ssafe mortgage loan originator key point review for sc only portion

Real Estate School of SC • 803-791-3800 www.realestateschoolofsc.com

SAFE Mortgage Loan Originator Test – State Component for South Carolina

Key Point Review

CHAPTER 58: LICENSING OF MORTGAGE BROKERS Section 40-58-20 Definitions •Definitions in sections: 1: Act as a Mortgage Broker 2: Act as a Mortgage Lender 3: Administrator – Department of Consumer Affairs 8: Branch Office 9: Clerical or support duties 16: Persons or entities exempt from licensure 19: Immediate family members 20: Servicing a mortgage loan 21: Licensee 22: Loan commitment 23: Loan Originator 24: Making a mortgage loan 25: Managing principal 26: Mortgage broker 27: Mortgage lender 28: Mortgage loan 29: Nationwide Mortgage Licensing System 30: Nontraditional mortgage product 31: Person 32: Processor or underwriter 33: Registered loan originator 36: Soliciting, processing, placing and negotiating a mortgage loan 37: Tablefunding Section 40-58-30: Mortgage brokers and originators to be licensed; exceptions •A person may not act as a mortgage broker in this state without first being licensed with the Administrator. •The license of a loan originator is not effective during any period when that person is not employed by a mortgage broker licensed under this Chapter. •Know when to notify the administrator of a change in employment status and what must be included in the notification. •This chapter does not apply to exempt persons. •A loan originator may not be employed by more than one mortgage broker at one time. •Independent contractors must be separately licensed.


Section 40-58-40: Surety bonds, determination of amounts and uses •Mortgage brokers must post and maintain a surety bond. •The amount of the bond is based on the total dollar amount of mortgage loans originated in a calendar year. •Dollar volume of mortgages from $0 - $49,999,999, the surety bond is $25,000. •Dollar volume of mortgages from $50,000,000 - $99,999,999, the surety bond is $40,000. •Dollar volume of mortgages greater than $100,000,000, the surety bond is $55,000. •The surety bond can never be lower than $25,000. Section 40-58-50: Application for licensure; applicant work experience and education requirements; exceptions •Know what information must be included on the application for licensure for mortgage brokers and mortgage loan originators, as well as the fee amount to be paid. •Mortgage broker license applicants must supply an affimation of financial solvency (noting the bonding requirements for mortgage loan dollar volume) and a description of business activities, credit history, financial responsibility, educational background, and general character and tiness of the applicant and any partner, officer, or director, a person occupying similar status or a person directly or indirectly controlling the applicant. •Credit reports and state and national criminal background checks are conducted through the Federal Bureau of Investigation (FBI) and the South Carolina Law Enforcement Division (SLED). •Applicants must be fingerprinted. •Mortgage broker license applicants must have at least three years of experience in financial services or financial services related business before an initial license is issued. •An alternative to the three year experience requirement is proof of at least three years of employment with a federally insured depository institution or a VA, FHA or HUD approved mortgagee. •The application for a mortgage loan originator license must be accompanied by a fee in the amount of $50. •MLO applicants must complete satisfactorily a prelicensing course of at least 20 hours and a written examination; have never had a loan originator license revoked in any jurisdiction; have not been convicted of a felony – either within the last 10 years or at any time if the felony involved an act of fraud,dishonesty, breach of trust or money laundering; and be at least 18 years old. Section 40-58-60: Issuance of license, contents and posting; issuance as indication of approval of contracts by State or state agency; correction of errors; advertising •If the administrator finds that the financial fitness and general responsibility of the applicant to command the confidence of the community, a license shall be


issued. If the administrator finds that the applicant doesn’t meet those conditions, the license shall not be issued and the applicant will be notified of the denial. •A license must be posted prominently in each place of business of the licensee. •Licensees must not represent that it’s services or contracts are approved by the State or a state agency. •All advertisements of mortgage loans must comply with the Truth In Lending Act and the SC Consumer Protection Code, Title 37. Section 40-58-65: Maintaining, availability and examination of records; mortgage loan logs; official place of business; notice of closing of branch office or ceasing doing business in State •Records must be kept at the normal place of business so that the Adminstrator can audit at any time. •Mortgage loan logs: must be kept and include the following information – credit score of the borrower, adjustable or fixed type of loan, term of the loan, annual percentage rate, appraised value of the collateral. •Mortgage loan logs must be completed with information known at the time of review by the administrator and must include loans in process, closed laons, turndowns, denials and withdrawals. •Mortgage loan logs must be submitted to the Administrator by March 31st each year. Licensees will be fined $100 per day for late or incomplete data submissions. •Books and records must be maintained for at least three years. These records may be kept in an electronic format. •Mortgage brokers doing business in SC must maintain a sufficient physical presence in the State and records must be maintained at the licensed locations in the State. At a minimum, a broker must maintain an official place of business, open during regular business hours (Mon-Fri 8:30am – 5:00pm), staffed by one or more licensees who have the authority to contract on behalf of the broker. If the office isn’t open during regular business hours, the broker shall notify the Administrator in writing as to the other hours of operation. •Licensed mortgage broker may maintain more than one branch office. Know the procedure for notifying the Administrator of the opening and/or closing of any branch office. •Compliance evaluations are limited to one each year, unless there is reason to believe a violation of the law has occurred. •A mortgage broker who ceases doing business in SC must notify the Administrator at least seven days in advance. Section 40-58-67: Continuing professional education requirements •Licensees must complete at least eight hours of continuing professional education annually. •Continuing education credit may be granted only for the year in which the class is taken and may not be granted for the same course in successive years. •Continuing education must be reported to the administrator annually. Course providers must maintain records of attendees for two years after the course.


•Mortgage brokers must keep records for all associated licensees that consists of a certificate of completion issued by the course provider showing the number of hours completed. •If a licensee fails to complete the continuing education prior to renewal, his license shall expire and the licensee shall pay a penalty of $100 in order to renew. •All prelicensing,continuing education and written exams must be approved through the NMLS before credit may be awarded. Section 40-58-70: Prohibited activities •In addition to other prohibited activities, it’s unlawful for a person in the course of a mortgage transaction to:

a. misrepresent material facts or make false promises b. intentionally misrepresent or conceal a material factor, term, or

condition c. engage in a transaction, practice or course of business that’s

unconscionable or which operates a fraud upon a person d. fail to use due diligence and make reasonable efforts in procuring a

mortgage loan on behalf of a borrower e. collect any third party fees (excluding appraisals or credit reports)

before a conditional mortage loan commitment is obtained f. influence a real estate appraisal g. fail to pay third party fees within a reasonable period of time h. advertise mortgage loans, including rates, margins, discounts, points,

fees, commissions, or other material information unless the person is able to make mortgage loans as advertised to qualified applicants

i. fail to provide disclosures as required by state and federal law j. fail to comply with this chapter k. falsely advertise or misuse names l. use any trade name or insignia of membership in any organization of

which the licensee is not a member Section 40-58-75: Mortgage broker fee agreements disclosing charges •Within three business days of the receipt of an application for a mortgage loan, the broker must provide a mortgage broker fee agreement that discloses the total estimated charges to the borrower for the loan. The disclosure is considered delivered when placed in traditional U.S. mail. •All fees earned for services rendered must be disclosed as required by federal or state law. •The fee agreeement must be in writing. Know the elements of the agreement. Section 40-58-78: Mortgage broker fee agreement requirements; penalty for violations, unintentional violations •A mortgage broker fee agreement with a mortgage broker or loan originaotry must contain an explicit statement:


a. the mortgage broker or loan originator is acting as an agent of the borrower for brokerage services

b. the borrower is owed the duties of care, honesty and loyalty in the transaction, including the duty of full disclosure

c. a detailed description of the services to be performed, including a Good Faith Estimate (GFE)

d. a clear and conspicuous statement of when and under what conditions the borrower must pay for the services rendered

•If the above terms are violated, the borrower may recover from the mortgage broker or loan originator:

a. a penalty determined by the court of NOT LESS than $1,500 and NOT MORE THAN $7,500 for each loan transaction

b. fees paid by the borrower to the mortgage broker or loan originator for services rendered

c. actual costs, including attorney fees, for enforcing the borrower’s rights Section 40-58-80: Denial, suspension, revocation or non-renewal of license, grounds, administrative penalty, cease and desist orders, investigation or examination of loans, notification of national registry •The administrator may deny, suspend, revoke, or refuse to issue or re-issue a license if the administrator finds that both: the denial is in the public interest and any of the following applies:

a. the application contains a false statement b. the applicant has violated or failed to comply with any provisions of the

governing law or order of the administrator c. has been convicted of a felony within the past 10 years, a

misdemeanor involving financial services or an offense involving breach of trust or money laundering

d. is permanently or temporarily prohibited by a court order from working in a financial services position

e. is the subject of an order from the Administrator denying licensure f. is the subject of an order from a government entity denying licensure g. doesn’t meet the financial responsibility or general fitness requirements h. has been the executive officer or controlling shareholder in a financial

services business that has been subject to an order of injunction i. has failed to pay the proper renewal or filing fee, or any fine or fee

imposed by a government entity j. has falsely certified attendance or completion of hours at an approved

education course •The administrator may impose a penalty upon a licensee for a violation of this chapter. The penalty may not exceed $10,000 for each violation. The administrator may impose a penalty for each violation of this chapter not to exceed $10,0000 for each violation by a person other than a licensee or exempt person. •The administrator may conduct routine examinations of the books and records of a licensee to determine compliance with this chapter.


•A person who willfully violates a provision of this chapter is guilty of a misdemeanor and upon conviction, must be fined not more than $500 or imprisoned for not more than six months, or both, for each offense. Section 40-58-90: Request for contested case hearing before Administrative Law Court •A person who is unhappy with an administrative order issued by the administrator may request a contested case hearing before the Administrative Law Court. Section 40-58-100: Authority to promulgate regulations •The administrator may create rules and regulations as needed in order to enforce and administer the purposes of this Chapter. Section 40-58-110: License application and renewal fees, terms of license, late renewals •First time mortgage broker licensees shall pay a a one-time, non-refundable processing fee of $200, in addition to the initial, non-refundable license application fee of $550. •Thereafter, a mortgage broker licensee shall pay an annual, non-refundable renewal fee of $550. •For branch locations, a mortgage broker licensee shall pay an initial non-refundable fee of $150 and thereafter, a non-refundable renewal fee of $150 for EACH branch location. •Loan originators: initial non-refundable license fee is $50 for a loan originator license and $50, non-refundable, for a renewal license. •Mortgage brokers must notify the Administrator in writing 10 days before opening a new location or changing the address of a licensed location. A fee of $25 is required when changing an address with the administrator. •Licenses are valid for one year. Licenses expire on December 31st annually. •The renewal period is from November 1st thru December 31st annually. Applications received after December 31st are late and late fees will apply. •If a licensed mortgage broker doesn’t renew the license before December 31st, $500 in addition to the renewal fee must be assessed as a late fee to any renewal. •If a licensee fails to renew his license within 30 days of expiration or otherwise maintain a valid license, the licensee must comply with the requirements for the initial issuance of his or her type of license, in addition to paying any fee that has accrued. Section 40-58-120: Maintenance of records; composite annual report; confidentiality •Records should be maintained according to generally accepted accounting principles.


•Licensees must file a report by March 31st each year with the administrator that is a detailed composite annual report relating to all mortgage loans made or brokered by him. The fine is $100 per day for late filings. •The report must include the volume and amounts of first and second lien mortgage loans originated by the licensee and closed in the name of another party and the volume and amounts of first and second lien mortgage loans originated and closed in the name of the licensee. •The report must also include the total gross revenue earned in this State under this license. Section 40-58-130: Participation in Nationwide Mortgage Licensing System Registry •The administrator may participate in the NMLS and take all actions necessary to effect this requirement.

SOUTH CAROLINA CONSUMER PROTECTION CODE, TITLE 37 CHAPTER 22: MORTGAGE LENDING

Section 37-22-110: Definitions •Definitions in sections: 1: Act as a mortgage broker 2: Act as a mortgage lender 3: Administrator 4: Advertising 5: Affiliate 6: Board 7: Borrower 8: Branch manager 9: Branch office 10: Clerical or support duties 11: Commissioner 12: Control 15: Employee 16: Escrow account 17: Escrow funds 18: Exempt person 20: Financial services and financial services-related business 21: Immediate family member 23: Licensee 25: Loan originator 26: Make a mortgage loan 27: Managing principal 30: Mortgage loan 31: Nationwide Mortgage Licensing System 32: Nontraditional mortgage product


33: Person 34: Processor or underwriter 35: Registered loan originator 36: Residential real property 37: RESPA 38: Soliciting, processing, placing or negotiating a mortgage loan 39: Tablefunding 40: Truth in Lending Act Section 37-22-120: Licensing requirements •You must have a license in order to act as a mortgage lender, advertise your services in the mortgage field, or hire a loan originator unless the loan originator is licensed. •Independent contractors, except for exempt persons, must be licensed separately. Processors and underwriters who are independent contractors must be licensed. •The remainder of this section is a duplicate of licensing requirements cited in Chapter 58. Section 37-22-130: Contested case proceedings; appeals •You may request a contested case hearing before the Administrative Law Court if you’re not satisfied with an administrative order issued by the commissioner. Section 37-22-140: Application for licensure; information required; identification of managing principal; filing fee; surety bond; issuance of license •Most of this section is a duplicate of licensing requirements cited in Chapter 58. •Persons desiring licensure must apply to the commissioner with requested information, including name, address, SSN or EIN, form and place of organization and proposed method of and location(s) for doing business. •Qualifications and business history must be disclosed, along with financial condition and credit history. •Loan originator applicants must be at least 18 years old and work for a licensed mortgage lender. Twenty hours of pre-licensing education and a written exam must be satisfactorily completed. •Each principal office and each branch office of a licensed mortgage lender at which business is conducted must be licensed according to this Chapter and issued a separate license. Each branch office must pay a licensing fee of $150. •A mortgage lender who also acts as a mortgage broker is not required to obtain a license as a mortgage broker and is not subject to regulation by the Administrator, except that that mortgage lender acting as a mortgage broker must comply with Sections 40-58-70, 40-58-75 and 40-58-78. •A person with three years of experience as a loan originator who applies for a license and who has filed with the NMLS must be provided a provisional license as a loan originator before the commissioner takes action on his application IF


the applicant is employed b a mortgage lender licensed under this Chapter and a senior officer or managing principal of that licensee attests that:

a. the applicant, within the previous six months, hasn’t worked as a MLO in another state

b. during the previous five years, the applicant hasn’t had a professional license denied or revoked or suspended

c. hasn’t been convicted of a felony d. meets all of the requirements for licensure

OR: The applicant is currently working (or has during the past six months) as a MLO in another state AND items B through D are true.

•The provisional license expires when the permanent license is issued or 90 days from the date of issue. Section 37-22-150: Expiration and renewal of licenses; fingerprint check; assignment or transfer of license •Licenses expire on December 31st. The license is invalid after that date unless renewed. The renewal period is from November 1st through December 31st. •A license is not assignable or transferable. •This section duplicates information in Chapter 58 regarding renewals and fees. Section 37-22-160: Professional continuing education •This section duplicates information in Chapter 58 regarding continuing education. Section 37-22-170: Managing principal; branch offices; notification of commissioner of designation and change or managing principal or branch manager •Each principal and branch office of a mortgage lender shall have a branch manager who meets the requirements of Section 37-22-140(b) and (c)(1). •The managing principal for a licensee’s business also may serve as the branch manager of one of the licensee’s branch offices. •You must notify the commissioner whenever there’s a change in branch managers or managing principals. •A licensee acting as a sole proprietor is a managing principal for the purposes of this Chapter. Section 37-22-180: Notice of change of address; display of license •Changes of address must be reported seven days before the change takes place. Business location changes of address require a $25 fee. •A mortgage lender must display in plain view in its principle office and in each branch office. Section 37-22-190: Prohibited activities; violation of state or federal law •It’s unlawful to:

a. misrepresent or conceal material facts or make false promises


b. fail to issue a satisfaction of mortgage c. fail to account for or deliver to a person entitled to receive funds or

documents related to a mortgage loan d. pay, receive or collect a commission or any compensation for a

mortgage loan origination in violation of this Chapter e. charge or collect a fee or rate of interest OR to make or service a loan

with terms or conditions contrary to this Chapter f. advertise loans, rates, margins, discounts, points, fees or commissions

UNLESS the person is able to make the mortgage loans available as advertised

g. fail to disburse funds in good faith according to the written agreement with the borrower

h. fail to pay legitimate fees from third party providers i. fail to provide within a reasonable time a payment history statement in

a form easily understood by the borrower including payment dates and amounts and charges within the previous 12 months. This statement must also be provided without charge once each year during the life of the loan.

j. take a security interest in a borrower’s principle dwelling where the loan amount is less than $5,000

k. fail to provide required disclosures l. falsely advertise or misuse names, including trade names and

designations Section 37-22-200: Powers of commissioner relating to denial, suspension, revocation or refusal to renew license; surrender, investigations and subpoena of documents •The majority of this section duplicates rules in Chapter 58. •Orders issued by the Commissioner or by the Administrative Law Court pursuant to this Chapter must be reported by the commissioner to the NMLS. Section 37-22-210: Commissioner’s records; segregated escrow funds; licensee ceasing business activities •The commissioner must keep a list of applicants for licensure and whether the license was issued or refused. •The commissioner shall keep a current roster with names and business addresses of all licensees and their respective MLO’s. •Mortgage logs: this section duplicates the mortgage log requirements in Chapter 58. •Segregated escrow funds must be kept, which are not commingled with personal funds of the licensee. The account must be in a FDIC insured institution. RESPA rules for accounting must be followed. •Licensees must clearly display the unique identifier assigned by the NMLS on all mortgage loan forms, solicitations or advertisements, including business cards or websites and any other documents furnished in connection with a mortgage loan transaction.


•Licensees wishing to cease business operations must notify the commissioner seven days in advance, including a timetable for the disposition of the business, the location of the books, records and accounts until the end of the retention period, and certification of the proper disposal of those records after that time. Section 37-22-220: Maintenance of records by licensee; annual mortgage reports •The majority of this section duplicates rules in Chapter 58. •Annual report to the commissioner must include the total gross revenue earned in this state under the license, the total dollar amount of points paid to the licensee by borrowers on first and subordinate lien mortgage loans, the total dollar amount of points paid to brokers by the licensee on first and subordinate lien mortgage loans, including yield spread premiums, and the lending institution, maximum amount available, outstanding balance, and expiration date of licensee’s four largest warehouse lines of credit during the previous calendar year. Section 37-22-230: Violations of chapter; penalties •Violations of this Chapter are misdemeanors and carry a fine of not more than $500 or six months imprisonment or both for each violation. Section 37-22-240: Criminal background checks •This section is a duplicate of information in Chapter 58. •SLED will provide a criminal history records check to the commissioner for a person who has applied for or holds a mortgage lender or loan originator license. Section 37-22-270: Participation in the Nationwide Mortgage Licensing System and Registry •The majority of this section duplicates rules in Chapter 58. •The commissioner may participate in the Nationwide Mortgage Licensing System and Registry (NMLS) and:

a. require persons that must be licensed by this chapter to utilize the NMLS

b. require all applicants to pay all applicable funds provided for in this chapter through the NMLS.

SOUTH CAROLINA CONSUMER PROTECTION CODE, TITLE 37 CHAPTER 3: LOANS

Section 37-3-104: Consumer loan defined •Consumer loan is a loan made by a person regularly engage in the business of making loans in which:

a. the debtor is a person other than an organization b. the debt is incurred primarily for a personal, family or household

purpose


c. either the debt is payable in installments or a loan finance charge is made and

d. either the principal doesn’t exceed $25,000 or the debt is secured by an interest in land.

Section 37-3-105: First mortgage real estate loans •Unless a loan is made subject to this title by agreement (Section 37-3-601), consumer loan doesn’t include a loan secured by a first lien or equivalent security interest in real estate. Section 37-3-209: Right to prepay •The debtor may prepay in full the unpaid balance of a consumer loan, refinancing or consolidation at any time without penalty. Section 37-3-301: Application of and compliance with Federal Truth in Lending Act •A person upon whom the TILA imposes duties or obligations shall make or give to the consumer the disclosures, information and notices required of him by that act and in all respects comply with that act. Section 37-3-601: Loans subject to this Title by agreement of parties •The parties to a loan OTHER THAN A CONSUMER LOAN may agree in writing that the loan is subject to the provisions of this Title applying to consumer loans. Section 37-3-605: Loan finance charge for other loans •Loans other than consumer loans: the parties may contract for the payment by the debtor of any loan finance charge, except as provided in Chapter 10 of this title.

CHAPTER 5: REMEDIES AND PENALTIES Section 37-5-108: Unconscionability; inducement by unconscionable conduct •Review this section in total for discussion.

CHAPTER 6: ADMINISTRATION Section 37-6-103: Administrator defined •Definition of Administrator


Section 37-6-414: Contested case hearings before the Administrative Law Court •A person who has exhausted all remedies available and who is unhappy with the administrator’s determination is entitled to a contested case hearing before the Administrative Law Court. •This section is a duplicate of rules mentioned in Chapter 58. Section 37-6-502: Members of Commission on Consumer Affairs; terms; vacancies •Commission on Consumer Affairs: 9 members, one shall be the Secretary of State as an ex officio member; four members appointed by the Governor with advise/consent of the Senate; four members elected by the General Assembly. • Members of the commission will elect a chairman. •Members serve four years unless otherwise stipulated; when the terms expire, the Governor shall appoint a member and the General Assembly shall elect one member. •With the exception of the ex officio member, any vacancy shall be filled by the Governor by appointment for the unexpired term. •Members of the commission are eligible for reappointment. Section 37-6-506: Powers and duties of the Commission •The commission shall be the policy making and governing authority of the Department of Consumer Affairs and shall appoint the Administrator and be responsible for enforcement of this Title.

CHAPTER 10: ADMINISTRATION

Section 37-10-102: Attorney’s fees and other charges on mortgage loans for personal, family or household purposes •When the primary purpose of a loan that’s secured in whole or in part by a lien on real estate is for a personal, family or household purpose:

a. the creditor needs to make sure the borrower has an attorney b. the creditor needs to make sure the borrower has an insurance agent

who will furnish required hazard and flood property insurance in connection with the mortgage (unless the property is a condominium)

•Give the borrower a written notice of the preference information within three business days of the application. •The creditor may require the attorney or agent to provide reasonable security to the creditor by way of mortgage title insurance in a company acceptable to the creditor and to comply with reasonable closing procedures. • A nonrefundable assumption fee in an amount not exceeding the lesser of four hundred dollars or one percent of the unpaid balance of the loan at the time the assumption transaction is consummated.


Section 37-10-104: Agricultural loans under $25,000 •Loans less than $25,000 for agricultural purposes may not be charged more than 18% per annum in loan finance charges. Section 37-10-105: Violations, civil actions •Become familiar with sections A and C in this section. Section 37-10-106: Maximum rate of interest; legal rate of interest •No greater interest than 6% per annum shall be charged upon any contract in this state for the hiring, lending or use of money or other commodity, either by way of straight interest, discount or otherwise, except upon written contracts wherein, by express agreement, any rate of interest may be charged, except as otherwise provided in this Title or by law.

CHAPTER 23: HIGH COST AND CONSUMER HOME LOANS Section 37-23-20: Definitions •Definitions in sections: 2. Annual percentage rate 5. Conventional conforming discount points 6. Conventional mortgage rate 7. Conventional prepayment penalty 8. Flipping 9. High cost home loan 14. Table funded transaction 15. Threshold Section 37-23-30: High cost home loan agreements •Know from this Section what items a high cost home loan MAY NOT contain. Section 37-23-40: Lender limitations •The lender of a high cost home loan MAY NOT:

1. Make a high cost home loan without first receiving a written certification from a counselor approved by the State Housing Finance and Development Authority that the borrower has received counseling on the advisability of the loan transaction and the appropriate loan for the borrower.

2. Make a high cost home loan unless the lender reasonably believes at the time the loan is consummated that one or more of the obligors, when considered individually or collectively, is able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status and other financial resources other than the borrower’s equity in the dwelling that secure repayment of the loan.


Section 37-23-45: Disclosure; form •When the borrower receives the GFE under RESPA and before the scheduled closing of a high cost home loan, the broker of a loan must disclose in writing the amount being earned on the loan. Section 37-23-50: Borrower’s right in action for violations •The borrower in a high cost home loan has a right to recover from the lender or party charged with the violation actual damages and also a penalty in the amount determined by the court of not less than $1500 and not more than $7500 for each loan transaction. •No borrower may bring an action more than six years after the violation occurred and after the original scheduled maturity date of the debt. •The Administrator of the Department of Consumer Affairs, the Attorney General, the Commissioner of Banking, the Director of the Consumer Finance Division or any party to a high cost home loan may enforce the provisions of this article. Section 37-23-80: Prepayment •The debtor may prepay in full at any time without penalty the debt represented by a personal family or household purpose loan agreement that is secured in whole or in part by a first or second lien on real estate if the aggregate of all sums doesn’t exceed $150,000.


SAFE Mortgage Loan Originator Test – State Component for South Carolina Test Questions

1. What is the name of the governing law that requires mortgage brokers and mortgage loan originators?

a. National Mortgage Licensing System b. Licensing of Mortgage Brokers Act c. South Carolina Practice Act d. Department of Consumer Affairs Rule

2. “For compensation or gain by soliciting, processing, placing or negotiating a mortgage loan” is considered:

a. Acting as a an administrator b. Acting as a mortgage broker c. Acting as an affiliate d. Acting as a mortgage manager

3. Clerical or support duties include all of the following EXCEPT: a. Gathering information b. Assembling files c. Taking a mortgage loan application d. Sending correspondence to the borrower

4. Certain individuals and entities are exempt from licensure. Which of the following is an example of an exempt person or entity?

a. A company with offices in several states, including South Carolina b. A person who places a mortgage loan for a borrower with a lender c. A company that services a mortgage loan d. A manufactured home retailer performing clerical duties

5. A 15 Year Adjustable Rate Mortgage is considered to be a(n): a. Non-traditional mortgage product b. Better option than a 30 Year Fixed mortgage c. Loan Available to Borrowers with credit scores over 750 d. Traditional mortgage product

6. The Nationwide Mortgage Licensing System and Registry is maintained by:

a. American Conference of Lending Professionals b. Conference of Mortgage Loan Supervisors c. Conference of State Bank Supervisors d. American Association of Mortgage Loan Supervisors

7. The definition of “Table Funding” is: a. A settlement at which a loan is funded by an advance of loan

funds and an assignment of the loan to the person advancing the funds.

b. A process whereby a loan is funded 48 hours after closing, with closing documents held by the attorney until funds are received.

c. An agreement between the lender and the borrower to provide a lower interest rate to the borrower without a buy-down fee.


d. The illegal dissemination of loan proceeds to a party other than the borrower.

8. The license of a loan originator is not effective: a. unless a certified copy is prominently displayed in his or her office. b. during any period when he or she isn’t employed by a

mortgage broker. c. if he or she operates as an independent contractor. d. until a fee of $25 has been paid to the Administrator.

9. Surety bonds are required for mortgage brokers. The bond amount for mortgage loan dollar volumes of $50,000,000 - $99,999,999 is:

a. $25,000 b. $35,000 c. $40,000 d. $50,000

10. The application fee for a mortgage broker’s license is: a. $25 b. $250 c. $500 d. $550

11. When applying for a mortgage broker’s license, you must have: a. at least three years of experience in financial services or a

financial services-related field. b. served an apprenticeship under a licensed broker for 24 months. c. a degree in mortgage lending from an accredited college or

university. d. been previously licensed in another state.

12. The application fee for a mortgage loan originator’s license is: a. $25 b. $50 c. $250 d. $550

13. Mortgage loan originator applicants must complete a pre-licensing course: a. of at least 24 hours and pass a written examination. b. of at least 20 hours and have not been convicted of a felony within

the past five years. c. of at least 20 hours and pass a written examination. d. of at least 24 hours and have not been convicted of a felony within

the past ten years. 14. Mortgage loan logs include all of the following types of information

EXCEPT: a. term of the loan b. appraised value of the collateral c. borrower’s place of employment d. borrower’s credit score

15. Mortgage loan logs must be submitted to the Administrator by: a. March 31st


b. June 30th c. September 1st d. December 31st

16. Licensees must complete ___ hours of continuing education __________: a. 20 hours, annually b. 8 hours, biennially c. 8 hours, annually d. 8 hours, quarterly

17. It is unlawful for a person in the course of a mortgage transaction to: a. fail to provide required disclosures. b. fail to gather the borrower’s employment history. c. fail to make a commission. d. fail to offer both adjustable rate and fixed rate mortgage products.

18. A fee agreement must be provided to a borrower: a. at the time of closing. b. within three business days of receipt of the application. c. at any point during the loan process. d. within ten business days of the receipt of the application.

19. The administrator may impose a penalty for violations of Section 40-58-80: a. upon both licensees and non-licensed persons of up to

$10,000 per offense b. upon licensees only of up to $10,000 per offense c. upon non-licensed persons of up to $10,000 per offense d. upon mortgage lenders of up to $500 and/or six months

imprisonment or both per offense 20. With what entity can a licensee request a contested case hearing:

a. the Nationwide Mortgage Licensing System b. the Department of Housing and Urban Development c. the South Carolina Supreme Court d. the Administrative Law Court

21. What entity has the authority to suspend and/or revoke a mortgage loan originator license:

a. the Nationwide Mortgage Licensing System b. the South Carolina Department of Consumer Affairs c. the South Carolina Law Enforcement Division d. the supervising mortgage broker

22. The rule for notifying the Administrator when opening a new location states that the mortgage broker must:

a. notify the administrator in writing ten days before the opening of the new location

b. send a new license application for the office within five days of beginning operation

c. staff the office with three full time employees during regular business hours

d. offer a full variety of loan products and verify the offerings with the administrator


23. If a licensed mortgage broker doesn’t renew his or her license by December 31st deadline, the late fee assessed is:

a. $50 b. $250 c. $500 d. $550

24. The managing principal for a licensee’s business: a. must work in only one office b. may also serve as the branch manager of one of the licensee’s

branch offices c. may not act as a sole proprietor d. isn’t required to meet the licensing requirements for mortgage

brokers or mortgage loan originators 25. How many members are there on the Commission of Consumer Affairs:

a. 5 b. 10 c. 4 d. 9


SAFE Mortgage Loan Originator Test – State Component for South Carolina Test Questions

1. What is the name of the governing law that requires mortgage brokers and mortgage loan originators?

a. National Mortgage Licensing System b. Licensing of Mortgage Brokers Act c. South Carolina Practice Act d. Department of Consumer Affairs Rule

2. “For compensation or gain by soliciting, processing, placing or negotiating a mortgage loan” is considered:

a. Acting as a an administrator b. Acting as a mortgage broker c. Acting as an affiliate d. Acting as a mortgage manager

3. Clerical or support duties include all of the following EXCEPT: a. Gathering information b. Assembling files c. Taking a mortgage loan application d. Sending correspondence to the borrower

4. Certain individuals and entities are exempt from licensure. Which of the following is an example of an exempt person or entity?

a. A company with offices in several states, including South Carolina b. A person who places a mortgage loan for a borrower with a lender c. A company that services a mortgage loan d. A manufactured home retailer performing clerical duties

5. A 15 Year Adjustable Rate Mortgage is considered to be a(n): a. Non-traditional mortgage product b. Better option than a 30 Year Fixed mortgage c. Loan Available to Borrowers with credit scores over 750 d. Traditional mortgage product

6. The Nationwide Mortgage Licensing System and Registry is maintained by:

a. American Conference of Lending Professionals b. Conference of Mortgage Loan Supervisors c. Conference of State Bank Supervisors d. American Association of Mortgage Loan Supervisors

7. The definition of “Table Funding” is: a. A settlement at which a loan is funded by an advance of loan funds

and an assignment of the loan to the person advancing the funds. b. A process whereby a loan is funded 48 hours after closing, with

closing documents held by the attorney until funds are received. c. An agreement between the lender and the borrower to provide a

lower interest rate to the borrower without a buy-down fee. d. The illegal dissemination of loan proceeds to a party other than the

borrower.


8. The license of a loan originator is not effective: a. unless a certified copy is prominently displayed in his or her office. b. during any period when he or she isn’t employed by a mortgage

broker. c. if he or she operates as an independent contractor. d. until a fee of $25 has been paid to the Administrator.

9. Surety bonds are required for mortgage brokers. The bond amount for mortgage loan dollar volumes of $50,000,000 - $99,999,999 is:

a. $25,000 b. $35,000 c. $40,000 d. $50,000

10. The application fee for a mortgage broker’s license is: a. $25 b. $250 c. $500 d. $550

11. When applying for a mortgage broker’s license, you must have: a. at least three years of experience in financial services or a financial

services-related field. b. served an apprenticeship under a licensed broker for 24 months. c. a degree in mortgage lending from an accredited college or

university. d. been previously licensed in another state.

12. The application fee for a mortgage loan originator’s license is: a. $25 b. $50 c. $250 d. $550

13. Mortgage loan originator applicants must complete a pre-licensing course: a. of at least 24 hours and pass a written examination. b. of at least 20 hours and have not been convicted of a felony within

the past five years. c. of at least 20 hours and pass a written examination. d. of at least 24 hours and have not been convicted of a felony within

the past ten years. 14. Mortgage loan logs include all of the following types of information

EXCEPT: a. term of the loan b. appraised value of the collateral c. borrower’s place of employment d. borrower’s credit score

15. Mortgage loan logs must be submitted to the Administrator by: a. March 31st b. June 30th c. September 1st


d. December 31st 16. Licensees must complete ___ hours of continuing education __________:

a. 20 hours, annually b. 8 hours, biennially c. 8 hours, annually d. 8 hours, quarterly

17. It is unlawful for a person in the course of a mortgage transaction to: a. fail to provide required disclosures. b. fail to gather the borrower’s employment history. c. fail to make a commission. d. fail to offer both adjustable rate and fixed rate mortgage products.

18. A fee agreement must be provided to a borrower: a. at the time of closing. b. within three business days of receipt of the application. c. at any point during the loan process. d. within ten business days of the receipt of the application.

19. The administrator may impose a penalty for violations of Section 40-58-80: a. upon both licensees and non-licensed persons of up to $10,000 per

offense b. upon licensees only of up to $10,000 per offense c. upon non-licensed persons of up to $10,000 per offense d. upon mortgage lenders of up to $500 and/or six months

imprisonment or both per offense 20. With what entity can a licensee request a contested case hearing:

a. the Nationwide Mortgage Licensing System b. the Department of Housing and Urban Development c. the South Carolina Supreme Court d. the Administrative Law Court

21. What entity has the authority to suspend and/or revoke a mortgage loan originator license:

a. the Nationwide Mortgage Licensing System b. the South Carolina Department of Consumer Affairs c. the South Carolina Law Enforcement Division d. the supervising mortgage broker

22. The rule for notifying the Administrator when opening a new location states that the mortgage broker must:

a. notify the administrator in writing ten days before the opening of the new location

b. send a new license application for the office within five days of beginning operation

c. staff the office with three full time employees during regular business hours

d. offer a full variety of loan products and verify the offerings with the administrator

23. If a licensed mortgage broker doesn’t renew his or her license by December 31st deadline, the late fee assessed is:


a. $50 b. $250 c. $500 d. $550

24. The managing principal for a licensee’s business: a. must work in only one office b. may also serve as the branch manager of one of the licensee’s

branch offices c. may not act as a sole proprietor d. isn’t required to meet the licensing requirements for mortgage

brokers or mortgage loan originators 25. How many members are there on the Commission of Consumer Affairs:

a. 5 b. 10 c. 4 d. 9

Last Updated: 5/11/2010

SAFE Mortgage Loan Originator Test – State Component SOUTH CAROLINA Content Outline

(50 scored test questions; 10 unscored test questions) I. South Carolina Department of Consumer Affairs/South Carolina State

Board of Financial Institutions (5%) A. Regulatory authority B. Department/agency structure C. Responsibilities and limitations

II. South Carolina Law and Regulation Definitions (15%)

A. The South Carolina Mortgage Lending Act B. The High Cost and Consumer Home Loan Act C. Consumer Protection Code, Ch. 3 and 10 D. Other State Law and Regulation Definitions III. South Carolina License Law and Regulation (25%)

A. Persons required to be licensed 1. Activities requiring licensure 2. Exemptions

B. Licensee qualifications and application process 1. Financial responsibility (surety bond) 2. Background check and fingerprints (criminal check; credit report) 3. Pre-licensing education and experience 4. Testing and retesting

C. Grounds for denying a license 1. Criminal convictions 2. Previous revocation 3. Prohibition

D. License maintenance 1. Continuing education 2. Personal information updates and required notifications 3. Renewal 4. Record keeping and reporting 5. Suspension and reinstatement

IV. Compliance (45%)

A. Prohibited conduct and practices B. Required conduct C. Fees and charges D. Disclosures and agreements E. Advertising

V. Disciplinary Action (10%)

A. Notifications, hearings, and appeals


B. Suspension, revocation, and rescission of licenses C. Penalties/fines D. Civil and criminal liability


South Carolina State Test Component Reference List A number of references and resources are used to develop the SAFE Mortgage Loan Originator Test. The following list is intended to be used as a guide to help candidates prepare for the test component; however, it is not intended to be an all-inclusive list. All information is from the SC Code of Laws which can be viewed at: http://www.scstatehouse.gov/code/statmast.htm

• SC Code Title 1, Chapter 23

• SC Consumer Protection Code, Title 37 o Chapter 3 requires all disclosures be in compliance with TILA o Chapter 5 o Chapter 6 o Chapter 10 o Chapter 22 o Chapter 23

• SC Code Title 40

o Chapter 5 o Chapter 58

http://www.scstatehouse.gov/code/statmast.htm�

1

UNDERSTANDING SOUTH CAROLINA REAL ESTATE

TAXATION

WHY IS THIS IMPORTANT?

•  TAXES EFFECT THE INCOME STREAM

•  OF INVESTMENT PROPERTIES.

•  TAXES EFFECT THE PAYMENTS / LOAN QUALIFICATIONS OF HOMEOWNERS.

•  RECENT CHANGES IN TAX LAWS COULD RADICALLY EFFECT TAX LIABILITY.

SECTION 1

•  IN THIS SECTION WE WILL LEARN:

•  HOW TO UNDERSTAND THE WORDING OF TAX BILLS

•  HOW ASSESSMENTS ARE CALCULATED

•  HOW THE DIFFERENT ASSESSMENTS EFFECT THE TAX LIABILITY

2

TERMS AND DEFINITIONS

•  ASSESSED VALUE: ESTIMATE OF MARKET VALUE FOR AD VALORUM TAXATION

•  ASSESSMENT: PERCENTAGE OF ASSESSED VALUE USED TO CALCULATE TAX LIABILITY

•  MILLAGE: RATE AT WHICH PROPERTY IS TAXED, VARIES BY TAX DISTRICT

ASSESSED VALUE

•  ASSESSED VALUE IS AN ESTIMATE OF MARKET VALUE DETERMINED USING MASS APRAISAL TECHNIQUES. PROPERTIES ARE DIVIDED INTO MARKET AREAS AND COST TABLES ARE BUILT FOR TYPICAL PROPERTIES WITH TOOLS FOR ADJUSTING INDIVIDUAL PROPERTIES FOR DIFFERENCES IN CONDITION AND QUALITY

ASSESSMENT

•  ASSESSMENTS ARE A PERCENTAGE OF THE ASSESSED VALUE, EITHER 4%, 6% OR 10.5%

•  6% IS THE “BASE” ASSESSMENT AND REFLECTS NO EXEMPTIONS OR BREAKS

•  4% ASSESSMENT IS AVAILABLE FOR LEGAL RESIDENCE AND SOME AGRICULTURAL USE PROPERTIES

•  10.5% ASSESSMENTS ARE APPLIED TO MANUFACTURING PROPERTIES

3

ASSESSMENT FORMULA

•  ASSESSED VALUE X ASSESSMENT RATE = ASSESSMENT

EXAMPLE

•  GIVEN A SINGLE FAMIY HOUSE WITH AN ASSESSED VALUE OF $100,000.

•  THE ASSESSMENT AT 4% (LEGAL RESIDENCE) WOULD BE $4000. (100,000 X .04)

•  THE ASSESSMENT AT 6% (RENTAL PROPERTY) WOULD BE $6,000. (100,000 X .06)

MILLIAGE

•  THE MILLIAGE IS THE RATE AT WHICH PROPERTY IS TAXED, TYPICALLY EXPRESSED AS “MILLS”. ONE MILL EQUALS 1/1000 OF A DOLLAR.

•  FOR EXAMPLE: 350 MILLS = .350

4

TAX LIABILITY FORMULA

•  ASSESSMENT X MILLIAGE = LIABILITY

EXAMPLE

•  GIVEN A SINGLE FAMILY HOUSE SUBJECT TO 350 MILLS WITH AN ASSESSMENT OF 4000:

•  TAX LIABILITY = 4000 X .350 = $1,400

“OWNER OCCUPIED” MILLIAGE (A.K.A. “RELIEF” MILLAGE)

•  A REDUCED RATE GIVEN TO OWNER OCCUPIED PROPERTIES IN S. C. (LEGAL RESIDENCE DISCOUNT)

•  DOES NOT INCLUDE EXPENSES FOR SCHOOL OPERATIONS

•  DOES INCLUDE OTHER SCHOOL EXPENSES (BOND INDEBTEDNESS, OTHER DEBT SERVICE, ETC.)

5

“OWNER OCCUPIED” MILLAGE

•  MAXIMUM OF 5 ACRES

•  ONLY ONE PROPERTY PER HOUSEHOLD.

•  IF SEPERATED OR DIVORCED MAY HAVE TO PROVIDE PROOF.

EXAMPLE

•  GIVEN A SINGLE FAMILY HOUSE WITH AN ASSESSED VALUE OF $100,000. A BASE MILLIAGE OF 370 MILLS AND RELIEF MILLIAGE OF 248 MILLS.

•  AS RENTAL PROPERTY, TAX LIABILITY IS: (100,000 X .06) X .370 = $2,220.

•  AS LEGAL RESIDENCE, TAX LIABILITY IS: (100,000 X .04) X .248 = $992.

REVIEW SECTION 1

•  AT THIS POINT WE SHOULD UNDERSTAND:

•  HOW TO UNDERSTAND THE WORDING OF TAX BILLS

•  HOW ASSESSMENTS ARE CALCULATED

•  HOW THE DIFFERENT ASSESSMENTS EFFECT THE TAX LIABILITY

6

•  QUESTIONS??

CAN YOU TELL ME??

•  REFER TO THE MILLAGE SHEET: •  WHAT IS THE MILLAGE FOR DISTRICT

“1”? •  WHAT IS THE “RELIEF” MILLAGE FOR

DISTRICT “1”? •  WHAT IS THE MILLAGE FOR DISTRICT

“2W” •  WHAT IS THE RELIEF MILLAGE FOR

DISTRICT “2W”?

