgage loan originator's license to the registrant, if the registrant receives written confirmation from the superintendent that the mortgage loan originator is licensed under sections 1321.51 to 1321.60 of the Revised Code.

(E) Notwithstanding divisions (B), (C), and (D) of this section, if a mortgage loan originator is employed by or associated with a person claiming an exemption under division (D) of section 1321.53 of the Revised Code, the mortgage loan originator shall maintain and display the original mortgage loan originator license at the office where the mortgage loan originator principally transacts business.

If the mortgage loan originator's employment or association is terminated for any reason, the licensee shall return the original mortgage loan originator license to the superintendent within five business days after the termination. The licensee may request the transfer of the license to amortgage broker or other person claiming an exemption under division (D) of section 1321.53 of the Revised Code by submitting a transfer application, along with a fifteen dollar fee and any fee required by the national mortgage licensing system and registry, to the superintendent, or may request the superintendent in writing to hold the license in escrow. A licensee whose license is held in escrow shall cease activity as a mortgage loan originator. A licensee whose license is held in escrow shall be required to apply for renewal annually and to comply with the annual continuing education requirement.

The licensee may seek to be employed or associated with a mortgage broker or other person claiming an exemption under division (D) of section 1321.53 of the Revised Code if the mortgage broker or person receives written confirmation from the superintendent that the mortgage loan originator is licensed under sections 1321.51 to 1321.60 of the Revised Code.

(F) No registrant, through its managers or otherwise, shall fail to do either of the following:

(1) Reasonably supervise mortgage loan originators or other persons employed by or associated with the registrant;

(2) Establish reasonable procedures designed to avoid violations of sections 1321.51 to 1321.60 of the Revised Code or rules adopted thereunder, or violations of applicable state and federal consumer and lending laws or rules, by mortgage loan originators or other persons employed by or associated with the registrant.

(G) A license, or the authority granted under that license, is not assignable and cannot be franchised by contract or any other means.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 09-26-1996

1321.552 Adoption of rules.

(A) Notwithstanding any provision of sections 1321.51 to 1321.60 of the Revised Code, or any rule adopted thereunder, if the "Secure and Fair Enforcement for Mortgage Licensing Act of 2008," 122 Stat. 2810, 12 U.S.C. 5101 , as amended, is modified after the effective date of this section, or any regulation, statement, or position is adopted under that act, and the item modified or adopted affects any matter within the scope of sections 1321.51 to 1321.60 of the Revised Code, the superintendent of financial institutions may by rule adopt a similar provision.

(B) The superintendent shall adopt the rules authorized by this section in accordance with section 111.15 of the Revised Code. Chapter 119. of the Revised Code does not apply to rules adopted under the authority of this section.

(C) A rule adopted by the superintendent under the authority of this section is effective on the later of the following dates:

(1) The date the superintendent issues the rule;

(2) The date the regulation, rule, interpretation, procedure, or guideline the superintendent's rule is based on becomes effective.

(D) The superintendent may, upon thirty days' written notice, revoke any rule adopted under the authority of this section. A rule adopted under the authority of this section, and not revoked by the superintendent, lapses and has no further force and effect eighteen months after the rule's effective date.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.56 Forfeiting interest.

Any person who willfully violates section 1321.57 of the Revised Code shall forfeit to the borrower the amount of interest paid by the borrower. The maximum rate of interest applicable to any loan transaction that does not comply with section 1321.57 of the Revised Code shall be the rate that would be applicable in the absence of sections 1321.51 to 1321.60 of the Revised Code.

Effective Date: 06-13-1996

1321.57 Computation of interest.

(A) Notwithstanding any other provisions of the Revised Code, a registrant may contract for and receive interest, calculated according to the actuarial method, at a rate or rates not exceeding twenty-one per cent per year on the unpaid principal balances of the loan. Loans may be interest-bearing or precomputed.

(B) For purposes of computation of time on interest-bearing and precomputed loans, including, but not limited to, the calculation of interest, a month is considered one-twelfth of a year, and a day is considered one three hundred sixty-fifth of a year when calculation is made for a fraction of a month. A year is as defined in section 1.44 of the Revised Code. A month is that period described in section 1.45 of the Revised Code. Alternatively, a registrant may consider a day as one three hundred sixtieth of a year and each month as having thirty days.

(C) With respect to interest-bearing loans:

(1)

(a) Interest shall be computed on unpaid principal balances outstanding from time to time, for the time outstanding.

(b) As an alternative to the method of computing interest set forth in division (C)(1)(a) of this section, a registrant may charge and collect interest for the first installment period based on elapsed time from the date of the loan to the first scheduled payment due date, and for each succeeding installment period from the scheduled payment due date to the next scheduled payment due date, regardless of the date or dates the payments are actually made.

(c) Whether a registrant computes interest pursuant to division (C)(1)(a) or (b) of this section, each payment shall be applied first to unpaid charges, then to interest, and the remainder to the unpaid principal balance. However, if the amount of the payment is insufficient to pay the accumulated interest, the unpaid interest continues to accumulate to be paid from the proceeds of subsequent payments and is not added to the principal balance.

(2) Interest shall not be compounded, collected, or paid in advance. However, both of the following apply:

(a) Interest may be charged to extend the first monthly installment period by not more than fifteen days, and the interest charged for the extension may be added to the principal amount of the loan.

(b) If part or all of the consideration for a new loan contract is the unpaid principal balance of a prior loan, the principal amount payable under the new loan contract may include any unpaid interest that has accrued. The resulting loan contract shall be deemed a new and separate loan transaction for purposes of this section. The unpaid principal balance of a precomputed loan is the balance due after refund or credit of unearned interest as provided in division (D)(3) of this section.

(D) With respect to precomputed loans:

(1) Loans shall be repayable in monthly installments of principal and interest combined, except that the first installment period may exceed one month by not more than fifteen days, and the first installment payment amount may be larger than the remaining payments by the amount of interest charged for the extra days; and provided further that monthly installment payment dates may be omitted to accommodate borrowers with seasonal income.

(2) Payments may be applied to the combined total of principal and precomputed interest until maturity of the loan. A registrant may charge interest after the original or deferred maturity of a precomputed loan at the rate specified in division (A) of this section on all unpaid principal balances for the time outstanding.

