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The 191st General Court of the Commonwealth of Massachusetts

Section 100: ''Licensee'' defined; investigations by regulatory board; charges; prepayments; establishment of rates; effective date of order; more than one contract

Section 100. As used in this section the term ''licensee'' shall mean all persons licensed under sections ninety-six to one hundred and thirteen, inclusive.

The small loans regulatory board shall investigate from time to time the economic conditions and other factors relating to and affecting the business of making loans under sections ninety-six to one hundred and thirteen, inclusive, and shall ascertain all pertinent facts necessary to determine what maximum rate of charge should be permitted. Upon the basis of such ascertained facts, the board shall determine and establish by regulation or order a maximum rate of charge in connection with such loans which will induce efficiently managed commercial capital to be invested in such business in sufficient amounts to make available adequate credit facilities to individuals seeking such loans at reasonable rates, and which will afford those engaged in such business a fair and reasonable return upon the assets. Such maximum rate of charge established by the board may be the aggregate of two or more different maximum rates applicable to different portions of the unpaid principal balance, so that as the size of the loan or the unpaid principal balance increases the aggregate rate decreases. The board may reestablish the maximum monthly rate of charge from time to time on the basis of changed conditions and facts. When the board establishes a maximum rate of charge it shall also by order permit licensees to precompute the monthly rate of charge contracted for on scheduled unpaid principal balances of loans contracted to be repaid in substantially equal and consecutive monthly installments of principal and charges combined with such installments applied to the unpaid balance of principal and the precomputed charge combined, subject to such provisions as the board shall by order prescribe for a refund or credit in the event of prepayment and for extension and default charges in the event of an extension or default. Such refund or credit shall be computed on a method which is at least as favorable to the borrower as the actuarial method, so-called. 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 payment 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. Where the amount of the credit for anticipation of payment is less than one dollar, no refund need be made. The details of application and the rules for a fraction of a month or partial prepayments shall be subject to the order of the board.

Before establishing or reestablishing the maximum rate of charge, the board shall give reasonable notice by mail of its intention to all licensees and shall give such licensees an opportunity to be heard thereon and to introduce evidence with respect thereto. Any order which the board may make establishing or reestablishing the maximum rate of charge after such hearing shall contain the effective date thereof, which shall be not less than sixty days after notice of the establishing of such new rates as given by mail to each licensee. An order of the board establishing or reestablishing the maximum rate of charge shall not apply to loans made prior to its effective date. Within the authority conferred by this section, the board shall be subject to all pertinent provisions of chapter thirty A.

The total amount to be collected on any loan by a licensee for interest, expenses and other considerations shall not, in the aggregate, exceed an amount equivalent to the maximum monthly rate computed on unpaid principal balances of the amount actually received by the borrower except that the lawful fees actually paid out by the lender to a public officer for filing, recording, releasing or discharging any instrument securing the loan may be charged to and collected from the borrower when the loan is made or at any time thereafter and may be collected in such manner as is authorized by the board in connection with loans on which charges are precomputed as heretofore provided, but such interest shall not exceed twelve per cent per annum or the original rate of interest on the note evidencing the loan, whichever is less, after the termination of one year after maturity of the loan. No licensee shall wilfully permit any person, or any husband and wife jointly or severally, to be obligated, either directly or contingently to such licensee, under more than one contract of loan at the same time for the purpose of obtaining a higher rate of charge than would otherwise be permitted by this section on a single loan contract. No licensee or company or association to which sections ninety-six to one hundred and thirteen, inclusive, apply shall charge or receive upon any loans more than the maximum rate of charge permitted by this section. No charge, bonus, fee, expense or demand of any nature whatsoever, except as herein provided, shall be made upon loans to which said sections relate; provided, however, that a licensee may, if the loan agreement so provides, assess and collect a charge, not to exceed ten dollars, for any check, draft or order for the payment of money submitted in accordance with said agreement which is returned unpaid or not honored by a bank or other depository.