home improvement financing volume ii

Volume IISummaries of State Laws(Alabama - Michigan)

FINANCIALPROTECTION

A Model State LawIn three volumes

Home ImprovementFinancing

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byMargot Saunders, AttorneyElizabeth Renuart, Attorney

National Consumer Law Center

Sharon Hermanson, Project OfficerAARP Public Policy Institute

October 2000

The Public Policy Institute, formed in 1985, is part of Public Affairs at AARP. One of the missions of theInstitute is to foster research and analysis on public policy issues of importance to older Americans.This publication represents part of that effort. The views expressed therein are for information, debate,and discussion, and do not necessarily represent formal policies of AARP.

© 2000, AARP. Reprinting with permission only. Stock Number: D17165AARP, 601 E Street, NW, Washington, DC 20049http://research.aarp.org

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ALABAMA ............................................................................................................................................4Consumer Finance (the “Mini-Code”) ............................................................................................4Interest Surcharge on Loans; Alternative Maximum Interest Rate .................................................4

ALASKA...............................................................................................................................................5Retail Installment Sales Act ...........................................................................................................5Interest-Usury ................................................................................................................................5Consumer Paper ...........................................................................................................................6Alaska Small Loans Act .................................................................................................................6

ARIZONA .............................................................................................................................................8Retail Installment Sales Transactions ...........................................................................................8Consumer Paper ...........................................................................................................................8Consumer Lender Loans ..............................................................................................................8Interest - Usury, Small Loans ........................................................................................................9

ARKANSAS ....................................................................................................................................... 11Industrial Loan Institutions ........................................................................................................... 11Consumer Loans and Credit Sales ............................................................................................. 11

CALIFORNIA .....................................................................................................................................13Professions and Vocations, Contractors .....................................................................................13Unruh Act (Retail Installment Sales Law) ....................................................................................14Finance Lenders Law ..................................................................................................................16Industrial Loan Companies - Loans and Purchased Obligations ................................................18

COLORADO .....................................................................................................................................20Colorado Uniform Consumer Credit Code ..................................................................................20

CONNECTICUT ................................................................................................................................26Small Loan Lenders Act ..............................................................................................................26Usury ...........................................................................................................................................26Retail Installment Sales Act .........................................................................................................27

DELAWARE ......................................................................................................................................28Retail Installment Sales Law .......................................................................................................28Licensed Lenders ........................................................................................................................29Interest-Usury ..............................................................................................................................30

DISTRICT OF COLUMBIA ................................................................................................................32Interest and Usury .......................................................................................................................32Consumer Credit Protection Act ................................................................................................. 32

FLORIDA ...........................................................................................................................................34Home Improvement Sales and Finance Act; Home Improvement Sales and Finance ................34

GEORGIA ..........................................................................................................................................37Retail Installment and Home Solicitation Sales Act .....................................................................37Industrial Loans ...........................................................................................................................38Interest-Usury ..............................................................................................................................39

GUAM ................................................................................................................................................41Uniform Consumer Credit Code ..................................................................................................41

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HAWAII ...............................................................................................................................................43Credit Sales Act ..........................................................................................................................43Interest-Usury ..............................................................................................................................45Financial Services Loan Companies ...........................................................................................45

IDAHO ...............................................................................................................................................47Idaho Credit Code .......................................................................................................................47

ILLINOIS ............................................................................................................................................50Illinois Interest Act ........................................................................................................................50Retail Installment Sales Act .........................................................................................................50Consumer Installment Loan Act ..................................................................................................52

INDIANA.............................................................................................................................................54Indiana Consumer Credit Code ...................................................................................................54

IOWA .................................................................................................................................................58Iowa Consumer Credit Code .......................................................................................................58Iowa Regulated Loan Act (Iowa Small Loan Law) .......................................................................62Iowa Industrial Loan Law .............................................................................................................62Money and Interest ......................................................................................................................63

KANSAS ............................................................................................................................................66Kansas Uniform Consumer Credit Code ....................................................................................66Interest-Usury ..............................................................................................................................70

KENTUCKY .......................................................................................................................................72Installment Sales Contracts ........................................................................................................72Industrial Loan Corporations........................................................................................................73Interest-Usury ..............................................................................................................................74Consumer Credit Contracts ........................................................................................................74

LOUISIANA ........................................................................................................................................75Interest and Usury .......................................................................................................................75Louisiana Consumer Credit Law .................................................................................................75

MAINE................................................................................................................................................77Maine Consumer Credit Code .....................................................................................................77Door to Door Home Repair Transient Sellers Act ........................................................................78

MARYLAND .......................................................................................................................................80Home Improvement Law .............................................................................................................80Retail Installment Sales ...............................................................................................................81Consumer Loans—Credit Provisions .........................................................................................83Preservation of a Consumer’s Claims and Defenses in Consumer Credit Transactions ...........84Secondary Mortgage Loan Law ...................................................................................................85Credit Grantor Closed-End Credit Provisions .............................................................................86

MASSACHUSETTS ...........................................................................................................................89Licensing of Certain Mortgage Lenders and Brokers ..................................................................89Retail Installment Sales and Services .........................................................................................89Rates of Interest and Loans ........................................................................................................90

MICHIGAN .........................................................................................................................................92Home Improvement Finance Act .................................................................................................92Credit Reform Act .......................................................................................................................94Secondary Mortgage Loan Act ....................................................................................................96

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Consumer Finance (the “Mini-Code”)Citation: Ala. Code §§5-19-1 to 5-19-3

Applicability: Only the provisions of the act regulating maximum and minimum financecharges apply to transactions involving an interest in real property (§5-19-31). Acreditor covered by the act is a person who regularly extends or arranges for extensionof credit. Regularly is defined as more than 5 times in preceding calendar year fortransactions secured by a residential structure of one to four units (§5-19-1).

Interest Rate and Fee Caps: The maximum interest rates are: 1) if the amountfinanced is less than $2,000, 15 percent per year on first $750; 2) 10 percent per yearon amount greater than $750 and less than $2,000; and 3) no limit if the amountfinanced is greater than $2,000 (§5-19-3).

Loan Terms: If the amount financed is less than $2,000, debtors may pay, in advance,the unpaid balance and accrued finance charges without penalty (§5-19-3).

Prohibited Loan Terms: If the amount financed is less than $2,000, the finance chargemay not be payable in advance, with exception of certain prepaid finance charges, andmay not be compounded (§5-19-3).

Applicability of State UDAP: Yes, except banks. Ala. Code §8-19-1. Private right ofaction with actual damages, $100 minimum damages, attorney fees available. Trebledamages discretionary based on frequency, seriousness and intent of violations

Interest Surcharge on Loans; Alternative Maximum Interest RateCitation: Ala. Code §§8-8-12 and 8-8-14

Applicability: Legal licensed lending institutions, vendors making credit sales, anyfinancial institution operating in Alabama or any individual (§8-8-14)

Interest Rate and Fee Caps: Covered lenders may, if provided in contract, charge a 6percent surcharge on the portion of the amount financed that is not in excess of$2,000, in addition to the allowed finance charge. As an alternative to any otherallowed interest rate, covered lenders may charge a maximum rate not exceeding 2percent above the prime rate, which shall be the average of the prime rate offered bythe 3 largest banks in New York City 3 days before the transaction (§8-8-14).

Civil Penalties/Enforcement: The penalty for charging excess interest is the forfeitureof all interest (§8-8-12).

Applicability of State UDAP: Yes, except banks. Ala. Code §8-19-1. Private right ofaction with actual damages, $100 minimum damages, attorney fees available; trebledamages discretionary based on frequency, seriousness, and intent of violations

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Retail Installment Sales ActCitation: Alaska Stat. §§45.10.010 to 45.10.230

Applicability: The act applies to purchasers of good or services from retail sellers.“Goods” explicitly include goods which are to be so affixed to real property or tobecome a part of it, whether or not severable from it (at the end of sale orsubsequently). “Services” explicitly include repairs, alterations, or improvements uponor in connection with real property (does not include the services of a professionalperson licensed by the state) (§45.10.220).

Interest Rate and Fee Caps: Premiums included for insurance may not exceed theamount actually charged the seller (if more than $1) (§45.10.130). The interest rate islimited to the amount agreed upon in the contract (§45.10.120). Reasonabledelinquency, collection, or dishonored check charges; attorney fees; court costs; anddisbursements may be charged to the buyer if agreed upon in the contract. Noattorney fees may be recovered, unless the contract is referred for collection to anattorney who is not a salaried employee of the holder (§45.10.080).

Loan Terms: The buyer may prepay at any time (§45.10.070).

Disclosures: The seller must provide the buyer with a copy of the accepted contract.Until the seller does so, the buyer is only obligated to pay cash sale price(§45.10.150). The written contract must disclose all fees and charges, the rate of theservice charge, and amount and number of installments (§45.10.060).

Prohibited Acts: Waivers of any provision of the act or of buyers’ remedies, if enteredinto before or at the time of contract (§45.10.150). Signing a contract with essentialterms left blank (§45.10.060)

Criminal Penalties: Willful and intentional violations are a misdemeanor (§45.10.210).Violations of orders or injunctions issued under the act are punishable by a $1,000fine and/or 6 months imprisonment (§45.10.200).

Civil Penalties/Enforcement: Except for bona fide errors, a seller who violates thischapter may not collect the service charges, officials fees, or delinquency orcollection charges (§45.10.190). The Attorney General has the right to restrain andprevent violations (§§45.10.170 and 45.10.180).

Applicability of State UDAP: Yes. Alaska Stat. §45.50.471. Private right of action isavailable for actual damages; $200 minimum damages; treble damages discretionaryfor willful violations; necessary equitable relief; attorney fees “may” be awarded to theprevailing party

Special Assignee Provisions: Waivers of right to raise claims or defense against theseller or assignment are invalid (§45.10.140).

Interest-UsuryCitation: Alaska Stat. §§ 45.45.010 to 45.45.070

Applicability: The act applies only to transactions not subject to the Alaska RetailInstallment Sales Act (RISA) or Alaska Small Loan Act (§45.45.010).

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Exemptions: Loans greater than $25,000 are exempt (§45.45.010).

Interest Rate and Fee Caps: 10.5 percent per year or no more than 5 percent abovethe annual rate charged member banks for advances by the 12th Federal ReserveDistrict (§45.10.010)

Civil Penalties/Enforcement: The penalty for receiving or collecting usurious interestis: 1) double the amount of interest (§45.45.030), and 2) the forfeiture of the entireinterest on the debt (§45.45.040).

Private Right of Action: Available for double amount of interest paid (§45.45.030)

Applicability of State UDAP: Yes. Alaska Stat. §45.50.471. Private right of action isavailable for actual damages; $200 minimum damages; treble damages discretionaryfor willful violations; necessary equitable relief; attorney fees “may” be awarded to theprevailing party.

Consumer PaperCitation: Alaska Stat. §45.50.541

Applicability: Consumer credit sales of goods or services

Loan Terms: The note, instrument, or other evidence of a consumer credit sale musthave the words “consumer paper” printed on its face. The note is not a negotiableinstrument.

Applicability of State UDAP: Yes. Alaska Stat. §45.50.471. Private right of action isavailable for actual damages; $200 minimum damages; treble damages discretionaryfor willful violations; necessary equitable relief; attorney fees “may” be awarded toprevailing party

Special Assignee Provisions: The assignee of rights of the seller is subject to all ofthe claims of the buyer arising out of the sale. No waiver of this right is allowed. Theassignee’s liability may not exceed the amount owed to the assignee under thecontract at the time buyer asserts the claim or defense.

Alaska Small Loans ActCitation: Alaska Stat. §§06.20.010 to 06.20.920

Applicability: Loans of $25,000 or less (§06.20.010)

Exemptions: Banks, saving banks, trust companies, building and loan associations orcredit unions, or pawnbrokers who make loans for less than $500 are exempt(§06.20.330).

Licensing Requirements: Alaska Stat. §§06.20.010 to 06.20.190

Interest Rate and Fee Caps: Interest: 3 percent per month on the portion of theprincipal not exceeding $850; 2 percent per month on the portion of the principalbetween $850 and $10,000; as agreed by the contract on the portion of principal

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between $10,000 and $25,000 (§06.20230). The following other charges arepermitted: filing or recording fees actually paid, or filing insurance premiums if they donot exceed said fees; consumer credit or property insurance premiums if actuallypaid; and court costs. If the loan is for less than $10,000 and secured by real estate,or for more than $10,000, then any reasonable costs of appraisals, surveys, and titleinsurance may be charged. Late payment fees of not more than 10 percent of thepayment due or $25, whichever is less, maybe charged. Bad check fee may notexceed $25. Reasonable attorney fees, actual expenses, and costs incurred forcollection, if referred to an attorney who is not a salaried employee and the balanceowed exceeds $5,000, may be charged. Actual repossession expenses and costsmay be charged (§06.20.260). Interest may not be paid, deducted, or received inadvance. No compounding of interest is allowed unless the loan partly consolidates aprevious loan (§06.20.250).

Loan Terms: Payment in advance must be permitted (§06.20.270). Maximum loanterms: if principal is $1,000 or less, 24.5 months; if principal is between $1,000 and$2,500, 48.5 months; if principal is between $2,500 and $5,000, 60.5 months; ifprincipal is between $5,000 and $25,000, as agreed by contract (§06.20.250)

Prohibited Loan Terms: No balloon payments are allowed unless the borrowerdemonstrates sufficient seasonal income to justify an irregular payment schedule(§06.20.250).

Disclosures: The Department of Commerce and Economic Development is authorizedto require that rates of charge be stated fully and clearly in a manner considerednecessary to prevent any misunderstanding by prospective borrowers (§06.20.200). Acopy of the statutory sections limiting charges plus clear and distinct statements ofamount of loan, nature of security, and agreed rate of charge must be disclosed(§06.20.270).

Prohibited Acts: The following acts are prohibited: transacting business or makingloan away from licensed premises; home solicitation (§06.20.220); splitting loansmade at same time in order to obtain higher rate of interest (§06.20240); and theenforcement of any out of state loan for $25,000 or less with a greater rate of interestthan allowed by this statute, unless the loan is legal under the state of origin’s similarsmall loan law is prohibited (§06.20.310).

Civil Penalties/Enforcement: If an usurious interest is charged, other than due to abona fide error, all interest, consideration, or charges are void and a like amount mustbe credited to the debtor against the loan principal, or refunded to the borrower to theextent that it exceeds the principal (§06.20.260). The revocation or suspension of alicense by the Department of Commerce and Economic Development (which may alsoadopt general regulations).

Applicability of State UDAP: Yes. Alaska Stat. §45.50.471. Private right of action isavailable for actual damages; $200 minimum damages; treble damages discretionaryfor willful violations; necessary equitable relief; attorney fees “may” be awarded to theprevailing party

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Retail Installment Sales TransactionsCitation: Ariz. Rev. Stat. Ann. §§44-6001 to 44-6006

Applicability: The act applies to retail sellers and any person entitled to the rights of aretail seller and a retail installment contract (§44-6001).

Interest Rate and Fee Caps: Interest as agreed to in the contract. A late payment feemay not exceed $5 on installment of less than $25 or $10 on an installment of morethan $25. A bounced check fee may not exceed $10 or the actual charge made bybank to seller, whichever is greater (§44-6002).

Civil Penalties/Enforcement: A seller or holder who violates the act is barred fromreceiving any finance charge, official fees, and delinquency charges for as long as theviolation continues (§44-6006).

Applicability of State UDAP: Yes. Ariz. Rev. Stat. Ann. §44-1521. No private right ofaction is specified; it is implied by the courts.

Consumer PaperCitation: Ariz. Rev. Stat. Ann. §§44-144 and 44-145


Special Assignee Provisions: The rights of a holder or assignee of any instrument,other than a check or draft, which evidences the obligation of a natural person asbuyer, lessee, or borrower in connection with the purchase or lease of consumergoods or services, are subject to all defenses and set offs of the debtor arising fromthe transaction, if notice of such defense or setoff is given within 90 days after receiptof the goods or services by the debtor, notwithstanding any agreement to the contrary.The debtors’ rights hereunder may be asserted only as to the amounts then owed. Anotice must be given, in writing, to the seller or lessor by certified mail within 90 daysafter the receipt of the goods or services.

Consumer Lender LoansCitation: Ariz. Rev. Stat. Ann. §§6-601 to 6-638

Applicability: The act applies to direct closed-end loans in an amount of $10,000 orless (§6-601).

Exemptions: Exemptions include: banks; saving banks; trust companies; savings andloans; profit sharing and personal trusts; credit unions; insurance companies;consumer loan companies; pawnbrokers; and individuals not regularly engaged in thebusiness of making consumer lender loans (§6-602)

Licensing Requirements: Ariz. Rev. Stat. Ann. §§6-603 to 6-6012

Interest Rate and Fee Caps: Interest rate: 36 percent per year if loan for $1,000 orless; if loan is for more than $1,000 either 36 percent per year on first $500 and 24percent on that part of the principal in excess of $500, or the single blended interest

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rate resulting from combining those two rates. Prepaid finance charges (points) areprohibited (except on: charge of 4 percent on loans of $5,000 or more secured byconsumer’s principal residence) (§6-632). Delinquency charges are limited to 5percent of any installment not paid within 7 days. A loan origination fee of no morethan $75 is allowed for loans of $1,500 or more (no fee is allowed for refinancing within1 year). Finance charges and fees are not specifically allowed by the statute (§6-635).

Loan Terms: The consumer must be allowed to prepay the loan. A rebate is requiredwhen the loan is prepaid in full (§6-634).

Prohibited Loan Terms: The term of the loan is not to exceed: 24.5 months (loan is$1,000 or less); 36.5 months (loan is for $1,000-$2,500); 48.5 months (loan is for$2,500-$4,000); 60.5 months (loan is for $4,000-$6,000); and no limit (loan is greaterthan $6,000). Balloon payments are prohibited (§6-637).

Disclosures: Federal Truth in Lending Act (TILA) disclosures are required. The lendermust post disclosures in the office; the agreement must include a notice that federalTILA disclosures are available in Spanish. Each office desk must have a noticeposted that discloses that loan documents may be taken away and reviewed (§6-631).

Prohibited Acts: Payment of referral fees, commissions, or bonuses to any merchant,dealer, consumer or other person other than as permitted by federal Real EstateSettlement Procedures Act (RESPA) are prohibited (§6-611).

Civil Penalties/Enforcement: If the loan is for $5,000 or less, the loan is voidable andprincipal, interest, or fees are not collectable; if the loan is for more than $5,000, nofinance charge is collectible (except for a bona fide error, if excess finance charge orfees contracted for or received). Any consumer lender loan made by an unlicensedlender is void (§6-613).


Interest - Usury, Small LoansCitation: Ariz. Rev. Stat. Ann. §§44-1202 to 44-1208 and 13-2208

Interest Rate and Fee Caps: On closed-end loans of more than $5,000: interest not toexceed the maximum rate set by contract; a late charge not to exceed 5 percent ofinstallment or $10, whichever is less; court costs, expenses, and reasonable attorneyfees may be charged for collection only if the loan is referred to an attorney, not asalaried employee of lender or holder; only lawful fees actually paid for filing,assessors, escrow, acknowledgment of the instrument, title reports, and titleinsurance are allowed. No other fees for any other service or expense are allowed(§44-1205).

Prohibited Acts: For loans other than consumer lender loans secured by real estate,property insurance in excess of replacement cost of improvements may not berequired (§44-1208).

Criminal Penalties: Usury is a class 6 felony (§13-2208).

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Civil Penalties/Enforcement: If interest is charged in excess of the maximumpermitted by law, all interest is forfeited (§44-1202).

Private Right of Action: If interest is in excess of maximum permitted by law charged,and interest payment by debtor exceeds the principal amount, then the debtor maybring action to recover the excess (§44-1204).

Applicability of State UDAP: Yes. Ariz. Rev. Stat. Ann. §44-1521. No private right ofaction specified; it is implied by the courts.

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Industrial Loan InstitutionsCitation: Ark. Code Ann. §§23-36-101 to 23-36-117

Applicability: The act applies to any Arkansas corporation engaged in the business oflending money to be repaid in weekly, monthly, or other periodical installments orprincipal sums (§23-36-101)

Exemptions: Building and loan associations; commercial banks or saving banks; trustcompanies; credit unions; pawnbrokers; agriculture or livestock pools; rural creditunions; farmers cooperatives (§23.36-101)

Licensing Requirements: Ark. Code Ann. §§23-36-104 to 23-36-107

Interest Rate and Fee Caps: Interest as agreed to in the contract (§23-36-108); a non-cumulative late fee of 5 cents per $1 or fraction thereof of the late payment (§23-36-112)

Civil Penalties/Enforcement: Supervision and regulation by the Bank Commissioner(§23-36-105)

Applicability of State UDAP: Yes (§4-88-101). Elderly or disabled persons are giventhe right to recover actual damages, reasonable attorney fees and restitution, as wellas punitive damages, if appropriate.

Consumer Loans and Credit SalesCitation: Ark. Const. Art. XIX, §13; Ark. Code Ann. §§4-57-101 to 4-57-108

Applicability: Consumer loans and credit sales are credit extended for money,property, or services primarily extended for personal, family, or household purposes(Ark. Const. Art. XIX, §13).

Interest Rate and Fee Caps: Consumer loans and credit sales: 17 percent per year;general loans: 5 percent above the Federal Reserve Discount Rate at the time of thecontract (Ark. Const. Art. XIX, §13)

Prohibited Loan Terms: In no case where a payment falls short of paying the interestdue, shall the balance of the interest be added to the principal (§4-57-101).

Disclosures: Upon a written request at time of extending credit or making sale, theseller must separately furnish a statement of the principal and interest charged (§4-57-103).

Criminal Penalties: Failure to make required disclosure or misrepresenting amount ofprincipal and interest is a misdemeanor (§4-57-103).

Civil Penalties/Enforcement: Consumer loans and credit sales having usuriousinterest void as to principal and interest. Other loans having usurious interest void asto unpaid interest and borrower may recover twice the amount of usurious interestpaid (Ark. Const. Art. XIX, §13).

Applicability of State UDAP: Yes (§4-88-101). Elderly or disabled persons are given

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the right to recover actual damages, reasonable attorney fees and restitution, as wellas punitive damages, if appropriate.

Other: Any person who prevails in alleging in court that a consumer loan or credit saleis willfully usurious shall be awarded reasonable attorneys’ fees (§4-57-108).

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Professions and Vocations, ContractorsCitation: Cal. Bus. & Prof. Code §§7159.1, 7159.2, 7163 to 7166

Exemptions: The disclosure notice required by §7159.1 does not apply to homeimprovement contracts with a value of $5,000 or less, or which are subject to theCalifornia Retail Installment Sales Act (RISA) (§7159.1).

Loan Terms: The contract and any contract changes must be in writing and state the:name, address, and license number of the contractor; start and finish dates; locationof the work to be done; and notice of the possibility of mechanics’ liens. The buyermust be furnished with a copy of the contract signed by the contractor prior to thestart of work (§7164).

Prohibited Loan Terms: No home improvement contract with a value of $5,000 or lessshall provide for a security interest in real property, except for a mechanics’ lien orother interest, which arises by operation of law (§7159.2).

Disclosures: Any home improvement contract offered door-to-door that is secured bya lien on real property must be accompanied by a separate notice (written in the samelanguage as the contract) warning the buyer that the home could be sold withoutpermission and without court action if any payments are missed. This notice must besigned and dated by the buyer, and a copy must be provided to the buyer (§7159.1).In close proximity to the signature lines, each contract must include a notice in atleast 10-point bold type stating that the owner has the right to require the contractorto obtain a performance and payment bond; the bond may be at owner’s expense(§7164).

Prohibited Acts: No contract is enforceable in which obtaining a loan is a condition ofthe contract or if the contractor provides or arranges for financing, unless the lenderagrees to make the loan, the buyer accepts, and the buyer does not rescind pursuantto their rights under federal TILA or Regulation Z. Contractors are not to: 1) deliverproperty or commence work, 2) represent that the contract is enforceable, or 3)represent that the buyer is obligated in any way, until these requirements are met. Awaiver of these provisions is unenforceable, except for emergency repairs in which thebuyer signs a dated written waiver. Waivers on printed forms are void (§7163).

Civil Penalties/Enforcement: A security interest created by any contract that fails toinclude the disclosure required by §7159.1 is void and unenforceable (§7159.1). Asecurity interest in real estate created by a contract with a value of $5,000 or less isvoid and unenforceable (§7159.2).

Applicability of State UDAP: Yes. Cal. Civ. Code §1750 (West). Actual damages,injunction; punitive damages; restitution; attorney fees to prevailing consumers, to thedefendant if the action is brought in bad faith

Other: When the proceeds of a loan secured by a mortgage are used to fund goods orservices pursuant to a home improvement contract for more than $5,000, the lendershall only pay the proceeds: 1) by an instrument payable to the borrower, or jointly tothe borrower and contractor, or 2) at the election of the borrower, through a third-partyescrow agent (§7159.2).

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Unruh Act (Retail Installment Sales Law)Citation: Cal. Civ. Code §§1801 to 1812.20

Applicability: The act is applicable to the sales of goods or services for primarilypersonal, family, or household uses, by a person in the business of selling goods orservices, for a deferred payment price payable in installments. Goods include itemswhich, at the time of sale or subsequent thereto, are to be so affixed to realty as tobecome a part thereof, whether or not severable therefrom. Services includeimprovements in connection with real property (§§1802.1, 1802.2, 1802.3, 1802.5).

Exemptions: Exemptions include: 1) construction and sale of entire residence,including a mobile home; sale of a lot or parcel of real property; sales of aircraft; salesof vessels worth more than $25,000 (§1801.4); 2) loans made by supervised financialorganizations to a buyer for the purchase of goods or services, even if the seller ofsuch goods or services arranges the loan or participates in the preparation of the loandocuments, unless the supervised financial organization and the seller are eitherrelated by common ownership and the relationship was a material factor in the loantransaction, or share in the profits or losses of the sale or loan or both (§1801.6). Ifthe seller or holder corrects any unintentional violation within 30 days of the executionof the contract, with the buyer’s written permission in the case of errors in the seller’sfavor, then the seller or holder is not subject to penalties (§1812.8).

Interest Rate and Fee Caps: The interest rate is as disclosed by the contract. Annualfees are prohibited (§1805.1). Simple interest rate is required if the contract’s originalterm exceeds 62 months (§1805.7). Finance charges shall include all charges forinvestigating or making the contract or for the extension of credit. Any bad check feemay not exceed $15 (§1805.4). The holder may, if the contract so provides and aninstallment is at least 10 days past due, collect a late charge not to exceed $10, or ifan installment is at least 15 days past due, collect a charge not to exceed $15.Actual and reasonable costs of collection occasioned by removal of goods fromCalifornia without the holder’s permission, or by the failure of the buyer to notify theholder of a change of address or by failure of the buyer to communicate with the holderfor 45 days after any payment default (§1803.6). In a home improvement contract, afinance charge may be assessed from the approximate date of commencement of thework as set forth in the contract (§1805.6). An extension or deferral charge is not toexceed 1 percent per month on the amount deferred and may be charged if thecontract includes a precomputed finance charge; fee, not to exceed the lesser of $25or 10 percent of the then unpaid balance of the contract may be charged, if thecontract includes a simple interest finance charge (§1807.1).

Loan Terms: The contract shall: 1) be in writing; 2) be in a single document; and 3)contain the entire agreement of the parties (§§1803.1 and 1803.2). The contract shallinclude, in at least 12-point bold type, the words: 1) “Security Agreement” at the top ifa security interest in goods or realty is taken, or 2) “Retail Installment Contract” if nosecurity interest is taken (§1803.2). If it is explicitly understood between the buyerand the seller that the buyer will pay for the goods from the proceeds of a loan from athird party, and if the buyer makes a reasonable effort but is unable to obtain the loanon reasonable terms, then the buyer may rescind the contract within 3 business days(§1803.9). If any scheduled payment is more than 2 times as large as the average ofearlier payments, the buyer must be given the right to a new payment schedule withpayments not substantially greater than the average of the preceding installments(§1807.3). The buyer may prepay at any time before maturity without penalty, andreceive a refund of unearned interest (§1806.3).

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Prohibited Loan Terms: Prohibited terms include: 1) any waiver of provisions of the act(§1801.1); 2) acceleration clauses in the absence of the buyer’s default; 3) agreementby buyer not to assert a claim or defense arising out of the sale against a seller orassignee; 4) establishment of a power of attorney to confess judgment or anassignment of wages; 5) relief by the buyer to the seller from liability for any remediesthat the buyer may have against the seller; 6) agreement by the buyer to the paymentof any charge for rescinding or avoiding the contract; 7) provision to the seller of theright to bring action outside the county where the contract was signed, where thebuyer resides or resided at time of contract, or where the goods have become affixedto realty seller or holder or person acting on their behalf given power to enter buyer’spremises or commit any breach of the peace during repossession; 8) establishment ofa power of attorney appointing the seller or holder, or a person acting on their behalf,buyer’s agent for purposes of repossession (§1804.1). No contract for the sale ofgoods shall take a lien on goods already fully paid for or not sold by the seller. Nocontract for goods shall provide for a security interest in real property, unless thegoods sold are to be attached to the real property (§1804.3).

Disclosures: Any disclosures may be made in the form required or permitted byFederal Regulation Z. Regardless of Regulation Z application to the transaction,those disclosures must be made (§§1801.5 & 1803.3). In addition, the contract mustdisclose the method of calculating any rebate of unearned interest due uponprepayment or amount of any minimum finance charge (§1803.3). In any contractwhich takes a security interest in real property, a notice (in 14-point bold type justabove the buyer’s signature line in the same language as the rest of the contract),giving a warning to the buyer that the home could be sold without permission andwithout any court action if any payment required by the contract is missed. In atleast 10-point bold type, 1 of 3 notices (which differ slightly depending on method ofcalculating any rebate of unearned finance charge) must be provided, advising thebuyer to read the contract. The notice should be completed before signing; the buyerhas a right to a completed copy; and the buyer has the right to pay off the loan inadvance (§1803.2). A notice of any balloon payment and of the right to a newpayment schedule if buyer defaults on any balloon payment must be disclosed(§1807.3). The holder must send a notice within 10 days after repossession statingthe intention to sell the goods at a public sale or retain them in satisfaction of thedebt, and explain the buyer’s right to redeem and the amount required to redeem(§1812.2).