(3) When any loan contract is paid in full by cash, renewal, refinancing, or a new loan, one month or more before the final installment due date, the registrant shall refund, or credit the borrower with, the total of the applicable charges for all fully unexpired installment periods, as originally scheduled or as deferred, that follow the day of prepayment. If the prepayment is made other than on a scheduled installment due date, the nearest scheduled installment due date shall be used in such computation. If the prepayment occurs prior to the first installment due date, the registrant may retain one-thirtieth of the applicable charge for a first installment period of one month for each day from date of loan to date of prepayment, and shall refund, or credit the borrower with, the balance of the total interest contracted for. If the maturity of the loan is accelerated for any reason and judgment is entered, the registrant shall credit the borrower with the same refund as if prepayment in full had been made on the date the judgment is entered.

(4) If the parties agree in writing, either in the loan contract or in a subsequent agreement, to a deferment of wholly unpaid installments, a registrant may grant a deferment and may collect a deferment charge as provided in this section. A deferment postpones the scheduled due date of the earliest unpaid installment and all subsequent installments as originally scheduled, or as previously deferred, for a period equal to the deferment period. The deferment period is that period during which no installment is scheduled to be paid by reason of the deferment. The deferment charge for a one-month period may not exceed the applicable charge for the installment period immediately following the due date of the last undeferred installment. A proportionate charge may be made for deferment for periods of more or less than one month. A deferment charge is earned pro rata during the deferment period and is fully earned on the last day of the deferment period. If a loan is prepaid in full during a deferment period, the registrant shall make, or credit to the borrower, a refund of the unearned deferment charge in addition to any other refund or credit made for prepayment of the loan in full.

(E) A registrant, at the request of the borrower, may obtain, on one or more borrowers, credit life insurance, credit accident and health insurance, and unemployment insurance. The premium or identifiable charge for the insurance may be included in the principal amount of the loan and may not exceed the premium rate filed by the insurer with the superintendent of insurance and not disapproved by the superintendent. If a registrant obtains the insurance at the request of the borrower, the borrower shall have the right to cancel the insurance for a period of twenty-five days after the loan is made. If the borrower chooses to cancel the insurance, the borrower shall give the registrant written notice of this choice and shall return all of the policies or certificates of insurance or notices of proposed insurance to the registrant during such period, and the full premium or identifiable charge for the insurance shall be refunded to the borrower by the registrant. If the borrower requests, in the notice to cancel the insurance, that this refund be applied to reduce the balance of a precomputed loan, the registrant shall credit the amount of the refund plus the amount of interest applicable to the refund to the loan balance.

If the registrant obtains the insurance at the request of the borrower, the registrant shall not charge or collect interest on any insured amount that remains unpaid after the insured borrower's date of death.

(F) A registrant may require the borrower to provide insurance or a loss payable endorsement covering reasonable risks of loss, damage, and destruction of property used as security for the loan and with the consent of the borrower such insurance may cover property other than that which is security for the loan. The amount and term of required property insurance shall be reasonable in relation to the amount and term of the loan contract and the type and value of the security, and the insurance shall be procured in accordance with the insurance laws of this state. The purchase of this insurance through the registrant or an agent or broker designated by the registrant shall not be a condition precedent to the granting of the loan. If the borrower purchases the insurance from or through the registrant or from another source, the premium may be included in the principal amount of the loan.

(G) On loans secured by an interest in real estate, all of the following apply:

(1) A registrant, if not prohibited by section 1343.011 of the Revised Code, may charge and receive up to two points, and a prepayment penalty not in excess of one per cent of the original principal amount of the loan. Points may be paid by the borrower at the time of the loan or may be included in the principal amount of the loan. On a refinancing, a registrant may not charge under division (G)(1) of this section either of the following:

(a) Points on the portion of the principal amount that is applied to the unpaid principal amount of the refinanced loan, if the refinancing occurs within one year after the date of the refinanced loan on which points were charged;

(b) A prepayment penalty.

(2) As an alternative to the prepayment penalty described in division (G)(1) of this section, a registrant may contract for, charge, and receive the prepayment penalty described in division (G)(2) of this section for the prepayment of a loan prior to two years after the date the loan contract is executed. This prepayment penalty shall not exceed two per cent of the original principal amount of the loan if the loan is paid in full prior to one year after the date the loan contract is executed. The penalty shall not exceed one per cent of the original principal amount of the loan if the loan is paid in full at any time from one year, but prior to two years, after the date the loan contract is executed. A registrant shall not charge or receive a prepayment penalty under division (G)(2) of this section if any of the following applies:

(a) The loan is a refinancing by the same registrant or a registrant to whom the loan has been assigned;

(b) The loan is paid in full as a result of the sale of the real estate that secures the loan;

(c) The loan is paid in full with the proceeds of an insurance claim against an insurance policy that insures the life of the borrower or an insurance policy that covers loss, damage, or destruction of the real estate that secures the loan.

(3) Division (G) of this section is not a limitation on discount points or other charges for purposes of section 501(b)(4) of the "Depository Institutions Deregulation and Monetary Control Act of 1980," 94 Stat. 161, 12 U.S.C.A. 1735f-7 note.

(H)

(1) In addition to the interest and charges provided for by this section, no further or other amount, whether in the form of broker fees, placement fees, or any other fees whatsoever, shall be charged or received by the registrant, except costs and disbursements in connection with any suit to collect a loan or any lawful activity to realize on a security interest or mortgage after default, including reasonable attorney fees incurred by the registrant as a result of the suit or activity and to which the registrant becomes entitled by law, and except the following additional charges which may be included in the principal amount of the loan or collected at any time after the loan is made:

(a) The amounts of fees authorized by law to record, file, or release security interests and mortgages on a loan;

(b) With respect to a loan secured by an interest in real estate, the following closing costs, if they are bona fide, reasonable in amount, paid to third parties, and not for the purpose of circumvention or evasion of this section:

(i) Fees or premiums for title examination, abstract of title, title insurance, surveys, title endorsements, title binders, title commitments, home inspections, or pest inspections; settlement or closing costs paid to unaffiliated third parties; courier fees; and any federally mandated flood plain certification fee;

(ii) If not paid to the registrant, an employee of the registrant, or a person affiliated with the registrant, fees for preparation of a mortgage, settlement statement, or other documents, fees for notarizing mortgages and other documents, appraisal fees, and fees for any federally mandated inspection of home improvement work financed by a second mortgage loan;

(c) Fees for credit investigations not exceeding ten dollars.

