Section 351. Restrictions on loans subject to the provisions of this article; interest; other charges

1. Every licensee hereunder  may  loan  any  sum of money not exceeding the maximum principal amounts prescribed
  in section three hundred forty of this article, and may charge, contract
  for, and receive thereon interest at the rate or rates agreed to by  the
  licensee and the borrower. Such interest may either (a) 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 and in accordance with the  provisions  of  the
  evidence  of  the indebtedness or (b) precomputed under subdivision five
  of this section.
    2. On any loan with a variable rate of interest made pursuant to  this
  subdivision,  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 licensee, and (d) approved by
  the superintendent.
    The banking board shall adopt regulations, including but  not  limited
  to:  (i) providing for disclosure to the borrower by the licensee 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; (ii) providing for disclosure to the
  borrower  by  the licensee of a history of the fluctuations of the index
  over a reasonable period of time; and (iii) providing for notice to  the
  borrower  from  the licensee prior to any rate increase or change in the
  terms of payment.
    3. Loans may be granted under an open end or closed end loan agreement
  providing for a fixed or variable rate.
    4. Interest, consideration, or charges for the use of money shall  not
  be  deducted  or  received  in  advance  and shall be computed on unpaid
  principal balances. Such interest, consideration, or charges  shall  not
  be  compounded; provided that, if part or all of the principal amount of
  any loan contract is the unpaid principal balance of a prior  loan,  the
  unpaid  interest,  consideration or charges for the use of money on such
  prior loan which have accrued within sixty days  before  the  making  of
  such  loan contract may be incorporated as interest bearing principal in
  the principal amount of such loan contract, and for the purposes of this
  subdivision  any  such  new  loan  shall  be  deemed  a  separate   loan
  transaction.
    5.   When   a   closed-end   loan   agreement  requires  repayment  in
  substantially equal and consecutive monthly  installments  of  principal
  and  interest  combined,  the  interest may be precomputed at the agreed
  rate on scheduled unpaid principal balances according to  the  terms  of
  the  agreement  and  added  to  the  principal amount of the loan. Every
  payment  may  be  applied  to  the  combined  total  of  principal   and
  precomputed  interest  until  the  loan  agreement is fully paid and the
  acceptance or payment of interest on loans made under the provisions  of
  this subdivision shall not be deemed to constitute payment, deduction or
  receipt  thereof  in  advance  nor compounding under subdivision four of
  this  section.  Such  precomputed  interest  shall  be  subject  to  the
  following adjustments:
    (a)  If  the  loan  agreement  is prepaid in full by cash, a new loan,
  refinancing or otherwise before the final installment date, the borrower
  shall receive a refund of (i) the unearned portion of the  interest  the
  amount  of  which  portion  shall be determined according to a generally

