Connecticut - Breach of security re computerized data containing personal information (Conn. Gen. Stat. § 36a-701(b))
CHAPTER 669*
REGULATED ACTIVITIES
*Creditors' Collection Practices Act cited. 231 C. 707.
Table of Contents
Sec. 36a-645. (Formerly Sec. 36-243a). Definitions.
Sec. 36a-646. (Formerly Sec. 36-243b). Prohibited acts.
Sec. 36a-647. (Formerly Sec. 36-243c). Enforcement powers of commissioner. Regulations.
Sec. 36a-648. Abusive, harassing, fraudulent, deceptive or misleading debt collection practices. Liability. Exemptions. Limitations on actions.
Sec. 36a-648a. Credit card debt collection actions against parents or legal guardians of students.
Secs. 36a-649 to 36a-654. Reserved
Sec. 36a-655. (Formerly Sec. 36-364). Definitions.
Sec. 36a-656. (Formerly Sec. 36-365). License requirements and fees. Required system filings. Authority of commissioner to conduct criminal history records checks and deny application for license. Renewal of license. Automatic suspension of license.
Sec. 36a-657. (Formerly Sec. 36-369). Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-658. (Formerly Sec. 36-370). License required. Change in control persons, name or place of business. Use of name. Automatic suspension of license. Surrender of license. Required system filing or notice to commissioner. Unique identifier of license. Advertising of license.
Sec. 36a-659. (Formerly Sec. 36-372). Separate bank account for benefit of debtors. Books and records.
Sec. 36a-660. (Formerly Sec. 36-375). Licensee's duties. Written agreement required.
Sec. 36a-661. (Formerly Sec. 36-376). Prohibited acts.
Sec. 36a-661a. Written agreement voidable. Licensee claims for restitution.
Sec. 36a-662. (Formerly Sec. 36-377). Regulations.
Sec. 36a-663. (Formerly Sec. 36-378). Exceptions.
Sec. 36a-664. (Formerly Sec. 36-380). Surety bond required. Form of surety bond. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing.
Sec. 36a-665. (Formerly Sec. 36-381). Penalties.
Secs. 36a-666 to 36a-670. Reserved
Sec. 36a-671. Definitions. Debt negotiation. License application, requirements and fees. Authority of commissioner to conduct criminal history records checks and deny application for license. Abandonment of application. License renewal. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. License not assignable or transferable. Use of name. Surrender of license. Required system filing or notice to commissioner. Unique identifier. Advertisements of licensee.
Sec. 36a-671a. Suspension, revocation or refusal to renew license or taking other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-671b. Debt negotiation service contract required. Fees, commissions and other valuable consideration. Noncompliant contracts voidable by consumer.
Sec. 36a-671c. Exceptions.
Sec. 36a-671d. Surety bond required. Form of surety bond. Cancellation of bond. Automatic suspension of license. Notice. Opportunity for hearing. Determination of penal sum. Aggregate amount of residential loans.
Sec. 36a-671e. Requirements re mortgage loan originator license.
Sec. 36a-671f. Prohibited practices.
Secs. 36a-672 to 36a-674. Reserved
Sec. 36a-675. (Formerly Sec. 36-416). Short title: Connecticut Truth-in-Lending Act.
Sec. 36a-676. (Formerly Sec. 36-393). Definitions.
Sec. 36a-677. (Formerly Sec. 36-393a). State policy.
Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions.
Sec. 36a-679. (Formerly Sec. 36-395). Regulations.
Sec. 36a-680. (Formerly Sec. 36-398). Effect of inconsistent law.
Sec. 36a-681. (Formerly Sec. 36-399). Penalty.
Sec. 36a-682. (Formerly Sec. 36-400). Compliance of governmental instruments. Exemptions from penalties.
Sec. 36a-683. (Formerly Sec. 36-407). Failure to comply; liability. Civil action. Right to rescind.
Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments.
Sec. 36a-685. (Formerly Sec. 36-415). Unenforceable agreements.
Sec. 36a-686. Civil penalty. Liability.
Secs. 36a-687 to 36a-689. Reserved
Sec. 36a-690. (Formerly Sec. 36-417z). Calculation of interest or finance charge rebates. Prohibited methods. Transactions affected.
Secs. 36a-691 to 36a-694. Reserved
Sec. 36a-695. (Formerly Sec. 36-431). Definitions.
Sec. 36a-696. (Formerly Sec. 36-432). Disclosure to consumer of information re credit report.
Sec. 36a-697. (Formerly Sec. 36-433). Exceptions.
Sec. 36a-698. (Formerly Sec. 36-434). Regulations.
Sec. 36a-699. (Formerly Sec. 36-435). Penalty.
Sec. 36a-699a. Written summary of consumer's rights.
Sec. 36a-699b. Dispute by consumer re completeness or accuracy of information.
Sec. 36a-699c. Procedures by credit rating agency to assure accuracy.
Sec. 36a-699d. Credit report for use in credit transaction not initiated by consumer.
Sec. 36a-699e. Existing consent judgment or settlement with Attorney General.
Sec. 36a-699f. Blocking of information appearing on credit report as result of identity theft.
Sec. 36a-700. (Formerly Sec. 36-435l). Credit clinics. Definitions. Contracts. Prohibited acts. Penalties.
Sec. 36a-701. Security freeze on credit report: Definitions.
Sec. 36a-701a. Security freeze on credit report. Timing. Disclosure of report to third party during freeze. Procedures for freeze. Refusal by credit rating agency to implement freeze. Exceptions. Prohibition on fees.
Sec. 36a-701b. *(See end of section for amended version of subparagraph (B) of subdivision (2) of subsection (b) and effective date.) Breach of security re computerized data containing personal information. Notice of breach. Provision of identity theft prevention services and identity theft mitigation services. Delay for criminal investigation. Means of notice. Unfair trade practice.
Sec. 36a-701c. Regulations.
Secs. 36a-702 to 36a-704. Reserved
Sec. 36a-705. (Formerly Sec. 36-442). Definitions.
Sec. 36a-706. (Formerly Sec. 36-442a). Mortgage rate lock-in.
Sec. 36a-707. (Formerly Sec. 36-442b). Applicant's remedies.
Sec. 36a-708. Prohibited acts by mortgage brokers.
Secs. 36a-709 to 36a-714. Reserved
Sec. 36a-715. (Formerly Sec. 36-442m). Definitions.
Sec. 36a-716. (Formerly Sec. 36-442n). Escrow accounts.
Sec. 36a-717. (Formerly Sec. 36-442o). Penalties.
Sec. 36a-718. (Formerly Sec. 36-442p). Licenses required. Exemptions.
Sec. 36a-719. Mortgage servicer license. Issuance. Application. Criminal history records checks. Renewal standards. Automatic suspension of license. Abandonment of application. Schedule and report. Unique identifier of license. Advertising of license.
Sec. 36a-719a. License not assignable or transferable. Change in any control persons. Surrender of license. Change of name or address. Required filings on system or notification of commissioner. Automatic suspension of license.
Sec. 36a-719b. Expiration of license. Application for renewal. Fees.
Sec. 36a-719c. Surety bond, fidelity bond and errors and omissions coverage. Cancellation. Automatic suspension of license. Notices.
Sec. 36a-719d. Records to be maintained by licensee.
Sec. 36a-719e. Disclosure of notice and schedule of ranges and categories of costs and fees.
Sec. 36a-719f. Compliance with federal laws and regulations.
Sec. 36a-719g. Fee schedule. Imposition of late fee or delinquency charge.
Sec. 36a-719h. Prohibited acts. Duty to establish, enforce and maintain policies and procedures for compliance.
Sec. 36a-719i. Authority of commissioner re investigations and examinations. Prohibited acts by subjects of investigation or examination.
Sec. 36a-719j. Suspension, revocation or refusal to renew license or taking of other action. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-719k. Regulations.
Sec. 36a-719l. Exemptions.
Secs. 36a-720 to 36a-724. Reserved
Sec. 36a-725. (Formerly Sec. 36-442aa). Definitions.
Sec. 36a-726. (Formerly Sec. 36-442bb). Disclosure required.
Secs. 36a-727 to 36a-734. Reserved
Sec. 36a-735. (Formerly Sec. 36-443). Short title: Home Mortgage Disclosure Act.
Sec. 36a-736. (Formerly Sec. 36-444). Definitions.
Sec. 36a-737. (Formerly Sec. 36-445). Discrimination in making of home purchase, home improvement and mortgage loans. Applications submitted by members of reserves or National Guard.
Sec. 36a-738. (Formerly Sec. 36-446). Disclosure requirements for financial institutions.
Sec. 36a-739. (Formerly Sec. 36-448). Reports by financial institutions. Filing requirements.
Sec. 36a-740. (Formerly Sec. 36-449). Violations by financial institutions. Rights of loan applicant.
Sec. 36a-741. (Formerly Sec. 36-451). Cease and desist order. Enforcement action.
Sec. 36a-742. (Formerly Sec. 36-452). Protection of confidentiality of an individual's financial status.
Sec. 36a-743. (Formerly Sec. 36-454). Commissioner to analyze home financing.
Sec. 36a-744. (Formerly Sec. 36-455). Regulations.
Sec. 36a-745. Reserved
Sec. 36a-746. Short title: Connecticut Abusive Home Loan Lending Practices Act.
Sec. 36a-746a. Definitions.
Sec. 36a-746b. Disclosures.
Sec. 36a-746c. Prohibited provisions in loan agreement.
Sec. 36a-746d. Report of payment history.
Sec. 36a-746e. Prohibited acts by lender.
Sec. 36a-746f. Purchase of insurance by buyer.
Sec. 36a-746g. Refund or credit of charges.
Secs. 36a-747 to 36a-754. Reserved
Sec. 36a-755. (Formerly Sec. 36-9h). Mortgage appraisal practices. Definitions. Regulations.
Sec. 36a-756. (Formerly Sec. 36-9t). Title insurance as condition of mortgage on residential real estate prohibited.
Sec. 36a-757. (Formerly Sec. 36-9u). Mortgage insurance requirements limited.
Sec. 36a-758. (Formerly Sec. 36-9y). Payment of loan proceeds by certified, bank treasurer's or cashier's check or by wire transfer.
Sec. 36a-758a. Payment of first or secondary mortgage loan proceeds by wire transfer. Time limits. Penalties.
Sec. 36a-759. (Formerly Sec. 36-4). Minority of veterans, spouses and widows for purposes of the Servicemen's Readjustment Act.
Sec. 36a-759a. Compliance with John Warner National Defense Authorization Act for Fiscal Year 2007. Limit on interest rate charged on consumer credit to members of armed services.
Sec. 36a-760. Nonprime home loans: Definitions; applicability.
Sec. 36a-760a. Duties of lenders and mortgage brokers relating to nonprime home loans.
Sec. 36a-760b. Analysis of obligor's ability to pay.
Sec. 36a-760c. Prohibition against making nonprime home loan when proceeds used to pay off special mortgage.
Sec. 36a-760d. Requirements for making nonprime home loans.
Sec. 36a-760e. Restrictions on provisions in nonprime home loans.
Sec. 36a-760f. Prohibition against dividing or structuring loan to avoid application of nonprime home loan statutory provisions.
Sec. 36a-760g. Restrictions on making and financing under nonprime home loans. Curing of defaults.
Sec. 36a-760h. Additional duties of mortgage brokers.
Sec. 36a-760i. Court action based on lender's failure to comply with statutory requirements.
Sec. 36a-760j. Prohibition against influencing real estate appraisals.
Secs. 36a-761 to 36a-769. Reserved
Sec. 36a-770. (Formerly Sec. 42-83). Applicability of Uniform Commercial Code. Filing and recording. Definitions.
Sec. 36a-771. (Formerly Sec. 42-84). General contract requirements.
Sec. 36a-772. (Formerly Sec. 42-85). Maximum finance charge on retail sales of motor vehicles and other goods.
Sec. 36a-773. (Formerly Sec. 42-86). Insurance.
Sec. 36a-774. (Formerly Sec. 42-87). Installment loan contract requirements.
Sec. 36a-775. (Formerly Sec. 42-88). Confession of judgment provision invalid.
Sec. 36a-776. (Formerly Sec. 42-89). Inclusion of other goods in contract void.
Sec. 36a-777. (Formerly Sec. 42-90). Acknowledgment of receipt of notice and statement.
Sec. 36a-778. (Formerly Sec. 42-91). Delinquency and collection charges.
Sec. 36a-779. (Formerly Sec. 42-92). Assignment of contract.
Sec. 36a-780. (Formerly Sec. 42-93). Payments after assignment.
Sec. 36a-781. (Formerly Sec. 42-94). Statement of payments made. Receipts.
Sec. 36a-782. (Formerly Sec. 42-95). Cancellation of contract on payment in full.
Sec. 36a-783. (Formerly Sec. 42-96). Rebate and refund upon prepayment of contract.
Sec. 36a-784. (Formerly Sec. 42-97). Renewals and extensions.
Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure.
Sec. 36a-786. (Formerly Sec. 42-99). Recovery of charges barred by wilful violations.
Sec. 36a-787. (Formerly Sec. 42-100). Penalty.
Sec. 36a-788. (Formerly Sec. 42-100a). Enforcement action.
Secs. 36a-789 to 36a-799. Reserved
Sec. 36a-800. (Formerly Sec. 42-127). Consumer collection agency. Definitions.
Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Surrender of license. Required system filing or notice of commissioner. Automatic suspension of license. Name and place of business. Change in any control persons. Unique identifier of license. Advertising of license.
Sec. 36a-801a. Persons engaged in business of collecting child support.
Sec. 36a-801b. Collection of child support. Written agreement.
Sec. 36a-802. (Formerly Sec. 42-128a). Surety bond required. Authority of commissioner to proceed on bond. Cancellation of bond; notice. Automatic suspension of license; notice. Opportunity for hearing.
Sec. 36a-803. (Formerly Sec. 42-129). Conviction of certain crimes disqualification to engage in consumer collection business.
Sec. 36a-804. (Formerly Sec. 42-129a). Suspension, revocation or refusal to renew license or taking other action. Removal from office and from employement or retention. Temporary order to cease business.
Sec. 36a-805. (Formerly Sec. 42-131). Prohibited practices. Exception.
Sec. 36a-806. (Formerly Sec. 42-131a). Prohibited practices within and without state. Examination of affairs.
Sec. 36a-807. (Formerly Sec. 42-131b). Liability.
Sec. 36a-808. (Formerly Sec. 42-131c). Unfair or deceptive practices. Enforcement action.
Sec. 36a-809. (Formerly Sec. 42-131d). Commissioner's powers. Regulations.
Sec. 36a-810. (Formerly Sec. 42-133a). Penalty.
Sec. 36a-811. Maintenance of consumer debtor and creditor records.
Sec. 36a-812. Compliance with Fair Debt Collection Practices Act.
Sec. 36a-813. Evidence in cause of action for purchased debt owed by consumer debtor.
Sec. 36a-814. Initiation of cause of action for purchased debt prohibited when statute of limitations has expired. Limitations period not extended by payment or affirmation.
Secs. 36a-815 to 36a-829. Reserved
Sec. 36a-830. Exchange facilitator. Definitions.
Sec. 36a-831. Change in control of exchange facilitator. Notification to clients.
Sec. 36a-832. Fidelity bond. Deposit of exchange funds.
Sec. 36a-833. Errors and omissions insurance policy; cash or securities deposit; letters of credit.
Sec. 36a-834. Regulations. Damage claims.
Sec. 36a-835. Holding and investment of exchange funds.
Sec. 36a-836. Prohibited activities of exchange facilitators.
Sec. 36a-837. Civil action. Notice.
Secs. 36a-838 to 36a-845. Reserved
Sec. 36a-846. Definitions.
Sec. 36a-847. License required. Exemptions. Application. Authority to conduct criminal history records check. Fees. Examination of records. Automatic suspension of license. Abandonment of application.
Sec. 36a-848. Name and place of business. Change of name or location. License not transferable or assignable. Change in any control persons. Automatic suspension of license. Required system filing or notice of commissioner. Unique identifier of licensee. Advertisements of licensee.
Sec. 36a-849. Records to be maintained by licensee.
Sec. 36a-850. Prohibited activities of student loan servicer licensees and control persons.
Sec. 36a-851. Commissioner's authority re investigations and examinations. Prohibited acts by subjects of investigation or examination.
Sec. 36a-852. Suspension, revocation or refusal to renew license. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-853. Compliance with federal laws and regulations.
Sec. 36a-854. Regulations.
Secs. 36a-855 to 36a-859. Reserved
Sec. 36a-860. Financial planners.
Sec. 36a-860a. Links to educational materials re financial planning and investment advisers on department's Internet web site.
PART I*
CREDITORS' COLLECTION PRACTICES
*See Sec. 36a-675 et seq. re Truth-in-Lending Act.
See Sec. 36a-800 et seq. re consumer collection agencies.
Annotation to former chapter 647a:
Creditors' Collection Practices Act cited. 216 C. 458.
Sec. 36a-645. (Formerly Sec. 36-243a). Definitions. As used in sections 36a-645 to 36a-647, inclusive, unless the context otherwise requires:
(1) “Consumer debtor” means any natural person residing in this state who owes a debt to a creditor.
(2) “Creditor” means (A) any person to whom a debt is owed by a consumer debtor and such debt results from a transaction occurring in the ordinary course of such person's business, or (B) any person to whom such debt is assigned. “Creditor” shall not include a consumer collection agency, as defined in section 36a-800, or any department or agency of the United States, this state, any other state, or any political subdivision thereof.
(3) “Debt” means an obligation or alleged obligation arising out of a transaction in which the money, property, goods or services which are the subject of the transaction are for personal, family or household purposes, whether or not such obligation has been reduced to judgment.
(P.A. 77-418, S. 1; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 252, 345, 348; P.A. 87-9, S. 2, 3; P.A. 91-357, S. 53, 78; P.A. 92-12, S. 70; P.A. 94-122, S. 293, 340; P.A. 97-207, S. 1; P.A. 04-69, S. 23; P.A. 05-288, S. 208.)
History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner and made banking department a division within the department of business regulation, effective January 1, 1979; P.A. 80-482 restored banking division as independent department with commissioner as its head and abolished the department of business regulation, thereby allowing revision of commissioner's title to omit reference to that department; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 91-357 made a technical change in Subsec. (c); P.A. 92-12 redesignated Subdivs.; P.A. 94-122 deleted the definitions of “person” and “commissioner” and alphabetized the remaining definitions, effective January 1, 1995; Sec. 36-243a transferred to Sec. 36a-645 in 1995; P.A. 97-207 redefined “consumer debtor”, “creditor” and “debt”, and deleted definition of “credit”; P.A. 04-69 amended Subdiv. (2) to insert clause (i) and (ii) designators and add “any person to whom such debt is assigned” as clause (ii); P.A. 05-288 made technical changes in Subdiv. (2), effective July 13, 2005.
Annotation to former section 36-243a:
Cited. 231 C. 707.
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Sec. 36a-646. (Formerly Sec. 36-243b). Prohibited acts. No creditor shall use any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice to collect or attempt to collect any debt.
(P.A. 77-418, S. 2.)
History: Sec. 36-243b transferred to Sec. 36a-646 in 1995.
Annotations to former section 36-243b:
Cited. 216 C. 458; 231 C. 707.
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Sec. 36a-647. (Formerly Sec. 36-243c). Enforcement powers of commissioner. Regulations. (a) The commissioner may adopt such regulations in accordance with the provisions of chapter 54 as may be necessary to carry out the purposes of sections 36a-645 to 36a-647, inclusive, including, but not limited to, specifying those acts which are deemed to be in violation of section 36a-646.
(b) The commissioner may receive and investigate complaints and may receive assurances of voluntary compliance with the provisions of sections 36a-645 to 36a-647, inclusive, or forward such complaints to the appropriate prosecuting officials at the commissioner's discretion. No action taken by the commissioner against a creditor in accordance with section 36a-50 relieves the creditor from civil liability.
(c) Whenever the commissioner has reason to believe that any person has violated, is violating or is about to violate any provision of sections 36a-645 to 36a-647, inclusive, or any regulation adopted under this section, the commissioner may take action against such person in accordance with sections 36a-50 and 36a-52.
(d) Nothing contained in sections 36a-645 to 36a-647, inclusive, shall be construed as a limitation upon the power or authority of the state, the Attorney General or the commissioner to seek administrative, legal or equitable relief as provided by other statutes or at common law.
(P.A. 77-418, S. 3; P.A. 82-174, S. 3, 14; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 294, 340; P.A. 09-208, S. 22.)
History: P.A. 82-174 amended Subsec. (b) by authorizing the commissioner to issue, after notice, cease and desist orders, unless a hearing is requested, and authorizing him to bring an action to enforce any such order; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-243c transferred to Sec. 36a-647 in 1995; P.A. 09-208 amended Subsec. (c) to add reference to Sec. 36a-52.
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Sec. 36a-648. Abusive, harassing, fraudulent, deceptive or misleading debt collection practices. Liability. Exemptions. Limitations on actions. (a) A creditor, as defined in section 36a-645, who uses any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice with respect to any person to collect or attempt to collect a debt in violation of section 36a-646, section 36a-805 or the regulations adopted pursuant to section 36a-647 or 36a-809 shall be liable to such person in an amount equal to the sum of: (1) Any actual damages sustained by such person, (2) if such person is an individual, such additional damages as the court may award, not to exceed one thousand dollars, and (3) in the case of any successful action to enforce liability under the provisions of this subsection, the costs of the action and, in the discretion of the court, a reasonable attorney's fee.
(b) In determining the amount of liability in an action brought pursuant to subsection (a) of this section, the trier of fact shall consider, among other relevant factors, the frequency and persistence of noncompliance by the creditor, the nature of such noncompliance and the extent to which such noncompliance was intentional.
(c) A creditor may not be held liable in an action brought under this section if the creditor shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adopted by the creditor to avoid any such error.
(d) An action to enforce liability under this section may be brought in any court of competent jurisdiction not later than one year after the date on which the violation occurs.
(P.A. 07-176, S. 1; P.A. 16-65, S. 54.)
History: P.A. 07-176 effective July 1, 2007, and applicable to any cause of action accruing on or after that date; P.A. 16-65 amended Subsec. (a) by adding “with respect to any person”, adding reference to Secs. 36a-805 and 36a-809 and replacing “a person who is harmed by such conduct” with “such person”.
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Sec. 36a-648a. Credit card debt collection actions against parents or legal guardians of students. (a) No credit card issuer shall take any debt collection action, including, but not limited to, telephone calls or demand letters, against the parent or legal guardian of a student to whom a credit card has been issued, unless the parent or legal guardian has agreed in writing to be liable for the debts of the student pursuant to the terms of the credit card agreement.
(b) For purposes of this section, “student” means a person who is under twenty-one years of age and is enrolled in a public institution of higher education on a full or part-time basis.
(P.A. 09-167, S. 2.)
History: P.A. 09-167 effective July 1, 2009.
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Secs. 36a-649 to 36a-654. Reserved for future use.
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PART II
DEBT ADJUSTERS AND DEBT NEGOTIATION
Sec. 36a-655. (Formerly Sec. 36-364). Definitions. As used in sections 36a-655 to 36a-665, inclusive:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485.
(2) “Bona fide nonprofit organization” means any organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.
(3) “Branch office” means a location other than the main office at which a licensee or any other person on behalf of a licensee engages in the business of debt adjustment.
(4) “Control person” has the same meaning as provided in section 36a-485.
(5) “Debt adjustment” means, for or with the expectation of a fee, commission or other valuable consideration, receiving, as agent of a debtor, money or evidences thereof for the purpose of distributing such money or evidences thereof among creditors in full or partial payment of obligations of the debtor.
(6) “Debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.
(7) “Main office” has the same meaning as provided in section 36a-485.
(8) “Unique identifier” has the same meaning as provided in section 36a-485.
(1967, P.A. 882, S. 1; P.A. 77-614, S. 161, 610; P.A. 79-160, S. 1; P.A. 80-482, S. 258, 345, 348; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 295, 340; P.A. 95-79, S. 135, 189; P.A. 02-111, S. 40; P.A. 09-208, S. 23; P.A. 17-233, S. 22; P.A. 18-173, S. 62.)
