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This website publishes administrative rules on their effective dates, as designated by the adopting state agencies, colleges, and universities.

Chapter 1301:8-3 | Second Mortgage Loan Act

 
 
 
Rule
Rule 1301:8-3-03 | Definitions.
 

(A) "Assets," as used in division (B)(2) of section 1321.53 of the Revised Code, shall mean properties of value that are owned by the applicant or registrant. Therefore, assets include cash on hand and in depository institutions, readily marketable securities, accounts receivable (less allowances for uncollectible accounts) and real estate (less liens and depreciation). However, the term "assets" as used in this section shall not include: office premises, leasehold improvements, office furniture, fixtures, and equipment, or intangible assets.

(B) "Net worth," as used in division (B)(1) of section 1321.53 of the Revised Code shall mean the amount by which the business assets exceed the business liabilities.

(C) "Direct mail," as used in this chapter, shall mean a loan arranged via an application through the mail or internet where the loan proceeds are delivered through the mail or electronic transmission to the benefit of a borrower. A loan is not made by "direct mail" if it is facilitated by face to face, personal contact in this state between the lender, lender's employee or agent, or lender's attorney and the borrower or borrower's agent. For purposes of this rule, a bona fide third party title agency, notary, insured depository, or attorney which is suggested as part of a list of three or more recommended but not required closing providers, shall not be considered an agent of the lender. Nothing in this rule shall prohibit a registrant from creating a list of disapproved vendors, nor shall persons selected by the borrower only to witness the borrower's signature in compliance with a list be considered an agent of the lender.

(D) The phrase "refuse to provide information" as used in division (C) of section 1321.59 of the Revised Code shall mean the failure of a registrant to provide a borrower with information regarding the amount required to pay the borrower's loan in full within five business days after the receipt of a written request from a borrower or the borrower's designee.

(E) The term "prepayment penalty" as used in sections 1321.51 to 1321.60 of the Revised Code and this chapter shall mean a charge incurred for early payment of a loan in full prior to the loan's repayment due date.

(F) "Affiliation" or "affiliated with" as used in sections 1321.51 to 1321.60 of the Revised Code and this chapter shall mean directly or indirectly through one or more intermediaries controlled by or under common control with another person or enterprise. "Control" shall mean the authority to direct or cause the direction of the management and policies through ownership, by contract, or otherwise.

(G) "Final entry on a loan," as used in this chapter, means, as to that lender, the latter of the date the loan is:

(1) Paid in full,

(2) Deemed uncollectible,

(3) Assigned to another registrant or exempt entity and all records are transferred to the new lender, or

(4) Discharged or otherwise settled by an order terminating litigation governing the loan transaction.

Last updated December 20, 2022 at 8:21 AM

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.51 to 1321.60
Five Year Review Date: 12/17/2027
Prior Effective Dates: 2/1/1986, 4/1/1990
Rule 1301:8-3-04 | Recordkeeping requirements.
 

(A) Records must be kept current and be available at a registered location at all times during normal business hours for review by the superintendent. Records must be legible and maintained in a type size that is clearly readable without magnification and in conformity with any specific typeface or font size that may be required by state or federal law. Except when otherwise provided by federal or state law, records must be maintained in English. When records are allowed to be in a language other than English, the registrant or qualified exempt entity, at its expense, shall be responsible for providing the superintendent with a full and accurate translation. For purposes of this rule, "current" means within thirty days from the date of the occurrence of the event required to be recorded. A registrant shall keep and preserve the following records:

(1) A sortable electronic spreadsheet which discloses the following fields of information:

(a) Principal borrower's name;

(b) Principal borrower's address;

(c) Loan or account number;

(d) Type of the security for the loan;

(e) Date of loan;

(f) Amount financed;

(g) Date finance charges begin to accrue;

(h) Loan origination charge;

(i) Itemization of all additional fees or charges;

(j) Principal amount of the loan;

(k) Scheduled or precomputed interest;

(l) Number of payments;

