2014 -- S 2789 | |
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LC004224 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2014 | |
____________ | |
A N A C T | |
RELATING TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES | |
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Introduced By: Senators Walaska, and Picard | |
Date Introduced: March 25, 2014 | |
Referred To: Senate Commerce | |
(Business Regulation) | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Sections 19-14-1, 19-14-2, 19-14-4, 19-14-5 and 19-14-6 of the General |
2 | Laws in Chapter 19-14 entitled "Licensed Activities" are hereby amended to read as follows: |
3 | 19-14-1. Definitions. -- Unless otherwise specified, the following terms shall have the |
4 | following meanings throughout chapters 14, 14.1, 14.2, 14.3, 14.4, 14.6, 14.8, and 14.9, 14.10, |
5 | 14.11 and 14.12 of this title: |
6 | (1) "Check" means any check, draft, money order, personal money order, or other |
7 | instrument for the transmission or payment of money. For the purposes of check cashing, |
8 | travelers checks or foreign denomination instruments shall not be considered checks. "Check |
9 | cashing" means providing currency for checks; |
10 | (2) "Deliver" means to deliver a check to the first person who in payment for the check |
11 | makes or purports to make a remittance of or against the face amount of the check, whether or not |
12 | the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer |
13 | signs the check; |
14 | (3) "Electronic money transfer" means receiving money for transmission within the |
15 | United States or to locations abroad by any means including, but not limited to, wire, facsimile or |
16 | other electronic transfer system; |
17 | (4) (i) "Lender" means any person who makes or funds a loan within this state with the |
18 | person's own funds, regardless of whether the person is the nominal mortgagee or creditor on the |
19 | instrument evidencing the loan; |
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1 | (ii) A loan is made or funded within this state if any of the following conditions exist: |
2 | (A) The loan is secured by real property located in this state; |
3 | (B) An application for a loan is taken by an employee, agent, or representative of the |
4 | lender within this state; |
5 | (C) The loan closes within this state; |
6 | (D) The loan solicitation is done by an individual with a physical presence in this state; |
7 | or |
8 | (E) The lender maintains an office in this state. |
9 | (iii) The term "lender" shall also include any person engaged in a transaction whereby |
10 | the person makes or funds a loan within this state using the proceeds of an advance under a line |
11 | of credit over which proceeds the person has dominion and control and for the repayment of |
12 | which the person is unconditionally liable. This transaction is not a table funding transaction. A |
13 | person is deemed to have dominion and control over the proceeds of an advance under a line of |
14 | credit used to fund a loan regardless of whether: |
15 | (A) The person may, contemporaneously with or shortly following the funding of the |
16 | loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an |
17 | advance to the person under the line of credit; |
18 | (B) The proceeds of an advance are delivered directly to the settlement agent by the line |
19 | of credit lender, unless the settlement agent is the agent of the line of credit lender; |
20 | (C) One or more loans funded by the proceeds of an advance under the line of credit is |
21 | purchased by the line of credit lender; or |
22 | (D) Under the circumstances as set forth in regulations adopted by the director or the |
23 | director's designee pursuant to this chapter; |
24 | (5) "Licensee" means any person licensed under this chapter; |
25 | (6) "Loan" means any advance of money or credit including, but not limited to: |
26 | (i) Loans secured by mortgages; |
27 | (ii) Insurance premium finance agreements; |
28 | (iii) The purchase or acquisition of retail installment contracts or advances to the holders |
29 | of those contracts; |
30 | (iv) Educational loans; |
31 | (v) Any other advance of money; or |
32 | (vi) Any transaction such as those commonly known as "pay day loans," "pay day |
33 | advances," or "deferred presentment loans," in which a cash advance is made to a customer in |
34 | exchange for the customer's personal check, or in exchange for the customer's authorization to |
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1 | debit the customer's deposit account, and where the parties agree either that the check will not be |
2 | cashed or deposited, or that customer's deposit account will not be debited, until a designated |