CAN YOU TELL ME?

•  GIVEN A SINGLE FAMILY HOUSE IN DISTRICT “2W” WITH AN ASSESSED VALUE OF $193,000—

•  WHAT IS THE ASSESSMENT @ 6%?

•  WHAT IS THE ASSESSMENT @ 4%?

7

CAN YOU TELL ME?

•  GIVEN A SINGLE FAMILY HOUSE IN DISTRICT “2W” WITH AN ASSESSED VALUE OF $193,000—

•  WHAT IS THE TAX LIABILITY @ 4%?

•  IF THE OWNERS MOVE AND DECIDE TO KEEP THE HOUSE AND RENT IT WHAT WOULD THE TAX LIABILITY BE?

CAN YOU TELL ME?

•  GIVEN A DUPLEX IN DISTRICT “1” WITH AN ASSESSED VALUE OF $175,OOO. ($35,000 LAND VALUE, $140,000 IMPROVEMENT VALUE) –

•  YOUR BUYER IS GOING TO LIVE IN ONE SIDE AND RENT THE OTHER, WHAT IS THE TAX LIABILITY?

CAN YOU TELL ME?

•  GIVEN A SIX ACRE SITE WITH HOUSE ON THE LAKE WITH AN ASSESSED VALUE OF $450,000. ($300,000 SITE VALUE, $150,000 IMPROVEMENT VALUE) IN DISTRICT “1”—

•  YOUR BUYER IS GOING TO LIVE THERE, WHAT IS THE TAX LIABILITY?

•  -- AS A VACATION HOME, WHAT IS THE TAX LIABILITY?

8

SECTION 2


•  WHAT THE HOMESTEAD EXEMPTION IS AND WHO QUALIFIES

•  WHAT THE AGRICULTURAL USE EXEMPTION IS AND WHO QUALIFIES

•  WHAT ROLLBACK TAXES ARE AND WHEN THEY APPLY

OTHER COMMON EXEMPTIONS

•  HOMESTEAD: AGE 65 OR OLDER OR DISABLED

•  AGRICULTURAL USE: INTENDED FOR AGRICULTURAL PROPERTIES

HOMESTEAD EXEMPTION

•  AVAILABLE FOR AGE 65 OR OLDER OR DISABLED.

•  GENERALLY EXEMPTS UP TO $50,000 IN ASSESSED VALUE.

•  MUST QUALIFY FOR LEGAL RESIDENCE FIRST.

9

HOMESTEAD EXEMPTION

•  EXACT EXEMPTION VARIES WIDELY ON A CASE BY CASE BASIS.

•  ADMINISTERED THROUGH THE AUDITORS OFFICE.

EXAMPLE

•  GIVEN A SINGLE FAMILY RESIDENCE WITH AN ASSESSED VALUE OF $98,000 THAT QUALIFIES FOR THE HOMESTEAD & LEGAL RESIDENCE DISCOUNT WITH A RELIEF MILLAGE OF 278.

•  THE TAX LIABILITY WOULD BE $533.76 ((98,000 – 50,000) X .04 X .278)

AGRICULTURAL USE

•  5 ACRES OF TIMBER OR 10 ACRES OF CROP OR---

•  $1,000 OF FARM INCOME FOR THREE OF PAST FIVE YEARS OR ---.

•  ANOTHER “QUALIFYING TRACT” UNDER SAME MANAGEMENT PLAN.

•  IN SOME CASES “FAMILY LAND” THAT IS ALSO CROP LAND--

10

AGRICULTURAL USE

•  SUBJECT TO “ROLLBACK” TAX.

•  ADMINISTERED THROUGH THE ASSESSORS OFFICE.

AGRICULTURAL USE

•  MUST BE A “BONAFIDE” AGRICULTURAL USE

•  AGRICULTURAL USE CANNOT BE PROHIBITED BY PUBLIC OR PRIVATE (DEED) RESTRICTIONS

•  IS AN ARTIFICIAL ASSESSED VALUE (USE VALUE), NOT A REDUCTION IN MILLAGE

EXAMPLE

•  GIVEN A 12 ACRE TRACT WITH AN ASSESSED VALUE OF $120,000 AND A “USE” VALUE OF $2,400. (370 MILLS) IF QUALIFIED FOR “AG-USE”--

•  TAX LIABILITY WOULD BE $35.52

•  (2400 X .04 X .370)

11

ROLLBACK TAXES

•  A TAX LIABILITY FOR THE DIFFERENCE BETWEEN WHAT WOULD HAVE BEEN PAID AT A 6% ASSESSMENT RATE AND WHAT WAS ACTUALLY PAID UNDER THE “AG USE” RATE

•  A CHANGE IN USE SUBJECTS PROPERTY TO UP TO 5 YEARS OF ROLLBACKS

ROLLBACK TAXES

•  CAN REQUEST AN ESTIMATE OF ROLLBACKS FROM THE APPROPRIATE DEPARTMENT (TYPICALLY THE ASSESSOR)

•  ROLLBACK TAXES ARE A NEGOTIABLE EXPENSE BETWEEN BUYER AND SELLER

EXAMPLE

•  GIVEN A 12 ACRE TRACT WITH AN ASSESSED VALUE OF $120,000, A “USE” VALUE OF $2,400, AND “AG USE” FOR 4 OF THE LAST FIVE YEARS (MILLIAGE IS CONSTANT AT 370 MILLS).

•  “AG USE” BILL WOULD BE $35.52

•  (2400 X .04 X .370)

12

EXAMPLE

•  ROLLBACKS WOULD BE $10,513.92

•  (120,000 X .O6 X .370) – 35.52 = 2628.48

•  2628.48 X 4 = 10,513.92

WARNING!!!

•  DO NOT TELL YOUR CLIENTS THEY WILL QUALIFY – TELL THEM THEY MAY QUALIFY AND REFER THEM TO THE CORRECT OFFICE.

•  REQUIREMENTS OF PROOF AND INTERPRETATIONS OF THE LAW CAN VARY.

•  APP. DEADLINE FOR MOST “BREAKS”: JANUARY 15 OF FOLLOWING YEAR

REVIEW SECTION 2

•  AT THIS POINT YOU SHOULD UNDERSTAND:

•  WHAT THE HOMESTEAD EXEMPTION IS AND WHO QUALIFIES

•  WHAT THE AGRICULTURAL USE EXEMPTION IS AND WHO QUALIFIES

•  WHAT ROLLBACK TAXES ARE AND WHEN THEY APPLY

13

•  QUESTIONS??

CAN YOU TELL ME?

•  WHAT ARE THE TWO BASIC CATEGORIES THAT QUALIFY FOR THE HOMESTEAD EXEMPTION?

CAN YOU TELL ME?

•  GIVEN A SINGLE FAMILY HOUSE WIYH AN ASESSED VALUE OF $120,000 IN DISTRICT “2W”—

•  WHAT IS THE TAX LIABILITY AS A RENTAL PROPERTY?

•  WHAT IS THE TAX LIABILITY WITH LEGAL RESIDENCE?

•  WHAT IS THE TAX LIABILITY WITH THE HOMESTEAD EXEMPTION?

14

SECTION 3


•  WHAT A REASSESSMENT IS AND HOW IT IS PERFORMED

•  HOW MASS APPRAISAL DIFFERS FROM “FEE” APPRAISAL

•  HOW THE APPEAL PROCESS WORKS

REASSESSMENT

•  A COUNTY WIDE REVALUING OF PROPERTY FOR AD VALORUM TAXATION

•  OCCURS ONCE EVERY FIVE YEARS

•  INVOLVES MASS APPRAISAL TECHNIQUES

•  ALSO INVOLVES “CONVENTIONAL” TECHNIQUES FOR SOME PROPERTIES

MASS APPRAISAL

•  DIFFERS FROM “FEE” APPRAISAL IN THAT APPRAISER IS VALUING A GROUP OF PROPERTIES WITH A “MODEL” RATHER THAN ONE SPECIFIC PROPERTY

•  HAS MECHANISMS TO ADJUST VALUE FOR PARTICULAR PROPERTIES FOR DIFFERENCES IN QUALITY, AGE, CONDITION, SITE, ETC.

15

BASIC STEPS IN MASS APPRAISAL

•  DEFINE NEIGHBORHOODS

•  DEVELOP COST TABLES FOR BOTH COMMERCIAL AND RESIDENTIAL STRUCTURES

•  DEVELOP COST TABLES FOR LAND

•  VISUAL INSPECTION OF PROPERTY

•  COMPARE COMPUTER GENERATED VALUES WITH SALES

SCDOR

•  THE PROPERTY DIVISION OF THE SOUTH CAROLINA DEPARTMENT OF REVENUE HAS TO APPROVE COUNTY REASSESSMENT THROUGH “RATIO STUDIES” TO ENSURE ACCURACY OF A REASSESSMENT BEFORE THE NEW VALUES CAN BE APPLIED TO TAX BILLS

ASSESSMENT NOTICES

•  ASSESSMENT NOTICES ARE MAILED OUT TO PROPERTY OWNERS ANY TIME THE ASSESSED VALUE INCREASES OVER $1000

•  ASSESSMENT NOTICES ARE MAILED OUT TO ALL PROPERTY OWNERS IN A YEAR OF REASSESSMENT

•  PROPERTY OWNERS HAVE 90 DAYS TO “APPEAL” (OBJECT TO A VALUE THEY FEEL IS INCORRECT)

16

APPEALING VALUE

•  YOU CAN APPEAL A VALUE WITHIN 90 DAYS OF AN ASSESSMENT NOTICE

•  YOU CAN APPEAL A VALUE AT ANY TIME UP UNTIL THE LAST PENALTY DATE IF NO NOTICE IS SENT (JANUARY 15TH)

•  IF YOU RECEIVE A NOTICE AND DO NOT RESPOND IN 90 DAYS (IN WRITING) YOU FORFEIT YOUR RIGHT TO APPEAL FOR THAT YEAR

•  YOU CAN ONLY APPEAL THE ENTIRE VALUE

APPEALING VALUE

•  IF YOU APPEAL A VALUE YOU ARE ASKING FOR A REAPPRAISAL OF THE PROPERTY. ONE OF THREE THINGS CAN HAPPEN:

•  THE VALUE MAY STAY THE SAME

•  THE VALUE MAY BE DECREASED

•  THE VALUE MAY BE INCREASED

REPRESENTATION

•  PROPERTY OWNERS MAY BE REPRESENTED IN AN APPEAL BY:

•  THEMSELVES

•  INDIVIDUALS WHO ARE QUALIFIED TO REPRESENT THEM IN TAX PROCEEDINGS WITH THE INTERNAL REVENUE SERVICE (ATTORNEYS, ACCOUNTANTS)

•  LICENSED OR CERTIFIED APPRAISERS

17

STEPS OF THE APPEAL PROCESS

•  INFORMAL APPEAL

•  FORMAL APPEAL (COUNTY APPEAL BOARD)

•  ADMINISTRATIVE LAW JUDGE

•  STATE COURT OF APPEALS (RULE ON THE RULING)

REVIEW SECTION 3


•  WHAT A REASSESSMENT IS AND HOW IT IS PERFORMED

•  HOW MASS APPRAISAL DIFFERS FROM “FEE” APPRAISAL

•  HOW THE APPEAL PROCESS WORKS

•  QUESTIONS??

18

REAL PROPERTY VALUATION REFORM ACT

AN OVERVIEW OF THE EFFECT ON PROPERTY TAXATION IN

SOUTH CAROLINA

SECTION 4


•  HOW THE NEW TAX LAWS WILL EFFECT PROPERTY OWNERS

•  WHAT AN “ASSESSABLE TRANSFER OF INTREST” IS

•  HOW THIS WILL EFFECT OUR CLIENTS AND WHAT WE SHOULD TELL THEM

WHAT HAS CHANGED?

•  EXEMPTS LEGAL RESIDENCE FROM SCHOOL OPERATING MILLAGE.

•  DOES NOT EXEMPT 6% PROPERTIES

•  CAPS COUNTY AND SCHOOL MILLAGE BY CPI AND POPULATION GROWTH.

•  CAPS INCREASE IN ASSESSED VALUE TO 15% DURING A FIVE YEAR REASSESSMENT CYCLE.

19

EXCEPTIONS TO THE 15% CAP

•  ADDITIONS AND IMPROVEMENTS

•  ASSESSABLE TRANSFER OF INTEREST, (ATI)

ADDITIONS AND IMPROVEMENTS

•  NEW CONSTRUCTION. •  MAJOR ADDITIONS TO THE

BOUNDRIES OR STRUCTURE ON A PROPERTY.

•  REMODELING OR RENOVATION •  NOT RECONSTRUCTION TO SIMILAR

QUALITY OR UTILITY. •  NOT MODIFICATIONS FOR

HANDICAPPED ACCESSIBILITY.

ASSESSABLE TRANSFER OF INTEREST

•  SUBJECTS ASSESSED VALUE TO BE REAPPRAISED TO THE MARKET VALUE OF A PROPERTY AS OF THE FOLLOWING DECEMBER 31 FOR THE FOLLOWING TAX YEAR.

•  AN “ATI” IS NOT SUBJECT TO THE 15% CAP

20

ASSESSABLE TRANSFERS

•  CONVEYANCE BY DEED.

•  CONVEYANCE BY LAND CONTRACT (CONTRACT OF SALE).

•  CONVEYANCE TO A TRUST, EXCEPT IF THE SETTELOR AND / OR SPOUSE CONVEY AND ARE SOLE BENEFICIARIES.

•  “REMAINDERMAN” IN LIFE ESTATE.


•  DISTRIBUTION FROM A TRUST EXCEPT IF DISTRIBUTEE OR SPOUSE ARE SOLE BENEFICIARIES.

•  CHANGE IN BENEFICIARIES OF A TRUST EXCEPT CHANGE THAT ADDS OR SUBSTITUTES SPOUSE.

•  DISTRIBUTION UNDER A WILL OR BY INTESTATE SUCCESSION EXCEPT IF DISTRIBUTEE IS SPOUSE.


•  CONVEYANCE BY LONG TERM LEASE (20 YEARS OR MORE) OR IF LEASE INCLUDES “BARGAIN PURCHASE OPTION” (80% OR LESS OF MARKET VALUE AT LEASE TERMINATION).

•  CONVEYANCE OF OVER 50% OF A LEGAL ENTITY (LLC, PARTNERSHIP, CORPERATION, ETC.) WITHIN 25 YEAR PERIOD (MUST NOTIFY ASSESSOR)

21

ASSESSABLE TRANSFER

•  CHANGE IN USE OF AGRICULTURAL REAL PROPERTY WHICH SUBJECTS IT TO “ROLL BACK” TAXES.

•  CHANGE IN USE OF REAL PROPERTY WHEN CLASSIFICATION CHANGES AS A RESULT OF ZONING CHANGE– OR—

•  20 YEARS SINCE LAST “ATI” OR BASE YEAR IF OWNED BY A PUBLICLY HELD ENTITY.

HOW WILL THIS EFFECT CLIENTS?

•  WILL EFFECT ESCROW AMOUNTS

•  COULD BE SUBSTANTIAL ENOUGH TO EFFECT LOAN QUALIFICATION (ESPECIALLY IN COUNTIES WITH CONSERVATIVE ASSESSED VALUES)

HOW WILL THIS EFFECT CLIENTS??

•  TAKES EQUITY OUT OF THE TAX SYSTEM (BUYERS PENALIZED FOR BEING “THE NEW KIDS ON THE BLOCK”)

•  WILL BE A FACTOR PRIMARILY FOR 6% PROPERTIES (VACATION & INVESTMENT)

22

WHAT SHOULD YOU TELL CLIENTS??

•  DO NOT TELL THEM A TRANSFER WILL OR WILL NOT BE AN “ATI” (EXCEPT FOR OBVIOUS CASES)

•  TELL THEM IT MAY BE AN “ATI” AND REFER THEM TO THE ASSESSORS OFFICE OR A REAL ESTATE ATTORNEY

SECTION 4


•  HOW THE NEW TAX LAWS WILL EFFECT PROPERTY OWNERS

•  WHAT AN “ASSESSABLE TRANSFER OF INTREST” IS

•  HOW THIS WILL EFFECT OUR CLIENTS AND WHAT WE SHOULD TELL THEM

•  QUESTIONS??

23

•  THANK YOU!

CHAPTER 3.

LOANS

PART 1.

GENERAL PROVISIONS SECTION 37-3-101. Short title. This chapter shall be known and may be cited as South Carolina Consumer Protection Code - Loans. SECTION 37-3-102. Scope. This chapter applies to consumer loans including supervised loans and, except as provided in Sections 37-3-200 and 37-3-500, restricted loans; in addition part 6 applies to loans other than consumer loans. SECTION 37-3-103. Index of definitions. The following definitions apply to this title and appear in this chapter as follows: “Consumer Loan”--Section 37-3-104 “Lender”--Section 37-3-107(1) “Loan”--Section 37-3-106 “Loan finance charge”--Section 37-3-109 “Loan primarily secured by an interest in land”--Section 37-3-105 “Precomputed”--Section 37-3-107(2) “Principal”--Section 37-3-107(3) “Restricted Lender”--Section 37-3-501(4) “Restricted Loan”--Section 37-3-501(3) “Revolving loan account”--Section 37-3-108 “Short-term vehicle secured loan”--Section 37-3-413(1) “Supervised Lender”--Section 37-3-501(2) “Supervised Loan”--Section 37-3-501(1) SECTION 37-3-104. “Consumer loan” defined. Except as provided in Section 37-3-105, “consumer loan” is a loan made by a person regularly engaged in the business of making loans in which: (a) the debtor is a person other than an organization; (b) the debt is incurred primarily for a personal, family, or household purpose; (c) either the debt is payable in installments or a loan finance charge is made; and (d) either the principal does not exceed twenty-five thousand dollars or the debt is secured by an interest in land. SECTION 37-3-105. First mortgage real estate loans. [Section effective until January 1, 2010. See, also, section effective January 1, 2010.] (1) Except as otherwise provided in subsection (2), unless the loan is made subject to this title by agreement (Section 37-3-601), “consumer loan” does not include a loan secured by a first lien or equivalent security interest in real estate.

(2) Loans excluded from the definition of a “consumer loan” pursuant to subsection (1) shall nevertheless be subject to the following provisions: (a) Civil liability for violation of disclosure (Section 37-5-203); (b) Voluntary complaint resolution (Section 37-6-117); (c) Whenever the primary purpose of the credit extended is not to enable the debtor to buy or build a residence on residential real property, the administrative powers in Part 1 of Article 6. If an origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge substantially exceeds the usual and customary charge for a particular type of loan, the creditor is subject to the provisions of Part 1, Chapter 6 of Title 37, notwithstanding that the origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge is properly disclosed as part of the finance charge for purposes of complying with the Federal Truth-in-Lending Act or part or all of the origination charge, prepaid finance charge, prepaid points charge, service, or other prepaid charges are rebatable or refundable upon prepayment or acceleration of the obligation. For the purpose of this paragraph, a creditor is not subject to any liability if the loan finance charge and other fees and charges imposed by the creditor and the collection practices followed in administering or enforcing the loan are usual and customary for the particular type of loan. A charge, collection practice, or administrative procedure that is authorized or required by any state or federal statute or regulation relating to mortgage loans; or in any official manual setting forth the procedures for real estate mortgages issued by any governmental or quasi-governmental organization that purchases, insures, or guarantees such loans, including without limitation, manuals issued by the Federal Housing Administration, Veterans Administration, Farmers Home Administration, Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Corporation, or by any organization that regularly insures mortgages and is authorized to conduct such business in this State, is deemed to be usual and customary. (3) Loans excluded from the definition of a “consumer loan” pursuant to subsection (1) shall also be subject to the provisions of Chapter 10 of this title (Sections 37-10-101 et seq.). SECTION 37-3-105. First mortgage real estate loans. (1) Except as otherwise provided in subsection (2), unless the loan is made subject to this title by agreement (Section 37-3-601), “consumer loan” does not include a loan secured by a first lien or equivalent security interest in real estate. (2) Loans excluded from the definition of a “consumer loan” pursuant to subsection (1) shall nevertheless be subject to the following provisions: (a) Civil liability for violation of disclosure (Section 37-5-203); (b) Voluntary complaint resolution (Section 37-6-117); (c) Whenever the primary purpose of the credit extended is not to enable the debtor to buy or build a residence on residential real property, the administrative powers in Part 1 of Article 6. If an origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge substantially exceeds the usual and customary charge for a particular type of loan, the creditor is subject to the provisions of Part 1, Chapter 6 of Title 37, notwithstanding that the origination charge, prepaid finance charge, prepaid points, service, or other prepaid charge is properly disclosed as part of the finance charge for purposes of complying with the Federal Truth-in-Lending Act or part or all of the origination charge, prepaid finance charge, prepaid points charge, service, or other prepaid charges are rebatable or refundable upon prepayment or acceleration of the obligation. For the purpose of this paragraph, a creditor is not subject to any liability if the loan finance charge and other fees and charges imposed by the creditor and the collection practices followed in administering or enforcing the loan are usual and customary for the particular type of loan. A charge, collection practice, or administrative procedure that is authorized or required by any state or federal statute or regulation relating to mortgage loans; or in any official manual setting forth the procedures for real estate mortgages issued by any governmental or quasi-governmental organization that purchases, insures, or guarantees such loans, including without limitation, manuals issued by the Federal Housing Administration, Veterans Administration, Farmers

Home Administration, Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Corporation, or by any organization that regularly insures mortgages and is authorized to conduct such business in this State, is deemed to be usual and customary. [Subsection effective until January 1, 2010.] (3) Loans excluded from the definition of a “consumer loan” pursuant to subsection (1) shall also be subject to the provisions of Chapter 10 of this title (Sections 37-10-101 et seq.). [Subsection effective January 1, 2010.] (3) Loans excluded from the definition of a “consumer loan” pursuant to subsection (1) also are subject to the provisions of Chapter 7, Chapter 10, Chapter 22, and Chapter 23 of this title. SECTION 37-3-106. “Loan” defined. “Loan” includes: (1) The creation of debt by the lender’s payment of or agreement to pay money to the debtor or to a third party for the account of the debtor; (2) The creation of debt by a credit to an account with the lender upon which the debtor is entitled to draw immediately; (3) The creation of debt pursuant to a lender credit card or similar arrangement; and (4) The forbearance of debt arising from a loan. SECTION 37-3-107. “Lender”; “precomputed”; “principal” defined. (1) Except as otherwise provided “lender” includes an assignee of the lender’s right to payment but use of the term does not in itself impose on an assignee any obligation of the lender with respect to events occurring before the assignment. (2) A loan, refinancing, or consolidation is “precomputed” if the debt is expressed as a sum comprising the principal and the amount of the loan finance charge computed in advance. (3) “Principal” of a loan means the total of: (a) the net amount paid to, receivable by, or paid or payable for the account of the debtor. (b) the amount of any discount excluded from the loan finance charge (subsection (2) of Section 37-3-109), and, (c) to the extent that payment is deferred, (i) amounts actually paid or to be paid by the lender for registration, certificate of title, or license fees if not included in (a), and (ii) additional charges permitted by this chapter (Section 37-3-202). SECTION 37-3-108. “Revolving loan account” defined. “Revolving loan account” means an arrangement between a lender and a debtor pursuant to which (1) the lender may permit the debtor to obtain loans from time to time, (2) the unpaid balances of principal and the loan finance and other appropriate charges are debited to an account, (3) a loan finance charge if made is not precomputed but is computed on the outstanding unpaid balances of the debtor’s account from time to time, and (4) the debtor has the privilege of paying the balances in installments. SECTION 37-3-109. “Loan finance charge” defined. (1) “Loan finance charge” means the sum of - (a) all charges payable directly or indirectly by the debtor and imposed directly or indirectly by the lender as an incident to the extension of credit, including any of the following types of charges which are applicable: interest or any amount payable under a point, discount or other system of charges, however

denominated, premium or other charge for any guarantee or insurance protecting the lender against the debtor’s default or other credit loss; and, except as otherwise provided in this section; (b) charges incurred for investigating the collateral or creditworthiness of the debtor or for commissions or brokerage for obtaining the credit, irrespective of the person to whom the charges are paid or payable, unless the lender had no notice of the charges when the loan was made but excluding fees and charges paid to persons registered as mortgage loan brokers pursuant to Chapter 58 of Title 40. The term does not include charges as a result of default, additional charges (Section 37-3-202), delinquency charges (Section 37-3-203), or deferral charges (Section 37-3-204), or in a consumer loan which is secured in whole or in part by a first or junior lien on real estate, charges incurred for appraising the real estate that is collateral for the loan, if not paid to the creditor or a person related to the creditor. (2) If a lender makes a loan to a debtor by purchasing or satisfying obligations of the debtor pursuant to a lender credit card or similar arrangement, and the purchase or satisfaction is made at less than the face amount of the obligation, the discount is not part of the loan finance charge.

PART 2.

MAXIMUM CHARGES SECTION 37-3-200. Restricted loans and restricted lenders. This part does not apply to restricted loans or restricted lenders. SECTION 37-3-201. Loan finance charge for consumer loans. (1) With respect to a consumer loan, including a loan pursuant to open-end credit, a lender who is not a supervised lender may contract for and receive a finance charge, calculated according to the actuarial method, not exceeding twelve percent per year. With respect to a consumer loan made pursuant to open-end credit, the finance charge shall be deemed not to exceed twelve percent per year if the finance charge contracted for and received does not exceed a charge for each monthly billing cycle which is one percent of the average daily balance of the open-end account in the billing cycle for which the charge is made. The average daily balance of the open-end account is the sum of the amount unpaid each day during that cycle divided by the number of days in the cycle. The amount unpaid on a day is determined by adding to any balance unpaid as of the beginning of that day all purchases, loans, and other debits and deducting all payments and other credits made or received as of that day. If the billing cycle is not monthly, the finance charge shall be deemed not to exceed twelve percent per year if the finance charge contracted for and received does not exceed a percentage which bears the same relation to one percent as the number of days in the billing cycle bears to three hundred sixty-five divided by twelve. A billing cycle is monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from the regular date. (2) With respect to a consumer loan, including a loan pursuant to open-end credit, a supervised lender may contract for and receive a loan finance charge as provided: (a) on loans with a cash advance not exceeding six hundred dollars, a maximum charge not exceeding the maximum charges imposed in Section 34-29-140 as disclosed as an annual percentage rate, provided that a supervised lender may impose a finance charge at a rate less than provided in Section 34-29-140, and provided further that the maximum charge shall not exceed the rate posted and filed pursuant to Section 37-3-305; (b) on loans with a cash advance exceeding six hundred dollars, and on all loans, regardless of the dollar amount, made by Supervised Financial Organizations, any rate filed and posted pursuant to Section 37-3-305; or (c) on loans of any amount, eighteen percent per year on the unpaid balances of principal.

(3) This section does not limit or restrict the manner of calculating the finance charge, whether by way of add-on, discount, single annual percentage rate, or otherwise, so long as the rate of the finance charge does not exceed that permitted by this section. If the loan is a precomputed consumer credit transaction: (a) the finance charge may be calculated on the assumption that all scheduled payments will be made when due; and (b) the effect of prepayment is governed by the provisions on rebate upon prepayment (Section 37-3-210). (4) Except as provided in subsection (5), the term of a loan for purposes of this section commences on the day the loan is made. Any month may be counted as one-twelfth of a year but a day is counted as one-three hundred sixty-fifths of a year. Subject to classifications and differentiations the lender may reasonably establish, a part of a month in excess of fifteen days may be treated as a full month if periods of fifteen days or less are disregarded and that procedure is not consistently used to obtain a greater yield than would otherwise be permitted. The administrator may adopt regulations not inconsistent with the Federal Truth in Lending Act with respect to treating as regular other minor irregularities in amount or time. (5) Subject to classifications and differentiations the lender may reasonably establish, he may make the same finance charge on all amounts financed within a specified range. A finance charge so made does not violate subsection (1) or (2) if: (a) when applied to the median amount within each range, it does not exceed the maximum permitted by the applicable subsection, (b) when applied to the lowest amount within each range, it does not produce a rate of finance charge exceeding the rate calculated according to item (a) by more than eight percent of the rate calculated according to item (a). (6) Notwithstanding subsection (2), if a lender can demonstrate with competent evidence that (a) any failure to post rates properly filed under Section 37-3-305 or failure to properly file these rates under Section 37-3-305 was a result of a bona fide error or excusable neglect, (b) the rates were properly posted or properly filed when the error or neglect was discovered or brought to the lender’s attention, and (c) that no other failure to post or file rates has been brought to the lender’s attention by the Department of Consumer Affairs or by consumers within the previous forty-eight month period, then the maximum rate of loan finance charges assessable by the lender is the rate previously properly filed with the Department of Consumer Affairs, provided, however, the lender that has failed or neglected to post rates or to file rates is subject to a civil penalty of up to $5,000.00 payable to the Department of Consumer Affairs. SECTION 37-3-202. Additional charges. (1) In addition to the loan finance charge permitted by this chapter a lender may contract for and receive the following additional charges in connection with a consumer loan: (a) official fees and taxes; (b) charges for insurance as described in subsection (2); (c) with respect to open-end credit pursuant to a lender credit card or similar arrangement, as defined in Section 37-1-301(16), which entitles the debtor to purchase or lease goods or services from at least one hundred persons not related to the lender, under an arrangement pursuant to which the debts resulting from the purchases or leases are payable to the lender; (i) annual charges, payable in advance, for the privilege of using the lender credit card or other credit arrangement; and (ii) an over-limit charge not to exceed ten dollars if the balance of the account exceeds the credit limit established pursuant to the agreement between the lender and the debtor plus the lesser of ten percent of the credit limit or one hundred dollars. The over-limit charge authorized by this subitem must not be assessed again against the debtor unless the account balance has been reduced below the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars, and the debtor’s account balance

subsequently exceeds the credit limit plus the lesser of ten percent of the credit limit or one hundred dollars; and (d) with respect to a loan secured by an interest in land, the following “closing costs”, if they are bona fide, reasonable in amount, and not for the purpose of circumvention or evasion of this title: (i) fees or premiums for title examination, abstract of title, title insurance, surveys, or similar purposes; (ii) fees for preparation of a deed, settlement statement, or other documents, if not paid to the creditor or a person related to the creditor; (iii) escrows for future payments of taxes, including assessments for improvements, insurance, and water, sewer, and land rents; (iv) fees for notarizing deeds and other documents, if not paid to the creditor or a person related to the creditor; and (v) fees for appraising the real estate that is collateral for the loan, if not paid to the creditor or a person related to the creditor; (e) charges for other benefits, including insurance, conferred on the debtor, if the benefits are of value to him and if the charges are reasonable in relation to the benefits, are of a type which is not for credit, and are authorized as permissible additional charges by rule adopted by the administrator; (f) fees and charges paid to persons registered as mortgage loan brokers pursuant to Chapter 58 of Title 40. (2) An additional charge may be made for insurance written in connection with the loan, other than insurance protecting the lender against the debtor’s default or other credit loss with respect to: (a) insurance against loss of or damage to property, or against liability, if the lender furnishes a clear and specific statement in writing to the debtor, setting forth the cost of the insurance if obtained from or through the lender, and stating that the debtor may choose the person through whom the insurance is to be obtained; (b) consumer credit insurance providing life, accident and health, or unemployment insurance coverage, if the insurance coverage is not required by the lender, and this fact is clearly and conspicuously disclosed in writing to the debtor, and if, in order to obtain the insurance in connection with the loan, the debtor, or two of them in the case of joint coverage, gives specific, dated, and separately signed affirmative written indication of his desire to do so after written disclosure to him of the cost thereof with a statement similar to the following appearing in caps, underlined, or disclosed in another prominent manner with the consumer signature required by this section: CONSUMER CREDIT INSURANCE IS NOT REQUIRED TO OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL COST; and (c) vendor’s single interest insurance, but only: (i) to the extent that the insurer has no right of subrogation against the debtor; (ii) to the extent that the insurance does not duplicate the coverage of other insurance under which loss is payable to the creditor as his interest may appear, against loss of or damage to property for which a separate charge is made to the debtor pursuant to paragraph (a); and (iii) if a clear, conspicuous, and specific statement in writing is furnished by the creditor to the debtor setting forth the cost of the insurance if obtained from or through the creditor and stating that the debtor may choose the person through whom the insurance is to be obtained; and (iv) upon application of the consumer for the insurance or for a transaction in which this coverage may be offered in connection with the purchase of a motor vehicle or with the placement of a motor vehicle as collateral, the following notice printed in no smaller than bold-face 13-point type: “NOTICE: THE INSURANCE COVERAGE YOU ARE PURCHASING IS FOR THE BENEFIT OF THE CREDITOR. IT WILL NOT REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE, BUT IT MAY PAY THE CREDITOR FOR THE DAMAGES IF YOU CANNOT PAY. YOU HAVE THE RIGHT TO PURCHASE INSURANCE THAT WILL REIMBURSE YOU FOR DAMAGES TO YOUR VEHICLE EITHER THROUGH THE CREDITOR IF OFFERED BY THE CREDITOR OR THROUGH YOUR OWN AGENT.”

This notice must be signed by the applicant evidencing his acknowledgment of having read the notice, and be separate and apart from any other form used in the application; (d) noncredit term life insurance; provided, that the person soliciting the sale of such insurance is properly licensed as required under South Carolina insurance laws and the lender is properly licensed as an agency as required under South Carolina insurance laws and clearly and conspicuously discloses to the insured, prior to the consummation of the insurance purchase, the right to cancel and provides the insured at that time with a form in duplicate signed by the insured. This form shall clearly and conspicuously state in a manner that achieves a grade level score of no higher than seventh grade on the Flesch-Kincaid readability test: (i) that the purchase of this insurance is not a condition of any loan or extension of credit by including the following language: The purchase of this insurance is not required to obtain credit and will not be provided unless you sign this form and agree to pay the additional cost.”; (ii) that the interest rates and charges do not depend upon the purchase of this insurance; (iii) that the insured has the option to pay the insurance premium from his own funds or to pay the premium with a portion of the loan proceeds; (iv) the premium and a description of the coverage, including the face amount, term of the coverage, and any exceptions, limitations, or restrictions; (v) that the insured may cancel this insurance by mailing a signed request to cancel, together with the policy, to the lender or the insurance company within thirty days after receipt of the policy and, that in the event of cancellation by the insured within thirty days after receipt of the policy, the insured will be promptly refunded the entire premium for such insurance; (vi) that the insurance laws of South Carolina apply with respect to any type of termination other than as contained in subitem (v) of this item (d) and that the policy should be consulted for more information; (vii) that the insurance is not tied to the loan in any manner and that if the loan is terminated, the insurance will remain in force unless it is otherwise terminated under the terms of the agreement between the debtor and the insurer; (viii) the name, address, and phone number of the lender; and (ix) the name, address, and phone number of the insurance company and the process to be followed in submitting a claim. The noncredit term life insurance must be underwritten by an insurance company which is properly licensed as required under South Carolina insurance laws. In addition, the noncredit term life insurance must be filed for approval prior to use in accordance with South Carolina insurance laws, and the terms and conditions of the transaction must comply with any other applicable provisions of the South Carolina insurance laws. If the creditor contracts for or receives a separate charge for insurance, the amount charged for the insurance may not exceed the premium to be charged by the insurer, as computed at the time the charge to the debtor is determined, conforming to any rate filings required by law and made by the insurer with the Director of the Department of Insurance. Any attempt to tie the sale of the noncredit term life insurance to any loan or extension of credit or otherwise to coerce the debtor into purchasing the insurance is prohibited, and any party engaged in the tying or coercion is subject to penalties in accordance with Section 37-5-202. (3) With respect to an assumption of an existing obligation, the lender may, in addition to the other authorized charges, charge an assumption fee not exceeding the lesser of four hundred dollars or one percent of the unpaid balance of the debt at the time the assumption transaction is consummated whenever the primary collateral securing the credit is real estate or a residential manufactured home and not exceeding the lesser of fifty dollars or one percent of the unpaid balance of the debt at the time the assumption transaction is consummated whenever the primary collateral securing the credit is personal property other than a residential manufactured home. SECTION 37-3-203. Delinquency charges.

(1) With respect to a consumer loan including an open-end consumer loan pursuant to a lender credit card or similar arrangement, and any refinancings or consolidations of all such consumer loans, the parties may contract for a delinquency charge on any installment not paid in full within ten days after its due date, as originally scheduled or as deferred, in an amount, not exceeding five dollars which is not more than five percent of the unpaid amount of the installment. (2) Notwithstanding subsection (1) the lender may contract for and receive a minimum delinquency charge not to exceed forty percent of five dollars as adjusted pursuant to Section 37-1-109. The lender may contract for such a minimum charge even though the charge exceeds five percent of the unpaid amount of the installment. (3) A statement in the agreement between the lender and the debtor to the effect that the lender may charge the maximum delinquency charge (or late charge) authorized by law entitles the creditor to impose a delinquency charge in the dollar amount specified in subsections (1) and (2) as adjusted pursuant to Section 37-1-109 at the time the delinquency charge is imposed, subject to the five percent of the unpaid amount of the installment limitation, if applicable. (4) A delinquency charge under this section may be collected only once on an installment however long it remains in default. No delinquency charge may be collected with respect to a deferred installment unless the installment is not paid in full within ten days after its deferred due date. A delinquency charge may be collected at the time it accrues or at any time thereafter. (5) A delinquency charge pursuant to this section must not be collected on a payment that is otherwise a full installment payment for the applicable period and is paid on its due date or within ten days after its due date if the only delinquency is attributable to a late fee or a delinquency charge assessed on an earlier installment. It is the intent of the legislature that in construing this subsection, the courts be guided by interpretations to 16 C.F.R. 444.4 and 12 C.F.R. 227.15, as amended from time to time, relating to late charges, given by the Federal Trade Commission, Federal Reserve Board, and the Federal Courts. (6) If two installments or parts thereof of a precomputed consumer loan are in default for ten days or more, the lender may elect to convert the loan from a precomputed loan to one in which the loan finance charge is based on unpaid balances. In this event, he shall make a rebate pursuant to the provisions on rebate upon prepayment (Section 37-3-210) as if the date of prepayment were one day before the maturity date of a delinquent installment, and thereafter may make a loan finance charge as authorized by the provisions on loan finance charge for consumer loans by lenders not supervised lenders [Section 37-3-201(1)] or finance charge for consumer loans by supervised lenders [Section 37-3-201(2)], whichever is appropriate. The amount of the rebate must not be reduced by the amount of any permitted minimum charge (Section 37-3-210). If the creditor proceeds under this subsection, any delinquency or deferral charges made with respect to installments due on or after the maturity date of the first delinquent installment must be rebated, and no further delinquency or deferral charges may be made. SECTION 37-3-204. Deferral charges. (1) In this section and in the provisions on rebate upon prepayment (Section 37-3-210) the following defined terms apply with respect to a precomputed consumer loan: (a) “Computational period” means (i) the interval between scheduled due dates of instalments under the transaction if the intervals are substantially equal or, (ii) if the intervals are not substantially equal, one month if the smallest interval between the scheduled due dates of instalments under the transaction is one month or more, and, otherwise, one week. (b) “Deferral” means a postponement of the scheduled due date of an instalment as originally scheduled or as previously deferred. (c) “Deferral period” means a period in which no instalment is scheduled to be paid by reason of a deferral. (d) The “interval” between specified dates means the interval between them including one or the other but not both of them; if the interval between the date of a transaction and the due date of the first scheduled instalment does not exceed one month by more than 15 days when the computational period is one month,

or does not exceed 11 days when the computational period is one week, the interval may be considered by the creditor as one computational period. (e) “Periodic balance” means the amount scheduled to be outstanding on the last day of a computational period before deducting the instalment, if any, scheduled to be paid on that day. (f) “Standard deferral” means a deferral with respect to a transaction made as of the due date of an instalment as scheduled before the deferral by which the due dates of that instalment and all subsequent instalments as scheduled before the deferral are deferred for a period equal to the deferral period. A standard deferral may be for one or more full computational periods or a portion of one computational period or a combination of any of these. (g) “Sum of the balances method,” also known as the “Rule of 78,” means a method employed with respect to a transaction to determine the portion of the loan finance charge attributable to a period of time before the scheduled due date of the final instalment of the transaction. The amount so attributable is determined by multiplying the finance charge by a fraction the numerator of which is the sum of the periodic balances included within the period and the denominator of which is the sum of all periodic balances under the transaction. According to the sum of the balances method the portion of the finance charge attributable to a specified computational period is the difference between the portions of the finance charge attributable to the periods of time including and excluding, respectively, the computational period, both determined according to the sum of the balances method. (h) “Transaction” means a precomputed consumer loan unless the context otherwise requires. (2) Before or after default in payment of a scheduled instalment of a transaction, the parties to the transaction may agree in writing to a deferral of all or part of one or more unpaid instalments and the creditor may make at the time of deferral and receive at that time or at any time thereafter a deferral charge not exceeding that provided in this section. (3) A standard deferral may be made with respect to a transaction as of the due date, as originally scheduled or as deferred pursuant to a standard deferral, of an instalment with respect to which no delinquency charge (Section 37-3-203) has been made or, if made, is deducted from the deferral charge computed according to this subsection. The deferral charge for a standard deferral may equal but not exceed the portion of the loan finance charge attributable to the computational period immediately preceding the due date of the earliest maturing instalment deferred as determined according to the sum of the balances method multiplied by the whole or fractional number of computational periods in the deferral period, counting each day as 1/30 th of a month without regard to differences in lengths of months when the computational period is one month or as 1/7 th of a week when the computational period is one week. A deferral charge computed according to this subsection is earned pro rata during the deferral period and is fully earned on the last day of the deferral period. (4) With respect to a transaction as to which a creditor elects not to make and does not make a standard deferral or a deferral charge for a standard deferral, a deferral charge computed according to this subsection may be made as of the due date, as scheduled originally or as deferred pursuant to either subsection (3) or this subsection, of an instalment with respect to which no delinquency charge (Section 37-3-203) has been made or, if made, is deducted from the deferral charge computed according to this subsection. A deferral charge pursuant to this subsection may equal but not exceed the rate of loan finance charge required to be disclosed to the debtor pursuant to law applied to each amount deferred for the period for which it is deferred computed without regard to differences in lengths of months, but proportionately for a part of a month, counting each day as 1/30 th of a month or as 1/7 th of a week. A deferral charge computed according to this subsection is earned pro rata with respect to each amount deferred during the period for which it is deferred. (5) In addition to the deferral charge permitted by this section, a creditor may make and receive appropriate additional charges (Section 37-3-202), and any amount of these charges which is not paid may be added to the deferral charge computed according to subsection (3) or to the amount deferred for the purpose of computing the deferral charge computed according to subsection (4). (6) The parties may agree in writing at the time of a transaction that, if an instalment is not paid within ten days after its due date, the creditor may unilaterally grant a deferral and make charges as provided in this

section. A deferral charge may not be made for a period after the date that the creditor elects to accelerate the maturity of the transaction. SECTION 37-3-205. Loan finance charge on refinancing. With respect to a consumer loan, refinancing, or consolidation, the lender may by agreement with the debtor refinance the unpaid balance and may contract for and receive a loan finance charge based on the principal resulting from the refinancing at a rate not exceeding that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or the provisions on loan finance charge for supervised loans (Section 37-3-508), whichever is appropriate. For the purpose of determining the loan finance charge permitted, the principal resulting from the refinancing comprises the following: (1) if the transaction was not precomputed, the total of the unpaid balance and the accrued charges on the date of the refinancing, or, if the transaction was precomputed, the amount which the debtor would have been required to pay upon prepayment pursuant to the provisions on rebate upon prepayment (Section 37-3-210) on the date of refinancing, except that for the purpose of computing this amount no minimum charge (Section 37-3-210) shall be allowed; and (2) appropriate additional charges (Section 37-3-202), payment of which is deferred. SECTION 37-3-206. Loan finance charge on consolidation. (1) If a debtor owes an unpaid balance to a lender with respect to a consumer loan, refinancing, or consolidation, and becomes obligated on another consumer loan, refinancing, or consolidation with the same lender, the parties may agree to a consolidation resulting in a single schedule of payments. If the previous consumer loan, refinancing, or consolidation was not precomputed, the parties may agree to add the unpaid amount of principal and accrued charges on the date of consolidation to the principal with respect to the subsequent loan. If the previous consumer loan, refinancing, or consolidation was precomputed, the parties may agree to refinance the unpaid balance pursuant to the provisions on refinancing (Section 37-3-205) and to consolidate the principal resulting from the refinancing by adding it to the principal with respect to the subsequent loan. In either case the lender may contract for and receive a loan finance charge based on the aggregate principal resulting from the consolidation at a rate not in excess of that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or the provisions on loan finance charge for supervised loans (Section 37-3-508), whichever is appropriate. (2) The parties may agree to consolidate the unpaid balance of a consumer loan with the unpaid balance of a consumer credit sale. The parties may agree to refinance the previous unpaid balance pursuant to the provisions on refinancing sales (Section 37-2-205) or the provisions on refinancing loans (Section 37-3-205), whichever is appropriate, and to consolidate the amount financed resulting from the refinancing or the principal resulting from the refinancing by adding it to the amount financed or principal with respect to the subsequent sale or loan. The aggregate amount resulting from the consolidation shall be deemed principal, and the creditor may contract for and receive a loan finance charge based on the principal at a rate not in excess of that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or the provisions on loan finance charge for supervised loans (Section 37-3-508), whichever is appropriate. SECTION 37-3-207. Conversion to revolving loan account. The parties may agree to add to a revolving loan account the unpaid balance of a consumer loan, not made pursuant to revolving loan account, or a refinancing, or consolidation thereof, or the unpaid balance of a consumer credit sale, refinancing or consolidation. For the purpose of this section: (1) the unpaid balance of a consumer loan, refinancing, or consolidation is an amount equal to the principal determined according to the provisions on refinancing (Section 37-3-205); and

