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748
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Ch. 143
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LAWS OF MARYLAND
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(B) IF INTEREST CHARGED PURSUANT TO SECTION 12-1003 OF THIS
SUBTITLE IN RESPECT OF A LOAN TO A CONSUMER BORROWER HAS BEEN
PRECOMPUTED, THEN, IN THE EVENT OF PREPAYMENT OF THE ENTIRE LOAN,
THE BANK CREDIT GRANTOR SHALL REFUND OR CREDIT TO THE BORROWER
THE UNEARNED PORTION OF THE PRECOMPUTED INTEREST CHARGE. THIS
REFUND OR CREDIT SHALL BE IN AN AMOUNT NOT LESS THAN THE AMOUNT
WHICH WOULD BE REFUNDED OR CREDITED IF THE UNEARNED PRECOMPUTED
INTEREST CHARGE WERE CALCULATED IN ACCORDANCE WITH THE ACTUARIAL
METHOD, EXCEPT THAT THE BORROWER MAY NOT BE ENTITLED TO A REFUND
OR CREDIT OF LESS THAN $5. THE UNEARNED PORTION OF THE
PRECOMPUTED INTEREST CHARGE IS, AT THE OPTION OF THE BANK CREDIT
GRANTOR, EITHER:
(1) THAT PORTION OF THE PRECOMPUTED INTEREST CHARGE
WHICH IS ALLOCABLE TO ALL ORIGINALLY SCHEDULED OR, IF DEFERRED,
ALL DEFERRED PAYMENT PERIODS, OR PORTIONS OF PAYMENT PERIODS,
ENDING SUBSEQUENT TO THE DATE OF PREPAYMENT. THE UNEARNED
PRECOMPUTED INTEREST CHARGE IS THE TOTAL OF THAT WHICH WOULD HAVE
BEEN EARNED FOR EACH PERIOD, OR PORTION OF A PERIOD, HAD THE LOAN
NOT BEEN PRECOMPUTED, BY APPLYING TO THE UNPAID BALANCES OF
PRINCIPAL, ACCORDING TO THE ACTUARIAL METHOD, AN ANNUAL
PERCENTAGE RATE BASED ON THE PREDOMPUTED PRECOMPUTED INTEREST
CHARGES, ASSUMING THAT ALL PAYMENTS WERE MADE AS SCHEDULED, OR AS
DEFERRED, IF DEFERRED. THE BANK CREDIT GRANTOR, AT ITS OPTION,
MAY ROUND THIS ANNUAL PERCENTAGE RATE TO THE NEAREST 1/4 OF 1
PERCENT; OR
(2) THE TOTAL PRECOMPUTED INTEREST CHARGE LESS THE
EARNED PRECOMPUTED INTEREST CHARGE. THE EARNED PRECOMPUTED
INTEREST CHARGE SHALL BE DETERMINED BY APPLYING AN ANNUAL
PERCENTAGE RATE BASED ON THE TOTAL PRECOMPUTED INTEREST CHARGE,
UNDER THE ACTUARIAL METHOD, TO THE UNPAID BALANCES FOR THE ACTUAL
TIME THOSE BALANCES WERE UNPAID UP TO THE DATE OF PREPAYMENT.
(C) (1) AS USED IN SUBSECTION (B) OF THIS SECTION, THE
FOLLOWING TERMS HAVE THE MEANINGS INDICATED.
(2) "ACTUARIAL METHOD" MEANS THE METHOD OF ALLOCATING
PAYMENTS MADE ON A LOAN BETWEEN THE OUTSTANDING PRINCIPAL BALANCE
OF THE LOAN AND INTEREST, BY WHICH A PAYMENT IS APPLIED FIRST,
TO THE ACCUMULATED INTEREST, AND ANY REMAINDER IS SUBTRACTED FROM
THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN.
(3) "PRECOMPUTED INTEREST CHARGE" MEANS INTEREST AS
COMPUTED BY AN ADD ON, DISCOUNT, OR OTHER SIMILAR METHOD.
(4) "PAYMENT PERIOD" MEANS THE TIME PERIOD WITHIN
WHICH SCHEDULED PAYMENTS ON A LOAN ARE DUE AS PROVIDED IN THE
AGREEMENT, NOTE, OR OTHER EVIDENCE OF THE LOAN.
(D) IF A CHARGE IS MADE TO A CONSUMER BORROWER FOR PREMIUMS
FOR INSURING THE BORROWER UNDER AN INSURANCE POLICY PURSUANT TO
SECTION 12-1007 OF THIS SUBTITLE, THEN, IN THE EVENT OF
PREPAYMENT IN FULL, THE BANK CREDIT GRANTOR SHALL REFUND OR
CREDIT TO THE BORROWER ANY UNEARNED PREMIUMS PAID BY THE
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