  accepted actuarial method; provided, however,  that  if  the  amount  of
  precomputed  interest  (A)  is less than ten dollars, no refund shall be
  required; or (B) exceeds the sum of ten dollars and the earned  interest
  is  less  than  that  amount, the licensee 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 (ii)
  if a charge was made to the borrower for credit  related  insurance  for
  insuring  the borrower the excess of the charge to the borrower therefor
  over the insurance charges paid or payable  by  the  licensee,  if  such
  insurance  charges were paid or payable by the licensee periodically, or
  the refund for such insurance charges  received  or  receivable  by  the
  licensee,  if  such  premium  was  paid  or payable in a lump sum by the
  licensee, 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  credit  related
  insurance  policy  for  which  a charge was made to the borrower for the
  premium thereon, the borrower or legal representative, as the  case  may
  be,  shall  be  entitled  to  the  same refund of interest and insurance
  charges as if the  loan  had  been  prepaid  in  full  on  the  date  of
  acceleration or repayment.
    (b)  (i)  In the event of default of more than ten days in the payment
  of any scheduled installment, the licensee  may  charge  and  collect  a
  default charge not exceeding five percent of the installment in default.
  This charge may not be collected more than once for the same default and
  may be collected at the time of such default or at any time thereafter.
    (ii)  After  the  final  due date or upon acceleration of maturity for
  default, the licensee may charge interest at the original agreed rate on
  actual unpaid balances if the loan agreement so provides.
    (c) If payment of all unpaid installments on which no  default  charge
  has  been charged and collected is deferred one or more full months, and
  if the loan agreement so provides, the licensee may charge  and  collect
  an amount which shall be equal to the difference between the refund that
  would be required for prepayment in full as of the scheduled due date of
  the  first  deferred  installment and the amount which would be required
  for prepayment in full as of one month prior to said date, multiplied by
  the number of months in the deferment period. The  deferment  period  is
  that  period in which no scheduled payment has been made and in which no
  payment is required by reason of  the  deferment.  Such  charge  may  be
  collected  at  the  time  of  deferment  or may be collected at any time
  thereafter. If a refund of precomputed interest  is  required  during  a
  deferment  period  the  borrower  shall  also  receive  a  refund of the
  deferment charge for the number of months remaining in said period,  for
  which  purpose  a  portion  of  a  month exceeding fifteen days shall be
  deemed a month.
    (d) If two or more installments or parts thereof are  in  default  for
  five  days or more, the licensee may, if the loan agreement so provides,
  elect to convert the loan  from  a  precomputed  one  to  one  in  which
  interest  is paid on actual unpaid balances. In this event, the licensee
  shall make the same refund of interest as if the loan  were  prepaid  in
  full  on the scheduled payment due date preceding the date of conversion
  and thereafter may charge interest at the agreed rate, by the  actuarial
  method, on actual unpaid balances for the time actually outstanding.
    6.  * (a) In addition to the interest, consideration, or charges above
  specified, no further or other  charge  or  amount  whatsoever  for  any
  examination,  service,  brokerage, commission, expense, fee, or bonus or
  other thing or  otherwise  shall  be  directly  or  indirectly  charged,

  contracted  for,  or received, except the premium or identifiable charge
  for insurance authorized by section three hundred  fifty-seven  of  this
  article;  the  lawful fees, if any, actually and necessarily paid out by
  the  licensee  to any public officer for filing, recording, or releasing
  in any public office any instrument securing the loan, which fees may be
  collected when the loan is made or at any time thereafter or  non-filing
  insurance  premiums  not  in  excess of seven dollars in lieu of filing,
  recording or releasing any such instrument; an annual fee  on  open  end
  loans  authorized by the superintendent and made pursuant to subdivision
  three of this section, provided, however, that no such fee shall  exceed
  an  amount  equal  to  one  percent  of  the amount of the loan or fifty
  dollars, whichever is less; and a fee, not  to  exceed  the  amount  set
  forth  in  section 5-328 of the general obligations law, for return by a
  depository institution  of  a  dishonored  check,  negotiable  order  of
  withdrawal, or share draft.
    * NB Effective until June 30, 2011
    * (a)  In  addition  to  the interest, consideration, or charges above
  specified, no further or other  charge  or  amount  whatsoever  for  any
  examination,  service,  brokerage, commission, expense, fee, or bonus or
  other thing or  otherwise  shall  be  directly  or  indirectly  charged,
  contracted  for,  or received, except the premium or identifiable charge
  for insurance authorized by section three hundred  fifty-seven  of  this
  article;  the  lawful fees, if any, actually and necessarily paid out by
  the licensee to any public officer for filing, recording,  or  releasing
  in any public office any instrument securing the loan, which fees may be
  collected  when the loan is made or at any time thereafter or non-filing
  insurance premiums not in excess of seven dollars  in  lieu  of  filing,
  recording or releasing any such instrument; and a fee, not to exceed the
  amount  set  forth  in section 5-328 of the general obligations law, for
  return by a depository institution of  a  dishonored  check,  negotiable
  order of withdrawal, or share draft.
    * NB Effective June 30, 2011
    (b)  Any  licensee  which  knowingly  receives,  reserves or charges a
  greater rate of interest than that  authorized  by  this  section  shall
  forfeit  the  entire  interest which the note, 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 licensee twice the  entire
  amount of interest thus paid.
    * (c)  In addition to other such information as the superintendent may
  require, any licensee which charges an  annual  fee  on  open  end  loan
  accounts  shall  annually report, in a manner and form prescribed by the
  superintendent,  information  to  the  department  on  open   end   loan
  borrowers,  which  shall  include: average annual income of borrowers at
  the time of the loan, average amount of loans outstanding at the end  of
  each  calendar  year, average interest charged, average amount of annual
  fees, and geographic distribution of loans made by the licensee.
    * NB Repealed June 30, 2011