Section 108. Rates of interest; installment obligations; personal loan departments

1. Except as otherwise provided in this section, no bank or  trust company shall take, receive, reserve or  charge  on  any  loan  or
  discount  made,  or upon any note, bill of exchange or other evidence of
  debt, negotiable or otherwise, interest, as computed  pursuant  to  this
  subdivision,  at  a rate greater than the rate prescribed by the banking
  board pursuant to section fourteen-a of this chapter, or, if no rate has
  been so prescribed, six per centum per annum,  or  two  dollars  if  the
  interest  so  computed  is  less  than that amount. Such interest may be
  taken in advance, reckoning  the  days  for  which  the  note,  bill  or
  evidence  of debt has to run. If interest is so taken in advance and the
  maturity of the debt is accelerated and judgment  is  obtained,  or  the
  debt is otherwise paid prior to its normal date of maturity, the bank or
  trust  company  shall refund to the obligor or his legal representative,
  as the case may be, the unearned interest previously  deducted  and  the
  unused  portion of any premiums charged for insuring the obligor under a
  group  credit  insurance  policy,  such  refund  to  be  calculated   in
  accordance  with  the  method  described in paragraph (e) of subdivision
  four of this section. A reasonable charge by a bank or trust company for
  the collection of a bona fide bill of exchange, note or  other  evidence
  of  debt  payable  at  a  place  other  than  the place where purchased,
  discounted or sold, in addition to the interest, shall not be considered
  interest for the purpose of any  law  regulating  the  maximum  rate  of
  interest which may be charged, taken or received.
    Anything    contained    in   this   subdivision   to   the   contrary
  notwithstanding, the charging of interest  or  discount  on  a  loan  or
  discount  made  outside  this state at a rate allowed by the laws of the
  jurisdiction where such loan is made, or the acquisition by  a  bank  or
  trust  company  of a part interest or the entire interest in any loan or
  discount heretofore or hereafter made by a bank or trust company or  any
  other banking institution, shall not be a violation of this section.
    2.  Any  bank  or trust company may purchase or otherwise acquire from
  the payee, owner or holder thereof any obligation in writing to  pay  in
  installments  all  or  part of the price of personal property or that of
  the performance of services, whether that  obligation  be  a  negotiable
  promissory  note  or other evidence of debt, or any accounts receivable,
  whether or not they are obligations in writing, or any lease of personal
  property, and may lease personal property acquired by it, doing  so  for
  such  price  or  rentals or other consideration and upon such additional
  terms and conditions as may be mutually agreeable.
    3. Upon advances of money, repayable on demand, to an amount not  less
  than  five thousand dollars, made upon documents of title within article
  seven of the uniform commercial code or  negotiable  instruments  within
  article three or article eight of the uniform commercial code pledged as
  collateral  security  for  such repayment, any bank or trust company may
  receive or contract to receive and collect as  compensation  for  making
  such  advances  any  sum which may be agreed upon by the parties to such
  transaction.
    4. (a) A bank or trust company may operate a personal loan  department
  at  all  or  at  any one or more of its authorized places of business in
  accordance with the requirements of this  subdivision.  The  records  of
  such  department  shall  be  kept in such form as the superintendent may
  from time to time prescribe. The superintendent may, after giving notice
  of the contemplated action and reasonable opportunity to be heard, order
  that the operation of such department be discontinued if he  shall  find
  that  the bank or trust company has failed to conform to any requirement
  of this subdivision. The superintendent may forthwith, and for a  period
  not  to exceed thirty days pending further investigation, order that the

  operation of any such department be temporarily discontinued if he shall
  have  reasonable  cause  to  believe  that  the  requirements  of   this
  subdivision  are  not having compliance. Such order of discontinuance or
  temporary  discontinuance  may  apply  to  one or more of the authorized
  places of business of a bank or trust company.  The  superintendent  may
  terminate  or  modify  such  orders  if  he shall be satisfied that such
  department will be operated in accordance with the requirements of  this
  subdivision.   No   order   of  discontinuance  or  temporary  order  of
  discontinuance shall impair or affect the obligation of any  preexisting
  lawful loan or advance from a bank or trust company to any borrower.
    (b)  A bank or trust company which operates a personal loan department
  may make loans and charge interest thereon, which may be  calculated  on
  the  actual  unpaid  principal  balances of the loan or in the case of a
  loan commitment from the date of each advance thereunder for the  actual
  time  outstanding, according to a generally accepted actuarial method at
  a fixed or variable rate  in  accordance  with  the  provisions  of  the
  evidence  of  the  indebtedness,  or taken in advance, computed from the
  date of the loan, or in the case of a loan commitment from the  date  of
  each  advance  thereunder,  to  the date of the last installment payable
  thereunder, at the rate or rates agreed to by the bank or trust  company
  and the borrower, with respect to any loan which is repayable at regular
  periodic  intervals  of  not  more than one month over a period from the
  date of the loan not exceeding (i)  thirty-seven  months,  if  the  face
  amount  of the loan is for not more than twelve hundred dollars, or (ii)
  any number of months agreed to by the bank  or  trust  company  and  the
  borrower,  (A)  if  the  face amount of the loan is for more than twelve
  hundred dollars, (B) if  the  loan  is  for  more  than  twelve  hundred
  dollars,  and is made for a commercial or business use or purpose or for
  investment in or purchase of an unincorporated  business  or  commercial
  enterprise,  (C)  if the loan or loan commitment is made for educational
  purposes as specified in subdivision five-b of this section, or  (D)  if
  the  loan  or  advance  of  credit  is made for the purpose of financing
  alterations, repairs and improvements upon or in connection with, or  as
  the  superintendent  may authorize the equipping of existing structures,
  and the building of new structures, upon urban, suburban, or rural  real
  property  (including  the  restoration,  rehabilitation,  rebuilding and
  replacement of such improvements which have been damaged or destroyed by
  earthquake, conflagration, tornado, hurricane, cyclone, flood  or  other
  catastrophe),  by the owners thereof or by lessees of such real property
  under a lease expiring not less than six months after  the  maturity  of
  the  loan  or  advance  of credit or by lessees under proprietary leases
  from  corporations  or  partnerships  formed  for  the  purpose  of  the
  cooperative  ownership  of  real  estate.  The  total  unpaid  principal
  balances of any one or more loans made by such bank or trust company  to
  the  borrower  pursuant  to  this  subdivision  shall  be  determined by
  agreement between such bank or trust company and the  borrower.  If  the
  loan  is made for a period of one year or more, provision may be made in
  the note, instrument or other evidence of  debt,  for  the  omission  of
  payments  during  not  more  than  any  three  specified  months  in any
  twelve-month period, but the  maximum  period  of  thirty-seven  months,
  shall not be exceeded. On any loan with a variable rate of interest made
  pursuant  to  this  paragraph,  the  rate shall be determined at regular
  intervals as set forth in the evidence of indebtedness and in accordance
  with such regulations as the banking board shall prescribe but said rate
  shall not vary more often than once in any three month period and  shall
  be  based  on  a  published  index  that  is  (a) readily available, (b)
  independently verifiable, (c) beyond the control of the  bank  or  trust
  company and (d) approved by the superintendent.