Prohibited Acts: Prohibitions include: 1) obtaining the buyer’s signature to a contractnot filled in (§1803.4); 2) offering a rebate, discount, or commission on the conditionthat the buyer helps in referral sales (§1803.10); and 3) requiring a purchaser to obtainfinancing from any particular source (§1812.20).

Criminal Penalties: Any willful violation of the act is a misdemeanor (§1812.6).

Civil Penalties/Enforcement: A security interest in realty created in any contractwhich fails to include the warning notice to the buyer that the house may be soldwithout permission or court action if any payments missed is void and unenforceable(§1803.2). Until a signed copy of the contract is delivered to the buyer, the buyer isonly obligated to pay the cash sales price (§1803.7). A buyer’s waiver of the act’sprovisions is void and unenforceable (§1801.1). Any prohibited provision included in acontract shall be void, but it shall not otherwise affect the validity of the contract(§1804.4). Any person who violates the act and any person who acquires a contractwith knowledge of such noncompliance is barred from the recovery of any financecharge or delinquency, collection, extension, deferral, or refinance charges imposed in

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connection with the contract; the buyer may recover any such charges paid (§1812.7).The buyer is entitled to 3 times such charges paid in any case of willful violations ofprovisions relating to finance charges for consolidated contracts (§1812.9).

Private Right of Action: Yes (§1812.10).


Special Assignee Provisions: The buyer’s written acknowledgment of the delivery of acopy of the contract shall be a reputable presumption of delivery and of the contractbeing completely filled in, in any action by or against an assignee without knowledgeto the contrary. If the holder sends the buyer copies of such documents and asks thebuyer to respond if the buyer did not receive copies at the time of the contract, and thebuyer fails to respond within 30 days, then it shall be conclusively presumed that thedelivery occurred as required (§1803.7). Until the buyer has a notice of assignment,the payment made to the last known holder shall be binding upon all subsequentholders or assignees (§1806.1). No contract may contain a provision in which thebuyer agrees not to assert a claim or defense against an assignee (§1804.1). Norights of action or defense, arising out of a sale in which the buyer has against theseller, shall be cut off by assignment; the assignee’s liability may not exceed theamount of the debt owed to the assignee at the time of the assignment (§1804.2).

Other: The buyer may redeem goods for 10 days after the holder gives the requiredpost-repossession notice stating holder’s intention to sell the goods at a public sale orretain them in satisfaction of the debt, or at any time before public sale if the buyeralso pays holder any bona fide reasonable expenses for repairing the goods orpreparing them for sale (§1812.2). If the proceeds of sale are insufficient to cover theexpenses of the sale and remaining balance due under the contract, the holder maynot recover the deficiency from the buyer (§1812.4).

Finance Lenders LawCitation: Cal. Fin. Code §§22000 to 22751

Applicability: The statute applies to: 1) consumer loans, secured by real or personalproperty, or unsecured, which are intended primarily for personal, family, or householdpurposes and which are made by a finance lender (any person engaged in thebusiness of making consumer loans) (§22009 and 22203); and 2) loans less than$5,000 for any purpose (§22204). Certain protections do not apply to bona fide loansof $5,000 or more, others do not apply to bona fide loans of $10,000 or more. Interestrate limitations apply to all loans (§22250).

Exemptions: Exemptions include: 1) banks, trust companies, savings and loanassociations, industrial loan companies, credit unions, small business investmentcompanies, California business and industrial development corporations, andpawnbrokers; 2) colleges and universities making student loans; 3) check cashers(§22050); 4) agricultural cooperatives (§22051); and 5) credit card companies(§22052). There are no penalties when violations are shown by a preponderance of theevidence to be unintentional, bona fide errors are committed notwithstanding themaintenance of procedures reasonably adapted to avoid such errors, and corrected bythe holder within 60 days of discovery (§22751).

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Licensing Requirements: Cal. Fin. Code §§2100 to 22167

Interest Rate and Fee Caps: For loans of $2,500 or less, the interest rate for theportion of unpaid balance: 1) not more than $225 cannot exceed 2.5 percent permonth; 2) greater than $225 but not more than $900 cannot exceed 2 percent permonth; 3) greater than $900 but not more than $1,650 cannot exceed 1.5 percent permonth; 4) greater than $1,650 cannot exceed 1 percent per month (§22303).Alternative rates for loans of $2,500 or less: 1.6 percent per month or 5/6 percent permonth above the monthly rate for advances to member banks prevailing in the previousquarter at the Federal Reserve Bank of San Francisco (§22304). An administrative feemay be charged: 1) loans of $2,500 or less, 5 percent of the total payments due or$50, whichever is less; 2) loans in excess of $2,500, an amount not to exceed $75.Only 1 fee per borrower per loan or per 12 month period is allowed (§22305).Charges may not be paid in advance or compounded (§22309). The actual cost ofappraisal and a reasonable escrow fee for loans secured by real property may becharged (§§22317 and 22318). A bad check fee may not exceed $15 (§22320). Adelinquency fee may not exceed $10 for a default of at least 10 days; may not exceed$15 for a default of at least 15 days (§22320.5).

Loan Terms: Balloon payments are prohibited (§22307). Maximum loan terms:principal less than $500 (24.5 months); principal at least $500 but less than $1,500(36.5 months); principal at least $1,500 but less than $3,000 (48.5 months); andprincipal at least $3,000 but less than $5,000 (60.5 months) (§22334). Prepayment ofany amount is allowed at any time (§22337). If the loan is prepaid in full, a rebate ofunearned interest is required. If 3 or more installments are prepaid in full at any 1time, recomputing of payment amounts is required (§22400).

Prohibited Loan Terms: Prohibited terms include: 1) confession of judgment or anypower of attorney (§22331), and 2) taking of real property as security for any loan ofless than $5,000 (§§22203 and 22330).

Disclosures: A schedule of charges must be displayed in each place of business(§22325). At the time a loan is made, a statement including the amount of the loan;date; maturity; schedule of payments; type of security; name and address of lenderand borrower; and total amount of finance charges or the annual percentage rate mustbe disclosed (§22337).

Prohibited Acts: Prohibited acts include: 1) false, deceptive, or misleadingadvertisements (§22161); 2) charging or receiving any interest or charge unless a loanis made, except that actual preparation expenses for a loan of $5,000 or more, whichis not consummated because of a borrower’s incomplete application or failure todisclose outstanding liens, may be collected (§22301); 3) requiring the borrower topurchase anything or enter into a collateral sales agreement in connection with anyloan (§22311); 4) charging more interest, discount, or consideration than the lender ispermitted to charge, if not licensed under this act (§22326); 5) splitting any loan toobtain a higher rate of charge than otherwise permitted by law (§22327); 6) taking anote that does not accurately disclose the amount, term, finance charge, and annualpercentage rate (§22332); 7) taking a note with the blanks left to be filled in (§22333);8) refinancing a retail installment contract unless: the buyer has been paying for notless than 90 days; the contract is for 180 days or more; the loan provides sufficientfunds to pay off retail installment contract; no security interest is taken in realproperty if the loan is for less than $5,000, or if the loan is for more than $5,000,includes a warning to homeowner in 14-point type that the home could be sold withoutpermission and without court action if payments are missed; and 9) balloon payments

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if the loan is for less than $10,000 (A notice and the absolute right to a new repaymentschedule is required if a balloon payment is included) (§22341).

Civil Penalties/Enforcement: The Commissioner of Corporations enforces and maymake general rules and regulations (§§22150 and 22701 to 22712). Unconscionableloans is a violation of the act (§22302). A security interest in real estate taken in arefinancing that fails to provide the required notice to the homeowner that the homemay be sold without permission and without court action if payment missed is voidand unenforceable (§22341). The Attorney General, at the Commissioner’s request,may seek injunctions to restrain violations of law, as well as restitution or actualdamages, on behalf of the borrower. A civil penalty of up to $2,500 per violation ispermitted (§22713). If the lender willfully violates the act or if a greater rate of interestthan allowed by law is willfully contracted for or received, the contract is void and nointerest, charges, or principal may be collected. If excess interest is charged orreceived but violation is not willful, all interest and charges on the loan are forfeited(§22751).


Special Assignee Provisions: The assignee of a retail installment contract continuesto be subject to all equities and defenses of the borrower against the seller, despiterefinancing or any agreement to the contrary (§22341).

Industrial Loan Companies - Loans and Purchased ObligationsCitation: Cal. Fin. Code §§18190 to 18274, 18435 to 18457

Applicability: The act applies to loans made by industrial loan companies (§18190).Industrial loan companies may make loans and acquire obligations whose proceedsare used for home improvements, provided the loans are secured by real estate havinga market value of at least 100 percent of the principal of the outstanding loans thereon(§18266.1).

Exemptions: Interest rate limitations do not apply to bona fide loans of $5,000 or more;many other limitations do not apply to bona fide loans of $10,000 or more (§§18191and 18191.5).

Licensing Requirements: Cal. Fin. Code §§18100 to 18166.

Interest Rate and Fee Caps: No charges are permitted unless a loan is made, exceptactual expenses incurred may be charged as an application fee for loans in excess of$5,000 (§18211). Interest rate may not exceed 2 percent per month on the part of theprincipal $1,000 or less; 1 percent per month on principle over $1,000; or, in thealternative, 1.6 percent per month on the entire balance (§18212). Or, as a furtheralternative rate, 5/6 percent per month above the monthly rate for advances to memberbanks prevailing in the previous quarter at the Federal Reserve Bank of San Francisco(§18212.1). For loans of not more than $2,500, an administrative fee may not exceed$50 or 5 percent of the principal amount, whichever is less. Only 1 administrative feein any 1 year from any 1 borrower is allowed (§18212.2). Pre-computation is notallowed (§18213). The 1) actual cost of appraisal for loans in excess of $5,000secured by real estate (§18216), and 2) a reasonable escrow fee (if loan secured by

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real estate) (§18217), and 3) court costs and reasonable attorney fees in a collectionaction, or bona fide expenses paid for non-judicial collection not exceeding 10 percentof outstanding principal (§18218) may be charged. Bad check fees cannot exceed$15 (§18218.5).

Loan Terms: The loan term shall be for 120.5 months or less (§18205). Loans insuredby the Farmer’s Home Administration (FHA), Veterans’ Administration (VA), anotherfederal agency, or a state agency may be for longer terms (§18209). Notes securedprimarily by real property must not have balloon payments and may be for a term upto 30 years and 30 days; first mortgages may be made for up to 40 years and 30 daysif such loans do not exceed 5 percent of the industrial loan company’s outstandingobligations. Loans for less than $20,000 shall be secured solely by real property orsolely by personal property but not both. Loans secured solely by personal propertyshall not have a term exceeding 120.5 months (§18210). The borrower may prepay atany time (§18222).

Prohibited Loan Terms: Confession of judgment or power of attorney is prohibited(§18440).

Disclosures: A schedule of maximum charges must be displayed prominently at eachplace of business (§18230). At the time the loan is made, a written statementdisclosing the amount, date, maturity, schedule of payments, type of security, nameand address of lender and borrower, and agreed rate of charge must be disclosed(§18231).

Prohibited Acts: Prohibited acts include: 1) splitting any loans or splitting loansbetween husband and wife and thereby receiving charges in excess of those permittedby the act (§§18219, 18220, and 18221), 2) taking a note that does not accuratelydisclose the actual amount, term, or agreed rate of charge, or which has blanks left tobe filled in (§18235), and 3) requiring the borrower to purchase anything or enter into acollateral sales agreement in connection with any loan (§18441).

Criminal Penalties: Willful violations are punishable by a fine of not more than$10,000, year’s imprisonment, or both (§18435). Any director, officer, or employeewho asks for or receives a kickback from borrower for procuring a loan is guilty of afelony (§18445).

Civil Penalties/Enforcement: Industrial loan companies must request and receiveapproval from the Commissioner of Financial Institutions to enter the homeimprovement financing business (§§18266.2 and 18266.3). If the lender charges inexcess of the amount allowed by the act (except for unintentional and bona fidecomputational errors), then the contract is void and no principal, interest, or chargesmay be collected (§18439).

Private Right of Action: Individual actions only (§7-3-29)

Applicability of State UDAP: Yes. Cal. Civ. Code §1750 (West). Actual damages;injunction; punitive damages; restitution; attorney fees to prevailing consumers, to thedefendant if the action is brought in bad faith

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Colorado Uniform Consumer Credit CodeCitation: Colo. Rev. Stat. §§5-1-101 to 5-13-105

Applicability: The act applies to consumer credit transactions, including consumercredit sales and consumer loans (§5-1-301).

Exemptions: Exemptions include: extensions of credit to governmental agencies orinstrumentalities; certain sales of insurance; transactions with regulated public utilitiesor common carrier tariffs; disclosure of rates in connection with securities transactionswith regulated broker-dealers; licensed pawnbrokers; loans by an agency,instrumentality or political subdivision of the state; commercial credit plans (unless ifstated that code provisions apply) (§5-1-202). Consumer credit sales do not include,except as required by the federal Consumer Credit Protection Act, a sale of a mobilehome or of an interest in land if the credit service charge does not exceed 12 percentper year, or, for the sale of an interest in land, the sale is secured by a purchase-money first mortgage. Consumer Credit Sales do not include sales for a business,investment, commercial, or primarily agricultural purpose (§5-2-104). For consumerloans (except loans with disclosure provisions, debtor’s remedies, and powers, andfunctions of the administrator), a consumer loan does not include a loan secured by amobile home or a loan primarily secured by an interest in land if, at the time of theloan, the value of the collateral is substantial in relation to the amount of the loan, andthe rate of the finance charge does not exceed 12 percent per year, or the loan issecured by a purchase-money first mortgage (or refinancing thereof) (§5-3-105). Thereis no liability for self-discovery of error before a notice or action if the creditor notifiesthe person of the error and corrects it, and there is no liability for bona fide errorsnotwithstanding the maintenance of reasonable procedures (§5-5-202). There is noliability for acts done in good faith in conformity with administrative rules (§5-5-202).

Licensing Requirements: Colo. Rev. Stat. §5-3-503 Supervised loans (loans with aninterest rate in excess of 12 percent).

Interest Rate and Fee Caps: For a consumer credit sale (other than pursuant to arevolving charge account), a credit service charge may not exceed the greater of: 1)the total of 25 percent per year on the part of the unpaid balance that is $630 or less,20 percent per year on the part of the unpaid balance that is more than $630 but notmore than $2,100, and 15 percent per year on the part of the unpaid balance that ismore than $2,100, or 2) 21 percent per year on the unpaid balance (§5-2-201).However, notwithstanding that limit, a seller may contract for and receive a minimumcredit service charge of not more than: 1) $5 when the amount financed does notexceed $75, 2) $7.50 when the amount financed exceeds $75 but is less than $500, or3) $15 when the amount financed is $500 or more. For revolving charge accounts onmonthly billing cycle, the seller may charge not more than 1 3/4 percent of theaverage daily balance (or prorated amount for non-monthly billing cycle), and $.50charge of the unpaid balance on the billing date (or prorated amount for non-monthlybilling cycle) (§5-2-207). For a consumer loan other than a supervised loan (a loanwhose interest rate exceeds 12 percent per year), the creditor may not receive a loanfinance charge of more than 12 percent per year on unpaid balances (§5-3-201). For asupervised loan (interest rate exceeds 12 percent), a loan finance charge may notexceed the greater of: 1) the total of 25 percent per year on the part of the unpaidbalance that is $630 or less, 20 percent per year on the part of the unpaid balancethat is more than $630 but not more than $2,100, and 15 percent per year on the partof the unpaid balance that is more than $2,100, or 2) 21 percent per year on theunpaid balance (§5-3-508). For a loan not considered a ‘consumer loan’ because it issecured by a mobile home or primarily by an interest in land, the loan finance charge

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may not exceed 45 percent (§5-3-605). If there is no agreement as to the rate orprovision of law for a different rate, then the rate is 8 percent (§§5-12-101, 5-12-102).Parties to any bond, bill, promissory note or other writing may stipulate a rate notexceeding 45 percent per year (§5-12-103). In addition to permitted service/financecharges, the creditor may also charge: official fees and taxes; insurance charges;registration; certificate of title or license fees; charges for other benefits conferredupon the consumer (if reasonable in relation to the benefits, not of credit type, andauthorized by the administrator); annual credit card charges; and, for a debt securedby an interest in land, reasonable closing costs (§§5-2-202, 5-3-202). Deferralcharges are permitted for both consumer credit sales and loans (§§5-2-204, 5-3-202).The seller/creditor and the buyer/borrower may agree to refinance the unpaid balanceof a consumer credit sale or loan, and the seller may contract for and receive a creditservice charge on the amount refinanced, which may not exceed the rate forconsumer credit sales (§§5-2-205, 5-3-205). For a precomputed consumer creditsale, or the refinancing, or consolidation thereof, the parties may contract for adelinquency charge for payments not paid within 10 days of due, provided that thecharge may not exceed the greater of 5 percent of the unpaid installment (to amaximum of $10) or the deferral charge that would be permitted to defer the unpaidamount for the delinquent period (§§5-2-203). Parties may agree at the time of theprecomputed consumer credit sale, refinancing or consolidation that if an installmentis not paid within 10 days of when due, the seller may unilaterally grant a deferral andimpose a deferral charge (§§5-2-203). For a precomputed consumer loan, refinancingor consolidation, the parties may contract for a delinquency charge on any installmentnot paid in full within 10 days of when due that does not exceed the greater of: 1) 5percent of the unpaid amount of the installment (not to exceed $10), or 2) thepermitted deferral charge (§5-3-203). For a consumer loan that is not precomputed,the parties may contract for a delinquency charge not to exceed $15 (§§5-3-203). Ifagreed to by the parties, a creditor may charge an additional fee (not to exceed $20)for dishonored checks, credit sales (§§5-2-204), and consumer loans (§5-3-202). Foreither a consumer credit sale or loan, the creditor may add advances to performcovenants of the consumer, after giving prior notice and a reasonable opportunity forthe consumer to perform, and may charge a finance charge, not exceeding the ratedisclosed to the consumer (§§5-2-208, 5-3-208). The agreement may provide forpayment by the buyer/borrower of reasonable attorney fees of not more than 15percent of the unpaid debt, or such additional amount as may be directed by a court,consumer credit sales (§§5-2-413), consumer loans (§5-3-404), and supervised loans;no exception for court direction (§5-3-514).

Loan Terms: For a consumer credit sale, the seller may take a security interest in theproperty sold, and in goods upon which services are performed, in which goods soldare installed, or to which annexed, or in land to which goods are affixed or which ismaintained, repaired, or improved as a result of the sale, so long as the amountfinanced is $1,000 or more (if security interest is in land), or $300 or more (if securityinterest in goods) (§5-2-407). If the loan is a supervised loan in which the principal is$2,100 or less, the creditor must schedule the repayment in substantially equalinstallments at equal periodic intervals, except to the extent that the schedule ofpayments is adjusted to the seasonal or irregular income of the debtor, and over aperiod of not more than 1) 37 months, if principal is more than $630, or 2) not morethan 25 months, if $630 or less (§5-3-511). Cross collateralization is permitted (§5-2-408). The buyer (consumer credit sale) or borrower (consumer loan) may prepay infull or in part if the payment is not less than $5 (§§5-2-209, 5-3-209). Rebate is paidupon prepayment and computed as provided for by the Code (§§5-2-210, 5-3-210).Consolidation is permitted of both consumer credit sales and loans (§§5-2-206, 5-3-206). For home solicitation sales, the buyer has a 3-day right to cancel (§5-2-502).

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Prohibited Loan Terms: The creditor may not take an interest in land as security for asupervised loan in which the principal is $2,000 or less (§5-3-510). No assignment ofearnings is allowed; no default charges beyond reasonable expenses may be incurred;and no confession of judgment is permitted (consumer credit sales) (§§5-2-410, 5-2-412, §§5-2-414 to 5-2-415); (consumer loans) (§§5-3-403, 5-3-405, 5-3-407).

Disclosures: For consumer credit sales or consumer loans, required disclosuresmust: be made in writing (a copy must be delivered to the buyer), and be made clearlyand conspicuously (§§5-2-302, 5-3-302). Required disclosures must be made beforecredit is extended, except for sales made by telephone or mail, but may be made inthe sale, refinancing, or consolidation agreement, lease or other evidence ofindebtedness to be signed by the buyer if it is set forth conspicuously, and thedisclosures need to be made to only one buyer (§§5-2-302, 5-3-302). The seller mustgive the buyer (or creditor must give borrower) a statement of the rate of the creditservice charge in terms of an annual percentage rate, as defined (§§5-2-304, 5-3-304).For consumer credit sales not made pursuant to a revolving charge account, the sellermust give to the buyer: a brief description of the goods, services or interest in land; thecash price and any applicable taxes if not individually itemized in the cash price; theamount of the down payment and a statement of the portion paid in money and theportion paid by an allowance for property traded in, if there is a security interest in theproperty traded in that the seller agrees to discharge the seller must also state theamount which the seller agrees to pay to discharge the security interest and thisamount may be deducted from the trade-in allowance; the difference between the cashprice and the down payment; the amount paid or payable for registration, certificate oftitle or license fees, if not individually itemized in the cash price, along with adescription or identification of the fees; the amount of official fees and taxes, if notitemized, and a description; a brief description of insurance to be provided or paid forby the seller, including the type and amount of coverage and charges; the amount ofother additional charges (with a brief description); the amount financed; the amount ofthe credit service charge and the amount of the unpaid balance, except in the case ofa sale of a dwelling; the rate of the credit service charge (except in the case of a creditservice charge that does not exceed $5 when the amount financed does not exceed$75, or $7.50 when the amount financed exceeds $75); the number of payments, theamount of each payment, the due date of first payment and the due date ofsubsequent payments or interval between payments; any default, delinquency orsimilar charges payable in the event of late payments; and the description of anysecurity interest in connection with the extension of credit, with a clear identification ofthe secured property (§5-2-306) (consumer loan disclosures (§5-3-306)). Beforemaking a consumer credit sale pursuant to a revolving charge account, the seller mustdisclose: the conditions under which a credit service charge may be made, includingthe time period, if any, within which any credit may be repaid without charge; themethod of determining the balance; the method of determining the amount of creditservice charge; the corresponding nominal annual percentage rate (if more than 1, theamount of a balance to which each corresponding nominal annual percentage rateapplies); conditions under and the method by which additional charges may be made;conditions under which the seller may retain or acquire a security interest in theproperty to secure balances resulting from a sale under a revolving charge account(§5-2-310). Furthermore, if there is an outstanding balance owed at the end of thebilling cycle or if a credit service charge is made with respect to the billing cycle, theseller must disclose to the buyer, within a reasonable time after the end of the cycle:the outstanding balance at the beginning of the cycle; the cash price and date of eachsale during the cycle and unless previously furnished, a brief description of the goodsor services sold; the amount credited to the account during the cycle; the amount ofthe credit service charge and additional charges, itemized and explained; the periodic

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percentage used; the balance on which the service charge was computed; if the creditservice charge for the cycle exceeds $.50 (or prorated amount, if non-monthly cycle),the charge must be expressed as an annual percentage rate. If the credit servicecharge does not exceed $.50 (or prorated amount for a non-monthly billing cycle), thecorresponding nominal annual percentage rate applies (§5-2-310) (revolving loanaccount disclosures (§5-3-309)). If the seller refinances the balance owed, the sellermust disclose to the buyer the amount of the unpaid balance before refinancing(including accrued charge); the amount and a brief itemization of rebates to which thebuyer would have been entitled if the debt had been prepaid pursuant to the provisionson rebate upon prepayment (except that no minimum credit service charge shall beallowed); the amount of additional charges; the amount financed resulting from therefinancing; the credit service charge amount; the unpaid balance; the number ofpayments, the amount of each payment, due date of first payment and due date ofsubsequent payments (or interval between); the credit service charge rate (except inthe case of a credit service charge that does not exceed 1) $5 when the amountfinanced does not exceed $75, or 2) $7.50 when the amount financed exceeds $75)(§5-2-307). If the parties agree to consolidate an existing unpaid balance with asubsequent consumer credit sale, the seller must make similar disclosures (§5-2-308). If a consumer loan is consolidated, a creditor must give the information requiredfor consumer loans (§5-3-307). If the seller makes a deferral, the seller mustdisclose: the amount deferred; any additional charges; the aggregate amount deferred;the time to which payment is deferred; and the amount and annual percentage rate ofthe deferral charge, and when it is payable (§5-2-309) (consumer loan deferrals (§5-3-308)). If the seller makes a change in the terms of a revolving charge account orincreases the required minimum periodic payment, the seller must give 1 month’swritten notice (exception for changes agreed to by the buyer, or the increase in creditservice charge, periodic rate or other charge is a 1) result of the buyer’s delinquencyor default, 2) reduction, or 3) suspension of future credit privileges or termination of anaccount, or involves no significant cost to buyer, among other circumstances) (§5-2-416) (revolving loans (§5-3-408)). In a home solicitation sale, unless the buyerrequests provision of goods or services without delay in an emergency, the seller mustprovide in writing to be signed by buyer disclosures that designate 1) the date of thetransaction, 2) the date on which the buyer actually signs, and 3) a statement of thebuyer’s rights (by either complying with any notice of cancellation or a similarrequirement of any trade regulation of the FTC which applies to home solicitationsales or meets the statutorily prescribed notice of the buyer’s right to cancel) (§2-5-203). A notice of right to cure is prescribed (§5-5-111). No one (other than a spouse)is liable as a cosigner or guarantor unless the creditor receives a written notice thatcontains a completed identification of the debt and reasonably informs him or her ofthe obligation for it (§5-5-109).

Prohibited Acts: Discrimination is prohibited (§5-1-109). False and misleadingadvertising and certain practices specified are prohibited (consumer credit sales (§5-2-313)), (consumer loans (§5-3-312)); no evidence of indebtedness shall be signed thatcontains blank spaces to be filled in after execution (except for serial numbers orother identifying marks not available at time of execution) (§5-2-302). The seller maynot use multiple agreements for a single credit sale or loan for purpose of obtaining ahigher credit service charge than would otherwise be allowed (consumer credit sales(§5-2-402)), (consumer loans (§5-3-409)). No surcharge is allowed on any holder whoelects to use a credit or charge card in lieu of payment by cash or check (§5-3-110).No referral sales are allowed (§5-2-411). Limitations exist on garnishment (§5-5-105).Extortionate extensions of credit, those where it is understood that delay in making orfailure to make repayment could result in the use of violence or other criminal meansto cause harm, are unenforceable. An extension of credit made at a rate of more than

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45 percent per annum by a creditor with a reputation for the use or threat of use ofviolence or other criminal means to cause harm is prima facie evidence of anunenforceable extension of credit (§5-5-107). The creditor may not accelerate orrepossess until 20 days after the notice of right to cure, if default consists only offailure to make a payment (this provision does not apply to consumer credittransactions that are payable in four or fewer installments) (§5-5-112).

Criminal Penalties: Criminal penalties include: willfully charging in excess of thosepermitted (misdemeanor); making of supervised loans without a license(misdemeanor); and, engaging in the business of making consumer credit sales,consumer leases, or consumer loans, or of taking assignments of rights againstdebtors without complying with certain administrative provisions (misdemeanor) (§5-5-301).

Civil Penalties/Enforcement: The limit on civil penalties is $5,000 (§5-6-113).Responsibility for enforcement lies with the administrator, an assistant attorneygeneral designated by the state Attorney General, or any district attorney designatedby such assistant (§5-6-103). The administrator may investigate, issue cease anddesist orders, bring injunctive actions, seek temporary relief, and file civil actionsseeking a civil penalty (§§5-6-106 to 5-6-113). If a trier of fact finds an agreement orclause to have been unconscionable when made, or that an agreement was inducedby unconscionable conduct, then the court may refuse to enforce the agreement ormay limit the application of any unconscionable clause (specific factors indicatingunconscionability listed) (§5-5-108).

Private Right of Action: For limitations on the schedule of payments or loan term forsupervised loans, or authority to make supervised loans, the debtor has the right torecover from violator or assignee a penalty determined by the court not more than 3times the amount of the credit service charge or loan charge (§5-5-202). For otherviolations, the debtor has the right to refund, which may be made by reducing thedebtor’s obligation, and if the person liable to debtor refuses to make a refund within areasonable time after demand, the debtor may recover a penalty determined by a courtto be not more than the greater of either: 1) the amount of the credit service/loanfinance charge, or 2) 10 times the amount of the excess charge (§5-5-202). However,there is no liability for bona fide errors made notwithstanding the maintenance ofreasonable procedures (§5-5-202). The court may award attorney fees to the debtor(§5-5-202). If the creditor repeatedly fails to provide a debtor with a statement of anannual percentage rate or credit service or loan finance charge, and has receivedwritten notice from the administrator of such failure, any such subsequent failure shallrelieve the debtor from any obligation to pay any credit service charge or loan financecharge (§5-5-202). If the creditor fails to comply with disclosure provisions (other thanfor advertising) required for credit sales or consumer loans, the creditor is liable fortwice the amount of the credit service/loan finance charge (not less than $100 normore than $1,000) (§5-5-202). The violation of antidiscrimination provision allows foraction (not less than $100 nor more than $1,000, together with attorney fees) (§5-5-206).

Applicability of State UDAP: Yes. Colo. Rev. Stat. §6-1-101. Damages, trebledamages; minimum damages of $250; attorney fees; and costs for a successful action

Special Assignee Provisions: The assignee of consumer credit sale is subject to allclaims and defenses of the buyer notwithstanding holder in due course status, but isliable only to the extent of amount owed to the assignee (§5-2-403). The buyer/borrower is authorized to pay the original seller until the buyer/borrower receives

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notification of assignment of the rights to payment that reasonably identifies the rightsassigned (consumer credit sales (§5-2-412)), (consumer loans (§5-3-406)).

