Under Chapter 46A, Article 4, of the West Virginia State Code, a regulated consumer lender is defined as a person authorized to make or take assignments of regulated consumer loans. The chapter further defines a regulated consumer loan as a consumer loan, including a loan made pursuant to a revolving loan account, in which the rate of the loan finance charge exceeds eighteen percent per year as determined according to the actuarial method or where the lender is specifically permitted by state law other than article four of this chapter to make the loan at that rate without a requirement the lender hold a regulated consumer lender license.
Applicants to obtain a Regulated Consumer Lender License must first complete any and all filings required by the West Virginia Secretary of State to incorporate a domestic West Virginia corporation, unless such corporation already exists and is acceptable for the conduct of regulated consumer lender activity.
An application form must be submitted to the West Virginia Commissioner of Financial Institutions on the proper form. The application must be accompanied by a fee of $750 for each office in West Virginia to be licensed as a Regulated Consumer Lender. Applicants should also contact the West Virginia Division of Financial Institutions at (304) 558-2294 to obtain the appropriate number of fingerprint cards and to schedule a meeting with the Commissioner or staff to discuss the application. For additional information, you may contact Tracy Hudson
at the West Virginia Division of Financial Institutions with additional questions.
*Senate Bill 425 Compliance Guidelines for
Regulated Consumer Lenders*
SB 425 took effect July 10, 2009
It requires regulated consumer lenders (RCLs) to provide a disclosure form when refinancing or consolidating a non real-estate secured loan at a higher rate. It also requires RCLs to document a tangible net benefit to the borrower when refinancing or consolidating a residential real estate loan secured by a deed of trust on the property. The purpose of this law is to prevent the harm that may occur to consumers from serial financing, especially the "flipping" of mortgage loans.
The following guidelines will apply to future compliance examinations conducted by the Division of Financial Institutions after the effective date of SB 425:
* An RCL must comply with the provisions of SB 425 when refinancing or consolidating any loan it or an affiliate has made in the past to the same borrower.
* If the debt being refinanced or consolidated was not made by the RCL providing the new loan, that RCL should ask the borrower for the annual percentage rate of any prior loans that are being refinanced or consolidated into the new debt. Any information provided by the borrower should be used to aid in determining tangible net benefit for the new loan.
* There is no duty on the part of the RCL refinancing or consolidating prior loans not made by that RCL or an affiliate to obtain the annual percentage rate of those prior loans from the other creditors who made those prior loans.
Following is an application form to obtain a Regulated Consumer Lender License:
Application to Obtain a Regulated Consumer Lender License
Regulated Consumer Lender Branch Application
Tangible Net Benefit Form
Compliance with all applicable portions of the West Virginia Code is required in order to maintain a Regulated Consumer Lender license.
The following items are noted for your information; however, compliance and familiarity with the entire statute is required for all licensees.
The maximum allowable interest rate which may be charged by a Regulated Consumer Lender is described in the legislation in Section 107, Article 4, Chapter 46A. A chart is attached to this document which outlines the allowable interest rates.
No Regulated Consumer Lender may issue credit cards.
No Regulated Consumer Lender may charge prepayment penalties.
Regulated Consumer Lenders are limited in the amount of "points" or other prepaid finance charges they may charge per Section 107, Article 4, Chapter 46A.
No Regulated Consumer Lender may issue a loan contract which contains Balloon Payment terms and conditions.
There is a disclosure requirement for Regulated Consumer Lenders which must be given to customers who are refinancing debt under certain circumstances at rates above 18% APR. Please refer to Section 111, Article 4, Chapter 46A of the statute.
Certain non-revolving loan contracts applied for and consummated in another state may now be transferred/sold to a Regulated Consumer Lender licensee in West Virginia and the terms of the contract may be enforced even where the borrower is a West Virginia resident.
The Regulated Consumer Lender licensee must be a West Virginia corporation with a minimum capital of $10,000 plus an additional $2,000 in net assets for each office. (For example, the minimum capitalization for one office would be $12,000, for two offices $14,000.)
Records and documents must be readily available for review by examiners either at each office or at the designated main/principal office. Records which can be provided within 90 minutes of an examiner’s request
are considered readily available. A financial statement for the Regulated Consumer Lender corporation as of the previous month end or calendar quarter end must be readily available at the main/principal office.
Upon obtaining a license as a regulated consumer lender, licensees are assessed annually, payable each July 1st, on the amount of outstanding loan balances as of December 31st of the previous year-end. Please refer to West Virginia Code §31A-2-8 for additional information regarding assessments.
REGULATED CONSUMER LENDERS
(effective July 13, 2001)
Loans not secured by Real Property
$2,000 or less – 31% APR. No points/loan origination fee allowed.
**Alternative permitted if the loan is closed-end and $2,000 or less:
31% interest, plus 2 points for loan processing fee (thus APR may be higher than 31%).
$2,000+ to $10,000 – 27% APR
APR may include 2 points/loan origination fee if closed-end loan. No points or origination fees allowable if loan is revolving.
$l0,000+ -- 18% APR
APR may include 2 points/loan origination fee if closed end loan. No points or origination fees allowable if loan is revolving.
Loans secured by Real Property
$10,000 or less -- 27% APR. APR may include 5 points/loan origination fee.
$10,000+ -- 18% APR. APR may include 5 points/loan origination fee.
** Note: Points charged may be subject to rebate upon refinancing in certain situations.