History: P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation and made banking department a division within that department, effective January 1, 1979; P.A. 79-160 defined “bona fide nonprofit organization” and deleted reference to receipt of fee or compensation in definition of “debt adjustment”; P.A. 80-482 restored banking division as independent department and abolished the department of business regulation, allowing revision of commissioner's name to omit reference to abolished department; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 deleted the definition of “commissioner”, effective January 1, 1995; Sec. 36-364 transferred to Sec. 36a-655 in 1995; P.A. 95-79 redefined “bona fide nonprofit organization” to include a limited liability company, effective May 31, 1995; P.A. 02-111 redefined “bona fide nonprofit organization” and added definition of “debtor”; P.A. 09-208 redefined “debt adjustment”; P.A. 17-233 added Subdiv. (1) re definition of “advertise” or “advertising”, designated existing provisions re “bona fide nonprofit organization” as Subdiv. (2), added Subdiv. (3) re definition of “control person”, designated existing provisions re “debt adjustment” as Subdiv. (4), designated existing provisions re “debtor” as Subdiv. (5), and made technical changes; P.A. 18-173 added new Subdiv. (3) re definition of “branch office”, redesignated existing Subdivs. (3) to (5) as Subdivs. (4) to (6), added Subdiv. (7) re definition of “main office”, and added Subdiv. (8) re definition of “unique identifier”.
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Sec. 36a-656. (Formerly Sec. 36-365). License requirements and fees. Required system filings. Authority of commissioner to conduct criminal history records checks and deny application for license. Renewal of license. Automatic suspension of license. (a) No person shall engage in the business of debt adjustment in this state unless such person has first obtained a license for the main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-655 to 36a-665, inclusive. Any activity subject to licensure pursuant to sections 36a-655 to 36a-665, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(b) An application for a debt adjuster license or renewal of such license shall be processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-655 to 36a-665, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience and any administrative, civil or criminal findings by any governmental jurisdiction. As part of an application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager, and (2) in accordance with section 36a-24b (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual and any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time.
(c) (1) If the commissioner finds, upon the filing of an application for a debt adjuster license, that: (A) The financial responsibility, character, reputation, integrity and general fitness of the applicant and any control person, qualified individual and branch manager of the applicant are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-655 to 36a-665, inclusive, (B) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant, and (C) the applicant has the bond required pursuant to section 36a-664, the commissioner may thereupon issue the applicant a debt adjuster license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of the applicant has been convicted of any misdemeanor involving any aspect of the debt adjuster business, or any felony or has made a material misstatement in the application. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.
(2) The minimum standards for renewal of a debt adjuster license shall include the following: (A) The applicant continues to meet the minimum standards under subdivision (1) of this subsection; (B) the applicant has paid all required fees for renewal of the license; and (C) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a debt adjuster that fails to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(d) Each applicant for a debt adjuster license shall pay to the system any required fees or charges and a license fee in the amount of (1) two hundred fifty dollars if such applicant is a bona fide nonprofit organization, and (2) eight hundred dollars if such applicant is not a bona fide nonprofit organization. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, and provided any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a debt adjuster license shall pay to the system any required fees or charges and, if not a bona fide nonprofit organization, a license fee of eight hundred dollars.
(e) In accordance with section 36a-24b, the commissioner may automatically suspend any license if such person receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew pursuant to section 36a-657 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(f) No abatement of the license fee shall be made if the application is denied or withdrawn prior to the issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by subsection (d) of this section shall be nonrefundable.
(g) The commissioner may deem an application for a license to engage in the business of debt adjustment abandoned if the applicant fails to respond to any request for information required under sections 36a-655 to 36a-665, inclusive, or any regulations adopted pursuant to said sections 36a-655 to 36a-665, inclusive. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. In the event an application is deemed abandoned, any application filing fee paid prior to the date on which the application was filed is deemed abandoned and shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-655 to 36a-665, inclusive.
(h) Every debt adjuster license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-655 to 36a-665, inclusive. Not later than fifteen days after the date a licensee ceases to engage in the business of a debt adjuster in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business in accordance with subsection (c) of section 36a-51.
(1967, P.A. 882, S. 2; P.A. 79-160, S. 2; P.A. 94-122, S. 296, 340; P.A. 02-111, S. 41; P.A. 04-69, S. 24; P.A. 09-208, S. 24; P.A. 11-216, S. 38; P.A. 18-173, S. 63.)
History: P.A. 79-160 made provisions applicable to bona fide nonprofit organizations rather than to persons, firms or corporations generally, replaced detailed provisions re contents of application with statement re information required by commissioner, added provisions re notification of changes in business, location, number of offices, etc. and specified that license continues in effect as long as licensee continues in debt adjustment business, deleting former Subsecs. (b) to (e) which had required informing commissioner of contract intended to be used and any changes thereto, which had set June thirtieth as annual expiration date, which had required appointment of commissioner as applicant's agent for service of process and which had required that application contain names of persons, firms and corporations with financial interest in the business; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-365 transferred to Sec. 36a-656 in 1995; P.A. 02-111 designated existing provisions as Subsec. (a) and added reference to “debt adjuster” license, deleted reference to Secs. 36a-655 to 36a-665, inclusive, replaced “material changes” with “change”, deleted provisions re changes in location or additional locations and re effective period of license and made technical changes and added Subsecs. (b), (c) and (d) re requirements for obtaining debt adjuster license, licensing fees and renewal requirements and abatement and nonrefundability of license fee, respectively; P.A. 04-69 added new Subsec. (d), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay application fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (d) as Subsec. (e); P.A. 09-208 amended Subsec. (a) to authorize persons, in addition to bona fide nonprofit organizations, to engage in business of debt adjustment, added new Subsec. (b) re application for debt adjuster license to include criminal conviction information, redesignated existing Subsec. (b) as Subsec. (c) and amended same by authorizing commissioner to deny application based on certain criminal convictions and by adding language re when withdrawal of application for license becomes effective, redesignated existing Subsec. (c) as Subsec. (d) and amended same by creating separate fee schedule for bona fide nonprofit organizations and by deleting provision re licenses issued prior to October 1, 2002, redesignated existing Subsecs. (d) and (e) as Subsecs. (e) and (f) and made conforming changes; P.A. 11-216 amended Subsec. (b) to delete provision re ten-year period re history of criminal convictions and requirement re criminal history of applicant's directors and add provision authorizing commissioner to conduct state and national criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant, amended Subsec. (c) to delete provision re ten-year period re misdemeanor and felony convictions, and added Subsec. (g) re abandonment of application; P.A. 18-173 substantially amended Subsec. (a) by replacing provisions re person desiring to obtain debt adjuster license with provisions re obtaining license for main office and each branch office where business is conducted in accordance with Secs. 36a-655 to 36a-665, substantially amended Subsec. (b) by replacing provisions re application for debt adjuster license to be in writing on form provided by commissioner with provisions re application to be processed on the system and form to contain content set forth by instruction or procedure of commissioner and commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition, amended Subsec. (c) by designating existing provisions re commissioner's findings as new Subdiv. (1), redesignating existing Subdiv. (1) as Subpara. (A) and amending same to replace references to applicant partners if a partnership, applicant members if a limited liability company or association and officers, directors, and principal employees if a corporation with references to control person, qualified individual and branch manager, redesignating Subdiv. (2) as Subpara. (B), and adding Subpara. (C) re applicant has bond required pursuant to Sec. 36a-664, adding provision re material misstatement in application, deleting provision re withdrawal of application, and adding new Subdiv. (2) re minimum standards for renewal of debt adjuster license, substantially amended Subsec. (d) by replacing provisions re bona fide nonprofit organization, application fee and license fee, and renewal application with provisions re payment to the system of fees and charges, expiration of license, application for renewal, and payment of renewal and license fees, substantially amended Subsec. (e) by replacing provisions re check to pay application fee is dishonored and automatic suspension with provisions re automatic suspension if deficiency on system due to returned payment, amended Subsec. (f) by adding provision re application is denied or withdrawn prior to issuance, amended Subsec. (g) by replacing “in writing” with “on the system”, added Subsec. (h) re debt adjuster license to remain in force and effect and surrendering of license, and made technical and conforming changes.
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Sec. 36a-657. (Formerly Sec. 36-369). Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-655 to 36a-665, inclusive, or if the commissioner finds that the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misappropriated funds; (3) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any person or any other law or regulation applicable to the conduct of such licensee's debt adjustment business; or (4) failed to perform any agreement with a debtor.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate the provisions of sections 36a-655 to 36a-665, inclusive, or any regulation adopted thereunder; (2) any person is, was or would be the cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation; or (3) any licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, misappropriated funds or failed to perform any agreement with a debtor, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-655 to 36a-665, inclusive, from office and from employment or retention as an independent contractor in the debt adjuster business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(1967, P.A. 882, S. 6; P.A. 79-160, S. 3; P.A. 82-174, S. 11, 14; P.A. 94-122, S. 297, 340; P.A. 02-111, S. 42; P.A. 05-46, S. 13; P.A. 07-91, S. 23; P.A. 18-173, S. 64.)
History: P.A. 79-160 rephrased provisions, added in Subdiv. (3) ground of material error if licensee was not at time of application entitled to obtain license and remains unentitled to do so, inserted new Subdiv. (4) and renumbered former Subdivs. (4) and (5) accordingly; P.A. 82-174 replaced the provision that the commissioner may revoke or suspend a license after notice and hearing with provisions concerning the form and manner of the notice and authorizing the commissioner to revoke or suspend a license “after allowing the licensee a reasonable opportunity to be heard”; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-369 transferred to Sec. 36a-657 in 1995; P.A. 02-111 replaced former provisions re denial, revocation or suspension of a license by the commissioner with new provisions re suspension, revocation or refusal to renew license; P.A. 05-46 designated existing provisions as Subsec. (a) and added Subsec. (b) re commissioner's authority to impose civil penalty or issue cease and desist order against person or licensee; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 18-173 amended Subsec. (a) by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, replacing “provisions of sections 36a-655 to 36a-665, inclusive, or any other law or regulation” with “provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any person or any other law or regulation”, amended Subsec. (b) by designating existing provision re person violating Secs. 36a-655 to 36a-665 as Subdiv. (1), and amending same to add reference to regulation adopted under sections, adding Subdiv. (2) re person is, was or would be cause of violation of provision of section or regulation, designating existing provisions re misappropriation of funds or failure to perform agreement as Subdiv. (3), and amended same by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, added Subsec. (c) re commissioner's authority to order licensee to remove individual from office and from employment or retention as an independent contractor, added Subsec. (d) re commissioner's authority to issue temporary order, and made technical changes.
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Sec. 36a-658. (Formerly Sec. 36-370). License required. Change in control persons, name or place of business. Use of name. Automatic suspension of license. Surrender of license. Required system filing or notice to commissioner. Unique identifier of license. Advertising of license. (a) Each license shall state the location at which the business is to be conducted and shall state fully the name of the licensee. If the licensee desires to engage in the business of debt adjustment in more than one location, the licensee shall procure a license for each location where the business is to be conducted. A license issued under section 36a-656 shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval.
(b) No licensee shall use any name or address other than the name and address stated on the license issued by the commissioner. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system and provides to the commissioner a bond rider, endorsement or addendum, as applicable; and (2) the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period.
(c) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of such automatic suspension pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-657 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
(d) Not later than fifteen days after the date a licensee ceases to engage in this state in the business of debt adjustment for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business in accordance with subsection (c) of section 36a-51.
(e) Except as otherwise specified in subsections (a) and (b) of this section, each debt adjuster applicant or licensee, and each control person, qualified individual or branch manager of such applicant or licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license not later than fifteen days after the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.
(f) A debt adjuster licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following developments:
(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(2) Filing of a criminal indictment against the licensee in any way related to the debt adjuster activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; or
(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.
(g) Any person filing or submitting any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each debt adjuster licensee, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(h) The unique identifier of any person licensed under section 36a-656 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations or advertisements of any person licensed under section 36a-656: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-655 to 36a-665, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(1967, P.A. 882, S. 7; P.A. 79-160, S. 4; P.A. 02-111, S. 43; P.A. 08-119, S. 14; P.A. 18-173, S. 65.)
History: P.A. 79-160 rephrased prior provisions, authorized conduct of business which does not conflict with interests of clients or business of debt adjustment and deleted provision prohibiting change in office location unless authorized by commissioner; Sec. 36-370 transferred to Sec. 36a-658 in 1995; P.A. 02-111 replaced former provisions with provisions re license to specify location at which business is conducted and name of licensee, procurement of license for each business location, license maintenance and availability for public inspection, license not transferable or assignable and licensee's use of stated name; P.A. 08-119 added requirement for surrender of license when licensee ceases to engage in the business of debt adjustment; P.A. 18-173 designated existing provisions re license requirements as Subsec. (a) and amended same by deleting provision re license to be made available for public inspection, adding reference to Sec. 36a-656, deleting provision re prior written notice to commissioner to change location of licensee, adding provision re filing of advance change notice on the system, designated existing provision prohibiting use of any name other than name stated on license as Subsec. (b) and amended same by adding provisions re use of name or address of licensee and requirements to change the same, added Subsec. (c) re commissioner's authority to automatically suspend a license, designated existing provisions re surrender of license as Subsec. (d) and amended same by deleting “in person or by registered or certified mail” and adding reference to Sec. 36a-51(c), added Subsec. (e) requiring system filing or notification to commissioner of change in information most recently submitted to the system in connection with application or license, added Subsec. (f) requiring system filing or notification of commissioner of certain developments, added Subsec. (g) re submission of timely and accurate report on system, added Subsec. (h) re unique identifier of licensee and solicitation or advertisements by licensee, and made technical and conforming changes.
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Sec. 36a-659. (Formerly Sec. 36-372). Separate bank account for benefit of debtors. Books and records. Each licensee shall maintain a separate bank account for the benefit of debtors in which all payments received from debtors who are residents of Connecticut for the benefit of creditors shall be deposited. Every licensee shall keep and use in its business, books, accounts and records which will enable the commissioner to determine whether such licensee is complying with the provisions of sections 36a-655 to 36a-665, inclusive, and with the regulations adopted pursuant thereto. Every licensee shall preserve such books, accounts and records for at least seven years after making the final entry on any transaction recorded therein.
(1967, P.A. 882, S. 9; P.A. 94-122, S. 298, 340; P.A. 02-111, S. 44.)
History: P.A. 94-122 changed “his” to “the licensee's”, effective January 1, 1995; Sec. 36-372 transferred to Sec. 36a-659 in 1995; P.A. 02-111 changed “payments received from debtors” to “payments received from debtors who are residents of Connecticut”, deleted provision re payments to remain in bank account until remittance made to a debtor or creditor, and made technical changes.
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Sec. 36a-660. (Formerly Sec. 36-375). Licensee's duties. Written agreement required. Each licensee shall: (1) Provide the debtor with a written agreement that sets forth the services to be provided by the licensee and any fees to be charged for such services; (2) provide individualized credit counseling and budgeting assistance to the debtor without charge prior to entering into a written agreement with the debtor; (3) determine that the debtor has the financial ability to make the payments stated in the written agreement and that the payments stated in the written agreement are suitable for the debtor; (4) contact each creditor of the debtor to determine whether such creditors will accept payment of the debtor's debts as contemplated by the written agreement; (5) keep complete and adequate records during the term of the written agreement and for a period of seven years from the date of cancellation or completion of the written agreement with each debtor, which records shall contain complete information regarding the written agreement, extensions thereof, payments, disbursements and charges, and shall be open to inspection by the commissioner during normal business hours; (6) make remittances to creditors within a reasonable time after receipt of any funds, less prorated fees and costs, unless the reasonable payment of one or more of the debtor's obligations requires that such funds be held for a longer period so as to accumulate a sum certain; and (7) furnish the debtor a written statement of the debtor's account periodically, and no less than quarterly, and not later than the date ninety days after the date of completion of the adjustment of the debtor's debts, and shall furnish the debtor a verbal accounting at any time the debtor may request it during normal business hours.
(1967, P.A. 882, S. 12; P.A. 79-160, S. 6; P.A. 94-122, S. 299, 340; P.A. 09-208, S. 25.)
History: P.A. 79-160 required that remittances to creditors be made “within a reasonable time” rather than within 10 days, required that statement of account be likewise made within reasonable time after debtor requests it and in all cases within 90 days after adjustment completed rather than made each 90 days and deleted former Subsecs. (b) and (c) which required that budget analysis indicate debtor can meet requirements and that debtors have full benefit of any compromise of debt arranged by a licensee with any one or more creditors; P.A. 94-122 deleted “and his duly appointed agents” from Subdiv. (1) and changed “his” to “the debtor's” in Subdiv. (2), effective January 1, 1995; Sec. 36-375 transferred to Sec. 36a-660 in 1995; P.A. 09-208 added new Subdivs. (1) to (4) re licensee's duties, redesignated existing Subdivs. (1) to (3) as Subdivs. (5) to (7), amended redesignated Subdiv. (7) to require licensee to furnish debtor with written statement of the debtor's account no less than quarterly, changed “contract” to “written agreement” throughout, and made technical changes.
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Sec. 36a-661. (Formerly Sec. 36-376). Prohibited acts. No person who is required to be licensed and who is subject to the provisions of sections 36a-655 to 36a-665, inclusive, and no control person shall, directly or indirectly: (1) Purchase from a creditor any obligation of a debtor; (2) operate as a collection agent and as a licensee as to the same debtor's account; (3) execute any contract or agreement to be signed by the debtor unless the contract or agreement is fully and completely filled in and finished; (4) require the debtor to purchase other services or materials as a condition to enter into a written agreement for services; (5) pay any bonus or other consideration to any person for the referral of a debtor to the licensee's business or accept or receive any bonus, commission or other consideration for referring any debtor to any person for any reason; (6) advertise, display, distribute, broadcast or televise or permit to be displayed, advertised, distributed, broadcast or televised the licensee's services, rates or terms in any manner whatsoever wherein any false, misleading or deceptive statement or representation is made with regard to the services to be performed by the licensee or the charges to be made therefor; (7) employ any scheme, device or artifice to defraud or mislead any person in connection with a debt adjustment; (8) engage in any unfair or deceptive practice toward any person in connection with debt adjustment activities; (9) obtain property by fraud or misrepresentation; (10) fail to comply with the provisions of sections 36a-655 to 36a-665, inclusive, or regulations adopted under said sections, or any other state or federal law, including the rules and regulations thereunder; (11) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (12) fail to truthfully account for moneys belonging to a debtor; (13) fail to comply with any demand or requirement made by the commissioner under and within the authority of sections 36a-655 to 36a-665, inclusive; (14) collect any fee or charge or receive money or payment prohibited by section 36a-661a; or (15) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt adjustment laws and regulations.
(1967, P.A. 882, S. 13; P.A. 79-160, S. 7; P.A. 94-122, S. 300, 340; P.A. 09-208, S. 26; P.A. 17-233, S. 23.)
History: P.A. 79-160 deleted former Subdiv. (4) prohibiting receipt or charge of fee in form of promissory note or other promise to pay or receipt or acceptance of wage assignment, mortgage or other security for any fee, renumbering remaining Subsecs. accordingly; P.A. 94-122 changed “his” to “the licensee's”, effective January 1, 1995; Sec. 36-376 transferred to Sec. 36a-661 in 1995; P.A. 09-208 added new Subdiv. (4) re directly or indirectly requiring debtor to purchase other services or materials as a condition to enter into written agreement for services, and redesignated existing Subdivs. (4) and (5) as Subdivs. (5) and (6); P.A. 17-233 replaced “licensee shall” with “person who is required to be licensed and who is subject to the provisions of sections 36a-655 to 36a-665, inclusive, and no control person shall, directly or indirectly”, deleted “directly or indirectly” in Subdiv. (4), added Subdivs. (7) to (15) re prohibited acts, and made technical changes.
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Sec. 36a-661a. Written agreement voidable. Licensee claims for restitution. (a) If a debt adjuster licensee imposes a fee or other charge or receives money or other payments not specified in the written agreement with the debtor, the debtor may void the agreement and recover any fees paid.
(b) If any person is not licensed as required by section 36a-656, the written agreement is voidable by the debtor.
(c) If a debtor voids a written agreement under this section, the licensee shall not have a claim against the debtor for breach of contract or for restitution.
(P.A. 09-208, S. 27.)
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Sec. 36a-662. (Formerly Sec. 36-377). Regulations. The commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of sections 36a-655 to 36a-665, inclusive.
(1967, P.A. 882, S. 14; P.A. 94-122, S. 301, 340.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-377 transferred to Sec. 36a-662 in 1995.
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Sec. 36a-663. (Formerly Sec. 36-378). Exceptions. The provisions of sections 36a-655 to 36a-665, inclusive, shall not apply to the following: (1) Any attorney admitted to the practice of law in this state who engages in debt adjustment as an ancillary matter to such attorney's representation of a client; (2) any bank, fiduciary or financing or lending institution authorized to transact business in this state or any other state, which performs debt adjustment in the regular course of its principal business; (3) any title insurance or abstract company authorized to transact business in this state or any other state, while doing an escrow business; and (4) any person acting pursuant to any law of this state or of the United States or acting under the order of a court.
(1967, P.A. 882, S. 15; P.A. 73-357; P.A. 79-160, S. 8; P.A. 92-67, S. 8, 9; P.A. 11-216, S. 37.)
History: P.A. 73-357 added Subsec. (b) exempting bona fide nonprofit cooperative organizations offering debt adjustment services exclusively for members from chapter provisions except Secs. 36-364, 36-371, 36-372, 36-374, 36-375, 36-376, 36-377, 36-379 and 36-381; P.A. 79-160 deleted exemption from bona fide nonprofit, religious, fraternal or cooperative organization (Subsec. (a)(5) and Subsec. (b)) and exemption for employees of licensees when acting in the regular course of employment; P.A. 92-67 added exception for banks, fiduciaries or financing or lending institutions authorized to transact business in any other state; Sec. 36-378 transferred to Sec. 36a-663 in 1995; P.A. 11-216 amended Subdiv. (1) to replace “when engaged in such practice” with “who engages in debt adjustment as an ancillary matter to such attorney's representation of a client”.
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Sec. 36a-664. (Formerly Sec. 36-380). Surety bond required. Form of surety bond. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing. (a)(1) Except as provided in subdivision (2) of this subsection, no such license, and no renewal thereof, shall be granted unless the applicant has filed a surety bond with the commissioner written by a surety authorized to write such bonds in this state, provided any applicant that files applications for licenses for more than one location shall file a single bond. Except as provided in this subdivision, for every applicant, the principal amount of the bond shall be the greater of (A) forty thousand dollars, or (B) (i) twice the amount of the average daily balance of the payments received by the applicant from Connecticut debtors in connection with the applicant's debt adjustment activity during the preceding twelve months ending June thirtieth of each year, or (ii) in the case of an applicant that has acquired the business of a predecessor debt adjuster, the lesser of the amount of the predecessor's debt adjustment activity during such preceding period or one million dollars. The commissioner may require a larger bond if the commissioner determines that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct and that such increased bond is necessary for the protection of consumers, or may increase or decrease the amount of the bond based upon the applicant's or licensee's financial condition, business plan and the actual or estimated aggregate amount of payments and fees paid by Connecticut debtors to such applicant. To the extent not captured on a required report of condition on the system, each licensee shall submit to the commissioner, by September first of each year, in a form and manner as may be prescribed by the commissioner, a report containing information on the average daily balance of the payments received by the licensee from Connecticut debtors during the preceding twelve months ending June thirtieth of each such year.
(2) If a licensee or applicant for renewal of a license establishes that such licensee or applicant is unable to comply with the bond required by subdivision (1) of this subsection, it shall file a bond for the highest principal amount it can obtain, provided such amount shall be a minimum of forty thousand dollars, and the licensee or applicant for renewal shall, in lieu of the balance of the required amount of the bond, deposit a sum equal to the amount of the bond required by subdivision (1) of this subsection, less the amount of the bond filed with the commissioner, in cash or cash equivalents, with such bank, out-of-state bank that has a branch in this state, Connecticut credit union or federal credit union as such applicant or licensee may designate and the commissioner may approve, and subject to such conditions as the commissioner deems necessary for the protection of consumers and in the public interest. No licensee or applicant shall make such deposit until the depository institution and the licensee or applicant executes a deposit agreement satisfactory to the commissioner. The deposit agreement shall pledge the amount deposited to the commissioner and provide that the depository institution shall not release any of the moneys pledged without the authorization of the commissioner. The amount deposited shall secure the same obligation as would a surety bond filed under this section and shall be held at such banks or credit unions to cover claims during the period the license remains in full force and effect and the succeeding two years after such license has been surrendered, revoked or suspended or has expired. The licensee or applicant may collect interest on such deposit in accordance with its deposit agreement. The deposits made pursuant to this section shall be deemed, by operation of law, to be held in trust for the benefit of any debtor, who may be damaged by failure of a licensee or applicant to perform any written agreements or by the wrongful conversion of funds paid to a licensee in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.