(2) Division (H)(1) of this section does not limit the rights of registrants to engage in other transactions with borrowers, provided the transactions are not a condition of the loan.

(I) If the loan contract or security instrument contains covenants by the borrower to perform certain duties pertaining to insuring or preserving security and the registrant pursuant to the loan contract or security instrument pays for performance of the duties on behalf of the borrower, the registrant may add the amounts paid to the unpaid principal balance of the loan or collect them separately. A charge for interest may be made for sums advanced not exceeding the rate of interest permitted by division (A) of this section. Within a reasonable time after advancing a sum, the registrant shall notify the borrower in writing of the amount advanced, any interest charged with respect to the amount advanced, any revised payment schedule, and shall include a brief description of the reason for the advance.

(J)

(1) In addition to points authorized under division (G) of this section, a registrant may charge and receive the following:

(a) With respect to loans secured by goods or real estate: if the principal amount of the loan is five hundred dollars or less, loan origination charges not exceeding fifteen dollars; if the principal amount of the loan is more than five hundred dollars but less than one thousand dollars, loan origination charges not exceeding thirty dollars; if the principal amount of the loan is at least one thousand dollars but less than two thousand dollars, loan origination charges not exceeding one hundred dollars; if the principal amount of the loan is at least two thousand dollars but less than five thousand dollars, loan origination charges not exceeding two hundred dollars; and if the principal amount of the loan is at least five thousand dollars, loan origination charges not exceeding the greater of two hundred fifty dollars or one per cent of the principal amount of the loan.

(b) With respect to loans that are not secured by goods or real estate: if the principal amount of the loan is five hundred dollars or less, loan origination charges not exceeding fifteen dollars; if the principal amount of the loan is more than five hundred dollars but less than one thousand dollars, loan origination charges not exceeding thirty dollars; if the principal amount of the loan is at least one thousand dollars but less than five thousand dollars, loan origination charges not exceeding one hundred dollars; and if the principal amount of the loan is at least five thousand dollars, loan origination charges not exceeding the greater of two hundred fifty dollars or one per cent of the principal amount of the loan.

(2) If a refinancing occurs within ninety days after the date of the refinanced loan, a registrant may not impose loan origination charges on the portion of the principal amount that is applied to the unpaid principal amount of the refinanced loan.

(3) Loan origination charges may be paid by the borrower at the time of the loan or may be included in the principal amount of the loan.

(K) A registrant may charge and receive check collection charges not greater than twenty dollars plus any amount passed on from other depository institutions for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason.

(L) If the loan contract so provides, a registrant may collect a default charge on any installment not paid in full within ten days after its due date. For this purpose, all installments are considered paid in the order in which they become due. Any amounts applied to an outstanding loan balance as a result of voluntary release of a security interest, sale of security on the loan, or cancellation of insurance shall be considered payments on the loan, unless the parties otherwise agree in writing at the time the amounts are applied. The amount of the default charge shall not exceed the greater of five per cent of the scheduled installment or fifteen dollars.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000; 01-01-2007

1321.571 Agreement or consent for alternative interest rate.

As an alternative to the interest permitted in division (A) of section 1321.57 and in division (B) of section 1321.58 of the Revised Code, a registrant may contract for and receive interest at any rate or rates agreed upon or consented to by the parties to the loan contract or open-end loan agreement, but not exceeding an annual percentage rate of twenty-five per cent.

Effective Date: 02-11-1982

1321.58 Open-end loans by registrant - interest - charges.

(A) A registrant may make open-end loans pursuant to an agreement between the registrant and the borrower whereby:

(1) The registrant may permit the borrower to obtain advances of money from the registrant from time to time or the registrant may advance money on behalf of the borrower from time to time as directed by the borrower.

(2) The amount of each advance and permitted interest, charges, and costs are debited to the borrower's account and payments and other credits are credited to the same account.

(3) The interest and charges are computed on the unpaid balance or balances of the account from time to time.

(4) The borrower has the privilege of paying the account in full at any time or, if the account is not in default, in installments of determinable amounts as provided in the agreement.

For open-end loans, "billing cycle" means the time interval between periodic billing dates. A billing cycle shall be considered monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from such date.

(B) Notwithstanding any other provisions of the Revised Code, a registrant may contract for and receive interest for open-end loans at a rate or rates not exceeding twenty-one per cent per year and may compute interest in each billing cycle by either of the following methods:

(1) By multiplying the daily rate by the daily unpaid balance of the account, in which case the daily rate is determined by dividing the annual rate by three hundred sixty-five;

(2) By multiplying the monthly rate by the average daily unpaid balance of the account in the billing cycle, in which case the average daily unpaid balance is the sum of all of the daily unpaid balances each day during the cycle divided by the number of days in the cycle. The monthly rate is determined by dividing the annual rate by twelve.

The billing cycle shall be monthly and the unpaid balance on any day shall be determined by adding to any balance unpaid as of the beginning of that day all advances and permitted interest, charges, and costs and deducting all payments and other credits made or received that day.

(C) In addition to the interest permitted in division (B) of this section, a registrant may charge and receive or add to the unpaid balance any or all of the following:

(1) All charges and costs authorized by divisions (E), (F), (G), (H), (I), and (K) of section 1321.57 of the Revised Code;

(2) An annual credit line charge, for the privilege of maintaining a line of credit, as follows:

(a) For the first year:

(i) If the original credit line is less than five thousand dollars, an amount not exceeding one hundred fifty dollars;

(ii) If the original credit line is at least five thousand dollars, an amount not exceeding the greater of one per cent of the original credit line or two hundred fifty dollars.

(b) For subsequent years an amount not exceeding the greater of one-half per cent of the credit line on the anniversary date or fifty dollars.

(3) A default charge on any required minimum payment not paid in full within ten days after its due date. For this purpose, all required minimum payments are considered paid in the order in which they become due. The amount of the default charge shall not exceed the greater of five per cent of the required minimum payment or fifteen dollars.

(D) The borrower at any time may pay all or any part of the unpaid balance on the account or, if the account is not in default, the borrower may pay the unpaid balance in installments subject to minimum payment requirements as determined by the registrant and set forth in the open-end loan agreement.

