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Regular Session, 2014
HOUSE BILL NO. 766
BY REPRESENTATIVE PONTI
FINANCIAL INSTITUTIONS: Provides relative to consumer credit transactions
AN ACT1
To amend and reenact R.S. 9:3557(B), 3560(A)(8), 3561(A), 3561.1(G)(1), 3578.4(A)(2)2
and 3578.7 and to enact R.S. 9:3518.4, 3561.2, and 3578.4.1, relative to record3
maintenance for and licensees of; to nullify certain consumer transactions and4
deferred presentment transactions; to provide relative to the location of offices of5
makers of consumer loans; to provide relative to records retention of makers of6
consumer loans; to provide relative to makers of consumer loans registration with7
the secretary of state; to permit certain licensees to offer extended payment plans8
prior to default of certain consumer credit or deferred presentment transactions; to9
provide relative to notice requirements for certain consumer credit or deferred10
presentment transactions; to provide for an effective date; and to provide for related11
matters.12
Be it enacted by the Legislature of Louisiana:13
Section 1. R.S. 9:3557(B), 3560(A)(8), 3561(A), 3561.1(G)(1), and 3578.4(A)(2)14
and 3578.7 are hereby amended and reenacted and R.S. 9:3518.4, 3561.2, and 3578.4.1 are15
hereby enacted to read as follows:16
§3518.4. Contract validity; consumer credit transactions; deferred presentment17
transactions18
A.(1) A consumer credit transaction as defined by R.S. 9:3516(13) or19
deferred presentment transaction as defined by R.S. 9:3578(2) shall be null, void,20
unenforceable, and uncollectible as being contrary to the policy of this state if the21 HLS 14RS-1227 ENGROSSED
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creditor has not obtained a license, if required by this Chapter or R.S. 9:3578.1 et1
seq., at the time the transaction is made.2
(2) The creditor shall forfeit all loans or transactions proceeds, fees, charges,3
and other amounts paid in association with the transaction or loan.4
(3) Upon request of the borrower, the creditor shall return any property taken5
as collateral within thirty days of the request. If the collateral property has been6
disposed of at the time of the request, the creditor shall reimburse the borrower an7
amount equal to the current value of the collateral as determined by any recognized8
market for the type of collateral or, if there is no recognized market, the fair market9
value of any such property as determined by commercially reasonable standards.10
B. Any person who attempts to enforce or collect pursuant to the agreements11
nullified by this Section shall be subject to fines, penalties, assessments, and12
applicable administrative and legal actions at the discretion of the commissioner13
within the powers granted to him under this Chapter.14
C. The provisions of this Section shall not apply to creditors exempt from15
the consumer loan licensing requirements pursuant to R.S. 9:3560 or any other16
creditor not required to obtain a license from the Office of Financial Institutions.17
* * *18
§3557. Authority to make consumer loans19
* * *20
B. Provided that the creditor has one or more offices in this state, a A21
creditor may not take assignments of and undertake direct collection of payments22
from or enforce rights against consumers arising from consumer loans, without first23
having obtained a license from the commissioner as provided under this Part. A24
creditor may, however, collect and enforce consumer loan obligations of which he25
has taken assignment for three months without a license if he notifies the26
commissioner in writing of his intention to take assignments of consumer loans,27
including the name and address of the proposed assignee and assignor, the number28
of loans assigned, the dollar amount of the assignment, and other information the29 HLS 14RS-1227 ENGROSSED
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commissioner requires at least ten days prior to the time the assignment is made, and1
the commissioner has not objected, and such creditor promptly applies for a license2
and his application has not been denied.3
* * *4
§3560. Licenses not required5
A. Notwithstanding R.S. 9:3557, the following persons shall be exempt from6
the consumer loan licensing requirements under this Part:7
* * *8
(8) A creditor having no office within this state offering credit to Louisiana9
consumers through the mails and other means of interstate commerce.10
(9) Unless otherwise provided by rule or regulation of the commissioner,11
