Chapter 244

2007 -- S 104 SUBSTITUTE A AS AMENDED

Enacted 07/03/07

 

A N A C T

RELATING TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES

          

     Introduced By: Senators Walaska, Bates, McCaffrey, and McBurney

     Date Introduced: January 24, 2007

It is enacted by the General Assembly as follows:

 

     SECTION 1. Sections 19-14-1, 19-14-2, 19-14-3, 19-14-4, 19-14-6, 19-14-7, 19-14-9,

19-14-23 and 19-14-30 of the General Laws in Chapter 19-14 entitled "Licensed Activities" are

hereby amended to read as follows:

 

     19-14-1. Definitions. [Effective March 31, 2007.] -- For purposes of this chapter and

chapters 14.1, 14.2, 14.3, 14.4, 14.6 and 14.7 of this title:

      (1) "Check" means any check, draft, money order, personal money order, or other

instrument for the transmission or payment of money. For the purposes of check cashing,

travelers checks or foreign denomination instruments shall not be considered checks. "Check

cashing" means providing currency for checks;

      (2) "Deliver" means to deliver a check to the first person who in payment for the check

makes or purports to make a remittance of or against the face amount of the check, whether or not

the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer

signs the check;

      (3) "Electronic money transfer" means receiving money for transmission within the

United States or to locations abroad by any means including, but not limited to, wire, facsimile or

other electronic transfer system;

      (4) (i) "Lender" means any person who makes or funds a loan within this state with the

person's own funds, regardless of whether the person is the nominal mortgagee or creditor on the

instrument evidencing the loan;

      (ii) A loan is made or funded within this state if any of the following conditions exist:

      (A) The loan is secured by real property located in this state;

      (B) An application for a loan is taken by an employee, agent, or representative of the

lender within this state;

      (C) The loan closes within this state; or

      (D) The loan solicitation is done by an individual with a physical presence in this state.;

or

     (E) The lender maintains an office in this state.

      (iii) The term "lender" shall also include any person engaged in a transaction whereby

the person makes or funds a loan within this state using the proceeds of an advance under a line

of credit over which proceeds the person has dominion and control and for the repayment of

which the person is unconditionally liable. This transaction is not a table funding transaction. A

person is deemed to have dominion and control over the proceeds of an advance under a line of

credit used to fund a loan regardless of whether:

      (A) The person may, contemporaneously with or shortly following the funding of the

loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an

advance to the person under the line of credit;

      (B) The proceeds of an advance are delivered directly to the settlement agent by the line

of credit lender, unless the settlement agent is the agent of the line of credit lender;

      (C) One or more loans funded by the proceeds of an advance under the line of credit is

purchased by the line of credit lender; or

      (D) Under the circumstances as set forth in regulations adopted by the director or the

director's designee pursuant to this chapter;

      (5) "Licensee" means an entity licensed under this chapter;

      (6) "Loan" means any advance of money or credit including, but not limited to:

      (i) Loans secured by mortgages;

      (ii) Insurance premium finance agreements;

      (iii) The purchase or acquisition of retail installment contracts or advances to the holders

of those contracts;

      (iv) Educational loans;

      (v) Any other advance of money; or

      (vi) Any transaction such as those commonly known as "pay day loans," "pay day

advances," or "deferred presentment loans," in which a cash advance is made to a customer in

exchange for the customer's personal check, or in exchange for the customer's authorization to

debit the customer's deposit account, and where the parties agree either that the check will not be

cashed or deposited, or that customer's deposit account will not be debited, until a designated

future date.

      (7) "Loan broker" means any person who, for compensation or gain, or in the expectation

of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells

a loan within this state for others in the primary market, or offers to do so. A loan broker shall

also mean any person who is the nominal mortgagee or creditor in a table funding transaction. A

loan is brokered within this state if any of the following conditions exist:

      (i) The loan is secured by real property located in this state;

      (ii) An application for a loan is taken or received by an employee, agent or representative

of the loan broker within this state;

      (iii) The loan closes within this state; or

      (iv) The loan solicitation is done by an individual with a physical presence in this state.;

or

     (v) The loan broker maintains an office in this state.