(3) The form of any surety bond submitted pursuant to this section shall be approved by the Attorney General. Any surety bond filed under this section shall be conditioned upon the licensee faithfully performing any and all written agreements with debtors, truly and faithfully accounting for all funds received by the licensee in the licensee's capacity as a debt adjuster, and conducting such business consistent with the provisions of sections 36a-655 to 36a-665, inclusive. Any debtor who may be damaged by failure to perform any written agreements, or by the wrongful conversion of funds paid to a licensee, may proceed on any such surety bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on any such surety bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50. On and after April 1, 2019, the commissioner may also proceed on any restitution imposed pursuant to subsection (c) of section 36a-50, and any unpaid costs of examination of a license as determined pursuant to section 36a-65. The proceeds of any bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. Any bond required by this section shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under any such bond shall not exceed the principal amount of the bond or the limit of liability.
(b) The surety shall have the right to cancel any bond filed under subsection (a) of this section at any time by a written notice to the licensee and the commissioner, stating the date cancellation shall take effect. If such bond is issued electronically on the system, written notice of cancellation may be provided by the surety to the principal and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. No such bond shall be cancelled unless the surety notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless prior to such date the licensee submits a letter of reinstatement of the bond from the surety or a new bond or the licensee has surrendered the license. After a license has been automatically suspended, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(c) No licensee shall use, attempt to use or make reference to, either directly or indirectly, any word or phrase which states or implies that the licensee is endorsed, sponsored, recommended or bonded by the state.
(1967, P.A. 882, S. 17; P.A. 94-122, S. 302, 340; P.A. 02-111, S. 45; P.A. 04-69, S. 25; P.A. 06-35, S. 10; P.A. 09-23, S. 1; P.A. 09-208, S. 28; P.A. 11-216, S. 39; P.A. 18-173, S. 66.)
History: P.A. 94-122 changed “he” to “the licensee”, effective January 1, 1995; Sec. 36-380 transferred to Sec. 36a-664 in 1995; P.A. 02-111 added new Subsec. (a) re surety bond, designated existing provisions as Subsec. (b) and, in said Subsec., changed “bonded, approved, bonded by the state or approved by the state” to “endorsed, sponsored, recommended or bonded by the state”; P.A. 04-69 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and amending same to add exception for provisions of Subdiv. (2) and reference to “surety” bond, to delete provision re approval of form by Attorney General, to replace “July thirty-first” with “March thirty-first” and provision re submission of bond or renewal thereof with provision re submission of evidence that bond complies with subdivision, to delete former requirements for bond and proceeding thereon and to make technical changes, and by adding Subdiv. (2) re supplemental bond or insurance policy and Subdiv. (3) re requirements for bond or insurance policy and proceeding thereon, added new Subsec. (b) re cancellation of bond or insurance policy and automatic suspension of license, redesignated existing Subsec. (b) as Subsec. (c) and amended same by adding “or insured”; P.A. 06-35 amended Subsec. (a)(1)(B) to substitute July thirty-first for March thirty-first of each year as date marking end of 12-month period, effective May 8, 2006; P.A. 09-23 amended Subsec. (a)(1)(B) by designating existing provision as Subsec. (a)(1)(B)(i) and replacing “highest total payments” with “average daily balance of the payments” therein, by adding Subpara. (B)(ii) re applicants that acquired business of a predecessor debt adjuster and providing that commissioner may require larger bond upon certain findings and may increase or decrease amount of bond, and by replacing requirement that licensees submit evidence that bond complies with subdivision with requirement that licensees submit annual report containing the average daily balance of payments received from Connecticut debtors, amended Subsec. (a)(2) by adding provision re depositing cash or cash equivalents with certain depository institutions and making conforming changes, and amended Subsecs. (a)(3), (b) and (c) by removing provisions re insurance policies, effective July 1, 2009; P.A. 09-208 amended Subsec. (b) by requiring commissioner to provide written notice to licensee of date a bond or insurance policy cancellation shall take effect, by providing that commissioner shall automatically suspend a license unless licensee submits letter of reinstatement prior to date on which license suspension takes effect, authorizing commissioner to require licensee to take or refrain from taking certain actions, and by making technical changes, effective July 7, 2009; P.A. 11-216 amended Subsec. (b) to delete references to insurance company and insurance policy, effective July 1, 2011; P.A. 18-173 amended Subsec. (a)(1) by replacing “July thirty-first” with “June thirtieth”, adding “To the extent not captured on a required report of condition on the system,”, adding “in a form and manner as may be prescribed by the commissioner,”, deleting provision re report to be subscribed and affirmed as true and in form prescribed by commissioner, amended Subsec. (a)(3) by adding provision re commissioner's authority to proceed on restitution imposed pursuant to Sec. 36a-50(c) and certain unpaid costs, amended Subsec. (b) by adding provision re written notice to commissioner for cancellation of bond, adding provisions re cancellation of bond issued electronically on the system, designating existing provisions re notice of automatic suspension as Subdiv. (1), designating existing provision re requiring licensee to take or refrain from taking action as Subdiv. (2), and amending same by replacing “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”, and made technical and conforming changes.
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Sec. 36a-665. (Formerly Sec. 36-381). Penalties. (a) Any person who engages in debt adjustment without a license as required by sections 36a-655 to 36a-665, inclusive, shall be fined not more than one thousand dollars or imprisoned more than one year, or both, for each violation. Each day on which a person engages in debt adjustment without a license as required by said sections shall be construed as a separate violation.
(b) Any person who violates any other provision of sections 36a-655 to 36a-665, inclusive, shall be fined not more than one thousand dollars for the first offense, and for each subsequent offense shall be fined not more than one thousand dollars and imprisoned not less than thirty days nor more than one year.
(1967, P.A. 882, S. 18; P.A. 79-160, S. 9.)
History: P.A. 79-160 made no change; Sec. 36-381 transferred to Sec. 36a-665 in 1995.
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Secs. 36a-666 to 36a-670. Reserved for future use.
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Sec. 36a-671. Definitions. Debt negotiation. License application, requirements and fees. Authority of commissioner to conduct criminal history records checks and deny application for license. Abandonment of application. License renewal. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. License not assignable or transferable. Use of name. Surrender of license. Required system filing or notice to commissioner. Unique identifier. Advertisements of licensee. (a) As used in this section and sections 36a-671a to 36a-671f, inclusive:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485.
(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee engages or offers to engage in debt negotiation.
(3) “Control person” has the same meaning as provided in section 36a-485.
(4) “Debt negotiation” means, for or with the expectation of a fee, commission or other valuable consideration, assisting a debtor in negotiating or attempting to negotiate on behalf of a debtor the terms of a debtor's obligations with one or more mortgagees or creditors of the debtor, including the negotiation of short sales of residential property or foreclosure rescue services.
(5) “Debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.
(6) “Foreclosure rescue services” means services related to or promising assistance in connection with (A) avoiding or delaying actual or anticipated foreclosure proceedings concerning residential property, or (B) curing or otherwise addressing a default or failure to timely pay with respect to a mortgage loan secured by residential property, and includes, but is not limited to, the offer, arrangement or placement of a mortgage loan secured by residential property or other extension of credit when those services are advertised, offered or promoted in the context of foreclosure related services.
(7) “Main office” has the same meaning as provided in section 36a-485.
(8) “Mortgagee” means the original lender under a mortgage loan secured by residential property or its agents, successors or assigns.
(9) “Mortgagor” means a debtor who is an owner of residential property, including, but not limited to, a single-family unit in a common interest community, who is also the borrower under a mortgage encumbering such residential property.
(10) “Residential property” means a one-to-four family owner-occupied real property.
(11) “Short sale” means the sale of residential property by a mortgagor for an amount less than the outstanding balance owed on the loan secured by such property where, prior to the sale, the mortgagee or an assignee of the mortgagee agrees to accept less than the outstanding loan balance in full or partial satisfaction of the mortgage debt and the proceeds of the sale are paid to the mortgagee or an assignee of the mortgagee.
(12) “Unique identifier” has the same meaning as provided in section 36a-485.
(b) No person shall engage or offer to engage in debt negotiation in this state unless such person has first obtained a license for its main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-671 to 36a-671f, inclusive. Any activity subject to licensure pursuant to sections 36a-671 to 36a-671f, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2. A person is engaging in debt negotiation in this state if such person: (1) Has a place of business located within this state; (2) has a place of business located outside of this state and the debtor is a resident of this state who negotiates or agrees to the terms of the services in person, by mail, by telephone or via the Internet; or (3) has its place of business located outside of this state and the services concern a debt that is secured by property located within this state.
(c) An application for an original or renewal debt negotiation license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-671 to 36a-671f, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the applicant, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction. As part of the application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager, and (2) in accordance with section 36a-24b (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. The commissioner may deem an application for a debt negotiation license abandoned if the applicant fails to respond to any request for information required under sections 36a-671 to 36a-671f, inclusive, or any regulations adopted pursuant to said sections 36a-671 to 36a-671f, inclusive. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-671 to 36a-671f, inclusive.
(d) (1) If the commissioner finds, upon the filing of an application for a debt negotiation license, that: (A) The financial responsibility, character, reputation, integrity and general fitness of the applicant and any control person, qualified individual and branch manager of the applicant are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-671 to 36a-671f, inclusive; (B) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant; and (C) the applicant has the bond required by section 36a-671d, the commissioner may thereupon issue the applicant a debt negotiation license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of the applicant has been convicted of any misdemeanor involving any aspect of the debt negotiation business or any felony or has made a material misstatement in the application. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.
(2) The minimum standards for renewal of a debt negotiation license shall include the following: (A) The applicant continues to meet the minimum standards for license issuance under subdivision (1) of this subsection; (B) the applicant has paid all required fees for renewal of the license; and (C) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a debt negotiator failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(e) Each applicant for a debt negotiation license shall pay to the system any required fees or charges and a license fee of eight hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a debt negotiation license shall pay to the system any required fees or charges and a renewal fee of eight hundred dollars.
(f) The commissioner may automatically suspend a license if the licensee receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-671a and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(g) No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by subsection (e) of this section shall be nonrefundable.
(h) The license shall not be transferable or assignable. Any change in any control person of the license, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval.
(i) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address specified on the license issued by the commissioner. A licensee may change the name of the licensee or the address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, the licensee files such change with the system and provides to the commissioner a bond rider, endorsement or addendum, as applicable, and the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.
(j) The commissioner may automatically suspend any license for a violation of subsection (h) or (i) of this section. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-671a and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
(k) Not later than fifteen days after the date a licensee ceases to engage in the business of debt negotiation in this state for any reason, including, but not limited to, a business decision to terminate operations in this state, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business in accordance with subsection (c) of section 36a-51.
(l) Except as otherwise specified in subsections (h) and (i) of this section, each debt negotiation applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file on the system any change in the information most recently submitted to the system by such applicant, licensee, control person, qualified individual or branch manager in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days from the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change. A debt negotiation licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following events:
(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(2) Filing of a criminal indictment against the licensee for activities related to debt negotiation, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; or
(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.
(m) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each debt negotiation licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(n) The unique identifier of any person licensed under section 36a-671 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under section 36a-671: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-671 to 36a-671f, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(P.A. 09-208, S. 29; 09-209, S. 41; P.A. 11-216, S. 40; P.A. 14-7, S. 9; P.A. 17-233, S. 24; P.A. 18-173, S. 67.)
History: P.A. 09-209 redefined “mortgagor” in Subsec. (a)(4) and made a technical change in Subsec. (b)(3); P.A. 11-216 amended Subsec. (b) to delete references to contract and eliminate requirement re debtor being physically present in this state, amended Subsec. (c) to delete provision re ten-year period re history of criminal convictions, add provision authorizing commissioner to conduct a state and criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant and add provisions re abandonment of application, and amended Subsec. (d) to delete provision re ten-year period re misdemeanor and felony convictions; P.A. 14-7 replaced references to Sec. 36a-671d with references to Sec. 36a-671e in Subsecs. (a), (c) and (d), effective May 8, 2014; P.A. 17-233 amended Subsec. (a) to replace “36a-671e” with “36a-671f”, add new Subdiv. (1) defining “advertise” or “advertising”, add new Subdiv. (2) defining “control person”, redesignate existing Subdivs. (1) and (2) as Subdivs. (3) and (4), add new Subdiv. (5) defining “foreclosure rescue services”, redesignate existing Subdivs. (3) and (4) as Subdivs. (6) and (7), add new Subdiv. (8) defining “residential property”, redesignate existing Subdiv. (5) as Subdiv. (9), delete former Subdivs. (6) and (7), and make technical changes, and amended Subsec. (d)(1)(D) to replace “36a-671e” with “36a-671f”; P.A. 18-173 amended Subsec. (a) by adding new Subdiv. (2) re definition of “branch office”, redesignating existing Subdivs. (2) to (5) as new Subdivs. (3) to (6), adding new Subdiv. (7) re definition of “main office”, redesignating existing Subdivs. (6) to (9) as Subdivs. (8) to (11), adding Subdiv. (12) re definition of “unique identifier”, amended Subsec. (b) by replacing provisions re filing application for license with commissioner and notifying commissioner of change in applicant's business with provisions re obtaining license for main office and each branch office and activity to be conducted from office located in a state, amended Subsec. (c) by replacing provisions re application to be in writing on form provided by commissioner, information to be included and commissioner's authority to conduct criminal history records check with provisions re application to be processed on the system in form prescribed by commissioner, information to be furnished to the system, and commissioner's authority to conduct criminal history records checks, require submission of fingerprints and investigate financial condition of person, replacing references to Sec. 36a-671e with references to Sec. 36a-671f, and replacing provision re commissioner to notify applicant in writing with provision re commissioner to notify applicant on the system, amended Subsec. (d) by designating existing provisions re commissioner's findings as new Subdiv. (1) and amending same by redesignating existing Subdivs. (1) and (2) as Subparas. (A) and (B), deleting former Subpara. (A) designator, deleting former Subparas. (B) to (D) re partners, members, officers, directors and principal employees, adding references to control person, qualified individual and branch manager, adding new Subpara. (C) re applicant having required bond, deleting provisions re license not transferrable, written notice to commissioner required for change of location, licensee not to use any name unless approved, replacing “partner, member, officer, director of principal employee” with “control person, qualified individual or branch manager”, and adding provision re making material misstatement in application, deleting provision re withdrawal of application, adding new Subdiv. (2) re minimum standards for renewal of debt negotiation license, substantially amended Subsec. (e) by replacing provisions re application fees, and renewal of license with provisions re payment of required fees or charges to system, expiration of license and renewal of license, substantially amended Subsec. (f) by replacing provisions re check for application fee dishonored and automatic suspension of license with provisions re automatic suspension of license if deficiency on system indicating payment returned, amended Subsec. (g) by adding provision re application denied or withdrawn, added Subsec. (h) re license not transferable or assignable, filing of advance change notice on the system, adding Subsec. (i) re licensee's use of name other than legal name or approved fictitious name, use of name or address specified on license, and change to name or address, added Subsec. (j) re automatic suspension of license, added Subsec. (k) re surrender of license, added Subsec. (l) re change in information to be filed on the system or notification to commissioner re occurrence of certain events, added Subsec. (m) re filing or submission of information on the system, timely submission to the system of accurate reports of condition, added Subsec. (n) re solicitations and advertisements, and made technical and conforming changes.
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Sec. 36a-671a. Suspension, revocation or refusal to renew license or taking other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, in accordance with the provisions of section 36a-51, for any reason that would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-671 to 36a-671f, inclusive, or if the commissioner finds that the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misappropriated funds; (3) violated any provision of this title or of any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's debt negotiation business; or (4) failed to perform any agreement with a debtor.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate the provisions of sections 36a-671 to 36a-671f, inclusive, or any regulation adopted thereunder; (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation; or (3) any licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, misappropriated funds or failed to perform any agreement with a debtor, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52. For purposes of sections 36a-671 to 36a-671f, inclusive, each engagement and each offer to engage in debt negotiation shall constitute a separate violation.
(c) Upon complaint, the commissioner may review any fees or charges assessed by a person engaging or offering to engage in debt negotiation services and order the reduction of such fees or charges or repayment of such amount of the fees or charges that the commissioner deems excessive, taking into consideration the fees that other persons performing similar debt negotiation services charge for such services and the benefit to the consumer of such services. In conducting an investigation pursuant to this subsection, the commissioner shall have the same authority as specified in section 36a-17.
(d) The commissioner may order a licensee to remove any individual conducting business under sections 36a-671 to 36a-671f, inclusive, from office and from employment or retention as an independent contractor in the debt negotiation business in this state in accordance with section 36a-51a.
(e) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(P.A. 09-208, S. 33; P.A. 11-216, S. 42; P.A. 14-7, S. 10; P.A. 18-173, S. 68.)
History: P.A. 11-216 amended Subsec. (a) to add reference to Sec. 36a-671e, amended Subsec. (b) to add references to Sec. 36a-671e and add provision re each engagement and offer to engage in debt negotiation to constitute a separate violation, and amended Subsec. (c) to make technical changes, effective July 13, 2011; P.A. 14-7 amended Subsec. (a) to replace reference to Sec. 36a-671d with reference to Sec. 36a-671e, effective May 8, 2014; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-671e with reference to Sec. 36a-671f, replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, replacing reference to provisions of Secs. 36a-671 to 36a-671e with reference to provisions of title or any regulation or order adopted or issued pursuant to title in Subdiv. (3), amended Subsec. (b) by designating existing provisions re person violating provisions of sections as Subdiv. (1) and amending same by replacing reference to Sec. 36a-671e with reference to Sec. 36a-671f, and adding reference to regulation adopted under section, adding Subdiv. (2) re person is, was or would be cause of violation, designating existing provisions re fraud, misappropriated funds or failure to perform agreement as Subdiv. (3) and amending same by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, and replacing reference to Sec. 36a-671e with reference to Sec. 36a-671f, added Subsec. (d) re commissioner's authority to order licensee to remove individual from office, employment or retention as independent contractor, added Subsec. (e) re commissioner's authority to issue temporary order, and made technical changes.
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Sec. 36a-671b. Debt negotiation service contract required. Fees, commissions and other valuable consideration. Noncompliant contracts voidable by consumer. (a) A debt negotiator shall provide to each debtor a contract that shall include a complete, detailed list of services to be performed, the costs of such services and the results to be achieved. Each debt negotiation service contract shall contain (1) a statement certifying that the person offering debt negotiation services has reviewed the consumer's debt, and (2) an individualized evaluation of the likelihood that the proposed debt negotiation services would reduce the consumer's debt or debt service or, if appropriate, prevent the consumer's residential home from being foreclosed. Each contract shall allow the consumer to cancel or rescind such contract within three business days after the date on which the consumer signed the contract. Such contract shall contain a clear and conspicuous caption that shall read, “Debtor's three-day right to cancel”, along with the following statement: “If you wish to cancel this contract, you may cancel by mailing a written notice by certified or registered mail to the address specified below. The notice shall state that you do not wish to be bound by this contract and must be delivered or mailed before midnight of the third business day after you sign this contract.” As used in this section, “business day” has the same meaning as provided in section 42-134a.
(b) No person offering debt negotiation services may receive a fee, commission or other valuable consideration for the performance of any service the person offering debt negotiation services has agreed to perform for any consumer until the person offering debt negotiation services has fully performed such service. A person offering debt negotiation services may receive reasonable periodic payments as services are rendered, provided such payments are clearly stated in the contract. The commissioner may establish a schedule of maximum fees that a debt negotiator may charge for specific services.
(c) Any contract that does not comply with the provisions of this section shall be voidable by the consumer.
(P.A. 09-208, S. 32; P.A. 14-122, S. 160.)
History: P.A. 14-122 made technical changes in Subsec. (a).
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Sec. 36a-671c. Exceptions. The provisions of sections 36a-671 to 36a-671d, inclusive, shall not apply to the following: (1) Any attorney admitted to the practice of law in this state who engages or offers to engage in debt negotiation as an ancillary matter to such attorney's representation of a client; (2) any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union; (3) any wholly-owned subsidiary of any such bank or credit union; (4) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union; (5) any person licensed as a debt adjuster pursuant to sections 36a-655 to 36a-665, inclusive, while performing debt adjuster services; (6) any person acting under the order of a court; or (7) any bona fide nonprofit organization organized under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.
(P.A. 09-208, S. 31; P.A. 11-216, S. 43; P.A. 14-89, S. 22.)
History: P.A. 11-216 amended Subdiv. (1) to replace “when engaged in such practice” with “who engages or offers to engage in debt negotiation as an ancillary matter to such attorney's representation of a client”; P.A. 14-89 deleted proviso in Subdiv. (2), added new Subdiv. (3) re wholly-owned subsidiary and new Subdiv. (4) re operating subsidiary and redesignated existing Subdivs. (3) to (5) as Subdivs. (5) to (7).
Subdiv. (1) re inapplicability of provisions to attorneys offends the separation of powers provision of Art. 2 of the Connecticut Constitution and is unenforceable with respect to Connecticut attorneys engaged in the bona fide practice of law; assuming the facts alleged in the complaint by plaintiff to be true, the debt negotiation services provided by plaintiff are inextricably bound together with the practice of law by licensed Connecticut attorneys and their regulation falls under the exclusive authority of the Judicial Branch. 318 C. 652.
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Sec. 36a-671d. Surety bond required. Form of surety bond. Cancellation of bond. Automatic suspension of license. Notice. Opportunity for hearing. Determination of penal sum. Aggregate amount of residential loans. (a)(1) No debt negotiation license, and no renewal thereof, shall be granted unless the applicant has filed the surety bond required by this section, which bond shall be written by a surety authorized to write such bonds in this state.
(2) No application for a debt negotiation license for a main office, and no renewal of such a license, shall be granted unless the applicant has filed a single surety bond with the commissioner in an aggregate amount of fifty thousand dollars, or such other amount required by subdivision (4) of this subsection. No application for a debt negotiation license branch office, and no renewal of such a license, shall be granted unless the applicant has identified such branch office as a bonded location by addendum to the main office surety bond required by this section.
(3) Each debt negotiation licensee shall file a single surety bond that complies with the requirements of this section in connection with the main office license with the commissioner in an aggregate amount of fifty thousand dollars or such other amount required in subdivision (4) of this subsection, which bond shall identify any licensed branch office as a bonded location on such bond by addendum.
(4) In the case of a debt negotiation licensee engaging or offering to engage in the business of negotiating residential mortgage loans on behalf of mortgagors, such debt negotiation licensee shall file a bond in the penal sum amount set forth in subsection (e) of this section based on the aggregate dollar amount of the residential mortgage loans negotiated or offered to be negotiated by its sponsored mortgage loan originator licensees. The principal on a bond required by this subdivision shall file quarterly reports on the system reflecting residential mortgage loan volume in accordance with subsection (g) of this section and subsection (m) of section 36a-671 to confirm that it maintains the required penal sum in the amount required by this subdivision.
(5) Each debt negotiation licensee shall file with the commissioner such information as the commissioner may require to confirm that the penal sum of the bond remains consistent with the amount required by this section. The principal shall file, as the commissioner may require, any bond rider or endorsement to the surety bond on file with the commissioner to reflect any changes necessary to maintain the surety bond coverage required by this section.
(b) The form of any surety bond submitted pursuant to subsection (a) of this section shall be approved by the Attorney General. Any surety bond filed under subsection (a) of this section shall be conditioned upon the debt negotiation licensee and any sponsored mortgage loan originator licensee faithfully performing any and all written agreements or commitments with or for the benefit of debtors and mortgagors, as applicable, truly and faithfully accounting for all funds received from a debtor or mortgagor by the principal or a mortgage loan originator sponsored by the principal in the principal's capacity as debt negotiation licensee, and conducting such business consistent with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a, 36a-534b and 36a-671 to 36a-671f, inclusive. Any debtor or mortgagor who may be damaged by a failure to perform any written agreements, by the wrongful conversion of funds paid by a debtor or mortgagor to a debt negotiation licensee or mortgage loan originator licensee, or by conduct inconsistent with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a, 36a-534b and 36a-671 to 36a-671f, inclusive, may proceed on any such surety bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on any such surety bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65 and effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50. The proceeds of any bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. Any bond required by this section shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under any such bond shall not exceed the penal amount of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond. Any mortgagor or prospective mortgagor who may be damaged by a failure of the debt negotiation licensee or mortgage loan originator licensee to satisfy a judgment against the licensee arising from the negotiation of or offer to negotiate a nonprime home loan, as defined in section 36a-760, may proceed on such bond against the principal or surety on such bond, or both, to recover the amount of the judgment.