(2) the unpaid balance of a consumer credit sale, refinancing, or consolidation is an amount equal to the amount financed determined according to the provisions on refinancing (Section 37-2-205). SECTION 37-3-208. Advance to perform covenants of debtor. (1) If the agreement with respect to a consumer loan, refinancing, or consolidation contains covenants by the debtor to perform certain duties pertaining to insuring or preserving collateral and if the lender pursuant to the agreement pays for performance of the duties on behalf of the debtor, the lender may add the amounts paid to the debt. Within a reasonable time after advancing any sums, he shall state to the debtor in writing the amount of the sums advanced, any charges with respect to this amount, and any revised payment schedule and, if the duties of the debtor performed by the lender pertain to insurance, a brief description of the insurance paid for by the lender including the type and amount of coverages. No further information need be given. (2) A loan finance charge may be made for sums advanced pursuant to subsection (1) at a rate not exceeding the rate stated to the debtor pursuant to the provisions on disclosure (Part 3) with respect to the loan, refinancing, or consolidation, except that with respect to a revolving loan account the amount of the advance may be added to the unpaid balance of the debt and the lender may make a loan finance charge not exceeding that permitted by the provisions on loan finance charge for consumer loans (Section 37-3-201) or for supervised loans (Section 37-3-508), whichever is appropriate. SECTION 37-3-209. Right to prepay. Subject to the provisions on rebate upon prepayment (Section 37-3-210), the debtor may prepay in full the unpaid balance of a consumer loan, refinancing, or consolidation at any time without penalty. SECTION 37-3-210. Rebate upon prepayment. (1) Except as otherwise provided in this section, upon prepayment in full of a precomputed consumer loan entered into after September 28, 1976, the creditor shall rebate to the debtor an amount not less than the unearned portion of the loan finance charge computed according to this section. If the rebate otherwise required is less than $1.00, no rebate need be made. (2) Upon prepayment of a consumer loan, whether or not precomputed, except a consumer lease or one pursuant to a revolving loan account, the creditor may collect or retain a minimum charge not exceeding fifteen dollars, if the minimum charge was contracted for and the loan finance charge earned at the time of prepayment is less than the minimum charge contracted for. (3) In the following subsections these terms have the meanings ascribed to them in subsection (1) of Section 37-3-204: computational period, deferral, deferral period, periodic balance, standard deferral, sum of the balances method, and transaction. (4) If, with respect to a transaction payable according to its original terms in no more than 61 instalments, the creditor has made either: (a) no deferral or deferral charge, the unearned portion of the loan finance charge is no less than the portion thereof attributable according to the sum of the balances method to the period from the first day of the computational period following that in which prepayment occurs to the scheduled due date of the final instalment of the transaction; or (b) a standard deferral and a deferral charge pursuant to the provisions on a standard deferral, the unpaid balance of the transaction includes any unpaid portions of the deferral charge and any appropriate additional charges incident to the deferral, and the unearned portion of the loan finance charge is no less than the portion thereof attributable according to the sum of the balances method to the period from the first day of the computational period following that in which prepayment occurs except that the numerator of the fraction is the sum of the periodic balances, after rescheduling to give effect to any standard deferral, scheduled to follow the computational period in which prepayment occurs. A separate rebate of

the deferral charge is not required unless the unpaid balance of the transaction is paid in full during the deferral period, in which event the creditor shall also rebate the unearned portion of the deferral charge. (5) In lieu of computing a rebate of the unearned portion of the loan finance charge as provided in subsection (4) of this section, the creditor: (a) shall, with respect to a transaction payable according to its original terms in more than 61 instalments, and a transaction payable according to its original terms in no more than 61 instalments as to which the creditor has made a deferral other than a standard deferral, and (b) may, in other cases, recompute or redetermine the earned finance charge by applying, according to the actuarial method, the annual percentage rate of finance charge required to be disclosed to the debtor pursuant to law to the actual unpaid balances of the amount financed for the actual time that the unpaid balances were outstanding as of the date of prepayment, giving effect to each payment, including payments of any deferral and delinquency charges, as of the date of the payment. The Administrator shall adopt rules to simplify the calculation of the unearned portion of the finance charge, including allowance of the use of tables or other methods derived by application of a percentage rate which deviates by not more than one-half of one percent from the rate of the loan finance charge required to be disclosed to the debtor pursuant to law, and based on the assumption that all payments were made as originally scheduled or as deferred. (6) Except as otherwise provided in subsection (5), this section does not preclude the collection or retention by the creditor of delinquency charges (Section 37-3-203). (7) If the maturity is accelerated for any reason and judgment is entered, the debtor is entitled to the same rebate as if payment had been made on the date judgment is entered. (8) Upon prepayment in full of a precomputed consumer loan by the proceeds of consumer credit insurance (Section 37-4-103), the debtor or his estate is entitled to the same rebate as though the debtor had prepaid the agreement on the date the proceeds of insurance are paid to the creditor, but no later than 20 business days after satisfactory proof of loss is furnished to the creditor.

PART 3.

DISCLOSURE AND ADVERTISING SECTION 37-3-301. Application of and compliance with Federal Truth in Lending Act. A person upon whom the Federal Truth in Lending Act imposes duties or obligations shall make or give to the consumer the disclosures, information and notices required of him by that act and in all respects comply with that act. SECTION 37-3-302. Receipts; statements of account; evidence of payment. (1) The creditor shall deliver or mail to the debtor, without request, a written receipt for each payment by coin or currency on an obligation pursuant to a consumer loan. A periodic statement showing a payment received by mail complies with this subsection. (2) Upon written request of a debtor, the person to whom an obligation is owed pursuant to a consumer loan, except one pursuant to a revolving loan account, shall provide a written statement of the dates and amounts of payments made within the 12 months preceding the month in which the request is received and the total amount unpaid as of the end of the period covered by the statement. The statement shall be provided without charge once during each year of the term of the obligation. If additional statements are requested the creditor may charge not in excess of $2.00 for each additional statement. (3) After a debtor has fulfilled all obligations with respect to a consumer loan, except one pursuant to a revolving loan account, the person to whom the obligation was owed, upon request of the debtor, shall deliver or mail to the debtor written evidence acknowledging payment in full of all obligations with respect to the transaction.

SECTION 37-3-303. Notice to co-signers and similar parties. (1) A natural person, other than the spouse of the debtor, is not obligated as a co-signer, co-maker, guarantor, indorser, surety, or similar party with respect to a consumer loan, unless before or contemporaneously with signing any separate agreement of obligation or any writing setting forth the terms of the debtor’s agreement, the person receives a separate written notice that contains a completed identification of the debt he may have to pay and reasonably informs him of his obligation with respect to it. (2) A clear and conspicuous notice in substantially the following form complies with this section: NOTICE You agree to pay the debt identified below although you may not personally receive any property, services, or money. You may be sued for payment although the person who receives the property, services, or money is able to pay. This notice is not the contract that obligates you to pay the debt. Read the contract for the exact terms of your obligation. IDENTIFICATION OF DEBT YOU MAY HAVE TO PAY ______________________________________________________________ (Name of Debtor) ______________________________________________________________ (Name of Creditor) ______________________________________________________________ (Date) ______________________________________________________________ (Kind of Debt) I have received a copy of this notice. ___________________________________ _________________________ (Date) (Signed) (3) The notice required by this section need not be given to a seller, lessor, or lender who is obligated to an assignee of his rights. (4) A person entitled to notice under this section shall also be given a copy of any writing setting forth the terms of the debtor’s agreement and of any separate agreement of obligation signed by the person entitled to the notice. (5) A notice to co-signer which complies with the Federal Trade Commission’s Trade Regulation Rule on Credit Practices (16 C.F.R. Section 444) or which complies with a regulation regarding co-signer notices promulgated by any federal agency pursuant to Section 18(f) of the Federal Trade Commission Act, 15 U.S.C. Section 57a(f) (Section 202(a) of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, Public Law 93-63 F) likewise complies with this section, provided that the notice does not indicate that the creditor may collect any amount or engage in any activity which would be illegal under South Carolina law and the notice contains the following information signed and dated by the co-signer: IDENTIFICATION OF DEBT YOU MAY HAVE TO PAY ______________________________________________________________ (Name of Debtor) ______________________________________________________________ (Name of Creditor)

______________________________________________________________ (Date) ______________________________________________________________ (Kind of Debt) I have received a copy of this notice. ___________________________________ _________________________ (Date) (Signed) SECTION 37-3-304. Advertising. (1) A lender may not advertise, print, display, publish, distribute, broadcast, or cause to be advertised, printed, displayed, published, distributed, or broadcast in any manner any statement or representation with regard to the rates, terms, or conditions of credit with respect to a consumer loan that is false, misleading, or deceptive. (2) Advertising that complies with the Federal Truth in Lending Act does not violate this section. (3) This section does not apply to the owner or personnel, as such, of any medium in which an advertisement appears or through which it is disseminated. SECTION 37-3-305. Filing and posting maximum rate schedule. (1) Every creditor [Section 37-1-301(13)], other than an assignee of a credit obligation, making supervised or restricted consumer loans (Section 37-3-104) in this State shall on or before the effective date of this section, and in case of a creditor not making supervised consumer loans in this State on that date, on or before the date the creditor begins to make such loans in this State, file with the Department of Consumer Affairs and, except as otherwise provided in this section, post in one conspicuous place in every place of business, if any, in this State in which offers to make consumer loans are extended, a certified maximum rate schedule meeting the requirements set forth in subsections (2), (3), and (4) of this section. A creditor that has issued lender credit cards or similar arrangements [Section 37-1-301(16)] is not required to post a copy of the required rate schedule in any place of business which is authorized to honor such transactions except its central and branch offices other than a branch office that is a free-standing automatic teller machine; provided, that the creditor shall include a conspicuous statement of the maximum rate it intends to charge for these transactions in the initial disclosure statement required to be provided the debtor by the Federal Truth-In-Lending Act and notifies the debtor of any change in the maximum rate on or before the effective date of the change. (2) The rate schedule required to be filed and posted by subsection (1) must contain a list of the maximum rate of loan finance charge (Section 37-3-109) stated as an annual percentage rate, determined in accordance with the Federal Truth-In-Lending Act and Federal Reserve Board Regulation Z, that the creditor intends to charge for consumer credit transactions in each of the following categories of credit: (a) unsecured personal loans; (b) secured personal loans other than those secured by real estate; (c) real estate mortgage loans; (d) open-end (revolving) credit; (e) all other. The creditor may include as many subcategories as it chooses under each of the specified categories, and may, at its option, include a series of rates for different dollar amounts and maturities. A creditor may

omit one or more of the categories from the rate schedule if the creditor does not make consumer credit transactions falling within the omitted categories. If a variable rate is applicable to one or more categories or subcategories, the rate schedule must designate the rate as a variable rate and disclose the index for calculating changes in the rate and the cap or other limitation, if any, on any increases or decreases in the rate. (3) The rate schedule that is filed by the creditor shall be reproduced in at least fourteen-point type for posting as required by subsection (1). The terms “Loan Finance Charge” and “Annual Percentage Rate” will be printed in larger size type than the other terms in the posted rate schedule. The following statement shall be included in the posted rate schedule: “Consumers: All supervised and restricted creditors making consumer loans in South Carolina are required by law to post a schedule showing the maximum rate of LOAN FINANCE CHARGES stated as ANNUAL PERCENTAGE RATES that the creditor intends to charge for various types of consumer credit transactions. The purpose of this requirement is to assist you in comparing the maximum rates that creditors charge, thereby furthering your understanding of the terms of consumer credit transactions and helping you to avoid the uninformed use of credit. NOTE: Creditors are prohibited only from granting consumer credit at rates higher than those specified above. A creditor may be willing to grant you credit at rates that are lower than those specified, depending on the amount, terms, collateral and your credit worthiness.” (4) A rate schedule filed and posted as required by this section shall be effective until changed in accordance with this subsection. A creditor wishing to change any of the maximum rates shown on a schedule previously filed and posted or to add or delete the prescribed categories or subcategories shall file with the Department of Consumer Affairs, in duplicate, together with the required fee specified in subsection (6) and shall post as required by subsection (1) a revised schedule of maximum rates. The revised schedule shall be certified and returned to the creditor if properly filed. The revised rate schedule shall be effective for all consumer credit extended after the close of business on the day the certified schedule is received by the creditor or seven days after the date of submission postmark, whichever is earlier. The posting or changes in connection with lender credit cards and similar arrangements shall be made in accordance with subsection (1). (5) A creditor shall have no obligation to print the maximum rate schedule in any public advertisement that mentions rates charged by that creditor. (6) The Department of Consumer Affairs shall maintain a file for each creditor containing the original and all revised rate schedules filed by the creditor. A certified copy of each filing showing the date and time it was received must be sent to the creditor making the filing at the time of its receipt. A fee of twenty dollars for each rate schedule filed by a creditor is payable to the Department of Consumer Affairs for its services in maintaining the rate schedule files and providing one certified copy of each rate filing to the creditor. Additional certified copies of a filing must be provided at a charge of four dollars for each copy. (7) The Commission on Consumer Affairs shall promulgate a regulation pursuant to subsection (2) of Section 37-6-506 establishing the filing procedures for and the format of the rate schedules prescribed by this section. (8) Every creditor shall file at least one maximum rate schedule and pay at least one forty-dollar filing fee during each state fiscal year disclosing that creditor’s existing maximum rates plus an additional forty dollars for each additional location. This filing and fee required of each creditor is due annually before the thirty-first day of January of each year. If this filing does not change any maximum rates previously filed, the creditor is not required to alter posted maximum rates. If any creditor has not filed a maximum rate schedule with the Department of Consumer Affairs by the thirty-first day of January of the year in which it is due, then on this date the filing is no longer effective and the maximum credit service charge that the creditor may impose on any credit extended after that date may not exceed eighteen percent a year until such time as the creditor files a revised maximum rate schedule that complies with this section. The Department of Consumer Affairs shall retain thirty dollars of each fee to offset the cost of administering and enforcing this chapter and Chapter 2 of this title. This revenue may be applied to the cost of

operations and any unexpended balance carries forward to succeeding fiscal years and must be used for the same purposes. (9) On loans with a cash advance [Section 37-1-301(30)] not exceeding six hundred dollars, a licensed lender may not post a rate which exceeds the maximum charges imposed in Section 34-29-140 as disclosed as an annual percentage rate or that rate filed and posted pursuant to this section, whichever is less. SECTION 37-3-306. Notice of assumption rights. (1) Every creditor engaged in this State in making consumer loans pursuant to a lender credit card or similar arrangement shall: (a) file on or before January thirty-first of each year with the Department of Consumer Affairs for every lender card plan it offers to South Carolina residents the disclosures required for credit and charge card applications and solicitations by the Federal Truth-In-Lending Act, Federal Reserve Board Regulation Z, Section 226.5a(b), 12 C.F.R. Section 226.5a(b), and any amendments or replacements thereto. The disclosures required by this section must be based on fees and charges and other terms in effect as of December thirty-first of the prior year. The required disclosures may be filed by providing one or more actual applications or solicitations used by the creditor which contain the required disclosures on one or more of the model forms in Appendix G of Federal Reserve Board Regulation Z. The annual filing fee for each creditor is twenty dollars, payable at the time the disclosures are filed regardless of the number of filings; and (b) file with the Department of Consumer Affairs current figures on the disclosures required by item (a) within thirty days after receiving a written request for this information from the administrator. No filing fee may be imposed for this information request. (2) Failure to file the disclosures required by this section and any errors in these disclosures does not affect the validity of any transaction or the maximum rates or charges in any transaction made by the creditor but the creditor is subject to the administrative remedies in Part 1 of Chapter 6. SECTION 37-3-308. Manufactured home loan disclosure; material terms. (A) An estimate of the disclosures required by Section 37-3-301 is required in connection with a loan for the purchase, refinance, or consolidation of a loan secured by a borrower-occupied manufactured home not less than two days before the consummation of the transaction as defined in 12 C.F.R. Section 226.2(a)(13). The estimated disclosure must be accompanied by the itemization of the amount financed. With respect to a loan secured by real property, the disclosures required by the Federal Real Estate Settlement Procedures Act are applicable. (B) If the lender turns down the applicant for the credit sale before making the disclosures, the disclosures as provided in subsection (A) are not required. (C)(1) If the lender determines that a material term of the loan sale must change, then the lender shall redisclose the estimated disclosures to conform to the changed terms and the transaction must not be consummated until one day after the redisclosure. (2) A material term of the credit sale includes: (a) the number of payments of the transaction; (b) a feature of the transaction causing it to be an alternative mortgage transaction as defined in 12 U.S. Code Section 3802(1) when the transaction as previously disclosed was not an alternative mortgage transaction; (c) a term or fee in the transaction or combination of terms or fees causing the annual percentage rate to vary more than one quarter of one percent of the annual percentage rate previously disclosed; or (d) any insurance premiums, prepaid finance charges, third-party fees, or preparation charges that vary from the previously disclosed insurance premiums, prepaid finance charges, third-party fees, or

preparation charges by lesser than five hundred dollars in the aggregate or one percent of the estimated amount disclosed pursuant to subsection (A) above.

PART 4.

LIMITATION ON AGREEMENTS SECTION 37-3-401. Scope. This part applies to consumer loans. SECTION 37-3-402. Balloon payments. (1) Except as provided in subsection (2), if any scheduled payment of a consumer loan is more than twice as large as the average of earlier scheduled payments, the consumer has the right to refinance, without penalty, the amount of that payment at the time it is due. The terms of the refinancing shall be no less favorable to the consumer than the terms of the original transaction. (2) This section does not apply to - (a) a transaction pursuant to a revolving loan account; (b) a transaction to the extent that the payment schedule is adjusted to the seasonal or irregular income or scheduled payments or obligations of the consumer; (c) a credit transaction to the extent a formula for determining the rate of the loan finance charge and any change in the amount of payment upon renegotiation or refinancing is specified in the agreement between the parties or is an alternative mortgage instrument; or (d) a transaction of a class defined by rule of the Administrator as not requiring for the protection of the consumer his right to refinance as provided in this section. SECTION 37-3-403. No assignment of earnings. (1) A lender may not take an assignment of earnings of the debtor for payment or as security for payment of a debt arising out of a consumer loan. An assignment of earnings in violation of this section is unenforceable by the assignee of the earnings and revocable by the debtor. This section does not prohibit an employee from authorizing deductions from his earnings if the authorization is revocable. (2) A sale of unpaid earnings made in consideration of the payment of money to or for the account of the seller of the earnings is deemed to be a loan to him secured by an assignment of earnings. SECTION 37-3-404. Attorney’s fees. (1) Except as provided by the provisions on limitations on attorney’s fees as to certain supervised loans (Section 37-3-514), with respect to a consumer loan the agreement may provide for the payment by the debtor of reasonable attorney’s fees not in excess of fifteen percent of the unpaid debt after default and referral to an attorney not a salaried employee of the lender. A provision in violation of this section is unenforceable. (2) With respect to a consumer loan that is secured in whole or in part by a lien on real estate the provisions of Section 37-10-102(a) apply whenever the lender requires the debtor to purchase insurance or pay any attorney’s fees in connection with examining the title and closing the transaction. SECTION 37-3-405. Charges as a result of default prohibited except as authorized by title. Except for reasonable expenses incurred in realizing on a security interest, the agreement with respect to a consumer loan may not provide for charges as a result of default by the debtor other than those authorized

by this title. A provision in violation of this section is unenforceable. This section does not prohibit or limit delinquency or deferral charges. SECTION 37-3-406. Notice of assignment. The debtor is authorized to pay the original lender until he receives notification of assignment of rights to payment pursuant to a consumer loan and that payment is to be made to the assignee. A notification which does not reasonably identify the rights assigned is ineffective. If requested by the debtor, the assignee must seasonably furnish reasonable proof that the assignment has been made and unless he does so the debtor may pay the original lender. SECTION 37-3-407. Authorization to confess judgment prohibited. A debtor may not authorize any person to confess judgment on a claim arising out of a consumer loan. An authorization in violation of this section is void. SECTION 37-3-408. Change in terms of revolving loan accounts. (1) Whether or not a change is authorized by prior agreement, a creditor may change the terms of a revolving loan account applying to any balance incurred before or after the effective date of the change. If the change increases the rate of the loan finance charge or of additional charges, alters the method of determining the balance upon which charges are made so that increased charges may result, or imposes or increases minimum charges, the change is effective with respect to a balance incurred before the effective date of the change only if the debtor after receiving disclosure of the change agrees to it in writing or the creditor delivers or mails to the debtor one written disclosure of the change at least thirty days before the effective date. The written disclosure must state that if the consumer does not want to continue the revolving account under the new terms the creditor will terminate the account and permit the consumer to pay the existing balance under the terms in effect before the change in terms on the written request of the consumer sent to the creditor at the address provided in the disclosure. The disclosure also must state that the consumer may apply for another revolving account on the new terms. (2) A disclosure provided for in subsection (1) is mailed to the debtor when mailed to him at his address used by the creditor for mailing him periodic billing statements. (3) If a creditor attempts to change the terms of a revolving loan account as provided in subsection (1) without complying with this section, any additional cost or charge to the debtor resulting from the change is an excess charge and is subject to the remedies available to the debtor (Section 37-5-202) and to the administrator (Section 37-6-113). SECTION 37-3-409. Use of multiple agreements. A lender may not use multiple agreements with intent to avoid disclosure of an annual percentage rate pursuant to the provisions on disclosure and advertising (part 3). The excess amount of loan finance charge provided for in agreements in violation of this section is an excess charge for the purposes of the provisions on the effect of violations on rights of parties (Section 37-5-202) and the provisions on civil actions by Administrator (Section 37-6-113). SECTION 37-3-410. Lender subject to claims and defenses arising from sale and leases. (1) A lender, except the issuer of a lender credit card, who with respect to a particular transaction, makes a consumer loan to enable a debtor to buy or lease from a particular seller or lessor property or services is subject to all claims and defenses of the debtor against the seller or lessor arising from that sale or lease of the property or services if:

(a) the lender knows that the seller or lessor arranged for the extension of credit by the lender for a commission, brokerage, or referral fee; (b) the lender is a person related to the seller or lessor, unless the relationship is remote or is not a factor in the transaction; (c) the seller of lessor guarantees the loan or otherwise assumes the risk of loss by the lender upon the loan; (d) the lender directly supplies the seller or lessor with the contract document used by the debtor to evidence the loan, and the seller or lessor has knowledge of the credit terms and participates in preparation of the document; or (e) the loan is conditioned upon the debtor’s purchase or lease of the property or services from the particular seller or lessor, but the lender’s payment of proceeds of the loan to the seller or lessor does not in itself establish that the loan was so conditioned. (f) the lender, before he makes the consumer loan, has knowledge or, from his course of dealing with the particular seller or lessor or his records, notice of substantial complaints by other buyers or lessees of the particular seller’s or lessor’s failure or refusal to perform his contracts with them and of the particular seller’s or lessor’s failure to remedy his defaults within a reasonable time after notice to him of the complaints. (2) A claim or defense of a debtor specified in subsection (1) may be asserted against the lender under this section only if the debtor has made a good faith attempt to obtain satisfaction from the seller or lessor with respect to the claim or defense and then only to the extent of the amount owing to the lender with respect to the sale or lease of the property or services as to which the claim or defense arose at the time the lender has written notice of the claim or defense. Written notice of the claim or defense may be given before the attempt specified in this subsection. For the purposes of this section, written notice is any written notification other than notice on a coupon, billing statement or other payment medium or material supplied by the lender which sets forth or otherwise enables the creditor to identify the name and account number (if any) of the debtor. (3) For the purpose of determining the amount owing to the lender with respect to the sale or lease: (a) payments received by the lender after consolidation of two or more consumer loans, except pursuant to a revolving loan account, are deemed to have been applied first to the payment of the loans first made; if the loans consolidated arose from loans made on the same day, payments are deemed to have been applied first to the smallest loan; and (b) payments received for a revolving loan account are deemed to have been applied first to the payment of loan finance charges in the order of their entry to the account and then to the payment of debts in the order in which the entries of the debts are made to the account. (4) An agreement may not limit or waive the claims or defenses of a debtor under this section. SECTION 37-3-411. Card issuer subject to claims and defenses. (1) This section neither limits the liability of nor imposes liability on a card issuer as a manufacturer, supplier, seller, or lessor of property or services sold or leased pursuant to the credit card. This section may subject a card issuer to claims and defenses of a cardholder against a seller or lessor arising from sales or leases made pursuant to the credit card. (2) A card issuer is subject to claims and defenses of a cardholder against the seller or lessor arising from the sale or lease of property or services by a seller or lessor licensed, franchised, or permitted by the card issuer or a person related to the card issuer to do business under the trade name or designation of the card issuer or a person related to the card issuer, to the extent of the original amount owing to the card issuer with respect to the sale or lease of the property or services as to which the claim or defense arose. (3) Except as otherwise provided in this section, a card issuer, including a lender credit card issuer, is subject to all claims and defenses of a cardholder against the seller or lessor arising from the sale or lease of property or services pursuant to the credit card

(a) if the original amount owing to the card issuer with respect to the sale or lease of the property or services as to which the claim or defense arose exceeds $50.00; (b) if the residence of the cardholder and the place where the sale or lease occurred are in the same state or within 100 miles of each other; (c) if the cardholder has made a good faith attempt to obtain satisfaction from the seller or lessor with respect to the claim or defense; and (d) to the extent of the amount owing to the card issuer with respect to the sale or lease of the property or services as to which the claim or defense arose at the time the card issuer has written notice of the claim or defense. Written notice of the claim or defense may be given before the attempt specified in paragraph (c). For the purposes of this section, written notice is any written notification other than notice on a coupon, billing statement or other payment medium or material supplied by the creditor which sets forth or otherwise enables the assignee to identify the name and account number (if any) of the debtor. (4) For the purpose of determining the amount owing to the card issuer with respect to a sale or lease pursuant to a revolving loan account or a revolving charge account, payments received for the account are deemed to have been applied first to the payment of loan finance charges or credit service charges in the order of their entry to the account and then to the payment of debts in the order in which the entries of the debts are made to the account. (5) An agreement may not limit or waive the claims or defenses of a cardholder under this section. SECTION 37-3-412. Variable interest rate real estate mortgage loans. With respect to a consumer loan which is secured in whole or in part by a lien on real estate under which the aggregate of all sums advanced or contemplated by the parties in good faith to be advanced will not exceed one hundred thousand dollars, the rate of the loan finance charge shall be a fixed nonvariable rate unless the creditor makes the transaction in accordance with any regulation governing alternative mortgages promulgated by the State Board of Financial Institutions or a federal regulatory agency. SECTION 37-3-413. Short-term vehicle secured loans; notice to borrower. (1) A “short-term vehicle secured loan” means a nonpurchase money consumer loan with an original repayment term of less than one hundred and twenty days and secured by a motor vehicle. It does not include a loan made by a supervised financial organization. (2) A short-term vehicle secured loan must be for an original period of at least one month. A lender may allow the loan to be renewed no more than six additional periods, not to exceed two hundred forty days, with each period equal to the length of the original period. A short-term vehicle secured loan may not accrue interest after the maturity of the sixth renewal period. After the maturity of the final renewal period, the borrower may repay the remaining principal, without additional interest, in six equal monthly installments. For the purposes of this section, a renewal is an extension of a short-term vehicle secured loan for an additional period without changes in the terms of the loan other than a reduction in its principal. Accrued interest must not be capitalized or added to the principal of the loan at the time of a renewal. Fees must not be charged, other than the lien recording fee in the exact amount of the governmental entity’s charge. (3) Before making a short-term vehicle secured loan, a lender shall form a good faith belief that the borrower has the ability to repay the loan, considering the borrower’s, and any co-borrower’s, employment, monthly income, and other monthly expenses compared to the loan’s repayment obligation for the original term and permitted renewals. The lender is considered to comply with this subsection if the lender obtains from the borrower, on a form separate from the loan agreement, a signed statement that the information the borrower has provided regarding employment, income, and expenses is true and correct and that, given the information, the borrower believes he has the ability to repay the loan. (4) A lender may not make a short-term vehicle secured loan in a principal amount greater than the fair market retail value of the motor vehicle securing the loan, as determined by common industry appraisal

guides. If the motor vehicle securing the loan is not listed in common appraisal guides, the lender shall use his best judgment to determine the value. (5) Except in the event of fraud by the borrower, if a borrower defaults in the repayment of a short-term vehicle secured loan, the lender’s sole remedy is to seek possession and sale of the motor vehicle securing the loan and the lender may not pursue the borrower personally in an action for repayment of the loan or for any deficiency after sale. Notwithstanding this section, the lender must return to the borrower any surplus obtained after sale in excess of the amount owed on the loan and reasonable expenses of repossession and sale in accordance with Title 36, Chapter 9. (6) In a short-term vehicle secured loan agreement the lender shall provide a: (a) notice, placed conspicuously above the borrower’s signature and in at least fourteen point type, as follows: “THIS IS A HIGHER INTEREST LOAN. YOU SHOULD GO TO ANOTHER SOURCE IF YOU HAVE THE ABILITY TO BORROW AT A LOWER RATE OF INTEREST. YOU ARE PLACING YOUR VEHICLE AT RISK IF YOU DEFAULT ON THIS LOAN.”; and (b) right of rescission provision entitling the borrower to repay the principal amount borrowed without interest or other cost at any time until the close of business on the business day following the date the original loan was executed. (7) A lender making short-term vehicle secured loans may not advertise or offer a rate of interest that is lower in the original period of the loan if that rate increases in later renewals.

PART 5.

SUPERVISED LOANS SECTION 37-3-500. Scope. Except as provided in Section 37-3-512, this Part shall not apply to restricted loans or restricted lenders. SECTION 37-3-501. Definitions: “supervised loan”; “supervised lender”; “restricted loan”; “restricted lender”. [Section effective until January 1, 2010. See, also, section effective January 1, 2010.] (1) “Supervised loan” means a consumer loan in which the rate of the loan finance charge exceeds twelve percent per year as determined according to the provisions on the loan finance charge for consumer loans (Section 37-3-201). (2) “Supervised lender” means a person authorized to make or take assignments of supervised loans. (3) “Restricted loan” means a supervised loan made by a restricted lender pursuant to and in compliance with Chapter 29 of Title 34 (The South Carolina Consumer Finance Act). (4) “Restricted lender” means a person licensed pursuant to Chapter 29 of Title 34 to make loans under that chapter (The South Carolina Consumer Finance Act). SECTION 37-3-501. Definitions: “supervised loan”; “supervised lender”; “restricted loan”; “restricted lender”. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] [Subsection effective until January 1, 2010.] (1) “Supervised loan” means a consumer loan in which the rate of the loan finance charge exceeds twelve percent per year as determined according to the provisions on the loan finance charge for consumer loans (Section 37-3-201). [Subsection effective January 1, 2010.]

(1) “Supervised loan” means a consumer loan in which the rate of the loan finance charge exceeds twelve percent per year as determined according to the provisions on the loan finance charge for consumer loans (Section 37-3-201). A supervised loan does not include a mortgage loan as defined in Section 37-22-110(30). (2) “Supervised lender” means a person authorized to make or take assignments of supervised loans. (3) “Restricted loan” means a supervised loan made by a restricted lender pursuant to and in compliance with Chapter 29 of Title 34 (The South Carolina Consumer Finance Act). (4) “Restricted lender” means a person licensed pursuant to Chapter 29 of Title 34 to make loans under that chapter (The South Carolina Consumer Finance Act). SECTION 37-3-502. Authority to make supervised loans. Unless a person is a supervised financial organization or has first obtained a license from the State Board of Financial Institutions authorizing him to make supervised loans, he shall not engage in the business of (1) making supervised loans, or (2) taking assignments of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans. SECTION 37-3-503. License to make supervised loans. (1) The State Board of Financial Institutions shall receive and act on all applications for licenses to make supervised loans under this Title. Applications shall be filed in the manner prescribed by the Board and shall contain the information the Board requires by rule to make an evaluation of the financial responsibility, character and fitness of the applicant, and the convenience and advantage to the community in which the licensed office is to be located. (2) An applicant meets the minimum standard of financial responsibility for engaging in the business of making supervised loans (Section 37-3-502) if he has available for operation of that business in this State assets of at least twenty-five thousand dollars for each license issued. (3) Upon written request, the applicant is entitled to a hearing on the question of his qualifications for a license if (a) the State Board of Financial Institutions has notified the applicant in writing that his application has been denied, or (b) the Board has not issued a license within 60 days after the application for the license was filed. A request for a hearing may not be made more than 15 days after the Board has mailed a writing to the applicant notifying him that the application has been denied and stating in substance the Board findings supporting denial of the application. (4) The State Board of Financial Institutions shall issue additional licenses to the same licensee upon compliance with all the provisions of this Title governing issuance of a single license. A separate license shall be required for each place of business. Each license shall remain in full force and effect until surrendered, suspended, or revoked. (5) A supervised lender, other than a supervised financial organization, prior to installation of an electronic information processing device in the form of a computer terminal, whether or not manned by an employee of the licensee, which is or may be activated by a customer of a licensee for the purpose of obtaining consumer loans from a licensee, whether by way of cash disbursement or other method of funds transfer, must apply for and obtain a license for such installation if located off premises from a licensed location or place of business. (6) No licensee shall change the location of any place of business without giving the State Board of Financial Institutions at least 15 days prior written notice and no such change shall be made to a location outside of the city or town for which a license is issued, without obtaining a new license for such location. For these purposes “city or town” means an incorporated area and its contiguous unincorporated suburbs. (7) A licensee may conduct the business of making supervised loans only at or from any place of business for which he holds a license and not under any other name than that in the license. Sales or leases made pursuant to a lender credit card do not violate this subsection.

(8) The State Board of Financial Institutions, for the purposes of execution of its responsibilities under this Title, shall be entitled to collect from applicants and licensees the regulatory fees provided in Chapter 29 of Title 34. But all lenders shall pay the notification fee provided in this Title to Administrator. SECTION 37-3-504. Revocation or suspension of license. (1) The State Board of Financial Institutions may issue to a person licensed to make supervised loans an order to show cause why his license should not be revoked or suspended for a period not in excess of 6 months. The order shall state the place for a hearing and set a time for the hearing that is no less than 10 days from the date of the order. After the hearing the Board shall revoke or suspend the license if it finds that: (a) the licensee has repeatedly and willfully violated this Title or any rule or order lawfully made pursuant to this Title; or (b) facts or conditions exist which would clearly have justified the Board in refusing to grant a license had these facts or conditions been known to exist at the time the application for the license was made. (2) No revocation or suspension of a license is lawful unless prior to institution of proceedings by the State Board of Financial Institutions notice is given to the licensee of the facts or conduct which warrant the intended action, and the licensee is given an opportunity to show compliance with all lawful requirements for retention of the license. (3) If the State Baord of Financial Institutions finds that probable cause for revocation of a license exists and that enforcement of this Title requires immediate suspension of the license pending investigation, it may, after a hearing upon 5 days’ written notice, enter an order suspending the license for not more than 30 days. (4) Whenever the State Board of Financial Institutions revokes or suspends a license, it shall enter an order to that effect and forthwith notify the licensee of the revocation or suspension. Within five days after the entry of the order it shall deliver to the licensee a copy of the order and the findings supporting the order. (5) Any person holding a license to make supervised loans may relinquish the license by notifying the State Board of Financial Institutions in writing of its relinquishment, but this relinquishment shall not affect his liability for acts previously committed. (6) No revocation, suspension, or relinquishment of a license shall impair or affect the obligation of any preexisting lawful contract between the licensee and any debtor. (7) The State Board of Financial Institutions may reinstate a license, terminate a suspension, or grant a new license to a person whose license has been revoked or suspended if no fact or condition then exists which clearly would have justified the Board refusing to grant a license. SECTION 37-3-505. Records; annual reports. (1) Every licensee shall maintain records in conformity with generally accepted accounting principles and practices in a manner that will enable the State Board of Financial Institutions to determine whether the licensee is complying with the provisions of this title. The recordkeeping system of a licensee shall be sufficient if he makes the required information reasonably available. The records need not be kept in the place of business where supervised loans are made, if the board is given free access to the records wherever located. The records pertaining to any loan, including the certified maximum rate chart in effect at the time the loan was made, need not be preserved for more than two years after making the final entry relating to the loan, but in the case of a revolving loan account the two years is measured from the date of each entry. (2) On or before April fifteenth each year every licensee shall file with the board a composite annual report in the form prescribed by the board relating to all supervised loans made by him. The board shall consult with comparable officials in other states for the purpose of making the kinds of information required in annual reports uniform among the states.

(3) The report shall include, but is not limited to, the following: (a) the total number of loans and aggregate dollar amounts made by the lender which renewed existing accounts; (b) the total number of new loans and aggregate dollar amounts made to former borrowers; (c) the total number of loans and aggregate dollar amounts made to new borrowers; (d) the total number of loans and aggregate dollar amounts which received a final entry, as provided in subsection (a), other than by renewal; (e) the total number of renewals in which the borrower received a cash advance which was less than ten percent of the net outstanding loan balance at the time of renewal; (f) the total number of loans and aggregate dollar amounts outstanding at the beginning of the reporting period; (g) the total number of loans and aggregate dollar amounts outstanding at the end of the reporting period; (h) the highest annual percentage rate charged by the lender on loans of various sizes; and (i) the most frequent annual percentage rate charged by the lender on loans of various sizes. (4) Information contained in annual reports shall be confidential and may be published only in composite form. SECTION 37-3-506. Examinations and investigations. (1) The State Board of Financial Institutions shall examine periodically at intervals it deems appropriate the loans, business and records of every licensee. In addition, for the purpose of discovering violations of this Title or securing information lawfully required, the Agency to whose supervision the organization is subject may at any time investigate the loans, business and records of any lender. For these purposes such agency shall have free and reasonable access to the offices, places of business and records of the lender. For these purposes insurance agents, brokers and premium service companies are subject to the supervision of the Department of Insurance. Other supervised financial organizations [Section 37-1-301(17)], restricted lenders and supervised lenders (Section 37-3-501) are subject to the supervision of the agency which issued its license or charter. All other lenders are subject to the supervision of the Administrator of Consumer Affairs. (2) If the lender’s records are located outside this State, the lender at his option shall make them available to the supervisory agency at a convenient location within this State, or pay the reasonable and necessary expenses for the agency or its representative to examine them at the place where they are maintained. The agency may designate representatives, including comparable officials of the State in which the records are located, to inspect them on his behalf. (3) For the purposes of this section, the agency or official may administer oaths or affirmations, and upon its own motion or upon request of any party may subpoena witnesses, compel their attendance, adduce evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of relevant facts, or any other matter reasonably calculated to lead to the discovery of admissible evidence. (4) Upon failure without lawful excuse to obey a subpoena or to give testimony and upon reasonable notice to all persons affected thereby, the agency may apply to the circuit court for an order compelling compliance. SECTION 37-3-507. Application of Part on Administrative Procedure and Judicial Review to this part. Except as otherwise provided, the Part on Administrative Procedure and Judicial Review [Part 4 of Chapter 6 of this Title] applies to and governs all administrative action taken pursuant to this Part. SECTION 37-3-509. Use of multiple agreements.

