| | |
Louisiana Loan Interest
Title IX Civil Code Ancillaries
Code Title XII -- Of Loan
Chapter 1. Interest
PART I. IN GENERAL
PART I. IN GENERAL
Any contract for the payment of interest in excess of that authorized by law shall result in the forfeiture of the entire interest so contracted.
It is declared to be the public policy of this state to encourage the free flow of money into Louisiana; to allow this state to compete in the national money market; to promote and stimulate residential construction and to allow those retirement systems who desire it to continue to invest in first mortgage loans.
Unless otherwise provided, the amount of simple conventional interest on obligations bearing interest from date and secured in whole or in part, directly or indirectly, by a mortgage on immovable property, shall not exceed twelve percent per annum. The same must be fixed in writing. Testimonial proof of it is not admitted in any case.
A. Notwithstanding any other law to the contrary, particularly but not exclusively R.S. 9:3500, an obligation secured directly or indirectly, in whole or in part, by a mortgage on immovable property and guaranteed by the Veterans Administration pursuant to the provisions of Public Law 85-857,* including any amendments or supplements thereto, or insured by the Federal Housing Administration pursuant to the provisions of Subchapter II of Chapter 13 of Title 12** of the United States Code,** including any amendments or supplements thereto, may bear such rate of interest or be discounted at such rate as the parties may agree upon in writing within the maximum limitations permitted under the regulations promulgated from time to time by the Federal Housing Administration or the Veterans Administration. The interest rate may be in excess of the maximum rate of conventional interest authorized by law, and as to any such obligation, the claim or defense of usury, or of the taking of interest in excess of the maximum rate of conventional interest, by the obligor or by any guarantor or endorser of the obligation, is prohibited.
B. Notwithstanding any other law to the contrary, particularly but not exclusively Article 1939 of the Louisiana Civil Code and R.S. 9:3500, an obligation secured directly or indirectly, in whole or in part, by a mortgage on immovable property of the form commonly known as a "wrap-around" mortgage shall be exempt from the application of the laws on usury and interest upon interest if the nominal interest of the wrap-around mortgage is not greater than the rate of interest lawfully allowed in a conventional mortgage. For the purposes of this Subsection, the following definitions shall apply:
(1) "Wrap-around mortgage" means any second or lower ranked mortgage that (a) has a face amount that represents not only sums of money advanced by the wrap-around mortgagee but also outstanding balances on mortgages ranked higher than the wrap-around mortgage with respect to the immovable property subject to the wrap-around mortgage, or (b) incorporates provisions for the debt servicing and any other matters relating to the higher ranked mortgages which unpaid balances and charges are represented in the face amount of the wrap-around mortgage.
(2) "Nominal interest" is the interest rate applied to the face amount of the wrap-around mortgage.
C. Notwithstanding any other law to the contrary, particularly but not exclusively Civil Code Art. 1939 and R.S. 9:3500, an obligation secured directly or indirectly, in whole or in part, by a mortgage on immovable property of the form commonly known as "graduated payment" mortgage shall be exempt from the application of the laws on usury and interest upon interest if the nominal interest of the graduated payment mortgage is not greater than the rate of interest lawfully allowed in a conventional mortgage and if the unpaid principal balance does not increase as a result of the addition of deferred interest, exclusive of taxes, insurance, and other nonfinance charges that might be added to the unpaid balance, to an amount greater than one hundred fifty percent of the original face amount of the note and the mortgage. For the purposes of this Subsection, the following definitions shall apply:
(1) "Graduated payment mortgage" means a mortgage which provides for the amortization of the loan by periodic payments which increase one or more times during the term of the mortgage and which provides for the deferring of interest by adding accrued but unpaid interest to the unpaid principal balance.
(2) "Nominal interest" means the interest rate applied to the unpaid principal balance of the graduated payment mortgage.
D. To further promote the objectives of R.S. 9:3502, to encourage the flow of money into Louisiana for homebuilding, home financing, real estate financing, and business development and to assist the citizens of Louisiana in obtaining needed financing at affordable terms and cost, adjustable rate mortgage loans are authorized in accordance with the following terms:
(1) An adjustable rate mortgage loan is any loan of money, credit sale, or extension of credit which provides that the rate of simple interest charged on the unpaid balance may be adjusted from time to time during the term of the loan in accordance with the method of adjustment set forth in the promissory note or other documents evidencing the loan, and which is secured, in whole or in part, directly or indirectly, by a mortgage on leasehold improvements, a mobile home, residential mobile home, or immovable property located in this state.
