73rd OREGON LEGISLATIVE ASSEMBLY--2006 Special Session
Enrolled
Senate Bill 1105
Sponsored by JOINT SPECIAL SESSION COMMITTEE
CHAPTER ................
AN ACT
Relating to payday loans; creating new provisions; and amending
ORS 725.340 and 725.622.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 725.622 is amended to read:
725.622. { + (1) + } A lender in the business of making payday
loans may not:
{ + (a) Make or renew a payday loan at a rate of interest
that exceeds 36 percent per annum, excluding a one-time
origination fee for a new loan;
(b) Charge an origination fee for a new payday loan of more
than $10 for each $100 of the amount of the loan;
(c) Make or renew a payday loan for a term of less than 31
days;
(d) Charge a consumer any fee or interest other than a fee or
interest described in paragraph (a) or (b) of this subsection or
in subsection (2) of this section; + }
{ - (1) - } { + (e) + } Include in a payday loan contract:
{ - (a) - } { + (A) + } A hold-harmless clause;
{ - (b) - } { + (B) + } A confession of judgment or other
waiver of the right to notice and the opportunity to be heard in
an action;
{ - (c) - } { + (C) + } An agreement by the consumer not to
assert any claim or defense arising out of the contract against
the lender or any holder in due course; or
{ - (d) - } { + (D) + } An executory waiver or a limitation
of exemption from attachment, execution or other process on real
or personal property held by, owned by or due to the consumer,
unless the waiver or limitation applies only to property subject
to a security interest executed in connection with the loan;
{ - (2) - } { + (f) + } Conduct a payday loan business
where liquor or lottery tickets are sold or where gambling
devices are located;
{ - (3) Charge the consumer more than one fee under ORS
30.701 per loan transaction for dishonored checks when the
consumer issues more than one check to the lender. However, the
lender may recover from the consumer any fee charged to the
lender by an unaffiliated financial institution for each
dishonored check; - }
{ - (4) - } { + (g) + } Renew { - a - } { + an
existing + } payday loan more than { - three - } { + two + }
times; or
Enrolled Senate Bill 1105 (SB 1105-INTRO) Page 1
{ - (5) - } { + (h) + } Make a new payday loan to a
consumer { - on the same day that a previous payday loan
expires if the lender has renewed the previous payday loan three
times. The lender shall wait at least until the next day after
the expiration date of the previous loan before making the new
loan to the consumer - } { + within seven days of the day that
a previous payday loan expires + }.
{ + (2) A lender in the business of making payday loans may
not charge the consumer more than one fee per loan transaction
for dishonored checks or insufficient funds, regardless of how
many checks or debit agreements the lender obtains from the
consumer for the transaction. The fee may not exceed $20. A
lender in the business of making payday loans may not collect a
fee for a dishonored check under ORS 30.701 or seek or recover
statutory damages and attorney fees from a consumer for a
dishonored check under ORS 30.701. The lender may recover from
the consumer any fee charged to the lender by an unaffiliated
financial institution for each dishonored check. For a dishonored
check or insufficient funds, the fees described in this
subsection are the only remedy a lender may pursue and the only
fees a lender may charge. + }
SECTION 2. ORS 725.340 is amended to read:
725.340. (1) { + Except as provided in ORS 725.622, + }a
licensee may charge, contract for and receive any interest or
consideration for loans, secured or unsecured, as agreed upon by
the licensee and the borrower.
(2) When a precomputed loan contract is originally scheduled to
be repaid in 62 months or less and requires repayment in
substantially equal or consecutive monthly installments of
principal and interest combined, the interest or consideration
may be precomputed, contracted for and earned on scheduled unpaid
principal balances on the assumption that all scheduled payments
will be made when due. In such cases, every payment may be
applied to the combined total of principal and precomputed
interest until the contract is fully paid, and the acceptance or
payment of interest or consideration on any loan made under the
provisions of this subsection { - shall not be deemed - }
{ + is not considered + } to constitute payment, deduction or
receipt thereof in advance.
