| Date of Action |
Assembly Actions -
Lowercase Senate Actions - UPPERCASE |
|---|---|
| May 02, 2018 |
referred to banks |
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Senate Bill S8340
2017-2018 Legislative Session
Enacts the "New York limited state charter for internet lending services law"
download bill text pdfSponsored By
(R) Senate District
Archive: Last Bill Status - In Senate Committee Banks Committee
- Introduced
-
- In Committee Assembly
- In Committee Senate
-
- On Floor Calendar Assembly
- On Floor Calendar Senate
-
- Passed Assembly
- Passed Senate
- Delivered to Governor
- Signed By Governor
Actions
2017-S8340 (ACTIVE) - Details
- Current Committee:
- Senate Banks
- Law Section:
- Banking Law
- Laws Affected:
- Add Art 3-C §§156 - 156-p, amd §44, Bank L
2017-S8340 (ACTIVE) - Sponsor Memo
BILL NUMBER: S8340
SPONSOR: PHILLIPS
TITLE OF BILL: An act to amend the banking law, in relation to inter-
net lending services
PURPOSE OR GENERAL IDEA OF BILL:
This bill would establish a new Article 3-C of the Banking Law, to
provide for the regulation of Internet Lending Services under New York
State Law.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of this bill would establish a new Article 3-C to provide for
the regulation of Internet Lending Services under New York State Law.
Specifically, this bill would authorize the Department of Financial
Services to issue a new, limited state charter to Internet Lending
Services Corporations, which would engage in the business of making
loans over an internet or electronic platform, and to provide a customer
with the funds of an approved loan, whereby the application of the customer seeking the loan is taken, and such loan is approved or denied, by the internet lending services corporation, over the internet, or by other electronic means approved by the superintendent. This bill would further limit state chartered Internet Lending Services Corporations to make loans and collect payments on a loan in the princi- pal amount of twenty-five thousand dollars or less, for any loan to an individual for personal, family, household, or investment purposes, and in a principal amount of fifty thousand dollars or less, for business and commercial loans, and charge, contract for, or receive a rate of interest in accordance with the provisions of this new article. These state chartered Internet Lending Services Corporations would be required to demonstrate fiscal solvency and maintain a minimum capital require- ment of not less than $250,000. Such capital requirement is five time higher than that of brick and mortar based licensed lenders. This bill would additionally provide for the regulation of such entities granted this new limited state charter by the department of financial services. Such regulation, which is consistent with that of other regu- lated loan making entities, would allow these new Internet Lending Services Corporations to offer loans to New Yorkers, at presently legal- ly authorized interest rates, and under a regulatory environment which is customary for the financial services industry JUSTIFICATION: Around the nation financial and technical firms have used electronic platforms to develop a whole new sector of business. This economy, which is driven by a virtual presence on the internet, just like other busi- nesses, has needs for capital to grow and prosper. In recent years, financial services have begun to use an electronic platform to reduce costs and expand availability. This wave of modern finance has allowed the development of a host of new on-line lenders, many of which specialize in providing small person and commercial loans to persons and businesses who wish to engage in internet commerce or operate a technology business. Presently, the New York State Banking Law has yet to provide a regulato- ry environment in which these entities may operate under the laws of New York. This bill would provide such environment, using proven, long term banking statutes as a model, and adapting them to this new and growing financial services product. PRIOR LEGISLATIVE HISTORY: This is a new bill. FISCAL IMPLICATIONS: None Noted EFFECTIVE DATE: Immediately
2017-S8340 (ACTIVE) - Bill Text download pdf
S T A T E O F N E W Y O R K
________________________________________________________________________
8340
I N S E N A T E
May 2, 2018
___________
Introduced by Sen. PHILLIPS -- read twice and ordered printed, and when
printed to be committed to the Committee on Banks
AN ACT to amend the banking law, in relation to internet lending
services
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The banking law is amended by adding a new article 3-C to
read as follows:
ARTICLE 3-C
INTERNET LENDING SERVICES
SECTION 156. LIMITED STATE CHARTER FOR INTERNET LENDING SERVICES.
156-A. ESTABLISHMENT OF AN INTERNET LENDING SERVICES CORPO-
RATION.
156-B. APPLICATION FOR A LIMITED STATE CHARTER.
156-C. GENERAL POWERS AND LIMITATIONS.
156-D. REGULATION AND EXAMINATION OF THE LIMITED STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION; GROUNDS FOR
REVOCATION OR SUSPENSION OF THE LIMITED STATE CHARTER;
PROCEDURE.
156-E. BOOKS AND RECORDS; REPORTS.
156-F. RESTRICTIONS CONCERNING ADVERTISING; LIENS ON REAL
ESTATE; AND NAMES UNDER WHICH LOANS ARE MADE.
156-G. RESTRICTIONS ON LOANS SUBJECT TO THE PROVISIONS OF THIS
ARTICLE; INTEREST; OTHER CHARGES.
156-H. ACTS REQUIRED OF STATE CHARTERED INTERNET LENDING
SERVICES CORPORATIONS; ACTS PROHIBITED.
156-I. LIMITATION ON STATE CHARTERED INTERNET LENDING SERVICES
CORPORATIONS' CHARGES ON LOANS.
156-J. RESTRICTIONS ON ASSIGNMENTS OF COMPENSATION FOR SERVICES.
156-K. SOLICITATION OF LOANS.
156-L. INSURANCE.
156-M. PENALTIES.
156-N. AUTHORITY OF SUPERINTENDENT.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11824-02-7
S. 8340 2
156-O. SHORT TITLE.
156-P. SEVERABILITY.
§ 156. LIMITED STATE CHARTER FOR INTERNET LENDING SERVICES. THE
DEPARTMENT SHALL RECOGNIZE A LIMITED STATE CHARTER FOR INTERNET LENDING
SERVICES. ANY ENTITY SEEKING TO BE AWARDED SUCH LIMITED STATE CHARTER
SHALL COMPLY WITH ALL THE REQUIREMENTS OF THIS ARTICLE. UPON THE GRANT-
ING OF SUCH LIMITED STATE CHARTER, THE INTERNET LENDING SERVICES CORPO-
RATION SHALL BE SUBJECT TO ALL OF THE REGULATIONS OF THE SUPERINTENDENT
AUTHORIZED UNDER THIS ARTICLE.
§ 156-A. ESTABLISHMENT OF AN INTERNET LENDING SERVICES CORPORATION.
1. TO APPLY FOR A LIMITED STATE CHARTER TO OPERATE UNDER THIS ARTICLE AS
AN INTERNET LENDING SERVICES CORPORATION, THE ENTITY SHALL ESTABLISH A
BUSINESS CORPORATION PURSUANT TO THE BUSINESS CORPORATION LAW, SPECIFY-
ING IN ITS ARTICLES OF INCORPORATION THAT THE PURPOSE FOR WHICH IT IS
FORMED, IS THAT THE CORPORATION SHALL OPERATE AS AN INTERNET LENDING
SERVICES CORPORATION IN ACCORDANCE WITH THIS ARTICLE.
2. ANY INTERNET LENDING SERVICES CORPORATION FORMED UNDER THE BUSINESS
CORPORATION LAW SHALL SPECIFY A HOME OFFICE OF THE CORPORATION WITHIN
NEW YORK STATE, AND SHALL APPLY TO THE SUPERINTENDENT FOR A LIMITED
STATE CHARTER TO OPERATE UNDER THIS ARTICLE, WITHIN THIRTY DAYS OF BEING
RECOGNIZED AS A BUSINESS CORPORATION BY THE DEPARTMENT OF STATE. NO
LENDING SERVICES CORPORATION SHALL CONDUCT ANY LENDING SERVICES AUTHOR-
IZED UNDER THIS ARTICLE, UNTIL SUCH TIME AS IT HAS BEEN AWARDED ITS
LIMITED STATE CHARTER BY THE SUPERINTENDENT.
§ 156-B. APPLICATION FOR A LIMITED STATE CHARTER. 1. AN INTERNET
LENDING SERVICES CORPORATION MAY APPLY TO THE SUPERINTENDENT FOR A
LIMITED STATE CHARTER TO OPERATE AS A LENDING SERVICES CORPORATION IN
ACCORDANCE WITH THIS ARTICLE. THE SUPERINTENDENT SHALL DEVELOP AN APPLI-
CATION FOR AN INTERNET LENDING SERVICES CORPORATION, TO APPLY FOR SUCH
LIMITED STATE CHARTER, PURSUANT TO THE QUALIFICATIONS SPECIFIED UNDER
THIS CHAPTER.
