20 CSR 1140-5.020 - Lending Activities
(1)
Each applicant, at the time of filing application, shall pay the sum of one
hundred fifty dollars ($150) as an annual registration fee for the period July
1 through June 30 of the following year. The annual fee shall be paid on or
before June 30 of each year. If the initial fee is for a period of less than
twelve (12) months, the fee shall be prorated according to the number of months
remaining in the period. The remittance covering registration fee shall be made
payable to the director of revenue and mailed to the Division of Finance.
Surety bond in the amount of one thousand dollars ($1000) shall accompany the
initial application for certificate of registration and registration fee. The
bond is to be coextensive with the registration year and must be furnished by a
surety company authorized to do business in Missouri by the superintendent of
insurance. Bond form will be furnished with the initial application for
certificate of registration. No surety bond shall be required on renewal
applications unless the commissioner shall otherwise determine and no surety
bond shall be required in connection with the initial application if the
applicant or, in the case of a corporation, any affiliate under the same
general management has had a certificate of registration in effect for at least
one (1) year unless the commissioner deems a bond necessary and requires that
bond.
(2) No special system of
records is required by the commissioner of finance. The records of a consumer
credit lender will be considered sufficient if they include a cash journal,
double entry general ledger, or a comparable record, and an individual account
ledger. The records of the business of each registered office shall be
maintained so that the assets, liabilities, income and expense may be readily
segregated.
(3) A cash book or cash
journal shall contain a chronological record of the receipt and disbursement of
all funds including refunds, title transfer fees, filing fees and all other
items of receipt or expenditure incidental to the granting or collection of a
loan and replevin, repossession or sale of collateral.
(4) The general ledger shall be posted at
least monthly. A trial balance sheet and a profit and loss statement shall be
prepared within thirty (30) days after the close of every monthly period. This
trial balance or balance sheet and profit and loss statement shall be available
to the examiner. Where the general ledger is kept at a central office other
than the location of the registered lender, the general office shall provide
information in line with this section.
(5) The individual ledger, preferably
individual account card, shall be kept for each individual loan. The ledger
card or sheet shall set forth not less than the following items: kind of
security pledged for loan; account number; name and address of the borrower;
names of comakers and endorsers; number of installments; dates of first and
subsequent payments; date of loan; principal amount of loan; renewal notes (old
account so stamped shows also number of current loan); date payments received;
amount paid on interest when interest is not added to principal; amount paid on
principal when face of note does not include interest; amount of payment
including interest and principal; unpaid balance of principal or principal and
interest combined; date interest paid to, if this date differs from date of
payment, if interest is not included in face of note; if interest is added on,
show this amount in a separate figure; amount of any additional interest
collected on default or extension, if interest according to original contract
is included in face of note; and direct loan ledger cards and sales finance
ledger cards shall be filed separately.
(6) The lender shall maintain a file which
shall index alphabetically each maker, comaker and endorser on each loan and
shall recite each loan in respect to which party is a maker, comaker or
endorser and make available the following information: name and address of
borrower, and name of husband or wife, if married; names and addresses of
comakers or endorsers; date of loan; amount of loan; number of loan; and date
loan paid in full. The current record shall be filed separately from those paid
in full.
(7) Each loan or loan
contract shall bear a number which corresponds to the account number. Using
this procedure it will not be necessary to provide a loan register.
(8) All books, records and papers, including
the notes, applications, assignments, bills of sale, mortgages, motor vehicle
titles, record of all insurance policies issued by or through the lender as
agent or broker in connection with the loan shall be kept in the office of the
lender and made available to the examiner of the Division of Finance for
examination at any time without previous notice. When notes are hypothecated or
deposited with a financial institution or parties in connection with a loan or
credit, access must be provided for the examiner when the institution holding
those notes is situated in Missouri. When the institution or person holding
those notes is not so situated or access is not provided, the lender shall
obtain from this institution or person either a monthly list of all notes held
or a copy of the lists of notes deposited and withdrawn; these lists to show
date, original amount, name or number of account and bear authorized signature
of the institution or person.
(9)
When an error is made on the individual ledger or general ledger, a single thin
line, preferably in red, shall be drawn through the improper entry and the
correct entry made on the following line. No erasures shall be made in any
account of record.
(10) A consumer
credit lender shall keep all records on loans available for examination for a
period of two (2) years from the date of final payment.
(11) Extensions on precomputed loans made
pursuant to the Small Loan Act shall be calculated according to the following
formula:
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Extension fee = UC times NUMBER OF FULL REMAINING INSTALLMENTS. Example: Consider a twenty-four (24)-month contract of $1,925.25 with finance charges of $474.75, monthly payments of $100 and APR of 22.13%.
