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
B-Engrossed
House Bill 2205
Ordered by the Senate June 5
Including House Amendments dated February 5 and Senate Amendments
dated June 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. - }
{ + Draws distinction between consumer finance license and
short term license for persons making specified types of
loans. + }
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. - }
{ - (2) 'Director' means the Director of the Department of
Consumer and Business Services. - }
{ + (1) 'Consumer finance license' means a license issued
under ORS 725.140 that authorizes a person to make loans that
meet the requirements of section 3 of this 2007 Act.
(2) 'Consumer finance licensee' means a person authorized to
make loans under a consumer finance license. + }
(3) 'Licensee' means every person licensed under this chapter.
{ + (4) 'Loan underwriting' means a documented evaluation,
made before a lender makes a loan, of the risk the lender would
assume in making a loan to a specific borrower.
(5) 'Short term license' means a license issued under ORS
725.140 that authorizes a person to make payday loans or title
loans, as defined 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 consumer finance licensee must ensure that,
for each calendar year:
(1) 90 percent or more of the loans made by the consumer
finance licensee have a term of not less than six months;
(2) Loan underwriting is documented in the borrower's file for
90 percent or more of the loans made under the consumer finance
license, with loan underwriting remaining valid at the option of
the licensee for any loan made within 12 months of the initial
date of a previous loan to that borrower; and
(3) 90 percent or more of the loans made by the consumer
finance licensee 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, under a consumer finance license, a
consumer finance licensee makes a loan secured by an interest in
a borrower's vehicle, the licensee may not retain possession of
the title to the vehicle unless the licensee 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 consumer finance licensee may not require a borrower, as
a condition of obtaining a loan made under a consumer finance
license, 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 consumer finance licensee, if the licensee so permits, one or
more checks or debit authorizations to facilitate timely future
payments. + }
SECTION 5. { + (1) A person may apply for and hold both a
consumer finance license and a short term license.
(2) A person holding both a consumer finance license and a
short term 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 license or a short term 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
license or a short term + } 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) In accordance with ORS chapter 183, the Director of
the Department of Consumer and Business Services may adopt rules
to implement, administer and enforce this chapter and to regulate
lending terms and practices, consistent with this chapter, for
the protection of the public. + }
(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. { + 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. + }
----------