CHAPTER 22
FORMERLY
HOUSE BILL NO. 116
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO THE LENDING AND MORTGAGE BANKING BUSINESS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three—fifths of all members elected to each House thereof concurring therein):
Section 1. Amend Chapters 21, 3D and 31 of Title 5 of the Delaware Code by deleting said Chapters and establishing a new Chapter 22 to read as follows:
"CHAPTER 22 LICENSED LENDERS
SUBCHAPTER I. LICENSING
§2201. Definitions.
In this chapter, unless the context otherwise requires:
(1) 'Licensed Lender' is an individual, corporation, partnership or any other group of individuals however organized, but does not include any banking institution, savings bank, savings and loan association, federal credit union, insurance company, or any other financial institutions which is subject to any other law of this State or the United States, in the business of making closed end and open end loans pursuant to this chapter. No licensed lender shall be a participating merchant as used in this Chapter.
(2) 'Person' means an individual, corporation, partnership or any other group of individuals however organized, but does not include any banking institution, savings bank, savings and loan association, federal credit union, insurance company, or any other financial institution which is subject to any other law of this State of the United States, regulating the power of such institution to engage in the business of lending money as provided for in this chapter.
(3) 'Licensee' means any person duly licensed by the Commissioner pursuant to this chapter.
(4) 'Commissioner' means the State Bank Commissioner.
(5) 'Payment Period' means the period of time scheduled by the terms of a loan to elapse between the days upon which installment payments are required to be made on such loan.
§2202. License required.
Every person or combination of persons (other than any national, or state bank, any state or federal savings and loan association or savings bank or any trust company organized under this Code or any other laws of this State), desiring to transact the business of lending money as provided in this chapter shall apply to the State Bank Commissioner for a license.
A person that makes or negotiates not more than 5 loans within any 12 month period shall be deemed not to be transacting business as provided herein. Loans made by an unlicensed lender shall fall under the provision of §23D1 of Title 6, Delaware Code.
The Commissioner shall exempt from the licensing requirements of this chapter subsidiaries of savings and loan associations insured by the Federal Savings and Loan Insurance Corporation. The Commissioner shall be authorized to exempt from this section such additional entities or classes of entitites as he shall find inappropriate to include to effectuate the purpose of this chapter.
§2203. Rut '11'1 .1.
(1) Every application for a license shall be in writing in the form prescribed by the Commissioner and shall contain the name and complete address or addresses where the business of the applicant is located, and if the applicant be a partnership, association, corporation or other form of business organization, the names and complete addresses of each member, director and principal officer thereof. Such application
shall also include a description of the activities of the applicant, in such detail and for such periods, as the Commissioner may require, as well as such further information as the Commissioner may require. Such applicant, at the time of making such application, shall pay to the Commissioner as an investigation fee the sum of $250.00 which shall not be refundable.
(2) Upon approval, the applicant shall pay an annual license fee of $250.00 which shall be payable annually thereafter. No abatement in the amount of said license fee shall be made if the license is issued for less than 1 year, nor if the license is surrendered, canceled or revoked prior to the expiration of the period for which such license was issued. Every license shall expire on December 31 of each year.
§2204. Issuance of license.
Upon the filing of an application for a license, if the Commissioner shall find that the financial responsibility, experience, character and general fitness of the applicant and of the members thereof (if the applicant be a co-partnership or association) and of the officers and directors thereof (if the applicant be a corporation) are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly and efficiently within the purpose of this chapter, he shall thereupon issue a license to transact business in accordance with this chapter. If the Commissioner shall not so find, he shall not issue such license and he shall notify the applicant of the denial, give notice of the grounds for refusal and notify the applicant of the right to
request a hearing. If the applicant requests a hearing the Commissioner shall hold such
hearing under Chapter 101 of Title 29. The Commissioner shall approve or deny every
application for license hereunder within 90 days from the filing thereof.
