Enacts the "credit creation pilot program act of New York"
download bill text pdf| Date of Action |
Assembly Actions -
Lowercase Senate Actions - UPPERCASE |
|---|---|
| May 20, 2016 |
referred to banks |
Enacts the "credit creation pilot program act of New York"; directs the superintendent; defines terms; provides that a program licensee may not offer or make a program loan or impose any charges or fees without prior approval from the superintendent of financial services to participate in the program
S T A T E O F N E W Y O R K
________________________________________________________________________
10321
I N A S S E M B L Y
May 20, 2016
___________
Introduced by M. of A. MORELLE, PERRY, RODRIGUEZ, CRESPO, LUPARDO, MILL-
ER, GALEF, McDONALD, SCHIMEL, MOSLEY, HIKIND, STIRPE, JAFFEE --
Multi-Sponsored by -- M. of A. MAGEE, SIMON -- read once and referred
to the Committee on Banks
AN ACT to amend the banking law, in relation to enacting the "credit
creation pilot program act of New York"; and providing for the repeal
of such provisions upon expiration thereof
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Short title. This act shall be known and may be cited as
the "credit creation pilot program act of New York".
S 2. The legislature finds and declares that consumer demand for
responsible installment loans in principal amounts of at least three
hundred dollars and no more than five thousand dollars exceeds the
supply of these loans. The legislature has identified several improve-
ments that could be made to the banking laws, which would allow more New
Yorkers to access responsible installment loans of at least three
hundred dollars and no more than five thousand dollars. The credit
creation pilot program act of New York is intended to assist consumers
in building their credit and has additional consumer protections for
these loans which exceed current protections under existing law.
S 3. The banking law is amended by adding a new article 8-B to read as
follows:
ARTICLE 8-B
CREDIT CREATION PILOT PROGRAM ACT OF NEW YORK
SECTION 339-A. CREATION OF PILOT PROGRAM AND DEFINITIONS.
339-B. APPROVAL REQUIRED; PROGRAM APPLICATION REQUIREMENTS;
FEES.
339-C. REQUIREMENTS FOR PROGRAM LOANS.
339-D. UNDERWRITING REQUIREMENTS; CREDIT REPORTING; CREDIT
EDUCATION; PROHIBITION ON REFINANCE; PROHIBITION ON
CREDIT INSURANCE; AND ADDITIONAL CONSUMER PROTECTIONS.
339-E. DISCLOSURES, STATEMENTS AND RECEIPTS.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15075-03-6
A. 10321 2
339-F. REFERRAL PARTNERS; PERMITTED SERVICES; PROHIBITED ACTIV-
ITIES; COMPENSATION.
339-G. EXAMINATIONS AND GROUNDS FOR DISCIPLINARY ACTION.
339-H. PROGRAM REPORTING.
S 339-A. CREATION OF PILOT PROGRAM AND DEFINITIONS. 1. THE SUPERINTEN-
DENT SHALL CREATE AND IMPLEMENT WITHIN THE DEPARTMENT, THE CREDIT
CREATION PILOT PROGRAM ACT OF NEW YORK.
2. FOR PURPOSES OF THIS ARTICLE:
(A) "CONSUMER REPORTING AGENCY" HAS THE SAME MEANING AS IN SECTION
603(P) OF THE FAIR CREDIT REPORTING ACT, 15 U.S.C. SECTION 1681A(P).
(B) "CREDIT SCORE" HAS THE SAME MEANING AS IN SECTION 609(F)(2)(A) OF
THE FAIR CREDIT REPORTING ACT, 15 U.S.C. SECTION 1681G(F)(2)(A).
(C) "DATA FURNISHER" HAS THE SAME MEANING AS THE TERM "FURNISHER" IN
12 C.F.R. SECTION 1022.41(C).
(D) "PILOT PROGRAM" OR "PROGRAM" MEANS THE CREDIT CREATION PILOT
PROGRAM ACT OF NEW YORK.
(E) "PILOT PROGRAM LICENSEE" OR "PROGRAM LICENSEE" MEANS AN ENTITY
THAT IS LICENSED TO MAKE AND COLLECT PROGRAM LOANS UNDER THIS ARTICLE
AND WHO IS APPROVED BY THE SUPERINTENDENT TO PARTICIPATE IN THE PROGRAM.
(F) "PILOT PROGRAM MASTER LICENSE" OR "PROGRAM MASTER LICENSE" MEANS A
PROGRAM MASTER LICENSE ISSUED BY THE SUPERINTENDENT UNDER THIS ARTICLE
AUTHORIZING A PROGRAM LICENSEE TO MAKE AND COLLECT PROGRAM LOANS.
(G) "PROGRAM BRANCH OFFICE LICENSE" MEANS THE LICENSE GRANTED TO A
PROGRAM LICENSEE WITH A PROGRAM MASTER LICENSE FOR ADDITIONAL LICENSED
PROGRAM LOCATIONS, EXCLUDING A PROGRAM LICENSEE'S OR REFERRAL PARTNER'S
PRINCIPAL PLACE OF BUSINESS, AT WHICH PROGRAM LOANS ARE ORIGINATED,
NEGOTIATED, FUNDED, OR SERVICED BY A PROGRAM LICENSEE.
(H) "PROGRAM LOAN" MEANS A CONSUMER INSTALLMENT LOAN WITH A PRINCIPAL
AMOUNT OF AT LEAST THREE HUNDRED DOLLARS AND NO MORE THAN FIVE THOUSAND
DOLLARS.
(I) "REFERRAL PARTNER" MEANS AN ENTITY THAT, AT THE REFERRAL PARTNER'S
PHYSICAL LOCATION FOR BUSINESS, PERFORMS ONE OR MORE OF THE PERMITTED
SERVICES SPECIFIED IN SECTION THREE HUNDRED THIRTY-NINE-F OF THIS ARTI-
CLE ON BEHALF OF A PROGRAM LICENSEE. A REFERRAL PARTNER SHALL NOT MEAN A
LOAN BROKER AS DEFINED IN SECTION 5-531 OF THE GENERAL OBLIGATIONS LAW.
(J) "SUPERINTENDENT" MEANS THE SUPERINTENDENT OF FINANCIAL SERVICES.
S 339-B. APPROVAL REQUIRED; PROGRAM APPLICATION REQUIREMENTS; FEES. 1.
A PROGRAM LICENSEE MAY NOT OFFER OR MAKE A PROGRAM LOAN, OR IMPOSE ANY
CHARGES OR FEES PURSUANT TO THIS ARTICLE, WITHOUT PRIOR APPROVAL FROM
THE SUPERINTENDENT TO PARTICIPATE IN THE PROGRAM.
2. IN ORDER TO PARTICIPATE IN THE PROGRAM, A PERSON MUST:
(A) BE LICENSED AS A LENDER PURSUANT TO ARTICLE NINE OF THIS CHAPTER;
(B) NOT BE THE SUBJECT OF ANY INSOLVENCY PROCEEDINGS;
(C) BE IN GOOD STANDING WITH THE SUPERINTENDENT AND NOT BE SUBJECT TO
ANY OUTSTANDING ENFORCEMENT OR OTHER DISCIPLINARY ACTIONS TAKEN AGAINST
IT BY ANY OF NEW YORK'S FINANCIAL REGULATORS OR BY A FINANCIAL REGULATOR
OF ANOTHER STATE;
(D) PAY AN APPLICATION FEE OF THREE THOUSAND DOLLARS TO THE SUPER-
INTENDENT AT THE TIME OF MAKING THE APPLICATION;
(E) FILE WITH THE SUPERINTENDENT A DIGITAL APPLICATION IN A FORM AND
MANNER PRESCRIBED BY THE SUPERINTENDENT WHICH CONTAINS ALL OF THE
FOLLOWING INFORMATION WITH RESPECT TO THE PROGRAM APPLICANT:
(I) THE LEGAL BUSINESS NAME AND ANY OTHER NAME THE APPLICANT OPERATES
UNDER OTHER THAN THE LEGAL BUSINESS NAME;
(II) THE ADDRESS OF THE PRINCIPAL PLACE OF BUSINESS;
(III) THE TELEPHONE NUMBER AND E-MAIL ADDRESS;
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(IV) THE ADDRESS OF ANY PROGRAM BRANCH OFFICE;
(V) THE CONTACT PERSON'S NAME, TITLE, ADDRESS, TELEPHONE NUMBER, AND
E-MAIL ADDRESS;
(VI) THE LICENSE NUMBER, IF LICENSED UNDER ARTICLE NINE OF THIS CHAP-
TER;
(VII) A STATEMENT AS TO WHETHER THE APPLICANT INTENDS TO USE THE
SERVICES OF ONE OR MORE REFERRAL PARTNERS UNDER SECTION THREE HUNDRED
THIRTY-NINE-F OF THIS ARTICLE;
(VIII) A STATEMENT THAT THE APPLICANT HAS BEEN ACCEPTED AS A DATA
FURNISHER BY A CONSUMER REPORTING AGENCY AND WILL REPORT TO A CONSUMER
REPORTING AGENCY THE PAYMENT PERFORMANCE OF EACH BORROWER ON ALL LOANS
MADE UNDER THE PROGRAM; AND
(IX) THE SIGNATURE AND CERTIFICATION OF AN AUTHORIZED PERSON OF THE
APPLICANT.