    The  banking  board shall adopt regulations, including but not limited
  to:  (a) providing for disclosure to the borrower by the bank  or  trust
  company  of  the  circumstances  under  which the rate may increase, any
  limitations on the increase, the effect of an increase and an example of
  the  payment terms that would result from an increase; (b) providing for
  disclosure to the borrower by the bank or trust company of a history  of
  the  fluctuations of the index over a reasonable period of time; and (c)
  providing for notice to the borrower from  the  bank  or  trust  company
  prior to any rate increase or change in the terms of payment.
    (c)  The  rate  of  interest  authorized  by this subdivision shall be
  inclusive of all charges incident to investigating and making any  loan.
  No  fee,  commission,  expense,  or  other charge whatsoever in addition
  thereto shall be taken, received, reserved, or  contracted  for,  except
  (i)  the  fees  payable to the appropriate public officer to perfect any
  lien or other security interest taken to secure the loan or the premium,
  not in excess of such filing fee, payable for any insurance in  lieu  of
  such  filing;  (ii)  in  case  of  default,  and  in accordance with the
  provisions of the instrument evidencing the obligation, either a fine in
  an amount not to exceed five cents per dollar on any  installment  which
  has  become  due and remained unpaid for a period in excess of ten days,
  but no such fine shall exceed five dollars and only one  fine  shall  be
  collected  on any such installment regardless of the period during which
  it remains in default, and provided further that should the aggregate of
  such fines collected in connection with any loan exceed two  per  centum
  of  such  loan,  or  in any event twenty-five dollars, the bank or trust
  company shall refund such excess to the borrower within sixty days after
  the loan is paid in full,  or,  subject  to  an  allowance  of  unearned
  interest  attributable to the amount in default, interest on each amount
  past due at a rate not in  excess  of  the  rate  provided  for  in  the
  instrument  evidencing  the  obligation;  (iii) the actual expenditures,
  including reasonable attorney's fees for necessary  court  process;  and
  (iv) in case the bank or trust company insures a borrower under a credit
  unemployment insurance policy, group life insurance policy, group health
  insurance  policy,  group accident insurance policy, or group health and
  accident insurance policy, or requires insurance  on  personal  property
  securing  any  such  loan,  an  amount  not  in  excess  of the premiums
  chargeable in accordance with rate schedules then in effect and on  file
  with  the superintendent of insurance for such insurance by the insurer.
  No bank or trust company shall require a borrower to place  any  sum  on
  deposit,  or  to  make  deposits in lieu of regular periodic installment
  payments, or to do or refrain from  doing  any  other  act  which  would
  entail  additional  expense  or  sacrifice,  as a condition precedent to
  granting a loan under  the  authority  of  this  subdivision  except  as
  provided  in  subdivision  five-b  of  this section. Notwithstanding the
  provisions of this paragraph no refund of excess fines shall be required
  if it amounts to less than one dollar.
    (d) In each note, instrument or other evidence  of  debt  given  by  a
  borrower  to  evidence a loan under this subdivision, where such loan is
  not subject to the provisions of the act of congress entitled "Truth  in
  Lending Act" and the regulations thereunder, as such act and regulations
  may  from  time  to  time  be  amended,  the rate of charge (stating any
  minimum as permitted by  this  subdivision  four),  shall  be  expressed
  either  in accordance with the method prescribed by such act of congress
  or: (i) as a rate in dollars per annum discount per one hundred  dollars
  face  amount of loan, or (ii) as the rate or rates agreed to by the bank
  or trust company and the borrower.
    (e) A borrower may prepay the loan in full or, with the consent of the
  bank or trust company, may  refinance  the  loan.  If  the  interest  is

  calculated   on   the  actuarial  basis,  or  if  the  evidence  of  the
  indebtedness provides that the rate of interest may vary  from  time  to
  time,  a  borrower  may  prepay the loan in full without penalty. If the
  interest  was  taken  in  advance,  in  the  event of such prepayment or
  refinancing, the bank or trust company shall refund:  (1)  the  unearned
  portion  of  the  interest  to  the borrower the amount of which portion
  shall be determined according to a generally accepted actuarial  method;
  provided,  however,  that  if the amount of interest previously deducted
  (i) was less than ten dollars, no refund  shall  be  required;  or  (ii)
  exceeded  the  sum  of  ten dollars and the earned interest is less than
  that amount, the bank or trust company may  retain  such  an  additional
  amount  as  will bring the earned interest to the sum of ten dollars and
  refund the remainder, and provided further,  that  unless  the  loan  is
  refinanced,  no  refund shall be required if it amounts to less than one
  dollar; and (2) if a charge was made to the borrower  for  premiums  for
  insuring  the  borrower  under  a  credit unemployment insurance policy,
  group life insurance policy, or under a group health, group accident  or
  group  health and accident insurance policy, the excess of the charge to
  the borrower therefor over the premiums paid or payable by the  bank  or
  trust  company,  if  such  premiums  were paid or payable by the bank or
  trust company periodically, or the refund  for  such  insurance  premium
  received or receivable by the bank or trust company, if such premium was
  paid  or  payable  in  a lump sum by the bank or trust company, provided
  that no such refund shall be required if it amounts  to  less  than  one
  dollar.  In the event (i) the maturity of the loan is accelerated due to
  the default of the borrower or otherwise and judgment  is  obtained,  or
  (ii)  repayment  is  made  pursuant  to  any  such insurance policy, the
  borrower or his legal representative, as  the  case  may  be,  shall  be
  entitled  to  the same refund as if the loan had been prepaid in full on
  the date of acceleration or repayment.