3 | future date. |
4 | (7) "Loan broker" means any person who, for compensation or gain, or in the expectation |
5 | of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells |
6 | a loan within this state for others in the primary market, or offers to do so. A loan broker shall |
7 | also mean any person who is the nominal mortgagee or creditor in a table funding transaction. A |
8 | loan is brokered within this state if any of the following conditions exist: |
9 | (i) The loan is secured by real property located in this state; |
10 | (ii) An application for a loan is taken or received by an employee, agent or representative |
11 | of the loan broker within this state; |
12 | (iii) The loan closes within this state; |
13 | (iv) The loan solicitation is done by an individual with a physical presence in this state; |
14 | or |
15 | (v) The loan broker maintains an office in this state. |
16 | (8) "Personal money order" means any instrument for the transmission or payment of |
17 | money in relation to which the purchaser or remitter appoints or purports to appoint the seller as |
18 | his or her agent for the receipt, transmission, or handling of money, whether the instrument is |
19 | signed by the seller or by the purchaser or remitter or some other person; |
20 | (9) "Primary market" means the market in which loans are made to borrowers by lenders, |
21 | whether or not through a loan broker or other conduit; |
22 | (10) "Principal owner" means any person who owns, controls, votes or has a beneficial |
23 | interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock |
24 | and/or equity interest of a licensee; |
25 | (11) "Sell" means to sell, to issue, or to deliver a check; |
26 | (12) "Small loan" means a loan of less than five thousand dollars ($5,000), not secured |
27 | by real estate, made pursuant to the provisions of chapter 14.2 of this title; |
28 | (13) "Small loan lender" means a lender engaged in the business of making small loans |
29 | within this state; |
30 | (14) "Table funding transaction" means a transaction in which there is a |
31 | contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of |
32 | the loan to the lender; |
33 | (15) "Check casher" means a person or entity that, for compensation, engages, in whole |
34 | or in part, in the business of cashing checks; |
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1 | (16) "Deferred deposit transaction" means any transaction such as those commonly |
2 | known as "pay-day loans," "pay-day advances," or "deferred presentment loans" in which a cash |
3 | advance is made to a customer in exchange for the customer's personal check or in exchange for |
4 | the customer's authorization to debit the customer's deposit account and where the parties agree |
5 | either that the check will not be cashed or deposited, or that the customer's deposit account will |
6 | not be debited until a designated future date; |
7 | (17) "Insurance premium finance agreement" means an agreement by which an insured, |
8 | or prospective insured, promises to pay to an insurance premium finance company the amount |
9 | advanced or to be advanced, under the agreement to an insurer or to an insurance producer, in |
10 | payment of a premium or premiums on an insurance contract or contracts, together with interest |
11 | and a service charge, as authorized and limited by this title; |
12 | (18) "Insurance premium finance company" means a person engaged in the business of |
13 | making insurance premium finance agreements or acquiring insurance premium finance |
14 | agreements from other insurance premium finance companies; |
15 | (19) "Simple interest" means interest computed on the principal balance outstanding |
16 | immediately prior to a payment for the actual number of days between payments made on a loan |
17 | over the life of a loan; |
18 | (20) "Nonprofit organization" means a corporation qualifying as a 26 U.S.C. section |
19 | 501(c)(3) nonprofit organization, in the operation of which no member, director, officer, partner, |
20 | employee, agent, or other affiliated person profits financially other than receiving reasonable |
21 | salaries if applicable; |
22 | (21) "Mortgage loan originator" has the same meaning set forth in subdivision 19-14.10- |
23 | 3(6); |
24 | (22) "Mortgage loan" means a loan secured in whole or in part by real property located |
25 | in this state; |
26 | (23) "Loan solicitation" shall mean an effectuation, procurement, delivery and offer, and |
27 | advertisement of a loan. Loan solicitation also includes providing or accepting loan applications |
28 | and assisting persons in completing loan applications and/or advising, conferring, or informing |