§2205. 1.1.. I I •
In the event that there shall be any change among the Officers, Partners or Directors of any licensee, the licensee shall forthwith notify the Commissioner of the name, address and occupation of each new Officer, Partner or Director, and provide such other information as the Commissioner may require.
§2206. License requirements
Each license issued under this chapter shall state the address at which the business is to be conducted and shall state fully the name of the licensee, and the date and place of its incorporation, if applicable. A copy of such license shall be prominently posted in each place of business of the licensee. In case such location be changed, the Commissioner shall endorse the change of location on the license without charge. In case there is a change of name but no change in corporate structure, the Commissioner shall endorse such
name change on the license without charge. Such license shall not be otherwise
transferable or assignable. No licensee shall maintain an office at any other location
than that designated in the license. The Commissioner may issue more than one license to the same applicant upon payment of the required fees and compliance with all applicable provisions of law.
§2207. Renewal of license.
Every holder of a license or a renewal thereof, as provided for in this section, desiring to continue the transaction of the business as provided for in this chapter, shall at least 30 days prior to the expiration of such license or renewal thereof make application to the Commissioner on forms to be provided by the Commissioner for a license renewal. The Commissioner may mandate that applications for renewal shall be treated as new applications if said renewal applications are not on file with the Office of the State Bank Commissioner by January 1 of each year. Licensees who have not complied with supervisory letters or who have not paid the supervisory assessment or examination fees may be refused license renewal.
§2208. License bond.
Every licensee shall file with the Commissioner a corporate surety bond in the principal sum of $50,000 in a form satisfactory to the Commissioner with surety provided by
a corporation authorized to transact business in this State. The bond shall run to the
State and shall be conditioned that the licensee will comply with this chapter. The
aggregate liability of the surety on the bond shall in no event exceed the amount of such bond.
§2209. SnspenSion or revocation of license• surrender of license: procedure.
(a) The Commissioner may revoke any license issued hereunder if he shall find that:
(1) The licensee has violated any provisions of this chapter, or any rule or regulation made by the Commissioner under and within the authority of this chapter or of any other law, rule or regulation of this State.
(2) Any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the Commissioner in refusing originally to issue such license.
(3) The licensee has engaged in business activities or practices in connection with extensions of credit to consumers, which could be deemed unfair or deceptive by nature or intent. Such activities and practices include, but are not limited to, the use of tactics which mislead the consumer, misrepresent the consumer transaction or any part thereof or otherwise create false expectations on the part of the consumer.
(b) The Commissioner may, on good cause shown, suspend any license for a period not exceeding 30 days, pending investigation.
(c) Except as provided in subsection (b) of this section, no license shall be revoked or suspended except after notice and a hearing thereon.
(d) Any licensee may surrender any license by delivering to the Commissioner written notice that it thereby surrenders such license, but such surrender shall not affect such licensee's civil or criminal liability for acts committed prior to such surrender.
(e) No revocation, suspension or surrender of any license shall impair or affect the obligation of any preexisting lawful contract between the licensee and any person.
(a) Every license issued hereunder shall remain in force and effect until the same
shall have been surrendered, revoked or suspended in accordance with this chapter, but the Commissioner shall have authority to reinstate a suspended license or to issue a new license to a licensee whose license shall have been revoked if no fact or condition then exists which would have warranted the Commissioner in refusing originally to issue such license under this chapter.
(a) Whenever the Commissioner shall revoke or suspend a license issued pursuant to
this chapter, he shall forthwith execute a written order to that effect. The
Commissioner shall forthwith serve the written order upon the licensee. Any such order may be reviewed in the manner provided by Chapter 101 of Title 29. Such application for review as authorized by this section must be made within 30 days from the date of such order of suspension or revocation.
§2210. Supervision and examination_of business by Commissioner.
(a) Every person or combination of persons licensed to transact business as provided in this chapter in the State shall be subject to the supervision and examination of the State Bank Commissioner and shall be examined by the Commissioner or his authorized representative annually or at such intervals as the Commissioner deems necessary.
