2023 New York Laws › BNK - Banking › Article 3 - Banks and Trust Companies › 108 - Rates of Interest; Installment Obligations; Personal Loan Departments.

§ 108.  Rates  of  interest;  installment  obligations;  personal loan
departments. 1. Except as otherwise provided in this section, no bank or
trust company shall take, receive, reserve or  charge  on  any  loan  or
discount  made,  or upon any note, bill of exchange or other evidence of
debt, negotiable or otherwise, interest, as computed  pursuant  to  this
subdivision,  at  a  rate  greater  than  the  rate  prescribed  by  the
superintendent of financial services pursuant to section  fourteen-a  of
this  chapter, or, if no rate has been so prescribed, six per centum per
annum, or two dollars if the interest so  computed  is  less  than  that
amount.  Such  interest  may be taken in advance, reckoning the days for
which the note, bill or evidence of debt has to run. If interest  is  so
taken  in  advance  and  the  maturity  of  the  debt is accelerated and
judgment is obtained, or the debt is otherwise paid prior to its  normal
date  of maturity, the bank or trust company shall refund to the obligor
or his legal representative, as the case may be, the  unearned  interest
previously  deducted  and the unused portion of any premiums charged for
insuring the obligor under a group credit insurance policy, such  refund
to  be  calculated  in accordance with the method described in paragraph
(e) of subdivision four of this section. A reasonable charge by  a  bank
or  trust  company  for  the collection of a bona fide bill of exchange,
note or other evidence of debt payable at a place other than  the  place
where  purchased, discounted or sold, in addition to the interest, shall
not be considered interest for the purpose of  any  law  regulating  the
maximum rate of interest which may be charged, taken or received.
Anything    contained    in   this   subdivision   to   the   contrary
notwithstanding, the charging of interest  or  discount  on  a  loan  or
discount  made  outside  this state at a rate allowed by the laws of the
jurisdiction where such loan is made, or the acquisition by  a  bank  or
trust  company  of a part interest or the entire interest in any loan or
discount heretofore or hereafter made by a bank or trust company or  any
other banking institution, shall not be a violation of this section.
2.  Any  bank  or trust company may purchase or otherwise acquire from
the payee, owner or holder thereof any obligation in writing to  pay  in
installments  all  or  part of the price of personal property or that of
the performance of services, whether that  obligation  be  a  negotiable
promissory  note  or other evidence of debt, or any accounts receivable,
whether or not they are obligations in writing, or any lease of personal
property, and may lease personal property acquired by it, doing  so  for
such  price  or  rentals or other consideration and upon such additional
terms and conditions as may be mutually agreeable.
3. Upon advances of money, repayable on demand, to an amount not  less
than  five thousand dollars, made upon documents of title within article
seven of the uniform commercial code or  negotiable  instruments  within
article three or article eight of the uniform commercial code pledged as
collateral  security  for  such repayment, any bank or trust company may
receive or contract to receive and collect as  compensation  for  making
such  advances  any  sum which may be agreed upon by the parties to such
transaction.
4. (a) A bank or trust company may operate a personal loan  department
at  all  or  at  any one or more of its authorized places of business in
accordance with the requirements of this  subdivision.  The  records  of
such  department  shall  be  kept in such form as the superintendent may
from time to time prescribe. The superintendent may, after giving notice
of the contemplated action and reasonable opportunity to be heard, order
that the operation of such department be discontinued if he  shall  find
that  the bank or trust company has failed to conform to any requirement
of this subdivision. The superintendent may forthwith, and for a  period
not  to exceed thirty days pending further investigation, order that the

operation of any such department be temporarily discontinued if he shall
have  reasonable  cause  to  believe  that  the  requirements  of   this
subdivision  are  not having compliance. Such order of discontinuance or
temporary  discontinuance  may  apply  to  one or more of the authorized
places of business of a bank or trust company.  The  superintendent  may
terminate  or  modify  such  orders  if  he shall be satisfied that such
department will be operated in accordance with the requirements of  this
subdivision.   No   order   of  discontinuance  or  temporary  order  of
discontinuance shall impair or affect the obligation of any  preexisting
lawful loan or advance from a bank or trust company to any borrower.
(b)  A bank or trust company which operates a personal loan department
may make loans and charge interest thereon, which may be  calculated  on
the  actual  unpaid  principal  balances of the loan or in the case of a
loan commitment from the date of each advance thereunder for the  actual
time  outstanding, according to a generally accepted actuarial method at
a fixed or variable rate  in  accordance  with  the  provisions  of  the
evidence  of  the  indebtedness,  or taken in advance, computed from the
date of the loan, or in the case of a loan commitment from the  date  of
each  advance  thereunder,  to  the date of the last installment payable
thereunder, at the rate or rates agreed to by the bank or trust  company
and the borrower, with respect to any loan which is repayable at regular
periodic  intervals  of  not  more than one month over a period from the
date of the loan not exceeding (i)  thirty-seven  months,  if  the  face
amount  of the loan is for not more than twelve hundred dollars, or (ii)
any number of months agreed to by the bank  or  trust  company  and  the
borrower,  (A)  if  the  face amount of the loan is for more than twelve
hundred dollars, (B) if  the  loan  is  for  more  than  twelve  hundred
dollars,  and is made for a commercial or business use or purpose or for
investment in or purchase of an unincorporated  business  or  commercial
enterprise,  (C)  if the loan or loan commitment is made for educational
purposes as specified in subdivision five-b of this section, or  (D)  if
the  loan  or  advance  of  credit  is made for the purpose of financing
alterations, repairs and improvements upon or in connection with, or  as
the  superintendent  may authorize the equipping of existing structures,
and the building of new structures, upon urban, suburban, or rural  real
property  (including  the  restoration,  rehabilitation,  rebuilding and
replacement of such improvements which have been damaged or destroyed by
earthquake, conflagration, tornado, hurricane, cyclone, flood  or  other
catastrophe),  by the owners thereof or by lessees of such real property
under a lease expiring not less than six months after  the  maturity  of
the  loan  or  advance  of credit or by lessees under proprietary leases
from  corporations  or  partnerships  formed  for  the  purpose  of  the
cooperative  ownership  of  real  estate.  The  total  unpaid  principal
balances of any one or more loans made by such bank or trust company  to
the  borrower  pursuant  to  this  subdivision  shall  be  determined by
agreement between such bank or trust company and the  borrower.  If  the
loan  is made for a period of one year or more, provision may be made in
the note, instrument or other evidence of  debt,  for  the  omission  of
payments  during  not  more  than  any  three  specified  months  in any
twelve-month period, but the  maximum  period  of  thirty-seven  months,
shall not be exceeded. On any loan with a variable rate of interest made
pursuant  to  this  paragraph,  the  rate shall be determined at regular
intervals as set forth in the evidence of indebtedness and in accordance
with such regulations as the superintendent of financial services  shall
prescribe but said rate shall not vary more often than once in any three
month period and shall be based on a published index that is (a) readily
available,  (b)  independently verifiable, (c) beyond the control of the
bank or trust company and (d) approved by the superintendent.