Other: For consumer credit sales, there is no liability for deficiency unless the sellerhas complied with the Uniform Commercial Code (UCC) (§5-5-103). If the sellerrepossesses or voluntarily accepts surrender of the goods that 1) were the subject ofthe sale, and 2) the seller has a security interest, then the buyer is not personallyliable to the seller for the unpaid balance of the debt arising from the sale of acommercial unit of goods of which the cash sale price was $2,100 or less. In suchcase, the buyer is not personally liable to the seller for the unpaid balance of the debtarising from the sale, and the seller’s duty to dispose of the collateral is governed bythe UCC (§5-5-103). For a consumer credit sale (except a sale: 1) primarily foragricultural purposes; 2) of an interest in residential land and secured by a first deedof trust or similar lien, or 3) pursuant to a revolving charge account), the buyer has theright to refinance balloon payments (payments that are more than twice as large asthe average of all the other payments) (§5-2-405) (consumer loans (§5-3-402)). Thecreditor must deliver or mail to the consumer a written receipt for each payment (§5-5-110). Upon written request, the creditor must provide, without charge (twice duringeach year), a written statement of the dates and amounts of payments made withinthe past 12 months and the total amount unpaid (§5-2-405). Within 30 days offulfillment of all obligations, creditor shall upon request deliver or mail written evidenceacknowledging payment in full (§5-2-405). In the case of a consumer credit sale orconsumer loan for which a security interest is retained or acquired in any propertywhich is used as the debtor’s dwelling, the debtor has a 3-day right to cancel, whichthe creditor must disclose to the debtor (purchase money mortgages and refinancingthereof, and advances under a preexisting open-ended credit plan where a securityinterest has already been retained or acquired are exempted) (§5-5-204). For homesolicitation sales, the buyer must, upon demand, tender goods delivered pursuant tothe sale, but need not tender at any place other than the residence. The buyer maykeep the goods if the seller fails to demand possession within a reasonable time (40days) after cancellation (§5-2-505). Within 10 days of receiving a notice ofcancellation, the seller must tender any payments made, any note or other evidenceof indebtedness, and any goods traded in (§5-2-504).

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Small Loan Lenders ActCitation: Conn. Gen. Stat. §§36a-555 to 573

Applicability: §36a-555 applies to persons engaging in the business of making loans inthe value of $5,000 or less, or $10,000 or less for open-ended loans.

Exemptions: §36a-555 exempts banks, credit unions, and savings and loans.

Licensing Requirements: §36a-555 to 562

Interest Rate and Fee Caps: §36a-563 allows the licensee to collect charges up to 17percent on loans up to $1,800, and 11 percent on loans over $1,800. §36a-565 allowsthe licensee to charge up to 19 8/10 percent for an open-ended loan. §§36a-563 and§§36a-565 also delineate what additional charges may be made, and under whatcircumstances.

Loan Terms: §36a-567 allows prepayment of loans by the borrower. §36a-568 allows alicensee to take security in chattel or personal property other than household goods,and in real estate where the cash advance is more than $1,800.

Prohibited Acts: Any violation of the act is prohibited.

Civil Penalties/Enforcement: Under §36a-573, a loan for which a greater rate ofinterest has been charged than is allowed cannot be enforced.

Private Right of Action: Implied above

Applicability of State UDAP: Yes. Conn. Gen. Stat. §§42-110a, et seq. A plaintiffmay be entitled to actual damages, punitive damages, and attorney fees.

UsuryCitation: Conn. Gen. Stat. §§37-1 to 37-9

Applicability: The act establishes allowable interest rates.

Exemptions: §37-9 sets forth exceptions, including loans made by banks, creditunions, and savings and loans (as well as other exceptions which do not apply tohome financing).

Interest Rate and Fee Caps: §37-1 sets the interest rate “in the absence of anagreement to the contrary” at 8 percent. §37-4 sets interest rates limits for contractsat 12 percent.

Prohibited Acts: Any violation of usury statutes is prohibited.

Criminal Penalties: A usury violation a misdemeanor (§37-7).

Civil Penalties/Enforcement: None specified. §37-2 prohibits a borrower who brings anaction to recover more than 6 percent, for the “detention of money” by the lender.

Private Right of Action: Implied above

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Applicability of State UDAP: Yes. Conn. Gen. Stat. §§42-110a, et seq. A plaintiffmay be entitled to actual damages, punitive damages, and attorney fees.

Retail Installment Sales ActCitation: §§36a-770 to 788

Applicability: §36a-770 (7) applies to any agreement to repay in installments anamount loaned or advanced to a retail buyer for the purchase of goods and by virtue ofwhich a security interest in the goods is taken.

Loan Terms: §36a-771 contains general contract requirements, including: 1) therequirement that the contract be in writing, with no blanks left, 2) that the contract setforth separately the information required in §36a-675 to 685 (that is, the Truth inLending Act (TILA)), and 3) the standard “Notice to Buyer” provision. §§36a-781, 782and 783 contain the standard receipt for payment, cancellation of contract uponpayment in full, and rebate/refund provisions for prepayment.

Disclosures: See TILA disclosures as required under §36a-774.

Civil Penalties/Enforcement: Under §36a-788, enforcement is through theCommissioner of Banking. §36a-786 bars the recovery of charges where there is awillful violation. §36a-787 further contains a penalty provision of not less than $25 ormore than $500 per violation.

Private Right of Action: None specified

Other: §36a-785 rules the governing and limitations on foreclosures andrepossessions.

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Retail Installment Sales LawCitation: Del. Code Ann. tit. 6, §§4301 to 4351

Applicability: The statute applies to the sales of goods or services by a person, who isin the business of selling goods or services, for a time sale price payable ininstallments. Goods include things which, at the time of sale or subsequent thereto,are to be so affixed to realty as to become a part thereof, whether or not severabletherefrom. Services include improvements in connection with real property (tit. 6,§4301).

Exemptions: Sales of $75 or less where no security interest is retained by the sellerare exempt (tit. 6, §4302). If the seller or holder corrects any violation within 10 daysof noticing a failure or being notified thereof by the buyer, then the seller or holder isnot subject to penalties. However, this safe harbor does not apply to anyone whowillfully violates provisions relating to service charges for consolidated sales (tit. 6,§§4349, 4350).

Interest Rate and Fee Caps: The interest rate is established as agreed to by thecontract (tit. 6, §4315). The finance charge shall include any charges for investigatingor making contract, or for the extension of credit (tit. 6, §4317). The holder may, if thecontract so provides and an installment is 10 days past due, collect a late charge of$5 or 5 percent of the delinquent installment, whichever is less (a minimum charge of$1 is allowed) (tit. 6, §4308). Actual and reasonable costs of collection occasioned bythe removal of goods from Delaware without the holder’s permission, or by the failureof the buyer to notify the holder of any change of address or by the failure of the buyerto communicate with the holder for 45 days after any payment default (tit. 6, §4308).Actual court costs and reasonable attorneys’ fees may be charged if the contract isreferred for collection to an attorney (tit. 6, §4344).

Loan Terms: The contract shall be in writing and shall contain the entire agreement ofthe parties (tit. 6, §§4303, 4304). The contract shall include, in at least 10-point boldtype, the words “Conditional Sale Contract” or “Lien Contract” either at the top ordirectly above the buyer’s signature line (if a security interest in goods or realty istaken); or, the words “Retail Installment Contract” (if no security interest is taken) (tit.6, §4304). If any scheduled payment is more than 2 times as large as the average ofearlier payments, the buyer must be given the right to a new payment schedule withpayments not substantially greater than the average of the preceding installments (tit.6, §4326). The buyer may prepay at any time before maturity without a penalty andreceive a refund of unearned interest (tit. 6, §4322).

Prohibited Loan Terms: Acceleration clauses in the absence of buyer’s default areprohibited. The buyer is prohibited from entering into an agreement not to assert aclaim or defense arising out of the sale against a seller or assignee. A waiver ofprovisions of the act or of any right of action against the seller or holder of the contractor any other person acting on his behalf, for any illegal acts committed duringcollection or repossession, is not allowed. The seller or holder or person acting ontheir behalf is prohibited from ascertaining the power to enter the buyer’s premises orcommit any breach of the peace during repossession. A power of attorney appointingseller or holder, or person acting on their behalf, buyer’s agent for purposes ofrepossession is prohibited (tit. 6, §§4302, 4311). No contract for the sale of goodsshall take a lien on goods already fully paid for or not sold by the seller (tit. 6, §4313).

Disclosures: Disclosure requirements include, in at least 8-point bold type, a noticeadvising: 1) the buyer to read the contract (which should be filled-in) before signing it;2) that the buyer has right to a completed copy of the contract; and, 3) that the buyer

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has the right to pay off the loan in advance (tit. 6, §4304). The contract must disclosethe itemized amount financed; amounts of insurance and official fees, if any; financecharges; total and breakdown of payments; and sale price at the time (tit. 6, §4305).Any certificate of completion or satisfaction must include at the top, in 10-point boldtype, a notice stating that the buyer should not to sign the certificate until all servicesare satisfactorily performed or the goods are received and found satisfactory (tit. 6,§4312). Compliance with federal Truth in Lending Act (TILA) satisfies the disclosurerequirements (tit. 6, §4351).

Prohibited Acts: Prohibited acts include: 1) obtaining buyer’s signature to a contractnot filled in (tit. 6, §4306); and 2) assigning wages for a period of 60 days from thedate of default (tit. 6, §4345).

Criminal Penalties: Willful violations of the act are a misdemeanor (tit. 6, §4347).

Civil Penalties/Enforcement: Until a signed copy of the contract is delivered to thebuyer, the buyer is obligated only to pay the cash sales price (tit. 6, §4309). Abuyer’s waiver of the act’s provisions is void (tit. 6, §4302). Any person who violatesthe act or any person who acquires a contract with knowledge of such noncomplianceis barred from the recovery of any time price differential or finance charge ordelinquency, collection, extension, deferral, or refinance charges imposed inconnection with the contract; the buyer may recover any such charges paid (tit. 6,§4348). The buyer is entitled to 3 times such charges paid in case of willful violationsof provisions relating to finance charges for consolidated contracts (tit. 6, §4350).

Private Right of Action: Yes (tit. 6, §4348). Reasonable attorney fees and costs forprevailing party in any action brought hereunder, regardless of who institutes theaction (tit. 6, §4344)

Applicability of State UDAP: Yes. Del. Code Ann. tit. 6, §§2511, 2531. Injunction;attorney fees “may” be awarded to the successful party in exceptional cases; trebledamages (but only where the actual damages are awarded under common law orother Delaware statute)

Special Assignee Provisions: A buyer’s written acknowledgment of the delivery of acopy of the contract shall be a conclusive presumption of delivery and of contractbeing completely filled in (in any action by or against an assignee without knowledgeto the contrary) (tit. 6, §4309). Until the buyer has a notice of assignment, anypayment made to the last known holder shall be binding upon all subsequent holdersor assignees (tit. 6, §4320). No contract may contain a provision in which the buyeragrees not to assert a claim or defense against an assignee. No rights of action ordefense arising out of a sale in which the buyer has against the seller shall be cut offby assignment, unless the assignee gives the buyer written notice of assignment andbuyer fails to notify assignee within 15 days of facts giving rise to claim or defense, orunless assignee relies in good faith upon a certificate of completion or satisfactionsigned by the buyer (tit. 6, §§4311, 4312).

Licensed LendersCitation: Del. Code Ann. tit. 5, §§2201 to 2243

Applicability: The act applies to persons who engage in the business of lendingmoney (tit. 5, §2202).

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Exemptions: Exemptions include: any banking institution, federal credit union orinsurance company; any lender making less than 5 loans within any 12-month period;any person lending money as authorized by any other applicable law of Delaware orthe United States; any other person or class of loan that the State BankingCommissioner decides to exclude; and any participating merchant (tit. 5, §2202).

Licensing Requirements: Del. Code Ann. tit. 5, §§2202 to 2213

Interest Rate and Fee Caps: The interest rate is as agreed by contract (tit. 5, §2229).Reasonable fees may be charged for services rendered or for the reimbursement ofexpenses incurred in good faith in connection with the loan. The State BankingCommissioner is directed to issue a schedule of the maximum amounts that may becharged to a loan applicant for costs, fees, services, points, premiums, and otherreasonable expenses (tit. 5, §2231). Any delinquency charge is limited to 5 percent ofthe installment not paid (tit. 5, §2231). No prepayment penalty is allowed, except forresidential mortgage loans (tit. 5, §2234). If the contract so provides, reasonableattorney fees may be charged (all actual court, alternative dispute resolution and othercollection costs) if the lender refers the account for collection to a third party or anattorney not a salaried employee of the lender (tit. 5, §2236). Any other law of thisState that limits the rate or amount of interest or charges shall not apply to extensionsof credit under this act (tit. 5, §2237).

Loan Terms: The buyer may prepay a loan in full at any time and receive a rebate ofunearned interest (tit. 5, §2234).

Prohibited Loan Terms: Prohibited loan terms include: assignment of wages;confession of judgment or any power of attorney; and, acceleration clauses based onthe holder deeming these clauses insecure (tit. 5, §2242).

Prohibited Acts: Prohibited acts include: taking an assignment of wages (tit. 5,§2242), and advertising that is false, deceptive, or misleading (tit. 5, §2243).

Criminal Penalties: Criminal penalties include: failing to give the borrower, on request,a correct copy of the contract punishable by a fine of at least $20, but not more than$100 or one months imprisonment (tit. 5, §2239); and taking an assignment of wagesor including a prohibited loan term punishable by a fine of at least $100 but not morethan $500 or 6 months imprisonment (tit. 5, §2242).

Applicability of State UDAP: Yes. Del. Code Ann. tit. 6, §§2511, 2531. Injunction;attorney fees “may” be awarded the successful party in exceptional cases; trebledamages, but only where actual damages are awarded under common law or anotherDelaware statute

Interest-UsuryCitation: Del. Code Ann. tit. 6, §§2301 to 2305

Applicability: Lenders (tit. 6, §2301); loans made by unlicensed lenders specificallycovered in the act (tit. 5, §2202)

Interest Rate and Fee Caps: Interest allowed is at any rate agreed upon in writing thatis not in excess of 5 percent over the Federal Reserve discount rate, including any

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surcharge thereon. This limitation does not apply to loans which are for more than$100,000, and are not secured by a mortgage against the borrower’s principalresidence (tit. 6, §2301).

Civil Penalties/Enforcement: If a greater rate of interest than allowed by law has beencontracted for, the borrower is not required to pay the excess interest over the lawfulrate and may retain and deduct the excess from the amount of any debt. If theborrower has paid off the loan, the borrower may recover 3 times the amount of theexcess interest or $500, whichever is greater (tit. 6, §2304).

Private Right of Action: Recover excess interest when the whole debt has alreadybeen paid off (tit. 6, §2304)

Applicability of State UDAP: Yes. Del. Code Ann. tit. 6, §§2511, 2531. Injunction;attorney fees “may” be awarded the successful party in exceptional cases; trebledamages (only where actual damages awarded under common law or anotherDelaware statute)

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Interest and UsuryCitation: D.C. Code Ann. §§28-3301 to 3314

Applicability: This act establishes interest rates.

Exemptions: §3301 exempts certain loans over $1,000 from the limitations describedherein (exceptions do not pertain to consumer transactions, and would not, in anyevent, apply to loans secured by residential property).

Interest Rate and Fee Caps: §28-3301 establishes a 24 percent interest rate limit foran instrument in writing, and specifically applies that limit to first or subsequentmortgages of residential real property. §3308 applies the same 24 percent rate as aceiling for retail installment finance charges. Under §28-3302, if no interest rate isspecified by an express contract, the rate is 6 percent.

Loan Terms: §28-3301 further contains certain requirements for loans secured bymortgages or interests in residential property dealing with prepayment, advancepayment of taxes, and Truth in Lending Act (TILA) requirements.

Disclosures: §28-3310 provides that a lender (who received periodic payments onmore than five loans per year) shall furnish the borrower, upon request, with a writtenstatement of the payments made, application of payments. This section also limitsdelinquent charges.

Prohibited Acts: §28-3312 prohibits “unlawful practices,” including misrepresentationsand the failure to state material facts.

Criminal Penalties: §28-3313 makes a violation of the act a misdemeanor.

Civil Penalties/Enforcement: See “Private Right of Action” below.

Private Right of Action: §28-3304 allows a person to recover any usury paid in anaction brought within 1 year after the date of payment. §28-3305 limits the creditor’sjudgment to only principal. §28-3314 also allows a debtor to collect reasonableattorney fees, and actual and punitive damages.

Applicability of State UDAP: §28-3901 et seq. encompass lending practices; theconsumer may recover actual damages, attorney fees, punitive damages, and/or trebledamages (depending on the circumstances)

Consumer Credit Protection ActCitation: D.C. Code Ann. §§28-3801 to 3816

Applicability: Under §28-3801, the chapter “applies to actions to enforce rights arisingfrom a consumer credit sale or direct installment loan.”

Exemptions: Consumer credit sales in which the amount financed exceeds $25,000are exempt (§28-3802).

Loan Terms: §28-3804 prohibits the assignment of earnings; §28-3305 establishesrules for cross-collateralization of debts.

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Prohibited Loan Terms: §28-3810 prohibits referral sales rebates.

Disclosures: §28-3811 requires disclosure of a standard home solicitation notice andcancellation provisions.

Prohibited Acts: Violations of the act are prohibited.

Civil Penalties/Enforcement: §28-3812 limits the creditor’s ability to enforce the actfollowing default, without first giving the consumer notice and the right to cure. §28-3812 also prohibits the creditor from pursuing deficiencies, if the value of the collateralis less than $2,000.

Private Right of Action: §28-3813 states consumer remedies and specifies damagesthat may be collected, and allows attorney fees to be collected.

Special Assignee Provisions: §28-3808 makes an assignee subject to all claims ordefenses of the consumer (may not exceed the amount owed to the assignee at thetime of the assignment).

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Home Improvement Sales and Finance Act; Home ImprovementSales and FinanceCitation: Fla. Stat. §§520.60 to 520.998; Fla. Admin. Code Ann. Ch. 3D-80

Applicability: The act applies to any repair, replacement, remodeling, alteration,conversion, modernization, or improvement of any land or building which is to be usedas a single family residence, when such construction is done pursuant to a homeimprovement contract and a security interest in the real property is retained; contractswhere all or part of the contract price is to be paid in installments over more than 90days (§520.61).

Exemptions: Exemptions include: 1) construction of a new home or work done incompliance with a guarantee of completion of a new building project; 2) sales of goodsby a seller who neither arranges to perform nor performs directly, or indirectly, anylabor in connection with the goods’ installation or application; and 3) sellers who enterinto fewer than 2 home improvements contracts with a value of $500 or more in any 1calendar year (§520.61).

Licensing Requirements: Fla. Stat. §§520.63 to 520.69; Fla. Admin. Code Ch. 3D-80

Interest Rate and Fee Caps: If a contract is payable in substantially equal monthlyinstallments, beginning one month from the date the finance charge accrues: 12percent per year, with a minimum finance charge of $25 allowed. If a contract ispayable in irregular or unequal installments in either amount or period, or if paymentsdo not begin for more than 1 month after the date the finance charge accrues, a ratewhich will provide the same yield as if the contract were payable in equal installments,beginning within 1 month. Debt consolidation interest rates are: 10 percent simpleinterest or the rate for simple interest in ch. 687 [18 percent].

Fees allowed include: reasonable fees and costs actually paid for construction permitsand for title search, title insurance, and attorney fees relating to any mortgage or liengranted (§520.78); simple interest (§520.785); delinquency charge for each installmentoverdue 10 days or more allowed (but charge may not exceed 5 percent of thepayment due or $5) and may be charged only once; court costs actually incurred andattorney fees not exceeding 20 percent of the amount due and payable under thecontract (if the contract is referred to an attorney who is not a salaried employee of theseller or holder for collection) (§520.85). The holder may agree in writing to extend ordefer all or part of any scheduled payment, but may charge no more than 1.5 percentper month simple interest on the amount of the installment or installments or partthereof deferred during the period of the deferral, plus any added insurance premiums(§520.86).

Loan Terms: Either party may cancel the contract prior to midnight of the thirdbusiness day following the execution of the contract by giving written notice mailed byeither certified or registered mail (§520.72). Every home improvement contract mustbe in writing and signed by the parties and include the (1) name, address, and licensenumber of the home improvement finance seller; (2) names of the seller’s employeeswho solicited or negotiated the contract; (3) start and finish dates for the work; and (4)description of the work and the materials to be used (§520.73). The contract muststate whether the home improvement finance seller carries workers’ compensation andpublic liability insurance, and where they are applicable to the work to be performedunder the contract or whether the seller qualifies as a self-insurer (§520.73).

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The contract must state: 1) the premium paid for any group credit life or otherinsurance, 2) which party is responsible for procuring insurance, and 3) that anyunearned premiums must be credited to the buyer. If the seller is to procure theinsurance, a copy of the policy must be provided the buyer within 30 days (§520.76).The buyer may prepay the loan at any time and shall receive a refund of any unearnedinterest less an acquisition cost of $25 (§520.84).

Prohibited Loan Terms: Prohibited terms include: any provision authorizing a seller toselect a home improvement finance seller on behalf of a homeowner (§520.70); theagreement by the buyer not to assert any claim or defense arising out of the saleagainst the home improvement finance seller or their assignee, or waiver from anyright of action against the seller or a holder or other persons acting on their behalf forany illegal act committed in the collection of payments; an acceleration clause in theabsence of buyer’s default in performance; any clause relieving the home improvementfinance seller from liability for any claims the homeowner may have against the homeimprovement contractor; any clause authorizing the seller or holder or any personacting on their behalf to enter upon the premises unlawfully; a liquidated damagesclause which exceeds 10 percent of the cash price in the event the buyer fails orrefuses to accept delivery of the goods or performance of the services; requirementthat the execution of a note or series of notes which, when separately negotiated, becut off to third party rights of action or defenses against the home improvementfinance seller; and any power of attorney, confession of judgment or assignment ofwages (§520.74).

Disclosures: The written contract must disclose the amount financed; the financecharge; total of payments; total sales price; amount provided for debt consolidation;interest charge on the amount advanced for debt consolidation; amounts included forinsurance; and, official fees, survey or permit charges actually incurred. Compliancewith federal Truth in Lending Act (TILA) disclosure requirements satisfy thisrequirement of the act (§520.73). A notice to the homeowner must be printed in 10-point boldfaced type above the signature line and must state: 1) that the buyer shouldnot sign the contract in blank, 2) that the buyer is entitled to a copy of the contract atthe time of signing, and 3) that the contract may contain a mortgage or otherwisecreate a lien on the property that could be foreclosed on if payments are not made(§520.73).

Prohibited Acts: Prohibited acts include: 1) using a form contract that fails to disclosea named home improvement finance seller; 2) accepting or paying any compensationon or for a transaction other than from or for the home improvement finance sellerinvolved in the transaction (§520.70); 3) leaving any blank spaces in the contract to befilled in after the owner signs (§520.73); 4) waiving any provision (act by agreement orstatement by a buyer) of the act intended for the protection of the buyer (§520.75); 5)failing, without justification, to perform the contract or to materially deviate from theplans without the owner’s consent; 6) failing of a home improvement finance seller’semployee to remit funds to seller; 7) making any substantial misrepresentation in theprocurement of a contract; 8) fraud in executing or making material alterations to anycontract, note, or mortgage involving fraud; 9) preparing or accepting any note ormortgage with the knowledge that it recites a greater monetary obligation than theconsideration for the home improvement work; 10) false, deceptive, or misleadingadvertising; 11) willfully or deliberately disregarding the building code or the safety,labor, or workmen’s compensation insurance laws; 11) conducting business in a nameother than the one in which the home improvement finance seller is licensed; 12)knowingly or without due care violating the act or an order of the Florida Department ofBanking and Finance; 13) willfully failing to perform any written agreement with the

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homeowner; and 14) willfully failing to disclose anything required to be disclosed to thehomeowner (§520.90).

Criminal Penalties: Anyone who accepts or receives a completion certificate withknowledge that the work has not been finished, and utters, offers, or uses thecertificate in connection with the assignment or negotiation of that contract, or in usingthat contract as security for any credit or loan, shall be guilty of a first degreemisdemeanor (§520.91). Any person who willfully or intentionally violates the act orregulations is guilty of a first degree misdemeanor (§520.98).

Civil Penalties/Enforcement: Any costs and charges not authorized by the act areunenforceable and must be offset against any principal still owed or remitted to theowner (§520.79 and Rule 3D-80.002). Enforcement actions, investigations, regulation,and licensing are conducted by the Florida Department of Banking and Finance. Civilfines of $1,000 per violation are allowed (§§520.993 to 520.998).

Private Right of Action: Yes. For willful violations the homeowner may recover by wayof action or setoff or counterclaim an amount equal to the finance charge and any feescharged to the owner by reason of delinquency, plus attorney fees and costs(§520.98).

Applicability of State UDAP: Yes. Fla. State. §501.201. Injunction; declaratory relief;actual damages for consumer, provided retailer did not act in good faith and withknowledge; attorney fees and costs may be awarded to the prevailing party.

Special Assignee Provisions: Clauses in which the buyer 1) agrees not to assert anyclaim or defense arising out of the sale against the home improvement finance selleror their assignee, or 2) waives any right of action against the seller or a holder or otherpersons acting on their behalf for any illegal act committed in the collection ofpayments, are prohibited (§520.73). Unless a notice of assignment has been given,payment by the owner to the last known holder shall be binding upon any subsequentholder or assignee (§520.87). No holder shall sell, transfer, or assign a homeimprovement contract to any person who is not an authorized sales finance company;notice of the assignment must be given to the homeowner immediately. No note orother evidence of indebtedness may be negotiated or otherwise transferred withoutsimultaneous delivery of the related contract. No right of action or defense arising outof the transaction which the buyer has against the home improvement seller shall becut off by the assignment of the contract to a third party, whether or not the partyacquired the contract in good faith and for value (§520.88).

Other: Every note or mortgage must bear a notation on the side of the note in at least10-point boldface type that the note or mortgage is subject to the terms of a homeimprovement contract of even date (§520.80). A certificate of completion must beprepared and executed by the home improvement finance seller (§520.81). Uponwritten request, twice per year the holder of a contract must provide the buyer with awritten statement of all payments made and any amount still owing. The statementmust be provided within 10 days (§520.82). Upon payment in full, the seller mustrelease all encumbrances and return to the buyer any original instruments evidencingthe indebtedness (§520.83).

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Retail Installment and Home Solicitation Sales ActCitation: Ga. Code Ann. §§10-1-1 to 10-1-16

Applicability: The act applies to the sales of goods or services by a person whoregularly sells goods or services, primarily for personal, family, or householdpurposes, which are paid for in installments. Goods include items which, at the timeof sale or subsequent thereto, are to be used in the modernization, rehabilitation,repair, alteration, improvement, or construction of real property so as to become a partthereof, whether or not severable therefrom. Services include those services furnishedin connection with the modernization, rehabilitation, repair, alteration, improvement, orconstruction of real property. Retail sellers include those persons who regularly grantcredit to retail buyers for the purpose of buying goods or services from others (§10-1-2).

Exemptions: None of the provisions of the Georgia loan or interest statutes shall affector apply to any retail installment or home solicitation sale (§10-1-11). If the seller orholder corrects any violation within 10 days of the buyer’s execution of the contract,then the seller or holder is not subject to any penalties. If the seller or holder shows,by clear and convincing evidence, that any violation was not intentional and resultedfrom a bona fide clerical or typographical error, then the seller or holder is not subjectto any penalties (§10-1-15).

Interest Rate and Fee Caps: Notwithstanding any other law, the interest rate on aretail installment contract shall not exceed 13 percent per year. A minimum timecharge, not in excess of $12, may be charged on any contract for $50 or more; $7.50on a contract for more than $25, but less than $50; and $5 on a contract for $25 orless. If a retail time transaction involves the repair, modernization, alteration,improvement, construction, or rehabilitation of real property, the cash sale price mayinclude reasonable fees and costs actually paid for construction permits (§10-1-3).The holder may, if the contract so provides, collect: a delinquency charge not toexceed $10 if an installment is 10 days past due; and a bad check charge not toexceed $20 or 5 percent of the face amount of the check, whichever is greater. If thebuyer has failed to make good on the check within 10 days of receiving notice fromthe seller that a check has been dishonored, then a delinquency fee may not becharged in addition to the bad check fee. Reasonable attorney fees and court costs,if the contract is sent for collection to an attorney who is not a salaried employee ofthe seller, may be charged (§10-1-7).

Loan Terms: The contract shall be in writing, signed by the parties, and completedprior to the buyer’s signing the contract. The buyer may prepay at any time beforematurity of the loan and receive a refund of unearned interest, less an acquisition costof $20 (§10-1-3). The buyer shall have the right to cancel any home solicitation sale,until midnight on the third day after the date of the transaction. The seller shall havethe right to 1) $25 or 5 percent of the gross sales price, whichever is less, asliquidated damages for such cancellation; and 2) the actual cost of picking up themerchandise, or $5, whichever is less (§10-1-6).

Disclosures: Required disclosures include a notice: 1) advising the buyer to read thecontract (which should be filled-in) before signing it; 2) that the buyer has the right to acompleted copy; and 3) that the buyer has the right to pay off the loan in advance(§10-1-3).

Prohibited Acts: Requiring a buyer to sign a contract containing blank spaces isprohibited (§10-1-3).

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Criminal Penalties: Any willful violation is a misdemeanor punishable by a fine not toexceed $500 for the first defense, and punishable as a misdemeanor thereafter (§10-1-15).

Civil Penalties/Enforcement: The buyer’s proper written acknowledgment of thedelivery of a copy of the contract shall be presumptive proof of delivery and of thecontract being completely filled in (§10-1-3). Any buyer’s waiver of the act’s provisionsis void (§10-1-13). Any person who violates interest rate limitations of act is barredfrom the recovery of any finance, delinquency, or collection charge (§10-1-15).

Private Right of Action: For any willful violation of the act, the buyer may recover aminimum of $100 or 2 times the time price differential and any delinquency charge,plus attorney fees and court costs charged in connection with such a transaction(§10-1-15).

Applicability of State UDAP: Yes. Ga. Code Ann. §10-1-390. Injunction; generaldamages; exemplary and treble damages for intentional violations; costs and attorneyfees to successful consumers

Special Assignee Provisions: An assignment shall not bar any right of action arisingagainst the seller, and nor bar any defense against an assignee arising from violationof interest rate limitations (§10-1-9). Until the buyer has a notice of assignment, thepayment made to the last known holder shall be binding upon all subsequent holdersor assignees (§10-1-9).