2. THE APPLICATION FOR THE LIMITED STATE CHARTER SHALL BE IN WRITING
AND SIGNED UNDER OATH BY THE CHIEF EXECUTIVE OFFICER OF THE CORPORATION
THAT ALL THE INFORMATION PROVIDED THEREIN IS ACCURATE AND CORRECT. AT
THE TIME OF THE MAKING OF THE APPLICATION FOR THE LIMITED STATE CHARTER,
THE APPLICANT CORPORATION SHALL PAY TO THE SUPERINTENDENT A FEE AS
PRESCRIBED PURSUANT TO SECTION EIGHTEEN-A OF THIS CHAPTER FOR INVESTI-
GATING THE APPLICATION.
3. IN CONNECTION WITH AN APPLICATION FOR A LIMITED STATE CHARTER UNDER
THIS ARTICLE, THE APPLICANT CORPORATION SHALL SUBMIT AN AFFIDAVIT OF
FINANCIAL SOLVENCY, AND SIGNED UNDER OATH BY THE CHIEF FINANCIAL OFFICER
OF THE CORPORATION NOTING SUCH CAPITALIZATION REQUIREMENTS AND ACCESS TO
SUCH CREDIT AS MAY BE PRESCRIBED BY THE REGULATIONS OF THE SUPERINTEN-
DENT.
4. THE APPLICANT CORPORATION SHALL ALSO PROVE, IN FORM SATISFACTORY TO
THE SUPERINTENDENT, THAT THE APPLICANT HAS AVAILABLE FOR THE OPERATION
OF THE BUSINESS AS A STATE CHARTERED INTERNET LENDING SERVICES CORPO-
RATION LIQUID ASSETS OF AT LEAST TWO HUNDRED FIFTY THOUSAND DOLLARS.
THIS AMOUNT SHALL BE MAINTAINED FOR THE PERIOD WITHIN WHICH THE APPLI-
CANT MAKES LOANS IN THE AMOUNTS PRESCRIBED IN SUBDIVISION TWO OF SECTION
ONE HUNDRED FIFTY-SIX-C OF THIS ARTICLE.
5. IN THE EVENT THE SUPERINTENDENT DOES NOT APPROVE THE CORPORATION'S
APPLICATION SUBMITTED PURSUANT TO THIS SECTION, WITHIN SIXTY DAYS OF ITS
SUBMISSION, SUCH APPLICATION SHALL BE DEEMED APPROVED UNLESS THE SUPER-
INTENDENT CAN DEMONSTRATE, IN WRITING, THAT SUCH APPLICATION DOES NOT
MEET THE LEGAL REQUIREMENTS OF THIS ARTICLE, OR THAT THE FINANCIAL
S. 8340 3
RESPONSIBILITY, EXPERIENCE, CHARACTER, AND GENERAL FITNESS OF THE OFFI-
CERS AND/OR DIRECTORS OF THE APPLICANT INTERNET LENDING SERVICES CORPO-
RATION, ARE SUCH AS TO NOT COMMAND THE CONFIDENCE OF THE COMMUNITY NOR
TO WARRANT BELIEF THAT THE BUSINESS WILL BE OPERATED HONESTLY, FAIRLY,
AND EFFICIENTLY WITHIN THE PURPOSES OF THIS ARTICLE.
6. IF THE SUPERINTENDENT SHALL FIND THAT THE APPLICANT HAS OTHERWISE
MET THE REQUIREMENTS OF THIS ARTICLE, AND WOULD BE AVAILABLE FOR THE
OPERATION OF THE BUSINESS OF BEING AN INTERNET LENDING SERVICES CORPO-
RATION, AND CAN MAINTAIN AND OPERATE A SECURE INTERNET OR OTHER TYPE OF
ELECTRONIC PLATFORM FOR THE CONDUCT OF SUCH BUSINESS, AND CAN MAINTAIN
LIQUID ASSETS OF AT LEAST TWO HUNDRED FIFTY THOUSAND DOLLARS, THEN THE
SUPERINTENDENT SHALL THEREUPON ISSUE SUCH INTERNET LENDING SERVICE
CORPORATION A LIMITED STATE CHARTER TO MAKE LOANS IN ACCORDANCE WITH THE
PROVISIONS OF THIS ARTICLE.
7. UPON THE ISSUANCE OF THE LIMITED STATE CHARTER, THE SUPERINTENDENT
SHALL TRANSMIT ONE COPY OF SUCH LIMITED STATE CHARTER TO THE APPLICANT
INTERNET LENDING SERVICES CORPORATION AND FILE THE SAME IN THE OFFICE OF
THE DEPARTMENT. EACH SUCH LIMITED STATE CHARTER SHALL REMAIN IN FULL
FORCE AND EFFECT UNTIL IT IS SURRENDERED BY THE INTERNET LENDING
SERVICES CORPORATION OR UNTIL IT IS REVOKED OR SUSPENDED, OR UNTIL THE
INTERNET LENDING SERVICES CORPORATION IS DISSOLVED AS A BUSINESS CORPO-
RATION.
§ 156-C. GENERAL POWERS AND LIMITATIONS. EVERY STATE CHARTERED INTER-
NET LENDING SERVICES CORPORATION SHALL, SUBJECT TO THE RESTRICTIONS AND
LIMITATIONS CONTAINED IN THIS CHAPTER, HAVE THE FOLLOWING POWERS AND
LIMITATIONS:
1. TO ENGAGE IN THE BUSINESS OF MAKING LOANS OVER AN INTERNET OR ELEC-
TRONIC PLATFORM, AND TO PROVIDE A CUSTOMER WITH THE FUNDS OF AN APPROVED
LOAN, WHEREBY THE APPLICATION OF THE CUSTOMER SEEKING THE LOAN IS TAKEN,
AND SUCH LOAN IS APPROVED OR DENIED, BY THE INTERNET LENDING SERVICES
CORPORATION, OVER THE INTERNET, OR BY OTHER ELECTRONIC MEANS APPROVED BY
THE SUPERINTENDENT.
2. PURSUANT TO SUBDIVISION ONE OF THIS SECTION, MAKE LOANS AND COLLECT
PAYMENTS ON A LOAN IN THE PRINCIPAL AMOUNT OF TWENTY-FIVE THOUSAND
DOLLARS OR LESS, FOR ANY LOAN TO AN INDIVIDUAL FOR PERSONAL, FAMILY,
HOUSEHOLD, OR INVESTMENT PURPOSES; AND IN A PRINCIPAL AMOUNT OF FIFTY
THOUSAND DOLLARS OR LESS, FOR BUSINESS AND COMMERCIAL LOANS; AND CHARGE,
CONTRACT FOR, OR RECEIVE A RATE OF INTEREST IN ACCORDANCE WITH THE
PROVISIONS OF THIS ARTICLE.
3. FOR THE PURPOSES OF THIS SECTION, AN INTERNET LENDING SERVICES
CORPORATION SHALL BE CONSIDERED AS ENGAGING IN THE BUSINESS OF MAKING
LOANS IN NEW YORK, AND SUBJECT TO THE REQUIREMENTS OF THIS ARTICLE, IF
SUCH INTERNET LENDING SERVICES CORPORATION SOLICITS LOANS IN THE AMOUNTS
PRESCRIBED BY THIS SECTION, WITHIN THIS STATE, AND IN CONNECTION WITH
SUCH SOLICITATION, MAKES LOANS TO INDIVIDUALS THEN RESIDENT IN THIS
STATE.
4. NO INTERNET LENDING SERVICES CORPORATION, OR ANY OTHER PERSON OR
ENTITY SHALL BE CONSIDERED AS ENGAGING IN THE BUSINESS OF MAKING LOANS
IN THIS STATE IN VIOLATION OF THIS ARTICLE, IF SUCH ENTITY IS LICENSED
OR REGULATED BY ANY FEDERAL ENTITY RESPONSIBLE FOR LICENSING OR REGULAT-
ING BANKING AND/OR LOAN MAKING ENTITIES.
5. NO INTERNET LENDING SERVICES CORPORATION, OR ANY OTHER PERSON OR
ENTITY, THAT DOES NOT MAINTAIN A LIMITED STATE CHARTER IN ACCORDANCE
WITH THIS ARTICLE, OR THAT IS NOT LICENSED OR REGULATED BY ANY FEDERAL
ENTITY RESPONSIBLE FOR LICENSING OR REGULATING BANKING AND/OR LOAN
MAKING ENTITIES, OR THAT IS NOT OTHERWISE AUTHORIZED TO ENGAGE IN THE
S. 8340 4
BUSINESS OF MAKING LOANS PURSUANT TO THIS CHAPTER, SHALL ENGAGE IN THE
BUSINESS OF MAKING LOANS OVER AN INTERNET OR ELECTRONIC PLATFORM.