With respect to a supervised loan, no lender may use multiple agreements with respect to a single consumer loan transaction with intent to obtain a higher rate of loan finance charge than would otherwise be permitted by the provisions on loan finance charges for supervised loans (Section 37-3-508). The excess amount of loan finance charge resulting from a violation of this section is an excess charge for the purpose of the provisions on rights of parties (Section 37-5-202) and the provisions on civil actions by the Administrator (Section 37-6-113). SECTION 37-3-510. Restrictions on interest in land as security. (1) With respect to a supervised loan in which the principal is one thousand dollars or less, a lender may not contract for an interest in land as security. A security interest taken in violation of this section is void. (2) An open-end credit agreement under which the credit limit is a minimum of five thousand dollars is exempt from this section even though one or more advances made pursuant to the agreement are less than one thousand dollars. SECTION 37-3-511. Regular schedule of payments; maximum loan term. Supervised loans, in which the rate of loan finance charge exceeds twelve percent per annum, not made pursuant to a revolving loan account, in which the principal is one thousand dollars or less, shall be scheduled to be payable in substantially equal installments at equal periodic intervals except to the extent that the schedule of payments is adjusted to the seasonal or irregular income of the debtor, and (a) over a period of not more than thirty-seven months if the principal is more than three hundred dollars, or (b) over a period of not more than twenty-five months if the principal is three hundred dollars or less. SECTION 37-3-512. Conduct of business other than making loans. (1) Except as provided in subsection (2), a restricted lender and a licensee authorized to make supervised loans pursuant to the provisions on authority to make supervised loans (Section 37-3-502) may not engage in the business of selling goods, or permit others to engage in the business of selling goods, at a location where supervised loans are made. In this section, “location” means the entire space in which supervised loans are made and must be separated from any space where goods are sold or leased by walls which may be broken only by a passageway to which the public is not admitted. (2) This section does not apply to (a) occasional sales of property used in the ordinary course of business of the licensee; (b) sales of items of collateral of which the licensee has taken possession, (c) sales of items by a licensee who is also authorized by law to operate as a pawnbroker; or (d) Supervised Financial Organizations. (3) A licensee may not carry on other business for the purpose of evasion or violation of this Title at a location where he makes supervised loans. SECTION 37-3-513. Application of other provisions. Except as otherwise provided, all provisions of this Title applying to consumer loans apply to supervised loans. SECTION 37-3-514. Limitation on attorney’s fees.

With respect to a supervised loan with a loan finance charge in excess of eighteen percent per year and in which the principal is $1,000 or less, the agreement may not provide for the payment by the debtor of attorney’s fees. A provision in violation of this section is unenforceable. SECTION 37-3-515. Loan renewal limitations. A licensed lender may not renew a loan of one thousand dollars or less more than one time during any fifteen-month period where the dollars actually given to the customer is less than ten percent of the net outstanding loan balance at the time of renewal.

PART 6.

LOANS OTHER THAN CONSUMER LOANS SECTION 37-3-601. Loans subject to this Title by agreement of parties. The parties to a loan other than a consumer loan may agree in a writing signed by the parties that the loan is subject to the provisions of this title applying to consumer loans. If the parties so agree, the loan is a consumer loan for the purposes of this title. SECTION 37-3-605. Loan finance charge for other loans. With respect to a loan other than a consumer loan, the parties may contract for the payment by the debtor of any loan finance charge, except as provided in Chapter 10 of this title.

CHAPTER 5.

REMEDIES AND PENALTIES

PART 1.

LIMITATIONS ON CREDITORS’ REMEDIES SECTION 37-5-101. Short title. This chapter shall be known and may be cited as South Carolina Consumer Protection Code - Remedies and Penalties. SECTION 37-5-102. Scope. This part applies to actions or other proceedings to enforce rights arising from consumer credit sales, consumer leases, consumer loans, and consumer rental-purchase agreements; and, in addition, to extortionate extensions of credit (Section 37-5-107). SECTION 37-5-103. Restrictions on deficiency judgments in consumer credit sales. (1) This section applies to a deficiency on a consumer credit sale of goods or services and on a consumer loan in which the lender is subject to claims and defenses arising from sales and leases (Section 37-3-410). A consumer is not liable for a deficiency unless the creditor has disposed of the goods in good faith and in a commercially reasonable manner. (2) If the seller repossesses or voluntarily accepts surrender of goods that were the subject of the sale and in which he has a security interest, the consumer is not personally liable to the seller for the unpaid balance of the debt arising from the sale of a commercial unit of goods of which the cash sale price was $1,500 or less, and the seller is not obligated to resell the collateral unless the consumer has paid 60 percent or more of the cash price and has not signed after default a statement renouncing his rights in the collateral. (3) If the seller repossesses or voluntarily accepts surrender of goods that were not the subject of the sale but in which he has a security interest to secure a debt arising from a sale of goods or services or a combined sale of goods and services and the cash price of the sale was $1,500 or less, the consumer is not personally liable to the seller for the unpaid balance of the debt arising from the sale, and the seller’s duty to dispose of the collateral is governed by the provisions on disposition of collateral in the Commercial Code, Chapter 9 of Title 36. (4) If the lender takes possession or voluntarily accepts surrender of goods in which he has a purchase money security interest to secure a debt arising from a consumer loan in which the lender is subject to claims and defenses arising from sales and leases (Section 37-3-410) and the net proceeds of the loan paid to or for the benefit of the consumer were $1,500 or less, the consumer is not personally liable to the lender for the unpaid balance of the debt arising from that loan and the lender’s duty to dispose of the collateral is governed by the provisions on disposition of collateral in the Commercial Code, Chapter 9 of Title 36. (5) For the purpose of determining the unpaid balance of consolidated debts or debts pursuant to a revolving charge account, the allocation of payments to a debt shall be determined in the same manner as provided for determining the amount of debt secured by various security interests (Section 37-2-409). (6) The consumer may be held liable in damages to the creditor if the consumer has wrongfully damaged the collateral or if, after default and demand, the consumer has wrongfully failed to make the collateral available to the creditor.

(7) If the creditor elects to bring an action against the consumer for a debt arising from a consumer credit sale of goods or services or from a consumer loan in which the lender is subject to claims and defenses arising from sales and leases (Section 37-3-410), when under this section he would not be entitled to a deficiency judgment if he took possession of the collateral, and obtains judgment: (a) he may not take possession of the collateral, and (b) the collateral is not subject to levy or sale on execution or similar proceedings pursuant to the judgment. SECTION 37-5-104. No garnishment. With respect to a debt arising from a consumer credit sale, a consumer lease, a consumer loan, or a consumer rental-purchase agreement, regardless of where made, the creditor may not attach unpaid earnings of the debtor by garnishment or like proceedings. SECTION 37-5-106. No discharge from employment for garnishment. No employer shall discharge an employee for the reason that a creditor of the employee has subjected or attempted to subject unpaid earnings of the employee to garnishment or like proceedings directed to the employer for the purpose of paying a judgment arising from a consumer credit sale, consumer lease, consumer loan, or a consumer rental-purchase agreement. SECTION 37-5-107. Extortionate extensions of credit. (1) If it is the understanding of the creditor and the debtor at the time an extension of credit is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person, the repayment of the extension of credit is unenforceable through civil judicial processes against the debtor. (2) If it is shown that the creditor then had a reputation for the use or threat of use of violence or other criminal means to cause harm to the person, reputation, or property of any person to collect extensions of credit or to punish the nonrepayment thereof, there is prima facie evidence that the extension of credit was unenforceable under subsection (1). SECTION 37-5-108. Unconscionability; inducement by unconscionable conduct. (1) With respect to a transaction that is, gives rise to, or leads the debtor to believe will give rise to, a consumer credit transaction, if the court as a matter of law finds: (a) the agreement or transaction to have been unconscionable at the time it was made, or to have been induced by unconscionable conduct, the court may refuse to enforce the agreement; or (b) any term or part of the agreement or transaction to have been unconscionable at the time it was made, the court may refuse to enforce the agreement, enforce the remainder of the agreement without the unconscionable term or part, or so limit the application of any unconscionable term or part as to avoid any unconscionable result and award the consumer any actual damages he has sustained. (2) With respect to a consumer credit transaction, if the court as a matter of law finds that a person has engaged in, is engaging in, or is likely to engage in unconscionable conduct in collecting a debt arising from that transaction, the court may grant an injunction. In addition, the consumer has a cause of action to recover actual damages and, in an action other than a class action, a right to recover from the person violating this section a penalty in the amount determined by the court of not less than one hundred dollars nor more than one thousand dollars. For purposes of this subsection and subsection (3), the term ‘collecting a debt’ in a consumer credit transaction includes the collection or the attempt to collect any rental charge or any other fee or charge or any item rented to a lessee in connection with a consumer rental-purchase agreement as described in Section 37-2-701(6).

(3) If it is claimed or appears to the court that the agreement or transaction or any term or part thereof may be unconscionable, or that a person has engaged in, is engaging in, or is likely to engage in unconscionable conduct in collecting a debt, the parties shall be afforded a reasonable opportunity to present evidence as to the setting, purpose, and effect of the agreement or transaction or term or part thereof, or of the conduct, to aid the court in making the determination. (4)(a) In applying subsection (1), consideration must be given to applicable factors, such as, but without limitation: (i) in the case of a consumer credit sale, consumer lease, or consumer rental-purchase agreement, knowledge by the seller or lessor at the time of the sale or lease of the inability of the consumer to receive substantial benefits from the property or services sold or leased; (ii) in the case of a consumer credit sale, consumer lease, consumer rental-purchase agreement, or consumer loan, gross disparity between the price of the property or services sold, leased, or loaned and the value of the property, services, or loan measured by the price at which similar property, services, or loans are readily obtainable in consumer credit transactions by like consumers; (iii) the fact that the creditor contracted for or received separate charges for insurance with respect to a consumer credit sale, consumer loan, or consumer rental-purchase agreement with the effect of making the sale or loan unconscionable, considered as a whole, when including the sale of insurance from which the consumer receives no potential benefit as referenced in Section 37-4-106(1)(a); (iv) the fact that the seller, lessor, or lender knowingly has taken advantage of the inability of the consumer or debtor reasonably to protect his interests by reason of physical or mental infirmities, ignorance, illiteracy, inability to understand the language of the agreement, or similar factors; (v) taking a nonpurchase money, nonpossessory security interest in household goods defined as the following: clothing, furniture, appliances, one radio and one television, linens, china, crockery, kitchenware, and personal effects, including wedding rings of the consumer and his dependents; except that when a purchase money consumer credit transaction is refinanced or consolidated, the security lawfully collateralizing the previous consumer credit transaction continues to secure the new consumer credit transaction, even if the new consumer credit transaction is for a larger amount or is in other respects a nonpurchase money consumer credit transaction; and further, that a nonpurchase money, nonpossessory security interest may be taken in a work of art, electronic entertainment equipment, except one television and one radio, items acquired as antiques and which are over one hundred years of age, and jewelry, except wedding rings. In construing subitem (v), the courts must be guided by the interpretations and rulings of the federal courts and the Federal Trade Commission to the Credit Trade Regulation Rule (16 C.F.R. PART 444). (b) In applying subsection (1), consideration may be given to the extension of credit to a consumer if, considering the consumer’s current and expected income, current obligations, and employment status, the creditor knows or should know that the consumer is unable to make the scheduled payment on the obligation when due. Rental renewals necessary to acquire ownership in a consumer rental-purchase agreement are not obligations contemplated in this item (b). (5) In applying subsection (2), consideration shall be given to each of the following factors, among others, as applicable: (a) using or threatening to use force, violence, or criminal prosecution against the consumer or members of his family, including harm to the physical person, reputation, or property of any person; (b) communicating with the consumer or a member of his family at frequent intervals during a twenty-four hour period or at unusual hours or under other circumstances so that it is a reasonable inference that the primary purpose of the communication was to harass the consumer. The term ‘communication’ means the conveying of information regarding a debt directly or indirectly to any person through any medium. A creditor or debt collector may not: (i) communicate with a consumer at any unusual time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, it may be assumed that a convenient time to communicate with a consumer is between 8 a.m. and 9 p.m.; or

(ii) communicate with a consumer who is represented by an attorney when such fact is known to the creditor or debt collector unless the attorney consents to direct communication or fails to respond within ten days to a communication; (iii) contact a consumer at his place of employment after the consumer or his employer has requested in writing that no contacts be made at such place of employment or except as may be otherwise permitted by statute or to verify the consumer’s employment; (iv) communicate with anyone other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the attorney of the creditor or debt collector, unless the consumer or a court of competent jurisdiction has given prior direct permission; (v) use obscene or profane language or language the natural consequence of which is to abuse the hearer or reader; (vi) publish a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency; (vii) cause a telephone to ring repeatedly during a twenty-four hour period or engage any person in a telephone conversation with intent to annoy, abuse, or harass any person at the called number; (viii) advertise for sale any debt to coerce payment of the debt; (ix) communicate with a consumer regarding a debt by postcard; (x) deposit or threaten to deposit any postdated check or other postdated payment instrument requested by the creditor prior to the date on such check or instrument; (xi) take or threaten to take any nonjudicial action to effect dispossession or disablement of property if: (aa) there is no present right to possession of the property claimed as collateral through an enforceable security interest or other ownership interest; (bb) there is no present intention to take possession of the property; or (cc) the property is exempt by law from such dispossession or disablement; or (xii) cause charges to be incurred by any person for communications to the consumer by concealment of the true purpose of the communication, such charges include, but are not limited to, collect telephone calls and telegram fees. (c) using fraudulent, deceptive, or misleading representations in connection with the collection of a consumer credit transaction. Such false representations shall include: (i) the character, amount, or legal status of any debt; (ii) any services rendered or fees which may be received, unless such fees are expressly authorized by law; (iii) a claim of an individual that he is an attorney or that any communication is from an attorney; (iv) any claim or implication that nonpayment of any debt will result in arrest, imprisonment, garnishment, seizure, or attachment unless the remedy is legally permitted to the creditor and the claim or implication is not used for the purpose of harassment or abuse of process; (v) a claim or implication that the consumer committed any crime or other conduct to disgrace the consumer; or (vi) any written communication which simulates or appears to be a document authorized, issued, or approved by any state or federal agency or court or creates a false impression as to its source; (d) causing or threatening to cause injury to the consumer’s reputation or economic status by disclosing information affecting the consumer’s reputation for creditworthiness with knowledge or reason to know that the information is false; communicating with the consumer’s employer before obtaining a final judgment against the consumer, except as permitted by statute or to verify the consumer’s employment; disclosing to a person, with knowledge or reason to know that the person does not have a legitimate business need for the information, or in any way prohibited by statute, information affecting the consumer’s credit or other reputation; or disclosing information concerning the existence of a debt known to be disputed by the consumer without disclosing that fact; (e) engaging in conduct with knowledge that like conduct has been restrained or enjoined by a court in a civil action by the administrator against any person pursuant to the provisions on injunctions against fraudulent or unconscionable agreements or conduct (Section 37-6-111).

(6) No action at law claiming unconscionable debt collection may be commenced in any court until at least thirty days after the facts and circumstances of any claim of unconscionable conduct in collecting a debt arising out of a consumer credit transaction has been filed in writing with the administrator of the Department of Consumer Affairs. The administrator shall immediately provide to the person or organization complained against with a copy of any complaint alleging unconscionable debt collection practices filed with the Department of Consumer Affairs. The administrator shall immediately provide to the Director of the Consumer Finance Division of the Board of Financial Institutions a copy of any written claim of unconscionable conduct in collecting a debt filed against a supervised lender under this title or a restricted lender under Title 34. A creditor or debt collector may only take such action as is authorized by law to protect its collateral during the thirty-day state agency review period. The administrator shall take immediate steps to investigate, evaluate, and attempt to resolve such complaints. The administrator and director shall jointly take immediate steps to investigate, evaluate, and attempt to resolve complaints involving supervised and restricted lenders. If in an action, properly filed after the thirty-day state agency review period with regard to conduct in collecting a debt arising out of a consumer credit transaction, in which unconscionability is claimed the court finds unconscionability pursuant to subsection (1) or (2), the court shall award reasonable fees to the attorney for the consumer or debtor. If the court does not find unconscionability and the consumer or debtor claiming unconscionability has brought or maintained an action he knew to be groundless, the court may award reasonable fees to the attorney for the party against whom the claim is made. In determining attorney’s fees, the amount of the recovery on behalf of the consumer is not controlling. (7) The remedies of this section are in addition to remedies available for the same conduct under law other than this title. (8) For the purpose of this section, a charge or practice expressly permitted by this title is not in itself unconscionable. (9) Nothing in this title may be construed to prevent a finding of unconscionability where a creditor assesses an origination charge, prepaid finance charge, service, or other prepaid charge which substantially exceeds the usual and customary charge for the particular type of consumer credit transaction. In such a transaction the court shall consider the relative sophistication of the debtor and the creditor, the relative bargaining power of the debtor and creditor, and any oral or written representations made by the creditor regarding the credit service charge or the loan finance charge of the consumer credit transaction. SECTION 37-5-109. Default. An agreement of the parties to a consumer credit transaction with respect to default on the part of the consumer is enforceable only to the extent that: (1) the consumer fails to make a payment as required by agreement; provided, with respect to a consumer rental-purchase agreement, a lessee defaults when he fails to renew an agreement and fails to return the rented property or make arrangements for its return as provided for by the agreement; or (2) the prospect of payment, performance, or realization of collateral is significantly impaired; the burden of establishing the prospect of significant impairment is on the creditor. SECTION 37-5-110. Notice of consumer’s right to cure. (1) With respect to a secured or unsecured consumer credit transaction payable in two or more installments, after a consumer has been in default for ten days for failure to make a required payment and has not voluntarily surrendered possession of goods that are collateral, a creditor may give the consumer the notice described in this section. A creditor gives notice to the consumer under this section when he delivers the notice to the consumer or mails the notice to him at his residence [Section 37-1-201(6)]. (2) The notice shall be in writing and conspicuously state: the name, address and telephone number of the creditor to whom payment is to be made, a brief identification of the credit transaction, the consumer’s

right to cure the default, and the amount of payment and date by which payment must be made to cure the default. A notice in substantially the following form complies with this subsection: “(name, address and telephone number of creditor) _____________________________________________________________________________ (account number, if any) _____________________________________________________________________________ (brief identification of credit transaction) _____________________________________________________________________________ __________________________________________(date is the LAST DAY FOR PAYMENT, ____________________________________________(amount) is the AMOUNT NOW DUE. You are late in making your payment(s). If you pay the AMOUNT NOW DUE (above) by the LAST DAY FOR PAYMENT (above), you may continue with the contract as though you were not late. If you do not pay by that date, we may exercise our rights under the law. These rights include the right to repossess any property held as collateral for this transaction and the right, in many instances, to hold you personally responsible for any difference between the amount the property brings in a sale and the balance due us on the credit transaction in question. If you are late again in making your payments, we may exercise our rights without sending you another notice like this one. If you have questions, write or telephone the creditor promptly.” (3) Notwithstanding subsections (1) and (2), in consumer rental-purchase agreements, after a consumer has been in default for three business days and has not voluntarily surrendered possession of the rented property, a lessor may give the consumer the notice provided in subsection (4) of this section. A lessor gives the notice to the consumer under this section when he delivers notice to the consumer or mails the notice to him at his address. (4) The notice must be in writing and conspicuously state: the name, address, and telephone number of the lessor to whom payment is to be made, a brief identification of the transaction, the consumer’s right to cure the default, and the amount of payment and date by which payment must be made to cure the default. A notice in substantially the following form complies with this subsection: “(name, address, and telephone number of lessor) (account number, if any) (brief identification of transaction) (__________) is LAST DAY FOR PAYMENT, (__________) is the AMOUNT NOW DUE. You have failed to renew your rental agreement(s). If you pay the AMOUNT NOW DUE (above) by the LAST DAY FOR PAYMENT (above), you may continue with the contract as though you had renewed on time. If you do not pay by that date, we may exercise our rights under the law. You may be required to pay reasonable costs authorized by law. If you are late again in either returning the merchandise or renewing your agreement, we may exercise our rights without sending you another notice like this one. If you have questions, write or telephone the lessor promptly.” SECTION 37-5-111. Cure of default. (1) With respect to a secured or unsecured consumer credit transaction payable in two or more installments, except as provided in subsection (2), after a default consisting only of the consumer’s failure to make a required payment, a creditor, because of that default, may neither accelerate maturity of the unpaid balance of the obligation, nor take possession of or otherwise enforce a security interest in goods that are collateral until twenty days after a notice of the consumer’s right to cure (Section 37-5-110) is given. Until expiration of the minimum applicable period after the notice is given, the consumer may cure all defaults consisting of a failure to make the required payment by tendering the amount of all unpaid sums due at the time of the tender, without acceleration, plus any unpaid delinquency or deferral charges. Cure restores the consumer to his rights under the agreement as though the defaults had not occurred.

(2) With respect to defaults on the same obligation and subject to subsection (1), after a creditor has once given notice of consumer’s right to cure (Section 37-5-110), this section gives the consumer no right to cure and imposes no limitation on the creditor’s right to proceed against the consumer or goods that are collateral or which are rented or the lessor’s right to recover the property. For the purpose of this section, in credit extended pursuant to a revolving charge or revolving loan account, the obligation is the unpaid balance of the account and there is no right to cure and no limitation on the creditor’s rights with respect to a default that occurs within twelve months after an earlier default as to which a creditor has given a notice of consumer’s right to cure (Section 37-5-110). (3) Notwithstanding subsection (1), with respect to consumer rental-purchase agreements, with payments or options to renew which are monthly or less frequent than monthly, after a default consisting of failure to renew and failure to return the property, a lessor may not instigate court action to recover rented property until five days after the notice of the consumer’s right to cure (Section 37-5-110) is given. (4) Notwithstanding subsection (1), with respect to consumer rental-purchase agreements with payments or options to renew more frequently than monthly, after default consisting of failure to renew or return the property, a lessor may not instigate court action to recover rented property until three days after notice of the consumer’s right to cure (Section 37-5-110) is given. (5) With respect to all consumer rental-purchase agreements until expiration of the minimum applicable period after notice is given, the consumer may cure all defaults consisting of failure to renew and failure to return the property by tendering the amount of all unpaid sums due at the same time of the tender plus any unpaid delinquency charges or other charges authorized by Part 7 of Chapter 2. (6) This section and the provisions on waiver, agreements to forego rights, and settlement of claims (Section 37-1-107) do not prohibit a consumer from voluntarily surrendering possession of goods which are collateral or which are rented, and the creditor from thereafter accelerating maturity of the obligation and enforcing the obligation and his security interest in the goods at any time after default. In any enforcement proceeding, however, the creditor shall affirmatively plead and prove either that the notice to cure is not required or that the creditor has given the required notice, but the failure to so plead does not invalidate any action taken by the creditor that is otherwise lawful and if the creditor has rightfully repossessed any collateral the repossession does not constitute conversion. (7) Any repossession of collateral or rented property in violation of this section is void and the creditor is liable for conversion. SECTION 37-5-112. Creditor’s right to take possession after default. Upon default by a consumer with respect to a consumer credit transaction, unless the consumer voluntarily surrenders possession of the collateral or rented property to the creditor, the creditor may take possession of the collateral or rented property without judicial process only if possession can be taken without entry into a dwelling used as a current residence and without the use of force or other breach of the peace. SECTION 37-5-113. Venue, complaint, stay of enforcement of or relief from default judgment. An action by a creditor against a consumer arising from a consumer credit transaction shall be brought in the county of the consumer’s residence [Section 37-1-201(6)], unless an action is brought to enforce an interest in land securing the consumer’s obligation, in which case the action may be brought in the county in which the land or a part thereof is located. If the county of the consumer’s residence has changed, the consumer upon motion may have the action removed to the county of his current residence. If the residence of the consumer is not within this State, the action may be brought in the county in which the sale, lease or loan was made. If the initial papers offered for filing in the action on their face show noncompliance with this section, the clerk of court shall not accept them. The court may change the place of trial as otherwise provided by law.

SECTION 37-5-114. Complaint; proof; entry of default judgment. (1) In an action brought by a creditor against a consumer arising from a consumer credit transaction, the complaint shall allege the facts of the consumer’s default, the amount to which the creditor is entitled, an indication of how that amount was determined, and either that the notice to cure required by Sections 37-5-110 and 37-5-111 has been given or is not required. (2) A default judgment may not be entered in the action in favor of the creditor unless the complaint is verified by the creditor or sworn testimony, by affidavit or otherwise, is adduced showing that the creditor is entitled to the relief demanded. SECTION 37-5-115. Stay of enforcement of or relief from default judgment. Except as otherwise set forth in this section, at any time after entry of a default judgment in favor of a creditor and against a consumer in an action arising from a consumer credit transaction, the court which rendered judgment, for cause including lack of jurisdiction to render the judgment, and upon motion of a party or its own motion, with notice as the court may direct, may stay enforcement of or relieve the consumer from the judgment by order upon just and equitable conditions; provided, however, that whenever the motion is based on the mistake, inadvertence, surprise or excusable neglect of the consumer, the motion must be filed within one year after the date the judgment is entered in the abstract of judgments pursuant to Section 15-35-520. SECTION 37-5-117. Lien, or submission of debt to credit bureau or reporting agency, by health care services provider; notice required; penalties. A provider of health care services must give twenty days prior notice before submitting a debt to a credit bureau or credit reporting agency or filing a lien against real or personal property, and the debtor must be notified by mail of the creditor’s intention. Failure to comply with this requirement is punishable by a fine of not less than one hundred dollars for each occurrence.

PART 2.

DEBTORS’ REMEDIES SECTION 37-5-202. Effect of violations on rights of parties. (1) If a creditor has violated any provisions of this title applying to receipts, statements of account, and evidences of payment (Sections 37-2-302 and 37-3-302), notice to cosigners and similar parties (Sections 37-2-302 and 37-3-303), schedule of maximum loan finance charges to be filed and posted (Sections 37-2-305 and 37-3-305), certain negotiable instruments prohibited (Section 37-2-403), assignee subject to claims and defenses (Sections 37-2-404(5) and 37-2-709), security in sales or leases (Section 37-2-407), no assignment of earnings (Sections 37-2-410, 37-3-403 and 37-2-710), referral sales and leases (Section 37-2-411), attorney’s fees (Sections 37-2-413 and 37-3-404), limitations on default charges (Sections 37-2-414, 37-2-706, and 37-3-405), authorizations to confess judgment (Sections 37-2-415, 37-2-713, and 37-3-407), consumer rental-purchase disclosure (Section 37-2-702), consumer rental-purchase reinstatement (Section 37-2-714), noncredit term life insurance (Section 37-3-202(2)), lender subject to claims and defenses arising from sales and leases (Section 37-3-410(4)), card issuer subject to claims and defenses (Section 37-3-411(5)), authority to make supervised loans (Section 37-3-502), restrictions on interest in land as security (Section 37-3-510), limitations on the schedule of payments on loan terms for supervised loans (Section 37-3-511), or assurance of discontinuance (Section 37-6-109), the consumer has a cause of action to recover actual damages and also a right in an action other than a class action, to recover from the person violating this title a penalty in an amount determined by the court not less than

one hundred dollars nor more than one thousand dollars. With respect to violations arising from sales or loans made pursuant to a revolving charge or a revolving loan account no action pursuant to this subsection may be brought more than two years after the violation occurred. With respect to violations arising from other consumer credit transactions, no action pursuant to this subsection may be brought more than one year after the scheduled or accelerated maturity of the debt. (2) A consumer is not obligated to pay a charge in excess of that allowed by this title and has a right of refund of any excess charge paid. A refund may not be made by reducing the consumer’s obligation by the amount of the excess charge, unless the creditor has notified the consumer that the consumer may request a refund and the consumer has not so requested within 30 days thereafter. If the consumer has paid an amount in excess of the lawful obligation under the agreement, the consumer may recover the excess amount from the person who made the excess charge or from an assignee of that person’s rights who undertakes direct collection of payments from or enforcement of rights against consumers arising from the debt. (3) If a creditor has contracted for or received a charge in excess of that allowed by this title, or if a consumer is entitled to a refund and a person liable to the consumer refuses to make a refund within a reasonable time after demand, the consumer may recover from the creditor or the person liable in an action other than a class action a penalty in an amount determined by the court not less than $100 nor more than $1,000. With respect to excess charges arising from sales or loans made pursuant to a revolving charge or revolving loan account, no action pursuant to this subsection may be brought more than two years after the violation or passage of a reasonable time for refund occurs. With respect to excess charges arising from other consumer credit transactions no action pursuant to this subsection may be brought more than one year after the scheduled or accelerated maturity of the debt. For purposes of this subsection, a reasonable time is presumed to be 30 days. (4) Except as otherwise provided, a violation of this title does not impair rights on a debt. (5) If an employer discharges an employee in violation of the provisions prohibiting discharge (Section 37-5-106), the employee within ninety days may bring a civil action for recovery of wages lost as a result of the violation and for an order requiring reinstatement of the employee. Damages recoverable shall not exceed lost wages for six weeks. (6) A creditor is not liable for a penalty under subsection (1) or (3) if he notifies the consumer of a violation before the creditor receives from the consumer written notice of the violation or the consumer has brought an action under this section, and the creditor corrects the violation within sixty days after notifying the consumer. If the violation consists of a prohibited agreement, giving the consumer a corrected copy of the writing containing the violation is sufficient notification and correction. If the violation consists of of an excess charge, correction shall be made by an adjustment or refund. The Administrator and any official or agency of this State having supervisory authority over a supervised financial organization shall give prompt notice to a creditor of any violation discovered pursuant to an examination or investigation of the transactions, business, records, and acts of the creditor (Sections 37-3-506, 37-6-105 and 37-6-106). (7) A creditor may not be held liable in an action brought under this section for a violation of this title if the creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. (8) In an action in which it is found that a creditor has violated this title, the court shall award to the consumer the costs of the action and to his attorneys their reasonable fees. In determining attorney’s fees, the amount of the recovery on behalf of the consumer is not controlling. SECTION 37-5-203. Civil liability for violation of disclosure provisions. (1) Except as otherwise provided in this section, a creditor who, in violation of the provisions of the Federal Truth in Lending Act or Section 37-2-309 or 37-3-308, fails to disclose information to a person entitled to the information pursuant to this title is liable to that person in an amount equal to the sum of:

(a) twice the amount of the finance charge in connection with the transaction, but the liability pursuant to this item must be not less than one hundred dollars or more than one thousand dollars; and (b) in the case of a successful action to enforce the liability pursuant to item (a), the costs of the action together with reasonable attorney’s fees as determined by the court. (2) With respect to disclosures required by Section 37-2-301 or 37-3-301, a creditor has no liability pursuant to this section if, within sixty days after discovering an error, and before the institution of an action pursuant to this section or the receipt of written notice of the error, the creditor notifies the person of the error and makes necessary adjustments in the appropriate account to assure that the person is not required to pay a finance charge in excess of the amount of percentage rate actually disclosed. With respect to disclosures required by Section 37-2-309 or 37-3-308, a creditor has the liability stated in subsection (1)(a) if: (a) the creditor fails to give the disclosures required by Section 37-2-309 or 37-3-308; or (b) the disclosures required by Section 37-2-309(C) or 37-3-308(C) are provided but vary from the disclosures given at consummation pursuant to Section 37-2-301 or 37-3-301; if the cure or correction provisions of this subsection do not apply to those violations; and except that a lender is not liable unless the credit sale or loan transaction is consummated. (3) A creditor may not be held liable in any action brought under this section for a violation of this title if the creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. (4) Any action which may be brought under this section against the original creditor in any credit transaction involving a security interest in land may be maintained against any subsequent assignee of the original creditor where the assignee, its subsidiaries, or affiliates were in a continuing business relationship with the original creditor either at the time the credit was extended or at the time of the assignment, unless the assignment was involuntary, or the assignee shows by a preponderance of evidence that it did not have reasonable grounds to believe that the original creditor was engaged in violations of this title and that it maintained procedures reasonably adapted to apprise it of the existence of the violations. (5) No action pursuant to this section may be brought more than one year after the date of the occurrence of the violation. (6) In this section, creditor includes a person who in the ordinary course of business regularly extends or arranges for the extension of credit, or offers to arrange for the extension of credit. Nothing in this subsection, however, shall be construed to impose civil liability or penalties on an arranger of credit when disclosure constituting a violation of the Federal Truth in Lending Act is actually committed by another person and the arranger of credit has no knowledge of the violation when it occurred. The creditor shall provide a copy of the final closing documents to the arranger of credit. (7) The liability of the creditor under this section is in lieu of and not in addition to his liability under the Federal Truth in Lending Act; no action with respect to the same violation may be maintained pursuant to both this section and the Federal Truth in Lending Act. (8) The right of a person to sue for a violation of Section 37-2-309 or 37-3-308 is maintainable only as an individual action. SECTION 37-5-205. Refunds and penalties as setoff to obligation. Refunds or penalties to which the debtor is entitled pursuant to this part may be set off against the debtor’s obligation, and may be raised as a defense to a suit on the obligation without regard to the time limitations prescribed by this subdivision.

PART 3.

CRIMINAL PENALTIES

SECTION 37-5-301. Willful violations. (1) A lender who willfully makes charges in excess of those permitted by applicable law is guilty of a misdemeanor and upon conviction may be sentenced to pay a fine not exceeding five thousand dollars, or to imprisonment not exceeding one year, or both. (2) A person, other than a supervised financial organization, who willfully engages in the business of making loans without a license, where a license is required, is guilty of a misdemeanor and upon conviction may be sentenced to pay a fine not exceeding five thousand dollars, or imprisonment not exceeding one year, or both. (3) A person who willfully engages in the business of making consumer credit sales, consumer leases, or consumer loans, or of taking assignments of rights against debtors arising therefrom and undertakes direct collection of payments or enforcement of these rights, without complying with the provisions of this title concerning notification (Section 37-6-202) or payment of fees (Section 37-6-203), is guilty of a misdemeanor and upon conviction may be sentenced to pay a fine not exceeding one hundred dollars. SECTION 37-5-302. Disclosure violations. A person is guilty of a misdemeanor and upon conviction may be sentenced to pay a fine not exceeding five thousand dollars, or to imprisonment not exceeding one year, or both, if he willfully and knowingly (1) Gives false or inaccurate information or fails to provide information which he is required to disclose under the provisions of the Federal Truth in Lending Act, (2) Uses any rate table or chart, the use of which is authorized by the provisions of the Federal Truth in Lending Act, in a manner which consistently understates the annual percentage rate determined according to those provisions; or (3) Otherwise fails to comply with any requirement of the provisions on disclosure of the Federal Truth in Lending Act. (4) The criminal liability of a person under this section is in lieu of and not in addition to his criminal liability under the Federal Truth in Lending Act; no prosecution of a person with respect to the same violation may be maintained pursuant to both this section and the Federal Truth in Lending Act. SECTION 37-5-303. Fraudulent use of cards. (1) For the purposes of this section: (a) “credit card” means a seller credit card or a lender credit card or similar arrangement as defined in this title; and (b) “debit card” means a card or device issued by a supervised financial organization pursuant to an arrangement whereby the card or device enables the customer to obtain cash, goods, services or anything else of value. (2) Any person who knowingly uses or attempts or conspires to use any counterfeit, altered, forged, lost, stolen or fraudulently obtained credit or debit card to obtain money, goods, services or anything else of value is guilty of a misdemeanor and shall be fined not more than five thousand dollars or imprisoned not more than one year, or both.

CHAPTER 6.

ADMINISTRATION

PART 1.

POWERS AND FUNCTIONS OF ADMINISTRATOR SECTION 37-6-101. Short title. This chapter shall be known and may be cited as South Carolina Consumer Protection Code - Administration. SECTION 37-6-102. Applicability. This part applies to persons who in this State (1) make or solicit consumer credit sales, consumer leases, consumer loans, and consumer rental-purchase agreements; or (2) directly collect payments from or enforce rights against debtors arising from sales, leases, loans, or agreements specified in subsection (1), wherever they are made. SECTION 37-6-103. “Administrator” defined. “Administrator” means the officer appointed by the Commission on Consumer Affairs to administer this title part 5 of this chapter. SECTION 37-6-104. Powers of administrator; harmony with Federal regulations; reliance on rules; duty to report. (1) In addition to other powers granted by this title, the Administrator within the limitations provided by law, may (a) Receive and act on complaints, take action designed to obtain voluntary compliance with this title, or commence proceedings on his own initiative; (b) Counsel persons and groups on their rights and duties under this title; (c) Establish programs for the education of consumers with respect to credit practices and problems; (d) Make studies appropriate to effectuate the purposes and policies of this title and make the results available to the public; (e) Adopt, amend, and repeal substantive rules when specifically authorized by this title, and adopt, amend, and repeal procedural rules to carry out the provisions of this title; (f) Maintain offices within this State; and (g) Appoint any necessary attorneys, hearing examiners, clerks, and other employees and agents and fix their compensation, and authorize attorneys appointed under this section to appear for and represent the Administrator in court. (2) In addition to other powers granted by this title, the Administrator shall enforce the Federal Truth in Lending Act to the fullest extent provided by law. (3) To keep the Administrator’s rules in harmony with the Federal Consumer Credit Protection Act and the regulations prescribed from time to time pursuant to that Act by the Board of Governors of the Federal Reserve System and with the rules of administrators in other jurisdictions which enact the Uniform Consumer Credit Code. The Administrator, so far as is consistent with the purposes, policies and provisions of this title, shall (a) Before adopting, amending, and repealing rules, advise and consult with administrators in other jurisdictions which enact the Uniform Consumer Credit Code; and

(b) In adopting, amending, and repealing rules, take into consideration: (i) The regulations so prescribed by the Board of Governors of the Federal Reserve System; and (ii) The rules of administrators in other jurisdictions which enact the Uniform Consumer Credit Code. (4) Except for refund of an excess charge, no liability is imposed under this title for an act done or omitted in conformity with a rule of the Administrator notwithstanding that after the act or omission the rule may be amended or repealed or be determined by judicial or other authority to be invalid for any reason. (5) The Administrator shall report annually on or before January first to the Governor and legislature on the operation of his office, on the use of consumer credit in the State, and on the problems of persons of small means obtaining credit from persons regularly engaged in extending sales or loan credit. For the purpose of making the report, the Administrator is authorized to conduct research and make appropriate studies, the report shall include a description of the examination and investigation procedures and policies of his office, a statement of policies followed in deciding whether to investigate or examine the offices of credit suppliers subject to this title, a statement of the number and percentages of offices which are periodically investigated or examined, a statement of the types of consumer credit problems of both creditors and debtors which have come to his attention through his examinations and investigations and the disposition of them under existing law, a statement of the extent to which the rules of the Administrator pursuant to this title are not in harmony with the regulations prescribed by the Board of Governors of the Federal Reserve System pursuant to the Federal Consumer Credit Protection Act or the rules of administrators in other jurisdictions which enact the Uniform Consumer Credit Code and the reasons for such variations, and a general statement of the activities of his office and of others to promote the purposes of this title. The report shall not identify the creditors against whom action is taken by the Administrator. (6) The Administrator shall not bring class actions, initiate criminal actions or seek injunctive relief, as provided in this title, without prior approval of a majority of the Commission on Consumer Affairs, exclusive of members who are associated with any such business within the meaning of Section 8-13-20. SECTION 37-6-105. Administrative powers with respect to supervised financial organizations. (1) With respect to supervised financial organizations, the powers of examination and investigation (Sections 37-3-506, 37-6-106 and 37-6-118) and administrative enforcement (Section 37-6-108) shall be exercised by the official or agency to whose supervision the organization is subject. All other powers of the Administrator under this title may be exercised by him with respect to a supervised financial organization. (2) If the Administrator receives a complaint concerning noncompliance with this title by a supervised financial organization he shall refer the complaint to the official or agency having supervisory authority over the organization concerned. The Administrator may, in connection with a complaint received by him concerning noncompliance with this title by a supervised financial organization, obtain specific relevant information about the supervised financial organization involved in the complaint from the appropriate supervisory agency or official. Nothing herein shall be construed to prohibit the Administrator from taking any legal action he is otherwise empowered to take under this title. (3) The Administrator and any official or agency of this State having supervisory authority over a supervised financial organization are authorized and directed to consult and assist one another in maintaining compliance with this title. They may jointly pursue investigations, prosecute suits, and take other official action, as they deem appropriate, if either of them otherwise is empowered to take the action. SECTION 37-6-106. Investigatory powers. (1) If the Administrator has probable cause to believe that a person has engaged in an act which is subject to action by the Administrator, he may make an investigation to determine if the act has been committed,

and, to the extent necessary for this purpose, may administer oaths or affirmations, and, upon his own motion or upon request of any party, may subpoena witnesses, compel their attendance, adduce evidence, and require the production of any matter which is relevant to the investigation, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of relevant facts, or any other matter reasonably calculated to lead to the discovery of admissible evidence. (2) If the person’s records are located outside this State, the person at his option shall either make them available to the Administrator at a convenient location within this State or pay the reasonable and necessary expenses for the Administrator or his representative to examine them at the place where they are maintained. The Administrator may designate representatives, including comparable officials of the State in which the records are located, to inspect them on his behalf. (3) Upon failure without lawful excuse to obey a subpoena or to give testimony and upon reasonable notice to all persons affected, the administrator may apply to the Administrative Law Court for an order compelling compliance. (4) The Administrator shall not make public the name or identity of a person whose acts or conduct he investigates pursuant to this section or the facts disclosed in the investigation, but this subsection does not apply to disclosures in actions or enforcement proceedings pursuant to this title. SECTION 37-6-107. Application of part on administrative procedure and judicial review. Except as otherwise provided, the Part on Administrative Procedure and Judicial Review (Part 4) of this chapter applies to and governs all administrative action taken pursuant to this chapter or the Part on Supervised Loans (Part 5) of the Chapter on Loans (Chapter 3). SECTION 37-6-108. Administrative enforcement orders. (A) After notice, the administrator may order a creditor, a person acting on his behalf, or a person subject to this title to cease and desist from engaging in violations of this title. A respondent aggrieved by an order of the administrator may request a contested case before the Administrative Law Court in accordance with the Administrative Law Court’s rules of procedure. The administrator may obtain an order from the Administrative Law Court for enforcement of his orders as provided in the Administrative Procedures Act and the Administrative Law Court’s rules of procedure. The proceeding for enforcement must be initiated by filing a petition with the Administrative Law Court in accordance with the Administrative Law Court’s rules of procedure, and copies of the request for a contested case hearing must be served upon all parties of record. (B) The jurisdiction of the Administrative Law Court is exclusive, and its final order may be appealed as provided in Sections 1-23-610 and 1-23-380. (C) A request for a contested case hearing pursuant to this section must be initiated within thirty days after a copy of the order of the administrator is received. If a request is not initiated, the administrator may move for an order from the Administrative Law Court for enforcement of his order upon a showing that the order was issued in compliance with this section, that a request for a contested case hearing was not initiated within thirty days after a copy of the order was received, and that the respondent is subject to the jurisdiction of the Administrative Law Court. (D) For purposes of this section and Sections 37-6-117 and 37-6-118, a violation of the South Carolina Unfair Trade Practices Act arising out of the production, promotion, or sale of consumer goods, services, or interests in land is considered a violation of this title subject to action by the administrator before the Administrative Law Court. (E) Unless otherwise specifically provided by law, the following administrative penalties may be levied against persons found to have engaged in violations of this title pursuant to subsection (A) of this section: (1) If the violator is found to have violated repeatedly and intentionally any provision of this title, the violator must be fined in an amount not to exceed two thousand five hundred dollars and not to exceed ten

thousand dollars for any transaction or occurrence or set of transactions or occurrences which violated multiple provisions of this title. (2) If the violator is shown to have violated a previous lawful order of the tribunal of competent jurisdiction, the violator may be fined in an amount not to exceed five thousand dollars for each violation. (3) The penalties in items (1) and (2) of this subsection are in addition to any other penalties provided by law or any other remedies provided by law. (F) The administrative law judge may make findings and issue and enforce cease and desist orders regarding unconscionable conduct or unconscionable debt collection pursuant to this section, but the administrative law judge may not award damage, treble damage, or attorney’s fee remedies to affected customers in these hearings. SECTION 37-6-109. Assurance of discontinuance. If it is claimed that a person has engaged in conduct subject to an order by the Administrator (Section 37-6-108) or by a court (Sections 37-6-110 through 37-6-112), the Administrator may accept an assurance in writing that the person will not engage in the conduct in the future. If a person giving an assurance of discontinuance fails to comply with its terms, the assurance is evidence that prior to the assurance he engaged in the conduct described in the assurance. SECTION 37-6-110. Injunctions against violations of title. The Administrator may bring a civil action to restrain any person from violating this title and for other appropriate relief including but not limited to the following: to prevent a person from using or employing practices prohibited by this title, to reform contracts to conform to this title and to rescind contracts into which a creditor has induced a consumer to enter by conduct violating this title, even though a consumer is not a party to the action. An action under this section may be joined with an action under the provisions on civil actions by the Administrator (Section 37-6-113). SECTION 37-6-111. Injunctions against unconscionable agreements and fraudulent or unconscionable conduct. (1) The administrator may bring a civil action to restrain a person to whom this title applies from engaging in a course of: (a) making or enforcing unconscionable terms or provisions of consumer credit transactions; (b) fraudulent or unconscionable conduct in inducing consumers to enter into consumer credit transactions; (c) conduct of any of the types specified in item (a) or (b) with respect to transactions that give rise to or that lead persons to believe will give rise to consumer credit transactions; or (d) fraudulent or unconscionable conduct in the collection of debts arising from consumer credit transactions. (2) In an action brought pursuant to this section the court may grant relief only if it finds: (a) that the respondent has made unconscionable agreements or has engaged or is likely to engage in a course of fraudulent or unconscionable conduct; (b) that the respondent’s agreements have caused or are likely to cause or the conduct of the respondent has caused or is likely to cause injury to consumers or debtors; and (c) that the respondent has been able to cause or will be able to cause the injury primarily because the transactions involved are credit transactions. (3) In applying (1)(a), (b), and (c), consideration shall be given to each of the factors specified in the provisions on unconscionability with respect to a transaction that is, gives rise to, or that a person leads the debtor to believe will give rise to, a consumer credit transaction (subsection (2) of Section 37-5-108), among others.