(a) On the occasion of every examination, the Commissioner or his authorized
representative shall be given access to every part of the office or place of business visited and to the assets, securities, books and papers of the business.
(b) The examination made by the Commissioner or his authorized representative shall be a thorough examination into the affairs of the business visited, the resources and liabilities, the investment of the funds, the mode of conducting the business and the compliance or noncompliance with this Code and any other statutes of the State; and in connection with such examination the Commissioner or his authorized representative may examine, under oath or affirmation, any and all persons connected with or associated with the licensee.
(c) The Commissioner may prescribe regulations to carry out the purposes of this chapter.
§2211. Maintenance of books and records by licensee.
Every licensee shall maintain such books, accounts and records relating to all transactions within this chapter as will enable the Commissioner to enforce full compliance with the provisions of this chapter.
§2212. Period of retention of records by licensee.
All books, accounts and records of the licensee shall be preserved and kept available as provided in this chapter for such period of time as the Commissioner may by regulation require.
§2213. Prescriotion of information to be shown in licensee book;'!.
The Commissioner may prescribe the minimum information to be shown in such books, accounts and records of the licensee so that such records will enable the Commissioner to determine compliance with the provisions of this chapter.
SUBCHAPTER II.
REVOLVING_CREDIT
§2214. Definitions.
As used in this subchapter:
(a) "Revolving credit plan" or "plan" means a plan contemplating the extension of
credit under an account governed by an agreement between a licensee and a borrower pursuant to which:
(1) The licensee permits the borrower and, if the agreement governing the plan so provides, persons acting on behalf of or with authorization from the borrower, from time to time to make purchases from participating merchants and/or to obtain loans by use of a credit device;
(1) The amounts of such purchases from participating merchants and loans are charged to the borrower's account under the revolving credit plan;
(1) The borrower is required to pay the licensee the amounts of all purchases and loans charged to such borrower's account under the plan but has the privilege of paying such amounts outstanding from time to time in full or in installments; and
(1) Interest may be charged and collected by the licensee from time to time on the outstanding unpaid indebtedness under such plan.
(b) "Purchases" mean payments for property of whatever nature, real or personal,
tangible or intangible, and payments for services, licenses, taxes, official fees, fines, private or governmental obligations, or any other thing of value.
(c) "Loan" means cash advances or loans to be paid to or for the account of the
borrower.
(d. "Credit device" means any card, check, identification code or other means of
identification contemplated by the agreement governing the plan.
(e) "Outstanding unpaid indebtedness" means on any day an amount not in excess of the total amount of purchases from participating merchants and loans charged to the borrower's account under the plan which is outstanding and unpaid at the end of the day, after adding the aggregate amount of any new purchases from participating merchants and loans charged to the account as of that day and deducting the aggregate amount of any payments and credits applied to that indebtedness as of any day and, if the agreement providing the plan so provides, may include the amount of any interest and additional charges, including late or delinquency charges, which have accrued to the account and which are unpaid at the end of the day.
§2215. Extension Of Credit
Any licensee may offer and extend credit under a revolving credit plan to a borrower and in connection therewith may charge and collect the interest and other charges permitted by this subchapter and may take such security as collateral in connection therewith as may be acceptable to the licensee. Without limitation of the foregoing, credit may be extended under a revolving credit plan by a licensee's acquisition of obligations arising out of the honoring by a merchant, a bank or other financial institution (whether chartered or organized under the laws of this or any other state, the District of Columbia, the United States or any district, territory or possession of the United States, or any foreign country), or a government or governmental subdivision or agency of a credit device made available to a borrower under a plan, whether directly or indirectly by means of telephone, point of sale terminal, or other electronic or similar device or through the mail.
§2216. Interest.