persons whose lending activities pertain to federally related mortgage loans, and who12
are subject to licensing, supervision or auditing by the Federal National Mortgage13
Association, the Federal Home Loan Mortgage Corporation, the Governmental14
National Mortgage Association, the Veterans Administration, or the United States15
Department of Housing and Urban Development. Such lenders may also make loans16
secured by a second or junior lien or mortgage on owner-occupied one-to-four family17
residential immovable property made contemporaneously with federally related18
mortgage loans or as part of a mortgage revenue bond loan program, or sold on the19
secondary market to the Federal National Mortgage Association, the Federal Home20
Loan Mortgage Corporation, or the Governmental National Mortgage Association,21
and the entity sells ten or fewer of such loans over any calendar year.22
* * *23
§3561. Single place of business; additional licenses24
A. Each licensee shall maintain a place of business in the state and, unless25
otherwise provided by rule, making consumer loans to Louisiana residents shall26
maintain records of its consumer loans at that the location stated on its license. Not27
more than one place of business shall be maintained under the same license, but the28 HLS 14RS-1227 ENGROSSED
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commissioner shall issue additional licenses to the same licensed lender upon his1
compliance with all the provisions of this Part governing issuance of a license.2
* * *3
§3561.1. License; examination; renewal fees; records4
* * *5
G.(1) If the lender's records are located outside this state, the lender, at the6
commissioner's option, shall make them available in a format deemed by the7
commissioner to be acceptable to include physical reproductions and digital8
electronically imaged records, to the commissioner at a location within this state9
convenient to the commissioner, or via electronic transmittal or delivery of optical10
imaging disc containing electronic copies of the records, pay the reasonable and11
necessary expenses for the commissioner or his representatives to examine them at12
the place where they are maintained. The method of examination and delivery of13
records will be at the sole discretion of the commissioner. The commissioner may14
designate representatives, including comparable officials of the state in which the15
records are located, to inspect them on his behalf.16
* * *17
§3561.2. Registration of licensees with the secretary of state18
Any person required to be licensed pursuant to this Chapter shall, prior to19
application for licensure, be duly registered with the Louisiana secretary of state and20
be in possession of a certificate of authority to transact business pursuant to R.S.21
12:304 or 1345 or R.S. 9:3422, as applicable.22
* * *23
§3578.4. Finance charge and fees24
A.25
* * *26
(2) However, if If the loan remains unpaid at contractual maturity, the27
licensee may charge one of the following:28 HLS 14RS-1227 ENGROSSED
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(a) An an amount equal to the rate of thirty-six percent per annum for a1
period not to exceed one year and beginning one year after contractual maturity, the2
rate shall not exceed eighteen percent per annum.3
(b) A one-time delinquency charge as authorized in R.S. 9:3527(A)(1).4
* * *5
§3578.4.1. Extended payment plan; terms; conditions6
A.(1) A consumer who is unable to repay either a deferred presentment7
transaction or small loan when due to a licensee, may elect once in any twelve-month8
period to repay the licensee the amount due under the deferred presentment9
transaction or small loan by means of installments, referred to as an extended10
payment plan in this Section.11
(2) A consumer is ineligible for an extended payment plan if the consumer12
previously obtained an extended payment plan from the licensee within the13
preceding twelve months. The twelve-month period shall be measured from the date14
that the extended payment plan is executed between the licensee and the consumer.15
B.(1) To be eligible for an extended payment plan, the consumer shall16
request to enter into the plan before the due date of the outstanding deferred17
presentment transaction or small loan.18
(2) The licensee and consumer shall execute an agreement, in writing, that19
modifies the terms of the outstanding small loan or deferred presentment transaction20
and establishes the terms of the extended payment plan.21