    (f) A bank or trust company may, upon  agreement  with  the  borrower,
  extend  the  scheduled due date or defer the scheduled payment of all or
  any part of any installment or installments payable under the loan.  The
  agreement  for such extension or deferment must be in writing and signed
  by the borrower. The bank or trust company may charge and  contract  for
  the  payment  of  an  extension  or  deferral charge by the borrower and
  collect and receive the same, at the rate or rates agreed to by the bank
  or trust company and the borrower, on the amount of the  installment  or
  installments,  or  part  thereof, extended or deferred for the period of
  extension or deferral. Such period shall not exceed the period from  the
  date when such extended or deferred installment or installments, or part
  thereof,  would  have  been  payable in the absence of such extension or
  deferral, to the date when such installment  or  installments,  or  part
  thereof, are made payable under the agreement of extension or deferment;
  except  that  a minimum charge of one dollar for the period of extension
  or deferral may be made in any case  where  the  extension  or  deferral
  charge,  when  computed  at  such rate, amounts to less than one dollar.
  Such agreement may also provide for the payment by the borrower  of  the
  additional  cost to the bank or trust company of premiums for continuing
  in force, until the end of such period of  extension  or  deferral,  any
  insurance  coverages provided in connection with the loan subject to the
  other provisions of this subdivision.
    (g) If the borrower is  obligated  in  connection  with  the  loan  to
  maintain  insurance  on  a  motor  vehicle  securing  the  loan  and  if
  subsequent to the making of the loan the borrower fails to maintain  the
  insurance,  the  bank  or trust company may make advances to procure the
  equivalent limits of insurance for either the interests of the  borrower
  and  the  bank  or trust company or of either of them, and any amount so

  advanced may be the subject of an interest charge from the date of  such
  advance  as  though such amount was part of the unpaid principal balance
  of the loan.  Each amount so advanced shall be secured by  the  personal
  property  if so provided in the security agreement covering the personal
  property and if the bank or  trust  company  notifies  the  borrower  in
  writing  of the advance of such amount and of his or her option to repay
  such amount in any one of the following ways:
    (1) Full payment within ten days from the date of  giving  or  mailing
  the notice;
    (2)  Full  amortization  during  the  term  of  the  insurance  or the
  remaining term of the loan, at the option of the bank or trust company;
    (3) If offered by the bank  or  trust  company,  as  a  final  balloon
  payment payable one month after the last scheduled payment in connection
  with the loan;
    (4)  If  offered by the bank or trust company, full amortization after
  the term of the loan, to be payable in instalments which do  not  exceed
  the average instalment payable in connection with the loan; or
    (5)  If  offered  by the bank or trust company, any other amortization
  plan.
    If the borrower neither pays  in  full  the  amount  so  advanced  nor
  notifies  the  bank  or  trust  company  in writing of his or her choice
  regarding amortization options before the expiration of  ten  days  from
  the  date  of  giving  or  mailing  of  the  notice by the bank or trust
  company, the bank or trust company shall amortize the amount so advanced
  pursuant to subparagraph two of this paragraph.
    5. (a) A  bank  or  trust  company  which  operates  a  personal  loan
  department  pursuant  to  paragraph  (a)  of subdivision four hereof may
  establish credits under written agreements with borrowers,  pursuant  to
  which  one or more loans or advances to or for the account of a borrower
  may be made from time to time, by means of honoring one or  more  checks
  or  other  written,  electronic  or telephonic orders or requests of the
  borrower and may charge interest on such loans and advances at the  rate
  permitted  by paragraph (b) of this subdivision, provided such loans and
  advances  comply  with  the  provisions  of   this   subdivision.   This
  subdivision  does  not  authorize  any bank or trust company to make any
  loan or advance in connection with the purchase or  lease  of  goods  or
  services  by  means  of a credit card as defined in section five hundred
  eleven of the general  business  law,  except  for  a  loan  or  advance
  resulting  from  the use of a card which may be used to access a deposit
  account and line of credit associated with that account. The records  of
  such loans and advances shall be kept in such form as the superintendent
  may from time to time prescribe.
