Section 49. (a) Whoever in exchange for either a loan of money or other property knowingly contracts for, charges, takes or receives, directly or indirectly, interest and expenses the aggregate of which exceeds an amount greater than twenty per centum per annum upon the sum loaned or the equivalent rate for a longer or shorter period, shall be guilty of criminal usury and shall be punished by imprisonment in the state prison for not more than ten years or by a fine of not more than ten thousand dollars, or by both such fine and imprisonment. For the purposes of this section the amount to be paid upon any loan for interest or expenses shall include all sums paid or to be paid by or on behalf of the borrower for interest, brokerage, recording fees, commissions, services, extension of loan, forbearance to enforce payment, and all other sums charged against or paid or to be paid by the borrower for making or securing directly or indirectly the loan, and shall include all such sums when paid by or on behalf of or charged against the borrower for or on account of making or securing the loan, directly or indirectly, to or by any person, other than the lender, if such payment or charge was known to the lender at the time of making the loan, or might have been ascertained by reasonable inquiry.
New York has a pretty straightforward usury law on its books at this time. The general usury limit is set at 16% in New York. This is imposed on all personal, consumer loans.
In New York, if a personal loan agreement is crafted that includes an interest rate over and above the usury rate of 16%, there are two possible recourses. First, in many instances, when a personal loan has an interest rate above and beyond the usury cap, the loan agreement itself will be determined to be illegal and voided.
On the other hand, there are instances in which a personal loan agreement with impermissible interest will be reformed to lower the interest rate to an appropriate level. The loan agreement will remain otherwise the same and enforceable.
There are also criminal statutes on the book governing usury violations in certain circumstances. In order to prosecuted under New York criminal law for usury, or loan sharking as it is more commonly known, there really does need to be a pattern of lending to individuals or consumers in violation of the law.
In addition, Federal RICO statutes have been used to prosecute people in New York for serious violation of the usury statutes, for serious cases of loan sharking. Federal prosecutions occur in New York in instances in which a person loan agreement has been entered into that calls for the consumer to pay interest in the amount of twice the usury limit in the state, or in amount of 32% or more.
PP et al are using NY law for limit not Mass? I had posted about usury rates awhile ago and then saw E committee also.