(c) The surety shall have the right to cancel any bond written or issued under subsection (a) of this section at any time by a written notice to the debt negotiation licensee and the commissioner stating the date cancellation shall take effect. If such bond is issued electronically on the system, written notice of cancellation may be provided by the surety to the licensee and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. No such bond shall be cancelled unless the surety notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the debt negotiation licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the licenses of the debt negotiation licensee on such date and inactivate the license of any sponsored mortgage loan originator, unless prior to such date the debt negotiation licensee submits a letter of reinstatement of the bond from the surety or a new bond, surrenders all licenses or, in the case of a mortgage loan originator sponsored by a debt negotiation licensee, the sponsorship has been terminated and a new sponsor has been requested and approved. After a license has been automatically suspended, the commissioner shall (1) give the debt negotiation licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the debt negotiation licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(d) No licensee shall use, attempt to use or make reference to, either directly or indirectly, any word or phrase that states or implies that the licensee is endorsed, sponsored, recommended, bonded or insured by the state.
(e) The penal sum of the bond required by subdivision (4) of subsection (a) of this section shall be determined as follows:
(1) An initial applicant for a debt negotiation license shall file a bond in a penal sum of fifty thousand dollars.
(2) A debt negotiation licensee exempt from licensure as a mortgage lender, mortgage correspondent lender or mortgage broker pursuant to subdivision (4) of subsection (a) of section 36a-487 and sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subdivision (2) of subsection (a) and subsection (d) of section 36a-487 shall file a bond with a penal sum in the following amount:
(A) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July thirty-first of the current year is less than thirty million dollars, the penal sum of the bond shall be fifty thousand dollars;
(B) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July thirty-first of the current year is thirty million dollars or more but less than fifty million dollars, the penal sum of the bond shall be one hundred thousand dollars; and
(C) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July thirty-first of the current year is fifty million dollars or more, the penal sum of the bond shall be one hundred fifty thousand dollars.
(f) For purposes of subsection (e) of this section, “the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated” means the aggregate underlying dollar amount of all residential mortgage loans for which a sponsored mortgage loan originator provides debt negotiation services.
(g) Financial information necessary to verify the aggregate amount of residential mortgage loans negotiated or offered to be negotiated shall be filed with the commissioner as the commissioner may require, and shall be reported on the system at such time and in such form as the system may require. The commissioner may require a change in the penal sum of the bond if the commissioner determines at any time that the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated warrants a change in the penal sum of the bond.
(h) The commissioner may adopt regulations in accordance with chapter 54 with respect to the requirements for such surety bonds.
(P.A. 09-208, S. 30; P.A. 11-216, S. 44; P.A. 14-7, S. 3, 4; 14-122, S. 161; P.A. 18-173, S. 69.)
History: P.A. 11-216 amended Subsec. (a) to make a conforming change in Subdiv. (1) and add new Subdivs. (2) to (4) re surety bond requirements, redesignated existing Subsec. (a)(2) as Subsec. (b) and amended same to add references to debt negotiation and sponsored mortgage loan originator licensees, require a true and faithful accounting for all funds received from a debtor or mortgagor, add references to Secs. 36a-485 to 36a-498f, 36a-534a and 36a-534b, to permit debtor or mortgagor damaged by wrongful conversion of funds paid by a debtor or mortgagor to a debt negotiation or mortgage loan originator licensee to proceed on surety bond to recover damages, to permit commissioner to collect unpaid costs of examination of a licensee, to require principal to notify commissioner of commencement of action on the bond, to permit commissioner to require filing of a new bond when action is commenced, to permit any negotiator or prospective mortgagor damaged by failure to satisfy a judgment to proceed on surety to recover amount of judgment and to make conforming changes, redesignated existing Subsec. (b) as Subsec. (c) and amended same to add references to debt negotiation and mortgage loan originator licensees and make conforming changes, redesignated existing Subsec. (c) as Subsec. (d), and added Subsec. (e) re penal sum of bond, Subsec. (f) re aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated, Subsec. (g) re financial information required to verify aggregate amount and Subsec. (h) re regulations; P.A. 14-7 amended Subsec. (a)(4) to replace reference to Subsec. (f) with reference to Subsec. (e) and replace reference to Subsec. (h) with reference to Subsec. (g), amended Subsec. (b) to replace references to Sec. 36a-671d with references to Sec. 36a-671e and amended Subsec. (e)(2) to replace reference to Sec. 36a-487(c) with reference to Sec. 36a-487(d), effective May 8, 2014; P.A. 14-122 made a technical change in Subsec. (f); P.A. 18-173 amended Subsec. (a) by replacing provision re principal on bond to confirm annually that it maintains required penal sum with provision re principal on bond to file quarterly reports on the system to confirm it maintains required penal sum, designating existing provisions re licensee to file information with commissioner as Subdiv. (5) and amending same by deleting reference to September 1, 2012 and each September first thereafter, and deleting reference to Subsec. (g), amended Subsec. (b) by replacing references to Sec. 36a-498f with references to Sec. 36a-498e, replacing references to Sec. 36a-671e with references to Sec. 36a-671f, and adding “and effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50”, amended Subsec. (c) by adding references to commissioner, adding provision re notice of cancellation if bond issued electronically, designating existing provisions re notice of automatic suspension as Subdiv. (1), designating existing provisions re commissioner's authority to require licensee to take or refrain from taking action as Subdiv. (2), and amending same to replace “action as, in the opinion of the commissioner, will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”, amended Subsec. (e)(2) by adding provision re exemption from licensure as mortgage lender, mortgage correspondent lender or mortgage broker, and amended Subsec. (g) by deleting reference to Sec. 36a-485, and made technical and conforming changes.
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Sec. 36a-671e. Requirements re mortgage loan originator license. (a) No person licensed to engage or offer to engage in debt negotiation or exempt from such licensure shall permit any individual to engage or offer to engage in debt negotiation of a residential mortgage loan on behalf of a mortgagor for compensation or gain or with the expectation of compensation or gain unless such individual is licensed as a mortgage loan originator under section 36a-489 or exempt from such licensure under subdivision (2) of subsection (b) of section 36a-486.
(b) No individual shall engage or offer to engage in debt negotiation of a residential mortgage loan on behalf of a mortgagor for compensation or gain or with the expectation of compensation or gain without first obtaining and maintaining annually a license as a mortgage loan originator under section 36a-489 unless such individual is exempt from such licensure under subdivision (2) of subsection (b) of section 36a-486.
(c) Any individual required to obtain and annually maintain a license as a mortgage loan originator under subsection (b) of this section shall comply with all requirements imposed on a mortgage loan originator licensee under chapter 668.
(P.A. 11-216, S. 41.)
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Sec. 36a-671f. Prohibited practices. No person who is required to be licensed and who is subject to the provisions of this section and sections 36a-671 to 36a-671e, inclusive, and no control person, shall, directly or indirectly: (1) Employ any scheme, device or artifice to defraud or mislead any person in connection with a debt negotiation; (2) engage in any unfair or deceptive practice toward any person in connection with a debt negotiation; (3) obtain property by fraud or misrepresentation; (4) fail to comply with the provisions of sections 36a-671 to 36a-671e, inclusive, or regulations adopted under said sections, or any other state or federal law, including the rules and regulations thereunder; (5) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (6) fail to truthfully account for moneys belonging to a debtor or mortgagor; (7) fail to comply with any demand or requirement made by the commissioner under and within the authority of sections 36a-671 to 36a-671e, inclusive; (8) make, in any manner, any false or deceptive statement or representation in connection with a debt negotiation or engage in bait and switch advertising; or (9) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt negotiation laws and regulations.
(P.A. 17-233, S. 25.)
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Secs. 36a-672 to 36a-674. Reserved for future use.
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PART III*
CONNECTICUT TRUTH-IN-LENDING ACT
*Annotations to former chapter 657:
Cited. 205 C. 319; 223 C. 80.
Cited. 12 CA 670; 18 CA 16; 27 CA 628.
Cited. 34 CS 154; 35 CS 508. Since extension of credit was to other than a natural person, transaction was not a consumer credit transaction and disclosure provisions of chapter did not apply. 36 CS 158. Cited. Id., 183; Id., 506. Federally chartered banking institution subject to Federal Truth-in-Lending Act. Id., 512. Cited. Id., 629; 37 CS 606.
Sec. 36a-675. (Formerly Sec. 36-416). Short title: Connecticut Truth-in-Lending Act. Sections 36a-675 to 36a-686, inclusive, shall be known and may be cited as the “Connecticut Truth-in-Lending Act”.
(1969, P.A. 454, S. 24; P.A. 15-235, S. 1.)
History: Sec. 36-416 transferred to Sec. 36a-675 in 1995; (Revisor's note: In 1997 the Revisors editorially reinstated the word “shall” before the words “be known and may be cited” to correct a clerical error in the preparation of the 1995 revision); P.A. 15-235 added reference to Sec. 36a-686 and replaced “Truth-in-Lending Act” with “Connecticut Truth-in-Lending Act”, effective August 1, 2015.
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Sec. 36a-676. (Formerly Sec. 36-393). Definitions. (a) As used in part II of chapter 668, the Connecticut Truth-in-Lending Act, sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:
(1) “Consumer Credit Protection Act” means 15 USC Chapter 41, Subchapter I, as from time to time amended, and includes regulations adopted by the Federal Reserve Board or the Bureau of Consumer Financial Protection pursuant to said act;
(2) “Creditor” means “creditor” as defined in 15 USC 1602, as amended from time to time, but does not include any department or agency of the United States; and
(3) “Lessor” means “lessor” as defined in 15 USC 1667, as amended from time to time, but does not include any department or agency of the United States.
(b) Any word or phrase in the Connecticut Truth-in-Lending Act that is not defined in said act but is defined in the Consumer Credit Protection Act has the meaning set forth in the Consumer Credit Protection Act.
(1969, P.A. 454, S. 1; P.A. 76-169, S. 1; P.A. 77-614, S. 161, 610; P.A. 80-482, S. 260, 345, 348; P.A. 81-158, S. 1, 17; P.A. 82-18, S. 2, 4; P.A. 83-136, S. 1, 2; P.A. 85-613, S. 104, 154; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 40; P.A. 90-230, S. 55, 101; P.A. 92-12, S. 81; P.A. 94-122, S. 303, 340; P.A. 11-110, S. 5; P.A. 14-122, S. 162; P.A. 15-235, S. 2.)
History: P.A. 76-169 redefined “creditor” to include credit card issuers and to specify credit “payable by agreement in more than four installments”; P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation, reflecting incorporation of banking department as division within that department, effective January 1, 1979; P.A. 80-482 abolished department of business regulation and restored banking division to prior status as independent department, thus allowing omission of reference to business regulation department in commissioner's title; P.A. 81-158 redefined the terms to make them conform to the definitions in the Consumer Credit Protection Act, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Sec. 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 83-136 corrected reference to public law in Subsec. (i), substituting “97-320” for “96-221”; P.A. 85-613 made technical changes; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-65 made a technical change by adding U.S. code citations; P.A. 90-230 made technical changes; P.A. 92-12 redesignated Subsecs. and Subdivs.; P.A. 94-122 deleted the definitions of “commissioner”, “organization”, and “person” and alphabetized the remainder, effective January 1, 1995; Sec. 36-393 transferred to Sec. 36a-676 in 1995; P.A. 11-110 amended Subsec. (a)(2) to delete reference to Public Law 90-321, add references to Consumer Credit Protection Act and Bureau of Consumer Financial Protection and make a technical change, effective July 21, 2011; P.A. 14-122 made a technical change in Subsec. (b); P.A. 15-235 amended Subsec. (a) to delete former Subdiv. (1) defining “consumer”, to redesignate existing Subdiv. (2) as Subdiv. (1), to delete former Subdivs. (3) and (4) defining “credit” and “credit card, cardholder and card issuer”, to redesignate existing Subdiv. (5) as Subdiv. (2), to delete former Subdiv. (6) defining “credit sale”, to redesignate existing Subdiv. (7) as Subdiv. (3), to delete former Subdiv. (8) defining “open-end credit plan” and to make technical changes, and amended Subsec. (b) to make technical changes, effective August 1, 2015.
Annotations to former section 36-393:
Cited. 158 C. 543.
Cited. 33 CS 203. Nonstock corporation falls within definition of organization; since party to whom credit was offered was a nonstock corporation and not a “natural person”, transaction was not a consumer credit transaction subject to provisions of chapter. 36 CS 158. Cited. Id., 506.
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Sec. 36a-677. (Formerly Sec. 36-393a). State policy. (a) It is the policy of this state to (1) enhance economic stabilization and strengthen competition among the various businesses engaged in the extension of consumer credit or in the leasing of consumer goods and to serve the interests of consumers of credit and leased goods by requiring meaningful disclosure of credit and lease terms so that prospective debtors and lessees have the opportunity to compare more readily the various credit and lease terms available to them and the opportunity to avoid the uninformed use of credit and leases, and (2) protect consumers against inaccurate and unfair credit billing practices.
(b) It is also the policy of this state to provide that the commissioner administer and enforce the requirements for such disclosures of credit and lease terms for transactions in this state.
(c) It is also the policy of this state to avoid duplication between the federal government and the government of this state in the administration and enforcement of statutes which are designed to accomplish an identical purpose, and therefore to obtain an exemption from the Consumer Credit Protection Act by subjecting various classes of credit and lease transactions in this state to requirements which are substantially similar to those imposed under said federal act.
(P.A. 81-158, S. 2, 17; P.A. 82-18, S. 2, 4; 82-472, S. 114, 183; P.A. 15-235, S. 3.)
History: P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-472 made technical changes and corrections; Sec. 36-393a transferred to Sec. 36a-677 in 1995; P.A. 15-235 amended Subsec. (a) by adding provisions re economic stabilization and protection of consumers against inaccurate and unfair credit billing practices and amended Subsec. (b) to make a technical change, effective August 1, 2015.
Annotation to former section 36-393a:
Cited. 27 CA 628.
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Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions. (a) Except as otherwise provided in the Connecticut Truth-in-Lending Act or regulations adopted by the commissioner, each person shall comply with all provisions of the Consumer Credit Protection Act that apply to such person, including the delivery of integrated disclosures required by 12 USC 5301 et seq. and implemented through regulations adopted by the Bureau of Consumer Financial Protection.
(b) Any transaction that is exempt from the provisions of the Consumer Credit Protection Act, pursuant to 15 USC 1603, as amended from time to time, or by regulation promulgated pursuant to 15 USC 1604, as amended from time to time, is exempt from the provisions of the Connecticut Truth-in-Lending Act.
(c) Notwithstanding subsection (b) of this section, each person shall comply with all provisions of the Real Estate Settlement Procedures Act of 1974 (12 USC Chapter 27), as amended from time to time, and the regulations promulgated thereunder that apply to such person.
(P.A. 81-158, S. 3, 17; P.A. 82-18, S. 2, 4; 82-174, S. 12, 14; P.A. 88-65, S. 41; P.A. 94-122, S. 304, 340; P.A. 15-235, S. 4.)
History: P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-174 amended Subsec. (a) by deleting the provision that a person “who is a creditor or lessor” shall comply with all applicable provisions; P.A. 88-65 made a technical change by adding U.S. code citations; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-393b transferred to Sec. 36a-678 in 1995; P.A. 15-235 amended Subsecs. (a) and (b) to add provisions re federal integrated disclosure requirements and to make technical changes and added Subsec. (c) re compliance with the Real Estate Settlement Procedures Act of 1974, effective August 1, 2015.
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Sec. 36a-679. (Formerly Sec. 36-395). Regulations. (a) The commissioner may adopt regulations, in accordance with chapter 54, to carry out the provisions of the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. Such regulations shall be consistent with the policy of this state as provided in section 36a-677 and the Consumer Credit Protection Act.
(b) No liability shall be imposed under the Connecticut Truth-in-Lending Act for an act done or omitted in conformity with any provision of said act, the Consumer Credit Protection Act or a regulation of the commissioner notwithstanding that after the act or omission the provision may be amended, repealed or determined to be invalid for any reason.
(1969, P.A. 454, S. 3; P.A. 81-158, S. 4, 17; P.A. 82-18, S. 2, 4; P.A. 88-65, S. 43; P.A. 94-122, S. 305, 340; P.A. 96-109, S. 11; P.A. 15-235, S. 5; P.A. 18-173, S. 93.)
History: P.A. 81-158 amended Subsec. (a) by replacing “prescribe” with “adopt” and by providing that the regulations be consistent with the policy of the state, deleted the language concerning the mandatory and optional provisions of the regulations, and redesignated Subsec. (c) as Subsec. (b) and added “any provision of this chapter, the Consumer Credit Protection Act or”, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 88-65 made technical changes by adding U.S. code citations; (Revisor's note: In 1991 the incorrect internal reference to section “42-83(2)(d)” was changed editorially by the Revisors to “42-83(3)(d)”); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-395 transferred to Sec. 36a-679 in 1995; P.A. 96-109 made technical changes in Subsec. (a), deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c); P.A. 15-235 amended Subsec. (a) by deleting provisions re substantive and procedural regulations, adding reference to adoption in accordance with Ch. 54 and making technical changes, and amended Subsec. (b) by making technical changes, effective August 1, 2015; P.A. 18-173 deleted reference to Secs. 36a-567 and 36a-568.
Annotation to former section 36-395:
Cited. 34 CS 154.
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Sec. 36a-680. (Formerly Sec. 36-398). Effect of inconsistent law. (a) If the commissioner finds that the requirements of any other law of this state relating to the disclosure of information in connection with consumer credit transactions are inconsistent with the provisions of the Connecticut Truth-in-Lending Act or regulations adopted thereunder, creditors may not make disclosures using the inconsistent term or form, and shall incur no liability under the other law of this state for failure to use such term or form, notwithstanding that such finding is subsequently amended, rescinded or determined by judicial or other authority to be invalid for any reason. For purposes of this subsection, disclosure statutes are inconsistent if both require disclosure of the same information even though the prescribed definition, method of calculation or manner of expression is different and, in case of such conflict or inconsistency, the provisions of the Connecticut Truth-in-Lending Act shall control, provided sections 36a-746b to 36a-746g, inclusive, shall not be deemed inconsistent with the provisions of the Connecticut Truth-in-Lending Act.
(b) Except as provided in this section, the provisions of 15 USC 1639, as amended from time to time, do not annul, alter or affect the applicability of the laws of this state imposing requirements on high-cost mortgages as defined in 15 USC 1602(bb), as amended from time to time, or exempt any person subject to the provisions of 15 USC 1639, as amended from time to time, from complying with such laws. If any such law is inconsistent with any provision of 15 USC 1639, as amended from time to time, such provision shall prevail to the extent of such inconsistency.
(c) In any action or proceeding in any court involving a consumer credit sale, the disclosure of an annual percentage rate required by the Connecticut Truth-in-Lending Act may not be received as evidence that the sale was a loan or any type of transaction other than a credit sale, and in any consumer credit transaction, the disclosure of an annual percentage rate required by said sections shall not in itself indicate that a transaction is usurious or that the rate of charge exceeds a statutory ceiling.
(d) Except as provided in 15 USC 1635, 15 USC 1640 and 15 USC 1666e, as amended from time to time, the Connecticut Truth-in-Lending Act and any regulations adopted thereunder do not affect the validity or enforceability of any contract or obligation under state or federal law.
(e) The provisions of 15 USC 1632(c) and 15 USC 1637(c), (d), (e) and (f), as amended from time to time, shall supersede any law of this state relating to the disclosure of information in any credit or charge card application or solicitation that is subject to the requirements of 15 USC 1637(c), as amended from time to time, or any renewal notice that is subject to the requirements of 15 USC 1637(d), as amended from time to time, except the laws of this state employed or established for the purpose of enforcing the requirements of said sections.
(1969, P.A. 454, S. 6; P.A. 81-158, S. 5, 17; P.A. 82-18, S. 2, 4; 82-472, S. 115, 183; P.A. 94-122, S. 306, 340; P.A. 01-34, S. 12; P.A. 15-235, S. 6.)
History: P.A. 81-158 deleted references to Secs. 36-97a, 36-235, 36-236, 36-254(c), 42-83(2)(d), 42-84, 42-87, 42-90 and 42-99, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-472 made technical grammatical change in Subsec. (a); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-398 transferred to Sec. 36a-680 in 1995; P.A. 01-34 amended Subsec. (a) by changing “shall by regulation exempt” to “may exempt” and added provision re applicability of Secs. 36a-746b to 36a-746g; P.A. 15-235 amended Subsec. (a) to add provision re disclosures using inconsistent term or form, added new Subsec. (b) re compliance with state laws imposing requirements on high-cost mortgages, redesignated existing Subsec. (b) as Subsec. (c), added Subsec. (d) re validity or enforceability of any contract or obligation under state or federal law, added Subsec. (e) re federal act superseding state laws relating to disclosure of information in credit or charge card application or solicitation, and made technical changes, effective August 1, 2015.
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Sec. 36a-681. (Formerly Sec. 36-399). Penalty. Any person who wilfully and knowingly (1) gives false or inaccurate information or fails to provide information which such person is required to disclose under the provisions of sections 36a-567, 36a-568 and the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774, 36a-777 and 36a-786, or any regulation adopted thereunder, (2) uses any chart or table authorized by the Federal Reserve Board or the Bureau of Consumer Financial Protection under 15 USC 1606, as amended from time to time, in such manner as to consistently understate the annual percentage rate determined under said sections, or (3) otherwise fails to comply with any requirement imposed under said sections shall be fined not more than five thousand dollars or imprisoned not more than one year or both.
(1949 Rev., S. 6699, (a) 6; 1957, P.A. 361, S. 1 (a) 6; P.A. 94-122, S. 307, 340; P.A. 96-109, S. 12; P.A. 11-110, S. 6; P.A. 15-235, S. 7.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-94 transferred to Sec. 36a-681 in 1995; P.A. 96-109 made technical changes, deleting reference to Sec. 36a-535(c) and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c); P.A. 11-110 added reference to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 15-235 made technical changes, effective August 1, 2015.
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Sec. 36a-682. (Formerly Sec. 36-400). Compliance of governmental instruments. Exemptions from penalties. (a) Any department or agency of the state or any political subdivision thereof which administers a credit program in which it extends, insures or guarantees consumer credit and in which it provides instruments to a creditor which contain any disclosures required by the Connecticut Truth-in-Lending Act shall, prior to the issuance or continued use of such instruments, consult with the commissioner to assure that such instruments comply with said sections.
(b) No civil or criminal penalty provided under the Connecticut Truth-in-Lending Act for any violation thereof may be imposed upon the United States or any department or agency thereof, or upon this state or any other state, or any political subdivision thereof, or any department or agency of any such state or political subdivision.
(c) A creditor shall not be held liable for a civil or criminal penalty under the Connecticut Truth-in-Lending Act in any case in which the violation results from the use of an instrument required by any department or agency of: (1) The United States, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency; or (2) this state or of any political subdivision of this state, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency, provided such department or agency has consulted with the commissioner to assure that such instrument complies with said act as provided in subsection (a) of this section.
(d) A creditor shall not be held liable for a civil or criminal penalty under the laws of this state for any technical or procedural failure, such as a failure to use a specific form, to make information available at a specific place on an instrument, or to use a specific typeface, as required by the laws of this state, which is caused by the use of an instrument required to be used by any department or agency of: (1) The United States with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency; or (2) this state or any political subdivision of this state, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency, provided that such department or agency has consulted with the commissioner to assure that such instrument complies with the Connecticut Truth-in-Lending Act as provided in subsection (a) of this section.
(1969, P.A. 454, S. 8; P.A. 81-158, S. 7, 17; P.A. 82-18, S. 2, 4; P.A. 96-109, S. 13; 96-180, S. 118, 166; P.A. 15-235, S. 8.)
History: P.A. 81-158 added Subsec. (a) to provide that any department, agency or political subdivision of the state consult with the commissioner to assure that the instruments it provides to a creditor comply with this chapter, clarified the governmental exemptions from penalties in Subsec. (b), and added Subsecs. (c) and (d) to provide that a creditor is not liable in certain cases where the violation results from the use of an instrument required by a federal department or agency or the state or a political subdivision of the state, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; Sec. 36-400 transferred to Sec. 36a-682 in 1995; P.A. 96-109 and 96-180 both substituted “36a-675 to 36a-685” for “36a-665 to 36a-675”, where appearing, effective June 3, 1996; (Revisor's note: In 1997 the word “as” was reinstated editorially by the Revisors at the end of Subsec. (d) before the phrase “... provided in subsection (a) of this section.” thereby correcting an omission which occurred in the preparation of the 1995 revision); P.A. 15-235 amended Subsec. (b) to add reference to the United States or any department or agency thereof, and made technical changes, effective August 1, 2015.