The superintendent of  financial  services  shall  adopt  regulations,
including  but  not  limited  to:  (a)  providing  for disclosure to the
borrower by the bank or trust company of the circumstances  under  which
the rate may increase, any limitations on the increase, the effect of an
increase  and  an example of the payment terms that would result from an
increase; (b) providing for disclosure to the borrower by  the  bank  or
trust  company  of  a  history  of  the fluctuations of the index over a
reasonable period of time; and (c) providing for notice to the  borrower
from  the  bank or trust company prior to any rate increase or change in
the terms of payment.
(c) The rate of interest  authorized  by  this  subdivision  shall  be
inclusive  of all charges incident to investigating and making any loan.
No fee, commission, expense, or  other  charge  whatsoever  in  addition
thereto  shall  be  taken, received, reserved, or contracted for, except
(i) the fees payable to the appropriate public officer  to  perfect  any
lien or other security interest taken to secure the loan or the premium,
not  in  excess of such filing fee, payable for any insurance in lieu of
such filing; (ii) in  case  of  default,  and  in  accordance  with  the
provisions of the instrument evidencing the obligation, either a fine in
an  amount  not to exceed five cents per dollar on any installment which
has become due and remained unpaid for a period in excess of  ten  days,
but  no  such  fine shall exceed five dollars and only one fine shall be
collected on any such installment regardless of the period during  which
it remains in default, and provided further that should the aggregate of
such  fines  collected in connection with any loan exceed two per centum
of such loan, or in any event twenty-five dollars,  the  bank  or  trust
company shall refund such excess to the borrower within sixty days after
the  loan  is  paid  in  full,  or,  subject to an allowance of unearned
interest attributable to the amount in default, interest on each  amount
past  due  at  a  rate  not  in  excess  of the rate provided for in the
instrument evidencing the obligation;  (iii)  the  actual  expenditures,
including  reasonable  attorney's  fees for necessary court process; and
(iv) in case the bank or trust company insures a borrower under a credit
unemployment insurance policy, group life insurance policy, group health
insurance policy, group accident insurance policy, or group  health  and
accident  insurance  policy,  or requires insurance on personal property
securing any such  loan,  an  amount  not  in  excess  of  the  premiums
chargeable  in accordance with rate schedules then in effect and on file
with the superintendent of financial services for such insurance by  the
insurer.  No bank or trust company shall require a borrower to place any
sum on deposit,  or  to  make  deposits  in  lieu  of  regular  periodic
installment payments, or to do or refrain from doing any other act which
would  entail  additional expense or sacrifice, as a condition precedent
to granting a loan under the authority of  this  subdivision  except  as
provided  in  subdivision  five-b  of  this section. Notwithstanding the
foregoing, a bank or trust company may, with the prior approval  of  the
superintendent, offer a loan product that encourages personal savings by
requiring  a  borrower  to  place a portion of the principal of the loan
into an interest-bearing savings account as  a  condition  precedent  to
granting  a  loan  under  the authority of this subdivision. In deciding
whether to approve a loan product pursuant to  the  preceding  sentence,
the  superintendent  may  consider the recent results of examinations of
the bank  or  trust  company,  the  terms  and  structure  of,  and  the
underwriting  criteria and marketing plan for the proposed loan product,
other loans offered by the bank or trust company, and such other factors
the superintendent deems to be relevant. Notwithstanding the  provisions
of  this  paragraph  no  refund  of excess fines shall be required if it
amounts to less than one dollar.
(d) In each note, instrument or other evidence  of  debt  given  by  a
borrower  to  evidence a loan under this subdivision, where such loan is
not subject to the provisions of the act of congress entitled "Truth  in
Lending Act" and the regulations thereunder, as such act and regulations
may  from  time  to  time  be  amended,  the rate of charge (stating any
minimum as permitted by  this  subdivision  four),  shall  be  expressed
either  in accordance with the method prescribed by such act of congress
or: (i) as a rate in dollars per annum discount per one hundred  dollars
face  amount of loan, or (ii) as the rate or rates agreed to by the bank
or trust company and the borrower.
