New York

CHAPTER 2. BANKING

ARTICLE 9. LICENSED LENDERS

SECTION 340. Doing business without license prohibited

• 340. Doing business without license prohibited.

No person or other entity shall engage in the business of making loans in the principal

amount of twenty-five thousand dollars or less for any loan to an

individual for personal, family, household, or investment purposes and

in a principal amount of fifty thousand dollars or less for business and

commercial loans, and charge, contract for, or receive a greater rate of

interest than the lender would be permitted by law to charge if he were

not a licensee hereunder except as authorized by this article and

without first obtaining a license from the superintendent.

For the purposes of this section, a person or entity shall be

considered as engaging in the business of making loans in New York, and

subject to the licensing and other requirements of this article, if it

solicits loans in the amounts prescribed by this section within this

state and, in connection with such solicitation, makes loans to

individuals then resident in this state, except that no person or entity

shall be considered as engaging in the business of making loans in this

state on the basis of isolated, incidental or occasional transactions

which otherwise meet the requirements of this section.

Nothing in this article shall apply to licensed collateral loan

brokers.

SECTION 341. Application for license; fees; capital requirements

• 341. Application for license; fees; capital requirements.

1. (a) As used in this article, the term master license shall mean an original

license granted to a person or entity.

(b) As used in this article, the term supplemental license shall mean

the license granted to a person or entity having a master license for

additional licensed locations.

2. An application for a master license shall be in writing, under

oath, and in the form prescribed by the superintendent and shall contain

such information as the superintendent may require by regulations. The

application shall set forth all of the locations at which the applicant

seeks to conduct business hereunder. At the time of making the

application for a master license, the applicant shall pay to the

superintendent a fee as prescribed pursuant to section eighteen-a of

this chapter for each proposed location for investigating the

application.

3. In addition to the investigation fee and annual license fee every

licensee hereunder shall pay to the superintendent the sums provided to

be paid under the provisions of section seventeen of the banking law.

4. In connection with an application for a master license, the

applicant shall submit an affidavit of financial solvency noting such

capitalization requirements and access to such credit as may be

prescribed by the regulations of the superintendent.

5. The applicant shall also prove, in form satisfactory to the

superintendent, that the applicant has available for the operation of

such business at the location or locations specified in the application

liquid assets of at least fifty thousand dollars. This amount shall be

maintained for the period within which the licensee makes loans in the

amounts prescribed in section three hundred forty of this article at

such location.

6. If a person or entity holding a master license seeks to open

another location for the conduct of activities licensable under this

article, the licensee shall first submit written notification of this

fact to the superintendent. The notification shall contain the address

of the new location and the master license number. An investigation fee

as prescribed pursuant to section eighteen-a of this chapter shall be

paid for each additional location. Upon receipt of the notification and

fees, the superintendent shall issue a temporary supplemental license,

valid for a period not exceeding thirty days, pending the final approval

of the new location. The superintendent, in his or her sole discretion,

may extend the validity of the temporary supplemental license for

additional thirty day periods pending investigation, but such extension

shall not exceed a total of sixty days. The temporary supplemental

license shall, upon written approval by the superintendent, become

permanent after thirty days of issuance, or after the expiration of any

extension granted by the superintendent, unless the superintendent finds

that the opening of the new location by the licensee is not in the

public interest, in which case, the superintendent shall send a written

denial to the licensee. Upon receipt of such written denial, the

temporary supplemental license issued to the licensee shall become void

and the licensee shall immediately cease all activity licensable under

this article at the location set forth on such license. The failure of

the superintendent to give written approval or denial of the permanence

of the temporary supplemental license prior to expiration of the initial

thirty day period or any extension thereof shall not be deemed to

constitute the approval of a permanent supplemental license.

SECTION 342. Conditions precedent to issuing license; procedure where application denied

• 342. Conditions precedent to issuing license; procedure where application denied.

