(1) All persons subject, in whole or in part,
to the provisions of M.G.L. c. 140, §§ 96 through 113, may charge,
contract for, and receive the following maximum interest charges for loans not
in excess of $6,000:
(a) 23% per annum of the
unpaid balances of the amount financed calculated according to the actuarial
method plus an administrative fee of $20 upon the granting of a loan. An
administrative fee is not permitted to be assessed to a borrower more than once
during any 12 month period.
(b)
Outstanding loans contracted at the previous rate may be refinanced at higher
rates permitted under this order only after the borrower is furnished with
written notice of their legal right to have two separate loans and disclosing
the additional finance charge incurred in consolidating the outstanding loan
with a new loan. Receipt of this notice must be acknowledged in writing by the
borrower.
(2) Such
maximum interest charges shall not exceed 6% per annum after the termination of
one year after maturity of the loan.
(3) Interest charges shall be computed on the
actual unpaid principal balances for the actual time outstanding or may be
pre-computed as authorized by this order. For the purpose of computation,
whether at the maximum rate or less, a month shall be that period of time from
any date in a month to the corresponding date in the next month and if there is
no such corresponding date then to the last day of the said next month, and a
day shall be considered 1/30 of a month when computation is made for a fraction
of a month.
(4) When the loan
contract requires repayment in substantially equal and consecutive monthly
installments of principal and interest charges combined, the interest charges
may be pre-computed at the agreed monthly rate, which rate shall not be in
excess of that established by this Board and in effect at the time the loan is
made, on scheduled monthly principal balances and added to the principal of the
loan, and every payment may be applied to the combined total of principal and
pre-computed interest charges until the contract is fully paid. The portion of
the pre-computed interest charge applicable to any particular monthly
installment period shall bear the same ratio to the total pre-computed interest
charge as the balance scheduled to be outstanding during that monthly period
bears to the sum of all monthly balances scheduled by the original contract of
loan. Such pre-computed interest charge shall be subject to the following
adjustments and such adjustments shall be deemed to be within the limitation on
interest charges as established by this Board:
(a) The first installment date may be not
more than one month and 15 days after the date of the loan. If such date is
more than one month after the date of the loan, the licensee may charge and
collect an extension charge not exceeding 1/30 of the portion of the finance
charge applicable to a first installment period of one month for each day that
the first installment date is deferred beyond one month. Such extension charge
may be collected at the time of payment of the first installment or at any time
thereafter. If the first installment date is less than one month after the date
of the loan, the licensee shall, on the date of the loan, credit against the
finance charge an amount not less than 1/30 of the portion of the finance
charge applicable to a first installment period of one month for each day the
first installment date is less than one month.
(b) If the loan contract is prepaid in full
by cash, a new loan, or refinancing of such loan before the final installment
date, the borrower shall receive a refund or credit. Any such refund or credit
shall represent at least as great a proportion of the total amount of the
pre-computed interest as the sum of the scheduled periodic total of payments
after the date of prepayment, as the date of prepayment is fixed below, bears
to the sum of the scheduled periodic total of payments under the schedule of
installments in the original contract. Such computation of refund or credit
shall be made under the so-called sum of the digits method. If the prepayment
is made other than on an installment due date it shall be deemed to have been
made on the first installment due date if the prepayment is before that date,
and in any other case it shall be deemed to have been made on the next
preceding or next succeeding installment due date, whichever is nearer to the
date of prepayment.
(c) In the
event of a default of more than ten days in the payment in full of any
scheduled installment, the licensee may charge and collect a default charge in
an amount not in excess of 5% of each installment in default or $5.00,
whichever is less. Said 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. Such charge may be taken out of any payment received after a
default occurs, provided, that if such deduction results in the default of a
subsequent installment, no charge shall be made for such subsequent
default.
(d) A licensee may, by
agreement with the borrower, defer payment of all wholly unpaid installments
one or more full months and may charge and collect a deferment charge which
shall not exceed the portion of the finance charge applicable under the
original contract of loan to the first month of the deferment period multiplied
by the number of months in said period. The deferment period is the month or
months in which no scheduled payment has been made or in which no payment is to
be required by reason of the deferment. Such deferment charge may be collected
at the time of deferment or at any time thereafter. No deferment charge shall
be made on any installment for which a default charge has been made unless the
default charge on such installment is refunded in full. Except as provided
hereinafter a deferment agreement
1. shall be
in writing and signed by the parties;
2. shall incorporate by reference the loan
agreement to which the deferment agreement applies;
3. shall state the terms of the
agreement;
4. may provide that the
borrower shall pay the additional cost, if any, for insurance coverage provided
in the deferment; and
5. shall
clearly set forth the facts of any deferment charge, the amount deferred, the
date to which or the time period for which payment is deferred, the amount of
the charge for the deferment, and the amount for the additional cost of
insurance, if any, resulting from the deferment. If the deferment agreement
extends the due date of less than three installments, it need not be in
writing, but it must have the specific authorization of the borrower. If a loan
is prepaid in full during a deferment period, the borrower shall receive, in
addition to the refund required under 209 CMR 26.01(4)(b) a refund of that
portion of the deferment charge applicable to any unexpired months of the
deferment period. In computing any required refund or credit, the portion of
the finance charge applicable to each installment period following the
deferment period and prior to the extended maturity shall remain the same as
that applicable to such periods under the original contract of loan.