(2) When the adjustable rate mortgage loan is made for the purpose of financing or refinancing a mobile home, residential mobile home or a one-to-four family dwelling and when applicable to the transaction, either the promissory note or other evidence of the loan shall set forth the following:
(a) The contractual index formula or other basis agreed upon, and any alternate or substitute therefor, upon which changes in the simple interest rate will be based.
(b) The frequency of allowable interest rate adjustments.
(c) Any contractual limitations on interest rate adjustments, such as maximum or minimum interest rates.
(d) The manner and method by which the unpaid balance and, if the loan is to be repaid in installments, the manner and method by which installments will be adjusted periodically to reflect adjustments in the interest rate and the effect, if any, on the number of installments or maturity date of the loan.
(e) The agreement of the parties as to the method by which any changes in the contractual index which are not reflected in a rate adjustment may be carried over to subsequent rate adjustment periods, and be implemented to the extent not offset by opposite movement in the index.
(3) Adjustments in the interest rate shall be based upon changes in the contractual index formula or other basis agreed upon as set forth in either the promissory note or other evidence of the loan. While the parties may agree that the increases in the interest rate caused by increases in the contractual index formula will be made at the option of the lender, notwithstanding any agreement to the contrary, decreases in the interest rate caused by decreases in the contractual index formula shall be implemented at the succeeding adjustment date; provided that no increase or decrease shall be made which would affect any contractual limitations on interest rate adjustments including maximum or minimum interest rates to which the parties have agreed. The parties may agree to use as an index any measurement of interest rates described in either the promissory note or other evidence of the loan, including, but not limited to, the prime or base lending rate of any national or state bank as fixed from time to time by its board of directors or management; the federal reserve discount rate in effect from time to time at any federal reserve bank; the average yield to maturity on United States Treasury obligations of any stipulated term; or any standard or measurement which may be authorized or permitted in any regulation or statute, or both, for residential mortgage loans by the Federal Home Loan Bank Board or by the Office of the Comptroller of the Currency, Department of the Treasury, or any other federal department, agency, or board.
(4) The provisions of a promissory note evidencing an adjustable rate mortgage loan meeting the requirements of this Subsection shall not impair or destroy the negotiability of the promissory note, nor shall such provisions be deemed potstative conditions.
(5) An adjustable rate mortgage loan shall rank from the date the mortgage is recorded as required by statute, and the priority of the mortgage and all amounts secured thereby shall not be affected by adjustments in the interest rate, or by the effects of such adjustments.
(6) Proof of changes in the interest rate may be made by affidavit of the lender or the holder of the promissory note or other evidence of the loan, or by any officer, partner, or employee of the lender or the holder, if the lender or the holder is not a natural person. Any such affidavit may refer to the contents of an official government publication. In the event of foreclosure by executory process of an adjustable rate mortgage loan, such affidavit shall be authentic evidence of the facts recited therein. Whenever appropriate, proof may also be made by corporate resolution, or by other written instrument. The taking of testimony concerning the content of any affidavit, official government publication, corporate resolution, or other written instrument shall be permitted and shall not be considered a violation of the provisions of R.S. 9:3500 or 3503 relative to the taking of testimonial proof of the rate of interest.
(7) The provisions of Louisiana Civil Code Art. 1939 shall not apply to adjustable rate loans.
(8) Except as otherwise provided in either the promissory note or other evidence of the loan, upon the filing of suit for payment of an adjustable rate mortgage loan, the interest rate in effect on the date suit is filed shall be fixed as the interest rate on the loan thereafter and no further adjustment in the rate shall be made; provided that, if the loan is thereafter reinstated, the interest rate may thereafter be adjusted as if no judicial demand had been made.
(9) Nothing herein shall be construed as impairing the validity or enforceability of adjustable rate loans made prior to the effective date hereof. All adjustable rate loans made prior to the effective date of this Act which are not otherwise specifically prohibited by law shall be valid and enforceable.
(10) Except as otherwise provided herein, the provisions of this Subsection shall only be applicable to the types of mortgage loan transactions defined in Paragraph (1) of this Subsection, including, but not limited to, loan transactions made pursuant to the Louisiana Consumer Credit Law R.S. 9:3510, et seq. and the Louisiana Motor Vehicle Sales Finance Act R.S. 6:951, et seq.