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Sec. 36a-683. (Formerly Sec. 36-407). Failure to comply; liability. Civil action. Right to rescind. (a) Except as otherwise provided in this section, any creditor who fails to comply with any requirement of the Connecticut Truth-in-Lending Act, or of section 36a-771 or 36a-774, with respect to any person is liable to that person as provided for in 15 USC 1640, as amended from time to time.
(b) Any action under this section shall be brought in any court of competent jurisdiction pursuant to the time frames established in 15 USC 1640(e), as amended from time to time, provided a person may assert a violation of the Connecticut Truth-in-Lending Act in an action to collect the debt in accordance with the provisions of 15 USC 1640(e), as amended from time to time.
(c) No provision of this section, subsection (d) of section 36a-684 or section 36a-681 imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion, final decision or order adopted by the commissioner, any rule, regulation or interpretation adopted by the Bureau of Consumer Financial Protection pursuant to the Consumer Credit Protection Act, or any interpretation or approval by an official or employee of the Federal Reserve System as provided in 15 USC 1640(f), as amended from time to time, notwithstanding that after such act or omission has occurred, such rule, regulation, approval, opinion, decision, order or interpretation is amended, rescinded or determined by judicial or other authority to be invalid for any reason.
(d) Notwithstanding any other provision of the Connecticut Truth-in-Lending Act, (1) no person shall be entitled in any action to a recovery under this section for the failure to disclose any information required under said act if a recovery is awarded in the same action under 15 USC 1640, as amended from time to time, for the failure to disclose any information required under said act; and (2) no person shall be entitled in any action brought under this section to a recovery if, prior to an award in any such action, a recovery has been awarded to such person in any action brought under 15 USC 1640, as amended from time to time, in which the same act or omission was the basis of that action.
(e) (1) Except as otherwise provided in this subsection, an obligor shall have the right to rescind as provided in 15 USC 1635, as amended from time to time.
(2) An obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs earlier, notwithstanding the fact that the information and forms required under this section and 15 USC 1635, as amended from time to time, or any other disclosures required under the Connecticut Truth-in-Lending Act, have not been delivered to the obligor, except that if (A) the commissioner institutes a proceeding to enforce the provisions of this section, or 15 USC 1635, as amended from time to time, made a part of said sections as provided in section 36a-678 within three years after the date of consummation of the transaction, (B) the commissioner finds a violation of this subsection or 15 USC 1635, as amended from time to time, and (C) the obligor's right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding or any judicial review or period for judicial review thereof, whichever is later.
(3) (A) In any credit transaction in which an obligor has the right to rescind under 15 USC 1635, as amended from time to time, and the obligor does not exercise that right, a finance charge may not begin to accrue in connection with such transaction until after midnight of the third business day following the consummation of the transaction. (B) Any obligor required to pay a finance charge, in violation of the provisions of this subdivision, may recover from the creditor twice the amount of such finance charge, costs and reasonable attorney's fees.
(f) (1) Except as otherwise specifically provided in the Connecticut Truth-in-Lending Act, any civil action for a violation of said act or proceeding by the commissioner which may be brought against a creditor may be maintained against any assignee of that creditor as provided in 15 USC 1641, as amended from time to time, and creditors and assignees shall comply with the notice requirements of said section.
(2) Any consumer who has the right to rescind a transaction under subsection (e) of this section or 15 USC 1635, as amended from time to time, may rescind the transaction as against any assignee of the obligation.
(g) A card issuer who has issued a credit card to a cardholder pursuant to an open-end consumer credit plan shall be subject to all claims, other than tort claims, and defenses arising out of any transaction in which the credit card is used as a method of payment or extension of credit as provided in 15 USC 1666i, as amended from time to time.
(h) (1) Any lessor who fails to comply with any requirement imposed under 15 USC 1667a or 1667b, as amended from time to time, with respect to any person is liable to such person as provided in this section as if such lessor is a creditor.
(2) Any lessor who fails to comply with any requirement imposed under 15 USC 1667c, as amended from time to time, with respect to any person who suffers actual damage from the violation is liable to such person as provided in this section as if such lessor is a creditor.
(i) Any mortgage originator who fails to comply with any requirement imposed by 15 USC 1639b, as amended from time to time, or any regulation promulgated thereunder shall be liable as provided in 15 USC 1639b(d), as amended from time to time.
(j) In the case of any consumer credit transaction subject to the provisions of the Connecticut Truth-in-Lending Act that is consummated before September 30, 1995, the civil, administrative and criminal liability of a creditor or any assignee of a creditor under said act and a consumer's extended rescission rights under subdivision (2) of subsection (e) of this section, shall be limited to the extent provided in and subject to the exceptions contained in 15 USC 1649, as amended from time to time.
(1969, P.A. 454, S. 15; P.A. 75-55; 75-436, S. 6, 7; P.A. 77-315, S. 1; P.A. 81-158, S. 8, 17; P.A. 82-18, S. 2, 4; P.A. 87-65; P.A. 88-65, S. 45; P.A. 96-40, S. 1, 2; 96-109, S. 14; 96-180, S. 119, 166; P.A. 11-110, S. 7, 8; P.A. 15-235, S. 9; P.A. 16-193, S. 14.)
History: P.A. 75-55 required that action be brought within three years, rather than one year, in Subsec. (e); P.A. 75-436 rewrote Subsec. (a) to distinguish between class actions and individual actions, returned time for bringing action to one year in Subsec. (e) and added Subsecs. (f) to (j); P.A. 77-315 specified applicability in Subsec. (a) to failure to comply with requirements of chapter 657a, this chapter and previously listed sections rather than to failure to disclose information required under this chapter and listed sections; P.A. 81-158 inserted new Subsecs. (i) to (m) and made extensive changes to the existing Subsecs. to make the provisions of the section conform to federal law, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 87-65 added Subsec. (j)(4) re the accrual of finance charges during the rescission period; P.A. 88-65 made technical changes by adding U.S. code citations; Sec. 36-407 transferred to Sec. 36a-683 in 1995; P.A. 96-40 made technical changes, and made specific changes to conform with the federal Truth in Lending Act by amending Subsecs. (a) and (k) re consumer credit secured by real property, adding Subdivs. (j)(6) and (7) re obligor rescission rights, adding Subdivs. (k)(4) and (5) re assignments, and adding Subsec. (n) re consumer rescission rights and re liability of creditors and assignees for transactions before September 30, 1995, effective May 2, 1996; P.A. 96-109 and 96-180 both substituted “36a-675 to 36a-685” for “36a-665 to 36a-675” where appearing and substituted references to Subsec. (d) for Subsec. (g) of Sec. 36a-684, effective June 3, 1996; P.A. 11-110 amended Subsecs. (f) and (j)(6) to add references to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 15-235 substantially revised section to incorporate provisions of the federal Truth-in-Lending Act, deleted former Subsecs. (b) to (d), redesignated existing Subsec. (e) as Subsec. (b) and amended same to add reference to time frames established in 15 USC 1640(e), redesignated existing Subsec. (f) as Subsec. (c) and amended same to provide creditor with immunity from liability for any act done in reliance on commissioner's advisory opinion, final decision or order, Bureau of Consumer Financial Protection interpretation or federal Consumer Credit Protection Act, deleted former Subsecs. (g) and (h), redesignated existing Subsec. (i) as Subsec. (d), redesignated existing Subsec. (j) as Subsec. (e) and amended same to add provision re right to rescind in Subdiv. (1), to delete former Subdiv. (2), to redesignate existing Subdivs. (3) and (4) as Subdivs. (2) and (3) and to delete former Subdivs. (5) to (7), redesignated existing Subsec. (k) as Subsec. (f) and amended same to add provisions re notice requirements of 15 USC 1641, to delete former Subdiv. (2), to redesignate existing Subdiv. (3) as Subdiv. (2) and to delete former Subdivs. (4) and (5), redesignated existing Subsec. (l) as Subdiv. (g) and amended same to add reference to 15 USC 1666i and to delete former Subdiv. (2), deleted former Subsec. (m)(1) re definition of “creditor”, redesignated existing Subsec. (m)(2) as Subsec. (h)(1) and amended same to add reference to 15 USC 1667a and 1667b, redesignated existing Subsec. (m)(3) as Subsec. (h)(2) and amended same to add reference to 15 USC 1667c, added new Subsec. (i) re mortgage originator compliance with 15 USC 1639b, redesignated existing Subsec. (n) as Subsec. (j), and made conforming and technical changes, effective August 1, 2015; P.A. 16-193 made technical changes in Subsec. (d)(1).
Annotations to former section 36-407:
Cited. 183 C. 85.
Cited. 3 CA 201.
1-year limitation for bringing action under state Truth-in-Lending Act is not bar to common law defense of recoupment. 33 CS 201. Statute of limitations does not bar defendant's counterclaim by way of recoupment. 35 CS 508. Cited. 36 CS 629; 37 CS 606.
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Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments. (a) The commissioner shall enforce the requirements of sections 36a-567, 36a-568, the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. The commissioner shall, in addition to other powers granted by said sections or by other provisions of law, receive and act on complaints, take action designed to obtain voluntary compliance with said sections or commence proceedings on the commissioner's own initiative pursuant to sections 36a-50 to 36a-53, inclusive.
(b) In order to accomplish the purposes of the Connecticut Truth-in-Lending Act and the provisions of the general statutes referred to in subsection (a) of this section, the commissioner may (1) counsel persons and groups on their rights and duties under said act and provisions, (2) establish programs for the education of consumers with respect to credit and leasing practices and problems, and (3) make studies appropriate to effectuate the purposes and policies of said act and provisions and make the results available to the public.
(c) The commissioner may by regulation require the maintenance of records related to consumer credit sales, loans and leases sufficient to evidence the adoption of policies calculated to produce compliance with the Connecticut Truth-in-Lending Act and the provisions of the general statutes referred to in subsection (a) of this section which shall be in addition to the record retention requirements imposed under the Consumer Credit Protection Act.
(d) (1) In carrying out enforcement activities under this section, the commissioner, in cases where an annual percentage rate or finance charge was inaccurately disclosed, shall notify the creditor of such disclosure error and may require the creditor to make an adjustment to the account of the person to whom credit was extended, to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. For the purposes of this subsection, except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, in determining whether a disclosure error has occurred and in calculating any adjustment, the commissioner shall apply the tolerances set forth in 15 USC 1607(e)(1), as amended from time to time.
(2) The commissioner shall require such an adjustment when the commissioner determines that such disclosure error resulted from a clear and consistent pattern or practice of violations, from gross negligence, or from a wilful violation which was intended to mislead the person to whom the credit was extended. Notwithstanding the preceding sentence, except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, the commissioner need not require such an adjustment if the commissioner determines that such disclosure error: (A) Resulted from an error involving the disclosure of a fee or charge that would otherwise be excludable in computing the finance charge, including but not limited to, violations involving the disclosures described in 15 USC 1605(b), (c) and (d), as amended from time to time, in which event the commissioner may require such remedial action as the commissioner determines to be equitable, except that for transactions consummated after March 31, 1982, such an adjustment shall be ordered for violations of 15 USC 1605(b), as amended from time to time; (B) involved a disclosed amount which was ten per cent or less of the amount that should have been disclosed and (i) in cases where the error involved a disclosed finance charge, the annual percentage rate was disclosed correctly, and (ii) in cases where the error involved a disclosed annual percentage rate, the finance charge was disclosed correctly; in which event the commissioner may require such adjustment as the commissioner determines to be equitable; (C) involved a total failure to disclose either the annual percentage rate or the finance charge, in which event the commissioner may require such adjustment as the commissioner determines to be equitable; or (D) resulted from any other unique circumstance involving clearly technical and nonsubstantive disclosure violations that do not adversely affect information provided to the consumer and that have not misled or otherwise deceived the consumer. In the case of other such disclosure errors, the commissioner may require such an adjustment.
(3) Notwithstanding subdivision (2) of this subsection, no adjustment shall be ordered: (A) If it would have a significantly adverse impact upon the safety or soundness of the creditor, but in any such case, the commissioner may require a partial adjustment in an amount which does not have such an impact except that with respect to any transaction consummated after May 18, 1981, the commissioner shall require the full adjustment, but permit the creditor to make the required adjustment in partial payments over an extended period of time which the commissioner considers to be reasonable, if the commissioner determines that a partial adjustment or making partial adjustments over an extended period is necessary to avoid causing the creditor to become undercapitalized pursuant to 12 USC 1831o, as amended from time to time, (B) if the amount of the adjustment would be less than one dollar, except that if more than one year has elapsed since the date of the violation, the commissioner may require that such amount be paid to the commissioner, or (C) except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, in the case of an open-end credit plan, more than two years after the violation, or in the case of any other extension of credit, as follows: (i) With respect to creditors that have been examined by the commissioner, except in connection with violations arising from practices identified in the current examination and only in connection with transactions that are consummated after the date of the immediately preceding examination, except that where practices giving rise to violations identified in earlier examinations have not been corrected, adjustments for those violations shall be required in connection with transactions consummated after the date of the examination in which such practices were first identified; (ii) with respect to creditors that have not been examined by the commissioner, except in connection with transactions that are consummated after May 10, 1978; and (iii) in no event after the later of (I) the expiration of the life of the credit extension, or (II) two years after the agreement to extend credit was consummated.
(4) In addition to the enforcement powers authorized by the provisions of this section, the commissioner may order any creditor to make an adjustment as provided in this subsection. After such an order is issued, the persons named therein may, within fourteen days after receipt of the order, file a written request for a hearing. The hearing shall be held in accordance with the provisions of chapter 54.
(5) Except as otherwise specifically provided in this subsection and notwithstanding any other provision of law, the commissioner may not require a creditor to make dollar adjustments for errors in any requirements under the Consumer Credit Protection Act, except with regard to the requirements of 15 USC 1666d, as amended from time to time.
(6) A creditor shall not be subject to an order to make an adjustment, if within sixty days after discovering a disclosure error, whether pursuant to a final written examination report or through the creditor's own procedures, the creditor notifies the person concerned of the error and adjusts the account so as to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.
(1969, P.A. 454, S. 22; P.A. 74-254, S. 7; P.A. 78-280, S. 6, 127; P.A. 81-158, S. 9, 10, 17; P.A. 82-18, S. 2, 4; 82-174, S. 7, 14; P.A. 88-65, S. 46; 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 308, 340; P.A. 96-109, S. 15; P.A. 03-61, S. 7; P.A. 15-235, S. 10; P.A. 16-193, S. 15.)
History: P.A. 74-254 substituted reference to chapter 54 for reference to chapter 637 in Subsec. (f); P.A. 78-280 substituted “judicial district of Hartford-New Britain” for “Hartford county” in Subsec. (d); P.A. 81-158 amended Subsec. (b) to include leasing practices and problems in the education programs of the commissioner, amended Subsec. (c) to require the intention of records related to consumer leases, provide that the record retention requirements are in addition to those imposed by federal law and provide that examination of records related to required disclosures may take place on the premises of a lessor or an assignee of a creditor or lessor, amended Subsec. (d) to provide that the commissioner is not required to post a bond, amended Subsec. (e) to delete provisions concerning the specific topics to be covered by the report, amended Subsec. (f) to add “or lessor or assignee thereof”, effective March 31, 1982, and added Subsec. (g) concerning disclosure errors and required adjustments by a creditor to conform to federal law; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-174 amended Subsec. (f) by deleting provisions authorizing the commissioner, after a hearing, to order a creditor, lessor or assignee to cease and desist from violating the chapter and authorizing an aggrieved person to appeal in the manner provided in chapter 54, and by adding provisions authorizing the commissioner to issue, after notice, cease and desist orders unless a hearing is requested and authorizing him to bring an action to enforce any such order; P.A. 88-65 made technical changes by adding U.S. code citations; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; (Revisor's note: In 1991 the incorrect internal reference in Subsec. (a) to section “42-83(2)(d)” was changed editorially by the Revisors to “42-83(3)(d)”); P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted a provision authorizing the commissioner or his representative to examine records on a creditor's or lessor's premises in Subsec. (c), deleted Subsecs. (d) re court injunctions, (e) re annual reports to the governor and (f) re cease and desist orders, relettered former Subsec. (g) as Subsec. (d) and made technical changes, effective January 1, 1995; Sec. 36-414 transferred to Sec. 36a-684 in 1995; P.A. 96-109 made technical change in Subsec. (a), deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for reference to Subdiv. (12) of Sec. 36a-770(c); P.A. 03-61 deleted Subsec. (d)(7) re adjustments for annual percentage rate disclosure errors with respect to transactions consummated between January 1, 1977, and May 18, 1981; P.A. 15-235 amended Subsec. (a) to add reference to Secs. 36a-50 to 36a-53, amended Subsec. (d) to add reference to tolerances set forth in 15 USC 1607(e)(1) and to add provisions re creditors at risk of becoming undercapitalized, and made technical changes, effective August 1, 2015; P.A. 16-193 made a technical change in Subsec. (d)(4).
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Sec. 36a-685. (Formerly Sec. 36-415). Unenforceable agreements. (a) If it is the understanding of the creditor and the debtor at the time an extension of credit is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation or property of any person, the repayment of the extension of credit is unenforceable through civil judicial processes against the debtor.
(b) Proof that an extension of credit was made at an annual rate exceeding forty-five per cent calculated according to the actuarial method, and that the creditor then had a reputation for the use or threat of use of violence or other criminal means to cause harm to the person, reputation or property of any person to collect extensions of credit or to punish the nonrepayment thereof, is prima facie evidence that the extension of credit was unenforceable under subsection (a) of this section.
(1969, P.A. 454, S. 23; P.A. 05-288, S. 209.)
History: Sec. 36-415 transferred to Sec. 36a-685 in 1995; P.A. 05-288 made a technical change in Subsec. (b), effective July 13, 2005.
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Sec. 36a-686. Civil penalty. Liability. (a) In addition to the enforcement provisions in the Connecticut Truth-in-Lending Act, the Banking Commissioner may order any person who violates 15 USC 1639e, as amended from time to time, to pay a civil penalty as provided in subsection (k) of said section. Such order shall be issued in accordance with section 36a-50, provided the amount of any civil penalty imposed shall be determined in accordance with 15 USC 1639e(k), as amended from time to time.
(b) In addition to any other liability allowed by the Connecticut Truth-in-Lending Act, a creditor found to have wilfully failed to obtain an appraisal as required by 15 USC 1639h, as amended from time to time, shall be liable to the applicant or borrower as provided in subsection (e) of said section.
(P.A. 15-235, S. 11.)
History: P.A. 15-235 effective August 1, 2015.
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Secs. 36a-687 to 36a-689. Reserved for future use.
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PART IV
INTEREST AND FINANCE CHARGE REBATES
Sec. 36a-690. (Formerly Sec. 36-417z). Calculation of interest or finance charge rebates. Prohibited methods. Transactions affected. (a) As used in this section:
(1) “Amount financed” means the amount of credit a borrower will actually be able to use as determined in accordance with sections 36a-675 to 36a-686, inclusive.
(2) “Annual percentage rate” means the annual percentage rate of finance charge determined in accordance with sections 36a-675 to 36a-686, inclusive.
(3) “Finance charge” means the cost of credit determined in accordance with sections 36a-675 to 36a-686, inclusive.
(b) Except as provided in this section, no creditor shall use any method of calculating interest rebates or finance charge rebates in any transaction described in subsection (c) of this section which originated on or after December 1, 1980, if such method would cause the actual interest or finance charge earned for the period during which the indebtedness is outstanding after deduction of an acquisition charge of twenty-five dollars to exceed the finance charge which would be earned if the annual percentage rate were calculated by the actuarial method on the amount financed in accordance with the disclosed schedule of payments. When such rebate is less than one dollar, no rebate need be made.
(c) Notwithstanding any section of the general statutes to the contrary, this section shall apply to any transaction which is subject to sections 36a-675 to 36a-686, inclusive, and which originated on or after December 1, 1980, but before October 1, 1987, if in such transaction: (1) The finance charge is precomputed; (2) the annual percentage rate is greater than fourteen per cent; and (3) the original term of the contract exceeds forty-eight months and fifteen days; and to any such transaction which originated on or after October 1, 1987, if in such transaction: (A) The finance charge is precomputed; and (B) the original term of the contract exceeds forty-eight months and fifteen days.
(P.A. 79-135, S. 1–4; P.A. 81-472, S. 70, 159; P.A. 87-13; P.A. 15-235, S. 19.)
History: P.A. 81-472 made technical changes; P.A. 87-13 amended Subsec. (c) to expand the application of the section after October 1, 1987, by deleting the requirement that the interest rate of the loan exceeds 14%; Sec. 36-417z transferred to Sec. 36a-690 in 1995; (Revisor's note: In 1997 an obsolete reference in Subsec. (c) to “chapter 657” was changed editorially by the Revisors to “sections 36a-675 to 36a-685, inclusive,” to reflect the renumbering in 1995 of the sections contained in former chapter 657); P.A. 15-235 amended section to change “36a-685” to “36a-686”, effective August 1, 2015.
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Secs. 36a-691 to 36a-694. Reserved for future use.
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PART V
CONSUMER CREDIT REPORTS
Sec. 36a-695. (Formerly Sec. 36-431). Definitions. As used in sections 36a-695 to 36a-699e, inclusive, unless the context otherwise requires:
(1) “Consumer” means an individual seeking credit for personal, family or household purposes;
(2) “Creditor” means any person who extends credit in the ordinary course of business;
(3) “Credit report” means any written or oral report, recommendation or representation of a credit rating agency as to the credit worthiness, credit standing, or credit capacity of any consumer, and includes any information which is sought or given for the purpose of serving as the basis for determining eligibility for credit to be used primarily for personal, family or household purposes;
(4) “Credit rating agency” means any person whose business is the assembling and evaluating of information as to the credit standing and credit worthiness of a consumer, for the purposes of furnishing credit reports, for monetary fees and dues to third parties.
(1971, P.A. 868, S. 1; P.A. 86-403, S. 100, 132; P.A. 92-12, S. 85; P.A. 94-122, S. 309, 340; P.A. 98-177, S. 5.)
History: P.A. 86-403 made technical change in Subdiv. (c); P.A. 92-12 redesignated Subdivs. and made technical changes; P.A. 94-122 added “unless the context otherwise requires” and deleted “firm, company, partnership, corporation, bureau or agency” from the definition of “credit rating agency” in Subdiv. (4), effective January 1, 1995; Sec. 36-431 transferred to Sec. 36a-695 in 1995; P.A. 98-177 made a technical change.
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Sec. 36a-696. (Formerly Sec. 36-432). Disclosure to consumer of information re credit report. (a) No creditor shall take adverse action based wholly or in part on a credit report on any consumer applying to such creditor for credit for personal, family or household purposes without first disclosing to the consumer the name and address of the credit rating agency which issued the report.
(b) Upon written request and proper identification of any consumer, a credit rating agency shall disclose to the consumer, within five business days of receipt of the consumer's request, the nature and substance of all information in its files, including (1) any credit score or predictor relating to the consumer, as required by and in a form and manner that complies with the federal Fair Credit Reporting Act and commentary adopted and enforced by the Federal Trade Commission or the Bureau of Consumer Financial Protection; (2) a record of all inquiries, by recipient, including the recipient's name which resulted in providing a credit report concerning the consumer during the preceding twelve-month period; (3) a clear and concise explanation of the information; and (4) a written summary of the consumer's rights under state and federal consumer credit reporting statutes in a form substantially similar to the summary in section 36a-699a. The credit rating agency may charge no more than five dollars for the first request for such information within the preceding twelve months and no more than seven dollars and fifty cents for any additional request within the same twelve-month period for such information, provided such disclosure shall be made without charge to the consumer if the request for disclosure is made not more than sixty days after notification to the consumer of an adverse action by a creditor.
(1971, P.A. 868, S. 2; P.A. 87-146, S. 2; P.A. 92-12, S. 86; P.A. 95-104, S. 1; P.A. 11-110, S. 9.)