A licensee may charge and collect interest under a revolving credit plan on outstanding unpaid indebtedness in the borrower's account under the plan at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing the plan provides or as established in the manner provided in the agreement governing the plan. If the applicable periodic percentage rate under the agreement governing the plan is other than daily, interest may be calculated on an amount not in excess of the average of outstanding unpaid indebtedness for the applicable billing period, determined by dividing the total of the amounts of outstanding unpaid indebtedness for each day in the applicable billing period by the number of days in the billing period. If the applicable periodic percentage rate under the agreement governing the plan is monthly, a billing period shall be deemed to be a month or monthly if the last day of each billing period is on the same day of each month or does not vary by more than 4 days therefrom.
§2217. Variable rates
If the agreement governing the revolving credit plan so provides, the periodic percentage rate or rates of interest under such plan may vary in accordance with a schedule or formula. Such periodic percentage rate or rates may vary from time to time as the rate determined in accordance with such schedule or formula varies and such periodic percentage rate or rates, as so varied, may be made applicable to all outstanding unpaid indebtedness under the plan on or after the effective date of such variation including any such indebtedness arising out of purchases made from a participating merchant or loans obtained prior to such variation in the periodic percentage rate or rates.
§2218. Additional charges.
In addition to or in lieu of interest at a periodic percentage rate or rates as provided in §2216 and §2217 of this title, a licensee may, if the agreement governing the revolving credit plan so provides, charge and collect one or more of the following:
(a) A daily, weekly, monthly, annual or other periodic charge in such amount or amounts as the agreement may provide for the privileges made available to the borrower under the plan;
(b) A transaction charge or charges in such amount or amounts as the agreement may provide for each separate purchase or loan under the plan;
(a) A minimum charge for each daily, weekly, monthly, annual or other scheduled
billing period under the plan during any portion of which there is an outstanding unpaid indebtedness under the plan:
(b) Reasonable fees for services rendered or for reimbursement of expenses incurred in good faith by the licensee or its agents in connection with such loan, including without limitation, commitment fees, official fees and taxes, premiums or other charges for any guarantee or insurance protecting the licensee against the borrower's default or other credit loss, or costs incurred by reason of examination of title, inspection, recording and other formal acts necessary or appropriate to the security of the loan, filing fees, attorney's fees and travel expenses; and
(c) Such other charges as the Commissioner shall include in an itemized schedule of the maximum amounts which may be charged to an applicant for an extension of credit for costs, fees, services, points, premiums, and all other reasonable expenses which may be incurre by such applicant in connection with the extension of credit.The maximum
amounts permitted by said schedule may vary with the amount of the extension of credit and shall bear a reasonable relationship to such extensions of credit, the services required and the complexity of the transaction. No licensee or any other person shall demand, collect or receive from any borrower, directly or indirectly, any other charges, or any greater amounts for any authorized charges, than those permitted by said schedule or otherwise under this chapter.
§2219. Terms for indebtedness.
A licensee may, if the agreement governing a revolving credit plan so provides, impose different terms (including, without limitation, the terms governing the periodic percentage rate or rates used to calculate interest, the method of computing the outstanding unpaid Indebtedness to which such rate or rates are applied, the amounts of other charges and the applicable installment repayment schedule) in respect to indebtedness arising out of purchases and indebtedness arising out of loans made under the plan.
§2220. emitted installments.
A licensee may at any time and from time to time unilaterally extend to a borrower under a revolving credit plan the option of omitting monthly installments.
§2221. Insurance.
(a) A licensee may request but not require an individual borrower to be insured in respect of a revolving credit plan under a life, health, accident, health and accident or other credit or other permissible insurance policy, whether group or individual, and in the event that an individual borrower's outstanding unpaid indebtedness under the plan is secured by an interest in real or personal property, a licensee may require the borrower to obtain insurance, from an insurer acceptable to the licensee, against loss of or damage to such property, or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance.
(a) The offer and placement of insurance under this section shall be subject in all respects to the applicable provisions of Title 18.
§2222. Delinquent installment.