E. Notwithstanding any law to the contrary, particularly but not exclusively R.S. 9:3500, an obligation secured by a mortgage on immovable property where the mortgagee is the former owner of said property, may bear such rate of interest or be discounted at such rate as the parties may agree upon in writing within the maximum limitations permitted to be charged by federally insured financial institutions under federal law or regulation. The interest rate may be in excess of the maximum rate of conventional interest authorized by law, and as to any such obligation, the claim or defense of usury, or the taking of interest in excess of the maximum rate of conventional interest, by the obligor or by any guarantor or endorser of the obligation, is prohibited. However, in no instance shall the interest rate exceed seventeen percent.
Notwithstanding any other law to the contrary, particularly but not exclusively R.S. 9:3500, and in addition to those fees, charges, costs and expenses ordinarily not considered interest and not included in the calculation of interest, the following charges, fees, costs and expenses shall not be considered interest on any conventional obligation covered by R.S. 9:3502-9:3506:
(1) Charges for the pre-payment of the loan, or any installment or part thereof, prior to the time fixed for the payment of same;
(2) Charges assessed because of the nonpayment of the loan or any installment or part thereof after said loan or any installment of principal or interest thereof has become delinquent and is not timely paid, including cost of collecting and a reasonable attorney's fee, provided that such charges or the methods of fixing same are provided in writing in either the note or the mortgage securing same;
(3) Brokerage fees, discount fees, service fees, origination fees, commitment fees, warehousing fees, lender's fees, or other similar fees or charges paid by anyone on a loan secured directly or indirectly, in whole or in part, by a mortgage on immovable property;
(4) Fees or charges paid by the borrower to a mortgage broker or agent retained by the borrower to obtain a loan for the borrower from a lender, even though the loan may be closed in the name of such mortgage agent or broker;
(5) Fees, taxes, charges and other expenses incurred in making the loan which are collected from or paid by the borrower or on his behalf, if such fees, taxes, charges and other expenses are actually paid to or are payable to persons other than the lender or the person making the loan or any employee of such lender or person making the loan;
(6) Charges or premiums for credit life insurance actually written on the life of any borrower or endorser;
(7) The listing herein of certain fees and charges shall not be construed as exclusive, but shall be in addition to any fees, charges, costs and expenses not ordinarily considered interest.
The provisions of R.S. 9:3502-9:3506 shall apply only to conventional obligations bearing simple interest from date on the unpaid balance and shall not apply to or affect precomputed interest or discount loans; nor shall it affect the enforceability or collectibility of notes or obligations as provided in R.S. 9:3500. Notwithstanding the twelve percent simple interest rate limitations under R.S. 9:3503, the provisions of R.S. 9:3504 and 3505 shall apply to federally related mortgage loans subject to 12 U.S.C. §1735f-5 that bear simple interest at rates in excess of twelve percent per annum.
A. Notwithstanding the provisions of R.S. 9:3506 or any other law to the contrary, interest on the principal obligation of a promissory note, evidencing a closed-end loan secured by a mortgage on immovable property, including any improvements thereon, shall not commence to accrue prior to the date upon which the loan proceeds have been made available for disbursement. In such case, when funds are to be disbursed to or for the account of a vendor, borrower, or purchaser, the lending institution shall make the loan proceeds available to the notary public or licensed title company for disbursement at the time of execution of the act of sale or act of mortgage.
B. The provisions of Subsection A of this Section shall not apply (a) if the loan proceeds are paid or made available, as the case may be, in cash or by check, cashier's check, share draft, traveler's check, or money order issued by, or drawn on, a financial institution, the accounts of which are insured by an agency or instrumentality of the United States, and which has an office in this state from which payment shall be obtained, or (b) if the notary public or licensed title company fails to comply with the lending institution's written closing instructions. The provisions of Subsection A of this Section also shall not apply to open-end lines of credit, including without limitation, revolving loan accounts, subject to the Louisiana Consumer Credit Law.
C. The provisions of Subsection A of this Section shall not apply to any transaction in which a right of rescission applies pursuant to the provisions of Regulation Z, specifically 12 CFR Section 226.15 and 12 CFR Section 226.23, issued pursuant to the Truth in Lending Act, 15 U.S.C. 1601 et seq.
