S*461 Session 105 (1983-1984)
S*0461(Rat #0402, Act #0355 of 1984) General Bill, By J.C. Lindsay
A Bill to provide that the Federal Alternative Mortgage Transaction Parity Act
not apply in this State; to amend Sections 37-1-201, 37-2-104, 37-2-413,
37-3-404, 37-5-110, and 37-5-111, all as amended, and 37-2-305, 37-3-305,
37-10-102, and 37-10-103, Code of Laws of South Carolina, 1976, relating to
the Consumer Protection Code, so as to delete the provision limiting the
charges a creditor may collect pursuant to out of state transactions, provide
that credit sales excluded from the Consumer Protection Code are subject to
its provisions for violation of disclosure, selection of attorney or insurance
agent, increase the fee from four dollars to ten dollars for a rate schedule
filed by a creditor and increase the charge for certified copies of this
schedule from two dollars to four dollars, apply the same provisions for the
purchase of title insurance as to attorney's fees when a credit sale is
secured by real estate, provide for a notice of consumer's right to cure a
secured or unsecured consumer credit transaction that is in default, exempt
the creditor from ascertaining the borrower's preference of insurance agent
when a loan on property is subject to the Horizontal Property Act, to provide
the loan finance charge may be at a variable rate for loans not exceeding one
hundred thousand dollars made for business or agricultural purposes, to
provide that in residential loans not exceeding one hundred thousand dollars
the rate may be variable if the loan is made in accordance with regulations of
the State Board of Financial Institutions or a federal regulatory agency; and
to amend the Code by adding Section 37-3-412 so as to provide that a consumer
loan not in excess of one hundred thousand dollars secured by real estate may
be made at a variable rate if the creditor makes the loan in accordance with
regulations for alternative mortgages by the State Board of Financial
Institutions or a federal regulatory agency.-amended title
04/13/83 Senate Introduced and read first time SJ-985
04/13/83 Senate Referred to Committee on Banking and Insurance SJ-98
04/28/83 Senate Committee report: Favorable with amendment
Banking and Insurance SJ-1156
05/03/83 Senate Read second time SJ-1195
05/03/83 Senate Ordered to third reading with notice of
amendments SJ-1195
05/05/83 Senate Amended SJ-1274
05/05/83 Senate Read third time and sent to House SJ-1275
05/06/83 House Introduced and read first time HJ-2637
05/06/83 House Referred to Committee on Labor, Commerce and
Industry HJ-2638
02/15/84 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-908
02/21/84 House Objection by Rep. Blanding, Griffin, Klapman &
Washington HJ-963
04/04/84 House Objection withdrawn by Rep. Griffin, Blanding,
Washington & Klapman HJ-2178
04/04/84 House Debate adjourned HJ-2179
04/05/84 House Debate adjourned HJ-2255
04/10/84 House Amended HJ-2304
04/10/84 House Debate adjourned HJ-2305
04/11/84 House Read second time HJ-2321
04/12/84 House Amended HJ-2397
04/12/84 House Debate adjourned HJ-2398
04/17/84 House Read third time HJ-2420
04/17/84 House Returned HJ-2421
04/19/84 Senate Concurred in House amendment and enrolled SJ-1460
04/26/84 Ratified R 402
04/30/84 Signed By Governor
04/30/84 Effective date 04/30/84
04/30/84 Act No. 355
05/10/84 Copies available
(A355, R402, S461)
AN ACT TO PROVIDE THAT THE FEDERAL ALTERNATIVE MORTGAGE
TRANSACTION PARITY ACT
NOT APPLY IN THIS STATE; TO AMEND SECTIONS 37-1-201, 37-2-104, 37-2-413,
37-3-404, 37-5-110, AND 37-5-111, ALL AS AMENDED, AND 37-2-305, 37-3-305,
37-10-102, AND 37-10-103, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING
TO THE