If the agreement governing a revolving credit plan so provides, a licensee may impose a late or delinquency charge upon such installment payments or portions thereof; provided, however, that no more than one such late or delinquency charge may be imposed in respect of any single such installment payment or portion thereof regardless of the period during which it remains in default; and provided further, however, that for the purpose only of the preceding provision all payments by the borrower shall be deemed to be applied to satisfaction of installment payments in the order in which they become due.
§2223. Attorney's fees' costs.
In the event a borrower defaults under the terms of a plan and the licensee refers the borrower's account to an attorney (not a regularly salaried employee of the licensee) for collection, the licensee may, if the agreement governing the revolving credit plan so provides, charge and collect from the borrower a reasonable attorney's fee and, in addition, if the agreement governing the revolving credit plan so provides, the licensee may recover from the borrower all court or other collection costs actually incurred by the licensee in connection with a collection proceeding.
§2224. Amendment of agreement.
(a) A licensee may, if the agreement governing a revolving credit plan so provides, at any time or from time to time amend the terms of such agreement (including, without limitation, the terms governing the periodic percentage rate or rates used to calculate interest, the method of computing the outstanding unpaid indebtedness to which such rate or rates are applied, the amounts of other charges and the applicable installment repayment schedule) in accordance with the further provisions of this section.
(b) The licensee shall notify each affected borrower of the amendment in the manner set forth in the agreement governing the plan and in compliance with the requirements of the Truth-In-Lending Act (15 U.S.C. §1601 et seq.), and regulations promulgated thereunder, as in effect from time to time, if applicable; provided, however, that if such amendment has the effect of increasing the interest or other charges to be paid by the borrower, the licensee shall mail or deliver to the borrower, at least 15 days before the effective date of the amendment, a clear and conspicuous written notice which shall describe the amendment and the existing term or terms of the agreement affected by the amendment and the pertinent information contemplated by the following provisions of this section. If the amendment has the effect of increasing the interest or other charges to be paid by the borrower, such amendment shall become effective only if the borrower uses the plan after a date specified in the notice which is at least 15 days after the giving of notice (but which need not be the date the amendment becomes effective) by making a purchase or obtaining a loan, or if the borrower indicates to the licensee in writing such borrower's express agreement to the amendment. Any such amendment may become effective as to a particular borrower as of the first day of the billing period during which such borrower so used such borrower's account or so indicated agreement to the amendment. Any borrower who fails to use such borrower's account or so to indicate agreement to an amendment shall be permitted to pay the outstanding unpaid indebtedness in such borrower's account under the plan in accordance with the terms of the agreement governing the plan without giving effect to the amendment.
(a) If the terms of the agreement governing the plan, as originally drawn or as amended pursuant to this section, so provide, any amendment may, on and after the date
upon which it becomes effective as to a particular borrower, apply to all then outstanding unpaid indebtedness in the borrower's account under the plan, including any such indebtedness which shall have arisen out of purchases made or loans obtained prior to the effective date of the amendment.
(d) For the purposes of this section, a decrease in the required amount of periodic installment payments shall not be deemed an amendment which has the effect of increasing the interest to be paid by the borrower.
§2225. Acolication of other state Laws.
Any other law of this State limiting the rate or amount of interest, discount, points, finance charges, service charges or other charges which may be charged, taken, collected, received or reserved shall not apply to extensions of credit under a revolving credit plan operated in accordance with this subchapter.
§2226. Nonexclusivity: factions
(a) The provisions of this subchapter are not exclusive and a licensee may at its
option elect to extend credit either pursuant to this subchapter or as otherwise permitted by applicable law.
(a) Section headings and captions contained in this subchapter are inserted only as a matter of convenience and for reference and do not, and shall not be construed to define, limit, extend or describe the scope of this subchapter or the meaning or intent of any section hereof.
SUBCHAPTER III CLOSED END CREDIT
§2227. Definitions.
As used in this subchapter:
(a) "Closed end credit" means the extension of credit by a licensee to a borrower
pursuant to an arrangement or agreement which is not a revolving credit plan as defined in subchapter II of this chapter.