      (8) "Personal money order" means any instrument for the transmission or payment of

money in relation to which the purchaser or remitter appoints or purports to appoint the seller as

his or her agent for the receipt, transmission, or handling of money, whether the instrument is

signed by the seller or by the purchaser or remitter or some other person;

      (9) "Primary market" means the market in which loans are made to borrowers by lenders,

whether or not through a loan broker or other conduit;

      (10) "Principal owner" means any person who owns, controls, votes or has a beneficial

interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock

and/or equity interest of a licensee;

      (11) "Sell" means to sell, to issue, or to deliver a check;

      (12) "Small loan" means a loan of less than five thousand dollars ($5,000), not secured

by real estate, made pursuant to the provisions of chapter 14.2 of this title;

      (13) "Small loan lender" means a lender engaged in the business of making small loans

within this state;

      (14) "Table funding transaction" means a transaction in which there is a

contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of

the loan to the lender;

      (15) "Check casher" means a person or entity that, for compensation, engages, in whole

or in part, in the business of cashing checks;

      (16) "Deferred deposit transaction" means any transaction such as those commonly

known as "pay-day loans," "pay-day advances," or "deferred presentment loans" in which a cash

advance is made to a customer in exchange for the customer's personal check or in exchange for

the customer's authorization to debit the customer's deposit account and where the parties agree

either that the check will not be cashed or deposited, or that the customer's deposit account will

not be debited until a designated future date;

      (17) "Insurance premium finance agreement" means an agreement by which an insured,

or prospective insured, promises to pay to an insurance premium finance company the amount

advanced or to be advanced, under the agreement to an insurer or to an insurance producer, in

payment of a premium or premiums on an insurance contract or contracts, together with interest

and a service charge, as authorized and limited by this title;

      (18) "Insurance premium finance company" means a person engaged in the business of

making insurance premium finance agreements or acquiring insurance premium finance

agreements from other insurance premium finance companies;

      (19) "Simple interest" means interest computed on the principal balance outstanding

immediately prior to a payment for the actual number of days between payments made on a loan

over the life of a loan;

      (20) "Nonprofit organization" means a corporation qualifying as a 26 U.S.C. section

501(c)(3) nonprofit organization, in the operation of which no member, director, officer, partner,

employee, agent, or other affiliated person profits financially other than receiving reasonable

salaries if applicable.;

     (21) "Mortgage loan originator" means a natural person employee of a lender or loan

broker that is required to be licensed under Rhode Island general laws section 19-14-1 et seq., or

a provisional employee as defined herein, and who for or with the expectation of a fee,

commission or other valuable consideration (i) advises an applicant about different loan products

and their terms and conditions in order to permit the applicant to select and apply for a particular

loan product, or (ii) advises persons in completing loan applications by informing the applicant

regarding the benefits, terms and/or conditions of a loan product or service, or (iii) negotiates or

offers to negotiate the making of a loan with an applicant. A person whose activities are

ministerial and clerical is not acting as a mortgage loan originator;

      (22) "Mortgage loan" means a loan secured in whole or in part by real property located

in this state;

     (23) "Loan solicitation" shall mean an effectuation, procurement, delivery and offer, and

advertisement of a loan. Loan solicitation also includes providing or accepting loan applications

and assisting persons in completing loan applications and/or advising, conferring, or informing

anyone regarding the benefits, terms and/or conditions of a loan product or service. Loan

solicitation does not include loan processing or loan underwriting as defined in this section. Loan

solicitation does not include telemarketing which is defined for purposes of this section to mean

contacting a person by telephone with the intention of collecting such person's name, address and

telephone number for the sole purpose of allowing a mortgage loan originator to fulfill a loan

inquiry;

     (24) "Loan processing" shall mean any of a series of acts or functions including the

preparation of a loan application and supporting documents performed by a person which leads to

or results in the acceptance, approval, denial, and/or withdrawal of a loan application, including,

without limitation, the rendering of services including loan underwriting, taking or receiving loan

applications, obtaining verifications, credit reports or appraisals, communicating with the

applicant and/or the lender or loan broker, and/or other loan processing and origination services

for consideration by a lender or loan broker. Loan processing does not include the following:

     (A) The providing of title services, including title searches, title examinations, abstract

preparation, insurability determinations, and the issuance of title commitments and title insurance

policies, loan closings, preparation of loan closing documents when performed by or under the

supervision of a licensed attorney, licensed title agency or licensed title insurance company;

     (B) Rendering of credit reports by an authorized credit reporting agency; and

     (C) Rendering of appraisal services.