29 | anyone regarding the benefits, terms and/or conditions of a loan product or service. Loan |
30 | solicitation does not include loan processing or loan underwriting as defined in this section. Loan |
31 | solicitation does not include telemarketing which is defined for purposes of this section to mean |
32 | contacting a person by telephone with the intention of collecting such person's name, address and |
33 | telephone number for the sole purpose of allowing a mortgage loan originator to fulfill a loan |
34 | inquiry; |
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1 | (24) "Processes" shall mean, with respect to a loan, any of a series of acts or functions |
2 | including the preparation of a loan application and supporting documents performed by a person |
3 | which leads to or results in the acceptance, approval, denial, and/or withdrawal of a loan |
4 | application, including, without limitation, the rendering of services including loan underwriting, |
5 | obtaining verifications, credit reports or appraisals, communicating with the applicant and/or the |
6 | lender or loan broker, and/or other loan processing and origination services for consideration by a |
7 | lender or loan broker. Loan processing does not include the following: |
8 | (i) Providing loan closing services; |
9 | (ii) Rendering of credit reports by an authorized credit reporting agency; and |
10 | (iii) Rendering of appraisal services. |
11 | (25) "Loan underwriting" shall mean a loan process that involves the analysis of risk |
12 | with respect to the decision whether to make a loan to a loan applicant based on credit, |
13 | employment, assets, and other factors including evaluating a loan applicant against a lender's |
14 | various lending criteria for creditworthiness, making a determination for the lender as to whether |
15 | the applicant meets the lender's pre-established credit standards and/or making a recommendation |
16 | regarding loan approval; |
17 | (26) "Negotiates" shall mean, with respect to a loan, to confer directly with or offer |
18 | advice directly to a loan applicant or prospective loan applicant for a loan product or service |
19 | concerning any of the substantive benefits, terms, or conditions of the loan product or service; |
20 | (27) "Natural person employee" shall mean any natural person performing services as a |
21 | bona-fide employee for a person licensed under the provisions of Rhode Island general laws |
22 | section 19-14-1, et. seq., in return for a salary, wage, or other consideration, where such salary, |
23 | wage, or consideration is reported by the licensee on a federal form W-2 payroll record. The term |
24 | does not include any natural person or business entity performing services for a person licensed |
25 | under the provisions of Rhode Island general laws in return for a salary, wage, or other |
26 | consideration, where such salary, wage, or consideration is reported by the licensee on a federal |
27 | form 1099; |
28 | (28) "Bona-fide employee" shall mean an employee of a licensee who works under the |
29 | oversight and supervision of the licensee; |
30 | (29) "Oversight and supervision of the licensee" shall mean that the licensee provides |
31 | training to the employee, sets the employee's hours of work, and provides the employee with the |
32 | equipment and physical premises required to perform the employee's duties; |
33 | (30) "Operating subsidiary" shall mean a majority-owned subsidiary of a financial |
34 | institution or banking institution that engages only in activities permitted by the parent financial |
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1 | institution or banking institution; |
2 | (31) "Provisional employee" means a natural person who, pursuant to a written |
3 | agreement between the natural person and a wholly owned subsidiary of a financial holding |
4 | company, as defined in The Bank Holding Company Act of 1956, as amended, a bank holding |
5 | company, savings bank holding company, or thrift holding company, is an exclusive agent for the |
6 | subsidiary with respect to mortgage loan originations, and the subsidiary: (a) holds a valid loan |
7 | broker's license and (b) enters into a written agreement with the director or the director's designee |
8 | to include: |
9 | (i) An "undertaking of accountability" in a form prescribed by the director or the |
10 | director's designee, for all of the subsidiary's exclusive agents to include full and direct financial |
11 | and regulatory responsibility for the mortgage loan originator activities of each exclusive agent as |
12 | if said exclusive agent was an employee of the subsidiary; |
13 | (ii) A business plan to be approved by the director or the director's designee, for the |
