Bill Text: CT SB00173 | 2016 | General Assembly | Comm Sub
Bill Title: An Act Concerning Connecticut Financial Institutions, Martin Luther King, Jr. Corridors, Money Transmission In The State And Fiduciary Duties Of Mortgage Servicers, Lead Generators, Technical Revisions To The Connecticut Uniform Securities Act, Retail Installment Sales Financing, Advance Rental Payments, Protecting Tenants In Foreclosure, Assessments And Technical Changes To The Mortgage Servicing Statutes.
Spectrum: Committee Bill
Status: (Introduced - Dead) 2016-04-29 - Senate Recommitted to Banking [SB00173 Detail]
Download: Connecticut-2016-SB00173-Comm_Sub.html
General Assembly |
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February Session, 2016 |
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AN ACT CONCERNING CONNECTICUT FINANCIAL INSTITUTIONS, MARTIN LUTHER KING, JR. CORRIDORS, MONEY TRANSMISSION IN THE STATE AND FIDUCIARY DUTIES OF MORTGAGE SERVICERS, LEAD GENERATORS, TECHNICAL REVISIONS TO THE CONNECTICUT UNIFORM SECURITIES ACT, RETAIL INSTALLMENT SALES FINANCING, ADVANCE RENTAL PAYMENTS, PROTECTING TENANTS IN FORECLOSURE, ASSESSMENTS AND TECHNICAL CHANGES TO THE MORTGAGE SERVICING STATUTES.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Subsection (b) of section 36a-448a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(b) The governing board of a Connecticut credit union shall consist of an odd number of directors, at least five in number. The initial governing board shall be elected at the organization meeting of the Connecticut credit union as provided in subsection (e) of section 36a-437a, and thereafter by the members of the Connecticut credit union at the annual meeting as provided in section 36a-440a. [Any director elected or appointed to serve on the governing board of a troubled Connecticut credit union shall be approved by the commissioner prior to any such service.] The commissioner shall approve the election, appointment or employment of any director or potential member of the senior management of a troubled Connecticut credit union prior to such director or member taking such position. For the purposes of this subsection, "troubled Connecticut credit union" means any Connecticut credit union that, in the written opinion of the commissioner is (1) in danger of becoming insolvent, (2) not likely to be able to meet the demands of its members, or pay its obligations in the normal course of business or is likely to incur losses that may deplete all or substantially all of its capital, or (3) being operated in an unsafe and unsound manner.
Sec. 2. Subdivision (1) of subsection (a) of section 36a-34 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(1) "Eligible entity" means any entity that (A) received a composite rating of one or two under the Uniform Financial Institutions Rating System as a result of its most recent safety and soundness examination; (B) received a compliance rating of one or two on its most recent compliance examination; (C) received a satisfactory or better rating on its most recent community reinvestment performance evaluation; (D) is well capitalized, [in that it (i) has a total risk-based capital ratio of ten per cent or greater; (ii) has a tier one risk-based capital ratio of six per cent or greater; (iii) has a tier one leverage capital ratio of five per cent or greater; and (iv) is not subject to any written agreement, order, capital directive or prompt corrective action directive issued pursuant to Section 8 or 38 of the Federal Deposit Insurance Act, 12 USC 1818 and 12 USC 1831o, respectively, as amended from time to time, the International Lending Supervision Act, 12 USC 3907, as amended from time to time, the Home Owners' Loan Act, 12 USC 1461, as amended from time to time, or any regulation thereunder, to meet and maintain a specific capital level for any capital measure] as defined in 12 CFR 324.403(b)(1), as amended from time to time; (E) is not subject to a cease and desist order, consent order, prompt correction action directive, written agreement, memorandum of understanding or other administrative agreement with its primary state or federal banking regulator; and (F) is not subject to any formal or informal administrative action by its primary state or federal banking regulator.
Sec. 3. Subdivision (1) of subsection (b) of section 36a-333 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(b) (1) Each qualified public depository that is a bank or out-of-state bank having a tier one leverage ratio of five per cent or greater or a risk-based capital ratio of ten per cent or greater shall transfer eligible collateral maintained under subsection (a) of this section to its own trust department, provided such trust department is located in this state unless the commissioner approves otherwise, to the trust department of another financial institution, provided such eligible collateral shall be maintained in such other financial institution's trust department located in this state unless the commissioner approves otherwise, or to a federal reserve bank or federal home loan bank. Each qualified public depository that is a bank or out-of-state bank having a tier one leverage ratio of less than five per cent or a risk-based capital ratio of less than ten per cent and each qualified public depository that is a credit union or federal credit union shall transfer eligible collateral maintained under subsection (a) of this section to the trust department of a financial institution that is not owned or controlled by the depository or by a holding company owning or controlling the depository, provided such eligible collateral shall be maintained in such other financial institution's trust department located in this state unless the commissioner approves otherwise, or to a federal reserve bank or federal home loan bank. Such transfers of eligible collateral shall be made in a manner prescribed by the commissioner. The qualified public depository shall determine and adjust the market value of such eligible collateral on a monthly basis. Without the requirement of any further action, the commissioner shall have, for the benefit of public depositors, a perfected security interest in all such eligible collateral held in such segregated trust accounts. [, granted pursuant to and in accordance with the terms of the agreement between the public depositor and the qualified public depository.] Such security interest shall have priority over all other perfected security interests and liens. The commissioner may, at any time, require the depository to value the collateral more frequently than monthly if the commissioner reasonably determines that such valuation is necessary for the protection of public deposits. Each holder of eligible collateral shall file with the commissioner, at the end of each calendar quarter, a report with the CUSIP number, description and par value of each investment it holds as eligible collateral.
Sec. 4. Subsection (q) of section 36a-70 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(q) (1) As used in this subsection, "bankers' bank" means a Connecticut bank that is (A) owned exclusively by (i) any combination of banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions, [having their principal office in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island or Vermont] or (ii) a bank holding company that is owned exclusively by any such combination, and (B) [organized to engage] engaged exclusively in providing services for, or that indirectly benefit, other banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions and their directors, officers and employees.
(2) One or more persons may organize a bankers' bank in accordance with the provisions of this section, except that subsections (g) and (h) of this section shall not apply. The approving authority for a bankers' bank shall be the commissioner acting alone. Before granting a temporary certificate of authority in the case of an application to organize a bankers' bank, the approving authority shall consider (A) whether the proposed bankers' bank will facilitate the provision of services that such banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions would not otherwise be able to readily obtain, and (B) the character and experience of the proposed directors and officers. The application to organize a bankers' bank shall be approved if the approving authority determines that the interest of the public will be directly or indirectly served to advantage by the establishment of the proposed bankers' bank, and the proposed directors possess capacity and fitness for the duties and responsibilities with which they will be charged.
(3) A bankers' bank shall have all of the powers of and be subject to all of the requirements applicable to a Connecticut bank under this title which are not inconsistent with this subsection, except [: (A) A bankers' bank may only provide services for, or that indirectly benefit, other banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions and for the directors, officers and employees of such banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions; (B) only banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions having their principal office in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island or Vermont may own the capital stock of or otherwise invest in a bankers' bank; (C) upon] to the extent the commissioner limits such powers by regulation. Upon the written request of a bankers' bank, the commissioner may waive specific requirements of this title and the regulations adopted thereunder if the commissioner finds that [(i)] (A) the requirement pertains primarily to banks that provide retail or consumer banking services and is inconsistent with this subsection, and [(ii)] (B) the requirement may impede the ability of the bankers' bank to compete or to provide desired services to its market provided, any such waiver and the commissioner's findings shall be in writing and shall be made available for public inspection. [; and (D) the commissioner may, by regulation, limit the powers that may be exercised by a bankers' bank.]
(4) The commissioner may adopt regulations, in accordance with chapter 54, to administer the provisions of this subsection.
Sec. 5. Subsection (a) of section 36a-21 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(a) Notwithstanding any provision of state law and except as provided in subsections (b) and (d) of this section and subdivision (2) of subsection (a) of section 36a-534b, as amended by this act, the following records of the Department of Banking shall not be disclosed by the commissioner or any employee of the Department of Banking, or be subject to public inspection or discovery:
(1) Examination and investigation reports and information contained in or derived from such reports, including examination reports prepared by the commissioner or prepared on behalf of or for the use of the commissioner;
(2) Confidential supervisory or investigative information and records obtained [from] or collected by a state, federal or foreign regulatory or law enforcement agency;
(3) Information obtained, collected or prepared in connection with examinations, inspections or investigations, and complaints from the public received by the Department of Banking, if such records are protected from disclosure under federal or state law or, in the opinion of the commissioner, such records would disclose, or would reasonably lead to the disclosure of: (A) Investigative information the disclosure of which would be prejudicial to such investigation, until such time as the investigation and all related administrative and legal actions are concluded; (B) personal or financial information, including account or loan information, without the written consent of the person or persons to whom the information pertains; or (C) information that would harm the reputation of any person or affect the safety and soundness of any person whose activities in this state are subject to the supervision of the commissioner, and the disclosure of such information under this subparagraph would not be in the public interest; and
(4) Information obtained, collected or prepared in connection with the organization of an expedited Connecticut bank prior to the issuance of a final certificate of authority to commence the business of a Connecticut bank pursuant to section 36a-70, as amended by this act.
Sec. 6. (NEW) (Effective October 1, 2016) The Banking Commissioner shall designate three Martin Luther King, Jr. Corridors to promote secured and unsecured lending in the state.
Sec. 7. Subsection (a) of section 36a-597 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
(a) No person shall engage in the business of money transmission in this state, or advertise or solicit such services, without a license issued by the commissioner as provided in sections 36a-595 to 36a-612, inclusive, except as an authorized delegate of a person that has been issued a license by the commissioner and in accordance with section 36a-607. A person [shall be deemed to be engaged in the business of money transmission] is acting as a money transmitter in this state if such person: (1) Has a place of business located in this state, (2) receives money or monetary value in this state or from a person located in this state, (3) transmits money or monetary value from a location in this state or to a person located in this state, (4) issues stored value or payment instruments that are sold in this state, or (5) sells stored value or payment instruments in this state. The licensee shall promptly notify the commissioner, in writing, of the termination of the contract between such licensee and authorized delegate.
Sec. 8. Section 36a-716 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
(a) Any mortgage servicer who receives funds from a mortgagor to be held in escrow for payment of taxes and insurance premiums shall: [pay]
(1) Deposit such funds in one or more segregated escrow accounts under dual control or trust accounts maintained at a federally insured bank, Connecticut credit union, federal credit union or out-of-state bank, which accounts shall be reconciled monthly, provided (A) such funds shall not be commingled with funds of the mortgage servicer or used in the conduct of the mortgage servicer's business, (B) such accounts shall not be used for any purpose other than (i) the deposit of such funds received from mortgagors, (ii) the payment of such funds to the appropriate taxing authority or insurance company, as applicable, and (iii) the reimbursement of moneys paid on behalf of a mortgagor for taxes and insurance premiums from the mortgage servicer's own funds, and (C) any service charge or other fee imposed against such accounts by a depository institution shall be reimbursed by the mortgage servicer to such accounts not more than thirty days after the withdrawal;
(2) Maintain records, in accordance with generally accepted accounting principles, that (A) clearly identify the amounts and dates of all escrow payments received from mortgagors and all remittances made for such purposes on behalf of such mortgagor, and (B) shall be kept readily available to the commissioner and retained for a period of not less than two years after the date of final entry thereon; and
(3) Pay the taxes and insurance premiums of the mortgagor to the appropriate taxing authority and insurance company in the amount required and at the time such taxes and insurance premiums are due, provided [(1)] (A) the mortgage servicer has been provided with the tax or insurance bills at least fifteen days prior to the date such taxes and insurance premiums are due, and [(2)] (B) the mortgagor has paid to the mortgage servicer the amounts required to be paid into the escrow account, as determined by the mortgage servicer, for all amounts scheduled to be paid to the mortgage servicer prior to the date such taxes and insurance premiums are due.
(b) Each mortgage servicer shall, through its own effort and expense, determine and notify the mortgagor of the amounts necessary to be paid into the escrow account to assure that sufficient funds will be available for the payment of such taxes and insurance premiums as of the date such payment is due.
(c) If the amount held in the escrow account as of the date such taxes and insurance premiums are due is insufficient to pay the taxes and insurance premiums despite compliance by the mortgagor with [subdivision (2)] subparagraph (B) of subdivision (3) of subsection (a) of this section, the mortgage servicer shall pay such taxes and insurance premiums from its own funds. The mortgage servicer shall then give the mortgagor the option of paying the shortage over a period of not less than one year. The mortgage servicer shall not charge or collect interest on such shortage during the one-year period.
Sec. 9. Section 36a-485 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
As used in this section and sections 36a-486 to 36a-498f, inclusive, as amended by this act, [and] 36a-534a, [to 36a-534c, inclusive,] 36a-534b, as amended by this act, and sections 22 to 31, inclusive, of this act, unless the context otherwise requires:
(1) "Advance fee" means any consideration paid or given, directly or indirectly, [to a mortgage lender, mortgage correspondent lender or mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498f, inclusive, and sections 36a-534a and 36a-534b,] by a consumer to a person for a residential mortgage loan prior to the closing of [a] such residential mortgage loan, [to any person,] including, but not limited to, loan fees, points, broker's fees or commissions, transaction fees or similar prepaid finance charges;
(2) "Advertise", "advertisement" or "advertising" means the use of any announcement, statement, assertion or representation that is placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station, by means of the Internet, or by other electronic means of distributing information, by personal contact, or in any other way;
(3) "Branch office" means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator;
(4) "Control person" means an individual that directly or indirectly exercises control over another person. Any person that (A) is a director, general partner or executive officer; (B) directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities; (C) in the case of a limited liability company, is a managing member; or (D) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten per cent or more of the capital, is presumed to be a control person. For purposes of this subdivision, "control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise;
(5) "Depository institution" has the same meaning as provided in Section 3 of the Federal Deposit Insurance Act, 12 USC 1813, and includes any Connecticut credit union, federal credit union or out-of-state credit union;
(6) "Dwelling" [has the same meaning] means any "dwelling" as provided in Section 103 of the Consumer Credit Protection Act, 15 USC 1602, located in this state;
(7) "Employee" means an individual (A) whose manner and means of work performance are subject to the right of control of, or are controlled by, a person, and (B) whose compensation is reported or required to be reported on a W-2 form issued by the controlling person. For purposes of the definition of "registered mortgage loan originator", "employee" has the foregoing meaning or such other meaning as the federal banking agencies may issue in connection with such agencies' implementation of such agencies' responsibilities under the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC 5101 et seq.;
(8) "Federal banking agency" means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration and the Federal Deposit Insurance Corporation;
(9) "First mortgage loan" means a residential mortgage loan that is secured by a first mortgage;
(10) "Immediate family member" means a spouse, child, sibling, parent, grandparent or grandchild and includes stepparents, stepchildren, stepsiblings and adoptive relationships;
(11) "Independent contractor" means an individual retained on a basis where the individual is not an employee of any person in connection with the services such individual provides and whose compensation is reported or required to be reported on an Internal Revenue Service Form 1099 issued by the retaining person;
(12) "Individual" means a natural person;
(13) "Lead" means any information identifying a potential consumer of a residential mortgage loan;
(14) "Lead generator" means a person who: (A) Initiates consumer interest or inquiry in a residential mortgage loan by online marketing, direct response advertising, telemarketing or other similar consumer contact; (B) engages in the business of selling leads for residential mortgage loans; (C) generates or augments leads for other persons for or with the expectation of compensation or gain; or (D) refers consumers to other persons for a residential mortgage loan for or with the expectation of compensation or gain;
[(13)] (15) "Loan processor or underwriter" means an individual who performs clerical or support duties. The term "clerical or support duties" includes, subsequent to the receipt of an application, (A) the receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan, and (B) communication with a consumer to obtain the information necessary for the processing or underwriting of a loan to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms;
[(14)] (16) "Main office" means the main address designated on the system;
[(15)] (17) "Mortgage broker" (A) means a person who (i) for compensation or gain or with the expectation of compensation or gain (I) takes a residential mortgage loan application, or (II) offers or negotiates terms of a residential mortgage loan, and (ii) is not the prospective source of the funds for the residential mortgage loan, and (B) does not include (i) an individual who is licensed as a mortgage loan originator acting as a mortgage loan originator on behalf of such mortgage loan originator's sponsoring mortgage lender, mortgage correspondent lender, mortgage broker or exempt registrant, or (ii) an individual exempt from mortgage loan originator licensure under subdivision (2) of subsection (b) of section 36a-486, as amended by this act, when acting within the scope of such exemption;
[(16)] (18) "Mortgage correspondent lender" means a person engaged in the business of making residential mortgage loans in such person's own name where the loans are not held by such person for more than ninety days and are funded by another person through a warehouse agreement, table funding agreement or similar agreement;
[(17)] (19) "Mortgage lender" means a person engaged in the business of making residential mortgage loans in such person's own name utilizing such person's own funds or by funding loans through a warehouse agreement, table funding agreement or similar agreement;
[(18)] (20) "Mortgage loan originator" means an individual who for compensation or gain or with the expectation of compensation or gain, either for such individual or for the person employing or retaining such individual, (A) takes a residential mortgage loan application, or (B) offers or negotiates terms of a residential mortgage loan. "Mortgage loan originator" does not include (i) an individual engaged solely as a loan processor or underwriter; (ii) a person who only performs real estate brokerage activities and is licensed in accordance with chapter 392, unless the person is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (iii) a person solely involved in extensions of credit relating to timeshare plans, as that term is defined in Paragraph 53D of 11 USC 101; or (iv) any individual who solely renegotiates terms for existing mortgage loans on behalf of a mortgagee and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires such individual to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act;
[(19)] (21) "Office" means a branch office or a main office;
[(20)] (22) "Person" means a natural person, corporation, company, limited liability company, partnership or association;
[(21)] (23) "Principal amount of the loan" means the gross amount the borrower is obligated to repay including any prepaid finance charge that is financed, and any other charge that is financed;
[(22)] (24) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including (A) acting as a real estate agent or real estate broker for a buyer, seller, lessor or lessee of real property; (B) bringing together parties interested in the sale, purchase, lease, rental or exchange of real property; (C) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental or exchange of real property, other than in connection with providing financing with respect to any such transaction; (D) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (E) offering to engage in any activity, or act in any capacity, described in this subdivision;
[(23)] (25) "Registered mortgage loan originator" means any individual who (A) meets the definition of mortgage loan originator and is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration; and (B) is registered with and maintains a unique identifier through the system;
[(24)] (26) "Residential mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling;
[(25)] (27) "Residential real estate" means any real property located in this state, upon which is constructed or intended to be constructed a dwelling;
[(26)] (28) "Secondary mortgage loan" means a residential mortgage loan that is secured, in whole or in part, by a mortgage, provided such property is subject to one or more prior mortgages;
[(27)] (29) "Simulated check" means a document that imitates or resembles a check but is not a negotiable instrument;
[(28)] (30) "Sponsored" means employed or retained as an independent contractor;
[(29)] (31) "Table funding agreement" means an agreement wherein a person agrees to fund mortgage loans to be made in another person's name and to purchase such loans after they are made;
(32) "Trigger lead" means a consumer report obtained pursuant to Section 604(c)(1)(B) of the Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. "Trigger lead" does not include a consumer report obtained by a small loan lender that holds or services existing indebtedness of the applicant who is the subject of the report.