(e) A borrower may prepay the loan in full or, with the consent of the
bank or trust company, may  refinance  the  loan.  If  the  interest  is
calculated   on   the  actuarial  basis,  or  if  the  evidence  of  the
indebtedness provides that the rate of interest may vary  from  time  to
time,  a  borrower  may  prepay the loan in full without penalty. If the
interest was taken in advance,  in  the  event  of  such  prepayment  or
refinancing,  the  bank  or trust company shall refund: (1) the unearned
portion of the interest to the borrower  the  amount  of  which  portion
shall  be determined according to a generally accepted actuarial method;
provided, however, that if the amount of  interest  previously  deducted
(i)  was  less  than  ten  dollars, no refund shall be required; or (ii)
exceeded the sum of ten dollars and the earned  interest  is  less  than
that  amount,  the  bank  or trust company may retain such an additional
amount as will bring the earned interest to the sum of ten  dollars  and
refund  the  remainder,  and  provided  further, that unless the loan is
refinanced, no refund shall be required if it amounts to less  than  one
dollar;  and  (2)  if a charge was made to the borrower for premiums for
insuring the borrower under  a  credit  unemployment  insurance  policy,
group  life insurance policy, or under a group health, group accident or
group health and accident insurance policy, the excess of the charge  to
the  borrower  therefor over the premiums paid or payable by the bank or
trust company, if such premiums were paid or  payable  by  the  bank  or
trust  company  periodically,  or  the refund for such insurance premium
received or receivable by the bank or trust company, if such premium was
paid or payable in a lump sum by the bank  or  trust  company,  provided
that  no  such  refund  shall be required if it amounts to less than one
dollar. In the event (i) the maturity of the loan is accelerated due  to
the  default  of  the borrower or otherwise and judgment is obtained, or
(ii) repayment is made  pursuant  to  any  such  insurance  policy,  the
borrower  or  his  legal  representative,  as  the case may be, shall be
entitled to the same refund as if the loan had been prepaid in  full  on
the date of acceleration or repayment.
(f)  A  bank  or  trust company may, upon agreement with the borrower,
extend the scheduled due date or defer the scheduled payment of  all  or
any  part of any installment or installments payable under the loan. The
agreement for such extension or deferment must be in writing and  signed
by  the  borrower. The bank or trust company may charge and contract for
the payment of an extension or  deferral  charge  by  the  borrower  and
collect and receive the same, at the rate or rates agreed to by the bank
or  trust  company and the borrower, on the amount of the installment or
installments, or part thereof, extended or deferred for  the  period  of
extension  or deferral. Such period shall not exceed the period from the
date when such extended or deferred installment or installments, or part
thereof, would have been payable in the absence  of  such  extension  or
deferral,  to  the  date  when such installment or installments, or part
thereof, are made payable under the agreement of extension or deferment;
except that a minimum charge of one dollar for the period  of  extension
or  deferral  may  be  made  in any case where the extension or deferral

charge, when computed at such rate, amounts to  less  than  one  dollar.
Such  agreement  may also provide for the payment by the borrower of the
additional cost to the bank or trust company of premiums for  continuing
in  force,  until  the  end of such period of extension or deferral, any
insurance coverages provided in connection with the loan subject to  the
other provisions of this subdivision.
(g)  If  the  borrower  is  obligated  in  connection with the loan to
maintain  insurance  on  a  motor  vehicle  securing  the  loan  and  if
subsequent  to the making of the loan the borrower fails to maintain the
insurance, the bank or trust company may make advances  to  procure  the
equivalent  limits of insurance for either the interests of the borrower
and the bank or trust company or of either of them, and  any  amount  so
advanced  may be the subject of an interest charge from the date of such
advance as though such amount was part of the unpaid  principal  balance
of  the loan.   Each amount so advanced shall be secured by the personal
property if so provided in the security agreement covering the  personal
property  and  if  the  bank  or  trust company notifies the borrower in
writing of the advance of such amount and of his or her option to  repay
such amount in any one of the following ways:
(1)  Full  payment  within ten days from the date of giving or mailing
the notice;
(2) Full  amortization  during  the  term  of  the  insurance  or  the
remaining term of the loan, at the option of the bank or trust company;
(3)  If  offered  by  the  bank  or  trust company, as a final balloon
payment payable one month after the last scheduled payment in connection
with the loan;
(4) If offered by the bank or trust company, full  amortization  after
the  term  of the loan, to be payable in instalments which do not exceed
the average instalment payable in connection with the loan; or
(5) If offered by the bank or trust company,  any  other  amortization
plan.
If  the  borrower  neither  pays  in  full  the amount so advanced nor
notifies the bank or trust company in  writing  of  his  or  her  choice
regarding  amortization  options  before the expiration of ten days from
the date of giving or mailing  of  the  notice  by  the  bank  or  trust
company, the bank or trust company shall amortize the amount so advanced
pursuant to subparagraph two of this paragraph.
5.  (a)  A  bank  or  trust  company  which  operates  a personal loan
department pursuant to paragraph (a)  of  subdivision  four  hereof  may
establish  credits  under written agreements with borrowers, pursuant to
which one or more loans or advances to or for the account of a  borrower
may  be  made from time to time, by means of honoring one or more checks
or other written, electronic or telephonic orders  or  requests  of  the
borrower  and may charge interest on such loans and advances at the rate
permitted by paragraph (b) of this subdivision, provided such loans  and
advances   comply   with   the  provisions  of  this  subdivision.  This
subdivision does not authorize any bank or trust  company  to  make  any
loan  or  advance  in  connection with the purchase or lease of goods or
services by means of a credit card as defined in  section  five  hundred
eleven  of  the  general  business  law,  except  for  a loan or advance
resulting from the use of a card which may be used to access  a  deposit
account  and line of credit associated with that account. The records of
such loans and advances shall be kept in such form as the superintendent
may from time to time prescribe.
