As Introduced

127th General Assembly Regular Session 2007-2008

H. B. No. 333

Representatives Batchelder, Hagan, R. 

Cosponsors: Representatives Foley, Collier, Ujvagi, McGregor, J., Wolpert, Brinkman, Fende, Stebelton, Harwood, Bolon, Otterman, Webster, Healy, Mallory, Stewart, D., Gerberry, Yuko, Letson, Koziura, Celeste, Sykes, Sayre, Williams, B., Goyal, Barrett, Budish, Dyer, Boyd 

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A BILL

To amend sections 135.63, 1315.35, 1315.36, 1315.39,

1

1315.40, 1315.41, 1321.13, 1321.131, 1349.72, and

2

1733.25 and to enact sections 135.68, 135.69,

3

135.70, and 1315.45 of the Revised Code to

4

prohibit a check-cashing business from making a

5

loan to a borrower who has an outstanding loan

6

with any check-cashing licensee, to create a

7

statewide database of loans by check-cashing

8

licensees, to modify the terms for making a loan

9

under the check-cashing loan act, to create a

10

small loan linked deposit program, to expand the

11

responsibilities of the consumer finance

12

education board to promote small loan counseling

13

and education for borrowers, and to eliminate a

14

certain credit union lending option.

15

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 135.63, 1315.35, 1315.36, 1315.39,	16
1315.40, 1315.41, 1321.13, 1321.131, 1349.72, and 1733.25 be	17
amended and sections 135.68, 135.69, 135.70, and 1315.45 of the	18
Revised Code be enacted to read as follows:	19

Sec. 135.63.  The treasurer of state may invest in linked	20
deposits under sections 135.61 to 135.67, small loan linked	21
deposits under sections 135.68 to 135.70, agricultural linked	22
deposits under sections 135.71 to 135.76, housing linked deposits	23
under sections 135.81 to 135.87, and assistive technology device	24
linked deposits under sections 135.91 to 135.97 of the Revised	25
Code, provided that at the time of placement of any linked deposit	26
under sections 135.61 to 135.67 of the Revised Code, small loan	27
linked deposit, agricultural linked deposit, housing linked	28
deposit, or assistive technology device linked deposit, the	29
combined amount of investments in the linked deposits, small loan	30
linked deposits, agricultural linked deposits, housing linked	31
deposits, and assistive technology device linked deposits is not	32
more than twelve per cent of the state's total average investment	33
portfolio as determined by the treasurer of state. When deciding	34
whether to invest in the linked deposits, small loan linked	35
deposits, agricultural linked deposits, housing linked deposits,	36
or assistive technology device linked deposits, the treasurer of	37
state shall give priority to the investment, liquidity, and cash	38
flow needs of the state.	39

Sec. 135.68. As used in sections 135.68 to 135.70 of the	40
Revised Code:	41

(A) "Eligible individual" means a person in this state.

42

(B) "Eligible lending institution" means a financial	43
institution that is eligible to make loans, is a public depository	44
of state funds under section 135.03 of the Revised Code, and	45
agrees to participate in the small loan linked deposit program.	46

(C) "Small loan" means an extension of credit that does not	47
exceed eight hundred dollars, the duration of which is not less	48
than ninety days and six installments, and the interest on the	49
loan is calculated in compliance with 15 U.S.C. 1606, and does not	50
exceed an annual percentage rate of thirty-six per cent. For the	51
purpose of this section, annual percentage rate has the same	52
meaning as in section 1315.35 of the Revised Code.	53

(D) "Small loan linked deposit" means a certificate of	54
deposit placed by the treasurer of state with an eligible lending	55
institution at up to three per cent below current market rates, as	56
determined and calculated by the treasurer of state, provided the	57
institution agrees to lend the value of such deposit, according to	58
the deposit agreement provided for section 135.69 of the Revised	59
Code, to eligible individuals in the form of small loans.	60

Sec. 135.69.  (A) An eligible lending institution shall enter	61
into a deposit agreement with the treasurer of state, which	62
agreement shall include requirements necessary to carry out the	63
purposes of sections 135.68 to 135.70 of the Revised Code. These	64
requirements shall reflect the market conditions prevailing in the	65
eligible lending institution's lending area.	66

(B)(1) The deposit agreement required by division (A) of this	67
section shall include provisions for certificates of deposit to be	68
placed for any maturity considered appropriate by the treasurer of	69
state not to exceed two years, but may be renewed for up to an	70
additional two years at the option of the treasurer of state.	71
Interest shall be paid at the times determined by the treasurer of	72
state.	73

(2) The deposit agreement required by division (A) of this	74
section may include a specification of the period of time in which	75
the lending institution is to lend funds upon the placement of a	76
linked deposit.	77

