S.B. 209

VETOES

(6) Nothing in this subsection shall prohibit the receipt of the loan proceeds
by the borrower at the time the consolidated loan agreement is made. The borrower must
return any loan proceeds received pursuant to the consolidated loan agreement if he
elects to cancel the consolidated loan agreement pursuant to subsection (5). The
borrower may retain the loan proceeds if he elects the separate loan option pursuant to
subsection (2).

12-117.

With respect to any loan made at a rate pursuant to § 12-103(a) and (c) or § 12-404
of the Commercial Law Article [or § 6-507 of the Financial Institutions Article], the
lender must comply with § 14-1302 of this article except that subsection (c) of § 14-1302
is not applicable.

12-118.                                

A lender may not enter into a loan agreement, providing for an initial interest rate
pursuant to § 12-103(a) and (c), § 12-306, or § 12-404 of this title [or Section 6-507 of
the Financial Institutions Article], which contains a provision that permits the lender to
increase or decrease the applicable rate of interest or finance charges from time to time
during the term of the obligation, unless:

(1)     The loan is secured by an interest in real property;

(2)     Any such provision limits adjustments in the rate on an obligation as
follows:

(i) The increase and decrease in the rate is determined by an
objective index which is not directly controlled by the lender and which is agreed upon by
the parties to the agreement.

(ii) The rate may not be adjusted more frequently than once in a 6
month period.

1.       The amount of increase in any 6 month period may not be
more than the equivalent of 1 percentage point above the rate in effect prior to the rate
change.

2.       Notwithstanding subparagraph (i), if the rate of change in
any index so allows, the rate may be increased to not more than the originally contracted
for rate if authorized by the loan agreement. The agreed upon additional increases must
comply with subparagraph (i).

3.       Notwithstanding subparagraph (i), the lender may decrease
the rate at any time and by any amount;

(3)     Interest rate decreases warranted by decreases in the agreed upon index
shall be mandatory except to the extent that past increases in the index have not been
implemented by the lender, either at his option or because the lender was subject to the
rate change limitation of paragraph (2) of this section;

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