14 | education of the exclusive agents, the handling of consumer complaints related to the exclusive |
15 | agents, and the supervision of the mortgage loan origination activities of the exclusive agents; and |
16 | (iii) A restriction of the exclusive agents' mortgage loan originators' activities to loans to |
17 | be made only by the subsidiary's affiliated bank. ; and |
18 | (32) "Multi-state licensing system" means a system involving one or more states, the |
19 | District of Columbia, or the Commonwealth of Puerto Rico established to facilitate the sharing of |
20 | regulatory information and the licensing, application, reporting and payment processes, by |
21 | electronic or other means, for mortgage lenders and loan brokers, and other licensees required to |
22 | be licensed under this chapter. |
23 | (33) "Negative equity" means the difference between the value of an asset and the |
24 | outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former |
25 | amount. |
26 | (34) "Loan closing services" means providing title services, including title searches, title |
27 | examinations, abstract preparation, insurability determinations, and the issuance of title |
28 | commitments and title insurance policies, conducting loan closings, and preparation of loan |
29 | closing documents when performed by or under the supervision of a licensed attorney, licensed |
30 | title agency, or licensed title insurance company. |
31 | (35) "Servicing" means receiving a scheduled periodic payment from a borrower pursuant |
32 | to the terms of a loan, including amounts for escrow accounts, and making the payments to the |
33 | owner of the loan or other third party of principal and interest and other payments with respect to |
34 | the amounts received from the borrower as may be required pursuant to the terms of the servicing |
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1 | loan documents or servicing contract. In the case of a home equity conversion mortgage or a |
2 | reverse mortgage, servicing includes making payment to the borrower. |
3 | (36) "Third-party loan servicer" means a person who engages in the business of servicing |
4 | a loan, directly or indirectly, owed or due or asserted to be owed or due another. |
5 | (37) "Writing" means hard copy writing or electronic writing that meets the requirements |
6 | of § 42-128-1 et seq. |
7 | 19-14-2. Licenses required. -- (a) No person shall engage within this state in the |
8 | business of: (1) making or funding loans or acting as a lender or small loan lender; (2) brokering |
9 | loans or acting as a loan broker; (3) selling checks for a fee or other consideration; (4) cashing |
10 | checks for a fee or other consideration which includes any premium charged for the sale of goods |
11 | in excess of the cash price of the goods; (5) providing electronic money transfers for a fee or |
12 | other consideration; (6) providing debt-management services; or (7) performing the functions of a |
13 | debt collector; (7)(8) performing the duties of a mortgage loan originator; (9) servicing a loan |
14 | directly or indirectly, owed or due or asserted to be owed or due another; or (10) making deferred |
15 | deposit loans without first obtaining a license or registration from the director or the director's |
16 | designee. The licensing requirement for any person providing debt management plans shall apply |
17 | to all persons, without regard for state of incorporation or a physical presence in this state, who |
18 | initiate or service debt management plans for residents of this state. Special exemptions from |
19 | licensing for each activity are contained in other chapters in this title. |
20 | (b) No lender or loan broker licensee shall permit an employee to act as a mortgage loan |
21 | originator without first verifying that such originator is licensed under this chapter. No individual |
22 | may act as a mortgage loan originator without being licensed, or act as a mortgage loan originator |
23 | for more than one person. The license of a mortgage loan originator is not effective during any |
24 | period when such mortgage loan originator is not associated with a lender or loan broker licensee. |
25 | (c) Each loan negotiated, solicited, placed, found or made without a license as required |
26 | in subsection (a) of this section shall constitute a separate violation for purposes of this chapter. |
27 | (d) No person engaged in the business of making or brokering loans in this state, whether |
28 | licensed in accordance with the provisions of this chapter, or exempt from licensing, shall accept |
29 | applications or referral of applicants from, or pay a fee to, any lender, loan broker or mortgage |
30 | loan originator who is required to be licensed or registered under said sections but is not licensed |