(C) Eligible lending institutions shall comply fully with	78
sections 135.68 to 135.70 of the Revised Code and with this	79
chapter.	80

(D) An eligible lending institution that desires to receive a	81
small loan linked deposit shall forward to the treasurer of state	82
a small loan linked deposit loan package, in the form and manner	83
as prescribed by the treasurer of state. The package required by	84
this section shall include such information as required by the	85
treasurer of state, including the amount of the loan requested.	86

(E) Upon the placement of a small loan linked deposit with	87
an eligible lending institution, the institution shall make small	88
loans, as defined in section 135.68 of the Revised Code, to	89
eligible individuals in accordance with the deposit agreement	90
required by section 135.69 of the Revised Code.	91

(F) An eligible lending institution shall certify compliance	92
with this section in the form and manner prescribed by the	93
treasurer of state.	94

Sec. 135.70.  (A) The treasurer of state may accept or reject	95
a small loan linked deposit loan package or any portion of the	96
package required by section 135.69 of the Revised Code, based on	97
the treasurer's evaluation of the package and the amount of state	98
funds to be deposited.	99

(B) Upon acceptance of the small loan linked deposit loan	100
package or any portion of the package the treasurer of state may	101
place certificates of deposit with the eligible lending	102
institution at three per cent below current market rates, as	103
determined and calculated by the treasurer of state. However, when	104
necessary, the treasurer of state may place certificates of	105
deposit prior to acceptance of a small loan linked deposit loan	106
package.	107

(C) The treasurer of state shall take all steps, including	108
the development of guidelines, necessary to implement the small	109
loan linked deposit program established under sections 135.68 to	110
135.70 of the Revised Code and monitor compliance of eligible	111
lending institutions.	112

(D)(1) Annually, by the first day of February, the treasurer	113
of state shall report on the small loan linked deposit program	114
established under sections 135.68 to 135.70 of the Revised Code	115
for the preceding calendar year to the governor, the speaker of	116
the house of representatives, and the president of the senate.	117

(2) The report required by division (D)(1) of this section	118
shall set forth the small loan linked deposits made by the	119
treasurer of state under the program during the year and shall	120
include the following information:	121

(a) The number of small loans made by each eligible lending	122
institution pursuant to a small loan linked deposit, categorized	123
by United States postal zip code;	124

(b) A representation of the number or percentage of loans,	125
pursuant to each small loan linked deposit, that were paid late	126
or in default.	127

(3) The speaker of the house of representatives shall	128
transmit copies of the report required by division (D)(1) of this	129
section to the chairperson of the standing house of	130
representatives committee that customarily considers legislation	131
regarding financial institutions, and the president of the senate	132
shall transmit copies of the report to the chairperson of the	133
standing senate committee that customarily considers legislation	134
regarding financial institutions.	135

(E) The state and the treasurer of state are not liable to	136
any eligible lending institution in any manner for payment of the	137
principal or interest on a loan made under sections 135.68 to	138
135.70 of the Revised Code to an eligible individual.	139

(F) Any delay in payments or default on the part of an	140
eligible individual with respect to a loan made under sections	141
135.68 to 135.70 of the Revised Code does not in any manner affect	142
the deposit agreement between the eligible lending institution and	143
the treasurer of state.	144

Sec. 1315.35.  As used in sections 1315.35 to 1315.44 of the	145
Revised Code:	146

(A) "Check-cashing business" has the meaning set forth in	147
section 1315.21 of the Revised Code.	148

(B) "Interest" means all charges payable directly or	149
indirectly by a borrower to a check-cashing business licensed	150
pursuant to sections 1315.35 to 1315.44 of the Revised Code as a	151
condition to a loan, but does not include loan origination	152
including fees, check collection charges, or other fees or charges	153
specifically authorized by lawservice charges, renewal charges,	154
credit insurance premiums, and any ancillary product sold in	155
connection with a loan made pursuant to sections 1315.35 to	156
1315.44 of the Revised Code.	157

(C) "Annual percentage rate" has the same meaning as in the	158
"Truth in Lending Act," 82 Stat. 149 (1980), 15 U.S.C. 1606, as	159
implemented by regulations of the board of governors of the	160
federal reserve system. All fees and charges, except those	161
authorized under section 1315.40 of the Revised Code, shall be	162
included in the computation of the annual percentage rate. Fees	163
and charges for single premium credit insurance and other	164
ancillary products sold in connection with the credit transaction	165
shall be included in the calculation of the annual percentage	166
rate.	167

(D) "Superintendent of financial institutions" includes the	168
deputy superintendent for consumer finance as provided in section	169
1181.21 of the Revised Code.	170