History: P.A. 87-146 amended Subsec. (b) by requiring disclosure to be made without charge to the consumer if the request for disclosure is made not more than 30 days after notification to the consumer of an adverse action by a creditor; P.A. 92-12 made technical changes; Sec. 36-432 transferred to Sec. 36a-696 in 1995; P.A. 95-104 divided section into Subsecs. and amended Subsec. (b) by adding a 5-day disclosure deadline, adding Subdiv. (1) providing for disclosure of any credit score or predictor relating to the customer, Subdiv. (2) requiring a record of all inquiries by recipient, Subdiv. (3) requiring a clear and concise explanation of the information and Subdiv. (4) requiring a written summary of the consumer's rights, and adding the maximum charge by the credit rating agency and changing the request period from 30 to 60 days for disclosures without charge; P.A. 11-110 amended Subsec. (b)(1) to add reference to Bureau of Consumer Financial Protection, effective July 21, 2011.
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Sec. 36a-697. (Formerly Sec. 36-433). Exceptions. The provisions of sections 36a-691 to 36a-699, inclusive, shall not apply to any disclosure made at the request of a law enforcement or investigative officer in his capacity as such, who is employed on a full-time basis in that capacity, by the United States, or by any state or political subdivision thereof, or upon the order of any court.
(1971, P.A. 868, S. 3.)
History: Sec. 36-433 transferred to Sec. 36a-697 in 1995.
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Sec. 36a-698. (Formerly Sec. 36-434). Regulations. The commissioner shall adopt such regulations, in accordance with chapter 54, as may be necessary to carry out the provisions of sections 36a-695 to 36a-699, inclusive.
(1971, P.A. 868, S. 4; P.A. 77-614, S. 161, 610; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 310, 340.)
History: P.A. 77-614 replaced bank commissioner with banking commissioner, effective January 1, 1979; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-434 transferred to Sec. 36a-698 in 1995.
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Sec. 36a-699. (Formerly Sec. 36-435). Penalty. Any person who wilfully violates any provision of sections 36a-695 to 36a-699, inclusive, or section 36a-699f shall be fined not more than one hundred dollars for a first offense and not more than five hundred dollars for a second offense, and shall be fined not more than one thousand dollars or be imprisoned for not more than six months, or both, for each subsequent offense.
(1971, P.A. 868, S. 5; P.A. 03-156, S. 10.)
History: Sec. 36-435 transferred to Sec. 36a-699 in 1995; P.A. 03-156 included a violation of Sec. 36a-699f.
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Sec. 36a-699a. Written summary of consumer's rights. Each written summary of a consumer's rights under state and federal consumer credit reporting statutes shall be in a form substantially similar to the following:
“You have a right to obtain a copy of your credit file from a credit rating agency. You may be charged a reasonable fee not exceeding five dollars for your first request in twelve months or seven dollars and fifty cents for any subsequent request in that same twelve-month period. There is no fee, however, if you have been turned down for credit, employment, insurance or a rental dwelling because of information in your credit report within the preceding sixty days. The credit rating agency must provide someone to help you interpret the information in your credit file.
You have a right to dispute inaccurate information by contacting the credit rating agency directly. However, neither you nor any credit repair company or credit service organization has the right to have accurate, current and verifiable information removed from your credit report. Under the federal Fair Credit Reporting Act, the credit rating agency must remove accurate, negative information from your report only if it is over seven years old. Bankruptcy information can be reported for ten years.
If you have notified a credit rating agency in writing that you dispute the accuracy of information in your file, the credit rating agency must then, within thirty business days, reinvestigate and modify or remove inaccurate information. If you provide additional information to the credit rating agency, the agency may extend this time period by fifteen business days. The credit rating agency shall provide you with a toll-free telephone number to use in resolving the dispute.
The credit rating agency may not charge a fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit rating agency.
If reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit rating agency to keep in your file, explaining why you think the record is inaccurate. The credit rating agency must include your statement about disputed information in a report it issues about you.
You have a right to receive a record of all inquiries relating to a credit transaction initiated in twelve months preceding your request which resulted in the provision of a credit report.
You may request in writing that the information contained in your file not be provided to a third party for marketing purposes.
If you have reviewed your credit report with the credit rating agency and are dissatisfied, you may contact the Connecticut Department of Banking. You have a right to bring civil action against anyone who knowingly or wilfully misuses file data or improperly obtains access to your file.”
(P.A. 95-104, S. 2.)
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Sec. 36a-699b. Dispute by consumer re completeness or accuracy of information. (a) If the completeness or accuracy of any item of information contained in any credit file of a credit rating agency is disputed by the consumer, the consumer may notify, in writing, the credit rating agency of the disputed information. The credit rating agency shall, no later than after a written dispute has been submitted by the consumer to the credit rating agency, provide the credit rating agency's toll-free telephone number to the consumer for use in resolving the dispute. The credit rating agency shall reinvestigate the disputed information without fee to the consumer. Within five business days of receipt of the notice from the consumer, the credit rating agency shall provide notice of the dispute to all persons who provided any item of the information in dispute. Within thirty business days of receipt of the notice of dispute from the consumer, the credit rating agency shall complete its reinvestigation and provide notice to the consumer of the results of the reinvestigation provided the time period for completing the reinvestigation may be extended for a period not exceeding fifteen business days if the credit rating agency receives additional information from the consumer which the credit rating agency determines is necessary to the accuracy of the reinvestigation and provides written notice to the consumer of such extension. The notice of the results of the reinvestigation shall contain a statement that the reinvestigation is completed, a copy of the credit file indicating the results of the reinvestigation, a notice of the consumer's right to file a statement with the credit rating agency disputing the accuracy or completeness of the information, a notice that the consumer may request, in writing or by a toll-free telephone call at the consumer's option, that the credit rating agency disclose the company name, address and telephone number of each information source contacted during the reinvestigation and a notice of the consumer's right to request a revised credit report be sent to any recipient of information in the consumer's file who requested such information within twelve months preceding the consumer's filing of the notice of disputed information. If the credit rating agency fails to complete the reinvestigation and provide notice of the results of the reinvestigation (1) within thirty business days of receipt of the notice of dispute, or (2) if an extension was noticed, within forty-five business days of such receipt, such information shall be deleted.
(b) If the credit rating agency determines, upon reinvestigation, that an item of information is inaccurate or cannot be verified, the credit rating agency shall promptly delete that item. At the request of the consumer, the credit rating agency shall promptly notify, without charge, those recipients specifically designated by the consumer who received a credit report within twelve months of completion of the reinvestigation that such information was deleted. Such information may be reinserted only upon verification of the completeness and accuracy of the information by the furnisher of the information. The credit rating agency shall notify the consumer within five business days of reinsertion of such information.
(c) If the credit rating agency determines, upon reinvestigation, that an item of information is accurate and complete or that the consumer has not provided sufficient information, the credit rating agency may retain such information.
(d) If the credit rating agency determines, upon reinvestigation, that an item of information is inaccurate or incomplete, but can be modified so as to make such information accurate and complete, the credit rating agency shall promptly modify such information.
(P.A. 95-104, S. 3.)
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Sec. 36a-699c. Procedures by credit rating agency to assure accuracy. Each credit rating agency shall maintain reasonable procedures to assure maximum possible accuracy of the information concerning the consumer and to avoid the reinsertion of previously deleted information without verification.
(P.A. 95-104, S. 4.)
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Sec. 36a-699d. Credit report for use in credit transaction not initiated by consumer. (a) A credit rating agency shall not provide a credit report for use in a credit transaction which is not initiated by the consumer if the consumer notifies, in writing, the credit rating agency that the consumer does not consent to that use.
(b) Each credit rating agency shall annually publish in a publication of general circulation in the state a notice that information in its credit files may be used in connection with a credit transaction which is not initiated by the consumer. A consumer may notify the credit rating agency of his election to be excluded from credit transactions which are not initiated by the consumer by writing to the address provided in the notice for such election. Compliance with the requirements of this section by any credit rating agency constitutes compliance by the agency's affiliates.
(c) As used in this section, “credit transaction which is not initiated by the consumer” does not include a request for a consumer report by a person with which the consumer has an account for purposes of reviewing the account or collecting on the account or a request for a consumer report by an employer in accordance with 15 USC 1681b.
(P.A. 95-104, S. 5.)
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Sec. 36a-699e. Existing consent judgment or settlement with Attorney General. Nothing in sections 36a-696 or 36a-699a to 36a-699d, inclusive, shall prohibit a credit rating agency from complying with any requirement contained in any existing consent judgment or settlement with the Attorney General.
(P.A. 95-104, S. 6.)
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Sec. 36a-699f. Blocking of information appearing on credit report as result of identity theft. (a) A consumer, as defined in section 36a-695, who believes he or she is a victim of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-129b, 53a-129c or 53a-129d may request a credit rating agency, as defined in section 36a-695, to block and not report information appearing on his or her credit report, as defined in section 36a-695, as a result of such violation. Such consumer shall submit such request, in writing, to the credit rating agency, together with proof of such consumer's identity and a copy of a police report prepared pursuant to section 54-1n. Not later than thirty days after receipt of such request, the credit rating agency shall block reporting any information that the consumer alleges appears on his or her credit report as a result of such violation so that the information cannot be reported. The credit rating agency shall promptly notify the furnisher of the information that a police report has been filed, that a block has been requested and the effective date of the block.
(b) A credit rating agency may decline to block or may rescind any block of consumer information if the credit rating agency believes in good faith that: (1) The information was blocked due to a misrepresentation of fact by the consumer relevant to the request to block under this section, (2) the consumer agrees that the blocked information or portions of the blocked information were blocked in error, (3) the consumer knowingly obtained possession of goods, services or moneys as a result of the blocked transaction or transactions or the consumer should have known that he or she obtained possession of goods, services or moneys as a result of the blocked transaction or transactions, (4) the information was blocked due to fraud in which the consumer participated or of which the consumer had knowledge, and which may for purposes of this section be demonstrated by circumstantial evidence, or (5) the credit rating agency, in the exercise of good faith and reasonable judgment, has substantial reason based on specific, verifiable facts to doubt the authenticity of the consumer's report of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-129b, 53a-129c or 53a-129d.
(c) If the credit rating agency declines to block information or rescinds the block of information pursuant to subsection (b) of this section, the credit rating agency shall promptly notify the consumer in the same manner as consumers are notified of the reinsertion of information pursuant to subsection (b) of section 36a-699b. The prior presence of the blocked information in the credit rating agency's file on the consumer is not evidence of whether the consumer knew or should have known that he or she obtained possession of any goods, services or moneys.
(d) A credit rating agency shall accept the consumer's version of the disputed information and correct the disputed item when the consumer submits to the credit rating agency documentation obtained from the source of the item in dispute or from public records confirming that the report was inaccurate or incomplete, unless the credit rating agency, in the exercise of good faith and reasonable judgment, has substantial reason based on specific, verifiable facts to doubt the authenticity of the documentation submitted and notifies the consumer in writing of that decision, explaining its reasons for unblocking the information and setting forth specific, verifiable facts on which the decision is based.
(e) A credit rating agency shall delete from a credit report inquiries for credit reports based upon credit requests that the credit rating agency verifies were initiated as a result of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-129b, 53a-129c or 53a-129d.
(f) The provisions of this section do not apply to: (1) A credit rating agency that acts as a reseller of credit information by assembling and merging information contained in the databases of other credit rating agencies, and that does not maintain a permanent database of credit information from which new credit reports are produced, (2) a check services or fraud prevention services company that issues reports on incidents of fraud or authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers or similar payment methods, or (3) a demand deposit account information service company that issues reports regarding account closures due to fraud, substantial overdrafts, automated teller machine abuse or similar negative information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing a consumer request for a demand deposit account at the inquiring bank or financial institution.
(P.A. 03-156, S. 9; P.A. 05-288, S. 224.)
History: P.A. 05-288 made a technical change in Subsec. (f)(3), effective July 13, 2005.
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Sec. 36a-700. (Formerly Sec. 36-435l). Credit clinics. Definitions. Contracts. Prohibited acts. Penalties. (a) As used in this section, “credit clinic” means any person who sells, provides or performs, or who represents that such person can or will sell, provide or perform, a service for the express or implied purpose of correcting, changing or deleting adverse entries on a consumer's credit record, history or rating or providing advice or assistance to a consumer with regard to correcting, changing or deleting adverse entries on a consumer's credit record, history or rating in return for the payment of a fee. “Credit clinic” does not include: (1) Credit rating agencies as defined in section 36a-695; (2) any person licensed to practice law in this state provided such person renders services as a credit clinic, as defined in this subsection, within the course and scope of his practice as an attorney; or (3) any organization which is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended.
(b) A credit clinic shall provide to each purchaser of the services of a credit clinic a contract which contract shall include, in boldface type a minimum size of ten points, the following statements:
RIGHT TO REVIEW YOUR FILE
The federal Fair Credit Reporting Act gives you the right to know what your credit file contains and the credit rating agency must provide someone to help you interpret the data. Sections 36a-695 to 36a-699, inclusive, of the Connecticut general statutes gives you the right to receive an actual copy of your credit report. You will be required to identify yourself to the credit rating agency and you may be charged a small fee. There is no fee, however, if you have been turned down for credit, employment or insurance because of information contained in a report within the preceding thirty days.
INCORRECT INFORMATION
If you notify the credit rating agency that you dispute the accuracy of information, the agency must reinvestigate and modify or remove inaccurate data. The credit rating agency may not charge any fee for this investigation or for modifying or removing inaccurate data. If reinvestigation does not resolve the dispute, you may enter a statement of one hundred words or less in your file, explaining why you dispute the accuracy of your record or file. This statement or a coded version of it must be included with all reports which the credit rating agency issues on you. If the error is corrected, the credit rating agency must notify any person who requested a report on you during the previous two years for employment purposes and the previous six months for any other purpose.
TIME LIMITS ON ADVERSE DATA
Most kinds of information in your file may be reported for a period of seven years. If you have declared personal bankruptcy, however, that fact may be reported for ten years. After seven or ten years, the information cannot be disclosed by a credit rating agency unless you are being investigated for a credit application of fifty thousand dollars or more, for an application to purchase life insurance of fifty thousand dollars or more, or for employment at an annual salary of twenty thousand dollars or more.
(c) In addition to statements required in subsection (b) of this section, each contract shall contain a complete, detailed list of services to be performed by the credit clinic and the results to be achieved by the credit clinic. A copy of the consumer's current credit report shall be attached to the contract with the adverse entries to be modified clearly marked.
(d) Any contract which does not comply with the provisions of subsections (b) and (c) of this section shall be void and the credit clinic shall return to the consumer any payments made by the consumer to the credit clinic under the voided contract.
(e) No credit clinic may charge a fee or receive any money or other valuable consideration for the performance of any service the credit clinic has agreed to perform for any consumer until the credit clinic has fully performed such service.
(f) A violation of any provision of this section shall be deemed an unfair or deceptive trade practice pursuant to section 42-110b.
(P.A. 87-146, S. 1; P.A. 91-357, S. 57, 78; P.A. 97-22, S. 2; P.A. 99-40.)
History: P.A. 91-357 made a technical change in Subsec. (a); Sec. 36-435l transferred to Sec. 36a-700 in 1995; P.A. 97-22 made technical changes in Subsec. (a); P.A. 99-40 added new Subsec. (e) prohibiting credit clinics from charging consumers prior to fully performing services and relettered former Subsec. (e) accordingly.
Annotations to former section 36-435l:
Cited. 228 C. 375; 231 C. 707.
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Sec. 36a-701. Security freeze on credit report: Definitions. As used in this section and section 36a-701a:
(1) “Consumer” means any person who is utilizing or seeking credit for personal, family or household purposes;
(2) “Credit rating agency” means credit rating agency, as defined in section 36a-695;
(3) “Credit report” means credit report, as defined in section 36a-695;
(4) “Creditor” means creditor, as defined in section 36a-695;
(5) “Minor child” means an individual under sixteen years of age at the time a request for placement of a security freeze is submitted;
(6) “Security freeze” means a notice placed in a consumer's credit report, at the request of the consumer, that prohibits the credit rating agency from releasing the consumer's credit report or any information from it without the express authorization of the consumer. In the case of a minor child under subsections (j) and (k) of section 36a-701a, “security freeze” means (A) a restriction that is placed on the minor child's credit report prohibiting the credit rating agency from releasing the minor child's credit report or any information derived from the minor child's credit report, provided a credit rating agency has information in its files pertaining to such minor child; or (B) a restriction that is placed on the minor child's record prohibiting the credit rating agency from releasing the minor child's record, provided a credit rating agency does not have any information in its files pertaining to such minor child; and
(7) “Sufficient proof of authority” means documentation showing that a parent or legal guardian has authority to act on behalf of a minor child, including, but not limited to, a court order, an original copy of the minor child's birth certificate or a written notarized statement expressly describing the authority of the parent or legal guardian to act on behalf of the minor child that is signed by the parent or legal guardian and acknowledged, in accordance with the provisions of chapter 6, by (A) a judge of a court of record or a family support magistrate, (B) a clerk or deputy clerk of a court having a seal, (C) a town clerk, (D) a notary public, (E) a justice of the peace, or (F) an attorney admitted to the bar of this state.
(P.A. 05-148, S. 1; P.A. 15-62, S. 1; P.A. 16-65, S. 55.)
History: P.A. 05-148 effective January 1, 2006; P.A. 15-62 added new Subdiv. (5) defining “minor child”, redesignated existing Subdiv. (5) as Subdiv. (6) and amended same to redefine “security freeze” by adding provisions re minor child, and added Subdiv. (7) defining “sufficient proof of authority”; P.A. 16-65 redefined “minor child” in Subdiv. (5).
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Sec. 36a-701a. Security freeze on credit report. Timing. Disclosure of report to third party during freeze. Procedures for freeze. Refusal by credit rating agency to implement freeze. Exceptions. Prohibition on fees. (a) Any consumer may submit a written request, by certified mail or such other secure method as authorized by a credit rating agency, to a credit rating agency to place a security freeze on such consumer's credit report. Such credit rating agency shall place a security freeze on a consumer's credit report as soon as practicable, but not later than five business days after receipt of such request. Not later than ten business days after placing a security freeze on a consumer's credit report, such credit rating agency shall send a written confirmation of such security freeze to such consumer that provides the consumer with a unique personal identification number or password to be used by the consumer when providing authorization for the release of such consumer's report to a third party or for a period of time. Nothing in this subsection shall be deemed to require a consumer reporting agency to provide to a minor child or the parent or legal guardian of a minor child, on behalf of the minor child, a unique personal identification number, password or similar device to be used to authorize the consumer reporting agency to release such minor child's credit report.
(b) In the event such consumer, other than a minor child or the parent or legal guardian of a minor child, wishes to authorize the disclosure of such consumer's credit report to a third party, or for a period of time, while such security freeze is in effect, such consumer shall contact such credit rating agency and provide: (1) Proper identification, (2) the unique personal identification number or password described in subsection (a) of this section, and (3) proper information regarding the third party who is to receive the credit report or the time period for which the credit report shall be available. Any credit rating agency that receives a request from a consumer pursuant to this section shall lift such security freeze not later than three business days after receipt of such request.
(c) Except for the temporary lifting of a security freeze as provided in subsection (b) of this section, any security freeze authorized pursuant to the provisions of this section shall remain in effect until such time as such consumer requests such security freeze to be removed. A credit rating agency shall remove such security freeze as soon as practicable, but not later than three business days after receipt of such request provided such consumer provides proper identification to such credit rating agency and the unique personal identification number or password described in subsection (a) of this section at the time of such request for removal of the security freeze. In the case of a minor child, the credit rating agency shall remove such security freeze not later than fifteen business days after receipt of such request, provided the minor child or the parent or legal guardian of the minor child uses the unique personal identification number, password or similar device provided under subsection (a) of this section at the time of such request, if applicable.
(d) Any credit rating agency may develop procedures to receive and process such request from a consumer to temporarily lift or remove a security freeze on a credit report pursuant to subsection (b) of this section. Such procedures, at a minimum, shall include, but not be limited to, the ability of a consumer to send such temporary lift or removal request by electronic means, letter or facsimile.
(e) In the event that a third party requests access to a consumer's credit report that has such a security freeze in place and such third party request is made in connection with an application for credit or any other use and such consumer has not authorized the disclosure of such consumer's credit report to such third party, such third party may deem such credit application as incomplete.
(f) Any credit rating agency may refuse to implement or may remove such security freeze if such agency believes, in good faith, that: (1) The request for a security freeze was made as part of a fraud that the consumer participated in, had knowledge of, or that can be demonstrated by circumstantial evidence, or (2) the consumer credit report was frozen due to a material misrepresentation of fact by the consumer. In the event any such credit rating agency refuses to implement or removes a security freeze pursuant to this subsection, such credit rating agency shall promptly notify such consumer in writing of such refusal not later than five business days after such refusal or, in the case of a removal of a security freeze, prior to removing the freeze on the consumer's credit report.
(g) Nothing in this section shall be construed to prohibit disclosure of a consumer's credit report to: (1) A person, or the person's subsidiary, affiliate, agent or assignee with which the consumer has or, prior to assignment, had an account, contract or debtor-creditor relationship for the purpose of reviewing the account or collecting the financial obligation owing for the account, contract or debt; (2) a subsidiary, affiliate, agent, assignee or prospective assignee of a person to whom access has been granted under subsection (b) of this section for the purpose of facilitating the extension of credit or other permissible use; (3) any person acting pursuant to a court order, warrant or subpoena; (4) any person for the purpose of using such credit information to prescreen as provided by the federal Fair Credit Reporting Act; (5) any person for the sole purpose of providing a credit file monitoring subscription service to which the consumer has subscribed; (6) a credit rating agency for the sole purpose of providing a consumer with a copy of his or her credit report upon the consumer's request; or (7) a federal, state or local governmental entity, including a law enforcement agency, or court, or their agents or assignees pursuant to their statutory or regulatory duties. For purposes of this subsection, “reviewing the account” includes activities related to account maintenance, monitoring, credit line increases and account upgrades and enhancements.
(h) The following persons shall not be required to place a security freeze on a consumer's credit report, provided such persons shall be subject to any security freeze placed on a credit report by another credit rating agency: (1) A check services or fraud prevention services company that reports on incidents of fraud or issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers or similar methods of payment; (2) a deposit account information service company that issues reports regarding account closures due to fraud, substantial overdrafts, automated teller machine abuse, or similar information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing a consumer request for a deposit account at the inquiring bank or financial institution; or (3) a credit rating agency that: (A) Acts only to resell credit information by assembling and merging information contained in a database of one or more credit reporting agencies; and (B) does not maintain a permanent database of credit information from which new credit reports are produced.
(i) (1) A credit rating agency shall not (A) charge a fee to a consumer for a security freeze, removal of such freeze, temporary lift of such freeze for a period of time or a temporary lift of such freeze for a specific party, or (B) require as a condition for placing a security freeze that a consumer enter into an agreement that limits any claim the consumer may have against such credit rating agency.
(2) No credit rating agency shall charge a fee to a consumer for a personal identification number.
(j) The parent or legal guardian of a minor child may place a security freeze on the credit report of a minor child by submitting a written request to the credit rating agency in the manner described in this section and subject to the same conditions and by providing the credit rating agency with proper identification and sufficient proof of authority to act on behalf of the minor child. The credit rating agency shall place the security freeze on the credit report of a minor child as soon as practicable, but not later than five business days after receipt of such request. If the credit rating agency does not have any information in its files pertaining to the minor child at the time the credit rating agency receives a request pursuant to this subsection, the credit rating agency shall create a record for the minor child and place a security freeze on such record. Such record shall consist of a compilation of information created by a credit rating agency that identifies a minor child. A credit rating agency shall not create or use such record to consider the minor child's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. A credit rating agency shall not release a minor child's credit report, any information derived from a minor child's credit report or any record created for a minor child.
(k) The parent or legal guardian of a minor child may request the removal of a security freeze placed on the credit report or record of a minor child by submitting a written request to the credit rating agency in the manner described in this section and subject to the same conditions and by providing the credit rating agency with proper identification and sufficient proof of authority to act on behalf of the minor child. The credit rating agency shall remove the security freeze on the credit report or record of a minor child not later than fifteen business days after receipt of such request.
(l) An insurer, as defined in section 38a-1, may deny an application for insurance if an applicant has placed a security freeze on such applicant's credit report and fails to authorize the disclosure of such applicant's credit report to such insurer pursuant to the provisions of subsection (b) of this section.
(m) Any security freeze in a credit report in effect as of October 1, 2016, shall continue to be in effect until the consumer or the parent or legal guardian of a minor child requests the removal of the security freeze.
(P.A. 05-148, S. 2; 05-288, S. 230; P.A. 15-53, S. 9; 15-62, S. 2; P.A. 16-65, S. 56; P.A. 18-90, S. 1.)