§ 156-D. REGULATION AND EXAMINATION OF THE LIMITED STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION; GROUNDS FOR REVOCATION OR SUSPEN-
SION OF THE LIMITED STATE CHARTER; PROCEDURE. 1. AN INTERNET LENDING
SERVICES CORPORATION THAT IS ISSUED A LIMITED STATE CHARTER PURSUANT TO
THIS ARTICLE SHALL BE SUBJECT TO THE REGULATION OF, AND EXAMINATION BY,
THE SUPERINTENDENT IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE.
2. THE SUPERINTENDENT IS AUTHORIZED TO EXAMINE A LIMITED STATE CHAR-
TERED INTERNET LENDING SERVICES CORPORATION IN ACCORDANCE WITH THIS
ARTICLE. FOR THE PURPOSE OF DISCOVERING VIOLATIONS OF THIS ARTICLE OR
SECURING INFORMATION LAWFULLY REQUIRED PURSUANT THERETO, THE SUPERINTEN-
DENT MAY AT ANY TIME, AND AS OFTEN AS MAY BE DETERMINED, EITHER
PERSONALLY OR BY A PERSON DULY DESIGNATED BY THE SUPERINTENDENT, INVES-
TIGATE THE LOANS AND BUSINESS AND EXAMINE THE BOOKS, ACCOUNTS, RECORDS,
AND FILES USED THEREIN OF EVERY LIMITED STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION. FOR THAT PURPOSE THE SUPERINTENDENT AND DULY
DESIGNATED REPRESENTATIVES SHALL HAVE FREE ACCESS TO THE OFFICES AND
PLACE OF BUSINESS, BOOKS, ACCOUNTS, PAPERS, RECORDS, FILES, COMPUTERS,
NETWORKS, ELECTRONIC PLATFORMS, SAFES AND VAULTS OF ALL SUCH LIMITED
STATE CHARTERED INTERNET LENDING SERVICES CORPORATIONS. THE SUPERINTEN-
DENT SHALL FURTHER HAVE AUTHORITY TO REQUIRE THE ATTENDANCE OF, AND TO
EXAMINE UNDER OATH, ALL PERSONS WHOMSOEVER WHOSE TESTIMONY MAY BE
REQUIRED RELATIVE TO SUCH LOANS OR SUCH BUSINESS.
3. THE SUPERINTENDENT MAY IMPOSE A FINE IN ACCORDANCE WITH SECTION
FORTY-FOUR OF THIS CHAPTER, OR SUSPEND OR REVOKE ANY LICENSE ISSUED
PURSUANT TO THIS ARTICLE IF THE SUPERINTENDENT SHALL FIND THAT:
(A) THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION HAS
FAILED TO PAY ANY SUM OF MONEY LAWFULLY DEMANDED BY THE SUPERINTENDENT
OR TO COMPLY WITH ANY LAWFUL DEMAND, RULING, OR REQUIREMENT OF THE
SUPERINTENDENT;
(B) THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION HAS
VIOLATED ANY PROVISIONS OF THIS ARTICLE, THE ACT OF CONGRESS ENTITLED
"TRUTH IN LENDING ACT" AND THE REGULATIONS THEREUNDER, AS SUCH ACT AND
REGULATIONS MAY FROM TIME TO TIME BE AMENDED, OR OF ANY RULE OR REGU-
LATION LAWFULLY MADE BY THE SUPERINTENDENT; OR
(C) ANY FACT OR CONDITION EXISTS WHICH, IF IT HAD EXISTED AT THE TIME
OF THE ORIGINAL APPLICATION FOR SUCH LIMITED STATE CHARTER, CLEARLY
WOULD HAVE WARRANTED THE SUPERINTENDENT IN REFUSING ORIGINALLY TO ISSUE
SUCH LIMITED STATE CHARTER.
4. THE SUPERINTENDENT MAY, UPON WRITTEN NOTICE TO A STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION, AND UPON GOOD CAUSE SHOWN, AND
WITH A HEARING IN ACCORDANCE WITH THE PROVISIONS OF THE STATE ADMINIS-
TRATIVE PROCEDURE ACT, SUSPEND ANY LIMITED STATE CHARTER FOR A PERIOD
NOT EXCEEDING SIXTY DAYS, PENDING INVESTIGATION. UPON WRITTEN NOTICE TO
THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION, AND UPON GOOD
CAUSE, PRIOR TO THE HEARING REQUIRED BY THIS SUBDIVISION, THE SUPER-
INTENDENT MAY ISSUE AN EMERGENCY SUSPENSION OF A LIMITED STATE CHARTER,
FOR A PERIOD NOT EXCEEDING FIVE DAYS.
5. ANY STATE CHARTERED INTERNET LENDING SERVICES CORPORATION MAY
SURRENDER ITS LIMITED STATE CHARTER BY DELIVERING TO THE SUPERINTENDENT
WRITTEN NOTICE THAT SUCH INTERNET LENDING SERVICES CORPORATION THEREBY
SURRENDERS SUCH LIMITED STATE CHARTER, BUT SUCH SURRENDER SHALL NOT
AFFECT SUCH INTERNET LENDING SERVICES CORPORATION'S CIVIL OR CRIMINAL
LIABILITY FOR ACTS COMMITTED PRIOR TO SUCH SURRENDER. ANY DISSOLUTION OF
AN INTERNET LENDING SERVICES CORPORATION IN ACCORDANCE WITH THE BUSINESS
S. 8340 5
CORPORATION LAW, SHALL BE DEEMED TO CONSTITUTE A SURRENDER OF ITS LIMIT-
ED STATE CHARTER IN ACCORDANCE WITH THIS SUBDIVISION.
6. NO REVOCATION OR SUSPENSION OR SURRENDER OF ANY LIMITED STATE CHAR-
TER UNDER THIS ARTICLE SHALL IMPAIR OR AFFECT THE OBLIGATION OF ANY
PRE-EXISTING LAWFUL CONTRACT BETWEEN THE STATE CHARTERED INTERNET LEND-
ING SERVICES CORPORATION AND ANY BORROWER.
7. EVERY LIMITED STATE CHARTER ISSUED UNDER THIS ARTICLE SHALL REMAIN
IN FORCE AND EFFECT UNTIL IT SHALL HAVE BEEN SURRENDERED, REVOKED, OR
SUSPENDED IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE, BUT THE
SUPERINTENDENT SHALL FURTHER HAVE THE AUTHORITY TO REINSTATE SUSPENDED
LIMITED STATE CHARTERS OR TO ISSUE NEW LIMITED STATE CHARTERS TO AN
INTERNET LENDING SERVICES CORPORATION WHOSE LIMITED STATE CHARTER SHALL
HAVE BEEN REVOKED IF NO FACT OR CONDITION THEN EXISTS WHICH CLEARLY
WOULD HAVE WARRANTED THE SUPERINTENDENT IN REFUSING ORIGINALLY TO ISSUE
SUCH LIMITED STATE CHARTER UNDER THIS ARTICLE.
8. IN ADDITION TO ANY OTHER REQUIREMENTS OF THIS ARTICLE, WHENEVER THE
SUPERINTENDENT SHALL REVOKE OR SUSPEND A LIMITED STATE CHARTER ISSUED
PURSUANT TO THIS ARTICLE, THE SUPERINTENDENT SHALL EXECUTE A WRITTEN
ORDER TO THAT EFFECT AND SERVE A COPY OF THE SAME UPON SUCH INTERNET
LENDING SERVICES CORPORATION IN ACCORDANCE WITH THIS SUBDIVISION. THE
SUPERINTENDENT SHALL FURTHER FILE ONE COPY OF SUCH ORDER IN THE OFFICE
OF THE DEPARTMENT AND SERVE A COPY UPON SUCH INTERNET LENDING SERVICES
CORPORATION, WHICH ORDER MAY BE REVIEWED IN THE MANNER PROVIDED BY ARTI-
CLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES. SUCH SPECIAL
PROCEEDING FOR REVIEW AS AUTHORIZED BY THIS SECTION MUST BE COMMENCED
WITHIN THIRTY DAYS FROM THE DATE SUCH ORDER OF SUSPENSION OR REVOCATION
WAS SERVED UPON SUCH INTERNET LENDING SERVICES CORPORATION.
