71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 2842
 
                           A-Engrossed
 
                         House Bill 3796
                  Ordered by the House April 26
            Including House Amendments dated April 26
 
Sponsored by COMMITTEE ON SMART GROWTH AND COMMERCE
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
 
  Eliminates late payment grace period on   { - certain loans
made by financial institutions - }  { +  open-end credit
arrangements that are credit card accounts + }.
 
                        A BILL FOR AN ACT
Relating to financial institutions; creating new provisions; and
  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.
  SECTION 2.  { + The amendments to ORS 708A.255 by section 1 of
this 2001 Act apply only to open-end credit arrangements entered
into on or after the effective date of this 2001 Act. + }
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