Industrial LoansCitation: Ga. Code Ann. §§7-3-1 to 7-3-29

Applicability: The act applies to persons who make loans for $3,000 or less (§7-3-4).

Exemptions: Exemptions include: banks; trust companies; real estate loan ormortgage companies; federal savings and loan associations; Georgia building and loanassociations; credit unions; pawnbrokers; student loans; persons making loans andcharging 8 percent per year or less simple interest (§7-3-6). If the seller or holdercorrects any violation within 15 days after discovering an error, and prior to theinstitution of any action or the receipt of a written notice of the violation, then the selleror holder is not subject to civil penalties to the borrower. If a seller or holder shows, bya preponderance of evidence, that any violation was not intentional, and resulted froma bona fide clerical or typographical error (notwithstanding the maintenance ofprocedures reasonably adopted to avoid any such error), then the seller or holder isnot subject to penalties. A licensee acting in conformity with any rule or regulationissued by the Commissioner of Insurance or the Georgia appellate courts shall bepresumed to have acted in accordance with the law and not be liable for any such actor practice (§7-3-29).

Licensing Requirements: Ga. Code Ann. §§7-3-8 to 7-3-12

Interest Rate and Fee Caps: The interest rate may not exceed 10 percent per year.Interest may be discounted in advance on loans repayable in 18 months or less, andmust be added on for longer-term loans. A loan fee of 8 percent of the first $600 ofprincipal and 4 percent of the remainder is permitted, except on refinancing within 6months, provided such charges do not exceed the criminal usury limits of §7-4-18.

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Delinquency charges are limited to 5 percent of any installment not paid within 5days. A maintenance charge of $2 per month per loan outstanding is permitted (§7-3-14). Commissions paid to third parties by borrowers shall not exceed the interestcharge limitations of the act (§7-3-5). The actual cost of recording any securityinstrument; actual insurance premium costs; court costs and attorney fees authorizedby law incurred in collection; and actual and reasonable expenses of repossessing,storing and selling collateral are permitted fees (§7-3-15).

Loan Terms: The loan term shall be for 36.5 months or less (§7-3-14). The buyer mayprepay at any time and receive a refund of any unearned interest (§7-3-17).

Disclosures: At the time that a loan is made, a statement must be provided (inEnglish) disclosing the: amount; date; schedule of payments; type of security; nameand address of the lender and the borrower; and the total amount of cash advanced,interest, and fees (§7-3-18).

Prohibited Acts: Prohibited acts include: false, deceptive, or misleading advertising(§7-3-13); and, loan splitting, thereby receiving charges in excess of those permittedby the act (§7-3-15).

Criminal Penalties: Knowing and willful violations of the act are a misdemeanor (§7-3-29).

Civil Penalties/Enforcement: The state Commissioner of Insurance shall administerand enforce the act (§7-3-7). Violations of any cease and desist order issued by theCommissioner when a determination is made that action constitutes a publicnuisance (§7-3-23). Any contract made by a lender who should be, but is not,licensed under this chapter is void. Violations by a licensed lender punishable bypenalty of twice all interest and loan fees charged, or $100, whichever is greater.Contracts made knowingly and willfully in violation of act are void (§7-3-29).

Private Right of Action: Individual actions only (§7-3-29)

Applicability of State UDAP: Yes. Ga. Code Ann. §10-1-390. Injunction; generaldamages; exemplary and treble damages for intentional violations; costs and attorneyfees to successful consumers

Interest-UsuryCitation: Ga. Code Ann. §§7-4-1 to 7-4-21

Exemptions: Retail installment sales and loans made by Georgia industrial banks areexempt (§7-4-2). Any commissions paid to third parties by borrowers shall not rendera loan usurious (§7-4-8).

Interest Rate and Fee Caps: Interest rates: loans of $3,000 or less 16 percent peryear simple interest; loans of more than $3,000 but less than $250,000 (any agreedrate of simple interest and charges); loans of $250,000 or more (any agreed rate ofinterest and charges). However, any agreed upon interest rate is still subject to thecriminal usury limit of 5 percent per month (§7-4-2; see §7-4-18). Prepaymentpenalties are forbidden, unless stipulated in the contract (§7-4-2).

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Criminal Penalties: Charging interest greater than 5 percent per month, either directlyor indirectly, is a misdemeanor (§7-4-18).

Civil Penalties/Enforcement: Usurious interest is forfeited and may be set off againstany principal owed to the creditor (§7-4-10).

Private Right of Action: Yes. Claims of violations on loans secured by real estate maybe asserted only in individual suits and not in class actions (§7-4-21).

Applicability of State UDAP: Yes. Ga. Code Ann. §10-1-390. Injunction; generaldamages; exemplary and treble damages for intentional violations; costs and attorneyfees to successful consumers.

Other: The act establishes a criminal interest rate cap at 5 percent per month (§7-4-18).

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Uniform Consumer Credit CodeCitation: Title 14 Guam Code Ann.

Applicability: The purpose of §1102 is to: simplify, clarify, and modernize the lawgoverning retail installment sales, consumer credit, small loans, and usury; furtherconsumer understanding of the terms of credit transactions, and to promotecompetition among suppliers of consumer credit; protect consumer buyers againstunfair practices; permit the development of sound consumer credit practices; andmake the law uniform among various jurisdictions. §2 addresses credit sales, and §3addresses loans.

Exemptions: Under §2401, the credit sales provision does not apply to sales or leasesin which the amount financed is more than $25,000, or to interests in land. Under§3401, the loan provisions do not apply to loans of greater than $25,000.

Licensing Requirements: §§3503-3507 contain licensing requirements for “regulatedlenders.”

Credit Sales: §2201 allows loan finance charges on credit sales: 36 percent up to$300; 21 percent between $300 and $1,000; and 15 percent for over $1,000 or 24percent. The act then provides the usual UCCC list of additional charges and costs:§2202 allows additional charges such as official fees and charges for insurance andother benefits of value to the consumer; §2203 provides for delinquency charges;§2204 provides for deferral charges; §2205-2207 provide for credit service charges.

Consumer Loans: §3201 addresses loan finance charges on consumer loans up to 10percent, other than regulated loans or loans pursuant to a revolving loan account.§3202 sets forth requirements for additional charges. §3203 sets forth requirementsfor delinquency charges. §3204 sets forth requirements for deferral charges. Sections3205 and 3206 set forth requirements for loan finance charges.

Regulated Loans: §3508 provides for loan finance charges: 36 percent for amounts upto $300; 18 percent for $300-$500; 12 percent for $500-$1,500, or 24 percent.

Loan Terms: §§2209 to 2210 and 3208 to 3209 address the consumer’s right to repayin advance, and rebate entitlement. Under §§2405 and 3402, if the agreementcontains a balloon payment, then the buyer shall have the right to refinance at thetime of the balloon on terms “no less favorable to the buyer than the terms of theoriginal sale.” §§2413 and 3404 allow for the provision of attorney fees, but not inexcess of 15 percent of the unpaid debt.

Prohibited Loan Terms: §2402 prohibits the use of multiple agreements to obtainhigher interest rates. §2410 prohibits assignment of earnings. §2411 prohibits referralsales.

Criminal Penalties: §5301 makes a violation of the act a misdemeanor.

Civil Penalties/Enforcement: §5, Remedies and Penalties, sets forth the standardUCCC remedies and penalty provisions. §5103 restricts deficiency judgments if thebalance owed is under $1,000. Under §5201, a buyer is not obligated to pay a chargein excess of that allowed under the act; if the buyer is entitled to a refund. If the sellerrefuses to provide the refund, then the court may award the buyer no greater than 10times the amount of the excess, or the amount of the credit service charge or loanfinance charge. If the creditor violated the provisions governing regulated loans, then

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the buyer is not responsible to pay either principal or interest. The creditor is notconsidered responsible if the error was unintentional. If the court finds the creditorliable, it may award attorney fees.

Private Right of Action: Implied in the above (Civil Penalties/Enforcement)

Special Assignee Provisions: Under §2402, a transferee of a consumer creditagreement may not be liable for the buyer’s claims and defenses if the transfereegives the buyer a notice of the transfer, and the buyer does not give the transferee anotice of a claim within 6 months.

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Credit Sales ActCitation: Haw. Rev. Stat. §§476-1 to 476-32

Applicability: The act applies to the sales of goods or services by a person whoregularly sells goods or services, and to whom the obligation to pay over time issubject to a finance charge or in more than 4 installments. Goods include itemswhich are or will become fixtures. Services include repairs, alterations, orimprovements upon or in connection, with real property (§476-1).

Exemptions: If the seller corrects any violation prior to the institution of any action orany notification from buyer, then the seller or holder is not subject to penalties (§476-21).

Interest Rate and Fee Caps: Any payment on the account of principal, which is dueon a particular date, may be deferred or extended. A finance charge may be collectedin advance at the allowed interest rate (§476-6). The holder may, if the contract soprovides, collect a late charge of $50 or 5 percent of the delinquent installment,whichever is less, if the installment is 10 day past due. The costs of action andreasonable attorneys’ fees may be charged if the contract is referred for collection toan attorney who is not a salaried employee or officer of the holder (§476-9). Aminimum finance charge of no more than $10 is allowable. Interest added-on ordeducted in advance may not exceed the rates allowed by the Financial Services LoanCompanies statute. The simple interest rate is limited to 24 percent per year (§476-28).

Loan Terms: The contract shall be in writing, signed by both parties, and clearlyincorporate or refer to all agreements of the parties. The contract shall include in atleast 10-point bold type the words “Credit Sale Contract” both at the top of thecontract and directly above buyer’s signature line (§476-3). If any scheduled paymentis more than 2 times as large as the average of earlier payments, the buyer must begiven the right to refinance that payment without penalty, unless a balloon payment isincluded due to seasonal or irregular income of buyer (§476-5). The buyer is given a15-day right to cancel any sale in which a rebate or discount exceeding 40 percent ofthe total sale price is given for referral sales (§476-20). The buyer may prepay, upon 5days notice, at any time before maturity and receive a refund of unearned interest,less a $10 acquisition fee (§476-23).

Prohibited Loan Terms: Prohibited loan terms include: acceleration clauses in theabsence of buyer’s default (§476-14); confessions of judgment or power of attorney, orwage assignment (§476-15); waivers of provisions of act or of any right of actionagainst the seller or holder of the contract or any other person acting on his behalf, forany illegal acts committed during collection or repossession (§476-16); provisions forsubsequent liens or security interests in goods other than the goods that are subjectmatter of the sale (§476-17); powers of attorney appointing the seller or holder buyer’sagent for purposes of collection or repossession (§476-18); buyer agreements not toassert a claim or defense arising out of the sale against a seller or assignee (§476-19); buyer agreements that the law of another jurisdiction applies; consents by thebuyer to service of process of another jurisdiction; appointments of agents by buyersto receive service; venue fixes; consents by the buyer to jurisdiction of court otherwisewithout jurisdiction (§476-30).

Disclosures: Required disclosures include: a notice advising the buyer to readcontract before signing it (directly above the buyer’s signature line); that the buyer hasthe right to a completed copy; that the buyer should keep a copy of the contract; that

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act and, perhaps, under other state and federal laws (§476-3). The contract mustdisclose the itemized amount financed; finance charge; total of payments; and totalsales price. Compliance with federal Truth in Lending Act (TILA) satisfies thedisclosure requirements of §476-3 (§476-4). The holder must give the buyer a writtennotice of any assessment of late charges prior to the next installment’s due date(§476-9). Advertising disclosures similar to federal TILA requirements are required(§476-29).

Prohibited Acts: Requiring the execution of any note or series of notes which, whenseparately negotiated, will cut off as to third parties any right the buyer may haveagainst the seller is prohibited (§476-19).

Criminal Penalties: Any buyer who maliciously or with intent to defraud destroys,injures, or conceals the goods, or removes them from the island or sells or mortgagesthe goods claiming full ownership in them, shall be subject to a fine of $500 or 1 yearimprisonment or both (§476-27).

Civil Penalties/Enforcement: Until a signed copy of the contract is delivered to thebuyer, a buyer who has not received delivery of the goods has the right to cancel andreceive an immediate refund of all payments made and return of any trade-ins, unlessthe goods are specifically ordered or custom made (§476-7). An alteration by theholder of a contract that is both fraudulent and material discharges the buyer, unlessbuyer assents or is precluded from asserting the defense (§476-10). The AttorneyGeneral, the Director of the Office of Consumer Protection, or the prosecuting attorneymay enforce the act (§476-31).

Private Right of Action: For violations of most provisions, the buyer is given the rightto recover an amount equal to the finance charge, or 10 percent of the cash price if nofinance charge is specified, plus reasonable attorneys’ fees and costs; the seller isbarred from recovery of any finance charges, late charges, collection charges andrefinancing charges. Neither the seller nor assignee may be held liable if they showby a preponderance of the evidence that the violation was unintentional and resultedfrom a bona fide error notwithstanding the maintenance of procedures reasonablyadapted to avoid such error (§476-21).

Applicability of State UDAP: Yes. Haw. Rev. Stat. §480. Violations of the door-to-door sales act are explicitly labeled unfair and deceptive practices (§481C-2). trebleactual damages or $1,000, whichever is greater; injunctive relief; attorney fees andcosts; and minimum damages raised to $5,000 for plaintiffs over 62 years old areenforceable. Contracts in violation of this statute are void and unenforceable.

Special Assignee Provisions: The buyer’s written acknowledgment of delivery of acopy of the contract shall be a reputable presumption of delivery and of the contractbeing completely filled in, in any action by or against an assignee without theknowledge to the contrary (§476-10). Until the buyer has a notice of assignment, thepayment made to the last known holder shall be binding upon all subsequent holdersor assignees (§476-12). No contract may contain a provision in which the buyeragrees not to assert a claim or defense against an assignee. No rights of action ordefense arising out of sale which buyer has against seller shall be cut off by anassignment, but the buyer’s recovery may not exceed any amounts paid or to be paidby the buyer and may be set-off (§476-19).

Other: No contract, memo, or advertisement shall be required to contain any

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disclosures which are inconsistent with the requirements of federal TILA (§476-2).While the contract is not completed, the buyer shall not remove goods from the islandon which the goods are first kept, or mortgage or sell goods, without giving seller priorwritten notice (§476-25).

Interest-UsuryCitation: Haw. Rev. Stat. §§478-1 to 478-11.5

Applicability: The act applies to credit extended to a natural person primarily forpersonal, family, or household purposes in which the principal amount does notexceed $250,000, unless such credit is secured by real property or personal propertyused or expected to be used as borrower’s principal dwelling (§478-1). The act doesnot apply to loans made by financial services companies, or credit unions, or loansthat are regulated by the Hawaii Credit Sales Act (§478-4).

Exemptions: Farmer’s Home Administration (FHA) or Veteran’s Administration (VA)guaranteed or insured loans; first mortgage loans; purchase-money junior mortgages;any sale of goods or services where the rate of interest does not exceed 18 percent;any mortgage made pursuant to rules adopted by the Commissioner of FinancialInstitutions (§478-8)

Interest Rate and Fee Caps: The interest rate cap for written contracts is: 12 percentper year (unless creditor is a regulated financial institution other than a trust companyor a credit union, in which case: 24 percent per year) (§478-4). No action ismaintainable to recover compound interest (§487-7).

Criminal Penalties: $250 fine or one years imprisonment or both (§478-6)

Civil Penalties/Enforcement: If the contracted rate of interest is greater than allowedby law, the creditor may only recover the principal; the debtor shall recover costs; and,any interest paid must be offset against principal (§478-5).

Applicability of State UDAP: Yes. Haw. Rev. Stat. §480. Violations of the door-to-door sales act are explicitly labeled unfair and deceptive practices (§481C-2). Trebleactual damages or $1,000, whichever is greater; injunctive relief; attorney fees andcosts; and minimum damages raised to $5,000 for plaintiffs over 62 years old areenforceable. Contracts in violation of statute are void and unenforceable.

Financial Services Loan CompaniesCitation: Haw. Rev. Stat. §§412:9-100 to 412:9-309

Applicability: The act applies to loans made by financial services loan companies tonatural persons primarily for personal, family, or household purposes in which theprincipal amount does not exceed $25,000, unless the loan is secured by real propertyor personal property used or expected to be used as borrower’s principal dwelling(§412:9-100).

Licensing Requirements: Haw. Rev. Stat. §§412:9-101 to 412:9-202

Interest Rate and Fee Caps: Interest, fees and other charges are as allowed by theHawaii Interest-Usury Statute. In the alternative: 24 percent per year on precomputed

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precomputed loans with a term of less than 48 months: 14 percent per year for thefirst 18 months, plus 10.5 percent for the next year, plus 7 percent for the next year,plus 4 percent for the final 6 months (§412:9-302). Late charges shall not exceed 5percent of the delinquent installment and are payable only once. A prepaymentpenalty is allowed on a simple interest mortgage loan with a term in excess of 5years, if it is prepaid within the first 5 years of the loan. The prepayment penalty shallbe computed only on the amount prepaid in excess of 20 percent of the originalprincipal in any 12-month period, and in any case shall not exceed 6 months interestat the maximum interest rate permissible for the amount prepaid. Nonrefundablediscount, points, loan fees, and loan origination charges are not allowed onprecomputed loans. Fees, charges, and expenses reasonably related to a consumerloan transaction are allowed; no such charges may be retained by the financialservices loan company unless the loan is secured by real property, and the chargesare bona fide and reasonable, and not unfair or deceptive. Any payment on theaccount of the principal due on a particular date may be deferred or extended and afinance charge may be collected in advance at allowed interest rate (§412:9-304).

Civil Penalties/Enforcement: If a greater rate of interest than allowed by law iscontracted for, the financial services loan company may only recover the amount thatis received by the borrower in cash, credit, or the equivalent, plus any chargesproperly charged to the borrower which were not deducted from principal or otherwisepaid by the borrower. The borrower shall only recover costs, and any interest paidmust be offset against principal (§412:9-303).

Applicability of State UDAP: Yes. Haw. Rev. Stat. §480. Violations of the door-to-door sales act are explicitly labeled unfair and deceptive practices (§481C-2). Trebleactual damages or $1,000, whichever is greater; injunctive relief; attorney fees andcosts; and minimum damages raised to $5,000 for plaintiffs over 62 years old areenforceable. Contracts in violation of statute are void and unenforceable.

Special Assignee Provisions: The financial services loan company may only assignloans to financial institutions or persons who have the right to receive interest at thesame interest rate, and on the same terms, as provided for in the loan (except inloans may be assigned for collection purposes to people not such financialinstitutions) (§412:9-309).

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�Idaho Credit CodeCitation: Idaho Code §§28-41-101 to 28-49-107

Applicability: Credit transactions for a consumer purpose (except certain sectionsapply to all credit transactions) §28-41-204

Exemptions: Extensions of credit to governmental agencies or instrumentalities, saleof insurance, transactions with regulated public utilities or common carrier tariffs,licensed pawnbrokers are exempt (§28-41-202). Home solicitation sales, consumercredit sales of goods or services (except for agricultural purposes) in which a seller ora person given to the seller or a person acting for him, at a residence (but excludingsales made pursuant to prior negotiations between the parties at a businessestablishment at a fixed location, or transactions conducted by entirely by mail ortelephone, or a sale which is subject to the Federal Consumer Credit Protection Act’sprovisions on the consumer’s right to rescind) are exempt (§28-43-401). The creditoris not liable if the creditor discovers the violation and corrects it within 45 days ofnotifying the debtor, or if the violation is unintentional and is the result from a bona fideerror, notwithstanding reasonable procedures (§28-45-201).

Licensing Requirements: Idaho Code §28-46-301

Interest Rate and Fee Caps: There is no cap on interest rates. The finance charge islimited only by the parties’ agreement (§28-42-201). Upon any prepayment, thecreditor may also collect a minimum charge, if the finance charge earned at the timeof prepayment is less than any minimum charge contracted for. The minimum chargemay not exceed the amount of the finance charge contracted for, or $5 on atransaction of $75 or less; or $7.50 on a transaction of more than $75. The debtor hasthe right to prepay in full, but for transactions secured by a mortgage or deed of trust,the parties may agree to a prepayment charge if prepaid during the first 3 years of thecontract, and are capped at 6 month’s interest (different calculations for closed-endand open-ended loans) (§28-42-306). No prepayment charge is allowed if the loan isrefinanced or consolidated with the same creditor (§28-42-306). Refinancing chargesare permitted; no minimum charge is allowed (§28-42-303). Deferral charges arepermitted for precomputed credit transactions, and refinancing and consolidationsthereof (§28-42-302). The parties may agree, at the time of the precomputedtransaction, that if an installment is not paid within 10 days of when due, the creditormay unilaterally grant a deferral and impose a deferral charge (§28-42-302).Consolidation charges are allowed (§28-42-304). For a precomputed credittransaction, the parties may contract for a delinquency charge that may not exceedthe greater of 5 percent of the unpaid installment or $5 for payments not paid within 10days of due (§28-42-301). For a consumer loan secured by the debtor’s residencewhich is not a precomputed loan, the parties may contract for a delinquency charge inthe same amount, but only if the installment is not paid within 15 days of when due.(§28-42-301). For all other consumer transactions (whether open-ended or closed-ended), 5 percent or $10, whichever greater, if the installment is not paid within 15days (§28-42-301). The creditor may impose a dishonored check fee up to $20 (§28-22-105), if the fee was contracted for (§28-42-308). The agreement may provide for thedebtor to pay reasonable attorney fees to an attorney that is not a salaried employeeof the creditor, if the loan was not a regulated consumer loan of $1,000 or less (§28-43-312).

Loan Terms: The parties may agree that the interest shall compound (§28-42-404).For regulated consumer loans of $1,000 or less, the repayment must be scheduled insubstantially equal installments at equal periodic intervals (except for the debtor’s

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�seasonal or irregular income) over a period of not more than 37 months; if the principalis more than $300; over a period of not more than 25 months if the principal is $300 orless (§28-43-310). Rebate upon prepayment is allowed, but it need not be made if therebate is less than $1 (§28-42-307). Cross collateralization is permitted (§28-43-302).A creditor may change the terms of an open-ended consumer credit account andapply any balance incurred before or after the effective date of the change (§28-43-203). For home solicitation sales, the buyer has 3 day right to cancel (§28-43-402).

Prohibited Loan Terms: Prohibited loan terms include: regulated lender taking aninterest in land as security for a loan of $1,000 or less (§28-43-309); the assignmentof earnings or confession of judgment (§§28-43-304, 28-43-305); any unauthorizeddefault charges (§28-45-301); attorney fees by debtor if the loan is a regulated loan of$1,000 or less (§28-43-311). If a court finds an agreement or clause to have beenunconscionable when the loan was made, then the court may refuse to enforce theagreement or may limit the application of any unconscionable clause (§28-45-106).

Disclosures: The creditor must: 1) disclose prepayment charges (§28-42-306); and, 2)comply with Federal Consumer Credit Protection Act if the Act, by its terms, appliesto the transaction (§28-43-201). In a home solicitation sale, the seller must providedisclosures in writing to be signed by the buyer that: designate the date of thetransaction; the date on which the buyer actually signed; and, a statement of thebuyer’s rights (by either complying with any notice of cancellation or a similarrequirement of any trade regulation of the FTC which applies to home solicitationsales or meets the statutorily prescribed notice of the buyer’s right to cancel) (§28-43-403.

Prohibited Acts: The creditor may not take a negotiable instrument, other than acheck (postdated no more than 10 days), as evidence of debtor’s obligation (§28-43-306). Limitations on garnishment exist (§28-45-104). The agreement for a debtor’sdefault is only enforceable to the extent that the debtor fails to make a payment asrequired, or the prospect of payment, performance or realization of collateral issignificantly impaired (§28-45-107). Referral sales are prohibited (§28-43-308).Extortionate extensions of credit (those where it is understood that delay in making orfailure to make repayment could result in the use of violence or other criminal meansto cause harm) are unenforceable (§28-45-109). The creditor may repossess after adefault without judicial process, only if possession can be taken without entry into adwelling and without the use of force or breach of peace (§28-45-108).

Criminal Penalties: A regulated lender who willfully and knowingly makes excesscharges is guilty of a misdemeanor (§28-45-401). A person who willfully andknowingly engages in business of regulated consumer loans without a license, orwithout complying with certain administrative provisions, is guilty of a misdemeanor.(§28-41-401). Any violation of disclosure provisions is a misdemeanor (§28-45-402).

Civil Penalties/Enforcement: Civil penalties of up to $5,000 are allowed (§28-46-113).The Department of Finance may investigate, issue cease and desist orders, bringinjunctive actions, seek temporary relief, and file civil actions seeking a civil penalty(limited to $5,000) (§§28-46-104 to 113).

Private Right of Action: Private Right of Action applies if the creditor has collected anexcess charge or made a loan without authority, or has violated provisions (restrictingtaking interest in land as security; limitations on schedule of payments or loan termsfor regulated consumer loans; attorney fees; receipts, statements of account andevidences of payment; form of insurance premium loan agreement; security in sales;

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assignment of earnings; certain negotiable instruments prohibited; referral sales;limitations on default charges, assignees subject to claims or defenses, or assuranceof discontinuance) the debtor can recover actual damages and a penalty of not lessthan $100 or more than $1,000 (§28-45-201). In such cases, a debtor does not haveto pay an excess charge, and has a right to its refund; the refund may be made byreducing debtor’s obligation (§28-45-201). If the debtor has paid an amount in excessof the lawful obligation, the debtor may recover the excess amount from the personwho made the excess charge or its assignee (§28-45-201). If the liable person refusesto make the refund within a reasonable time after the demand, the debtor may recovera penalty of not less than $100 or more than $1,000. If the debtor prevails, the debtoris entitled to attorney fees. (§28-45-201). For violations of disclosure provisions,liability is determined under the Federal Consumer Credit Protection Act (in lieu of thatAct’s penalties) (§28-45-203).

Applicability of State UDAP: Yes. Idaho Code §48-601. Contract for purchase ofgoods or services void if consumer suffered loss; actual damages, $1,000 minimumdamages; actual damages or one $1,000 minimum damage award in a class action;restitution, injunction, punitive damages and any other appropriate relief; attorney feesto prevailing plaintiff

Special Assignee Provisions: The debtor may pay the original creditor until he or shereceives a proper notice of assignment (§28-42-202). The assignee is subject to allclaims and defenses of the debtor against the seller, but the assignee’s liability maynot exceed the amount owed to the assignee (§28-45-302).

Other: The creditor may take a security interest in any property sold, and in goodsupon which services are performed or in which goods sold are installed or to whichthey are annexed or the land to which the goods are affixed, if the debt secured is$1,000 or more (in the case of land), or $100 or more (in the case of goods) (§28-43-301). Restrictions on deficiency judgments include: if the seller repossesses orvoluntarily takes surrender of goods that were security for a sale of $1,000 or less, thebuyer is not personally liable for deficiency judgment (§28-45-103). The consumer hasthe right to refinance balloon payments (a payment more than twice the average ofearlier payments) without penalty (§28-43-307). The creditor must deliver or mail tothe debtor, without request, a written receipt for each payment, and upon writtenrequest (except with respect to open-ended transactions), must provide a writtenstatement of the dates and amounts of all payments made in the preceding 12 months(without charge once/year, up to $10 for each additional statement) (§28-43-204).After paid in full, the creditor must upon request (delivery or mail) provide writtenacknowledgment (§28-43 205).

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Illinois Interest ActCitation: Ill. Comp. Stat. Ann. ch. 815, §205/4a

Applicability: Credit extended to a person in which the principal amount does notexceed $25,000 and the loan is repayable in 2 or more installments over a period notin excess of 181 months, unless such loan is for a purchase money real estate loansecured by a lien on such real estate

NOTE: There are conflicting opinions of the Illinois Appeals Court about whether the$25,000 limitation applies to the act in general specifically to the real estateexception. The Illinois Supreme Court declined to review either decision

Exemptions: Banks, savings and loan associations; and licensed lenders under theIllinois Consumer Installment Loan Act are exempt.

Interest Rate and Fee Caps: The interest rate cap for written contract is: 9 percent peryear (whenever the principal amount is $300 or more and the repayment period is 6months or more, a minimum charge of $15 may be collected instead of interest): whenthe principal amount is $800 or less, the lender may also collect a service charge of$5. However, both the minimum charge and service charge may be collected from thesame borrower only once in any 1 year. If the contract so provides, a delinquencycharge, not exceeding 5 percent of any installment over $200 and $10 of anyinstallment $200 or less, which is past due for 10 days or more is allowed.Reasonable attorney fees for collection or enforcement of the obligation are allowed.

Loan Terms: The buyer may prepay at any time and receive a rebate of any unearnedinterest.

Disclosures: Compliance with federal Truth in Lending Act (TILA) requirementssatisfies the disclosure requirements of the act.

Applicability of State UDAP: Yes. Ill. Comp. Stat. Ann. ch. 815, §505/1. Actualdamages, injunctive relief, or other proper relief at court’s discretion; court “may”award attorney fees and costs to prevailing party

Retail Installment Sales ActCitation: Ill. Comp. Stat. Ann. ch. 815, §§405/1 to 405/33

Applicability: Sales of goods or services by a person who regularly sells goods orservices for a deferred payment price payable in one or more installments (ch. 815,§§405/2.4 & 405/2.5); goods include items purchased for personal, family, orhousehold purposes which are used at the time of sale or subsequently in themodernization, rehabilitation, repair, alteration, improvement, or construction of realestate so as to become a part thereof whether or not severable therefrom (ch. 815,§405/2.1)

Interest Rate and Fee Caps: None (ch. 815, §405/27). If the contract so provides, adelinquency charge is allowed, that does not exceed 5 percent of any installment over$200 and $10 of any installment $200 or less, which is past due for 10 days or more.Reasonable attorney fees for collection or enforcement of the obligation are permitted.(ch. 815, §405/12).

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Loan Terms: The contract shall be in writing, signed by both parties, and completedas to all essential provisions before signing by the buyer. The contract shall include,in at least 10-point bold type, the words “Retail Installment Contract” both at the topand directly above the buyer’s signature line (ch. 815, §405/3). The buyer may prepayat any time and receive a refund of unearned interest, less a $25 acquisition fee (ch.815, §405/7).

