Chapter 440 Oregon Laws 2001

AN ACT

HB 3796

Relating to financial institutions; amending ORS 708A.255.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 708A.255 is amended to read:

708A.255. (1) Except as otherwise provided in this section, there is no limitation on the rate of interest or on the amount of other charges that a financial institution may contract for and receive for a loan or use of money.

(2) If a loan made by a financial institution is repaid before maturity, the unearned portion of the charges, if any, shall be refunded or credited to the borrower as provided in this subsection. The amount of the refund shall not be less than the total interest contracted for to maturity, less the greater of:

(a) Ten percent of the amount financed, or $75, whichever is less; or

(b) The interest earned to the installment due date nearest the date of prepayment, computed by applying the simple interest rate of the loan to the actual principal balances outstanding, for the periods of time the balances were actually outstanding. For purposes of rebate computations under this paragraph, the installment due date preceding the date of prepayment shall be considered to be nearest if prepayment occurs 15 days or less after that installment date. If prepayment occurs more than 15 days after the preceding installment due date, the next succeeding installment due date shall be considered to be nearest the date of prepayment. In determining the simple interest rate, the lender may apply to the scheduled payments the actuarial method, by which each scheduled payment is applied first to accrued and unpaid interest and any amount remaining is applied to reduction of the principal balance.

(3) Any installment of an installment loan or payment under an open-end credit arrangement that is not paid when due shall continue to bear interest until paid. In addition, if the installment or payment is not paid when due, the installment or payment may bear a late charge in such amount as is agreed to by the lender and the borrower. However, except for loans secured by real property, the lender may impose a late charge only if:

(a) The installment or payment is not received by the lender within 10 days after the due date or, if the open-end credit arrangement is a credit card account, the payment is not received by the lender on or before the due date;

(b) The loan agreement or open-end credit arrangement provides for a late charge upon delinquent installments or payments; and

(c) A monthly billing, coupon or notice is provided by the lender disclosing the date on which installments or payments are due and that a late charge may be imposed if payment is not received by the lender within 10 days thereafter or, in the case of an open-end credit arrangement that is a credit card account, that a late charge may be imposed if payment is not received by the lender on or before the date on which the payment is due. However, if the lender and the borrower have provided in the note or other written loan agreement that the payments on the loan shall be made by the means of automatic deductions from a deposit account maintained by the borrower, the lender shall not be required to provide the borrower with a monthly billing, coupon or notice under this paragraph with respect to any occasion on which there are insufficient funds in the borrower’s account to cover the amount of a loan payment on the date the loan payment becomes due and within the [period] periods described in paragraph (a) of this subsection.

Approved by the Governor June 18, 2001

Filed in the office of Secretary of State June 18, 2001

Effective date January 1, 2002

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