Variable rate contracts; mobile homes.

A retail installment contract for the purchase of a mobile home may provide that the rate of finance charge may be adjusted at stated regular intervals, in which case the retail installment contract shall be subject to the following provisions:

(1) Instead of a finance charge computed on the amount financed as determined under s. 520.07(2), the seller may compute the finance charge on the unpaid balance as it changes from time to time or by any other method. For purposes of this section, the class of any mobile home as provided in s. 520.08(1) shall be determined at the time of execution of the retail installment contract.

(2) Adjustments to the rate of finance charge shall be based on changes in the monthly average yield on United States Treasury securities adjusted to a constant maturity of 5 years as published in the Federal Reserve Bulletin, multiplied by 2.0, hereinafter referred to as “index value.”

(3) Adjustments to the rate of finance charge may not exceed 0.5 percent a year for any 6-month period. The maximum net adjustment over the term of the retail installment contract shall not exceed 5 percentage points.

(4) The rate of finance charge shall not increase or decrease during the 6-month period beginning with the date of execution of the contract, and at least 6 months shall elapse between changes.

(5) Subject to the limitations prescribed by this section, the adjustments, either up or down, to the rate of finance charge on each rate adjustment date shall be equal:

(a) For an initial adjustment, to the difference between the index value for the third calendar month preceding the month in which the rate adjustment date falls and the index value for the month of execution of the retail installment contract.

(b) For an adjustment after the initial adjustment, to the difference between the index value for the third calendar month preceding the month in which the rate adjustment date falls and the index value for the third calendar month preceding the month in which the immediately preceding rate adjustment date fell.

(6) Any increase in the rate of finance charge permitted by this section may be waived at the option of the seller. Subject to the limitations prescribed in this section, decreases in the rate of finance charge are mandatory in the event of any decrease in the index value exceeding one-tenth of 1 percentage point in any 6-month period. If the seller and buyer agree in writing to impose limitations on the frequency or amount of increases in the rate of finance charge which are less than the limitations permitted under this section, those limitations shall also apply to decreases in the rate of finance charge. Changes in the index value which are not taken may be accumulated by the seller in the case of an increase, and shall be accumulated in the case of a decrease, and taken at a later time or used to offset other changes. Such changes shall not exceed the maximum provided in subsection (3).

(7) By written agreement of the buyer and the seller, adjustments to the rate of finance charge may result in changes in the amount of any installment payment due under the retail installment contract, changes in the term of the retail installment contract, or a combination of such changes in amount and term.

(8) The buyer and seller may agree in writing that any change in the amount of any installment payment which results from an adjustment to the rate of finance charge may be applied to any subsequent installment payments. Adjustments to the amount of the installment payments may be made less frequently than adjustments to the rate of finance charge.

(9) The seller shall send the buyer written notice of any rate adjustment by United States mail, at least 35 days prior to the effective date of the new rate. The notification shall include:

(a) The current and new rates of finance charge.

(b) The index value used to calculate the new change in the rate of finance charge and the index value for the month of execution of the retail installment contract or, for adjustments after the initial adjustment, the index value used for the immediately preceding rate adjustment.

(c) The amounts of new installment payments and the remaining maturity.

(d) For increases and decreases in the rate of finance charge, the method by which the changes will be applied.

(10) The disclosures required pursuant to s. 520.07(2) and (8) shall be made on the basis of the rate of finance charge in effect at the time the disclosure is made assuming that each scheduled payment is made on the date it is due and in the scheduled amount.

(11) The provisions of s. 520.09 which prescribe a refund credit upon prepayment in full before the maturity of the unpaid balance of the retail installment contract shall not be applicable in a simple interest contract.

(12) In the event the unpaid balance of the retail installment contract is extended, deferred, renewed, or restated, the holder may compute the refinance charge in accordance with the provisions of this section.