(b) Such agreement may provide for interest on  the  unpaid  aggregate
principal   amount  of  such  loans  and  advances  from  time  to  time
outstanding at the rate or rates agreed to by the bank or trust  company
and  the  borrower,  as computed pursuant to this section, including, in

accordance with the provisions of the agreement,  rates  that  may  vary
from  time  to  time  reckoned  on  each  loan  or advance from the date
thereof, calculated on any of the following bases:  (i)  on  the  unpaid
principal   amount  of  such  loans  and  advances  from  time  to  time
outstanding, or (ii) for each month on an  average  balance  outstanding
determined  by  dividing  by  two  the  sum  of  the  balances of unpaid
principal of such loans and advances outstanding  on  two  dates  during
such  month,  as  specified  in such agreement; the first of which dates
being not later than the fifteenth day of  such  month  and  the  second
being not earlier than the sixteenth day of such month and not less than
ten  nor  more  than twenty days after the first date, or (iii) for each
month on a fixed amount selected from a schedule, which fixed amount may
exceed the average daily balance under (i) above, or the average balance
if determined under (ii) above, by a differential of not more than  five
dollars,  provided  the  same  fixed  amount  is also used for computing
interest for any month for which such balance exceeds said fixed  amount
by any amount up to at least the same differential. For purposes of this
subdivision, a month may but need not be a calendar month, and a bank or
trust  company  computing  interest on a daily basis may charge for each
day one thirtieth of the monthly interest  rate.  No  amendment  to  any
agreement  shall  take  effect  unless  at  least  30  days prior to the
effective date of such amendment,  imposition  or  increase,  a  written
notice  has  been  mailed  or delivered to the borrower that clearly and
conspicuously describes such amendment, imposition or increase  and  the
indebtedness  to which it applies and if the amendment has the effect of
increasing the rate of interest, either (a) the notice states  that  the
incurrence  by  the  borrower or another person authorized by him of any
further indebtedness under the plan to which the agreement relates on or
after the effective date of such change specified in  the  notice  shall
constitute  acceptance of such change, and either the borrower agrees in
writing to such change or the borrower or another person  authorized  by
him  incurs  such further indebtedness on or after the effective date of
the change stated in the notice, or (b) the notice advises the  borrower
that  he  has thirty days from the earlier of the mailing or delivery of
the notice to advise the bank or trust company in writing that  he  does
not accept such amendment, provided that such notice contains an address
to  which the borrower may send notice of his election not to accept the
amendment and also provided that the notice specifies that the amendment
will take effect absent receipt of the borrower's written  objection  to
the amendment. Any borrower who has received a notice pursuant to clause
(a)  who  does  not  agree  in  writing  to the amendment and no further
indebtedness is incurred under the plan to which the agreement  relates,
and  any  borrower  who  gives  a timely notice, pursuant to clause (b),
electing not to accept the amendment  shall  be  permitted  to  pay  his
outstanding  indebtedness  in accordance with the terms of the agreement
but the bank or  trust  company  may  terminate  the  amount  of  credit
available  to  the  borrower  and may require the borrower to return all
credit cards and checks issued in connection with the agreement. If such
a borrower subsequently obtains credit under  the  agreement,  such  use
shall  constitute  acceptance of the change of terms and shall be deemed
to have been accepted and shall become effective as to the  borrower  as
of  the  date such change would have become effective but for the giving
of notice by the borrower. If notice is given pursuant to clause (b) and
the borrower does not timely object in writing to  the  amendment,  such
amendment  shall  become  effective  without  action  on the part of the
borrower; provided that in no event shall any such amendment or increase
take effect with respect to (i) the unpaid aggregate principal amount of
loans or advances representing indebtedness outstanding prior to January

1, 1981 and (ii) the unpaid  aggregate  principal  amount  of  loans  or
advances  representing  indebtedness  incurred,  under or pursuant to an
agreement in effect on December 1, 1980, between January  1,  1981,  and
the  effective date of such amendment or increase specified in the first
notice  mailed  or  delivered  pursuant  to  clause  (a).   Indebtedness
outstanding  prior  to  January 1, 1981, for purpose of clause (i) above
and indebtedness outstanding prior to the effective date of an  increase
for  purposes  of  clause (ii) above shall be determined on the basis of
crediting payments and other credits first to that portion of  any  such
indebtedness  representing interest charges, insurance premiums, service
charges and fines and then to that portion  representing  the  principal
amount  of  loans or advances in the order in which made. The provisions
of this paragraph permitting an increase in a rate of interest shall not
apply in the case of an agreement which expressly prohibits changing  of
interest  rates  or  which  provides limitations on changing of interest
rates  which  are  more  restrictive  than  the  requirements  of   this
paragraph.  An  amendment  to an agreement deleting a provision that the
rate of interest may vary from time to time  may  not  become  effective
within one year from the later of the effective date of the agreement or
the  effective  date  of  an amendment to an agreement adding a variable
rate provision. On any loans or advances with rates of interest that may
vary from time to time made pursuant to this  paragraph,  such  variable
rates  of interest shall be determined at regular intervals as set forth
in the  agreement  and  in  accordance  with  such  regulations  as  the
superintendent of financial services shall prescribe but said rate shall
not  vary  more  often  than once in any three month period and shall be
based  on  a  published  index  that  is  (a)  readily  available,   (b)
independently  verifiable,  (c)  beyond the control of the bank or trust
company and (d) approved by the superintendent, (e) such loan rate shall
be based on the index  values,  or  the  index  numbers  plus  or  minus
additional  percentage  points provided, however, that variations in the
rate must correspond directly to the movements of the index values  plus
or   minus   additional  percentage  points  only.  Once  such  rate  is
established no lending institution may add any factors to  increase  the
rate  other  than  variations in the established index without the prior
approval of the superintendent of financial services.  For  purposes  of
this  paragraph,  an adjustment in the rate of interest as a consequence
of movement in the selected index shall not constitute an  amendment  to
that  agreement. A reduction in the grace period for the assessment of a
fee on any installment  not  paid  when  due,  shall  be  considered  an
amendment to an agreement as set forth in this paragraph.
