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LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 510
Introduced by Lindstrom, 18.
Read first time January 19, 2021
Committee: Banking, Commerce and Insurance
1 A BILL FOR AN ACT relating to the Nebraska Installment Loan Act; to amend
2 section 45-1014, Reissue Revised Statutes of Nebraska, and sections
3 45-1013 and 45-1024, Revised Statutes Cumulative Supplement, 2020;
4 to change installment loan license renewal fees and provide for
5 distribution; to change the rate of interest charged on installment
6 loans; to harmonize provisions; and to repeal the original sections.
7 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 45-1013, Revised Statutes Cumulative Supplement,
2 2020, is amended to read:
3 45-1013 (1) For the annual renewal of an original license under the
4 Nebraska Installment Loan Act, the licensee shall file with the
5 department a fee of five two hundred fifty dollars and a renewal
6 application containing such information as the director may require to
7 indicate any material change in the information contained in the original
8 application or succeeding renewal applications.
9 (2) For the relocation of its place of business, a licensee shall
10 file with the department a fee of one hundred fifty dollars and an
11 application containing such information as the director may require to
12 determine whether the relocation should be approved. Upon receipt of the
13 fee and application, the director shall publish a notice of the filing of
14 the application in a newspaper of general circulation in the county where
15 the licensee proposes to relocate. If the director receives any
16 substantive objection to the proposed relocation within fifteen days
17 after publication of such notice, he or she shall hold a hearing on the
18 application in accordance with the Administrative Procedure Act and the
19 rules and regulations adopted and promulgated under the act. The expense
20 of any publication required by this section shall be paid by the
21 applicant licensee.
22 Sec. 2. Section 45-1014, Reissue Revised Statutes of Nebraska, is
23 amended to read:
24 45-1014 (1) All original license fees and annual renewal fees shall
25 be collected by the department and remitted to the State Treasurer.
26 Except as provided in subsection (2) of this section, the State Treasurer
27 shall credit the fees, charges, and costs for credit to the Financial
28 Institution Assessment Cash Fund. All investigation and examination fees,
29 charges, and costs collected by or paid to the department shall likewise
30 be remitted to the State Treasurer for credit to the Financial
31 Institution Assessment Cash Fund and shall be available for the uses and
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1 purposes of the fund.
2 (2) For fees collected pursuant to section 45-1013, the State
3 Treasurer shall credit (a) one hundred fifty dollars of each annual
4 renewal fee to the Financial Institution Assessment Cash Fund and (b)
5 three hundred fifty dollars of each annual renewal fee to the Financial
6 Literacy Cash Fund.
7 Sec. 3. Section 45-1024, Revised Statutes Cumulative Supplement,
8 2020, is amended to read:
9 45-1024 (1) Except as provided in section 45-1025 and subsection (6)
10 of this section, every licensee may make loans and may contract for and
11 receive on such loans charges at a rate not exceeding twenty-nine twenty-
12 four percent per annum on that part of the unpaid principal balance on
13 any loan not in excess of one thousand dollars, and twenty-one percent
14 per annum on any remainder of such unpaid principal balance. Except for
15 loans secured by mobile homes, a licensee may not make loans for a period
16 in excess of one hundred forty-five months if the amount of the loan is
17 greater than three thousand dollars but less than twenty-five thousand
18 dollars. Charges on loans made under the Nebraska Installment Loan Act
19 shall not be paid, deducted, or received in advance. The contracting for,
20 charging of, or receiving of charges as provided for in subsection (2) of
21 this section shall not be deemed to be the payment, deduction, or receipt
22 of such charges in advance.
23 (2) When the loan contract requires repayment in substantially equal
24 and consecutive monthly installments of principal and charges combined,
25 the licensee may, at the time the loan is made, precompute the charges at
26 the agreed rate on scheduled unpaid principal balances according to the
27 terms of the contract and add such charges to the principal of the loan.