(a) "Loan" means any single extension of closed end credit.
§2228. Extension of credit.
(a) Any licensee may, subject to any limitations on lending authority contained in its charter or otherwise imposed by law and subject to the other provisions of this subchapter, offer and extend closed end credit to a borrower and in connection therewith, may charge and collect the interest and other charges permitted by this subchapter and may take such security as collateral in connection therewith as may be acceptable to the licensee. Loans to any one borrower may not exceed 20% of the paid capital stock and surplus of such lender.
(a) All licensees will maintain records or other comparable evidence of their activity taken to reach a decision on a loan. If a commitment between a licensee and an applicant is not met (regardless of whether a similar loan at a higher rate is closed or not) and the delay is the licensee's fault, or the licensee cannot demonstrate through its records or other comparable evidence that it took reasonably diligent steps to meet its deadline, such action or inaction taken by the licensee may be deemed to be an unsafe and unsound operating practice. In such a case, the Commissioner shall take appropriate action which may include, but is not limited to, an order to refund certain fees paid by the applicant to the licensee.
§2229. Interest.
A licensee may charge and collect interest in respect of a loan at such daily, weekly, monthly, annual or other periodic percentage rate or rates as the agreement governing the loan provides or as established in the manner provided in such agreement and may calculate such Interest by way of simple Interest or such other method as the agreement governing the loan provides. If the interest is precomputed it may be calculated on the assumption that
all scheduled payments will be made when due. For purposes hereof, a year may but need not be a calendar year and may be such period of from 360 to 366 days, including or disregarding leap year, as the licensee may determine.
§2230. Variable rates.
If the agreement governing the loan so provides, the periodic percentage rate or rates of interest charged and collected in respect of the loan may, if the interest is not precomputed and taken in advance, vary in accordance with a schedule or formula. Such periodic percentage rate or rates may vary from time to time as the rate determined in accordance with such schedule or formula varies and such periodic percentage rate or rates, as so varied. may be made applicable to any or all outstanding and unpaid amounts of such loan on and after the effective date of such variation. This section shall not be construed to limit the authority of a licensee to charge and collect interest in respect of a loan in the manner and at the rate or rates authorized in any other section of this subchapter.
§2231. Additional charges.
In addition to or in lieu of interest at a periodic percentage rate or rates permitted by (§2229 and §2230 of this title), the licensee may charge and collect, in respect of a loan:
(a) Reasonable fees for services rendered or for reimbursement of expenses incurred in good faith by the licensee or its agents in connection with such loan, including without limitation, commitment fees, official fees and taxes, premiums or other charges for any guarantee or insurance protecting the licensee against the borrower's default or other credit loss, or costs incurred by reason of examination of title, inspection, recording and other formal acts necessary or appropriate to the security of the loan, filing fees, attorney's fees and travel expenses;
(a) A delinquency charge upon any installment which is completely or partially in
default for a period of not less than 10 days; provided, however, that no more than one such delinquency charge may be imposed in respect of any single such installment payment or portion thereof regardless of the period during which it remains in default; and provided further, that no such delinquency charge may exceed 5% of the amount of any such installment of portion thereof in default;
(a) Such other charges as the Commissioner shall include in an itemized schedule of
the maximum amounts which may be charged to an applicant for a loan for costs, fees, services, points, premiums, and all other reasonable expenses which may be incurred by such applicant in connection with a loan. The maximum amounts permitted by said
schedule may vary with the amount of the loan and shall bear a reasonable relationship to such loan, the services required and the complexity of the transaction. No licensee or any other person shall demand, collect or receive from any applicant for a loan, directly or indirectly, any other charges, or any greater amounts for any authorized charges, than those permitted by said schedule or this subchapter. Every licensee shall furnish to every applicant for a loan a copy of said schedule at the time when such application is made.
§2232. Oligrred installments.