Sec. 1315.36.  No person shall lend funds to a borrower in	171
Ohio as part of a check-cashing business shall engage in the	172
business of making loans under sections 1315.35 to 1315.44 of the	173
Revised Code, or, in whole or in part, make, offer, broker, or	174
assist a borrower in Ohio to obtain such a loan, through any	175
method including, but not limited to, mail, telephone, internet,	176
or electronic means, without first having obtained a license from	177
the superintendent of financial institutions under sections	178
1315.35 to 1315.44 of the Revised Code.	179

Sec. 1315.39.  (A) A check-cashing business licensed under	180
sections 1315.35 to 1315.44 of the Revised Code may engage in the	181
business of making loans provided that each loan meets all of the	182
following conditions:	183

(1) The total amount of the loan does not exceed eight	184
hundred dollars.	185

(2) The duration of the loan does not exceed six months.

186

(3) The interest on the loan is calculated in compliance with	187
15 U.S.C. 1606, and does not exceed the amount permitted by,	188
division (B) of this sectionan annual percentage rate greater	189
than thirty-six per cent.	190

(4) The loan is made pursuant to a written loan contract that	191
sets forth the terms and conditions of the loan, and discloses in	192
a clear and concise manner all of the following:	193

(a) The total amount of fees and charges the borrower will be	194
required to pay in connection with the loan pursuant to the loan	195
contract;	196

(b) The rate of interest contracted for under the loan	197
contract, calculated both as an annual percentage rate based	198
solely on the principal of the loan and as an annual percentage	199
rate based on the sum of the principal of the loan and the loan	200
origination fee, check collection charge, and all other fees or	201
charges contracted for under the loan contract;	202

(c) The total amount of each payment, when each payment is	203
due, and the total number of payments that the borrower will be	204
required to make under the loan contract;	205

(d) A statement, printed in boldface type of the minimum size	206
of ten points, as follows: "WARNING: The rate of interest charged	207
on this loan is higher than the average rate of interest charged	208
by financial institutions on substantially similar loans."	209

(e) Any disclosures required under the "Truth in Lending	210
Act," 82 Stat. 146 (1974), 15 U.S.C. 1601, et seq.	211

(5) The loan is not being made to a borrower for purposes of	212
retiring an existing loan between the check-cashing business and	213
that borrower, which existing loan was made pursuant to sections	214
1315.35 to 1315.44 of the Revised Code.	215

(B) A check-cashing business may contract for and receive	216
interest at a rate of five per cent per month or fraction of a	217
month on the unpaid principal of a loan made under sections	218
1315.35 to 1315.44 of the Revised Code. Anynot deduct any	219
unearned interest shall not be deducted from the proceeds of the	220
loan or paid in advancea loan made pursuant to section 1315.35 to	221
1315.44 of the Revised Code, and interest shall be computed on the	222
unpaid balance and shall not be compounded. If, after the first	223
month of the loan contract, the loan is paid in full before the	224
final date on which payment is due on the loan pursuant to the	225
loan contract, the licensee shall refund or credit the borrower	226
with the amount of the unearned interest for the unexpired period	227
of the loan contract that follows the date of the borrower's	228
payment in full.	229

(C) A check-cashing business shall verify a borrower's	230
eligibility to enter into a loan by accessing a statewide database	231
pursuant to section 1315.45 of the Revised Code.	232

Sec. 1315.40.  In addition to the interest authorized to be	233
contracted for and received pursuant to section 1315.39 of the	234
Revised Code, a check-cashing business licensed pursuant to	235
sections 1315.35 to 1315.44 of the Revised Code may charge,	236
collect, and receive the following fees and charges in connection	237
with a loan made under sections 1315.35 to 1315.44 of the Revised	238
Code:	239

(A) Loan origination fees not exceeding an amount equal to	240
five dollars per fifty dollars up to five hundred dollars of the	241
amount of the loan and three dollars and seventy-five cents per	242
fifty dollars of the amount of the loan between five hundred one	243
and eight hundred dollars;	244

(B)CheckOne collection chargescharge per loan not	245
exceeding an amount equal to twenty dollars plus any amount passed	246
on from other financial institutions for each check, negotiable	247
order of withdrawal, share draft, or other negotiable instrument	248
returned or dishonored for any reason, provided that the terms	249
and conditions upon which check collection charges will be	250
charged to the borrower are set forth in the written loan	251
contract described in division (A)(4) of section 1315.39 of the	252
Revised Code;	253

(C)(B) Damages, costs, and disbursements to which the	254
check-cashing business may become entitled to by law in connection	255
with any civil action to collect a loan after default.	256

Sec. 1315.41.  No check-cashing business licensed pursuant to	257
sections 1315.35 to 1315.44 of the Revised Code shall do any of	258
the following:	259