Upon the filing of such application and the payment

of such fees, if the superintendent shall find that the financial

responsibility, experience, character, and general fitness of the

applicant, and of the members thereof if the applicant be a partnership

or association, and of the officers and directors thereof if the

applicant be a corporation, are such as to command the confidence of the

community and to warrant belief that the business will be operated

honestly, fairly, and efficiently within the purposes of this article,

and if the superintendent shall find that the applicant has available

for the operation of such business at each specified location liquid

assets of at least fifty thousand dollars, the superintendent shall

thereupon execute a master license, and if applicable one or more

supplemental licenses, to make loans in accordance with the provisions

of this article at the location or locations specified in the said

application. The superintendent shall transmit one copy of such license

or licenses to the applicant and file the same in the office of the

department. Each such license shall remain in full force and effect

until it is surrendered by the licensee or revoked or suspended as

hereinafter provided; if the superintendent shall not so find, a master

license shall not be issued and the superintendent shall notify the

applicant of the denial. If an application is denied or withdrawn the

superintendent shall return to the applicant the sum paid by the

applicant as a license fee, retaining the investigation fee to cover the

costs of investigating the application. The superintendent shall approve

or deny every application for a master license hereunder within ninety

days from the filing thereof with the said fees.

SECTION 343. License provisions; separate license for each place of business; change of location

• 343. License provisions; separate license for each place of business; change of location.

1. A license shall state the address at

which the business is to be conducted and shall state fully the name of

the licensee, and if the licensee is a partnership or association, the

names of the members thereof, and if a corporation, the date and place

of its incorporation. A master license shall be kept conspicuously

posted in the principal place of business of the licensee and a

supplemental license shall be conspicuously posted at the location

identified in the license. No master or supplemental license shall be

transferable or assignable.

2. A separate license shall be required for each location at which a

licensee makes loans under the provisions of this article. The

superintendent may issue more than one license to the same licensee. For

each new license, the licensee shall comply with all the requirements

for obtaining a license as stated in this article.

3. (a) A licensee may change the location of a licensed lender

business by giving written notice to the superintendent at least thirty

days prior to such change. The licensee shall pay to the superintendent

a fee as prescribed pursuant to section eighteen-a of this chapter for

each change of location and shall provide any information which may be

required regarding the change of location.

(b) The superintendent shall, if satisfied that there is no reasonable

objection to such change of location and upon the surrender of the

license for the location which is being changed, issue a license

containing the information required by subdivision one of this section.

If the superintendent shall not be satisfied that such change is in

accordance with the purposes of this article, the superintendent shall

refuse such change of location and notify the licensee of the

determination.

SECTION 344. Issuance of license upon acquisition of business of licensed lender

• 344. Issuance of license upon acquisition of business of licensed

lender.

1. Prior to any acquisition, by merger, consolidation, purchase

of assets or otherwise, except by purchase of stock, of the assets or

business, or a substantial part thereof, of a licensee under this

article, the person desirous of continuing to maintain and operate any

place of business theretofore maintained and operated by such licensee

and each person who controls such person shall file with the

superintendent, for all such places of business, one application, in

such form and containing such information, including the information

required under section three hundred forty-one of this article, as the

superintendent may require. At the time of making such application, the

applicants shall pay to the superintendent an investigation fee, as

prescribed pursuant to section eighteen-a of this chapter if the person

desirous of continuing to maintain and operate such places of business

is already licensed under this article, or, if such person is not so

licensed, an investigation fee as prescribed pursuant to section

eighteen-a of this chapter. If such person is licensed, the

superintendent shall amend the license accordingly within thirty days if

it is found that the acquisition is in accordance with the purposes of

this article. If such person is not licensed, the superintendent shall

determine whether the financial responsibility, experience, character,

and general fitness of the applicants, and of the members thereof if any

applicant be a partnership or association, and of the officers,

directors and controlling stockholders thereof if any applicant be a

corporation, are such as to command the confidence of the community and

to warrant belief that the business will be operated honestly, fairly,

and efficiently within the purpose of this article and the

superintendent shall approve or deny such application within ninety days

of the filing thereof. If the superintendent disapproves such

application, or, if no such application has been made, the license for

each such place of business shall become null and void and the

applicants or licensee, whoever has possession of each such license,

shall forthwith surrender the license theretofore in effect to the

superintendent. If the superintendent approves such application, the

person being acquired shall surrender to the superintendent the license

theretofore in effect for each such place of business and the

superintendent shall issue and transmit one copy of a new license to

maintain and operate each such place of business to the person desirous

of continuing to maintain and operate such place of business and file

another copy in the department.