Prohibited Loan Terms: Prohibited loan terms include: 1) acceleration clauses in theabsence of buyer’s default; 2) acceleration clauses unless the buyer has been indefault in excess of 30 days or has abandoned or destroyed the property, or the holderhas reasonable cause to believe the buyer is about to leave the state (ch. 815, §405/13); waiver of provisions of act, and 4) relieving the seller from liability for any remediesthe buyer may have against the seller under the contract (ch. 815, §405/13).

Disclosures: A notice must be provided that disclosures advising the buyer to readcontract (which should be filled-in, before signing it) and that the buyer has rights to acompleted copy; and that buyer has right to pay off in advance (ch. 815, §405/3). Thecontract must include a description of goods and services, type of security taken,name and address of lender and borrower, insurance included (ch. 815, §405/4).Contract must disclose itemized amount financed, finance charge, total of paymentsand total sales price. Compliance with federal TILA satisfies the disclosurerequirements (ch. 815, §405/5). Advertising disclosures similar to federal TILArequired (ch. 815, §405/29.1).

Criminal Penalties: Knowing violations are a misdemeanor (ch. 815, §405/31).

Civil Penalties/Enforcement: Until a signed copy of the contract is delivered to thebuyer, a buyer who has not received delivery of the goods has the right to cancel andreceive an immediate refund of all payments made and return any trade-ins, unless thegoods were specifically ordered or custom made (ch. 815, §405/14). No person whoviolates the act may collect any finance, delinquency, collection, or refinance charges,unless the violation is an accident or bona fide computation error (ch. 815, §405/31).The Attorney General or the state’s attorney of any county may enforce the act (ch.815, §405/30).

Private Right of Action: The courts may award attorneys’ fees to either party as theinterests of justice may require in any collection or enforcement action (ch. 815, §405/12).

Applicability of State UDAP: Yes. Ill. Comp. Stat. Ann. ch. 815, §505/1. Actualdamages, injunctive relief, or other proper relief in court’s discretion; court “may” awardattorney fees and costs to prevailing party

Special Assignee Provisions: The buyer’s written acknowledgment of the delivery of acopy of the contract shall be conclusive proof of the delivery in any action by oragainst an assignee without knowledge to the contrary (ch. 815, §405/14). A provisionin which the buyer agrees not to assert a claim or defense against an assignee shallbe enforceable by an assignee or holder who takes a contract for value, in good faith,and without notice of a claim or defense, unless the assignee or holder is an affiliate ofthe seller, or has knowledge of repetitive complaints by other buyers to the seller or toa governmental agency about seller’s failure to perform its obligations and seller hasfailed to remedy such complaints within a reasonable time (ch. 815, §405/17). Allrights that are available against a holder in due course under UCC §3-305 are available

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to the buyer (ch. 815, §405/18).

Other: Guarantors, except for parents and spouses, are liable only if they actuallyreceive the goods or services, and receive and sign a separate notice of theguarantor’s obligations (ch. 815, §405/19).

Consumer Installment Loan ActCitation: Ill. Comp. Stat. Ann. ch. 205, §§670/1 to 670/27

Applicability: Persons who make loans for $25,000 or less (ch. 205, §670/1)

Exemptions: Banks, savings banks, mortgage companies, savings and loanassociations, credit unions; business loans are exempt (ch. 205, §670/21). If theseller or holder corrects any bona fide error within a reasonable time after discoveringan error, then the seller or holder may not subject borrower to civil penalties (ch. 205,§670/20). A licensee, acting in conformity with any rule or regulation issued by theDepartment of Financial Institutions, shall be presumed to have acted in accordancewith the law and not be liable for any such act or practice (ch. 205, §670/20).

Licensing Requirements: Ill. Comp. Stat. Ann. ch. 205, §§670/1 to 670/12.5

Interest Rate and Fee Caps: Interest cap is established as agreed to in writing.Interest shall not be payable in advance or compounded. If the contract so provides: adelinquency charge is allowed that does not exceed 5 percent of any installment over$200 and $10 of any installment $200 or less, which is past due for 10 days or more.In the case of a deferment, a charge is allowed that does not exceed the applicableinterest for the installment period immediately following the last undeferred payment(ch. 205, §670/15). Other allowable facts include: the actual cost of recording anysecurity instrument; actual costs for title insurance or examination, survey, orappraisal and points in connection with a real estate loan; actual insurance premiumcosts; court costs and reasonable attorney fees incurred in collection or to realize onsecurity after default; a bad check fee not to exceed $25; and a document preparationfee not to exceed $25 (ch. 205, §670/15d).

Loan Terms: The loan term shall be for 181 months or less (ch. 205, §670/17).

Disclosures: Compliance with federal TILA requirements satisfies the disclosurerequirements of the act, provided the lender also provides an explanation of themethod used to calculate any rebate of an unearned finance charge (ch. 205, §670/16).

Prohibited Acts: Prohibited acts include: taking a power of attorney (ch. 205, §670/13); allowing an obligor to owe more than $25,000 for all loans outstanding to licenseeand its affiliates (ch. 205, §670/17); and false, deceptive, or misleading advertising(ch. 205, §670/18).

Civil Penalties/Enforcement: The Director of Financial Institutions shall administer andenforce the act (ch. 205, §670/9). Civil fines of up to $1,000 plus attorney fees andcosts (ch. 205, §670/24.5) are allowed.

Private Right of Action: Yes. (ch. 205, §670/20.7). Borrowers are entitled to recoverreasonable attorneys’ fees and court costs and have them set off against the balancedue (ch. 205, §670/20).

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Applicability of State UDAP: Yes. Ill. Comp. Stat. Ann. ch. 815, §505/1. Actualdamages, injunctive relief, or other proper relief in court’s discretion; court “may”award attorney fees and costs to prevailing party.

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Indiana Consumer Credit CodeCitation: Ind. Code Ann. §§24-4.5-1-101 to 24.4.5-1-303

Applicability: Consumer credit transactions, which include consumer credit sales andconsumer loans (§§24-4.5-1-301, 24-4.5-3-104)

Exemptions: Exemptions include: extensions of credit to governmental agencies orinstrumentalities; sale of insurance; transactions with regulated public utilities orcommon carrier tariffs; licensed pawnbrokers; sale of goods; services or an interest inland not primarily for personal; family or household use or a loan incurred primarily fora purpose other than personal, family or household purpose; an extension of creditprimarily for a business, commercial, or agricultural purpose; and an installmentagreement for the purchase of home fuels in which no finance charge is imposed andstudent loans (§24-4.5-1-202). There is no liability for unintentional or bona fide errors(§24-4.5-5-202); and self-discovery of error before notice or action if creditor notifies theperson of the error and corrects it, and no liability for bona fide errors notwithstandingthe maintenance of reasonable procedures (§24-4.5-5-201).

Licensing Requirements: Ind. Code Ann. §24-4.5-3-503

Interest Rate and Fee Caps:

NOTE: nearly all dollar amounts designated in this article change on July 1 of eacheven-numbered year in accordance with the Consumer Price Index (CPI) (§24-4.5-1-106). The adjusted rates are printed in Ind. Admin. Code tit. 750, r. 1-1-1.

For a consumer credit sale (other than pursuant to a revolving charge account), anycredit service charge may not exceed the greater of: 1) the total of 36 percent per yearon the part of the unpaid balance that is $300 or less, 21 percent per year on the partthat is more than $300 but not more than $1,000, and 15 percent per year on the partthat is more than $1,000 (the $300 and $1,000 amounts are subject to CPIadjustment), or 2) 21 percent per year on the unpaid balance (§24-4.5-2-201). Thesame rates apply to supervised loans (those loans carrying an interest rate in excessof 21 percent per year) (§24-4.5-3-508).

However, notwithstanding that limit, with respect to a credit sale, a seller may contractfor and receive a minimum credit service charge of not more than $30 (subject to CPIadjustment) (§24-4.5-3-508). For consumer credit sales made pursuant to revolvingcharge accounts, the seller may charge a service charge not more than 1 3/4 percentper monthly billing cycle (or a prorated amount for non-monthly billing cycle) (§24-4.5-2-207). The seller may impose an additional monthly charge of $.50 if there is anunpaid balance on billing date (or a prorated amount for non-monthly billing cycle)(§24-4.5-2-207). For a credit sale, a seller may also charge: official fees and taxes;insurance charges; charges for benefits conferred upon the consumer if the chargesare reasonable in relation to the benefits; not of credit type, and are excluded aspermissible additional charges from the credit service charge; and, for a debt securedby an interest in land, bona fide closing costs, document preparation fees, notary andcredit report fees, escrow amounts and appraisal fees (§24-4.5-2-202).

Credit service charges on consumer related sales are capped at 21 percent (§24-4.5-2-602). Loan finance charges on consumer related loans are capped at the same rateas non-supervised consumer loans (21 percent per §24-4.5-3-201) (§24-4.5-3-602).For a consumer loan, a creditor may charge official fees and taxes; insurance

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charges; revolving loan fees; and for a debt secured by an interest in land bona fideclosing costs if reasonable in amount and not for the purpose of evasion for titleexamination fees, document preparation fees, notary and credit report fees, escrowamounts and appraisal fees; charges for other benefits conferred upon the consumer ifreasonable in relation to the benefits, not of credit type, and excluded as permissibleadditional charges from the loan finance charge; a dishonored check charge not toexceed $20; and certain revolving loan transaction fees (not to exceed the lesser of 2percent of the transaction or $10) (§24-4.5-3-202).

Upon refinancing, parties to either a consumer credit sale or consumer loan may grantthe seller or creditor a refinance charge at a rate not exceeding the permitted rate(§§24-4.5-2-205 (credit sales)), (24-4.5-3-205 (consumer loans)). Deferral charges arepermitted for both precomputed consumer credit sales and loans (§24-4.5-2-204, 24-4.5-3-204). Parties may agree, at time of precomputed consumer credit sale or loan,or the refinancing or consolidation, that if an installment is not paid within 10 days ofwhen it is due, the seller/creditor may unilaterally grant a deferral and impose adeferral charge (§24-4.5-2-2-04, 24-4.5-3-204). For a consumer credit sale, orconsumer loan, or the refinancing, or consolidation thereof, the parties may contractfor a delinquency charge not to exceed $5 for payments not paid within 10 days of thedue date (§§24-4.5-2-203.5, 24-4.5-3-203.5). A dishonored check charge is permitted;it may not exceed $20 ((§§24-4.5-2-202 (credit sales)), (24-4.5-3-202 (loans)).

For either a consumer credit sale or loan, the creditor may add advances to performcovenants of consumer and may charge a finance charge not exceeding the ratedisclosed to the consumer (§§24-4.5-2-208, 24-4.5-3-208). The agreement mayprovide for the payment by the buyer/borrower of reasonable attorney fees of attorneynot a salaried employee of creditor ((§§24-4.5-2-413 (consumer credit sales)), (§24-4.5-3-404 (consumer loans)).

Loan Terms: For a consumer credit sale, the seller may take a security interest in theproperty sold, and in goods upon which services are performed; in which goods soldare installed, or to which annexed; or, in land to which goods are affixed or which ismaintained, repaired or improved as a result of the sale, so long as amount financedis $1,000 or more (if security interest is in land), or $300 or more (if there is securityinterest in goods) (the $300 and $1,000 amounts are subject to CPI adjustment) (§24-4.5-2-407). For non-revolving supervised loans of $1,000 or less, the creditor mustschedule the repayment in substantially equal installments at equal periodic intervals,except to the extent that the schedule of payments is adjusted to the seasonal orirregular income of the debtor, and over a period of not more than 37 months, if theprincipal is more than $300, or not more than 25 months, if $300 or less (§24-4.5-3-511). The buyer (consumer credit sale) or borrower (consumer loan) may prepay infull (§§24-4.5-2-209, 24-4.5-3-209). Rebate occurs upon prepayment, and iscomputed as provided for by the Code (need not rebate if the required rebate is lessthan $1 (§§24-4.5-2-210, 24-4.5-3-210). Cross collateralization is permitted inconsumer credit sales (§§24-4.5-2-408, 24-4.5-2-409). Consolidation is permitted ofboth consumer credit sales and loans (§§24-4.5-2-206, 24-4.5-2-306). For homesolicitation sales, the seller must meet the notice and cancellation requirements of 16C.F.R. 429 (§24-4.5-2-502).

Prohibited Loan Terms: Prohibited loan terms include: assignment of earnings; defaultcharges beyond reasonable expenses incurred; and confession of judgment (§§24-4.5-2-410, 24-4.5-2-414 to 24-4.5-2-415 (consumer credit sales)), (§§24-4.5-3-403, 24-4.5-3-405, 24-4.5-3-407 (consumer loans)). If a court finds an agreement or clause tohave been unconscionable when made, then the court may refuse to enforce the

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agreement or may limit the application of any unconscionable clause (§24-4.5-5-108).If a supervised loan is for $1,000 or less, the creditor may not take interest in land assecurity (the $1,000 subject to CPI adjustment) (§24-4.5-3-510).

Disclosures: Sellers and creditors must make disclosures required by the FederalConsumer Credit Protection Act, unless the act provides that the transaction isexempt (§§24-4.5-2-301 and 24-4.5-3-301).

Prohibited Acts: The seller or creditor may not use multiple agreements for a singlecredit sale or loan for the purpose of obtaining a higher credit service charge thanwould otherwise be allowed; the same rule applies to consumer loans (§§24-4.5-2-402and 24-4.5-3-509). Referral sales (§24-4.5-2-411) garnishment before judgment (§§24-4.5-5-104 to -105) are prohibited. Extortionate extensions of credit, those where it isunderstood that delay in making or failure to make repayment could result in the useof violence, or other criminal means to cause harm, make repayment unenforceable.An extension of credit made at a rate of more than 45 percent per annum by a creditorwith a reputation for the use or threat of use of violence or other criminal means tocause harm is prima facie evidence of an unenforceable extension of credit (§24-4.5-5-107).

Criminal Penalties: Knowing charges in excess of those permitted is a class Amisdemeanor; making supervised loans without a license is a Class A misdemeanor,and engaging in the business of making consumer credit sales, consumer leases, orconsumer loans, or of taking assignments of rights against debtors without complyingwith certain administrative provisions is a Class A misdemeanor (§24-4.5-5-301).Knowingly giving false or inaccurate information required to be disclosed is also aClass A misdemeanor (§24-4.5-5-302).

Civil Penalties/Enforcement: Civil penalties may be made up to $5,000 (§24-4.5-6-113). This act is enforceable by the “Department,” meaning members of theDepartment of Financial Institutions; the Division of Consumer Credit administrates theadministration article (§24-4.5-6-103). The Department may investigate, issue ceaseand desist orders, bring injunctive actions, seek temporary relief, and file civil actionsseeking a civil penalty (limited to $5,000) (§24-4.5-6-106 to §24-4.5-6-113).

Private Right of Action: With respect to limitations on the schedule of payments orloan term for supervised loans, or authority to make supervised loans, the debtor hasthe right to recover from the violator or assignee a penalty determined by the court notmore than 3 times the amount of the credit service charge or loan charge (§24-4.5-5-202). If the creditor is not authorized to make consumer loans, the loan is void andthe consumer may recover any paid principal or finance charge from either creditor orassignee (§24-4.5-5-202). If the debtor is entitled to a refund, it may be made byreducing the debtor’s obligation, and if the person liable (including assignee) refuses tomake a refund within a reasonable time after demand, the debtor may recover apenalty in a court-determined amount not exceeding the greater of either the amountof the charge or 10 times the amount of the excess charge (§24-4.5-5-202).Furthermore, if the creditor made an excess charge in deliberate violation or recklessdisregard, a penalty can be recovered even if the creditor refunded the excess charge(§24-4.5-5-202). A creditor who violates the disclosure provisions for either creditsales or consumer loans is liable for the sum of: 1) twice the amount of the creditservice or loan finance charge, but not less than $100 or more than $1,000 (if individualaction, cap is set as for class actions), and attorney fees and costs (§24-4.5-5-203).The disclosure liability provision applies to mortgage transactions, if the transaction isotherwise a credit sale or consumer loan (§24-4.5-5-201). If the creditor violates §125�6�

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of the Federal Consumer Credit Protection Act concerning a debtor’s right to rescind acredit sale or loan, the creditor may not accrue interest during the rescission period(§24-4.5-5-204). This provision applies to mortgage transactions if the transaction isotherwise a credit sale or consumer loan (§24-4.5-5-201). If the creditor repeatedlyfails to provide the debtor with a statement of an annual percentage rate or creditservice or loan finance charge, and has received written notice from the administratorof such failure, any such subsequent failure shall relieve the debtor from any obligationto pay any credit service charge or loan finance charge (§24-4.5-5-202). If the creditorfails to comply with provisions on disclosure (other than for advertising) required forcredit sales or consumer loans, the creditor is liable for twice the amount of the creditservice/loan finance charge (but not less than $100 nor more than $1,000) (§24-4.5-5-202). No liability for acts done in good faith in conformity with administrative rules(§24-4.5-5-202).

Applicability of State UDAP: Applicable, but there are no private remedies available for“real estate transactions” (Ind. Code Ann. §24-5-0.5-1).

Special Assignee Provisions: Assignees of consumer credit sale are subject to allclaims and defenses of buyer notwithstanding holder in due course status, but areliable only to the extent of the amount owed to the assignee (§5-2-403). Buyer/borrower is authorized to pay the original seller until the buyer/borrower receivesnotification of the assignment of the rights to payment that reasonably identifies therights assigned (§§24-4.5-2-412 (consumer credit sales)) (24-4.5-3-406 (consumerloans)).

Other: For consumer credit sales, if the seller repossesses or voluntarily acceptssurrender of the goods that were the subject of a sale and in which the seller has asecurity interest, or of goods in which the seller otherwise has a security interest, thebuyer is not personally liable if the cash sale price was $1,000 or less ($1,000 subjectto CPI adjustment) (§24-4.5-5-103). Buyer/borrower has the right to refinance balloonpayments, those that are more than twice as large as the average of all the otherpayments (revolving loan accounts or loans on which only loan finance charges arepayable prior to time final scheduled payment due are excepted) ((§24-4.5-2-405(credit sales)), (§24-4.5-3-402 (loans)).

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Iowa Consumer Credit CodeCitation: Iowa Code Ann. §§537.1101 to 537.6203

Applicability: The act applies to consumer credit transactions, which includeconsumer credit sales and consumer loans.

Exemptions: Extensions of credit to governmental agencies or instrumentalities;certain sales of insurance; transactions with regulated public utilities or commoncarrier tariffs; securities transactions with regulated broker-dealers; and licensedpawnbrokers are exempt (§537.1202). The creditor has no liability for a penalty if thecreditor discovers the error before the action or before the consumer gives writtennotice of the error, and notifies the consumer of the error and corrects it within 45 days(§537.5201). There is no liability if the violation is unintentional, and from a bona fideerror that occurred notwithstanding reasonable procedures to avoid the error(§537.5201).

Licensing Requirements: Iowa Code Ann. §537.2301

Interest Rate and Fee Caps: For a consumer credit sale involving closed-end creditand not involving a motor vehicle, the finance charges capped at 21 percent perannum; the seller may receive a minimum finance charge of $5 or less when theamount financed does not exceed $75, or $7.50 when the amount financed exceeds$75 (§537.2201). For a consumer sale made pursuant to open-end credit, the greatestof: 1) the average daily balance of the open end account in the relevant cycle, which isthe sum of the amount unpaid each day in the cycle divided by the number of days; 2)the balance of the open-end account at the beginning of the first day of the cycle, afterdeducting all payments and credits of the cycle except those attributable topurchases charged to the account during the cycle; and 3) the median amount withina specified range including the balance of the open end account not exceeding thatpermitted by 1) and 2); the creditor must make the same charge on all balances withinthe specified range (§537.2202).

A similar provision governs finance charges on open-end loans (§537.2402).Consumer loan finance charges are capped at 21 percent for supervised lenders,unless allowed by other laws (§537.2401). The creditor may also charge official feesand taxes; insurance charges; registration fees; certificate of title or license fees;specified closing costs (if debt secured by an interest in land); charges for otherbenefits conferred upon the consumer if reasonable in relation to the benefits, are notof credit type, and are authorized by the administrator; loss and liability insurance;and certain consumer credit insurance (§537.2501).

Upon prepayment in full (but not in part) of any consumer credit transaction, thecreditor may collect a minimum charge of not more than $5, if the amount financedwas $75 or less, or $7.50 if the amount financed was more than $75 as the contractedfor and the earned finance charge was less than the minimum contracted for(§537.2201). If the finance charge does not exceed 18 percent per year, the partiesmay agree to refinance and contract for a finance charge at a rate up to 21 percent(§537.2504).

If the finance charge exceeds 18 percent per year, the refinance charge may notexceed the original rate (§537.2504). If the parties agree to defer all or part of anunpaid installment, the creditor may receive a deferral charge that is not in excess of 11/2 percent per month, so long as the charge doesn’t exceed the finance chargedisclosed pursuant to §§537.3201 and 537.2503. The parties may consolidate debts;

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the finance charge on consolidated debts may not exceed 21 percent (§§537.3201and 537.2503).

Delinquency charges permitted for non-open-end credit payments not paid within 10days of due date, provided that for a precomputed transaction, the charge may notexceed the greater of 5 percent of the unpaid installment (to a maximum of $20) or thedeferral charge that would be permitted to defer the unpaid amount for the delinquentperiod, and for an interest-bearing transaction, the charge may not exceed 5 percentof the unpaid installment (to a maximum of $15) (§537.2502). For open-end credit,the parties may contract for a delinquency charge of up to $15 (§537.2502). Thecreditor may add advances to perform covenants of consumer, after giving prior noticeand a reasonable opportunity for the consumer to perform, and may charge a financecharge not exceeding the rate disclosed to the consumer in the Truth in Lending Act(TILA) statement (§537.2306).

Loan Terms: For supervised, non-open-end credit loans of $1,000 or less, paymentsmust be scheduled in substantially equal installments and periodic intervals, exceptto the extent adjusted to seasonal or irregular income of debtor (§537.2401). If theamount financed is $300 or less, the repayment period may not exceed 25 months; ifthe loan is over $300 but not more than $1,000, the repayment may not exceed 37months, provided; the creditor may make a loan repayable in a single payment if theamount financed does not exceed $1000 and the finance charge does not exceed 21percent (§537.2401). The consumer may prepay (§537.2509). Rebate is requiredupon prepayment of a precomputed consumer credit transaction (§537.2510). Crosscollateralization is permitted (§537.3302). Consolidation is permitted (§537.2505).

Prohibited Loan Terms: For a supervised loan, a creditor may not contract for asecurity interest in the consumer’s residence, if the finance charge is more than 15percent and the amount financed is $2,000 or less (§537.2307). If the loan is asupervised loan, the creditor may not take a non-purchase-money security interest inclothing, one dining table and set of chairs, one refrigerator, one heating stove, onecooking stove, one radio, beds, bedding, one couch, two living room chairs, cookingutensils or kitchenware used by the consumer (§537.3301). The creditor cannotprovide for unauthorized default charges (§537.3402). No assignment of earnings arepermitted (§537.3306). No confession of judgment is permitted (§537.3306).Provisions for payment of attorney fees by consumer are prohibited (§537.2507). If atrier of fact finds an agreement or clause to have been unconscionable when made, oran agreement was induced by unconscionable conduct, then the court may refuse toenforce the agreement or may limit the application of any unconscionable clause;certain defined factors indicate unconscionability (§537.5108).

Disclosures: A TILA statement is required (§537.3201). Disclosures must provide theconsumer with a copy of any writing evidencing a consumer credit transaction (otherthan an open-ended credit transaction) (§537.3203). A clear and conspicuous noticestating the consumer: should not sign before reading; is entitled to a copy: is entitledto prepay at any time with such penalty and minimum charges allowed by theagreement and §537.2510; and is entitled to a refund of unearned charges. A samplenotice must be provided (§537.2510). For open-end credit, it must be conspicuouslystated the highest finance rate charged by that creditor to any consumer within thelast calendar year for each type of credit sale (§537.3212). Negotiable instrumentnotes taken in a consumer credit transaction that provides for consumer’s signaturemust state that it is a consumer credit transaction (§537.3211). A notice of right tocure is prescribed (§537.5111). A notice to cosigners (other than consumer’s spouse)is required (§537.3208).

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Prohibited Acts: Discrimination is prohibited (§537.3311). False, misleading, anddeceptive advertising is prohibited (§537.3209). A statement of rates in the form of anadd-on or discount rate or any form other than actuarial method as a percent per yearor as required to be disclosed under TILA is prohibited (§537.3210). The creditor maynot use multiple agreements to disguise a single transaction in order to obtain ahigher finance charge (§537.3304). No unauthorized default charges except forreasonable expenses incurred in realizing a security interest are permitted(§537.3402). If the transaction is a consumer credit sale, the creditor may not take anegotiable instrument other than a check or share draft, if postdated, by not more than10 days (§537.3308). Referral sales are prohibited (§537.3309). No garnishmentbefore judgment is permitted (§537.5105). Extortionate extensions of credit, thosewhere it is understood that delay in making or failure to make repayment could resultin the use of violence or other criminal means to cause harm, are unenforceable(§537.5107).

Criminal Penalties: Willfully charging in excess of the amounts allowed, willfullymaking supervised loans without authority, and willfully engaging in the business ofconsumer credit transactions without filing the notice and paying the fees required areserious misdemeanors (§537.5301). Willfully giving false or inaccurate information orfailure to comply with TILA disclosures is also a serious misdemeanor (§537.5302).

Civil Penalties/Enforcement: Civil penalties may be incurred of up to $5,000(§537.6113). The Attorney General or the Attorney General’s designee enforces theact (§537.6103). For supervised financial organizations and persons licensed underother Code provisions, the official or agency charged with investigating or supervisingsuch organizations or persons has enforcement power (§§537.6105, 537.6108). Theenforcing authority may: bring an injunction action; apply for temporary relief; bringaction for all amounts of money (other than penalties) that a consumer has the right torecover; or may bring an action for a civil penalty of up to $5,000 (§§537.6110 to537.6113).

Private Right of Action: For violation of most sections, the consumer may recoveractual damages and a penalty of between $100 and $1,000 (§537.5201). Theconsumer is entitled to a refund of any charges in excess of the amount allowed. Thecreditor may not make a refund by reducing the consumer’s obligation without noticeto consumer of right to refund and consumer does not request within 30 days(§531.5201). If the creditor has contracted for or received a charge in excess of thatallowed, or if consumer is entitled to refund and the creditor refuses, the consumermay recover the excess charge and a penalty of between $100 and $1,000(§531.5201). If a violation has occurred, the court shall award reasonable attorneyfees (§531.5201). A creditor who fails to make disclosures required under TILA (otherthan advertising of credit terms) is liable for an amount twice the finance charge, butnot less than $100 or more than $1,000, and in the case of a successful action,reasonable attorney fees (§537.5203). The creditor liability is in lieu of TILA liability(§537.5203). If the consumer shows unconscionability, entitled to attorney fees(§537.5108. If consumer alleges unconscionability and has brought an action that isfound to be groundless, the creditor is entitled to attorney fees (§537.5108).

Applicability of State UDAP: Applicable. Iowa Code Ann. §714.16. No privateremedies specified.

Special Assignee Provisions: The consumer is authorized to pay the original creditoruntil the consumer receives notification of assignment of rights to payment which

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reasonably identifies the rights assigned (§537.3204). An assignee of the consumercredit sale subject to all claims and defenses of the consumer against the sellerarising from the sale, regardless of whether assignee is holder in due course, unlessthe consumer has agreed, in writing, not to assert such claims against an assigneeand the assignee is unrelated to the seller and acquired the contract in good fair andfor value, and has given required notice of the assignment. The consumer has 30 daysto send assignee notice of the facts giving rise to the claim or defense (§537.3404).The consumer may assert a claim or defense against the assignee only if theconsumer has made a good faith attempt to obtain satisfaction from the seller, andonly to extent of amount owing to the assignee (§537.3404). A creditor who makes aconsumer loan for the purpose of enabling a transaction with a particular seller issubject to all the claims and defenses of the consumer against the seller if thecreditor: 1) knows that the seller has arranged for a commission or similar fee for theextension of credit by the creditor; 2) the creditor is related to the seller (unlessrelationship remote or not a factor in the transaction); 3) the seller guarantees the loanor otherwise assumes the risk of loss by the creditor; 4) the creditor supplies theseller with the contract document evidencing the loan and the seller knows the creditterms and participates in the document’s preparation; 5) the loan is conditioned uponthe consumer’s purchase of the property or services from the particular seller, orotherwise knowingly participates with the seller in the sale. The consumer mayassert a claim or defense against such a creditor only if the consumer has made agood faith attempt to settle with the seller, and only to the extent of the amount owingto the creditor. The consumer may recover amounts paid in excess of those allowedfrom assignee (§537.5201). Any action that may be brought against the originalcreditor in any credit transaction involving a security interest in land may bemaintained against any subsequent assignee of the original creditor where theassignee, its subsidiaries or affiliates were in a continuing business relationship withthe original creditor, unless the assignment is involuntary or the assignee shows it didnot have reasonable grounds to believe the original creditor was violating this act andthat it maintained reasonable procedures to apprize it of the existence of the violations(§537.5203).

Other: If the consumer transaction is a credit sale, the creditor may take a securityinterest in the property sold, and in goods upon which services are performed, inwhich goods sold are installed, or to which annexed, or in land to which goods areaffixed or which is maintained, repaired or improved as a result of the sale, so long asamount financed is $1,000 or more (if security interest is in land), or $300 or more (ifsecurity interest in goods) (§537.3301). Default is defined and includes the failure tomake a payment within 10 days of the due date (§537.5109). The consumer has theright to cure before the creditor may commence an action or repossess collateral, buta notice is not required prior to attachment petition, which requires its own notices. Ifthe consumer has a right to cure, the creditor may not accelerate the balance of debtuntil 20 days after proper notice of right to cure; the consumer may cure untilexpiration of the period by tendering amounts due, without acceleration, or bytendering necessary performance (if not a payment default) (§537.5109). If thecreditor commences an action for money judgment prior without following notice andright to cure procedure, the action must be dismissed (§537.5110). If the seller orcreditor repossesses goods, the creditor must comply with UCC (§537.5103). Theconsumer has the right to refinance balloon payments (a scheduled payment that ismore than twice as large as the average of the earlier scheduled payments, but doesnot have that right if the amount financed exceeds $5,000 and is secured by aninterest in land) (§537.3308). The creditor must deliver or mail to the consumer awritten receipt for each payment (§537.2306). Upon a written request, the creditormust provide, without charge, a written statement of the dates and amounts of

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payments made within the past 12 months and the total amount unpaid (§537.2306).Upon the fulfillment of all obligations, the creditor shall, upon request, deliver or mailwritten evidence acknowledging payment in full (§537.2306). The creditor must creditpayments, on the date of receipt, unless the consumer failed to follow creditor-specified requirements. In such case, the creditor must credit the account within 2days of receipt (§537.3206). If the consumer credit transaction for delivery of goods,services or both is 4 or more installments, the consumer may cancel with respect tosuch part as has not yet been performed (§537.3310).