3. A PROGRAM LICENSEE WHO DESIRES TO PARTICIPATE IN THE PROGRAM BUT
WHO IS NOT LICENSED TO MAKE LOANS PURSUANT TO ARTICLE NINE OF THIS CHAP-
TER MUST SUBMIT CONCURRENTLY THE FOLLOWING TWO APPLICATIONS TO THE
SUPERINTENDENT, IN A FORM AND MANNER SPECIFIED IN THIS SECTION:
(A) AN APPLICATION AND A FEE FOR A MASTER LICENSE PURSUANT TO ARTICLE
NINE OF THIS CHAPTER; AND
(B) AN APPLICATION AND A FEE FOR ADMISSION TO THE PROGRAM IN ACCORD-
ANCE WITH PARAGRAPHS (D) AND (E) OF SUBDIVISION TWO OF THIS SECTION.
4. EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE, A PROGRAM LICENSEE IS
SUBJECT TO ALL THE LAWS AND RULES GOVERNING CONSUMER LOANS UNDER ARTICLE
NINE OF THIS CHAPTER.
5. ALL PROGRAM LICENSEES SHALL BE ASSESSED AN ANNUAL NONREFUNDABLE
LICENSE FEE OF ONE THOUSAND DOLLARS.
6. ONLY ONE PILOT PROGRAM MASTER LICENSE IS REQUIRED FOR A PERSON TO
MAKE PROGRAM LOANS UNDER THIS ARTICLE, REGARDLESS OF WHETHER THE PROGRAM
LICENSEE OFFERS PROGRAM LOANS TO PROSPECTIVE BORROWERS AT ITS OWN PHYS-
ICAL BUSINESS LOCATIONS, THROUGH REFERRAL PARTNERS, OR VIA AN ELECTRONIC
ACCESS POINT THROUGH WHICH A PROSPECTIVE BORROWER MAY DIRECTLY ACCESS
THE WEBSITE OF THE PROGRAM LICENSEE.
7. EACH BRANCH OFFICE OF A PROGRAM LICENSEE MUST BE LICENSED UNDER
THIS SECTION.
8. THIS SUPERINTENDENT SHALL ISSUE A PROGRAM BRANCH OFFICE LICENSE TO
A PROGRAM LICENSEE AFTER THE SUPERINTENDENT DETERMINES THAT THE PROGRAM
LICENSEE HAS SUBMITTED A COMPLETED ELECTRONIC APPLICATION FOR A PROGRAM
BRANCH OFFICE LICENSE IN A FORM PRESCRIBED BY THE SUPERINTENDENT AND
PAYMENT OF AN INITIAL NONREFUNDABLE PROGRAM BRANCH OFFICE LICENSE FEE OF
FIVE HUNDRED DOLLARS FOR EACH BRANCH OFFICE AS PRESCRIBED BY THE SUPER-
INTENDENT. APPLICATION FEES MAY NOT BE PRORATED FOR PARTIAL YEARS OF
LICENSURE. THE PROGRAM BRANCH OFFICE LICENSE SHALL BE ISSUED IN THE NAME
OF THE PROGRAM LICENSEE THAT MAINTAINS THE BRANCH OFFICE. THE APPLICA-
TION FOR A PROGRAM BRANCH OFFICE LICENSE SHALL CONTAIN THE FOLLOWING
INFORMATION WITH RESPECT TO THE APPLICANT:
(A) THE LEGAL BUSINESS NAME AND ANY OTHER NAME THE APPLICANT OPERATES
UNDER OTHER THAN THE LEGAL BUSINESS NAME;
(B) THE ADDRESS OF THE PRINCIPAL PLACE OF BUSINESS;
(C) THE TELEPHONE NUMBER AND E-MAIL ADDRESS;
(D) THE ADDRESS OF EACH PROGRAM BRANCH OFFICE;
(E) THE CONTACT PERSON'S NAME, TITLE, ADDRESS, TELEPHONE NUMBER, AND
E-MAIL ADDRESS;
(F) THE PROGRAM MASTER LICENSE NUMBER, IF LICENSED UNDER THIS ARTICLE;
AND
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(G) THE SIGNATURE AND CERTIFICATION OF AN AUTHORIZED PERSON OF THE
APPLICANT.
S 339-C. REQUIREMENTS FOR PROGRAM LOANS. 1. A PROGRAM LICENSEE SHALL
COMPLY WITH EACH OF THE FOLLOWING REQUIREMENTS IN MAKING PROGRAM LOANS:
(A) A PROGRAM LOAN SHALL BE UNSECURED;
(B) A PROGRAM LOAN SHALL HAVE A MINIMUM PRINCIPAL AMOUNT UPON ORIGI-
NATION OF THREE HUNDRED DOLLARS AND A MAXIMUM PRINCIPAL AMOUNT UPON
ORIGINATION OF FIVE THOUSAND DOLLARS;
(C) A PROGRAM LOAN SHALL HAVE A TERM OF NOT LESS THAN TWO HUNDRED
FORTY DAYS;
(D) A PROGRAM LOAN MUST BE REPAYABLE BY THE BORROWER IN SUBSTANTIALLY
EQUAL WEEKLY, BIWEEKLY, SEMIMONTHLY, OR MONTHLY INSTALLMENTS; AND
(E) A PROGRAM LOAN MUST INCLUDE A BORROWER'S RIGHT TO RESCIND THE
PROGRAM LOAN BY NOTIFYING THE PROGRAM LICENSEE OF THE BORROWER'S INTENT
TO RESCIND THE PROGRAM LOAN AND RETURN THE PRINCIPAL ADVANCED BY THE END
OF THE BUSINESS DAY AFTER THE DAY THE PROGRAM LOAN IS CONSUMMATED.
2. AS AN ALTERNATIVE TO THE CHARGES AUTHORIZED BY SECTION 5-501 OF THE
GENERAL OBLIGATIONS LAW OR SECTION FOURTEEN-A OF THIS CHAPTER, A PROGRAM
LICENSEE MAY CONTRACT FOR AND RECEIVE CHARGES FOR A PROGRAM LOAN MADE
PURSUANT TO THIS SECTION AT AN ANNUAL SIMPLE INTEREST RATE NOT TO EXCEED
THIRTY PERCENT. THE INTEREST RATE CALCULATED AS OF THE DATE OF LOAN
ORIGINATION SHALL BE FIXED FOR THE LIFE OF THE LOAN AND SHALL ACCRUE ON
A SIMPLE-INTEREST BASIS, THROUGH THE APPLICATION OF A DAILY PERIODIC
RATE TO THE ACTUAL UNPAID PRINCIPAL BALANCE EACH DAY.
3. NOTWITHSTANDING SECTION 5-501 OF THE GENERAL OBLIGATIONS LAW OR
SECTION FOURTEEN-A OF THIS CHAPTER, A PROGRAM LICENSEE MAY CONTRACT FOR
AND RECEIVE A NONREFUNDABLE ORIGINATION FEE FROM THE BORROWER. THE ORIG-
INATION FEE SHALL BE FULLY EARNED IMMEDIATELY UPON MAKING THE PROGRAM
LOAN, IN AN AMOUNT NOT TO EXCEED FIVE PERCENT OF THE PRINCIPAL AMOUNT,
EXCLUSIVE OF THE ORIGINATION FEE, OR SEVENTY-FIVE DOLLARS, WHICHEVER IS
LESS, ON THE PROGRAM LOAN MADE TO THAT BORROWER. AN ORIGINATION FEE
CHARGED BY A PROGRAM LICENSEE SHALL BE SUBJECT TO ALL OF THE FOLLOWING:
(I) ONLY ONE ORIGINATION FEE MAY BE CONTRACTED FOR OR RECEIVED FROM A
BORROWER UNTIL THE PROGRAM LOAN HAS BEEN REPAID IN FULL;
(II) A PROGRAM LICENSEE SHALL NOT CHARGE THE SAME BORROWER AN ORIGI-
NATION FEE MORE THAN TWICE IN ANY TWELVE-MONTH PERIOD; AND
(III) THE PROGRAM LICENSEE MAY EITHER DEDUCT THE ORIGINATION FEE FROM
THE PRINCIPAL AMOUNT OF THE PROGRAM LOAN DISBURSED TO THE BORROWER OR
CAPITALIZE THE ORIGINATION FEE INTO THE PRINCIPAL BALANCE OF THE PROGRAM
LOAN.