As used in this subdivision one, (a) the term “person” includes an

individual, partnership, corporation, association or any other

organization and (b) the term “control” means the possession, directly

or indirectly, of the power to direct or cause the direction of the

management and policies of a person, whether by means of the ownership

of the voting stock or equity interests of such person or of one or more

persons controlling such persons, by means of a contractual arrangement,

or otherwise. Control shall be presumed to exist if any person directly

or indirectly owns, controls or holds with the power to vote ten per

centum or more of the voting stock or equity interests of the person

desirous of continuing to maintain and operate a licensee’s place of

business or of any entity which directly or indirectly controls such

person. The superintendent may, upon the application of a licensee or

any such person or entity, determine whether or not the ownership,

control or holding of such voting stock or equity interests constitutes

or would constitute control for purposes of this subdivision.

2. The transfer by operation of law to a legal representative, as

hereinafter defined, of the assets or business of a licensee under this

article, or a substantial part thereof, shall not, to the extent

hereinafter provided, be deemed an acquisition within the meaning of

this section. Such legal representative, if duly qualified to act in

this state, may continue to maintain and operate any place of business

theretofore maintained and operated by such licensee, subject to all the

provisions of this chapter including the payment of license fees, for a

period of not more than six months from the date of his qualification as

legal representative and for such additional period of time as the

superintendent may prescribe in writing. During such period, the legal

representative shall be deemed a licensee under this article. The

appointment and qualification of a successor to the legal representative

shall not, without the approval of the superintendent, operate to extend

such period.

Each such legal representative shall promptly following his or her

appointment file with the superintendent a certificate or duly certified

copy of an order of the court to evidence his authority to acquire the

assets of the licensee and to maintain and operate the business thereof.

If a legal representative desires to continue to maintain and operate

any place of business theretofore maintained and operated by the

licensee he or she shall, prior to the expiration of such six month

period or any extension thereof prescribed by the superintendent, file

an application pursuant to this section and comply with all of the

provisions of this chapter. The investigation fee payable upon filing

such application shall be as prescribed pursuant to section eighteen-a

of this chapter.

The term “legal representative,” for the purposes of this section,

shall mean one duly appointed by a court of competent jurisdiction as an

executor, administrator, trustee, committee, conservator or receiver,

including one who succeeds a legal representative and one acting in an

ancillary capacity thereto in accordance with the provisions of such

court appointment.

If any provision of this section, or the application of such provision

to any individual, company, corporation or circumstance, shall be held

invalid, the remainder of this section, and the application thereof to

anyone other than the one to which it is held invalid, shall not be

affected thereby.

SECTION 345. Application for acquisition of control of licensed lender by purchase of stock

• 345. Application for acquisition of control of licensed lender by

purchase of stock.

1. Prior to the acquisition of control of a licensee

under this article by means of the acquisition of the capital stock or

equity interests in such licensee or in any person who directly or

indirectly controls such licensee, the person desirous of acquiring such

capital stock or other equity interests shall make written application

to the superintendent. Such application shall be in such form and shall

contain such information, including the information required under

section three hundred forty-one of this article, as the superintendent

may require and such applicant, at the time of making such application

if not licensed, shall pay to the superintendent an investigation fee as

prescribed pursuant to section eighteen-a of this chapter. If such

licensee is licensed, upon payment of an investigation fee as prescribed

pursuant to section eighteen-a of this chapter, the superintendent shall

approve the acquisition if it is found that such acquisition is in

accordance with the purposes of this article. If such person is not

licensed, the superintendent shall determine whether the financial

responsibility, experience, character, and general fitness of the

applicant, and of the members thereof if the applicant be a partnership

or association, and of the officers, directors and controlling

stockholders thereof if the applicant be a corporation, are such as to

command the confidence of the community and to warrant belief that the

business will be operated honestly, fairly, and efficiently within the

purpose of this article. Unless the superintendent shall have denied

such application in writing within ninety days of the filing thereof,

such application shall be deemed approved. If no such application has

been made, the license for each place of business maintained and

operated by the licensee shall, at the discretion of the superintendent,

become null and void and each such license shall be surrendered to the

superintendent. In addition, the superintendent may, in a proceeding

after notice and a hearing, require any person who has failed to make

application pursuant to this subdivision to pay the people of this state

a penalty in an amount as determined pursuant to section forty-four of

this chapter for each day of said violation.