(m) Contractual rate of interest;

(n) Payment amount;

(o) Types and amounts of credit related insurance;

(p) Default charge

(q) Check collection charge;

(r) Any points charged to the borrower;

(s) Any charges for prepayment of the loan;

(t) The NMLS number of the registrant/exempt entity, if applicable;

(2) Payment histories for each outstanding loan and each loan paid in full. The payment history shall disclose the following information:

(a) Principal borrower's name

(b) Loan or account number; and

(c) A chronological entry of all debits, credits, payments and charges received, assessed or disbursed in connection with the loan, recorded thereon in an identifiable manner in order to show the actual date of receipt, assessment or disbursement and the balance due on the loan or account.

(3) A file for each principal borrower which contains copies of all documents related to the loan transaction from origination through the final entry on the record. If there are multiple loan transactions with the same borrower, every loan transaction in the file must have a unique loan or account number.

(4) A sortable electronic spreadsheet of all loans in collection litigation which shall include the following fields of information:

(a) Principal borrower's name;

(b) Loan or account number;

(c) Date litigation proceedings were initiated;

(d) Name of court where proceedings were initiated;

(e) Indicate whether a final judgment has been entered, and if so include the following:

(i) Date of judgment;

(ii) Amount of judgment; and

(iii) The judgment rate of interest.

(f) In addition to the spreadsheet of litigation, copies of the complaints, court orders, settlements and judgments must be maintained in the principal borrower's file. In cases of garnishment or attachment, copies of all notices served on employers and amounts collected must be maintained in the principal borrower's file. The registrant must provide any additional court documents upon the request of the superintendent.

(5) A sortable electronic spreadsheet of all loans in repossession and foreclosure which shall include the following fields of information:

(a) Principal borrower's name;

(b) Loan or account number;

(c) Type of security foreclosed, attached, replevied, repossessed or surrendered;

(d) Date of repossession or foreclosure;

(e) Date of sale of the security;

(f) Gross amount received from the sale of the security;

(g) The amount of money applied to the outstanding loan balance; and

(h) In addition to the spreadsheet of loans in repossession and foreclosure, copies of all repossession and foreclosure legal documents and other records, including bills for all expenses shall be maintained in the principal borrower's loan file. In instances where the security is offered for private sale, there must be in the principal borrower's file not less than three bona fide written bids or appraisals in order to establish that the terms of the sale were commercially reasonable to the borrower. Where the security is offered for private or public sale, the sale must be consummated in compliance with the provisions of sections 1309.610, 1309.611, 1309.615, 1309.617, and 1309.624 of the Revised Code.

(6) A sortable electronic spreadsheet of all loans upon which a credit life claim has been paid by the insurer which shall include the following fields of information:

(a) Principal borrower's name;

(b) Loan or account number;

(c) Date of death;

(d) Total amount paid by the insurance claim;

(e) Amount applied to the principal borrower's account; and

(f) In addition to the spreadsheet of loans upon which a credit life claim has been paid, a copy of the death certificate and documentation of all funds received or paid pursuant to the credit life claim shall be maintained in the principal borrower's file.

(7) Each registrant conducting business as a lender shall maintain a log for business conducted with brokers. This log shall be kept in chronological order and shall contain the following information:

(a) Amounts of fees paid to brokers;

(b) Names and addresses of brokers; and

(c) Dates of transactions with brokers.

(8) To the extent such records have been created in the course of the registrant's operations, any contracts with third party vendors relating to lending services, any policy or procedures manuals relating to lending services, and any training materials pertaining to loans made under sections 1321.51 to 1321.60 of the Revised Code.

(9) A file of all advertisements.

(10) Histories of nonpublished indices used to establish interest rates for variable rate loans maintained for two years from date of usage.

(B) Where electronic records are required, a licensee may retain paper records as well. Where electronic records are required, the superintendent may, for good cause, allow a licensee to retain paper records in lieu of the electronic records required by this rule.