(4) In an action brought pursuant to this section, a charge or practice expressly permitted by law is not in itself unconscionable. SECTION 37-6-112. Temporary relief. With respect to an action brought to enjoin violations of the title (Section 37-6-110) or unconscionable agreements or fraudulent or unconscionable conduct (Section 37-6-111), the Administrator may apply to the court for appropriate temporary relief against a respondent, pending final determination of proceedings. If the court finds after a hearing held upon notice to the respondent that there is reasonable cause to believe that the respondent is engaging in or is likely to engage in conduct sought to be restrained, it may grant any temporary relief or restraining order it deems appropriate. SECTION 37-6-113. Civil actions by Administrator. (A) After demand, the administrator may bring a civil action against a creditor or a person subject to this title to recover actual damages sustained and excess charges paid by one or more consumers who have a right to recover explicitly granted by this title. In a civil action pursuant to this subsection, penalties must not be recovered by the administrator. The court shall order amounts recovered pursuant to this subsection to be paid to each consumer or set off against his obligation. A consumer’s action, except a class action, takes precedence over a prior or subsequent action by the administrator with respect to the claim of that consumer. A consumer’s class action takes precedence over a subsequent action by the administrator with respect to claims common to both actions, but the administrator may intervene. An administrator’s action on behalf of a class of consumers takes precedence over a consumer’s subsequent class action with respect to claims common to both actions. Whenever an action takes precedence over another action pursuant to this subsection, the latter action may be stayed to the extent appropriate while the precedent action is pending and dismissed if the precedent action is dismissed with prejudice or results in a final judgment granting or denying the claim asserted in the precedent action. A defense available to a creditor in a civil action brought by a consumer is available to him in a civil action brought pursuant to this subsection. (B) The administrator may bring a civil action against a creditor, a person acting in his behalf, or a person subject to this title to recover a civil penalty of no more than five thousand dollars for repeatedly and intentionally violating this title. A civil penalty pursuant to this subsection must not be imposed for a violation of this title occurring more than two years before the action is brought. (C) The administrator may bring a civil action or an administrative action, as provided in Section 37-6-108, against a creditor for failure to file notification in accordance with the provisions on notification pursuant to Section 37-6-202 or to pay fees in accordance with the provisions on fees pursuant to Section 37-6-203 to recover the fees the defendant has failed to pay and a civil penalty in an amount determined by the court not exceeding the greater of three times the amount of fees the defendant has failed to pay or one thousand dollars. SECTION 37-6-115. Debtors’ remedies not affected. The grant of powers to the Administrator in this chapter does not affect remedies available to debtors under this title or under other principles of law or equity. SECTION 37-6-116. Venue. The Administrator may bring actions or proceedings in a court in a county in which an act on which the action or proceeding is based occurred or in a county in which respondent resides or transacts business. SECTION 37-6-117. Administrative responsibilities respecting consumer protection generally.

In addition to his powers and responsibilities relating to consumer credit transactions the Administrator shall: (a) Receive complaints of individuals pertaining to any consumer transaction arising out of the production, promotion or sale of consumer goods and services; endeavor to determine the probable basis and merit of such complaint and advise the complainant of such determination; (b) Subject to the provisions of Section 37-6-118, refer to the appropriate state or federal agency any complaint which is under the jurisdiction of such agency, for appropriate action. (c) Endeavor to bring about a voluntary adjustment of any such complaint not within the jurisdiction of any regulatory or enforcement agency; (d) Cooperate with and assist the South Carolina and United States Attorney General and all state and local agencies performing consumer protection functions in carrying out their legal enforcement responsibilities for the protection of consumers; (e) Initiate and encourage programs to inform consumers of market practices and schemes which are fraudulent, deceptive or illegal; how to detect and avoid abusive consumer transactions; and of remedies and relief available to consumers; (f) Undertake activities to encourage business and industry to maintain high standards of honesty, fair business practices, and public responsibility in the production, promotion and sale of consumer goods and services; (g) Study the operation of consumer protection laws and recommend to the Governor and the legislature new laws and amendments to laws which would promote the protection of legitimate interests of consumers within this State. (h) A state agency to which a written consumer complaint is referred pursuant to paragraph (b) of this section shall have the same power and responsibility with respect to such complaint as is provided in paragraphs (a), (b) and (d) of this section and shall endeavor to effect a voluntary settlement of any such complaint arising out of a transaction with a person who is subject to the regulatory or enforcement jurisdiction of such agency. (i) With the approval of the Commission on Consumer Affairs, bring an individual action for a consumer who might have a cause of action for damages resulting from the use of or employment by another person of an unfair or deceptive method, act, or practice, as provided in Section 39-5-140, when he considers such action is necessary to protect the consumer’s interest, the actual damages sought are two thousand five hundred dollars or less, and either the individual has written evidence that two attorneys licensed to practice law in this State have reviewed the case and have declined to represent the individual in pursuing the cause of action, or an attorney licensed to practice law in this State, after reviewing the facts of the case, in writing has requested that the administrator bring an action on behalf of the consumer under this section. (j) Develop a written pamphlet that explains the rights and responsibilities of consumers who obtain from a licensed lender consumer loans under this title and Title 34 for distribution in all licensed consumer loan offices. Such pamphlet shall include the names, addresses, and telephone numbers of state agencies responsible for enforcing the provisions of this title and Title 34. Such pamphlet shall be given to a consumer at the time the initial loan by a licensed lender is made whenever the amount financed is two thousand dollars or less and shall be readily available to all consumers at all times in each licensed consumer loan office. The administrator shall consult with, and seek input from representatives of consumers, the consumer finance industry, and the Director of the Consumer Finance Division of the Board of Financial Institutions. Each licensed lender shall be responsible for reproducing and distributing the pamphlet finally approved and authorized by the administrator. The pamphlet developed under this subsection shall be provided to consumers as of January 1, 1996. The provisions of this subsection do not apply if consumer-industry appeals, arbitration or mediation panels or boards, whose decisions are binding on the participating business, are available in this State for the product or service concerned, provided such business complies with the decision of the panel or board.

SECTION 37-6-118. Investigation of unfair trade practices in consumer transactions. (1) Whenever the Administrator receives a complaint against a person pertaining to any consumer transaction arising out of the production, promotion or sale of consumer goods and services, and - (a) the person against whom the complaint is made fails to respond to a written inquiry made by the Administrator concerning the complaint within the time limitation set forth in the inquiry, or (b) the Administrator has probable cause to believe that the person complained of has or is engaged in market practices or a course of conduct which is fraudulent, illegal, deceptive or unfair, the Administrator may, subject to Section 37-6-105, conduct an investigation of the complaint pursuant to Section 37-6-106 to determine if that person has engaged in such market practices or course of conduct. Upon receiving written notice of an action brought by an individual or the Attorney General of South Carolina pursuant to Chapter 5 of Title 39 or of an unfair trade practice action by the Federal Trade Commission to investigate the facts complained of or to seek sanctions against the person that is the subject of the complaint, the Administrator shall automatically stay any pending investigation undertaken by him. Any action by the Administrator shall be dismissed if the other action is dismissed with prejudice or results in a final judgment granting or denying the claim asserted. (2) The Administrator shall notify the person whose conduct is investigated of his findings of fact and conclusions, separately stated. The notice shall be in writing and mailed by certified or registered mail to the address of the principal office of the person investigated or to such other address as that person may designate in writing. (3) Upon written request, filed within twenty days after the notice is mailed, the person is entitled to a hearing on any finding or conclusion of the Administrator. Such proceedings shall be deemed a contested case within the meaning of item (2) of Section 1-23-310. (4) The findings and conclusions of the Administrator, when and as they become final, either by failure to request a hearing as provided for in subsection (3) or by exhausting administrative and judicial remedies, shall be filed in the office of the Administrator as a part of an education and information program provided for in paragraph (e) of Section 37-6-117. (5) The provisions of this section shall not apply if consumer-industry appeals, arbitration or mediation panels or boards, whose decisions are binding on the participating business, are available in South Carolina for the product or service concerned, provided such business complies with the decision of the panel or board.

PART 2.

NOTIFICATION AND FEES SECTION 37-6-201. Applicability. This part applies to a person engaged in this State in making consumer credit sales, consumer leases, consumer loans, or consumer rental-purchase agreements and to a person having an office or place of business in this State who takes assignments of and undertakes direct collection of payments from or enforcement of rights against debtors arising from these sales, leases, or loans. SECTION 37-6-202. Notification. (1) Persons subject to this part shall file notification with the Administrator within thirty days after commencing business in this State, and, thereafter, on or before January thirty-first of each year. The notification shall state: (a) Name of the person; (b) Name in which business is transacted if different from (a);

(c) Address of principal office, which may be outside this State; (d) Address of all offices or retail stores, if any, in this State at which consumer credit sales, consumer leases, or consumer loans are made, or in the case of a person taking assignments of obligations, the offices or places of business within this State at which business is transacted; (e) If consumer credit sales, consumer leases, or consumer loans are made otherwise than at an office or retail store in this State, a brief description of the manner in which they are made; (f) Address of designated agent upon whom service of process may be made in this State (Section 37-1-203); and (2) If information in a notification becomes inaccurate after filing, no further notification is required until the following January thirty-first. SECTION 37-6-203. Fees. A person required to file notification shall pay on or before January thirty-first of each year to the administrator an annual fee of one hundred twenty dollars for that year, for each address in this State listed in the notification. The fee for any one person must be not less than one hundred twenty dollars. A person who does not extend credit pursuant to written contracts and a person whose annual gross volume of business does not exceed one hundred fifty thousand dollars is exempt from any fee and from the notification requirements of Section 37-6-202. A person engaged in making consumer credit sales or consumer leases who is also engaged in making consumer rental-purchase agreements is only required to pay one one hundred twenty dollar fee for each location. The Department of Consumer Affairs shall retain thirty dollars of each fee to offset the cost of administration and enforcement of this chapter. SECTION 37-6-204. Notification; persons making consumer rental-purchase agreements. In lieu of the notification requirements of Section 37-6-202, persons engaged in this State in making consumer rental-purchase transactions shall: (1) File notification with the Administrator within thirty days after commencing business in this State, and, thereafter, on or before January thirty-first of each year. The notification must state: (a) Name of the person; (b) Name in which business is transacted if different from (a); (c) Address of principal office, which may be outside this State; (d) An indication that the creditor engages in the business of making consumer rental-purchase agreements; (e) Address of all offices or stores, if any, in this State at which consumer rental-purchase transactions are made, or in the case of a person taking assignments of obligations, the offices or places of business within this State at which business is transacted; (f) An indication of which addresses listed in (c) and (e) above engage in making consumer credit sales or cash sales of merchandise in addition to consumer rental-purchase agreements; (g) If consumer rental-purchase transactions are made otherwise than at an office or retail store in this State, a brief description of the manner in which they are made; (h) Address of designated agent upon whom service of process may be made in this State (Section 37-1-203); and (2) If information in a notification becomes inaccurate after filing, no further notification is required until the following January thirty-first.

PART 3.

COUNCIL OF ADVISORS ON CONSUMER CREDIT SECTION 37-6-301. Council of Advisors on Consumer Credit.

(1) There is hereby created the Council of Advisors on Consumer Credit consisting of sixteen members, who shall be appointed by the Governor. One of the advisors shall be designated by the Governor as chairman. In appointing members of the Council, the Governor shall seek to achieve a fair representation from the various segments of the consumer credit industry and the public. (2) The term of office of each member of the Council is four years. Of those members first appointed, four shall be appointed for a term of one year, four for a term of two years, four for a term of three years, and four for a term of four years. A member chosen to fill a vacancy arising otherwise than by expiration of term shall be appointed for the unexpired term of the member whom he is to succeed. A member of the Council is eligible for reappointment. (3) Members of the Council shall serve without compensation but are entitled to reimbursement of expenses incurred in the performance of their duties. SECTION 37-6-302. Function of Council; conflict of interest. The Council shall advise and consult with the Administrator concerning the exercise of his powers under this title and may make recommendations to him. Members of the Council may assist the Administrator in obtaining compliance with this title. Since it is an objective of this part to obtain competent representatives of creditors and the public to serve on the Council and to assist and cooperate with the Administrator in achieving the objectives of this title, service on the Council shall not in itself constitute a conflict of interest regardless of the occupations or associations of the members. SECTION 37-6-303. Meetings. The Council and the Administrator shall meet together at a time and place designated by the chairman at least twice each year. The Council may hold additional meetings when called by the chairman.

PART 4.

ADMINISTRATIVE PROCEDURE AND JUDICIAL REVIEW SECTION 37-6-401. Applicability and scope; conflict with Administrative Procedures Act. This part applies to the administrator, prescribes the procedures to be observed by him in exercising his powers under this title, and supplements the provisions of the part on Powers and Functions of Administrator (Part 1) of this chapter and of the part on Supervised Loans (Part 5) of the Chapter on Loans (Chapter 3). A conflict between the provisions of this part and the Administrative Procedures Act pursuant to Chapter 23, Title 1 or the rules governing practice before the Administrative Law Court must be resolved in favor of the Administrative Procedures Act and the rules governing practice before the Administrative Law Court. SECTION 37-6-402. “Contested case”; “license”; “licensing”; “party”; “rule” defined. In this part (1) “Contested case” means a proceeding including, but not restricted to, a proceeding initiated pursuant to the provisions on administrative enforcement orders as provided in Section 37-6-108(A) and licensing matters in which the legal rights, duties, or privileges of a party are required by law to be determined after an opportunity for hearing.

(2) “License” means a license authorizing a person to make supervised loans pursuant to the provisions on authority to make supervised loans (Section 37-3-502) and restricted loans pursuant to Chapter 29 of title 34 (the South Carolina Consumer Finance Act). (3) “Licensing” includes the Board of Bank Control’s process respecting the grant, denial, revocation, suspension, annulment, withdrawal, or amendment of a license. (4) “Party” means the Administrator and each person named or admitted as a party, or who is aggrieved by action taken and seeks to be admitted as a party. (5) “Rule” means each rule authorized by this title that applies generally and implements, interprets or prescribes law or policy, or each statement by the Administrator that applies generally and describes the Administrator’s procedure or practice requirements or the organization of his office. The term includes the amendment or repeal of a prior rule but does not include (a) Statements concerning only the internal management of the Administrator’s office and not affecting private rights or procedures available to the public; (b) Declaratory rulings issued pursuant to the provisions of declaratory rulings by Administrator (Section 37-6-409); (c) Intra-office memoranda. SECTION 37-6-403. Public information; adoption of rules; availability of rules and orders. (1) In addition to other rule-making requirements imposed by law, the Administrator shall: (a) Adopt as a rule a description of the organization of his office, stating the general course and method of the operations of his office and the methods whereby the public may obtain information or make submissions or requests; (b) Adopt rules of practice setting forth the nature and requirements of all formal and informal procedures available, including a description of all forms and instructions used by the Administrator or his office; (c) Make available for public inspection all rules and all other written statements of policy or interpretations formulated, adopted, or used by the Administrator in the discharge of his functions. (d) Make available for public inspection all final orders, decisions and opinions. (2) No rule, order, or decision of the Administrator is valid or effective against any person or party, nor may it be invoked by the Administrator for any purpose, until it has been made available for public inspection as herein required. This provision is not applicable in favor of any person or party who has actual knowledge thereof. SECTION 37-6-404. Procedure for adoption of rules. (1) Prior to the adoption, amendment, or repeal of any rule, the Administrator shall (a) Give at least twenty days’ notice of his intended action. The notice shall include a statement of either the terms or substance of the intended action or a description of the subjects and issues involved, and the time when, the place where, and the manner in which interested persons may present their views therein. The notice shall be mailed to all persons who have made timely request of the Administrator for advance notice of his rule-making proceedings and shall be published in a newspaper of general circulation in the State. (b) Afford all interested persons reasonable opportunity to submit data, views, or arguments, orally or in writing. In case of substantive rules, opportunity for oral hearing must be granted if requested by twenty-five persons, by a governmental subdivision or agency, or by an association having not less than twenty-five members. The Administrator shall consider fully all written and oral submissions respecting the proposed rule. Upon adoption of a rule the Administrator, if requested to do so by an interested person either prior to adoption or within thirty days thereafter, shall issue a concise statement of the principal reasons for and against its adoption, incorporating therein his reasons for overruling the considerations urged against its adoption.

(2) No rule is valid unless adopted in substantial compliance with this section. A proceeding to contest any rule on the ground of noncompliance with the procedural requirements of this section must be commenced within two years from the effective date of the rule. SECTION 37-6-405. Filing and taking effect of rules. (1) The Administrator shall file in the office of the Secretary of State a certified copy of each rule adopted by him. The Secretary of State shall keep a permanent register of the rules open to public inspection. (2) Each rule hereafter adopted is effective twenty days after filing, except that, if a later date is specified in the rule, the later date is the effective date. SECTION 37-6-406. Publication of rules. (1) The Secretary of State shall compile, index, and publish all effective rules adopted by the Administrator. Compilations shall be supplemented or revised as often as necessary. (2) Compilations shall be made available upon request to agencies and officials of this State free of charge and to other persons at prices fixed by the Secretary of State to cover mailing and publication costs. SECTION 37-6-407. Petition for adoption of rules. An interested person may petition the Administrator requesting the promulgation, amendment, or repeal of a rule. The Administrator shall prescribe by rule the form for petitions and the procedure for their submission, consideration, and disposition. Within thirty days after submission of a petition, the Administrator either shall deny the petition in writing, stating his reasons for the denials, or shall initiate rule-making proceedings in accordance with the provisions on procedure for adoption of rules (Section 37-6-404). SECTION 37-6-408. Declaratory judgment on validity or applicability of rules. The validity or applicability of a rule may be determined in an action for declaratory judgment in the court of common pleas for Richland County if it is alleged that the rule, or its threatened application, interferes with or impairs, or threatens to interfere with or impair, the legal rights or privileges of the plaintiff. The Administrator shall be made a party to the action. A declaratory judgment may be rendered whether or not the plaintiff has requested the Administrator to pass upon the validity or applicability of the rule in question. SECTION 37-6-409. Declaratory rulings by Administrator. The Administrator shall provide by rule for the filing and prompt disposition of petitions or declaratory rulings as to the applicability of any statutory provision or of any rule of the Administrator. Rulings disposing of petitions have the same status as decisions or orders in contested cases. SECTION 37-6-410. Contested cases; notice; hearing; records. (1) In a contested case, all parties shall be afforded an opportunity for hearing after reasonable notice. (2) The notice shall include: (a) A statement of the time, place, and nature of the hearing; (b) A statement of the legal authority and jurisdiction under which the hearing is to be held; (c) A reference to the particular provisions of the statutes and rules involved;

(d) A short and plain statement of the matters asserted. If the Administrator or other party is unable to state the matters in detail at the time the notice is served, the initial notice may be limited to a statement of the issues involved. Thereafter upon application a more definite and detailed statement shall be furnished. (3) Opportunity shall be afforded all parties to respond and present evidence and argument on all issues involved. (4) Unless precluded by law, informal disposition may be made of any contested case by stipulation, agreed settlement, consent order, or default. (5) The record in a contested case shall include: (a) All pleadings, motions, intermediate rulings; (b) Evidence received or considered; (c) A statement of matters officially noticed; (d) Questions and offers of proof, objections, and rulings thereon; (e) Proposed findings and exceptions; (f) Any decision, opinion, or report by the officer presiding at the hearing; (g) All staff memoranda or data submitted to the hearing officer or members of the office of the Administrator in connection with their consideration of the case. (6) Oral proceedings or any part thereof shall be transcribed on request of any party, but at his expense. (7) Findings of fact shall be based exclusively on the evidence and on matters officially noticed. SECTION 37-6-411. Rules of evidence; official notice. In contested cases: (1) Irrelevant, immaterial, or unduly repetitious evidence shall be excluded. The rules of evidence as applied in nonjury civil cases in the court of common pleas of this State shall be followed. When necessary to ascertain facts not reasonably susceptible of proof under those rules, evidence not admissible thereunder may be admitted, except where precluded by statute, if it is of a type commonly relied upon by reasonably prudent men in the conduct of their affairs. The Administrator shall give effect to the rules of privilege recognized by law. Objections to evidentiary offers may be made and shall be noted in the record. Subject to these requirements, when a hearing will be expedited and the interests of the parties will not be prejudiced substantially, any part of the evidence may be received in written form; (2) Documentary evidence may be received in the form of copies or excerpts, if the original is not readily available. Upon request, parties shall be given an opportunity to compare the copy with the original; (3) A party may conduct cross-examinations required for a full and true disclosure of the facts; (4) Notice may be taken of judicially cognizable facts. In addition, notice may be taken of generally recognized technical or scientific facts within the Administrator’s specialized knowledge. Parties shall be notified either before or during the hearing, or by reference in preliminary reports or otherwise, of the material noticed, including any staff memoranda or data, and they shall be afforded an opportunity to contest the material so noticed. The Administrator’s experience, technical competence, and specialized knowledge may be utilized in the evaluation of the evidence. SECTION 37-6-412. Decisions and orders. A final decision or order adverse to a party in a contested case shall be in writing or stated in the record. A final decision shall include findings of fact and conclusions of law, separately stated. Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings. If, in accordance with rules of the Administrator, a party submitted proposed findings of fact, the decision shall include a ruling upon each proposed finding. Parties shall be notified either personally or by mail of any decision or order. In every decision or order, regardless whether adverse or not, a copy of the decision or order shall be delivered or mailed by certified mail to each party and to the attorneys of record.

SECTION 37-6-413. Licenses. (1) When the grant or denial of a license is required to be preceded by notice and opportunity for hearing, the provisions of this part concerning contested cases apply. (2) No revocation, suspension, annulment, or withdrawal of a license is lawful unless, prior to the institution of proceedings by the Board of Bank Control, it gave notice by mail to the licensee of facts or conduct which warrant the intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license. SECTION 37-6-414. Contested case hearings before the Administrative Law Court. (A) A person who has exhausted all administrative remedies available before the administrator and who is aggrieved by the administrator’s determination is entitled to a contested case hearing before the Administrative Law Court as provided in Section 1-23-600(D) and judicial review as provided in Sections 1-23-380(B) and 1-23-610. This section does not limit utilization of or the scope of judicial review available under other means of review, redress, relief, or trial de novo provided by law. A preliminary, procedural, or intermediate action or ruling of the Administrative Law Court is reviewable immediately if review of the final decision of the Administrative Law Court would not provide an adequate remedy. (B) Contested case proceedings are instituted by filing a request for a contested case hearing with the Administrative Law Court according to the rules of procedure of the Administrative Law Court. Copies of the request for a contested case hearing must be served upon the administrator and all parties of record. The final decision of the administrative law judge may be appealed as provided for in Sections 1-23-380 and 1-23-610. SECTION 37-6-415. Repealed by 2005 Act No. 128, Section 24, eff July 1, 2005.

PART 5.

DEPARTMENT OF CONSUMER AFFAIRS

SECTION 37-6-501. Department of Consumer Affairs; Commission on Consumer Affairs; Administrator. There is hereby created (a) The Department of Consumer Affairs; (b) The Commission on Consumer Affairs; and (c) The Office of Administrator of Consumer Affairs. SECTION 37-6-502. Members of Commission on Consumer Affairs; terms; vacancies. The Commission on Consumer Affairs shall be composed of nine members, one of whom shall be the Secretary of State as an ex officio member; four members shall be appointed by the Governor with advice and consent of the Senate and the remaining four members shall be elected by the General Assembly. Members of the Commission shall elect a Chairman. Terms of the members shall be four years unless otherwise stipulated in this section, and upon the expiration of the terms, the Governor shall appoint a member and the General Assembly shall elect one member respectively. With the exception of the ex officio member, any vacancy in the office of a member shall be filled by the Governor by appointment for the unexpired term. Members of the Commission shall be eligible for reappointment. No person associated with any businesses regulated by the Commission on Consumer Affairs shall be

eligible to serve on the Commission as defined by Section 8-13-20 of the Code of Laws of South Carolina. SECTION 37-6-503. Quorum; meetings. A majority of the members shall constitute a quorum. The Commission shall meet monthly on such date as it may designate and may meet at such other times as it may deem necessary, or when called by the chairman or by a majority of its members, and shall counsel and advise with the Administrator on any and all phases of the operations and functions of the Department. SECTION 37-6-504. Bonds of Commission members. Each member of the Commission other than ex officio shall, before entering upon the duties of his office, give bond to the State in the sum of twenty-five thousand dollars with a sufficient surety, to be approved by the State Treasurer, for the faithful performance of all duties required of him under the law during the term of his office. The premium of such bond shall be paid by the State. SECTION 37-6-505. Compensation and expenses of Commission members. Each member of the Commission other than ex officio shall receive such compensation and official expenses as provided by law for members of state boards and commissions. SECTION 37-6-506. Powers and duties of Commission. (1) The Commission shall be the policymaking and governing authority of the Department of Consumer Affairs and shall appoint the Administrator and be responsible for enforcement of this title. (2) The Commission, through the Administrator, shall see that the provisions of this title are faithfully administered and enforced and to that end it may adopt, amend and repeal rules and regulations, not inconsistent with law, to interpret and explain provisions of this title, carry out the purposes and policies of this title, to prevent circumvention or evasion thereof or to facilitate compliance therewith. (3) No provision of this title or of any statute to which this title refers which imposes any penalty on any creditor shall apply to any act done, or omitted to be done, in conformity with any rule or regulation so adopted, amended or repealed or in conformity with any written order, opinion, interpretation or statement of the Commission or of the Administrator, notwithstanding that such rule, regulation, order, opinion, interpretation or statement may, after such act or omission, be amended, or rescinded or be determined by judicial or other authority to be erroneous or invalid for any reason. SECTION 37-6-507. Qualifications of Administrator. The Administrator shall be a person of good moral character, at least thirty years of age, a resident taxpayer of this State, and shall be thoroughly familiar with this title and the consumer transactions to which it pertains. The Commission may also require additional qualifications. The Administrator, while serving as such, shall not directly or indirectly be financially interested in or associated with any other person subject to the jurisdiction of the Commission or the Administrator thereof. The Administrator shall serve at the pleasure of the Commission. SECTION 37-6-508. Deputy Administrator. The administrator, with the approval of the commission, may designate such deputies as he determines necessary to assist him in performing the duties he is required to perform under this title. Any deputy shall satisfy and meet the same qualifications, including bond, required for the administrator.

SECTION 37-6-509. Oath and bond of Administrator. The Administrator shall take the oath of office prescribed for all State officers. Before entering upon the duties of his office, he shall give bond to the State for the benefit of any person aggrieved by his unlawful or wrongful actions, and such bond shall be in the sum of fifty thousand dollars, with sufficient surety, to be approved by the State Treasurer, for the faithful performance of all the duties required of him under the law during the term of his office. The premium of the bond shall be paid by the State. SECTION 37-6-510. Personnel. The Administrator shall prepare in writing a manual of necessary employee positions for the Department, including job classifications, personnel qualifications, duties, maximum and minimum salary schedules, and other personnel information for approval by the Commission before appointing any personnel. The Deputy Administrator and other employees of the Department shall serve at the pleasure of the Administrator. SECTION 37-6-511. Department to maintain file for each creditor of rate schedules filed by creditor; certified copies; fees. The Department of Consumer Affairs shall maintain a file for each creditor containing the original and all revised rate schedules filed by the creditor. A certified copy of each filing showing the date and time that it was received shall be sent to the creditor making the filing at the time of its receipt. A fee of ten dollars for each rate schedule filed by a creditor shall be payable to the Department of Consumer Affairs for its services in maintaining the rate schedule files and providing one certified copy of each rate filing to the creditor. Provided, That each creditor shall be required to pay a minimum annual fee of ten dollars. Additional certified copies of a filing shall be provided at a charge of four dollars per copy. SECTION 37-6-512. Advisory committee of persons with cognizable handicaps. The Administrator of the Department of Consumer Affairs acting as the Consumer Advocate may appoint an advisory committee of persons with cognizable handicaps to provide advice to the Consumer Advocate in regard to protecting the rights of consumers with these types of handicaps with particular attention to the manner in which consumers with these handicaps interact with those entities regulated by the Public Service Commission. Nothing herein shall require the Consumer Advocate to take a position or undertake an action that is contrary to his general duty to protect and represent the interests of the general public and consumers.

PART 6.

DIVISION OF CONSUMER ADVOCACY SECTION 37-6-601. Division of Consumer Advocacy created. There is created within the Department of Consumer Affairs the Division of Consumer Advocacy with duties and organizations as provided in this chapter. SECTION 37-6-602. Consumer Advocate; qualifications. The Consumer Advocate may be the Administrator of Consumer Affairs or he may be appointed by the administrator with the approval of the Commission on Consumer Affairs. The Consumer Advocate must

be an attorney qualified to practice in all courts of this State with a minimum of three years’ practice experience. SECTION 37-6-603. Staff and expenses. The Division of Consumer Advocacy must be staffed and equipped to perform the functions prescribed in Section 37-6-604. The expenses of the office must be paid from appropriations provided annually in the state General Appropriations Act. SECTION 37-6-604. Functions and duties of division. (A) The functions and duties of the Division of Consumer Advocacy are: (1) to provide legal representation of the consumer interest before the state and federal regulatory agencies which undertake to fix rates or prices for consumer products or services or to enact regulations or establish policies related thereto and to provide legal representation of the consumer interest concerning insurance matters, certificates of need for health facilities and services as required for an activity under Section 44-7-160, and other health-related provisions; (2) to monitor existing regulations, rate structures, and policies of that agency of special interest to consumers and report to the public through the news media proposed changes therein under consideration and the effect of those changes on the lives of the citizens of the State; and (3) to evaluate and act upon requests from consumers concerning the matters set forth in items (1) and (2), except that any proceedings initiated by the Consumer Advocate must be brought on behalf of the public at large and not for individuals; initiation or continuation of any proceedings is in the sole discretion of the Consumer Advocate. (B) The annual report required of the Commission on Consumer Affairs must include a report on the activities of the Division of Consumer Advocacy. (C) After January 1, 2005, the division must not represent consumers in matters arising under Title 58. Matters or appeals under Title 58 that are pending on January 1, 2005, shall be transferred to the Office of Regulatory Staff. SECTION 37-6-605. Access to records of state agencies and insurance companies. In the performance of his assigned functions, the Consumer Advocate shall have reasonable access to records of all state agencies which are not classified by law as confidential, and all state agencies must cooperate with the Consumer Advocate in the performance of his duties. In addition, the Consumer Advocate must have reasonable access to confidential records and information if he enters a proprietary agreement to ensure their confidentiality. The South Carolina Department of Insurance and Consumer Advocate also shall have access to records, information, and data of the insurance companies as well as all of their sister affiliates, subsidiaries, and parent companies. During the course of a ratemaking or other proceeding initiated before the South Carolina Department of Insurance, the Consumer Advocate, as a party of record, may request in writing, in addition to all other methods of discovery as provided by law, the issuance of an order compelling a witness or company to either produce or allow inspection of documentary evidence relevant to the matter. If an order is not issued, the aggrieved party may appeal. The written request, in addition to showing a general relevance and reasonable scope of the evidence sought, must also specify with particularity the books, accounts, papers, records, or other materials of the business desired and the facts expected to be proved thereby. In lieu of a written request, the request for such an order may be made orally upon the record at the hearing, for good cause shown. Any objections to the issuance of the order must be filed within three days of being notified of the written request or the order. Any objections so filed must list the specific grounds for objection. Objections must be ruled on within ten days or the objection is denied.

SECTION 37-6-606. Petitions filed by advocate with regulatory agencies in interest of consumers. (A) Except as provided in Section 37-6-604(C), whenever the Consumer Advocate determines that it would be in the interest of consumers affected by regulatory agencies, he may file with the appropriate regulatory agency a petition requesting the regulatory agency to commence or complete a proceeding respecting any organization whose operations substantially affect the consumer interest. (B) The petition must state facts which claim to establish the need for the proceeding and a brief description of the substance of the order or amendment desired as a result of the proceeding. (C) The regulatory agency may hold a public hearing or may conduct an investigation or proceeding as the regulatory agency considers appropriate in order to determine whether or not the petition should be granted. (D) Within sixty days after the filing of the petition described in subsection (A), the regulatory agency must either grant or deny the petition. If the agency grants the petition, it must promptly commence or complete the proceeding, as requested by the petition. If the agency denies the petition, it must publish the reasons for the denial. (E) If the regulatory agency denies the petition made under this section or, if it fails to grant or deny the petition within sixty days, the petitioner may commence a civil action in the circuit court to compel the regulatory agency to commence or complete the proceeding as requested in the petition. The action may be filed by the petitioner thirty days after the denial of the petition or, if the agency fails to grant or deny the petition within sixty days, within thirty days after the expiration of the sixty-day period. (F) If the petitioner demonstrates to the satisfaction of the court that the failure of the agency to commence or complete the proceeding as requested in the petition was unreasonable, the court must order the agency to commence or complete the proceeding as requested in the petition. (G) In any action under this section, the court has no authority to compel the agency to take any action other than the commencement or completion of a proceeding. (H) The remedies under this section are in addition to and not in lieu of other remedies provided by law. SECTION 37-6-607. Advocate may maintain actions for judicial review. With the exception of matters arising under Title 58, the Consumer Advocate is considered to have an interest sufficient to maintain actions for judicial review and may, as of right and in the manner prescribed by law, intervene or otherwise participate in any civil proceeding which involves the review or enforcement of an agency action that the Consumer Advocate determines may substantially affect the interests of consumers. SECTION 37-6-608. Temporary staff; compensation. To the extent necessary to carry out the consumer advocacy responsibilities, the Consumer Advocate may employ, in addition to a regular staff, temporary, professional, technical, or research specialists to assist in preparing and presenting cases. The compensation paid to these persons may be commensurate with compensation generally paid by the regulated industry for these specialists but must not exceed the appropriation made for such purposes. SECTION 37-6-609. Discretion as to Consumer Advocate’s decisions. Decisions of the Consumer Advocate respecting whether, when, or how to initiate, continue, or intervene in proceedings under Sections 37-6-601 to 37-6-608, are in the sole discretion of the Consumer Advocate, except as modified by order of a court of competent jurisdiction.

CHAPTER 10.

MISCELLANEOUS LOAN PROVISIONS SECTION 37-10-101. Scope. Except as otherwise provided in other chapters of this title, this chapter applies to designated loan transactions other than consumer loan transactions (Sections 37-3-104 and 37-3-105). SECTION 37-10-102. Attorney’s fees and other charges on mortgage loans for personal, family or household purposes. Whenever the primary purpose of a loan that is secured in whole or in part by a lien on real estate is for a personal, family or household purpose - (a) The creditor must ascertain prior to closing the preference of the borrower as to the legal counsel that is employed to represent the debtor in all matters of the transaction relating to the closing of the transaction and except in the case of a loan on property that is subject to the South Carolina Horizontal Property Act (Section 27-31-10 et seq.) the insurance agent to furnish required hazard and flood property insurance in connection with the mortgage and comply with such preference. The creditor may comply with this section by: (1) including the preference information on or with the credit application so that this information shall be provided on a form substantially similar to a form distributed by the administrator; or (2) providing written notice to the borrower of the preference information with the notice being delivered or mailed no later than three business days after the application is received or prepared. If a creditor uses a preference notice form substantially similar to a form distributed by the administrator, the form is in compliance with this section. The creditor may require the attorney or agent to provide reasonable security to the creditor by way of mortgage title insurance in a company acceptable to the creditor and to comply with reasonable closing procedures. If title insurance is made a condition of the loan at any point during the negotiations, it must remain a condition all the time thereafter regardless of which attorney ultimately closes the transaction. Any legal fees other than for examination and certification of the title, the preparation of all required documents, and the closing of the transaction required or incurred by the creditor in connection with the transaction is the responsibility of the creditor regardless of which party pays for the title work, document preparation, and closing. (b) The creditor may contract and receive the following additional charges in a transaction in which the creditor authorizes a transferee of the real estate that serves as security for the transaction to assume the original debtor’s obligation - (i) Except as otherwise provided in subparagraph (iii), the additional charges authorized by Section 37-3-202; (ii) The charge for any credit report on the debtor required by the creditor, if not paid to the creditor or a person related to the creditor; and (iii) A nonrefundable assumption fee in an amount not exceeding the lesser of four hundred dollars or one percent of the unpaid balance of the loan at the time the assumption transaction is consummated. (c) [Deleted.] SECTION 37-10-103. Prepayment of loans of one hundred fifty thousand dollars or less. The debtor may prepay in full at any time without penalty the debt represented by a personal, family, or household purpose loan agreement that is secured in whole or in part by a first or junior lien on real estate if the aggregate of all sums advanced will not exceed one hundred fifty thousand dollars.

SECTION 37-10-104. Agricultural loans under twenty-five thousand dollars. With respect to a loan under which the aggregate of all sums advanced or contemplated by the parties in good faith to be advanced is less than twenty-five thousand dollars and which is primarily for an agricultural purpose, the maximum loan finance charge that may be contracted for and received shall be eighteen percent per annum, calculated according to the actuarial method. SECTION 37-10-105. Violations; civil actions. (A) If a creditor violates a provision of this chapter, the debtor has a cause of action, other than in a class action, to recover actual damages and also a right in an action, other than in a class action, to recover from the person violating this chapter a penalty in an amount determined by the court of not less than one thousand five hundred dollars and not more than seven thousand five hundred dollars. No debtor may bring a class action for a violation of this chapter. No debtor may bring an action for a violation of this chapter more than three years after the violation occurred, except as set forth in subsection (C). The three-year statute of limitations applies to actions commenced after May 2, 1997. No inference should be drawn as to the applicable statute of limitations for any pending actions. This subsection does not bar a debtor from asserting a violation of this chapter in an action to collect a debt which was brought more than three years from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action. (B) No creditor may be held liable in an action brought under this section for a violation of this chapter if the creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. (C) If the court finds as a matter of law that the agreement or transaction is unconscionable pursuant to Section 37-5-108 at the time it was made, or was induced by unconscionable conduct, the court may, in an action other than a class action: (1) refuse to enforce the agreement, or a term, or part of the agreement or transaction that the court determines to have been unconscionable at the time it was made; (2) enforce the remainder of the agreement without the unconscionable term or part, or limit the application of the unconscionable term or part to avoid an unconscionable result; (3) rewrite or modify the agreement to eliminate an unconscionable term, part, or result and enforce the new agreement; or (4) award: (a) not more than the total amount of the loan finance charge and allow repayment of the unpaid balance of the loan without any finance charge; (b) not more than double the amount of the excess loan finance charge or other charges or fees actually received by the creditor or paid by the debtor to a third party; and (c) attorney’s fees and costs. An action pursuant to this subsection may not be brought after the original scheduled maturity date of the debt. (D) In an action in which it is found that a creditor has violated this chapter, the court shall award to the debtor the costs of the action and to his attorneys their reasonable fees. In determining attorneys’ fees, the amount of the recovery on behalf of the debtor is not controlling. SECTION 37-10-106. Maximum rate of interest; legal rate of interest. (1) No greater interest than six percent per annum shall be charged, taken, agreed upon or allowed upon any contract arising in this State for the hiring, lending, or use of money or other commodity, either by way of straight interest, discount or otherwise, except upon written contracts wherein, by express agreement, any rate of interest may be charged, except as otherwise provided in this title or by law.

(2) Whenever the term legal rate of interest or lawful rate of interest is used in any contract, judgment or other document, it shall mean the rate specified in Section 34-31-20, unless the document otherwise specifically provides. (3) No greater interest than eight percent per annum shall be charged on life insurance policy loans unless otherwise provided by law. SECTION 37-10-107. Certain legal or equitable actions prohibited. (1) No person may maintain an action for legal or equitable relief or a defense based upon a failure to perform an alleged promise, undertaking, accepted offer, commitment, or agreement: (a) to lend or borrow money; (b) to defer or forbear in the repayment of money; or (c) to renew, modify, amend, or cancel a loan of money or any provision with respect to a loan of money, involving in any such case a principal amount in excess of fifty thousand dollars, unless the party seeking to maintain the action or defense has received a writing from the party to be charged containing the material terms and conditions of the promise, undertaking, accepted offer, commitment, or agreement and the party to be charged, or its duly authorized agent, has signed the writing. (2) Failure to comply with subsection (1) precludes an action or defense based on any of the following legal or equitable theories: (a) an implied agreement based on course of dealing or performance or on a fiduciary relationship; (b) promissory or equitable estoppel; (c) part performance, except to the extent that the part performance may be explained only by reference to the alleged promise, undertaking, accepted offer, commitment, or agreement; or (d) negligent misrepresentation. (3) Subsections (1) and (2) do not apply to: (a) a loan of money used primarily for personal, family, or household purposes; (b) an agreement or change in the terms of an agreement relating to a line of consumer credit, lender credit card, or similar arrangement; (c) an overdraft on a demand deposit or other bank account; or (d) promissory notes, real estate mortgages, security agreements, guaranty and surety agreements, and letters of credit. (4) In the event of a conflict between this section and any other provision of law of this State relating to the requirement of a signed writing, the provisions of the other provision of law shall control.

