2015 -- H 5769 | |
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LC001889 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2015 | |
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A N A C T | |
RELATING TO FINANCIAL INSTITUTIONS -- COMMUNITY OBLIGATIONS AND | |
BANKING OFFENSES | |
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Introduced By: Representative Robert B. Jacquard | |
Date Introduced: February 26, 2015 | |
Referred To: House Judiciary | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Chapter 19-9 of the General Laws entitled "Community Obligations and |
2 | Banking Offenses" is hereby amended by adding thereto the following section: |
3 | 19-9-35. Consumer privacy in mortgage applications. – (a) For purposes of this |
4 | section, "mortgage trigger lead" means a consumer report obtained pursuant to section |
5 | 604(c)(l)(B) of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681b, where the issuance of |
6 | the report is triggered by an inquiry made with a consumer reporting agency in response to an |
7 | application for credit. "Mortgage trigger lead" does not include a consumer report obtained by a |
8 | lender or servicer that holds or services existing indebtedness of the applicant who is the subject |
9 | of the report. |
10 | (b) With regard to a solicitation of a consumer for a residential mortgage loan, as defined |
11 | in § 19-14.10-3, which solicitation is based, in whole or in part, on information contained in a |
12 | mortgage trigger lead, the following shall be deemed to be a prohibited act or practice for |
13 | purposes of §§ 19-4-12, 19-14-26 and 19-14.10-17: |
14 | (1) The failure to clearly and conspicuously state in the initial phase of the solicitation |
15 | that the solicitor is not affiliated with the lender or broker with which the consumer initially |
16 | applied; |
17 | (2) The failure to clearly and conspicuously state in the initial phase of the solicitation |
18 | that the solicitation is based on personal information about the consumer that was purchased, |
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1 | directly or indirectly, from a consumer reporting agency without the knowledge or permission of |
2 | the lender or broker with which the consumer initially applied; |
3 | (3) The failure in the initial solicitation to comply with the provisions of the federal Fair |
4 | Credit Reporting Act relating to prescreening solicitations that use consumer reports, including |
5 | the requirement to make a firm offer of credit to the consumer; or |
6 | (4) Knowingly or negligently using information from a mortgage trigger lead: |
7 | (i) To solicit consumers who have opted out of prescreened offers of credit under the |
8 | federal Fair Credit Reporting Act; or |
9 | (ii) To place telephone calls to consumers who have placed their contact information on a |
10 | federal or state "do not call" list. |
11 | (c) In addition to any other remedy provided by law, any lender or broker aggrieved by a |
12 | prohibited act or practice under this section may bring an action in the superior court in which |
13 | venue the lender or broker has an office to enjoin an act in violation of this section and recover |
14 | damages. The court shall award damages in the amount of actual damages or one thousand dollars |
15 | ($1,000) per violation whichever is greater. In any successful action for injunctive relief or for |
16 | damages, the court shall award the lender or broker attorneys' fees and costs, including court |
17 | costs. |
18 | (d) The director or the director's designee may adopt reasonable rules and regulations for |
19 | the implementation of the provisions of this section. |
20 | SECTION 2. Section 19-14.10-3 of the General Laws in Chapter 19-14.10 entitled "An |
21 | Act Adopting the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2009" is |
22 | hereby amended to read as follows: |
23 | 19-14.10-3. Definitions. -- For purposes of this chapter, the following definitions shall |
24 | apply: |
25 | (1) "Depository institution" has the same meaning as in section 3 of the Federal Deposit |
26 | Insurance Act, and includes any credit union. |
27 | (2) "Federal banking agencies" means the Board of Governors of the Federal Reserve |
28 | System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the |
29 | National Credit Union Administration, and the Federal Deposit Insurance Corporation. |
30 | (3) "Immediate family member" means a spouse, child, sibling, parent, grandparent, or |
31 | grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships. |
32 | (4) "Individual" means a natural person. |
33 | (5) (i) "Loan processor or underwriter" means an individual who performs clerical or |
34 | support duties as an employee at the direction of and subject to the supervision and instruction of |
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1 | a person licensed as a lender or as a loan broker, or exempt from licensing under chapters 19-14, |
2 | or 19-14.1. |
3 | (ii) For purposes of subsection (5)(i), "clerical or support duties" may include subsequent |
4 | to the receipt of an application: |
5 | (A) The receipt, collection, distribution, and analysis of information common for the |
6 | processing or underwriting of a residential mortgage loan; and |
7 | (B) Communicating with a consumer to obtain the information necessary for the |
8 | processing or underwriting of a loan, to the extent that such communication does not include |
9 | offering or negotiating loan rates or terms, or counseling consumers about residential mortgage |
10 | loan rates or terms. |
11 | (iii) An individual engaging solely in loan processor or underwriter activities, shall not |
12 | represent to the public, through advertising or other means of communicating or providing |
13 | information including the use of business cards, stationery, brochures, signs, rate lists, or other |