[(30)] (33) "Unique identifier" means a number or other identifier assigned by protocols established by the system; and
[(31)] (34) "Warehouse agreement" means an agreement to provide credit to a person to enable the person to have funds to make residential mortgage loans and hold such loans pending sale to other persons.
Sec. 10. Section 36a-486 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) No person shall engage in the business of making residential mortgage loans or act as a mortgage broker in this state unless such person has first obtained the required license for its main office and each branch office where such business is conducted in accordance with the provisions of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act. [Effective April 1, 2010, any] Any such person who is an individual shall also obtain a mortgage loan originator license prior to conducting such business unless such individual does not engage directly in the activities of a mortgage loan originator. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage lender or mortgage correspondent lender, shall be deemed to be engaged in the business of making residential mortgage loans if such person advertises, causes to be advertised, solicits or offers to make residential mortgage loans, either directly or indirectly. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage broker, shall be deemed to be acting as a mortgage broker if such person advertises or causes to be advertised that such person will negotiate, solicit, place or find a residential mortgage loan, either directly or indirectly. A licensed lead generator shall not be deemed to be acting as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator when engaged in activities contemplated by the definition of lead generator set forth in section 36a-485, as amended by this act. A mortgage correspondent lender shall not be deemed to be acting as a mortgage lender if such mortgage correspondent lender makes a loan utilizing its own funds in a situation where another person does not honor such person's commitment to fund the loan.
(b) (1) No person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker shall engage the services of a mortgage loan originator or of a loan processor or underwriter required to be licensed under this section unless such mortgage loan originator or loan processor or underwriter is licensed under section 36a-489, as amended by this act. No person licensed as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator shall engage the services of a lead generator unless such lead generator is licensed under section 23 of this act. An individual, unless specifically exempted under subdivision (2) of this subsection, shall not engage in the business of a mortgage loan originator on behalf of a licensee or a person exempt under section 36a-487 with respect to any residential mortgage loan without first obtaining and maintaining annually a license as a mortgage loan originator under section 36a-489, as amended by this act. An individual, unless specifically exempted under subdivision (2) of this subsection, shall be deemed to be engaged in the business of a mortgage loan originator if such individual: (A) Acts as a mortgage loan originator in connection with any residential mortgage loan on behalf of a licensee or person exempt under section 36a-487; or (B) makes any representation to the public through advertising or other means of communication that such individual can or will act as a mortgage loan originator on behalf of a licensee or person exempt under section 36a-487. Each licensed mortgage loan originator and each licensed loan processor or underwriter shall register with and maintain a valid unique identifier issued by the system. No individual may act as a mortgage loan originator for more than one person at the same time. No loan processor or underwriter licensee may be sponsored by more than one person at a time. The license of a mortgage loan originator or a loan processor or underwriter is not effective during any period when such mortgage loan originator or a loan processor or underwriter is not sponsored by a licensed mortgage lender, mortgage correspondent lender or mortgage broker, or by a person registered as an exempt registrant under subsection (d) of section 36a-487, or during any period in which the license of the mortgage lender, mortgage correspondent lender or mortgage broker with whom such originator or loan processor or underwriter is associated has been suspended. Either the mortgage loan originator, the loan processor or underwriter or the sponsor may file a notification of the termination of sponsorship with the system.
(2) The following are exempt from subdivision (1) of subsection (b) of this section: (A) A registered mortgage loan originator or an employee of an institution or subsidiary described in subdivision [(23)] (25) of section 36a-485, as amended by this act, who is not required to be registered under Section 1507 of the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., when acting for such institution or subsidiary; (B) an individual who offers or negotiates the terms of a residential mortgage loan with or on behalf of an immediate family member of such individual; (C) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as the individual's residence, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition; (D) a Connecticut licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (E) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of a federal, state or local government agency or housing finance agency exempt from licensure pursuant to section 36a-487, and who does so only pursuant to such individual's official duties as an employee of such agency; (F) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of an organization that has obtained bona fide nonprofit status from the commissioner and is exempt from licensure pursuant to section 36a-487, and who does so only pursuant to such individual's official duties as an employee of such organization; and (G) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that is not the individual's residence but is owned by such individual, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition.
(3) No individual shall engage in the activities of a loan processor or underwriter unless such individual obtains and maintains a license as a loan processor or underwriter under section 36a-489, as amended by this act. The following individuals are exempt from the foregoing license requirement:
(A) An employee of a licensed mortgage lender, mortgage correspondent lender or mortgage broker who engages in loan processor or underwriter activities (i) in connection with residential mortgage loans either originated or made by such licensee, and (ii) at the direction of and subject to the supervision of a licensed mortgage loan originator of such licensee;
(B) An employee of a person exempt from licensure under subdivision (1), (2) or (3) of subsection (a) of section 36a-487 who engages in loan processor or underwriter activities at the direction of and subject to the supervision of either a licensed mortgage loan originator or a registered mortgage loan originator of such exempt person; or
(C) Any individual engaged, in any capacity, in loan processor or underwriter activities in connection with a residential mortgage loan originated by an individual not required to be licensed or registered as a mortgage loan originator under this part.
(4) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.
(c) If the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires an individual described in subparagraph (B) (iv) of subdivision [(18)] (20) of section 36a-485, as amended by this act, to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act, such individual may continue to act in such individual's current capacity, provided such individual files an application for a mortgage loan originator license not later than the date sixty days from the date of such determination by the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction.
(d) Each residential mortgage loan taken, offered, negotiated, solicited, arranged, placed, found, made, processed or underwritten without a license shall constitute a separate violation for purposes of section 36a-50.
Sec. 11. Section 36a-488 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) (1) The commissioner shall not issue a mortgage lender license, a mortgage correspondent lender license or a mortgage broker license to any person unless such person meets the following tangible net worth and experience requirements, as applicable: (A) The minimum tangible net worth requirement for a mortgage lender shall be two hundred fifty thousand dollars and the minimum tangible net worth requirement for a mortgage correspondent lender and a mortgage broker shall be [(i) prior to March 2, 2009, twenty-five thousand dollars, and (ii) on and after March 2, 2009,] fifty thousand dollars, and (B) a mortgage lender, mortgage correspondent lender or mortgage broker shall have, at the main office for which the license is sought, a qualified individual and, at each branch office, a branch manager (i) who have supervisory authority over the lending or brokerage activities, (ii) who have at least three years' experience in the mortgage business within the five years immediately preceding the date of the application for the license, (iii) who [, effective April 1, 2010, have completed the prelicensing education requirement described in section 36a-489a and passed a written test that meets the test requirement described in section 36a-489a, and (iv) who, effective November 1, 2012,] are licensed as a mortgage loan originator under section 36a-489, as amended by this act. As used in this subdivision, "experience in the mortgage business" means paid experience in the origination, processing or underwriting of residential mortgage loans, the marketing of such loans in the secondary market or in the supervision of such activities, or any other relevant experience as determined by the commissioner.
(2) Each licensee shall maintain the net worth required by this subsection.
[(3) Not later than April 1, 2010, each qualified individual and branch manager shall have completed the prelicensing education requirement described in section 36a-489a and passed a written test that meets the test requirement described in section 36a-489a.]
(b) The commissioner may issue a mortgage lender license, a mortgage correspondent lender license, or a mortgage broker license. Each mortgage lender licensee may also act as a mortgage correspondent lender and a mortgage broker, and each mortgage correspondent lender licensee may also act as a mortgage broker. [On and after July 1, 2008, an] An application for a license as a mortgage lender, mortgage correspondent lender or mortgage broker office or renewal of such license shall be filed, in a form prescribed by the commissioner, with the system. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-21, as amended by this act, 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. The following supplementary information shall be filed directly with the commissioner: (1) In the case of an initial application for a license for the main office, (A) a financial statement as of a date not more than twelve months prior to the filing of the application which reflects tangible net worth, and if such financial statement is unaudited, the proprietor, general partner, or duly authorized officer, trustee or member shall swear to its accuracy under oath before a notary public, and (B) a bond as required by section 36a-492, as amended by this act; (2) evidence that the qualified individual or branch manager meets the experience required by subsection (a) of this section; and (3) such other information pertaining to the applicant, the applicant's background, the background of its principals, employees, mortgage loan originators, and loan processors or underwriters, and the applicant's activities as the commissioner may require. For the purpose of this subsection, evidence of experience of the qualified individual or branch manager shall include: (A) A statement specifying the duties and responsibilities of such person's employment, the term of employment, including month and year, and the name, address and telephone number of a supervisor, employer or, if self-employed, a business reference; and (B) if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer's letterhead verifying such person's duties and responsibilities and term of employment including month and year, and if such person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement. The commissioner may conduct a criminal history records check of the applicant, any control person of the applicant and the qualified individual or branch manager with supervisory authority at the office for which the license is sought and require the applicant to submit the fingerprints of such persons and authorization of such persons for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as part of the application.
(c) [(1)] The commissioner may issue a mortgage loan originator license or a loan processor or underwriter license. Each mortgage loan originator licensee may also act as a loan processor or underwriter. An application to license an individual as a mortgage loan originator or a loan processor or underwriter for a specified office or renewal of such license shall be filed, in a form prescribed by the commissioner, with the system. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act. The applicant shall, at a minimum, furnish to the system, in a form prescribed by the system, information concerning the applicant's identity, including personal history and experience and information related to any administrative, civil or criminal findings by any governmental jurisdiction. [Effective April 1, 2010, each] Each applicant for a mortgage loan originator [license and, effective October 1, 2011, each applicant for a] or loan processor or underwriter license [,] shall furnish to the system fingerprints for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check. [Effective the later of July 31, 2010, or thirty days after the date the system commences accepting such authorizations for processing, each] Each applicant shall furnish authorization for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a.
[(2) Not later than April 1, 2010, each mortgage loan originator licensee shall furnish to the system fingerprints for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check. By July 31, 2010, or thirty days after the system commences accepting such authorizations for processing, whichever is later, each such licensee shall furnish authorization for the system and the commissioner to obtain an independent credit report obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a.]
Sec. 12. Section 36a-489 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) (1) The commissioner shall not issue an initial license for a mortgage lender, mortgage correspondent lender or mortgage broker unless the commissioner, at a minimum, finds that: (A) The applicant meets the requirements of subsection (a) of section 36a-488, as amended by this act; (B) notwithstanding the provisions of section 46a-80, the applicant, the control persons of the applicant and the qualified individual or branch manager with supervisory authority at the office for which the license is sought have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign or military court during the seven-year period preceding the date of the application for licensing or at any time preceding the date of application if such felony involved an act of fraud, dishonesty, a breach of trust or money laundering, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (C) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant and the qualified individual or branch manager having supervisory authority over the office for which the license is sought are such as to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act; (D) the applicant has met the surety bond requirement under section 36a-492, as amended by this act; and (E) the applicant has not made a material misstatement in the application. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event that such jurisdiction does not use the term "felony", "pardon" or "expungement", such terms shall include legally equivalent events.
(2) (A) The minimum standards for license renewal for a mortgage lender, mortgage correspondent lender or mortgage broker shall include the following: (i) The applicant continues to meet the minimum standards under subdivision (1) of this subsection; and (ii) [effective April 1, 2010, each qualified individual and branch manager has completed the prelicensing education requirement described in section 36a-489a and passed a written test that meets the test requirement described in section 36a-489a, or has satisfied the annual continuing education requirements described in subsection (c) of section 36a-489a, as applicable, and effective November 1, 2012, each qualified individual and branch manager is licensed as a mortgage loan originator and has completed any applicable continuing education requirements described in subsection (c) of section 36a-489a; and (iii)] the mortgage lender, mortgage correspondent lender or mortgage broker has paid all required fees for renewal of the license.
(B) The license of a mortgage lender, mortgage correspondent lender or mortgage broker failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage lender, mortgage correspondent lender or mortgage broker license if the licensee receives a deficiency on the system indicating that the payment required by subparagraph (A) of this subdivision was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494, as amended by this act, and an opportunity for a hearing on such action in accordance with section 36a-51, and require such licensee to take or refrain from taking such action that, in the opinion of the commissioner, will effectuate the purposes of this section.
(b) (1) The commissioner shall not issue an initial license for a mortgage loan originator or a loan processor or underwriter unless the commissioner, at a minimum, finds that the applicant has: (A) Never had a mortgage loan originator or equivalent loan processor or underwriter license revoked in any governmental jurisdiction, except that a subsequent formal vacating of such revocation shall not be deemed a revocation; (B) notwithstanding the provisions of section 46a-80, not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign or military court during the seven-year period preceding the date of the application for licensing or at any time preceding such date of application if such felony involved an act of fraud, dishonesty, a breach of trust, or money laundering, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (C) demonstrated financial responsibility, character and general fitness so as to command the confidence of the community and to warrant a determination that the mortgage loan originator or loan processor or underwriter will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act; (D) [for mortgage loan originator applicants, effective April 1, 2010, and for loan processor or underwriter applicants, effective October 1, 2011,] completed the prelicensing education requirement described in section 36a-489a, amended by this act, and passed a written test that meets the test requirement described in section 36a-489a, as amended by this act; [and, effective November 1, 2012, for qualified individuals or branch managers seeking initial licensure as a mortgage loan originator, completed any continuing education required of them in their position as qualified individuals and branch managers pursuant to section 36a-489a; (E) effective July 31, 2010,] (E) met the surety bond requirement under section 36a-492, as amended by this act, and [, effective October 1, 2011,] in the case of a mortgage loan originator required to be licensed under section 36a-671e, met the surety bond requirements under sections 36a-492, as amended by this act, and 36a-671d; and (F) not made a material misstatement in the application. If the commissioner denies an application for a mortgage loan originator or a loan processor or underwriter license, the commissioner shall notify the applicant and may notify the sponsor or any other person the commissioner deems appropriate of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event that such jurisdiction does not use the term "felony", "pardon" or "expungement", those terms shall include legally equivalent events.