§ 156-E. BOOKS AND RECORDS; REPORTS. 1. EACH STATE CHARTERED INTERNET
LENDING SERVICES CORPORATION SHALL KEEP AND USE IN ITS BUSINESS SUCH
BOOKS, ACCOUNTS, AND RECORDS AS WILL ENABLE THE SUPERINTENDENT TO DETER-
MINE WHETHER SUCH STATE CHARTERED INTERNET LENDING SERVICES CORPORATION
IS COMPLYING WITH THE PROVISIONS OF THIS ARTICLE AND WITH THE RULES AND
REGULATIONS LAWFULLY MADE BY THE SUPERINTENDENT PURSUANT THERETO.
2. EVERY STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL
PRESERVE SUCH BOOKS, ACCOUNTS, AND RECORDS, FOR AT LEAST TWO YEARS AFTER
MAKING THE FINAL ENTRY ON ANY LOAN RECORDED THEREIN. PRESERVATION OF
PHOTOGRAPHIC REPRODUCTION THEREOF OR RECORDS IN PHOTOGRAPHIC FORM,
INCLUDING AN OPTICAL DISK STORAGE SYSTEM AND THE USE OF ELECTRONIC DATA
PROCESSING EQUIPMENT THAT PROVIDES COMPARABLE RECORDS TO THOSE OTHERWISE
REQUIRED AND WHICH ARE AVAILABLE FOR EXAMINATION UPON REQUEST SHALL
CONSTITUTE COMPLIANCE WITH THE REQUIREMENTS OF THIS SECTION.
3. EACH STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL
ANNUALLY, ON OR BEFORE THE FIRST DAY OF APRIL, FILE A REPORT WITH THE
SUPERINTENDENT GIVING SUCH INFORMATION AS THE SUPERINTENDENT MAY REQUIRE
CONCERNING THE BUSINESS AND OPERATIONS DURING THE PRECEDING CALENDAR
YEAR CONCERNING THE STATE CHARTERED INTERNET LENDING SERVICES CORPO-
RATION'S BUSINESS CONDUCTED WITHIN THE STATE UNDER AUTHORITY OF THIS
ARTICLE. SUCH REPORT SHALL BE SUBSCRIBED AND AFFIRMED AS TRUE BY THE
CHIEF EXECUTIVE OFFICER AND THE CHIEF FINANCIAL OFFICER OF THE STATE
CHARTERED INTERNET LENDING SERVICES CORPORATION, UNDER PENALTY OF PERJU-
RY, AND SHALL BE IN THE FORM PRESCRIBED BY THE SUPERINTENDENT WHO SHALL
MAKE AND PUBLISH ANNUALLY A CONSOLIDATED STATEMENT OF CONDITION SHOWING
THE COMBINED ASSETS AND LIABILITIES OF ALL STATE CHARTERED INTERNET
LENDING SERVICES CORPORATIONS. SUCH CONSOLIDATED STATEMENT OF CONDITION
SHALL BE BASED UPON THE INFORMATION CONTAINED IN SUCH REPORTS. IN ADDI-
TION TO ANNUAL REPORTS, THE SUPERINTENDENT MAY REQUIRE, UPON GOOD CAUSE,
S. 8340 6
SUCH ADDITIONAL REGULAR OR SPECIAL REPORTS AS MAY BE DEEMED NECESSARY TO
THE PROPER SUPERVISION OF THE STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION UNDER THIS ARTICLE. SUCH ADDITIONAL REPORTS SHALL BE IN THE
FORM PRESCRIBED BY THE SUPERINTENDENT AND SHALL ALSO BE SUBSCRIBED AND
AFFIRMED AS TRUE BY THE CHIEF EXECUTIVE OFFICER AND THE CHIEF FINANCIAL
OFFICER OF THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION,
UNDER THE PENALTY OF PERJURY.
§ 156-F. RESTRICTIONS CONCERNING ADVERTISING; LIENS ON REAL ESTATE;
AND NAMES UNDER WHICH LOANS ARE MADE. 1. NO STATE CHARTERED INTERNET
LENDING SERVICES CORPORATION SHALL ADVERTISE, PRINT, DISPLAY, PUBLISH,
DISTRIBUTE, OR BROADCAST OR CAUSE OR PERMIT TO BE ADVERTISED, PRINTED,
DISPLAYED, PUBLISHED, DISTRIBUTED, OR BROADCASTED, IN ANY MANNER WHATSO-
EVER ANY STATEMENT OR REPRESENTATION WITH REGARD TO THE RATES, TERMS, OR
CONDITIONS FOR THE LOANING OF MONEY, CREDIT, GOODS, OR THINGS IN ACTION
WHICH IS FALSE, MISLEADING OR DECEPTIVE, OR IN VIOLATION OF CHAPTER
THREE OF THE ACT OF CONGRESS ENTITLED "TRUTH IN LENDING ACT" AND THE
REGULATIONS THEREUNDER, AS SUCH ACT AND REGULATIONS MAY FROM TIME TO
TIME BE AMENDED.
2. NO STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL
FURTHER MAKE, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, BY ANY METH-
OD, PRACTICE OR DEVICE, ANY REPRESENTATION THAT IT IS CHARTERED UNDER
THIS CHAPTER, EXCEPT A REPRESENTATION THAT SUCH INTERNET LENDING
SERVICES CORPORATION IS CHARTERED AS A STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION BY THE DEPARTMENT OR EXCEPT AS AUTHORIZED IN WRIT-
ING BY THE SUPERINTENDENT.
3. NO STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL TAKE
A LIEN UPON REAL ESTATE AS SECURITY FOR ANY LOAN UNDER THE PROVISIONS OF
THIS ARTICLE, UNLESS SUCH LIEN IS LESS THAN OR EQUAL TO THE AMOUNT OF
THE LOAN AUTHORIZED PURSUANT TO SUBDIVISION TWO OF SECTION ONE HUNDRED
FIFTY-SIX-C OF THIS ARTICLE, OR EXCEPT IF SUCH LIEN AS IS CREATED BY LAW
UPON THE RECORDING OF A JUDGMENT.
4. NO STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL
TRANSACT BUSINESS OR MAKE ANY LOAN PROVIDED FOR BY THIS ARTICLE UNDER
ANY OTHER NAME THAN THAT NAMED IN ITS LIMITED STATE CHARTER, EXCEPT AS
MAY BE AUTHORIZED BY THE SUPERINTENDENT.
§ 156-G. RESTRICTIONS ON LOANS SUBJECT TO THE PROVISIONS OF THIS ARTI-
CLE; INTEREST; OTHER CHARGES. 1. EVERY INTERNET LENDING SERVICES CORPO-
RATION ISSUED A LIMITED STATE CHARTER UNDER THIS ARTICLE MAY LOAN ANY
SUM OF MONEY NOT EXCEEDING THE MAXIMUM PRINCIPAL AMOUNTS PRESCRIBED IN
SUBDIVISION TWO OF SECTION ONE HUNDRED FIFTY-SIX-C OF THIS ARTICLE, AND
MAY, SUBJECT TO THE PROVISIONS OF THIS ARTICLE, CHARGE, CONTRACT FOR,
AND RECEIVE THEREON INTEREST AT THE RATE OR RATES AGREED TO BY THE STATE
CHARTERED INTERNET LENDING SERVICES CORPORATION AND THE BORROWER.
2. THE RATE OF INTEREST ON ANY LOAN MADE PURSUANT TO THIS ARTICLE MAY:
(A) BE CALCULATED ON THE ACTUAL UNPAID PRINCIPAL BALANCES OF THE LOAN;
OR
(B) IN THE CASE OF A LOAN COMMITMENT FROM THE DATE OF EACH ADVANCE
THEREUNDER FOR THE ACTUAL TIME OUTSTANDING, BE CALCULATED ACCORDING TO A
GENERALLY ACCEPTED ACTUARIAL METHOD AT A FIXED OR VARIABLE RATE AND IN
ACCORDANCE WITH THE PROVISIONS OF THE EVIDENCE OF THE INDEBTEDNESS; OR
(C) BE PRECOMPUTED UNDER SUBDIVISION SEVEN OF THIS SECTION.
3. ON ANY LOAN WITH A VARIABLE RATE OF INTEREST MADE PURSUANT TO THIS
ARTICLE, THE RATE SHALL BE DETERMINED AT REGULAR INTERVALS AS SET FORTH
IN THE EVIDENCE OF INDEBTEDNESS AND IN ACCORDANCE WITH SUCH REGULATIONS
AS THE SUPERINTENDENT SHALL PRESCRIBE, BUT SAID RATE SHALL NOT VARY MORE
S. 8340 7
OFTEN THAN ONCE IN ANY THREE MONTH PERIOD AND SHALL BE BASED ON A
PUBLISHED INDEX THAT IS:
(A) READILY AVAILABLE;
(B) INDEPENDENTLY VERIFIABLE;
(C) BEYOND THE CONTROL OF THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION; AND
(D) APPROVED BY THE SUPERINTENDENT.
