02/14/08 0555s

02/14/08 0614s

14May2008… 1541h

06/05/08 2153eba

2008 SESSION

08-2724

08/09

SENATE BILL 472

COMMITTEE: Commerce, Labor and Consumer Protection

AMENDED ANALYSIS

This bill redefines payday loan, small loan, and title loan.

This bill establishes a commission to study access to consumer credit for people in New Hampshire.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

02/14/08 0555s

02/14/08 0614s

14May2008… 1541h

06/05/08 2153eba

08-2724

08/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eight

Be it Enacted by the Senate and House of Representatives in General Court convened:

321:1 Findings. The general court recognizes that:

I. Access to consumer credit can provide people with a means by which to navigate gaps in income, establish long-term financial stability, and build household wealth.

II. Certain irresponsible or abusive lending practices and loan products can increase consumers’ financial distress, rather than decrease it.

III. Some people may lack access to responsible consumer credit.

IV. Access to responsible consumer credit for people benefits not only individual households, but also local and state economic health.

321:2 Payday Loan; Definition. RSA 399-A:1, X is repealed and reenacted to read as follows:

X. “Payday loan” means a short-maturity, secured or unsecured loan, other than a title loan.

321:3 Small Loan; Definition. Amend RSA 399-A:1, XIV to read as follows:

XIV. “Small loan” means a closed-end loan in the amount of $10,000 or less or an open-end loan with a line of credit of $10,000 or less, and where the lender contracts for, exacts or receives, directly or indirectly, or where the borrower pays for, directly or indirectly in connection with any such loan any charges, whether for interest, examination, commission, compensation, service, brokerage, endorsement fees, other fees, consideration, expense or otherwise, which in the aggregate are greater than 10 percent per annum except for the lawful fees, if any, actually and necessarily paid out by the lender to any public officer, for filing or recording in any public office any instrument securing such loan and except for the reasonable costs, charges, and expenses, including court costs actually incurred in connection with a repossession of the security or an actual sale of the security.

321:4 Lender; Definition. Amend RSA 399-A:1, VIII to read as follows:

VIII. “Lender” means individuals, corporations, associations, firms, partnerships, limited liability companies, and joint stock companies or other forms of organizations that lend money or give credit temporarily on condition that the amount borrowed be returned, usually with an interest fee. “Lender” shall not include a financial institution. “Lender” shall include a person who for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly:

(a) Acts as an intermediary, finder, or agent of a lender or borrower for the purpose of negotiating, arranging, finding, or procuring loans, or commitments for loans.

(b) Offers to serve as an agent for any person in an attempt to obtain a loan.

(c) Offers to serve as an agent for any person who has money to lend for a loan.

(d) Performs services or any of the business functions auxiliary or supplemental to the production, distribution or maintenance of loans for a lender.

321:5 License Required. Amend RSA 399-A:2, IV to read as follows:

IV. Any person not exempt under paragraph III, and the several members, officers, directors, agents and employees thereof, who shall willfully violate or participate in the violation of any provisions of paragraph I shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person. If in the making or collection of a loan the [licensee] person violates paragraph I of this section, the loan contract shall be void and the lender shall have no right to collect, receive, or retain any principal, interest, or charges whatsoever.

321:6 New Paragraph; License Required. Amend RSA 399-A:2 by inserting after paragraph IV the following new paragraph:

V. The provisions of this chapter shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense, including, without limitation:

(a) Calling a loan by any other name;

(b) Using any agents, affiliates, or subsidiaries in an attempt to avoid the application of the provisions of this chapter; or

(c) Having any affiliation or other business arrangement with an entity that is exempt from the provisions of this chapter, the effect of which is to evade the provisions of this chapter, including, without limitation, making a loan, while purporting to be the agent of such an exempt entity where the purported agent holds, acquires, or maintains a preponderant economic interest in the revenues generated by the loan.

321:7 No Refinancing of Payday Loans. Amend RSA 399-A:11, X to read as follows:

X. If a borrower desires to renew an existing closed-end loan[, payday loan,] or title loan for the purpose of obtaining additional cash a new contract shall be drawn up in its entirety and such prior loan shall be paid in full from such proceeds of the new loan. Payday loans shall not be rolled over, renewed, or refinanced. All legal papers in connection with such prior loan shall be stamped “PAID IN FULL” and returned to such borrower.

321:8 Debit Authorization. Amend RSA 399-A:13, II(d)-(e) to read as follows:

(d) Evidence of receipt from the borrower of a check[,] or other account debit authorization, dated the same date, as security for the loan, stating the amount of the check, if a check or other account debit authorization was given by the borrower.

(e) An agreement by the lender not to present the check or other account debit authorization for payment or deposit until a specified maturity date, which date shall be at least 7 days and not more than 30 days after the date the loan is made and after which date interest shall not accrue at a greater rate than 6 percent per year, if a check or other account debit authorization was given by the borrower.

321:9 Commission Established. There is established a commission to study access to consumer credit for people in New Hampshire.

321:10 Membership and Compensation.

I. The members of the commission shall be as follows:

(a) Two members of the senate, appointed by the president of the senate.

(b) Two members of the house of representatives, appointed by the speaker of the house of representatives.

(c) The governor, or designee.

(d) The bank commissioner, or designee.

(e) The attorney general, or designee.

(f) A representative of Consumer Credit Counseling of New Hampshire and Vermont, appointed by that organization.

(g) Two representatives of the New Hampshire Bankers Association, appointed by that organization.

(h) A representative of the New Hampshire Community Loan Fund, appointed by that organization.

(i) Two representatives of the New Hampshire Credit Union League, appointed by that organization.

(j) A representative of the New England Financial Services Association, appointed by that organization.

(k) A representative of New Hampshire Legal Assistance, appointed by that organization.

(l) A representative of the New Hampshire Local Welfare Administrators Association, appointed by that organization.

(m) A representative of the payday lending industry, appointed by the governor.

(n) A representative of the Community Financial Services Association of America, appointed by the northeastern regional office of that organization.

(o) Two representatives of the title loan industry, appointed by the governor.

II. Legislative members of the commission shall receive mileage at the legislative rate when attending to the duties of the commission.

321:11 Duties. The commission shall examine the following:

I. The varieties of consumer credit currently available to people in New Hampshire;

II. The varieties of non-credit emergency assistance currently available to people in New Hampshire;

III. The impact of irresponsible or abusive lending practices and loan products on people in New Hampshire;

IV. The potential for market-based development of new varieties of responsible consumer credit for people in New Hampshire; and

V. Possible legislation to improve access to responsible consumer credit for people in New Hampshire.

321:12 Chairperson; Quorum. The members of the study commission shall elect a chairperson from among the members. The first meeting of the commission shall be called by the first-named senate member. The first meeting of the commission shall be held within 45 days of the effective date of this section. Five members of the commission shall constitute a quorum.

321:13 Report. The commission shall report its findings and any recommendations for proposed legislation to the president of the senate, the speaker of the house of representatives, the senate clerk, the house clerk, the governor, and the state library on or before November 14, 2008.

321:14 Contingent Renumbering. If HB 759-FN of the 2008 legislative session becomes law, RSA 399-A:2, V, as inserted by section 6 of this act, shall be renumbered as RSA 399-A:2, VI.

321:15 Effective Date.

I. Sections 1 and 9-14 of this act shall take effect upon its passage.

II. The remainder of this act shall take effect January 1, 2009.

Approved: July 2, 2008

Effective Date: I. Sections 1 and 9-14 shall take effect July 2, 2008.

II. Remainder shall take effect January 1, 2009.