Revision: Jan. 31, 2013, midnight
HB 594-FN – AS INTRODUCED
2013 SESSION
08/09
HOUSE BILL 594-FN
AN ACT relative to the general consumer credit laws of the state.
COMMITTEE: Commerce and Consumer Affairs
This bill makes general changes to laws regarding mortgage bankers, mortgage brokers, and mortgage servicers.
This bill is a request of the banking department.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
13-0829
08/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Thirteen
AN ACT relative to the general consumer credit laws of the state.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Banks and Banking; Fidelity Bond Coverage. Amend RSA 383:14, I to read as follows:
I. Each institution under the supervision of the commissioner, except for institutions supervised under RSA 361-A, RSA 397-A, RSA 397-B, RSA 399-A, RSA 399-D, and RSA 399-G, shall purchase fidelity bond coverage for protection or indemnity against losses from dishonest or criminal acts of officers, employees, and agents of the institution, and acts such as robbery, burglary, or forgery by persons not associated with the institution.
2 Mortgage Bankers and Brokers; Definitions. Amend the introductory paragraph of RSA 397-A:1, 1-a to read as follows:
I-a. “Affiliate” means a relationship between 2 or more persons if either person has the power to control the other, or a third person who controls or has the power to control both. Affiliates shall include but not be limited to:
3 Mortgage Bankers and Brokers; Definitions. Amend the introductory paragraph of RSA 397-A:1, XVII(a) to read as follows:
XVII.(a) “Originator” or “mortgage loan originator” or “mortgage originator” or “loan originator” means an individual who for direct or indirect compensation or gain or in the expectation of direct or indirect compensation or gain, takes a mortgage application or offers, negotiates, solicits, arranges, or finds a mortgage loan or who offers or negotiates terms of a residential mortgage loan. [No individual may act as an originator for more than one mortgage broker, mortgage servicer, or mortgage banker. A sole proprietor licensed as a mortgage broker, mortgage servicer, or mortgage banker shall also obtain a license as a mortgage originator prior to engaging in the activities of a mortgage originator.] Mortgage loan originator does not include:
4 Mortgage Bankers and Brokers; Definitions. Amend RSA 397-A:1, XXVI to read as follows:
XXVI. “Yield spread premium” means compensation paid or credit given by a lender directly or indirectly to a mortgage broker or mortgage originator for originating a mortgage [or] that is based on selling an interest rate to a borrower that is above the wholesale par rate [that] for which the borrower qualifies [for].
5 Mortgage Bankers and Brokers; Application of Chapter. Amend RSA 397-A:2, III to read as follows:
III. Persons subject to or licensed under this chapter shall abide by applicable federal laws and regulations, the laws and rules of this state, and the orders of the commissioner. Any violation of such law, regulation, order, or rule is a violation of this chapter. Such federal laws and regulations include the Bank Secrecy Act (BSA), 31 U.S.C. section 5311 et seq. and 31 C.F.R. part 103 et seq. promulgated thereunder when required by the BSA, and include interpretive orders, and similar directives issued thereunder.
6 New Section; Mortgage Bankers and Brokers; Prohibitions. Amend RSA 397-A by inserting after section 3 the following new section:
397-A:3-a Prohibitions.
I. No individual may act as an originator for more than one mortgage broker, mortgage servicer, mortgage banker, or other financial institution at the same time, unless the entities are affiliates.
II. A sole proprietor licensed as a mortgage broker, mortgage servicer, or mortgage banker shall also obtain a license as a mortgage originator prior to acting as a mortgage originator.
III. No individual may act as a principal for more than one mortgage broker, mortgage servicer, mortgage banker, or other financial institution at the same time, unless the entities are affiliates.
7 New Subparagraph; Mortgage Bankers and Brokers; License Application; Investigation. Amend RSA 297-A:5, III by inserting after subparagraph (d) the following new subparagraph:
(e) Mortgage bankers shall designate an individual contact person who shall be a control person of their organization to communicate with department personnel on foreclosure workouts and foreclosure avoidance procedures. The contact person shall have authority to facilitate foreclosure workouts and foreclosure avoidance procedures. The contact person shall be named in the license application and the mortgage banker shall update the department whenever the designated contact person changes within 2 business days of such change.
8 Mortgage Bankers and Brokers; Record Keeping. Amend RSA 397-A:11, I-IV to read as follows:
I. The licensee shall maintain such records as will enable the department to determine whether the licensee’s business is in compliance with the provisions of this chapter and the rules adopted pursuant to it. Such records shall be maintained in a readily accessible location and made available for examination at the licensee’s New Hampshire principal office or its New Hampshire branch office location or the office of its New Hampshire agent for a period of at least 3 years after the loan is closed, if the loan is not retained in the licensee’s loan portfolio, or 3 years after the [loan is paid in full, if the loan is retained in the licensee’s loan portfolio. Licensees may maintain photocopies, microfilm, or microfiche copies of original documents] licensee’s final transaction on a loan or application file.