(2) (A) The minimum standards for license renewal for a mortgage loan originator or a loan processor or underwriter shall include the following: (i) The licensee continues to meet the minimum standards for license issuance under subdivision (1) of this subsection; (ii) the licensee has satisfied the annual continuing education requirements described in subsection (c) of section 36a-489a, as amended by this act; and (iii) the licensee has paid all required fees for renewal of the license.
(B) The license of a mortgage loan originator or a loan processor or underwriter that fails to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage loan originator or a loan processor or underwriter license if the licensee receives a deficiency on the system indicating that the payment required by subparagraph (A) of subdivision (2) of this subsection was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494, as amended by this act, and an opportunity for a hearing on such action in accordance with section 36a-51 and require such licensee to take or refrain from taking such action that, in the opinion of the commissioner, will effectuate the purposes of this section.
[(3) Not later than April 1, 2010, each mortgage loan originator licensee shall have completed the prelicensing education requirement described in section 36a-489a and passed a written test that meets the test requirement described in section 36a-489a, provided a mortgage loan originator licensee who was licensed as of the enactment of public act 09-209 shall have completed such prelicensing education requirement and passed such written test not later than October 31, 2010.]
(c) For purposes of this section, a person has shown that such person is not financially responsible when such person has shown a disregard in the management of such person's own financial condition. A determination that a person has not shown financial responsibility may include, but is not limited to: (1) Current outstanding judgments, except judgments solely as a result of medical expenses; (2) current outstanding tax liens or other government liens and filings; (3) foreclosures during the three years preceding the date of application for an initial license or renewal of a license; or (4) a pattern of seriously delinquent accounts within the past three years.
(d) (1) Withdrawal of an application for a license filed under subsection (a) or (b) of this section shall become effective upon receipt by the commissioner of a notice of intent to withdraw such application. The commissioner may deny a license up to the date one year after the effective date of withdrawal.
(2) If a license expires under this section due to the licensee's failure to renew, the commissioner may institute a revocation or suspension proceeding or issue an order suspending or revoking such license pursuant to section 36a-494, as amended by this act, not later than one year after the date of such expiration.
(e) The commissioner may deem an application for a license under this section abandoned if the applicant fails to respond to any request for information required under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, or the regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days from the date of such request the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under said sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act.
Sec. 13. Section 36a-489a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) (1) In order to meet the prelicensing education and testing requirements referred to in sections 36a-488, as amended by this act, and 36a-489, as amended by this act, an individual shall complete at least twenty-one hours of education approved in accordance with subdivision (2) of this subsection, which shall include at least (A) three hours of instruction on relevant federal law and regulations; (B) three hours of ethics, including instruction on fraud, consumer protection and fair lending issues; (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and (D) one hour of relevant Connecticut law.
(2) For purposes of subdivision (1) of this subsection, prelicensing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a prelicensing education course shall include review and approval of the course provider.
(3) Nothing in this subsection shall preclude any prelicensing education course, as approved by the system, that is provided by the sponsor or employer of the individual or an entity which is affiliated with the individual by an agency contract, or any subsidiary or affiliate of such sponsor, employer or entity.
(4) Prelicensing education may be offered either in a classroom, online or by any other means approved by the system.
(5) When prelicensing education requirements described in subdivision (1) of this subsection are completed in another state, such out-of-state prelicensing education requirements shall be accepted as credit towards completion of the prelicensing education requirements of this state, provided such out-of-state prelicensing education requirements are approved by the system.
(6) (A) An individual previously licensed under section 36a-489, as amended by this act, [subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489,] who is applying to be relicensed shall prove that such individual has completed [all of] the continuing education requirements for the year in which the license was last held.
(B) An individual who previously held a position as a qualified individual or branch manager, [subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-488,] at a time when such individual was not required to be licensed as a mortgage loan originator, may not hold such position again until such individual has completed [all of] the continuing education requirements for the year in which such individual last held such position and [, effective November 1, 2012,] has obtained the required mortgage loan originator license.
(b) (1) In order to meet the written test requirements referred to in sections 36a-488, as amended by this act, and 36a-489, as amended by this act, an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the system and administered by a test provider approved by the system based upon reasonable standards.
(2) A written test shall not be treated as a qualified written test for purposes of subdivision (1) of this subsection unless the test adequately measures the individual's knowledge and comprehension in appropriate subject areas, including ethics, federal law and regulation pertaining to mortgage origination, state law and regulation pertaining to mortgage origination, and federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace and fair lending issues.
(3) Nothing in this subsection shall prohibit a test provider approved by the system from providing a test at the location of the sponsor or employer, any subsidiary or affiliate of the sponsor or employer or any entity with which the individual holds an exclusive arrangement to conduct the business of a mortgage loan originator.
(4) (A) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than seventy-five per cent correct answers to questions.
(B) An individual may retake a test three consecutive times with each consecutive taking occurring at least thirty days after the preceding test. After failing three consecutive tests, an individual shall wait at least six months before taking the test again.
(C) (i) An individual who was previously licensed [subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489] as a mortgage loan originator, who completed the test in connection with such license and who has not been licensed as a mortgage loan originator within the five-year period preceding the date of the filing of such individual's application for a mortgage loan originator license, not taking into account any time during which such individual [is] was a registered mortgage loan originator, shall retake such test; and (ii) [effective October 1, 2011,] an individual previously licensed as a loan processor or underwriter who applies to be licensed again shall retake the test if such individual has not been licensed as a loan processor or underwriter within the five-year period preceding the date of the filing of such application, not taking into account any time during which such individual [is] was engaged in loan processing or underwriting but not required to be licensed under subdivision (3) of subsection (b) of section 36a-486, as amended by this act.
(c) (1) In order to meet the annual continuing education requirements referred to in subsections (a) and (b) of section 36a-489, as amended by this act, a licensed mortgage loan originator, a qualified individual or branch manager and [, effective October 1, 2011,] a licensed loan processor or underwriter, shall complete at least eight hours of education approved in accordance with subdivision (2) of this subsection. Such courses shall include at least (A) three hours of instruction on relevant federal law and regulation; (B) two hours of ethics, including instruction on fraud, consumer protection and fair lending issues; (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and (D) effective January 1, 2015, one hour of relevant Connecticut law.
(2) For purposes of subdivision (1) of this subsection, continuing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.
(3) Nothing in this subsection shall preclude any education course approved by the system that is provided by the sponsor or employer or an entity that is affiliated with the mortgage loan originator, qualified individual, [or] branch manager or [, effective October 1, 2011,] loan processor or underwriter by an agency contract, or by any subsidiary or affiliate of such sponsor, employer or entity.
(4) Continuing education may be offered either in a classroom, online or by any other means approved by the system.
(5) Except as provided in procedures adopted under subsections (a) and (b) of section 36a-489, as amended by this act, or in regulations adopted under subdivision (9) of this subsection, a licensed mortgage loan originator, qualified individual, [or] branch manager or [, effective October 1, 2011,] a licensed loan processor or underwriter, may only receive credit for a continuing education course in the year for which the course is taken, and may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(6) A licensed mortgage loan originator, [or] a qualified individual, [or] branch manager or [, effective October 1, 2011,] a licensed loan processor or underwriter who is an approved instructor of an approved continuing education course may receive credit for the licensee's own annual continuing education requirement at the rate of two hours credit for every one hour taught.
(7) When education requirements described in subdivision (1) of subsection (a) of this section are completed in another state, such out-of-state education requirements shall be accepted as credit towards completion of the education requirements of this state, provided such out-of-state education requirements are approved by the system.
(8) A licensed mortgage loan originator and [, effective October 1, 2011,] a licensed loan processor or underwriter who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of an initial or renewed license. A qualified individual or branch manager who ceases to hold such position shall complete the continuing education requirements for the last year in which such individual or branch manager held such position prior to licensure as a mortgage loan originator.
(9) A person who meets the requirements of subparagraphs (A)(i) and [(A)(iii)] (A)(ii) of subdivision (2) of subsection (a) or subparagraphs (A)(i) and (A)(iii) of subdivision (2) of subsection (b) of section 36a-489, as amended by this act, may compensate for any deficiency in an individual's continuing education requirements pursuant to regulations adopted by the commissioner.
(d) For purposes of this section "nontraditional mortgage product" means any mortgage product other than a thirty-year fixed rate mortgage.
Sec. 14. Section 36a-490 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) (1) A mortgage lender, mortgage correspondent lender and mortgage broker license shall not be transferable or assignable. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. Any licensee who intends to permanently cease engaging in the business of making residential mortgage loans or acting as a mortgage broker at any time during a license period for any cause, including, but not limited to, bankruptcy or voluntary dissolution, shall file a request to surrender the license for each office at which the licensee intends to cease to do business, on the system, not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.
(2) A mortgage loan originator licensee who intends to permanently cease engaging in the business of a mortgage loan originator at any time during a license period for any cause, including, but not limited to, bankruptcy, shall file a request to surrender the license on the system not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.
(3) [Effective October 1, 2011, a] A loan processor or underwriter licensee who intends to permanently cease engaging in the activities of a loan processor or underwriter at any time during a license period for any cause, including, but not limited to, bankruptcy, shall file a request to surrender the license on the system not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.
(b) A mortgage lender, mortgage correspondent lender or mortgage broker licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system and, in the case of a main or branch office, provides, directly to the commissioner, a bond rider or endorsement, or addendum, as applicable, to the surety bond on file with the commissioner that reflects the new name or address of the main or branch office, and (2) the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period. The licensee shall promptly file any change in the information most recently submitted in connection with the license with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, of such change in the information.
(c) The mortgage lender, mortgage correspondent lender or mortgage broker licensee shall promptly file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, of the occurrence of any of the following developments:
(1) Filing for bankruptcy, or the consummation of a corporate restructuring, of the licensee;
(2) Filing of a criminal indictment against the licensee in any way related to the lending or brokerage activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal [regulatory] action by any governmental agency against the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action by the Attorney General or the attorney general of any other state and the reasons therefor;
(5) Receiving notification of a material adverse action with respect to any existing line of credit or warehouse credit agreement;
(6) Suspension or termination of the licensee's status as an approved seller or servicer by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association;
(7) Exercise of recourse rights by investors or subsequent assignees of residential mortgage loans if such loans for which the recourse rights are being exercised, in the aggregate, exceed the licensee's net worth exclusive of real property and fixed assets;
(8) Receiving notification of filing for bankruptcy of any of the licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock of the licensee; or
(9) A decrease in the net worth required by subsection (a) of section 36a-488, as amended by this act.
(d) Each mortgage loan originator licensee and [, effective October 1, 2011, each] loan processor or underwriter licensee shall promptly file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, of any change in the information most recently submitted in connection with the license and of the occurrence of any of the following developments:
(1) Filing for bankruptcy of the licensee;
(2) Filing of a criminal indictment against the licensee;
(3) Receiving notification of the institution of license or registration denial, cease and desist, suspension or revocation procedures, or other formal or informal [regulatory] action by any governmental agency against the licensee and the reasons therefor; or
(4) Receiving notification of the initiation of any action against the licensee by the Attorney General or the attorney general of any other state and the reasons therefor.
(e) Each mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator and loan processor or underwriter license shall remain in force and effect until it has been surrendered, revoked or suspended, or until it expires or is no longer effective, in accordance with the provisions of this title.
Sec. 15. Section 36a-491 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) [The expiration date of any mortgage lender, mortgage correspondent lender and mortgage broker license that expires on September 30, 2008, shall be extended to the close of business on December 31, 2008. On and after July 1, 2008, each] Each mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator and [, on and after October 1, 2011, each] loan processor or underwriter license shall expire at the close of business on December thirty-first of the year in which it is approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for an initial license or renewal of a license as a mortgage lender or mortgage correspondent lender shall pay to the system any required fees or charges and a license fee of one thousand dollars, and each applicant for an initial or renewal license as a mortgage broker shall pay to the system any required fees or charges and a license fee of five hundred dollars. [, provided each mortgage lender or mortgage correspondent lender licensee who is a licensee on September 30, 2008, who submits a renewal application shall, at the time of making such application, pay to the system any required fees or charges and a license fee of one thousand one hundred twenty-five dollars and each mortgage broker who was a licensee on June 30, 2008, who submits a renewal application shall, at the time of making such application, pay to the system any required fees or charges and a license fee of five hundred sixty-five dollars. Effective November 1, 2009, each] Each applicant for an initial license or renewal of a license as a mortgage loan originator [and, effective October 1, 2011, as a] or loan processor or underwriter [,] shall pay to the system any required fees or charges and a license fee of three hundred dollars.
(b) All fees paid pursuant to this section, including fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license, shall be nonrefundable. No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.
Sec. 16. Section 36a-492 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) (1) Each licensed mortgage lender, mortgage correspondent lender and mortgage broker shall file with the commissioner a single surety bond, written by a surety authorized to write such bonds in this state, covering its main office and file an addendum to such bond to cover any branch office, in a penal sum determined in accordance with subsection (d) of this section, provided the penal sum of the bond for licensed mortgage lenders and mortgage correspondent lenders shall be not less than one hundred thousand dollars and the penal sum of the bond for mortgage brokers shall be not less than fifty thousand dollars. The bond shall cover all mortgage loan originators sponsored by such licensee.
(2) Each mortgage loan originator licensee shall be covered by a surety bond with a penal sum in an amount that reflects the dollar amount of loans originated by such mortgage loan originator in accordance with subsection (d) of this section, provided such coverage shall be provided through a single surety bond filed with the commissioner by the person who sponsors such mortgage loan originator.
(3) [Effective October 1, 2011,] (A) [in] In the case of an exempt registrant under subdivision (1), (2) or (3) of subsection (a) of section 36a-487: (i) The surety bond shall cover all mortgage loan originators sponsored by such exempt registrant and comply with the requirements set forth in this section, and (ii) the penal sum of such bond shall be in an amount determined in accordance with subsection (d) of this section, provided the penal sum of the bond shall be not less than one hundred thousand dollars; (B) in the case of an exempt registrant under subsection (b) of section 36a-487: (i) The surety bond shall cover all mortgage loan originators sponsored by such exempt registrant and comply with the requirements set forth in this section, and (ii) the penal sum of the bond shall be in an amount determined in accordance with subsection (d) of this section, provided the penal sum shall be not less than fifty thousand dollars; and (C) in the case of an exempt registrant under subdivision (4) of subsection (a) of section 36a-487, the surety bond shall cover all mortgage loan originators sponsored by such exempt registrant and comply with the requirements set forth in section 36a-671d.
(4) (A) The principal on a bond required by subdivisions (1) and (2) of this subsection shall annually confirm, in connection with any renewal request, that it maintains the required penal sum in an amount required by subsection (d) of this section after review of the preceding four-quarter period ending June thirtieth. The principal shall file such information as the commissioner may require under subsection (d) of this section and shall file, as the commissioner may require, pursuant to subdivision (d) of this section, any bond rider or endorsement to the surety bond on file with the commissioner to reflect any changes necessary to maintain the surety bond coverage required by this section.
(B) [Effective October 1, 2011, the] The principal on a bond required by subdivision (3) of this subsection shall annually confirm, in connection with any renewal request, that it maintains the required penal sum in an amount required by subsection (d) of this section after review of the preceding four-quarter period ending June thirtieth. The principal shall file such information as the commissioner may require under subsection (d) of this section and shall file, as the commissioner may require pursuant to subsection (d) of this section, any bond rider or endorsement to the surety bond on file with the commissioner to reflect any changes necessary to maintain the surety bond coverage required by this section.
(5) The commissioner may adopt regulations in accordance with chapter 54 with respect to the requirements for such surety bonds.