4. NOTWITHSTANDING SECTION THREE HUNDRED FIFTY-ONE OF THIS CHAPTER, A
PROGRAM LICENSEE MAY:
(A) REQUIRE PAYMENT FROM A BORROWER OF NO MORE THAN TWENTY-FIVE
DOLLARS FOR INSUFFICIENT FUNDS FEES INCURRED BY THAT PROGRAM LICENSEE
DUE TO ACTIONS OF THE BORROWER; AND
(B) CONTRACT FOR AND RECEIVE A DELINQUENCY FEE OF NO MORE THAN FOUR-
TEEN DOLLARS FOR EACH PAYMENT IN DEFAULT FOR AT LEAST SEVEN DAYS IF THE
CHARGE IS AGREED UPON IN WRITING BETWEEN THE PARTIES BEFORE IMPOSING THE
CHARGE. A DELINQUENCY FEE IMPOSED BY A PROGRAM LICENSEE IS SUBJECT TO
ALL OF THE FOLLOWING:
(I) NO MORE THAN ONE DELINQUENCY FEE MAY BE IMPOSED PER DELINQUENT
PAYMENT;
(II) NO MORE THAN TWO DELINQUENCY FEES MAY BE IMPOSED DURING ANY PERI-
OD OF THIRTY CONSECUTIVE DAYS; AND
(III) NO DELINQUENCY FEE MAY BE IMPOSED ON A BORROWER WHO IS ONE
HUNDRED EIGHTY DAYS OR MORE PAST DUE IF THAT FEE WOULD RESULT IN THE SUM
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OF THE BORROWER'S REMAINING UNPAID PRINCIPAL BALANCE, ACCRUED INTEREST,
AND DELINQUENCY FEES EXCEEDING ONE HUNDRED EIGHTY PERCENT OF THE
ORIGINAL PRINCIPAL AMOUNT OF THE BORROWER'S LOAN.
S 339-D. UNDERWRITING REQUIREMENTS; CREDIT REPORTING; CREDIT EDUCA-
TION; PROHIBITION ON REFINANCE; PROHIBITION ON CREDIT INSURANCE; AND
ADDITIONAL CONSUMER PROTECTIONS. 1. THE FOLLOWING SHALL APPLY TO A
PROGRAM LOAN MADE BY A PROGRAM LICENSEE PURSUANT TO THIS ARTICLE:
(A) THE PROGRAM LICENSEE SHALL UNDERWRITE EACH PROGRAM LOAN TO DETER-
MINE A BORROWER'S ABILITY AND WILLINGNESS TO REPAY THE PROGRAM LOAN
PURSUANT TO THE PROGRAM LOAN TERMS, AND SHALL NOT MAKE A PROGRAM LOAN IF
IT DETERMINES THAT THE BORROWER'S TOTAL MONTHLY DEBT SERVICE PAYMENTS,
AT THE TIME OF ORIGINATION, INCLUDING THE PROGRAM LOAN FOR WHICH THE
BORROWER IS BEING CONSIDERED AND ALL OUTSTANDING FORMS OF CREDIT THAT
CAN BE INDEPENDENTLY VERIFIED BY THE PROGRAM LICENSEE, EXCEED FIFTY
PERCENT OF THE BORROWER'S GROSS MONTHLY INCOME.
(I) (A) THE PROGRAM LICENSEE SHALL SEEK INFORMATION AND DOCUMENTATION
PERTAINING TO ALL OF A BORROWER'S OUTSTANDING DEBT OBLIGATIONS DURING
THE PROGRAM LOAN APPLICATION AND UNDERWRITING PROCESS, INCLUDING LOANS
THAT ARE SELF-REPORTED BY THE BORROWER BUT NOT AVAILABLE THROUGH INDE-
PENDENT VERIFICATION. THE PROGRAM LICENSEE SHALL VERIFY THAT INFORMATION
USING A CREDIT REPORT FROM AT LEAST ONE CONSUMER REPORTING AGENCY THAT
COMPILES AND MAINTAINS FILES ON CONSUMERS ON A NATIONWIDE BASIS OR
THROUGH OTHER AVAILABLE ELECTRONIC DEBT VERIFICATION SERVICES THAT
PROVIDE RELIABLE EVIDENCE OF A BORROWER'S OUTSTANDING DEBT OBLIGATIONS.
(B) THE PROGRAM LICENSEE SHALL NOT BE REQUIRED TO CONSIDER, FOR
PURPOSES OF DEBT-TO-INCOME RATIO EVALUATION, LOANS FROM FRIENDS OR FAMI-
LY.
(II) THE PROGRAM LICENSEE SHALL ALSO VERIFY THE BORROWER'S INCOME THAT
THE PROGRAM LICENSEE RELIES ON TO DETERMINE THE BORROWER'S DEBT-TO-IN-
COME RATIO USING INFORMATION FROM EITHER OF THE FOLLOWING:
(A) ELECTRONIC MEANS OR SERVICES THAT PROVIDE RELIABLE EVIDENCE OF THE
BORROWER'S ACTUAL INCOME; OR
(B) INTERNAL REVENUE SERVICE FORM W-2, TAX RETURNS, PAYROLL RECEIPTS,
BANK STATEMENTS, OR OTHER THIRD-PARTY DOCUMENTS THAT PROVIDE REASONABLY
RELIABLE EVIDENCE OF THE BORROWER'S ACTUAL INCOME.
(B) THE PROGRAM LICENSEE SHALL REPORT EACH BORROWER'S PAYMENT PERFORM-
ANCE TO AT LEAST ONE CONSUMER REPORTING AGENCY THAT COMPILES AND MAIN-
TAINS FILES ON CONSUMERS ON A NATIONWIDE BASIS. FOR PURPOSES OF THIS
SECTION, A CONSUMER REPORTING AGENCY THAT COMPILES AND MAINTAINS FILES
ON CONSUMERS ON A NATIONWIDE BASIS IS ONE THAT MEETS THE DEFINITION IN
SECTION 60-3(P) OF THE FEDERAL FAIR CREDIT REPORTING ACT (15 U.S.C. SEC.
1681A(P)).
(C) THE PROGRAM LICENSEE SHALL PROVIDE EACH BORROWER WITH THE NAME OF
THE CONSUMER REPORTING AGENCY OR AGENCIES TO WHICH IT WILL REPORT THE
BORROWER'S PAYMENT HISTORY.
(D) THE PROGRAM LICENSEE SHALL NOTIFY EACH BORROWER, AT LEAST TWO DAYS
PRIOR TO EACH PAYMENT DUE DATE, INFORMING THE BORROWER OF THE AMOUNT
DUE, AND THE PAYMENT DUE DATE. NOTIFICATION MAY BE PROVIDED BY ANY MEANS
MUTUALLY ACCEPTABLE TO THE BORROWER AND THE PROGRAM LICENSEE. A BORROWER
SHALL HAVE THE RIGHT TO OPT OUT OF THIS NOTIFICATION AT ANY TIME, UPON
ELECTRONIC OR WRITTEN REQUEST TO THE PROGRAM LICENSEE. THE PROGRAM
LICENSEE SHALL NOTIFY EACH BORROWER OF THIS RIGHT PRIOR TO DISBURSING
PROGRAM LOAN PROCEEDS.
(E) BEFORE DISBURSING PROGRAM LOAN PROCEEDS TO A BORROWER, THE PROGRAM
LICENSEE SHALL EITHER:
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(I) OFFER A CREDIT EDUCATION PROGRAM OR SEMINAR TO THE BORROWER THAT
HAS BEEN PREVIOUSLY REVIEWED AND APPROVED BY THE SUPERINTENDENT FOR USE
IN COMPLYING WITH THIS SECTION; OR
(II) INVITE THE BORROWER TO A CREDIT EDUCATION PROGRAM OR SEMINAR
OFFERED BY AN INDEPENDENT THIRD PARTY THAT HAS BEEN PREVIOUSLY REVIEWED
AND APPROVED BY THE SUPERINTENDENT FOR USE IN COMPLYING WITH THIS
SECTION. THE BORROWER SHALL NOT BE REQUIRED TO PARTICIPATE IN EITHER OF
THESE EDUCATION PROGRAMS OR SEMINARS. A CREDIT EDUCATION PROGRAM OR
SEMINAR OFFERED PURSUANT TO THIS PARAGRAPH SHALL BE PROVIDED AT NO COST
TO THE BORROWER.
(F) A PROGRAM LICENSEE SHALL NOT REFINANCE A PROGRAM LOAN. REFINANCE
MEANS THE REPLACEMENT OR REVISION OF AN EXISTING PROGRAM LOAN CONTRACT
WITH A BORROWER IN EXCHANGE FOR AN ADVANCE OF ADDITIONAL PRINCIPAL TO
THAT BORROWER. A PROGRAM LICENSEE MAY EXTEND, DEFER, OR REWRITE A
PROGRAM LOAN.
2. (A) NOTWITHSTANDING SECTION THREE HUNDRED FIFTY-SEVEN OF THIS CHAP-
TER, NO PERSON, IN CONNECTION WITH, OR INCIDENTAL TO, THE MAKING OF ANY
PROGRAM LOAN MADE PURSUANT TO THIS ARTICLE, MAY OFFER, SELL, OR REQUIRE
THE BORROWER TO CONTRACT FOR "CREDIT INSURANCE" OF THE TYPE SPECIFIED IN
SUBDIVISION THREE OF SECTION THREE HUNDRED FIFTY-SEVEN OF THIS CHAPTER
OR INSURANCE ON TANGIBLE PERSONAL OR REAL PROPERTY OF THE TYPE SPECIFIED
IN SUBDIVISION ONE OF SECTION THREE HUNDRED FIFTY-SEVEN OF THIS CHAPTER.