The  superintendent of financial services shall adopt regulations with
respect to agreements that provide for  a  variable  rate  of  interest,
including  but  not  limited  to:  (a)  providing  for disclosure to the
borrower by the bank or trust company of the circumstances  under  which
the rate may increase, any limitations on the increase, the effect of an
increase  and  an example of the payment terms that would result from an
increase; (b) providing for disclosure to the borrower by  the  bank  or
trust  company  of  a  history  of  the fluctuations of the index over a
reasonable period of time; and (c) providing for notice to the  borrower
from  the  bank or trust company prior to any rate increase or change in
the terms of payment. The  regulations  shall  allow  a  bank  or  trust
company  after  choosing  an  approved  index  to  choose a spread and a
minimum and maximum rate of interest at its discretion.
A written agreement, whether it  provides  for  a  fixed  or  variable
interest  rate,  may  provide  for  an  introductory rate of interest at
either a fixed or a variable rate,  provided  that  the  terms  of  such
introductory  rate,  including,  if  applicable,  the  date on which the

introductory rate shall terminate, are disclosed to the  borrower.  Such
disclosure  shall  be  contained  on an application form or pre-approved
written solicitation as specified pursuant to subdivisions one and one-a
of  section five hundred twenty of the general business law. A change in
the interest rate upon expiration of an introductory rate shall  not  be
considered  a  variable  rate or a change in terms. The interest rate in
effect after expiration of an introductory rate may apply to all amounts
due under the agreement regardless of when incurred  and  disclosure  of
the same shall be provided to the borrower in the written agreement.
Any interest charge, whether assessed by a fixed or variable rate, may
be  reduced  on  such  terms as the bank or trust company may determine,
provided that the terms of such reduction, including, if applicable, the
date on which  the  reduction  will  terminate,  are  disclosed  to  the
borrower  on  the  written notice announcing the reduction, prior to the
effective date of the reduction. A new method of determining an interest
charge is a reduction in the interest charge if  the  charge  determined
under the new method never exceeds the charge under the original method.
The  original  interest  charge  or  original  method of determining the
interest charge may be applied after the reduction ends  to  the  entire
outstanding  indebtedness,  including  any  indebtedness incurred when a
reduced interest charge applied and disclosure  of  the  same  shall  be
provided to the borrower in the written notice announcing the reduction.
A  reduction  to  an  interest  charge,  including the resumption of the
original interest charge or  the  original  method  of  determining  the
interest  charge,  shall not be considered an amendment of the agreement
for purposes of this paragraph.
(c) The aggregate unpaid  principal  amount  of  all  such  loans  and
advances  to  a  borrower made pursuant to this subdivision by a bank or
trust company at  any  one  time  outstanding  shall  be  determined  by
agreement  between such bank or trust company and the borrower except to
the extent that such loans or advances are made pursuant  to  a  written
agreement  providing for establishing credits for a primarily commercial
or business use or purpose or  for  investment  in  or  purchase  of  an
interest in an unincorporated business or commercial enterprise.
(d)  The  aggregate  unpaid principal amount of all loans and advances
outstanding at any time pursuant to this subdivision shall be  repayable
at  regular  periodic  intervals of not more than one month and for such
term as agreed upon by such bank or  trust  company  and  the  borrower;
provided,  however,  that  nothing herein shall prohibit a bank or trust
company from providing in any agreement for the omission of payments for
three consecutive specified months during any consecutive  twelve  month
period.  The  initial installment of any loan or advance may be deferred
for a period of not more than sixty-five days from the date of such loan
or advance; provided, however, that the installments payable during  any
such  period on any prior loans or advances shall not be affected by any
such deferment. Provided, however,  that  an  agreement  may  require  a
minimum installment as agreed upon by the parties.
The  borrower  may  at  any time prepay the amount owing in part or in
full, with interest to the date of prepayment.
Notwithstanding the  foregoing  provisions  of  this  paragraph,  each
installment  or  other  amount paid by the borrower to the bank or trust
company may be applied to interest, insurance premiums, service charges,
fines and principal in the order named, or in any  such  manner  as  the
agreement  may  provide. The term "installment" may be deemed to include
or exclude amounts  to  be  applied  to  interest,  insurance  premiums,
service charges and fines.
(e)  The  fees  and charges authorized by this paragraph and paragraph
(b) of this subdivision  shall  be  inclusive  of  all  charges  to  the

borrower  incident to investigating and making any such loan or advance.
No fee, commission, expense, or other charge to the borrower  whatsoever
shall  be  taken,  received,  reserved,  or  contracted  for,  except as
provided  in  this  subdivision.  In  addition  to  the  interest charge
permitted under paragraph (b) of this subdivision,  the  bank  or  trust
company  may charge, receive and collect any one or more of the fees and
charges described in this paragraph,  provided  that  any  such  fee  or
charge is set forth in the written agreement with the borrower. The bank
or  trust  company may contract with the borrower for the payment by the
borrower of: (i) a service charge either as a percentage  or  an  amount
upon each such check or other written, electronic or telephonic order or
request  which is approved; (ii) a charge in an amount or percentage for
each check or other written, electronic or telephonic order  or  request
to  obtain  money  from  a credit line that cannot be approved since the
borrower is in violation of the terms of the  agreement  or  payment  of
such  order  or  request  would cause borrower to be in violation of the
terms of the agreement; (iii) a fee for any  installment  which  is  not
paid  on  or before the date on which it is due. A bank or trust company
that imposes the charge described in this subparagraph without  allowing
a grace period of at least ten days must credit any cash payment made by
a  borrower  to  a teller at a branch where deposits are accepted by the
bank or trust company, as of the date of receipt of  the  payment;  (iv)
the  actual  expenditures,  including  reasonable  attorneys'  fees  for
necessary court process; (v) in case the bank or trust company insures a
borrower in accordance with applicable insurance law, including but  not
limited  to  under  a  credit  unemployment insurance policy, group life