C.(1) The terms of the extended payment plan shall:22
(a) Allow the consumer to repay the outstanding deferred presentment23
transaction or small loan, including any fees due prior to entering into the plan, in at24
least four substantially equal installments.25
(b) Allow the consumer to prepay sums due pursuant to an extended26
payment plan in full at any time without penalty.27
(c) Prohibit the licensee from charging the consumer any interest, or28
additional charges or fees during the term of the plan.29 HLS 14RS-1227 ENGROSSED
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(d) Require that the first plan installment shall be due no sooner than thirty1
days following the execution of the plan, unless a shorter period of time is agreed to2
by the consumer and licensee based on when the consumer receives income. The3
dollar amount of each installment shall be substantially the same and the installment4
due dates shall be spread out substantially evenly over the term of the extended5
payment plan.6
(2) The terms of the extended payment plan may permit the licensee to do7
either of the following:8
(a) With each payment under the plan by a consumer, provide for the return9
of the consumer's previously held check and require a new check for the remaining10
balance under the plan.11
(b) Require the consumer to provide multiple checks, one for each of the12
installments in the amounts of each installment at the time the plan is executed.13
D. A licensee shall immediately give a consumer receipts, signed and dated14
by the licensee, for any payments made in connection with the extended payment15
plan. The receipts shall also state the balance due under the extended payment plan16
after each payment.17
E.(1) If the consumer fails to pay any extended payment plan installment18
when due, the consumer shall be in default of the extended payment plan and the19
licensee may immediately accelerate payment on only the remaining balance of the20
extended payment plan.21
(2) Upon default, the licensee may take action to collect only the amount22
outstanding on the extended payment plan. A licensee is prohibited from collecting23
any amount on an extended payment plan other than what the consumer owes24
pursuant to the plan on the date of default.25
F. If a consumer enters into an extended payment plan, the consumer and26
licensee are prohibited from entering into a subsequent deferred presentment27
transaction or small loan until repayment in full of the extended payment plan.28 HLS 14RS-1227 ENGROSSED
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G.(1) At each licensed location or on the homepage of a licensee's website,1
a licensee shall prominently post a notice visible to the public and all those visiting2
the website stating that if a consumer is unable to repay either a deferred presentment3
transaction or small loan when due, the consumer can enter into one extended4
payment plan for either a deferred presentment transaction or small loan if he notifies5
the licensee as required by R.S. 9:3578.4.1(B)(1) before the payment is due of his6
inability to make payment.7
(2) A licensee shall also notify a person of his right to enter into an extended8
payment plan by including the following statement, in at least twelve point bold type,9
on the first page of each deferred presentment or small loan agreement: "IF YOU10
CANNOT MAKE PAYMENT WHEN DUE, YOU CAN ASK TO ENTER INTO11
AN EXTENDED PAYMENT PLAN ONCE I N A TWELVE-MONTH PERI OD,12
BUT THE REQUEST MUST BE MADE BEFORE PAYMENT IS DUE. SHOULD13
YOUR LICENSEE (LENDER) REFUSE TO ENTER INTO AN EXTENDED14
PAYMENT PLAN UPON YOUR REQUEST BEFORE THE DUE DATE,15
CONTACT THE OFFICE OF FINANCIAL INSTITUTIONS AT 1-888-525-9414."16
* * *17
§3578.7. Posting of notice; toll-free number18
The commissioner may provide a notice, which includes a toll-free number19
to the commissioner's office, which shall be posted, along with the fees as allowed20
under this Chapter, in a conspicuous place and manner by the licensee at the lending21
location or on the homepage of the website of the licensee, or both if the licensee has22
a physical location in the state and a website.23
* * *24
Section 2. This Act shall be effective September 30, 2014.25 HLS 14RS-1227 ENGROSSED
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Ponti HB No. 766
Abstract: Provides relative to makers of consumer loans, credit transaction, and deferred
presentment transactions pursuant to the Louisiana Consumer Credit Law and the
Louisiana Deferred Presentment and Small Loan Act.