     (25) "Loan underwriting" shall mean a loan process that involves the analysis of risk with

respect to the decision whether to make a loan to a loan applicant based on credit, employment,

assets, and other factors including evaluating a loan applicant against a lender's various lending

criteria for creditworthiness, making a determination for the lender as to whether the applicant

meets the lender's pre-established credit standards and/or making a recommendation regarding

loan approval;

     (26) "Negotiate a loan" shall mean to confer directly with or offer advice directly to a

loan applicant or prospective loan applicant for a loan product or service concerning any of the

substantive benefits, terms, or conditions of the loan product or service;

     (27) "Natural person employee" shall mean any natural person performing services as a

bona-fide employee for a person licensed under the provisions of Rhode Island general laws

section 19-14-1, et. seq., in return for a salary, wage, or other consideration, where such salary,

wage, or consideration is reported by the licensee on a federal form W-2 payroll record. The term

does not include any natural person or business entity performing services for a person licensed

under the provisions of Rhode Island general laws in return for a salary, wage, or other

consideration, where such salary, wage, or consideration is reported by the licensee on a federal

form 1099;

     (28) "Bona-fide employee" shall mean an employee of a licensee who works under the

oversight and supervision of the licensee;

     (29) "Oversight and supervision of the licensee" shall mean that the licensee provides

training to the employee, sets the employee's hours of work, and provides the employee with the

equipment and physical premises required to perform the employee's duties;

     (30) "Operating subsidiary" shall mean a majority-owned subsidiary of a financial

institution or banking institution that engages only in activities permitted by the parent financial

institution or banking institution;

     (31) "Provisional Employee" means a natural person who, pursuant to a written

agreement between the natural person and a wholly owned subsidiary of a financial holding

company, as defined in The Bank Holding Company Act of 1956, as amended, a bank holding

company, savings bank holding company, or thrift holding company, is an exclusive agent for the

subsidiary with respect to mortgage loan originations, and the subsidiary: (a) holds a valid loan

broker's license and (b) enters into a written agreement with the director or the director's designee

to include:

     (i) an "undertaking of accountability" in a form prescribed by the director or the director's

designee, for all of the subsidiary's exclusive agents to include full and direct financial and

regulatory responsibility for the mortgage loan originator activities of each exclusive agent as if

said exclusive agent was an employee of the subsidiary;

     (ii) a business plan to be approved by the director or the director's designee, for the

education of the exclusive agents, the handling of consumer complaints related to the exclusive

agents, and the supervision of the mortgage loan origination activities of the exclusive agents; and

     (iii) a restriction of the exclusive agents' mortgage loan originators' activities to loans to

be made only by the subsidiary's affiliated bank.

 

     19-14-2. Licenses required. [Effective March 31, 2007.] (a) No person shall engage

within this state in the business of: (1) making or funding loans or acting as a lender or small loan

lender; (2) brokering loans or acting as a loan broker; (3) selling checks for a fee or other

consideration; (4) cashing checks for a fee or other consideration which includes any premium

charged for the sale of goods in excess of the cash price of the goods; (5) providing electronic

money transfers for a fee or other consideration; or (6) providing debt-management services; or

(7) performing the duties of a mortgage loan originator without first obtaining a license or

registration from the director or the director's designee. The licensing requirement for any person

providing debt management plans shall apply to all persons, without regard for state of

incorporation or a physical presence in this state, who initiate or service debt management plans

for residents of this state. Special exemptions from licensing for each activity are contained in

other chapters in this title.

     (b) No lender or loan broker licensee shall permit an employee to act as a mortgage loan

originator without first verifying that such originator is licensed under this chapter. No individual

may act as a mortgage loan originator without being licensed, or act as a mortgage loan originator

for more than one person. The license of a mortgage loan originator is not effective during any

period when such mortgage loan originator is not associated with a lender or loan broker licensee.

     (c) Each loan negotiated, solicited, placed, found or made without a license as required in

subsection (a) of this section shall constitute a separate violation for purposes of this chapter.

     (d) No person engaged in the business of making or brokering loans in this state, whether

licensed in accordance with the provisions of this chapter, or exempt from licensing, shall accept

applications or referral of applicants from, or pay a fee to, any lender, loan broker or mortgage

loan originator who is required to be licensed or registered under said sections but is not licensed

to act as such by the director or the director's designee.