14 | promotional items, that such individual can or will perform any of the activities of a mortgage |
15 | loan originator. |
16 | (6) (i) "Mortgage loan originator" means: |
17 | (A) An individual who, for compensation or gain or in the expectation of compensation |
18 | or gain: |
19 | (I) Takes a residential mortgage loan application; or |
20 | (II) Offers or negotiates terms of a residential mortgage loan; |
21 | (B) Does not include an individual engaged solely as a loan processor or underwriter |
22 | except as otherwise provided in subsection 19-14.10-4(c); |
23 | (C) Does not include a person or entity that only performs real estate brokerage activities |
24 | and is licensed or registered in accordance with Rhode Island law, unless the person or entity is |
25 | compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of |
26 | such lender, mortgage broker, or other mortgage loan originator; |
27 | (D) Does not include a person or entity solely involved in extensions of credit relating to |
28 | timeshare plans, as that term is defined in § 101(53D) of title 11, United States Code, as |
29 | amended; and |
30 | (E) Does not include a person (or its employees) engaged in servicing mortgage loans. |
31 | For purposes of this exclusion, "servicing mortgage loans" means, on behalf of the note holder, |
32 | collecting and receiving payments, including payments of principal, interest, escrow amounts, |
33 | and other sums due, on obligations due and owing to the note holder pursuant to a residential |
34 | mortgage loan, and, when the borrower is in default, or in reasonably foreseeable likelihood of |
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1 | default, working with the borrower on behalf of the note holder and pursuant to the contract |
2 | between the person servicing mortgage loans and the note holder, to modify but not refinance, |
3 | either temporarily or permanently, the obligations, or otherwise finalizing collection of the |
4 | obligation through the foreclosure process. |
5 | (ii) "Real estate brokerage activity" means any activity that involves offering or |
6 | providing real estate brokerage services to the public, including: |
7 | (A) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee |
8 | of real property; |
9 | (B) Bringing together parties interested in the sale, purchase, lease, rental, or exchange |
10 | of real property; |
11 | (C) Negotiating, on behalf of any party, any portion of a contract relating to the sale, |
12 | purchase, lease, rental, or exchange of real property (other than in connection with providing |
13 | financing with respect to any such transaction); |
14 | (D) Engaging in any activity for which a person engaged in the activity is required to be |
15 | registered or licensed as a real estate agent or real estate broker under any applicable law; and |
16 | (E) Offering to engage in any activity, or act in any capacity, described in subparagraphs |
17 | (A), (B), (C), or (D) of this section. |
18 | (7) "Nationwide Mortgage Licensing System and Registry" means a mortgage licensing |
19 | system developed and maintained by the conference of state bank supervisors and the American |
20 | association of residential mortgage regulators for the licensing and registration of licensed |
21 | mortgage loan originators. |
22 | (8) "Nontraditional mortgage product" means any mortgage product other than a thirty |
23 | (30) year fixed rate mortgage. |
24 | (9) "Person" means a natural person, corporation, company, limited liability company, |
25 | partnership, association, or any other entity however organized. |
26 | (10) "Registered mortgage loan originator" means any individual who: |
27 | (i) Meets the definition of mortgage loan originator and is an employee of: |
28 | (A) A depository institution; |
29 | (B) A subsidiary that is: |
30 | (1) Owned and controlled by a depository institution; and |
31 | (2) Regulated by a Federal banking agency; or |
32 | (C) An institution regulated by the farm credit administration; and |
33 | (ii) Is registered with, and maintains a unique identifier through, the nationwide |
34 | mortgage licensing system and registry. |
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1 | (11) "Residential mortgage loan" means any loan primarily for personal, family, or |
2 | household use that is secured by a mortgage, deed of trust, or other equivalent consensual security |
3 | interest on a dwelling (as defined in § 103(v) of the Truth in Lending Act) or residential real |
4 | estate upon which is constructed or intended to be constructed a dwelling (as so defined). |
5 | (12) "Residential real estate" means any real property located in Rhode Island, upon |
6 | which is constructed or intended to be constructed a dwelling. |
7 | (13) "SAFE Act" means the Secure and Fair Enforcement for Mortgage Licensing Act, |
8 | comprising §§ 1501-1517 of the Housing and Economic Recovery Act of 2008, Public Laws 110- |
9 | 289. |
10 | (14) "Unique identifier" means a number or other identifier assigned by protocols |
11 | established by the nationwide mortgage licensing system and registry. |
12 | SECTION 3. This act shall take effect upon passage. |
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LC001889 | |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO FINANCIAL INSTITUTIONS -- COMMUNITY OBLIGATIONS AND | |
BANKING OFFENSES | |
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1 | This act would define a mortgage trigger lead with regard to consumer privacy in |
2 | mortgage applications, and would specify prohibited acts or practices which may result from |
3 | solicitations based upon information contained in a mortgage trigger lead. |
4 | This act would take effect upon passage. |
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LC001889 | |
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