Missouri Code of State Regulations › Title 20 - DEPARTMENT OF COMMERCE AND INSURANCE › Division 1140 - Division of Finance › Chapter 5 - Small Loan Companies › Section 20 CSR 1140-5.020 - Lending Activities

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: Consumer credit lenders (small loan
				  companies) are subject to examination by the Division of Finance for the
				  purpose of determining these companies are complying with the provisions of
				  Chapter 367, RSMo and the laws relating to consumer lending. In addition, these
				  companies are subject to regulation by the Division of Finance with respect to
				  their lending activities and the sale of insurance in connection with loans
				  made. This rule sets out minimum recordkeeping requirements to facilitate
				  examinations by the Division of Finance and establishes limitations upon the
				  sale of insurance by small loan companies in connection with their lending
				  activities.
(1) Each
				applicant, at the time of filing application, shall pay the sum of one hundred
				fifty dollars ($150) as an annual registration fee for the period July 1
				through June 30 of the following year. The annual fee shall be paid on or
				before June 30 of each year. If the initial fee is for a period of less than
				twelve (12) months, the fee shall be prorated according to the number of months
				remaining in the period. The remittance covering registration fee shall be made
				payable to the director of revenue and mailed to the Division of Finance.
				Surety bond in the amount of one thousand dollars ($1000) shall accompany the
				initial application for certificate of registration and registration fee. The
				bond is to be coextensive with the registration year and must be furnished by a
				surety company authorized to do business in Missouri by the superintendent of
				insurance. Bond form will be furnished with the initial application for
				certificate of registration. No surety bond shall be required on renewal
				applications unless the commissioner shall otherwise determine and no surety
				bond shall be required in connection with the initial application if the
				applicant or, in the case of a corporation, any affiliate under the same
				general management has had a certificate of registration in effect for at least
				one (1) year unless the commissioner deems a bond necessary and requires that
				bond.
(2) No special system of
				records is required by the commissioner of finance. The records of a consumer
				credit lender will be considered sufficient if they include a cash journal,
				double entry general ledger, or a comparable record, and an individual account
				ledger. The records of the business of each registered office shall be
				maintained so that the assets, liabilities, income and expense may be readily
				segregated.
(3) A cash book or cash
				journal shall contain a chronological record of the receipt and disbursement of
				all funds including refunds, title transfer fees, filing fees and all other
				items of receipt or expenditure incidental to the granting or collection of a
				loan and replevin, repossession or sale of collateral.
(4) The general ledger shall be posted at
				least monthly. A trial balance sheet and a profit and loss statement shall be
				prepared within thirty (30) days after the close of every monthly period. This
				trial balance or balance sheet and profit and loss statement shall be available
				to the examiner. Where the general ledger is kept at a central office other
				than the location of the registered lender, the general office shall provide
				information in line with this section.
(5) The individual ledger, preferably
				individual account card, shall be kept for each individual loan. The ledger
				card or sheet shall set forth not less than the following items: kind of
				security pledged for loan; account number; name and address of the borrower;
				names of comakers and endorsers; number of installments; dates of first and
				subsequent payments; date of loan; principal amount of loan; renewal notes (old
				account so stamped shows also number of current loan); date payments received;
				amount paid on interest when interest is not added to principal; amount paid on
				principal when face of note does not include interest; amount of payment
				including interest and principal; unpaid balance of principal or principal and
				interest combined; date interest paid to, if this date differs from date of
				payment, if interest is not included in face of note; if interest is added on,
				show this amount in a separate figure; amount of any additional interest
				collected on default or extension, if interest according to original contract
				is included in face of note; and direct loan ledger cards and sales finance
				ledger cards shall be filed separately.
(6) The lender shall maintain a file which
				shall index alphabetically each maker, comaker and endorser on each loan and
				shall recite each loan in respect to which party is a maker, comaker or
				endorser and make available the following information: name and address of
				borrower, and name of husband or wife, if married; names and addresses of
				comakers or endorsers; date of loan; amount of loan; number of loan; and date
				loan paid in full. The current record shall be filed separately from those paid
				in full.
(7) Each loan or loan
				contract shall bear a number which corresponds to the account number. Using
				this procedure it will not be necessary to provide a loan register.
(8) All books, records and papers, including
				the notes, applications, assignments, bills of sale, mortgages, motor vehicle
				titles, record of all insurance policies issued by or through the lender as
				agent or broker in connection with the loan shall be kept in the office of the
				lender and made available to the examiner of the Division of Finance for
				examination at any time without previous notice. When notes are hypothecated or
				deposited with a financial institution or parties in connection with a loan or
				credit, access must be provided for the examiner when the institution holding
				those notes is situated in Missouri. When the institution or person holding
				those notes is not so situated or access is not provided, the lender shall
				obtain from this institution or person either a monthly list of all notes held
				or a copy of the lists of notes deposited and withdrawn; these lists to show
				date, original amount, name or number of account and bear authorized signature
				of the institution or person.
(9)
				When an error is made on the individual ledger or general ledger, a single thin
				line, preferably in red, shall be drawn through the improper entry and the
				correct entry made on the following line. No erasures shall be made in any
				account of record.
(10) A consumer
				credit lender shall keep all records on loans available for examination for a
				period of two (2) years from the date of final payment.
(11) Extensions on precomputed loans made
				pursuant to the Small Loan Act shall be calculated according to the following
				formula:
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Extension fee = UC times NUMBER OF FULL REMAINING
				  INSTALLMENTS. Example: Consider a twenty-four (24)month contract of $1,925.25
				  with finance charges of $474.75, monthly payments of $100 and APR of
				  22.13%.
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If an extension is taken with twenty-two (22) installments
				  remaining, the extension fee would be 22 x 1.5825 or $34.81. Considerations
				  within the Act necessitate the following limitations on extensions:
(A) No extension may be taken on the first
				installment;
(B) No extension fee
				shall be collected more than one (1) month prior to the due date of the
				earliest installment being deferred;
(C) No extension shall be collected for any
				partial payment, however, two dollars ($2) or less shall not be considered a
				partial payment;
(D) A minimum
				extension fee of one dollar ($1) will be allowed;
(E) Any principal payment collected on the
				same day as an extension shall be applied before calculating the extension fee;
				and
(F) In the event of prepayment
				in full of the note or contract, the extensions shall be counted as months and
				the Rule of Seventy-Eight's (78's) factor, based on this total, applied to all
				of the interest contracted for, plus the extension fees collected.