As used in this subdivision, (a) the term “person” includes an

individual, partnership, corporation, association or any other

organization and (b) the term “control” means the possession, directly

or indirectly, of the power to direct or cause the direction of the

management and policies of a person, whether by means of the ownership

of the voting stock or equity interests of such person or of one or more

persons controlling such person, by means of a contractual arrangement,

or otherwise. Control shall be presumed to exist if any person directly

or indirectly owns, controls or holds with the power to vote ten per

centum or more of the voting stock or equity interests of the person

desirous of continuing to maintain and operate a licensee’s place of

business or of any entity which directly or indirectly controls such

person. The superintendent may, upon the application of a licensee or

any such person or entity, determine whether or not the ownership,

control or holding of such voting stock or equity interests constitutes

or would constitute control for purposes of this subdivision.

2. For a period of six months from the date of qualification thereof

and for such additional period of time as the superintendent may

prescribe in writing, the provisions of subdivision one of this section

shall not apply to a transfer of control by operation of law to the

legal representative, as hereinafter defined, of one who has control of

a licensee. Thereafter, such legal representative shall comply with the

provisions of subdivision one of this section. The provisions of

subdivision one of this section shall be applicable to an application

made under such section by a legal representative.

The term “legal representative,” for the purposes of this section,

shall mean one duly appointed by a court of competent jurisdiction to

act as executor, administrator, trustee, committee, conservator or

receiver, including one who succeeds a legal representative and one

acting in an ancillary capacity thereto in accordance with the

provisions of such court appointment.

If any provision of this section, or the application of such provision

to any individual, company, corporation or circumstance, shall be held

invalid, the remainder of this section, and the application thereof to

anyone other than one to which it is held invalid, shall not be affected

thereby.

SECTION 347. Grounds for revocation or suspension of license; procedure

• 347. Grounds for revocation or suspension of license; procedure.

The superintendent may suspend or revoke any license issued hereunder if the

superintendent shall find that:

(a) The licensee has failed to pay any sum of money lawfully demanded

by the superintendent or to comply with any demand, ruling, or

requirement of the superintendent;

(b) The licensee has violated any provisions of this article, 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, or of any rule or regulation lawfully made by the

superintendent;

(c) Any fact or condition exists which, if it had existed at the time

of the original application for such license, clearly would have

warranted the superintendent in refusing originally to issue such

license;

(d) The licensee has engaged in the business of a sales finance

company and has done or failed to do any act, except the failure to pay

the fees required, which would be grounds for the suspension or

revocation of its license pursuant to section four hundred ninety-five

of this chapter were it required to obtain such a license.

The superintendent may on good cause shown, without notice or hearing,

suspend any license for a period not exceeding thirty days, pending

investigation.

The superintendent may revoke or suspend only the particular license

with respect to which grounds for revocation or suspension may occur or

exist, or, if the superintendent shall find that such grounds for

revocation or suspension are of general application to all offices, or

to more than one office, operated by such licensee, the superintendent

shall revoke or suspend all of the licenses issued to such licensee or

such number of licenses as such grounds apply to, as the case may be.

Any licensee may surrender any license by delivering to the

superintendent written notice that the licensee thereby surrenders such

license, but such surrender shall not affect such licensee’s civil or

criminal liability for acts committed prior to such surrender.

No revocation or suspension or surrender of any license shall impair

or affect the obligation of any pre-existing lawful contract between the

licensee and any borrower.

Every license issued hereunder shall remain in force and effect until

it shall have been surrendered, revoked, or suspended in accordance with

the provisions of this article, but the superintendent shall have

authority to reinstate suspended licenses or to issue new licenses to a

licensee whose license or licenses shall have been revoked if no fact or

condition then exists which clearly would have warranted the

superintendent in refusing originally to issue such license under this

article.

Whenever the superintendent shall revoke or suspend a license issued

pursuant to this article, the superintendent shall execute a written

order to that effect. The superintendent shall file one copy of such

order in the office of the department and serve a copy upon the

licensee, which order may be reviewed in the manner provided by article

seventy-eight of the civil practice law and rules. Such special

proceeding for review as authorized by this section must be commenced

within thirty days from the date of such order of suspension or

revocation.

SECTION 348. Superintendent authorized to examine

• 348. Superintendent authorized to examine.

For the purpose of discovering violations of this article or securing information lawfully

required hereunder, the superintendent may at any time, and as often as

may be determined, either personally or by a person duly designated by

the superintendent, investigate the loans and business and examine the

books, accounts, records, and files used therein of every licensee. For

that purpose the superintendent and duly designated representatives

shall have free access to the offices and place of business, books,

accounts, papers, records, files, safes and vaults of all such

licensees. The superintendent shall have authority to require the

attendance of and to examine under oath all persons whomsoever whose

testimony may be required relative to such loans or such business.