(C) In accordance with division (A) of section 1321.55 of the Revised Code, a registrant shall keep and preserve records pertaining to loans made under division (A)(1) of section 1321.52 of the Revised Code for at least two years after the final entry on the record. The final entry on the record occurs when the loan is paid in full, charged off as uncollectable, sold, transferred or assigned to another, or discharged or otherwise settled by a final order issued in litigation governing the loan transaction. Notwithstanding the third sentence in division (A) of section 1321.55 of the Revised Code, a registrant shall keep and preserve records pertaining to residential mortgage loans in accordance with 12 C.F.R. 1026.25(c)(3) as in effect on November 30, 2016. The retention period for advertisements commences from the date the advertisements are published, broadcast, or disseminated.

(D) A registrant shall segregate the records pertaining to business conducted pursuant to sections 1321.51 to 1321.60 of the Revised Code from all other business records.

(E) A registrant shall notify the superintendent of a change of location of its records pertaining to business conducted pursuant to sections 1321.51 to 1321.60 of the Revised Code no later than five business days after the change.

(F) Where a registrant maintains electronic records in compliance with this rule, and those records are located outside of the state of Ohio, the registrant shall make the electronic records available to the division of financial institutions upon request, within the time frame provided by the division. The electronic records may be uploaded to a secure server for the purpose of the division conducting an examination of the registrant.

(G) In the event electronic records, books, records, data or documents of a registrant are located outside Ohio, and the superintendent determines that an in person examination is necessary, the registrant shall be required to pay the costs of the examination of the registrant outside the state of Ohio, including the proportionate cost of the salaries of division of financial institutions employees who conduct the examination. If the superintendent requests, the registrant shall advance to the superintendent the superintendent's estimate of the cost of the examination, with any unconsumed portion to be returned to the registrant. The registrant shall pay the cost of its examination, or any balance of the cost of its examination in the case of a registrant that advanced the estimated cost of its examination, within fourteen days after receiving an invoice for payment.

(H) Any records maintained on an electronic storage media or system shall meet all of the following requirements:

(1) The electronic storage media or system must preserve the records in a non-rewritable, non-erasable format;

(2) The electronic storage media or system must verify automatically the quality and accuracy of the storage media recording process;

(3) The electronic storage media or system must have the capacity to readily download indices and records preserved on the electronic storage media or system to any medium acceptable to the superintendent;

(4) Acceptable facilities and appropriate equipment shall, at all times during normal business hours, be available to the superintendent for immediate, easily readable projection or production of electronic storage media or system images and for producing easily readable images;

(5) Immediate facsimile enlargement shall be available upon the superintendent's request;

(6) A duplicate copy of the electronic record stored on any electronic media or system for the time required must be stored separately from the "original" electronic record;

(7) The electronic storage media or system must organize and index accurately all information maintained on both the original and duplicate storage media or system. At all times, a registrant must be able to have indices of the electronic records being stored available for examination by the superintendent. Each index must also be duplicated and the duplicate copies must be stored separately from the original copy of each index. Original and duplicate indices shall be preserved for the time required for the indexed records;

(8) A registrant must have in place providing for accountability regarding inputting of records and inputting any changes made to every original and duplicate record maintained and preserved. At all times, a registrant shall have the results of the audit system available for examination by the superintendent. The audit results shall be preserved for the time required for the audited records;

(9) All information necessary to access records and indices stored on the electronic storage media or system, a copy of the physical and logical file format of the electronic storage media or system, the field format of all different information types written on the electronic storage media or system, together with the appropriate documentation and information necessary to access records and indices will be maintained, kept current and provided promptly to the superintendent upon request;

(10) No paper documents produced or reproduced by means of an electronic storage media or system shall be destroyed until the conditions of this paragraph have been met with regard to each paper document that is to be destroyed; and

(11) At the request of the division, the records shall be printed on paper for inspection or examination without cost to the division within forty-eight hours of the request. The superintendent may grant additional time for good cause shown upon receipt of a request for additional time from the registrant.

