47-14-113 - Limitations on loan charges, commitment fees and brokerage commissions. - Tennessee Statutes

47-14-113. Limitations on loan charges, commitment fees and brokerage commissions.

(a)  For all loans in which a provision of this chapter or another statute authorizes or allows loan charges, commitment fees, or brokerage commissions for particular categories of lenders or transactions, the collection of such charges, fees, and commissions shall be limited to the charges, fees, or commissions so authorized or allowed.

(b)  For any written contract, signed by the party to be charged, the collection of commitment fees shall be limited to compensation which is fair and reasonable for the detriment suffered or the commitment made by the lender, considering the condition of the money market, the interest rates then prevailing, the credit worthiness of the borrower, the likelihood of the loan being made, and the interest rate and other terms contained in the loan commitment.

(c)  The collection of brokerage commissions shall be limited to compensation which is fair and reasonable for the services performed, considering the condition of the money market, the credit worthiness of the borrower, the custom in the market place, the interest rate to be paid, the nature and value of the security, and other relevant factors.

(d)  For any written contract, signed by the party to be charged, and not subject to subsection (a), the collection of loan charges shall be limited to those loan charges agreed to in that contract; provided, that no such charges may validly be agreed to in such a contract other than those which are fair and reasonable compensation for some expense incurred or to be incurred, or some service rendered or to be rendered, to or on behalf of the borrower, in connection with a particular loan. In any event, no such loan or contract shall include, except as a part of interest, charges for costs indirectly related to that loan or contract, including, but not limited to, overhead of the lender, loan losses, and charges for services performed by officers or employees of the lender unless such services are rendered directly for:

     (1)  Inspecting and verifying collateral prior to the loan being made;

     (2)  Servicing and verifying the collateral securing the loan; and

     (3)  Collection of the loan.

(e)  For all other loans, no such charges or fees may validly be imposed.

[Acts 1979, ch. 203, § 12.]