NOTE: Organization and Powers of the Iowa Consumer Credit Code Administration arefound at Iowa Admin. Code §§61-10.1 to 61-16.1.

Iowa Regulated Loan Act (Iowa Small Loan Law)Citation: Iowa Code Ann. §§536.1 to 536.29

Applicability: The act applies to persons engaged in the business of making loans ofmoney, credit, goods, or things in the amount of $25,000 or less (§536.1). Licenseesmay not charge more than would be permitted, if not a licensee for a loan in excess of$25,000 (§536.15).

Exemptions: Exemptions include: banks, trust companies, building and loanassociations, credit unions, licensed pawnbrokers, and corporations entitled to dobusiness as Industrial Lenders under Chapter 536A.

Licensing Requirements: Iowa Code Ann. §536.1

Interest Rate and Fee Caps: The maximum interest rates are 3 percent per month onany part of unpaid principal of $150 or less; 2 percent per month on unpaid principal ofmore than $150 but not more than $300; 1 1/2 percent per month on unpaid principalof more than $300 but not more than $700; and 1 percent per month on any unpaidprincipal in excess of $700 (§536.13). The Iowa Banking Board may establish amaximum rate of interest for those loans whose unpaid principal balance is $10,000 orless; for those loans whose unpaid principal balance is more than $10,000, thecreditor may charge the greater of the rate allowed by chapter 535 or that allowed forsupervised financial organizations by §536.13. The Iowa Consumer Credit Codesupersedes these rates as to loans covered by both that Code and this act (§536.13).

Prohibited Loan Terms: Licensees may not charge more than would be permitted, ifnot a licensee, for a loan in excess of $25,000 (§536.15).

Civil Penalties/Enforcement: State Superintendent of Banking (§§536.9, 536.28,536.29)

Applicability of State UDAP: Yes. (§714.16). No private remedies are specified.

Other: The creditor must: 1) permit prepayment; 2) mark every obligation as paid orcanceled; and 3) release any security interest upon repayment of loan (§536.14).

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Iowa Industrial Loan LawCitation: Iowa Code Ann. §§536A.1 to 536A.31

Applicability: The act applies to any corporation engaged in the business of loaningmoney to be repaid in one payment or in weekly, monthly or other periodicinstallments and charging interest, fees, or other compensation for the use of suchmoney (§536A.2).

Exemptions: Banks, trust companies, building and loan associations, savings andloan associations, insurance companies, regulated loan companies governed byChapter 536 or credit unions; persons who make only loans secured by firstmortgages on real estate; licensed real estate brokers or salespersons; personsengaged exclusively in purchasing commodity financing or commercial paper;pawnbrokers, persons engaged in the mercantile business; loans made to a domesticor foreign corporation (§536A.5)

Licensing Requirements: Iowa Code Ann. §§536A.3, 536A.7 to 536A.15

Interest Rate and Fee Caps: The interest rate is capped at 10 cents on the hundredby the year (§536A.23). Service charges are capped at $1 for each $50 of the amountof the note, not to exceed $120 (§536A.23). The creditor may also collect a bonafide, reasonable, non-evasive appraisal fee on a loan secured by a mortgage or deedof trust (§536A.23). The Iowa Consumer Credit Code supersedes these rates, exceptwith respect to allowed appraisal fees (§536A.31).

Loan Terms: The borrower may prepay the loan (§536A.26).

Prohibited Acts: It is prohibited to require the purchase of insurance from the creditoras a condition for obtaining a loan (§536A.23).

Criminal Penalties: Any violation of Chapter 536A which is not also a violation of theIowa Consumer Credit Code, or operating an industrial loan company without alicense, is a serious misdemeanor (§536A.27).

Civil Penalties/Enforcement: The Superintendent of Banking within the BankingDivision of the Department of Commerce shall enforce the Iowa Consumer Credit Codefor industrial loan licensees (§536A.29).

Applicability of State UDAP: Yes. (§714.16). There are no private remediesspecified.

Other: The provisions of the Iowa Consumer Credit Code apply to consumer loansmade by a licensee of the Industrial Loan Act (§536A.31).

Money and InterestCitation: Iowa Code §§535.2 to 535.14

Applicability: Interest bearing transactions (§535.2)

Interest Rate and Fee Caps: The interest rate is capped at 5 cents on the hundred peryear (except as otherwise agreed or allowed) for the following loans: 1) money due by

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express contract; 2) money after such contract becomes due; 3) money loaned; 4)money received to the use of another and retained beyond a reasonable time withoutconsent; 5) money due on the settlement of accounts; 6) money due upon openaccounts after 6 months from the due date; and, 7) money due or to become duewhere there is a contract to pay interest and no rate is stipulated (§535.2). However,the following persons may agree to pay ANY rate of interest: 1) persons borrowingmoney for the purpose of acquiring real property or refinancing a contract for deed; 2)persons borrowing money in an amount over $215,000 for the purpose of constructingimprovements on real property; 3) vendees under a contract for deed; 4) domestic orforeign corporations or Real Estate Investment Trust (REIT); 5) persons borrowingmoney for business or agricultural purposes; and 6) persons borrowing money orobtaining credit in an amount more than $25,000 for personal, family or householdpurposes (§535.2). Otherwise, the maximum rate agreed to in a written agreementmay not exceed 2 percentage points above the monthly maturity interest rate of U.S.government notes and bonds (§535.2). The creditor may collect a loan processing feethat does not exceed 2 percent of the principal, and may also collect a commitmentfee, closing fee, or both that is agreed to in writing; such loan fees are not included inthe determination of the maximum interest rate charge (§535.2). Regarding homeequity lines of credit, the creditor may collect an account maintenance fee of not morethan $15, which is not included in the determination of the maximum interest ratecharge (§535.10). The interest rate on a home equity line of credit may not exceed 13/4 percent per month (§535.10). The creditor may additionally collect the followingcosts incurred by the creditor so long as they are disclosed to the borrower: creditreports; appraisal fees paid to third party (or if performed by creditor, fee that is areasonable estimate of creditor’s expense); attorney’s opinions; abstracting fees paidto a third party (or if performed by creditor, a reasonable estimate of creditor’sexpense); county recorder’s fees; inspection fees; mortgage guarantee insurancecharge; survey fees; termite inspection fees; and title guaranty fees (§535.8).

Prohibited Loan Terms: No prepayment penalties are allowed on loans used in wholeor in part to purchase a single-family or 2-family dwelling to be occupied by theborrower or for agricultural land; the creditor may require a 30-day advance notice ofthe intent to prepay the entire outstanding balance (§535.9).

Disclosures: If the transaction involving accounts receivable is subject to TILA, thecreditor must give all disclosures as required by TILA (§535.11).

Prohibited Acts: No loan origination fees, closing fees, commitment fees, or similarcharges not made pursuant to a written agreement are permitted (§535.8). Thecreditor may not charge the borrower for the cost of revenue stamps or real estatecommissions paid by the seller (§535.8). If the loan is for the purchase of a single-family or two-family dwelling, the creditor may not prohibit the transfer of interest to athird party for use as a residence or allow the creditor to make a change in the interestrate, the repayment schedule or the term of the loan as a result of such a transferunless has reasonable grounds to believe that its security interest or likelihood ofrepayment impaired (§535.8). The creditor may not, as a condition of making a loan,require the borrower to place the money or property (other than that given as security)on deposit with the creditor or some other person if the affect is to increase the yieldto the creditor (escrow funds are allowed) (§535.8). Real estate which is theconsumer’s principal dwelling shall not be subject to foreclosure when the balancesecured is $2,000 or less (§535.10).

Civil Penalties/Enforcement: If the creditor has contracted for a rate of interest greaterthan allowed, the creditor must forfeit 8 cents on the hundred upon the amount of

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principal remaining unpaid upon the contract and forfeit to the borrower the unpaidprincipal, the amount of which shall also be paid to the state (§535.5).

Private Right of Action: If the creditor collects an unauthorized fee or charge, theborrower may recover free, or charge plus attorney fees and costs (§535.8). If thecreditor receives unauthorized interest, the borrower may recover such moneys, plusattorney fees and costs (§535.8). The borrower may recover unauthorized prepaymentfees with attorney fees and court costs (§535.9).

Applicability of State UDAP: Applicable. Iowa Code Ann. §714.16. No privateremedies are specified.

Special Assignee Provisions: Any assignee of a usurious contract in good faith in theusual course of business and without notice may recover, from the usurer, the fullamount of consideration paid, less any sums realized on the contract (§535.7).

Other: When the foreclosure of a mortgage results from a due-on-sale clause, themortgagor has 3 years to redeem (§535.8). The Iowa Consumer Credit Code (seeIowa Consumer Credit Code Statute) applies to home equity lines of credit (provisionsregarding restrictions on interest in land as security, finance charges for open endcredit, and rebate upon prepayment provisions do not apply) (§535.9). The creditormust comply with the Iowa Consumer Credit Code §537.3206, regarding the promptcrediting of payments, for a loan secured by owner-occupied residential real property(see Iowa Consumer Credit Code Statute) (§535.14).

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Kansas Uniform Consumer Credit CodeCitation: Kan. Stat. Ann. §§16a-1-101 to 16a-9-102

Applicability: The statute applies to consumer credit transactions, which includeconsumer credit sales and consumer loans (§16a-1-301).

Exemptions: Exemptions include: extensions of credit to governmental agencies orinstrumentalities; insurance sales; transactions with regulated public utilities orcommon carrier tariffs; licensed pawnbrokers; and transactions covered by theinsurance premium finance company act (§16a-1-201). Consumer sales do notinclude sales made pursuant to a lender, credit card, or a sale of an interest in land(unless the parties agree the transaction will be subject to the Code) (§16a-1-301).Consumer loans do not include first mortgages, unless the loan-to-value ratio at thetime the loan is made exceeds 100 percent, or loans made by a qualified plan to aparticipant in such plan or his or her family member (§16a-1-301). The creditor has noliability for a penalty if the creditor discovers the error before institution of an action orreceipt of written notice of the error, and notifies the consumer of the error and correctsit; nor does a creditor have liability for penalties for good faith compliance with awritten administrative interpretation (§16a-5-201). No liability is incurred for bona fideerrors of law or fact notwithstanding the maintenance of reasonable procedures (§16a-5-201).

Licensing Requirements: Kan. Stat. Ann. §§16a-2-301 to 16a 3. These requirementsapply only to those persons making or taking assignments of supervised loans, andthose loans carrying an annual percentage rate exceeding 12 percent.

Interest Rate and Fee Caps: For closed-end consumer credit sales, a seller maycharge a finance charge at any rate agreed to by the parties, but may only charge aprepaid finance charge not to exceed the lesser of 2 percent of the amount financed or$100 (§16a-2-201). For closed-end credit consumer loans that are not secured by afirst or second mortgage, the periodic finance charge may not exceed 36 percent onany amount of $860 or less, and 21 percent on any loan that exceeds $860 (§16a-2-401). If any consumer loan is secured by a second mortgage, the periodic financecharge may not exceed 18 percent (§16a-2-401). If the consumer loan is secured by afirst mortgage, and the parties agree to make it subject to the Uniform ConsumerCredit Code (UCCC), then the periodic finance charge may not exceed 18 percent(§16a-2-401). The periodic finance charge limits for loans secured by first and secondmortgages do not apply to loans for which the rate, term, or amortization table may bevaried (§16a-2-401). If a loan secured by a first mortgage constitutes a consumer loanby virtue of the loan-to-value ratio exceeding 100 percent, then the periodic financecharge may not exceed the rate set by §16-207(b): 12 percentage points above theyield of 30-year fixed rate conventional home mortgages committed for delivery within61 to 90 days accepted under Freddie Mac’s daily offerings for sale on the last day onwhich commitments for such mortgages were received in the preceding month (§16a-2-401). For an open-end credit sale, a seller may charge a finance charge at any rateagreed to by the parties; this provision does not apply to a sale of an interest in land(§16a-2-202). In addition to the maximum finance charges, a creditor may contract forand receive: official fees and taxes; charges for insurance; permitted delinquencycharges; charges for other benefits conferred on the consumer, if they are of value tothe consumer and the charges are reasonable in relation to the benefits; and aservice charge for an insufficient check (not to exceed $10 or, if a larger amount wascontracted for, such amount (not exceeding $30)) (§16a-2-501). For consumer loanssecured by a first or second mortgage, the prepaid finance charges may not exceed 8percent of the amount financed; a prepaid finance charge payable to the creditor or a

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related person may not exceed 5 percent of the amount financed (§16a-2-501). Forany other consumer loan, the prepaid finance charges may not exceed the lesser of 2percent of the amount financed or $100, and those charges may be charged inaddition to the periodic finance charge (§16a-2-501). A creditor may impose aprepayment fee on a precomputed transactions of $5 where the amount financed was$75 or less, or $7.50 if the amount financed was more than $75, so long as thefinance charge earned at the time of prepayment is less than 2 percent of the amountfinanced or $100, but only if the prepayment in full (§16a-2-501). Consumers mayprepay other loans without penalty; upon repayment (but not upon a refinancing) thecreditor may collect a minimum charge of $5 if the amount financed was $75 or less,or $7.50 on other loans, if the minimum charge was contracted for and the financecharge earned at the time of prepayment is less than the minimum charge contractedfor (§16a-2-509). Refinancing charges allowed (§16a-2-504). If a creditor refinances aconsumer loan within 12 months of the date of the original loan, then the prepaidfinance charge payable to the creditor of a loan secured by a first or second mortgagemay not exceed 5 percent of the additional amount financed, and prepaid chargepayable to creditors of other loans may not exceed the lesser of 2 percent of theadditional amount financed or $100 (§16a-2-504). The parties to a consumer credittransaction may contract for a delinquency charge on any installment not paid in fullwithin 10 days of its due date, but such charge may not exceed 5 percent of theunpaid amount of the installment or $25, whichever is less; the parties may, instead,contract for a delinquency charge not to exceed $10 ($5 if the installment is $25 orless) on any installment not paid in full within 10 days of its due date (§16a-2-502).The creditor may add advances to perform covenants of the consumer after giving priornotice and a reasonable opportunity for the consumer to perform, and may charge afinance charge not exceeding the rate disclosed to the consumer (§16a-2-506).Attorney fees and costs of collection may be contracted for, but may not exceed 15percent of the unpaid debt after default (§16a-2-507).

Loan Terms: For a consumer credit sale, a seller may take a security interest in thegoods upon which services are performed or in which goods sold are installed or towhich they are annexed, or in land to which the goods are affixed or which ismaintained, repaired or improved as a result of the sale of the goods or services, if inthe case of a security interest in land the debt secured is $3,000 or more, or, in thecase of a security interest in goods the debt secured is $900 or more (§16a-3-301).Upon prepayment of a precomputed credit transaction, a creditor must rebate theportion of the finance charge attributable to the period following prepayment (§16a-2-501). If the loan finance charge exceeds 12 percent and the amount financed is$1,000 or less, the installment payments must be scheduled to be payable insubstantially equal installments and intervals except to accommodate seasonal orirregular income of the debtor; furthermore, the repayment period may not exceed 37months if the amount financed is more than $300 but not more than $1,000, and therepayment period may not exceed 25 months if the amount financed is $300 or less.Cross collateralization is allowed (§16a-3-302).

Prohibited Loan Terms: A creditor may not take a security interest in the land if thedebt secured is less than $3,000, or in goods if the debt secured is less than $900(§16a-3-301). If a consumer loan is secured by a first or second mortgage on theconsumer’s principal residence and for which either the loan-to-value ratio exceeds100 percent or the annual percentage rate exceeds the code mortgage rate (thegreater of 12 percent or 5 percent plus Freddie Mac’s 30-year fixed rate onconventional mortgages), then it may not provide for the negative amortization ofprincipal or a balloon payment (a payment that is equal to or more than twice theamount of any other payment) (added by 1999 Kan. S.B. 301). An agreement of the

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parties for default on the part of the consumer is enforceable only to the extent thatthe consumer fails to make a payment as required, or the prospect of payment,performance, or realization of collateral is significantly impaired (§16a-5-109). Nosurcharge is permitted for the use of a credit card (§16a-2-403). Creditors may notimpose unauthorized default charges (§16a-3-402). No assignment of earnings orconfession of judgment is permitted (§§16a-3-305, 16a-3-306). If a trier of fact finds anagreement or clause to have been unconscionable when made, or an agreement wasinduced by unconscionable conduct, then the court may refuse to enforce theagreement or may limit the application of any unconscionable clause (§16a-5-108).

Disclosures: The agreement must contain a clear, conspicuous, and printed noticethat the consumer should not sign the agreement before reading it; the consumer isentitled to a copy of the agreement and to prepay the unpaid balance at any timewithout penalty (§16a-3-202). A default notice and a notice of right to cure areprescribed (§16a-5-110).

Prohibited Acts: A supervised lender, that is, one who makes a loan with an annualfinance charge exceeding 12 percent, may not make false, misleading, or deceptiveadvertisements regarding loans (added by 1999 Kan. S.B. 301). A creditor may notuse multiple agreements to obtain a higher finance charge than would otherwise bepermitted (§16a-3-304). Creditors may not take a negotiable instrument for aconsumer credit sale other than a currently dated check (§16a-3-307). Referral salesare prohibited (§16a-3-309). The creditor may not accelerate the maturity of theunpaid balance, nor take possession of collateral due to a consumer’s failure to makea required payment, until 20 days after a notice of the consumer’s right to cure isgiven. Until that time, the consumer may cure the default by tendering unpaid sumsdue, without acceleration, plus any unpaid delinquency or deferral charges (§16a-5-111). The creditor may take possession of the collateral without judicial process onlyif consumer voluntarily surrenders possession or if possession can be taken withoutentry into a dwelling and without the use of force or other breach of the peace.Extortionate extensions of credit, that is those where it is understood that delay inmaking or failure to make repayment could result in the use of violence or othercriminal means to cause harm, are unenforceable (§16a-5-107). An extension of creditmade at a rate of more than 36 percent per annum by a creditor with a reputation forthe use or threat of use of violence or other criminal means to cause harm is primafacie evidence of an unenforceable extension of credit (§16a-5-107).

Criminal Penalties: Intentional violations are a class A nonperson misdemeanor; asecond or subsequent conviction is a severity level 7 nonperson felony (§16a-5-301).No imprisonment is allowed if a person proves that he or she had no knowledge of therule and regulation or order (§16a-5-301). Criminal liability of a person is in lieu ofcriminal liability under The Truth in Lending Act (TILA). A person other than asupervised financial organization, attorney or collection agency who does notpurchase the credit obligation, but who willfully engages in the business of enteringinto consumer credit transactions or of taking assignments of rights against consumerarising therefrom and undertakes collection or enforcement without complying withnotice requirements or fee payments, is guilty of a class A misdemeanor (§16a-5-301).

Civil Penalties/Enforcement: The court may impose a civil penalty of up to $5,000(§16a-6-113). Consumers are entitled to recover civil penalties (see “Private Right ofAction” below). Civil penalty of up to $5,000 is allowed (§§16a-6-108, 16a-6-113). TheConsumer Credit Commissioner, upon determining a violation, has the power to ordercease and desist from unlawful acts or practices, to censure, to impose a civil penaltyup to a maximum of $5,000 for each violation, or to revoke or suspend the person’s

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license or bar the person from subsequently applying for a license (§16a-6-108). TheCommissioner may also bring a civil injunction action against a creditor and apply forappropriate temporary relief for the consumer, and may bring a civil action for allamounts of money, other than penalties, which a consumer or class of consumers hasthe right to recover under the Act. If the court finds that the defendant has engaged ina course of repeated and willful violations, may impose a civil penalty of up to $5,000(§§16a-6-111 to 16a-6-113).

Private Right of Action: Violation of provisions apply to the collection of excesscharges or enforcement of rights, restrictions on interests in land as security,limitations on the schedule of payments or loan terms for supervised loans, attorneyfees, security in sales and leases, assignments of earnings, authorizations to confessjudgment, prohibition of certain negotiable instruments, assignees subject todefenses, or limitations on default charges, the consumer has a cause of action torecover actual damages and a right other than a class action to recover a penalty ofnot less than $100 nor more than $1000 (§16a-5-201). If a creditor has violated thelicensing provisions, the loan is void and the consumer is not obligated to pay eitherthe amount financed or the finance charge (§16a-5-201). The consumer is notobligated to pay a charge in excess of that allowed, and is entitled to a refund of twicethe excess charge, which may be made by reducing the consumer’s obligations(§16a-5-201). If the creditor refuses the refund the consumer may recover a penalty ofnot less than $100 nor more than $1,000 (§16a-5-201). Consumers are entitled toreasonable attorney fees and costs for any action (§16a-5-201). A creditor who fails tomake the required disclosures is liable for an amount twice the amount of the financecharge, but not less than $200 or more than $2,000, and in the case of a successfulaction, reasonable attorney fees (§16a-5-203). Any action that may be broughtagainst the original creditor in any credit transaction involving a security interest inland may be maintained against any subsequent assignee of the original creditorwhere the assignee, its subsidiaries or affiliates were in a continuing businessrelationship with the original creditor, unless the assignment was involuntary or theassignee shows it did not have reasonable grounds to believe the original creditor wasviolating this act and that it maintained reasonable procedures to apprise it of theexistence of the violations (§16a-5-203). The creditor has liability in lieu of TILAliability (§16a-5-203).

Applicability of State UDAP: Yes. Kan. Stat. Ann. §50-623. Declaratory judgment;injunction; actual damages; maximum statutory damages of $5,000 per violation;reasonable attorney fees to prevailing party

Special Assignee Provisions: The consumer is authorized to pay the original creditoruntil the consumer receives notification of assignment of rights to payment whichreasonably identifies the rights assigned (§16a-3-202). The assignee is subject to allclaims and defenses of the buyer, notwithstanding an agreement to the contrary or theassignee is a holder in due course of a prohibited negotiable instrument (§16a-3-404).A buyer may assert claims or defenses against the assignee only if the buyer hasattempted in good faith to obtain reasonable satisfaction from the seller for the claims,if the buyer, when requested to do so by the seller or assignee, has given notice inwriting to the seller and assignee stating the claims or defenses, and only to theextent the amount owed to the assignee for the sale at the time of the assignee hasnotice of such claims or defenses, and only as a matter of defense to or set offagainst claims by the assignee, although buyer may bring rescission action (§16a-3-404). A lender who makes a consumer loan for the purpose of enabling a consumer tobuy or lease from a particular seller or lessee goods or services is subject to allclaims and defenses of the consumer against the seller arising from the sale if: the

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lender knows that the seller arranged for a commission, brokerage, or referral fee forthe extension of credit by the lender; the lender is related to the seller (unless remoteor not a factor in the transaction); the seller guarantees the loan, or otherwiseassumes the lender’s risk of loss; or the lender directly supplies the seller with theloan contract document used by the consumer, and the seller significantly participatesin the preparation of the document; or the loan is conditioned upon the consumer’spurchase of goods or services from the particular seller, but the lender’s payment ofproceeds of the loan to the seller does not itself establish that the loan was soconditioned (§16a-3-405). Such claims or defenses may only be asserted against thelender under the same conditions as may be asserted against an assignee (§16a-3-405).

Other: Consumers cannot waive their rights and benefits under the Code (§16a-1-107).The consumer is not liable for a deficiency unless the creditor has disposed of thegoods in good faith and in a commercially reasonable manner (§16a-5-103). If theseller repossesses or voluntarily accepts the surrender of the goods that were thesubject of the sale and in which the seller has a security interest, the buyer is notpersonally liable to the seller for the unpaid balance of the debt arising from the sale ofa commercial unit of goods of which the cash sale price was $1,000 or less; the selleris not obligated to resell the collateral unless the buyer has paid 60 percent or more ofthe cash price and has not signed after default a statement renouncing his rights inthe collateral (§16a-5-103). If the seller repossesses or voluntarily accepts surrenderof the goods that were not the subject of the sale but in which the seller has a securityinterest to secure a debt from a sale of goods and services costing $1,000 or less, thebuyer is not personally liable to the seller for the unpaid balance of the debt arisingfrom the sale, and the seller’s duty to dispose of the collateral is governed by theUniform Commercial Code (§16a-5-103). If a creditor takes possession or voluntarilyaccepts surrender of the goods in which it has a security interest to secure a debtarising from a consumer loan in which the loan is subject to defenses arising fromsales, and the net proceeds of the loan paid to or for the benefit of the debtor were$1,000 or less, the debtor is not personally liable to the creditor for the balance of thedebt arising from the loan and the creditor’s duty to dispose of the collateral isgoverned by the provisions on disposition of collateral of the Uniform Commercial Code(§16a-5-103). If any scheduled payment is a balloon payment (more than twice aslarge as the average of earlier scheduled payments), the consumer may refinance theamount of that payment at the time it is due without penalty on no less favorableterms than the terms of the original transaction (§16a-3-308). The creditor must credita payment on the date of receipt, or within 5 days if consumer failed to comply withreasonable requirements delivered to consumer in writing (added by 1999 Kan. S.B.301). The creditor must deliver or mail to the consumer a written receipt for eachpayment (§16a-3-202). Upon written request, the creditor must provide, withoutcharge, a written statement of the dates and amounts of payments made within thepast 15 months and the total amount unpaid (§16a-3-202). Upon fulfillment of allobligations, the creditor shall, upon request, deliver or mail written evidenceacknowledging payment in full (§16a-3-202).

Interest-UsuryCitation: Kan. Stat. Ann. §§16-201 to 16-207d

Applicability: General imposition of interest

Interest Rate and Fee Caps: The maximum interest allowed on judgments is the

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adjusted rate equal to 4 percentage points above the New York Federal Reserve Bankdiscount rate (§16-204). Judgments pursuant to the code of civil procedure for limitedactions are capped at 12 percent (§16-204). For contracts, the rate that is specified inthe contract may not exceed that authorized by law (§16-205). For first mortgages(except where parties agreed to make transaction subject to the Uniform ConsumerCredit Code), the maximum rate is 12 percentage points above the yield of the 30-yearfixed rate conventional home mortgages committed for delivery within 61-90 daysaccepted under Freddie Mac’s daily offerings for sale on the last day on whichcommitments for such mortgages were received in the preceding month (§16-207).This limitation does not apply to: 1) second mortgages covered by the UniformConsumer Credit Code (UCCC); 2) business or agricultural loans; and 3) loans madeby a qualified plan to a member (or family member thereof) of the plan, or anadjustable rate note secured by a mortgage (§16-207). Consumer adjustable rateloans are governed by jointly-adopted rules of the state Bank Commissioner,Consumer Credit Commissioner, Savings and Loan Commissioner, and Credit UnionAdministrator (§16-207d).

Loan Terms: The creditor may collect: 1) actual filing and recording fees paid to apublic official or agency of the state or federal government; and 2) reasonableexpenses (§16-207).

Prohibited Acts: No prepayment penalties for prepayment of home loan secured by areal estate mortgage prepaid more than 6 months after execution are allowed (§16-207).

Private Right of Action: Any person contracting for a greater rate of interest thanauthorized shall forfeit all unauthorized interest, and shall also forfeit a sum equal tothe amount of such unauthorized excess (§16-207).

Applicability of State UDAP: Yes. Kan. Stat. Ann (§50-623. Declaratory judgment;injunction; actual damages; maximum statutory damages of $5,000 per violation;reasonable attorney fees to prevailing party

Other: There is a specific override of §501(a)(1) of Title V of P.L. 96-221 with respect toloans, mortgages, credit sales, and advances made after effective date of act (§16-207a).

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Installment Sales ContractsCitation: Ky. Rev. Stat. §§371.310 to 371.990

Applicability: The act applies to the sales of goods or services, when purchasedprimarily for personal, family or household purposes, from a person who regularly sellsgoods or services using contracts with a time price differential payable in one or moreinstallments. Goods include items which are used at the time of the sale orsubsequently in the modernization, rehabilitation, repair, alteration, improvement, orconstruction of real estate so as to become a part thereof whether or not severabletherefrom (§371.210).

Exemptions: If the seller corrects any violation, other than a willful or intentionalviolation, within 10 days after notification from buyer, then the seller or holder is notsubject to penalties (§371.990).

Interest Rate and Fee Caps: None (§371.260). If the contract so provides, adelinquency charge is permitted, that does not exceed $10 or 5 percent of the overdueinstallment, whichever is greater, for any installment which is past due for 10 days ormore, or in lieu of such charge interest does not exceed the highest lawful contractrate. An extension or deferral charge of 1.5 percent per month may be charged for theperiod of any extension (§371.270).

Loan Terms: The contract shall be in writing, signed by both parties, and completedas to all essential provisions. The contract shall be designated a “Retail InstallmentContract” (§371.220). The buyer may prepay at any time and receive a refund ofunearned interest, less a $20 acquisition fee (§371.260).

Prohibited Loan Terms: No act or agreement of the buyer before or at the time ofmaking the contract shall waive any provisions of the act or any remedies granted tothe buyer by law (§371.320).

Disclosures: Required disclosures include: a notice advising the buyer to read thecontract, which should be filled-in, before signing it; and, a notice that buyer has rightto a completed copy (§371.220). The contract must include a description of the goodsand services; and the name and address of lender and borrower. The contract mustdisclose itemized amount financed, finance charge, insurance charges, official fees,the total of payments, and total sales price (§371.220).

Prohibited Acts: Signing the contract when essential provisions are blank is prohibited(§371.250).

Criminal Penalties: Willful violations are a misdemeanor punishable by a fine of $500and 6 months imprisonment or both (§371.990).