(I) In order to reduce the risk of consumer fraud and related harms, including identity theft, registrants and qualified exempt entities shall be required to comply with section 216 of the "Fair and Accurate Credit Transactions Act of 2003," 117 Stat. 1952 (amended 2010), 15 U.S.C. 1681w as in effect on November 30, 2016, section 501 of the "Gramm Leach Bliley Act," 113 Stat. 1338 (1999) (amended 2010), 15 U.S.C. 6801 as in effect on January 12, 2014, and the rules promulgated pursuant to those federal acts, including 16 C.F.R. Part 313 and 16 C.F.R. Part 682, as in effect November 30, 2016, pertaining to the maintenance, security, and disposal of consumer information and records.

(J) Before ceasing to conduct or discontinuing business as a registrant, the registrant shall arrange for and be responsible for the preservation of the books and records required to be maintained and preserved under this rule for the remainder of the period of time specified in this rule, and shall notify the division in writing of the exact address where the books and records will be maintained during the required period. If there is a change in location of the records any time withing the time the former registrant is required to preserve the records under this rule, the former registrant shall notify the superintendent of the change in location.

Last updated December 20, 2022 at 8:21 AM

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.55
Five Year Review Date: 12/17/2027
Prior Effective Dates: 2/1/1986, 11/13/1997
Rule 1301:8-3-05 | Advertising.
 

(A) The following advertising requirements shall be observed by all registrants:

(1) The words "advertisement" and "advertising," as used in section 1321.51 to 1321.60 of the Revised Code and this chapter, shall include all material printed, published, displayed, distributed or broadcast for the purpose of obtaining applications for loans. Materials displayed or distributed over the internet, telephone, facsimile, or other electronic transmission for the purposes of obtaining applications for loans are considered advertising for purposes of this rule.

(2) A registrant shall not advertise that loans will be made at any place other than that named in the certificate of registration. Every advertisement shall state and clearly indicate the identity of the registrant and shall do so in a manner that prevents confusion with the name of any other unrelated registrant. Registrants shall be identified by means of tradenames, service marks or business names which are filed with the division of financial institutions and Ohio secretary of state.

(3) A registrant shall not use loan advertisements which provide only telephone or facsimile numbers or newspaper box addresses and do not clearly indicate the identity of the registrant.

(4) A registrant shall not advertise that loans shall be made within a specified time after the loan application is received, unless it is the general practice of the registrant to make loans within the specified time.

(5) A registrant shall not advertise special terms, reduced rates, reduced payments, or any other special feature of a loan within a specified limited time, unless the advertisement clearly states any limitations that apply to the offer.

(6) A registrant shall not advertise by the use of unqualified superlatives, including but not limited to "lowest rates," "lowest costs," "lowest payment plan," or "cheapest loans," or by making offers which cannot be reasonably fulfilled.

(7) A registrant shall not advertise the words "new" or "reduced," or words of similar import, in connection with rates, costs, payments or plans, for more than ninety days after the rates, costs, payments or plans shall have become effective.

(8) Any registrant specifying in any advertisement charges on loans in dollars shall also state the length of time required to repay the loans as well as the method of repayment, and shall, when the rate of interest is stated, do so in a manner to prevent misunderstanding.

(9) Any registrant advertising flat or average payments on loans which include principal and interest shall specify the number and frequency of payments required to repay the loans. Whenever the amounts of periodic payments are advertised, the amounts must include all interest to the borrower, as well as principal. The principal payments alone may be shown separately provided the interest charges are also clearly stated with equal prominence.

(10) A registrant shall not advertise rebates, rates, or charges below the maximum lawful rate of interest which are conditioned upon prompt payment unless the condition is clearly indicated.

(11) A registrant shall not advertise:

(a) Waiver of payments in the event of sickness or disability or other contingency, without advertising that the interest and other charges, if assessed, continue during the waiver period.

(b) That the first payment on any loan may be made more than thirty days after the date of loan closing, without advertising that the interest and other charges, if assessed, will accrue from the date of disbursement of the loan funds until the first payment is due.