4. THE SUPERINTENDENT SHALL ADOPT REGULATIONS TO PROVIDE FOR THE
FOLLOWING INCLUDING, BUT NOT LIMITED TO:
(A) DISCLOSURE TO THE BORROWER BY THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION OF THE CIRCUMSTANCES UNDER WHICH THE RATE MAY
INCREASE, ANY LIMITATIONS ON THE INCREASE, THE EFFECT OF AN INCREASE AND
AN EXAMPLE OF THE PAYMENT TERMS THAT WOULD RESULT FROM AN INCREASE;
(B) DISCLOSURE TO THE BORROWER BY THE THE STATE CHARTERED INTERNET
LENDING SERVICES CORPORATION OF A HISTORY OF THE FLUCTUATIONS OF THE
INDEX OVER A REASONABLE PERIOD OF TIME; AND
(C) NOTICE TO THE BORROWER FROM THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION PRIOR TO ANY RATE INCREASE OR CHANGE IN THE TERMS
OF PAYMENT.
5. LOANS MAY BE GRANTED UNDER THIS ARTICLE FOR AN OPEN END OR CLOSED
END LOAN AGREEMENT PROVIDING FOR A FIXED OR VARIABLE RATE.
6. INTEREST, CONSIDERATION, OR CHARGES FOR THE USE OF MONEY UNDER THIS
ARTICLE SHALL NOT BE DEDUCTED OR RECEIVED IN ADVANCE, AND SHALL BE
COMPUTED ON UNPAID PRINCIPAL BALANCES. SUCH INTEREST, CONSIDERATION, OR
CHARGES SHALL NOT BE COMPOUNDED; PROVIDED THAT, IF PART OR ALL OF THE
PRINCIPAL AMOUNT OF ANY LOAN CONTRACT IS THE UNPAID PRINCIPAL BALANCE OF
A PRIOR LOAN, THE UNPAID INTEREST, CONSIDERATION OR CHARGES FOR THE USE
OF MONEY ON SUCH PRIOR LOAN WHICH HAVE ACCRUED WITHIN SIXTY DAYS BEFORE
THE MAKING OF SUCH LOAN CONTRACT MAY BE INCORPORATED AS INTEREST BEARING
PRINCIPAL IN THE PRINCIPAL AMOUNT OF SUCH LOAN CONTRACT, AND FOR THE
PURPOSES OF THIS SUBDIVISION ANY SUCH NEW LOAN SHALL BE DEEMED A SEPA-
RATE LOAN TRANSACTION.
7. WHEN A CLOSED-END LOAN AGREEMENT REQUIRES REPAYMENT IN SUBSTANTIAL-
LY EQUAL AND CONSECUTIVE MONTHLY INSTALLMENTS OF PRINCIPAL AND INTEREST
COMBINED, THE INTEREST MAY BE PRECOMPUTED AT THE AGREED RATE ON SCHED-
ULED UNPAID PRINCIPAL BALANCES ACCORDING TO THE TERMS OF THE AGREEMENT
AND ADDED TO THE PRINCIPAL AMOUNT OF THE LOAN. EVERY PAYMENT MAY BE
APPLIED TO THE COMBINED TOTAL OF PRINCIPAL AND PRECOMPUTED INTEREST
UNTIL THE LOAN AGREEMENT IS FULLY PAID AND THE ACCEPTANCE OR PAYMENT OF
INTEREST ON LOANS MADE UNDER THE PROVISIONS OF THIS SUBDIVISION SHALL
NOT BE DEEMED TO CONSTITUTE PAYMENT, DEDUCTION OR RECEIPT THEREOF IN
ADVANCE NOR COMPOUNDING UNDER SUBDIVISION SIX OF THIS SECTION. SUCH
PRECOMPUTED INTEREST SHALL BE SUBJECT TO THE FOLLOWING ADJUSTMENTS:
(A) IF THE LOAN AGREEMENT IS PREPAID IN FULL BY CASH, A NEW LOAN,
REFINANCING OR OTHERWISE BEFORE THE FINAL INSTALLMENT DATE, THE BORROWER
SHALL RECEIVE A REFUND OF:
(I) THE UNEARNED PORTION OF THE INTEREST THE AMOUNT OF WHICH PORTION
SHALL BE DETERMINED ACCORDING TO A GENERALLY ACCEPTED ACTUARIAL METHOD;
PROVIDED, HOWEVER, THAT IF THE AMOUNT OF PRECOMPUTED INTEREST:
(A) IS LESS THAN TEN DOLLARS, THEN NO REFUND SHALL BE REQUIRED; OR
(B) EXCEEDS THE SUM OF TEN DOLLARS AND THE EARNED INTEREST IS LESS
THAN THAT AMOUNT, THEN THE STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION MAY RETAIN SUCH AN ADDITIONAL AMOUNT AS WILL BRING THE
EARNED INTEREST TO TEN DOLLARS AND REFUND THE REMAINDER, AND PROVIDED
FURTHER, THAT UNLESS THE LOAN IS REFINANCED, NO REFUND SHALL BE REQUIRED
IF IT AMOUNTS TO LESS THAN ONE DOLLAR; AND
S. 8340 8
(II) IF A CHARGE WAS MADE TO THE BORROWER FOR CREDIT RELATED INSURANCE
FOR INSURING THE BORROWER THE EXCESS OF THE CHARGE TO THE BORROWER
THEREFOR OVER THE INSURANCE CHARGES PAID OR PAYABLE BY THE STATE CHAR-
TERED INTERNET LENDING SERVICES CORPORATION, IF SUCH INSURANCE CHARGES
WERE PAID OR PAYABLE BY THE STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION PERIODICALLY, OR THE REFUND FOR SUCH INSURANCE CHARGES
RECEIVED OR RECEIVABLE BY THE STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION, IF SUCH PREMIUM WAS PAID OR PAYABLE IN A LUMP SUM BY THE
STATE CHARTERED INTERNET LENDING SERVICES CORPORATION, PROVIDED THAT NO
SUCH REFUND SHALL BE REQUIRED IF IT AMOUNTS TO LESS THAN TEN DOLLARS.
(B) IN THE EVENT:
(I) THE MATURITY OF THE LOAN IS ACCELERATED DUE TO THE DEFAULT OF THE
BORROWER OR OTHERWISE AND JUDGMENT IS OBTAINED; OR
(II) REPAYMENT IS MADE PURSUANT TO ANY CREDIT RELATED INSURANCE POLICY
FOR WHICH A CHARGE WAS MADE TO THE BORROWER FOR THE PREMIUM THEREON,
THE BORROWER OR LEGAL REPRESENTATIVE, AS THE CASE MAY BE, SHALL BE
ENTITLED TO THE SAME REFUND OF INTEREST AND INSURANCE CHARGES AS IF THE
LOAN HAD BEEN PREPAID IN FULL ON THE DATE OF ACCELERATION OR REPAYMENT.
(C) (I) IN THE EVENT OF DEFAULT OF MORE THAN TEN DAYS IN THE PAYMENT
OF ANY SCHEDULED INSTALLMENT, THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION MAY CHARGE AND COLLECT A DEFAULT CHARGE NOT EXCEED-
ING FIVE PERCENT OF THE INSTALLMENT IN DEFAULT. THIS CHARGE MAY NOT BE
COLLECTED MORE THAN ONCE FOR THE SAME DEFAULT AND MAY BE COLLECTED AT
THE TIME OF SUCH DEFAULT OR AT ANY TIME THEREAFTER.
(II) AFTER THE FINAL DUE DATE OR UPON ACCELERATION OF MATURITY FOR
DEFAULT, THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION MAY
CHARGE INTEREST AT THE ORIGINAL AGREED RATE ON ACTUAL UNPAID BALANCES IF
THE LOAN AGREEMENT SO PROVIDES.