(b) The bond required by subsection (a) of this section shall be (1) in a form approved by the Attorney General, and (2) conditioned upon the mortgage lender, mortgage correspondent lender or mortgage broker licensee and any mortgage loan originator licensee sponsored by such mortgage lender, mortgage correspondent lender or mortgage broker or, in the case of a mortgage loan originator licensee sponsored [after October 1, 2011,] by an exempt registrant, upon such mortgage loan originator licensee faithfully performing any and all written agreements or commitments with or for the benefit of borrowers and prospective borrowers, truly and faithfully accounting for all funds received from a borrower or prospective borrower by the licensee in the licensee's capacity as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator, and conducting such mortgage business consistent with the provisions of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act. Any borrower or prospective borrower who may be damaged by failure to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a borrower or prospective borrower to a licensee, may proceed on such bond against the principal or surety thereon, or both, to recover damages. [Commencing August 1, 2009, any] Any borrower or prospective borrower who may be damaged by a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator licensee's failure to satisfy a judgment against the licensee arising from the making or brokering of a nonprime home loan, as defined in section 36a-760, may proceed on such bond against the principal or surety thereon, or both, to recover the amount of the judgment. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon a licensee pursuant to subsection (a) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65, as amended by this act. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license for the main office and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.
(c) The surety company shall have the right to cancel the bond at any time by a written notice to the principal stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the principal at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety company, the commissioner shall give written notice to the principal of the date such bond cancellation shall take effect and such notice shall be deemed notice to each mortgage loan originator licensee sponsored by such principal. The commissioner shall automatically suspend the licenses of a mortgage lender, mortgage correspondent lender or mortgage broker on such date and inactivate the licenses of the mortgage loan originators sponsored by such lender, correspondent lender or broker. [On and after October 1, 2011, in] In the case of a cancellation of an exempt registrant's bond, the commissioner shall inactivate the licenses of the mortgage loan originators sponsored by such exempt registrant. No automatic suspension or inactivation shall occur if, prior to the date that the bond cancellation shall take effect, (1) the principal submits a letter of reinstatement of the bond from the surety company or a new bond, (2) the mortgage lender, mortgage correspondent lender or mortgage broker licensee has ceased business and has surrendered all licenses in accordance with subsection (a) of section 36a-490, as amended by this act, or (3) in the case of a mortgage loan originator licensee, the sponsorship with the mortgage lender, mortgage correspondent lender or mortgage broker who was automatically suspended pursuant to this section or, [after October 1, 2011,] with the exempt registrant who failed to provide the bond required by this section, has been terminated and a new sponsor has been requested and approved. After a mortgage lender, mortgage correspondent lender or mortgage broker license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494, as amended by this act, and an opportunity for a hearing on such action in accordance with section 36a-51 and require such licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section. [Effective October 1, 2011, the] The commissioner may provide information to an exempt registrant concerning actions taken by the commissioner pursuant to this subsection against any mortgage loan originator licensee that was sponsored and bonded by such exempt registrant.
(d) The penal sum of the bond required by subdivisions (1) to (3), inclusive, of subsection (a) of this section shall be determined as follows:
(1) An applicant for an initial mortgage lender license or mortgage correspondent lender license shall file a bond in a penal sum of one hundred thousand dollars in connection with its application for the main office.
(2) An applicant for an initial mortgage broker license shall file a bond in a penal sum of fifty thousand dollars in connection with its application for the main office.
(3) [Effective October 1, 2011, an] An exempt registrant under subsection (d) of section 36a-487 who is exempt from licensure under subdivision (1), (2) or (3) of subsection (a) of section 36a-487 shall file a bond in a penal sum of one hundred thousand dollars the first time such exempt registrant sponsors a mortgage loan originator.
(4) [Effective October 1, 2011, an] An exempt registrant under subsection (d) of section 36a-487 who is exempt from licensure under subsection (b) of section 36a-487 shall file a bond in a penal sum of fifty thousand dollars the first time such exempt registrant sponsors a mortgage loan originator.
(5) [Effective October 1, 2011, an] An exempt registrant under subsection (d) of section 36a-487, who is exempt from licensure under subdivision (4) of subsection (a) of section 36a-487, shall file a bond in a penal sum as set forth in section 36a-671d.
(6) (A) For mortgage lender and mortgage correspondent lender licensees [,] and [, after October 1, 2011,] persons sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subsection (d) of section 36a-487 and who are exempt from licensing under subdivision (1), (2) or (3) of subsection (a) of section 36a-487 if: (i) The aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is less than thirty million dollars, the penal sum of the bond shall be one hundred thousand dollars; (ii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is thirty million dollars or more but less than one hundred million dollars, the penal sum of the bond shall be two hundred thousand dollars; (iii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is one hundred million dollars or more but less than two hundred fifty million dollars, the penal sum of the bond shall be three hundred thousand dollars; and (iv) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is two hundred fifty million dollars or more, the penal sum of the bond shall be five hundred thousand dollars.
(B) For mortgage broker licensees and [, after October 1, 2011,] persons who are sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subsection (d) of section 36a-487 and who are exempt from licensing under subsection (b) or (c) of section 36a-487 [:] if: (i) The aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is less than thirty million dollars, the penal sum of the bond shall be fifty thousand dollars; (ii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is thirty million dollars or more but less than fifty million dollars, the penal sum of the bond shall be one hundred thousand dollars; and (iii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is fifty million dollars or more, the penal sum of the bond shall be one hundred fifty thousand dollars.
(7) For purposes of this subsection, the aggregate dollar amount of all residential mortgage loans originated by such licensee or [, after October 1, 2011, such] exempt registrant [,] includes the aggregate dollar amount of all closed residential mortgage loans that the licensee or exempt registrant originated, brokered or made, as applicable.
(8) Financial information necessary to verify the aggregate dollar amount of residential mortgage loans originated shall be filed with the commissioner, as the commissioner may require, and shall be reported on the system at such time and in such form as the system may require.
(9) The commissioner may require a change in the penal sum of the bond if the commissioner determines at any time that the aggregate dollar amount of all residential mortgage loans originated warrants a change in the penal sum of the bond.
Sec. 17. Subsection (c) of section 36a-494 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(c) (1) The commissioner may order a licensee to remove any individual conducting business under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, from office and from employment or retention as an independent contractor in the mortgage business in this state whenever the commissioner finds as the result of an investigation that such [person] individual: (A) Has violated any of said sections or any regulation or order issued thereunder; or (B) for any reason that would be sufficient grounds for the commissioner to deny a license under section 36a-489, as amended by this act, by sending a notice to such [person] individual by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by such [person] individual on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (i) A statement of the time, place and nature of the hearing; (ii) a statement of the legal authority and jurisdiction under which the hearing is to be held; (iii) a reference to the particular sections of the general statutes, regulations or orders alleged to have been violated; (iv) a short and plain statement of the matters asserted; and (v) a statement indicating that such [person] individual may file a written request for a hearing on the matters asserted not later than fourteen days after receipt of the notice. If the commissioner finds that the protection of borrowers requires immediate action, the commissioner may suspend any such [person] individual from office and require such [person] individual to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this subsection, by incorporating a finding to that effect in such notice. The suspension or prohibition shall become effective upon receipt of such notice and, unless stayed by a court, shall remain in effect until the entry of a permanent order or the dismissal of the matters asserted.
(2) If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such [person] individual fails to appear at the hearing. After the hearing, if the commissioner finds that any of the grounds set forth in subparagraph (A) or (B), of subdivision (1) of this subsection exist with respect to such [person] individual, the commissioner may order the removal of such [person] individual from office and from any employment in the mortgage business in this state. If such [person] individual fails to appear at the hearing, the commissioner may order the removal of such [person] individual from office and from employment in the mortgage business in this state.
Sec. 18. Section 36a-498e of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
No person [or individual] who is required to be licensed and who is subject to sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, may:
(1) Directly or indirectly employ any scheme, device or artifice to defraud or mislead borrowers or lenders or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person;
(3) Obtain property by fraud or misrepresentation;
(4) Solicit or enter into a contract with a borrower that provides in substance that such person or individual may earn a fee or commission through "best efforts" to obtain a loan even though no loan is actually obtained for the borrower;
(5) Solicit, advertise or enter into a contract for specific interest rates, points or other financing terms unless the terms are actually available at the time of soliciting, advertising or contracting;
(6) Conduct any business as a mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator or loan processor or underwriter without holding a valid license as required under sections 36a-485 to 36a-498f, inclusive, as amended by this act, sections 22 to 31, inclusive, of this act, 36a-534a and 36a-534b, as amended by this act, or assist or [aide] aid and abet any person in the conduct of business as a mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator or loan processor or underwriter without a valid license as required under said sections;
(7) Fail to make disclosures as required by sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, and any other applicable state or federal law including regulations thereunder;
(8) Fail to comply with sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, or rules or regulations adopted under said sections or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections;
(9) Make, in any manner, any false or deceptive statement or representation including, with regard to the rates, points or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising;
(10) Negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, as defined in section 36a-2, or in connection with any investigation conducted by the commissioner or another governmental agency;
(11) Make any payment, threat or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan as defined in section 36a-485, as amended by this act, or make any payment, threat or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property;
(12) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act;
(13) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer; or
(14) Fail to truthfully account for moneys belonging to a party to a residential mortgage loan transaction.
Sec. 19. Section 36a-498f of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) In addition to any authority provided under this title, the [Banking Commissioner] commissioner shall have the authority to conduct investigations and examinations as follows:
(1) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to: (A) Criminal, civil and administrative history information; (B) personal history and experience information including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the federal Fair Credit Reporting Act, 15 USC 1681a; and (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.
(2) For the purposes of investigating violations or complaints arising under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a or 36a-534b, as amended by this act, or for the purposes of examination, the commissioner may review, investigate or examine any licensee, individual or person subject to said sections as often as necessary in order to carry out the purposes of said sections. The commissioner may direct, subpoena or order the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or subject matter of any such examination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.
(b) Each licensee [, individual] or person subject to sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this section including accounting compilations, information lists and data concerning loan transactions in a format prescribed by the commissioner or such other information the commissioner deems necessary to carry out the purposes of this section.
(c) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no [individual or] person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the licensee have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a or 36a-534b, as amended by this act, the licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
(d) In order to carry out the purposes of this section, the commissioner may:
(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;
(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section;
(3) Use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the licensee [, individual] or person subject to sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act;
(4) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and
(5) Accept audit reports made by an independent certified public accountant for the licensee, individual or person subject to sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of the examination, report of investigation or other writing of the commissioner.
(e) The authority of this section shall remain in effect, whether such licensee [, individual] or person subject to sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.
(f) No licensee [, individual] or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.
Sec. 20. Section 36a-534b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) (1) In addition to any other duties imposed upon the commissioner by law, the commissioner shall require mortgage lenders, mortgage correspondent lenders, mortgage brokers, lead generators, mortgage loan originators and loan processors or underwriters to be licensed and registered through the system. In order to carry out this requirement, the commissioner shall participate in the system and permit the system to process applications for mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator and loan processor or underwriter licenses in this state and receive and maintain records related to such licenses that are allowed or required to be maintained by the commissioner. For this purpose, the commissioner may establish requirements as necessary for participation in the system, including: (A) Background checks for criminal history through (i) fingerprint or other databases, (ii) civil or administrative records, or (iii) credit history or any other information as deemed necessary by the system; (B) the payment of fees to apply for or renew licenses through the system; (C) the setting or resetting of renewal or reporting dates; and (D) the requirements for amending or surrendering a license or any other such activities as the commissioner deems necessary for participation in the system. For the purpose of participating in the system, the commissioner may waive or modify, in whole or in part, by regulation or order, any requirement of this section and sections 36a-485 to 36a-498f, inclusive, as amended by this act, and 36a-534a and establish new requirements as reasonably necessary to participate in the system. For the purposes of implementing an orderly and efficient licensing process, the commissioner may adopt licensing regulations, in accordance with the provisions of chapter 54, and interim procedures for licensing and acceptance of applications. For previously licensed individuals, the commissioner may establish expedited review and licensing procedures.
(2) The commissioner shall report regularly to the system violations of and enforcement actions under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, and other relevant information.
(3) The commissioner may establish relationships or enter into contracts with the system or other entities designated by the system to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act.
(4) For the purposes of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, and to reduce the points of contact that the Federal Bureau of Investigation may have to maintain for purposes of subsections (b) and (c) of section 36a-488, as amended by this act, the commissioner may use the system as a channeling agent for requesting information from and distributing information to the United States Department of Justice or any governmental agency.
(5) For the purposes of sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, and to reduce the points of contact that the commissioner may have to maintain for purposes of subsections (b) and (c) of section 36a-488, as amended by this act, the commissioner may use the system as a channeling agent for requesting and distributing information to and from any source, as directed by the commissioner.
(6) Mortgage lenders, mortgage correspondent lenders, mortgage brokers, lead generators, mortgage loan originators and [, effective October 1, 2011, individuals licensed as] loan processors or underwriters may challenge information entered into the system by the commissioner. Such challenge shall (A) be made in writing to the commissioner, (B) set forth the specific information being challenged, and (C) include any evidence which supports the challenge. Challenges shall be limited to the factual accuracy of information within the system. If the commissioner determines that the information entered into the system is factually inaccurate, the commissioner shall take prompt action to correct such information. Nothing in this subdivision shall be construed to permit a challenge under this section to the merits or factual basis of any administrative action taken by the commissioner pursuant to this title.
[(b) (1) Each first mortgage lender license and secondary mortgage lender license in existence on June 30, 2008, shall be deemed on and after July 1, 2008, to be a mortgage lender license, as defined in section 36a-485; (2) each first mortgage correspondent lender license and secondary mortgage correspondent lender license in existence on June 30, 2008, shall be deemed on and after July 1, 2008, to be a mortgage correspondent lender license, as defined in section 36a-485; (3) each first mortgage broker license and secondary mortgage broker license in existence on June 30, 2008, shall be deemed on and after July 1, 2008, to be a mortgage broker license, as defined in section 36a-485; and (4) each originator registration in existence on June 30, 2008, shall be deemed on and after July 1, 2008, to be a mortgage loan originator license, as defined in section 36a-485.
(c) (1) Each person licensed on July 1, 2008, as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator shall, prior to October 1, 2008, transition on to the system by submitting all licensing and license-related information required by the system for this state.]
[(2) On and after July 1, 2008, any] (b) Any licensing or license-related filings shall be submitted exclusively through the system, except as directed by the commissioner.
[(3)] (c) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator and loan processor or underwriter licensee and each exempt registrant, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision. Failure of an exempt registrant to timely and accurately submit a report of condition shall form a basis to inactivate the licenses of all sponsored mortgage loan originators or loan processor or underwriters. To the extent that the system does not require submission of reports of condition by individual mortgage loan originator or loan processor or underwriter licensees, such individual licensees shall timely and accurately report all required information in their possession to their sponsor for purposes of their sponsor's reporting obligation. Failure of an individual licensee to timely and accurately report required information in such licensee's possession to such licensee's sponsor shall constitute a violation of this provision.
[(d) Notwithstanding the provisions of this section, any initial application for a license submitted on the system between October 1, 2008, and December 31, 2008, shall not be approved by the commissioner prior to January 1, 2009.]
Sec. 21. Subdivision (1) of subsection (d) of section 36a-719 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(d) (1) Withdrawal of an application for a license filed under this section shall become effective upon [receipt by the commissioner of a notice of intent to withdraw such application] the commissioner's acceptance on the system of a withdrawal request. The commissioner may deny a license up to one year after the effective date of withdrawal.
Sec. 22. (NEW) (Effective October 1, 2016) On and after January 1, 2017, no person shall act as a lead generator, directly or indirectly, without first obtaining a license under section 23 of this act.
Sec. 23. (NEW) (Effective October 1, 2016) (a) The Banking Commissioner shall issue a lead generator license to an applicant for such license if the commissioner finds, at a minimum, that: (1) The applicant demonstrates that the character, reputation, integrity and general fitness of the applicant, any control person of the applicant and the qualified individual are such as to command the confidence of the community; (2) the applicant has not made a material misstatement in the application; and (3) the applicant has met any other requirements determined by the commissioner. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the denial and the reasons for such denial. Subject to the provisions of 46a-80 of the general statutes, the commissioner may deny an application based on the history of criminal convictions of the applicant, any control person of the applicant or the qualified individual.
(b) An application for a license as a lead generator or an application for a license renewal shall be filed, in a form prescribed by the commissioner, with the system, as defined in section 36a-2 of the general statutes, and accompanied by the fees required under section 25 of this act. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 22 to 31, inclusive, of this act. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant and the qualified individual, including, but not limited to, personal history and experience, in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. The applicant shall notify the commissioner on the system of any change to the information submitted in connection with its most recent application for licensure not later than fifteen days after the applicant has reason to know of such change. The commissioner, in accordance with section 29-17a of the general statutes, may conduct a state or national criminal history records check of the applicant, any control person of the applicant and the qualified individual, and, in accordance with section 36a-24b of the general statutes, may require the submission of fingerprints of such persons to the Federal Bureau of Investigation or other state, national or international criminal databases as part of the application.