SECTION 349. Licensee’s books and records; reports

• 349. Licensee’s books and records; reports.

The licensee shall keep and use in its business such books, accounts, and records as will enable

the superintendent to determine whether such licensee is complying with

the provisions of this article and with the rules and regulations

lawfully made by the superintendent hereunder. Every licensee shall

preserve such books, accounts, and records, including cards used in the

card system, if any, for at least two years after making the final entry

on any loan recorded therein. Preservation of photographic reproduction

thereof or records in photographic form, including an optical disk

storage system and the use of electronic data processing equipment that

provides comparable records to those otherwise required and which are

available for examination upon request shall constitute compliance with

the requirements of this section.

Each licensee shall annually on or before the first day of April file

a report with the superintendent giving such information as the

superintendent may require concerning the business and operations during

the preceding calendar year of each licensed place of business conducted

by such licensee within the state under authority of this article. Such

report shall be subscribed and affirmed as true by the licensee under

the penalties of perjury and shall be in the form prescribed by the

superintendent who shall make and publish annually a consolidated

statement of condition showing the combined assets and liabilities of

all licensed lenders. Such consolidated statement of condition shall be

based upon the information contained in such reports. In addition to

annual reports, the superintendent may require such additional regular

or special reports as may be deemed necessary to the proper supervision

of licensees under this article. Such additional reports shall be in the

form prescribed by the superintendent and shall be subscribed and

affirmed as true under the penalties of perjury.

SECTION 350. Restrictions concerning advertising, liens on real estate, and places where loans made

• 350. Restrictions concerning advertising, liens on real estate, and

places where loans made.

1. (a) No licensee or other entity shall advertise, print, display, publish, distribute, or broadcast or cause or permit to be advertised, printed, displayed, published, distributed, or

broadcasted, in any manner whatsoever any statement or representation

with regard to the rates, terms, or conditions for the loaning of money,

credit, goods, or things in action which is false, misleading or

deceptive, or in violation of chapter three 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.

(b) No licensee shall make, directly or indirectly, orally or in

writing, by any method, practice or device, any representation that it

is licensed under this chapter, except a representation that such

licensee is licensed as a licensed lender by the New York state

department of financial services.

2. No licensee shall take a lien upon real estate as security for any

loan under the provisions of this article, except such lien as is

created by law upon the recording of a judgment.

3. No licensee shall conduct the business of making loans under the

provisions of this article within any office, room, or place of business

in which any other business is solicited or engaged in, or in

association or conjunction therewith, except (a) a licensee may, after

obtaining any required license, conduct on its premises businesses

authorized under articles eleven-B, twelve-B, twelve-D and thirteen-B of

this chapter, or (b) as may be authorized in writing by the

superintendent upon a finding that such other business would not result

in evasions of this article or of the rules and regulations lawfully

made hereunder.

4. No licensee shall transact such business or make any loan provided

for by this article under any other name or at any other place of

business than that named in the license, except as may be authorized by

the superintendent.

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

• 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 superintendent of financial services 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 superintendent of financial services 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, 2023

* (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, 2023

(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, 2023

SECTION 352. Acts required of licensees; acts prohibited

• 352. Acts required of licensees; acts prohibited.

Every licensee shall:

Deliver to the borrower at the time any loan is made or prior to the

first advance under an open-end loan agreement a statement, in the

English language showing in clear and distinct terms the name and

address of the borrower and of the licensee and all items required to be

disclosed by 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.

For each cash payment made on account of any closed-end loan, give to

the person making it at the time the payment is made, a plain and

complete receipt containing the information required by regulations of

the superintendent.

Permit payment to be made in advance in any amount on any loan

agreement at any time, but the licensee may initially apply such payment

to all interest and other charges due to the date of such payment.

Upon repayment of the loan in full, mark indelibly every obligation

signed by the borrower or a copy thereof with the word “paid” or

“cancelled”, and release any mortgage or security agreement no longer

securing an obligation of the borrower, restore any pledge, cancel and

return any note or a copy thereof, and cancel and return any assignment

or a copy thereof given to the licensee by the borrower. An open-end

loan shall not be deemed to be repaid in full for this purpose unless

any balance is paid in full and the borrower relinquishes all power to

receive further advances under the contract and makes a written request

for the release of all collateral for the loan. Every licensee which

holds collateral of a borrower shall be fully liable for the return of

the collateral upon payment of the indebtedness in full.