Civil Penalties/Enforcement: Until a signed copy of the contract is delivered to thebuyer, any buyer who has not received delivery of the goods has the right to canceland receive an immediate refund of all payments made and return of any trade-ins(§371.220). No person who violates the act may collect any time price differential, ordelinquency, or collection charges, unless the violation is an accident or bona fideerror (§371.990).

Applicability of State UDAP: Yes. (§367.110). Actual damages; equitable relief thecourt deems necessary and proper; punitive damages; attorney fees and costs to

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prevailing party

Special Assignee Provisions: The buyer’s written acknowledgment of the delivery of acopy of the contract shall be a conclusive proof of delivery and that contract wascompleted, in any action by or against an assignee without knowledge to the contrary,and presumptive proof in any other action (§371.250). Until the buyer has notice ofthe assignment, any payment made to the last known holder shall be binding upon allsubsequent holders (§371.310).

Industrial Loan CorporationsCitation: Ky. Rev. Stat. §§291.410 to 291.990

Applicability: Industrial loan corporations who make loans for $7,500 or less(§291.460)

Licensing Requirements: Yes. §§291.420 to 291.450

Interest Rate and Fee Caps: The maximum interest rate allowed is: 7 percent peryear, unless made under authority of §291.460(4) which, by reference, allows a rate of8 percent per year on loans of up to $10,000. The maximum allowable charge uponclosing a loan fee for examining and investigating the borrower is at a rate of $1 foreach $50 of principal, but not to exceed $40. (§291.460). A delinquency charge of $5or 5 percent of any installment, whichever is less, for any installment that is past duefor 10 days or more may be charged. A deferment charge may not exceed 7 percentper year interest. Attorney fees may not exceed 15 percent of the unpaid balance andcourt costs, if note referred to an attorney who is not a salaried employee of theholder for collection (§291.500). The actual cost of recording any security instrument,and actual insurance premium costs are permissible charges (§291.470).

Loan Terms: The loan term shall not exceed 5 years and 32 days (§291.460). Thebuyer may prepay, in whole or in part, at any time and receive a refund of unearnedinterest, less a $10 acquisition fee (§291.500).

Prohibited Loan Terms: Prohibited loan terms include: 1) principal amount exceeding$7,500 (§291.460); 2) the assignment of wages; and 3) a first lien or first mortgage assecurity (§291.510).

Disclosures: In the contract or a separate statement, the total charge, the total andschedule of payments, and the amount financed must be disclosed (§291.510).

Prohibited Acts: Splitting a loan for the purpose of obtaining a greater charge thanwould otherwise be allowed is prohibited (§291.510).

Criminal Penalties: Willful violations of the act are a misdemeanor punishable by a fineof not less than $100 nor more than $1,000 (§291.990).

Civil Penalties/Enforcement: Any contract in the making or collection of which anywillful violation of the act has been done is void and the lender has no right to collectany interest or charges whatsoever on the loan (§291.520). The Department ofBanking and Securities shall administer and enforce the act (§291.530).

Applicability of State UDAP: Yes. Ky. Rev. Stat. §367.110. Actual damages;

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equitable relief the court deems necessary and proper; punitive damages; attorneyfees; and costs to prevailing party

Interest-UsuryCitation: Ky. Rev. Stat. §§360.010 to 360.990

Exemptions: The maximum rate of interest established herein shall not amend orrepeal the maximum rate established by any other Kentucky law regulating particulartypes of transactions (§360.010).

Interest Rate and Fee Caps: Interest is allowed at any rate as agreed upon in writingfor loans in excess of $15,000; for loans of $15,000 or less, the maximum rate is 19percent or a rate not in excess of 4 percent over the local Federal Reserve discountrate on 90-day commercial paper, whichever is less. Banks may charge a minimuminterest charge of $10 (§360.010).

Civil Penalties/Enforcement: If a greater rate of interest than allowed by law has beenknowingly charged, reserved or received, the entire interest is forfeited (§360.020).

Private Right of Action: Twice the amount of interest thus paid, if the creditor hastaken or received interest at greater than the allowed rate (§360.020)

Applicability of State UDAP: Yes. Ky. Rev. Stat. §367.110. Actual damages;equitable relief the court deems necessary and proper; punitive damages; attorneyfees; and costs to prevailing party

Consumer Credit ContractsCitation: Ky. Rev. Stat. §§367.600 to 367.610

Applicability: The purchase of money loans on a deferred payment basis, made toconsumers who purchase goods or services primarily for personal, family or householduse from a seller who refers consumers to the creditor, or who is affiliated with thecreditor by common control, contract or business arrangement (§367.600)

Exemptions: Contracts which comply with Federal Trade Commission or similar rulesrelating to preservation of consumer claims and defenses in credit transactions areexempt (§367.610).

Private Right of Action: The buyer’s rights hereunder may only be asserted as adefense or set off against a claim by an assignee (§367.610).

Applicability of State UDAP: Yes. Ky. Rev. Stat. §367.110. Actual damages;equitable relief the court deems necessary and proper; punitive damages; attorneyfees; and costs to prevailing party

Special Assignee Provisions: An assignee is subject to all defenses of the buyeragainst the seller arising out of the sale notwithstanding any agreement to thecontrary; the assignee’s liability is limited to the amount owed to the assignee at thetime the defense is raised against the assignee (§367.610).

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Interest and UsuryCitation: La. Civ. Code Ann. Art. 2924, §§9:3501-3509

Applicability: The act establishes interest rates. §9:3506 applies the statute only to“conventional” obligations bearing simple interest from date on the unpaid balance andshall not apply to or affect precomputed interest or discount loans.

Exemptions: §9:3504 exempts certain loans from the operation of the usury statutes,including loans federally guaranteed, graduated payment mortgages, and adjustablerate mortgages.

Interest Rate and Fee Caps: §2924(C) caps interest rates at 12 percent, but requiresthe Commissioner of Financial Institutions to yearly set a rate, based on the averageaccepted auction price for the last auction of 52 week treasury bills, and the interestpresumably cannot go above the 12 percent. §9:3503 sets the maximum interest rateon mortgages at 12 percent; §9:3506 states that where a federal-related mortgage isexempt from the interest rate limitations, the other provisions limiting costs andexpenses which may be charged do apply. §9:3505 lists costs and expenses not tobe considered interest.

Applicability of State UDAP: La. Rev. Stat. Ann. §51:1401 et seq. Appears to bebroad enough; actions subject to the Banking Commissioner are exempt; allowsactual damages, up to treble damages

Louisiana Consumer Credit LawCitation: La. Civ. Code Ann. §§9:3510 to 3565

Applicability: The act applies to consumer credit sales, defined under §9:3516 (12) asa sale “in which the purchaser is permitted to defer all or part of the purchase price orother consideration in 2 or more installments excluding the down payment when thething is purchased primarily for personal, family or household purposes.”

Exemptions: §9:3512 contains exclusions from the act, none of which appear to applyto consumer credit loans.

Licensing Requirements: §§9:3557 to 3561 govern the licensing of consumer lenders.

Interest Rate and Fee Caps: §9:3519 sets the interest rates for consumer loans;allows rates of up to 36 percent for loans up to $1,400; 27 percent for that portion ofloans of $1,400-$4,000; 24 percent for that portion of loans of $4,000 to $7,000; and 21percent for that portion of the unpaid principal exceeding $7,000. §9:3520 sets theinterest rates for consumer credit sales at 24 percent for loans up to $1,750; 18percent for loans of $1,750 to $5,000; 12 percent for loans of over $5,000; or 18percent. §9:3524 sets the loan finance charge for lender credit cards at 18 percent.§9:3527 sets limitations on delinquency charges. §9:3528 sets the maximum deferralcharges allowed.

Loan Terms: §§9:3531 to 3533 address prepayment of consumer credit transactions,and rebates. §§9:3542 to 3550 govern the imposition of insurance in a consumercredit transaction.

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Criminal Penalties: §9:3553 makes any violation of the act a misdemeanor.

Civil Penalties/Enforcement: §9:3552 states that if the court finds a violation of theact, the consumer is entitled to a refund of all loan finance charges or credit servicecharges and has the right to recover 3 times the amount of such loan finance chargesor service charges together with reasonable attorney fees. The right to recoveraccrues only after a 30-day notice is given to the seller. The extender of the credit isnot liable for any violation made in good faith, or in instances of “self discoveredviolations.”

Private Right of Action: Implied

Applicability of State UDAP: La. Rev. Stat. Ann. §51:1401 et seq. Actions subject tothe Banking Commissioner are exempt; allows actual damages, up to treble damages

Other: §§9:3538 to 41 apply to home solicitation sales, and contain the standard 3-day notification requirements. These sections contain a special provision providingprotection for elderly victims of home solicitation sales: “The home solicitation of aconsumer who is an aged person where a loan is made encumbering the primaryresidence of that consumer for the purposes of paying for home improvements andwhere the transaction is part of a pattern or practice in violation of (15 U.S.C. 1639) isprohibited."

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Maine Consumer Credit CodeCitation: Me. Rev. Stat. Ann. tit. 9-A §§1-101 to 9-407

Applicability: Under §1-201, the act applies to consumer credit transactions and open-end credit plans made or entered into in Maine. §1-102 contains the standard UniformConsumer Credit Code (UCCC) statement of purposes and policies.

Exemptions: §1-202 contains exclusions (most of which are not relevant to consumercredit); an exclusion is included for loans or credit sales made to finance or refinancethe acquisition of real estate or the initial construction of a dwelling, or a loan securedby a first mortgage on real estate.

Licensing Requirements (cite only): §§2-301 to 310 contain the licensing requirementsfor businesses making supervised consumer loans.

Interest Rate and Fee Caps: §2-201(2) limits finance charges for consumer creditsales. The finance charge can be no greater than: (i) 30 percent on an unpaid balanceunder $1,000; (ii) 21 percent on an unpaid balance between $1,000 and $2,800; (iii) 15percent on an unpaid balance over $2,800, or 18 percent. §2-2017 states: “(T)hefinance charge on any transaction involving the credit sale of goods or services used inthe modernization or improvement of real property, in which the seller or his agentinstalls the goods or provides the services related to the modernization, rehabilitation,repair, alteration, or improvement of the real property, may not exceed 18 percent.” §2-202 sets limits on finance charges for open ended credit sales. §2-401 limits thefinance charge for consumer loans to: (i) 30 percent on unpaid balances under $2,000;(ii) 24 percent on unpaid balances between $2,000 and $4,000; and (iii) 18 percent onunpaid balance in excess of $4,000. However, in no event may the total financecharge on a loan totaling over $8,000 exceed 18 percent. §2-402 controls financecharges for loans with open-ended credit. Sections 2-501-510 contain the UCCC listof allowed additional charges, including delinquency charges, deferral charges, financecharges on refinancing and consolidation, and attorney fees. Title 9-B, §432 (outsidethe UCCC) sets the default interest rate where there is no agreement at 6 percent.

Prohibited Loan Terms: §§3-301 to 312 contain the standard UCCC “limitations onagreements and practices” provisions. §3-301 allows a seller to take a securityinterest in the property sold, but limits the seller’s ability to take a security interest inother property to transactions over $2,800 (security in land), or $1,000 (security inpersonal property). §3-304 prohibits the use of multiple agreements to obtain a higherfinance charge than allowed. §3-308 limits when a creditor may schedule balloonpayments, and §309 prohibits referral sales techniques.

Disclosures: §§3-201 to 206 contain the standard UCCC disclosure provisions,including provisions: 1) prohibiting false or misleading advertising, 2) requiring thelender to provide a written copy of the agreement, 3) requiring a notice of assignment;4) requiring the lender to provide receipts, and 5) requiring a notice to cosigners.§3.310 requires certain disclosures when an agreement contains a variable rate ofinterest.


Criminal Penalties: §5-301 makes any violation of the act a misdemeanor.

Civil Penalties/Enforcement: The Maine UCCC contains the standard UCCC remediesand penalties provisions (§§5-101 to 5-202). §5-103 restricts deficiency where the

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goods financed are worth less than $2,800. §5-107 prohibits extortionate extensionsof credit. §5-108 allows a court to set aside part or all of an agreement, if it is found tobe unconscionable. §5-110 requires the seller to give the consumer notice of defaultand a right to cure. §5-115 prohibits a seller from making misrepresentations to aconsumer. §5-201 sets forth the consumer’s remedies, including the right to recoveractual damages and a refund of any excess finance charge, as well as a chance ofrecovering attorney fees.

Applicability of State UDAP: Maine’s UDAP, Title 5, §§206, et seq, encompassesUCCC: related unfair or deceptive actions; the remedy provision of the UCCC does notlimit non-UCCC remedies. The UDAP allows for awards of actual damages andattorney fees, but does not specifically provide for treble damages or punitivedamages.

Special Assignee Provisions: §3.203 allows the consumer to pay the original creditoruntil he receives notification of an assignment. §3-403 makes the assignee subject tothe claims and defenses of the consumer, but limits that liability to the amount ofmoney owing to the assignee.

Other: Sections 3.501 to 3.507 govern home solicitation sales, and includes thestandard notice of right to cancel requirement, and the right to cancel within threedays of the sale. Sections 9-101 to 407 contain special provisions for consumer credittransactions secured by first lien mortgage. (Note: the UCCC grants rulemakingauthority to the Bureau of Consumer Protection, which has adopted rulesimplementing parts of the UCCC.)

Door to Door Home Repair Transient Sellers ActCitation: Me. Rev. Stat. Ann. §§14501 to 14512

Applicability: Applies to “transient sellers of home repair services,” defined in §14501(9) as a seller of home repair services who engages in the business of door to doorsales or solicitation who does not have a permanent address in the municipality inwhich the sale occurs.

Exemptions: Under §14502, the Act does not apply to the original construction of ahome.

Licensing Requirements (cite only): Under §14505, transient sellers must register withthe state.

Loan Terms: Home repair service contracts must comply with the provisions governingconsumer solicitations or sales, §§4661 to 4670 (providing a 3-day rescissionprovision), transient sales §§4681-4689 (requiring registration and disclosure ofregistration), home solicitation sales, Title 9-A, §§3-501 to 3-507 govern (UCCC homesolicitation provision), and home construction contracts, and Title 10, §§1486-1490(contains required provisions for home construction contracts).

Disclosures: Disclosures required in statutes as cited above (i.e. right to rescind onhome solicitation sale, etc.)

Criminal Penalties: §14512 makes any violation of the act a Class D crime.

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Civil Penalties/Enforcement: §14512 provides for a civil penalty of up to $2,000.

Applicability of State UDAP: Yes. §14512 makes any violation of the act an unfairtrade practice in violation of Title 5, §207.� ��

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Home Improvement LawCitation: Md. Bus. Reg. Code Ann. §§8-101 to 8-702

Applicability: The act applies to: additions, alterations, conversions, improvements,modernization, remodeling, and repairs to or the replacement of a building or part of abuilding used or designed to be used as a residence or to a structure or land adjacentto that building. The act applies to the connection, installation or replacement of adishwasher, disposal, or refrigerator with an icemaker to existing plumbing lines (§8-101).

Exemptions: Construction of a new home; work done to comply with guarantee ofcompletion of a new building; connection, installation or replacement of an applianceto existing plumbing lines that requires alteration of the plumbing lines; sale ofmaterials if the seller does not directly or indirectly perform any work in connectionwith the installation or application of the materials (§8-101)

Licensing Requirements: Yes. §§8-301 to 8-317

Loan Terms: The contract must be signed, in writing, and describe clearly eachdocument it incorporates. The contract must include the: name, address, and licensenumber of contractor and each salesperson involved in the sale; start and finish dates;description of the work and materials; consideration; number and amount of anypayments including finance charge; description of the security; and phone number ofthe Maryland Home Improvement Commission. A contract which violates this sectionis not invalid merely because of the noncompliance (§8-501).

Disclosures: If the payment is secured by an interest in residential real estate, anotice in at least 10-point bold type on the contract’s first page, stating that: 1) thecontract creates a lien against the property and may cause loss of that property iffailure of payment, 2) homeowner has the right to consult an attorney, and 3) borrowerhas a 3-day right to rescind the contract. This notice must be independently initialedby the homeowner (§8-501).

Prohibited Acts: A salesperson may not represent more than one contractor; use aform that does not disclose the name of the contractor; choose a contractor for theowner; or accept compensation from or pay compensation, to anyone other than thecontractor the salesperson represents (§8-502). Prohibited acts include: 1) promisingor offering any compensation or reward for referrals; 2) paying or offering any gift,bonus, trading stamps or cash loan as an inducement to enter into a contract (§8-503); 3) knowingly preparing or arranging for a mortgage or promissory note whichrecites a greater obligation than the consideration for the home improvement (§8-610);and 4) demanding or receiving payment before the contract is signed, or taking adeposit in excess of one-third of the contract price before or at the time of executionof the contract (§8-617).

Civil Penalties/Enforcement: Maryland Home Improvement Commission enforces theact through regulations, injunctions, restitution, and orders for completion (§§8-201 to8-214) (up to $5,000 fine per violation (§8-260)).

Applicability of State UDAP: Yes. (Md. Com. Law Code Ann. §§13-101, 14-101).Actual damages; attorney fees “may” be awarded; seller receives attorney fees ifaction in bad faith or frivolous

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Retail Installment SalesCitation: Md. Com. Law Code Ann. §§12-601 to 12-636

Applicability: The act applies to the sales of goods in which part or all of the price ispayable in one or more installments, and the seller takes collateral or a securityinterest in the goods sold. Goods is defined as tangible personal property with a cashprice of $25,000 or less. Sales finance companies include those companies in thebusiness of acquiring or investing or lending on the security of installment salesagreements; including home improvement transactions made between other parties, ifcollateral is required by the contractor (§12-601).

Interest Rate and Fee Caps: For any installment sale agreement made after July 1,1982; the interest rate cap is 24 percent per year simple interest. A minimum chargeof $10, or if the agreement for a term of eight months or less, $8 is allowed (§12-610).Certain conditions apply to refinancing pre-July 1, 1982 contracts (§12-610.1).Variable rates are forbidden in certain contracts (§12-610.2). Court costs allowed bycourt in any action to realize upon security or recover possession of the goods orenforce any obligation of buyer or his surety. A bad check fee may not exceed $15 ifcheck dishonored upon second presentment (§12-614). Official fees actually paid outmay be charged; credit against last installment may be required if charged but notpaid (§12-616). An extension or deferral charge of 1 percent per month of amountextended or deferred may be charged for the period of any extension (§12-619). Astatement of the account balance must be supplied upon the request without chargeonce every 60 days; the fee for any other requested statement is limited to 50 cents(§12-621). If the contract so provides, a delinquency charge not exceeding the lesserof $10 or 5 percent of the overdue installment, for any installment which is past due for10 days or more may be charged. Court costs and attorneys’ fees may not exceed 15percent of the amount due if referred for collection to an attorney who is not a salariedemployee of the holder (§12-623).

Loan Terms: If the buyer is required to make any payment in addition to a downpayment prior to delivery of the goods, the buyer has the right to cancel before thedelivery of the goods, and the seller must refund at least 90 percent of all paymentsmade, including the down payment, within 10 days (§12-615). The buyer may prepaypart or all of amount due at any time, without penalty, and receive a refund of unearnedinterest, but the holder is entitled to retain a finance charge of at least $6. This rightapplies to all sales of consumer goods, even if the cash price of goods exceeds$25,000 (§§12-612 & 12-620).

Prohibited Loan Terms: Prohibited loan terms include: confession of judgment orpower of attorney therefore; balloon payments more than double the averageinstallment or due in an interval less than one-half intervals between other payments,unless the borrower is given the absolute right upon the default of such excess orirregular payment to a new payment schedule conforming to previous average inamount and interval; any repossession or acceleration clause based on holderdeeming itself insecure; any waiver of any tort claim or provision allowing the seller theright to enter the buyer’s premises unlawfully; making the person acting for the holderthe buyer’s agent; and the assignment of wages (§12-607). No act or agreement ofthe buyer shall waive any benefit or protection accorded to the buyer by the act (§12-629).

Disclosures: Required disclosures include: name and address of parties; date; cleardescription of goods sold; cash price; other charges; principal balance; insurancecoverage and charges; finance charge; schedule and amount of payments. A clear

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statement is required of any collateral taken and a notice in 12-point bold type directlyabove the buyer’s signature line stating: entitlement to a copy of this agreementwhen signed; borrower’s rights under the state installment sales law to prepay andobtain a rebate of unearned finance charge; borrower’s rights to redeem if the propertyis repossessed; and requirement of a resale in certain circumstances (§12-606). Theholder may serve a notice of intent to repossess 10 days in advance. The holder mustsend a notice within 5 days after repossession explaining the buyer’s right to redeem;the amount required to redeem; the rights of buyer as to resale and possible liabilityfor any deficiency; and the exact location where the goods are stored and an addresswhere payments may be made (§12-624).

Prohibited Acts: False, misleading, or deceptive advertising is prohibited (§12-602).Additional prohibited acts include: discriminating on the basis of sex, marital status,geographic area of residence, neighborhood or age (§12-603); failing to provide thebuyer with a copy of the contract (§12-604); taking a contract which contains anyblanks (§12-607); contracting for, charging, or receiving any charges (directly orindirectly) in excess of those allowed by the act (§12-614); and repossessing, exceptby legal process or self-help without the use of force (§12-624).

Criminal Penalties: Knowing violations are a misdemeanor punishable by a fine notexceeding $100 for a first offense and $500 for any subsequent offense (§12-636).

Civil Penalties/Enforcement: If the seller does not provide a signed copy of thecontract to the buyer within 15 days, the contract is void and the buyer has theunconditional right to cancel and the seller must immediately refund all payments anddeposits (§12-605). The failure to issue a statement and any instruments required torelease security within 15 days of payment in full, subjects the holder to $10 fine andliability for damages (§12-622). The holder may not collect any finance, delinquency,or collection charges if: 1) the contract fails to include required information, 2) theseller fails to deliver the required copy to the buyer, or the contract includes a financecharge in excess of that allowed by law, unless finance charge violation isunintentional and in good faith and holder corrects the error within 10 days after holdernotice it or buyer notifies holder in writing. If contract contains any of provisionsforbidden by §12-607 that provision is void and holder may not collect any finance,delinquency or collection charges (§12-630). Commissioner of Consumer Credit toenforce the act (§12-631).

Applicability of State UDAP: Yes. (§§13-101, 14-101). Actual damages; attorneyfees “may” be awarded; seller receives attorney fees if action in bad faith or frivolous

Special Assignee Provisions: Any note taken by a seller or a sales finance companymust refer to the agreement out of which it arises. If a note is assigned, it is subjectto all defenses which the buyer may have against the seller or sales finance company.The buyer’s written acknowledgment of delivery of a copy of the contract shall beconclusive proof of delivery in any action by or against an assignee, withoutknowledge to the contrary (§12-628). Until the buyer has a written notice ofassignment, the payment made to last known holder or notice given hereunder shallbe binding upon all subsequent holders (§§12-611 and 12-617).

Other: The buyer may redeem goods for 15 days after the holder gives required post-repossession notice, unless the goods were already repossessed once within theprevious 18 months or the goods repossessed due to the buyer’s fraud or wrongfulconcealment or damage of the goods (§12-625). The holder must sell anyrepossessed goods at a public auction if the buyer has paid at least 50 percent of the

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cash price of the goods and the buyer requests a sale within 15 days after the holdergives the required post-repossession notice, and gives the holder a deposit of $10 or10 percent of the time balance due to cover the costs of the sale (§12-626). If there isnot a resale of any repossessed goods, all the buyer’s obligations are discharged andthe holder may retain the goods (§12-627).

Consumer Loans—Credit ProvisionsCitation: Md. Com. Law Code Ann. §§12-301 to 12-317

Applicability: Persons who make loans for $6,000 or less (§12-303)

Exemptions: Banks, trust companies, savings banks, savings and loan associations,and credit unions are exempt (§11-202). A licensee acting in good faith in conformitywith any form or written opinion issued by the Attorney General or the Commissionerof Financial Institutions shall be presumed to have acted in accordance with the law,and not liable for any resulting violation (§12-316.1).

Licensing Requirements: Md. Fin. Inst. Code Ann. §§11-201 to 11-223.

Interest Rate and Fee Caps: For a loan of $2,000 or less: 2.75 percent per month onthe portion of the loan $500 or less; 2 percent per month on the portion of loan over$500 but not more than $700; 1.25 percent per month on the balance. For a loan ofmore than $2,000 but not more than $3,500: 1.75 percent per month. For a loan ofmore than $3,500 but not more than $5,000: 1.5 percent per month. For a loan ofmore than $5,000: 1.35 percent per month. As an alternative, for certain loans madeafter July 1, 1982, the lender may charge: for loans of $2,000 or less, 2.75 percent permonth on the part of the balance $1,000 or less and 2 percent per month on theremainder; for loans of more than $2,000: 2 percent per month. If any balanceremains unpaid 6 months after maturity, the lender may charge interest not to exceed6 percent simple interest. A lender may not add more than 60 days outstandinginterest to the principal in any refinancing. Advance or compounded interest isforbidden (§12-306). Title insurance premiums or reasonable attorney’s fees paid forsearching and insuring the title to any real property securing the loan may be charged.A bad check fee of $15 may be charged if the check is dishonored on secondpresentment (§12-307). If the contract so provides, court costs and attorney’s fees,not to exceed 15 percent of the amount due may be charged if the loan is referred forcollection to an attorney who is not a salaried employee of the lender. Fees are setby the court if the suit is filed on any loan for less than $2,000 (§12-307.1). Any profitor advantage a person contracts for or receives by a collateral sale, purchase, oragreement in connection with negotiating, arranging, or making a loan is considered acharge for the loan (§12-310).

Loan Terms: The loan term shall be: 30.5 months or less for loans of $700 or less;36.5 months or less for loans of more than $700 but less than $2,000; 72.5 months forloans of more than $2,000 (§12-306). The buyer may prepay in full or in part at anytime, without penalty (§12-308). The principal amount of the loan, schedule ofpayments and agreed amount and rate of interest and fees and charges must beincluded in contract (§12-311).

Prohibited Loan Terms: Confession of judgment or power of attorney therefore;assignment of wages; taking a security interest in real property in any loan for lessthan $2,000; taking a security interest in personal property in any loan for less than

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$700 (§12-311)

Disclosures: At the time the loan is made, a statement (in English) quoting §§12-306,12-307, 12-312-12-313 (limiting the interest rates and charges payable underconsumer loans) (§12-308)

Prohibited Acts: Prohibited acts include: 1) making loans if not licensed (§12-302); 2)making loans for amounts larger than $6,000 (§12-303); 3) evading any provisions ofthe act by structuring a transaction as a purchase or assignment of wages, or as apretended purchase of property (§12-303); 4) false, deceptive, or misleadingadvertising (§12-304); 5) discriminating on the basis of race, color, creed, nationalorigin, sex, marital status, or age in granting or denying credit (§12-305); 6) taking aninstrument with blanks in it as security for a loan (§12-311); and 7) splitting any loanand thereby receiving charges in excess of those permitted by act (§12-313).

Criminal Penalties: Knowing violations are a misdemeanor (§12-316).

Civil Penalties/Enforcement: A lender who loans or contracts to loan a borrower anamount in excess of $6,000, whether in one or more transactions, shall not receiveany interest, fees, or charges under this statute (§12-303). The state Commissionerof Financial Regulation shall administer and enforce the act (§12-304). If any chargein excess of amounts allowed by the act is willfully contracted for or received, thelender may not receive any compensation with respect to the loan. If the excesscharge is not made willfully, and the lender does not correct the error before theborrower makes the next loan payment, then the lender is liable to the borrower for 3times the excess amount received, but otherwise may receive principal and interestunder the loan (§12-313). Loans for under $6,000 made by an unlicensed person areunenforceable if a greater rate of interest than allowed by statute is charged, unlessthe excess rate is contracted for because of a clerical error and the person correctsthe error before receiving any payments (§12-314).

Applicability of State UDAP: Yes. Md. Com. Law Code Ann. §§13-101, 14-101.Actual damages; attorney fees “may” be awarded; seller receives attorney fees ifaction in bad faith or frivolous

Special Assignee Provisions: If the loan is used to buy goods or services primarily forpersonal, family or household purposes, and the lender knows that the seller arrangedfor the credit or the lender otherwise knowingly participated in the sale, then thelender is subject to the defenses and claims that the borrower may have against theseller. Knowing participation defined as being a related person to the seller; havingproceeds of loan made payable to seller; taking a purchase money security interest inthe goods bought; seller guaranteed the loan; lender supplied the seller a form to use;or the loan was conditioned upon the purchase from a particular seller. Lender’sliability limited to amount owed to lender at time of notice of buyer’s claim or defense(§12-309).

Preservation of a Consumer’s Claims and Defenses in ConsumerCredit TransactionsCitation: Md. Com. Law Code Ann. §14-302

Applicability: Consumer credit contracts, which include any instrument whichevidences a debt arising from a purchase money loan (any loan applied to a purchase

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of goods or services from a seller who refers consumers to the creditor or is affiliatedwith the creditor by common control, contract, or business arrangement) or whicharises from a financed sale (credit extended to a consumer in connection with a creditsale).

Exemptions: The act does not apply if the seller does not require consumer creditcontract to be a negotiable instrument or contain a clause waiving a consumer’sclaims against the seller as to any holder of the contract, and the seller also does nottransfer, sell, pledge, or assign the contract except under circumstances in whichtransferee is subject to all claims and defenses the consumer has against the seller.

Disclosures: Every consumer credit contract must include a notice in 10-point boldtype that any holder is subject to all of the buyer’s claims and defenses against theseller; debtor’s recovery under the contract limited to the amount paid by the debtorpursuant to the contract.

Prohibited Acts: Prohibited acts include: 1) taking or receiving (directly or indirectly)any consumer credit contract which fails to include the required notice; or 2) acceptingthe proceeds of any loan which fails to include the required notice. These acts areexplicitly declared unfair and deceptive practices.

Applicability of State UDAP: Yes. Md. Com. Law Code Ann. §§13-101 and 14-101.Actual damages; attorney fees “may” be awarded; the seller receives attorney fees ifthe action is done in bad faith or is frivolous

Special Assignee Provisions: Any holder is subject to all claims of the buyer againstthe seller arising out of the sale. The assignee’s liability is not to exceed the amountpaid by the debtor under the note.