(c) (1) The minimum standards for license renewal for a lead generator shall include the following: (A) The applicant continues to meet the minimum standards under subsection (a) of this section; and (B) the lead generator has paid all required fees for renewal of the license.
(2) The license of a lead generator who fails to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a lead generator license if the licensee receives a deficiency on the system indicating that the payment required by subdivision (1) of this subsection was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (A) give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 28 of this act, and an opportunity for a hearing on such action in accordance with section 36a-51 of the general statutes, and (B) require such licensee to take or refrain from taking such action that, in the opinion of the commissioner, will effectuate the purposes of this section.
(d) (1) Withdrawal of an application for a license shall become effective upon the commissioner's acceptance on the system of a withdrawal request. The commissioner may deny a license up to the date one year after the effective date of withdrawal.
(2) If the license of a lead generator expires due to the licensee's failure to renew, the commissioner may institute a revocation or suspension proceeding or issue an order suspending or revoking such license pursuant to section 28 of this act not later than one year after the date of such expiration.
(e) The commissioner may deem an application for a license under this section abandoned if the applicant fails to respond to any request for information required under sections 22 to 31, inclusive, of this act or the regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that, if such information is submitted more than sixty days after the date of such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 22 to 31, inclusive, of this act.
Sec. 24. (NEW) (Effective October 1, 2016) (a) A lead generator license shall not be transferable or assignable. No licensee may use any name other than its legal name or a fictitious name approved by the Banking Commissioner, provided such licensee may not use its legal name if the commissioner disapproves of the use of such name. Any licensee who intends to permanently cease acting as a lead generator at any time during a license period for any cause, including, but not limited to, bankruptcy or voluntary dissolution, shall file a request to surrender the license on the system, as defined in section 36a-2 of the general statutes, not later than fifteen days after the date of cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51 of the general statutes. No surrender shall be effective until accepted by the commissioner.
(b) A lead generator licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system, and (2) the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period. The licensee shall file any change in the information most recently submitted in connection with the license with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, of such change in the information not later than fifteen days after the licensee has reason to know of such change.
(c) The lead generator licensee shall file on the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, not later than fifteen days after the occurrence of any of the following developments:
(1) Filing for bankruptcy, or the consummation of a corporate restructuring, of the licensee;
(2) Filing of a criminal indictment against the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency and the reasons therefor;
(4) Receiving notification of the initiation of any action by the Attorney General or the attorney general of any other state and the reasons therefor;
(5) Receiving notification of filing for bankruptcy of any of the licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock of the licensee; or
(6) Receiving notification of the initiation of a class action lawsuit on behalf of consumers against the licensee that is related to the operation of the licensed business.
Sec. 25. (NEW) (Effective October 1, 2016) (a) Each lead generator license shall expire at the close of business on December thirty-first of the year in which it is approved, unless such license is renewed, provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for an initial license or renewal of a license as a lead generator shall pay to the system, as defined in section 36a-2 of the general statutes, any required fees or charges and a license fee of one thousand dollars.
(b) All fees paid pursuant to this section, including fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license, shall be nonrefundable. No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.
Sec. 26. (NEW) (Effective January 1, 2017) (a) Each lead generator shall include the following statement in all advertisements of residential mortgage loans and solicitations of leads, clearly and conspicuously expressed: LEAD GENERATOR ONLY, NOT ACTING IN THE CAPACITY OF A MORTGAGE LOAN ORIGINATOR, MORTGAGE BROKER, MORTGAGE CORRESPONDENT LENDER OR MORTGAGE LENDER. INFORMATION RECEIVED WILL BE SHARED WITH ONE OR MORE THIRD PARTIES IN CONNECTION WITH YOUR RESIDENTIAL MORTGAGE LOAN INQUIRY.
(b) No lead generator shall: (1) Accept payment of any advance fee, as such term is defined in section 36a-485 of the general statutes, as amended by this act, in connection with a residential mortgage loan, or (2) use, sell, lease, exchange or otherwise transfer or release information received from a consumer in connection with a residential mortgage loan inquiry for purposes other than as necessary to facilitate a residential mortgage loan transaction.
Sec. 27. (NEW) (Effective October 1, 2016) A lead generator licensee shall maintain adequate records of its lead generation activities at the office named in the license, or, if requested by the Banking Commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by an express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send such records to the commissioner. Such records shall include, for the preceding two-year period: (1) Copies of all solicitation materials used in its business regardless of medium, including, but not limited to, business cards, telephone scripts, mailers, electronic mail, and radio, television and Internet advertisements, (2) records of any contact or attempted contact with a consumer, including the name, date, method and nature of contact, and any information provided to or received from the consumer, and (3) the name, address and, if applicable, unique identifier of any person who received, requested or contracted for leads or referrals and any fees or consideration charged or received for such services.
Sec. 28. (NEW) (Effective October 1, 2016) (a) The Banking Commissioner may suspend, revoke or refuse to renew any lead generator license or take any other action, in accordance with the provisions of section 36a-51 of the general statutes, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 22 to 31, inclusive, of this act, or if the commissioner finds that the licensee, any control person of the licensee or qualified individual, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misrepresentation; or (3) violated any of the provisions of title 36a of the general statutes or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business.
(b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 22 to 31, inclusive, of this act or of any regulations adopted pursuant thereto, or any licensee has committed any fraud or made any misrepresentation, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52 of the general statutes.
(c) (1) The commissioner may order a lead generator licensee to remove any individual conducting business under sections 22 to 31, inclusive, of this act from office or employment whenever the commissioner finds as the result of an investigation that such individual: (A) Has violated any of the provisions of said sections, any regulation adopted thereunder or any order issued thereunder; or (B) has for any other reason failed to meet the minimum requirements for maintaining the license. The commissioner shall send notice of such finding to such individual by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by such individual on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (i) A statement of the time, place and nature of the hearing; (ii) a statement of the legal authority and jurisdiction under which the hearing is to be held; (iii) a reference to the particular sections of the general statutes, regulations or orders alleged to have been violated; (iv) a short and plain statement of the matters asserted; and (v) a statement indicating that such individual may file a written request for a hearing on the matters asserted not later than fourteen days after receipt of the notice. If the commissioner finds that the protection of consumers requires immediate action, the commissioner may suspend any such individual from office and require such individual to take or refrain from taking such action as, in the opinion of the commissioner, will effectuate the purposes of this subsection, by incorporating a finding to that effect in such notice. The suspension or prohibition shall become effective upon receipt of such notice and, unless stayed by a court, shall remain in effect until the entry of a permanent order or the dismissal of the matters asserted.
(2) If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such individual fails to appear at the hearing. After the hearing, if the commissioner finds that any of the grounds set forth in subparagraph (A) or (B) of subdivision (1) of this subsection exist with respect to such individual, the commissioner may order a licensee to remove such individual from office and from any employment in the lead generation business in this state. If such individual fails to appear at the hearing, the commissioner may order the removal of such individual from office and from employment in the lead generation business in this state.
Sec. 29. (NEW) (Effective October 1, 2016) The Banking Commissioner may adopt such regulations, in accordance with chapter 54 of the general statutes, as the commissioner deems necessary to administer and enforce the provisions of sections 22 to 31, inclusive, of this act.
Sec. 30. (NEW) (Effective January 1, 2017) (a) No lead generator shall:
(1) Initiate any outbound telephone call using an automatic telephone dialing system or an artificial or prerecorded voice without the prior express written consent of the recipient;
(2) Fail to transmit the lead generator's name and telephone number to any caller identification service in use by a consumer;
(3) Initiate an outbound telephone call to a consumer's residence between nine o'clock p.m. and eight o'clock a.m. local time in the consumer's location;
(4) Fail to clearly and conspicuously identify the lead generator and the purpose of the contact in its written and oral communications with a consumer;
(5) Fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an electronic mail address;
(6) Initiate an unsolicited advertisement via electronic mail to a consumer more than ten business days after the receipt of a request from such consumer to opt out of such unsolicited advertisements;
(7) Use a subject heading or electronic mail address in a commercial electronic mail message that would likely mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the sender, contents or subject matter of the message;
(8) Sell, lease, exchange or otherwise transfer or release the electronic mail address or telephone number of a consumer who has requested to opt out of future solicitations.
(9) Collect, buy, lease, exchange or otherwise transfer or receive an individual's Social Security number or bank account number;
(10) Use information from a trigger lead when a lender obtains a copy of a customer's credit report to solicit consumers who have opted out of firm offers of credit under the federal Fair Credit Reporting Act;
(11) Initiate a telephone call to a consumer who has placed his or her contact information on a federal or state Do Not Call list, unless the consumer has provided express written consent;
(12) Represent to the public, through advertising or other means of communicating or providing information, including the use of business cards or stationery, brochures, signs or other promotional items, that such lead generator can or will perform any other activity requiring licensure under title 36a of the general statutes, unless such lead generator is duly licensed to perform such other activity or exempt from such licensure requirements;
(13) Refer applicants to, or receive a fee from, any person who is required to be licensed under title 36a of the general statutes but was not so licensed as of the time of performance of such lead generator's services;
(14) Assist or aid and abet any person in the conduct of business requiring licensure under title 36a of the general statutes when such person does not hold the license required;
(15) Directly or indirectly employ any scheme, device or artifice to defraud or mislead any person;
(16) Make, in any manner, any false, misleading or deceptive statement or representation in connection with a residential mortgage loan or engage in bait and switch advertising; or
(17) Negligently make any false statement or knowingly or wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, as defined in section 36a-2 of the general statutes, or in connection with any investigation conducted by the Banking Commissioner or other governmental agency.
(b) A violation of any provision of this section or section 22 or 26 of this act shall be deemed an unfair or deceptive act or practice pursuant to subsection (a) of section 42-110b of the general statutes.
Sec. 31. (NEW) (Effective October 1, 2016) (a) In addition to any authority provided under title 36a of the general statutes, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:
(1) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with this section and sections 22 to 30, inclusive, of this act, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to, (A) criminal, civil and administrative history information, (B) personal history and experience information, and (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.
(2) For the purposes of investigating violations or complaints arising under this section and sections 22 to 30, inclusive, of this act or for the purposes of examination, the commissioner may review, investigate or examine any lead generator licensee or person subject to said sections as often as necessary in order to carry out the purposes of said sections. The commissioner may direct, subpoena or order the attendance of and examine under oath all persons whose testimony may be required about the lead generation business or subject matter of any such examination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.
(b) Each lead generator licensee or person subject to this section and sections 22 to 30, inclusive, of this act shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this section including accounting compilations, information lists and data concerning residential mortgage loan transactions in a format prescribed by the commissioner or such other information the commissioner deems necessary to carry out the purposes of this section and sections 22 to 30, inclusive, of this act.
(c) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the lead generator licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the lead generator licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of this section and sections 22 to 30, inclusive, of this act, the lead generator licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
(d) In order to carry out the purposes of this section, the commissioner may:
(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;
(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section;
(3) Use, hire, contract for or employ public or privately available analytical systems, methods or software to examine or investigate the lead generator licensee or person subject to this section and sections 22 to 30, inclusive, of this act;
(4) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and
(5) (A) Accept audit reports made by an independent certified public accountant for the lead generator licensee or person subject to this section and sections 22 to 30, inclusive, of this act, in the course of that part of the examination covering the same general subject matter as the audit, and (B) incorporate the audit report into the report of investigation or examination or other writing of the commissioner.
(e) The authority of this section shall remain in effect, regardless of whether such lead generator licensee or person subject to this section and sections 22 to 30, inclusive, of this act, acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.
(f) No lead generator licensee or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.
Sec. 32. Subdivision (6) of subsection (c) of section 36a-65 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(6) A licensee under section 36a-489, as amended by this act, 36a-541, 36a-556, 36a-581, 36a-600, 36a-628, 36a-656, 36a-671, 36a-719, as amended by this act, or 36a-801 or section 23 of this act shall pay to the commissioner the actual cost of any examination of the licensee, as such cost is determined by the commissioner. If the licensee fails to pay such cost not later than sixty days after receipt of demand from the commissioner, the commissioner may suspend the license until such costs are paid.
Sec. 33. Subsection (c) of section 4-182 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(c) No revocation, suspension, annulment or withdrawal of any license is lawful unless, prior to the institution of agency proceedings, the agency gave notice by mail or personal delivery to the licensee of facts or conduct which warrant the intended action and the specific provisions of the general statutes or of regulations adopted by the agency that authorize such intended action, and the licensee was given an opportunity to show compliance with all lawful requirements for the retention of the license. If the agency finds that public health, safety or welfare imperatively requires emergency action, and incorporates a finding to that effect in its order, summary suspension of a license may be ordered pending proceedings for revocation or other action. These proceedings shall be promptly instituted and determined.
Sec. 34. Subdivision (1) of section 36b-3 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
(1) "Agent" means any individual, other than a broker-dealer, who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. "Agent" does not include an individual who represents an issuer in (A) effecting transactions in a security exempted by subdivision (1), (2), (3), (4), (6), (9), (10), (11) or (22) of subsection (a) of section 36b-21, (B) effecting transactions exempted by subsection (b) of section 36b-21, except for transactions exempted by subdivisions (10), (13) or (14) of said subsection, (C) effecting transactions with existing employees, partners or directors of the issuer if no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state, or (D) effecting transactions in any covered security, except for covered securities within the meaning of Sections 18(b)(2) or [18(b)(4)(D)] 18(b)(4)(E) of the Securities Act of 1933. "Agent" does not include such other persons not within the intent of this subdivision as the commissioner may by regulation or order determine. A general partner, officer or director of a broker-dealer or issuer, or a person occupying a similar status or performing similar functions, is an agent only if such person otherwise comes within this definition and any compensation that such person receives is directly or indirectly related to purchases or sales of securities.
Sec. 35. Subsection (a) of section 36b-6 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(a) No person shall transact business in this state as a broker-dealer unless such person is registered under sections 36b-2 to 36b-34, inclusive. No person shall transact business in this state as a broker-dealer in contravention of a sanction that is currently effective imposed by the Securities and Exchange Commission or by a self-regulatory organization of which such person is a member if the sanction would prohibit such person from effecting transactions in securities in this state. No individual shall transact business as an agent in this state unless such individual is (1) registered as an agent of the broker-dealer or issuer whom such individual represents in transacting such business, or (2) an associated person who represents a broker-dealer in effecting transactions described in subdivisions [(2) and (3) of Section 15(h)] (3) and (4) of Section 15(i) of the Securities Exchange Act of 1934. No individual shall transact business in this state as an agent of a broker-dealer in contravention of a sanction that is currently effective imposed by the Securities and Exchange Commission or a self-regulatory organization of which the employing broker-dealer is a member if the sanction would prohibit the individual employed by such broker-dealer from effecting transactions in securities in this state.
Sec. 36. Section 36b-14 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(a) (1) Every registered investment adviser shall make, keep and preserve such accounts, correspondence, memoranda, papers, books and other records as the commissioner by regulation adopted, in accordance with chapter 54, or order prescribes. All such records shall be preserved for such period as the commissioner by regulation or order prescribes.
(2) Every investment adviser that is registered with the Securities and Exchange Commission or excepted from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940, and every registered broker-dealer, shall make, keep and preserve such accounts, correspondence, memoranda, papers, books and other records as the Securities and Exchange Commission requires. All such records shall be preserved for such period as the Securities and Exchange Commission requires.
(3) Broker-dealer records required to be maintained under subdivision (2) of this subsection may be maintained in any form of data storage acceptable under Section 17(a) of the Securities Exchange Act of 1934 if they are readily accessible to the commissioner. Investment adviser records required to be maintained under this section may be stored on microfilm, microfiche or on an electronic data processing system or similar system utilizing an internal memory device provided that a printed copy of any such record is immediately accessible.
(b) (1) Every registered investment adviser shall file such financial reports as the commissioner by regulation prescribes.
(2) Every investment adviser that is registered with the Securities and Exchange Commission or excepted from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940, and, subject to Section [15(h)] 15(i) of the Securities Exchange Act of 1934, every registered broker-dealer shall file such financial reports as the commissioner by regulation prescribes, except that the commissioner shall not require the filing of financial reports that are not required to be filed with the Securities and Exchange Commission.
(c) If the information contained in any document filed with the commissioner under this section is or becomes inaccurate or incomplete in any material respect, the person making the filing shall promptly file a correcting amendment unless notification of the correction has been given under sections 36b-2 to 36b-34, inclusive.