 

      19-14-3. Application for license. [Effective March 31, 2007.] -- (a) Application for a

license shall be made in writing under oath in a form to be provided by the director or the

director's designee. The applicant at the time of making application shall pay to the director or the

director's designee the sum of one half (1/2) of the annual license fee as a fee for investigating the

application. If the application for license is approved, the applicant shall pay a fee equal to the

annual license fee as provided in this chapter. The license shall be continuous and the license fee

shall cover the period through March 31 of each year. Any application approved after January 1

of any given year shall pay one half (1/2) of the annual license fee for the period ending March 31

of that year.

      (b) [Reserved].

      (c) [Reserved].

      (d) Any license issued under the provisions of former section 5-66-2 shall remain in full

force and effect until its expiration and shall be subject to the provisions of this chapter.

     (e) An applicant for issuance of a mortgage loan originator license shall file with the

director or the director's designee evidence acceptable to the director or the director's designee

that said applicant has:

     (1) Successfully complete, during the two (2) years immediately preceding the date of

application, an entry level training course relative to state and federal statutes, rules and

regulations applicable to loans, mortgages, real property, deeds and contracts consisting of a

minimum of twenty-four (24) hours with an approved nationally recognized training facility or

other facility including in-house programs, as determined by the director or the director's

designee; or

     (2) If the applicant has been employed as a mortgage loan originator for five (5) or more

years as of January 1, 2009 in this state, the applicant must file with the director or the director's

designee that applicant has completed a minimum of twelve (12) hours of education relative to

state and federal statutes, rules and regulations applicable to loans, mortgages, real property,

deeds and contracts during the two (2) years immediately preceding January 1, 2009, by an

approved nationally recognized training facility or other facility including in-house programs, as

determined by the director or the director's designee; or

     (3) If the applicant has been employed as a loan officer of a financial institution, credit

union, bank organized under the laws of another state or bank organized under the laws of the

United States for between one and five (5) years immediately preceding applicant's employment

as a mortgage loan originator, applicant shall file an application for a mortgage loan originator

license on or before his or her date of employment as a mortgage loan originator and shall file

evidence acceptable to the director or the director's designee that applicant has completed a

minimum of twenty-four (24) hours of education relative to state and federal statutes, rules and

regulations applicable to loans, mortgages, real property, deeds and contracts within one hundred

twenty (120) days of his or her employment as a mortgage loan originators by an approved

nationally recognized training facility or other facility including in-house programs, as

determined by the director or the director's designee; or

     (4) If the applicant has been employed as a loan officer of a financial institution, credit

union, bank organized under the laws of another state or bank organized under the laws of the

United States for five (5) years immediately preceding applicant's employment as a mortgage

loan originator, applicant shall file an application for a mortgage loan originator license on or

before his or her date of employment as a mortgage loan originator and shall file evidence

acceptable to the director or the director's designee that applicant has completed a minimum of

twelve (12) hours of education relative to state and federal statues, rules and regulations

applicable to loans, mortgages, real property, deeds and contracts within twelve (12) months of

his or her employment as a mortgage loan originator by an approved nationally recognized

training facility or other facility including in-house programs, as determined by the director or

the director's designee; or

     (5) The requirements that mortgage loan originators obtain licenses as set forth by

section 19-14-2 shall be effective January 1, 2009 however, all mortgage loan originators shall

register with the department by March 31, 2008 on a form to be prescribed by the director or the

director's designee along with a registration fee of the same amount as provided for in section 19-

14-4 (8).

      (f) The application for a lender, or loan broker license shall include an application for a

license for each mortgage loan originator of the applicant.

 

     19-14-4. Annual fee. [Effective March 31, 2007.] -- (a) Each licensee shall pay an

annual license fee as follows:

      (1) Each small loan lender license and each branch certificate, the sum of five hundred

fifty dollars ($550);

      (2) Each loan broker license and each branch certificate, the sum of five hundred fifty

dollars ($550);

      (3) Each lender license and each branch certificate, the sum of one thousand one hundred

dollars ($1,100);

      (4) Each sale of checks license, the sum of three hundred dollars ($300);

      (5) Each check cashing license, the sum of three hundred dollars ($300);

      (6) Each electronic money transfer license, the sum of three hundred dollars ($300); and

      (7) Each registration to provide debt-management services, the sum of two hundred

dollars ($200).; and

     (8) Each mortgage loan originator license, the sum of one hundred dollars ($100).