II. Those licensees that maintain their files and business records in another state are required to return such files to their principal or branch New Hampshire office, to the banking department, or to the office of their New Hampshire agent for examination no later than 21 calendar days after being requested to do so by the department. When the commissioner requests a loan list or other similar summary document from a licensee from which to select particular files for review, the licensee shall ensure that the list is received by the commissioner within 7 calendar days, and [return] provide the files selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21-day requirement. Failure to provide files and documents within the time established by this paragraph shall subject a licensee or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the department shall be sufficient cause for license revocation, suspension, or denial.
III. If the licensee retains a mortgage loan in its loan portfolio or services a loan it originated, an adequate loan payment history for such loan shall be made available to the department upon request.
IV. A licensee shall keep and use business records in such form and at such location as the commissioner shall by rule determine. The records shall enable the commissioner to determine whether the licensee is complying with the provisions of this chapter, any rules adopted under it, and any other law, rule, or regulation applicable to the conduct of the business for which it is licensed under this chapter. The rules may contain provisions for records to be recorded, copied, or reproduced by any process which accurately reproduces or forms a durable medium for reproducing the original record or document, or in any other form or manner authorized by the commissioner. For its own business purposes a licensee may maintain photocopies, microfilm, microfiche, or digital copies of original documents. However, nothing in this section shall be construed to permit any licensee to destroy original records or documents. Each licensee shall preserve all such business records for as long a period as the commissioner shall prescribe by rule.
9 Mortgage Bankers and Brokers; Advertising. Amend RSA 397-A:14-a, III to read as follows:
III. Any advertisement, printing, display, publication, distribution, or broadcast offering loans governed by this chapter shall clearly and conspicuously contain the disclosure in substantially the following form, “Licensed by the New Hampshire banking department”. Failure to comply with the provisions of this paragraph shall constitute sufficient cause for license revocation, suspension, or denial.
10 Mortgage Servicing Company; Definitions. Amend RSA 397-B:1, III to read as follows:
III. “Mortgage servicing company” or “mortgage servicer” means an individual, partnership, corporation, association, or other entity however organized and wherever located which, for itself or on behalf of the holder of a mortgage loan, holds the servicing rights or records such payments on its books and records and performs such other administrative functions as may be necessary to properly carry out the mortgage holders obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of such funds to the taxing authority and insurance company.
11 Mortgage Servicing Company; Application of Chapter. Amend RSA 397-B:2, II to read as follows:
III. Persons subject to, or registered, or licensed under this chapter shall abide by applicable federal laws and regulations, the laws and rules of this state, and the orders of the commissioner. Any violation of such law, regulation, order, or rule is a violation of this chapter. Such federal laws and regulations include the Bank Secrecy Act (BSA), 31 U.S.C. section 5311 et seq. and 31 C.F.R. part 103 et seq. promulgated thereunder when required by the BSA, and include interpretive orders and similar directives issued thereunder.
12 New Subparagraphs; Mortgage Servicing Company; Registration. Amend RSA 397-B:4, V by inserting after subparagraph (e) the following new subparagraphs:
(f) Mortgage servicers and mortgage loan originators acting on behalf of mortgage servicers shall abide by the provisions of RSA 397-A and the rules adopted thereunder where such statute and rules apply to mortgage origination and lending activities.
(g) Mortgage servicing companies shall designate an individual contact person, who shall be a control person of the entity, to communicate with department personnel on foreclosure workouts and foreclosure avoidance procedures. The contact person shall have the authority to facilitate foreclosure workouts and foreclosure avoidance procedures. The contact person shall be named in the license application and the mortgage banker shall update the department whenever the designated contact person changes within 2 business days of such change.
13 New Section; Mortgage Servicing Company; Recordkeeping. Amend RSA 397-B by inserting after section 9-a the following new section:
397-B:9-b Record Keeping.
I. The registrant shall maintain such records as will enable the department to determine whether the registrant’s business is in compliance with the provisions of this chapter and the rules adopted pursuant to it. Such records shall be maintained in a readily accessible location and made available for examination at the registrant’s New Hampshire principal office or its New Hampshire branch office location or the office of its New Hampshire agent for a period of at least 3 years after the registrant’s last transaction on a loan file.