31 | to act as such by the director or the director's designee. |
32 | 19-14-4. Annual fee. -- (a) Each licensee shall pay an annual license fee as follows: |
33 | (1) Each small loan lender license and each branch certificate, the sum of five hundred |
34 | fifty dollars ($550); |
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1 | (2) Each loan broker license and each branch certificate, the sum of five hundred fifty |
2 | dollars ($550); |
3 | (3) Each lender license and each branch certificate, the sum of one thousand one hundred |
4 | dollars ($1,100); |
5 | (4) Each sale of checks license, the sum of three hundred sixty dollars ($360); |
6 | (5) Each check cashing license, the sum of three hundred sixty dollars ($360); |
7 | (6) Each deferred deposit loan license, the sum of three hundred sixty dollars ($360); |
8 | (6)(7) Each electronic money transfer license, the sum of three hundred sixty dollars |
9 | ($360); |
10 | (7)(8) Each registration to provide debt-management services, the sum of two hundred |
11 | dollars ($200); and |
12 | (8)(9) Each mortgage loan originator license, the sum of one hundred dollars ($100). ; |
13 | and |
14 | (10) Each third-party loan servicer license and each branch certificate, the sum of one |
15 | thousand one hundred dollars ($1,100). |
16 | (b) Any licensee who shall not pay the annual fee by December 31 of each year shall be |
17 | subject to a daily penalty of twenty-five dollars ($25) per day, subject to a maximum of seven |
18 | hundred fifty dollars ($750). The penalty shall be paid to the director to and for the use of the |
19 | state. The penalty may be waived for good cause by the director or the director's designee, upon |
20 | written request. |
21 | 19-14-5. Minimum capital. -- Each licensee, licensed pursuant to an application for |
22 | license filed after June 30, 1995, shall maintain the following minimum net worth to be evidenced |
23 | in accordance with regulations promulgated by the director or the director's designee. |
24 | (1) Small loan lenders, the sum of twenty-five thousand dollars ($25,000); |
25 | (2) Loan brokers, the sum of ten thousand dollars ($10,000); |
26 | (3) Lenders, the sum of one hundred thousand dollars ($100,000); and |
27 | (4) Sale of checks, the sum of fifty thousand dollars ($50,000). ; and |
28 | (5) Third-party loan servicers, the sum of one hundred thousand dollars ($100,000). |
29 | 19-14-6. Bond of applicant. -- (a) An applicant for any license shall file with the director |
30 | or the director's designee a bond to be approved by him or her in which the applicant shall be the |
31 | obligor. |
32 | (b) The amount of the bond shall be as follows: |
33 | (1) Small loan lenders, the sum of ten thousand dollars ($10,000); |
34 | (2) Loan brokers, the sum of twenty thousand dollars ($20,000); |
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1 | (3) Lenders, the sum of fifty thousand dollars ($50,000); |
2 | (4) Sale of checks and electronic money transfer licensees, the sum of fifty thousand |
3 | dollars ($50,000) subject to a maximum of one hundred and fifty thousand dollars ($150,000) |
4 | when aggregated with agent locations; |
5 | (5) Check cashing licensees who accept checks for collection with deferred payment, the |
6 | sum of fifty thousand dollars ($50,000) subject to a maximum of one hundred and fifty thousand |
7 | dollars ($150,000) when aggregated with agent locations; |
8 | (6) Deferred deposit licensees the sum of fifty thousand dollars ($50,000) subject to a |
9 | maximum of one hundred and fifty thousand dollars ($150,000) when aggregated with agent |
10 | locations; |
11 | (6)(7) Foreign exchange licensees, the sum of ten thousand dollars ($10,000); |
12 | (7)(8) Each The amounts listed above apply to licensees with zero (0) to three (3) branch |
13 | or agent locations location of a licensee, the sum of five thousand dollars ($5,000) Licensees with |
14 | four (4) to seven (7) branches shall post a bond as indicated above and an additional bond in the |
15 | sum of ten thousand dollars ($10,000). Licensees with eight (8) or more branches shall post a |
16 | bond as indicated above and an additional bond in the sum of twenty-five thousand dollars |
17 | ($25,000); or |
18 | (8)(9) Each debt-management services registrant, the amount provided in section 19- |
19 | 14.8-13. ; or |
20 | (10) Each third-party loan servicer, the sum of fifty thousand dollars ($50,000). |
21 | (c) The bond shall run to the state for the use of the state and of any person who may |
22 | have cause of action against the obligor of the bond under the provisions of this title. The bond |
23 | shall be perpetual and shall be conditioned upon the obligor faithfully conforming to and abiding |