(B) NOTWITHSTANDING SECTION THREE HUNDRED FIFTY-SEVEN OF THIS CHAPTER,
NO PROGRAM LICENSEE, REFERRAL PARTNER, OR ANY OTHER PERSON THAT PARTIC-
IPATES IN THE ORIGINATION OF A PROGRAM LOAN UNDER THIS ARTICLE SHALL
REFER A BORROWER TO ANY OTHER PERSON FOR THE PURCHASE OF "CREDIT INSUR-
ANCE" OF THE TYPE SPECIFIED IN SUBDIVISION THREE OF SECTION THREE
HUNDRED FIFTY-SEVEN OF THIS CHAPTER OR INSURANCE ON TANGIBLE PERSONAL OR
REAL PROPERTY OF THE TYPE SPECIFIED IN SUBDIVISION ONE OF SECTION THREE
HUNDRED FIFTY-SEVEN OF THIS CHAPTER.
3. (A) NO PROGRAM LICENSEE SHALL REQUIRE, AS A CONDITION OF PROVIDING
THE PROGRAM LOAN, THAT THE BORROWER WAIVE ANY RIGHT, PENALTY, REMEDY,
FORUM, OR PROCEDURE PROVIDED FOR IN ANY LAW APPLICABLE TO THE PROGRAM
LOAN, INCLUDING THE RIGHT TO FILE AND PURSUE A CIVIL ACTION OR FILE A
COMPLAINT WITH OR OTHERWISE COMMUNICATE WITH THE SUPERINTENDENT OR ANY
COURT OR OTHER PUBLIC ENTITY, OR THAT THE BORROWER AGREE TO RESOLVE
DISPUTES IN A JURISDICTION OUTSIDE OF NEW YORK OR TO THE APPLICATION OF
LAWS OTHER THAN THOSE OF NEW YORK, AS PROVIDED BY LAW. ANY WAIVER BY A
BORROWER MUST BE KNOWING, VOLUNTARY, AND IN WRITING, AND EXPRESSLY NOT
MADE A CONDITION OF DOING BUSINESS WITH THE PROGRAM LICENSEE. ANY WAIV-
ER THAT IS REQUIRED AS A CONDITION OF DOING BUSINESS WITH THE PROGRAM
LICENSEE SHALL BE PRESUMED INVOLUNTARY, UNCONSCIONABLE, AGAINST PUBLIC
POLICY, AND UNENFORCEABLE. THE PROGRAM LICENSEE HAS THE BURDEN OF PROV-
ING THAT A WAIVER OF ANY RIGHTS, PENALTIES, FORUMS, OR PROCEDURES WAS
KNOWING, VOLUNTARY, AND NOT MADE A CONDITION OF THE CONTRACT WITH THE
BORROWER.
(B) NO PROGRAM LICENSEE SHALL REFUSE TO DO BUSINESS WITH OR DISCRIMI-
NATE AGAINST A BORROWER OR APPLICANT ON THE BASIS THAT THE BORROWER OR
APPLICANT REFUSES TO WAIVE ANY RIGHT, PENALTY, REMEDY, FORUM, OR PROCE-
DURE, INCLUDING THE RIGHT TO FILE AND PURSUE A CIVIL ACTION OR COMPLAINT
WITH, OR OTHERWISE NOTIFY, THE SUPERINTENDENT OR ANY COURT OR OTHER
PUBLIC ENTITY. THE EXERCISE OF A PERSON'S RIGHT TO REFUSE TO WAIVE ANY
RIGHT, PENALTY, REMEDY, FORUM, OR PROCEDURE, INCLUDING A REJECTION OF A
CONTRACT REQUIRING A WAIVER, SHALL NOT AFFECT ANY OTHERWISE LEGAL TERMS
OF A CONTRACT OR AN AGREEMENT.
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(C) THIS SUBDIVISION SHALL NOT APPLY TO ANY AGREEMENT TO WAIVE ANY
RIGHT, PENALTY, REMEDY, FORUM, OR PROCEDURE, INCLUDING ANY AGREEMENT TO
ARBITRATE A CLAIM OR DISPUTE, AFTER A CLAIM OR DISPUTE HAS ARISEN.
NOTHING IN THIS SUBDIVISION SHALL AFFECT THE ENFORCEABILITY OR VALIDITY
OF ANY OTHER PROVISION OF THE CONTRACT.
4. THE PROGRAM LICENSEE OR ANY OF ITS WHOLLY OWNED SUBSIDIARIES MAY
NOT SELL OR ASSIGN AN UNPAID DEBT TO AN INDEPENDENT THIRD PARTY FOR
COLLECTION PURPOSES UNLESS THE DEBT HAS BEEN DELINQUENT FOR AT LEAST
THIRTY DAYS.
5. THE PROGRAM LICENSEE SHALL DEVELOP AND IMPLEMENT POLICIES AND
PROCEDURES DESIGNED TO RESPOND TO QUESTIONS RAISED BY APPLICANTS AND
BORROWERS REGARDING THEIR PROGRAM LOANS, INCLUDING THOSE INVOLVING
REFERRAL PARTNERS, AND TO ADDRESS CUSTOMER COMPLAINTS AS SOON AS REASON-
ABLY PRACTICABLE.
S 339-E. DISCLOSURES, STATEMENTS AND RECEIPTS. 1. (A) IN ADDITION TO
THE DISCLOSURE REQUIREMENTS OF ARTICLE NINE OF THIS CHAPTER, A PROGRAM
LICENSEE SHALL DISCLOSE THE FOLLOWING TO THE CONSUMER IN WRITING, IN A
TYPEFACE NO SMALLER THAN TWELVE-POINT TYPE, AT THE TIME OF APPLICATION:
(I) THE AMOUNT BORROWED; THE TOTAL DOLLAR COST OF THE PROGRAM LOAN TO
THE CONSUMER IF THE PROGRAM LOAN IS PAID BACK ON TIME, INCLUDING THE SUM
OF THE ORIGINATION FEE, PRINCIPAL AMOUNT BORROWED, AND INTEREST
PAYMENTS; THE CORRESPONDING ANNUAL PERCENTAGE RATE, CALCULATED IN
ACCORDANCE WITH FEDERAL RESERVE BOARD REGULATION Z (12 C.F.R. 226); THE
PERIODIC PAYMENT AMOUNT; THE DELINQUENCY FEE SCHEDULE; AND THE FOLLOWING
STATEMENT: "REPAYING YOUR LOAN EARLY WILL LOWER YOUR BORROWING COSTS BY
REDUCING THE AMOUNT OF INTEREST YOU WILL PAY. THIS LOAN HAS NO PREPAY-
MENT PENALTY."
(II) A STATEMENT THAT THE CONSUMER HAS THE RIGHT TO RESCIND THE
PROGRAM LOAN BY NOTIFYING THE PROGRAM LICENSEE OF THE CONSUMER'S INTENT
TO RESCIND THE PROGRAM LOAN AND RETURNING THE PRINCIPAL ADVANCED BY THE
END OF THE BUSINESS DAY FOLLOWING THE DATE THE PROGRAM LOAN IS CONSUM-
MATED.
(B) A PROGRAM LICENSEE MAY PROVIDE THE BORROWER WITH THE DISCLOSURES
REQUIRED BY PARAGRAPH (A) OF THIS SUBDIVISION IN A MOBILE OR OTHER ELEC-
TRONIC APPLICATION, ON WHICH THE SIZE OF THE TYPEFACE OF THE DISCLOSURE
CAN BE MANUALLY MODIFIED BY A PROSPECTIVE BORROWER, IF THE PROSPECTIVE
BORROWER IS GIVEN THE OPTION TO PRINT THE DISCLOSURE IN A TYPEFACE OF AT
LEAST TWELVE-POINT SIZE OR IS PROVIDED BY THE PROGRAM LICENSEE WITH A
HARDCOPY OF THE DISCLOSURE IN A TYPEFACE OF AT LEAST TWELVE-POINT SIZE
BEFORE THE PROGRAM LOAN IS CONSUMMATED.
(C) THE PROGRAM LOAN CONTRACT AND ALL WRITTEN DISCLOSURES AND STATE-
MENTS MAY BE PROVIDED IN ENGLISH OR ANOTHER LANGUAGE IN WHICH THE
PROGRAM LOAN IS NEGOTIATED.
2. AT THE TIME A REFERRAL PARTNER RECEIVES OR PROCESSES AN APPLICATION
FOR A PROGRAM LOAN PURSUANT TO SECTION THREE HUNDRED THIRTY-NINE-F OF
THIS ARTICLE, THE REFERRAL PARTNER SHALL PROVIDE THE FOLLOWING STATEMENT
TO THE APPLICANT, ON BEHALF OF THE PROGRAM LICENSEE, IN NO SMALLER THAN
TEN-POINT TYPE, AND MUST REQUEST THAT THE APPLICANT ACKNOWLEDGE RECEIPT
OF THE STATEMENT IN WRITING:
"YOUR LOAN APPLICATION HAS BEEN REFERRED TO US BY (NAME OF REFERRAL
PARTNER). WE MAY PAY A FEE TO (NAME OF REFERRAL PARTNER) FOR THE
SUCCESSFUL REFERRAL OF YOUR LOAN APPLICATION. IF YOU ARE APPROVED FOR
THE LOAN, (NAME OF PROGRAM LICENSEE) WILL BECOME YOUR LENDER. IF YOU
HAVE ANY QUESTIONS ABOUT YOUR LOAN, NOW OR IN THE FUTURE, YOU SHOULD
DIRECT THOSE QUESTIONS TO (NAME OF PROGRAM LICENSEE) BY (INSERT AT LEAST
TWO DIFFERENT WAYS IN WHICH A BORROWER MAY CONTACT THE PROGRAM LICEN-
A. 10321 8
SEE). IF YOU WISH TO REPORT A COMPLAINT ABOUT (NAME OF REFERRAL PART-
NER) OR (NAME IF PROGRAM LICENSEE) REGARDING THIS LOAN TRANSACTION, YOU
MAY CONTACT THE DEPARTMENT OF FINANCIAL SERVICES AND FILE YOUR COMPLAINT
ONLINE AT HTTP://WWW.DFS.NY.GOV."