(d) All the records of a registered investment adviser and a registered broker-dealer referred to in subsection (a) of this section are subject at any time or from time to time to such reasonable periodic, special or other examinations by the commissioner, within or without this state, as the commissioner deems necessary or appropriate in the public interest or for the protection of investors. Every registered investment adviser and every registered broker-dealer shall keep such records open to examination by the commissioner and, upon the commissioner's request, shall provide copies of any such records to the commissioner. For the purpose of avoiding unnecessary duplication of examinations, the commissioner, insofar as the commissioner deems it practicable in administering this subsection, may cooperate with the securities administrators of other states, the Securities and Exchange Commission, and any self-regulatory organization.
(e) Subject to Section [15(h)] 15(i) of the Securities Exchange Act of 1934 or Section 222 of the Investment Advisers Act of 1940, an agent may not have custody of funds or securities of a customer except under the supervision of a broker-dealer and an investment adviser agent may not have custody of funds or securities of a client except under the supervision of an investment adviser. Subject to Section [15(h)] 15(i) of the Securities Exchange Act of 1934 or Section 222 of the Investment Advisers Act of 1940, the commissioner may, by regulation adopted, in accordance with chapter 54, or order, prohibit, limit or impose conditions on a broker-dealer regarding custody of funds or securities of a customer and on an investment adviser regarding custody of funds or securities of a client.
Sec. 37. Subsection (e) of section 36b-21 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(e) Any person who offers or sells a security that is a covered security under Section [18(b)(4)(D)] 18(b)(4)(E) of the Securities Act of 1933 shall file a notice with the commissioner within fifteen days after the first sale of such a security in this state. Such notice shall contain such information as the commissioner may require and shall be accompanied by a consent to service of process as required by subsection (g) of section 36b-33 and a nonrefundable fee of one hundred fifty dollars.
Sec. 38. Subsection (d) of section 36b-31 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(d) Subject to Section [15(h)] 15(i) of the Securities Exchange Act of 1934 and Section 222 of the Investment Advisers Act of 1940, the commissioner may, by regulation or order, prescribe: (1) The form and content of financial statements required under sections 36b-2 to 36b-34, inclusive; (2) the circumstances under which consolidated financial statements shall be filed; and (3) whether any required financial statements shall be certified by independent certified public accountants. All financial statements shall be prepared in accordance with generally accepted accounting principles.
Sec. 39. Section 36a-773 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
Every retail seller or sales finance company, if insurance is included in a retail installment contract, shall, within fifteen days after execution of the retail installment contract, send or cause to be sent to the retail buyer a policy or policies or certificate of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the insurance contract or contracts. [of the insurance.] In the event of repossession of goods under section 36a-785, as amended by this act, where the holder of the retail installment contract has received a refund of all or part of the unearned insurance premiums paid by the retail buyer in connection with the retail installment contract, the holder shall apply such amount toward the balance of the retail buyer's obligations under the retail installment contract. For purposes of this section, "unearned insurance premiums" means the premiums that are collected by an insurer in advance, but subject to return if the coverage under the insurance contract or contracts ends before the term covered by the premiums is complete.
Sec. 40. Section 36a-774 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
Every installment loan contract shall be in writing executed by the retail buyer and a copy thereof shall be delivered to such retail buyer at the time of the execution thereof. Within fifteen days after the execution of such installment loan contract, the holder thereof shall send or cause to be sent to the retail buyer a policy or policies or certificates of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the insurance contract or contracts. [of the insurance.] Every installment loan contract for the purchase of consumer goods subject to section 36a-771 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.
Sec. 41. Section 36a-778 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
The holder of any retail installment contract or any installment loan contract shall not receive or collect any charges or expenses for [delinquency and collection] collecting any delinquent payment, including, but not limited to, any service fees for accepting delinquent payments over the telephone or Internet, except as follows: The holder of a retail installment contract or installment loan contract, [other than] except a contract for the purchase of a commercial vehicle or an installment loan contract regulated by sections 36a-555 to 36a-573, inclusive, may collect a delinquency and collection charge for default in the payment of any such contract or installment [thereof] of such contract, when such default has continued for a period of ten days, such charge not to exceed five per cent of the amount of the installments in default or the sum of ten dollars, whichever is the lesser. [; provided this provision shall have no application to installment loan contracts regulated by sections 36a-555 to 36a-573, inclusive.] The holder of any retail installment contract or any installment loan contract for the purchase of a commercial vehicle, as defined in section 36a-770, except an installment loan contract regulated by sections 36a-555 to 36a-573, inclusive, may collect a delinquency and collection charge for default in the payment of any such contract or installment [thereof] of such contract, when such default has continued for a period of ten days, such charge not to exceed five per cent of the amount of the installments in default. [, provided this provision shall have no application to installment loan contracts regulated by sections 36a-555 to 36a-573, inclusive.] In addition to any such delinquency and collection charge, the retail installment contract or the installment loan contract may provide for the payment of attorney's fees not exceeding fifteen per cent of the amount due and payable under such contract when such contract is referred to an attorney, who is not a salaried employee of the holder of the contract, for collection, plus the court costs. The restriction on charges [herein provided] under this section shall not apply to any expenses permitted under section 36a-785, as amended by this act.
Sec. 42. Section 36a-785 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) When the retail buyer is in default in the payment of any sum due under the retail installment contract or installment loan contract, or in the performance of any other condition that such contract requires [him] the retail buyer to perform, or in the performance of any promise, the breach of which is by such contract expressly made a ground for the retaking of the goods, the holder of the contract may retake possession [thereof] of such goods, provided the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle. Unless the goods can be retaken without breach of the peace, [it] the goods shall be retaken by legal process, [but nothing herein contained] provided nothing contained in this section shall be construed to authorize a violation of the criminal law. In the case of repossession of any motor vehicle without the knowledge of the retail buyer, the local police department shall be notified of such repossession [within] not later than two hours after repossession. In the absence of a local police department or if the local police department cannot be reached for notification, the state police shall be promptly notified of such repossession.
(b) Not less than ten days prior to the retaking, the holder of such contract [, if he so desires,] may serve upon the retail buyer, personally or by registered or certified mail, a notice of intention to retake the goods on account of the retail buyer's default. The notice shall state [the] that the retail buyer is in default and the period at the end of which such goods will be retaken and designate (1) the obligations required to be performed in order to cure the default, including the dollar amount of any required payment, and (2) the date by which such obligations must be performed. The notice shall briefly and clearly state [what] the retail buyer's rights under this subsection [will be] in [case] the event such goods are retaken. If the notice is so served and the retail buyer does not perform the conditions and provisions [as to which he is in] required under the contract to cure the default before the day set for retaking, the holder of the contract may retake [said] such goods and hold such goods subject to the provisions of subsections (d), (e), (f), (g) and (h) of this section regarding resale, but without any right of redemption.
(c) If the holder of such contract does not give the notice of intention to retake, described in subsection (b) of this section, [he] the holder shall retain such goods for fifteen days after the retaking within the state in which [they] such goods were located when retaken. During such period the retail buyer, upon payment or tender of the unaccelerated amount due under such contract at the time of retaking and interest, or upon performance or tender of performance of such other condition as may be named in such contract as precedent to the retail buyer's continued possession of such goods, or upon performance or tender of performance of any other promise for the breach of which such goods were retaken, and upon payment of the actual and reasonable expenses of any retaking and storing, may redeem such goods and become entitled to take possession of [the same] such goods and to continue in the performance of such contract as if no default had occurred. The holder of such contract shall, [within three days of] not later than three days after the retaking, furnish or mail, by registered or certified mail, to the last known address of the retail buyer, a written statement of the unaccelerated sum due under such contract and the actual and reasonable expense of any retaking and storing. [For failure] Failure to furnish or mail such statement as required by this section [, the holder of the contract shall forfeit the] shall result in forfeiture of the holder's right to claim payment for the actual and reasonable expenses of retaking and storage, and [also] the holder shall be liable for the actual damages suffered because of such failure. If such goods are perishable so that retention for fifteen days [as herein prescribed] under this subsection would result in their destruction or substantial injury, the provisions of this subsection shall not apply and the holder of the contract may resell the goods immediately upon such retaking.
(d) If the retail buyer does not redeem such goods within fifteen days after the holder of the contract has retaken possession, the holder of the contract shall sell such goods at public or private sale [which sale may be held] not less than fifteen days and [shall be held] not more than one hundred eighty days after the retaking. When the holder of the contract retakes possession by legal process, and an answer is interposed, the holder of the contract may, at [his] the holder's election, hold such retaken goods for a period not to exceed thirty days after the entry of final judgment by a court of competent jurisdiction entitling the holder of the contract to possession of such goods before holding such resale. The holder of the contract shall give the retail buyer not less than ten days' written notice of the time and place of any public sale, or the time after which any private sale or other intended disposition is to be made, either personally or by registered mail or by certified mail, [receipted for on mailing] return receipt requested, directed to the retail buyer at [his] such retail buyer's last-known place of business or residence. The holder of the contract may bid for such goods at any public sale. The proceeds of the resale shall be considered to be either the amount paid for such goods at such sale or the fair cash retail market value of such goods at the time of repossession, whichever is the greater, except as otherwise provided in subsection (g) of this section.
(e) Proceeds of the resale shall be applied in the following order of priority: (1) First, to the payment of the actual and reasonable expenses [thereof] of such resale, (2) if, after application pursuant to subdivision (1) of this subsection, there are proceeds remaining, then to the payment of the actual and reasonable expenses of any retaking and storing of said goods, and (3) if, after application pursuant to subdivisions (1) and (2) of this subsection, there are proceeds remaining, then to the satisfaction of the balance due under the contract. [Within thirty days of] Not later than thirty days after the resale, the holder of the contract shall give the retail buyer a written statement itemizing the disposition of the proceeds. Any sum remaining after the satisfaction of such claims shall be paid to the retail buyer.
(f) [Notwithstanding that] Even if the proceeds of the resale are [not sufficient] insufficient to defray the actual and reasonable expenses [thereof] of such resale, and [also] such actual and reasonable expenses of any retaking and storing of such goods and the balance due under the contract, the holder of the contract may not recover the deficiency from the retail buyer or any surety or guarantor for [him] the retail buyer, or from [any one] anyone who has succeeded to the obligations of such retail buyer, except as provided in subsection (g) of this section.
(g) If the goods retaken consist of a motor vehicle the aggregate cash price of which was more than [two] six thousand dollars, the prima facie fair market value of such motor vehicle shall be calculated by adding together the [average] highest-stated trade-in value for [that] such motor vehicle and the [average] highest-stated retail value for [that] such motor vehicle and dividing [that] the sum of such values by two. Such [average] highest-stated trade-in value and [average] highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Used Car Guide, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest trade-in value stated in said guide for the motor vehicle shall be used. If the goods retaken consist of a boat the aggregate cash price of which was more than [two] six thousand dollars, the prima facie fair market value of such boat shall be calculated by adding together the [average] highest-stated trade-in value for [that] such boat and the [average] highest-stated retail value for [that] such boat and dividing [that] the sum of such values by two. Such [average] highest-stated trade-in value and [average] highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Appraisal Guide for Boats, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest trade-in value stated in said guide for the boat shall be used. In the event that the value of such motor vehicle or boat is not stated in such publication, [then] the fair market value at retail minus the reasonable costs of resale shall be determined by the court. The prima facie evidence of fair market value of such motor vehicle or boat so determined may be rebutted only by direct in-court testimony. If such value of the motor vehicle or boat is less than the balance due under the contract, plus the actual and reasonable expenses of the retaking of possession, the holder of the contract may recover from the retail buyer, or from anyone who has succeeded to [his] such retail buyer's obligations, as a deficiency, the amount by which such liability exceeds such fair market value, as defined in this subsection. If the actual resale price received by the holder exceeds such fair market value, as defined in this subsection, the actual resale price shall govern.
(h) After the holder retakes possession as provided in subsection (a) of this section, or if the holder obtains a prejudgment remedy against the goods under chapter 903a, the retail buyer or anyone who has succeeded to [his] such retail buyer's obligations shall not be liable for any balance due, except to the extent permitted by subsection (g) of this section. The holder may seek a monetary judgment on the contract against the retail buyer unless the goods have been repossessed, with or without judicial process. Goods purchased under the contract shall not be executed upon to satisfy such judgment. When such judgment becomes final, the holder's security interest in the goods shall be extinguished. If the contract covers a retail sale of a motor vehicle required to be registered, the holder shall comply with section 14-188.
(i) If the holder of the contract fails to comply with the provisions of subsections (c), (d), (e), (f), (g) and (h) of this section, after retaking the goods, the retail buyer may recover from the holder of the contract [his] such retail buyer's actual damages, if any, and in no event less than one-fourth of the sum of all payments which have been made under the contract.
(j) No act or agreement of the retail buyer before or at the time of the making of a retail installment contract or installment loan contract nor any agreement or statement by the retail buyer in such contract shall constitute a valid waiver of the provisions of subsections (c), (d), (e), (f), (g), (h) and (i) of this section.
(k) After the delivery of the goods to the retail buyer and prior to any retaking [thereof] of such goods by the holder of the contract, the risk of injury and loss shall rest upon the retail buyer.
Sec. 43. Section 47a-21 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
(a) As used in this chapter:
(1) "Commissioner" means the Banking Commissioner.
(2) "Escrow account" means any account at a financial institution which is not subject to execution by the creditors of the [person in whose name such account is maintained] escrow agent and includes a clients' funds account.
(3) "Escrow agent" means the person in whose name an escrow account [, including a clients' funds account,] is maintained.
(4) "Financial institution" means any state bank and trust company, national bank, savings bank, federal savings bank, savings and loan association, and federal savings and loan association that is located in this state.
(5) "Forwarding address" means the address to which a security deposit may be mailed for delivery to a former tenant.
(6) "Landlord" means any landlord of residential real property, and includes (A) any receiver; (B) any [person who is a] successor; [to a landlord or to a landlord's interest;] and (C) any tenant who sublets his premises.
(7) "Receiver" means any person who is appointed or authorized by any state, federal or probate court to receive rents from tenants, and includes trustees, executors, administrators, guardians, conservators, receivers, and receivers of rent.
(8) "Rent receiver" means a receiver who lacks court authorization to return security deposits and to inspect the premises of tenants and former tenants.
(9) "Residential real property" means real property containing one or more residential units, including residential units not owned by the landlord, and containing one or more tenants who paid a security deposit.
(10) "Security deposit" means any advance rental payment, [other than] except an advance payment for the first month's rent [and] or a deposit for a key or any special equipment.
(11) "Successor" [to a landlord or to a landlord's interest] means any person who succeeds to a landlord's interest whether by purchase, foreclosure or otherwise and includes a receiver.
(12) "Tenant" means a tenant, as defined in section 47a-1, or a resident, as defined in section 21-64.
(13) "Tenant's obligations" means (A) the amount of any rental or utility payment due the landlord from a tenant; and (B) a tenant's obligations under the provisions of section 47a-11.
(b) (1) In the case of a tenant under sixty-two years of age, a landlord shall not demand a security deposit in an amount [or value in excess of] that exceeds two months' [periodic rent which may be in addition to the current month's] rent.
(2) In the case of a tenant sixty-two years of age or older, a landlord shall not demand a security deposit in an amount [or value in excess of] that exceeds one month's [periodic rent, which may be in addition to the current month's rent. Upon the request of a tenant sixty-two years of age or older, any landlord who has received from such tenant a security deposit in an amount or value in excess of one month's periodic rent shall refund to such tenant the portion of such security deposit that exceeds one month's periodic] rent.
(3) Any landlord who has received from a tenant a security deposit in an amount that exceeds the amount allowed under subdivision (1) or (2) of this subsection shall refund to such tenant the excess portion of the security deposit upon the request of such tenant or the commissioner, provided any portion of such excess that the landlord has applied to a past rental payment shall be deemed to have been refunded to such tenant.
(c) Any security deposit paid by a tenant shall remain the property of such tenant in which the landlord [and his successor] shall have a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, to secure such tenant's obligations. A security deposit shall be exempt from attachment and execution by the creditors of the landlord [or his successor] and shall not be considered part of the estate of the landlord [or his successor] in any legal proceeding. Any voluntary or involuntary transfer of a landlord's interest in residential real [estate] property to a successor shall constitute an assignment to such successor of such landlord's security interest in all security deposits paid by tenants of such transferred residential real [estate] property.