CHAPTER 22.

MORTGAGE LENDING SECTION 37-22-110. Definitions. The following definitions apply in this chapter: (1) “Act as a mortgage broker” means to act, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, by: (i) soliciting, processing, placing, or negotiating a mortgage loan for a borrower from a mortgage lender or depository institution or offering to process, place, or negotiate a mortgage loan for a borrower from a mortgage lender or depository institution, (ii) engaging in tablefunding of a mortgage loan, or (iii) acting as a loan correspondent, as that term is defined in 24 C.F.R. Part 202 et seq., whether those acts are done by telephone, by electronic means, by mail, or in person with the borrowers or potential borrowers. “Act as a mortgage broker” also includes bringing a borrower and lender together to obtain a mortgage loan or rendering a settlement service as described in 12 U.S.C. 2602(3) and 24 C.F.R. Part 3500.2(b). (2) “Act as a mortgage lender” means to engage in the business of making or servicing a mortgage loan for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, including soliciting, processing, placing, or negotiating a mortgage loan. (3) “Administrator” means the Administrator of the Department of Consumer Affairs (department) or the administrator’s designees. (4) “Advertising” means a commercial message in a medium that promotes, either directly or indirectly, a mortgage loan transaction. (5) “Affiliate” means a company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.). For purposes of this item, the term “control” means ownership of all of the voting stock or comparable voting interest of the controlled person. (6) “Board” means the State Board of Financial Institutions as that term is used in Chapter 1, Title 34. (7) “Borrower” means a natural person in whose dwelling a security interest is or is intended to be retained or acquired if that person’s ownership interest in the dwelling is or is to be subject to the security interest. (8) “Branch manager” means the natural person who is in charge of and who is responsible for the business operations of a branch office of a licensee. (9) “Branch office” means an office of the licensee that is separate and distinct from the licensee’s principal office. (10) “Clerical or support duties” mean administrative functions after the receipt of an application by a licensed mortgage originator or lender, such as gathering information, requesting information, word processing, sending correspondence, or assembling files, and may include: (a) the receipt, collection, and distribution common for the processing or underwriting of a residential mortgage loan; or (b) any communication with a borrower to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include taking a residential mortgage loan application, offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms. (11) “Commissioner” means the designee of the State Board of Financial Institutions for purposes of licensing and regulation of mortgage lenders and mortgage loan originators pursuant to this chapter. (12) “Control”, except as provided in item (5), means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. A person is presumed to have “control” of a company if that person: (i) is a director, general partner or executive officer, (ii) directly or indirectly has the right to vote ten percent or more of a class of a voting security or has the power to sell or direct the sale of ten percent or more of a class of voting securities,

(iii) in the case of an LLC, is the managing member, or (iv) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten percent or more of the capital. (13) “Depository institution” has the same meaning as in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Section 1811, et seq.), and includes a credit union. (14) “Dwelling” means the same as the term in Section 226.2(a)19 of Title 12 of the Code of Federal Regulations and the Federal Reserve Board’s Official Staff Commentary to that section. (15) “Employee” means a natural person who has an employment relationship, acknowledged by both the natural person and the mortgage lender, and is treated like an employee for purposes of compliance with the federal income tax laws. (16) “Escrow account” means an account that a mortgage lender establishes or controls on behalf of a borrower to pay taxes, insurance premiums including flood insurance, or other charges with respect to a mortgage loan, including charges that the borrower and mortgage lender have voluntarily agreed that the mortgage lender collects and pays. The definition encompasses an account established for this purpose. For purposes of this item, the term “escrow account” excludes an account that is under the borrower’s total control. (17) “Escrow funds” means money entrusted to a mortgage lender by a borrower for the purpose of payment of taxes and insurance or other payments to be made in connection with the servicing of a mortgage loan. (18) “Exempt person” means: (a) an employee of a licensee whose responsibilities are limited to clerical or support duties for the employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer; (b) a depository institution or a subsidiary that is wholly owned and controlled by the depository institution and regulated by a federal banking agency or an institution regulated by the Farm Credit Administration. This chapter does not apply to the exempt persons described in this subitem; (c) an officer, registered loan originator, or employee of an exempt person described in subitem (b) of this section when acting in the scope of employment for the exempt person; (d) a person who offers or negotiates terms of a mortgage loan with or on behalf of an immediate family member of the individual; (e) an individual who offers or negotiates terms of a mortgage loan secured by a dwelling that served as the person’s residence; (f) a natural person who sells residential real estate and who lends or services, in one calendar year, no more than five purchase money notes secured by mortgages, deeds of trust, or other security instruments on the real estate sold as security for the purchase money obligation, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that this exemption is not in compliance with the SAFE Act pursuant to Section 1508 of Title V of The Housing and Economic Recovery Act of 2008, Public Law 110-289; (g) an employee whose employment as a processor or underwriter is undertaken pursuant to the direction and supervision of a licensee or exempt person except when the processor or underwriter is working as an independent contractor; (h) an attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a mortgage lender, a mortgage broker, or other mortgage loan originator or by an agent of the mortgage lender, mortgage broker, or other mortgage loan originator; (i) an attorney who works for a mortgage lender, pursuant to a contract, for loss mitigation efforts or third party independent contractor who is HUD-certified, Neighborworks-certified, or similarly certified, who works for a mortgage lender, pursuant to a contract, for loss mitigation efforts; or (j) a manufactured home retailer and its employees if performing only clerical or support duties in connection with the sale or lease of a manufactured home and the manufactured home retailer and its employees receive no compensation or other gain from a mortgage lender or a mortgage broker for the performance of the clerical or support duties.

(19) “Federal banking agencies” means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation. (20) “Financial services or financial services related business” means pertaining to securities, commodities, banking, insurance, consumer lending, or real estate including, but not limited to, acting as or being associated with a bank or savings association, credit union, mortgage lender, mortgage servicer, mortgage broker, real estate broker, real estate salesperson or agent, closing agent, title company, or escrow agent. (21) “Immediate family member” means a spouse, child, sibling, parent, grandparent, or grandchild including stepparents, stepchildren, stepsiblings, and adoptive relationships. (22) “Individual servicing a mortgage loan” means an employee of a mortgage lender licensed in this State, that: (a) collects or receives payments including payments of principal, interest, escrow amounts, and other amounts due on existing obligations due and owing to the licensed mortgage lender for a mortgage loan when: (i) the borrower is in default; or (ii) the borrower is in reasonably foreseeable likelihood of default; (b) works with the borrower and the licensed mortgage lender, collects data, and makes decisions necessary to modify, either temporarily or permanently, certain terms of those obligations; or (c) otherwise finalizes collection through the foreclosure process. (23) “Licensee” means a person who is licensed pursuant to this chapter. (24) “Loan commitment” or “commitment” means a statement, written or electronic, by the mortgage lender setting forth the terms and conditions upon which the mortgage lender is willing to make a particular mortgage loan to a particular borrower. (25) “Loan originator” means a natural person who, in exchange for compensation or gain or in the expectation of compensation or gain as an employee of a licensed mortgage lender, solicits, negotiates, accepts, or offers to accept applications for mortgage loans, including electronic applications, or includes direct contact with, or informing mortgage loan applicants of, the rates, terms, disclosures, and other aspects of the mortgage loan. The definition of “loan originator” does not include an exempt person described in item (18) of this section or a person solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11, United States Code. The definition of loan originator does not apply to an individual servicing a mortgage loan as that term is defined in this chapter until July 31, 2011, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines before that time that those individuals servicing mortgage loans are “loan originators” as that term is defined in the SAFE Act pursuant to Section 1508 of Title V of The Housing and Economic Recovery Act of 2008, Public Law 110-289. Solely acquiring and reviewing a credit report does not constitute acting as a loan originator. (26) “Make a mortgage loan” means to close a mortgage loan, advance funds, offer to advance funds, or make a commitment to advance funds to a borrower under a mortgage loan. (27) “Managing principal” means a natural person who meets the requirements of Section 37-22-140(C) and who agrees to be primarily responsible for the operations of a licensed mortgage lender. (28) “Mortgage broker” means a person who acts as a mortgage broker, as that term is defined in item (1) of this section. (29) “Mortgage lender” means a person who acts as a mortgage lender as that term is defined in item (2) of this section or engages in the business of servicing mortgage loans for others or collecting or otherwise receiving mortgage loan payments directly from borrowers for distribution to another person. This definition does not include engaging in a tablefunded transaction. (30) “Mortgage loan” means a loan made to a natural person primarily for personal, family, or household use, primarily secured by a mortgage, deed of trust, or other security interest on residential real property or security interest arising under an installment sales contract or equivalent security interest against the

borrower’s dwelling and: (i) located in South Carolina, (ii) negotiated, offered, or otherwise transacted within this State, in whole or in part, or (iii) made or extended within this State. (31) “Nationwide Mortgage Licensing System and Registry” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators of licensees licensed pursuant to this chapter. (32) “Nontraditional mortgage product” means a mortgage product other than a thirty-year fixed rate mortgage loan. (33) “Person” means a natural person, partnership, limited liability company, limited partnership, corporation, association, or other group engaged in joint business activities, however organized. (34) “Processor or underwriter” means an employee of a mortgage broker, mortgage lender, or exempt person who performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensee or exempt person and may include direct contact with applicants but does not include soliciting, negotiating, accepting, or offering to accept applications that include personal identifying information as defined in Section 16-13-510(D) for mortgage loans including electronic applications or informing applicants of the rates, terms, disclosures, and other aspects of the mortgage loan. (a) For purposes of this item only, clerical or support duties may include after the receipt of an application: (i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a mortgage loan, and (ii) communication with a consumer to obtain the information necessary for the processing or underwriting of a mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling consumers about mortgage loans. (b) A person engaging solely in loan processor or underwriter activities may not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items that the person may or will perform any of the activities of a loan originator. (c) A processor or underwriter who is an independent contractor may not engage in the activities of a processor or underwriter unless the independent contractor processor or underwriter obtains and maintains a license as provided by rule or regulation pursuant to Section 37-22-270. (35) “Registered loan originator” means a natural person who meets the definition of loan originator and is an employee of a depository institution or a subsidiary that is wholly owned and controlled by the depository institution and regulated by a federal banking agency or an institution regulated by the Farm Credit Administration and is registered with and maintains a unique identifier through the Nationwide Mortgage Licensing System and Registry. (36) “Residential real property” means real property located in the State of South Carolina upon which there is located or is to be located one or more single-family dwellings or dwelling units that are to be occupied as the owner’s dwelling, and includes real estate and residential manufactured home (land/home) transactions. (37) “RESPA” means the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. Section 2601 et seq. and regulations adopted pursuant to it by the Department of Housing and Urban Development. (38) “Soliciting, processing, placing, or negotiating a mortgage loan” means, for compensation or gain or in the expectation of compensation or gain, either directly or indirectly, accepting or offering to accept an application for a mortgage loan, assisting or offering to assist in the processing of an application for a mortgage loan, soliciting or offering to solicit a mortgage loan, or negotiating or offering to negotiate the terms or conditions of a mortgage loan. (39) “Tablefunding” means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. (40) “TILA” means the Truth in Lending Act, 15 U.S.C. Section 1601 et seq. and regulations adopted pursuant to it by the Board of Governors of the Federal Reserve System. (41) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Mortgage Licensing System and Registry.

SECTION 37-22-120. Licensing requirements. (A) Without first obtaining a license pursuant to this chapter it is unlawful for a person, other than an exempt person, doing business in this State to: (1) act as a mortgage lender or, directly or indirectly, engage in the business of a mortgage lender under any name or title; or (2) circulate or use advertising, including electronic means, make a representation or give information to a person which indicates or reasonably implies activity within the scope of this chapter. (B) It is unlawful for a person to employ, compensate, or appoint as its agent a loan originator unless the loan originator is licensed as a loan originator pursuant to this chapter. An exempt person is not subject to this subsection. (C) The license of a loan originator is not effective during a period that the person is not employed by a mortgage lender licensed pursuant to this chapter. (D) If a loan originator ceases to be employed by a mortgage lender licensed pursuant to this chapter, the loan originator and the mortgage lender by whom that person is employed promptly shall notify the commissioner in writing. The mortgage lender’s notice must include a statement of the specific reason or reasons for the termination of the loan originator’s employment. The reason for termination is confidential information and must not be released to the public. (E) A loan originator must not be employed simultaneously by more than one mortgage lender licensed pursuant to this chapter. (F) Independent contractors, except for exempt persons, must be licensed separately. Processors and underwriters who are independent contractors must be licensed as provided in Section 37-22-110(34)(c). SECTION 37-22-130. Contested case proceedings; appeals. (A) A person aggrieved by an administrative order issued by the commissioner may request a contested case hearing before the Administrative Law Court in accordance with the court’s rules of procedure. If the person fails to request a contested case hearing within the time provided in the court’s rules of procedure, the administrative order becomes final and the commissioner may bring an action to enforce its order pursuant to Chapter 23, Title 1. This section does not limit utilization of, or the scope of judicial review available under, other means of review, redress, relief, or trial de novo provided by law. A preliminary, procedural, or intermediate action or ruling of the Administrative Law Court is reviewable immediately if review of the final decision of the Administrative Law Court would not provide an adequate remedy. (B) Contested case proceedings are instituted by filing a request for a contested case hearing with the Administrative Law Court according to the rules of procedure of the Administrative Law Court. Copies of the request for a contested case hearing must be served upon the commissioner and all parties of record. The final decision of the administrative law judge may be appealed as provided in Section 1-23-380 and 1-23-610 or Chapter 23, Title 1. SECTION 37-22-140. Application for licensure; information required; identification of managing principal; filing fee; surety bond; issuance of license. (A) A person desiring to obtain a license pursuant to this chapter shall make application for licensure to the commissioner on forms prescribed by the commissioner. The application must contain the information the commissioner considers necessary including, but not limited to, the applicant’s: (1) name, address, and social security number or, if applicable, Employer Identification Number (EIN); (2) form and place of organization, if applicable; (3) proposed method of and locations for doing business, if applicable;

(4) qualifications and business history and, if applicable, the business history of any partner, officer, or director, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling the applicant, including: (i) a description of any injunction or administrative order by a state or federal authority to which the person is or has been subject, including denial, suspension, or revocation of a financial services or financial services related license or registration, (ii) a conviction, or plea of guilty or nolo contendere to a misdemeanor within the last ten years involving financial services or a financial services related business or any fraud, false statements or omissions, theft or wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, money laundering, breach of trust, or a conspiracy to commit any of these offenses, and (iii) a conviction of, or plea of guilty or nolo contendere to, a felony; (5) financial condition, credit history, and business history, with respect to an application for licensing as a mortgage lender; and credit history and business history, with respect to the application for licensing as a loan originator; and (6) consent to a national and state fingerprint-based criminal history record check pursuant to Section 37-22-240 and submission of a set of the applicant’s fingerprints in a form acceptable to the commissioner. In the case of an applicant that is a corporation, partnership, limited liability company, association, or trust, each natural person who has control of the applicant or who is the managing principal or a branch manager shall consent to a national and state fingerprint-based criminal history record check pursuant to Section 37-22-240 and submit a set of that natural person’s fingerprints pursuant to this item. Refusal to consent to a criminal history record check constitutes grounds for the commissioner to deny licensure to the applicant as well as to any entity: (i) by whom or by which the applicant is employed, (ii) over which the applicant has control, or (iii) as to which the applicant is the current or proposed managing principal or a current or proposed branch manager. (B) In addition to the requirements imposed by the commissioner in subsection (A), each applicant for licensure as a loan originator shall: (1) have attained the age of at least eighteen years; (2) work for a licensed mortgage lender; (3) have satisfactorily completed prelicensing education of at least twenty hours and a written examination approved pursuant to 12 U.S.C. 5101 et seq. To satisfy the twenty hours of prelicensing education, an applicant may show proof of the equivalent of twenty or more semester hours of satisfactorily completed course work in real estate finance or real estate law or course work that is equivalent to the education requirements in the SAFE Act pursuant to Section 1508 of Title V of The Housing and Economic Recovery Act of 2008, Public Law 110-289 if the course work counts toward the successful completion of a degree that is baccalaureate level or more advanced with a major or minor in finance, accounting, business administration, real estate finance economics, or similar baccalaureate or more advanced degree, approved by the commissioner, from an accredited college or university. The coursework must be approved pursuant to 12 U.S.C. 5101 et seq.; (4) have never had a loan originator license revoked in any governmental jurisdiction; and (5) have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court: (i) during the ten-year period preceding the date of the application for licensing or (ii) at any time, if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering. (C) In addition to the requirements of subsection (A) of this section, each applicant for licensure as a mortgage lender at the time of application and at all times after that shall comply with the following requirements: (1) If the applicant is a sole proprietor, the applicant shall have at least three years of experience in financial services or financial services related business or other experience or competency requirements as the commissioner may impose. (2) If the applicant is a general or limited partnership, at least one of its general partners shall have the experience described in item (1). (3) If the applicant is a corporation, at least one of its principal officers shall have the experience described in item (1).

(4) If the applicant is a limited liability company, at least one of its members or managers shall have the experience described in item (1). (5) Instead of a showing of three years’ experience, an applicant may show proof of three years’ employment with a federally insured depository institution or a VA-, FHA-, or HUD-approved mortgagee. (D) Each applicant shall identify one person meeting the requirements of subsections (B) and (C) to serve as the applicant’s managing principal. (E) Every applicant for initial licensure shall pay a filing fee of one thousand dollars for licensure as a mortgage lender or fifty dollars for licensure as a loan originator, in addition to the actual cost of obtaining credit reports and national and state fingerprint-based criminal history record checks. If a licensed loan originator changes employment, a new license must be issued and a fee of twenty-five dollars must be paid. (F) A mortgage lender shall post and maintain a surety bond in an amount determined by the commissioner, based on the total dollar amount of mortgage loans originated in a calendar year in this State pursuant to the following: (i) dollar volume of mortgage loans from $0 to $49,999,999, surety bond of $50,000, (ii) dollar volume of mortgage loans from $50,000,000 to $249,999,999, surety bond of $100,000, (iii) dollar volume of mortgage loans greater than $250,000,000 surety bond of $150,000. In no case is the surety bond less than fifty thousand dollars. The surety bond must be executed by a surety company authorized by the laws of this State to transact business within this State. The surety bond must be in a form satisfactory to the commissioner, must be executed to the commissioner, and must be for the use of the State for the recovery of expenses, fines, and fees, or any of them, levied pursuant to this chapter and for consumers who have losses or damages as a result of noncompliance with this chapter by the mortgage lender. The full amount of the surety bond must be in effect at all times. The license of a licensee expires upon the termination of the bond by the surety company, unless a new bond is filed with the commissioner before the termination of the previous bond. If the license expires based on bond termination, all licensed activity must cease and the person must apply for a license pursuant to subsection (A). (G) Any sole proprietor, general partner, member or manager of a limited liability company, or officer of a corporation who meets individually the requirements of subsection (B), upon payment of the applicable fee, meets the qualifications for licensure as a loan originator subject to the provisions of subsection (I). (H) Each principal office and each branch office of a licensed mortgage lender at which business is conducted must be licensed pursuant to this chapter and must be issued a separate license. A licensed mortgage lender shall file with the commissioner an application on a form prescribed by the commissioner which identifies the address of the principal office and each branch office and branch manager. A licensing fee of one hundred fifty dollars must be assessed by the commissioner for each branch office issued a license. (I) If the commissioner determines that an applicant meets the qualifications for licensure and finds that the financial responsibility, character, and general fitness of the applicant are such as to command the confidence of the community and to warrant belief that the business is to be operated honestly, fairly, and efficiently according to the purposes of this chapter and in accordance with all applicable state and federal laws, the commissioner shall issue a license to the applicant. If the commissioner does not make that determination, the commissioner shall refuse to license the applicant and shall notify him of the denial. (J) Issuance of a license does not indicate approval or acceptance of any contract, agreement, or other document submitted in support of the application. A licensee may not represent that its services or contracts are approved by the State or state agency. (K) A person who obtains a license as a mortgage lender, upon notice to the commissioner on a form prescribed by the commissioner, may act as a mortgage broker as defined in Section 37-22-110(1). The commissioner shall provide to the administrator notification of which mortgage lenders also are acting as brokers. A mortgage lender who also acts as a mortgage broker is not required to obtain a license as a mortgage broker pursuant to Chapter 58, Title 40 and is not subject to regulation by the administrator,

except that the mortgage lender acting as a mortgage broker must comply with Sections 40-58-70, 40-58-75, and 40-58-78. (L)(1) A person with three years’ experience as a loan originator who applies for a license as a loan originator and who has completed and filed with the Nationwide Mortgage Licensing System and Registry all information, documents, and requirements for licensure pursuant to this chapter and who has been assigned a unique identifier by the registry must be provided a provisional license as a loan originator before the commissioner takes action on his application if the applicant is employed by a mortgage lender licensed pursuant to this chapter and a senior officer or managing principal of that licensee attests to the commissioner that: (a) the applicant, within the six-month period before the date of application for licensure, has not been acting as a registered loan originator or a state-licensed loan originator in another state under provisions of Section 1507 of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and: (i) the applicant has never had a loan originator license denied, revoked, or suspended in any governmental jurisdiction; (ii) the applicant during the previous five years, ending on the date of the filing of the current application, has not had an application for a professional license denied, a professional license revoked, or any adverse action taken on a professional license; (iii) the applicant has not been convicted of a felony that would otherwise authorize the commissioner to deny a license; (iv) the application meets all of the applicable requirements of this chapter for licensure; and (v) the licensee will be responsible for the acts of the applicant during the period that such application is pending; or (b) the applicant is currently, or has within the six-month period before the date of the application, been acting as a registered loan originator or a state-licensed loan originator in another state under provisions of Section 1507 of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 and the applicant has never had a loan originator license denied, revoked, or suspended in any governmental jurisdiction and has not been convicted of a felony that would otherwise authorize the commissioner to deny a license. (2) A provisional license issued pursuant to this section expires on the earlier of the following: (a) the date upon which the commissioner issues or denies the permanent license applied for; or (b) ninety days from the date the provisional license is issued. (3) The commissioner may deny or suspend the rights of a licensee pursuant to this chapter to employ a loan originator acting under item (1) of this subsection if the commissioner finds that the licensee, the senior officer, or managing principal does not make the certification or undertaking set forth in item (1)(b) of this subsection in good faith. (M) If the information contained in a document filed with the commissioner is or becomes inaccurate or incomplete, the licensee promptly shall file a correcting amendment to the information contained in the document. (N) All advertisements of mortgage loans must comply with the Truth in Lending Act, 15 U.S.C. 1601 et seq. and the South Carolina Consumer Protection Code, Title 37. SECTION 37-22-150. Expiration and renewal of licenses; fingerprint check; assignment or transfer of license. (A) All licenses issued by the commissioner pursuant to this chapter expire annually on the thirty-first day of December or on another date that the commissioner may determine. The license is invalid after that date unless renewed. The renewal period for all licensees is from November first through December thirty-first annually or on another date the commissioner may determine. A licensee desiring to renew its license must submit an application to the commissioner on forms and containing information the commissioner requires. Applications received after December thirty-first or another date the commissioner determines, are late and the late fees in subsection (B) apply. A license may be renewed by

compliance with this section and by paying to the commissioner, in addition to the actual cost of obtaining credit reports and national and state fingerprint-based criminal history record checks as the commissioner may require, a renewal fee as prescribed by the board for each of the following: (1) for a licensed mortgage lender, an annual renewal fee of no more than eight hundred dollars and no more than one hundred fifty dollars for each branch office; and (2) for a licensed loan originator, an annual fee of no more than fifty dollars. (B) If a license of a licensed mortgage lender is not renewed during the renewal period, a late fee of not more than five hundred dollars as prescribed by the board, in addition to the renewal fee in subsection (A)(1), must be assessed. If a license of a licensed loan originator is not renewed during the renewal period, a late fee of not more than one hundred dollars as prescribed by the board, in addition to the renewal fee in subsection (A)(2) of this section, must be assessed as a late fee to a renewal. If a licensee fails to renew its license within thirty days after the date the license expires or otherwise fails to maintain a valid license, the commissioner shall require the licensee to comply with the requirements for the initial issuance of a license pursuant to this chapter, in addition to paying any fee that has accrued. (C) At any time required by the commissioner, each person described in Section 37-22-140 shall furnish to the commissioner consent to a national and state fingerprint-based criminal history record check and a set of fingerprints in a form acceptable to the commissioner. Refusal to consent to a criminal history record check may constitute grounds for the commissioner to deny renewal of the license of the person as well as the license of another person by which he is employed, over which he has control, or as to which he is the current or proposed managing principal or a current or proposed branch manager. (D) A license issued pursuant to this chapter is not assignable or transferable. Control of a licensee must not be acquired through a stock purchase or other device without the prior written consent of the commissioner. The commissioner may not give written consent if the commissioner finds that any of the grounds for denial, revocation, or suspension of a license pursuant to Section 37-22-200 are applicable to the acquiring person. SECTION 37-22-160. Continuing professional education. (A) As a condition of license renewal, a licensee must complete at least eight hours of continuing professional education annually for the purpose of enhancing professional competence and responsibility. The continuing professional education completed must be reported to the commissioner annually. Documentation of courses completed must be maintained by all licensees. This documentation is subject to inspection by the commissioner for up to two years after the date of course completion. (B) Continuing education credit may be granted only for the year in which the class is taken and may not be granted for the same course in successive years. (C) If a licensee fails to complete the continuing professional education before the license expiration date, his license expires and he shall pay a penalty of not more than one hundred dollars, in addition to other fees or penalties that have accrued, to reinstate the license. (D) All prelicensing education, continuing education, and written examinations must be approved through the Nationwide Mortgage Licensing System and Registry, pursuant to 12 U.S.C. 5101 et seq. before credit can be awarded. Applicants and licensees that successfully complete education or testing approved through the Nationwide Mortgage Licensing System and Registry fulfill the requirements of this State. SECTION 37-22-170. Managing principal; branch offices; notification of commissioner of designation and change of managing principal or branch manager. A mortgage lender licensed pursuant to this chapter shall have a managing principal who operates the business under that manager’s full charge, control, and supervision. A mortgage lender may operate a branch office subject to the requirements of this chapter. Each principal and branch office of a mortgage lender licensed pursuant to this chapter shall have a branch manager who meets the requirements of Section 37-22-140(B) and (C)(1). Each mortgage lender licensed pursuant to this chapter shall file a form

prescribed by the commissioner indicating the business’s designation of managing principal and branch manager for each branch and their acceptance of the responsibility. The managing principal for a licensee’s business also may serve as the branch manager of one of the licensee’s branch offices. A mortgage lender licensed pursuant to this chapter shall notify the commissioner of a change in its managing principal or any branch manager. The license of a licensee who does not comply with this provision must be suspended pursuant to Section 37-22-200 until the licensee complies with this section. A licensee who operates as a sole proprietorship is a managing principal for the purposes of this chapter. SECTION 37-22-180. Notice of change of address; display of license. (A) A licensee shall report to the commissioner a change of address of the principal place of business or a branch office at least seven days before the change. Change of address notification of a licensed location must be accompanied by a fee of twenty-five dollars. (B) A mortgage lender licensed pursuant to this chapter shall display in plain view in its principal office and in each branch the license issued by the commissioner. A loan originator licensed pursuant to this chapter shall display in each branch office in which mortgage loans are originated a copy of the license issued by the commissioner. SECTION 37-22-190. Prohibited activities; violation of state or federal law. (A) In addition to the activities prohibited by other provisions of state or federal law, it is unlawful for a person licensed pursuant to this chapter, in the course of a mortgage loan origination, to: (1) misrepresent or conceal the material facts or make false promises likely to influence, persuade, or induce an applicant for a mortgage loan or a mortgagor to take a mortgage loan, or to pursue a course of misrepresentation through agents or otherwise; (2) refuse improperly or fail to issue a satisfaction of a mortgage pursuant to Section 29-3-310; (3) fail to account for or deliver to a person entitled to receive funds, documents, or other things of value obtained in connection with a mortgage loan including money provided by a borrower for a real estate appraisal or a credit report, which the mortgage lender or loan originator is not entitled to retain under the circumstances; (4) pay, receive, or collect in whole or in part any commission, fee, or other compensation for a mortgage loan origination in violation of this chapter including any unlicensed person other than an exempt person; (5) charge or collect a fee or rate of interest or to make or service a mortgage loan with terms or conditions or in a manner contrary to the provisions of this chapter; (6) advertise mortgage loans including rates, margins, discounts, points, fees, commissions, or other material information including material limitations on the loans, unless the person is able to make the mortgage loans available as advertised to qualified applicants; (7) fail to disburse funds in good faith and in accordance with a written commitment or agreement to make a mortgage loan that has been accepted by the borrower; (8) engage in a transaction, practice, or course of business in connection with the making or servicing of, or purchase or sale of, a mortgage loan that is not in good faith or fair dealing, that is unconscionable, as set forth in Section 37-5-108, or that constitutes a fraud upon a person; (9) fail to pay reasonable fees within a reasonable time to a licensed third party for services that are: (a) requested from the third party in writing by the mortgage lender or an employee of the mortgage lender; and (b) performed by the third party in connection with the origination or closing of a mortgage loan for a customer or mortgage lender; (10) influence or attempt to influence through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan. This item does not prohibit a mortgage lender or servicer from asking the appraiser to do one or more of the following: (a) consider additional appropriate property information;

(b) provide further detail, substantiation, or explanation for the appraiser’s value conclusion; or (c) correct errors in the appraisal report; (11) fail to comply with the mortgage loan servicing transfer, escrow account administration, or borrower inquiry response requirements imposed by Sections 6 and 10 of the Real Estate Settlement Procedures Act (RESPA), 12 U. S.C. Section 2605 and Section 2609, and regulations adopted pursuant to them by the Secretary of the Department of Housing and Urban Development and state law; (12) fail to provide within a reasonable time, upon written request of a borrower, a payment history statement in a form easily understood by the borrower including payment dates and amounts and charges within the twelve months preceding the month in which the request is received and the total amount unpaid as of the end of the period covered by the statement. The statement must be provided without charge once during each year of the term of the obligation. If additional statements are requested, the borrower may be charged a reasonable fee, not to exceed five dollars for each additional statement; (13) take a security interest in a borrower’s principal dwelling where the amount of the mortgage loan is less than five thousand dollars; (14) fail to provide disclosures as required by state or federal law or collect any fee before providing required disclosures; (15) fail to comply with this chapter or other state or federal law including rules and regulations applicable to business regulated by this chapter; (16) falsely advertise or misuse names in violation of 18 U.S.C. Section 709 or state law; or (17) use any trade name or insignia of membership in an organization of which the licensee is not a member or advertise falsely through any material including, but not limited to, business card, stationery, or signage concerning a designation or certification of special education, credentials, trade organization membership, or business. (B) A violation of a state or federal law applicable to a business covered by this chapter is a violation of this chapter and may be enforced by the commissioner. SECTION 37-22-200. Powers of commissioner relating to denial, suspension, revocation or refusal to renew license; surrender; investigations and subpoena of documents. (A) The commissioner, by order, may deny, suspend, revoke, or refuse to issue or renew a license of a licensee or applicant pursuant to this chapter or may restrict or limit the activities relating to mortgage loans of a licensee or a person who owns an interest in or participates in the business of a licensee, if the commissioner finds that both: (1) the order is in the public interest; and (2) the applicant, licensee, or any partner, member, manager, officer, director, loan originator, managing principal, or other person occupying a similar status or performing similar functions or a person directly or indirectly controlling the applicant or licensee: (a) has filed an application for license that, as of its effective date or as of a date after filing, contained a statement that, in light of the circumstances under which it was made, is false or misleading with respect to a material fact; (b) has violated or failed to comply with a provision of this chapter or order of the commissioner; (c) within the past ten years has been convicted of, or pled guilty or nolo contendere to, a misdemeanor involving financial services or financial services related business or an offense involving breach of trust or fraudulent or dishonest dealing, or money laundering or has been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court; (d) is permanently or temporarily enjoined by a court of competent jurisdiction from engaging in or continuing conduct or practice involving financial services or financial services related business; (e) is the subject of an order of the commissioner denying, suspending, or revoking that person’s license; (f) is the subject of an order entered by the authority of a governmental entity with jurisdiction over the financial services or financial services related industry denying or revoking that person’s license;

(g) does not meet the qualifications or the financial responsibility, character, or general fitness requirements, or a bond or capital requirements, pursuant to this chapter; (h) has been the executive officer or controlling shareholder or owned a controlling interest in a financial services or financial services related business that has been subject to an order or injunction described in subitems (d), (e), or (f); (i) has failed to pay the proper filing or renewal fee pursuant to this chapter or a fine, penalty, or fee imposed by any governmental entity. However, the commissioner may enter only a denial order pursuant to this subitem, and the commissioner shall vacate the order when the deficiency is corrected; or (j) has falsely certified attendance or completion of hours at an approved education course. (B) The commissioner, by order, summarily may postpone or suspend the license of a licensee pending final determination of a proceeding pursuant to this section. Upon entering the order, the commissioner shall notify promptly the applicant or licensee that the order has been entered, the reasons for the order, and the procedure for requesting a hearing before the Administrative Law Court. If a licensee does not request a hearing and the commissioner does not request a hearing, the order remains in effect until it is modified or vacated by the commissioner. (C) The commissioner, by order, may impose an administrative penalty upon a licensee or any member, partner, officer, director, or other person occupying a similar status or performing similar functions on behalf of a licensee for a violation of this chapter. The administrative penalty may not exceed ten thousand dollars for each violation of this chapter by a licensee. The commissioner may impose an administrative penalty that may not exceed ten thousand dollars for each violation of this chapter by a person other than a licensee or exempt person. (D) In addition to other powers pursuant to this chapter, upon finding that an action of a person is in violation of this chapter, the commissioner may order the person to cease from the prohibited action. If the person subject to the order fails to request a contested case hearing in accordance with Section 37-22-130, or if the person requests the hearing and it is denied or dismissed, and the person continues to engage in the prohibited action in violation of the commissioner’s order, the person is subject to an administrative penalty that may not exceed twenty-five thousand dollars for each violation of the commissioner’s order. The penalty provision of this section is in addition to and not instead of another provision of law for failure to comply with an order of the commissioner. (E) Unless otherwise provided, all actions and hearings pursuant to this chapter are governed by Chapter 23, Title 1. (F) If a licensee is accused of any act, omission, or misconduct that subjects the licensee to disciplinary action, the licensee, with the consent and approval of the commissioner, may surrender the license and the rights and privileges pertaining to it and is not eligible to receive, or to submit an application for, licensure for a period of time established by the commissioner. (G) If the commissioner has reasonable grounds to believe that a licensee or other person has violated this chapter or that facts exist that would be the basis for an order against a licensee or other person, the commissioner, either personally or by a person duly designated by the commissioner, at any time may investigate or examine the loans and business of the licensee and examine the books, accounts, records, and files of the licensee or other person relating to the complaint or matter under investigation. The reasonable cost of this investigation or examination must be charged against the licensee. The commissioner may require the licensee or other person to submit a consent to a national and state fingerprint-based criminal history record check and a set of that person’s fingerprints in a form acceptable to the commissioner in connection with an examination or investigation. Refusal to submit the requested criminal history record check or a set of fingerprints is grounds for disciplinary action. (H) The commissioner may subpoena documents and witnesses and compel their production and attendance, to examine under oath all persons whose testimony the commissioner considers relative to the person’s business and require the production of books, papers, or other materials. (I) The commissioner, at the licensee’s expense, may conduct routine examinations of the books and records of a licensee to determine compliance with this chapter.

(J) The commissioner shall cooperate and share information with an agency of this State, other states, or the federal government concerning activity regulated by this chapter. The commissioner shall accept or participate in examinations conducted by one of these agencies. (K) In addition to the authority described in this section, the commissioner may require a person to pay to a borrower or other natural person amounts received by the person or its employees in violation of this chapter. (L) If the commissioner finds that the managing principal, branch manager, or loan originator of a licensee had knowledge of, or reasonably should have had knowledge of, or participated in an activity that results in the entry of an order suspending or withdrawing the license of a licensee, the commissioner may prohibit the branch manager, managing principal, or loan originator from serving as a branch manager, managing principal, or loan originator for the period of time the commissioner considers necessary. (M) Orders issued by the commissioner or by the Administrative Law Court pursuant to this chapter must be reported by the commissioner to the Nationwide Mortgage Licensing System and Registry. SECTION 37-22-210. Commissioner’s records; segregated escrow funds; licensee ceasing business activities. (A) The commissioner shall keep a list of all applicants for licensure pursuant to this chapter which includes the date of application, name, and place of residence and whether the license was granted or refused. (B) The commissioner shall keep a current roster containing the names and places of business of all licensees and containing their respective loan originators. The rosters must: (i) be kept on file in the office of the commissioner, (ii) contain information regarding all orders or other action taken against the licensees, loan originators, and other persons, and (iii) be open to public inspection. (C)(1) A licensee shall make and keep the accounts, correspondence, memoranda, papers, books, and other records prescribed by the commissioner. Records must be preserved for three years unless the commissioner prescribes otherwise for particular types of records. A licensee should develop, maintain, and test disaster recovery plans for all records that are maintained. The recordkeeping requirements imposed by the commissioner or this subsection must not be greater than those imposed by applicable state or federal law. Licensee’s records may be maintained electronically, if approved by the commissioner, so long as they are readily accessible for examination by the commissioner. (2) Beginning on January 1, 2010, in addition to the records required to be maintained by licensees pursuant to subitem (1), each licensee shall maintain a mortgage log that contains these specific data elements: (i) credit score of the borrower, (ii) adjustable or fixed type of loan, (iii) term of the loan, (iv) annual percentage rate of the loan, and (v) appraised value of the collateral. Each licensee shall submit to the commissioner by March thirty-first of each year its mortgage log data and the data identified in 12 C.F.R. Part 203 et seq., in a form determined by the commissioner. The licensee shall pay a fine of one hundred dollars a day for late or incomplete data submissions. Data collected by the commissioner pursuant to this section is confidential and may be released to the public only in composite form. The commissioner annually shall submit to the department, in a form prescribed by the department and no later than April thirtieth, the data that it collected. The department shall prepare and make available to the public a report based on the data. The report must be available by June thirtieth each year. (D) If the information contained in a document filed with the commissioner is or becomes inaccurate or incomplete in a material respect, the licensee promptly shall file a correcting amendment to the information contained in the document. (E) A licensee shall maintain in a segregated escrow fund or trust account funds that come into the licensee’s possession, but which are not the licensee’s property and which the licensee is not entitled to retain under the circumstances. The escrow fund or trust account must be held on deposit in a federally insured financial institution. Escrow funds must be accounted for in compliance with the rules under RESPA.

(F) A licensee clearly shall display the unique identifier assigned by the Nationwide Mortgage Licensing System and Registry on all mortgage loan forms, solicitations, or advertisements including business cards or websites and any other documents furnished in connection with a mortgage loan transaction. (G) A licensee ceasing activities regulated by this chapter and desiring no longer to be licensed shall inform the commissioner at least seven days in advance. The licensee shall include with the notification a plan of withdrawal that includes a timetable for the disposition of the business, the location of the books, records, and accounts until the end of the retention period, and certification of the proper disposal of those records after that. SECTION 37-22-220. Maintenance of records by licensee; annual mortgage reports. (A) A licensee shall maintain records in conformity with generally accepted accounting principles and practices in a manner that will enable the commissioner to determine if the licensee is complying with the provisions of this chapter and other state and federal laws. The recordkeeping system of a licensee is sufficient if it makes the required information reasonably available. The records need not be kept in the place of business where loans are made if the commissioner is given free access to the records wherever located and the licensee pays the reasonable cost of their examination. (B) On or before March thirty-first each year, a licensee shall file with the commissioner an annual report in the form prescribed by the commissioner relating to all mortgage loans made, serviced, or brokered by it. The licensee shall pay a fine of one hundred dollars a day for each late or incomplete annual report. (C) The mortgage loan report shall include, but is not limited to, the total number and dollar amounts in connection with all mortgage loans, of: (1) first and subordinate lien loans originated by licensee and closed in the name of another party; (2) first and subordinate lien loans originated by another party and closed in the name of the licensee; (3) first and subordinate lien loans originated by and closed in the name of the licensee; (4) first and subordinate lien loans originated by and closed in the name of another party but funded by licensee; (5) loans purchased by licensee; (6) first and subordinate lien loans serviced by licensee; (7) loans owned with and without servicing rights; (8) loans sold with and without servicing rights; (9) loans paid off before and at maturity; (10) unpaid loans at the beginning and end of the reporting year; (11) delinquent loans that are 30-59, 60-89, and ninety days or more delinquent, of all the loans the licensee owned as of December thirty-first; (12) loans in foreclosure as of December thirty-first and foreclosed in the previous calendar year by licensee; (13) mortgage loans charged against reserve for loan losses as a result of foreclosures during the reporting year; and (14) loans repurchased during the previous calendar year. (D) The annual report also must include the total gross revenue earned in this State under this license, the total dollar amount of points paid to the licensee by borrowers on first and subordinate lien mortgage loans, the total dollar amount of points paid to brokers by the licensee on first and subordinate lien mortgage loans, including yield spread premiums, and the lending institution, maximum amount available, outstanding balance, and expiration date of licensee’s four largest warehouse lines of credit during the previous calendar year. (E) Information contained in annual reports is confidential and may be published only in composite form. (F) The commissioner annually shall submit to the department, in a form prescribed by the Department of Consumer Affairs and no later than April thirtieth, the data that it collected. The department shall prepare and make available to the public a report based on the data. The report must be available by June thirtieth each year.