    (b)  Such  agreement  may provide for interest on the unpaid aggregate
  principal  amount  of  such  loans  and  advances  from  time  to   time
  outstanding  at the rate or rates agreed to by the bank or trust company
  and the borrower, as computed pursuant to this  section,  including,  in
  accordance  with  the  provisions  of the agreement, rates that may vary
  from time to time reckoned  on  each  loan  or  advance  from  the  date
  thereof,  calculated  on  any  of the following bases: (i) on the unpaid
  principal  amount  of  such  loans  and  advances  from  time  to   time
  outstanding,  or  (ii)  for each month on an average balance outstanding
  determined by dividing  by  two  the  sum  of  the  balances  of  unpaid
  principal  of  such  loans  and advances outstanding on two dates during
  such month, as specified in such agreement; the  first  of  which  dates
  being  not  later  than  the  fifteenth day of such month and the second
  being not earlier than the sixteenth day of such month and not less than
  ten nor more than twenty days after the first date, or  (iii)  for  each
  month on a fixed amount selected from a schedule, which fixed amount may

  exceed the average daily balance under (i) above, or the average balance
  if  determined under (ii) above, by a differential of not more than five
  dollars, provided the same fixed  amount  is  also  used  for  computing
  interest  for any month for which such balance exceeds said fixed amount
  by any amount up to at least the same differential. For purposes of this
  subdivision, a month may but need not be a calendar month, and a bank or
  trust company computing interest on a daily basis may  charge  for  each
  day  one  thirtieth  of  the  monthly interest rate. No amendment to any
  agreement shall take effect  unless  at  least  30  days  prior  to  the
  effective  date  of  such  amendment,  imposition or increase, a written
  notice has been mailed or delivered to the  borrower  that  clearly  and
  conspicuously  describes  such amendment, imposition or increase and the
  indebtedness to which it applies and if the amendment has the effect  of
  increasing  the  rate of interest, either (a) the notice states that the
  incurrence by the borrower or another person authorized by  him  of  any
  further indebtedness under the plan to which the agreement relates on or
  after  the  effective  date of such change specified in the notice shall
  constitute acceptance of such change, and either the borrower agrees  in
  writing  to  such change or the borrower or another person authorized by
  him incurs such further indebtedness on or after the effective  date  of
  the  change stated in the notice, or (b) the notice advises the borrower
  that he has thirty days from the earlier of the mailing or  delivery  of
  the  notice  to advise the bank or trust company in writing that he does
  not accept such amendment, provided that such notice contains an address
  to which the borrower may send notice of his election not to accept  the
  amendment and also provided that the notice specifies that the amendment
  will  take  effect absent receipt of the borrower's written objection to
  the amendment. Any borrower who has received a notice pursuant to clause
  (a) who does not agree in  writing  to  the  amendment  and  no  further
  indebtedness  is incurred under the plan to which the agreement relates,
  and any borrower who gives a timely  notice,  pursuant  to  clause  (b),
  electing  not  to  accept  the  amendment  shall be permitted to pay his
  outstanding indebtedness in accordance with the terms of  the  agreement
  but  the  bank  or  trust  company  may  terminate  the amount of credit
  available to the borrower and may require the  borrower  to  return  all
  credit cards and checks issued in connection with the agreement. If such
  a  borrower  subsequently  obtains  credit under the agreement, such use
  shall constitute acceptance of the change of terms and shall  be  deemed
  to  have  been accepted and shall become effective as to the borrower as
  of the date such change would have become effective but for  the  giving
  of notice by the borrower. If notice is given pursuant to clause (b) and
  the  borrower  does  not timely object in writing to the amendment, such
  amendment shall become effective without  action  on  the  part  of  the
  borrower; provided that in no event shall any such amendment or increase
  take effect with respect to (i) the unpaid aggregate principal amount of
  loans or advances representing indebtedness outstanding prior to January
  1,  1981  and  (ii)  the  unpaid  aggregate principal amount of loans or
  advances representing indebtedness incurred, under  or  pursuant  to  an
  agreement  in  effect  on December 1, 1980, between January 1, 1981, and
  the effective date of such amendment or increase specified in the  first
  notice   mailed  or  delivered  pursuant  to  clause  (a).  Indebtedness
  outstanding prior to January 1, 1981, for purpose of  clause  (i)  above
  and  indebtedness outstanding prior to the effective date of an increase
  for purposes of clause (ii) above shall be determined on  the  basis  of
  crediting  payments  and other credits first to that portion of any such
  indebtedness representing interest charges, insurance premiums,  service
  charges  and  fines  and then to that portion representing the principal
  amount of loans or advances in the order in which made.  The  provisions

  of this paragraph permitting an increase in a rate of interest shall not
  apply  in the case of an agreement which expressly prohibits changing of
  interest rates or which provides limitations  on  changing  of  interest
  rates   which  are  more  restrictive  than  the  requirements  of  this
  paragraph. An amendment to an agreement deleting a  provision  that  the
  rate  of  interest  may  vary from time to time may not become effective
  within one year from the later of the effective date of the agreement or
  the effective date of an amendment to an  agreement  adding  a  variable
  rate provision. On any loans or advances with rates of interest that may
  vary  from  time  to time made pursuant to this paragraph, such variable
  rates of interest shall be determined at regular intervals as set  forth
  in  the agreement and in accordance with such regulations as the banking
  board shall prescribe but said rate shall not vary more often than  once
  in  any  three month period and shall be based on a published index that
  is (a) readily available, (b) independently verifiable, (c)  beyond  the
  control   of  the  bank  or  trust  company  and  (d)  approved  by  the
  superintendent, (e) such loan rate shall be based on the  index  values,
  or  the  index  numbers  plus  or  minus  additional  percentage  points
  provided, however, that variations in the rate must correspond  directly
  to the movements of the index values plus or minus additional percentage
  points  only.  Once  such rate is established no lending institution may
  add any factors to increase  the  rate  other  than  variations  in  the
  established  index  without the prior approval of the banking board. For
  purposes of this paragraph, an adjustment in the rate of interest  as  a
  consequence  of  movement  in the selected index shall not constitute an
  amendment to that agreement. A reduction in the  grace  period  for  the
  assessment  of  a  fee  on  any  installment not paid when due, shall be
  considered an amendment to an agreement as set forth in this paragraph.
    The banking board shall adopt regulations with respect  to  agreements
  that  provide for a variable rate of interest, including but not limited
  to: (a) providing for disclosure to the borrower by the  bank  or  trust
  company  of  the  circumstances  under  which the rate may increase, any
  limitations on the increase, the effect of an increase and an example of
  the payment terms that would result from an increase; (b) providing  for
  disclosure  to the borrower by the bank or trust company of a history of
  the fluctuations of the index over a reasonable period of time; and  (c)
  providing  for  notice  to  the  borrower from the bank or trust company
  prior to any rate increase or  change  in  the  terms  of  payment.  The
  regulations  shall  allow  a  bank  or  trust  company after choosing an
  approved index to choose a spread and a  minimum  and  maximum  rate  of
  interest at its discretion.
