DEPARTMENT OF CONSUMER AND INDUSTRY SERVICES

                       FINANCIAL INSTITUTIONS BUREAU

                         REGULATORY LOAN LICENSEES


(By authority conferred on the commissioner of  the  financial   institutions 
bureau by section 21 of Act No. 21 of the Public Acts of  1939,  as  amended, 
being S493.21 of the Michigan Compiled Laws)


R  493.1   Definitions.
  Rule 1. (1) As used in these rules:
  (a) "Act" means Act No. 21 of the Public Acts of 1939,  as  amended,  being 
S493.1 et seq. of the Michigan Compiled Laws.
  (b) "Bureau" means the financial institutions bureau.
  (c) "Commissioner" means the commissioner of  the  financial   institutions 
bureau.
  (2) Terms defined in the act have the same meaning when   used   in   these 
rules.

 History: 1981 AACS.


R  493.5   Applications.
  Rule 5. (1) When a properly completed application   form,   together   with 
any required fees, bonds, and accompanying documents, is  received   by   the 
bureau, it shall be filed. The date of  the  filing   shall   determine   the 
priority rights of an applicant.
  (2) If the application is approved,  the  applicant  shall   be   given   a 
specified period of time within which the office must be  established  and in 
operation. The approval  and   application   shall   become   void   if   the 
applicant does not establish the office within the  specified  time,   unless 
the period of time is extended in writing by the commissioner.

  History: 1981 AACS; 1983 AACS.


R  493.10   Records; maintenance by means  of  data  processing  equipment
  permitted; availability.
  Rule 10. A licensee may maintain any or all of the records  required  by  R 
493.11 to R 493.13 by means of  electronic  data  processing  equipment.  For 
examination purposes, a licensee shall make available, at   a   location   in 
Michigan, all the information contained in these records   written   in   the 
English language on paper or, with the approval of   the   commissioner,   by 
means of an alternative medium.

  History: 1981 AACS; 1983 AACS.


R  493.11   Records; daily transactions;  borrowers;  alphabetical  index;
  judgments.
  Rule  11.  (1)  A  licensed  office  shall  maintain  a   record   of   all 
transactions involving receipt or disbursement of  money   by   that   office 
each day. The record shall  identify  each   transaction;   show   separately 
payments received on principal and interest charges;  show  account  numbers, 
names of borrowers, and all amounts disbursed; and  shall   be   posted   and 
balanced daily.
  (2) A licensee shall maintain a record for  each   borrower   which   shall 
contain all of the following information:
  (a) Borrower's name and address.
  (b) Loan number.
  (c) Loan amount.
  (d) Loan date.
  (e) Rate of charge.
  (f) Repayment terms.
  (g) Description of security.
  (h) Names of endorsers, comakers, or sureties.
  (i) Amount of filing or discharge fees collected from the borrower.
  (j) Marital status only if the loan is secured by household goods.
  (k) Any amount received or withheld from the borrower as  a   premium   for 
insurance in connection with the loan, and  the  period   covered   by   such 
insurance policy or policies.
  (l) The date and amounts of all principal   payments   received,   interest 
charges received, and cash disbursements pertaining to  the  loan,  including 
court costs.
  (m) The date to which interest charges are paid and  the   unpaid   balance 
due on the principal.
  (3) A licensee shall maintain  an  alphabetical   index   identifying   the 
name, loan number, and original loan amount  of   each   borrower,   comaker, 
surety, guarantor, or endorser. Information concerning  a  comaker,   surety, 
guarantor, or endorser shall be readily identifiable.
  (4) When a note is reduced to judgment, all of  the  following   provisions 
shall be complied with:
  (a) The loan record maintained pursuant to  subrule  (2)   of   this   rule 
shall be clearly designated a judgment account.
  (b) Payments received shall be identified and applied   on   the   judgment 
loan record.
  (c) The licensee shall retain a statement signed by a judge  or  clerk   of 
the court which shall disclose all of the following information:
  (i) Judgment date.
  (ii) Name of licensee.
  (iii) Judgment debtor's name.
  (iv) Date suit was filed.
  (v) Nature of the suit.
  (vi) Name and location of the court.
  (vii) Amount of the judgment, specifying   principal,   interest   charges, 
and court costs.
  (viii) A judgment of default, consent, or contested suit.
  (ix) Disposition of the case.
  (d) A licensee shall maintain a list of all loans   reduced   to   judgment 
during the previous 25 months.
  (e) A licensee which charges a borrower for court costs it  incurred  on  a 
judgment account shall itemize the costs on the loan record  and   retain   a 
receipt or other document substantiating the costs.
  (f) A licensee shall retain a copy of the officer's  return  of   execution 
issued when property is sold pursuant to a judgment.
  (5) When property is taken in accordance with the terms   of   a   security 
agreement or by judicial process or abandonment, the loan  record  shall   be 
designated clearly as a foreclosure account and shall state  when   and   how 
possession of the security was obtained and shall identify  the  proceeds  of 
the sale of the property. The licensee shall retain all of the  following:
  (a) A copy of any agreement entered into with the borrower with  respect to 
terms of surrender.
  (b) A copy of the notice of sale, together with evidence  of   mailing   or 
personal delivery.
  (c) An inventory of the property taken, unless it appears  in   detail   on 
the notice of sale.
  (d) A signed statement from the purchasers, or from   the   auctioneer   if 
the sale was public, describing the collateral purchased  and   showing   the 
amounts paid.
  (e) Evidence that the sale was held on the date set forth in the  notice of 
sale, including a record of any bids received.
  (f) A copy of a detailed statement  of  final  accounting   sent   to   the 
borrower setting forth the disposition of the proceeds of the  sale  and  the 
principal balance due on the account, if any.
  (g) Paid receipts evidencing costs incurred in the repossession and sale of 
the security which have been charged to the borrower.
  (h) A list of  all  loan  accounts  foreclosed  each   month   during   the 
previous 25 months.
  (6) When the property is abandoned and the address of   the   borrower   is 
uncertain or unknown, a notice of sale and statement  of   final   accounting 
shall be sent to the last known address by registered  or   certified   mail, 
return receipt requested, and the copies of the notice and statement shall be 
retained by the licensee.
  (7) Within 30 days after consolidation of 2 or   more   licensed   offices, 
the records maintained pursuant to R 493.11(2) by each   of   these   offices 
shall be consolidated and the records maintained by the  offices  pursuant to 
R 493.11(3) shall be consolidated.