(d) (1) [Within] Not later than the time specified in [subdivisions] subdivision (2) [and (4)] of this subsection, the person who is the landlord at the time a tenancy is terminated, other than a rent receiver, shall pay to the tenant or former tenant: (A) The amount of any security deposit that was deposited by the tenant with the person who was landlord at the time such security deposit was deposited less the value of any damages [which] that any person who was a landlord of such premises at any time during the tenancy of such tenant has suffered as a result of such tenant's failure to comply with such tenant's obligations; and (B) any accrued interest due on such security deposit as [required by] provided in subsection (i) of this section. If the landlord at the time of termination of a tenancy is a rent receiver, such rent receiver shall return security deposits in accordance with the provisions of subdivision (3) of this subsection.
(2) Upon termination of a tenancy, any tenant may notify [his] the landlord in writing of such tenant's forwarding address. [Within] Not later than thirty days after termination of a tenancy or fifteen days after receiving written notification of such tenant's forwarding address, whichever is later, each landlord other than a rent receiver shall deliver to the tenant or former tenant at such forwarding address either (A) the full amount of the security deposit paid by such tenant plus [accrued] interest [as provided in] accrued pursuant to subsection (i) of this section, or (B) the balance of [the] such security deposit [paid by such tenant plus] and accrued interest [as provided in subsection (i) of this section] after deduction for any damages suffered by such landlord by reason of such tenant's failure to comply with such tenant's obligations, together with a written statement itemizing the nature and amount of such damages. Any [such] landlord who violates any provision of this subsection shall be liable for twice the amount [or value] of any security deposit paid by such tenant, except that, if the only violation is the failure to deliver the accrued interest, such landlord shall [only] be liable for ten dollars or twice the amount of [such] the accrued interest, whichever is greater.
(3) (A) Any receiver who is authorized by [the] a court [appointing him receiver] to return security deposits and to inspect the premises of any tenant shall pay security deposits and interest in accordance with the provisions of subdivisions (1) and (2) of this subsection from the operating income of such receivership to the extent that any such payments exceed the amount in any escrow accounts for such tenants. (B) Any rent receiver shall present any claim by any tenant for return of a security deposit to the court which authorized [him to be a] the rent receiver. Such court shall determine the validity of any such claim and shall direct such rent receiver to pay from the escrow account or from the operating income of such property the amount due such tenant as determined by such court.
[(4) Any landlord who does not have written notice of his tenant's or former tenant's forwarding address shall deliver any written statement and security deposit due to the tenant, as required by subdivision (2) of this subsection, within the time required by subdivision (2) of this subsection or within fifteen days after receiving written notice of such tenant's forwarding address, whichever is later.]
(e) A successor, other than a receiver, [to a landlord's interest in residential real property] shall be liable for the claims of tenants of such property for return of any part of such security deposit which is or becomes due to such tenant during the time such successor is a landlord. A receiver's liability for payment of security deposits and interest under this section shall be limited to the balance in any escrow account for such tenants maintained by such receiver in such receivership in accordance with subsection (h) of this section and to the operating income generated in such receivership.
(f) Any landlord who is not a resident of this state shall appoint in writing the Secretary of the State as his or her attorney upon whom all process in any action or proceeding against such landlord may be served.
(g) Any person may bring an action in replevin or for money damages in any court of competent jurisdiction to reclaim any part of [his] such person's security deposit which may be due. This section does not preclude the landlord or tenant from recovering other damages to which [he] the landlord or tenant may be entitled.
(h) (1) Each landlord shall immediately deposit the entire amount of all security deposits received by [him on or after October 1, 1979, from his tenants] such landlord into one or more escrow accounts [for such tenants] established or maintained in a financial institution for the benefit of such landlord's tenants. [Such landlord shall be escrow agent of such account. Within seven days after a written request by the commissioner for the name of each financial institution in which any such escrow accounts are maintained and the account number of each such escrow account, a landlord shall deliver such requested information to the commissioner. (2)] Each landlord [and each successor to the landlord's interest] shall maintain each such account as escrow agent and shall not withdraw [the amount of any security deposit or accrued interest on such amount, as provided in subsection (i) of this section, that is in any escrow account] funds from such account except as provided in [this section] subdivision (2) of this subsection.
(2) The escrow agent may withdraw funds from an escrow account to: (A) Disburse the amount of any security deposit and accrued interest due to a tenant pursuant to subsection (d) of this section; (B) disburse interest to a tenant pursuant to subsection (i) of this section; (C) make a transfer of the entire amount of certain security deposits pursuant to subdivision (3) of this subsection; (D) retain interest credited to the account in excess of the amount of interest payable to the tenant under subsection (i) of this section; (E) retain all or any part of a security deposit and accrued interest after termination of tenancy equal to the damages suffered by the landlord by reason of the tenant's failure to comply with such tenant's obligations; (F) disburse all or any part of the security deposit to a tenant at any time during tenancy; or (G) transfer such funds to another financial institution or escrow account, provided such funds remain continuously in an escrow account.
(3) (A) Whenever any real estate is voluntarily or involuntarily transferred from a landlord, other than a receiver, to [his] a successor, including a receiver, such landlord shall withdraw from the escrow account and deliver to [his] the successor the entire amount of security deposits paid by tenants of the property being transferred, plus [accrued] any interest [provided for in] accrued pursuant to subsection (i) of this section. If at the time of transfer of such real estate the funds in such account are commingled with security deposits paid by tenants in real estate not being transferred to such successor, and if at such time the funds in such account are less than the amount of security deposits paid by all tenants whose security deposits are contained in such account, such landlord shall deliver to such successor a pro rata share of security deposits paid by tenants of the real estate being transferred to such successor. [Any successor to a landlord shall immediately deposit the entire amount of funds delivered to him in accordance with this subdivision into an escrow account as provided in subdivision (l) of this subsection and shall maintain such account as escrow agent in accordance with the provisions of this section.] (B) Whenever any real estate is transferred from a receiver to his or her successor, such receiver shall dispose of the escrow accounts as ordered by the court which appointed [him] such receiver. The order of such court shall provide for the priority of the present and future rights of tenants to security deposits paid by them over the rights of any secured or unsecured creditor of any person and shall provide that the funds in such account shall be delivered to the successor of such receiver for immediate deposit in an escrow account for tenants who paid security deposits.
(4) [No person shall withdraw funds from any escrow account except as follows: (A) Within the time specified in subsection (d) of this section, each escrow agent shall withdraw and disburse the amount of any security deposit due to any tenant upon the termination of such tenancy, in accordance with subsection (d) of this section, together with accrued interest thereon as provided in subsection (i) of this section. (B) At the time provided for in subsection (i) of this section, each escrow agent shall withdraw from such account and pay to each tenant any accrued interest due and payable to any tenant in accordance with the provisions of said subsection. (C) The escrow agent may withdraw and personally retain interest credited to and not previously withdrawn from such account to the extent such interest exceeds the amount of interest being earned by tenants as provided in subsection (i) of this section. (D) The escrow agent may withdraw and personally retain the amount of damages withheld, in accordance with the provisions of subsection (d) of this section, from payment of a security deposit to a tenant. (E) The escrow agent may at any time during a tenancy withdraw and pay to a tenant all or any part of a security deposit together with accrued interest on such amount as provided in subsection (i) of this section. (F) The escrow agent shall withdraw and disburse funds in accordance with the provisions of subdivision (3) of this subsection. (G) The escrow agent may transfer any escrow account from one financial institution to another and may transfer funds from one escrow account to another provided that all security deposits in escrow accounts remain continuously in escrow accounts] (A) The landlord shall provide each tenant with a written notice stating the amount held for the benefit of the tenant and the name and address of the financial institution at which the tenant's security deposit is being held not later than thirty days after the landlord receives a security deposit from the tenant or the tenant's previous landlord or transfers the security deposit to another financial institution or escrow account.
(B) Not later than seven days after the commissioner makes a written request for information, the landlord shall provide the commissioner with any information related to a tenant's security deposit, including, but not limited to, the name of each financial institution in which any escrow account is maintained and the account number of each escrow account.
(i) [(1)] On and after July 1, 1993, each landlord other than a landlord of a residential unit in any building owned or controlled by any educational institution and used by such institution for the purpose of housing students of such institution and their families, and each landlord or owner of a mobile manufactured home or of a mobile manufactured home space or lot or park, as such terms are defined in subdivisions (1), (2) and (3) of section 21-64, shall pay interest on each security deposit received by such landlord at a rate of not less than the average rate paid, as of December 30, 1992, on savings deposits by insured commercial banks as published in the Federal Reserve Board Bulletin rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 1994, the rate for each calendar year shall be not less than the deposit index, as defined in [subdivision (2) of this subsection] section 44 of this act, for that year, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 2012, the rate for each calendar year shall be not less than the deposit index, as defined in [subdivision (2) of this subsection,] section 44 of this act, for that year. [On the anniversary date of the tenancy and annually thereafter, such interest shall be paid to the tenant or resident or credited toward the next rental payment due from the tenant or resident, as the landlord or owner shall determine. If the tenancy is terminated before the anniversary date of such tenancy, or if the landlord or owner returns all or part of a security deposit prior to termination of the tenancy, the landlord or owner shall pay the accrued interest to the tenant or resident not later than thirty days after such termination or return. In any case where a tenant or resident] The landlord shall pay such interest to the tenant upon termination of the tenancy pursuant to subsection (d) of this section, unless the landlord elects to pay such interest to the tenant annually on the anniversary date of the tenancy or the tenant requests that the landlord pay such interest annually. Any such interest paid upon termination of the tenancy shall be compounded annually. Interest shall not be paid to a tenant for any month in which the tenant has been delinquent for more than ten days in the payment of any monthly rent, [such resident or tenant shall forfeit any interest that would otherwise be payable to such resident or tenant for that month, except that there shall be no such forfeiture if, pursuant to a provision of the rental agreement, a late charge is imposed for failure to pay such rent within the time period provided by section 47a-15a] unless the landlord imposes a late charge for such delinquency. No landlord [or owner] shall increase the rent due [on any quarters or property subject to the provisions of this section] from a tenant because of the requirement that interest be paid on [any] the security deposit [made with respect to such quarters or property] by such tenant.
[(2) The commissioner shall publish the rate that takes effect July 1, 1993, in the Department of Banking news bulletin no later than July 15, 1993. The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board Bulletin in November of the prior year. The commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. The commissioner shall also cause such rates to be disseminated in a manner designed to come to the attention of landlords and tenants including, but not limited to, the issuance of press releases and public service announcements, the encouragement of news stories in the mass media and the posting of conspicuous notices at financial institutions. For purposes of this subsection, "Federal Reserve Board Bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H.6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.]
(j) (1) [The] Except as provided in subdivision (2) of this subsection, the commissioner may receive and investigate complaints regarding any alleged violation of subsections (b), (d), (h) or (i) of this section. [, provided the commissioner shall not have jurisdiction over the refusal or other failure of any landlord to return all or part of a security deposit if such failure results from the landlord's good faith claim that the landlord has suffered damages as a result of a tenant's failure to comply with such tenant's obligations whether or not the existence or amount of alleged damages is disputed by the tenant. For purposes of this section a good faith claim is deemed to be a claim for actual damages suffered by the landlord for which written notification of such damages has been given to the tenant in accordance with the provisions of subdivisions (1), (2) and (4) of subsection (d) of this section.] For the purposes of such investigation, any person who is or was a landlord shall be subject to the provisions of section 36a-17. [(2)] If the commissioner determines that any landlord has violated any provision of this section over which the commissioner has jurisdiction, the commissioner may, in accordance with section 36a-52, order such person to cease and desist from such practices and to comply with the provisions of this section.
(2) The commissioner shall not have jurisdiction over (A) the failure of a landlord to pay interest to a tenant annually under subsection (i) of this section, or (B) the refusal or other failure of the landlord to return all or part of the security deposit if such failure results from the landlord's good faith claim that such landlord has suffered damages as a result of a tenant's failure to comply with such tenant's obligations, regardless of whether the existence or amount of the alleged damages is disputed by the tenant. For purposes of this section, a good faith claim means a claim for actual damages suffered by the landlord for which written notification of such damages has been provided to the tenant in accordance with the provisions of subdivision (2) of subsection (d) of this section.
(3) The commissioner may adopt regulations, in accordance with chapter 54, to carry out the purposes of this section.
(k) (1) Any person who is a landlord at the time of termination of a tenancy and who knowingly and wilfully fails to pay all or any part of a security deposit when due shall be subject to a fine of not more than two hundred fifty dollars for each offense, provided it shall be an affirmative defense under this subdivision that such failure was caused by such landlord's good faith belief that he was entitled to deduct the value of damages he has suffered as a result of such tenant's failure to comply with such tenant's obligations.
(2) Any person who knowingly and wilfully violates the provisions of subsection (h) of this section on or after October 1, 1979, shall be subject to a fine of not more than five hundred dollars or imprisonment of not more than thirty days or both for each offense. It shall be an affirmative defense under the provisions of this subdivision that at the time of the offense, such person leased residential real property to fewer than four tenants who paid a security deposit.
(3) Any person who is a landlord at the time an interest payment is due under the provisions of subsection (i) of this section and who knowingly and wilfully violates the provisions of such subsection shall be subject to a fine of not more than one hundred dollars for each offense.
(4) No financial institution shall be liable for any violation of this section except for any violation in its capacity as a landlord. [or successor to a landlord's interest.]
(l) Nothing in this section shall be construed as a limitation upon: (1) The power or authority of the state, the Attorney General or the commissioner to seek administrative, legal or equitable relief permitted by the general statutes or at common law; or (2) the right of any tenant to bring a civil action permitted by the general statutes or at common law.
Sec. 44. (NEW) (Effective July 1, 2016) The Banking Commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking's news bulletin and on the department's Internet web site not later than December fifteenth of the prior year. The commissioner may also disseminate the deposit index and any information the commissioner deems appropriate in a manner designed to alert the parties that may rely on the deposit index, including the issuance of press releases and public service announcements, the encouragement of news stories in the mass media and the posting of conspicuous notices at financial institutions. For purposes of this section, "deposit index" means the average of the national rates for savings deposits and money market deposits as determined by the Federal Deposit Insurance Corporation pursuant to 12 CFR 337.6, as amended from time to time, for the last week in November of the prior year.
Sec. 45. Subsection (e) of section 3-70a of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
(e) In the case of any claim allowed under this section for property, funds or money delivered to the Treasurer pursuant to subdivision (1) or (2) of subsection (a) of section 3-57a, the Treasurer shall pay such claim with interest as follows: For each calendar year or portion thereof that the property, funds or money has been paid or delivered to the Treasurer, the Treasurer shall pay interest at [the deposit index rate determined and published by the Banking Commissioner not later than December fifteenth of the preceding calendar year pursuant to subdivision (2) of subsection (i) of section 47a-21] a rate that is not less than the deposit index, as determined under section 44 of this act, for such year. Such interest shall accrue from the date of payment or delivery of the property, funds or money to the Treasurer until the date of payment or delivery of the property, funds or money to the claimant.
Sec. 46. Section 16-262j of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
(a) No public service company and no electric supplier shall refuse to provide electric, gas or water service to a residential customer based on the financial inability of such customer to pay a security deposit for such service. The Public Utilities Regulatory Authority shall adopt regulations in accordance with chapter 54 to carry out the provisions of this subsection.
(b) No telephone company and no certified telecommunications provider shall refuse to provide telecommunications service to a candidate or a committee, as defined in section 9-601, on the grounds that such candidate, such committee or the person acting on behalf of such committee has offered to pay the security deposit for such service with a credit card.
(c) Each public service company, certified telecommunications provider and electric supplier shall pay interest on any security deposit it receives from a customer at the average rate paid, as of December 30, 1992, on savings deposits by insured commercial banks as published in the Federal Reserve Board bulletin and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 1994, the rate for each calendar year shall be not less than the deposit index, as determined [by the Banking Commissioner and defined in subsection (d) of this section] under section 44 of this act, for [that] such year and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent.
[(d) The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board bulletin in November of the prior year. The Banking Commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. For purposes of this section, "Federal Reserve Board bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H.6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.]