D. If a lending institution fails to comply with the provisions of Subsection A of this Section, the offending lending institution shall, upon written demand of the borrower, vendor, or purchaser, pay a penalty of one thousand dollars to the borrower, vendor, or purchaser. If a lending institution fails to comply with the provisions of this Subsection within thirty days after receipt of the written demand, the lending institution shall be liable for reasonable attorney fees for the prosecution of the borrower's, vendor's, or purchaser's claim, either amicably or in a judicial proceeding. In the event that a lending institution is liable for the payment of any penalties or attorney fees due to the failure of the notary public or licensed title company to comply with the lending institution's written closing instructions, the notary public or licensed title company shall be liable for any penalties or attorney fees which may be owed to the vendor, borrower, or purchaser.
A. It is the intent and purpose of the legislature in enacting this law to authorize governing bodies of political subdivisions, as herein defined, to provide that local or special assessments for public improvements imposed on benefited properties under laws enacted under authority of Article VI, Section 36 of the Louisiana Constitution of 1974 or prior constitutional provisions, or imposed on benefited properties under the provisions of a home rule charter, may bear such rates of interest as the governing body of such political subdivision may determine, and to provide for the manner and circumstances under which such authority may be exercised.
B. As used in this Section, the words "political subdivision" shall mean parishes, municipalities and other political subdivisions or public corporations, such as, but not limited to sewerage and sub-sewerage districts, waterworks and sub-waterworks districts, and drainage and sub-drainage districts.
C. Any political subdivision authorized to impose local or special assessments on benefited properties under laws enacted under the authority of Article VI, Section 36 of the Constitution of the State of Louisiana of 1974 or prior constitutional provisions, or imposed on benefited properties under the provisions of a home rule charter may, in accordance with the procedure and subject to the limitations provided in the constitution or law or home rule charter authorizing the imposition of such assessments, provide that the maximum interest rate such assessments shall bear shall be the maximum interest rate set forth in the ordinance or instrument levying such assessments or in any ordinance or instrument amendatory thereto, notwithstanding that such law or home rule charter may provide for a lower maximum rate of interest.
D. The right, power and authority conferred herein shall be in addition to any other right, power and authority now conferred upon political subdivisions with reference to the imposition of local or special assessments.
A clause requiring the payment of interest in any obligation secured directly or indirectly, in whole or in part, by a mortgage on immovable property insured by the Federal Housing Administration pursuant to the provisions of Section 245 of the National Housing Act (including any amendments or supplements thereto), or although eligible to be insured by the Federal Housing Administration pursuant to Section 245 of the National Housing Act (including any amendments thereto), but such insurance therefor has been denied by the Federal Housing Administration for reasons other than the rate of interest charged or the manner of collecting such interest, shall be fully enforceable notwithstanding any other law to the contrary.
A. Notwithstanding any other provisions of the law of this state to the contrary, any debtor that is a domestic corporation, a limited liability company formed pursuant to the laws of this or any other state, a foreign corporation, a partnership in commendam formed pursuant to the laws of this state, a registered limited liability partnership formed pursuant to the laws of this or any other state, a foreign limited partnership, or a partnership in which all of the partners are either corporations, limited liability companies formed pursuant to the laws of this or any other state, foreign limited partnerships, partnerships in commendam, or partnerships comprised of corporations, foreign limited partnerships, or partnerships in commendam, or registered limited liability partnerships formed pursuant to the laws of this or any other state, or ordinary partnership or any other person or individual borrowing funds for commercial, business, or agricultural purposes or deferring payment of an obligation for commercial, business, or agricultural purposes, may agree to pay interest in excess of the maximum rate of conventional interest authorized by the laws of this state, whether in connection with unsecured or secured indebtedness and whether the secured indebtedness is secured, in whole or in part, directly or indirectly, by a real estate mortgage or chattel mortgage on property in this state or is otherwise secured, and as to any such agreement such debtor shall be prohibited from asserting a claim or defense of usury or of the taking of interest in excess of the maximum rate of conventional interest, and any person whatsoever signing as co-maker, guarantor, or endorser for such debtor shall also be prohibited from asserting any such claim or defense. The term "foreign limited partnership", as used hereinabove, shall mean any partnership domiciled in any state of the United States, other than Louisiana or the District of Columbia, which shall have been formed and is existing pursuant to the limited partnership law or Uniform Limited Partnership Law of any such state, and such partnership need not qualify as a partnership in commendam under the laws of this state.
