§ 6-26-4 - Usurious contracts – Penalty. - Rhode Island Statutes

SECTION 6-26-4

   § 6-26-4  Usurious contracts –Penalty. – (a) Every contract made in violation of any of the provisions of § 6-26-2,and every mortgage, pledge, deposit, or assignment made or given as securityfor the performance of the contract, shall be usurious and void.

   (b) Nothing contained in this section shall affect the rightsof an indorsee or transferee of a negotiable instrument, who purchases theinstrument before maturity, for value, and without notice of its usuriouscharacter.

   (c) Nothing contained in this section shall affect therights, duties or liabilities of any persons acting under the provisions oftitle 19, and if the borrower shall, either before or after suit, make anypayment on the contract, either of principal or interest, or of any part ofeither, and whether to the lender or to any assignee, indorsee, or transfereeof the contract, the borrower shall be entitled to recover from the lender theamount so paid in an action of the case. Receipts shall be given wheneverpayments are made of either principal or interest.

   (d) The provisions previously stated in this section shallnot apply to any financial institution and its subsidiaries, credit union, orbank holding company and its subsidiaries, organized under the laws of thestate, any other entity regulated by the department of business regulation, anational bank and its subsidiaries, federal savings and loan association orfederal credit union, or a bank, company, or association collectively andindividually referred to as a regulated financial institution. In the event aregulated financial institution knowingly contracts or charges a usurious rateof interest in violation of any of the provisions of § 6-26-2, it shallforfeit the entire interest on the debt. In case the usurious rate of interesthas been paid, the person by whom it has been paid, or his or her legalrepresentative, may recover from the regulated financial institution in anaction in the nature of an action on the debt, twice the amount of the interestso paid, provided that the action is commenced within two (2) years from thetime the usurious transaction occurred.