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If an extension is taken with twenty-two (22) installments remaining, the extension fee would be 22 × 1.5825 or $34.81. Considerations within the Act necessitate the following limitations on extensions:
(A) No extension may be
taken on the first installment;
(B)
No extension fee shall be collected more than one (1) month prior to the due
date of the earliest installment being deferred;
(C) No extension shall be collected for any
partial payment, however, two dollars ($2) or less shall not be considered a
partial payment;
(D) A minimum
extension fee of one dollar ($1) will be allowed;
(E) Any principal payment collected on the
same day as an extension shall be applied before calculating the extension fee;
and
(F) In the event of prepayment
in full of the note or contract, the extensions shall be counted as months and
the Rule of Seventy-Eight's (78's) factor, based on this total, applied to all
of the interest contracted for, plus the extension fees collected.
(12) If a lender customarily by
arrangement or otherwise permits its loan forms, including applications, notes,
mortgages, financial statement, etc., to be in the hands of any person, firm or
corporation at a place of business other than the place of business recited in
the registration certificate for the purpose of having these applications,
notes, mortgages or other documents executed by others at that place, whether
or not this person, firm or corporation be an employee or agent of the lender,
or purports to be an agent of prospective borrowers or a broker, the place
where these loan papers are located shall be deemed to be a place of business
of the lender and shall require a separate certificate of
registration.
(13) Whenever a loan
is secured by a lien on a motor vehicle, it shall be the responsibility of the
lender to see that the title to the motor vehicle is in the name of the
borrower executing the mortgage on this motor vehicle.
(14) No note or loan contract shall be
accelerated as to payment unless it shall be duly signed by the borrower and
shall contain a provision that, upon default in payment of the note or loan
contract or any part, or upon default of a condition contained in this note or
loan contract, it may be so accelerated. Whenever the lender shall accelerate
the balance due on a note or loan contract which provides for an amount of
interest added to the principal amount, the unpaid balance shall be reduced by
the refund of that portion of the amount of interest originally contracted for
and added to the principal which would be required by section
408.170, RSMo as if prepayment
in full occurred on the date of acceleration and the lender may charge interest
at the rate originally contracted for computed on unpaid balances for the time
actually outstanding from the installment date following the date of
acceleration until paid.
(15)
Comprehensive and collision insurance with a deductible clause of not less than
fifty dollars ($50) may be sold, requisitioned, required or accepted in
connection with any consumer credit loan secured by a lien on any motor vehicle
in an amount that does not exceed the average retail value of the motor vehicle
in accordance with any of the standard automobile manuals. Motor vehicle
insurance is limited to the motor vehicle owned by the borrower and shall not
cover motor vehicles of comakers, endorsers, guarantors or others. Provided,
that on consumer credit loans of three hundred dollars ($300) or less secured
by a lien on a motor vehicle, no insurance may be sold, requisitioned or
required.
(16) Decreasing term life
insurance may be sold, requisitioned, required or accepted by any lender in
connection with any consumer credit loan. The original amount of this insurance
shall not exceed the face amount of the note evidencing this loan.
(17) Credit property insurance may be sold,
requisitioned, required or accepted in connection with any consumer credit
loan; provided, that the credit property insurance is subject to the following
requirements, restrictions and qualifications:
(A) Minimum Policy Standards. Credit property
insurance must include standard fire coverage, extended coverage endorsement
and replacement cost provision endorsement; this insurance must calculate
benefits from the state of loss;
(B) Written Evidence of Coverage. The
borrower must be provided with a copy of the policy or certificate of insurance
within thirty (30) days of the extension of credit;
(C) Personal Property Lists. Whenever credit
property insurance is sold by a creditor, the creditor must retain a list of
the personal property securing the loan which list must be signed by the
borrower and dated to correspond with the loan;
(D) Borrower's Rights. The borrower shall
have the following rights concerning any credit property insurance:
1. The borrower shall not be required or
coerced to obtain insurance from any particular insurer or agent as a condition
for obtaining a loan;
2. The
borrower may substitute coverage at any time and, upon substitution, shall be
entitled to a pro rata refund of the unearned premium; where
insurance was not initially required by the creditor, the borrower may cancel
at any time without substituting and shall be entitled to a pro
rata refund of any premium paid; and
3. Credit property insurance must be
cancelled upon the satisfaction or termination of the underlying indebtedness;
upon cancellation, the borrower shall be entitled to a pro
rata refund of the unearned premium;
(E) Notice of Borrower's Rights. Lenders must
provide borrowers with a summary of their rights concerning credit property
insurance, a signed, dated notice of the following or substantially similar
language will evidence compliance with this requirement:
"I understand that I am free to insure my furniture with whatever licensed company, agent or broker I may choose; that I may do so at any time after the date of this loan; that I have not cancelled existing insurance on my furniture if I owned it before this loan; and that this loan cannot be denied me simply because I did not purchase my insurance through the lender."
_________ ________________________
Date Signature of Insured
(F) Insurance Not to Exceed Contract Terms.
Credit property insurance may not exceed in amount the total amount of the
indebtedness nor exceed in duration the scheduled term of the underlying
contract;
(G) Rates. Credit
property insurance rates may not exceed the rates for coverage prescribed or
approved by the Department of Insurance; and
(H) Severability. If any provision of any
section of this rule or the application of any person or circumstances is held
invalid, these invalidity shall not affect other provisions of that section or
application of the rule which can be given effect without the invalid provision
or application and to this end the provisions of this rule are declared to be
severable.