CONSUMER PROTECTION CODE, SO AS TO DELETE THE PROVISION LIMITING THE
CHARGES A
CREDITOR MAY COLLECT PURSUANT TO OUT OF STATE TRANSACTIONS,
PROVIDE THAT CREDIT
SALES EXCLUDED FROM THE CONSUMER PROTECTION CODE ARE SUBJECT TO
ITS PROVISIONS
FOR VIOLATION OF DISCLOSURE, SELECTION OF ATTORNEY OR INSURANCE
AGENT, INCREASE
THE FEE FROM FOUR DOLLARS TO TEN DOLLARS FOR A RATE SCHEDULE FILED
BY A CREDITOR
AND INCREASE THE CHARGE FOR CERTIFIED COPIES OF THIS SCHEDULE FROM
TWO DOLLARS
TO FOUR DOLLARS, APPLY THE SAME PROVISIONS FOR THE PURCHASE OF TITLE
INSURANCE
AS TO ATTORNEY'S FEES WHEN A CREDIT SALE IS SECURED BY REAL ESTATE,
PROVIDE FOR
A NOTICE OF CONSUMER'S RIGHT TO CURE A SECURED OR UNSECURED
CONSUMER CREDIT
TRANSACTION THAT IS IN DEFAULT, EXEMPT THE CREDITOR FROM
ASCERTAINING THE
BORROWER'S PREFERENCE OF INSURANCE AGENT WHEN A LOAN ON PROPERTY
IS SUBJECT TO
THE HORIZONTAL PROPERTY ACT, TO PROVIDE THE LOAN FINANCE CHARGE
MAY BE AT A
VARIABLE RATE FOR LOANS NOT EXCEEDING ONE HUNDRED THOUSAND
DOLLARS MADE FOR
BUSINESS OR AGRICULTURAL PURPOSES, TO PROVIDE THAT IN RESIDENTIAL
LOANS NOT
EXCEEDING ONE HUNDRED THOUSAND DOLLARS THE RATE MAY BE VARIABLE
IF THE LOAN IS
MADE IN ACCORDANCE WITH REGULATIONS OF THE STATE BOARD OF
FINANCIAL INSTITUTIONS
OR A FEDERAL REGULATORY AGENCY; AND TO AMEND THE CODE BY ADDING
SECTION 37-3-412
SO AS TO PROVIDE THAT A CONSUMER LOAN NOT IN EXCESS OF ONE HUNDRED
THOUSAND
DOLLARS SECURED BY REAL ESTATE MAY BE MADE AT A VARIABLE RATE IF
THE CREDITOR
MAKES THE LOAN IN ACCORDANCE WITH REGULATIONS FOR ALTERNATIVE
MORTGAGES BY THE
STATE BOARD OF FINANCIAL INSTITUTIONS OR A FEDERAL REGULATORY
AGENCY.
Be it enacted by the General Assembly of the State of South Carolina:
Provisions not to apply
SECTION 1. The provisions of Section 804 of the Alternative Mortgage Transaction
Parity Act of 1982, Title VIII of P.L. 97-320 (96 Stat. 1545), known as the
Garn-St. Germain Depository Institutions Act of 1982, do not apply to any
alternative mortgage transaction as the term alternative mortgage transaction is
defined in Section 803(1) of the Alternative Mortgage Transaction Parity Act of
1982, and that this State does not want the provisions of Section 804 of the
Alternative Mortgage Transaction Parity Act of 1982 to apply with respect to any
alternative mortgage transaction made in this State.
Applicability of title
SECTION 2. Section 37-1-201 of the 1976 Code, as last amended by Act 385 of
1982, is further amended to read:
"Section 37-1-201. (1) Except as otherwise provided in this section, this
title applies to consumer credit transactions made in this State. For purposes
of this title, a consumer credit transaction is made in this State if:
(a) A signed writing evidencing the obligation or offer of the consumer is
received by the creditor in this State; or
(b) The creditor induces the consumer who is a resident of this State to enter
into the transaction by face-to-face solicitation in this State.
(2) With respect to consumer credit transactions entered into pursuant to
open-end credit this title applies if the consumer's communication or indication
of his intention to establish the arrangement is received by the creditor in this
State. If no communication or indication of intention is given by the consumer
before the first transaction, this title applies if the creditor's communication
notifying the consumer of the privilege of using the arrangement is mailed or
personally delivered in this State.
(3) The subdivision on limitations on creditors' remedies (Part 1) of the
chapter on remedies and penalties (Chapter 5) applies to actions or other
proceedings brought in this State to enforce rights arising from consumer credit
transactions or extortionate extensions of credit, wherever made.