{ - Such - } { + The + } precomputed interest or
consideration { - shall be - } { + is + } subject to the
following adjustments:
(a) When a default of more than 10 days in the payment of any
scheduled installment occurs, the licensee may charge and collect
a default charge not exceeding five percent of the unpaid amount
of the installment or $5, whichever is less. A default charge may
be collected only once on an installment, but may be collected at
the time it accrues or at any time thereafter. { - No - }
{ + A + } default charge may { + not + } be assessed with
respect to an installment which is paid in full on or within 10
days after a scheduled installment due date when an earlier
maturing installment or a default or deferral charge on an
earlier maturing installment may not have been paid in full even
though all or part of such installment payment is applied to an
earlier maturing installment, or a default or deferral charge.
(b) If the payment of all unpaid installments is deferred one
or more full months, and if the contract so provides, the
licensee may charge and collect a deferral charge not exceeding
the annual percentage rate previously disclosed to the borrower
pursuant to the Federal Consumer Credit Protection
Enrolled Senate Bill 1105 (SB 1105-INTRO) Page 2
(Truth-in-Lending) Act applied to the sum of the installments
deferred for the length of the deferral period. The deferral
period is that period in which no scheduled installment is
required to be paid by reason of the deferral. { - Such - }
{ + The + } charge may be collected at the time of deferral or
at any time thereafter. A deferral charge may not be made for the
deferral of any installment with respect to which a default
charge has been collected, unless the default charge is deducted
from the deferral charge. If prepayment of the loan in full
occurs during the deferral period, in addition to any other
rebate which may be required, the borrower shall receive a rebate
of the portion of the deferral applicable to the unexpired months
in the deferral period, for which purpose a fraction of an
unexpired month exceeding 15 days { - shall be deemed - }
{ + is considered + } to be a month.
(c) Upon prepayment in full of the unpaid balance of a
precomputed loan, a rebate of unearned interest or consideration
shall be made as provided in this paragraph. The amount of the
rebate shall be not less than the total interest contracted for
to maturity, less the greater of:
(A) Ten percent of the amount financed or $75, whichever is
less; or
(B) The interest or consideration earned to the installment due
date nearest the date of prepayment, computed by applying the
simple interest rate of the loan to the actual principal balances
outstanding, for the periods of time the balances were actually
outstanding. For purposes of rebate computations under this
subparagraph, the installment due date preceding the date of
prepayment { - shall be - } { + is + } considered to be
nearest if prepayment occurs 15 days or less after that
installment date. If prepayment occurs more than 15 days after
the preceding installment due date, the next succeeding
installment due date { - shall be - } { + is + } considered
to be nearest to the date of prepayment. In determining the
simple interest rate, the licensee may apply to the scheduled
payments the actuarial method, by which each scheduled payment is
applied first to accrued and unpaid interest or consideration,
and any amount remaining is applied to reduction of the principal
balance.
(3) If the borrower agrees to perform certain duties to insure
or preserve the collateral and fails to perform those duties, the
licensee may pay for the performance of those duties and add the
amounts paid to the unpaid principal balance. A charge may be
made for sums advanced, at the rate provided for in the loan
agreement.
(4) The loan contract may provide that after default and
referral the borrower shall pay the licensee for reasonable
attorney fees actually paid by the licensee to an attorney not a
salaried employee of the licensee.
SECTION 3. { + Section 4 of this 2006 Act is added to and made
a part of ORS 725.600 to 725.625. + }
SECTION 4. { + The Director of the Department of Consumer and
Business Services may adopt rules for the purposes of carrying
out and enforcing the provisions of ORS 725.622, as amended by
section 1 of this 2006 Act, and ORS 725.340, as amended by
section 2 of this 2006 Act. + }
SECTION 5. { + The amendments to ORS 725.340 and 725.622 by
sections 1 and 2 of this 2006 Act apply to payday loans made or
renewed on or after July 1, 2007. + }
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Enrolled Senate Bill 1105 (SB 1105-INTRO) Page 3
Passed by Senate April 20, 2006
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House April 20, 2006
...........................................................
Speaker of House
Enrolled Senate Bill 1105 (SB 1105-INTRO) Page 4
Received by Governor:
......M.,............., 2006
Approved:
......M.,............., 2006
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2006
...........................................................
Secretary of State
Enrolled Senate Bill 1105 (SB 1105-INTRO) Page 5