      (b) Any licensee who shall not pay the annual fee by March 31 of each year shall be

subject to a daily penalty of twenty-five dollars ($25) per day, subject to a maximum of seven

hundred fifty dollars ($750). The penalty shall be paid to the director to and for the use of the

state. The penalty may be waived for good cause by the director or the director's designee, upon

written request.

 

     19-14-6. Bond of applicant. [Effective March 31, 2007.] -- (a) An applicant for any

license shall file with the director or the director's designee a bond to be approved by him or her

in which the applicant shall be the obligor.

      (b) The amount of the bond shall be as follows:

      (1) Small loan lenders, the sum of ten thousand dollars ($10,000);

      (2) Loan brokers, the sum of ten thousand dollars ($10,000) twenty thousand dollars

($20,000);

      (3) Lenders, the sum of twenty-five thousand dollars ($25,000) fifty thousand dollars

($50,000);

      (4) Sale of checks and electronic money transfer licensees, the sum of fifty thousand

dollars ($50,000) subject to a maximum of one hundred and fifty thousand dollars ($150,000)

when aggregated with agent locations;

      (5) Check cashing licensees who accept checks for collection with deferred payment, the

sum of fifty thousand dollars ($50,000) subject to a maximum of one hundred and fifty thousand

dollars ($150,000) when aggregated with agent locations;

      (6) Foreign exchange licensees, the sum of ten thousand dollars ($10,000);

      (7) Each branch or agent location of a licensee, the sum of five thousand dollars

($5,000); or

      (8) Each debt-management services registrant, the amount provided in section 19-14.8-

13.

      (c) The bond shall run to the state for the use of the state and of any person who may

have cause of action against the obligor of the bond under the provisions of this title. The bond

shall be conditioned upon the obligor faithfully conforming to and abiding by the provisions of

this title and of all rules and regulations lawfully made, and the obligor will pay to the state and to

any person any and all money that may become due or owing to the state or to the person from

the obligor under and by virtue of the provisions of this title.

      (d) The provisions of subsection (b)(6) of this section shall not apply to any foreign

exchange business holding a valid electronic money transfer license issued pursuant to section

19-14-1 et seq., that has filed with the division of banking the bond required by subsections (b)(4)

and (b)(7) of this section.

      (e) The bond shall remain in force and effect until the surety is released from liability by

the director or the director's designee or until the bond is cancelled by the surety. The surety may

cancel the bond and be released from further liability under the bond upon receipt by the director

or the director's designee of written notice of the cancellation of the bond at least thirty (30) days

in advance of the cancellation of the bond. The cancellation shall not affect any liability incurred

or accrued under the bond before the termination of the thirty (30) day period. Upon receipt of

any notice of cancellation, the director shall provide written notice to the licensee.

 

     19-14-7. Issuance or denial of license. -- (a) Upon the filing of a completed application,

the payment of fees and the approval of the bond, the director or the director's designee shall

commence an investigation of the applicant. The director or the director's designee shall issue and

deliver the license applied for in accordance with the provisions of this chapter at the location

specified in the application if he or she shall find:

      (1) That the financial responsibility, experience, character, and general fitness of the

applicant, and of the applicant's members and of the applicant's officers, including the designated

manager of record of a licensed location, if the applicant is a partnership, limited liability

company or association, or of the officers including the designated manager of record of a

licensed location, and directors and the principal owner or owners of the issued and outstanding

capital stock, if the applicant is a corporation, are such as to command the confidence of the

community and to warrant belief that the business will be operated honestly, fairly, and efficiently

within the purposes of this title; and

      (2) That allowing the applicant to engage in business will promote the convenience and

advantage of the community in which the business of the applicant is to be conducted.

      (b) A license provided pursuant to this title shall remain in full force and effect until it is

surrendered by the licensee or revoked or suspended as provided by law.

      (c) If the director or the director's designee rejects an application for a license, he or she

shall notify the applicant, by certified mail, of the denial, the reason(s) supporting the denial and

shall afford the applicant the opportunity for a hearing within a reasonable time period to show

cause why the license should not be denied. When an application for a license is denied, the

director or the director's designee shall return to the applicant the bond, but shall retain the

investigation fee to cover the costs of investigating the application. The director or the director's

designee shall approve or deny every application for license under this section within sixty (60)

days from the date the application is deemed by the director or the director's designee to be

completed.