History: P.A. 05-148 effective January 1, 2006; P.A. 05-288 made a technical change in Subsec. (f), effective January 1, 2006; P.A. 15-53 amended Subsec. (i) by designating existing provisions as Subdiv. (1) and amending same to add exception re Subdiv. (2), and by adding Subdiv. (2) re credit rating agencies not to charge fees to certain persons, effective June 19, 2015; P.A. 15-62 added Subsecs. (j) and (k) re request by parent or legal guardian of minor child for placement or removal of security freeze on minor child's credit report or record, prohibited uses of minor child's record by credit rating agency and timeline for agencies to respond to such requests, and redesignated existing Subsec. (j) as Subsec. (l); P.A. 16-65 amended Subsec. (a) by adding provision re nothing in Subsec. deemed to require unique personal identification number, password or similar device to be provided for minor child, amended Subsec. (b) by adding “other than a minor child or the parent or legal guardian of a minor child”, amended Subsec. (c) by adding provision re removal of security freeze in the case of a minor child and added Subsec. (m) re security freeze to continue to be in effect; P.A. 18-90 amended Subsec. (a) by adding “as soon as practicable, but” re placing security freeze, amended Subsec. (c) by adding “as soon as practicable, but” re removing security freeze, amended Subsec. (d) by replacing “electronic mail” with “electronic means”, substantially amended Subsec. (i) including by deleting reference to Subdiv. (2), replacing provisions re credit rating agency may charge fee of not more than $10 for security freeze, removal of freeze or temporary lift of freeze with provisions re credit rating agency shall not charge fee for security freeze, removal of freeze, temporary lift of freeze or require as condition for placing freeze that consumer enter into agreement that limits claim against credit rating agency in Subdiv. (1), deleting provisions re fees not to be charged to certain persons, and deleting references to replacement personal identification number, amended Subsec. (j) by adding “as soon as practicable, but” re placing security freeze on credit report of minor child, and made technical and conforming changes.
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Sec. 36a-701b. *(See end of section for amended version of subparagraph (B) of subdivision (2) of subsection (b) and effective date.) Breach of security re computerized data containing personal information. Notice of breach. Provision of identity theft prevention services and identity theft mitigation services. Delay for criminal investigation. Means of notice. Unfair trade practice. (a) For purposes of this section, (1) “breach of security” means unauthorized access to or unauthorized acquisition of electronic files, media, databases or computerized data, containing personal information when access to the personal information has not been secured by encryption or by any other method or technology that renders the personal information unreadable or unusable; and (2) “personal information” means an individual's first name or first initial and last name in combination with any one, or more, of the following data: (A) Social Security number; (B) driver's license number or state identification card number; (C) credit or debit card number; or (D) financial account number in combination with any required security code, access code or password that would permit access to such financial account. “Personal information” does not include publicly available information that is lawfully made available to the general public from federal, state or local government records or widely distributed media.
(b) (1) Any person who conducts business in this state, and who, in the ordinary course of such person's business, owns, licenses or maintains computerized data that includes personal information, shall provide notice of any breach of security following the discovery of the breach to any resident of this state whose personal information was breached or is reasonably believed to have been breached. Such notice shall be made without unreasonable delay but not later than ninety days after the discovery of such breach, unless a shorter time is required under federal law, subject to the provisions of subsection (d) of this section and the completion of an investigation by such person to determine the nature and scope of the incident, to identify the individuals affected, or to restore the reasonable integrity of the data system. Such notification shall not be required if, after an appropriate investigation and consultation with relevant federal, state and local agencies responsible for law enforcement, the person reasonably determines that the breach will not likely result in harm to the individuals whose personal information has been acquired and accessed.
(2) If notice of a breach of security is required by subdivision (1) of this subsection:
(A) The person who conducts business in this state, and who, in the ordinary course of such person's business, owns, licenses or maintains computerized data that includes personal information, shall, not later than the time when notice is provided to the resident, also provide notice of the breach of security to the Attorney General; and
*(B) The person who conducts business in this state, and who, in the ordinary course of such person's business, owns or licenses computerized data that includes personal information, shall offer to each resident whose personal information under subparagraph (A) of subdivision (4) of subsection (a) of section 38a-999b or subparagraph (A) of subdivision (2) of subsection (a) of this section was breached or is reasonably believed to have been breached, appropriate identity theft prevention services and, if applicable, identity theft mitigation services. Such service or services shall be provided at no cost to such resident for a period of not less than twenty-four months. Such person shall provide all information necessary for such resident to enroll in such service or services and shall include information on how such resident can place a credit freeze on such resident's credit file.
(c) Any person that maintains computerized data that includes personal information that the person does not own shall notify the owner or licensee of the information of any breach of the security of the data immediately following its discovery, if the personal information of a resident of this state was breached or is reasonably believed to have been breached.
(d) Any notification required by this section shall be delayed for a reasonable period of time if a law enforcement agency determines that the notification will impede a criminal investigation and such law enforcement agency has made a request that the notification be delayed. Any such delayed notification shall be made after such law enforcement agency determines that notification will not compromise the criminal investigation and so notifies the person of such determination.
(e) Any notice to a resident, owner or licensee required by the provisions of this section may be provided by one of the following methods: (1) Written notice; (2) telephone notice; (3) electronic notice, provided such notice is consistent with the provisions regarding electronic records and signatures set forth in 15 USC 7001; (4) substitute notice, provided such person demonstrates that the cost of providing notice in accordance with subdivision (1), (2) or (3) of this subsection would exceed two hundred fifty thousand dollars, that the affected class of subject persons to be notified exceeds five hundred thousand persons or that the person does not have sufficient contact information. Substitute notice shall consist of the following: (A) Electronic mail notice when the person has an electronic mail address for the affected persons; (B) conspicuous posting of the notice on the web site of the person if the person maintains one; and (C) notification to major state-wide media, including newspapers, radio and television.
(f) Any person that maintains such person's own security breach procedures as part of an information security policy for the treatment of personal information and otherwise complies with the timing requirements of this section, shall be deemed to be in compliance with the security breach notification requirements of this section, provided such person notifies, as applicable, residents of this state, owners and licensees in accordance with such person's policies in the event of a breach of security and in the case of notice to a resident, such person also notifies the Attorney General not later than the time when notice is provided to the resident. Any person that maintains such a security breach procedure pursuant to the rules, regulations, procedures or guidelines established by the primary or functional regulator, as defined in 15 USC 6809(2), shall be deemed to be in compliance with the security breach notification requirements of this section, provided (1) such person notifies, as applicable, such residents of this state, owners, and licensees required to be notified under and in accordance with the policies or the rules, regulations, procedures or guidelines established by the primary or functional regulator in the event of a breach of security, and (2) if notice is given to a resident of this state in accordance with subdivision (1) of this subsection regarding a breach of security, such person also notifies the Attorney General not later than the time when notice is provided to the resident.
(g) Failure to comply with the requirements of this section shall constitute an unfair trade practice for purposes of section 42-110b and shall be enforced by the Attorney General.
(P.A. 05-148, S. 3; 05-288, S. 231, 232; June 12 Sp. Sess. P.A. 12-1, S. 130; P.A. 15-142, S. 6; P.A. 18-90, S. 2.)
*Note: On and after October 1, 2021, subparagraph (B) of subdivision (2) of subsection (b) of this section, as amended by section 231 of public act 19-117 and section 9 of public act 19-196, is to read as follows:
“(B) The person who conducts business in this state, and who, in the ordinary course of such person's business, owns or licenses computerized data that includes personal information, shall offer to each resident whose nonpublic information under subparagraph (B)(i) of subdivision (9) of subsection (b) of section 38a-38 or personal information as defined in subparagraph (A) of subdivision (2) of subsection (a) of this section was breached or is reasonably believed to have been breached, appropriate identity theft prevention services and, if applicable, identity theft mitigation services. Such service or services shall be provided at no cost to such resident for a period of not less than twenty-four months. Such person shall provide all information necessary for such resident to enroll in such service or services and shall include information on how such resident can place a credit freeze on such resident's credit file.”
(P.A. 05-148, S. 3; 05-288, S. 231, 232; June 12 Sp. Sess. P.A. 12-1, S. 130; P.A. 15-142, S. 6; P.A. 18-90, S. 2; P.A. 19-117, S. 231; 19-196, S. 9.)
History: P.A. 05-148 effective January 1, 2006; P.A. 05-288 made technical changes in Subsecs. (b) and (f), effective January 1, 2006; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a) by adding “unauthorized” re acquisition, amended Subsec. (b) by designating existing provisions as Subdiv. (1) and amending same to replace “disclose” with “provide notice of” and “disclosure” with “notice” and by adding Subdiv. (2) re notice of breach of security to Attorney General, amended Subsec. (c) by adding “of a resident of this state” re personal information, amended Subsec. (e) by adding “to a resident, owner or licensee” re notice, replacing “person, business or agency” with “person” and making a technical change, and amended Subsec. (f) by replacing references to subject persons with references to residents of this state, owners and licensees, as applicable, adding provisions re notice to Attorney General and deleting reference to system; P.A. 15-142 made technical changes in Subsec. (a), amended Subsec. (b) to replace “was, or is reasonably believed to have been, accessed by an unauthorized person through such breach of security” with “was breached or is reasonably believed to have been breached” and add provision re notice of breach of security not later than 90 days after discovery unless shorter time is required under federal law in Subdiv. (1), to designate existing provision re notice of breach to Attorney General as Subpara. (A) in Subdiv. (2) and amend same to add Subpara. (B) re provision of identity theft prevention services and identity theft mitigation services, and amended Subsec. (c) to replace “was, or is reasonably believed to have been accessed by an unauthorized person” with “was breached or is reasonably believed to have been breached”; P.A. 18-90 amended Subsec. (a)(1) by deleting “account number,” in Subpara. (C), adding Subpara. (D) re financial account number, and making a technical change, and amended Subsec. (b)(2)(B) by replacing “twelve months” with “twenty-four months” re period for which service is to be provided at no cost to resident; P.A. 19-117 amended Subsec. (b)(2)(B) by replacing provision re personal information under Sec. 38a-999b(a)(4)(A) with provision re nonpublic information under Sec. 38a-38(b)(9)(B)(i) and made a conforming change, effective October 1, 2020; P.A. 19-196 changed effective date of P.A. 19-117 from October 1, 2020, to October 1, 2021, effective July 8, 2019.
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Sec. 36a-701c. Regulations. The Banking Commissioner shall adopt regulations in accordance with chapter 54 to require credit rating agencies to provide to the Banking Commissioner dedicated points of contact through which the Department of Banking may assist consumers in the event of a data breach.
(P.A. 18-90, S. 3.)
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Secs. 36a-702 to 36a-704. Reserved for future use.
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PART VI
MORTGAGE PROCESSING
Sec. 36a-705. (Formerly Sec. 36-442). Definitions. As used in this section and sections 36a-706, 36a-707 and 36a-708, unless the context otherwise requires:
(1) “First mortgage loan” means “first mortgage loan”, as defined in section 36a-485;
(2) “Mortgage broker” means a “mortgage broker”, as defined in section 36a-485, who is licensed or required to be licensed under sections 36a-485 to 36a-498a, inclusive;
(3) “Mortgage lender” means a “mortgage lender” or “mortgage correspondent lender”, as defined in section 36a-485, who is required to be licensed under sections 36a-485 to 36a-498a, inclusive, except that the term shall include a bank, out-of-state bank, Connecticut credit union, federal credit union and out-of-state credit union; and
(4) “Mortgage rate lock-in” means a written or electronically transmitted confirmation issued to a mortgage applicant or the representative of such applicant by a mortgage lender or mortgage correspondent lender or the mortgage lender's or mortgage correspondent lender's representative, prior to the issuance of a first mortgage loan commitment, stating that a particular rate, number of points or variable rate terms will be the rate, number of points, or variable rate terms at which the mortgage lender or mortgage correspondent lender will make the loan, provided the first mortgage loan is closed by a specified date, and the applicant qualifies for the loan in accordance with the mortgage lender's or mortgage correspondent lender's standards of creditworthiness.
(P.A. 87-73, S. 1; P.A. 92-12, S. 89; P.A. 94-122, S. 311, 340; P.A. 04-69, S. 26; 04-105, S. 1; P.A. 05-74, S. 4; P.A. 08-176, S. 59.)
History: P.A. 92-12 redesignated Subdivs.; P.A. 94-122 deleted the definition of “person”, reordered definitions and made technical changes, effective January 1, 1995; Sec. 36-442 transferred to Sec. 36a-705 in 1995; P.A. 04-69 amended Subdiv. (2) to substitute “36a-498a” for “36a-498”; P.A. 04-105 added reference to Sec. 36a-708, redefined “first mortgage loan” in Subdiv. (1), added new Subdiv. (2) defining “mortgage lender”, redesignated existing Subdivs. (2) and (3) as new Subdivs. (3) and (4), respectively, and redefined “mortgage lender” and “mortgage rate lock-in” therein, effective May 21, 2004; P.A. 05-74 amended Subdiv. (3) to make a technical change, effective June 2, 2005; P.A. 08-176 added references to “mortgage correspondent lender” and made conforming and technical changes, effective July 1, 2008.
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Sec. 36a-706. (Formerly Sec. 36-442a). Mortgage rate lock-in. (a) Duration. (1) No mortgage lender shall commit to a first mortgage loan applicant or the applicant's representative that the lender will make the loan at a specified rate if the loan is closed by the expiration of a specified period of time except by issuing a mortgage rate lock-in, and the period for which the terms are locked in is at least as long as the mortgage lender's good faith estimate of the anticipated time from when the mortgage loan application is submitted to the lender to the time when such lender will be ready to close such loan, taking into consideration current market conditions and the processing requirements for the type of first mortgage loan in question. (2) In the event a mortgage rate lock-in is issued after the mortgage loan application is submitted to the lender, the minimum period for which the terms may be locked in shall be the period determined in accordance with subdivision (1) of this subsection, less the number of days elapsed since the application was submitted to the lender.
(b) Closing required in accordance with lock-in. Exceptions. Any first mortgage loan application for which a mortgage rate lock-in has been issued shall, unless it is denied in accordance with the mortgage lender's standards of creditworthiness, be closed at the terms specified in the mortgage rate lock-in regardless of whether the specified lock-in date has expired, unless the failure to close the first mortgage loan is the result of the following: (1) The applicant has failed to provide information or documentation required by the lender in a timely manner; (2) the applicant or the applicant's attorney has failed to close the first mortgage loan on or before the date specified by the mortgage lender; (3) the applicant has failed to produce, at or before the closing, all of the documentation specified by the mortgage loan commitment as being required for closing; or (4) the applicant has provided or omitted any information, in the application or subsequently, which upon verification proves to be significantly inaccurate causing the need for review or further investigation by the lender. Information is significantly inaccurate if the information as verified would cause the applicant to be disqualified for the type of first mortgage loan for which the applicant has applied or would cause the secondary market source for which the first mortgage loan is being originated to refuse to purchase the loan.
(c) Refund of fees. In any case where a first mortgage loan has not been closed, and the application has not been rejected in accordance with the mortgage lender's standards of creditworthiness, ninety days after the filing of an application for a first mortgage loan with an initial loan to value ratio of eighty per cent or less or one hundred twenty days after filing an application for a first mortgage loan with an initial loan to value ratio of more than eighty per cent, or a first mortgage loan to be insured or guaranteed by any agency of the federal government, or any state or municipal government, or any quasi-governmental agency, whether or not there has been a mortgage rate lock-in, the applicant shall be entitled upon written request, which shall be made not later than thirty days after the expiration of the ninety or one-hundred-twenty-day period, as applicable, to a full refund of all funds paid to the mortgage lender unless the failure to close was caused by the applicant for one of the reasons set forth in subdivisions (1) to (4), inclusive, of subsection (b) of this section or the applicant has requested a closing date which is later than ninety days after application for a first mortgage loan with an initial loan to value ratio of eighty per cent or less or one hundred twenty days for a first mortgage loan with an initial loan to value ratio of more than eighty per cent or which is to be insured or guaranteed by any agency of the federal government, or any state or municipal government, or any quasi-governmental agency.
(d) Mortgage rate lock-in generally. Information requested by lender. For the purposes of subsections (b) and (c) of this section:
(1) An applicant shall be deemed to have provided information or documentation in a timely manner if such information or documentation is delivered to the mortgage lender or a representative of the mortgage lender not later than seven calendar days after it is requested.
(2) If a written first mortgage loan commitment issued by a mortgage lender contains any conditions to be satisfied by the applicant, the mortgage lender shall specify a closing date no sooner than seven calendar days after the issuance of such commitment unless an earlier date is requested by the applicant.
(3) Any new information or documentation requested by the mortgage lender within seven calendar days before the expiration of any rate lock-in period shall serve to extend the rate lock-in period by seven calendar days from the date of such request. Information or documentation is not new if the request is made necessary by inaccuracies in or omissions from previously provided information, by changes in the information previously provided by the applicant, or questions raised as the result of appraisals, pest inspections, water or sewer tests, engineering reports or reports of a similar nature.
(4) If an applicant chooses to change the type or amount of a first mortgage loan for which application is made, or does not qualify for a particular type or amount of first mortgage loan and chooses to apply for another, any mortgage rate lock-in shall be void and any subsequent rate lock-in shall be evidenced by a new mortgage rate lock-in and the application shall be considered a new application for the purposes of sections 36a-705 to 36a-707, inclusive.
(5) A mortgage rate lock-in shall not be binding on the mortgage lender in connection with the application for any first mortgage loan which is to be insured or guaranteed by any agency of the federal government or any state or municipal government or quasi-governmental agency in the event the loan program for which the applicant has applied becomes unavailable subsequent to filing an application because of actions taken by that governmental agency. In such cases the applicant shall be entitled to a refund of all funds paid by the applicant which have not actually been expended by the mortgage lender.
(6) If the mortgage lender requires that the closing of the first mortgage loan be conducted by a particular attorney or law firm, and that attorney or law firm is not available to conduct the closing before a first mortgage loan commitment period or rate lock-in period expires, the mortgage lender shall extend the first mortgage loan commitment or rate lock-in period until the designated attorney is available to conduct the closing.
(P.A. 87-73, S. 2; P.A. 88-364, S. 54, 123; P.A. 04-105, S. 2.)
History: P.A. 88-364 made a technical change; Sec. 36-442a transferred to Sec. 36a-706 in 1995; P.A. 04-105 amended Subsec. (a)(1) to substitute requirement that no mortgage lender shall commit to a first mortgage loan applicant or the applicant's representative that lender will make the loan at a specified rate if loan is closed by expiration of specified time period except by issuing a mortgage rate lock-in for requirement that no mortgage lender shall “enter into a mortgage rate lock-in agreement unless such agreement is in writing”, amended Subsec. (a)(2) to substitute “is issued” for “agreement is executed”, amended Subsec. (b) to eliminate references to “agreement”, to substitute “date” for “period” and to make a technical change, amended Subsecs. (c) and (d)(1) to make technical changes, amended Subsec. (d)(2) to insert “first mortgage loan” to qualify “written commitment” and to make a technical change, amended Subsec. (d)(4) to substitute “mortgage rate lock-in” for “rate lock-in agreement” and “written agreement” and to make a technical change, amended Subsec. (d)(5) to eliminate reference to “agreement”, and amended Subsec. (d)(6) to insert “first mortgage loan” to qualify “commitment”, effective May 21, 2004.
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Sec. 36a-707. (Formerly Sec. 36-442b). Applicant's remedies. (a) Any mortgage lender who violates any provision of sections 36a-705 to 36a-707, inclusive, with respect to any applicant shall be liable to such applicant for all fees and charges paid by the applicant in connection with the application for a first mortgage loan.
(b) No provision of sections 36a-705 to 36a-707, inclusive, shall be construed or implied to impose an obligation on any party by implication unless expressly stated in said sections.
(c) No provision of sections 36a-705 to 36a-707, inclusive, shall be considered as a limitation of the applicant's ability to seek such equitable relief as may be provided by any other statute or at common law.
(P.A. 87-73, S. 3.)
History: Sec. 36-442b transferred to Sec. 36a-707 in 1995.
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Sec. 36a-708. Prohibited acts by mortgage brokers. No mortgage broker shall collect a rate lock-in fee, except where required by a governmental agency to be collected directly by the mortgage broker, issue a mortgage rate lock-in or otherwise represent to a first mortgage loan applicant or the applicant's representative that the loan will be made at a specified rate if the loan is closed by the expiration of a specified period of time. Notwithstanding the provisions of this section, a mortgage broker may provide a mortgage lender's mortgage rate lock-in to a mortgage loan applicant or the applicant's representative on behalf of such mortgage lender and collect a rate lock-in fee on the mortgage lender's behalf payable to the mortgage lender.
(P.A. 04-105, S. 3.)
History: P.A. 04-105 effective May 21, 2004.
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Secs. 36a-709 to 36a-714. Reserved for future use.
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PART VII
MORTGAGE SERVICING
Sec. 36a-715. (Formerly Sec. 36-442m). Definitions. As used in sections 36a-715 to 36a-719l, inclusive, unless the context otherwise requires:
(1) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage servicer.
(2) The terms “advertise or advertising”, “control person”, “individual”, “main office”, “mortgage broker”, “mortgage correspondent lender”, “mortgage lender”, “office”, “person” and “unique identifier” have the same meanings as provided in section 36a-485.
(3) “Mortgage servicer” (A) means any person, wherever located, who, for such person or on behalf of the holder of a residential mortgage loan, receives payments of principal and interest in connection with a residential mortgage loan, records such payments on such person's books and records and performs such other administrative functions as may be necessary to properly carry out the mortgage holder's obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of such funds to the taxing authority and insurance company, and (B) includes a person who makes payments to borrowers pursuant to the terms of a home equity conversion mortgage or reverse mortgage.
(4) “Mortgagee” means the grantee of a residential mortgage, provided if the residential mortgage has been assigned of record, “mortgagee” means the last person to whom the residential mortgage has been assigned of record.
(5) “Mortgagor” means any person obligated to repay a residential mortgage loan.
(6) “Residential mortgage loan” means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling, as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602, located in this state, or real property located in this state upon which is constructed or intended to be constructed a dwelling.
(P.A. 89-347, S. 3; P.A. 92-12, S. 90; P.A. 94-122, S. 312, 340; P.A. 04-257, S. 107; P.A. 08-176, S. 60; P.A. 14-89, S. 1; P.A. 18-173, S. 70.)
History: P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-442m transferred to Sec. 36a-715 in 1995; P.A. 04-257 made a technical change in Subdiv. (1), effective June 14, 2004; P.A. 08-176 made a technical change in Subdiv. (1), effective July 1, 2008; P.A. 14-89 added reference to Secs. 36a-719 to 36a-719l, deleted former Subdiv. (1) re definition of “first mortgage loan”, added new Subdiv. (1) defining “branch office” and new Subdiv. (2) defining “control person”, “individual”, “main office”, “mortgage broker”, “mortgage correspondent lender”, “mortgage lender”, “office” and “person”, redesignated existing Subdiv. (2) as Subdiv. (3) and amended same to replace “mortgage servicing company” with “mortgage servicer”, added new Subdiv. (4) defining “mortgagee”, redesignated existing Subdiv. (3) as Subdiv. (5), added Subdiv. (6) defining “residential mortgage loan” and made technical and conforming changes; P.A. 18-173 amended Subdiv. (2) by adding “advertise or advertising,” and “unique identifier” and made technical changes.
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Sec. 36a-716. (Formerly Sec. 36-442n). Escrow accounts. (a) Any mortgage servicer who receives funds from a mortgagor to be held in escrow for payment of taxes and insurance premiums shall:
(1) Keep records that (A) reflect the mortgage servicer's handling of each mortgagor's escrow account, which may involve electronic storage, microfiche storage or any method of computerized storage of information, provided the information is readily retrievable, and (B) shall include, but need not be limited to, the payment of amounts into and from the escrow account and the submission of initial and annual escrow account statements to the mortgagor in accordance with subsections (g) and (i) of 12 CFR 1024.17. Such records shall be maintained for each such account for a period of at least five years after the mortgage servicer last serviced the escrow account.
(2) Pay the taxes and insurance premiums of the mortgagor to the appropriate taxing authority and insurance company in the amount required and at the time such taxes and insurance premiums are due, provided (A) the mortgage servicer has been provided with the tax or insurance bills at least fifteen days prior to the date such taxes and insurance premiums are due, and (B) the mortgagor has paid to the mortgage servicer the amounts required to be paid into the escrow account, as determined by the mortgage servicer, for all amounts scheduled to be paid to the mortgage servicer prior to the date such taxes and insurance premiums are due.