    A  written  agreement,  whether  it  provides  for a fixed or variable
  interest rate, may provide for  an  introductory  rate  of  interest  at
  either  a  fixed  or  a  variable  rate, provided that the terms of such
  introductory rate, including, if  applicable,  the  date  on  which  the
  introductory  rate  shall terminate, are disclosed to the borrower. Such
  disclosure shall be contained on an  application  form  or  pre-approved
  written solicitation as specified pursuant to subdivisions one and one-a
  of  section five hundred twenty of the general business law. A change in
  the interest rate upon expiration of an introductory rate shall  not  be
  considered  a  variable  rate or a change in terms. The interest rate in
  effect after expiration of an introductory rate may apply to all amounts
  due under the agreement regardless of when incurred  and  disclosure  of
  the same shall be provided to the borrower in the written agreement.
    Any interest charge, whether assessed by a fixed or variable rate, may
  be  reduced  on  such  terms as the bank or trust company may determine,
  provided that the terms of such reduction, including, if applicable, the
  date on which  the  reduction  will  terminate,  are  disclosed  to  the

  borrower  on  the  written notice announcing the reduction, prior to the
  effective date of the reduction. A new method of determining an interest
  charge is a reduction in the interest charge if  the  charge  determined
  under the new method never exceeds the charge under the original method.
  The  original  interest  charge  or  original  method of determining the
  interest charge may be applied after the reduction ends  to  the  entire
  outstanding  indebtedness,  including  any  indebtedness incurred when a
  reduced interest charge applied and disclosure  of  the  same  shall  be
  provided to the borrower in the written notice announcing the reduction.
  A  reduction  to  an  interest  charge,  including the resumption of the
  original interest charge or  the  original  method  of  determining  the
  interest  charge,  shall not be considered an amendment of the agreement
  for purposes of this paragraph.
    (c) The aggregate unpaid  principal  amount  of  all  such  loans  and
  advances  to  a  borrower made pursuant to this subdivision by a bank or
  trust company at  any  one  time  outstanding  shall  be  determined  by
  agreement  between such bank or trust company and the borrower except to
  the extent that such loans or advances are made pursuant  to  a  written
  agreement  providing for establishing credits for a primarily commercial
  or business use or purpose or  for  investment  in  or  purchase  of  an
  interest in an unincorporated business or commercial enterprise.
    (d)  The  aggregate  unpaid principal amount of all loans and advances
  outstanding at any time pursuant to this subdivision shall be  repayable
  at  regular  periodic  intervals of not more than one month and for such
  term as agreed upon by such bank or  trust  company  and  the  borrower;
  provided,  however,  that  nothing herein shall prohibit a bank or trust
  company from providing in any agreement for the omission of payments for
  three consecutive specified months during any consecutive  twelve  month
  period.  The  initial installment of any loan or advance may be deferred
  for a period of not more than sixty-five days from the date of such loan
  or advance; provided, however, that the installments payable during  any
  such  period on any prior loans or advances shall not be affected by any
  such deferment. Provided, however,  that  an  agreement  may  require  a
  minimum installment as agreed upon by the parties.
    The  borrower  may  at  any time prepay the amount owing in part or in
  full, with interest to the date of prepayment.
    Notwithstanding the  foregoing  provisions  of  this  paragraph,  each
  installment  or  other  amount paid by the borrower to the bank or trust
  company may be applied to interest, insurance premiums, service charges,
  fines and principal in the order named, or in any  such  manner  as  the
  agreement  may  provide. The term "installment" may be deemed to include
  or exclude amounts  to  be  applied  to  interest,  insurance  premiums,
  service charges and fines.
    (e)  The  fees  and charges authorized by this paragraph and paragraph
  (b) of this subdivision  shall  be  inclusive  of  all  charges  to  the
  borrower  incident to investigating and making any such loan or advance.
  No fee, commission, expense, or other charge to the borrower  whatsoever
  shall  be  taken,  received,  reserved,  or  contracted  for,  except as
  provided in  this  subdivision.  In  addition  to  the  interest  charge
  permitted  under  paragraph  (b)  of this subdivision, the bank or trust
  company may charge, receive and collect any one or more of the fees  and
  charges  described  in  this  paragraph,  provided  that any such fee or
  charge is set forth in the written agreement with the borrower. The bank
  or trust company may contract with the borrower for the payment  by  the
  borrower  of:  (i)  a service charge either as a percentage or an amount
  upon each such check or other written, electronic or telephonic order or
  request which is approved; (ii) a charge in an amount or percentage  for
  each  check  or other written, electronic or telephonic order or request

  to obtain money from a credit line that cannot  be  approved  since  the
  borrower  is  in  violation  of the terms of the agreement or payment of
  such order or request would cause borrower to be  in  violation  of  the
  terms  of  the  agreement;  (iii) a fee for any installment which is not
  paid on or before the date on which it is due. A bank or  trust  company
  that  imposes the charge described in this subparagraph without allowing
  a grace period of at least ten days must credit any cash payment made by
  a borrower to a teller at a branch where deposits are  accepted  by  the
  bank  or  trust  company, as of the date of receipt of the payment; (iv)
  the  actual  expenditures,  including  reasonable  attorneys'  fees  for
  necessary court process; (v) in case the bank or trust company insures a
  borrower  in accordance with applicable insurance law, including but not
  limited to under a credit  unemployment  insurance  policy,  group  life
  insurance   policy,   group  health  insurance  policy,  group  accident
  insurance policy, or group health  and  accident  insurance  policy,  an
  amount  for  each  month  which,  notwithstanding  any other law, may be
  computed on the amount of  the  borrower's  entire  unpaid  indebtedness
  under  this  subdivision except in the case of a loan or loan commitment
  made under this subdivision for educational  purposes  as  specified  in
  subdivision  five-b  of  this  section, and then on an amount no greater
