Home Improvement Financing Volume II

[Pages:99]A Model State Law

In three volumes

FINANCIAL PROTECTION

Home Improvement Financing

Volume II Summaries of State Laws (Alabama - Michigan)

HOME IMPROVEMENT .INANCING

Volume II

SUMMARIES O. STATE STATUTES

Alabama - Michigan

by Margot Saunders, Attorney Elizabeth Renuart, Attorney National Consumer Law Center

Sharon Hermanson, Project Officer AARP Public Policy Institute

October 2000

The Public Policy Institute, formed in 1985, is part of Public Affairs at AARP. One of the missions of the Institute is to foster research and analysis on public policy issues of importance to older Americans. This publication represents part of that effort. The views expressed therein are for information, debate, and discussion, and do not necessarily represent formal policies of AARP. ? 2000, AARP. Reprinting with permission only. Stock Number: D17165 AARP, 601 E Street, NW, Washington, DC 20049

Contents Volume II Home Improvement .inancing Summaries of State Statutes (Alabama - Michigan)

ALABAMA ............................................................................................................................................ 4 Consumer Finance (the "Mini-Code") ............................................................................................ 4 Interest Surcharge on Loans; Alternative Maximum Interest Rate ................................................. 4

ALASKA ............................................................................................................................................... 5 Retail Installment Sales Act ...........................................................................................................5 Interest-Usury ................................................................................................................................ 5 Consumer Paper ........................................................................................................................... 6 Alaska Small Loans Act ................................................................................................................. 6

ARIZONA .............................................................................................................................................8 Retail Installment Sales Transactions ...........................................................................................8 Consumer Paper ........................................................................................................................... 8 Consumer Lender Loans ..............................................................................................................8 Interest - Usury, Small Loans ........................................................................................................ 9

ARKANSAS ....................................................................................................................................... 11 Industrial Loan Institutions ........................................................................................................... 11 Consumer Loans and Credit Sales ............................................................................................. 11

CALIFORNIA ..................................................................................................................................... 13 Professions and Vocations, Contractors ..................................................................................... 13 Unruh Act (Retail Installment Sales Law) .................................................................................... 14 Finance Lenders Law .................................................................................................................. 16 Industrial Loan Companies - Loans and Purchased Obligations ................................................ 18

COLORADO ..................................................................................................................................... 20 Colorado Uniform Consumer Credit Code .................................................................................. 20

CONNECTICUT ................................................................................................................................ 26 Small Loan Lenders Act .............................................................................................................. 26 Usury ........................................................................................................................................... 26 Retail Installment Sales Act ......................................................................................................... 27

DELAWARE ...................................................................................................................................... 28 Retail Installment Sales Law ....................................................................................................... 28 Licensed Lenders ........................................................................................................................ 29 Interest-Usury .............................................................................................................................. 30

DISTRICT OF COLUMBIA ................................................................................................................ 32 Interest and Usury ....................................................................................................................... 32 Consumer Credit Protection Act ................................................................................................. 32

FLORIDA ........................................................................................................................................... 34 Home Improvement Sales and Finance Act; Home Improvement Sales and Finance ................ 34

GEORGIA .......................................................................................................................................... 37 Retail Installment and Home Solicitation Sales Act ..................................................................... 37 Industrial Loans ........................................................................................................................... 38 Interest-Usury .............................................................................................................................. 39

GUAM ................................................................................................................................................ 41 Uniform Consumer Credit Code .................................................................................................. 41

2 Volume II - Home Improvement .inancing: Summaries of State Statutes

HAWAII ............................................................................................................................................... 43 Credit Sales Act .......................................................................................................................... 43 Interest-Usury .............................................................................................................................. 45 Financial Services Loan Companies ........................................................................................... 45

IDAHO ............................................................................................................................................... 47 Idaho Credit Code ....................................................................................................................... 47

ILLINOIS ............................................................................................................................................ 50 Illinois Interest Act ........................................................................................................................ 50 Retail Installment Sales Act ......................................................................................................... 50 Consumer Installment Loan Act .................................................................................................. 52

INDIANA ............................................................................................................................................. 54 Indiana Consumer Credit Code ................................................................................................... 54