(4) A consumer credit transaction to which this title does not apply entered
into with a person who is a resident of this State at the time of the transaction
is valid and enforceable in this State to the extent that it is valid and
enforceable under the laws of the jurisdiction applicable to the transaction.
A creditor may not enforce rights against the consumer with respect to the
provisions of agreements which violate the provisions on limitations on
agreements and practices (Part 4) of the chapter on credit sales (Chapter 2) or
of the chapter on loans (Chapter 3).
(5) Except as provided in subsections (3), (4), and (8), a consumer credit
transaction made in another jurisdiction is valid and enforceable in this State
according to its terms to the extent that it is valid and enforceable under the
laws of the jurisdiction applicable to the transaction.
(6) For the purposes of this title, the residence of a consumer is the address
given by him as his residence in a writing signed by him in connection with a
credit transaction. Until he notifies the creditor of a new or different
address, the given address is presumed to be unchanged.
(7) For purposes of this section:
(a) 'Consumer' means the buyer, lessee, or debtor to whom credit is granted
in a consumer credit transaction.
(b) 'Consumer credit transaction' means a consumer credit sale or consumer
loan or a refinancing or consolidation thereof, or a consumer lease.
(c) 'Creditor' means the person who grants credit in a consumer credit
transaction or, except as otherwise provided, an assignee of a creditor's right
to payment, but use of the term does not in itself impose on an assignee any
obligation of his assignor. In the case of credit granted pursuant to a credit
card, the 'person who grants credit' is the card issuer and not another person
honoring the credit card.
(d) 'Open-end credit' means an arrangement pursuant to which:
(i) A creditor may permit a consumer, from time to time, to purchase or lease
on credit from the creditor or pursuant to a credit card, or to obtain loans from
the creditor or pursuant to a credit card,
(ii) The amounts financed and the finance and other appropriate charges are
debited to an account,
(iii) The finance charge, if made, is computed on the account periodically,
and
iv) The consumer has the privilege of paying in full or in installments.
(8) With respect to a consumer credit sale or consumer loan to which this
title does not otherwise apply, if, pursuant to solicitation in this State, a
consumer who is a resident of this State sends a signed writing evidencing the
obligation or offer of the consumer to a creditor in another state and receives
the goods or services purchased or the cash proceeds of the loan in this State:
(a) The creditor may not contract for or receive charges exceeding those
permitted by this title;
(b) The provisions on Powers and Functions of Administrator (Part 1 of Chapter
6 of this title) shall apply as though the consumer credit sale or consumer loan
were entered into in this State.
(9) Notwithstanding other provisions of this section:
(a) except as provided in subsection (3), this title does not apply if the
consumer is not a resident of this State at the time of a consumer credit
transaction and the parties have agreed that the law of his residence applies;
(b) this title applies if the consumer is a resident of this State at the time
of a consumer credit transaction and the parties have agreed that the law of his
residence applies.
(10) Each of the following agreements or provisions of an agreement by a
consumer who is a resident of this State at the time of a consumer credit
transaction is invalid with respect to the transaction:
(a) that the law of another jurisdiction apply;
(b) that the consumer consents to be subject to the process of another
jurisdiction;
(c) that the consumer appoints an agent to receive service of process;
(d) that fixes venue;
(e) that the consumer consents to the jurisdiction of the court that does not
otherwise have jurisdiction.
(11) The following provisions of this title specify the applicable law
governing certain cases:
(a) applicability (Section 37-6-102) of the Part on Powers and Functions of
Administrator (Part 1) of the Chapter on Administration (Chapter 6);
(b) applicability (Section 37-6-201) of the Chapter on Notification and Fees
(Part 2) of the Chapter on Administration (Chapter 6)."
"Consumer Credit Sale" not to include
SECTION 3. Subsection (2) of Section 37-2-104 of the 1976 Code, as last amended
by Section 10 of Act 385 of 1982, is further amended to read:
"(2) Unless the sale is made subject to this title by agreement (Section
37-2-601), 'consumer credit sale' does not include:
(a) a sale in which a seller allows the buyer to purchase goods or services
pursuant to a lender credit card or similar arrangement, or
(b) a sale of an interest in land if the debt is secured by a first lien or
equivalent security interest in real estate.
