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2005 House Bill 4834: License and regulate “payday lenders”

Public Act 244 of 2005

Introduced by Rep. Bill McConico D- on May 26, 2005
To require providers of a "deferred presentment service" (or "payday loan"), in which for a fee the lender accepts a post-dated check, or agrees to hold a check for a period of days prior to deposit, to be licensed and regulated by the state, with license fees and bonding requirements. The bill would cap the fee that can be charged for a “payday loan” transaction at 15 percent of the amount paid to the customer. Licensees would be required to display a warning on the written loan agreements that the loan is not intended to meet long-term needs and should be used only for short-term cash needs, and to post notices regarding fees and limitations. The bill contains other regulations, and would also require all payday lenders to utilize a database of all loan transactions, which would be maintained by a third-party private entity. The database would be accessible to the Office of Financial and Insurance Services (OFIS) for regulation purposes, and to payday loan providers to check whether a loan applicant has an outstanding payday loan at another lender. The bill limits the amounts and duration of such loans to a single person.   Official Text and Analysis.
Referred to the House Banking and Financial Services Committee on May 26, 2005
Reported in the House on June 16, 2005
With the recommendation that the substitute (H-1) be adopted and that the bill then pass.
Substitute offered in the House on June 29, 2005
To replace the previous version of the bill with one that incorporates technical changes resulting from committee testimony and deliberation. This version was subsequently superceded by another substitute with substantive changes. See House-passed for details of these.
The substitute failed by voice vote in the House on June 29, 2005
Substitute offered by Rep. Tupac Hunter D- on June 29, 2005
To replace the previous version of the bill with one that embodies a deal struck between the House and the executive branch. See House-passed version for details.
The substitute passed by voice vote in the House on June 29, 2005
Amendment offered by Rep. Andy Dillon D- on June 29, 2005
To insert a provision allowing payday lenders to use arbitration to settle disutes with borrowers, and establishing regulations on the arbitration procedures.
The amendment passed by voice vote in the House on June 29, 2005
Amendment offered by Rep. Bill McConico D- on June 29, 2005
To revise the criteria for determining whether a person unable to repay a loan can make installment payments.
The amendment passed by voice vote in the House on June 29, 2005
Amendment offered by Rep. Leon Drolet R- on June 29, 2005
To eliminate the provision establishing an on-line database to track "payday" loans.
The amendment failed by voice vote in the House on June 29, 2005
Amendment offered by Rep. David Robertson R- on June 29, 2005
To clarify the requirement that payday lenders furnish a security bond so as to cover situations where a single person owns a piece of two or more lending operations.
The amendment passed by voice vote in the House on June 29, 2005
Amendment offered by Rep. David Robertson R- on June 29, 2005
To move back certain deadlines in the bill.
The amendment passed by voice vote in the House on June 29, 2005
To require licensure and impose regulations on providers of a "deferred presentment service" (or "payday loans"), including license fees and bonding requirements. The maximum allowable loan would be $600, and fees (interest) would be capped under a sliding scale of 11 percent to 15 percent depending on the size of the loan. Licensees would have to provide detailed warnings and notices about the loans, and use a real-time state database of all loan transactions to check whether an applicant has an outstanding payday loan elsewhere. The bill limits the duration of such loans, and prohibits "rollovers" and multiple loans.
Received in the Senate on June 30, 2005
Referred to the Senate Banking and Financial Institutions Committee on June 30, 2005
Which reported a version that delays the start of the reulation until 2007, and changes various details, but leaves the main provisions unchanged.
Reported in the Senate on September 13, 2005
With the recommendation that the substitute (S-7) be adopted and that the bill then pass.
Substitute offered in the Senate on September 13, 2005
To replace the previous version of the bill with one that delays the start of the regulation until April 1, 2006, with some exceptions, and adds a misdemeanor and other penalties for misusing the data in the proposed payday loan customer database, including using the data for political campaign purposes.
The substitute passed by voice vote in the Senate on September 13, 2005
Amendment offered by Sen. Martha G. Scott D- on September 13, 2005
To lower the maximum allowable payday loan to $500, and cap the interest rate at 10 percent plus a $5 fee.
The amendment failed 16 to 21 in the Senate on September 13, 2005.
    See Who Voted "Yes" and Who Voted "No".
Received in the House on September 13, 2005
To concur with a Senate-passed version of the bill. The vote sends the bill to a House-Senate conference committee to work out the differences.
Received in the Senate on September 14, 2005
To adopt a compromise version of the bill reported by a House-Senate conference committee. This makes minor changes to various timelines and deadlines related to starting up the new system.
Received in the House on September 15, 2005
Signed by Gov. Jennifer Granholm on November 26, 2005

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