(A) Violate section 1315.36 of the Revised Code;

260

(B) Make a loan that does not comply with division (A) of	261
section 1315.39 of the Revised Code;	262

(C) Charge, collect, or receive, directly or indirectly, any	263
additional fees or charges in connection with a loan, other than	264
fees and charges permitted by sections 1315.39 and 1315.40 of the	265
Revised Code and costs or disbursements to which the check-cashing	266
business may become entitled to by law in connection with any	267
civil action to collect a loan after default;	268

(D) Collect treble damages pursuant to division (A)(1)(b)(ii)	269
of section 2307.61 of the Revised Code in connection with any	270
civil action to collect a loan after a default due to a check,	271
negotiable order of withdrawal, share draft, or other negotiable	272
instrument that was returned or dishonored for insufficient funds;	273

(E) Make a loan to a borrower if there exists an outstanding	274
loan, or a loan was terminated on the same business day, between	275
the check-cashing business and that borrower or any other	276
check-cashing business licensed under sections 1315.35 to 1315.44	277
and that borrower and if the outstanding loan or terminated loan	278
was made pursuant to sections 1315.35 to 1315.43 of the Revised	279
Code;	280

(F) Make a loan to a borrower that would cause the borrower	281
to be indebted to one or more check-cashing businesses in excess	282
of ninety days during the previous twelve months, considering all	283
loans by that borrower in the aggregate, including the term of	284
the proposed loan;	285

(G) Make a loan to a borrower for purposes of retiring an	286
existing loan between any check-cashing business and that	287
borrower, which existing loan was made pursuant to sections	288
1315.35 to 1315.44 of the Revised Code.	289

(H) Require the borrower to waive the borrower's right to	290
legal recourse under any otherwise applicable provision of state	291
or federal law;	292

(I) Accept a check or other method of access to a deposit	293
account maintained by the borrower, or the title of a vehicle as	294
security for the obligation;	295

(J) Engage in any device or subterfuge to evade the	296
requirements of sections 1315.35 to 1315.44 of the Revised Code	297
including assisting a borrower to obtain a loan at a rate of	298
interest that would be prohibited by sections 1315.35 to 1315.44	299
of the Revised Code, making loans disguised as personal property	300
sales and leaseback transactions, or disguising loan proceeds as	301
cash rebates for the pretextual installment sale of goods or	302
services.	303

Sec. 1315.45. (A) The superintendent shall make a statewide	304
common database, as implemented by the superintendent, accessible	305
at all times to check-cashing businesses licensed under this	306
chapter and to the superintendent through an internet connection.	307
Licensees shall use the database to determine if a borrower has an	308
open loan with any check-cashing business licensed under sections	309
1315.35 to 1315.44 of the Revised Code, and to determine if the	310
borrower has been indebted to one or more check-cashing businesses	311
for a total of ninety days or more during the previous twelve	312
months, considering all loans made to that borrower in aggregate.	313
Licensees shall submit the required data in a format as the	314
superintendent prescribes by rule, and verify eligibility before	315
entering into each loan transaction.	316

(B) The superintendent shall adopt rules to administer and	317
enforce this section and to ensure that the database is used by	318
licensees in accordance with this section, including:	319

(1) A rule requiring that data are retained in the database	320
only as required to ensure licensee compliance with this section;	321

(2) A rule requiring that identifying borrower information is	322
deleted from the database on a regular and routine basis, twelve	323
months after the transaction is closed;	324

(3) A rule authorizing the archiving of deleted data, should	325
the superintendent determine that archiving is necessary for the	326
enforcement of this section;	327

(4) A rule prohibiting the database from ranking the credit	328
worthiness of a borrower and limiting the database so that it may	329
only be used to determine a borrower's eligibility or	330
ineligibility for a loan based on the provisions of this chapter;	331

(5) A rule requiring that data collected pursuant to this	332
section be used only as prescribed in this section and for no	333
other purpose;	334

(6) A rule authorizing a fee per transaction for data	335
required to be submitted.	336

(C) The database operator, whether the superintendent or a	337
third party selected by the superintendent pursuant to Chapter	338
125. of the Revised Code, shall do all of the following:	339

(1) Establish and maintain a process for responding to	340
transaction verification requests due to technical difficulties	341
with the database that prevent the licensee from accessing the	342
database through the internet;	343

(2) Provide accurate and secure receipt, transmission, and	344
storage of borrower data;	345

(3) Designate a transaction as closed within one business day	346
of receiving notification from a licensee;	347

(4) Take all reasonable measures to ensure the	348
confidentiality of the database and to prevent identity theft.	349

(D) A check-cashing business may rely on the information	350
contained in the database as accurate and is not subject to any	351
administrative penalty or civil liability as a result of relying	352
on inaccurate information contained in the database.	353