  than the unpaid balance of the borrower's scheduled  periodic  payments,
  whether  due or not due, upon the loan or loan commitment, at a rate not
  in excess of the premiums chargeable for such month in  accordance  with
  rate  schedules  then  in  effect and on file with the superintendent of
  insurance for such insurance by the insurer; (vi) if loans  or  advances
  may  be  obtained  by  use  of a credit card issued by the bank or trust
  company to the borrower, an annual fee for membership in the credit card
  plan. If the borrower has requested the issuance of a credit  card,  the
  fee  for  the  first year may be charged by the bank or trust company at
  any time. The bank or trust company shall in  each  subsequent  year  in
  which  an  annual  fee  is  payable,  send  the  borrower in or with the
  statement for the monthly billing period before that in which the fee is
  to be billed, a notice that the annual fee will be billed  in  the  next
  monthly  statement.    A  borrower who is not delinquent or otherwise in
  breach of any term of the agreement with the bank or trust company shall
  have the right during the first six  months  after  the  annual  fee  is
  billed to notify the bank or trust company in writing, at its address on
  the  credit agreement, to terminate the borrower's account and request a
  refund of the unused portion of the annual  fee  previously  paid.  Upon
  receipt of the termination notice and refund request from such borrower,
  the  bank  or  trust company shall refund to the borrower the unused pro
  rata share of any annual fee previously paid as  of  the  first  billing
  statement  date  after  receipt  of the termination notice; and (vii) an
  overlimit charge which may be  imposed  whenever  the  specified  credit
  limit  is exceeded but not more than once in a monthly billing cycle. If
  the overlimit charge is imposed, the credit limit must be  disclosed  on
  the  monthly billing statement; and (viii) a returned payment charge, in
  the amount set forth in section 5-328 of the  general  obligations  law,
  for  any  check  or  other  method  of  payment that is returned unpaid,
  excluding payment made by automated teller machine or  other  electronic
  media;  (ix)  a  charge  for replacement of lost or stolen credit cards,
  which charge shall be applied only where a borrower has suffered a  lost
  or  stolen  credit card after two replacements thereof; (x) a charge for
  additional credit cards for the borrower's account; and  (xi)  a  charge
  for  copies  of  sales slips, cash advance slips, monthly statements and
  other documents when such copies are not required by  federal  or  state
  law governing billing error disputes.

    The  fees  and  charges  set  forth  in  this  paragraph  shall not be
  considered in applying sections 190.40 and 190.42 of the penal law.  For
  purposes  of  12 U.S.C. §§  85, 1831d, 1463(g) and 1785(g), the fees and
  charges permitted under this paragraph are interest under New York  law,
  and  all  terms, conditions, and other provisions of a written agreement
  between a bank or  trust  company  and  a  borrower,  including  without
  limitation,  fees  and  charges,  provisions  related  to  the method of
  determining the outstanding balance  on  which  an  interest  charge  is
  imposed  and  circumstances  in which an interest charge may be avoided,
  are material to the determination of the interest rate  under  New  York
  law.
    (f)  No bank or trust company shall require a borrower to keep any sum
  on deposit, or to make deposits in lieu of regular periodic  installment
  payments,  or  to  do  or  refrain  from doing any other act which would
  entail additional expense or sacrifice, as a condition precedent to  the
  entering  into  of  the agreement or granting of a loan or advance under
  the authority of this subdivision, except  as  provided  in  subdivision
  five-b  of this section, provided, however, that nothing herein shall be
  construed to prohibit a borrower  from  agreeing  that  such  loans  and
  advances  may  be  disbursed by crediting a demand deposit account to be
  opened or maintained by the borrower on the same terms  as  are  offered
  generally by the bank or trust company to all or any class or classes of
  demand  deposit  customers,  and  provided further, that a bank or trust
  company may require a  pledge  to  such  bank  or  trust  company  of  a
  specifically identified interest-bearing deposit account at such bank or
  trust  company  as  collateral  security for a loan made by such bank or
  trust company under the authority of this subdivision.
    5-a. A bank or trust company may make loans  secured  by  mobile  home
  chattel  paper  evidencing a monetary obligation incurred to finance the
  purchase of a mobile home located at the time of such purchase, or to be
  located within ninety days, at a semipermanent site within the state  or
  in  a  contiguous  state  and  to  be  maintained  as a residence of the
  borrower,  the  borrower's  spouse,   child,   grandchild,   parent   or
  grandparent.
    (1) For this subdivision:
    (i)  "mobile  home  chattel  paper"  means  written evidence of both a
  monetary obligation and a security  interest  of  first  priority  in  a
  mobile home and any equipment installed or to be installed therein; and
    (ii)   "mobile   home"  or  "manufactured  home"  means  a  structure,
  transportable in one or more sections, which in the traveling  mode,  is
  eight  body  feet or more in width or forty body feet or more in length,
  or when erected on site, is three hundred twenty or  more  square  feet,
  and  which  is built on a permanent chassis and designed to be used as a
  dwelling with or  without  a  permanent  foundation  when  connected  to
  required utilities, and includes the plumbing, heating, air-conditioning
  and electrical systems contained therein.
    (2)  If the loan is for the purpose of financing the purchase of a new
  mobile home,
    (i) it shall mature not later than two hundred forty months after  the
  date thereof, and
    (ii)  the amount advanced shall not exceed one hundred per cent of the
  sum of  (a)  the  manufacturer's  invoice  price  of  such  mobile  home
  (including  any  installed  equipment),  excluding freight, plus (b) the
  invoice price of the manufacturer of any new equipment installed  or  to
  be installed by the dealer, excluding freight.
    (3) If the loan is for the purpose of financing the purchase of a used
  mobile home,

    (i)  it shall mature not later than two hundred forty months after the
  date of the loan, and
    (ii)  the amount advanced shall not exceed one hundred per cent of the
  purchase price of the used mobile home actually paid  or  the  wholesale
  value  of  such  mobile  home  (including  any  installed  equipment) as
  established in the dealer's market, whichever is the lower.
