74th OREGON LEGISLATIVE ASSEMBLY--2007 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 874
A-Engrossed
House Bill 2205
Ordered by the House February 5
Including House Amendments dated February 5
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
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.
Requires person in business of making consumer finance loans to
obtain license. Defines consumer finance loan.
Directs Director of Department of Consumer and Business
Services to issue consumer finance loan license or short term
loan license to qualified applicants.
Declares emergency, effective July 1, 2007.
A BILL FOR AN ACT
Relating to lender licenses; creating new provisions; amending
ORS 725.010, 725.120, 725.140, 725.505 and 725.620; repealing
ORS 725.625 and section 4, chapter 3, Oregon Laws 2006; and
declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 725.010 is amended to read:
725.010. As used in this chapter:
{ - (1) 'Department' means the Department of Consumer and
Business Services. - }
{ + (1) 'Consumer finance loan' means a loan that is
unsecured or secured by personal or real property and that has
periodic payments and terms longer than six months.
(2) 'Consumer finance loan license' means a license issued
under ORS 725.140 to a lender that is in the business of making
consumer finance loans. + }
{ - (2) 'Director' means the Director of the Department of
Consumer and Business Services. - }
{ + (3) 'In the business of making consumer finance loans '
means conducting lending activities or making loans that have the
characteristics described in section 3 of this 2007 Act. + }
{ - (3) - } { + (4) + } 'Licensee' means every person
licensed under this chapter.
{ + (5) 'Loan underwriting' means a documented evaluation,
made before a lender grants a loan, of the risk the lender would
assume in granting a loan to a specific borrower.
(6) 'Short term loan license' means a license issued under ORS
725.140 to a lender that is in the business of making payday
loans or title loans. As used in this subsection, 'in the
business of making payday loans' and 'in the business of making
title loans' have the meanings given those terms in ORS
725.600. + }
SECTION 2. { + Sections 3 to 5 of this 2007 Act are added to
and made a part of ORS chapter 725. + }
SECTION 3. { + A lender that is issued a consumer finance loan
license must ensure that, for each calendar year:
(1) 90 percent or more of the loans made by the lender are
consumer finance loans;
(2) Loan underwriting is documented in the borrower's file for
90 percent or more of the loans, with loan underwriting remaining
valid at the option of the lender for any loan made within 12
months of the initial date of a previous consumer finance loan to
that borrower; and
(3) 90 percent or more of the loans made by the lender are
structured to be repaid in fully amortized and substantially
equal periodic payments, other than loans that are secured by
real estate or interests in farming implements or future farm
crops or made in accordance with ORS 725.345 or 725.347. For
purposes of this subsection, a loan is considered to have
'substantially equal periodic payments' notwithstanding that:
(a) The first regularly scheduled periodic payment is larger
due to additional interest that accrues because the period
between the date the loan is issued and the date of the first
regularly scheduled periodic payment is longer than the standard
number of days in a period;
(b) The final regularly scheduled periodic payment is larger,
if that payment is not more than one and one-half times the
amount of the next to last regularly scheduled periodic payment;
and
(c) Periodic payments may change due to an interest rate
adjustment on an adjustable rate loan, provided that the revised
payments due after the change are substantially equal until any
further interest rate adjustment. + }
SECTION 4. { + (1) If a lender in the business of making
consumer finance loans makes a loan secured by an interest in a
borrower's vehicle, the lender may not retain possession of the
title to the vehicle unless the lender is recorded as a
lienholder on the title or has taken other commercially
reasonable steps to be added as a holder of a security interest
in the vehicle.
(2) A lender in the business of making consumer finance loans
may not require a borrower, as a condition of obtaining a loan,
to provide a check or debit authorization for one or more future
payments.
(3) A borrower at the borrower's sole discretion may deliver to
a lender in the business of making consumer finance loans, if the
lender so permits, one or more checks or debit authorizations to
facilitate timely future payments. The Director of the Department
of Consumer and Business Services by rule shall set standards for
the use of borrowers' checks or debit authorizations in consumer
finance loans. + }
SECTION 5. { + (1) A person may apply for and hold both a
consumer finance loan license and a short term loan license.
(2) A person holding both a consumer finance loan license and a
short term loan license shall:
(a) Maintain separate loan records for every activity conducted
under each license; and
(b) File separate annual reports for lending activity conducted
under each license. + }
SECTION 6. ORS 725.120 is amended to read:
725.120. (1) Application for { - the - } { + a + } license
shall be in writing in the form prescribed by the Director of the
Department of Consumer and Business Services { + . + }
{ - and - }
{ + (2) The application + } shall { + :
(a) + } Contain the name and both the residence and business
addresses of the applicant, and if the applicant is a
partnership { + , limited liability company + } or association,
of every member thereof, and if a corporation { + , firm or joint
stock company + }, of each officer and director thereof { + ; + }
{ - . The application shall also contain - }
{ + (b) Contain + } the county and city with street and
number, if any, where the business is to be conducted { + ; + }
{ - and - }
{ + (c) Designate whether the license applied for is a
consumer finance loan license or a short term loan license; and
(d) Contain + } any other information { - which - }
{ + that + } the director may require.