Proposed law provides that a consumer credit transaction as defined by present law (R.S.
9:3516(13)) or deferred presentment transaction as defined by present law (R.S. 9:3578(2))
shall be null, void, unenforceable, and uncollectible as being contrary to the policy of this
state if the creditor has not obtained a license from the Office of Financial Institutions (OFI)
if required to do so.
Present law prohibits a creditor from taking assignments of and undertaking direct collection
of payments from or enforcing rights against consumers arising from consumer loans
without an office in this state and first having obtained a license from the commissioner of
OFI.
Proposed law retains present law and removes requirement that the creditor have an office
in this state.
Present law provides that a creditor having no office within this state who offers credit to
Louisiana consumers through the mail and other means of interstate commerce is not
required to be licensed by OFI.
Proposed law removes present law.
Present law provides that each licensee shall maintain a place of business in the state and,
unless otherwise provided by rule, shall maintain records of its consumer loans at that
location.
Proposed law provides that each licensee making consumer loans to La. residents, shall
maintain records of its consumer loans at the location stated on its license.
Present law provides that if the lender's records are located outside this state, the lender, at
the commissioner's option, shall make them available to the commissioner at a location
within this state convenient to the commissioner, or, pay the reasonable and necessary
expenses for the commissioner or his representatives to examine them at the place where
they are maintained. The commissioner may designate representatives, including
comparable officials of the state in which the records are located, to inspect them on his
behalf.
Proposed law adds that if the lender's records are located outside this state, the lender, at the
commissioner's option, shall make them available in a format deemed by the commissioner
to be acceptable to include physical reproductions and digital electronically imaged records,
or via electronic transmittal or delivery of optical imaging disc containing electronic copies
of the records. The method of examination and delivery of records will be at the sole
discretion of the commissioner.
Proposed law provides that any person required to be licensed pursuant to this Chapter shall,
prior to application for licensure, be duly registered with the La. secretary of state and be in HLS 14RS-1227 ENGROSSED
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possession of a certificate of authority to transact business pursuant to present law (R.S.
12:304 or 1345, or R.S. 9:3422), as applicable.
Proposed law authorizes certain finance charges and fees in conjunction with a deferred
presentment transaction or small loan.
Present law provides that if the loan remains unpaid at contractual maturity, then the licensee
may charge (1) an amount equal to the rate of 36% per annum for a period not to exceed one
year and beginning one year after contractual maturity, the rate shall not exceed 18% per
annum, or (2) a one-time delinquency charge of 5% of the unpaid amount or $10, whichever
is greater.
Proposed law removes that authority of the licensee to charge the one-time delinquency
charge of 5% of the unpaid amount or $10, whichever is greater.
Proposed law permits a consumer who is unable to repay either a deferred presentment
transaction or small loan when due to a licensee to elect once in any 12-month period to
repay the licensee the amount due by means of installments, referred to as an extended
payment plan.
Proposed law provides that a consumer is ineligible for an extended payment plan if the
consumer previously obtained an extended payment plan from the licensee within the
preceding 12 months.
Proposed law requires the consumer to request to enter into the plan before the due date of
the outstanding deferred presentment transaction or small loan.
Proposed law requires the licensee and consumer to execute an agreement, in writing, that
modifies the terms of the outstanding small loan or deferred presentment plan and
establishes the terms of the extended payment plan.
Proposed law provides that the terms of the extended payment plan shall:
(1)Allow the consumer to repay the outstanding deferred presentment transaction or
small loan, including any fees due prior to entering into the plan, in at least four
substantially equal installments.
(2)Allow the consumer to prepay sums due pursuant to an extended payment plan in full
at any time without penalty.
(3)Prohibit the licensee from charging the consumer any interest, or additional charges
or fees during the term of the plan.