B.(1) Notwithstanding the provisions of Subsection A of this Section, and unless otherwise agreed in writing after the default, a lender may not prospectively increase the simple interest rate under a commercial, business, or agricultural purpose loan following declaration of the obligor's default except as follows:
(a) With respect to obligations having an original principal balance of two hundred fifty thousand dollars or less, the fixed simple interest rate shall not be prospectively increased to a rate greater than eighteen percent per annum or three percentage points over the original, fixed contract rate in effect prior to default, whichever is greater.
(b) With respect to obligations having an original principal balance in excess of two hundred fifty thousand dollars, the fixed simple interest rate shall not be prospectively increased to a rate greater than twenty-one percent per annum or three percentage points over the original, fixed contract rate in effect prior to default, whichever is greater.
(2) This Subsection shall apply only to fixed rate, simple interest commercial, business, and agricultural purpose loans, promissory notes, and other obligations entered into on or after September 7, 1990, which provide for a prospective increase in the interest rate following the obligee's declaration of an obligor's default. This Subsection shall not apply to consumer credit transactions or other consumer obligations, or to loans, notes, or other obligations that do not bear interest at a fixed rate and on a simple interest basis prior to a declaration of default. This Subsection shall also not apply to commercial, business, or agricultural purpose loans, notes, or other obligations which are contractually subject to the laws of another state notwithstanding the fact that the obligor may be located or have facilities in Louisiana or that loan proceeds or a portion thereof may be utilized in Louisiana.
(3) The exclusive remedy that may be asserted against a lender or other obligee for a violation of this Subsection is the return of any excessive post-default interest that may have been assessed and collected. Specifically, the obligor shall have no rights under R.S. 9:3501.
A. Notwithstanding any other provisions of law to the contrary, any person borrowing funds for commercial, business, or agricultural purposes, or deferring payment of an obligation for commercial, business, or agricultural purposes, may agree that the interest rate that is charged on the indebtedness may vary from time to time in accordance with the provisions of either the promissory note or other evidence of the indebtedness. Such conditions in either the promissory note or other evidence of the indebtedness shall not be deemed to rely on the whim of the obligor so as to render them null nor shall such conditions destroy the negotiability of the promissory note or other evidence of the indebtedness.
B. All debts created pursuant to the provisions of this Section shall comply with the provisions of R.S. 9:3504(D)(3) through (7) and (9), and the provisions contained therein shall be applicable to all transactions created pursuant to this Section.
The general prohibition against the recovery of interest upon accrued interest, as expressed in Civil Code Article 2001, is subject to the following exceptions:
(1) As provided by the Louisiana Consumer Credit Law, or as specifically provided by law.
(2) In transactions entered into for commercial, business, or agricultural purposes.
(3) In matters preempted by federal law or by rules and regulations of federal agencies, including but not limited to the Federal Home Loan Bank, Federal Savings and Loan Insurance Corporation, Comptroller of the Currency, and the Federal Deposit Insurance Corporation.
(4) As provided in rules and regulations promulgated by the commissioner of financial institutions for supervised financial organizations as provided by R.S. 6:242(A)(2).
In the absence of federal law, rules and regulations of federal agencies, and contractual provisions by the parties to the contrary, including provisions relative to the terms and conditions of prepayment, the debtor in any loan may prepay in full at any time the unpaid balance of all sums due and owing at that point in time. The provisions of this Section shall not be construed to supersede other provisions of law regulating the prepayment of loans.
Notwithstanding any other provision of law to the contrary, when the governor declares a state of disaster or emergency pursuant to R.S. 29:721 et seq., and the federal financial regulatory bodies issue guidelines to financial institutions regarding their response thereto, the commissioner of the Office of Financial Institutions is authorized to expend funds in the utilization of all reasonably efficient means of communication to encourage and facilitate communication between Louisiana citizens and their particular financial institution and to inform and educate Louisiana citizens of their potential options under such guidelines. If a lender requires full payment of the deferred principal and interest upon termination of the deferment period, then the lender shall obtain written approval from the borrower prior to the acceptance of the deferment.
LA Louisana Official State Statutes
 Back to Debt Related Laws
|
|
More Information About:
|