No licensee shall collect, evaluate, report or maintain in the file on

a borrower the credit worthiness, credit standing or credit capacity of

members of the borrower’s social network for purposes of determining the

credit worthiness of the borrower; the average credit worthiness, credit

standing or credit capacity of members of the borrower’s social network;

or any group score that is not the borrower’s own credit worthiness,

credit standing or credit capacity. The provisions of this paragraph

shall be enforced concurrently by the superintendent and the director of

the division of consumer protection and each shall utilize their

consumer complaint and assistance hotlines to document complaints by

borrowers who believe that group credit ratings of their social media

network are being used to deny them credit. The superintendent shall

ensure that the credit scoring formulas filed with the department do not

contain variables which account for internet viewing history as part of

that formula by asking the licensee to certify to that fact.

No licensee shall take any confession of judgment or any power of

attorney running to himself or to any third person to confess judgment

or to appear for the borrower in a judicial proceeding.

No licensee shall take any instrument in which blanks are left to be

filled in after execution.

SECTION 353. Limitation on licensee’s charges on certain loans

• 353. Limitation on licensee’s charges on certain loans.

No licensee shall directly or indirectly charge, contract for, or receive any

interest, discount, or consideration upon the loan, use, or forbearance

of money, goods, or things in action, or upon the loan, use, or sale of

credit, of the amount or value of more than the maximum amounts

prescribed in section three hundred forty of this article greater than

the rate permitted by section 5-501 of the general obligations law. The

foregoing prohibition shall also apply to any licensee which permits any

person, as borrower or as endorser, guarantor, or surety for any

borrower or otherwise, to owe directly or contingently or both to the

licensee at any time more than the maximum amounts prescribed in section

three hundred forty of this article.

SECTION 354. Restrictions on assignments of compensation for services

• 354. Restrictions on assignments of compensation for services.

1. A licensee shall not take an assignment of unearned wages or other

earnings unless:

(a) the assignment by its terms is revocable at the will of the

borrower; or

(b) the assignment is a payroll deduction plan.

2. No assignment of wages or other earnings given to secure any loan

hereunder shall be valid unless the amount of such loan is paid to the

borrower simultaneously with its execution.

SECTION 355. Solicitation of loans

• 355. Solicitation of loans.

1. Any loan made by a person not licensed under this article to a resident of this state, in the amount, not exceeding the maximum amounts prescribed in section three hundred

forty of this article, where solicitation of the loan was made within

this state, and where the interest, discount, consideration or other

charge contracted for or received exceeds that permitted to a licensee

under the laws of this state shall be void, and the lender shall have no

right to collect or receive any principal, interest or charge

whatsoever. No action to enforce a loan made in violation of this

subdivision may be maintained, even though the amount demanded to be

paid in such action does not exceed that permitted to a licensee under

the laws of this state.

2. For purposes of this article, solicitation of a loan shall include

any solicitation, request or inducement to enter into a loan made by

means of or through a direct mailing, television or radio announcement

or advertisement, advertisement in a newspaper, magazine, leaflet or

pamphlet distributed within this state, or visual display within this

state, whether or not such solicitation, request or inducement

constitutes an offer to enter into a contract.

SECTION 356. Restrictions on certain loans by non-licensees, interests, other charges; loans made outside this state

• 356. Restrictions on certain loans by non-licensees, interests, other charges; loans made outside this state.

No person or other entity, other than a licensee under this article, shall directly or indirectly

charge, contract for, or receive any interest, discount, or

consideration greater than the person or other entity would be permitted

by law to charge if it were not a licensee hereunder upon a loan not

exceeding the maximum amounts prescribed in section three hundred forty

of this article.

The foregoing prohibition shall apply to any person or other entity

who or which, by any device, subterfuge, or pretense whatsoever shall

charge, contract for, or receive greater interest, consideration, or

charges than is authorized by the laws of this state for any such loan,

use, or forbearance of money, goods, or things in action or for any such

loan, use, or sale of credit.

Any loan in an amount not exceeding the maximum amounts prescribed in

section three hundred forty of this article for which a greater rate of

interest, consideration, or charges than is permitted by the laws of

this state has been charged, contracted for, or received, wherever made,

shall not be enforced in this state and every person or other entity

participating therein in this state shall be subject to the provisions

of this article. An action to enforce any such loan made in any other

state to a person then a resident of that state, who now resides in this

state may be maintained in this state if the amount of interest,

discount, consideration or other charge for such loan, demanded to be

paid in such action, does not exceed that permitted to a licensee by

section three hundred fifty-one of this article for a loan of the same

amount repayable in the same manner.