3. IF THE PROGRAM LOAN IS CONSUMMATED, THE PROGRAM LICENSEE SHALL
PROVIDE THE BORROWER A WRITTEN COPY OF THE DISCLOSURE NOTICE SPECIFIED
IN SUBDIVISION TWO OF THIS SECTION WITHIN TWO WEEKS AFTER THE DATE THE
PROGRAM LOAN IS CONSUMMATED. A PROGRAM LICENSEE MAY INCLUDE THE DISCLO-
SURE WITHIN ITS LOAN CONTRACT OR AS A SEPARATE DOCUMENT TO THE BORROWER,
VIA ANY MEANS ACCEPTABLE TO THE BORROWER.
4. A REFERRAL PARTNER THAT DISBURSES LOAN PROCEEDS TO A BORROWER
PURSUANT TO PARAGRAPH (J) OF SUBDIVISION THREE OF SECTION THREE HUNDRED
THIRTY-NINE-F OF THIS ARTICLE SHALL DELIVER OR CAUSE TO BE DELIVERED TO
THE BORROWER AT THE TIME LOAN PROCEEDS ARE DISBURSED A PLAIN AND
COMPLETE RECEIPT SHOWING ALL OF THE FOLLOWING:
(A) THE DATE OF DISBURSEMENT;
(B) THE TOTAL AMOUNT DISBURSED:
(C) THE CORRESPONDING LOAN ACCOUNT IDENTIFICATION; AND
(D) THE FOLLOWING STATEMENT, PROMINENTLY DISPLAYED IN A TYPE SIZE
EQUAL TO OR GREATER THAN THE TYPE SIZE USED TO DISPLAY THE OTHER ITEMS
ON THE RECEIPT: "IF YOU HAVE ANY QUESTIONS ABOUT YOUR LOAN, NOW OR IN
THE FUTURE, YOU SHOULD DIRECT THOSE QUESTIONS TO (NAME OF PROGRAM LICEN-
SEE) BY (INSERT AT LEAST TWO DIFFERENT WAYS IN WHICH A BORROWER MAY
CONTACT THE PROGRAM LICENSEE)."
5. IN ADDITION TO THE RECEIPT REQUIREMENTS IN ARTICLE NINE OF THIS
CHAPTER, A PROGRAM LICENSEE OR ITS APPROVED REFERRAL PARTNER, IF APPLI-
CABLE, MUST MAKE AVAILABLE TO THE BORROWER BY ELECTRONIC OR PHYSICAL
MEANS, AT THE TIME THAT A PAYMENT IS MADE BY THE BORROWER, A PLAIN AND
COMPLETE RECEIPT OF PAYMENT. FOR AUDIT PURPOSES, A PROGRAM LICENSEE MUST
MAINTAIN AN ELECTRONIC RECORD FOR EACH RECEIPT MADE AVAILABLE TO A
BORROWER, WHICH MUST INCLUDE A COPY OF THE RECEIPT AND THE DATE AND TIME
THAT THE RECEIPT WAS GENERATED. EACH RECEIPT OF PAYMENT MUST SHOW ALL OF
THE FOLLOWING:
(A) THE NAME OF THE BORROWER;
(B) THE NAME OF THE REFERRAL PARTNER, IF APPLICABLE;
(C) THE TOTAL PAYMENT AMOUNT RECEIVED;
(D) THE DATE OF PAYMENT;
(E) THE PROGRAM LOAN BALANCE BEFORE AND AFTER APPLICATION OF THE
PAYMENT;
(F) THE AMOUNT OF THE PAYMENT THAT WAS APPLIED TO PRINCIPAL, INTEREST,
AND FEES;
(G) THE TYPE OF PAYMENT MADE BY THE BORROWER; AND
(H) THE FOLLOWING STATEMENT, PROMINENTLY DISPLAYED IN A TYPE SIZE
EQUAL TO OR GREATER THAN THE TYPE SIZE USED TO DISPLAY THE OTHER ITEMS
ON THE RECEIPT: "IF YOU HAVE ANY QUESTIONS ABOUT YOUR LOAN NOW OR IN THE
FUTURE, YOU SHOULD DIRECT THOSE QUESTIONS TO ... (NAME OF PROGRAM LICEN-
SEE) ... BY ... (AT LEAST TWO DIFFERENT WAYS IN WHICH A BORROWER MAY
CONTACT THE PROGRAM LICENSEE) ...."
S 339-F. REFERRAL PARTNERS; PERMITTED SERVICES; PROHIBITED ACTIVITIES;
COMPENSATION. 1. A LICENSEE WHO IS APPROVED BY THE SUPERINTENDENT TO
PARTICIPATE IN THE PROGRAM MAY USE THE SERVICES OF ONE OR MORE REFERRAL
PARTNERS AS PROVIDED IN THIS ARTICLE.
2. ALL ARRANGEMENTS BETWEEN A PROGRAM LICENSEE AND A REFERRAL PARTNER
MUST BE SPECIFIED IN A WRITTEN REFERRAL PARTNER AGREEMENT BETWEEN THE
PARTIES. THE AGREEMENT MUST CONTAIN A PROVISION THAT THE REFERRAL PART-
NER AGREES TO COMPLY WITH THIS SECTION AND ALL RULES ADOPTED UNDER THIS
A. 10321 9
SECTION REGARDING THE ACTIVITIES OF REFERRAL PARTNERS, AND THAT THE
SUPERINTENDENT HAS ACCESS TO THE REFERRAL PARTNER'S BOOKS AND RECORDS
PERTAINING TO THE REFERRAL PARTNER'S OPERATIONS UNDER THE AGREEMENT WITH
THE PROGRAM LICENSEE IN ACCORDANCE WITH SUBDIVISION ONE OF SECTION THREE
HUNDRED THIRTY-NINE-G OF THIS ARTICLE.
3. A REFERRAL PARTNER MAY PERFORM ONE OR MORE OF THE FOLLOWING
SERVICES FOR A PROGRAM LICENSEE AT THE REFERRAL PARTNER'S PHYSICAL BUSI-
NESS LOCATION:
(A) DISTRIBUTING, CIRCULATING, USING, OR PUBLISHING PRINTED BROCHURES,
FLYERS, FACTSHEETS, OR OTHER WRITTEN MATERIALS RELATING TO PROGRAM LOANS
THAT THE PROGRAM LICENSEE MAY MAKE OR NEGOTIATE. THE WRITTEN MATERIALS
MUST BE REVIEWED AND APPROVED IN WRITING BY THE PROGRAM LICENSEE BEFORE
BEING DISTRIBUTED, CIRCULATED, OR PUBLISHED;
(B) PROVIDING WRITTEN FACTUAL INFORMATION ABOUT PROGRAM LOAN TERMS,
CONDITIONS, OR QUALIFICATION REQUIREMENTS TO A PROSPECTIVE BORROWER
WHICH HAVE BEEN EITHER PREPARED BY THE PROGRAM LICENSEE OR REVIEWED AND
APPROVED IN WRITING BY THE PROGRAM LICENSEE. A REFERRAL PARTNER MAY
DISCUSS THE INFORMATION WITH A PROSPECTIVE BORROWER IN GENERAL TERMS;
(C) NOTIFYING A PROSPECTIVE BORROWER OF THE INFORMATION NEEDED IN
ORDER TO COMPLETE A PROGRAM LOAN APPLICATION;
(D) ENTERING INFORMATION PROVIDED BY THE PROSPECTIVE BORROWER ON A
PREPRINTED OR ELECTRONIC APPLICATION FORM OR ONTO A PREFORMATTED COMPUT-
ER DATABASE;
(E) ASSEMBLING CREDIT APPLICATIONS AND OTHER MATERIALS OBTAINED IN THE
COURSE OF A CREDIT APPLICATION TRANSACTION FOR SUBMISSION TO THE PROGRAM
LICENSEE;
(F) CONTACTING THE PROGRAM LICENSEE TO DETERMINE THE STATUS OF A
PROGRAM LOAN APPLICATION;
(G) COMMUNICATING A RESPONSE THAT IS RETURNED BY THE PROGRAM
LICENSEE'S AUTOMATED UNDERWRITING SYSTEM TO A BORROWER OR A PROSPECTIVE
BORROWER;
(H) OBTAINING A BORROWER'S SIGNATURE ON DOCUMENTS PREPARED BY THE
PROGRAM LICENSEE AND DELIVERING FINAL COPIES OF THE DOCUMENTS TO THE
BORROWER;
(I) OPERATING AN ELECTRONIC ACCESS POINT THROUGH WHICH A PROSPECTIVE
BORROWER MAY DIRECTLY ACCESS THE WEBSITE OF THE PROGRAM LICENSEE TO
APPLY FOR A PROGRAM LOAN;
(J) DISBURSING LOAN PROCEEDS TO A BORROWER, IF THIS METHOD OF
DISBURSEMENT IS ACCEPTABLE TO THE BORROWER SUBJECT TO THE REQUIREMENTS
OF SUBDIVISION FOUR OF SECTION THREE HUNDRED THIRTY-NINE-E OF THIS ARTI-
CLE. A LOAN DISBURSEMENT MADE BY A REFERRAL PARTNER UNDER THIS SUBDIVI-
SION IS DEEMED TO BE MADE BY THE PROGRAM LICENSEE ON THE DATE THE FUNDS
ARE DISBURSED OR OTHERWISE MADE AVAILABLE BY THE REFERRAL PARTNER TO THE
BORROWER; OR
(K) RECEIVING A PROGRAM LOAN PAYMENT FROM THE BORROWER IF THIS METHOD
OF PAYMENT IS ACCEPTABLE TO THE BORROWER, SUBJECT TO THE REQUIREMENTS OF
SUBDIVISION FIVE OF SECTION THREE HUNDRED THIRTY-NINE-E OF THIS ARTICLE.
