H. B. 3065
(By Delegates Moore, Perry, Shook and Reynolds)
[Introduced March 11, 2009; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §46A-4-111 of the Code of West
Virginia, 1931, as amended, relating to the requirement of a
disclosure of a higher annual percentage rate in any
refinancing or consolidation of a nonrevolving consumer loan
or consumer credit sale and the requirement of a documentation
of a reasonable, net tangible benefit to the borrower of any
refinancing or consolidation of a nonrevolving consumer loan
or consumer credit sale made under this article that is
secured by residential real estate;
Be it enacted by the Legislature of West Virginia:
That §46A-4-111 of the Code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 4. REGULATED CONSUMER LENDERS.
§46A-4-111. Substantial benefit Disclosure of higher annual
percentage rate upon refinancing of a loan not secured by real estate at higher rate; requiring
documentation of a reasonable net tangible benefit
to the borrower of any refinancing of a real estate
secured loan.
(1) Any nonrevolving consumer loan or consumer credit sale
that is not secured by residential real estate that is refinanced
and or consolidated with a new loan under this article after
September 1,
one thousand nine hundred ninety-six 2009, at a higher
finance annual percentage rate than
allowed merchants by section
one hundred one, article three of this chapter the consumer loan or
consumer credit sale being refinanced must
either provide the
consumer
with a substantial benefit or provide the
following
disclosures:
set forth in this section. A substantial benefit
accrues to the consumer if the transaction
(a) Provides the consumer at least five hundred dollars in new
funds for the consumer's own use, excluding any charges connected
with the loan; or
(b) Provides the consumer with new funds in an amount equal to
the original amount of the loan or credit.
(2) If no substantial benefit is provided, the lender must
comply with the following requirements, except where such an
agreement would violate section one hundred eight of this article:
(a) The lender must in a fixed rate transaction give the
following disclosures in writing to the borrower prior to the execution of the new agreement:
"If you do agree to
refinance or consolidate your existing
obligation, you will be paying an annual percentage rate of _____%
on the existing balance of $_____, instead of the
annual percentage
rate of ______% which you are now paying.
I acknowledge receipt of this information __________ (initials
of borrower)."
(b) The lender must allow the borrower the choice of repaying
his or her existing loan/credit balance at the originally agreed
upon rate and obtaining any additional extension of credit as a
separate agreement, notwithstanding any law other than section one
hundred eight of this article which may limit the borrower's
ability to have multiple loan agreements with the same lender;
(c) The lender, where it holds the prior agreement, must
refund or credit to the borrower's account any unearned finance
charge and any returned insurance premiums upon cancellation of the
insurance sold in connection with the prior agreement;
(d) The lender shall, where applicable, provide the borrower
prior to the loan's execution, conspicuous written notice of the
provisions of subdivisions (a), (b) and (c) of this subsection;
(e) The commissioner may provide and require a modified
disclosure form for similar transactions involving adjustable or
variable rates, and where applicable, prior to the loan's
execution, the borrower must be given conspicuous written notice of the provisions of subdivisions (b) and (c) of this subsection,
together with the disclosure form as may be required by this
section; and
(f) Nothing in this
section subsection shall prohibit the
receipt of goods or services by the borrower at the time the
consolidated loan agreement is made, nor shall this
section
subsection prohibit or pertain to any loan where the refinancing
or
consolidation results in the consumer paying the same or a lower
finance charge annual percentage rate.
(
2) No nonrevolving consumer loan or consumer credit sale that
is secured by residential real estate may be refinanced or
consolidated with a new loan secured by residential real estate and
made under this article unless the new loan has a reasonable,
tangible net benefit to the borrower considering all of the
circumstances, including the terms of both the new and the
refinanced loans, the cost of the new loan and the borrower's
circumstances. The reasonable, tangible net benefit shall be
documented in writing on a form prescribed by the commissioner and
maintained in the loan file.
NOTE: The purpose of this bill is to require a disclosure
highlighting the higher annual percentage rate in any refinancing
of a consumer loan or sale that is not secured by residential real
estate and to require a reasonable, tangible net benefit to the
borrower in any refinancing of a consumer loan or sale that is
secured by residential real estate.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.