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SECTION 108
Rates of interest; installment obligations; personal loan departments
Banking (BNK) CHAPTER 2, ARTICLE 3
§ 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.