    (4) The loan shall be payable in equal or substantially equal  monthly
  installments  calculated  from the date of the loan. Interest, which may
  be taken in advance, may be charged thereon, computed from the  date  of
  the  loan to the date of the last installment payable thereunder, if the
  loan has a maturity (i) not exceeding thirty-seven months, at a rate not
  to exceed six dollars per annum discount per one hundred dollars of  the
  face amount or ten dollars if the interest so computed is less than that
  amount,  or  (ii) exceeding thirty-seven months, at a rate not to exceed
  five dollars per annum discount per one  hundred  dollars  of  the  face
  amount  or  ten  dollars,  if the interest so computed is less than that
  amount; provided that the interest which may be charged, if  it  exceeds
  ten  dollars,  shall  not  exceed  one  per cent per month on the unpaid
  principal balance.
    (5) The authorized interest shall  include  all  charges  incident  to
  investigating and making any loan. No fee, commission, expense, or other
  charge  shall  be  permitted  except  that the bank or trust company may
  contract to charge the borrower (i) the fees payable to a public officer
  to perfect any lien or other security interest taken to secure the loan,
  or the premium, not in excess of such fee, payable for any insurance  in
  lieu of such filing; (ii) in case of default, and in accordance with the
  instrument  evidencing the obligation, either a fine in an amount not to
  exceed five per cent  on  any  installment  which  has  become  due  and
  remained  unpaid  for  a  period in excess of ten days, but no such fine
  shall exceed five dollars and only one fine shall be  collected  on  any
  such installment regardless of the duration of the default, and provided
  further  that should the aggregate of such fines collected in connection
  with any loan exceed two per cent of such loan  or  twenty-five  dollars
  the  bank  or  trust  company shall refund such excess within sixty days
  after the loan is paid in full, or, subject to an allowance of  unearned
  interest  attributable to the amount in default, interest on each amount
  past due at a rate not in excess of one per cent per  month  during  the
  period   of   delinquency;  (iii)  the  actual  expenditures,  including
  reasonable attorney's fees for necessary court process, and (iv) in case
  the bank or trust company insures a borrower under a credit unemployment
  insurance policy, group life, health, accident, or health  and  accident
  insurance  policy,  or  requires insurance on the property securing such
  loan, an amount not in excess of the premiums  lawfully  chargeable.  No
  bank  or  trust  company  shall  require  a borrower to place any sum on
  deposit, or to make deposits in lieu  of  regular  periodic  installment
  payments,  or  to  do  or  refrain  from doing any other act which would
  entail additional expense or sacrifice, as a condition of a mobile  home
  loan,  as the superintendent may from time to time approve. No refund or
  excess fines shall be required if it amounts to less than one dollar.
    (6) A borrower may prepay the loan in full or, with the consent of the
  bank or trust company, may refinance the loan. In such event,  the  bank
  or  trust company shall refund: (1) the unearned portion of the interest
  to the  borrower  the  amount  of  which  portion  shall  be  determined
  according to a generally accepted actuarial method; provided that if the
  interest  previously  deducted  (i) was less than ten dollars, no refund
  shall be required; or (ii) exceeded ten dollars and the earned  interest
  is  less  than that amount, the bank or trust company may retain such an
  additional amount as will bring the earned interest to ten  dollars  and

  refund  the  remainder,  and  provided  further, that unless the loan is
  refinanced, no refund shall be required if it amounts to less  than  one
  dollar;  and  (2)  if a charge was made to the borrower for premiums for
  insuring  the  borrower  under  a  credit unemployment insurance policy,
  group life insurance policy, or under a group health, group accident  or
  group  health and accident insurance policy, the excess of the charge to
  the borrower therefor over the premiums paid or payable by the bank,  if
  such  premiums  were  paid  or  payable  by  the  bank  or trust company
  periodically, or the refund  for  such  insurance  premium  received  or
  receivable  by  the  bank  or trust company, if such premium was paid or
  payable in a lump sum by the bank or trust company. No such refund  need
  be  made  if  it  amounts  to less than one dollar. In the event (i) the
  maturity of the loan is accelerated due to the default of  the  borrower
  or  otherwise  and  judgment  is  obtained,  or  (ii)  repayment is made
  pursuant to any  such  insurance  policy,  the  borrower  or  his  legal
  representative, as the case may be, shall be entitled to the same refund
  as  if  the loan had been prepaid in full on the date of acceleration or
  repayment.
    (7) As a condition of any loan  made  pursuant  hereto,  the  borrower
  shall  certify  that the mobile home, for the purchase of which the loan
  is made, is intended to be maintained in the state or  in  a  contiguous
  state  as  a  residence  of  the borrower, the borrower's spouse, child,
  grandchild, parent or grandparent. If the mobile home shall  not  be  so
  maintained  on the ninetieth day next succeeding the date of the loan or
  if it is relocated so as to no longer be  located  in  the  state  or  a
  contiguous  state  at any time before the first anniversary of the loan,
  the loan and all authorized charges shall  become  immediately  due  and
  payable  subject  only to the refund provisions of paragraph six and the
  borrower may, if the contract so provides, be  required  to  pay  as  an
  additional  authorized  charge, a penalty in an amount not to exceed two
  per cent of the face amount of the loan.
    (8) No investment shall be made by a bank or trust company pursuant to
  this subdivision if the total amount invested by  it  pursuant  to  this
  subdivision exceeds, or by the making of such investment will exceed, an
  amount  equal  to  fifteen  per  cent of the assets of the bank or trust
  company.
    (9) Subject to such limitations and conditions as  the  banking  board
  may  prescribe by general regulation, a bank or trust company may make a
  loan  pursuant  to  this   subdivision   which   the   federal   housing
  administrator  has  insured  or  has made a commitment to insure and may
  receive and hold such debentures as are issued by  the  federal  housing
  administrator  in  payment  of  such  insurance,  or which is guaranteed
  pursuant  to  the  provisions  of  the  act  of  congress  entitled  the
  "Servicemen's   Readjustment   Act  of  1944."  No  law  of  this  state
  prescribing or limiting the interest rate  upon  loans  or  advances  of
  credit or prescribing a penalty for violation thereof or prescribing the
  nature,  amount  or  form  of  security or requiring security upon which
  loans or advances of credit may be made or prescribing or  limiting  the
  period for which loans or advances of credit may be made or limiting the
  amount  of any class of loans, advances of credit or purchases which may
  be made shall be deemed  to  apply  to  loans,  advances  of  credit  or
  purchases  made  or  to  loans  acquired  by  purchase  pursuant to this
  paragraph.