IOWA ................................................................................................................................................. 58 Iowa Consumer Credit Code ....................................................................................................... 58 Iowa Regulated Loan Act (Iowa Small Loan Law) ....................................................................... 62 Iowa Industrial Loan Law ............................................................................................................. 62 Money and Interest ...................................................................................................................... 63

KANSAS ............................................................................................................................................ 66 Kansas Uniform Consumer Credit Code .................................................................................... 66 Interest-Usury .............................................................................................................................. 70

KENTUCKY ....................................................................................................................................... 72 Installment Sales Contracts ........................................................................................................ 72 Industrial Loan Corporations........................................................................................................ 73 Interest-Usury .............................................................................................................................. 74 Consumer Credit Contracts ........................................................................................................ 74

LOUISIANA ........................................................................................................................................ 75 Interest and Usury ....................................................................................................................... 75 Louisiana Consumer Credit Law ................................................................................................. 75

MAINE ................................................................................................................................................ 77 Maine Consumer Credit Code ..................................................................................................... 77 Door to Door Home Repair Transient Sellers Act ........................................................................ 78

MARYLAND ....................................................................................................................................... 80 Home Improvement Law ............................................................................................................. 80 Retail Installment Sales ............................................................................................................... 81 Consumer Loans--Credit Provisions ......................................................................................... 83 Preservation of a Consumer's Claims and Defenses in Consumer Credit Transactions ........... 84 Secondary Mortgage Loan Law ................................................................................................... 85 Credit Grantor Closed-End Credit Provisions ............................................................................. 86

MASSACHUSETTS ........................................................................................................................... 89 Licensing of Certain Mortgage Lenders and Brokers .................................................................. 89 Retail Installment Sales and Services ......................................................................................... 89 Rates of Interest and Loans ........................................................................................................ 90

MICHIGAN ......................................................................................................................................... 92 Home Improvement Finance Act ................................................................................................. 92 Credit Reform Act ....................................................................................................................... 94 Secondary Mortgage Loan Act .................................................................................................... 96

Volume II - Home Improvement .inancing: Summaries of State Statutes 3

ALABAMA

ALABAMA

Consumer Finance (the "Mini-Code")

Citation: Ala. Code ??5-19-1 to 5-19-3

Applicability: Only the provisions of the act regulating maximum and minimum finance charges apply to transactions involving an interest in real property (?5-19-31). A creditor covered by the act is a person who regularly extends or arranges for extension of credit. Regularly is defined as more than 5 times in preceding calendar year for transactions secured by a residential structure of one to four units (?5-19-1).

Interest Rate and Fee Caps: The maximum interest rates are: 1) if the amount financed is less than $2,000, 15 percent per year on first $750; 2) 10 percent per year on amount greater than $750 and less than $2,000; and 3) no limit if the amount financed is greater than $2,000 (?5-19-3).

Loan Terms: If the amount financed is less than $2,000, debtors may pay, in advance, the unpaid balance and accrued finance charges without penalty (?5-19-3).

Prohibited Loan Terms: If the amount financed is less than $2,000, the finance charge may not be payable in advance, with exception of certain prepaid finance charges, and may not be compounded (?5-19-3).

Applicability of State UDAP: Yes, except banks. Ala. Code ?8-19-1. Private right of action with actual damages, $100 minimum damages, attorney fees available. Treble damages discretionary based on frequency, seriousness and intent of violations

Interest Surcharge on Loans; Alternative Maximum Interest Rate

Citation: Ala. Code ??8-8-12 and 8-8-14

Applicability: Legal licensed lending institutions, vendors making credit sales, any financial institution operating in Alabama or any individual (?8-8-14)

Interest Rate and Fee Caps: Covered lenders may, if provided in contract, charge a 6 percent surcharge on the portion of the amount financed that is not in excess of $2,000, in addition to the allowed finance charge. As an alternative to any other allowed interest rate, covered lenders may charge a maximum rate not exceeding 2 percent above the prime rate, which shall be the average of the prime rate offered by the 3 largest banks in New York City 3 days before the transaction (?8-8-14).

Civil Penalties/Enforcement: The penalty for charging excess interest is the forfeiture of all interest (?8-8-12).

Applicability of State UDAP: Yes, except banks. Ala. Code ?8-19-1. Private right of action with actual damages, $100 minimum damages, attorney fees available; treble damages discretionary based on frequency, seriousness, and intent of violations

4 Volume II - Home Improvement .inancing: Summaries of State Statutes

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