28 Every payment may be applied to the combined total of principal and
29 precomputed charges until the contract is fully paid. All payments made
30 on account of any loan except for default and deferment charges shall be
31 deemed to be applied to the unpaid installments in the order in which
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1 they are due. The portion of the precomputed charges applicable to any
2 particular month of the contract, as originally scheduled or following a
3 deferment, shall be that proportion of such precomputed charges,
4 excluding any adjustment made for a first installment period of more than
5 one month and any adjustment made for deferment, which the balance of the
6 contract scheduled to be outstanding during such month bears to the sum
7 of all monthly balances originally scheduled to be outstanding by the
8 contract. This section shall not limit or restrict the manner of
9 calculating charges, whether by way of add-on, single annual rate, or
10 otherwise, if the rate of charges does not exceed that permitted by this
11 section. Charges may be contracted for and earned at a single annual
12 rate, except that the total charges from such rate shall not be greater
13 than the total charges from the rate provided for in several rates
14 otherwise applicable to the different portions of the unpaid balance
15 according to subsection (1) of this section. All loan contracts made
16 pursuant to this subsection are subject to the following adjustments:
17 (a) Notwithstanding the requirement for substantially equal and
18 consecutive monthly installments, the first installment period may not
19 exceed one month by more than twenty-one days and may not fall short of
20 one month by more than eleven days. The charges for each day exceeding
21 one month shall be one-thirtieth of the charges which would be applicable
22 to a first installment period of one month. The charge for extra days in
23 the first installment period may be added to the first installment and
24 such charges for such extra days shall be excluded in computing any
25 rebate;
26 (b) If prepayment in full by cash, a new loan, or otherwise occurs
27 before the first installment due date, the charges shall be recomputed at
28 the rate of charges contracted for in accordance with subsection (1) or
29 (2) of this section upon the actual unpaid principal balances of the loan
30 for the actual time outstanding by applying the payment, or payments,
31 first to charges at the agreed rate and the remainder to the principal.
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1 The amount of charges so computed shall be retained in lieu of all
2 precomputed charges;
3 (c) If a contract is prepaid in full by cash, a new loan, or
4 otherwise after the first installment due date, the borrower shall
5 receive a rebate of an amount which is not less than the amount obtained
6 by applying to the unpaid principal balances as originally scheduled or,
7 if deferred, as deferred, for the period following prepayment, according
8 to the actuarial method, the rate of charge contracted for in accordance
9 with subsection (1) or (2) of this section. The licensee may round the
10 rate of charge to the nearest one-half of one percent if such procedure
11 is not consistently used to obtain a greater yield than would otherwise
12 be permitted. Any default and deferment charges which are due and unpaid
13 may be deducted from any rebate. No rebate shall be required for any
14 partial prepayment. No rebate of less than one dollar need be made.
15 Acceleration of the maturity of the contract shall not in itself require
16 a rebate. If judgment is obtained before the final installment date, the
17 contract balance shall be reduced by the rebate which would be required
18 for prepayment in full as of the date judgment is obtained;
19 (d) If any installment on a precomputed or interest bearing loan is
20 unpaid in full for ten or more consecutive days, Sundays and holidays
21 included, after it is due, the licensee may charge and collect a default
22 charge not exceeding an amount equal to five percent of such installment.
23 If any installment payment is made by a check, draft, or similar signed
24 order which is not honored because of insufficient funds, no account, or
25 any other reason except an error of a third party to the loan contract,
26 the licensee may charge and collect a fifteen-dollar bad check charge.