insurance  policy,  group  health  insurance  policy,   group   accident
insurance  policy,  or  group  health  and accident insurance policy, an
amount for each month which,  notwithstanding  any  other  law,  may  be
computed  on  the  amount  of  the borrower's entire unpaid indebtedness
under this subdivision except in the case of a loan or  loan  commitment
made  under  this  subdivision  for educational purposes as specified in
subdivision five-b of this section, and then on  an  amount  no  greater
than  the  unpaid balance of the borrower's scheduled periodic payments,
whether due or not due, upon the loan or loan commitment, at a rate  not
in  excess  of the premiums chargeable for such month in accordance with
rate schedules then in effect and on file  with  the  superintendent  of
financial  services  for such insurance by the insurer; (vi) if loans or
advances may be obtained by use of a credit card issued by the  bank  or
trust  company  to  the  borrower,  an  annual fee for membership in the
credit card plan. If the borrower has requested the issuance of a credit
card, the fee for the first year may be charged by  the  bank  or  trust
company  at any time. The bank or trust company shall in each subsequent
year in which an annual fee is payable, send the borrower in or with the
statement for the monthly billing period before that in which the fee is
to be billed, a notice that the annual fee will be billed  in  the  next
monthly  statement.    A  borrower who is not delinquent or otherwise in
breach of any term of the agreement with the bank or trust company shall
have the right during the first six  months  after  the  annual  fee  is
billed to notify the bank or trust company in writing, at its address on
the  credit agreement, to terminate the borrower's account and request a
refund of the unused portion of the annual  fee  previously  paid.  Upon
receipt of the termination notice and refund request from such borrower,
the  bank  or  trust company shall refund to the borrower the unused pro
rata share of any annual fee previously paid as  of  the  first  billing
statement  date  after  receipt  of the termination notice; and (vii) an
overlimit charge which may be  imposed  whenever  the  specified  credit
limit  is exceeded but not more than once in a monthly billing cycle. If

the overlimit charge is imposed, the credit limit must be  disclosed  on
the  monthly billing statement; and (viii) a returned payment charge, in
the amount set forth in section 5-328 of the  general  obligations  law,
for  any  check  or  other  method  of  payment that is returned unpaid,
excluding payment made by automated teller machine or  other  electronic
media;  (ix)  a  charge  for replacement of lost or stolen credit cards,
which charge shall be applied only where a borrower has suffered a  lost
or  stolen  credit card after two replacements thereof; (x) a charge for
additional credit cards for the borrower's account; and  (xi)  a  charge
for  copies  of  sales slips, cash advance slips, monthly statements and
other documents when such copies are not required by  federal  or  state
law governing billing error disputes.
The  fees  and  charges  set  forth  in  this  paragraph  shall not be
considered in applying sections 190.40 and 190.42 of the penal law.  For
purposes  of  12 U.S.C. §§  85, 1831d, 1463(g) and 1785(g), the fees and
charges permitted under this paragraph are interest under New York  law,
and  all  terms, conditions, and other provisions of a written agreement
between a bank or  trust  company  and  a  borrower,  including  without
limitation,  fees  and  charges,  provisions  related  to  the method of
determining the outstanding balance  on  which  an  interest  charge  is
imposed  and  circumstances  in which an interest charge may be avoided,
are material to the determination of the interest rate  under  New  York
law.
(f)  No bank or trust company shall require a borrower to keep any sum
on deposit, or to make deposits in lieu of regular periodic  installment
payments,  or  to  do  or  refrain  from doing any other act which would
entail additional expense or sacrifice, as a condition precedent to  the
entering  into  of  the agreement or granting of a loan or advance under
the authority of this subdivision, except  as  provided  in  subdivision
five-b  of this section, provided, however, that nothing herein shall be
construed to prohibit a borrower  from  agreeing  that  such  loans  and
advances  may  be  disbursed by crediting a demand deposit account to be
opened or maintained by the borrower on the same terms  as  are  offered
generally by the bank or trust company to all or any class or classes of
demand  deposit  customers,  and  provided further, that a bank or trust
company may require a  pledge  to  such  bank  or  trust  company  of  a
specifically identified interest-bearing deposit account at such bank or
trust  company  as  collateral  security for a loan made by such bank or
trust company under the authority of this subdivision.
5-a. A bank or trust company may make loans  secured  by  mobile  home
chattel  paper  evidencing a monetary obligation incurred to finance the
purchase of a mobile home located at the time of such purchase, or to be
located within ninety days, at a semipermanent site within the state  or
in  a  contiguous  state  and  to  be  maintained  as a residence of the
borrower,  the  borrower's  spouse,   child,   grandchild,   parent   or
grandparent.
(1) For this subdivision:
(i)  "mobile  home  chattel  paper"  means  written evidence of both a
monetary obligation and a security  interest  of  first  priority  in  a
mobile home and any equipment installed or to be installed therein; and
(ii)   "mobile   home"  or  "manufactured  home"  means  a  structure,
transportable in one or more sections, which in the traveling  mode,  is
eight  body  feet or more in width or forty body feet or more in length,
or when erected on site, is three hundred twenty or  more  square  feet,
and  which  is built on a permanent chassis and designed to be used as a
dwelling with or  without  a  permanent  foundation  when  connected  to
required utilities, and includes the plumbing, heating, air-conditioning
and electrical systems contained therein.
(2)  If the loan is for the purpose of financing the purchase of a new
mobile home,
(i)  it shall mature not later than two hundred forty months after the
date thereof, and
(ii) the amount advanced shall not exceed one hundred per cent of  the
sum  of  (a)  the  manufacturer's  invoice  price  of  such  mobile home
(including any installed equipment), excluding  freight,  plus  (b)  the
invoice  price  of the manufacturer of any new equipment installed or to
be installed by the dealer, excluding freight.
(3) If the loan is for the purpose of financing the purchase of a used
mobile home,
(i) it shall mature not later than two hundred forty months after  the
date of the loan, and
(ii)  the amount advanced shall not exceed one hundred per cent of the
purchase price of the used mobile home actually paid  or  the  wholesale
value  of  such  mobile  home  (including  any  installed  equipment) as
established in the dealer's market, whichever is the lower.