Credit sales excluded from the definition of a consumer credit sale pursuant
to this subsection are subject to the following provisions of this title: civil
liability for violation of disclosure (Section 37-5-203) and voluntary complaint
resolution (Section 37-6-117); and in credit sales excluded pursuant to item (b)
limitations on selection of a closing attorney and insurance agent [Section
37-10-102(a)] and notice of assumption rights [Section 37-10-102(c)]."
Department to maintain file
SECTION 4. (A) Subsection (6) of Section 37-2-305 of the 1976 Code, added by
Section 20 of Act 385 of 1982, is amended to read:
"(6) The Department of Consumer Affairs must maintain a file for each
creditor containing the original and all revised rate schedules by the creditor.
A certified copy of each filing showing the date and time that it was received
must be sent to the creditor making the filing at the time of its receipt. A fee
of ten dollars for each rate schedule filed by a creditor is payable to the
Department of Consumer Affairs for its services in maintaining the rate schedule
files and providing one certified copy of each rate filing to the creditor.
Additional certified copies of a filing shall be provided at a charge of four
dollars per copy."
(B) Section 37-2-305 of the 1976 Code, added by Section 20 of Act 385 of 1982,
is amended by adding at the end:
"(8) Every creditor must file at least one maximum rate schedule and pay
at least one ten dollar filing fee during each state fiscal year disclosing that
creditor's existing maximum rates. If this filing does not change any maximum
rates previously filed, the creditor will not be required to alter posted maximum
rates. If any creditor has not filed a maximum rate schedule with the Department
of Consumer Affairs since the beginning of the previous state fiscal year then
on July first of the following year the filing will no longer be effective and
the maximum credit service charge that the creditor may impose on any credit
extended after that date may not exceed eighteen percent per annum until such
time as the creditor files a revised maximum rate schedule that complies with
this section."
"Consumer Credit Sale"
SECTION 5. Subsection (2) of Section 37-2-413 of the 1976 Code, as last amended
by Section 24 of Act 385 of 1982, is further amended to read:
"(2) With respect to a consumer credit sale that is secured in whole or
in part by a lien on real estate the provisions of Section 37-10-102(a) apply
whenever the seller requires the debtor to purchase insurance or pay any
attorney's fees in connection with examining the title and closing the
transaction."
Consumer loan
SECTION 6. Subsection (2) of Section 37-3-404 of the 1976 Code, as last amended
by Section 36 of Act 385 of 1982, is further amended to read:
"(2) With respect to a consumer loan that is secured in whole or in part
by a lien on real estate the provisions of Section 37-10-102(a) apply whenever
the lender requires the debtor to purchase insurance or pay any attorney's fees
in connection with examining the title and closing the transaction."
Consumer loan secured by lien
SECTION 7. The 1976 Code is amended by adding:
"Section 37-3-412. With respect to a consumer loan which is secured in
whole or in part by a lien on real estate under which the aggregate of all sums
advanced or contemplated by the parties in good faith to be advanced will not
exceed one hundred thousand dollars, the rate of the loan finance charge shall
be a fixed nonvariable rate unless the creditor makes the transaction in
accordance with any regulation governing alternative mortgages promulgated by the
State Board of Financial Institutions or a federal regulatory agency."
Secured or unsecured consumer credit transactions
SECTION 8. Subsection (1) of Section 37-5-110 of the 1976 Code, as last amended
by Section 44 of Act 385 of 1982, is further amended to read:
"(1) With respect to a secured or unsecured consumer credit transaction
payable in two or more installments, after a consumer has been in default for ten
days for failure to make a required payment and has not voluntarily surrendered
possession of goods that are collateral, a creditor may give the consumer the
notice described in this section. A creditor gives notice to the consumer under
this section when he delivers the notice to the consumer or mails the notice to
him at his residence [Section 37-1-201(6)]."