A licensee may at any time or from time to time permit a borrower to defer installment payments of a loan and may, in connection with such deferral, charge and collect deferral charges and may also require payment by such borrower of the additional cost to the licensee of premiums for continuing in force, until the end of such period of deferral, any insurance coverage provided in connection with the loan pursuant to §2231 of this title.
§2233. IMMLO_Dce.
(a) A licensee may request but not require borrower to be insured in respect of a loan under a life, health, accident, health and accident or other permissible insurance policy, whether group or individual, and in the event that a loan to a borrower is secured by an interest in real or personal property, the licensee may require the borrower to obtain insurance, from an insurer acceptable to the licensee, against loss of or damage to such property. or against the liability arising out of the ownership or use of the property and may finance the premiums for such insurance.
(a) The offer and placement of insurance under this section shall be subject in all
respects to the applicable provisions of Title 18.
§2234. PreDaYMe01.
(a) A borrower may prepay a loan in full at any time.
(b) If interest charged pursuant to §2229 of this title in respect to a loan has been precomputed and taken in advance. then. in the event of prepayment of the entire
indebtedness, the licensee shall refund to such borrower the unearned portion of the precomputed interest charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned precomputed interest charge were calculated in accordance with the actuarial method, except that the borrower shall not be entitled to a refund which is less than $5. The unearned portion of the precomputed interest charge is, at the option of the licensee, either:
(1) That portion of the precomputed interest charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed interest charge is the total of that which would have been earned for each such period, or portion thereof, had the loan not been precomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed interest charges, assuming that all payments were made as scheduled, or a deferred, if deferred. The licensee, at its option, may round this annual percentage rate to the nearest one-quarter of 1 percent; or
(2) The total precomputed interest charge less the earned precomputed interest charge. The earned precomputed interest charge shall be determined by applying an annual percentage rate based on the total precomputed interest charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.
(c) As used in subsection (b) of this section:
(1) "Actuarial method" means the method of allocating payments made on a loan
between the outstanding balance of the loan and interest pursuant to which a payment is applied first to the accumulated interest and any remainder is subtracted from the outstanding balance of the loan.
(2) "precomputed interest charge" means interest as computed by the add-on,
discount or other similar method.
(3) "Payment period" means the time period within which periodic installment
payments of a loan are due as provided in the agreement governing the loan.
(d) If a charge was made for premiums for insuring such borrower under an insurance policy pursuant to §2233 of this title, then, in the event of prepayment, the licensee shall refund to such borrower the excess of the charge to such borrower therefor over the premiums paid or payable to the licensee, if such premiums were paid or payable to the licensee periodically, or the refund for such insurance premium received or receivable by the licensee, if such premium was paid or payable in a lump sum by the licensee, provided that no such refund shall be required if it amounts to less than $5.
(e) In connection with any prepayment of any loan by an individual borrower, the
licensee may not impose any prepayment charge, except that in the case of a residential
mortgage loan, the lender may charge and collect any prepayment penalty or charge
specified in the agreement governing, or, the bond, note or other evidence of, the loan.
§2235. Refinancing.
(a) A borrower may, with the consent of the licensee, refinance the entire outstanding and unpaid amount of a loan, and the licensee may charge and collect a refinancing charge in connection with any such refinancing.
(a) For the purposes of this section, the entire outstanding and unpaid amount of a
loan shall be deemed to be:
(1) If the interest and charges in respect of the loan were not taken in advance, the total of the unpaid balance and the accrued and unpaid interest and charges on the date of refinancing; or
(1) If the Interest and charges on the loan were precomputed and taken in
advance, the amount which the borrower would have been required to pay upon prepayment on the date of refinancing pursuant to §2232 of this title governing refund upon prepayment.
§2236. Attorneys fees: costs.
In the event a borrower defaults under the terms of a loan and the licensee refers such borrower's account to an attorney (not a regularly salaried employee of the licensee) for
collection, the licensee may, if the agreement governing the loan so provides, charge and collect from the borrower a reasonable attorney's fee and, in addition, if the agreement governing the loan so provides the licensee may recover from the borrower all court and other collection costs actually incurred by the licensee in connection with a collection proceeding.