Secondary Mortgage Loan LawCitation: Md. Com. Law Code Ann. §§12-401 to 12-415

Applicability: Loans made by licensed mortgage lenders, or by those exempt from thelicensing requirement, which are secured by a mortgage upon real property which isused as a dwelling, if the property is subject to a lien for one or more prior mortgages(§12-401)

Exemptions: Charges authorized by any federal lending program provided the loan iseligible for purchase under the program and the sum of fees, interest, discount, pointsand other charges does not exceed 24 percent per year (§12-404.1)

Licensing Requirements: Md. Com. Law Code Ann. §12-402; Md. Fin. Inst. Code Ann.§§11-501 to 11-524, Maryland Mortgage Lender Law

Interest Rate and Fee Caps: For loans made after July 1, 1982: 24 percent per yearsimple interest, but no interest in advance or compound interest and certain otherconditions imposed; otherwise 16 percent per year simple interest (§12-404). Chargesare limited to: official fees paid for recording and satisfying instrument securing theloan; an origination fee not to exceed $250 or 10 percent of the net loan proceeds; adelinquency charge of $2 or 5 percent of the amount past due, whichever is greater, ifdelinquency over due 10 days or more (§12-405). No balloon payments are allowed(except that loans to aid in sale of borrower’s residence or purchase of a new

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residence may include a balloon payment at maturity if the borrower is given the rightto postpone the balloon payment 1 time for 6 months, providing borrower keepsmaking regular monthly payments and no new closing costs or processing fees areimposed) (§12-404).

Loan Terms: Prepayment, in part or in full, is allowed at any time without penalty andany unearned interest must be refunded (§12-407).

Prohibited Loan Terms: Waiver of borrower’s rights under act; assignments of wages;acceleration clause in absence of buyer’s default (§12-409)

Disclosures: Federal Truth in Lending Act (TILA) disclosures are required (§12-407).The purpose of the loan must be stated on form developed by the Commissioner ofFinancial Regulation (§12-407.1).

Prohibited Acts: Prohibited acts include: 1) contracting for or receiving any interest,discount, fee, commission, or other consideration in excess of amount allowed by act(§12-411); 2) making or offering to make a second mortgage loan except within termsand conditions allowed by the act (§12-412); 3) making false or misleadingadvertisements (§12-403); 4) refinancing a loan more often than once during any 12months or twice within any 5 years (§12-408); and, 5) discriminating solely on thebasis of age in granting or denying any loan application (§12-403.1). A commission orfinder’s fees shall be paid by the lender, and only to a lawyer, a licensee hereunder, ora licensed real estate broker (§12-406).

Criminal Penalties: Willful violations is a misdemeanor punishable by $1,000 fine or 1year’s imprisonment or both (§12-414).

Civil Penalties/Enforcement: The commissioner of Financial Regulations shall enforcethe act (§§12-407 & 12-407.1). For any violation other than a bona fide computationerror, the lender may not collect interest, costs, or other charges but may collectprincipal. Knowing violations entitle the borrower to collect 3 times the amount ofexcess interest and charges collected (§12-413).

Applicability of State UDAP: Yes. Md. Com. Law Code Ann. §§13-101, 14-101.Actual damages; attorney fees “may” be awarded; seller receives attorney fees if theaction is in bad faith or is frivolous

Credit Grantor Closed-End Credit ProvisionsCitation: Md. Com. Law Code Ann. §§12-1001 to 12-1028

Applicability: Any credit grantor making a closed-end loan to a consumer borrower forpersonal, family, or household purposes secured by residential real property. Creditgrantors include any federal or state bank, trust company, depository institution, orsavings bank having a Maryland branch and also anyone not required to be licensedbut who makes a secondary mortgage loan on residential real property (§12-1001).

Exemptions: Loans made prior to October 1, 1994, by a home improvement contractornot licensed as required hereunder are not unenforceable or a violation because ofsuch lack of licensing (§12-1015). Credit grantors not liable for unintentional, goodfaith violations of act if error corrected and borrower made whole for any losses,including reasonable attorneys’ fees and interest, within 10 days after grantor receives

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notice of error or violation from borrower. Burden of proving violation unintentional andin good faith is on credit grantor (§12-1019). If credit grantor corrects, within 60 days,any error it discovers on its own without receiving notice from the borrower, grantor notliable for violating act (§12-1020).

Licensing Requirements: Md. Com. Law Code Ann. §12-1015.

Interest Rate and Fee Caps: Interest rate may not exceed 24 percent per year simpleinterest (§12-1003). Loan fees, points, finders’ fees, other charges, and mortgagebroker’s fee must total no more than 10 percent of the original extension of credit.Such fees are prohibited for consumer loans not secured by residential real property.No such fee limitations apply to loans secured by a first mortgage. Reasonablecharges are allowed for services rendered, incurred in good faith by lender and notretained by lender, including: commitment fees; official fees; insurance premiums; titleexamination; filing fees; and attorney fees and travel expenses (§12-1005). A badcheck fee may not exceed $15, if the check is dishonored upon the secondpresentment (§12-1008). No more than one refinancing charge in any 12 month periodof the loan may be charged, if the new loan is made by the credit grantor, secured bya second mortgage, and made to cure a default on loan being refinanced (§12-1010).If the contract so provides, court costs and other collection costs, and reasonableattorneys’ fees if the loan referred for collection to an attorney not a salaried employeeof holder may be charged (§12-1011). A lender’s inspection fee may only be imposedto ascertain the completion of a new home or repairs, alterations or other workrequired by the credit grantor (§12-1027). Reasonable attorneys’ fees for processingand closing first mortgage loan are allowed (§12-1008).

Loan Terms: The buyer may prepay in full at any time, without penalty, and receive arefund of unearned interest (§12-1009).

Prohibited Loan Terms: Balloon payments are prohibited on loans to consumers notsecured by residential real property; however, balloon payments are allowed on loanssecured by residential real property if the borrower is given the right to postponepayment 1 time, for 6 months, and provided the buyer continues to make paymentsand no fees or charges are imposed by the postponement (§12-1003). Confession ofjudgment or power of attorney therefore; any repossession or acceleration clausebased on holder deeming itself insecure; demand for the person act for holder buyer’sagent; and assignment of wages are prohibited (§12-1023).

Disclosures: The holder may serve a notice of intent to repossess tangible personalproperty 10 days in advance, but must send a notice within 5 days after therepossession explaining: 1) the buyer’s right to redeem; 2) the amount required toredeem; 3) the rights of the buyer as to resale and possible liability for any deficiency;4) the exact location where the goods are stored; and 5) the address where thepayment may be made (§12-1021).

Prohibited Acts: Failing to deliver a copy of the contract to the borrower (§12-1013.2);failing to release security after payment in full (§12-1024); repossession except bylegal process or self-help without the use of force (§12-1021)

Criminal Penalties: Willful violations are a misdemeanor punishable by a $1,000 fineand 1 year’s imprisonment or both (§12-1017).

Civil Penalties/Enforcement: The Commissioner of Financial Regulation is authorizedto enforce the act. Obtaining an administrative hearing before the Commissioner

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requires the borrower to waive any right to bring a cause of action on mattersaddressed in the complaint or hearing (§12-1016). For any violation other than a bonafide computation error, the credit grantor may not collect interest, costs, or othercharges (may collect principal). Knowing violations entitle the borrower to collect 3times the amount of excess interest and charges collected (§12-1018).

Applicability of State UDAP: Yes. Md. Com. Law Code Ann. §§13-101, 14-101.Actual damages; attorney fees “may” be awarded; seller receives attorney fees if theaction is in bad faith or is frivolous

Special Assignee Provisions: The buyer’s written acknowledgment of the delivery of acopy of the contract shall be conclusive proof of delivery in any action by or against anassignee without knowledge to the contrary (§12-1013.2). Until the buyer has awritten notice of assignment, and payment made to the last known holder or noticegiven hereunder shall be binding upon all subsequent holders (§12-1023).

Other: After October 1, 1993, the credit grantor must elect, in writing, to make a loanunder this act and not as otherwise permitted by some other applicable law (§12-1013.1). The buyer may redeem goods for 15 days after the holder gives required apost-repossession notice, unless the goods have been already repossessed oncewithin the previous 18 months or the goods were repossessed due to the buyer’s fraudor wrongful concealment or damage of the goods. The holder must sell anyrepossessed goods at a private sale or public auction in a commercially reasonablemanner if the buyer has paid at least 60 percent of the cash price of the goods or 60percent of the loan. If there is not a resale of any repossessed goods, all the buyer’sobligations are discharged and the holder may retain the goods (§12-1021). Thelender must present a financing agreement to a first mortgage borrower 72 hoursbefore the time of settlement (§12-1022). Lending institutions must pay 3 percentsimple interest or the passbook savings interest rate on all funds held in escrow undera first mortgage loan (§12-1026).

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Licensing of Certain Mortgage Lenders and BrokersCitation: Mass. Gen. Law Chapter 255E

Applicability: §255E:2 states that no person may act as a mortgage broker ormortgage lender with respect to residential property without first obtaining a licensefrom the Commissioner.

Exemptions: §255E:2 lists a number of exemptions, including: persons lending orbrokering less than 5 times a year; banks; savings and loans; and credit unions.

Licensing Requirements (cite only): The entire chapter is a licensing requirement.

Prohibited Acts: Violating the licensing provisions is prohibited (§255E:7).

Civil Penalties/Enforcement: §§255E:76 gives the Commissioner authority to enforce.

Applicability of State UDAP: A violation of the licensing provision is presumably aviolation of Chapter 93A.

Retail Installment Sales and ServicesCitation: Mass. Gen. L. Chapter 255D

Applicability: This act licenses businesses issuing sales finance agreements, andsets forth requirements for the agreements.

Exemptions: §255D:2 exemptions include: banks, savings and loans, and creditunions.

Licensing Requirements: §255D:2-8

Interest Rate and Fee Caps: §255D:10 sets the interest rate cap at 21 percent.

Loan Terms: §255D:9 sets forth requirements as to the form and content of theagreements, including: 1) a notice to the buyer not to sign the agreement if there areblank forms, and that the buyer is entitled to a copy of it; 2) that the buyer may payloan off in full at any time; 3) that under certain circumstances, the buyer may redeemthe property if repossessed; and, 4) that the seller has no right to unlawfully enterpremises. The section also requires notification to the buyer of cancellation rightswithin 3 days (home solicitation sale only). The section prohibits a seller fromassigning such a contract within 5 days of the sale. The seller is also required toinclude in the contract the information required to be included under §140D:12 and 13,pursuant to §255D:31. §255D:13 requires a refund credit for prepayment in full. Thebuyer has a right to cancel until the seller delivers to him, in person or by mail, thecontract, or if it is a home solicitation sale, within 3 business days of the sale(§255D:14). §255D:16 sets forth the requirements for extension agreements.§255D:17 sets forth the requirements for refinancing agreements. §255D:18addresses add on purchases. §255D:19 contains requirements that the seller mustgo through to modify an installment sales agreement. §§255D:20 and 21 set forthrequirements and rights if the buyer is in default. §255D:21 requires a notice ofdefault by the seller before the seller can take any action, and a right to cure.§255D:22 limits the ability of a creditor to repossess without judicial involvement. Italso limits the creditor’s ability to collect a deficiency, if the balance owed is under

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$1,000. §255D:26 contains provisions governing the inclusion of insurance in a retailagreement, and precludes the seller from charging the buyer more for insurance thanthe seller is being charged by the insurer.

Prohibited Loan Terms: Retail sales agreement shall provide for a security interest in(a) personal property other than the goods sold or worked on under the agreementunless such goods become affixed to such personal property; (b) after acquiredcollateral; or (c) goods subject to a prior retail sales agreement (§255D:15).

Disclosures: §255D:31 requires the seller to comply with the truth in lendingdisclosure requirements of Chapter 240D.

Prohibited Acts: §255D:9A states that in any transaction involving the modernization,rehabilitation, repair, alteration, improvement, or construction of real property, a writingsigned by the buyer that such work has been satisfactorily completed shall not bevalid unless the work to be performed by the seller is actually completed. §255D:10prohibits: blank spaces in contracts; confession of judgments; schedule of unequalpayments; “any provision for repossession of goods or for the acceleration of the timewhen any part or all of the total of payments becomes payable other than for default ofthe buyer”; granting holder to unlawfully enter buyer’s premises; waiver of rights buyermay have against seller; power of attorney to the seller or holder; assignment ofwages; and limitations on any express warranties.

Criminal Penalties: §255D:30 makes a violation of the Chapter a misdemeanor.

Civil Penalties/Enforcement: The violation of any provision of the chapter bars thecreditor from collecting any finance charge, delinquency, or collection charge, butdoes not bar his right to recover the principal or to recover the goods (§255D:29).

Private Right of Action: Implicit

Applicability of State UDAP: Chapter 93A is broad enough to encompass credittransactions. The exemption in §93A:3 for “action otherwise permitted by anyregulatory board” could encompass the licensed lenders, but surely not if they were inviolation of the licensing/usury laws. An individual may bring an action for actualdamages and up to 3 times actuals, and attorney fees, but must first give the creditora 30-day notice (§93A:9).

Rates of Interest and LoansCitation: Mass. Gen. L. Chapters 107 and 140

Applicability: Ch. 107 establishes the default rate of interest, while Ch. 140 regulateslenders and establishes other rates of interest. §140:96-113 applies to small lenders,while loans secured by mortgages, are exempt from the small loan licensingrequirements (§140:90A).

Licensing Requirements: §140:96-113 for small lenders

Interest Rate and Fee Caps: §107:3 sets the default interest rate at 6 percent.§140:90 sets the interest for loans of less than $1,000 at 18 percent. §140:90Aaddresses home mortgages: “No person shall directly or indirectly charge, take, orreceive for a loan of more than $1,500 secured wholly or partially by a mortgage of real

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estate having an assessed value of not over $40,000, having a dwelling house … agreater rate than (18 percent).” §140:96 sets the limit for small loans (under $6,000) at12 percent, unless the lender receives a license, pursuant to §96-113. §96:100 givesthe board the authority to establish from time to time the interest rates allowed bylicensed small lenders.

Prohibited Acts: Violation of usury statutes is prohibited.

Criminal Penalties: §140:90E makes any violation of 90A a misdemeanor.

Civil Penalties/Enforcement: Under §140:90D, a loan made in violation of 90A isdischarged upon payment in full of the principal, plus 18 percent. “If an action isbrought upon a loan coming within the purview of §90A, the verdict or finding enteredfor the plaintiff in such action shall in no event exceed the amount that would berequired to discharge by payment or tender the indebtedness at the time of suchverdict or finding.” §140:103 sets penalties for violating the licensing provisions,including revocation of the license and voiding the loan.

Private Right of Action: Implicit above

Applicability of State UDAP: Chapter 93A is broad enough to encompass credittransactions. The exemption in §93A:3 for “action otherwise permitted by anyregulatory board” could encompass the licensed lenders, but surely not if they were inviolation of the licensing/usury laws. An individual may bring an action for actualdamages and up to 3 times actuals, and attorney fees, but must first give the creditora 30-day notice (93A:9).

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Home Improvement Finance ActCitation: Mich. Comp. Laws §§445.1101 to 445.1431

Applicability: The act applies to the sale of chattels used in the repair, alteration,rehabilitation, modernization, or improvement of real property, or the provision ofservices to apply or install such goods; and home improvement contracts where all orpart of the contract price is to be paid in installments, provided that the cash price is$300 or more (§445.1102).

Exemptions: Exemptions include: construction of a new home; real property used fora commercial or business purpose; sales of goods by a seller who neither arranges toperform nor performs directly or indirectly any labor in connection with the goods’installation or application; sales for under $300; sales of only an appliance designedto be free-standing and not built into and permanently affixed as an integral part of thestructure; soans contracted for or obtained directly by the buyer from the lendinginstitution, person, or corporation (§445.1102).

Interest Rate and Fee Caps: If the contract is payable in substantially equal monthlyinstallments, beginning 1 month from the date the finance charge accrues, theinterest rate cap is 8 percent per year, with a minimum finance charge of $12 allowed.If the contract is payable in irregular or unequal installments in either amount orperiod, or if payments do not begin for more than 1 month after the date the financecharge accrues; the interest rate cap which will provide the same yield as if thecontract were payable in equal installments, beginning within 1 month is applied. Ifthe amount of any particular installment is 2 times or more the amount of any otherpayment other than the down payment, the finance charge is in respect to the portionof the principal amount financed included in that installment, and the interest rate capis 6 percent per year, simple interest, payable over the entire period from the date thefinance charge begins to accrue to the due date of the larger installment, insubstantially equal payments throughout entire period. Special rates apply tocontracts entered into before December 31, 1991 (§445.1301). The finance charge forany consolidated time balance shall not exceed the rates specified above(§445.1307). Simple interest is allowed (§445.1309). A delinquency charge isallowable for each installment overdue 10 days or more allowed, and may not exceed5 percent of the payment due or $5, and may be charged only once. Court costsactually incurred and attorney’s fees not exceeding 20 percent of the amount due andpayable under the contract may be charged, if the contract is referred to an attorneywho is not a salaried employee of the seller or holder for collection (§445.1209). Theholder may agree, in writing, to extend or defer all or part of any scheduled payment,but may charge no more than 1 percent per month simple interest on the amount ofthe installment or installments or part thereof deferred during the period of the deferral,plus any added insurance premiums (§445.1304). No costs, credit investigationcharges, insurance premiums, examination, service, brokerage, commission, interest,discount, expense, fee, fine, penalty or other thing of value may be collected if notauthorized by the act (§445.1406).

Loan Terms: The buyer may cancel the contract until 5:00 p.m. of the business dayfollowing the execution of the contract by giving written notice to the contractor or hisagent in person or by certified mail (§445.1203). Every home improvement contractmust be dated and in writing (§445.120). At either the top of each contract or directlyabove the buyer’s signature line the words “home improvement installment contract”shall appear in at least 10-point bold type (§445.1202). Every home improvementinstallment contract shall include the name and address of the home improvementcontractor and buyer, the location of the premises to be improved, and a description of

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the goods and services involved sufficient to identify them. A statement includingsimilar information must be provided at the time any subsequent home improvementsale is added-on to the original contract (§§445.1203 and 445.1308). If the premiumpaid for any group credit life or other insurance is included in the contract, the contractmust state which party is responsible for procuring insurance (§445.1205). The buyermay prepay at any time and shall receive a refund of any unearned interest(§445.1303).

Prohibited Loan Terms: Prohibited loan terms include: 1) an agreement by the buyernot to assert any claim or defense arising out of the sale against the homeimprovement contractor or their assignee, or an agreement to waive any right of actionagainst the contractor or a holder or other persons acting on their behalf for any illegalact committed in the collection of payments; 2) an acceleration clause in the absenceof the buyer’s default in performance; 3) any clause relieving the home improvementcontractor from liability for any claims the homeowner may have against the homeimprovement contractor; 4) any clause authorizing the seller or holder or any personacting on their behalf to enter upon the premises unlawfully or authorizing them tocommit a breach of the peace in connection with any repossession or other entry uponthe premises; and 5) a liquidated damages clause entitling the contractor to damagesfor any cancellation, rescission, or failing or refusing to accept delivery of the goods orperformance of the services. Any prohibited term listed above is void if it is included inthe contract, but shall not otherwise affect the validity of the contract (§445.1206).

Disclosures: The amount financed; the finance charge; the total of payments; the totalsales price; the amounts included for insurance; the official fees; and a separatenotice of any larger payments (if the contract is not payable in substantially equalpayments) must be disclosed in the written home improvement installment contract.Compliance with federal Truth in Lending Act (TILA) disclosure requirements shallsatisfy this requirement of the act. A statement providing similar information must beprovided at the time any subsequent home improvement sale is added on to theoriginal contract (§§445.1111, 445.1203 and 445.1308). In a home improvementinstallment contract, a notice to the homeowner must be printed in 8-point bold-facedtype stating: not to sign before reading the agreement, entitlement to a completelyfilled-in copy of the agreement, the right to pay off the loan in advance and, undercertain conditions, the right to obtain a partial refund of the finance charge, and theright to cancel (§445.1202).

Prohibited Acts: Prohibited acts include: failing to deliver a completed copy of a homeimprovement installment contract to the buyer at the time the contract is executed(§445.1204); taking a negotiable instrument other than a currently dated check or draftas evidence of the obligation of a buyer (§445.1207); splitting the loan in order toqualify for an exclusion from coverage by the act (§445.1302); refinancing more thanone home improvement installment contract, unless the original home improvementcontract allowed the contractor the option of adding on subsequent home improvementsales to the original amount financed (§§445.1305 & 445.1306); promising or offeringany compensation or reward to a buyer for procuring a home improvement contractwith others; offering any gift, bonus, award, merchandise or cash loan as aninducement to enter into a home improvement contract (§445.1404); making any cashloan in connection with a home improvement contract or with any extension,deferment, refinancing, add-on or consolidation agreement pertaining thereto(§445.1407): and no act, agreement or statement by a buyer shall constitute a validwaiver of any provision of the act intended for the protection of the buyer (§445.1409).

Criminal Penalties: A criminal violation by any officer, employee, or agent of a home

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improvement contractor or financing agency is deemed a violation by such contractoror agency unless the management of the entity had no actual or constructiveknowledge of the wrongful conduct (§445.1405). Any person who willfully violates theact or directs or consents to such violation is guilty of a first degree misdemeanor(§445.1421).

Civil Penalties/Enforcement: Until an executed copy of the home improvementinstallment contract is provided to the buyer, or until the statement summarizing theterms of the addition to the original contract of any subsequent home improvementsale is provided to the buyer, the buyer is not obligated to pay (§§445.1204 and445.1308). Any costs and charges not authorized by the act are unenforceable andmust be offset against principal still owed or remitted to owner (§445.1406). TheAttorney General or the prosecuting attorney of any county may sue to restrain orprevent any violation. Any person who violates any order, injunction or decree issuedin such action may be fined $1,000 (§445.1422).

Applicability of State UDAP: Yes. Mich. Comp. Laws §445.901. Injunction;declaratory relief; actual damages, $250 minimum damages plus attorney fees; classaction for actual damages; restitution; strike unconscionable clauses; receiver orother appropriate relief

Special Assignee Provisions: The buyer’s written acknowledgment of the delivery of acopy of a home installment contract shall be evidence of such delivery in any action orproceeding involving an assignee of the contract without knowledge to the contrarywhen he purchases the contract (§445.1204). Clauses in which the buyer agrees notto assert any claim or defense arising out of the sale against the home improvementcontractor or their assignee, or waives any right of action against the contractor or aholder or other persons acting on their behalf for any illegal act committed in thecollection of payments, are prohibited (§445.1206). The holder of a homeimprovement contract is subject to all the claims and defenses of the buyer arisingout of the home improvement installment sale; the buyer’s recovery shall not exceedthe amount paid to the holder thereunder (§445.1207). Unless notice of assignmenthas been given, payment by the owner to the last known holder shall be binding uponany subsequent holder or assignee (§445.1401).

Other: Other provisions of the act regulate home improvement charge agreements,but, as such, agreements may not be secured by a lien on the buyer’s principalresidence; these provisions are not summarized herein (see Mich. Laws 1985, PublicAct No. 202, §§204a and 204b). Upon written request, once per year, the holder of acontract must provide the buyer with a written statement of all payments made andany amount still owed. Additional statements should be made available for a fee notto exceed $1 (§445.1402). Upon payment in full, the seller must release allencumbrances (§445.1403).

Credit Reform ActCitation: Mich. Comp. Laws §§445.1851 to 445.1864

Applicability: Extensions of credit for the sale of goods and services by a regulatedlender, which includes depository institutions, sellers under the Michigan HomeImprovement Act, and licensees under the Michigan Consumer Financial ServicesAct, Motor Vehicle Sales Finance Act or Regulatory Loan Act (§445.1852)

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Exemptions: A regulated lender is not liable for violations if the lender has fullycomplied with the federal TILA and shows that the violation was an unintentional andbona fide error notwithstanding the maintenance of procedures reasonably adopted toavoid the error. Errors in legal judgment as to a person’s obligations under the act arenot bona fide errors. Regulated lenders bear the burden of proving that a violation wasunintentional and bona fide (§445.1862).

Interest Rate and Fee Caps: The maximum interest rate is 25 percent per year(§445.1854). Any processing fee charged in connection with the making, closing,disbursing, extending, readjusting, or renewing of any extension of credit may notexceed 2 percent of the amount of credit; the late fee charged for any installmentpayment received after the expiration of the agreed-upon grace period may not exceed$15 or 5 percent of the installment due, whichever is greater; and the fee fordishonored checks shall not exceed $25 (§445.1856). Depository institutions mayalso charge any fee or charge that is agreed to and accepted by the borrower(§445.1857). Neither depository institutions nor other regulated lenders may requireexcessive fees or charges (§§445.1856, 445.1857).

Loan Terms: Pre-computed interest is allowed in a home improvement sales contract,provided any rebate due at prepayment is computed according to the actuarial method(§445.1855).

Prohibited Loan Terms: In extensions of credit for personal, family or householdpurposes: powers of attorney to confess judgment, waiver of borrower’s or buyer’srights under this act, and an agreement by a borrower or buyer to pay a penalty (latepayment and prepayment charges are not penalties) are prohibited loan terms(§445.1858).

Prohibited Acts: Regulated lenders (other than depository institutions subject to 12U.S.C. 1972) may not require, as a condition of approving a loan, that the borrowercontract for additional financial services offered by the regulated lender or a serviceprovider designated by the lender. But the lender may offer a combination of 2 or moresuch services at a reduced price (§445.1859).

Civil Penalties/Enforcement: The Commissioner of the Financial Institutions Bureau ofthe Michigan Department of Consumer and Industry Services given the power toinvestigate complaints (§445.1860). The Attorney General or the prosecuting attorneyfor the county where the violation occurred is given the right to bring actions fordeclaratory or injunctive relief, actual damages, $1,000 statutory damages, and forattorney fees and costs if the regulated lender is found to have violated the act, plus acivil fine of $10,000 for willful and knowing violations and $20,000 for persistentviolations. The Attorney General is also given the right to bring class actions(§445.1861). Any regulated lender who violates the act is barred from recovering anyinterest or other charges and must pay the buyer’s reasonable attorney fees and courtcosts (§445.1861).

Private Right of Action: The borrower may bring an individual or class action fordeclaratory or injunctive relief, actual damages, $1,000 statutory damages, and forattorney fees and costs if the regulated lender is found to have violated the act(§445.1861).

Applicability of State UDAP: Yes. Mich. Comp. Laws §445.901. Injunction;declaratory relief; actual damages, $250 minimum damages plus attorney fees; classaction for actual damages; restitution; strike unconscionable clauses; receiver or otherappropriate relief

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Secondary Mortgage Loan ActCitation: Mich. Comp. Laws §§493.51 to 493.81

Applicability: The act applies to loans with a term of greater than 90 days which aremade to a person for personal, family, or household purposes and which are securedby a mortgage upon real property that is used as a dwelling, if the property is subjectto a lien for 1 or more prior mortgages. The act applies if the property is located inMichigan, even if the lender is not (§493.51).

Exemptions: Charges authorized by any federal lending program designed to promotethe making of secondary mortgage loans (§493.72), and depository financialinstitutions subject to other laws of Michigan, the laws of another state, or the UnitedStates when engaging in secondary mortgage transactions are exempt (§493.79).

Licensing Requirements: Mich. Comp. Laws §§493.52 to 493.70

Interest Rate and Fee Caps: Interest rate cap is as permitted by the Credit ReformAct (25 percent), but not to be added or deducted in advance (§493.71). Charges arelimited to: charges for optional credit life, credit health and accident or otherinsurance; reasonable and necessary charges that are the actual expenses incurredby the lender or exclusive broker in connection with making, closing, disbursing,extending, readjusting, or renewing the second mortgage; a non-refundable processingfee that is no more than 5 percent of the gross amount of the loan; and other chargesas authorized by the Credit Reform Act. Charges may be paid only once (§493.72).

Prohibited Loan Terms: Prohibited loan terms include: powers of attorney to confessjudgment; waivers of borrowers’ rights under Michigan or federal law; assignments ofwages; provisions designed to compel, encourage or induce a borrower to incorporateto evade the provisions of the act; and provisions by which the debtor agrees to paydamages absent a court judgment (§493.73).

Prohibited Acts: Prohibited acts include: transferring or assigning a secondarymortgage loan before 75 percent or more of the loan proceeds have been distributedto, or for the benefit of, the borrower, unless the loan provides, in writing, that theproceeds shall be disbursed in installments, upon request of the borrower or uponcompletion of renovations or repairs to the dwelling situated on the mortgagedproperty; failing to place any third-party funds held into trust or escrow prior to properdisbursement (includes fees held to pay title or other insurance premiums, taxes,recording fees, but does not include fees to process the loan application, appraise theproperty or obtain a credit report); failing to make a secondary mortgage loan pursuantto a written commitment if the borrower has timely and completely satisfied all of theconditions; taking a security interest in real property before closing the secondarymortgage loan in order to secure the payment of fees assessed in connection with theloan application (§493.74); and willfully or knowingly making false, misleading, ordeceptive advertisements (§493.76).

Civil Penalties/Enforcement: The commissioner of the Financial Institutions Bureau ofthe Michigan Department of Consumer and Industry Services is given the power tolicense, regulate, and investigate second mortgage brokers, lenders, and servicers(§493.56b). Remedies are available under the Michigan Credit Reform Act. A civilfine of $1,000 for each violation may be charged (§493.77).

Private Right of Action: Regardless of whether a person seeks damages or has anadequate remedy at law, an action for declaratory relief, injunctive relief, actual

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damages or statutory damages of $250, whichever is greater, together with reasonableattorneys’ fees and costs, is available (§493.77).

Applicability of State UDAP: Yes. Mich. Comp. Laws §445.901. Injunction;declaratory relief; actual damages, $250 minimum damages plus attorney fees; classaction for actual damages; restitution; strike unconscionable clauses; receiver or otherappropriate relief

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D17165 • PP15705(05-00)P • 2/3

home improvement financing volume ii

Documents

consumer loans

retail installment sales

consumer lender loans

consumer finance

credit sales

installment sales transactions

consumer paper

alaska small loans act