(12) A registrant shall not advertise loans for illegal purposes.

(13) A registrant shall not advertise specific amounts of loans to be made on designated makes and models of automobiles unless it is also stated that the amounts so specified are only the average loan values and are subject to the actual condition of the automobiles.

(14) A registrant shall not give, or advertise an offer to give any article or merchandise or anything of value, other than a reduction in interest, as an inducement to a borrower to make a loan.

(15) A registrant shall not advertise the availability of credit-related insurance without disclosing the charge, if any, for the insurance.

(B) Every registrant shall maintain in each registered office or in a central location, approved by the superintendent of financial institutions, a records file of all advertising, including newspaper, magazine, direct mailing, facsimile advertising and solicitations, roadside advertising, internet and scripts of radio and television commercials, for a period of two years from the date disseminated. A record or other file shall be readily available for inspection by the division of financial institutions at all times. Every registrant shall notify the division of financial institutions in writing of the location of the record or file. All registrants shall, upon the request of the superintendent, provide to the division of financial institutions any printed or electronic advertising done regarding any business conducted under sections 1321.51 to 1321.60 of the Revised Code. Text of advertising shall be maintained by the registrant for two years from the date of usage.

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.60
Five Year Review Date: 2/3/2025
Rule 1301:8-3-07 | General provisions for registrants.
 

(A) Except in the cases of loans made by direct mail as defined in this chapter, loans where the additional signature of a spouse, co-signor or guarantor is necessary or loans where one or more of the obligors is ill or disabled, no loan agreements, security agreements or other documents or papers involved with the making or renewing of a loan shall be signed by any obligor anywhere other than on the registrant's registered premises. In the instances when the additional signature of a spouse, co-signor or guarantor is necessary or when one or more of the obligors is ill or disabled, the signature may be obtained at an address other than that registered, but in no case may the signature be obtained by any person other than an obligor, an employee of the registrant, or authorized agent of the registrant.

(B) For purposes of sections 1321.51 to 1321.60 of the Revised Code, a loan is considered closed upon the signature of the obligor or obligors unless the loan contract is not executed by signature, in which case the loan is considered closed upon disbursement of loan funds.

(C) All loans made pursuant to sections 1321.51 to 1321.60 of the Revised Code, if made by direct mail as defined in this chapter, shall be made from a place of business for which the registrant holds a valid certificate of registration pursuant to section 1321.52 of the Revised Code.

(D) Registrants have an ongoing duty to notify the division of financial institutions of material changes in the information contained in the application and exhibits, schedules and other documentation submitted in conjunction with the application, and to report all changes or additions to information in the application within thirty days of the change. Material changes in the information include changes in affiliations, controlling interest, officers, directors, criminal record, and any change in net worth below the requirements in section 1321.53 of the Revised Code and Chapter 1301:8-3 of the Administrative Code.

(E) The registrant shall obtain written consent of the borrower for any purchase of insurance on property other than that which is used as security for the loan.

(F) A registrant under sections 1321.51 to 1321.60 of the Revised Code shall permit payment to be made in advance in any amount on any contract at any time, but the registrant may apply the payment first to interest and charges due up to the date of payment.

(G) The registrant shall notify the borrower in the instance of a non-amortized or partially amortized interest-bearing loan, the registrant shall provide the borrower with written notice of maturity at least ninety but not more than one hundred twenty days prior to the expected maturity date.

(H) Registrants shall clearly indicate by prominently disclosing on, or in, the loan documents, the federal or state statutory authority pursuant to which a loan is made. For purposes of this chapter, registrants shall be required to provide this prominent disclosure on loans made:

(1) Solely in reliance on the provisions of sections 1321.51 to 1321.60 of the Revised Code;

(2) Partially in reliance on the provisions of sections 1321.51 to 1321.60 of the Revised Code; or

(3) In reliance on any combination of federal or state provisions that do not include sections 1321.51 to 1321.60 of the Revised Code.