27 Such default or bad check charges may be collected when due or at any
28 time thereafter;
29 (e) If, as of an installment due date, the payment date of all
30 wholly unpaid installments is deferred one or more full months and the
31 maturity of the contract is extended for a corresponding period, the
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1 licensee may charge and collect a deferment charge not exceeding the
2 charge applicable to the first of the installments deferred, multiplied
3 by the number of months in the deferment period. The deferment period is
4 that period during which no payment is made or required by reason of such
5 deferment. The deferment charge may be collected at the time of deferment
6 or at any time thereafter. The portion of the precomputed charges
7 applicable to each deferred balance and installment period following the
8 deferment period shall remain the same as that applicable to such balance
9 and periods under the original loan contract. No installment on which a
10 default charge has been collected, or on account of which any partial
11 payment has been made, shall be deferred or included in the computation
12 of the deferment charge unless such default charge or partial payment is
13 refunded to the borrower or credited to the deferment charge. Any payment
14 received at the time of deferment may be applied first to the deferment
15 charge and the remainder, if any, applied to the unpaid balance of the
16 contract, except that if such payment is sufficient to pay, in addition
17 to the appropriate deferment charge, any installment which is in default
18 and the applicable default charge, it shall be first so applied and any
19 such installment shall not be deferred or subject to the deferment
20 charge. If a loan is prepaid in full during the deferment period, the
21 borrower shall receive, in addition to the required rebate, a rebate of
22 that portion of the deferment charge applicable to any unexpired full
23 month or months of such deferment period; and
24 (f) If two or more full installments are in default for one full
25 month or more at any installment date and if the contract so provides,
26 the licensee may reduce the contract balance by the rebate which would be
27 required for prepayment in full as of such installment date and the
28 amount remaining unpaid shall be deemed to be the unpaid principal
29 balance and thereafter in lieu of charging, collecting, receiving, and
30 applying charges as provided in this subsection, charges may be charged,
31 collected, received, and applied at the agreed rate as otherwise provided
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1 by this section until the loan is fully paid.
2 (3) The charges, as referred to in subsection (1) of this section,
3 shall not be compounded. The charging, collecting, and receiving of
4 charges as provided in subsection (2) of this section shall not be deemed
5 compounding. If part or all of the consideration for a loan contract is
6 the unpaid principal balance of a prior loan, then the principal amount
7 payable under such loan contract may include any unpaid charges on the
8 prior loan which have accrued within sixty days before the making of such
9 loan contract and may include the balance remaining after giving the
10 rebate required by subsection (2) of this section. Except as provided in
11 subsection (2) of this section, charges shall (a) be computed and paid
12 only as a percentage per month of the unpaid principal balance or
13 portions thereof and (b) be computed on the basis of the number of days
14 actually elapsed. For purposes of computing charges, whether at the
15 maximum rate or less, a month shall be that period of time from any date
16 in a month to the corresponding date in the next month but if there is no
17 such corresponding date then to the last day of the next month, and a day
18 shall be considered one-thirtieth of a month when computation is made for
19 a fraction of a month.
20 (4) Except as provided in subsections (5) and (6) of this section,
21 in addition to that provided for under the Nebraska Installment Loan Act,
22 no further or other amount whatsoever shall be directly or indirectly
23 charged, contracted for, or received. If any amount, in excess of the
24 charges permitted, is charged, contracted for, or received, the loan
25 contract shall not on that account be void, but the licensee shall have
26 no right to collect or receive any interest or other charges whatsoever.
27 If such interest or other charges have been collected or contracted for,
28 the licensee shall refund to the borrower all interest and other charges
29 collected and shall not collect any interest or other charges contracted
30 for and thereafter due on the loan involved, as liquidated damages, and
31 the licensee or its assignee, if found liable, shall pay the costs of any
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1 action relating thereto, including reasonable attorney's fees. No
2 licensee shall be found liable under this subsection if the licensee
3 shows by a preponderance of the evidence that the violation was not
4 intentional and resulted from a bona fide error notwithstanding the
5 maintenance of procedures reasonably adopted to avoid any such error.
6 (5) A borrower may be required to pay all reasonable expenses
7 incurred in connection with the making, closing, disbursing, extending,
8 readjusting, or renewing of loans. Such expenses may include abstracting,
9 recording, releasing, and registration fees; premiums paid for nonfiling
10 insurance; premiums paid on insurance policies covering tangible personal
11 property securing the loan; amounts charged for a debt cancellation
12 contract or a debt suspension contract, as agreed upon by the parties, if
13 the debt cancellation contract or debt suspension contract is a contract
14 of a financial institution or licensee and such contract is sold directly
15 by such financial institution or licensee or by an unaffiliated,
16 nonexclusive agent of such financial institution or licensee in
17 accordance with 12 C.F.R. part 37, as such part existed on January 1,
18 2011, and the financial institution or licensee is responsible for the
19 unaffiliated, nonexclusive agent's complian