(D) IF PAYMENT OF ALL UNPAID INSTALLMENTS ON WHICH NO DEFAULT CHARGE
HAS BEEN CHARGED AND COLLECTED IS DEFERRED ONE OR MORE FULL MONTHS, AND
IF THE LOAN AGREEMENT SO PROVIDES, THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION MAY CHARGE AND COLLECT AN AMOUNT WHICH SHALL BE
EQUAL TO THE DIFFERENCE BETWEEN THE REFUND THAT WOULD BE REQUIRED FOR
PREPAYMENT IN FULL AS OF THE SCHEDULED DUE DATE OF THE FIRST DEFERRED
INSTALLMENT AND THE AMOUNT WHICH WOULD BE REQUIRED FOR PREPAYMENT IN
FULL AS OF ONE MONTH PRIOR TO SAID DATE, MULTIPLIED BY THE NUMBER OF
MONTHS IN THE DEFERMENT PERIOD. THE DEFERMENT PERIOD IS THAT PERIOD IN
WHICH NO SCHEDULED PAYMENT HAS BEEN MADE AND IN WHICH NO PAYMENT IS
REQUIRED BY REASON OF THE DEFERMENT. SUCH CHARGE MAY BE COLLECTED AT THE
TIME OF DEFERMENT OR MAY BE COLLECTED AT ANY TIME THEREAFTER. IF A
REFUND OF PRECOMPUTED INTEREST IS REQUIRED DURING A DEFERMENT PERIOD THE
BORROWER SHALL ALSO RECEIVE A REFUND OF THE DEFERMENT CHARGE FOR THE
NUMBER OF MONTHS REMAINING IN SAID PERIOD, FOR WHICH PURPOSE A PORTION
OF A MONTH EXCEEDING FIFTEEN DAYS SHALL BE DEEMED A MONTH.
(E) IF TWO OR MORE INSTALLMENTS OR PARTS THEREOF ARE IN DEFAULT FOR
FIVE DAYS OR MORE, THE STATE CHARTERED INTERNET LENDING SERVICES CORPO-
RATION MAY, IF THE LOAN AGREEMENT SO PROVIDES, ELECT TO CONVERT THE LOAN
FROM A PRECOMPUTED ONE TO ONE IN WHICH INTEREST IS PAID ON ACTUAL UNPAID
BALANCES. IN THIS EVENT, THE STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION SHALL MAKE THE SAME REFUND OF INTEREST AS IF THE LOAN WERE
PREPAID IN FULL ON THE SCHEDULED PAYMENT DUE DATE PRECEDING THE DATE OF
CONVERSION AND THEREAFTER MAY CHARGE INTEREST AT THE AGREED RATE, BY THE
ACTUARIAL METHOD, ON ACTUAL UNPAID BALANCES FOR THE TIME ACTUALLY
OUTSTANDING.
8. (A) IN ADDITION TO THE INTEREST, CONSIDERATION, OR CHARGES SPECI-
FIED IN THIS SECTION, NO FURTHER OR OTHER CHARGE OR AMOUNT WHATSOEVER
S. 8340 9
FOR ANY EXAMINATION, SERVICE, BROKERAGE, COMMISSION, EXPENSE, FEE, OR
BONUS OR OTHER THING OR OTHERWISE SHALL BE DIRECTLY OR INDIRECTLY
CHARGED, CONTRACTED FOR, OR RECEIVED, EXCEPT THE PREMIUM OR IDENTIFIABLE
CHARGE FOR INSURANCE AUTHORIZED BY SECTION ONE HUNDRED FIFTY-SIX-L OF
THIS ARTICLE; THE LAWFUL FEES, IF ANY, ACTUALLY AND NECESSARILY PAID OUT
BY THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION TO ANY
PUBLIC OFFICER FOR FILING, RECORDING, OR RELEASING IN ANY PUBLIC OFFICE
ANY INSTRUMENT SECURING THE LOAN, WHICH FEES MAY BE COLLECTED WHEN THE
LOAN IS MADE OR AT ANY TIME THEREAFTER OR NON-FILING INSURANCE PREMIUMS
NOT IN EXCESS OF TEN DOLLARS IN LIEU OF FILING, RECORDING OR RELEASING
ANY SUCH INSTRUMENT; AN ANNUAL FEE ON OPEN END LOANS AUTHORIZED BY THE
SUPERINTENDENT AND MADE PURSUANT TO SUBDIVISION FIVE OF THIS SECTION,
PROVIDED, HOWEVER, THAT NO SUCH FEE SHALL EXCEED AN AMOUNT EQUAL TO ONE
PERCENT OF THE AMOUNT OF THE LOAN OR FIFTY DOLLARS, WHICHEVER IS LESS;
AND A FEE, NOT TO EXCEED THE AMOUNT SET FORTH IN SECTION 5-328 OF THE
GENERAL OBLIGATIONS LAW, FOR RETURN BY A DEPOSITORY INSTITUTION OF A
DISHONORED CHECK, NEGOTIABLE ORDER OF WITHDRAWAL, OR SHARE DRAFT.
(B) ANY STATE CHARTERED INTERNET LENDING SERVICES CORPORATION WHICH
KNOWINGLY RECEIVES, RESERVES OR CHARGES A GREATER RATE OF INTEREST THAN
THAT AUTHORIZED BY THIS SECTION SHALL FORFEIT THE ENTIRE INTEREST WHICH
THE NOTE, OR OTHER EVIDENCE OF DEBT CARRIES WITH IT, OR WHICH HAS BEEN
AGREED TO BE PAID THEREON, AND IF A GREATER RATE OF INTEREST HAS BEEN
PAID, THE PERSON PAYING THE SAME OR HIS LEGAL REPRESENTATIVE MAY RECOVER
FROM THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION TWICE THE
ENTIRE AMOUNT OF INTEREST THUS PAID.
(C) IN ADDITION TO OTHER SUCH INFORMATION AS THE SUPERINTENDENT MAY
REQUIRE, ANY STATE CHARTERED INTERNET LENDING SERVICES CORPORATION WHICH
CHARGES AN ANNUAL FEE ON OPEN-END LOAN ACCOUNTS SHALL ANNUALLY REPORT,
IN A MANNER AND FORM PRESCRIBED BY THE SUPERINTENDENT, INFORMATION TO
THE DEPARTMENT ON OPEN-END LOAN BORROWERS, WHICH SHALL INCLUDE:
(I) THE AVERAGE ANNUAL INCOME OF BORROWERS AT THE TIME OF THE LOAN;
(II) THE AVERAGE AMOUNT OF LOANS OUTSTANDING AT THE END OF EACH CALEN-
DAR YEAR;
(III) THE AVERAGE INTEREST CHARGED, AVERAGE AMOUNT OF ANNUAL FEES; AND
(IV) THE GEOGRAPHIC DISTRIBUTION OF LOANS MADE BY THE STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION.
§ 156-H. ACTS REQUIRED OF STATE CHARTERED INTERNET LENDING SERVICES
CORPORATIONS; ACTS PROHIBITED. 1. EVERY STATE CHARTERED INTERNET LEND-
ING SERVICES CORPORATION SHALL:
(A) DELIVER TO THE BORROWER AT THE TIME ANY LOAN IS MADE OR PRIOR TO
THE FIRST ADVANCE UNDER AN OPEN-END LOAN AGREEMENT, A STATEMENT, IN THE
ENGLISH LANGUAGE, WHICH MAY BE IN ELECTRONIC FORM, SHOWING IN CLEAR AND
DISTINCT TERMS THE NAME AND ADDRESS OF THE BORROWER AND OF THE STATE
CHARTERED INTERNET LENDING SERVICES CORPORATION AND ALL ITEMS REQUIRED
TO BE DISCLOSED BY THE ACT OF CONGRESS ENTITLED "TRUTH IN LENDING ACT"
AND THE REGULATIONS THEREUNDER, AS SUCH ACT AND REGULATIONS MAY FROM
TIME TO TIME BE AMENDED;
(B) GIVE, FOR EACH CASH PAYMENT MADE ON ACCOUNT OF ANY CLOSED-END
LOAN, TO THE PERSON MAKING IT AT THE TIME THE PAYMENT IS MADE, A PLAIN
AND COMPLETE RECEIPT, WHICH MAY BE IN ELECTRONIC FORM, CONTAINING THE
INFORMATION REQUIRED BY REGULATIONS OF THE SUPERINTENDENT; AND
(C) PERMIT PAYMENT TO BE MADE IN ADVANCE IN ANY AMOUNT ON ANY LOAN
AGREEMENT AT ANY TIME, BUT THE STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION MAY INITIALLY APPLY SUCH PAYMENT TO ALL INTEREST AND OTHER
CHARGES DUE TO THE DATE OF SUCH PAYMENT.
S. 8340 10
2. UPON REPAYMENT OF A LOAN IN FULL, THE STATE CHARTERED INTERNET
LENDING SERVICES CORPORATION SHALL MARK INDELIBLY EVERY OBLIGATION
SIGNED BY THE BORROWER OR A COPY THEREOF WITH THE WORD "PAID" OR
"CANCELLED", AND SHALL RELEASE ANY MORTGAGE OR SECURITY AGREEMENT NO
LONGER SECURING AN OBLIGATION OF THE BORROWER, AND SHALL RESTORE ANY
PLEDGE, CANCEL AND RETURN ANY NOTE OR A COPY THEREOF, AND CANCEL AND
RETURN ANY ASSIGNMENT OR A COPY THEREOF GIVEN TO THE STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION BY THE BORROWER.
