2006 New York Code - Rate Of Interest; Usury Forbidden.



 
    § 5-501. Rate  of interest; usury forbidden.  1. The rate of interest,
  as computed pursuant to this title, upon the loan or forbearance of  any
  money,  goods,  or  things in action, except as provided in subdivisions
  five and six of this section or as otherwise provided by law,  shall  be
  six  per  centum  per  annum  unless  a  different rate is prescribed in
  section fourteen-a of the banking law.
    2. No person or corporation shall,  directly  or  indirectly,  charge,
  take  or receive any money, goods or things in action as interest on the
  loan or forbearance of any money, goods or things in action  at  a  rate
  exceeding  the  rate  above  prescribed.  The  amount  charged, taken or
  received as interest shall include any and all amounts paid or  payable,
  directly  or  indirectly,  by  any  person, to or for the account of the
  lender in consideration for making the loan or forbearance as defined by
  the banking board pursuant to subdivision three of section fourteen-a of
  the banking law except such fee as may be fixed by the  commissioner  of
  taxation and finance as the cost of servicing loans made by the property
  and liability insurance security fund.
    3.  If  the rate of interest charged, taken or received on any loan or
  forbearance secured primarily by either (i) an interest in real property
  improved by a one to six family residence occupied by the owner or  (ii)
  certificates  of  stock  or other evidence of an ownership interest in a
  corporation or partnership formed for the  purpose  of  the  cooperative
  ownership  of real estate taken as security for a loan under subdivision
  five of section one  hundred  three  of  the  banking  law,  subdivision
  eight-a  of  section  two hundred thirty-five of such law or subdivision
  two-a of section three hundred eighty  of  such  law,  exceeds  six  per
  centum per annum,
    a.  in  the  case  of  a  loan  referred  to  by  clause  (i)  of this
  subdivision, the term of such loan or forbearance may extend five  years
  beyond  the  maximum  maturity of such loan otherwise prescribed by law,
  and
    b. notwithstanding any other provision of law, the unpaid  balance  of
  the  loan  or  forbearance  may  be prepaid, in whole or in part, at any
  time. If prepayment is made on or after one year from the date the  loan
  or forbearance is made, no penalty may be imposed. If prepayment is made
  prior  to such time, no penalty may be imposed unless provision therefor
  is expressly made in the loan contract.  In  all  cases,  the  right  of
  prepayment  shall  be  stated  in  the instrument evidencing the loan or
  forbearance, provided, however, that the provisions of this  subdivision
  shall  not apply to the extent such provisions are inconsistent with any
  federal law or regulation.
    4. Except as otherwise provided by law, interest shall not be charged,
  taken or received on any loan or forbearance at a  rate  exceeding  such
  rate  of  interest  as  may be authorized by law at the time the loan or
  forbearance is made, whether or not the  loan  or  forbearance  is  made
  pursuant  to a prior contract or commitment providing for a greater rate
  of interest, provided, however, that no change in the rate  of  interest
  prescribed in section fourteen-a of the banking law shall affect (a) the
  validity of a loan or forbearance made before the date such rate becomes
  effective,  or  (b)  the  enforceability  of such loan or forbearance in
  accordance with its terms,  except  that  if  any  loan  or  forbearance
  provides for an increase in the rate of interest during the term of such
  loan  or  forbearance,  the increased rate shall not exceed such rate of
  interest as may have been authorized by law at the  time  such  loan  or
  forbearance was made.
    4-a.  Notwithstanding  the  provisions  of  subdivision  four  of this
  section, a loan or forbearance  repayable  on  demand  may  provide  for
  changes,  reflecting  variations  in lending rates, from time to time in
  the rate of interest payable on such loan or forbearance up to the  rate
  of  interest  authorized  by  law at the time of such change and in such
  case the rate of interest may be so changed in accordance with the terms
  of  the contract or loan commitment relating thereto; provided, however,
  that the rate of interest charged, taken or received on such a  loan  or
  forbearance  shall  not exceed the rate of interest authorized by law as
  it may subsequently be reduced from time to time; and further  provided,
  however, that in no event shall such a loan or forbearance by subject to
  an  authorized  rate  of  interest less than that applicable at the time
  such loan or forbearance was made. The provisions  of  this  subdivision
  shall  apply only to a loan or forbearance repayable on demand which has
  an initial principal of more than five thousand dollars  and  which  the
  borrower  has  the  right  to  repay  at  any  time in whole or in part,
  together with accrued interest on the principal so repaid,  without  any
  penalty.  With  respect  to  a  loan  or  forbearance  covered  by  this
  subdivision, the lender shall disclose to the borrower  in  writing  not
  less often than annually the amount of interest accrued or payable as of
  the  date  of  such  disclosure  and the manner by which such amount was
  computed.
    5. No law regulating  the  maximum  rate  of  interest  which  may  be
  charged,  taken  or  received  shall  apply  to  any loan or forbearance
  insured by the federal housing commissioner or for which a commitment to
  insure has been made by the federal housing commissioner or to any  loan
  or  forbearance  insured  or guaranteed pursuant to the provisions of an
  act of congress entitled "Servicemen's Readjustment Act of 1944."
    6. a. No law regulating the maximum rate  of  interest  which  may  be
  charged,  taken or received, except section 190.40 and section 190.42 of
  the penal law, shall apply to any loan or forbearance in the  amount  of
  two  hundred  fifty  thousand  dollars  or  more, other than a loan or a
  forbearance secured primarily by an interest in real  property  improved
  by  a  one or two family residence. A loan of two hundred fifty thousand
  dollars or more which is to be advanced in installments  pursuant  to  a
  written  agreement  by  a lender shall be deemed to be a single loan for
  the total amount which the lender has agreed to advance pursuant to such
  agreement on the terms and conditions provided therein.
    b. No law regulating  the  maximum  rate  of  interest  which  may  be
  charged,  taken or received, including section 190.40 and section 190.42
  of the penal law, shall apply to any loan or forbearance in  the  amount
  of  two  million  five  hundred  thousand  dollars  or  more.  Loans  or
  forbearances aggregating two million five hundred  thousand  dollars  or
  more which are to be made or advanced to any one borrower in one or more
  installments  pursuant  to  a  written  agreement by one or more lenders
  shall be deemed to be a single loan or forbearance for the total  amount
  which  the  lender or lenders have agreed to advance or make pursuant to
  such agreement on the terms and conditions provided therein.
    7. Except as otherwise expressly provided by  law,  in  the  event  of
  prepayment  in  full of a loan, any refund of unearned interest to which
  the borrower may be entitled may  not  be  computed  by  a  sum  of  the
  balances  or  similar  method  but  must  be  determined  according to a
  generally accepted actuarial method.


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