Sec. 47. Section 37-9 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
The provisions of sections 37-4, 37-5 and 37-6 shall not affect: (1) Any loan made prior to September 12, 1911; (2) any loan made by (A) any bank, as defined in section 36a-2, or any out-of-state bank, as defined in section 36a-2, that maintains in this state a branch, as defined in section 36a-410, (B) any wholly-owned subsidiary of such bank or out-of-state bank, except a loan for consumer purposes, or (C) any Connecticut credit union, as defined in section 36a-2, or federal credit union, as defined in section 36a-2; (3) any bona fide mortgage of real property for a sum in excess of five thousand dollars; (4) (A) any loan, carrying an annual interest rate of not more than the deposit index, as determined [pursuant to subsection (c) of section 49-2a] under section 44 of this act, for the calendar year in which the loan is made plus seventeen per cent, made to a foreign or domestic corporation, statutory trust, limited liability company, general, limited or limited liability partnership or association organized for a profit or any individual, provided such corporation, trust, company, partnership, association or individual is engaged primarily in commercial, manufacturing, industrial or nonconsumer pursuits and provided further that the funds received by such corporation, trust, company, partnership, association or individual are utilized in such entity's business or investment activities and are not utilized for consumer purposes and provided further that the original indebtedness to be repaid is in excess of ten thousand dollars but less than or equal to two hundred fifty thousand dollars, or, in the case of one or more advances of money of less than ten thousand dollars made pursuant to a revolving loan agreement or similar agreement or a loan agreement providing for the making of advances to the borrower from time to time up to an aggregate maximum amount, the total principal amount of all loans owing by the borrower to the lender at the time of any such advance is in excess of ten thousand dollars but less than or equal to two hundred fifty thousand dollars, or (B) any loan made to a foreign or domestic corporation, statutory trust, limited liability company, general, limited or limited liability partnership or association organized for a profit or any individual, provided such corporation, trust, company, partnership, association or individual is engaged primarily in commercial, manufacturing, industrial or nonconsumer pursuits and provided further that the funds received by such corporation, trust, company, partnership, association or individual are utilized in such entity's business or investment activities and are not utilized for consumer purposes and provided further that the original indebtedness to be repaid is in excess of two hundred fifty thousand dollars, or, in the case of one or more advances of money of less than two hundred fifty thousand dollars made pursuant to a revolving loan agreement or similar agreement or a loan agreement providing for the making of advances to the borrower from time to time up to an aggregate maximum amount, the total principal amount of all loans owing by the borrower to the lender at the time of any such advance is in excess of two hundred fifty thousand dollars; (5) any obligations, including bonds, notes or other obligations, issued by (A) the state, (B) any municipality, including any city, town, borough, district, whether consolidated or not, or other public body corporate, or (C) any authority, instrumentality, public agency or other political subdivision of the state or of a municipality; (6) any loan made by (A) the state, (B) any municipality, including any city, town, borough, district, whether consolidated or not, or other public body corporate, or (C) any authority, instrumentality, public agency or other political subdivision of the state or of a municipality; (7) any loan made for the purpose of financing the purchase of a motor vehicle, a recreational vehicle or a boat, carrying an interest rate of not more than (A) eighteen per cent per annum on loans made on or after July 1, 1981, and prior to October 1, 1985, and (B) on loans made on or after October 1, 1985, and prior to October 1, 1993, (i) sixteen per cent per annum for new motor vehicles, recreational vehicles or boats, and (ii) eighteen per cent per annum for used motor vehicles, recreational vehicles or boats, payable in four or more monthly, quarterly or yearly installments which is unsecured or in which a security interest is taken in such property; (8) any loan by an institution of higher education made to an individual for the purpose of enabling attendance at such institution and carrying an interest rate of not more than the greater of (A) the maximum rate then permitted by section 37-4, or (B) a rate which is not more than five per cent in excess of the discount rate, including any surcharge, on ninety-day commercial paper in effect from time to time at the federal reserve bank in the federal reserve district where such institution is located; (9) any loan made to a plan participant or beneficiary from an employee pension benefit plan as defined in the Employee Retirement Income Security Act of 1974, Public Law 93-406, as from time to time amended. The provisions of part III of chapter 668 shall not apply to loans made pursuant to subdivision (7) of this section. No provision of this section shall prevent any such bank, out-of-state bank, Connecticut credit union or federal credit union or other lender from recovering by an action at law the amount of the principal and the interest stipulated or interest at the legal rate, if interest is not stipulated, in any negotiable instrument which it has acquired for value and in good faith without notice of illegality in the consideration. For the purpose of this section: "Interest" shall not be construed to include attorney's fees, including preparation of mortgage deed and note, security agreements, title search, waivers and closing fees, survey charges or recording fees paid by the mortgagor or borrower; and "consumer purposes" means the utilization of funds for personal, family or household purchases, acquisitions or uses.
Sec. 48. Section 49-2a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2016):
[(a)] On and after July 1, 1993, each state bank and trust company, national banking association, state or federally-chartered savings and loan association, savings bank, insurance company and other mortgagee or mortgage servicer holding funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state shall pay interest on such funds, except as provided in section 49-2c, at a rate of not less than the average rate paid, as of December 30, 1992, on savings deposits by insured commercial banks as published in the Federal Reserve Board Bulletin and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 1994, until September 30, 2012, the rate for each calendar year shall be not less than the deposit index, as [defined in subsection (c) of this section] determined under section 44 of this act, for [that] such year and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after October 1, 2012, the rate for each calendar year shall be not less than the deposit index, as [defined in subsection (c) of this section] determined under section 44 of this act, for [that] such year and rounded to the nearest one-tenth of one percentage point. Interest payments shall be credited on the thirty-first day of December annually toward the payment of taxes or insurance premiums as the case may be, on such mortgaged property in the ensuing year. If the mortgage debt is paid prior to December thirty-first in any year, the interest to the date of payment shall be paid to the mortgagor. The provisions of this section shall apply only with respect to mortgages on owner-occupied residential property consisting of not more than four living units and housing cooperatives occupied solely by the shareholders thereof. Any mortgagee or mortgage servicer violating the provisions of this section shall be fined not more than one hundred dollars for each offense.
[(b) Each mortgagee or mortgage servicer subject to the provisions of this section may contact the Department of Banking to ascertain the published deposit index to determine the minimum rate paid on funds of a mortgagor held in escrow for the payment of taxes and insurance premiums.
(c) The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board Bulletin in November of the prior year. The commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. For purposes of this section, "Federal Reserve Board Bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H.6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.]
Sec. 49 Subsection (a) of section 49-31p of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property that has a return date on or after July 13, 2011, [but not later than December 31, 2017,] any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to (1) the provision, by such successor in interest, of a notice to vacate to any bona fide tenant not less than ninety days before the effective date of such notice; and (2) the rights of any bona fide tenant, as of the date absolute title vests in such successor in interest (A) under any bona fide lease entered into before such date to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the ninety-day notice under subdivision (1) of this subsection; or (B) without a lease or with a lease terminable at will under state law, subject to the receipt by the tenant of the ninety-day notice under subdivision (1) of this subsection, except that nothing under this section shall affect the requirements for termination of any federally subsidized or state-subsidized tenancy or of any state or local law that provides longer time periods or other additional protections for tenants.
Sec. 50. Section 49-31q of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
(a) [On or before December 31, 2017, in] In the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of a lease, vacating the property prior to sale shall not constitute other good cause for terminating the lease of a tenant who is a recipient of assistance under 42 USC 1437f(o), the federal Housing Choice Voucher Program, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner (1) will occupy the unit as a primary residence, and (2) has provided the tenant a notice to vacate at least ninety days before the effective date of such notice.
(b) [On or before December 31, 2017, in] In the case of any foreclosure on any federally-related mortgage loan, as that term is defined in 12 USC 2602(1), the Real Estate Settlement Procedures Act of 1974, or on any residential real property in which a recipient of assistance under 42 USC 1437(o), the federal Housing Choice Voucher Program, resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subsection (a) of this section shall not affect any state or local law that provides longer time periods or other additional protections for tenants.
Sec. 51. Subsection (a) of section 36a-65 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):
(a) (1) The commissioner shall annually, on or after July first for the fiscal year commencing on said July first, collect pro rata based on asset size from each Connecticut bank and each Connecticut credit union an amount sufficient in the commissioner's judgment to meet the expenses of the Department of Banking, including a reasonable reserve for contingencies, provided the commissioner shall not collect such amount from a newly organized Connecticut credit union until July first following the third full calendar year after issuance by the commissioner of such credit union's certificate of authority. Such assessments and expenses shall not exceed the budget estimates submitted in accordance with section 36a-13.
(2) In addition to any license, investigation or examination fee required under this title, the commissioner may levy assessments on persons licensed as money transmitters pursuant to sections 36a-595 to 36a-612, inclusive, and persons licensed as student loan servicers, as defined in section 36a-846, as amended by this act. The commissioner shall annually, on or after July first for the fiscal year commencing on said July first, collect such additional amounts sufficient in the commissioner's judgment to meet the expenses of the Department of Banking, including a reasonable reserve for contingencies. Such assessment shall be determined pro rata based on: (A) For licensed money transmitters, dollar volume of money transmissions in this state, and (B) for licensed student loan servicers, dollar volume of student education loans, as defined in section 36a-846, as amended by this act, of student loan borrowers serviced. Each such licensee shall pay the commissioner the amount allocated to it not later than the date specified by the commissioner for payment. Failure by a licensee to timely make such payment shall constitute a violation of this section and a basis upon which the commissioner may take action against such licensee pursuant to section 36a-51.
(3) Such assessments may be made more frequently than annually at the discretion of the commissioner. Such assessments for any fiscal year shall be reduced pro rata by the amount of any surplus from the assessments of prior fiscal years, which surplus shall be maintained in accordance with subdivision (4) of subsection (b) of this section. The commissioner may reduce any such assessment collected from a Connecticut bank up to the amount of any assessment for the same fiscal year collected from such bank by another state in which such bank has established a branch, limited branch or mobile branch. The commissioner may reduce any such assessment collected from a Connecticut credit union up to the amount of any assessment for the same fiscal year collected from such credit union by another state in which such credit union has established a branch. Such assessments for any fiscal year shall be a liability of such banks, [and] credit unions and licensees as of the assessment date. Except as provided in this subsection, such assessments shall not be prorated for any reason.
Sec. 52. (Effective from passage) The Banking Commissioner shall study the feasibility of levying assessments on mortgage servicers. Not later than January 1, 2017, the commissioner shall submit a report, in accordance with the provisions of section 11-4a of the general statutes, to the joint standing committee of the General Assembly having cognizance of matters relating to banking concerning the findings of the study.
Sec. 53. Section 36a-719h of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016):
No mortgage servicer shall:
(1) Directly or indirectly employ any scheme, device or artifice to defraud or mislead mortgagors or mortgagees or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of the residential mortgage loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a residential mortgage loan, the terms and conditions of the servicing agreement or the mortgagor's obligations under the residential mortgage loan;
(3) Obtain property by fraud or misrepresentation;
(4) [Knowingly misapply or recklessly apply] Recklessly apply residential mortgage loan payments or knowingly misapply residential mortgage loan payments to the outstanding balance of a residential mortgage loan;
(5) [Knowingly misapply or recklessly apply] Recklessly apply payments or knowingly misapply payments to escrow accounts;
(6) Place hazard, homeowners or flood insurance on the mortgaged property when the mortgage servicer [knows] knew or [has reason to know] should have known that the mortgagor has an effective policy for such insurance;
(7) Fail to comply with section 49-10a;
(8) Knowingly or recklessly provide inaccurate information to a credit bureau [, thereby harming a mortgagor's creditworthiness] that results in harm to a mortgagor's creditworthiness;
(9) Fail to report both the favorable and unfavorable payment history of the mortgagor to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;
(10) Collect private mortgage insurance beyond the date for which private mortgage insurance is required;
(11) Fail to issue a release of mortgage in accordance with section 49-8;
(12) Fail to provide written notice to a mortgagor upon taking action to place hazard, homeowners or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the mortgagor may demonstrate that he or she has the required insurance coverage and by which the mortgage servicer shall terminate the insurance coverage placed by it and refund or cancel any insurance premiums and related fees paid by or charged to the mortgagor;
(13) Place hazard, homeowners or flood insurance on a mortgaged property, or require a mortgagor to obtain or maintain such insurance, in excess of the replacement cost of the improvements on the mortgaged property as established by the property insurer;
(14) Fail to provide to the mortgagor a refund of unearned premiums paid by a mortgagor or charged to the mortgagor for hazard, homeowners or flood insurance placed by a mortgagee or the mortgage servicer if the mortgagor provides reasonable proof that the mortgagor has obtained coverage such that the forced placement insurance is no longer necessary and the property is insured. If the mortgagor provides reasonable proof that no lapse in coverage occurred such that the forced placement was not necessary, the mortgage servicer shall promptly refund the entire premium;
(15) Require any amount of funds to be remitted by means more costly to the mortgagor than a bank or certified check or attorney's check from an attorney's account to be paid by the mortgagor;
(16) Refuse to communicate with an authorized representative of the mortgagor who provides a written authorization signed by the mortgagor, provided the mortgage servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the mortgagor;
(17) Conduct any business covered by sections 36a-715 to 36a-719l, inclusive, without holding a valid license as required under said sections, or assist or aid and abet any person in the conduct of business without a valid license as required under this title;
(18) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or the system or in connection with any investigation conducted by the Banking Commissioner or another governmental agency; or
(19) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act.
Sec. 54. Section 36a-534c of the general statutes is repealed. (Effective from passage)
This act shall take effect as follows and shall amend the following sections: | ||
Section 1 |
from passage |
36a-448a(b) |
Sec. 2 |
from passage |
36a-34(a)(1) |
Sec. 3 |
from passage |
36a-333(b)(1) |
Sec. 4 |
from passage |
36a-70(q) |
Sec. 5 |
from passage |
36a-21(a) |
Sec. 6 |
October 1, 2016 |
New section |
Sec. 7 |
July 1, 2016 |
36a-597(a) |
Sec. 8 |
July 1, 2016 |
36a-716 |
Sec. 9 |
October 1, 2016 |
36a-485 |
Sec. 10 |
October 1, 2016 |
36a-486 |
Sec. 11 |
October 1, 2016 |
36a-488 |
Sec. 12 |
October 1, 2016 |
36a-489 |
Sec. 13 |
October 1, 2016 |
36a-489a |
Sec. 14 |
October 1, 2016 |
36a-490 |
Sec. 15 |
October 1, 2016 |
36a-491 |
Sec. 16 |
October 1, 2016 |
36a-492 |
Sec. 17 |
October 1, 2016 |
36a-494(c) |
Sec. 18 |
October 1, 2016 |
36a-498e |
Sec. 19 |
October 1, 2016 |
36a-498f |
Sec. 20 |
October 1, 2016 |
36a-534b |
Sec. 21 |
October 1, 2016 |
36a-719(d)(1) |
Sec. 22 |
October 1, 2016 |
New section |
Sec. 23 |
October 1, 2016 |
New section |
Sec. 24 |
October 1, 2016 |
New section |
Sec. 25 |
October 1, 2016 |
New section |
Sec. 26 |
January 1, 2017 |
New section |
Sec. 27 |
October 1, 2016 |
New section |
Sec. 28 |
October 1, 2016 |
New section |
Sec. 29 |
October 1, 2016 |
New section |
Sec. 30 |
January 1, 2017 |
New section |
Sec. 31 |
October 1, 2016 |
New section |
Sec. 32 |
October 1, 2016 |
36a-65(c)(6) |
Sec. 33 |
October 1, 2016 |
4-182(c) |
Sec. 34 |
July 1, 2016 |
36b-3(1) |
Sec. 35 |
from passage |
36b-6(a) |
Sec. 36 |
from passage |
36b-14 |
Sec. 37 |
from passage |
36b-21(e) |
Sec. 38 |
from passage |
36b-31(d) |
Sec. 39 |
October 1, 2016 |
36a-773 |
Sec. 40 |
October 1, 2016 |
36a-774 |
Sec. 41 |
October 1, 2016 |
36a-778 |
Sec. 42 |
October 1, 2016 |
36a-785 |
Sec. 43 |
July 1, 2016 |
47a-21 |
Sec. 44 |
July 1, 2016 |
New section |
Sec. 45 |
July 1, 2016 |
3-70a(e) |
Sec. 46 |
July 1, 2016 |
16-262j |
Sec. 47 |
July 1, 2016 |
37-9 |
Sec. 48 |
July 1, 2016 |
49-2a |
Sec. 49 |
October 1, 2016 |
New section |
Sec. 50 |
October 1, 2016 |
49-31q |
Sec. 51 |
from passage |
36a-65(a) |
Sec. 52 |
from passage |
New section |
Sec. 53 |
October 1, 2016 |
36a-719h |
Sec. 54 |
from passage |
Repealer section |
BA |
Joint Favorable Subst. |
|
FIN |
Joint Favorable |