{ - (2) Notice of the filing of the application shall be
posted in the office of the Department of Consumer and Business
Services for 30 days and no license shall be issued before the
expiration of such 30-day period. However, the director may waive
the posting of notice and issue a license without regard to such
30-day period if the application is for a license at a location
where a license has been surrendered because of: - }
{ - (a) The transfer of the business of the licensee, and the
applicant is the transferee; - }
{ - (b) The death of the licensee, and the applicant is a
representative or heir of the licensee; or - }
{ - (c) The change of the name under which the licensee does
business, and the applicant is the same licensee. - }
(3) An applicant at the time of making application shall pay to
the director a license fee determined under ORS 725.185 for the
period terminating on the last day of the current calendar year.
In case the license is not issued for cause or if the application
is withdrawn after the applicant has been investigated by the
director, { - there - } { + the license fee + } shall be
refunded to the applicant { - all the license fee - } except
any portion { - thereof - } { + of the fee + } determined by
the director to reflect administrative and investigative costs
incurred by the section relative to the application. Otherwise no
part of any license fee { - shall - } { + may + } be
refunded.
SECTION 7. ORS 725.140 is amended to read:
725.140. (1) Conditioned upon the applicant's compliance with
this chapter and the payment of the license fee, the Director of
the Department of Consumer and Business Services, within 90 days
after the date of filing { - the - } { + a completed + }
application referred to in ORS 725.120, shall disapprove the
application or shall issue and deliver a { + consumer finance
loan license or a short term loan + } license to the applicant to
make loans in accordance with this chapter at the location
specified in the application. However, before issuing a license,
the director must first find upon investigation:
(a) That the financial responsibility, experience, character
and general fitness of the applicant, and of the members thereof
if the applicant is a partnership { + , limited liability
company + } or association, and of the officers and directors
thereof if the applicant is a corporation { + , firm or joint
stock company + }, are such as to command the confidence of the
community and to warrant the belief that the business will be
operated honestly, fairly and efficiently within the purposes of
this chapter; { - and - }
(b) That grounds for disapproval of an application described in
ORS 725.145 do not exist and that, in the judgment of the
director, there are no other reasons or conditions that would
warrant the refusal to grant a license { + ; and
(c) If the applicant is applying for an additional license as
provided in section 5 of this 2007 Act, that the applicant has
filed the reports required under section 5 of this 2007 Act + }.
(2) A license issued under this section shall be a continuing
license and shall remain in full force and effect until the
license is surrendered by the licensee as provided in ORS 725.250
or revoked or suspended as provided in ORS 725.230.
SECTION 8. ORS 725.505 is amended to read:
725.505. { - (1) In accordance with ORS chapter 183, the
Director of the Department of Consumer and Business Services may
adopt rules for the purpose of carrying out this chapter. - }
{ + (1) The Director of the Department of Consumer and
Business Services is vested with power to supervise and regulate
lenders under this chapter by rule and to do all things necessary
and convenient in the exercise of that power. + }
(2) In addition to the notice requirements of ORS chapter 183,
before the director adopts a rule, the director shall submit a
copy of the rule to each licensee.
SECTION 9. ORS 725.620 is amended to read:
725.620. (1) A lender in the business of making title loans
shall include in every title loan contract a notice, printed in
type size equal to at least 12-point type, stating that the
consumer or the consumer's attorney may file a complaint with the
Director of the Department of Consumer and Business Services as
provided in this section.
(2) Any person claiming to be aggrieved by a practice that
violates a provision of ORS 725.605, 725.610 or 725.615 or any
rule adopted under ORS { - 725.625 - } { + 725.505 regulating
a lender in the business of making title loans + }, or the
person's attorney, may file with the director a verified
complaint in writing. The person shall state in the complaint the
name and address of the lender alleged to have committed the
unlawful practice and the particulars of the alleged unlawful
practice. The director may require the person to set forth in the
complaint other information that the director considers
pertinent. The person may file the complaint no later than one
year after the alleged unlawful practice.
(3) After the filing of a complaint under this section, the
director may cause an investigation to be made under ORS 725.310.
SECTION 10. { + ORS 725.625 and section 4, chapter 3, Oregon
Laws 2006, are repealed. + }
SECTION 11. { + (1) If a person holding a license on the
effective date of this 2007 Act does not hold the appropriate
consumer finance loan license or short term loan license, the
person shall apply for the appropriate license not later than 30
days after the effective date of this 2007 Act.
(2) The determination of which license shall be applied for
shall be based on the previous 365 days during which the person
made payday loans, title loans or consumer finance loans. + }
SECTION 12. { + This 2007 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2007 Act takes effect on
July 1, 2007. + }
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