(E) If credit life insurance or credit accident and health insurance is obtained by the registrant and if the insured dies or becomes disabled when there is an outstanding open-end loan indebtedness, the insurance shall be sufficient to pay the unpaid balance on the loan due on the date of the borrower's death in the case of credit life insurance or all minimum payments that become due on the loan during the covered period of disability in the case of credit accident and health insurance. The additional charge for credit life insurance, credit accident and health insurance, or unemployment insurance shall be calculated each billing cycle by applying the current monthly premium rate for the insurance, filed by the insurer with the superintendent of insurance and not disapproved by the superintendent, to the unpaid balances in the borrower's account, using one of the methods specified in division (B) of this section for the calculation of interest. No credit life insurance, credit accident and health insurance, or unemployment insurance written in connection with an open-end loan shall be canceled by the registrant because of delinquency of the borrower in making the required minimum payments on the loan unless one or more such payments is past due for a period of thirty days or more. The registrant shall advance to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited to the borrower's account.

(F) Whenever there is no unpaid balance in an open-end loan account, the account may be terminated by written notice, by the borrower or the registrant, to the other party. If a registrant has taken a mortgage on real property to secure the open-end loan, the registrant shall deliver, within thirty days following termination of the account, a release of the mortgage to the borrower. If a registrant has taken a security interest in personal property to secure the open-end loan, the registrant shall release the security interest and terminate any financing statement in accordance with section 1309.513 of the Revised Code.

Effective Date: 07-01-2001

1321.59 Prohibited acts.

(A) No registrant under sections 1321.51 to 1321.60 of the Revised Code shall permit any borrower to be indebted for a loan made under sections 1321.51 to 1321.60 of the Revised Code at any time while the borrower is also indebted to an affiliate or agent of the registrant for a loan made under sections 1321.01 to 1321.19 of the Revised Code for the purpose or with the result of obtaining greater charges than otherwise would be permitted by sections 1321.51 to 1321.60 of the Revised Code.

(B) No registrant shall induce or permit any person to become obligated to the registrant under sections 1321.51 to 1321.60 of the Revised Code, directly or contingently, or both, under more than one contract of loan at the same time for the purpose or with the result of obtaining greater charges than would otherwise be permitted by sections 1321.51 to 1321.60 of the Revised Code.

(C) No registrant shall refuse to provide information regarding the amount required to pay in full a loan under sections 1321.51 to 1321.60 of the Revised Code when requested by the borrower or by another person designated in writing by the borrower.

(D) On any loan or application for a loan under sections 1321.51 to 1321.60 of the Revised Code secured by a mortgage on a borrower's real estate which is other than a first lien on the real estate, no person shall pay or receive, directly or indirectly, fees or any other type of compensation for services of a mortgage broker that, in the aggregate, exceed the lesser of one thousand dollars or one per cent of the principal amount of the loan.

(E) No registrant or licensee shall obtain a certificate of registration or license through any false or fraudulent representation of a material fact or any omission of a material fact required by state or federal law, or make any substantial misrepresentation in the registration or license application, to engage in lending secured by real estate.

(F) No registrant or licensee, in connection with the business of making or offering to make residential mortgage loans, shall knowingly make false or misleading statements of a material fact, omissions of statements required by state or federal law, or false promises regarding a material fact, through advertising or other means, or engage in a continued course of misrepresentations.

(G) No registrant, licensee, or person making loans without a certificate of registration in violation of division (A) of section 1321.52 of the Revised Code, shall knowingly engage in conduct, in connection with the business of making or offering to make residential mortgage loans, that constitutes improper, fraudulent, or dishonest dealings.

(H) No registrant, licensee, or applicant involved in the business of making or offering to make residential mortgage loans shall fail to notify the division of financial institutions within thirty days after knowing any of the following:

(1) That the registrant, licensee, or applicant has been convicted of or pleaded guilty or nolo contendere to a felony offense in a domestic, foreign, or military court;

(2) That the registrant, licensee, or applicant has been convicted of or pleaded guilty or nolo contendere to any criminal offense involving theft, receiving stolen property, embezzlement, forgery, fraud, passing bad checks, money laundering, breach of trust, dishonesty, or drug trafficking, or any criminal offense involving money or securities, in a domestic, foreign, or military court;

(3) That the registrant, licensee, or applicant has had a mortgage lender registration or mortgage loan originator license, or comparable authority, revoked in any governmental jurisdiction.

(I) No registrant or licensee shall knowingly make, propose, or solicit fraudulent, false, or misleading statements on any mortgage document or on any document related to a mortgage loan, including a mortgage application, real estate appraisal, or real estate settlement or closing document. For purposes of this division, "fraudulent, false, or misleading statements" does not include mathematical errors, inadvertent transposition of numbers, typographical errors, or any other bona fide error.

(J) No registrant or licensee shall knowingly instruct, solicit, propose, or otherwise cause a borrower to sign in blank a loan related document in connection with a residential mortgage loan.

(K) No registrant or licensee shall knowingly compensate, instruct, induce, coerce, or intimidate, or attempt to compensate, instruct, induce, coerce, or intimidate, a person licensed or certified as an appraiser under Chapter 4763. of the Revised Code for the purpose of corrupting or improperly influencing the independent judgment of the person with respect to the value of the dwelling offered as security for repayment of a mortgage loan.

(L) No registrant or licensee shall willfully retain original documents provided to the registrant or licensee by the borrower in connection with the residential mortgage loan application, including income tax returns, account statements, or other financial related documents.

(M) No registrant or licensee shall, in connection with making residential mortgage loans, receive, directly or indirectly, a premium on the fees charged for services performed by a bona fide third party.

(N) No registrant or licensee shall, in connection with making residential mortgage loans, pay or receive, directly or indirectly, a referral fee or kickback of any kind to or from a bona fide third party or other party with a related interest in the transaction, including a home improvement builder, real estate developer, or real estate broker or agent, for the referral of business. Nothing in this division shall prevent remuneration to a registrant or licensee for the licensed sale of any insurance product that is permitted under section 1321.57 of the Revised Code, provided there is no additional fee or premium added to the cost for the insurance and paid directly or indirectly by the borrower.

(O) No registrant, licensee, or person making loans without a certificate of registration in violation of division (A) of section 1321.52 of the Revised Code shall, in connection with making or offering to make residential mortgage loans, engage in any unfair, deceptive, or unconscionable act or practice prohibited under sections 1345.01 to 1345.13 of the Revised Code.