4. (A) A PROGRAM LOAN PAYMENT MADE BY A BORROWER TO A REFERRAL PARTNER
UNDER THIS SECTION MUST BE APPLIED TO THE BORROWER'S PROGRAM LOAN AND
DEEMED RECEIVED BY THE PROGRAM LICENSEE AS OF THE DATE THE PAYMENT IS
RECEIVED BY THE REFERRAL PARTNER.
(B) A REFERRAL PARTNER THAT RECEIVES PROGRAM LOAN PAYMENTS UNDER THIS
SECTION SHALL DELIVER OR CAUSE TO BE DELIVERED TO THE BORROWER AT THE
TIME THAT THE PAYMENT IS MADE BY THE BORROWER, A PLAIN AND COMPLETE
RECEIPT SHOWING ALL OF THE INFORMATION SPECIFIED IN SUBDIVISION FIVE OF
SECTION THREE HUNDRED THIRTY-NINE-E OF THIS ARTICLE.
A. 10321 10
5. A BORROWER WHO SUBMITS A PROGRAM LOAN PAYMENT TO A REFERRAL PARTNER
UNDER THIS SECTION SHALL NOT BE LIABLE FOR ANY FAILURE OR DELAY BY THE
REFERRAL PARTNER IN TRANSMITTING THE PAYMENT TO THE PROGRAM LICENSEE.
6. A REFERRAL PARTNER THAT DISBURSES OR RECEIVES LOAN PAYMENTS PURSU-
ANT TO SUBDIVISION THREE OF THIS SECTION SHALL MAINTAIN RECORDS OF ALL
DISBURSEMENTS MADE AND LOAN PAYMENTS RECEIVED FOR A PERIOD OF AT LEAST
TWO YEARS OR UNTIL ONE MONTH FOLLOWING THE COMPLETION OF AN EXAMINATION
OF THE PROGRAM LICENSEE BY THE SUPERINTENDENT, WHICHEVER IS LATER.
7. PROVIDING ANY NOTICE OR DISCLOSURE REQUIRED TO BE PROVIDED TO THE
BORROWER BY THE PROGRAM LICENSEE, OTHER THAN THE NOTICE REQUIRED TO BE
PROVIDED BY THE PROGRAM LICENSEE TO THE BORROWER PURSUANT TO SUBDIVISION
THREE OF SECTION THREE HUNDRED THIRTY-NINE-E OF THIS ARTICLE. A PROGRAM
LICENSEE THAT USES A REFERRAL PARTNER TO PROVIDE NOTICES OR DISCLOSURES
TO BORROWERS SHALL MAINTAIN A RECORD OF WHICH NOTICES AND DISCLOSURES
EACH REFERRAL PARTNER PROVIDES TO BORROWERS ON ITS BEHALF, FOR THE
PURPOSE OF FACILITATING THE COMMISSIONER'S EXAMINATION OF THE PROGRAM
LICENSEE.
8. A REFERRAL PARTNER SHALL NOT ENGAGE IN ANY OF THE FOLLOWING PROHIB-
ITED ACTIVITIES:
(A) PROVIDING COUNSELING OR ADVICE TO A BORROWER OR PROSPECTIVE
BORROWER WITH RESPECT TO ANY LOAN TERM;
(B) PROVIDING LOAN-RELATED MARKETING MATERIAL THAT HAS NOT PREVIOUSLY
BEEN APPROVED BY THE PROGRAM LICENSEE TO A BORROWER OR A PROSPECTIVE
BORROWER;
(C) NEGOTIATING A LOAN TERM BETWEEN A PROGRAM LICENSEE AND A PROSPEC-
TIVE BORROWER;
(D) OFFERING INFORMATION PERTAINING TO A SINGLE PROSPECTIVE BORROWER
TO MORE THAN ONE PROGRAM LICENSEE, EXCEPT IF A PROGRAM LICENSEE HAS
DECLINED TO OFFER A PROGRAM LOAN TO A PROSPECTIVE BORROWER AND HAS SO
NOTIFIED THAT PROSPECTIVE BORROWER IN WRITING, THE REFERRAL PARTNER MAY
THEN OFFER INFORMATION PERTAINING TO A SINGLE PROSPECTIVE BORROWER TO
ANOTHER PROGRAM LICENSEE WITH WHICH IT HAS A REFERRAL PARTNER'S AGREE-
MENT; AND
(E) REQUIRING A BORROWER TO PAY ANY FEES OR CHARGES TO THE REFERRAL
PARTNER OR TO ANY OTHER PERSON IN CONNECTION WITH A PROGRAM LOAN OTHER
THAN THOSE PERMITTED UNDER THIS ARTICLE.
9. A REFERRAL PARTNER SHALL COMPLY WITH ALL LAWS APPLICABLE TO THE
PROGRAM LICENSEE THAT IMPOSE REQUIREMENTS UPON THE PROGRAM LICENSEE FOR
SAFEGUARDS FOR INFORMATION SECURITY.
10. IF THE LOAN APPLICANT HAS QUESTIONS ABOUT THE PROGRAM LOAN THAT
THE REFERRAL PARTNER IS NOT PERMITTED TO ANSWER, THE REFERRAL PARTNER
SHALL MAKE A GOOD FAITH EFFORT TO ASSIST THE APPLICANT IN MAKING DIRECT
CONTACT WITH THE PROGRAM LICENSEE BEFORE THE PROGRAM LOAN IS CONSUM-
MATED.
11. THE PROGRAM LICENSEE MAY COMPENSATE A REFERRAL PARTNER PURSUANT TO
THE WRITTEN AGREEMENT BETWEEN THE LICENSEE AND THE REFERRAL PARTNER AND
A COMPENSATION SCHEDULE THAT IS MUTUALLY AGREED TO BY THE PROGRAM LICEN-
SEE AND THE REFERRAL PARTNER, SUBJECT TO THE REQUIREMENTS IN SUBDIVISION
TWELVE OF THIS SECTION.
12. THE COMPENSATION OF A REFERRAL PARTNER BY A PROGRAM LICENSEE SHALL
BE SUBJECT TO ALL OF THE FOLLOWING REQUIREMENTS:
(A) COMPENSATION MAY NOT BE PAID TO A REFERRAL PARTNER IN CONNECTION
WITH A LOAN APPLICATION UNLESS THAT PROGRAM LOAN IS CONSUMMATED;
(B) COMPENSATION MAY NOT BE PAID TO A REFERRAL PARTNER BASED UPON THE
PRINCIPAL AMOUNT OF THE PROGRAM LOAN;
A. 10321 11
(C) COMPENSATION MAY NOT BE DIRECTLY OR INDIRECTLY PASSED ON TO A
BORROWER THROUGH A FEE OR OTHER COMPENSATION, OR A PORTION OF A FEE OR
OTHER COMPENSATION CHARGED TO A BORROWER; AND
(D) SUBJECT TO THE LIMITATIONS SET FORTH IN PARAGRAPHS (A), (B) AND
(C) OF THIS SUBDIVISION, THE TOTAL COMPENSATION PAID BY A PROGRAM LICEN-
SEE TO A REFERRAL PARTNER FOR THE SERVICES SPECIFIED IN SUBDIVISION
THREE OF THIS SECTION SHALL NOT EXCEED THE SUM OF THE FOLLOWING:
(I) SIXTY DOLLARS PER PROGRAM LOAN, ON AVERAGE, ASSESSED ANNUALLY,
WHETHER PAID AT THE TIME OF CONSUMMATION OF THE PROGRAM LOAN, THROUGH
INSTALLMENTS, OR IN A MANNER OTHERWISE AGREED UPON BY THE PROGRAM LICEN-
SEE AND THE REFERRAL PARTNER; AND
(II) TWO DOLLARS PER PAYMENT RECEIVED BY THE REFERRAL PARTNER ON
BEHALF OF THE PROGRAM LICENSEE FOR THE DURATION OF THE PROGRAM LOAN, IF
THE REFERRAL PARTNER RECEIVES BORROWER LOAN PAYMENTS ON THE PROGRAM
LICENSEE'S BEHALF IN ACCORDANCE WITH SUBDIVISION THREE OF THIS SECTION.
