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Introduced Version Senate Bill 425 History

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sb425 intr
Senate Bill No. 425

(By Senators Minard, Jenkins and Deem)

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[Introduced March 3, 2009; referred to the Committee on Banking and Insurance; and then to the Committee on the Judiciary.]

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A BILL to amend and reenact §46A-4-111 of the Code of West Virginia, 1931, as amended, relating to requiring disclosure of a higher annual percentage rate in any refinancing or consolidation of a nonrevolving consumer loan or consumer credit sale; and requiring 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. 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.

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(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.)
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