(E) With respect to the database prescribed in division (A)	354
of this section, any information submitted for incorporation into	355
the database, information in the database itself, or archived	356
information as maintained by the superintendent pursuant to this	357
section, is not public record under section 149.43 of the Revised	358
Code.	359

(F) If approved by the superintendent, the database operator	360
may impose a per transaction fee for the actual costs of entering,	361
accessing, and maintaining data in the database. The fee shall be	362
payable to the database operator in a manner prescribed by the	363
superintendent. A licensee may charge a customer all or part of	364
the fee, but may not charge a borrower any other fee except as	365
authorized in section 1315.40 of the Revised Code.	366

Sec. 1321.13.  (A)(1) Notwithstanding any other provisions of	367
the Revised Code, a licensee may contract for and receive	368
interest, calculated according to the actuarial method, at a rate	369
or rates not exceeding twenty-eightthirty-six per cent per year	370
on that portion of the unpaid principal balance of the loan not	371
exceeding one thousandeight hundred dollars and.	372

(2) Notwithstanding any other provisions of the Revised Code,	373
a licensee may contract for and receive interest, calculated	374
according to the actuarial method at a rate or rates not exceeding	375
twenty-two per cent per year on any part of the unpaid principal	376
balance exceeding one thousandeight hundred dollars. A licensee	377
may contract for and receive interest at the single annual rate	378
that would earn the same total interest at maturity of the loan,	379
when the loan is paid according to its agreed terms, as would be	380
earned by the application of the graduated rates set forth in	381
this division. Loans may be interest-bearing or precomputed.	382

(B) For purposes of computation of time on interest-bearing	383
and precomputed loans, including, but not limited to, the	384
calculation of interest, a month is considered one-twelfth of a	385
year, and a day is considered one three hundred sixty-fifth of a	386
year when calculation is made for a fraction of a month. A year is	387
as defined in section 1.44 of the Revised Code. A month is that	388
period described in section 1.45 of the Revised Code.	389

(C) With respect to interest-bearing loans:

390

(1) Interest shall be computed on unpaid principal balances	391
outstanding from time to time, for the time outstanding. Each	392
payment shall be applied first to unpaid charges and fees, then to	393
interest, and the remainder to the unpaid principal balance.	394
However, if the amount of the payment is insufficient to pay the	395
accumulated interest, the unpaid interest continues to accumulate	396
to be paid from the proceeds of subsequent payments and is not	397
added to the principal balance. If the maturity of the loan is	398
accelerated for any reason and judgment is entered, the licensee	399
may thereafter charge the same rate or rates of interest as	400
provided in the loan contract.	401

(2) Interest shall not be compounded. However, if part or all	402
of the consideration for a new loan contract is the unpaid	403
principal balance of a prior loan, then the principal amount	404
payable under the new loan contract may include any unpaid	405
interest that has accrued. The resulting loan contract shall be	406
deemed a new and separate loan transaction for purposes of this	407
section. The unpaid principal balance of a precomputed loan is the	408
balance due after refund or credit of unearned interest as	409
provided in division (D)(3) of this section.	410

(D) With respect to precomputed loans:

411

(1) Loans shall be repayable in substantially equal and	412
consecutive monthly installments of principal and interest	413
combined, except that the first installment period may exceed one	414
month by not more than fifteen days, and the first installment	415
payment amount may be larger than the remaining payments by the	416
amount of interest charged for the extra days; and provided	417
further that monthly installment payment dates may be omitted to	418
accommodate borrowers with seasonal income.	419

(2) Payments may be applied to the combined total of	420
principal and precomputed interest until maturity of the loan. A	421
licensee may charge interest after the original or deferred	422
maturity of a precomputed loan at the rate or rates provided in	423
division (A) of this section on all unpaid principal balances for	424
the time outstanding.	425

(3) When any loan contract is paid in full by cash, renewal,	426
refinancing, or a new loan, one month or more before the final	427
installment due date, the licensee shall refund, or credit the	428
borrower with, the total of the applicable charges for all fully	429
unexpired installment periods, as originally scheduled or as	430
deferred, that follow the day of prepayment. If the prepayment is	431
made other than on a scheduled installment installment due date,	432
the nearest scheduled due date shall be used in such computation.	433
If the prepayment occurs prior to the first installment due date,	434
the licensee may retain one-thirtieth of the applicable charge for	435
a first installment period of one month for each day from date of	436
loan to date of prepayment, and shall refund, or credit the	437
borrower with, the balance of the total interest contracted for.	438
If the maturity of the loan is accelerated for any reason and	439
judgment is entered, the licensee shall credit the borrower with	440
the same refund as if prepayment in full had been made on the date	441
the judgment is entered and may thereafter convert the loan to an	442
interest-bearing loan at the same rate or rates of interest as	443
provided in the loan contract. If the maturity of the loan is	444
accelerated for any reason, the licensee may convert the loan to	445
an interest-bearing loan at the same rate or rates of interest as	446
provided in the loan contract, provided the licensee credits the	447
borrower with the same refund on the precomputed loan as if	448
prepayment in full had been made on the date of the conversion.	449