      (d) Any applicant or licensee aggrieved by the action of the director or the director's

designee in denying a completed application for a license shall have the right to appeal the action,

order, or decision pursuant to chapter 35 of title 42.

 

     19-14-9. Contents of license -- Posting. -- The license or branch certificate shall contain

any information that the director or the director's designee shall require, including the type of

activity authorized. The license or branch certificate shall be kept conspicuously posted in the

place of business of the licensee. The mortgage loan originator license must be carried by each

mortgage loan originator and presented, upon request to each applicant or potential applicant with

whom the mortgage loan originator transacts business in an in-person meeting. When dealing

with an applicant or potential applicant other than in an in-person meeting, the mortgage loan

originator shall disclose the mortgage loan originator's license number, upon request to the

applicant and the fact that the loan originator is licensed by this state. Any licensee who shall

lose, misplace or mutilate the license or branch certificate shall pay a replacement fee of one

hundred dollars ($100) to the director for the use of the state.

 

     19-14-22. Reporting requirements. -- (a) Each licensee shall annually on or before

March 31 file a report with the director or the director's designee giving any relevant information

that the director or the director's designee may reasonably require concerning the business and

operations during the preceding calendar year of each licensed place of business conducted by the

licensee within the state. The report shall be made under oath and shall be in a form prescribed by

the director or the director's designee. At the time of filing each report, the sum of fifty-five

dollars ($55.00) per license and fifty-five dollars ($55.00) per branch certificate shall be paid by

the licensee to the director for the use of the state. Any licensee who shall delay transmission of

any report required by the provisions of this title beyond the limit, unless additional time is

granted, in writing, for good cause, by the director or the director's designee, shall pay a penalty

of twenty-five dollars ($25) for each day of the delay.

      (b) Any licensee shall, within twenty-four (24) hours after actual knowledge, notify the

director or the director's designee, in writing, of the occurrence of any of the following events: the

institution of bankruptcy, receivership, reorganization or insolvency proceedings regarding a

licensee, the institution of any adverse government action against a licensee, or any felony

indictment or conviction of any licensee or any officers, directors, owners, employees, members

or partners thereof, as the case may be.

     (c) Each mortgage loan originator licensee shall, on or before March 31, 2010 and every

March 31st thereafter, file with the director or the director's designee evidence acceptable to the

director or the director's designee that said loan originator licensee has successfully completed,

during the twelve (12) months immediately preceding March 31, a minimum of eight (8) hours of

continuing education relative to state and federal statutes, rules and regulations applicable to

loans, mortgages, real property, deeds and contracts provided by an approved nationally

recognized training facility or other facility including in-house programs, as determined by the

director or the director's designee.

     (d) Both the mortgage loan originator and the licensee shall promptly notify the director

or the director's designee, in writing, within fifteen (15) business days of the termination of

employment or services of a mortgage loan originator.

 

     19-14-23. Examinations and investigations. -- (a) For the purpose of discovering

violations of this title or securing information lawfully required, the director or the director's

designee(s) may at any time investigate the loans and business and examine the books, accounts,

records and files used therein, of every licensee and person who shall be engaged in the business,

whether the person shall act or claim to act as principal or agent, or under or without the authority

of this title. For that purpose the director or the director's designee(s) shall have free access to the

offices and places of business, books, accounts, paper, records, files, and safes, of all such

persons. The director or the director's designee(s) shall have authority to require the attendance of

and to examine under oath any person whose testimony may be required relative to the loans or

the business or to the subject matter of any examination, investigation, or hearing.

      (b) The director or the director's designee shall make an examination of the affairs,

business, office, and records of each licensee and branch location at least once every eighteen

(18) months. The total cost of an examination made pursuant to this section shall be paid by the

licensee or person being examined, and shall include the following expenses:

      (1) One hundred fifty percent (150%) of the total salaries and benefits plus one hundred

percent (100%) for the travel and transportation expenses for the examining personnel engaged in

the examinations. The fees shall be paid to the director to and for the use of the state. The

examination fees shall be in addition to any taxes and fees otherwise payable to the state;

      (2) All reasonable technology costs related to the examination process. Technology costs

shall include the actual cost of software and hardware utilized in the examination process and the

cost of training examination personnel in the proper use of the software or hardware; and

      (3) All necessary and reasonable education and training costs incurred by the state to

maintain the proficiency and competence of the examination personnel. All such costs shall be

incurred in accordance with appropriate state of Rhode Island regulations, guidelines and

procedures.

