MARVIN MANDEL, Governor

381

simple interest," which is defined in §12—101
of this subtitle, is substituted for "simple
interest," This is in accord with the
interpretation of this section expressed in 53
Op. Att'y Gen. 348; 353 (1968), generally
cited with approval in B.F. Saul Co, v. lest
End Park, 250 Md. 707 (1968). The Attorney
General opined that "where [bonus] charges are
collected, the ten 'rate [of] simple interest
on the unpaid balance,' as used in Section 3,
must be construed as the rate of effective
interest computed according to Sections 1 and
2..." Similarly, in B.F. Saul, supra, the
Court of Appeals stated "Again, we emphasize
that the test as to whether the loan is
usurious would be the amount of the effective
annual interest rate (yield to maturity)..."
250 Md. at 718.

12-103. OTHER PERMITTED RATES OF INTEREST.

(A) LOAN ORDER WRITTEN AGREEMENT - 8 PERCENT
MAXIMUM.

A LENDER MAY CHARGE INTEREST AT AN EFFECTIVE RATE OF
SIMPLE INTEREST NOT IN EXCESS OF 8 PERCENT PER ANNUM ON
THE UNPAID PRINCIPAL BALANCE OF A LOAN IF THERE IS A
WRITTEN AGREEMENT SIGNED BY THE BORROWER WHICH SETS FORTH
THE STATED RATE OF INTEREST CHARGED BY THE LENDER.

REVISOR'S NOTE: This subsection is new language
derived from Art. 49, §3.

The term "effective rate of simple interest"
is substituted for "simple interest"; in this
regard, see the revisor's note to §12—102.

A requirement that the written agreement be
"signed by the borrower" is substituted for
the present reference to an agreement "between
the lender and the borrower." This conforms
the section to the usual statute of frauds
rule that a required writing need be signed
only by the party "to be charged" or "against
whom enforcement is sought," See, e.g., Art.
39C, §1; RP §5-104; ET §8-109 (i); and
§2-201(1) of this article.

The term "stated rate of interest" is defined
in §12—101. It is this rate which the Court
of Appeals held is required to be set forth in
the required agreement. Cf, B.F. Saul Co. v.
West End Park, 250 Md. 707, 718 (1968).