(4)Require that the first plan installment shall be due no sooner than thirty days
following the execution of the plan, unless a shorter period of time is agreed to by
the consumer and licensee based on when the consumer receives income. The dollar
amount of each installment shall be substantially the same and the installment due
dates shall be spread out substantially evenly over the term of the extended payment
plan.
Proposed law provides that the terms of the extended payment plan may permit the licensee
to do either of the following:
(1)With each payment under the plan by a consumer, provide for the return of the
consumer's previously held check and require a new check for the remaining balance
under the plan. HLS 14RS-1227 ENGROSSED
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(2) Require the consumer to provide multiple checks, one for each of the installments
in the amounts of each installment at the time the plan is executed.
Proposed law requires that a licensee immediately give a consumer receipts, signed and
dated by the licensee, for any payments made in connection with the extended payment plan.
The receipts shall also state the balance due under the extended payment plan after each
payment.
Proposed law provides that if the consumer fails to pay any extended payment plan
installment when due, the consumer shall be in default of the extended payment plan and the
licensee may immediately accelerate payment on only the remaining balance of the extended
payment plan.
Proposed law provides that upon default, the licensee may take action to collect only the
amount outstanding on the extended payment plan.
Proposed law provides that a licensee is prohibited from collecting any amount on an
extended payment plan other than what the consumer owes pursuant to the plan on the date
of default.
Proposed law provides that if a consumer enters into an extended payment plan, the
consumer and licensee are prohibited from entering into a subsequent deferred presentment
transaction or small loan until repayment in full of the extended payment plan.
Proposed law provides that at each licensed location or on the homepage of a licensee's
website, a licensee shall prominently post a notice visible to the public and all those visiting
the website stating that if a consumer is unable to repay either a deferred presentment
transaction or small loan when due, the consumer can enter into one extended payment plan
for either a deferred presentment transaction or small loan if he notifies the licensee before
the payment is due of his inability to make payment.
Proposed law provides that a licensee shall also notify a person of his right to enter into an
extended payment plan by including the following statement, in at least twelve point bold
type, on the first page of each deferred presentment transaction or small loan agreement: "IF
YOU CANNOT MAKE PAYMENT WHEN DUE, YOU CAN ASK TO ENTER INTO AN
EXTENDED PAYMENT PLAN ONCE IN A TWELVE-MONTH PERI OD, BUT THE
REQUEST MUST BE MADE BEFORE PAYMENT IS DUE. SHOULD YOUR
LICENSEE (LENDER) REFUSE TO ENTER INTO AN EXTENDED PAYMENT PLAN
UPON YOUR REQUEST BEFORE THE DUE DATE, CONTACT THE OFFICE OF
FINANCIAL INSTITUTIONS AT 1-888-525-9414."
Present law provides that the commissioner may provide a notice, which includes a toll-free
number to the commissioner's office, which shall be posted, along with the fees as allowed
under present law, in a conspicuous manner by the licensee at the lending location.
Proposed law provides that the commissioner may provide a notice, which includes a toll-
free number to the commissioner's office, which shall be posted, along with the fees as
allowed under present law, in a conspicuous place and manner by the licensee at the lending
location or on the homepage of the website of the licensee, or both if the licensee has both
a physical location in the state and a website.
Effective Sept. 30, 2014.
(Amends R.S. 9:3557(B), 3560(A)(8), 3561(A), 3561.1(G)(1), 3578.4(A)(2) and 3578.7;
Adds R.S. 9:3518.4, 3561.2, and 3578.4.1) HLS 14RS-1227 ENGROSSED
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Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Commerce to the original
bill.
1. Removed the authorization for the maker of a deferred presentment transaction
or small loan to charge a one-time delinquency charge of 5% of the unpaid
amount or $10, whichever is greater, if the loan remains unpaid at contractual
maturity.
2. Authorized a consumer to enter into an extended payment plan with a deferred
presentment transaction or small loan licensee if certain conditions are met.