(4) If the parties agree in writing, either in the loan	450
contract or in a subsequent agreement, to a deferment of wholly	451
unpaid installments, a licensee may grant a deferment and may	452
collect a deferment charge as provided in this section. A	453
deferment postpones the scheduled due date of the earliest unpaid	454
installment and all subsequent installments as originally	455
scheduled, or as previously deferred, for a period equal to the	456
deferment period. The deferment period is that period during which	457
no installment is scheduled to be paid by reason of the deferment.	458
The deferment charge for a one-month period may not exceed the	459
applicable charge for the installment period immediately following	460
the due date of the last undeferred installment. A proportionate	461
charge may be made for deferment for periods of more or less than	462
one month. A deferment charge is earned prorata during the	463
deferment period and is fully earned on the last day of the	464
deferment period. If a loan is prepaid in full during a deferment	465
period, the licensee shall make, or credit to the borrower, a	466
refund of the unearned deferment charge in addition to any other	467
refund or credit made for prepayment of the loan in full.	468

(E) A licensee, at the request of the borrower, may obtain,	469
on one or more borrowers, credit life insurance, credit accident	470
and health insurance, and unemployment insurance. The premium or	471
identifiable charge for the insurance may be included in the	472
principal amount of the loan and may not exceed the premium rate	473
filed by the insurer with the superintendent of insurance and not	474
disapproved by himthe superintendent. If a licensee obtains the	475
insurance at the request of the borrower, the borrower shall have	476
the right to cancel the insurance for a period of twenty-five days	477
after the loan is made. If the borrower chooses to cancel the	478
insurance, the borrower shall give the licensee written notice of	479
this choice and shall return all of the policies or certificates	480
of insurance or notices of proposed insurance to the licensee	481
during such period, and the full premium or identifiable charge	482
for the insurance shall be refunded to the borrower by the	483
licensee. If the borrower requests, in the notice to cancel the	484
insurance, that this refund be applied to reduce the balance of a	485
precomputed loan, the licensee shall credit the amount of the	486
refund plus the amount of interest applicable to the refund to the	487
loan balance.	488

(F) A licensee may require the borrower to provide insurance	489
or a loss payable endorsement covering reasonable risks of loss,	490
damage, and destruction of property used as security for the loan	491
and with the consent of the borrower such insurance may cover	492
property other than that which is security for the loan. The	493
amount and term of required property insurance shall be reasonable	494
in relation to the amount and term of the loan contract and the	495
type and value of the security, and the insurance shall be	496
procured in accordance with the insurance laws of this state. The	497
purchase of this insurance through the licensee or an agent or	498
broker designated by the licensee shall not be a condition	499
precedent to the granting of the loan. If the borrower purchases	500
the insurance from or through the licensee or from another source,	501
the premium may be included in the principal amount of the loan.	502

(G) In addition to the interest and charges provided for by	503
this section, no further or other amount shall be charged or	504
required by the licensee, except the amounts of fees authorized by	505
law to record, file, or release security interests on a loan and	506
fees for credit reports, which amounts may be included in the	507
principal amount of the loan or collected at any time after the	508
loan is made, and except costs and disbursements to which the	509
licensee may become entitled by law in connection with any suit to	510
collect a loan or any lawful activity to realize on a security	511
interest after default.	512

(H) If the loan contract or security instrument contains	513
covenants by the borrower to perform certain duties pertaining to	514
insuring or preserving security and the licensee pursuant to the	515
loan contract or security instrument pays for performance of the	516
duties on behalf of the borrower, the licensee may add the amounts	517
paid to the unpaid principal balance of the loan or collect them	518
separately. A charge for interest may be made for sums advanced	519
not exceeding the rate of interest permitted by division (A) of	520
this section. Within a reasonable time after advancing a sum, the	521
licensee shall notify the borrower in writing of the amount	522
advanced, any interest charged with respect to the amount	523
advanced, any revised payment schedule, and shall include a brief	524
description of the reason for the advance.	525

(I) A licensee may charge and receive loan origination	526
charges not exceeding the following:	527

(1) On loans in the principal amount of fiveeight hundred	528
dollars ofor less, the greater of fifteen dollars or one per cent	529
of the principal amount of the loan and, on each refinancing made	530
more than six months after the original loan and any previous	531
refinancing, not exceeding fifteen dollarsa licensee may not	532
charge a loan origination charge;	533