    5-b. Notwithstanding any inconsistent provision  of  this  section,  a
  bank  or  trust  company may make loans for the purpose of defraying the
  cost of education of one or more students at a university or college, or
  at an elementary or secondary school  providing  education  required  of
  minors  which  may  provide  for  (i)  payment  of  origination fees, or

  guarantee fees in such amounts as the superintendent may  from  time  to
  time  approve;  (ii)  capitalization  of  interest,  provided  that  the
  borrower has the option to avoid capitalization by paying such  interest
  without  penalty;  and  (iii) deferral and forbearance of payments under
  circumstances for which such deferral or forbearance  could  be  granted
  for  loans made pursuant to Title IV of the Higher Education Act of 1965
  (20 USC 1070 et seq.).
    6. The knowingly taking, receiving, reserving or  charging  a  greater
  rate  of  interest  than  that authorized by this section as computed by
  this section, shall be held and adjudged  a  forfeiture  of  the  entire
  interest  which  the  note,  bill  of exchange or other evidence of debt
  carries with it, or which has been agreed to be paid thereon, and  if  a
  greater  rate  of  interest has been paid, the person paying the same or
  his legal representative may recover from  the  bank  or  trust  company
  twice the entire amount of the interest thus paid.
    7. Upon an advance of money, whether or not repayable on demand, to an
  amount not less than five thousand dollars, made upon documents of title
  within  article  seven  of  the  uniform  commercial  code or negotiable
  instruments within  article  three  or  article  eight  of  the  uniform
  commercial  code  pledged as collateral security for such repayment, any
  bank or trust company may receive or contract to receive and collect  as
  compensation for making such advance any sum which may be agreed upon by
  the parties to such transaction; provided that such advance is (a) to or
  for  any  partner  of  a  firm  which  is  a  member  firm of a national
  securities  exchange  registered  with  the  securities   and   exchange
  commission   as   a  national  securities  exchange  under  the  federal
  securities exchange act of 1934, as amended, to enable such  partner  to
  make  a  contribution of capital to such firm or to purchase stock of an
  affiliated corporation of such  firm,  provided  that  such  partner  is
  actively  engaged  in  the  business  of such firm and devotes the major
  portion of his time thereto, or (b) to or for any person who is or  will
  become  a holder of stock of a corporation which is a member corporation
  of such a national securities exchange to enable such person to purchase
  stock of  such  corporation  or  to  purchase  stock  of  an  affiliated
  corporation  of  such corporation, provided that such person is actively
  engaged in the business  of  such  corporation  and  devotes  the  major
  portion of his time thereto.
    8.  (a) The banking board shall have the power, by a three-fifths vote
  of all its members, to prescribe by regulation (i)  the  maximum  charge
  which  may  be  imposed  in  this  state  by  a bank or trust company in
  connection with a  check  or  other  written  order  drawn  upon  it  on
  insufficient  funds,  irrespective  of  whether  the instrument is paid,
  accepted, or returned by the bank, and (ii) the maximum charge which may
  be imposed in this state by a bank or trust company in connection with a
  check or other written order received by it for  deposit  or  collection
  and subsequently dishonored and returned for any reason by the drawee.
    (b)  No  bank  or trust company shall, in connection with the payment,
  acceptance or return of such check  or  order,  impose  any  fee,  fine,
  commission  or  other  charge,  however  designated,  in addition to the
  maximum charge established therefore by the banking  board  pursuant  to
  paragraph  (a) of this subdivision, except that nothing herein expressed
  shall prevent a bank or trust company from taking, receiving,  reserving
  or  charging  interest,  as  authorized by law in connection with credit
  extended in connection with the payment of such check or order  or  from
  imposing  any  charge in accordance with a written agreement established
  in accordance with the provisions of subdivision five of this section. A
  bank or trust company may, as an accommodation to  its  customers,  pay,

  accept, or return a check or order without charge, or at a lesser charge
  than the maximum charge established by the banking board.
    (c)  In prescribing a maximum charge pursuant to paragraph (a) of this
  subdivision, the banking board shall consider the following factors: (i)
  the cost of processing an overdraft or returned check or order,  as  the
  case  may  be, (ii) the charge necessary to deter overdrafts or returned
  checks or orders, as the case may be, and (iii) such other  economic  or
  cost  factors that the banking board shall deem to be appropriate. Prior
  to  the  banking  board's  prescribing  any  such  maximum  charge,  the
  superintendent  shall make a written recommendation to the banking board
  as to such maximum charge, reciting the cost and other data  upon  which
  his recommendation is based.
    (d)  The  banking  board  may  promulgate such regulations as it deems
  necessary and proper to implement and  define  the  provisions  of  this
  subdivision.  The  banking board may prescribe maximum charges from time
  to time, but not more often than once in any six month period, and shall
  provide reasonable notice to the public of any change  in  such  maximum
  charges,  of  the effective date of such change, which shall not be less
  than seven days following the adoption of such  change  by  the  banking
  board,   and  of  any  rule  or  regulation  adopted  pursuant  to  this
  subdivision.
    9.  A  bank  or  trust  company  may,  in  the  case  of  business  or
  agricultural  loans  in  the  amount  of twenty-five thousand dollars or
  more, take, receive, reserve, and charge on any loan or  discount  made,
  or  upon any note, bill of exchange, or other evidence of debt, interest
  at a rate of not more than five per centum in  excess  of  the  discount
  rate  on  ninety-day  commercial  paper in effect at the Federal Reserve
  Bank of New York, and such interest may be taken in  advance,  reckoning
  the days for which the note, bill, or other evidence of debt has to run.