Amended by 128th General AssemblyFile No.17, SB 124, §1, eff. 12/28/2009.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 06-13-1996

1321.591 Compliance with Fair Debt Collection Practices Act.

No registrant or licensee shall fail to follow the practices set forth in the federal "Fair Debt Collection Practices Act," 91 Stat. 874, 15 U.S.C. 1692 , as amended, notwithstanding the fact that the registrant or licensee is seeking to collect upon the registrant's own debt.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.592 Disclosure to borrower.

(A) In connection with providing a non-brokered loan secured by a lien on real property, a registrant or licensee shall, not earlier than three business days nor later than twenty-four hours before the loan is closed, deliver to the borrower a written disclosure that includes the following:

(1) A statement indicating whether property taxes or any insurance will be escrowed;

(2) A description of what is covered by the regular monthly payment, including principal, interest, taxes, and insurance, as applicable.

(B) If a residential mortgage loan applied for will exceed ninety per cent of the value of the real property, the registrant shall provide a statement to the borrower within three business days after taking the loan application, printed in boldface type of the minimum size of sixteen points, as follows: "You are applying for a loan that is more than 90% of your home's value. Itwill be hard for you to refinance this loan. If you sell your home, you might owe more money on the loan than you get from the sale."

(C) No registrant or licensee shall fail to comply with this section.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.593 Duties and standards of care.

(A) A registrant, licensee, and any person required to be registered or licensed under sections 1321.51 to 1321.60 of the Revised Code shall, in connection with the business of making or offering to make residential mortgage loans, do all of the following:

(1) Safeguard and account for any money handled for the borrower;

(2) Follow reasonable and lawful instructions from the borrower;

(3) Act with reasonable skill, care, and diligence;

(4) Act in good faith and with fair dealing in any transaction, practice, or course of business in connection with making or originating any residential mortgage loan under sections 1321.51 to 1321.60 of the Revised Code.

(B) Division (A) of this section shall not apply to wholesale lenders. However, wholesale lender registrants are subject to all other requirements applicable to registrants. For purposes of this division, "wholesale lender" means a company that has been issued a certificate of registration and that enters into transactions with borrowers exclusively through unaffiliated third-party mortgage brokers or lenders.

(C) The duties and standards of care created in this section cannot be waived or modified.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.594 Disclosure regarding material changes.

(A) In connection with making a non-brokered residential mortgage, no registrant or licensee shall fail to do either of the following:

(1) Timely inform the borrower of any material change in the terms of the residential mortgage loan. For purposes of division (A) (1) of this section, "material change" means the following:

(a) A change in the type of residential mortgage loan being offered, such as a fixed or variable rate loan or a loan with a balloon payment;

(b) A change in the term of the loan, as reflected in the number of monthly payments due before a final payment is scheduled to be made;

(c) A change in the interest rate of more than 0.15 %;

(d) A change in the regular total monthly payment, including principal, interest, any required mortgage insurance, and any escrowed taxes or property insurance, of more than five per cent;

(e) A change regarding whether the escrow of taxes or insurance will be required;

(f) A change regarding whether private mortgage insurance will be required.

(2) Timely inform the borrower if any fees payable by the borrower to the licensee, registrant, or lender increase by more than ten per cent or one hundred dollars, whichever is greater.

(B) The disclosures required by this section shall be deemed timely if the registrant or licensee provides the borrower with the revised information not later than the time requirement imposed by 12 C.F.R. 226.19(a)(2) and (3) , as those provisions of federal law exist on July 31, 2009.

(C) If an increase in the total amount of the fee to be paid by the borrower to the registrant or licensee is not disclosed in accordance with division (A)(2) of this section, the registrant or licensee shall refund to the borrower the amount by which the fee was increased. If the fee is financed into the loan, the registrant or licensee shall also refund to the borrower the interest that would accrue over the term of the loan on that excess amount.

Added by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

1321.60 Advertising for loans.

(A)

(1) Advertising for loans subject to sections 1321.51 to 1321.60 of the Revised Code shall not be false, misleading, or deceptive.

(2) False, misleading, or deceptive advertising includes, but is not limited to, the following:

(a) Placing, or causing to be placed, any advertisement indicating that special terms, reduced rates, guaranteed rates, particular rates, or any other special feature of mortgage loans is available unless the advertisement clearly states any limitations that apply;

(b) Placing, or causing to be placed, any advertisement containing a rate or special fee offer that is not a bona fide available rate or fee.

(B) In making any advertisement, a registrant shall comply with 12 C.F.R. 226.16 , as amended.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 06-13-1996

1321.71 Insurance premium finance company definitions.

As used in sections 1321.71 to 1321.83 of the Revised Code:

(A) "Annual percentage rate" means the ratio of the finance charges, as authorized by sections 1321.79 and 1321.791 of the Revised Code, on a loan to the unpaid principal balance on the loan for any period of time, expressed on an annual basis.

(B) "Insurance premium finance company" or "premium finance company" means a person engaged in the business of entering into or otherwise acquiring premium finance agreements.

(C) "Person" means any individual, partnership, association, trust, corporation, or other legal entity.

(D) "Premium finance agreement" means an agreement by which an insured or prospective insured promises to pay a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or broker in payment of premiums on an insurance contract together with a finance charge as authorized and limited by sections 1321.71 to 1321.83 of the Revised Code.

(E) "License" means a license issued by the division of financial institutions under sections 1321.71 to 1321.83 of the Revised Code.

(F) "Licensee" means a premium finance company holding a license.

(G) "Superintendent of financial institutions" includes the deputy superintendent for consumer finance as provided in section 1181.21 of the Revised Code.

Effective Date: 09-26-1996

1321.72 Exemptions from provisions.

Except as provided in division (D) of section 1321.78 , sections 1321.71 to 1321.83 of the Revised Code do not apply with respect to any of the following:

(A) Life, property, or casualty insurance companies authorized to do business in this state as to policies issued by those companies;

(B) The inclusion of a charge for insurance in connection with any installment transaction pursuant to Chapter 1317. of the Revised Code;

(C) The financing of insurance premiums at a rate of interest not exceeding the maximum rate permitted by section 1343.01 of the Revised Code;

(D) Persons lawfully doing business under the authority of any law of this state, another state, or the United States relating to banks, savings banks, trust companies, savings and loan associations, lenders authorized to make loans pursuant to sections 1321.01 to 1321.19 of the Revised Code, lenders authorized to make loans pursuant to sections 1321.51 to 1321.60 of the Revised Code, or any credit union;

(E) Any person who purchases or otherwise acquires a premium finance agreement from a licensee if the licensee remains responsible for collecting payments due under the agreement, and for otherwise servicing the agreement, in compliance with sections 1321.71 to 1321.83 of the Revised Code.

