§14A-3-309.3. Index or rate of interest on revolving loan account
974 words·~4 min read·
/ok/title-14a-consumer-credit-code/14a-3-309-3·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
plan subject to variable rate and secured by consumer's principal dwelling - Termination of account - Change of terms or conditions - Refunding of fees.
(1)In the case of extensions of credit under a revolving loan account plan which are subject to a variable rate and are secured by a consumer's principal dwelling, the index or other rate of interest to which changes in the annual percentage rate are related shall be based on an index or rate of interest which is publicly available and is not under the control of the creditor.
(2)A creditor may not unilaterally terminate any account under a revolving loan account plan under which extensions of credit are secured by a consumer's principal dwelling and require the immediate repayment of any outstanding balance at such time, except in the case of:
(a)fraud or material misrepresentation on the part of the
consumer in connection with the account;
(b)failure by the consumer to meet the repayment terms of
the agreement for any outstanding balance; or
(c)any other action or failure to act by the consumer
which adversely affects the creditor's security for
the account or any right of the creditor in such
security. This subsection does not apply to reverse mortgage transactions.
(a)No revolving loan account plan under which extensions
of credit are secured by a consumer's principal
dwelling may contain a provision which permits a
creditor to change unilaterally any term required to
be disclosed under subsection
(1)of Section 3-309.2
of this title or any other term, except a change in
insignificant terms such as the address of the
creditor for billing purposes.
(b)Notwithstanding the provisions of paragraph
(a)of
this subsection, a creditor may make any of the
following changes:
(i)Change the index and margin applicable to
extensions of credit under such plan if the index
used by the creditor is no longer available and
the substitute index and margin would result in a
substantially similar interest rate,
(ii)Prohibit additional extensions of credit or
reduce the credit limit applicable to an account
under the plan during any period in which the
value of the consumer's principal dwelling which
secures any outstanding balance is significantly
less than the original appraisal value of the
dwelling,
(iii)Prohibit additional extensions of credit or
reduce the credit limit applicable to the account
during any period in which the creditor has
reason to believe that the consumer will be
unable to comply with the repayment requirements
of the account due to a material change in the
consumer's financial circumstances,
(iv)Prohibit additional extensions of credit or
reduce the credit limit applicable to the account
during any period in which the consumer is in
default with respect to any material obligation
of the consumer under the agreement,
(v)Prohibit additional extensions of credit or
reduce the credit limit applicable to the account
during any period in which:
(aa)the creditor is precluded by government
action from imposing the annual percentage
rate provided for in the account agreement,
or
(bb)any government action is in effect which
adversely affects the priority of the
creditor's security interest in the account
to the extent that the value of the
creditor's secured interest in the property
is less than one hundred twenty percent
(120%) of the amount of the credit limit
applicable to the account.
(vi)Any change that will benefit the consumer.
Upon the request of the consumer and at the time an
agreement is entered into by a consumer to open an
account under a revolving loan account plan under
which extensions of credit are secured by the
consumer's principal dwelling, the consumer shall be
given a list of the categories of contract obligations
which are deemed by the creditor to be material
obligations of the consumer under the agreement for
purposes of subparagraph
(iv)of paragraph
(b)of this
subsection.
(i)For purposes of subparagraph
(vi)of paragraph
(b)of this subsection, a change shall be deemed
to benefit the consumer if the change is
unequivocally beneficial to the consumer and the
change is beneficial through the entire term of
the agreement,
(ii)The Administrator may, by rule, determine
categories of changes that benefit the consumer.
(4)If any term or condition described in subsection
(1)of Section 3-309.2 of this title which is disclosed to a consumer in connection with an application to open an account under a revolving loan account plan described in such section, other than a variable feature of the plan, changes before the account is opened, and if, as a result of such change, the consumer elects not to enter into the plan agreement, the creditor shall refund all fees paid by the consumer in connection with such application.
(a)No nonrefundable fee may be imposed by a creditor or
any other person in connection with any application by
a consumer to establish an account under any revolving
loan account plan which provides for extensions of
credit which are secured by a consumer's principal
dwelling before the end of the three-day period
beginning on the date such consumer receives the
disclosure required under subsection
(1)of Section 2-
310.2 of this title and the pamphlet required under
subsection
(3)of Section 2-310.2 of this title with
respect to such application.
(b)For purposes of determining when a nonrefundable fee
may be imposed in accordance with this subsection if
the disclosures and pamphlet referred to in paragraph
(a)of this subsection are mailed to the consumer, the
date of the receipt of the disclosures by such
consumer shall be deemed to be three
(3)business days
after the date of mailing by the creditor. Added by Laws 1990, c. 260, § 26, operative July 1, 1990. Amended by Laws 2000, c. 217, § 11, eff. July 1, 2000.