SECTION 37-22-230. Violations of chapter; penalties. A person who wilfully violates a provision of this chapter is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned not more than six months, or both, for each violation. Each transaction involving the unlawful making or servicing of a mortgage loan is a separate offense. SECTION 37-22-240. Criminal background checks. (A) The South Carolina Law Enforcement Division (SLED) shall provide a criminal history record check to the commissioner for a person who has applied for or holds a mortgage lender or loan originator license through the commissioner pursuant to this chapter. (B) In addition, if a person described in subsection (A) is a corporation, partnership, limited liability company, association, or trust, SLED shall provide a criminal history record check to the commissioner for a person who has control of that person, or who is the managing principal or a branch manager of that person. (C) The commissioner shall provide to SLED, along with the request, the fingerprints of the person, additional information required by SLED, records check fees required by SLED and the Federal Bureau of Investigation (FBI), and a form signed by the person consenting to the check of the criminal record and to the use of the fingerprints and other identifying information required by the state or national repositories. Using the information supplied by the commissioner to SLED, the applicant must undergo a state criminal record check, supported by fingerprints, by SLED, and a national criminal record check, supported by fingerprints, by the FBI. The results of these criminal record checks must be reported to the commissioner. SLED is authorized to retain the fingerprints for certification purposes and for notification of the commissioner regarding subsequent criminal charges which may be reported to SLED or the FBI or both. The commissioner shall keep all information pursuant to this section privileged, in accordance with applicable state and federal guidelines. SECTION 37-22-250. Funds payable to commissioner. All funds specified in this chapter must be paid to the commissioner, must be used to implement the provisions of this chapter, and are nonrefundable. SECTION 37-22-260. Promulgation of regulations. (A) The commissioner may promulgate regulations necessary to effectuate the purposes of this chapter. (B) For the purpose of participating in the Nationwide Mortgage Licensing System and Registry, the commissioner may waive or modify, in whole or in part, by rule, regulation, or order, any or all of the requirements of this chapter and establish new requirements as reasonably necessary to participate in the Nationwide Mortgage Licensing System and Registry. (C) For the purposes of implementing an orderly and efficient licensing process, the commissioner may establish licensing rules or regulations and interim procedures for licensing and acceptance of applications. For previously registered or licensed individuals, the commissioner may establish expedited reviews, expedited licensing procedures, and grandfather provisions. SECTION 37-22-270. Participation in Nationwide Mortgage Licensing System and Registry. (A) The commissioner may participate in a Nationwide Mortgage Licensing System and Registry and may:

(1) facilitate and participate in the establishment and implementation of the Nationwide Mortgage Licensing System and Registry; (2) enter into agreements and contracts including cooperative, coordinating, and information sharing agreements; (3) contract with third parties to process, maintain and store information collected by the Nationwide Mortgage Licensing System and Registry; (4) authorize the Nationwide Mortgage Licensing System and Registry to collect fingerprints on the commissioner’s behalf in order to receive national and state criminal history background record checks from the FBI and SLED and furnish the fingerprints to SLED to retain for certification purposes and for notification of the commissioner regarding subsequent criminal charges which may be reported to SLED, or the FBI or both in accordance with Sections 37-22-140 and 37-22-240; (5) authorize the Nationwide Mortgage Licensing System and Registry to collect credit reports on the commissioner’s behalf for all licensees in accordance with Section 37-22-140; (6) require persons that must be licensed by this chapter to utilize the Nationwide Mortgage Licensing System and Registry; (7) require all applicants and licensees to pay all applicable funds provided for in this chapter through the Nationwide Mortgage Licensing System and Registry; (8) provide information to and receive information from the Nationwide Mortgage Licensing System and Registry; (9) authorize a third party to collect funds associated with licensure on behalf of the commissioner; and (10) authorize the Nationwide Mortgage Licensing System and Registry to collect and disburse consumer complaints. (B) Persons required to be licensed pursuant to this chapter must be required to pay all applicable fees to utilize the Nationwide Mortgage Licensing System and Registry and consent to utilizing the Nationwide Mortgage Licensing System and Registry to obtain fingerprint-based criminal history background record checks and credit reports. (C) The commissioner shall provide licensees with written notice sent to the address of record on file with the commissioner through the United States Postal Service the date the Nationwide Mortgage Licensing System and Registry will be available for their use. Licensees shall have one hundred and twenty days from the date the system is available for use to enter all their licensing information into the Nationwide Mortgage Licensing System and Registry. All filings required by the commissioner pursuant to this chapter after the date the system is available for use must be made through the Nationwide Mortgage Licensing System and Registry, except for exempt persons. (D) All licensees licensed through the Nationwide Mortgage Licensing System and Registry must use the unique identifier assigned in all advertising and on all mortgage loan documents. (E) Notwithstanding another provision of law to the contrary, the Nationwide Mortgage Licensing System and Registry is not intended to and does not replace or affect the commissioner’s authority to grant, suspend, revoke, or deny a license required pursuant to this chapter. (F) The commissioner shall develop a plan that ensures an orderly transition to the Nationwide Mortgage Licensing System and Registry. This transition plan must address issues of prelicensing education, written examinations, credit reports, and national and state fingerprint-based criminal histories and record checks.

CHAPTER 23.

HIGH-COST AND CONSUMER HOME LOANS

ARTICLE 1.

GENERAL PROVISIONS SECTION 37-23-10. Short title. This chapter may be cited as the “South Carolina High-Cost and Consumer Home Loans Act”. SECTION 37-23-20. Definitions. [Section effective until January 1, 2010. See, also, section effective January 1, 2010.] For purposes of this chapter: (1) “Affiliate” means a company that controls, is controlled by, or is under common control with another company, as described in the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.), as amended. (2) “Annual percentage rate” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act (15 U.S.C. Section 1601, et seq.) and the regulations promulgated under it by the Federal Reserve Board, both as amended. (3) “Broker” or “mortgage broker” means a person or organization in the business of soliciting, processing, placing, or negotiating mortgage loans for others or offering to process, place, or negotiate mortgage loans for others. A broker or mortgage broker also includes a person or organization who brings borrowers or lenders together to obtain mortgage loans or renders a settlement service as described in 24 CFR Part 3500.2(a)(16)(ii). (4) “Consumer home loan” means a loan in which: (a) the borrower is a natural person; (b) the debt is incurred by the borrower primarily for personal, family, or household purposes; and (c) the loan is secured by a mortgage on real estate upon which is located or is to be located a structure designed principally for occupancy of from one to four families and that is or is to be occupied by the borrower as the borrower’s principal dwelling. (5) “Conventional conforming discount points” means loan discount points knowingly paid by the borrower for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate applicable to the loan, so long as the home loan has an annual percentage rate that does not exceed the conventional mortgage rate by more than one percentage point. (6) “Conventional mortgage rate” means the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater. (7) “Conventional prepayment penalty” means a prepayment penalty or fee that may be collected or charged in a home loan and that is authorized by law other than by this chapter, provided the home loan (a) does not have an annual percentage rate that exceeds the conventional mortgage rate by more than two percentage points; and (b) does not permit prepayment fees or penalties that exceed two percent of the amount prepaid. (8) “Flipping” a consumer home loan means the making of a consumer home loan that refinances within forty-two months an existing consumer home loan of the borrower when the new loan does not have a reasonable, tangible net benefit to the borrower, considering all the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower’s circumstances. (a) A rebuttable presumption of reasonable, tangible, net benefit to the borrower occurs when including, but not limited to, the following:

(i) at the time the home loan is consummated, the borrower’s total monthly debts, including amounts due under the home loan, do not exceed fifty percent of the borrower’s monthly income as verified by tax returns, payroll receipts, or other third-party income verification; (ii) the borrower’s monthly payment to pay the new consolidated debt is a minimum of twenty percent lower than the total of all monthly obligations being financed, taking into account costs and fees; (iii) there is a beneficial change for the borrower in the duration of the loan; (iv) the borrower receives a reasonable amount of cash in excess of and in relation to the cost and fees as part of the refinancing; (v) the borrower’s note rate of interest is reduced by at least two percent; (vi) there is a change from an adjustable rate loan to a fixed rate loan, taking into account costs and fees and the costs can be recouped within two years; or (vii) the borrower is able to recoup the costs of refinancing the loan within two years and reduces the interest rate by two points or the length of term by a minimum of five years. (b) the home loan refinancing transaction is presumed to be a flipping if a home loan refinances an existing home loan that was consummated as a special mortgage originated, subsidized, or guaranteed by or through a state, tribal, or local government or a nonprofit organization, which either bears a below-market interest rate at the time the loan was originated or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or are not required at all under specified conditions, and if, as a result of the refinancing, the borrower loses one or more of the benefits of the special mortgage. (9) “High-cost home loan” means a loan, other than an open-end credit plan or a reverse mortgage transaction, in which the: (a) principal amount of the loan does not exceed the conforming loan size limit for a single-family dwelling as established from time to time by the Federal National Mortgage Association; (b) borrower is a natural person; (c) debt is incurred by the borrower primarily for personal, family, or household purposes; (d) loan is secured by either: (i) a security interest in a residential manufactured home, as defined in Section 37-1-301(24) which is to be occupied by the borrower as the borrower’s principal dwelling; or (ii) a mortgage on real estate upon which there is located or there is to be located a structure designed principally for occupancy of from one to four families and which is or is to be occupied by the borrower as the borrower’s principal dwelling; and (e) terms of the loan exceed one or more of the threshold as defined in item (15) of this section. (10) “Lender” includes, but is not limited to, a mortgage broker or a mortgage banker originating a loan in a table-funded loan transaction in which the broker or banker is identified as the original payee of the note. (11) “Obligor” means each borrower, co-borrower, cosigner, or guarantor obligated to repay a loan. (12) “Originator” means an employee of a mortgage loan broker whose primary job responsibilities include direct contact with and informing loan applicants of the rates, terms, disclosure, and other aspects of the mortgage. It does not mean an employee whose primary job responsibilities are clerical in nature, such as processing the loan. (13) “Points and fees” means: (a) items required to be disclosed pursuant to Sections 226.4(a) and 226.4( b) of Title 12 of the Code of Federal Regulations, as amended, except interest or the time-price differential; (b) charges for items listed in Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; otherwise, the charges are not included within the meaning of the phrase “points and fees”; (c) compensation paid directly by the borrower to a mortgage broker not otherwise included in subitem (a) or (b) of this item;

(d) the maximum prepayment fees and penalties that may be charged or collected pursuant to the terms of the loan documents. Interest that may accrue in advance of payment in full of a loan made under a local, state, or federal government-sponsored mortgage insurance or guaranty program, including a Federal Housing Administration program, is not considered a prepayment fee or penalty; (e) premiums or other charges paid at or before closing for credit life, accident, health, or loss-of-income insurance or debt-cancellation coverage that provides for cancellation of all or part of the consumer’s liability in the event of the loss of life, health, or income or in the case of accident. This subsection does not apply after January 1, 2005; and (f) “points and fees” does not include: (i) taxes, filing fees, recording, and other charges and fees actually paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest; (ii) bona fide and reasonable fees actually paid to a person, other than a lender or an affiliate of the lender or to the mortgage broker or an affiliate of the mortgage broker, who has received no direct or indirect compensation for the following: fees for tax payment services, fees for flood certification, fees for pest infestation and flood determinations, appraisal fees, fees for inspections performed before closing, credit reports, surveys, attorney’s fees if the borrower has the right to select the attorney, notary fees, escrow charges, and flood insurance premiums not otherwise included pursuant to subitem (a) of this section; (iii) premiums for insurance against title defects. Premiums for insurance against loss of or damage to property or against liability arising out of the ownership or use of property may be excluded from the points and fees if the insurance coverage may be obtained from a person of the borrower’s choice and this fact is disclosed and if the coverage is obtained from or through the lender or its affiliate, the premium for the initial term of insurance coverage is disclosed. If the term of insurance is less than the term of the transaction, the term of insurance must be disclosed also. The premium may be disclosed on a unit-cost basis only in open-end credit transactions, closed- end credit transactions by mail or telephone pursuant to Section 226.17(g) of Title 12 of the Code of Federal Regulations, and certain closed-end credit transactions involving an insurance plan that limits the total amount of indebtedness subject to coverage; (iv) commissions and other compensation paid to licensed real estate brokers and agents; (v) fees or charges payable or paid by a party in connection with a local, state, or federal government-sponsored mortgage insurance or guaranty program including, but not limited to, Federal Housing Administration, Veterans Administration, South Carolina Housing Finance and Development Authority programs, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Bank, or price adjustment; (14) “Table-funded transaction” means a settlement at which a mortgage loan is funded by an advance of loan funds to a lender who closes the loan in his name followed by an assignment of the loan from the person identified as the lender in the loan documents to the person advancing the initial loan funds. (15) “Threshold” means either (A) or (B) in a loan transaction, whichever is applicable: (A) without regard to whether the loan transaction is a “ residential mortgage transaction” as the term “ residential mortgage transaction” is defined in Section 226. 2(a)(24) of Title 12 of the Code of Federal Regulations, as amended, the annual percentage rate of the loan at the time the loan is consummated is such a rate that the loan is considered to be a “mortgage” pursuant to Section 152 of the Home Ownership and Equity Protection Act of 1994 (Pub. Law 103-25, [15 U.S.C. Section 1602(aa)]), as amended, and regulations adopted pursuant to it by the Federal Reserve Board, including Section 226.32 of Title 12 of the Code of Federal Regulations, as amended, except with regard to a mortgage or loan secured by a nonreal estate manufactured housing lien, the term “threshold” means the annual percentage rate of the nonreal estate secured manufactured housing lien at the time the mortgage or loan is consummated exceeds by more than ten percentage points the yield on United States Treasury securities having comparable periods of maturity as of the fifteenth day of the month immediately preceding the month in which the application of the extension of credit is received by the lender; (B) the total points and fees payable by the borrower at or before the loan closing exceed: (i) five percent of the total loan amount if the total loan amount is twenty thousand dollars or more;

(ii) the lesser of eight percent of the total loan amount or one thousand dollars if the total loan amount is less than twenty thousand dollars; or (iii) three percent of the total loan amount for nonreal estate secured manufactured housing transactions if the total loan amount in the nonreal estate secured housing transaction is twenty thousand dollars or more; (C) except that the following discount points and prepayment fees and penalties are excluded from the calculation of the total points and fees payable by the borrower: (i) up to and including two conventional conforming discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate is discounted does not exceed by more than one percentage point the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or (ii) up to and including one conventional conforming discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate is discounted does not exceed by more than two percentage points the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; (iii) a conventional prepayment penalty. (16) “Total loan amount” means the same as the term “ total loan amount” means in Section 226.32 of Title 12 of the Code of Federal Regulations and must be calculated in accordance with the Federal Reserve Board’s Official Staff Commentary to that section. SECTION 37-23-20. Definitions. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] For purposes of this chapter: (1) “Affiliate” means a company that controls, is controlled by, or is under common control with another company, as described in the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.), as amended. (2) “Annual percentage rate” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act (15 U.S.C. Section 1601, et seq.) and the regulations promulgated under it by the Federal Reserve Board, both as amended. (3) “Broker” or “mortgage broker” means a person or organization in the business of soliciting, processing, placing, or negotiating mortgage loans for others or offering to process, place, or negotiate mortgage loans for others. A broker or mortgage broker also includes a person or organization who brings borrowers or lenders together to obtain mortgage loans or renders a settlement service as described in 24 CFR Part 3500.2(a)(16)(ii). (4) “Consumer home loan” means a loan in which: (a) the borrower is a natural person; (b) the debt is incurred by the borrower primarily for personal, family, or household purposes; and (c) the loan is secured by a mortgage on real estate upon which is located or is to be located a structure designed principally for occupancy of from one to four families and that is or is to be occupied by the borrower as the borrower’s principal dwelling. (5) “Conventional conforming discount points” means loan discount points knowingly paid by the borrower for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate applicable to the loan, so long as the home loan has an annual percentage rate that does not exceed the conventional mortgage rate by more than one percentage point. (6) “Conventional mortgage rate” means the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater.

(7) “Conventional prepayment penalty” means a prepayment penalty or fee that may be collected or charged in a home loan and that is authorized by law other than by this chapter, provided the home loan (a) does not have an annual percentage rate that exceeds the conventional mortgage rate by more than two percentage points; and (b) does not permit prepayment fees or penalties that exceed two percent of the amount prepaid. (8) “Flipping” a consumer home loan means the making of a consumer home loan that refinances within forty-two months an existing consumer home loan of the borrower when the new loan does not have a reasonable, tangible net benefit to the borrower, considering all the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower’s circumstances. (a) A rebuttable presumption of reasonable, tangible, net benefit to the borrower occurs when including, but not limited to, the following: (i) at the time the home loan is consummated, the borrower’s total monthly debts, including amounts due under the home loan, do not exceed fifty percent of the borrower’s monthly income as verified by tax returns, payroll receipts, or other third-party income verification; (ii) the borrower’s monthly payment to pay the new consolidated debt is a minimum of twenty percent lower than the total of all monthly obligations being financed, taking into account costs and fees; (iii) there is a beneficial change for the borrower in the duration of the loan; (iv) the borrower receives a reasonable amount of cash in excess of and in relation to the cost and fees as part of the refinancing; (v) the borrower’s note rate of interest is reduced by at least two percent; (vi) there is a change from an adjustable rate loan to a fixed rate loan, taking into account costs and fees and the costs can be recouped within two years; or (vii) the borrower is able to recoup the costs of refinancing the loan within two years and reduces the interest rate by two points or the length of term by a minimum of five years. (b) the home loan refinancing transaction is presumed to be a flipping if a home loan refinances an existing home loan that was consummated as a special mortgage originated, subsidized, or guaranteed by or through a state, tribal, or local government or a nonprofit organization, which either bears a below-market interest rate at the time the loan was originated or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or are not required at all under specified conditions, and if, as a result of the refinancing, the borrower loses one or more of the benefits of the special mortgage. [Subsection effective until January 1, 2010.] (9) “High-cost home loan” means a loan, other than an open-end credit plan or a reverse mortgage transaction, in which the: (a) principal amount of the loan does not exceed the conforming loan size limit for a single-family dwelling as established from time to time by the Federal National Mortgage Association; (b) borrower is a natural person; (c) debt is incurred by the borrower primarily for personal, family, or household purposes; (d) loan is secured by either: (i) a security interest in a residential manufactured home, as defined in Section 37-1-301(24) which is to be occupied by the borrower as the borrower’s principal dwelling; or (ii) a mortgage on real estate upon which there is located or there is to be located a structure designed principally for occupancy of from one to four families and which is or is to be occupied by the borrower as the borrower’s principal dwelling; and (e) terms of the loan exceed one or more of the threshold as defined in item (15) of this section. [Subsection effective January 1, 2010.] (9) “High-cost home loan” means: (a) a loan, other than an open-end credit plan or a reverse mortgage transaction, in which the: (i) principal amount of the loan does not exceed the conforming loan size limit for a single-family dwelling as established from time to time by the Federal National Mortgage Association; (ii) borrower is a natural person;

(iii) debt is incurred by the borrower primarily for personal, family, or household purposes; (iv) loan is secured by either a security interest in a residential manufactured home, as defined in Section 37-1-301(24) which is to be occupied by the borrower as the borrower’s principal dwelling, or a mortgage on real estate upon which there is located or there is to be located a structure designed principally for occupancy from one to four families and which is or is to be occupied by the borrower as the borrower’s principal dwelling; and (v) terms of the loan exceed one or more of the thresholds as defined in item (15) of this section; or (b) an adjustable rate mortgage at the fully indexed rate assuming a fully amortizing repayment schedule that would exceed one or more of the thresholds as defined in item (15) of this section. [Subsection effective until January 1, 2010.] (10) “Lender” includes, but is not limited to, a mortgage broker or a mortgage banker originating a loan in a table-funded loan transaction in which the broker or banker is identified as the original payee of the note. [Subsection effective January 1, 2010.] (10) “Lender” includes, but is not limited to, a mortgage broker originating a loan in a tablefunded loan transaction in which the broker is identified as the original payee of the note. (11) “Obligor” means each borrower, co-borrower, cosigner, or guarantor obligated to repay a loan. [Subsection effective until January 1, 2010.] (12) “Originator” means an employee of a mortgage loan broker whose primary job responsibilities include direct contact with and informing loan applicants of the rates, terms, disclosure, and other aspects of the mortgage. It does not mean an employee whose primary job responsibilities are clerical in nature, such as processing the loan. [Subsection effective January 1, 2010.] (12) “Originator” or “loan originator” means an employee of a mortgage broker or mortgage lender whose primary job responsibilities include direct contact with or informing loan applicants of the rates, terms, disclosure, or other aspects of the mortgage. It does not mean an employee whose primary job responsibilities are clerical in nature, such as processing the loan. (13) “Points and fees” means: (a) items required to be disclosed pursuant to Sections 226.4(a) and 226.4( b) of Title 12 of the Code of Federal Regulations, as amended, except interest or the time-price differential; (b) charges for items listed in Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; otherwise, the charges are not included within the meaning of the phrase “points and fees”; (c) compensation paid directly by the borrower to a mortgage broker not otherwise included in subitem (a) or (b) of this item; (d) the maximum prepayment fees and penalties that may be charged or collected pursuant to the terms of the loan documents. Interest that may accrue in advance of payment in full of a loan made under a local, state, or federal government-sponsored mortgage insurance or guaranty program, including a Federal Housing Administration program, is not considered a prepayment fee or penalty; (e) premiums or other charges paid at or before closing for credit life, accident, health, or loss-of-income insurance or debt-cancellation coverage that provides for cancellation of all or part of the consumer’s liability in the event of the loss of life, health, or income or in the case of accident. This subsection does not apply after January 1, 2005; and (f) “points and fees” does not include: (i) taxes, filing fees, recording, and other charges and fees actually paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest; (ii) bona fide and reasonable fees actually paid to a person, other than a lender or an affiliate of the lender or to the mortgage broker or an affiliate of the mortgage broker, who has received no direct or indirect compensation for the following: fees for tax payment services, fees for flood certification, fees for pest infestation and flood determinations, appraisal fees, fees for inspections performed before closing, credit

reports, surveys, attorney’s fees if the borrower has the right to select the attorney, notary fees, escrow charges, and flood insurance premiums not otherwise included pursuant to subitem (a) of this section; (iii) premiums for insurance against title defects. Premiums for insurance against loss of or damage to property or against liability arising out of the ownership or use of property may be excluded from the points and fees if the insurance coverage may be obtained from a person of the borrower’s choice and this fact is disclosed and if the coverage is obtained from or through the lender or its affiliate, the premium for the initial term of insurance coverage is disclosed. If the term of insurance is less than the term of the transaction, the term of insurance must be disclosed also. The premium may be disclosed on a unit-cost basis only in open-end credit transactions, closed- end credit transactions by mail or telephone pursuant to Section 226.17(g) of Title 12 of the Code of Federal Regulations, and certain closed-end credit transactions involving an insurance plan that limits the total amount of indebtedness subject to coverage; (iv) commissions and other compensation paid to licensed real estate brokers and agents; (v) fees or charges payable or paid by a party in connection with a local, state, or federal government-sponsored mortgage insurance or guaranty program including, but not limited to, Federal Housing Administration, Veterans Administration, South Carolina Housing Finance and Development Authority programs, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Bank, or price adjustment; (14) “Table-funded transaction” means a settlement at which a mortgage loan is funded by an advance of loan funds to a lender who closes the loan in his name followed by an assignment of the loan from the person identified as the lender in the loan documents to the person advancing the initial loan funds. (15) “Threshold” means either (A) or (B) in a loan transaction, whichever is applicable: (A) without regard to whether the loan transaction is a “ residential mortgage transaction” as the term “ residential mortgage transaction” is defined in Section 226. 2(a)(24) of Title 12 of the Code of Federal Regulations, as amended, the annual percentage rate of the loan at the time the loan is consummated is such a rate that the loan is considered to be a “mortgage” pursuant to Section 152 of the Home Ownership and Equity Protection Act of 1994 (Pub. Law 103-25, [15 U.S.C. Section 1602(aa)]), as amended, and regulations adopted pursuant to it by the Federal Reserve Board, including Section 226.32 of Title 12 of the Code of Federal Regulations, as amended, except with regard to a mortgage or loan secured by a nonreal estate manufactured housing lien, the term “threshold” means the annual percentage rate of the nonreal estate secured manufactured housing lien at the time the mortgage or loan is consummated exceeds by more than ten percentage points the yield on United States Treasury securities having comparable periods of maturity as of the fifteenth day of the month immediately preceding the month in which the application of the extension of credit is received by the lender; (B) the total points and fees payable by the borrower at or before the loan closing exceed: (i) five percent of the total loan amount if the total loan amount is twenty thousand dollars or more; (ii) the lesser of eight percent of the total loan amount or one thousand dollars if the total loan amount is less than twenty thousand dollars; or (iii) three percent of the total loan amount for nonreal estate secured manufactured housing transactions if the total loan amount in the nonreal estate secured housing transaction is twenty thousand dollars or more; (C) except that the following discount points and prepayment fees and penalties are excluded from the calculation of the total points and fees payable by the borrower: (i) up to and including two conventional conforming discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate is discounted does not exceed by more than one percentage point the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or (ii) up to and including one conventional conforming discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan’s interest rate is discounted does not exceed by more than two percentage points the required net yield for a ninety-day

standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; (iii) a conventional prepayment penalty. (16) “Total loan amount” means the same as the term “ total loan amount” means in Section 226.32 of Title 12 of the Code of Federal Regulations and must be calculated in accordance with the Federal Reserve Board’s Official Staff Commentary to that section. [Subsection effective January 1, 2010.] (17) An adjustable rate mortgage (ARM) is a mortgage in which the interest rate and monthly payment may vary over time.

ARTICLE 3.

HIGH-COST HOME LOANS SECTION 37-23-30. High-cost home loan agreements. A high-cost home loan agreement may not contain: (1) a call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This item does not apply when repayment of the loan is accelerated by default, or pursuant to a due-on-sale provision, or some other provision of the loan documents unrelated to the payment schedule; (2) a balloon payment provision that contains a scheduled payment more than twice as large as the average of earlier scheduled payments. This provision does not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower; (3) a negative amortization provision with a periodic payment schedule that causes the principal balance to increase; (4) a provision that increases the interest rate after default. This provision does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, so long as the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness; (5) terms under which more than two periodic payments required pursuant to the loan are consolidated and paid in advance from the loan proceeds provided to the borrower; (6) charges to a borrower for fees to modify, renew, extend, or amend a high-cost home loan or to defer a payment due pursuant to the terms of a high-cost home loan; or (7) contain as a part of the loan agreement a choice of law provision identifying a state other than South Carolina, unless otherwise allowed under federal law. SECTION 37-23-40. Lender limitations. [Section effective until January 1, 2010. See, also, section effective January 1, 2010.] The lender of a high-cost home loan may not: (1) make a high-cost home loan without first receiving a written certification from a counselor approved by the State Housing Finance and Development Authority that the borrower has received counseling on the advisability of the loan transaction and the appropriate loan for the borrower. The Department of Consumer Affairs shall specify the information that must be provided by the lender and reviewed by the consumer credit counselor; (2) make a high-cost home loan unless the lender reasonably believes at the time the loan is consummated that one or more of the obligors, when considered individually or collectively, is able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status, and other financial resources other than the borrower’s equity in the dwelling that secures repayment of the loan. An obligor is presumed to be able to make the scheduled payments to repay the obligation if, at the time the loan is consummated, the obligor’s total

monthly debts, including amounts owed pursuant to the loan, do not exceed fifty percent of the obligor’s monthly gross income as verified by the credit application, the obligor’s financial statement, a credit report, financial information provided to the lender by or on behalf of the obligor, or another authoritative means. A presumption of inability to make the scheduled payments to repay the obligation does not arise solely from the fact that, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed under the loan, exceed fifty percent of the obligor’s monthly gross income; (3) directly or indirectly finance: (a) prepayment fees or penalties payable by the borrower in a refinancing transaction if the lender or an affiliate of the lender is the noteholder of the note being refinanced; (b) points and fees exceeding two and one-half percent of the total loan amount; (4) charge a borrower points and fees in connection with a high-cost home loan if the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan held by the same lender as noteholder; or (5) pay a contractor pursuant to a home improvement contract from the proceeds of a high-cost home loan other than: (a) by an instrument payable jointly to the borrower and the contractor; or (b) at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender, and the contractor before the disbursement. For purposes of this article, a home improvement contract does not include money for a new home construction loan or a purchase money loan for a home. SECTION 37-23-40. Lender limitations. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] The lender of a high-cost home loan may not: (1) make a high-cost home loan without first receiving a written certification from a counselor approved by the State Housing Finance and Development Authority that the borrower has received counseling on the advisability of the loan transaction and the appropriate loan for the borrower. The Department of Consumer Affairs shall specify the information that must be provided by the lender and reviewed by the consumer credit counselor; [Subsection effective until January 1, 2010.] (2) make a high-cost home loan unless the lender reasonably believes at the time the loan is consummated that one or more of the obligors, when considered individually or collectively, is able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status, and other financial resources other than the borrower’s equity in the dwelling that secures repayment of the loan. An obligor is presumed to be able to make the scheduled payments to repay the obligation if, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed pursuant to the loan, do not exceed fifty percent of the obligor’s monthly gross income as verified by the credit application, the obligor’s financial statement, a credit report, financial information provided to the lender by or on behalf of the obligor, or another authoritative means. A presumption of inability to make the scheduled payments to repay the obligation does not arise solely from the fact that, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed under the loan, exceed fifty percent of the obligor’s monthly gross income; [Subsection effective January 1, 2010.] (2) make a high-cost home loan unless the lender reasonably believes at the time the loan is consummated that one or more of the obligors, when considered individually or collectively, is able to make the scheduled payments to repay the obligation based upon a consideration of their current and expected income, current obligations, employment status, and other financial resources other than the borrower’s equity in the dwelling that secures repayment of the loan. If the loan is an adjustable rate mortgage (ARM), the analysis of the obligor must include an evaluation of the ability to repay by final maturity at

the fully indexed rate assuming a fully amortizing repayment schedule. An obligor is presumed to be able to make the scheduled payments to repay the obligation if, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed pursuant to the loan including, but not limited to, principal, interest, current property taxes, and current insurance, do not exceed fifty percent of the obligor’s monthly gross income as verified by the credit application, a credit report, and information provided to a lender by a third party, including the Internal Revenue Service (IRS). A presumption of inability to make the scheduled payments to repay the obligation does not arise solely from the fact that, at the time the loan is consummated, the obligor’s total monthly debts, including amounts owed under the loan, exceed fifty percent of the obligor’s monthly gross income; (3) directly or indirectly finance: (a) prepayment fees or penalties payable by the borrower in a refinancing transaction if the lender or an affiliate of the lender is the noteholder of the note being refinanced; (b) points and fees exceeding two and one-half percent of the total loan amount; (4) charge a borrower points and fees in connection with a high-cost home loan if the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan held by the same lender as noteholder; or (5) pay a contractor pursuant to a home improvement contract from the proceeds of a high-cost home loan other than: (a) by an instrument payable jointly to the borrower and the contractor; or (b) at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender, and the contractor before the disbursement. For purposes of this article, a home improvement contract does not include money for a new home construction loan or a purchase money loan for a home. SECTION 37-23-45. Disclosure; form. [Section effective until January 1, 2010. See, also, section effective January 1, 2010.] (A) At the time the borrower receives the good faith estimate under the Real Estate Settlement and Procedures Act (RESPA) and before the scheduled closing of a high-cost home loan, the broker or mortgage broker of a loan must disclose in writing the amount being earned on the loan. The Department of Consumer Affairs shall provide a disclosure form to include the following: (1) the dollar amount of the yield spread premium and the percentage of the yield spread premium in relation to the loan amount. For purposes of this item, “yield spread premium” is the amount paid to the broker by the lender based on the difference between the interest rate at which the broker originates the loan and the par, or market rate offered by a lender; (2) an itemization of dollar amounts for points, fees, and commissions with a combined total given. A percentage of the combined total should be specified in relation to the loan amount; and (3) a dollar amount total of items 37-23-45(A)(1) and (2) and a percentage of the total specified in relation to the total amount of the loan. (B) The form must include a signature line for the borrower to acknowledge that he has received the disclosures, the disclosures have been explained to him, he understands them, and he voluntarily enters into the loan transaction. SECTION 37-23-45. Disclosure; form. (A) At the time the borrower receives the good faith estimate under the Real Estate Settlement and Procedures Act (RESPA) and before the scheduled closing of a high-cost home loan, the broker or mortgage broker of a loan must disclose in writing the amount being earned on the loan. The Department of Consumer Affairs shall provide a disclosure form to include the following:

(1) the dollar amount of the yield spread premium and the percentage of the yield spread premium in relation to the loan amount. For purposes of this item, “yield spread premium” is the amount paid to the broker by the lender based on the difference between the interest rate at which the broker originates the loan and the par, or market rate offered by a lender; (2) an itemization of dollar amounts for points, fees, and commissions with a combined total given. A percentage of the combined total should be specified in relation to the loan amount; and (3) a dollar amount total of items 37-23-45(A)(1) and (2) and a percentage of the total specified in relation to the total amount of the loan. [Subsection effective January 1, 2010.] (4) for a loan that is an ARM as defined in Section 37-23-20(17), a listing of the schedule when the loan may be reset, for each and every reset, and a listing of the monthly payment that is owed for each change that is allowed by the terms of the contract. If the consumer escrows the insurance and taxes with each monthly payment, it must be reflected in the payment listed. (B) The form must include a signature line for the borrower to acknowledge that he has received the disclosures, the disclosures have been explained to him, he understands them, and he voluntarily enters into the loan transaction. SECTION 37-23-50. Borrower’s right in action for violations; penalties; statute of limitations; enforcement; costs; application of article. (A) If a lender, or party charged with a violation, when making a high-cost home loan violates the provisions of this article, the borrower has a right in action, other than a class action, to recover from the lender or party charged with the violation actual damages and also a penalty in an amount determined by the court of not less than one thousand five hundred dollars and not more than seven thousand five hundred dollars for each loan transaction. No borrower may bring a class action for a violation of this article. No borrower may bring an action for a violation of this article more than six years after the violation occurred and after the original scheduled maturity date of the debt. This section does not bar a borrower from asserting a violation of this article in an action to collect a debt which was brought more than six years from the date of the occurrence of the violation and after the original scheduled maturity date of the debt as a matter of defense by recoupment or set-off in such action; (B)(1) If the court finds as a matter of law that the agreement or transaction violates the provisions of this article at the time it was made, the court may, in an action other than a class action: (a) refuse to enforce the agreement, or a term, or part of the agreement or transaction that the court determines to have been unlawful at the time it was made; (b) enforce the remainder of the agreement without the unlawful term or part, or limit the application of the unlawful term or part to avoid an unlawful result; (c) rewrite or modify the agreement to eliminate an unlawful term, part, or result and enforce the new agreement; or (d) award either one of the following: (i) not more than the total amount of the loan finance charge and allow repayment of the unpaid balance of the loan without any finance charge; or (ii) not more than double the amount of excess loan finance charge or other charges or fees actually received by the creditor or paid by the debtor to a third party. (2) An action pursuant to this subsection may not be brought after the original scheduled maturity date of the debt. (C) In an action in which it is found that a lender or party charged with a violation has violated this chapter, the court shall award to the debtor the costs of the action and to his attorneys their reasonable fees. In determining attorney’s fees, the amount of the recovery on behalf of the debtor is not controlling. (D) This article establishes specific consumer protections in consumer home loans in addition to other consumer protections that may be otherwise available by law.

(E) The provisions of this article apply to a person who in bad faith attempts to avoid the application of this article by: (1) structuring a loan transaction as an open-end credit plan for the purpose and with the intent of evading the provisions of this article if the loan would be a high-cost home loan if it were structured as a closed-end loan; (2) dividing a loan transaction into separate parts for the purpose and with the intent of evading the provisions of this article; or (3) other subterfuge. (F) The Administrator of the Department of Consumer Affairs, the Attorney General, the Commissioner of Banking, the Director of the Consumer Finance Division or any party to a high-cost home loan may enforce the provisions of this article. The penalties and remedies provided in this article are in addition to and cumulative of penalties and remedies available pursuant to other provisions of law. SECTION 37-23-60. Bona fide error; restitution. A lender of a high-cost home loan who acts in good faith but through a bona fide unintentional error, notwithstanding the maintenance of procedures reasonably adapted to avoid errors, fails to comply with this article must make restitution to the borrower. Within forty-five days after the discovery of the compliance failure or receipt of written notice of the compliance failure, the lender must notify the borrower and make the necessary adjustments to the loan to make the high-cost home loan satisfy the requirements of Sections 37-23-30, 37-23-40, and 37-23-45. If the harm to the borrower cannot be remedied by compliance with the high-cost loan requirement of Sections 37-23-30, 37-23-40, and 37-23-45, the lender must change the terms of the loan in a manner beneficial to the borrower so that the loan is no longer considered a high-cost home loan subject to the provisions of this article. Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person’s obligations pursuant to this article is not a bona fide error.

ARTICLE 5.

CONSUMER HOME LOANS SECTION 37-23-70. Prohibited acts; complaints; penalties; statute of limitations; enforcement; costs. (A) A lender may not engage knowingly or intentionally in the unfair act or practice of “flipping” a consumer home loan. This provision applies regardless of whether the interest rate, points, fees, and charges paid or payable by the borrower in connection with the refinancing exceed those thresholds specified in Section 37-23-20(15). (B) It is unlawful, on or after January 1, 2005, for a lender in a consumer home loan to finance, directly or indirectly, credit life, disability, debt cancellation, or unemployment insurance, or other life or health insurance premiums, except that insurance premiums calculated and paid on a monthly basis are not considered to be financed by the lender. (C) A lender may not recommend or encourage default on an existing loan or other debt before and in connection with the closing or planned closing of a consumer home loan that refinances all or a portion of the existing loan or debt. (D) At the time of application for a mortgage loan, the mortgage broker, originator, or employee shall provide the borrower with a document specifying the agency designated to receive complaints or inquiries about the origination and making of the loan, with the telephone number and address of the agency. The consumer shall sign a copy of the document acknowledging receipt of this disclosure and the copy must be maintained in the files of the mortgage broker or originator.

(E) Unless otherwise allowed under federal law, a consumer home loan agreement may not contain a choice of law provision identifying a state other than South Carolina. (F) The making of a consumer home loan that violates this section is a violation of the provisions of this article and the borrower has a right in action, other than a class action, to recover from the lender or party charged with the violation actual damages and also a penalty in an amount determined by the court of not less than one thousand five hundred dollars and not more than seven thousand five hundred dollars for each transaction. No borrower may bring a class action for a violation of this article. No borrower may bring an action for a violation of this article more than six years after the violation occurred and after the original scheduled maturity date of the debt. This subsection does not bar a borrower from asserting a violation of this article in an action to collect a debt which was brought more than six years from the date of the occurrence of the violation and after the original scheduled maturity date of the debt as a matter of defense by recoupment or set-off in such action. (G)(1) If the court finds as a matter of law that the agreement or transaction violates the provisions of this article at the time it was made, the court may, in an action other than a class action: (a) refuse to enforce the agreement, or a term, or part of the agreement or transaction that the court determines to have been unlawful at the time it was made; (b) enforce the remainder of the agreement without the unlawful term or part, or limit the application of the unlawful term or part to avoid an unlawful result; (c) rewrite or modify the agreement to eliminate an unlawful term, part, or result and enforce the new agreement; or (d) award either one of the following: (i) not more than the total amount of the loan finance charge and allow repayment of the unpaid balance of the loan without any finance charge; or (ii) not more than double the amount of excess loan finance charge or other charges or fees actually received by the lender or paid by the borrower to a third party. (2) An action pursuant to this subsection may not be brought after the original scheduled maturity date of the debt. (H) In an action in which it is found that a lender has violated this chapter, the court shall award to the borrower the costs of the action and to his attorneys their reasonable fees. In determining attorney’s fees, the amount of the recovery on behalf of the borrower is not controlling. (I) This article establishes specific consumer protections in consumer home loans in addition to other consumer protections that may be otherwise available by law. (J) The Administrator of the Department of Consumer Affairs, the Attorney General, the Commissioner of Banking, the Director of the Consumer Finance Division, or any party to a high-cost home loan may enforce the provisions of this article. The penalties and remedies provided in this article are in addition to and cumulative of penalties and remedies available pursuant to other provisions of law. (K) Points and fees charged on consumer home loans and subject to this article are considered earned immediately and not subject to Section 37-3-201 and the rebate provisions of Sections 37-3-209 and 37-3-210; provided, that this section does not limit the borrower’s right to prepay under Section 37-3-209. SECTION 37-23-75. Disclosure; form. [Section effective until January 1, 2010. See, also, section effective January 1, 2010.] (A) At the time the borrower receives the good faith estimate under the Real Estate Settlement and Procedures Act (RESPA) and before the scheduled closing of a consumer home loan, the broker or mortgage broker of a loan must disclose in writing the amount being earned on the loan. The Department of Consumer Affairs shall provide a disclosure form to include the following: (1) the dollar amount of the yield spread premium and the percentage of the yield spread premium in relation to the loan amount. For purposes of this item, “yield spread premium” is the amount paid to the

broker by the lender based on the difference between the interest rate at which the broker originates the loan and the par, or market rate offered by a lender; (2) an itemization of dollar amounts for points, fees, and commissions with a combined total given. A percentage of the combined total should be specified in relation to the loan amount; and (3) a dollar amount total of items 37-23-75(A)(1) and (2) and a percentage of the total specified in relation to the total amount of the loan. (B) The form must include a signature line for the borrower to acknowledge that he has received the disclosures, the disclosures have been explained to him, he understands them, and he voluntarily enters into the loan transaction. SECTION 37-23-75. Disclosure; form. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) At the time the borrower receives the good faith estimate under the Real Estate Settlement and Procedures Act (RESPA) and before the scheduled closing of a consumer home loan, the broker or mortgage broker of a loan must disclose in writing the amount being earned on the loan. The Department of Consumer Affairs shall provide a disclosure form to include the following: (1) the dollar amount of the yield spread premium and the percentage of the yield spread premium in relation to the loan amount. For purposes of this item, “yield spread premium” is the amount paid to the broker by the lender based on the difference between the interest rate at which the broker originates the loan and the par, or market rate offered by a lender; (2) an itemization of dollar amounts for points, fees, and commissions with a combined total given. A percentage of the combined total should be specified in relation to the loan amount; and (3) a dollar amount total of items 37-23-75(A)(1) and (2) and a percentage of the total specified in relation to the total amount of the loan. [Subsection effective January 1, 2010.] (4) for a loan that is an ARM as defined in Section 37-23-20(17), a listing of the schedule when the loan may be reset, for each and every reset, and a listing of the monthly payment that is owed for each change that is allowed by the terms of the contract. If the consumer escrows the insurance and taxes with each monthly payment, it must be reflected in the payment listed. (B) The form must include a signature line for the borrower to acknowledge that he has received the disclosures, the disclosures have been explained to him, he understands them, and he voluntarily enters into the loan transaction. SECTION 37-23-80. Prepayment. The debtor may prepay in full at any time without penalty the debt represented by a personal, family, or household purpose loan agreement that is secured in whole or in part by a first or junior lien on real estate if the aggregate of all sums advanced or contemplated by the parties in good faith to be advanced does not exceed one hundred fifty thousand dollars. SECTION 37-23-85. Compliance failure. A lender of a consumer home loan who acts in good faith but fails to comply with this article does not violate this article if the lender establishes that either: (1) within forty-five days of the loan closing and before the institution of an action pursuant to this article, the lender notifies the borrower of the compliance failure, makes appropriate restitution, and makes necessary adjustments to the loan to make the consumer home loan satisfy the requirements of Section 37-23-70, 37-23-75, or 37-23-80; or (2) the compliance failure was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid those errors, and within ninety days after the

discovery of the compliance failure and before the institution of an action pursuant to this article or the receipt of written notice of the compliance failure, the lender notifies the borrower of the compliance failure, makes appropriate restitution, and makes necessary adjustments to the loan to make the consumer home loan satisfy the requirements of Sections 37-23-70, 37-23-75, and 37-23-80. Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person’s obligations pursuant to this article is not a bona fide error.