      (c) All expenses incurred pursuant to subsections (b)(2) and (b)(3) of this section shall be

allocated equally to each licensee no more frequently than annually and shall not exceed an

annual average assessment of fifty dollars ($50.00) per company for an any given three (3)

calendar year period. All revenues collected pursuant to this section shall be deposited as general

revenues. That assessment shall be in addition to any taxes and fees otherwise payable to the

state.

      (d) The provisions of section 19-4-3 shall apply to records of examinations or

investigations of licensees; however, the director or the director's designee is authorized to make

public the number of valid consumer complaints as determined by the director or the director's

designee filed against the licensee for a twelve (12) month period immediately preceding the

request for the information.

      (e) If the director or his or her designee has reason to believe that any person required to

be licensed under this chapter is conducting a business without having first obtained a license

under this chapter, or who after the denial, suspension, or revocation of a license is conducting

that business, the director or his or her designee may issue an order to that person commanding

him or her to cease and desist from conducting that business. The order shall provide an

opportunity to request a hearing to be held not sooner than three (3) days after issuance of that

order to show cause why the order should not become final. Any order issued pursuant to this

section shall become final if no request for a hearing is received by the director or his or her

designee within thirty (30) days of the issuance of the order. The order may be served on any

person by mailing a copy of the order, certified mail, return receipt requested, and first class mail

to that person at any address at which that person has done business or at which that person lives.

Any hearing held pursuant to this section shall be governed in accordance with chapter 35 of title

42. If that person fails to comply with an order of the director or his or her designee after being

afforded an opportunity for a hearing, the superior court for Providence County has jurisdiction

upon complaint of the department to restrain and enjoin that person from violating this chapter.

      (f) The director may impose an administrative assessment, as well as the penalties

provided for under section 19-14-26, against any person named in an order issued under

subsection (e) or, in accordance with the rules and regulations promulgated pursuant to section

19-14-30, against any person who violates or participates in the violation of any of the applicable

provisions of this title, or any regulation promulgated pursuant to any provisions of this title. The

amount of the administrative assessment may not exceed one thousand dollars ($1,000) for each

violation of this chapter or each act or omission that constitutes a basis for issuing the order. Any

person aggrieved by an administrative assessment shall have the opportunity to request a hearing

to be held in accordance with chapter 35 of title 42 within thirty (30) days of the imposition of

such administrative assessment.

 

     19-14-30. Rules and regulations. -- The director or the director's designee may adopt

reasonable rules and regulations for the implementation and administration of the provisions of

this chapter. The director or the director's designee shall adopt and amend reasonable rules and

regulations, not later than March 31, 2008, as may be necessary to effectuate and implement the

provisions of sections 19-14-1, 19-14-2, 19-14-3, 19-14-4, 19-14-6, 19-14-7, 19-14-9, 19-14-22,

19-14-23 and 19-14-33 pertaining to mortgage loan originators in order that those provisions

pertaining to mortgage loan originators are in effect and force on January 1, 2009.

 

     SECTION 2. Chapter 19-14 of the General Laws entitled "Licensed Activities" is hereby

amended by adding thereto the following section:

 

     19-14-33. Compliance with federal law governing licensed activities. (a) Each

licensee shall comply with all applicable federal laws, rules and regulations, as amended

governing activities conducted under its license.

     (b) Each licensee shall exercise due diligence in accordance with the rules and regulations

promulgated pursuant to section 19-14-30 in confirming its compliance with applicable

state/federal statutes and/or regulations at all phases of activities conducted under the license.

 

     SECTION 3. 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

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

loans or acting as a loan broker;

      (3) Person(s) 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 of the general laws; or

      (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 section 19-14-2.

     (6) A loan originator employed by an operating subsidiary of a financial institution or

banking institution organized under the laws of this state or any state within the United States;

provided, however, that any such operating subsidiary shall provide an educational program or

course that is relevant to the products and services offered by its employees who solicit loans on

behalf of such operating subsidiary.

      (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; or

      (8) Any state or federal agency which 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.

      (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.

 

     SECTION 4. This act shall take effect upon passage.

     

=======

LC00320/SUB A

=======