(18) No
insurance shall be sold in connection with consumer credit loans except in
companies duly authorized to do business in this state.
(19) No insurance may be sold in connection
with consumer credit loans which contain special policy provisions covering
conversion, embezzlement or similar protections against the borrower's
dishonesty.
(20) Health and
accident insurance may be sold, requisitioned or accepted by any lender in
connection with any consumer credit loan. A certificate of policy must be
issued to borrower. Insurance shall be obtained from an insurance company duly
authorized to conduct business in this state. Accident and health insurance may
be in the form prescribed in section
385.070(2),
RSMo or in the form known as dismemberment
insurance; under no circumstances may both types of accident and health
insurance be sold in connection with the same consumer credit loan. If credit
dismemberment insurance is sold, requisitioned or accepted in connection with a
consumer credit loan, this insurance shall be subject to the following
requirements, restrictions and qualifications:
(A) Persons Insured. Credit dismemberment
insurance may be written on no more than one (1) person on any
contract;
(B) Written Evidence of
Coverage. The borrower must be provided with a copy of the dismemberment policy
or certificate of insurance within thirty (30) days of the extension of
credit;
(C) Insurance must be
available as coverage by itself and not merely as a supplement to other
insurance;
(D) Cancellation. Credit
dismemberment insurance shall be subject to the refunding provisions as though
it were credit life insurance issued pursuant to Chapter 385, RSMo and
corresponding regulations;
(E)
Insurance Not to Exceed Contract Terms. Credit dismemberment insurance may not
exceed in amount the total indebtedness nor exceed the underlying contract in
duration;
(F) Minimum Standards.
Credit dismemberment insurance must provide for a total payoff of an underlying
indebtedness in the event of loss of the sight of one (1) eye, loss of one (1)
hand at or above the wrist, or loss of one (1) foot at or above the ankle or
both, no restrictions shall be permitted, that is, full benefits must be
payable on any dismemberment or blindness which occurs during the coverage;
and
(G) Recordkeeping. Claims which
are made through the dismemberment insurance shall be maintained in the same
manner as a death claim.
(21) The charge for any insurance sold shall
not be greater than the standard or usual rate charged for comparable insurance
by insurance companies or agents for similar insurance that is sold other than
in connection with consumer credit loans.
(22) The lender shall deliver to the borrower
at the time the loan is made or within a reasonable time, in all cases where
insurance is sold or requisitioned by the lender and paid for by the borrower,
a copy of the insurance policy or a certificate of insurance which shall set
out the effective date, date of expiration, type and amount of coverage and
amount of premium.
(23) When a loan
secured by insurance is renewed or refinanced, the insurance policy or
certificate shall be cancelled before any new insurance is written. When this
cancellation is made, the insured shall receive a refund of a portion of the
premium paid as follows: If the policy is decreasing term life insurance or
health and accident insurance, the amount of the refund shall be computed under
the Rule of Seventy Eight's (78's) refund method, which is the method specified
in section 408.170, RSMo for refund of
interest. If the policy is level term insurance or personal property insurance,
the amount of the refund shall be that portion of the insurance premium paid
which the number of full unexpired months of the policy after the date of
renewal or refinancing bears to the total number of full months for which the
premium was paid. Where the amount of the refund is less than one dollar ($1),
no refund need be made. Not more than one (1) policy of life and one (1) policy
of health and accident may be in force at any one (1) time.
(24) Whenever any loan is prepaid in full,
the lender shall release all claims to any insurance policy sold,
requisitioned, required or accepted in connection with any consumer credit loan
and the lender shall return any policy held by it to the borrower.
(25) Every lender shall disclose in the
annual report the income received by it from insurance sold in connection with
consumer credit loans, together with the expense incurred in connection with
this insurance and other relevant information as the commissioner finance may
prescribe.
(26) Every lender shall
keep a record of each insurance transaction, available for inspection by the
commissioner of finance, his/her deputies and examiners.
(27) If an issuing company shall cancel the
original motor vehicle policy, the responsibility for securing new insurance of
similar coverage rests upon the lender and, in the absence of this insurance,
full refund of unearned premium shall be paid to the borrower in cash or credit
to the borrower's loan account. In no case may a lender foreclose the account
or seize the mortgaged chattel by reason of failure to furnish insurance under
thirty (30) days' written notice, delivered to the borrower in person or by
registered mail. This notice shall require the borrower to provide similar
insurance coverage within ten (10) days as provided in the mortgage clause with
the policy or to pay off his/her loan or loan contract without penalty of costs
of suit, attorney's fees or otherwise.
(28) The lender shall not require, as a
condition of making any loan or the renewal or extension of the loan, that the
borrower shall negotiate through a particular insurance company or insurance
agent or broker any policy of insurance or renewal of insurance.
(29) The lender shall display in a
conspicuous place the following: "Credit insurance is available to borrowers.
No new loan, renewal or extension thereof is conditioned upon purchase of such
insurance from the lender or any particular insurer or agent."
Notes
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