24 | by the provisions of this title and of all rules and regulations lawfully made, and the obligor will |
25 | pay to the state and to any person any and all money that may become due or owing to the state or |
26 | to the person from the obligor under and by virtue of the provisions of this title. |
27 | (d) The provisions of subsection (b)(6)(7) of this section shall not apply to any foreign |
28 | exchange business holding a valid electronic money transfer license issued pursuant to section |
29 | 19-14-1 et seq., that has filed with the division of banking the bond required by subsections (b)(4) |
30 | and (b)(7)(8) of this section. |
31 | (e) The bond shall remain in force and effect until the surety is released from liability by |
32 | the director or the director's designee or until the bond is cancelled by the surety. The surety may |
33 | cancel the bond and be released from further liability under the bond upon receipt by the director |
34 | or the director's designee of written notice of the cancellation of the bond at least thirty (30) days |
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1 | in advance of the cancellation of the bond. The cancellation shall not affect any liability incurred |
2 | or accrued under the bond before the termination of the thirty (30) day period. Upon receipt of |
3 | any notice of cancellation, the director shall provide written notice to the licensee. |
4 | (f) Upon receipt of any notice of cancellation, the director may provide written notice to |
5 | the licensee requiring reinstatement or replacement of the bond. Unless the bond is reinstated by |
6 | the surety or a satisfactory replacement bond is filed with the director prior to the cancellation of |
7 | the original bond, the licensee shall be suspended. The licensee will be provided notice of the |
8 | suspension and may request a hearing within thirty (30) days. If the licensee does not request a |
9 | hearing the director or director's designee shall issue an order revoking the license for failure to |
10 | comply with this section. |
11 | SECTION 2. Title 19 of the General Laws entitled "FINANCIAL INSTITUTIONS" is |
12 | hereby amended by adding thereto the following chapter: |
13 | CHAPTER 14.11 |
14 | THIRD-PARTY SERVICE PROVIDERS |
15 | 19-14.11-1. License required. – (a) No person shall act as a third-party loan servicer, |
16 | directly or indirectly, for a loan to a Rhode Island borrower without first obtaining a license under |
17 | this chapter from the director or the director’s designee. |
18 | (b) No license shall be required of: |
19 | (1) A depository institution. |
20 | (2) A lender licensed under chapter 14-1 of title 19 that retains the servicing rights on a |
21 | loan originally closed in the lender's name and subsequently sold in whole or in part to a third |
22 | party, provided that the provisions of §§ 19-14.11-2 (segregated accounts) and 19-14.11-4 |
23 | (prohibited acts and practices) of this chapter shall apply to such lender. |
24 | (3) A debt management company licensed in this state when engaged in activities |
25 | permitted pursuant to its debt management license. |
26 | (4) An attorney licensed in this state when collecting a debt on behalf of a client. |
27 | (5) Bona fide nonprofit organizations, exempt from taxation under section 501(c) of the |
28 | Internal Revenue Code, that are approved by the Department of Housing and Urban Development |
29 | as housing counseling agencies, that have a physical location in Rhode Island and that lend state |
30 | or federal funds. |
31 | 19-14.11-2. Segregated accounts. -- (a) All amounts paid by borrowers to a licensee |
32 | subject to this chapter shall be deposited in one or more accounts maintained at a federally |
33 | insured depository institution and with respect to such funds, the licensee shall act as a fiduciary. |
34 | Such account or accounts shall be segregated from all other accounts of the licensee. Such funds |
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1 | shall not be used in the conduct of the licensee's personal affairs or in the licensee's business |
2 | affairs. |
3 | (b) The licensee may withdraw funds from the segregated account for payment directly to |
4 | the owner of the loan or other third-party of principal and interest and other payments as may be |
5 | required pursuant to the terms of the loan document or servicing contract. |
6 | (c) The licensee may withdraw funds from the segregated account for commissions to |
7 | which it is entitled for services actually performed. |
8 | (d) The licensee may return funds from the segregated account to the borrower if not |
9 | prohibited. |