§2237. Application of other state laws.
Any other law of this State limiting the rate or amount of interest, discount, points, finance charges, service charges or other charges which may be charged, taken, collected, received or reserved shall not apply to extensions of credit made in accordance with this subchapter.
§2238. Nonexclusivitv: Captions.
(a) The provisions of this subchapter are not exclusive and a licensee may at its option elect to extend credit either pursuant to this subchapter or as otherwise permitted by applicable law.
(a) Section headings and captions contained in this subchapter are inserted only as a matter of convenience and for reference and do not, and shall not be construed to define, limit, extend or describe the scope of this subchapter or the meaning or intent of any section hereof.
SUBCHAPTER IV. PROHIBITIONS AND PENALTIES
§2239. Penalty for failure to give copy of obligation to borrower.
Every lender shall give to the borrower, on request, a correct copy of the obligation evidencing the loan, and on failure or refusal, on such request, to furnish the borrower with such copy, shall be fined, for each offense, not less than $20 nor more than $100, or imprisoned for not more than one month, or both.
§2240. Prohibition against making loans without License: exception: Penalty.
(a) Loans as authorized by this chapter shall not be made unless a license of
registration has first been obtained from the State Bank Commissioner. Whoever violates this subsection shall be fined not less than $50 nor more than $200 for each offense, or imprisoned not more than three months, or both.
(a) Subsection (a) of this section shall not apply to state or federal savings and loan associations or savings bank, national banks, or state banks or trust companies organized under the laws of this State. Such institutions may make loans in accordance with and at the rates and upon the terms, and under the limitations with respect to corporations, provided for in this chapter, without first obtaining a license from the State Bank Commissioner.
§2241. Responsibility of agents.
For every violation of this chapter by any association, firm, partnership, trustee system or combination of persons not incorporated, or by any corporation, any member of the association, firm, partnership, trustee system or combination of persons not incorporated, and the president, secretary or treasurer, or any person acting as agent of the association, firm, partnership, trustee system or combination of persons not incorporated, or corporation, may be proceeded against as a principal, and if found guilty of violating this chapter, shall be punished as provided in this chapter.
§2242. Salary orders. warrants or assignments as security for loans confessions of
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(a) No order, warrant or claim of any kind, from any employee upon his employer, for any salary or part thereof due or to become due to such employee from such employer, shall be taken, accepted, or agreed to be taken or accepted, as security for money loaned or to be loaned.
(b) No loan shall be declared due and payable unless the borrower shall be in default of an expressed term or condition of the instrument.
(c) Whoever violates this section shall be fined not less than $100 nor more than $500, or imprisoned not more than six months, or both.
§2243. Ealle_or_milleading advertising prohibited,
It shall be unlawful for any person to cause to be placed before the public in this State, directly or indirectly, any false or misleading advertising matter pertaining to loans under this chapter or the availability thereof; provided, however, that this section shall not apply to the owner, publisher, operator or employees of any publication or radio or television station which disseminates such advertising matter without knowledge of the false or misleading character thereof."
§2244. Jurisdiction.
The Superior Court shall have jurisdiction of violations of Sections 2339, 2240 and 2242 of this Chapter.
Section 2. Amend §121 of Title 5 of the Delaware Code by deleting the term "Chapter 21" as it appears in paragraph (a) (2) of said section and inserting in lieu thereof "Chapter 22".
Section 3. Further amend §121 of Title 5 of the Delaware Code by deleting paragraph (e) of said section.
Section 4. If any provision of this Act or the application thereof to any person or circumstance is held invalid it shall not effect without the invalid provision or application, and to that end the provisions of this Act are declared severable.
Section 5. This Act shall be effective July 1, 1987. Licenses currently in effect under former Chapters 21, 30 and 31 in effect upon the effective date of this Act shall continue in effect until December 31, 1987.
Approved May 18, 1987.