(E) NEITHER THE PROGRAM LICENSEE NOR ANY REFERRAL PARTNER MAY PASS ON
TO A BORROWER, WHETHER DIRECTLY OR INDIRECTLY, ANY ADDITIONAL COST OR
OTHER CHARGE FOR COMPENSATION PAID TO A REFERRAL PARTNER UNDER THIS
PROGRAM.
13. A PROGRAM LICENSEE THAT UTILIZES THE SERVICES OF A REFERRAL PART-
NER MUST NOTIFY THE SUPERINTENDENT, IN A FORM AND MANNER PRESCRIBED BY
THE SUPERINTENDENT, WITHIN FIFTEEN DAYS AFTER ENTERING INTO A CONTRACT
WITH A REFERRAL PARTNER REGARDING ALL OF THE FOLLOWING:
(A) THE NAME, BUSINESS ADDRESS, AND LICENSING DETAILS OF THE REFERRAL
PARTNER AND ALL LOCATIONS AT WHICH THE REFERRAL PARTNER WILL PERFORM
SERVICES UNDER THIS SECTION;
(B) THE NAME AND CONTACT INFORMATION OF AN EMPLOYEE OF THE REFERRAL
PARTNER WHO IS KNOWLEDGEABLE ABOUT, AND HAS THE AUTHORITY TO EXECUTE,
THE REFERRAL PARTNER AGREEMENT;
(C) THE NAME AND CONTACT INFORMATION OF AN EMPLOYEE OF THE REFERRAL
PARTNER WHO IS RESPONSIBLE FOR THAT REFERRAL PARTNER'S REFERRING ACTIV-
ITIES ON BEHALF OF THE PROGRAM LICENSEE; AND
(D) A STATEMENT BY THE PROGRAM LICENSEE THAT IT HAS CONDUCTED DUE
DILIGENCE WITH RESPECT TO THE REFERRAL PARTNER AND HAS CONFIRMED THAT
NONE OF THE FOLLOWING APPLIES:
(I) THE FILING OF A PETITION UNDER THE UNITED STATES BANKRUPTCY CODE
FOR BANKRUPTCY OR REORGANIZATION BY THE REFERRAL PARTNER;
(II) THE COMMENCEMENT OF AN ADMINISTRATIVE OR A JUDICIAL LICENSE
SUSPENSION OR REVOCATION PROCEEDING, OR THE DENIAL OF A LICENSE REQUEST
OR RENEWAL, BY ANY STATE, THE DISTRICT OF COLUMBIA, ANY UNITED STATES
TERRITORY, OR ANY FOREIGN COUNTRY IN WHICH THE REFERRAL PARTNER OPER-
ATES, PLANS TO OPERATE, OR IS LICENSED TO OPERATE;
(III) A FELONY INDICTMENT INVOLVING THE REFERRAL PARTNER OR AN AFFIL-
IATED PARTY. AS USED IN THIS SUBPARAGRAPH, THE TERM "AFFILIATED PARTY"
MEANS A DIRECTOR, AN OFFICER, A RESPONSIBLE PERSON, AN EMPLOYEE, OR A
FOREIGN AFFILIATE OF A REFERRAL PARTNER; OR A PERSON WHO HAS A CONTROL-
LING INTEREST IN A REFERRAL PARTNER;
(IV) THE FELONY CONVICTION, GUILTY PLEA, OR PLEA OF NOLO CONTENDERE,
REGARDLESS OF ADJUDICATION, OF THE REFERRAL PARTNER OR AN AFFILIATED
PARTY;
(V) ANY SUSPECTED CRIMINAL ACT PERPETRATED IN THIS STATE RELATING TO
ACTIVITIES REGULATED UNDER THIS CHAPTER BY A REFERRAL PARTNER;
(VI) NOTIFICATION BY A LAW ENFORCEMENT OR PROSECUTORIAL AGENCY THAT
THE REFERRAL PARTNER IS UNDER CRIMINAL INVESTIGATION INCLUDING, BUT NOT
LIMITED TO, SUBPOENAS TO PRODUCE RECORDS OR TESTIMONY AND WARRANTS
ISSUED BY A COURT OF COMPETENT JURISDICTION WHICH AUTHORIZE THE SEARCH
A. 10321 12
AND SEIZURE OF ANY RECORDS RELATING TO A BUSINESS ACTIVITY REGULATED
UNDER THIS CHAPTER; AND
(VII) ANY OTHER INFORMATION REQUESTED BY THE SUPERINTENDENT.
14. A REFERRAL PARTNER MUST PROVIDE THE PROGRAM LICENSEE WITH A WRIT-
TEN NOTICE SENT BY REGISTERED MAIL WITHIN THIRTY DAYS OF ANY CHANGES TO
THE INFORMATION SPECIFIED IN PARAGRAPHS (A) THROUGH (C) OF SUBDIVISION
THIRTEEN OF THIS SECTION OR THE OCCURRENCE OR KNOWLEDGE OF, WHICHEVER
TIME PERIOD IS GREATER, ANY OF THE EVENTS SPECIFIED IN PARAGRAPH (D) OF
SUBDIVISION THIRTEEN OF THIS SECTION.
15. A PROGRAM LICENSEE IS RESPONSIBLE FOR ANY ACT OF ITS REFERRAL
PARTNER IF THE PROGRAM LICENSEE SHOULD HAVE KNOWN OF THE ACT OR HAD
ACTUAL KNOWLEDGE THAT SUCH ACT IS A VIOLATION OF THIS SECTION, AND THE
PROGRAM LICENSEE ALLOWED THE ACT TO CONTINUE. SUCH RESPONSIBILITY IS
LIMITED TO CONDUCT ENGAGED IN BY THE REFERRAL PARTNER PURSUANT TO THE
AUTHORITY GRANTED TO IT BY THE PROGRAM LICENSEE UNDER THE CONTRACT
BETWEEN THE REFERRAL PARTNER AND THE PROGRAM LICENSEE.
16. THE PROGRAM LICENSEE SHALL PAY TO THE SUPERINTENDENT, AT THE TIME
IT FILES A REFERRAL PARTNER NOTICE WITH THE SUPERINTENDENT, A ONE-TIME
NONREFUNDABLE FEE OF THIRTY DOLLARS FOR EACH REFERRAL PARTNER AS
PRESCRIBED BY THE SUPERINTENDENT.
S 339-G. EXAMINATIONS AND GROUNDS FOR DISCIPLINARY ACTION. 1. TO
ENSURE THAT THE ACTIVITIES OF THE PROGRAM LICENSEE ARE IN COMPLIANCE
WITH THIS ARTICLE, THE SUPERINTENDENT MUST EXAMINE EACH PROGRAM LICENSEE
AT LEAST ONCE EVERY TWENTY-FOUR MONTHS. THE SUPERINTENDENT MAY EXAMINE
EACH PROGRAM LICENSEE MORE FREQUENTLY IN ACCORDANCE WITH AND PURSUANT TO
ARTICLE NINE OF THIS CHAPTER. THE SUPERINTENDENT MAY ALSO EXAMINE THE
OPERATIONS OF EACH REFERRAL PARTNER TO ENSURE THAT THE ACTIVITIES OF THE
PROGRAM LICENSEE AND THE REFERRAL PARTNER ARE IN COMPLIANCE WITH THIS
ARTICLE.
2. THE PROGRAM LICENSEE SHALL PAY FOR THE COSTS OF ANY SUCH EXAMINA-
TION IN THE AMOUNT DETERMINED BY THE SUPERINTENDENT.
3. NOTWITHSTANDING SUBDIVISION ONE OF THIS SECTION, THE SUPERINTENDENT
SHALL HAVE THE AUTHORITY TO WAIVE ONE OR MORE PROGRAM BRANCH OFFICE
EXAMINATIONS, IF THE SUPERINTENDENT DEEMS THAT THE PROGRAM BRANCH OFFICE
EXAMINATIONS ARE NOT NECESSARY FOR THE PROTECTION OF THE PUBLIC, DUE TO
THE CENTRALIZED OPERATIONS OF THE PROGRAM LICENSEE OR OTHER FACTORS
ACCEPTABLE TO THE SUPERINTENDENT.
4. A PROGRAM LICENSEE WHO VIOLATES ANY APPLICABLE PROVISION OF THIS
ARTICLE IS SUBJECT TO DISCIPLINARY ACTION PURSUANT TO ARTICLE NINE OF
THIS CHAPTER. SUBJECT TO SUBDIVISION FIFTEEN OF SECTION THREE HUNDRED
THIRTY-NINE-F OF THIS ARTICLE, A PROGRAM LICENSEE IS ALSO SUBJECT TO
DISCIPLINARY ACTION FOR A VIOLATION OF THIS ARTICLE COMMITTED BY ANY OF
ITS REFERRAL PARTNERS.