3. AN OPEN-END LOAN SHALL NOT BE DEEMED TO BE REPAID IN FULL FOR THE
PURPOSES OF THIS ARTICLE UNLESS ANY BALANCE IS PAID IN FULL AND THE
BORROWER RELINQUISHES ALL POWER TO RECEIVE FURTHER ADVANCES UNDER THE
CONTRACT AND MAKES A WRITTEN REQUEST FOR THE RELEASE OF ALL COLLATERAL
FOR THE LOAN.
4. EVERY STATE CHARTERED INTERNET LENDING SERVICES CORPORATION WHICH
HOLDS COLLATERAL OF A BORROWER SHALL BE FULLY LIABLE FOR THE RETURN OF
THE COLLATERAL UPON PAYMENT OF THE INDEBTEDNESS IN FULL.
5. NO STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL TAKE
ANY CONFESSION OF JUDGMENT, OR ANY POWER OF ATTORNEY RUNNING TO ITSELF
OR TO ANY THIRD PERSON TO CONFESS JUDGMENT OR TO APPEAR FOR THE BORROWER
IN A JUDICIAL PROCEEDING.
6. NO STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL
FURTHER TAKE ANY INSTRUMENT IN WHICH BLANKS ARE LEFT TO BE FILLED IN
AFTER EXECUTION.
§ 156-I. LIMITATION ON STATE CHARTERED INTERNET LENDING SERVICES
CORPORATIONS' CHARGES ON LOANS. 1. NO STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION SHALL DIRECTLY OR INDIRECTLY CHARGE, CONTRACT FOR,
OR RECEIVE ANY INTEREST, DISCOUNT, OR CONSIDERATION UPON THE LOAN, USE,
OR FORBEARANCE OF MONEY, GOODS, OR THINGS IN ACTION, OR UPON THE LOAN,
USE, OR SALE OF CREDIT, OF THE AMOUNT OR VALUE OF MORE THAN THE MAXIMUM
AMOUNTS PRESCRIBED IN THIS ARTICLE, AND/OR GREATER THAN THE RATE PERMIT-
TED BY SECTION 5-501 OF THE GENERAL OBLIGATIONS LAW.
2. THE PROHIBITION IN SUBDIVISION ONE OF THIS SECTION SHALL ALSO APPLY
TO ANY STATE CHARTERED INTERNET LENDING SERVICES CORPORATION WHICH
PERMITS ANY PERSON, AS BORROWER OR AS ENDORSER, GUARANTOR, OR SURETY FOR
ANY BORROWER OR OTHERWISE, TO OWE DIRECTLY OR CONTINGENTLY OR BOTH TO
THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION AT ANY TIME
MORE THAN THE MAXIMUM AMOUNTS PRESCRIBED IN SUBDIVISION TWO OF SECTION
ONE HUNDRED FIFTY-SIX-C OF THIS ARTICLE.
§ 156-J. RESTRICTIONS ON ASSIGNMENTS OF COMPENSATION FOR SERVICES. 1.
A STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL NOT TAKE
AN ASSIGNMENT OF UNEARNED WAGES OR OTHER EARNINGS UNLESS:
(A) THE ASSIGNMENT BY ITS TERMS IS REVOCABLE AT THE WILL OF THE
BORROWER; OR
(B) THE ASSIGNMENT IS A PAYROLL DEDUCTION PLAN.
2. NO ASSIGNMENT OF WAGES OR OTHER EARNINGS GIVEN TO SECURE ANY LOAN
HEREUNDER SHALL BE VALID UNLESS THE AMOUNT OF SUCH LOAN IS PAID TO THE
BORROWER SIMULTANEOUSLY WITH ITS EXECUTION.
§ 156-K. SOLICITATION OF LOANS. 1. ANY LOAN IN AN AMOUNT EXCEEDING
THE MAXIMUM AMOUNTS PRESCRIBED IN SUBDIVISION TWO OF SECTION ONE HUNDRED
FIFTY-SIX-C OF THIS ARTICLE, WHERE SOLICITATION OF THE LOAN WAS MADE
WITHIN THIS STATE, AND/OR WHERE THE INTEREST, DISCOUNT, CONSIDERATION OR
OTHER CHARGE CONTRACTED FOR OR RECEIVED EXCEEDS THAT PERMITTED TO A
STATE CHARTERED INTERNET LENDING SERVICES CORPORATION UNDER THE LAWS OF
THIS STATE SHALL BE VOID, AND THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION SHALL HAVE NO RIGHT TO COLLECT OR RECEIVE ANY PRIN-
CIPAL, INTEREST OR CHARGE WHATSOEVER.
S. 8340 11
2. NO ACTION TO ENFORCE A LOAN MADE IN VIOLATION OF SUBDIVISION ONE OF
THIS SECTION MAY BE MAINTAINED, EVEN THOUGH THE AMOUNT DEMANDED TO BE
PAID IN SUCH ACTION DOES NOT EXCEED THAT PERMITTED TO A STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION UNDER THE PROVISIONS OF THIS ARTI-
CLE.
3. FOR PURPOSES OF THIS ARTICLE, SOLICITATION OF A LOAN SHALL INCLUDE
ANY SOLICITATION, REQUEST OR INDUCEMENT TO ENTER INTO A LOAN MADE BY
MEANS OF OR THROUGH A DIRECT MAILING, TELEVISION OR RADIO ANNOUNCEMENT
OR ADVERTISEMENT, ADVERTISEMENT IN A NEWSPAPER, MAGAZINE, LEAFLET OR
PAMPHLET DISTRIBUTED WITHIN THIS STATE, OR VISUAL DISPLAY WITHIN THIS
STATE, OR BY ELECTRONIC MEANS ON THE INTERNET OR OTHER ELECTRONIC PLAT-
FORM, WHETHER OR NOT SUCH SOLICITATION, REQUEST OR INDUCEMENT CONSTI-
TUTES AN OFFER TO ENTER INTO A CONTRACT.
§ 156-L. INSURANCE. 1. A STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION MAY REQUIRE A BORROWER, ON LOANS OF TWO HUNDRED FIFTY
DOLLARS OR MORE, EXCLUDING INSURANCE PREMIUMS AND PRECOMPUTED INTEREST,
TO INSURE TANGIBLE PERSONAL PROPERTY, EXCEPT HOUSEHOLD GOODS, TAKEN AS
SECURITY FOR A LOAN AGAINST ANY SUBSTANTIAL RISK OF LOSS, DAMAGE OR
DESTRUCTION FOR AN AMOUNT NOT TO EXCEED THE LESSER OF THE REASONABLE
VALUE OF THE PROPERTY INSURED OR THE PRINCIPAL AMOUNT OF THE LOAN, AND
FOR THE CUSTOMARY INSURANCE TERM APPROXIMATING THE TERM OF THE LOAN
CONTRACT.
2. THE INSURANCE POLICY REQUIRED BY THE STATE CHARTERED INTERNET LEND-
ING SERVICES CORPORATION IN SUBDIVISION ONE OF THIS SECTION MAY INSURE
THE INTEREST OF THE BORROWER AS WELL AS THE INTEREST OF THE STATE CHAR-
TERED INTERNET LENDING SERVICES CORPORATION.
3. THE INSURANCE POLICY REQUIRED BY THE STATE CHARTERED INTERNET LEND-
ING SERVICES CORPORATION IN SUBDIVISION ONE OF THIS SECTION, COVERING A
MOTOR VEHICLE SECURING THE LOAN MAY ALSO INSURE THE BORROWER AGAINST
LIABILITY FOR BODILY INJURY AND PROPERTY DAMAGE, BUT SUCH LIABILITY
INSURANCE SHALL BE AT THE OPTION OF THE BORROWER AND SHALL NOT BE
REQUIRED BY THE STATE CHARTERED INTERNET LENDING SERVICES CORPORATION.
4. THE PREMIUMS FOR ALL SUCH INSURANCE POLICIES REQUIRED BY THE STATE
CHARTERED INTERNET LENDING SERVICES CORPORATION IN SUBDIVISION ONE OF
THIS SECTION SHALL NOT EXCEED THE PREMIUMS CHARGEABLE IN ACCORDANCE WITH
RATE FILINGS MADE WITH THE SUPERINTENDENT FOR SUCH INSURANCE BY THE
INSURER.