(2) On all other loans, the greater of thirty dollars or one	534
percent of the principal amount of the loan and, on each	535
refinancing, not exceeding thirty dollars. Loan origination	536
charges may be paid by the borrower at the time of the loan or may	537
be included in the principal amount of the loan.	538

(J) A licensee may charge and receive check collection	539
charges not greater than twenty dollars plus any amount passed on	540
from other financial institutions for each check, negotiable order	541
of withdrawal, share draft, or other negotiable instrument	542
returned or dishonored for any reason.	543

(K) If the loan contract so provides, a licensee may collect	544
a default charge on any installment not paid in full within ten	545
days after its due date. For this purpose, all installments are	546
considered paid in the order in which they become due. Any amounts	547
applied to an outstanding loan balance as a result of voluntary	548
release of a security interest, sale of security on the loan, or	549
cancellation of insurance shall be considered payments on the	550
loan, unless the parties otherwise agree in writing at the time	551
the amounts are applied. The amount of the default charge shall	552
not exceed the greater of five per cent of the scheduled	553
installment or five dollars.	554

Sec. 1321.131.  As an alternative to the interest permitted	555
in division (A)(2) of section 1321.13 and in division (B) of	556
section 1321.16 of the Revised Code, a licensee may contract for	557
and receive interest at any rate or rates agreed upon or consented	558
to by the parties to the loan contract or open-end loan agreement,	559
but not exceeding an annual percentage rate of twenty-five per	560
cent.	561

Sec. 1349.72.  (A) In addition to any other duties imposed on	562
the consumer finance education board by section 1349.71 of the	563
Revised Code, the board shall:	564

(1) Analyze and investigate, on its own initiative, the	565
policies and practices of state agencies, nonprofit entities, and	566
businesses, inasmuch as such policies and practices address	567
financial literacy, access by state residents to financial	568
information, education, and resources, prevention of foreclosures	569
and bankruptcies, and prepurchase and postpurchase counseling and	570
education for homebuyers, and small loan counseling and education	571
for borrowers;	572

(2) Provide an annual report and consultation and	573
recommendations to the governor, the general assembly, state	574
agencies, nonprofit entities, and businesses based on the board's	575
findings;	576

(3) Coordinate and provide resources and assistance to state	577
agencies, nonprofit entities, and businesses in the furtherance of	578
those entities' efforts to improve financial literacy, access by	579
state residents to financial information, education, and	580
resources, prevention of foreclosures and bankruptcies, and	581
prepurchase and postpurchase counseling and education for	582
homebuyers, and small loan counseling and education for	583
borrowers.	584

(4) Provide financial assistance to Ohioans through grants	585
funded through the consumer finance fund created under section	586
1321.21 of the Revised Code and utilize these same funds to	587
provide grants to design, develop, and implement any other	588
programs described in this section.	589

(5) Receive grants from the consumer finance fund for the	590
implementation of this section.	591

(B) The board may assign and delegate the execution of its	592
duties to smaller groups of its own members, which shall include	593
committees specifically chartered to address all of the following	594
issues:	595

(1) The needs of persons, ages eighteen to twenty-five, in	596
the context of the objectives enumerated in division (A) of this	597
section;	598

(2) The needs of persons, classified as needy, based on a	599
household adjusted gross income equal to or less than two hundred	600
per cent of the poverty level, as determined by the Ohio office of	601
budget and management, or the earned income amount described in	602
section thirty-two of the Internal Revenue Code of 1986, taking	603
into account the size of the household, in the context of the	604
objectives enumerated in division (A) of this section;	605

(3) The needs of persons, previously convicted of one or more	606
felonies, in the context of the objectives enumerated in division	607
(A) of this section;	608

(4) The needs of persons, characterized as vulnerable by	609
reason of advanced age, disability, minority, or other demographic	610
consideration, in the context of the objectives enumerated in	611
division (A) of this section;	612

(5) Any other group or issue identified by the board as	613
worthy of particular attention.	614

(C) The board shall create a pilot financial literacy and	615
counseling program funded through the consumer finance fund, to be	616
operated in the five counties with the highest mortgage	617
foreclosure rates as of the effective date of this sectionJanuary	618
1, 2007, and completion of which shall be recommended by mortgage	619
brokers and loan officers for any consumer seeking a mortgage loan	620
with origination fees greater than five per cent. Before a	621
mortgage broker permits a consumer to commit to such a loan, the	622
broker shall notify the consumer that the loan may have attributes	623
that are predatory. No person who offers education, advice, or	624
counseling through the financial literacy and counseling program	625
shall be held liable for any damages incurred from actions taken	626
based on the education, advice, or counseling given.	627