SECTION 357. Insurance

• 357. Insurance.

1. The licensee may require a borrower, on loans of

two hundred and fifty dollars or more, excluding insurance premiums and

precomputed interest, to insure tangible personal property, except

household goods, taken as security for a loan against any substantial

risk of loss, damage or destruction for an amount not to exceed the

lesser of the reasonable value of the property insured or the principal

amount of the loan, and for the customary insurance term approximating

the term of the loan contract. The policy may insure the interest of the

borrower as well as the interest of the licensee. A policy covering a

motor vehicle securing the loan may also insure the borrower against

liability for bodily injury and property damage, but such liability

insurance shall be at the option of the borrower and shall not be

required by the licensee. The premiums for all such insurance shall not

exceed the premiums chargeable in accordance with rate filings made with

the superintendent of financial services for such insurance by the

insurer. Such insurance shall be written by, or through, a duly licensed

insurance agent or broker, or shall be provided directly by a company

qualified to do business in this state.

2. For purposes of this section, the term “household goods” shall mean

clothing, furniture, appliances, one radio and one television, linens,

china, crockery, kitchenware, and personal effects (including wedding

rings) owned by the consumer and his or her dependents, but shall not

include works of art, other electronic entertainment equipment, items

acquired as antiques, and other jewelry.

3. When a licensee provides credit life insurance, credit accident and

health insurance, or credit unemployment insurance, or credit property

insurance pursuant to section two thousand three hundred forty of the

insurance law, or any combination thereof with respect to one or more

borrowers, such licensee may collect from the borrower a premium or

identifiable charge which shall not exceed the premium rates or

identifiable charges chargeable in accordance with rate filings made

with the superintendent of financial services for such insurance by the

insurer, subject to a refund of the insurance charge computed as

provided in paragraph (a) of subdivision five of section three hundred

fifty-one of this article, in the event of prepayment by cash, a new

loan, refinancing or otherwise. Only one such amount may be collected in

connection with any loan contract irrespective of the number of obligors

and only one obligor need be insured.

4. The insurance authorized by this section, with the exception of

insurance provided under group insurance policies, may be written by or

arranged through the licensee or an affiliate, associate or employee of

the licensee only if such licensee, affiliate, associate or employee is

a duly licensed insurance agent or broker, provided, however, no

licensee shall decline new or existing insurance which meets or exceeds

the standards set forth in this section, nor prevent any borrower from

obtaining such insurance coverage from other sources.

5. If a borrower procures such insurance by or through a licensee, the

statement required by section three hundred fifty-two of this article

shall disclose the cost or rate of charge to the borrower and the type

of insurance, and the licensee shall cause to be delivered to the

borrower a copy of the policy, certificate, or other evidence therefor

within a reasonable time.

6. The insurance authorized by this section and all benefits or

returns therefrom accruing to the licensee or to any affiliate,

associate or employee of the licensee shall not be prohibited by any

other provision of this article.

7. No insurance shall be required, requested, sold or offered for sale

in connection with any loan made under this article, except as and to

the extent authorized by this section or as provided in subdivision six

of section three hundred fifty-one of this article.

If the borrowers on any loan are husband and wife, joint credit life

insurance and joint credit accident and health insurance may be issued

on such loan pursuant to this section.

SECTION 358. Penalties

• 358. Penalties. Any person or other entity including the officers,

directors, agents, and employees thereof, which shall violate or

participate in the violation of any of the provisions of section three

hundred forty of this chapter shall be guilty of a misdemeanor.

SECTION 359. Authority of superintendent

• 359. Authority of superintendent.

The superintendent is hereby authorized and empowered to make such general rules and regulations, and such specific rulings, demands, and findings as may be necessary for the

proper conduct of the business authorized and licensed under and for the

enforcement of this article, in addition hereto and not inconsistent herewith.

SECTION 360. Short title

• 360. Short title.

This article shall be known and may be cited as the New York licensed lender law.

SECTION 361. Severability

• 361. Severability.

If any provision of this article or the application thereof to any person or circumstances is held to be invalid, such invalidity shall not affect other provisions or applications of this article which can be given effect without the invalid provision or application, and to this end the provisions of this article are severable.