10 | (e) The licensee shall maintain complete and accurate account records, including, at a |
11 | minimum, the source of all deposits, the nature and recipient of all disbursements, the date and |
12 | amount of each transaction, and the name of the borrower. All documents pertaining to account |
13 | activity shall be produced upon request of the director. |
14 | 19-14.11-3. Records required of licensee. -- The licensee shall keep, use in the |
15 | licensee's business, and make available to the director or the director's designee upon request such |
16 | books, accounts, records and data compilations as will enable the director or director's designee to |
17 | determine whether such licensee is complying with the provisions of this and other applicable |
18 | chapters and with the rules and regulations promulgated thereunder. Every licensee shall preserve |
19 | such books, accounts, records, and data compilations in a secure manner and in accordance with § |
20 | 19-14-20 for at least three (3) years after making the final entry on any loan recorded therein. |
21 | 19-14.11-4. Prohibited acts and practices. -- (a) It is a violation of this chapter for a |
22 | person to: |
23 | (1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead |
24 | borrowers or lenders or to defraud any person. |
25 | (2) Engage in any unfair or deceptive practice toward any person. |
26 | (3) Obtain property by fraud or misrepresentation. |
27 | (4) Use any unfair or unconscionable means in servicing a loan. |
28 | (5) Knowingly misapply or recklessly apply loan payments to the outstanding balance of |
29 | a loan. |
30 | (6) Knowingly misapply or recklessly apply payments to escrow accounts. |
31 | (7) Require the unnecessary forced placement of insurance, when adequate insurance is |
32 | currently in place. |
33 | (8) Fail to provide loan payoff information within the time period set forth in chapter 19- |
34 | 9 of this title. |
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1 | (9) Charge excessive or unreasonable fees to provide loan payoff information. |
2 | (10) Fail to manage and maintain escrow accounts in accordance with § 19-9-2. |
3 | (11) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby |
4 | harming a consumer's credit worthiness. |
5 | (12) Fail to report both the favorable and unfavorable payment history of the consumer to |
6 | a nationally recognized consumer credit bureau at least annually if the servicer regularly reports |
7 | information to a credit bureau. |
8 | (13) Collect private mortgage insurance beyond the date for which private mortgage |
9 | insurance is required. |
10 | (14) Knowingly or recklessly facilitate the illegal foreclosure of real property collateral. |
11 | (15) Knowingly or recklessly facilitate the illegal repossession of chattel collateral. |
12 | (16) Fail to respond to consumer complaints in a timely manner. |
13 | (17) Conduct any business covered by this chapter without holding a valid license as |
14 | required under this chapter, or assist or aid and abet any person in the conduct of business under |
15 | this chapter without a valid license as required under this chapter. |
16 | (18) Fail to comply with any federal or state law, rule, or other legally binding authority |
17 | relating to the evaluation of loans for modification purposes or the modification of loans. |
18 | (19) Fail to comply with this chapter or rules adopted under this chapter, or fail to comply |
19 | with any orders or directives from the director, or fail to comply with any other state or federal |
20 | law, including the regulations thereunder, applicable to any business authorized or conducted |
21 | under this chapter. |
22 | SECTION 3. This act shall take effect on July 1, 2015. |
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LC004224 | |
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| LC004224 - Page 12 of 12 |
EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES | |
*** | |
1 | This act would require that persons performing the function of a debt collector, servicing |
2 | loans directly or indirectly, owed or due or asserted to be owed or due another or making deferred |
3 | deposit loans obtain a license or registration from the director of the department of business |
4 | regulation. The act would also establish annual fees for these persons, minimum capital |
5 | requirements, bonding amounts. |
6 | Additionally, the act would require third-party loans providers to be licensed and |
7 | regulated by the department of business regulation and prohibit various acts and practices. |
8 | This act would take effect on July 1, 2015. |
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LC004224 | |
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| LC004224 - Page 13 of 12 |