(I) A registrant is not prohibited from holding other licenses or registrations issued by the division of financial institutions as long as the registrant is in compliance with section 1321.551 of the Revised Code and other applicable provisions of state and federal laws.

(J) In providing any payment history requested by the borrower or by the division, the registrant shall provide a clear and accurate payment statement in a manner a reasonable borrower should understand that sets forth the dates and amounts due and owing and the dates and amounts received and paid.

(K) The registrant is liable for payment of the annual assessment described in section 1321.20 of the Revised Code on any loan made by the registrant which has been sold, transferred, or assigned to another person if servicing rights have been retained by the registrant.

(L) The registrant may in addition to, or as part of, its loan modification process offer the borrower the option to have the matters under dispute submitted for mediation before an unbiased private third party.

Last updated December 20, 2022 at 8:21 AM

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.53, 1321.551, 1321.57, 1321.59
Five Year Review Date: 12/17/2027
Prior Effective Dates: 4/1/1990
Rule 1301:8-3-12 | Prohibitions.
 

(A) No registrant shall take any note or other promise to pay that does not set forth the entire agreement made with the borrower.

(B) No registrant shall take any note or promise to pay in which blanks are left to be filled in after execution.

(C) No registrant shall charge or collect interest prior to the date of disbursement of the loan funds to the borrower.

(D) A new loan shall not be made for the purpose of paying any part of the interest or principal due on an existing loan with the same registrant unless the interest and principal balance of the existing loan is paid in full from the proceeds of the new loan.

Last updated December 20, 2022 at 8:22 AM

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.52, 1321.57, 1321.59
Five Year Review Date: 12/17/2027
Prior Effective Dates: 2/1/1986
Rule 1301:8-3-13 | Cancellation and return of original loan documents; receipt upon payment.
 

(A) Upon repayment of the loan in full, the original note signed by any obligor or copy, photograph, or stored representation of the original note as retained in accordance with rule 1301:8-3-04 of the Administrative Code shall be plainly marked "paid" or "canceled" and the note or the reproduction of the note shall be returned to the obligor or, if there are two or more obligors, to one of them.

(B) If requested, the registrant shall give to the borrower a receipt for each payment made on account of any interest-bearing or precomputed loan.

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.55, 1321.57, 1321.58
Five Year Review Date: 2/3/2025
Prior Effective Dates: 2/1/1986
Rule 1301:8-3-17 | Policy or certificate of insurance; disclosure of credit life, credit accident and health, and unemployment insurance cancellation rights; Ohio insurance law.
 

(A) When, in connection with a loan, a registrant furnishes or places insurance written on behalf of the borrower at the borrower's expense, a policy or certificate of insurance properly executed shall be furnished to the borrower within fifteen days of the closing date of the loan. The policy or certificate shall state the name of the insurance company, the nature of the insurance, the extent of the coverage, the amount of the premium, and the effective and expiration dates of the policy.

(B) If a registrant furnishes or places credit life insurance, credit accident and health insurance or unemployment insurance on behalf of the borrower at the borrower's expense, the registrant shall give written notice to the borrower at the time the loan is made. The notice shall disclose the borrower's right to cancel the insurance within twenty-five days of the purchase of the insurance with a full refund of the premium or identifiable charge for the insurance. The notice shall further disclose that the cancellation may be effected upon the written request of the borrower together with the return of the policy or certificate of insurance to the registrant.

(C) All insurance sold or obtained in connection with the making of a loan shall be governed by Title 39 of the Revised Code.

(D) In any transaction in which the registrant furnishes or places insurance on behalf of the borrower at the borrower's expense, the registrant shall, prior to furnishing or placing insurance, provide written disclosure to the borrower of the business relationship, beneficial ownership or affiliation, whether direct or indirect, between the registrant and the insurer.

Supplemental Information

Authorized By: 1321.54(A)
Amplifies: 1321.57(E)
Five Year Review Date: 2/3/2025
Prior Effective Dates: 2/10/1986