  History: 1983 AACS.


R  493.12   Records; assets, liabilities, income, and expenses;  temporary
  entry items.
  Rule 12. (1) A licensee shall maintain records showing   the   assets   and 
liabilities of each licensed office and records of   the   aggregate   income 
and aggregate expenses of all its licensed Michigan offices.
  (2) A licensee shall maintain lists of temporary entry items.
  (3) The  records  required  by  this  rule  shall  be   posted   not   less 
frequently than monthly and shall be  available  for   examination   by   the 
bureau not later than 25 days after the end of a month  and   for   2   years 
thereafter.

  History: 1983 AACS.


R  493.13   Records; errors.
  Rule 13. A  licensee  shall  clearly  designate   errors   and   correcting 
entries in the records required by R 493.11(2).  Alternatively,  a   licensee 
may maintain a record of all  errors  made  in  the  records  required  by  R 
493.11(2). This record shall identify the loan  record  in  which  an   error 
occurred; the date, nature, and amount of the error; and the  date   of   the 
correcting entry.

  History: 1983 AACS.


R  493.14   Correspondence; retention by licensed office.
  Rule  14.  Each  licensed  office   shall   retain    all    its    written 
correspondence with the bureau.

  History: 1983 AACS.


R  493.15   Insurance certificate or policy; provision to borrower of copy
  of  document   evidencing   indebtedness   or   constituting   security;
  consolidation of loans; retention of documents  evidencing  indebtedness
  or security.
  Rule 15. (1) When a licensee obtains insurance on behalf of the borrower in 
connection with a loan, wherein the premium  is  paid  by  the  borrower,   a 
properly executed policy or certificate of insurance shall  be  furnished  to 
the borrower within 15 days of the  date  of  the  loan.   Such   policy   or 
certificate shall clearly show all of the following:
  (a) The name of the insurance company.
  (b) The nature of the insurance.
  (c) The extent of the coverage.
  (d) The amount of the premium.
  (e) The effective date and expiration date of the policy.
  (2) A licensee shall furnish to a borrower, upon request, a  copy  of   any 
note, assignment, or  other  document,  which   evidences   indebtedness   or 
constitutes security and which the borrower is required to sign.
  (3) When an additional loan is  made  to  a  borrower  who   has   a   loan 
outstanding, the unpaid balance of the existing loan   and   the   additional 
loan shall be consolidated into a new loan.
  (4) Each licensed office shall retain the original or  a   copy   of   each 
note, security agreement, or other evidence of   indebtedness   or   security 
which has been signed by a borrower in favor of the licensee.

  History: 1981 AACS; 1983 AACS.


R  493.16   Designated business hours.
  Rule 16. A licensed office shall display conspicuously  a  sign  announcing 
the hours of each day during which an employee of  the   licensee   will   be 
present in the office to accept payments from borrowers.

  History: 1983 AACS.


R  493.20   Advertising.
  Rule  20.  (1)  A  licensee  shall  maintain  copies  of  all  direct  mail 
advertising material that  is  mailed  from  any  location  and  marketed  to 
residents of Michigan.  The date that the direct  mail  advertising  material 
was used shall be indicated on the material.  A licensee that operates  2  or 
more  licensed  offices  located  in  Michigan  may,  upon  notice   to   the 
commissioner, maintain 1 record of the advertising material required by  this 
rule in a centrally located office in Michigan for all licensed  offices.   A 
licensee that does not have a  licensed  office  located  in  Michigan  shall 
maintain the copies required by this rule at its  home  office.   All  copies 
that are required to be maintained by  the  rule  shall  be  retained  for  a 
minimum of  3  years  and  shall  be  made  available  for  inspection  by  a 
respresentative of the bureau.
  (2) An address shall not be carried in any advertisement,  except  for  the 
address of a licensed office or the home office of the licensee.
  (3)  A  licensee  shall  not  pay  any  person  for  loan  applications  or 
recommendations.

  History: 1981 AACS; 1983 AACS; 1997 AACS.


R  493.95   Rescission.

  Rule 95. R 487.71 to R 487.91 and R 487.205, appearing on  pages  4933   to 
4937, 4939, and  4940  of  the  1979  Michigan   Administrative   Code,   are 
rescinded.

 History: 1981 AACS.