HARRY HUGHES, Governor

2781

amount of the refund shall be [calculated according to the "Rule
of 78"; that is, the refund shall represent at least as great a
proportion of the total interest as the sum of the periodic time
balances after the date of prepayment bears to the sum of all the
periodic time balances under the schedule of payments in the
original loan contract] 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.

CALCULATED IN ACCORDANCE WITH SUBSECTION (F) OF THIS SECTION.

(e) (1) After full repayment of a loan, the lender shall:

(i) Indelibly mark with the word "paid" or
"cancelled" and return each note or other paper signed by the
borrower; and

(ii) Release the mortgage, deed of trust,
security agreement, or other lien.

(2) The lender shall prepare the release of the
mortgage, deed of trust, security agreement, or other lien at his
own expense.

(F) IF INTEREST CHARGED PURSUANT TO THIS SUBTITLE IN
RESPECT OF A LOAN TO A BORROWER HAS BEEN PRECOMPUTED, THEN, IN
THE EVENT OF PREPAYMENT OF THE ENTIRE LOAN, THE LENDER 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 LENDER, 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 PRECOMPUTED INTEREST CHARGES,
ASSUMING THAT ALL PAYMENTS WERE MADE AS SCHEDULED, OR AS
DEFERRED, IF DEFERRED. THE LENDER, 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.