2023 -- S 0058

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LC000357

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO FINANCIAL INSTITUTIONS -- LENDERS AND LOAN BROKERS

     Introduced By: Senators Raptakis, Burke, F. Lombardi, Felag, Sosnowski, Murray,
Mack, and Euer

     Date Introduced: February 01, 2023

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 19-14.1-10 of the General Laws in Chapter 19-14.1 entitled "Lenders

and Loan Brokers" is hereby amended to read as follows:

     19-14.1-10. Special exemptions.

     (a) The licensing provisions of chapter 14 of this title shall not apply to:

     (1) Nonprofit charitable, educational, or religious corporations or associations;

     (2) Any person who makes less than six (6) loans in this state in any consecutive twelve-

month (12) period; there is no similar exemption from licensing for loan brokers for brokering loans

or acting as a loan broker;

     (3) Any person acting as an agent for a licensee for the purpose of conducting closings at

a location other than that stipulated in the license;

     (4) Regulated institutions and banks or credit unions organized under the laws of the United

States, or subject to written notice with a designated Rhode Island agent for service of process in

the form prescribed by the director, or the director’s designee, of any other state within the United

States if the laws of the other state in which such bank or credit union is organized authorizes under

conditions not substantially more restrictive than those imposed by the laws of this state, as

determined by the director, or the director’s designee, a financial institution or credit union to

engage in the business of originating or brokering loans in the other state; no bank or credit union

duly organized under the laws of any other state within the United States may receive deposits, pay

checks, or lend money from any location within this state unless such bank or credit union has

received approval from the director, or the director’s designee, for the establishment of an interstate

branch office pursuant to chapter 7 of title 19;

     (5) Any natural person employee who is employed by a licensee when acting on the

licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator

required to be licensed under § 19-14-2 or § 19-14.10-4; or

     (6) A licensed attorney when performing loan closing services for a licensee or for an entity

identified in subdivision (4) above.

     (b) The provisions of this chapter and chapter 14 of this title shall not apply to:

     (1) Loans to corporations, joint ventures, partnerships, limited liability companies or other

business entities;

     (2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for

business or commercial, as opposed to personal, family or household purposes;

     (3) Loans principally secured by accounts receivable and/or business inventory;

     (4) Loans made by a life insurance company wholly secured by the cash surrender value

of a life insurance policy;

     (5) Education-purpose loans made by the Rhode Island health and educational building

corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested

in chapter 62 of title 16;

     (6) The acquisition of retail or loan installment contracts by an entity whose sole business

in this state is acquiring them from federal banks receivers or liquidators;

     (7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services

or insurance for a part or all of the purchase price;

     (8) Any municipal, state or federal agency that makes, brokers, or funds loans or acts as a

lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the

agency specifically designated by the agency to perform those functions on behalf of the agency

and which has notified the director, in writing, of the exclusive agency or contract; or

     (9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that

include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as

amended, an amount representing negative equity related to the motor vehicle being traded in as

part of the purchase price of the motor vehicle being purchased.

     (c) No license to make or fund loans, or to act as a lender or small loan lender shall be

required of any person who engages in deferred deposit transactions (commonly known as “pay-

day advance”) while holding a valid license to cash checks pursuant to chapter 14 of this title.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO FINANCIAL INSTITUTIONS -- LENDERS AND LOAN BROKERS

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     This act would remove the licensing exemption for a lender that originates six (6) loans or

less in twelve (12) consecutive months.

     This act would take effect upon passage.

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