Effective Date: 06-13-1996; 2008 HB404 09-11-2008

1321.73 License - annual fee - proof of net worth.

(A) No person shall engage in the business of entering into or otherwise acquiring premium finance agreements in the state without first having obtained a license as a premium finance company from the division of financial institutions.

(B) The annual license fee shall be determined by the superintendent of financial institutions pursuant to section 1321.20 of the Revised Code. Licenses may be renewed from year to year as of the first day of July of each year upon payment of the fee.

(C) The person to whom the license or the renewal thereof is issued shall file sworn answers, subject to the penalties of perjury, to such interrogatories as the division requires. The division may, at any time, require the applicant to fully disclose the identity of all stockholders, partners, officers, and employees, and it may, at its discretion, refuse to issue or renew a license in the name of any firm, partnership, or corporation if it is not satisfied that any officer, employee, stockholder, or partner thereof, who may materially influence the applicant's conduct, meets the standards provided by sections 1321.71 to 1321.83 of the Revised Code.

(D) Each applicant shall execute and file with the division proof that the applicant has a net worth of at least fifty thousand dollars, as determined in accordance with generally accepted accounting principles. The proof is subject to the approval of the division.

Effective Date: 09-26-1996

1321.74 Application for license as premium finance company.

(A) Application for a license as a premium finance company shall be in writing, under oath, in the form prescribed by the division of financial institutions. An applicant also shall provide the form of premium finance agreement it intends to use in doing business under sections 1321.71 to 1321.83 of the Revised Code. Upon the filing of an application and the payment of the license fee, and upon deposit of an investigation fee not to exceed three hundred dollars if the investigation can be conducted in this state or the estimated costs of the investigation if it must be conducted outside this state, the division shall make an investigation of each applicant and shall issue a license if the applicant is qualified in accordance with sections 1321.71 to 1321.83 of the Revised Code. An itemized statement of any investigation expenses incurred which the applicant is required to pay shall be furnished the applicant by the division, and only the actual cost of such investigation shall be paid by the applicant, but at no time shall the investigation fee be less than two hundred dollars. If the division does not so find, it shall, within a reasonable period of time after it has received the application, at the request of the applicant, give the applicant opportunity for a hearing conducted in accordance with Chapter 119. of the Revised Code.

(B) The division shall issue or renew a license when it is satisfied that the applicant:

(1) Is competent and trustworthy and intends to act in good faith in the capacity involved by the license applied for;

(2) Has a good business reputation and has had experience, training, or education so as to be qualified in the business for which the license is applied for;

(3) If a corporation, is a corporation incorporated under the laws of this state or is a foreign corporation authorized to transact business in this state;

(4) Has a net worth of at least fifty thousand dollars, as determined in accordance with generally accepted accounting principles;

(5) With respect to the issuance of a license, has filed with the division a form of premium finance agreement that complies with sections 1321.71 to 1321.83 of the Revised Code.

(C) Not more than one place of business shall be maintained under the same license, but the division may issue additional licenses to the same licensee upon compliance with sections 1321.71 to 1321.83 of the Revised Code.

No change in the place of business of a licensee to a location outside the original municipal corporation shall be permitted under the same license without the approval of a new application, the payment of the license fee as determined by the superintendent of financial institutions pursuant to section 1321.20 of the Revised Code, and, if required by the superintendent, the payment of an investigation fee of two hundred dollars. If a licensee wishes to change its place of business within the same municipal corporation, it shall give written notice of the change in advance to the division, which shall provide a license for the new address without cost. If a licensee changes its name, it shall give, prior to entering into or otherwise acquiring premium finance agreements under the new name, written notice of the change to the division, which shall provide a license in the new name, without cost.

Each license shall be kept conspicuously posted in the place of business of the licensee and is not transferable or assignable.

Effective Date: 09-26-1996

1321.75 Revoking or suspending license.

(A) The division of financial institutions may revoke, suspend, or refuse to renew a license of any premium finance company if, after investigation, it appears to the division that:

(1) Any license issued to the company was obtained by fraud;

(2) There was any misrepresentation in the application for the license;

(3) The holder of the license has otherwise shown himself, herself, or itself untrustworthy or incompetent to act as a premium finance company;

(4) The company has violated sections 1321.71 to 1321.83 of the Revised Code.

(B) Before the division revokes, suspends, or refuses to renew the license of any premium finance company, it shall give to the applicant notice and an opportunity for a hearing conducted in accordance with Chapter 119. of the Revised Code. In lieu of revoking or suspending the license for any of the causes enumerated in this section, after notice and an opportunity for a hearing conducted in accordance with Chapter 119. of the Revised Code, the division may subject the company to a penalty of not more than five hundred dollars for each offense when, in its judgment, it finds that the public interest would not be harmed by the continued operations of the company. The amount of any such penalty shall be paid by the company through the office of the division to the treasurer of state to the credit of the consumer finance fund.

(C) The superintendent of financial institutions may investigate alleged violations of sections 1321.71 to 1321.83 of the Revised Code, or the rules adopted thereunder, or complaints concerning any such violation. The superintendent may make application to the court of common pleas for an order enjoining any such violation and, upon a showing by the superintendent that a person has committed, or is about to commit, such a violation, the court shall grant an injunction, restraining order, or other appropriate relief.

(D) In conducting an investigation pursuant to this section, the superintendent may compel, by subpoena, witnesses to testify in relation to any matter over which the superintendent has jurisdiction, and may require the production or photocopying of any book, record, or other document pertaining to such matter. If a person fails to file any statement or report, give testimony, produce any book, record, or other document as required by such a subpoena, permit photocopying of any book, record, or other document subpoenaed, or obey any other order of a subpoena, the court of common pleas of any county in this state, upon application made to it by the superintendent, shall compel obedience by attachment proceedings for contempt, as in the case of disobedience of the requirements of a subpoena issued from the court, or a refusal to testify therein.