5. THE SUPERINTENDENT MAY TAKE ANY OF THE FOLLOWING ACTIONS AGAINST A
REFERRAL PARTNER WHO VIOLATES THE PROVISIONS OF THIS SECTION:
(A) DISQUALIFY THE REFERRAL PARTNER FROM PERFORMING SERVICES UNDER
THIS ARTICLE;
(B) BAR THE REFERRAL PARTNER FROM PERFORMING SERVICES AT ONE OR MORE
SPECIFIC LOCATIONS OF THAT REFERRAL PARTNER;
(C) TERMINATE A WRITTEN AGREEMENT BETWEEN A REFERRAL PARTNER AND A
PROGRAM LICENSEE;
(D) IMPOSE AN ADMINISTRATIVE FINE NOT TO EXCEED ONE THOUSAND DOLLARS
FOR EACH ACT OF THE REFERRAL PARTNER; AND
(E) IF THE SUPERINTENDENT DEEMS THAT ACTION IN THE PUBLIC INTEREST,
PROHIBIT THE USE OF THAT REFERRAL PARTNER BY ALL PROGRAM LICENSEES
ACCEPTED TO PARTICIPATE IN THE PROGRAM.
A. 10321 13
S 339-H. PROGRAM REPORTING. 1. ON OR BEFORE APRIL FIRST OF EACH YEAR,
A PROGRAM LICENSEE SHALL FILE A REPORT WITH THE SUPERINTENDENT CONTAIN-
ING AGGREGATED OR ANONYMIZED DATA, WITHOUT REFERENCE TO ANY BORROWER'S
NONPUBLIC PERSONAL INFORMATION OR ANY PROPRIETARY OR TRADE SECRET INFOR-
MATION OF THE PROGRAM LICENSEE, ON EACH OF THE ITEMS SPECIFIED IN SUBDI-
VISION FOUR OF THIS SECTION.
2. ON OR BEFORE JANUARY FIRST, TWO THOUSAND NINETEEN, AND AGAIN, ON OR
BEFORE JANUARY FIRST, TWO THOUSAND TWENTY-ONE, THE SUPERINTENDENT MUST
POST A REPORT ON ITS WEBSITE SUMMARIZING THE USE OF THE PROGRAM BASED
UPON THE INFORMATION CONTAINED IN THE REPORT FILED BY EACH PROGRAM
LICENSEE UNDER SUBDIVISION ONE OF THIS SECTION.
3. THE REPORT MUST STATE THE INFORMATION IN AGGREGATE SO AS NOT TO
IDENTIFY DATA BY SPECIFIC PROGRAM LICENSEE OR REFERRAL PARTNER.
4. THE SUPERINTENDENT'S REPORT MUST SPECIFY THE PERIOD TO WHICH THE
REPORT CORRESPONDS AND MUST INCLUDE, BUT SHALL NOT BE LIMITED TO, THE
FOLLOWING FOR THAT PERIOD:
(A) THE NUMBER OF ENTITIES THAT APPLIED TO PARTICIPATE IN THE PROGRAM.
(B) THE NUMBER OF ENTITIES ACCEPTED TO PARTICIPATE IN THE PROGRAM.
(C) THE REASONS FOR REJECTING APPLICATIONS FOR PARTICIPATION, IF
APPLICABLE. THIS INFORMATION MUST BE PROVIDED IN A MANNER THAT DOES NOT
IDENTIFY THE ENTITY OR ENTITIES REJECTED.
(D) THE NUMBER OF PROGRAM LOAN APPLICATIONS RECEIVED BY PROGRAM LICEN-
SEES PARTICIPATING IN THE PROGRAM, THE NUMBER OF PROGRAM LOANS MADE
PURSUANT TO THE PROGRAM, THE TOTAL AMOUNT LOANED, THE DISTRIBUTION OF
LOAN LENGTHS UPON ORIGINATION, AND THE DISTRIBUTION OF INTEREST RATES
AND PRINCIPAL AMOUNTS UPON ORIGINATION AMONG THOSE PROGRAM LOANS.
(E) THE NUMBER OF BORROWERS WHO OBTAINED MORE THAN ONE PROGRAM LOAN
AND THE DISTRIBUTION OF THE NUMBER OF PROGRAM LOANS PER BORROWER.
(F) THE AVERAGE CREDIT SCORE INCREASE BETWEEN SUCCESSIVE PROGRAM LOANS
FOR BORROWERS (I) WITH NO CREDIT SCORE AND (II) WITH A CREDIT SCORE. IN
EACH CASE THE LICENSEE MUST SPECIFY THE METHODOLOGY USED TO MEASURE THE
INCREASE BASED ON INFORMATION FROM AT LEAST ONE MAJOR CREDIT BUREAU.
(G) THE INCOME DISTRIBUTION OF BORROWERS UPON PROGRAM LOAN ORIGI-
NATION, INCLUDING THE NUMBER OF BORROWERS WHO OBTAINED AT LEAST ONE
PROGRAM LOAN AND WHO RESIDED IN A LOW-INCOME OR MODERATE-INCOME CENSUS
TRACT AT THE TIME OF THEIR LOAN APPLICATIONS.
(H) THE NUMBER OF BORROWERS WHO OBTAINED PROGRAM LOANS FOR THE FOLLOW-
ING PURPOSES, BASED ON BORROWER RESPONSES AT THE TIME OF THEIR LOAN
APPLICATIONS INDICATING THE PRIMARY PURPOSE FOR WHICH THE PROGRAM LOAN
WAS OBTAINED:
(I) PAY MEDICAL EXPENSES;
(II) PAY FOR VEHICLE REPAIR OR A VEHICLE PURCHASE;
(III) PAY BILLS;
(IV) CONSOLIDATE DEBT;
(V) BUILD OR REPAIR CREDIT HISTORY; AND
(VI) PAY OTHER EXPENSES.
(I) THE NUMBER OF BORROWERS WHO SELF-REPORT THAT THEY HAD A BANK
ACCOUNT AT THE TIME OF THEIR LOAN APPLICATION AND THE NUMBER OF BORROW-
ERS WHO SELF-REPORT THAT THEY DID NOT HAVE A BANK ACCOUNT AT THE TIME OF
THEIR LOAN APPLICATION.
(J) THE NUMBER AND TYPE OF REFERRAL PARTNERS USED BY PROGRAM LICEN-
SEES.
(K) THE NUMBER AND PERCENTAGE OF BORROWERS WHO OBTAINED ONE OR MORE
PROGRAM LOANS ON WHICH DELINQUENCY CHARGES WERE ASSESSED, THE TOTAL
AMOUNT OF DELINQUENCY CHARGES ASSESSED, AND THE AVERAGE DELINQUENCY
A. 10321 14
CHARGE ASSESSED BY DOLLAR AMOUNT AND AS A PERCENTAGE OF THE PRINCIPAL
AMOUNT LOANED.
(L) THE PERFORMANCE OF PROGRAM LOANS UNDER THE PROGRAM AS REFLECTED BY
ALL OF THE FOLLOWING:
(I) THE NUMBER AND PERCENTAGE OF BORROWERS WHO EXPERIENCED AT LEAST
ONE DELINQUENCY LASTING BETWEEN SEVEN AND TWENTY-NINE DAYS AND THE
DISTRIBUTION OF PRINCIPAL LOAN AMOUNTS CORRESPONDING TO THOSE DELINQUEN-
CIES;
(II) THE NUMBER AND PERCENTAGE OF BORROWERS WHO EXPERIENCED AT LEAST
ONE DELINQUENCY LASTING BETWEEN THIRTY AND FIFTY-NINE DAYS AND THE
DISTRIBUTION OF PRINCIPAL LOAN AMOUNTS CORRESPONDING TO THOSE DELINQUEN-
CIES; AND
(III) THE NUMBER AND PERCENTAGE OF BORROWERS WHO EXPERIENCED AT LEAST
ONE DELINQUENCY LASTING SIXTY DAYS OR MORE AND THE DISTRIBUTION OF PRIN-
CIPAL LOAN AMOUNTS CORRESPONDING TO THOSE DELINQUENCIES.
(M) THE NUMBER AND TYPES OF VIOLATIONS OF THIS ARTICLE BY REFERRAL
PARTNERS WHICH WERE DOCUMENTED BY THE SUPERINTENDENT.
(N) THE NUMBER AND TYPES OF VIOLATIONS OF THIS ARTICLE BY PROGRAM
LICENSEES WHICH WERE DOCUMENTED BY THE SUPERINTENDENT.
(O) THE NUMBER OF TIMES THAT THE SUPERINTENDENT DISQUALIFIED A REFER-
RAL PARTNER FROM PERFORMING SERVICES, BARRED A REFERRAL PARTNER FROM
PERFORMING SERVICES AT ONE OR MORE SPECIFIC LOCATIONS OF THE REFERRAL
PARTNER, TERMINATED A WRITTEN AGREEMENT BETWEEN A REFERRAL PARTNER AND A
PROGRAM LICENSEE, OR IMPOSED AN ADMINISTRATIVE PENALTY.
(P) THE NUMBER OF COMPLAINTS RECEIVED BY THE SUPERINTENDENT ABOUT A
PROGRAM LICENSEE OR A REFERRAL PARTNER AND THE NATURE OF THOSE
COMPLAINTS.
S 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law and shall expire and be deemed repealed five
years after such date; provided, however, that effective immediately,
the addition, amendment and/or repeal of any rule or regulation neces-
sary for the implementation of this act on its effective date are
authorized to be made or completed on or before such effective date.
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