Sec. 1733.25.  (A) A credit union may make loans or other	628
extensions of credit to members for provident and productive	629
purposes as authorized by law, including rules adopted by the	630
superintendent of credit unions; the articles; and the	631
regulations; and subject to policies adopted by the credit	632
committee and approved by the board of directors.	633

(B) Upon the approval of the board of directors, a credit	634
union may make loans or other extensions of credit to other credit	635
unions, provided that loans or other extensions of credit made to	636
other credit unions need not have the approval of the board of	637
directors on a per case basis. The total of all such loans or	638
other extensions of credit, including the aggregate of all money	639
paid into any trust established by one or more credit unions for	640
the purpose of making loans or other extensions of credit to other	641
credit unions, shall not exceed twenty-five per cent of the shares	642
and undivided earnings of the lending credit union, except that	643
this percentage limitation does not apply to corporate credit	644
unions.	645

(C) The interest on any loan or other extension of credit	646
made by a credit union shall not exceed one and one-half per cent	647
per month on unpaid balances. Such interest may accrue and be	648
chargeable upon a monthly basis, and may be computed upon the	649
unpaid balance of the loan or other extension of credit as of the	650
end of the previous calendar month.	651

Such interest may be accrued and charged by any technique	652
approved by the superintendent so long as the effective interest	653
rate on any loan or other extension of credit does not exceed the	654
amount permitted to be charged by the computation authorized in	655
this division.	656

(D) A credit union may accept security in such form and under	657
rules as shall be set forth in the articles, the regulations, or	658
established by the credit committee and approved by the board of	659
directors.	660

(E)(1) The credit union shall have a lien on the membership	661
share, shares, deposits, and accumulated dividends and interest of	662
a member in an individual, joint, trust, or payable on death	663
account for any obligation owed to the credit union by that member	664
or for any loan co-signed or guaranteed by the member or account	665
holder; provided, however, that a credit union shall not have a	666
lien upon the funds in an individual retirement account or an	667
account established pursuant to the Internal Revenue Code of the	668
United States.	669

(2) A credit union may refuse to allow withdrawals from any	670
share or deposit account by a member while the member has any	671
outstanding obligation to the credit union.	672

(F) Notwithstanding any limitation provided in any other	673
provision of this chapter or Chapter 1343. of the Revised Code, a	674
credit union may enter into a loan agreement with a member in	675
accordance with all of the following:	676

(1) The loan is for any amount up to one thousand dollars.

677

(2) The term of the loan is thirty days or less.

678

(3) The credit union may charge a fee in addition to any	679
interest authorized by law in connection with the loan, which fee	680
is not to be included in the computation of interest for any	681
provision of the Revised Code, including division (C) of this	682
section, that prescribes, regulates, or limits interest charged,	683
collected, or received in connection with a transaction.	684

(4) The total interest, fees, and other costs of the loan	685
does not exceed ten per cent of the principal amount.	686

(5) A member shall not have more than one loan under division	687
(F) of this section outstanding at any one time with the credit	688
union.	689

(6) The loan is not being made to a member for purposes of	690
retiring an existing loan between the credit union and that	691
member, which existing loan was made pursuant to division (F) of	692
this section.	693

(G)(1) Subject to division (G)(2) of this section and any	694
restrictions or requirements established by the superintendent, in	695
connection with any loan or extension of credit, a credit union	696
may enter into a debt suspension agreement or debt cancellation	697
contract with the borrower or borrowers.	698

(2) A credit union shall not offer or finance, directly or	699
indirectly, a debt suspension agreement or debt cancellation	700
contract requiring a lump sum, single payment for the agreement or	701
contract payable at the outset of the agreement or contract, if	702
the debt subject to the agreement or contract is secured by one to	703
four family, residential real property.	704

(3) For purposes of division (G) of this section, "debt	705
cancellation contract" and "debt suspension agreement" have the	706
same meanings as in 12 C.F.R part 37.	707

Section 2. That existing sections 135.63, 1315.35, 1315.36,	708
1315.39, 1315.40, 1315.41, 1321.13, 1321.131, 1349.72, and	709
1733.25 of the Revised Code are hereby repealed.	710

Section 3.  The Superintendent of Financial Institutions	711
shall develop, implement, and maintain a statewide common	712
database in accordance with section 1315.45 of the Revised Code	713
within 120 days of the effective date of this act. In the period	714
of time between the effective date of this act and the	715
availability of a statewide common database, a check-cashing	716
business shall require a borrower to sign a written declaration	717
confirming that the borrower does not have an outstanding loan	718
with any check-cashing business and has not been indebted to one	719
or more check-cashing businesses for a total of ninety days or	720
more during the previous twelve months.	721