(E) If the superintendent determines that a person is engaged in, or is believed to be engaged in, activities that may constitute a violation of sections 1321.71 to 1321.83 of the Revised Code, the superintendent may, after notice and a hearing conducted in accordance with Chapter 119. of the Revised Code, issue a cease and desist order. Such an order shall be enforceable in the court of common pleas.

(F) No licensee or other person is in violation of sections 1321.71 to 1321.83 of the Revised Code for any act taken or omission made in reliance on a written notice, interpretation, or examination report from the division.

Effective Date: 09-26-1996

1321.76 Records.

(A) Each licensee shall keep records of its insurance premium finance transactions conducted under sections 1321.71 to 1321.83 of the Revised Code. Such records shall be maintained separately from any records pertaining to transactions that are not subject to those sections. Each licensee shall preserve its records pertaining to insurance premium finance transactions conducted under sections 1321.71 to 1321.83 of the Revised Code for at least two years after the final entry on such records. Preservation of records by means of accounting systems maintained in whole or in part by mechanical or electronic data processing methods constitutes compliance with this division.

The division of financial institutions for purposes of determining whether a licensee is complying with sections 1321.71 to 1321.83 of the Revised Code, may make or cause to be made an examination of records pertaining to insurance premium finance transactions conducted under those sections.

(B) If a licensee's books, records, data, and other documents are located outside this state, the licensee shall, upon the request of the superintendent of financial institutions, deposit with the division an amount equal to the estimated costs, as determined by the superintendent, of an examination of the licensee conducted outside this state. After the actual costs of the examination have been determined and itemized by the division, the division shall return to the licensee any amount it had deposited in excess of the actual costs.

(C) All information obtained by the superintendent or the superintendent's deputies, examiners, assistants, agents, or clerks by reason of their official position, including information obtained by such persons in the course of examining a licensee or investigating an applicant for a license, is privileged and confidential. All such information shall remain privileged and confidential for all purposes except when, in the opinion of the superintendent, it is necessary for the superintendent and the superintendent's deputies, examiners, assistants, agents, or clerks to take official action in administering and enforcing sections 1321.71 to 1321.83 of the Revised Code or in connection with criminal proceedings. Such information may also be introduced into evidence or disclosed when and in the manner authorized in section 1181.25 of the Revised Code.

(D) This section does not prevent the division from releasing to or exchanging with other financial institution regulatory authorities information relating to licensees.

(E) For purposes of this section, "financial institution regulatory authority" includes a regulator of a business activity in which a licensee is engaged, or has applied to engage in, to the extent that the regulator has jurisdiction over a licensee engaged in that business activity. A licensee is engaged in a business activity, and a regulator of that business activity has jurisdiction over the licensee, whether the licensee conducts the activity directly or a subsidiary or affiliate of the licensee conducts the activity.

Effective Date: 06-18-2002

1321.77 Administrative rules.

The division of financial institutions may adopt, in accordance with Chapter 119. of the Revised Code, rules that are necessary for the enforcement of sections 1321.71 to 1321.83 of the Revised Code and that are consistent with those sections. Each rule shall contain a reference to the section, division, or paragraph of the Revised Code to which it applies. The division shall send by regular mail to each licensee a copy of each rule that is adopted pursuant to this section.

Effective Date: 09-26-1996

1321.78 Premium finance agreement - notice of financing to insurer.

(A) A premium finance agreement shall:

(1) Be dated, signed by the insured, and the printed portion thereof shall be in at least eight-point type;

(2) Contain the name and place of business of the insurance agent or broker negotiating the related insurance contract, the name and residence or the place of business of the insured as specified by him, the name and address of the premium finance company, and a description of the insurance contracts involved and the amount of the premium therefor;

(3) Set forth any charges the premium finance company elects to charge under sections 1321.79 , 1321.791 , and 1321.80 of the Revised Code.

(B) The premium finance company, agent, or agency shall deliver to the insured or send by regular mail to the insured at the address provided in the agreement, a complete copy of the premium finance agreement.

(C) A premium finance company shall give notice of its financing to the insurer not later than the thirtieth day after the date on which the premium financing agreement is accepted by the premium finance company. A notice given under this section shall be effective whether or not the insurer's policy number is set forth in the notice.

(D) Notwithstanding divisions (C) and (D) of section 1321.72 of the Revised Code, in the case of a life insurance policy, any premium finance company shall give notice of its financing to the insurer either prior to the issuance of the life insurance policy if the financing agreement is accepted prior to the issuance of the policy or prior to the completion of the premium financing transaction if the financing agreement is accepted after the issuance of the policy.

(E) If premium financing is used in connection with a life insurance policy, and the premium finance company fails to provide notice of its financing to the insurer pursuant to division (D) of this section, the premium financing agreement is unenforceable as a matter of public policy.

Effective Date: 09-29-1994; 2008 HB404 09-11-2008

1321.79 Finance charge limits.

(A) A premium finance company shall not charge, contract for, receive, or collect a finance charge other than as permitted by sections 1321.71 to 1321.83 of the Revised Code.

(B) The finance charge shall be computed on the balance of the premium due, after subtracting the down payment made by the insured in accordance with the premium finance agreement, from the effective date of the insurance coverage, for which the premium is being advanced, to and including the date when the final installment of the premium finance agreement is payable, without regard to any requirement for installment payments.

(C) The finance charge shall be computed at a maximum rate of twelve dollars per one hundred dollars per year, plus an acquisition charge of twenty dollars per premium finance agreement which need not be refunded upon cancellation or prepayment. However, if the insurance policies described in the premium finance agreement are primarily for other than personal, family, or household purposes, the licensee may contract for and receive any finance charge agreed to in writing by the licensee and the insured.

(D)

(1) Notwithstanding any provision in a premium finance agreement to the contrary, any insured may prepay his obligation under a premium finance agreement in full at any time before the final payment is due. In such event any unearned finance charge shall be refunded by the insurance premium finance company. The amount of any refund shall be calculated in accordance with the rule commonly known as the "rule of 78" or any other method more beneficial to the insured. A refund calculated in accordance with the "rule of 78" shall represent at least as great a proportion of the finance charge, if any, as the sum of the periodic balances at the nearest installment due date to the date on which prepayment is made bears to the sum of all periodic balances under the original schedule of payments in the agreement. If the amount of any refund computed under division (D)(1) of this section is less than three dollars, no refund need be made.