5. THE INSURANCE POLICY REQUIRED BY THE STATE CHARTERED INTERNET LEND-
ING SERVICES CORPORATION IN SUBDIVISION ONE OF THIS SECTION SHALL BE
WRITTEN BY, OR THROUGH, A DULY LICENSED INSURANCE AGENT OR BROKER, OR
SHALL BE PROVIDED DIRECTLY BY A COMPANY QUALIFIED TO DO BUSINESS IN THIS
STATE.
6. FOR PURPOSES OF THIS SECTION, THE TERM "HOUSEHOLD GOODS" SHALL MEAN
CLOTHING, FURNITURE, APPLIANCES, ONE RADIO AND ONE TELEVISION, LINENS,
CHINA, CROCKERY, KITCHENWARE, AND PERSONAL EFFECTS (INCLUDING WEDDING
RINGS) OWNED BY THE CONSUMER AND HIS OR HER DEPENDENTS, BUT SHALL NOT
INCLUDE WORKS OF ART, OTHER ELECTRONIC ENTERTAINMENT EQUIPMENT, ITEMS
ACQUIRED AS ANTIQUES, OR OTHER JEWELRY.
7. WHEN A STATE CHARTERED INTERNET LENDING SERVICES CORPORATION
PROVIDES CREDIT LIFE INSURANCE, CREDIT ACCIDENT AND HEALTH INSURANCE, OR
CREDIT UNEMPLOYMENT INSURANCE, OR CREDIT PROPERTY INSURANCE PURSUANT TO
SECTION TWO THOUSAND THREE HUNDRED FORTY OF THE INSURANCE LAW, OR ANY
COMBINATION THEREOF WITH RESPECT TO ONE OR MORE BORROWERS, SUCH STATE
CHARTERED INTERNET LENDING SERVICES CORPORATION MAY COLLECT FROM THE
BORROWER A PREMIUM OR IDENTIFIABLE CHARGE WHICH SHALL NOT EXCEED THE
PREMIUM RATES OR IDENTIFIABLE CHARGES CHARGEABLE IN ACCORDANCE WITH RATE
S. 8340 12
FILINGS MADE WITH THE SUPERINTENDENT FOR SUCH INSURANCE BY THE INSURER,
SUBJECT TO A REFUND OF THE INSURANCE CHARGE COMPUTED AS PROVIDED IN
PARAGRAPH (A) OF SUBDIVISION SEVEN OF SECTION ONE HUNDRED FIFTY-SIX-G OF
THIS ARTICLE, IN THE EVENT OF PREPAYMENT BY CASH, A NEW LOAN, REFINANC-
ING OR OTHERWISE. ONLY ONE SUCH AMOUNT MAY BE COLLECTED IN CONNECTION
WITH ANY LOAN CONTRACT IRRESPECTIVE OF THE NUMBER OF OBLIGORS AND ONLY
ONE OBLIGOR NEED BE INSURED.
8. THE INSURANCE AUTHORIZED BY THIS SECTION, WITH THE EXCEPTION OF
INSURANCE PROVIDED UNDER GROUP INSURANCE POLICIES, MAY BE WRITTEN BY OR
ARRANGED THROUGH THE STATE CHARTERED INTERNET LENDING SERVICES CORPO-
RATION OR AN AFFILIATE, ASSOCIATE OR EMPLOYEE OF THE STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION ONLY IF SUCH STATE CHARTERED
INTERNET LENDING SERVICES CORPORATION, AFFILIATE, ASSOCIATE OR EMPLOYEE
IS A DULY LICENSED INSURANCE AGENT OR BROKER, PROVIDED, HOWEVER, NO
STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL DECLINE NEW
OR EXISTING INSURANCE WHICH MEETS OR EXCEEDS THE STANDARDS SET FORTH IN
THIS SECTION, NOR PREVENT ANY BORROWER FROM OBTAINING SUCH INSURANCE
COVERAGE FROM OTHER SOURCES.
9. IF A BORROWER PROCURES SUCH INSURANCE BY OR THROUGH A STATE CHAR-
TERED INTERNET LENDING SERVICES CORPORATION, THE STATEMENT REQUIRED BY
SECTION ONE HUNDRED FIFTY-SIX-H OF THIS ARTICLE SHALL DISCLOSE THE COST
OR RATE OF CHARGE TO THE BORROWER AND THE TYPE OF INSURANCE, AND THE
STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL CAUSE TO BE
DELIVERED TO THE BORROWER A COPY OF THE POLICY, CERTIFICATE, OR OTHER
EVIDENCE THEREOF WITHIN A REASONABLE TIME.
10. THE INSURANCE AUTHORIZED BY THIS SECTION AND ALL BENEFITS OR
RETURNS THEREFROM ACCRUING TO THE STATE CHARTERED INTERNET LENDING
SERVICES CORPORATION OR TO ANY AFFILIATE, ASSOCIATE OR EMPLOYEE OF THE
STATE CHARTERED INTERNET LENDING SERVICES CORPORATION SHALL NOT BE
PROHIBITED BY ANY OTHER PROVISION OF THIS ARTICLE.
11. NO INSURANCE SHALL BE REQUIRED, REQUESTED, SOLD OR OFFERED FOR
SALE IN CONNECTION WITH ANY LOAN MADE UNDER THIS ARTICLE, EXCEPT AS AND
TO THE EXTENT AUTHORIZED BY THIS SECTION OR AS PROVIDED IN SUBDIVISION
EIGHT OF SECTION ONE HUNDRED FIFTY-SIX-G OF THIS ARTICLE.
12. IF THE BORROWERS ON ANY LOAN ARE HUSBAND AND WIFE, JOINT CREDIT
LIFE INSURANCE AND JOINT CREDIT ACCIDENT AND HEALTH INSURANCE MAY BE
ISSUED ON SUCH LOAN PURSUANT TO THIS SECTION.
§ 156-M. PENALTIES. ANY STATE CHARTERED INTERNET LENDING SERVICES
CORPORATION, INCLUDING THE OFFICERS, DIRECTORS, AGENTS, AND EMPLOYEES
THEREOF, WHICH SHALL WILLFULLY VIOLATE OR PARTICIPATE IN THE WILLFUL
VIOLATION OF ANY OF THE PROVISIONS OF SECTION ONE HUNDRED FIFTY-SIX-C OF
THIS ARTICLE SHALL BE GUILTY OF A MISDEMEANOR.
§ 156-N. AUTHORITY OF SUPERINTENDENT. THE SUPERINTENDENT IS HEREBY
AUTHORIZED AND EMPOWERED TO MAKE SUCH GENERAL AND LAWFUL RULES AND REGU-
LATIONS, AND SUCH SPECIFIC RULINGS, DEMANDS, AND FINDINGS AS MAY BE
NECESSARY FOR THE PROPER CONDUCT OF THE BUSINESS AUTHORIZED UNDER AND
FOR THE ENFORCEMENT OF THIS ARTICLE, IN ADDITION THERETO AND NOT INCON-
SISTENT THEREWITH.
§ 156-O. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS
THE "NEW YORK LIMITED STATE CHARTER FOR INTERNET LENDING SERVICES LAW".
§ 156-P. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE OR THE APPLI-
CATION THEREOF TO ANY NATURAL PERSON, CORPORATION OR CIRCUMSTANCES IS
HELD TO BE INVALID, SUCH INVALIDITY SHALL NOT AFFECT OTHER PROVISIONS OR
APPLICATIONS OF THIS ARTICLE WHICH CAN BE GIVEN EFFECT WITHOUT THE
INVALID PROVISION OR APPLICATION, AND TO THIS END THE PROVISIONS OF THIS
ARTICLE ARE SEVERABLE.
S. 8340 13
§ 2. Paragraph (a) of subdivision 1 of section 44 of the banking law,
as amended by chapter 155 of the laws of 2012, is amended to read as
follows:
(a) Without limiting any power granted to the superintendent under any
other provision of this chapter, the superintendent may, in a proceeding
after notice and a hearing, require any safe deposit company, licensed
lender, licensed casher of checks, licensed sales finance company,
licensed insurance premium finance agency, licensed transmitter of
money, licensed mortgage banker, registered mortgage broker, licensed
mortgage loan originator, registered mortgage loan servicer or licensed
budget planner, OR STATE CHARTERED INTERNET LENDING SERVICES CORPORATION
to pay to the people of this state a penalty for any violation of this
chapter, any regulation promulgated thereunder, any final or temporary
order issued pursuant to section thirty-nine of this article, any condi-
tion imposed in writing by the superintendent in connection with the
grant of any application or request, or any written agreement entered
into with the superintendent.
§ 3. This act shall take effect immediately.
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