Further
SECTION 9. Subsection (1) of Section 37-5-111 of the 1976 Code, as last amended
by Section 45 of Act 385 of 1982, is further amended to read:
"(1) With respect to a secured or unsecured consumer credit transaction
payable in two or more installments, except as provided in subsection (2), after
a default consisting only of the consumer's failure to make a required payment,
a creditor, because of that default, may neither accelerate maturity of the
unpaid balance of the obligation, nor take possession of or otherwise enforce a
security interest in goods that are collateral until twenty days after a notice
of the consumer's right to cure (Section 37-5-110) is given. Until expiration
of the minimum applicable period after the notice is given, the consumer may cure
all defaults consisting of a failure to make the required payment by tendering
the amount of all unpaid sums due at the time of the tender, without
acceleration, plus any unpaid delinquency or deferral charges. Cure restores the
consumer to his rights under the agreement as though the defaults had not
occurred."
Legal counsel
SECTION 10. Item (a) of Section 37-10-102 of the 1976 Code, added by Section 56
of Act 385 of 1982, is amended to read:
"(a) The creditor must ascertain the preference of the borrower as to the
legal counsel that is employed to represent the debtor in all matters of the
transaction relating to the closing of the transaction and except in the case of
a loan on property that is subject to the South Carolina Horizontal Property Act
(Section 27-31-10 et seq.) the insurance agent to furnish required hazard and
flood property insurance in connection with the mortgage and comply with such
preference, and the credit application on the first page thereof must contain
information as is necessary to ascertain these preferences of the borrower. The
creditor may require that the attorney or agent so chosen be able to provide
reasonable security to the creditor by way of mortgage title insurance in a
company acceptable to the creditor and other insurance in a company acceptable
to the creditor. If title insurance is made a condition of the loan at any point
during the negotiations, it must remain a condition all the time thereafter
regardless of which attorney ultimately closes the transaction. Any legal fees
other than for examination and certification of the title, the preparation of all
required documents, and the closing of the transaction required or incurred by
the creditor in connection with the transaction is the responsibility of the
creditor regardless of which party pays for the title work, document preparation,
and closing."
Secured loan agreement
SECTION 11. Section 37-10-103 of the 1976 Code, added by Section 56 of Act 385
of 1982, is amended to read:
"Section 37-10-103. With respect to a loan agreement which is secured in
whole or in part by a first or junior lien on real estate under which the
aggregate of all sums advanced or contemplated by the parties in good faith to
be advanced will not exceed one hundred thousand dollars.
(1) The debtor has the right to prepay the debt in full at any time without
penalty;
(2) The rate of the loan finance charge is a fixed, nonvariable rate. This
subsection does not apply:
(a) If the borrower otherwise agrees; and either
(b) The loan is primarily for a business or agricultural purpose or is used
for the construction of any improvements on the real estate which provides the
security for the loan; or
(c) The creditor makes the loan in accordance with any regulation governing
alternative mortgage loans promulgated by the State Board of Financial
Institutions or a federal regulatory agency."
Department to maintain file
SECTION 12. (A) Subsection (6) of Section 37-3-305 of the 1976 Code, added by
Section 33 of Act 385 of 1982, is amended to read:
"(6) The Department of Consumer Affairs must maintain a file for each
creditor containing the original and all revised rate schedules filed by the
creditor. A certified copy of each filing showing the date and time that it was
received must be sent to the creditor making the filing at the time of its
receipt. A fee of ten dollars for each rate schedule filed by a creditor is
payable to the Department of Consumer Affairs for its services in maintaining the
rate schedule files and providing one certified copy of each rate filing to the
creditor. Additional certified copies of a filing shall be provided at a charge
of four dollars per copy."
(B) Section 37-3-305 of the 1976 Code, added by Section 33 of Act 385 of 1982,
is amended by adding:
"(8) Every creditor must file at least one maximum rate schedule and pay
at least one ten dollar filing fee during each state fiscal year disclosing that
creditor's existing maximum rates. If this filing does not change any maximum
rates previously filed, the creditor will not be required to alter posted maximum
rates. If any creditor has not filed a maximum rate schedule with the Department
of Consumer Affairs since the beginning of the previous state fiscal year then
on July first of the following year the filing will no longer be effective and
the maximum finance charge that the creditor may impose on any credit extended
after that date may not exceed eighteen percent per annum until such time as the
creditor files a revised maximum rate schedule that complies with this
section."
Time effective
SECTION 13. This act shall take effect upon approval by the Governor. |