14 HќќѠіђџȱ юћјђџ юћѢюџѦȱ2014 COMPLIANCE CONNECTION Questions: Consumer Loan Fees – Last year, the Legislature changed the allowable loan origination fees for loans made under the Uniform Consumer Credit Code (UCCC).1 Is it permissible that my bank charges an origination fee, but ȱȱȱȱǵȱ ȱ the $50 limitation on origination fees mean I can only charge that much for a processing fee? How do I calculate ȱȱęȱȱȱȱ of the UCCC if I charge both, and am I allowed to charge these fees if ȱȱȱȱȱȱęȱ charge on my loans? Answer: In the 2013 legislative session, the General Assembly passed Senate Enrolled Act 238 (SEA 238), changing certain of the amounts that a lender may charge in connection with a Consumer Credit Sale,2 a Consumer Loan3 and a Supervised Loan.4 Included in these changes were amendments to the UCCC to allow lenders to charge a “loan origination fee” of $50 on a Consumer Loan5 or Supervised Loan.6 These origination fees are considered non-refundable, earned at the time of closing, and are not included in the calculation of the ȱęȱ7 under the UCCC. The UCCC generally allows a lender to contract for a “minimum ȱęȱȄȱȱ ȱ Loans8 and Supervised Loans9 that pre-pay of up to $45. As a result of the changes contained in SEA 238, a lender is precluded from contracting ȱȱȱęȱǰȱȱ the lender also assesses the consumer a loan origination fee. If a lender determines that it will charge the $50 loan origination fee, it should review its loan documents to ensure all refer- ȱȱȱȱȱęȱ charge is removed. If a lender chooses to charge other ȱȱę¢ȱȱȱ under the UCCC, it should bear a reasonable relationship to the services provided, be clearly disclosed to the consumer in accordance with all federal regulations, and be included in the calculation of the loan ęȱȱȱȱ ǯȱ ȱ limitation on non-refundable loan origination fees excluded from the ȱęȱȱȱȱ ȱ does not limit other fees a lender may charge. For example a lender could charge a $50 origination fee and a $75 processing fee, but would be precluded ȱȱȱȱęȱ charge. The origination fee would be considered earned at the time of closing, and not considered in the ȱȱȱȱęȱǰȱ whereas the processing fee would go into the calculation of the loan ęȱȱȱȱȱ- termining if the lender exceeded the allowable 25 percent maximum for a Consumer Loan,10 or the step-rate maximum of 36 percent, 21 percent and 15 percent for a Supervised Loan,11 depending on loan size. ABOUT COMPLIANCE CONNECTION In order to address compliance inquiries from members, IBA provides Compliance Connection, an assistance ȱěȱȱȱ Ȭęȱȱ ǯȱ ȱȱĴȱȱȱǰȱ ȱ Compliance Connection will refer the bank to a law ęǯȱ ȱȱȱȱȱ ȱȱ¢ȱLarry C. Tomlinǰȱȱ ȱ ȱ ȱ ǰȱ ǰȱ and IBA compliance consultant. Submit Compliance Connection questions to IBA’s Amber R. Van Til at avantil@indianabankers.org. 7KLV LQIRUPDWLRQ LV SURYLGHG IRU JHQHUDO HGXFDWLRQ SXUSRVHV DQG LV QRW LQWHQGHG WR EH OHJDO DGYLFH 3OHDVH FRQVXOW OHJDO FRXQVHO IRU VSHFLÀF JXLGDQFH DV WR KRZ WKLV LQIRUPDWLRQ DSSOLHV WR \RXU LQVWLWXWLRQ·V FLUFXPVWDQFHV RU VLWXDWLRQ 1 Ind. Code § 24-4.5 et seq. 2 ´&RQVXPHU &UHGLW 6DOHµ LV GHÀQHG LQ ,QG &RGH 24-4.5-1-301.5(8). 3 ´&RQVXPHU /RDQµ LV GHÀQHG LQ ,QG &RGH 4.5-24-4.5-1-301.5(9). 4 ´6XSHUYLVHG /RDQµ LV GHÀQHG LQ ,QG &RGH 4.5-3-501(1). 5 Ind. Code § 24-4.5-3-201(8). 6 Ind. Code § 24-4.5-3-508(8). 7 ´/RDQ ÀQDQFH FKDUJHµ LV GHÀQHG LQ ,QG &RGH 24-4.5-3-109. 8 Ind. Code § 24-4.5-3-201(6). 9 Ind. Code § 24-4.5-3-508(7). 10 Ind. Code § 24-4.5-3-201(1). 11 Ind. Code § 24-4.5-3-508(2) Larry J. Carr, 63, retired central region president of MainSource Bank, Greensburg, died ǯȱŘŖǰȱŘŖŗřǯȱ ȱ was in banking for more than 30 years, serving in positions including chairman, president and chief ¡ȱĜǯȱ ȱȱȱ- ing career in 1973 as a teller at First ȱ ȱȱ ǯȱ ȱ his accomplishments, he served on the board of directors of the Community Bankers Association of Indiana, on the ȱ ¢ȱ ȱ ǰȱȱ president of the Lake Manitou Chamber of Commerce, on the board of the Fort Wayne Philharmonic, as a member of Grace United Methodist Church and was active with several fraternal lodges. After retiring from banking, Carr worked ȱȱȱȱȬ ȱȱ ¢ȱ ȱ Group with one of his three daughters. He was a graduate of Ball State UniIN MEMORY OF versity and of the Graduate School of Banking at the University of Wisconsin. Hilbert “Hib” Lindsey, 78, member of the board of directors of the Springs Valley Bank & Trust Company, French Lickǰȱȱ ǯȱŗŗǰȱŘŖŗřǯȱ He joined the board in 1988 and was founder of Lindsey’s Construction. Lindsey was a member of the French Lick/West Baden Lions Club, of the French Lick American Legion Post 76 and a founding member of the French Lick Chamber of Commerce.
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