II. Those registrants that maintain their files and business records in another state are required to return such files to their principal or branch New Hampshire office, to the banking department, or to the office of their New Hampshire agent for examination no later than 21 calendar days after being requested to do so by the department. When the commissioner requests a loan list or other similar summary document from a registrant from which to select particular files for review, the registrant shall ensure that the list or information is received by the commissioner within 7 calendar days, and then shall provide the files and information selected by the commissioner to the commissioner within 14 calendar days to ensure compliance with the 21-day requirement. Failure to provide files and documents within the time established by this paragraph shall subject a registrant or person to a fine of $50 per day for each day after 21 days the files and documents are not produced. Failure to provide files and documents within 60 days after being requested to do so by the department shall be sufficient cause for registration revocation, suspension, or denial.
III. A registrant shall keep and use business records in such form and at such location as the commissioner shall by rule determine. The records shall enable the commissioner to determine whether the registrant is complying with the provisions of this chapter, any rules adopted under it, and any other law, rule, or regulation applicable to the conduct of the business for which it is registered under this chapter. The rules may contain provisions for records to be recorded, copied, or reproduced by any process which accurately reproduces or forms a durable medium for reproducing the original record or document, or in any other form or manner authorized by the commissioner. For their own business purposes, a registrant may maintain photocopies, microfilm, microfiche, or digital copies of original documents. However, nothing in this section shall be construed to permit any registrant to destroy original records or documents. Each registrant shall preserve all such business records for as long a period as the commissioner shall prescribe by rule.
IV. If the commissioner or examiner finds any records to be inadequate, or kept or posted in a manner not in accordance with generally accepted accounting principles, the commissioner may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such records after the commissioner or examiner has given him or her written notice and a reasonable opportunity to do so.
14 Mortgage Servicing Company; Exemption. Amend RSA 397-B:10 to read as follows:
397-B:10 Exemption.
I. The provisions of this chapter shall not apply to any bank, trust company, savings and loan association, or cooperative bank, savings bank, or credit union which may be chartered by this state or any other state or by any agency of the United States, or to any other person not within the intent of this chapter as the commissioner may designate by rule or order[, nor shall]. The registration provisions of this chapter also shall not apply to any individual or entity licensed by the banking department as a mortgage banker in accordance with RSA 397-A, provided that such mortgage banker abides by the provisions of this chapter and the rules adopted thereunder.
II. A person that funds a mortgage loan while such person is exempt from licensure under RSA 397-A:4, and that retains such mortgage loan in its, his, or her own portfolio, may perform mortgage servicing activities limited to the collection of interest and principal, foreclosure procedures, and loan negotiation and modification activity, without obtaining a mortgage servicing registration or mortgage loan originator license under this chapter.
15 New Subparagraph; Small Loan Lender; Application and Fees. Amend RSA 399-A:3, II by inserting after subparagraph (e) the following new subparagraph:
(f) The department may rely on criminal records checks reported through a national licensing system in lieu of subparagraphs (c) and (d).
16 Small Loan Lender; Consumer Credit Administration License Fund. RSA 399-A:5 is repealed and reenacted to read as follows:
399-A:5 Consumer Credit Administration License Fund. The balance in the consumer credit administration license fund shall be transferred and shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.
17 Debt Adjuster; Definitions. Amend RSA 399-D:2, II-a to read as follows:
II-a. “Concessions” means assent to repayment of a debt on terms more favorable to an individual than the terms of the contract between the individual and a creditor.
II-b. “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. Any person is presumed to control a company if such person:
(a) Is a director, general partner, or executive officer;
(b) Directly or indirectly has the right to vote 10 percent or more of a class of a voting security or membership interest, or has the power to sell or direct the sale of 10 percent or more of a class of voting securities or membership interest;
(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, 10 percent or more of the capital.
18 New Subparagraph; Debt Adjuster; Definitions. Amend RSA 399-D:2, IV by inserting after subparagraph (e) the following new subparagraph:
(f) Any person that serves as an intermediary between a consumer and one or more creditors of the consumer for the purpose of obtaining concessions.
19 Debt Adjuster; Licensee’s Duties. Amend RSA 399-D:15, VIII to read as follows:
VIII. Persons subject to or licensed under this chapter shall abide by applicable federal laws[,] and regulations [including the federal Truth in Lending Act,] and the laws, orders, and rules of this state. Any violation of such law, rule, or order shall be a violation of this chapter.
20 Effective Date. This act shall take effect 60 days after its passage.
LBAO
13-0829
01/18/13
HB 594-FN – FISCAL NOTE
AN ACT relative to the general consumer credit laws of the state.
FISCAL IMPACT:
Due to time constraints, the Office of Legislative Budget Assistant is unable to provide a fiscal note for this bill at this time. When completed, the fiscal note will be forwarded to the House Clerk's Office.