CHAPTER 58.

LICENSING OF MORTGAGE BROKERS SECTION 40-58-10. Citation of chapter; mortgage loan broker requirements. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) This chapter may be cited as the Licensing of Mortgage Brokers Act. (B) A person may not broker a mortgage loan as defined in this chapter unless the broker of the mortgage loan: (1) is an exempt person as defined by Section 40-58-20(16); or (2) has complied with the provisions of this chapter. SECTION 40-58-20. Definitions. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] As used in this chapter: (1) “Act as a mortgage broker” means to act, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, by: (i) soliciting, processing, placing, or negotiating a mortgage loan for a borrower from a mortgage lender or depository institution or offering to process, place, or negotiate a mortgage loan for a borrower from a mortgage lender or depository institution, (ii) engaging in tablefunding of a mortgage loan, or (iii) acting as a loan correspondent, as that term is defined in 24 C.F.R. Part 202 et seq., whether those acts are done by telephone, by electronic means, by mail, or in person with the borrowers or potential borrowers. “Act as a mortgage broker” also includes bringing a borrower and lender together to obtain mortgage loan or rendering a settlement service as described in 12 U.S.C. 2602(3) and 24 C.F.R. Part 3500. 2(b). (2) “Act as a mortgage lender” means to engage in the business of making or servicing mortgage loan for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, including soliciting, processing, placing, or negotiating a mortgage loan. (3) “Administrator” means the Administrator of the Department of Consumer Affairs (department) or the administrator’s designees. (4) “Advertising” means a commercial message in a medium that promotes, either directly or indirectly, a mortgage loan transaction. (5) “Affiliate” means a company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841 et seq.). For purposes of this item, the term “control” means ownership of all of the voting stock or comparable voting interest of the controlled person. (6) “Borrower” means a natural person in whose dwelling a security interest is or is intended to be retained or acquired if that person’s ownership interest in the dwelling is or is to be subject to the security interest. (7) “Branch manager” means the natural person who is in charge of and who is responsible for the business operations of a branch office of a licensee. (8) “Branch office” means an office of the licensee that is separate and distinct from the licensee’s principal office. (9) “Clerical or support duties” mean administrative functions after the receipt of an application by a licensed mortgage originator or broker, such as gathering information, requesting information, word processing, sending correspondence, or assembling files, and may include: (a) The receipt, collection, and distribution common for the processing or underwriting of a residential mortgage loan; or (b) Any communication with a borrower to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include taking a residential

mortgage loan application, offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms. (10) “Control”, except as provided in item (5), means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. A person is presumed to have “control” of a company if that person: (i) is a director, general partner or executive officer, (ii) directly or indirectly has the right to vote ten percent or more of a class of a voting security or has the power to sell or direct the sale of ten percent or more of a class of voting securities, (iii) in the case of an LLC, is the managing member, or (iv) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten percent or more of the capital. (11) “Depository institution” has the same meaning as in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. Section 1811 et. seq.), and includes a credit union. (12) “Dwelling” means the same as the term in Section 226.2(a)19 of Title 12 of the Code of Federal Regulations and the Federal Reserve Board’s Official Staff Commentary to that section. (13) “Employee” means a natural person who has an employment relationship, acknowledged by both the natural person and the mortgage broker, and is treated like an employee for purposes of compliance with the federal income tax laws. (14) “Escrow account” means an account that a mortgage lender establishes or controls on behalf of a borrower to pay taxes, insurance premiums including flood insurance, or other charges with respect to a mortgage loan, including charges that the borrower and mortgage lender have voluntarily agreed that the mortgage lender collects and pays. The definition encompasses an account established for this purpose. For purposes of this item, the term “escrow account” excludes an account that is under the borrower’s total control. (15) “Escrow funds” means money entrusted to a mortgage lender by a borrower for the purpose of payment of taxes and insurance or other payments to be made in connection with the servicing of a mortgage loan. (16) “Exempt person” means: (a) an employee of a licensee whose responsibilities are limited to clerical or support duties for the employer and who does not solicit borrowers, accept applications, or negotiate the terms of loans on behalf of the employer; (b) a depository institution or a subsidiary that is wholly owned and controlled by the depository institution and regulated by a federal banking agency or an institution regulated by the Farm Credit Administration. This chapter does not apply to the exempt persons described in this subitem; (c) an officer, registered loan originator, or employee of an exempt person described in subitem (b) of this section when acting in the scope of employment for the exempt person; (d) a person who offers or negotiates terms of a mortgage loan with or on behalf of an immediate family member of the individual; (e) an individual who offers or negotiates terms of a mortgage loan secured by a dwelling that served as the person’s residence; (f) a natural person who sells residential real estate and who lends or services, in one calendar year, no more than five purchase money notes secured by mortgages, deeds of trust, or other security instruments on the real estate sold as security for the purchase money obligation, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that this exemption is not in compliance with the SAFE Act pursuant to Section 1508 of Title V of The Housing and Economic Recovery Act of 2008, Public Law 110-289; (g) an employee whose employment as a processor or underwriter is undertaken pursuant to the direction and supervision of a licensee or exempt person except when the processor or underwriter is working as an independent contractor; (h) an attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a mortgage lender, a mortgage broker, or other mortgage loan originator or by an agent of the mortgage lender, mortgage broker, or other mortgage loan originator;

(i) an attorney who works for a mortgage lender, pursuant to a contract, for loss mitigation efforts or third party independent contractor who is HUD-certified, Neighborworks-certified, or similarly certified, who works for a mortgage lender, pursuant to a contract, for loss mitigation efforts; or (j) a manufactured home retailer and its employees if performing only clerical or support duties in connection with the sale or lease of a manufactured home and the manufactured home retailer and its employees receive no compensation or other gain from a mortgage lender or a mortgage broker for the performance of the clerical or support duties. (17) “Federal banking agencies” means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation. (18) “Financial services or financial services related business” means pertaining to securities, commodities, banking, insurance, consumer lending, or real estate including, but not limited to, acting as or being associated with a bank or savings association, credit union, mortgage lender, mortgage servicer, mortgage broker, real estate broker, real estate salesperson or agent, closing agent, title company, or escrow agent. (19) “Immediate family member” means a spouse, child, sibling, parent, grandparent, or grandchild including stepparents, stepchildren, stepsiblings, and adoptive relationships. (20) “Individual servicing a mortgage loan” means an employee of a mortgage lender licensed in this State, that: (a) collects or receives payments including payments of principal, interest, escrow amounts, and other amounts due on existing obligations due and owing to the licensed mortgage lender for a mortgage loan when: (i) the borrower is in default; or (ii) the borrower is in reasonably foreseeable likelihood of default; (b) works with the borrower and the licensed mortgage lender, collects data, and makes decisions necessary to modify, either temporarily or permanently, certain terms of those obligations; or (c) otherwise finalizes collection through the foreclosure process. (21) “Licensee” means a person who is licensed pursuant to this chapter. (22) “Loan commitment” or “commitment” means a statement, written or electronic, by the mortgage lender setting forth the terms and conditions upon which the mortgage lender is willing to make a particular mortgage loan to a particular borrower. (23) “Loan originator” means a natural person who, in exchange for compensation or gain or in the expectation of compensation or gain as an employee of a licensed mortgage broker, solicits, negotiates, accepts, or offers to accept applications for mortgage loans, including electronic applications, or includes direct contact with, or informing mortgage loan applicants of, the rates, terms, disclosures, and other aspects of the mortgage loan. The definition of “loan originator” does not include an exempt person described in item (16) of this section or a person solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11, United States Code. The definition of loan originator does not apply to an individual servicing a mortgage loan as that term is defined in this chapter until July 31, 2011, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines before that time that those individuals servicing mortgage loans are “loan originators” as that term is defined in the SAFE Act pursuant to Section 1508 of Title V of The Housing and Economic Recovery Act of 2008, Public Law 110-289. Solely acquiring and reviewing a credit report does not constitute acting as a loan originator. (24) “Make a mortgage loan” means to close a mortgage loan, advance funds, offer to advance funds, or make a commitment to advance funds to a borrower under a mortgage loan. (25) “Managing principal” means a natural person who meets the requirements of Section 40-58-50(B) and who agrees to be primarily responsible for the operations of a licensed mortgage broker. (26) “Mortgage broker” means a person who acts as a mortgage broker, as that term is defined in item (1) of this section.

(27) “Mortgage lender” means a person who acts as a mortgage lender as that term is defined in item (2) of this section or engages in the business of servicing mortgage loans for others or collecting or otherwise receiving mortgage loan payments directly from borrowers for distribution to another person. This definition does not include engaging in a tablefunded transaction. (28) “Mortgage loan” means a loan made to a natural person primarily for personal, family, or household use, primarily secured by a mortgage, deed of trust, or other security interest on residential real property or security interest arising under an installment sales contract or equivalent security interest against the borrower’s dwelling and: (i) located in South Carolina, (ii) negotiated, offered, or otherwise transacted within this State, in whole or in part, or (iii) made or extended within this State. (29) “Nationwide Mortgage Licensing System and Registry” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators of licensees licensed pursuant to this chapter. (30) “Nontraditional mortgage product” means a mortgage product other than a thirty-year fixed rate mortgage loan. (31) “Person” means a natural person, partnership, limited liability company, limited partnership, corporation, association, or other group engaged in joint business activities, however organized. (32) “Processor or underwriter” means an employee of a mortgage broker, mortgage lender, or exempt person who performs clerical or support duties at the direction of and subject to the supervision and instruction of a licensee or exempt person and may include direct contact with applicants but does not include soliciting, negotiating, accepting, or offering to accept applications that include personal identifying information as defined in Section 16-13-510(D) for mortgage loans including electronic applications or informing applicants of the rates, terms, disclosures, and other aspects of the mortgage loan. (a) For purposes of this item only, clerical or support duties may include after the receipt of an application: (i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a mortgage loan, and (ii) communication with a consumer to obtain the information necessary for the processing or underwriting of a mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling consumers about mortgage loans. (b) A person engaging solely in loan processor or underwriter activities may not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items that the person may or will perform any of the activities of a loan originator. (c) A processor or underwriter who is an independent contractor may not engage in the activities of a processor or underwriter unless the independent contractor processor or underwriter obtains and maintains a license as provided by rule or regulation pursuant to Section 40-58-100. (33) “Registered loan originator” means a natural person who meets the definition of loan originator and is an employee of a depository institution or a subsidiary that is wholly owned and controlled by the depository institution and regulated by a federal banking agency or an institution regulated by the Farm Credit Administration and is registered with and maintains a unique identifier through the Nationwide Mortgage Licensing System and Registry. (34) “Residential real property” means real property located in the State of South Carolina upon which there is located or is to be located one or more single-family dwellings or dwelling units that are to be occupied as the owner’s dwelling, and includes real estate and residential manufactured home (land/home) transactions. (35) “RESPA” means the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. Section 2601 et seq. and regulations adopted pursuant to it by the Department of Housing and Urban Development. (36) “Soliciting, processing, placing, or negotiating a mortgage loan” means, for compensation or gain or in the expectation of compensation or gain, either directly or indirectly, accepting or offering to accept an application for a mortgage loan, assisting or offering to assist in the processing of an application for a

mortgage loan, soliciting or offering to solicit a mortgage loan, or negotiating or offering to negotiate the terms or conditions of a mortgage loan. (37) “Tablefunding” means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. (38) “TILA” means the Truth in Lending Act, 15 U.S.C. Section 1601 et seq. and regulations adopted pursuant to it by the Board of Governors of the Federal Reserve System. (39) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Mortgage Licensing System and Registry. SECTION 40-58-30. Mortgage brokers and loan originators to be licensed; exceptions. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) A person may not act as a mortgage broker in this State without first being licensed with the administrator. A person, required to be licensed pursuant to this chapter, may not do business without a license under any name or title, or circulate or use advertising, including electronic means, or make a representation or give information to any person, which indicates or reasonably implies activity within the scope of this chapter unless that person has a license. (B) It is unlawful for a person to employ, to compensate, or to appoint as its agent a loan originator unless the loan originator is licensed pursuant to this chapter. The license of a loan originator is not effective during any period when that person is not employed by a mortgage broker licensed pursuant to this chapter. When a loan originator ceases to be employed by a licensed mortgage broker, the loan originator and the mortgage broker by whom that person was employed shall notify promptly the administrator in writing. The mortgage broker’s notice must include a statement of the specific reason or reasons for the termination of the loan originator’s employment. The reason for termination is confidential information and must not be released to the public. A loan originator must not be employed simultaneously by more than one mortgage broker. If a licensed loan originator changes employment, a new license must be issued and a fee of twenty-five dollars must be paid for issuance of the new license. (C) Notwithstanding subsection (A) of this section, the provisions of this chapter do not apply to an exempt person. (D) Independent contractors, including processors and underwriters, must be separately licensed. SECTION 40-58-40. Surety bonds; determination of amount; uses. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] A mortgage broker shall post and maintain a surety bond in an amount determined by the administrator that is based on the total dollar amount of mortgage loans originated in a calendar year pursuant to the following: (1) dollar volume of mortgage loans from $0 to $49,999,999 surety bond of $25,000, (2) dollar volume of mortgage loans from $50,000,000 to $99,999,999 surety bond of $40,000, (3) dollar volume of mortgage loans greater than $100,000,000 surety bond of $55,000. In no case will the surety bond be less than the amount of twenty-five thousand dollars. The surety bond must be executed by a surety company authorized by the laws of this State to transact business within this State. The surety bond must be in a form satisfactory to the administrator, must be executed to the administrator, and must be for the use of the State for the recovery of expenses, fines, and/or fees levied pursuant to this chapter and for consumers who have losses or damages as a result of noncompliance with this chapter by the mortgage broker. The full amount of the surety bond must be in effect at all times. The license of a licensee expires upon the termination of the bond by the surety company, unless a new bond has been filed with the administrator before the termination of the previous bond. In the event that the license expires based on bond termination, all licensed activity must cease and the person must apply for a license pursuant to Section 40-58-50.

SECTION 40-58-50. Application for licensure; applicant work experience and education requirements; exceptions. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) An application to become licensed as a mortgage broker or loan originator must be in writing, under oath, and in a form prescribed by the administrator. The application must contain any information the administrator deems necessary including the name and complete business and residential address or addresses, and social security number or if applicable Employer Identification Number (EIN) of the applicant. If the applicant for a mortgage broker license is a partnership, association, limited liability company, corporation, or other form of business organization, the names and complete business and residential addresses of each member, director, and principal officer and a list of all employees who engage in direct brokerage activity including, but not limited to, loan originators. (B)(1) The application for a mortgage broker license must include an affirmation of financial solvency noting bonding requirements required by the administrator and the descriptions of the business activities, credit history, financial responsibility, educational background, and general character and fitness of the applicant and any partner, officer, or director, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling the applicant as required by this chapter, including consent to a national and state criminal history record checks and a set of the applicant’s fingerprints in a form acceptable to the administrator. The application must be accompanied by a nonrefundable fee, payable to the department, of five hundred fifty dollars, in addition to the actual cost of obtaining credit reports and national and state criminal history record checks by the Federal Bureau of Investigation (FBI) and the South Carolina Law Enforcement Division (SLED). Using the information supplied by the administrator to SLED, the applicant must undergo a state criminal record checks, supported by fingerprints, by SLED, and a national criminal record checks, supported by fingerprints, by the FBI. The results of these criminal record checks must be reported to the administrator. The South Carolina Law Enforcement Division is authorized to retain the fingerprints for certification purposes and for notification of the administrator regarding criminal charges. The administrator shall keep all information pursuant to this section privileged, in accordance with applicable state and federal guidelines. (2) An applicant for a mortgage broker’s license must have at least three years’ experience in financial services or financial services related business or other experience or competency requirements the administrator may impose before an initial license is issued. (a) Instead of a showing of three years’ experience, an applicant may show proof of three years’ employment with a federally insured depository institution, or a VA-, FHA-, or HUD-approved mortgagee. (b) Instead of one of the required year’s experience, an applicant may show proof of the equivalent of six or more semester hours of satisfactorily completed course work in real estate finance, real estate law, or similar course work counting toward the successful completion of a degree that is baccalaureate level or more advanced with a major or minor in finance, accounting, business administration, real estate finance, economics, or similar baccalaureate or more advanced degree, approved by the administrator or the administrator’s designee, from an accredited college or university. (3) If the applicant is a partnership, limited liability company (LLC), or corporation, at least one partner, member-manager, or principal officer shall have the experience required for the applicant. Each applicant shall identify the person meeting the experience requirement to serve as the applicant’s managing principal. The managing principal shall operate the business under his full charge, control, and supervision. The managing principal also may serve as the branch manager of a licensee branch office. Each main and branch office of a mortgage broker licensed pursuant to this chapter must have a branch manager who meets the experience requirements of subsection (B)(2). The mortgage broker licensee must designate a managing principal in writing and notify the administrator of any changes in managing principal. The managing principal and each branch manager must meet the requirements in subsection (C) of this section.

(C) The application for a loan originator license must designate the employing mortgage broker and must include descriptions of the business activities, credit history, financial responsibility, educational background, and general character and fitness of the applicant as required by this chapter, including consent to a national and state criminal history record checks and a set of the applicant’s fingerprints in a form acceptable to the administrator. The application must be accompanied by a nonrefundable fee, payable to the department, of fifty dollars, in addition to the actual cost of obtaining credit reports and national and state criminal history record checks by the FBI and SLED. Using the information supplied by the administrator to SLED, the applicant must undergo a state criminal record checks, supported by fingerprints, by SLED, and a national criminal record checks, supported by fingerprints, by the FBI. The results of these criminal record checks must be reported to the administrator. The South Carolina Law Enforcement Division is authorized to retain the fingerprints for certification purposes and for notification of the administrator regarding criminal charges. The administrator shall keep all information pursuant to this section privileged, in accordance with applicable state and federal guidelines. Additionally, the applicant must: (1) complete satisfactorily a prelicensing educational course of at least twenty hours and a written examination approved pursuant to 12 U.S.C. 5101 et seq.; (2) have never had a loan originator license revoked in any governmental jurisdiction; (3) have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court: (i) during the ten-year period preceding the date of application for licensing, or (ii) at any time if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering; and (4) be at least eighteen years of age and otherwise comply with this chapter. (D) Any sole proprietor, general partner, member or manager of a limited liability company, or officer of a corporation who meets individually the requirements of subsection (C) of this section, upon payment of the applicable fee, meets the qualifications for licensure as a loan originator subject to the provisions of Section 40-58-60 of this chapter. SECTION 40-58-55. (Reserved.) [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] SECTION 40-58-60. Issuance of license; contents and posting; issuance as indication of approval of contracts by State or state agency; correction of errors; advertising. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) Upon the filing of an application for a license, if the administrator finds that the financial responsibility, experience, character, and general fitness of the applicant, and of the members if the applicant is a partnership, association, or limited liability company, and of the officers and directors if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business may be operated honestly, fairly, and efficiently according to the purposes of this chapter and in accordance with all applicable state and federal laws, it shall license the applicant and issue a license. If the administrator does not so find, it shall refuse to license the applicant and shall notify him of the denial. (B) Upon the receipt of the license, the licensee is authorized to engage in the business for which the license was issued. (C) Each license issued to a licensee must state the address at which the business is to be conducted and must state fully the name of the licensee and the date of the license. A license must be posted prominently in each place of business of the licensee. The license is not transferable or assignable. (D) Issuance of a license does not indicate approval or acceptance of any contract, agreement, or other document submitted in support of the application. A licensee may not represent that its services or contracts are approved by the State or a state agency.

(E) If the information contained in any document filed with the administrator is or becomes inaccurate or incomplete in a material respect, the licensee promptly shall file a correcting amendment to the information contained in the document. (F) All advertisements of mortgage loans must comply with the Truth in Lending Act, 15 U.S.C. 1601 et seq. and the South Carolina Consumer Protection Code, Title 37. SECTION 40-58-65. Maintaining, availability, and examination of records; mortgage loan logs; official place of business; notice of closing of branch office or ceasing doing business in State. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) A mortgage broker licensed pursuant to this chapter must maintain at his usual place of business books, records, and documents pertaining to the business conducted, to enable the administrator to determine compliance with this chapter, and shall include a mortgage loan log that contains these specific data elements: (i) credit score of the borrower, (ii) adjustable or fixed type of loan, (iii) term of the loan, (iv) annual percentage rate of the loan, and (v) appraised value of the collateral. Each licensee shall submit its mortgage loan log data and the data identified in 12 C.F.R. Part 203 et seq., in a form determined by the administrator by March thirty-first of each year. The licensee shall pay a fine of one hundred dollars a day for late or incomplete data submissions. Data collected by the administrator pursuant to this section is confidential and may be released only in composite form. The administrator shall prepare and make available to the public a report based on the above data. The report must be available by June thirtieth of each year. The mortgage loan log must be completed with information known at the time of review by the administrator and must include loans in process, closed loans, turndowns, denials, and withdrawals. A mortgage broker with two or more licensed offices may consolidate the records at any one of the licensed offices so long as the administrator is notified of the location of the records. The records must be available for examination to the administrator or his designee upon request. Books and records must be maintained for at least three years. A licensee’s records may be maintained electronically, if approved by the administrator, so long as they are readily accessible for examination by the administrator. (B) A mortgage broker doing business in this State shall maintain a sufficient physical presence in this State and his records must be maintained at the licensed location in this State. At a minimum, the broker shall maintain an official place of business open during regular business hours, staffed by one or more licensees who have the authority to contract on behalf of the broker and to accept service on behalf of the broker. If the official place of business is not open for business within the hours of 8:30 a.m. until 5:00 p.m., Monday through Friday, the broker shall notify the administrator in writing. (C) A licensed mortgage broker with an official place of business within South Carolina also may maintain one or more branch offices if the: (1) mortgage broker notifies the administrator in writing seven days before the opening of a branch office of the location of the branch office, the branch manager for each branch location, and that all records from the branch office are stored in a main or branch location in this State which is staffed by one or more licensees during regular business hours; (2) records of any pending mortgage loan application or records in which a loan closing is still in process are made available at the mortgage broker’s main or branch location as provided in item (1) to the administrator within seven business days of a written request delivered by facsimile transmission, mail, or hand delivery by the administrator; (3) broker notifies the administrator in writing within seven business days of closing a branch office; (4) mortgage broker licensee is responsible and accountable for the activities of all licensed locations, branch managers, and loan originators. Compliance reviews must include examination of all facts and circumstances of branch operations to ensure this responsibility and accountability. (D) The administrator may examine the books and records of a mortgage broker and other documents and records to determine whether there has been substantial compliance with this chapter. Unless there is reason to believe a violation of this chapter has occurred, examinations must be limited to one each year.

Records and information obtained by the administrator during an examination are confidential and the administrator must certify that it is in compliance with the Right to Financial Privacy Act (RFPA). (E) The administrator may cooperate and share information with an agency of this State, other states, or the federal government. The administrator may accept or participate in examinations conducted by one of these agencies. (F) If the mortgage broker fails to notify the administrator of the existence or closing of a branch office, the actual operating hours of the main or branch offices where records are kept, or the whereabouts of its records, the broker is subject to penalties as set forth in Section 40-58-80. (G) A mortgage broker licensee who ceases doing business in this State must notify the administrator at least seven days in advance. The notification must include a withdrawal plan that includes a timetable for disposition of the business, the location of the books, records, and accounts until the end of the retention period, and certification of the proper disposal of those records. (H) A mortgage broker licensee may develop, maintain, and test disaster recovery plans for all records that are maintained. SECTION 40-58-67. Continuing professional education requirements. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A)(1) Licensees must complete at least eight hours of continuing professional education annually. Continuing education credit may be granted only for the year in which the class is taken and may not be granted for the same course in successive years. The continuing professional education completed must be reported to the administrator annually. Course providers must maintain records of attendees for two years after the course. (2) Documentation of courses completed must be maintained by the mortgage broker for all licensees and shall consist of a certificate of completion issued by the provider of the course showing the recommended number of hours of continuing professional education. This documentation is subject to inspection by the administrator for up to two years after the date of the course. (B) If a licensee fails to complete his continuing professional education prior to renewal, his license shall expire and the licensee shall pay a penalty of one hundred dollars in order to renew the license. (C) All prelicensing education, continuing education, and written examinations must be approved through the Nationwide Mortgage Licensing System and Registry pursuant to 12 U.S.C. 5101 et seq. before credit may be awarded. Applicants and licensees that successfully complete education or testing approved through the Nationwide Mortgage Licensing System and Registry shall fulfill the requirements of this State. SECTION 40-58-70. Prohibited activities. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] In addition to the activities prohibited by other provisions of state or federal law, it is unlawful for a person in the course of a mortgage loan transaction to: (1) misrepresent the material facts or make false promises likely to influence, persuade, or induce an applicant for a mortgage loan or a mortgagor to take a mortgage loan. This includes presenting the broker in the guise of a lender or pursuing a course of misrepresentation through agents or otherwise; (2) intentionally misrepresent or conceal a material factor, term, or condition of a transaction to which he is a party, pertinent to an applicant for a mortgage loan or a mortgagor; (3) engage in a transaction, practice, or course of business which is unconscionable, as provided in Section 37-5-108, or which operates a fraud upon a person in connection with the making of or purchase or sale of a mortgage loan; (4) fail to use due diligence and make reasonable efforts in procuring a mortgage loan on behalf of a borrower;

(5) collect any allowable third party fees excluding appraisals or credit reports before a conditional mortgage loan commitment is obtained by the mortgage broker; (6) influence or attempt to influence through coercion, extortion, or bribery the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan. This item does not prohibit a mortgage broker or mortgage lender from asking the appraiser to do one or more of the following: (a) consider additional appropriate property information; (b) provide further detail, substantiation, or explanation for the appraiser’s value conclusion; or (c) correct errors in the appraisal report; (7) fail to pay reasonable fees within a reasonable time to a licensed third party for services that are: (a) requested from the third party in writing by the mortgage broker or an employee of the mortgage broker; and (b) performed by the third party in connection with the origination or closing of a mortgage loan for a customer or mortgage lender; (8) advertise mortgage loans, including rates, margins, discounts, points, fees, commissions, or other material information, including material limitations on the loans, unless the person is able to make the mortgage loans as advertised available to qualified applicants; (9) fail to provide disclosures as required by state or federal law or collect any fee prior to providing required disclosures; (10) fail to comply with this chapter or any other state or federal law including rules and regulations applicable to a business regulated by this chapter; (11) falsely advertise or misuse names in violation of 18 U.S.C. Section 709 or state law; or (12) use any trade name or insignia of membership in any organization of which the licensee is not a member or advertise falsely through any material including, but not limited to, any business card, stationery, or signage concerning a designation or certification of special education, credentials, trade organization membership, or business. SECTION 40-58-75. Mortgage broker fee agreements disclosing charges. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) Within three business days of the receipt of an application for a mortgage loan, the broker must provide a mortgage broker fee agreement that discloses the total estimated charges to the borrower for the mortgage loan and an itemization of the charges provided if required under, federal or state law. The disclosure is considered delivered when deposited with United States Postal Service for first class delivery. (B) A person may not earn, charge, or collect a mortgage broker or processing fee unless the person meets the requirements of this chapter, is authorized to conduct mortgage brokerage services by this chapter, or is exempt from the requirements of this chapter. (C) All fees earned for services rendered as a mortgage broker must be disclosed to the applicant by the mortgage broker as required by federal or state law. (D) A mortgage broker fee agreement must be in writing and include the current name, address, and telephone number of the mortgage broker’s branch office, the account number, if any, the date of the agreement, the name of the borrower or proposed borrower, signature of the borrower and mortgage broker, the amount of any fees, and the nature of services provided to the borrower. A copy of the completed agreement must be provided to the borrower by the mortgage broker. The mortgage broker agreement may provide for a signed acknowledgement by the borrower of receipt of a copy of the agreement. If a mortgage broker co-brokers mortgage loans, the mortgage broker agreement must contain a statement advising the applicant that the loan may be co-brokered. Within three days of making a final decision to co-broker a loan, the broker must provide the applicant with written notice of co-brokering, including the name and street and mailing address of the co-broker as well as which broker is to be

contacted regarding progress of the mortgage broker’s services provided to the applicant. Each broker in a co-brokering arrangement must be licensed with the administrator. (E) Additional disclosure requirements exist and must be complied with pursuant to Chapter 10 and Chapter 23, Title 37. SECTION 40-58-78. Mortgage broker fee agreement requirements; penalty for violations; unintentional violations. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) A mortgage broker fee agreement with a mortgage broker or loan originator must contain an explicit statement that: (1) the mortgage broker or loan originator is acting as the agent of the borrower in providing brokerage services to the borrower; (2) when acting as agent for the borrower, it owes to that borrower a duty of utmost care, honesty, and loyalty in the transaction, including the duty of full disclosure of all material facts. If the mortgage broker or loan originator is authorized to act as an agent for any other person, the mortgage broker fee agreement must contain a statement of that fact and identification of that person; (3) a detailed description of the services the mortgage broker or loan originator agrees to perform for the borrower, and a good faith estimate of any fees the mortgage broker or loan originator will receive for those services, whether paid by the borrower, the institutional lender, or both; and (4) a clear and conspicuous statement of the conditions under which the borrower is obligated to pay for the services rendered under the agreement. (B) If a mortgage broker or loan originator violates the provisions of subsection (A), the borrower may recover from the mortgage broker or loan originator charged with the violation: (1) a penalty in an amount determined by the court of not less than one thousand five hundred dollars and not more than seven thousand five hundred dollars for each loan transaction; (2) fees paid by the borrower to the mortgage broker or loan originator for services rendered by the agreement; and (3) actual costs, including attorney’s fees, for enforcing the borrower’s rights under the agreement. (C) A mortgage broker or loan originator charged with the violation must not be held liable in an action brought under this section for a violation if the mortgage broker or loan originator charged with the violation shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. SECTION 40-58-80. Denial, suspension, revocation, or non-renewal of license; grounds; administrative penalty; cease and desist orders; investigation or examination of loans; notification of national registry. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) The administrator, by order, may deny, suspend, revoke, or refuse to issue or renew a license of a licensee or applicant pursuant to this chapter or may restrict or limit the activities relating to mortgage loans of a licensee or a person who owns an interest in or participates in the business of a licensee, if the administrator finds that both: (1) the order is in the public interest; and (2) any of the following circumstances apply to the applicant, licensee, or any partner, member, manager, officer, director, loan originator, managing principal, or other person occupying a similar status or performing similar functions or a person directly or indirectly controlling the applicant or licensee. The person: (a) has filed an application for license that, as of its effective date or as of a date after filing, contained a statement that, in light of the circumstances under which it was made, is false or misleading with respect to a material fact; (b) has violated or failed to comply with any provision of this chapter or order of the administrator;

(c) has been convicted of, or pled guilty or nolo contendere to, a felony, or, within the past ten years, a misdemeanor involving financial services or financial services related business, or an offense involving breach of trust or fraudulent or dishonest dealing, or money laundering in a domestic, foreign, or military court; (d) is enjoined permanently or temporarily by a court of competent jurisdiction from engaging in or continuing any conduct or practice involving financial services or financial services related business; (e) is the subject of an order of the administrator denying, suspending, or revoking that person’s license; (f) is the subject of an order entered by the authority of a governmental entity with jurisdiction over the financial services or financial services related industry denying or revoking that person’s license; (g) does not meet the qualifications or the financial responsibility, character, or general fitness requirements, or bond or capital requirements, pursuant to this chapter; (h) has been the executive officer or controlling shareholder or owned a controlling interest in a financial services or financial services related business that has been subject to an order or injunction described in subitem (d), (e), or (f) of this item; (i) has failed to pay the proper filing or renewal fee pursuant to this chapter or any fine or fee imposed by any governmental entity. However, the administrator may enter only a denial order pursuant to this subitem, and the administrator shall vacate the order when the deficiency is corrected; or (j) has falsely certified attendance or completion of hours at an approved education course. (B) The administrator, by order, summarily may postpone or suspend the license of a licensee pending final determination of a proceeding pursuant to this section. Upon entering the order, the administrator shall notify promptly the applicant or licensee that the order has been entered, the reasons for the order, and the procedure for requesting a hearing before the Administrative Law Court. If a licensee does not request a hearing and the administrator does not request a hearing, the order remains in effect until it is modified or vacated by the administrator. (C) The administrator, by order, may impose an administrative penalty upon a licensee or any partner, member, officer, director, or other person occupying a similar status or performing similar functions on behalf of a licensee for a violation of this chapter. The administrative penalty may not exceed ten thousand dollars for each violation. The administrator may impose an administrative penalty that may not exceed ten thousand dollars for each violation of this chapter by a person other than a licensee or exempt person. (D) In addition to other powers pursuant to this chapter, upon finding that an action of a person is in violation of this chapter, the administrator may order the person to cease and desist from the prohibited action. If the person subject to the order fails to request a contested case hearing in accordance with Section 40-58-90, or if the person requests the hearing and it is denied or dismissed, and the person continues to engage in the prohibited action in violation of the administrator’s order, the person is subject to an administrative penalty that may not exceed twenty-five thousand dollars for each violation of the administrator’s order. The penalty provision of this section is in addition to and not instead of another provision of law for failure to comply with an order of the administrator. (E) Unless otherwise provided, all actions and hearings pursuant to this chapter are governed by Chapter 23, Title 1. (F) When a licensee is accused of any act, omission, or misconduct that subjects the licensee to disciplinary action, the licensee, with the consent and approval of the administrator, may surrender the license and the rights and privileges pertaining to it and is not eligible to receive, or to submit an application for, licensure for a period of time established by the administrator. (G) If the administrator has reasonable grounds to believe that a licensee or other person has violated this chapter or that facts exist that would be the basis for an order against a licensee or other person, the administrator, either personally or by a person duly designated by the administrator, at any time may investigate or examine the loans and business of the licensee and examine the books, accounts, records, and files of the licensee or other person relating to the complaint or matter under investigation. The reasonable cost of this investigation or examination must be charged against the licensee. The administrator may require the licensee or other person to submit a consent to a national and state

fingerprint-based criminal history record check and a set of that person’s fingerprints in a form acceptable to the administrator in connection with an examination or investigation. Refusal to submit the requested criminal history record check or a set of fingerprints is grounds for disciplinary action. (H) The administrator may subpoena documents and witnesses, and compel their production and attendance, to examine under oath all persons whose testimony the administrator considers relative to the person’s business, and require the production of books, papers, or other materials. (I) The administrator may conduct routine examinations of the books and records of a licensee to determine compliance with this chapter. (J) The administrator may cooperate and share information with an agency of this State, other states, or the federal government. The administrator may accept or participate in examinations conducted by one of these agencies. (K) In addition to the authority described in this section, the administrator may require a person to pay to a borrower or other natural person amounts received by the person or its employees in violation of this chapter. (L) If the administrator finds that the managing principal, branch manager, or loan originator of a licensee had knowledge of, or reasonably should have had knowledge of, or participated in any activity that results in the entry of an order suspending or withdrawing the license of a licensee, the administrator may prohibit the branch manager, managing principal, or loan originator from serving as a branch manager, managing principal, or loan originator for the period of time the administrator considers necessary. (M) A person who wilfully violates a provision of this chapter is guilty of a misdemeanor and, upon conviction, must be fined not more than five hundred dollars or imprisoned not more than six months, or both, for each offense. Each violation is considered a separate offense. (N) Orders issued by the administrator or by the Administrative Law Court pursuant to this chapter must be reported by the administrator to the Nationwide Mortgage Licensing System and Registry. (O) Nothing in this chapter limits a statutory or common law right of a person to bring an action in a court for an act or the right of the State to punish a person for a violation of a law. SECTION 40-58-90. Request for contested case hearing before Administrative Law Court. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A) A person aggrieved by an administrative order issued by the administrator may request a contested case hearing before the Administrative Law Court in accordance with the court’s rules of procedure. If the person fails to request a contested case hearing within the time provided in the court’s rules of procedure, the administrative order becomes final and the administrator may bring an action to enforce its order pursuant to Chapter 23, Title 1. This section does not limit utilization of or the scope of judicial review available under other means of review, redress, relief, or trial de novo provided by law. A preliminary, procedural, or intermediate action or ruling of the Administrative Law Court is reviewable immediately if review of the final decision of the Administrative Law Court would not provide an adequate remedy. (B) Contested case proceedings are instituted by filing a request for a contested case hearing with the Administrative Law Court according to the rules of procedure of the Administrative Law Court. Copies of the request for a contested case hearing must be served upon the administrator and all parties of record. The final decision of the administrative law judge may be appealed as provided in Chapter 23, Title 1. SECTION 40-58-100. Authority to promulgate regulations. [Section effective January 1, 2010. See, also, section effective until January 1, 2010.] The administrator may promulgate regulations necessary to effectuate the purposes of this chapter. SECTION 40-58-110. License application and renewal fees; term of license; late renewals.

[Section effective January 1, 2010. See, also, section effective until January 1, 2010.] (A)(1) In addition to the initial nonrefundable license application fee of five hundred fifty dollars required by Section 40-58-50, first time mortgage broker licensees also shall pay a one-time, nonrefundable processing fee of two hundred dollars. Thereafter, a mortgage broker licensee shall pay an annual nonrefundable renewal fee of five hundred fifty dollars. A mortgage broker licensee shall pay an initial nonrefundable fee of one hundred fifty dollars and, thereafter, a nonrefundable renewal fee of one hundred fifty dollars for each branch location. (2) The initial nonrefundable license fee is fifty dollars for a loan originator license, and fifty dollars, nonrefundable, for a renewal license. In addition, all licensees must pay the cost of obtaining credit reports and national and state criminal history record checks as the administrator may require. The broker shall notify the administrator in writing ten days before opening a new location or changing the address of a licensed location. A fee of twenty-five dollars is required when the licensee notifies the administrator of a change in address for a licensed location. (B)(1) The term of each license is one year. Licenses issued pursuant to this chapter expire on December thirty-first annually or another date that the administrator may determine and must be renewed in accordance with the provisions of this section. (2) The renewal period for all licensees is from November first through December thirty-first annually or on any other dates that the administrator may determine. (3) Applications received after December thirty-first, or any other date the administrator may determine, are late and late fees apply. (C) If a license of a licensed mortgage broker is not renewed before the dates in subsection (B), five hundred dollars in addition to the renewal fee pursuant to subsection (A) must be assessed as a late fee to any renewal. If a license of a licensed loan originator is not renewed before the dates in subsection (B), one hundred dollars in addition to the renewal fee pursuant to subsection (A) of this section must be assessed as a late fee to any renewal. If a licensee fails to renew his license within thirty days after the date the license expires or otherwise maintain a valid license, the administrator shall require the licensee to comply with the requirements for the initial issuance of a license pursuant to this chapter, in addition to paying any fee that has accrued. All renewal applications must contain information required by the administrator. All funds collected by the department pursuant to this chapter must be used to implement the provisions of this chapter and are nonrefundable. SECTION 40-58-120. Maintenance of records; composite annual report; confidentiality. (A) A licensee shall maintain records in conformity with generally accepted accounting principles and practices in a manner that will enable the administrator to determine whether the licensee is complying with this chapter. The recordkeeping system of a licensee is sufficient if he makes the required information reasonably available. (B) On or before March thirty-first each year a licensee shall file with the administrator a composite annual report in the form prescribed by the administrator relating to all mortgage loans made or brokered by him. The licensee shall pay a fine of one hundred dollars each day for late or incomplete annual reports. (C) The report must include, but is not limited to, the volume and amounts of first and second lien mortgage loans originated by licensee and closed in the name of another party and the volume and amounts of first and second lien mortgage loans originated and closed in the name of the licensee. (D) The annual report also must include the total gross revenue earned in this State under this license. (E) Information contained in annual reports is confidential and may be published only in composite form. SECTION 40-58-130. Participation in Nationwide Mortgage Licensing System Registry. (A) The administrator may participate in the Nationwide Mortgage Licensing System and Registry and may take all actions necessary and appropriate to that end including, but not limited to, the following:

(1) facilitating and participating in the establishment and implementation of the Nationwide Mortgage Licensing System and Registry; (2) entering into agreements and contracts including cooperative, coordinating, and information sharing agreements; (3) contracting with third parties to process, maintain, and store information collected by the Nationwide Mortgage Licensing System and Registry; (4) authorizing the Nationwide Mortgage Licensing System and Registry to collect fingerprints on the administrator’s behalf in order to receive national and state criminal history background record checks from the FBI and SLED and furnishing the fingerprints to SLED to retain for certification purposes and for notification of the administrator regarding subsequent criminal charges which may be reported to SLED, or the FBI, or both in accordance with Section 40-58-50; (5) authorizing the Nationwide Mortgage Licensing System and Registry to collect credit reports on the administrator’s behalf for all licensees; (6) requiring persons that must be licensed by this chapter to utilize the Nationwide Mortgage Licensing System and Registry; (7) requiring all applicants and licensees to pay all applicable funds provided for in this chapter through the Nationwide Mortgage Licensing System and Registry; (8) providing information to and receiving information from the Nationwide Mortgage Licensing System and Registry; (9) authorizing a third party to collect funds associated with licensure on behalf of the administrator; and (10) authorizing the Nationwide Mortgage Licensing System and Registry to collect and disburse consumer complaints. (B) Persons required to be licensed pursuant to this chapter shall pay all applicable fees to utilize the Nationwide Mortgage Licensing System and Registry and consent to utilizing the Nationwide Mortgage Licensing System and Registry to obtain fingerprint-based criminal history background record checks and credit reports. (C) The administrator shall provide licensees with written notice sent to the address of record on file with the administrator through the United States Postal Service the date the Nationwide Mortgage Licensing System and Registry will be available for their use. Licensees have one hundred and twenty days from the date the system is available for use to enter all their licensing information into the Nationwide Mortgage Licensing System and Registry. All filings required by the administrator pursuant to this chapter after the date the system is available for use must be made through the Nationwide Mortgage Licensing System and Registry. (D) All licensees licensed through the Nationwide Mortgage Licensing System and Registry must use the unique identifier assigned in all advertising and on all mortgage loan documents. (E) Notwithstanding another provision of law, the Nationwide Mortgage Licensing System and Registry is not intended to and does not replace or affect the administrator’s authority to grant, suspend, revoke, or deny a license required pursuant to this chapter.

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