(2) With respect to any premium finance agreement that is cancelled, the unearned finance charge shall be refunded in the same manner as set forth in division (D)(1) of this section. If the balance due on such an agreement is not paid in full, the licensee may earn interest at the rate stated in the agreement until paid in full.

Effective Date: 09-29-1994

1321.791 Agreement or consent for alternative finance charges.

As an alternative to the finance charges permitted by division (C) of section 1321.79 of the Revised Code, a premium finance company may contract for and receive finance charges at any rate or rates agreed upon or consented to by the parties to the premium finance agreement or revolving credit premium finance agreement, but not exceeding an annual percentage rate of twenty-five per cent.

Effective Date: 02-11-1982

1321.80 Delinquency, cancellation and check collection charges.

A premium finance agreement may provide for the payment by the insured of any of the following:

(A) A delinquency charge of not more than five per cent of any installment that is in default for a period of more than five days. If the insurance policies described in the premium finance agreement are primarily for personal, family, or household purposes, the maximum delinquency charge shall be ten dollars.

(B) A cancellation charge of ten dollars when the default results in the cancellation of any insurance contract described in the agreement.

(C) A check collection charge of not more than ten dollars, plus any amount passed on from other financial institutions, for each check, negotiable order of withdrawal, share draft, or other negotiable instrument returned or dishonored for any reason.

Effective Date: 09-29-1994

1321.81 Cancellation of insurance contract - procedure.

(A) When a premium finance agreement contains a power of attorney authorizing the premium finance company to cancel any insurance contract or contracts listed in the agreement, the insurance contract or contracts shall not be cancelled by the premium finance company unless the cancellation is effectuated in accordance with this section.

(B) Not less than ten days' written notice shall be mailed to the insured at his last known mailing address, as shown on the records of the premium finance company, of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such ten-day period.

(C) After expiration of such ten-day period, the premium finance company may cancel, in the name of the insured, such insurance contract or contracts by mailing to the insurer a notice of cancellation, and the insurance contract shall be cancelled as if such notice of cancellation had been submitted by the insured himself, but without requiring the return of the insurance contract or contracts. The premium finance company also shall mail a notice of cancellation to the insured at his last known mailing address, as shown on the records of the premium finance company.

(D) All statutory, regulatory, and contractual restrictions providing that the insurance contract may not be cancelled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under this section. The insurer shall give the prescribed notice in behalf of itself or the insured to any governmental agency, mortgagee, or third party on or before the second business day after the day it receives the notice of cancellation from the premium finance company and shall determine the effective date of cancellation taking into consideration the number of days' notice required to complete the cancellation.

(E) The premium finance company shall retain copies of the notices required under divisions (B) and (C) of this section by placing them in the insured's file or by preserving them in a retrieval system maintained in whole or in part by mechanical or electronic data processing methods.

Effective Date: 09-29-1994

1321.82 Return of gross unearned premium upon cancellation of contract.

(A) Whenever a financed insurance policy is cancelled, the insurer that has been notified pursuant to division (C) of section 1321.78 of the Revised Code shall, not later than sixty days after the date of cancellation, return whatever gross unearned premium is due under the insurance policy to the insurance premium finance company for the account of the insured or insureds. If the insurer returns the unearned premium through the agent or agency writing the insurance, the agent or agency shall remit the premium to the insurance premium finance company within that sixty-day period. If the insurer receives written notice of the failure of the agent or agency to remit the unearned premium, the insurer shall, not later than sixty days after it receives the notice, pay the amount of that premium directly to the insurance premium finance company.

(B) If the crediting of unearned premium to the account of the insured results in a surplus over any indebtedness owed by the insured to the premium finance company, the premium finance company shall refund such excess to the insured at his last known mailing address as shown on the records of the premium finance company, except that no such refund is required if it amounts to less than three dollars.

Effective Date: 09-29-1994

1321.83 Secured transactions filing provisions not applicable.

No filing provisions of Chapter 1309. of the Revised Code apply to insurance premium finance agreements, and no filing of the premium finance agreement is necessary to perfect the validity of such agreements as a secured transaction as against creditors, subsequent purchasers, pledgees, encumbrancers, trustees in bankruptcy or any other insolvency proceeding under any law, or their successors or assigns.

Effective Date: 07-01-2001

1321.84 Effect of child support default on license, certificate or permit.

On receipt of a notice pursuant to section 3123.43 of the Revised Code, the division of consumer finance shall comply with sections 3123.41 to 3123.50 of the Revised Code and any applicable rules adopted under section 3123.63 of the Revised Code with respect to a license, certificate, or permit issued pursuant to this chapter.

Effective Date: 03-22-2001

1321.90 to 1321.93 [Repealed].

Effective Date: 07-14-1987

1321.99 Penalty.

(A) Whoever violates section 1321.02 of the Revised Code is guilty of a felony of the fifth degree.

(B) Whoever violates section 1321.13 of the Revised Code shall be fined not less than one hundred nor more than five hundred dollars or imprisoned not more than six months, or both.

(C) Whoever violates section 1321.14 of the Revised Code shall be fined not less than fifty nor more than two hundred dollars for a first offense; for a second offense such person shall be fined not less than two hundred nor more than five hundred dollars and imprisoned for not more than six months.

(D) Whoever willfully violates section 1321.57 , 1321.58 , division (A), (B), (C), or (D) of section1321.59, 1321.591 , or 1321.60 of the Revised Code is guilty of a minor misdemeanor and shall be fined not less than one nor more than five hundred dollars.

(E) Whoever violates section 1321.52 or division (I), (J), (K), (L), or(M) of section 1321.59 of the Revised Code is guilty of a felony of the fifth degree.

(F) Whoever violates division (A) of section 1321.73 of the Revised Code shall be fined not more than five hundred dollars or imprisoned not more than six months, or both.

(G) Whoever violates section 1321.41 of the Revised Code is guilty of a misdemeanor of the first degree.

(H) Whoever violates division (N) of section 1321.59 of the Revised Code is guilty of a felony of the fourth degree.

(I) The imposition of fines pursuant to this section does not preclude the imposition of any administrative fines or civil penalties authorized under section 1321.54 or any other section of the Revised Code.

Amended by 128th General AssemblyFile No.9, HB 1, §101.01, eff. 10/16/2009.

Effective Date: 08-10-2000; 2008 HB545 09-01-2008