(4) The loan shall be payable in equal or substantially equal  monthly
installments  calculated  from the date of the loan. Interest, which may
be taken in advance, may be charged thereon, computed from the  date  of
the  loan to the date of the last installment payable thereunder, if the
loan has a maturity (i) not exceeding thirty-seven months, at a rate not
to exceed six dollars per annum discount per one hundred dollars of  the
face amount or ten dollars if the interest so computed is less than that
amount,  or  (ii) exceeding thirty-seven months, at a rate not to exceed
five dollars per annum discount per one  hundred  dollars  of  the  face
amount  or  ten  dollars,  if the interest so computed is less than that
amount; provided that the interest which may be charged, if  it  exceeds
ten  dollars,  shall  not  exceed  one  per cent per month on the unpaid
principal balance.
(5) The authorized interest shall  include  all  charges  incident  to
investigating and making any loan. No fee, commission, expense, or other
charge  shall  be  permitted  except  that the bank or trust company may
contract to charge the borrower (i) the fees payable to a public officer
to perfect any lien or other security interest taken to secure the loan,
or the premium, not in excess of such fee, payable for any insurance  in
lieu of such filing; (ii) in case of default, and in accordance with the
instrument  evidencing the obligation, either a fine in an amount not to
exceed five per cent  on  any  installment  which  has  become  due  and
remained  unpaid  for  a  period in excess of ten days, but no such fine
shall exceed five dollars and only one fine shall be  collected  on  any
such installment regardless of the duration of the default, and provided
further  that should the aggregate of such fines collected in connection
with any loan exceed two per cent of such loan  or  twenty-five  dollars
the  bank  or  trust  company shall refund such excess within sixty days
after the loan is paid in full, or, subject to an allowance of  unearned
interest  attributable to the amount in default, interest on each amount
past due at a rate not in excess of one per cent per  month  during  the
period   of   delinquency;  (iii)  the  actual  expenditures,  including
reasonable attorney's fees for necessary court process, and (iv) in case
the bank or trust company insures a borrower under a credit unemployment
insurance policy, group life, health, accident, or health  and  accident
insurance  policy,  or  requires insurance on the property securing such
loan, an amount not in excess of the premiums  lawfully  chargeable.  No
bank  or  trust  company  shall  require  a borrower to place any sum on
deposit, or to make deposits in lieu  of  regular  periodic  installment
payments,  or  to  do  or  refrain  from doing any other act which would
entail additional expense or sacrifice, as a condition of a mobile  home

loan,  as the superintendent may from time to time approve. No refund or
excess fines shall be required if it amounts to less than one dollar.
(6) A borrower may prepay the loan in full or, with the consent of the
bank  or  trust company, may refinance the loan. In such event, the bank
or trust company shall refund: (1) the unearned portion of the  interest
to  the  borrower  the  amount  of  which  portion  shall  be determined
according to a generally accepted actuarial method; provided that if the
interest previously deducted (i) was less than ten  dollars,  no  refund
shall  be required; or (ii) exceeded ten dollars and the earned interest
is less than that amount, the bank or trust company may retain  such  an
additional  amount  as will bring the earned interest to ten dollars and
refund the remainder, and provided further,  that  unless  the  loan  is
refinanced,  no  refund shall be required if it amounts to less than one
dollar; and (2) if a charge was made to the borrower  for  premiums  for
insuring  the  borrower  under  a  credit unemployment insurance policy,
group life insurance policy, or under a group health, group accident  or
group  health and accident insurance policy, the excess of the charge to
the borrower therefor over the premiums paid or payable by the bank,  if
such  premiums  were  paid  or  payable  by  the  bank  or trust company
periodically, or the refund  for  such  insurance  premium  received  or
receivable  by  the  bank  or trust company, if such premium was paid or
payable in a lump sum by the bank or trust company. No such refund  need
be  made  if  it  amounts  to less than one dollar. In the event (i) the
maturity of the loan is accelerated due to the default of  the  borrower
or  otherwise  and  judgment  is  obtained,  or  (ii)  repayment is made
pursuant to any  such  insurance  policy,  the  borrower  or  his  legal
representative, as the case may be, shall be entitled to the same refund
as  if  the loan had been prepaid in full on the date of acceleration or
repayment.
(7) As a condition of any loan  made  pursuant  hereto,  the  borrower
shall  certify  that the mobile home, for the purchase of which the loan
is made, is intended to be maintained in the state or  in  a  contiguous
state  as  a  residence  of  the borrower, the borrower's spouse, child,
grandchild, parent or grandparent. If the mobile home shall  not  be  so
maintained  on the ninetieth day next succeeding the date of the loan or
if it is relocated so as to no longer be  located  in  the  state  or  a
contiguous  state  at any time before the first anniversary of the loan,
the loan and all authorized charges shall  become  immediately  due  and
payable  subject  only to the refund provisions of paragraph six and the
borrower may, if the contract so provides, be  required  to  pay  as  an
additional  authorized  charge, a penalty in an amount not to exceed two
per cent of the face amount of the loan.
(8) No investment shall be made by a bank or trust company pursuant to
this subdivision if the total amount invested by  it  pursuant  to  this
subdivision exceeds, or by the making of such investment will exceed, an
amount  equal  to  fifteen  per  cent of the assets of the bank or trust
company.
(9) Subject to such limitations and conditions as  the  superintendent
of  financial  services  may  prescribe by general regulation, a bank or
trust company may make a loan pursuant to  this  subdivision  which  the
federal  housing  administrator  has insured or has made a commitment to
insure and may receive and hold such debentures as  are  issued  by  the
federal  housing administrator in payment of such insurance, or which is
guaranteed pursuant to the provisions of the act  of  congress  entitled
the  "Servicemen's  Readjustment  Act  of  1944."  No  law of this state
prescribing or limiting the interest rate  upon  loans  or  advances  of
credit or prescribing a penalty for violation thereof or prescribing the
nature,  amount  or  form  of  security or requiring security upon which

loans or advances of credit may be made or prescribing or  limiting  the
period for which loans or advances of credit may be made or limiting the
amount  of any class of loans, advances of credit or purchases which may
be  made  shall  be  deemed  to  apply  to  loans, advances of credit or
purchases made or  to  loans  acquired  by  purchase  pursuant  to  this
paragraph.
5-b.  Notwithstanding  any  inconsistent  provision of this section, a
bank or trust company may make loans for the purpose  of  defraying  the
cost of education of one or more students at a university or college, or
at  an  elementary  or  secondary school providing education required of
minors which may  provide  for  (i)  payment  of  origination  fees,  or
guarantee  fees  in  such amounts as the superintendent may from time to
time  approve;  (ii)  capitalization  of  interest,  provided  that  the
borrower  has the option to avoid capitalization by paying such interest
without penalty; and (iii) deferral and forbearance  of  payments  under
circumstances  for  which  such deferral or forbearance could be granted
for loans made pursuant to Title IV of the Higher Education Act of  1965
(20 USC 1070 et seq.).
6.  The  knowingly  taking, receiving, reserving or charging a greater
rate of interest than that authorized by this  section  as  computed  by
this  section,  shall  be  held  and adjudged a forfeiture of the entire
interest which the note, bill of exchange  or  other  evidence  of  debt
carries  with  it, or which has been agreed to be paid thereon, and if a
greater rate of interest has been paid, the person paying  the  same  or
his  legal  representative  may  recover  from the bank or trust company
twice the entire amount of the interest thus paid.
7. Upon an advance of money, whether or not repayable on demand, to an
amount not less than five thousand dollars, made upon documents of title
within article seven  of  the  uniform  commercial  code  or  negotiable
instruments  within  article  three  or  article  eight  of  the uniform
commercial code pledged as collateral security for such  repayment,  any
bank  or trust company may receive or contract to receive and collect as
compensation for making such advance any sum which may be agreed upon by
the parties to such transaction; provided that such advance is (a) to or
for any partner of  a  firm  which  is  a  member  firm  of  a  national
securities   exchange   registered  with  the  securities  and  exchange
commission  as  a  national  securities  exchange  under   the   federal
securities  exchange  act of 1934, as amended, to enable such partner to
make a contribution of capital to such firm or to purchase stock  of  an
affiliated  corporation  of  such  firm,  provided  that such partner is
actively engaged in the business of such  firm  and  devotes  the  major
portion  of his time thereto, or (b) to or for any person who is or will
become a holder of stock of a corporation which is a member  corporation
of such a national securities exchange to enable such person to purchase
stock  of  such  corporation  or  to  purchase  stock  of  an affiliated
corporation of such corporation, provided that such person  is  actively
engaged  in  the  business  of  such  corporation  and devotes the major
portion of his time thereto.
8. (a) The  superintendent  shall  have  the  power  to  prescribe  by
regulation  (i) the maximum charge which may be imposed in this state by
a bank or trust company in connection with  a  check  or  other  written
order  drawn  upon it on insufficient funds, irrespective of whether the
instrument is paid, accepted, or returned by  the  bank,  and  (ii)  the
maximum  charge  which  may  be imposed in this state by a bank or trust
company in connection with a check or other written order received by it
for deposit or collection and subsequently dishonored and  returned  for
any reason by the drawee.
(b)  No  bank  or trust company shall, in connection with the payment,
acceptance or return of such check  or  order,  impose  any  fee,  fine,
commission  or  other  charge,  however  designated,  in addition to the
maximum charge established therefore by the superintendent of  financial
services  pursuant  to  paragraph  (a)  of this subdivision, except that
nothing herein expressed shall prevent a  bank  or  trust  company  from
taking,  receiving, reserving or charging interest, as authorized by law
in connection with credit extended in connection  with  the  payment  of
such  check  or  order  or from imposing any charge in accordance with a
written agreement established  in  accordance  with  the  provisions  of
subdivision  five  of  this  section. A bank or trust company may, as an
accommodation to its customers, pay, accept, or return a check or  order
without   charge,  or  at  a  lesser  charge  than  the  maximum  charge
established by the superintendent of financial services.
(c) In prescribing a maximum charge pursuant to paragraph (a) of  this
subdivision,  the  superintendent  shall consider the following factors:
(i) the cost of processing an overdraft or returned check or  order,  as
the  case  may  be,  (ii)  the  charge  necessary to deter overdrafts or
returned checks or orders, as the case may  be,  and  (iii)  such  other
economic  or  cost  factors  that  the  superintendent  shall deem to be
appropriate. Prior to the superintendent's prescribing any such  maximum
charge,  the  superintendent  shall  issue a written determination as to
such maximum charge, reciting the cost and other  data  upon  which  the
determination is based.
(d)  The  superintendent  of  financial  services  may promulgate such
regulations as he or she deems necessary and  proper  to  implement  and
define  the  provisions  of  this  subdivision.  The  superintendent  of
financial services may prescribe maximum charges from time to time,  but
not  more  often  than  once  in any six month period, and shall provide
reasonable notice to the public of any change in such  maximum  charges,
of the effective date of such change, which shall not be less than seven
days  following  the  adoption  of  such change by the superintendent of
financial services, and of any rule or regulation  adopted  pursuant  to
this subdivision.
9.  A  bank  or  trust  company  may,  in  the  case  of  business  or
agricultural loans in the amount  of  twenty-five  thousand  dollars  or
more,  take,  receive, reserve, and charge on any loan or discount made,
or upon any note, bill of exchange, or other evidence of debt,  interest
at  a  rate  of  not more than five per centum in excess of the discount
rate on ninety-day commercial paper in effect  at  the  Federal  Reserve
Bank  of  New York, and such interest may be taken in advance, reckoning
the days for which the note, bill, or other evidence of debt has to run.