(b) Each mortgage servicer shall, through its own effort and expense, determine and notify the mortgagor of the amounts necessary to be paid into the escrow account to assure that sufficient funds will be available for the payment of such taxes and insurance premiums as of the date such payment is due.
(c) If the amount held in the escrow account as of the date such taxes and insurance premiums are due is insufficient to pay the taxes and insurance premiums despite compliance by the mortgagor with subparagraph (B) of subdivision (2) of subsection (a) of this section, the mortgage servicer shall pay such taxes and insurance premiums from its own funds. The mortgage servicer shall then give the mortgagor the option of paying the shortage over a period of not less than one year. The mortgage servicer shall not charge or collect interest on such shortage during the one-year period.
(d) Whenever a mortgage servicer licensee receives funds from a mortgagor to be held in escrow for the payment of taxes and insurance, the mortgage servicer licensee shall deposit or invest such funds in one or more segregated deposit or trust accounts maintained at a federally insured bank, Connecticut credit union, federal credit union or out-of-state bank, which account or accounts shall be reconciled monthly. Such reconciliation may be evidenced by a monthly account statement or statements furnished by the depository institution, provided (1) such account or accounts shall be maintained with the depository institution in a manner that reasonably reflects the fact that the funds held therein are being maintained for escrow purposes, (2) such funds shall not be commingled with funds belonging to the mortgage servicer licensee and may not be used to pay business operating expenses of the mortgage servicer licensee, and (3) the mortgage servicer licensee shall adopt, implement and maintain internal accounting controls that are reasonably designed to ensure compliance with this section. For purposes of this subsection, “mortgage servicer licensee” means a person who is licensed pursuant to section 36a-719 or exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718.
(P.A. 89-347, S. 4; P.A. 14-89, S. 2; P.A. 16-65, S. 8.)
History: Sec. 36-442n transferred to Sec. 36a-716 in 1995; P.A. 14-89 replaced references to mortgage servicing company with references to mortgage servicer; P.A. 16-65 amended Subsec. (a) by adding new Subdiv. (1) re records and designating existing provisions re payment of taxes and insurance premiums as new Subdiv. (2), added new Subsec. (d) re mortgage servicer licensee requirements, and made conforming changes, effective July 1, 2016.
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Sec. 36a-717. (Formerly Sec. 36-442o). Penalties. Any mortgage servicer who violates any provision of section 36a-716 shall be liable to the mortgagor for: (1) Any penalties, interest or other charges levied by the taxing authority or insurance company as a result of such violation; (2) any actual damages suffered by the mortgagor as a result of such violation, including, but not limited to, any amount which would have been paid by an insurer for a casualty or liability claim had the insurance policy not been cancelled for nonpayment by the mortgage servicer; and (3) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney's fees as determined by the court.
(P.A. 89-347, S. 5; P.A. 14-89, S. 3.)
History: Sec. 36-442o transferred to Sec. 36a-717 in 1995; P.A. 14-89 replaced references to mortgage servicing company with references to mortgage servicer.
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Sec. 36a-718. (Formerly Sec. 36-442p). Licenses required. Exemptions. (a) On and after January 1, 2015, no person shall act as a mortgage servicer, directly or indirectly, without first obtaining a license under section 36a-719 from the commissioner for its main office and for each branch office where such business is conducted, unless such person is exempt from licensure pursuant to subsection (b) of this section. Any activity subject to licensure pursuant to sections 36a-715 to 36a-719l, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(b) The following persons are exempt from mortgage servicer licensing requirements: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured; (2) any wholly-owned subsidiary of such bank or credit union; (3) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union; (4) any person licensed as a mortgage lender in this state while acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, provided (A) such person meets the supplemental mortgage servicer surety bond, fidelity bond and errors and omissions coverage requirements under section 36a-719c, and (B) during any period that the license of the mortgage lender in this state has been suspended, such exemption shall not be effective; and (5) any person licensed as a mortgage correspondent lender in this state while acting as a mortgage servicer with respect to any residential mortgage loan it has made and during the permitted ninety-day holding period for such loan from a location licensed as a main office or branch office under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, provided during any period the license of the mortgage correspondent lender in this state has been suspended, such exemption shall not be effective.
(c) The provisions of sections 36a-719e to 36a-719h, inclusive, shall apply to any person, including a person exempt from licensure pursuant to subsection (b) of this section, who acts as a mortgage servicer in this state on or after January 1, 2015.
(P.A. 88-230, S. 1, 12; P.A. 89-347, S. 6; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 313, 340; P.A. 01-48, S. 13; P.A. 09-208, S. 34; P.A. 14-89, S. 4; P.A. 15-53, S. 1; P.A. 18-173, S. 71.)
History: (Revisor's note: P.A. 88-230 authorized substitution of “judicial district of Hartford” for “judicial district of Hartford-New Britain” in the public and special acts of 1989, effective September 1, 1991); P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted provisions allowing the commissioner to bring an enforcement action in superior court and to fine violators up to $2,500 and made technical changes, effective January 1, 1995; Sec. 36-442p transferred to Sec. 36a-718 in 1995; P.A. 01-48 added provision re express delivery; P.A. 09-208 added “take action against such mortgage servicing company” and reference to Sec. 36a-50 and deleted “, order the mortgage servicing company to cease and desist from such violation”, effective July 7, 2009; P.A. 14-89 replaced former provisions re violation by mortgage servicing company with Subsec. (a) re mortgage servicers to be licensed, Subsec. (b) re exemptions from licensure and Subsec. (c) re application of requirements to person acting as a mortgage servicer in this state on or after January 1, 2015; P.A. 15-53 amended Subsec. (b) to add Subdiv. (5) re exemption for licensed mortgage correspondent lender, effective June 19, 2015; P.A. 18-173 amended Subsec. (a) by adding provision re activity subject to licensure to be conducted from an office located in a state, and amended Subsec. (b) by replacing references to Sec. 36a-498f with references to Sec. 36a-498e in Subdivs. (4) and (5).
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Sec. 36a-719. Mortgage servicer license. Issuance. Application. Criminal history records checks. Renewal standards. Automatic suspension of license. Abandonment of application. Schedule and report. Unique identifier of license. Advertising of license. (a) The commissioner shall issue a mortgage servicer license to an applicant for such license if the commissioner finds that: (1) The applicant has identified a qualified individual for its main office and a branch manager for each branch office where such business is conducted, provided such qualified individual and branch manager have supervisory authority over the mortgage servicer activities at the respective office location and at least three years' experience in the mortgage servicing business within the five years immediately preceding the date of the application for licensure; (2) notwithstanding the provisions of section 46a-80, the applicant, the control persons of the applicant, the qualified individual and any branch manager have not been convicted of or pled guilty or nolo contendere to, in a domestic, foreign or military court, a felony during the seven-year period preceding the date of the application for licensing or a felony involving an act of fraud or dishonesty, a breach of trust or money laundering at any time preceding the date of application, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (3) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant, the qualified individual and any branch manager command the confidence of the community and warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-715 to 36a-719l, inclusive; (4) the applicant has met the surety bond, fidelity bond and errors and omissions coverage requirement under section 36a-719c; (5) the applicant, the control persons of the applicant, the qualified individual and any branch manager have not made a material misstatement in the application; and (6) the applicant has met any other similar requirements as determined by the commissioner. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. The commissioner may waive the requirements of subdivision (1) of this subsection relating to the supervision and experience of (A) a qualified individual where the applicant establishes to the satisfaction of the commissioner that the applicant (i) will not conduct any activity subject to licensure under sections 36a-715 to 36a-719l, inclusive, at the main office, and (ii) has designated a qualified individual who is responsible for the actions of the applicant; and (B) a qualified individual or a branch manager where the applicant establishes to the satisfaction of the commissioner that the applicant (i) holds only mortgage servicing rights at the main office or branch office and conducts no other activity at such office, and (ii) has designated a qualified individual or branch manager at such main office or branch office who is responsible for the actions of the application. No person licensed as a mortgage servicer and granted a waiver by the commissioner shall engage in any activity that would have precluded the issuance of such waiver without first designating a qualified individual or branch manager, as the case may be, who meets all applicable requirements of subdivision (1) of this subsection and is approved by the commissioner. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event such jurisdiction does not use the term “felony”, “pardon” or “expungement”, such terms shall include legally equivalent events. For purposes of subdivision (1) of this subsection, “experience in the mortgage servicing business” means paid experience in the (I) servicing of mortgage loans, (II) accounting, receipt and processing of payments on behalf of mortgagees or creditors, or (III) supervision of such activities, or any other relevant experience as determined by the commissioner, and “at the respective office location” may be established if the qualified individual or branch manager resides not more than one hundred miles from the location of the office or otherwise demonstrates to the satisfaction of the commissioner an ability to provide full-time, in-person supervision of the office.
(b) An application for a license as a mortgage servicer or renewal of such license shall be made and processed on the system pursuant to section 36a-24b in a form prescribed by the commissioner and accompanied by the fees required by section 36a-719b. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-715 to 36a-719l, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. For the purpose of this subsection, evidence of experience of the qualified individual and any branch manager shall include: (1) A statement specifying the duties and responsibilities of such person's employment, the term of employment, including month and year, and the name, address and telephone number of a supervisor, employer or, if self-employed, a business reference; and (2) if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer's letterhead verifying such person's duties and responsibilities and term of employment including month and year, and, if such person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement. As part of an application, the commissioner may (A) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager, and (B) in accordance with section 36a-24b (i) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual and any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (ii) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time.
(c) (1) The minimum standards for license renewal for a mortgage servicer shall include the following: (A) The applicant continues to meet the minimum standards under subsection (a) of this section; (B) the mortgage servicer has paid all required fees for renewal of the license; and (C) the applicant has paid any outstanding examination fees or other moneys due to the commissioner.
(2) The license of a mortgage servicer failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage servicer license if the licensee receives a deficiency on the system indicating that the payment required by section 36a-719b was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(d) The commissioner may deem an application for a license under this section abandoned if the applicant fails to respond to any request for information required under sections 36a-715 to 36a-719l, inclusive, or the regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days from the date of such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license.
(e) As part of its application and upon a change to such information, a mortgage servicer shall file with the commissioner a current schedule of the ranges of costs and fees it charges mortgagors for its servicing-related activities.
(f) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each mortgage servicer licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision. At least annually, a licensee shall file with the commissioner a report in a form and format acceptable to the commissioner detailing the mortgage servicer's activities in the state, including (1) the number of residential mortgage loans the mortgage servicer is servicing, (2) the type and characteristics of the residential mortgage loans in this state, (3) the number of serviced residential mortgage loans in default, along with a breakdown of thirty-day, sixty-day and ninety-day delinquencies, (4) information on loss mitigation activities, and (5) information on foreclosures commenced in this state.
(g) The unique identifier of any person licensed under this section shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under this section: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-715 to 36a-719l, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(P.A. 14-89, S. 5; P.A. 17-38, S. 15, 17-233, S. 26; P.A. 18-173, S. 72.)
History: P.A. 17-38 amended Subsec. (d)(1) by replacing “receipt by the commissioner of a notice of intent to withdraw such application” with “the commissioner's acceptance on the system of a withdrawal request”; P.A. 17-233 amended Subsec. (f) by deleting “At least annually” and adding “and upon a change to such information” re filing with commissioner current schedule of ranges of costs and fees charged for servicing-related activities, deleting Subdiv. (1) and (2) designators and redesignating existing Subparas. (A) to (E) as Subdivs. (1) to (5), adding “At least annually, a licensee shall file with the commissioner” re report, deleting “including details on workout arrangements undertaken,” in redesignated Subdiv. (4), and making technical changes; P.A. 18-173 amended Subsec. (a) by deleting provision re branch manager to have supervisory authority over office for which license is sought in Subdivs. (2) and (3), adding “the control persons of the applicant, the qualified individual and the branch manager” in Subdiv. (5), adding provisions re commissioner's authority to waive supervision and experience requirements, replacing Subpara. (A) to (C) designators with clause (I) to (III) designators, and adding provision re establishment of “at the respective office location”, amended Subsec. (b) by replacing provision re application to be filed with the system with provision re application to be made and processed on the system pursuant to Sec. 36a-24b, deleting “36a-718, inclusive, and sections 36a-719a to”, deleting provision re applicant to notify commissioner on the system of change to information, deleting provision re commissioner's authority to conduct criminal history records check and require applicant to submit fingerprints, and adding provisions re commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition of person, amended Subsec. (c) by adding Subpara. (C) re applicant has paid outstanding examination fees or other moneys due in Subdiv. (1), adding Subpara. (A) and (B) designators and replacing “action that, in the opinion of the commissioner, will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section” in Subdiv. (2), deleted former Subsec. (d) re withdrawal of application, redesignated existing Subsecs. (e) and (f) as Subsecs. (d) and (e), amended Subsec. (f) by adding provisions re person filing or submitting information on the system to do so in accordance with procedures and requirements and timely submission of accurate reports of condition, added Subsec. (g) re unique identifier and solicitations and advertisements, and made technical and conforming changes.
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Sec. 36a-719a. License not assignable or transferable. Change in any control persons. Surrender of license. Change of name or address. Required filings on system or notification of commissioner. Automatic suspension of license. (a) A mortgage servicer license shall not be transferable or assignable. Any change in any control person of a licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. Any licensee who intends to permanently cease acting as a mortgage servicer at any time during a license period for any cause, including, but not limited to, bankruptcy or voluntary dissolution, shall file a request to surrender the license in accordance with subsection (c) of section 36a-51, for each office at which the licensee intends to cease to do business, on the system, not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.
(b) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address stated on the license issued by the commissioner. A mortgage servicer licensee may change the name of the licensee or address of any office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system and, in the case of a main office or branch office, provides the commissioner a bond rider or endorsement, or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner that reflects the new name or address of the main office or branch office; and (2) the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.
(c) Except as otherwise specified in subsections (a) and (b) of this section, each mortgage servicer applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file to the system any change in the information most recently submitted to the system by such applicant, licensee, control person, qualified individual or branch manager in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days from the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change. A mortgage servicer licensee shall file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, not later than fifteen business days after the licensee has reason to know of the occurrence of any of the following events:
(1) Filing for bankruptcy, or the consummation of a corporate restructuring, of the licensee;
(2) Filing of a criminal indictment against the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, qualified individual or branch manager of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee or any control person, qualified individual or branch manager of the licensee and the reasons for such action;
(4) Receiving notification of the initiation of any action against the licensee or any control person, qualified individual or branch manager of the licensee by the Attorney General or the attorney general of any other state and the reasons for such action;
(5) Suspension or termination of the licensee's status as an approved seller or servicer by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association;
(6) Receiving notification that certain servicing rights of the licensee will be rescinded or cancelled, and the reasons provided therefor;
(7) Receiving notification of filing for bankruptcy of any control person, qualified individual or branch manager of the licensee; or
(8) Receiving notification of the initiation of a class action lawsuit on behalf of consumers against the licensee that is related to the operation of the licensed business.
(d) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section or upon a failure of the licensee to designate a qualified individual or branch manager who meets the requirements set forth in section 36a-719 not later than thirty days after a vacancy in the position. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(P.A. 14-89, S. 6; P.A. 18-173, S. 73.)
History: P.A. 18-173 amended Subsec. (a) by replacing provision re licensee's use of name other than approved legal or fictitious name with provision re filing of advance change notice on the system, and adding reference to Sec. 36a-51(c), amended Subsec. (b) by adding provisions re licensee's use of approved legal or fictitious name and use of name or address stated on license, deleting “, directly to” re providing bond rider or endorsement or addendum to commissioner in Subdiv. (1), amended Subsec. (c) by adding provisions re filing change in information to the system or notification to commissioner in writing, replacing reference to 5 business days with reference to 15 business days re notice to commissioner, replacing references to officers, directors, members, partners or shareholders with references to control person, qualified individual or branch manager in Subdivs. (2) and (7), and adding references to control person, qualified individual or branch manager in Subdivs. (3) and (4), added Subsec. (d) re automatic suspension of license, and made technical changes.
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Sec. 36a-719b. Expiration of license. Application for renewal. Fees. (a) Each mortgage servicer license shall expire at the close of business on December thirty-first of the year in which it is approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for an initial license or renewal of a license as a mortgage servicer shall pay to the system any required fees or charges and a license fee of one thousand dollars.
(b) All fees paid pursuant to this section, including fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license, shall be nonrefundable. No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.
(P.A. 14-89, S. 7.)
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Sec. 36a-719c. Surety bond, fidelity bond and errors and omissions coverage. Cancellation. Automatic suspension of license. Notices. (a) Each mortgage servicer applicant or licensee and any person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 shall file with the commissioner (1) a surety bond, written by a surety authorized to write such bonds in this state, covering its main office and any branch office from which it acts as mortgage servicer, in a penal sum of one hundred thousand dollars per office location in accordance with subsection (b) of this section, (2) a fidelity bond, written by a surety authorized to write such bonds in this state, in accordance with the requirements of subsection (c) of this section, and (3) evidence of errors and omissions coverage, written by a surety authorized to write such coverage in this state, in accordance with the requirements of subsection (c) of this section. No mortgage servicer licensee and no person otherwise exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 shall act as a mortgage servicer in this state without maintaining the surety bond, fidelity bond and errors and omissions coverage required by this section.
(b) The surety bond required by subsection (a) of this section shall be (1) in a form approved by the Attorney General; and (2) conditioned upon the mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 faithfully performing any and all written agreements or commitments with or for the benefit of mortgagors and mortgagees, truly and faithfully accounting for all funds received from a mortgagor or mortgagee in such person's capacity as a mortgage servicer, and conducting such mortgage business consistent with the provisions of sections 36a-715 to 36a-719l, inclusive. Any mortgagor that may be damaged by the failure of a mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a mortgagor to such licensee or person, may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety on such bond, or both, to collect any civil penalty imposed pursuant to subsection (a) of section 36a-50, any restitution imposed pursuant to subsection (c) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The surety bond shall run concurrently with the period of the license for the main office of the mortgage servicer or mortgage lender and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.
(c) The fidelity bond and errors and omissions coverage required by subsection (a) of this section shall name the commissioner as an additional loss payee on drafts the surety issues to pay for covered losses directly or indirectly incurred by mortgagors of residential mortgage loans serviced by the mortgage servicer. The fidelity bond shall cover losses arising from dishonest and fraudulent acts, embezzlement, misplacement, forgery and similar events committed by employees of the mortgage servicer. The errors and omissions coverage shall cover losses arising from negligence, errors and omissions by the mortgage servicer with respect to the payment of real estate taxes and special assessments, hazard and flood insurance or the maintenance of mortgage and guaranty insurance. The fidelity bond and errors and omissions coverage shall each be in the following principal amounts based on the mortgage servicer's volume of servicing activity most recently reported to the commissioner:
(1) If the amount of the residential mortgage loans serviced is one hundred million dollars or less, the principal amount shall be at least three hundred thousand dollars; or
(2) If the amount of such loans exceeds one hundred million dollars, the principal amount shall be at least three hundred thousand dollars plus (A) three-twentieths of one per cent of the amount of residential mortgage loans serviced greater than one hundred million dollars but less than or equal to five hundred million dollars; (B) plus one-eighth of one per cent of the amount of residential mortgage loans serviced greater than five hundred million dollars but less than or equal to one billion dollars; and (C) plus one-tenth of one per cent of the amount of residential mortgage loans serviced greater than one billion dollars.
The fidelity bond and errors and omissions coverage may provide for a deductible amount not to exceed the greater of one hundred thousand dollars or five per cent of the face amount of such bond or coverage.
(d) A surety shall have the right to cancel the surety bond, fidelity bond and errors and omissions coverage required by this section at any time by a written notice to the principal and the commissioner stating the date cancellation shall take effect. If the surety bond required by this section was issued electronically on the system, written notice of cancellation may be provided by the surety company to the principal and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the principal and the commissioner at least thirty days prior to the date of cancellation. A surety bond, fidelity bond or errors and omissions coverage shall not be cancelled unless the surety notifies the commissioner, in writing, not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the principal of the date such cancellation shall take effect. The commissioner shall automatically suspend the license of a mortgage servicer on such date or on any date when a fidelity bond or errors and omissions coverage expires or is no longer in effect. No automatic suspension or inactivation shall occur if, prior to the date that such bond or errors and omissions coverage cancellation or expiration shall take effect, (1) the principal submits a letter of reinstatement of the bond or errors and omissions coverage, or a new bond or errors and omissions policy; or (2) the mortgage servicer licensee has ceased business in this state and has surrendered all licenses in accordance with section 36a-51 and section 36a-719a. After a mortgage servicer license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section. A person licensed as a mortgage lender in this state acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b shall cease to be exempt from mortgage servicer licensing requirements in this state upon cancellation or expiration of any surety bond, fidelity bond or errors and omissions coverage required by this section.
(e) If the commissioner finds that the financial condition of a mortgage servicer or mortgage lender licensee so requires, as evidenced by the reduction of tangible net worth, financial losses or potential losses as a result of a violation of sections 36a-715 to 36a-719k, inclusive, the commissioner may require one or more additional bonds meeting the standards set forth in this section. The licensee shall file any such additional bonds not later than ten days after receipt of the commissioner's written notice of such requirement. A mortgage servicer or mortgage lender licensee shall file, as the commissioner may require, any bond rider or endorsement or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner to reflect any changes necessary to maintain the surety bond, fidelity bond and errors and omissions coverage required by this section.
(P.A. 14-89, S. 8; P.A. 15-53, S. 2; P.A. 18-173, S. 74.)
History: P.A. 15-53 amended Subsec. (c) by adding “at least” re principal amount of bond and replacing “principal amount” with “face amount of such bond or coverage”, effective June 19, 2015; P.A. 18-173 amended Subsec. (d) by adding references to commissioner re cancellation of surety bond by written notice, adding provision re written notice of cancellation through the system if surety bond was issued electronically, adding provision re on date when fidelity bond or errors and omissions coverage expires or is no longer in effect re automatic suspension of license, designating existing provisions re notice of automatic suspension as Subpara. (A), designating existing provisions re requiring licensee to take or refrain from taking action as Subpara. (B) and amending same to replace “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”, and replacing reference to Sec. 36a-498f with reference to Sec. 36a-498e, and made technical and conforming changes.
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Sec. 36a-719d. Records to be maintained by licensee. (a) Each mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer or mortgage lender license, or, if requested by the commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send them to the commissioner. Such records shall provide the following information: (1) A loan history for residential mortgage loans upon which payments are received or made by the mortgage servicer, itemizing the amount and date of each payment and the unpaid balance at all times; (2) the original or an exact copy of the note, residential mortgage or other evidence of indebtedness and mortgage deed; (3) the name and address of the mortgage lender, mortgage correspondent lender and mortgage broker, if any, involved in the residential mortgage loan transaction; (4) copies of any disclosures or notifications provided to the mortgagor required by state or federal law; (5) a copy of any bankruptcy plan approved in a proceeding filed by the mortgagor or a co-owner of the property subject to the residential mortgage loan; (6) a communications log that documents all verbal communications with the mortgagor or the mortgagor's representative; (7) a copy of all notices sent to the mortgagor related to any foreclosure proceeding filed against the encumbered property; and (8) information on loss mitigation activities, included details on workout arrangements undertaken.
(b) Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall retain the records of each residential mortgage loan serviced for not less than two years following the final payment on such residential mortgage loan, or the assignment of such residential mortgage loan, whichever occurs first, or such longer period as may be required by any other provision of law. Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall keep and use in its business books, accounts and records that will enable the commissioner to determine whether such mortgage servicer is complying with the provisions of sections 36a-715 to 36a-719l, inclusive, and with any regulations adopted pursuant thereto.
(P.A. 14-89, S. 9; P.A. 15-53, S. 3; P.A. 17-233, S. 27.)
History: P.A. 15-53 added references to Sec. 36a-718(b)(5) and made a technical change, effective June 19, 2015; P.A. 17-233 amended Subsec. (a) to add Subdiv. (8) re information on loss mitigation activities, and make a technical change.
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Sec. 36a-719e. Disclosure of notice and schedule of ranges and categories of costs and fees. Upon assignment of servicing rights on a residential mortgage loan, the mortgage servicer shall disclose to the mortgagor: (1) Any notice required by the Real Estate Settlement Procedures Act of 1974, 12 USC Section 2601 et seq., as from time to time amended, and the regulations promulgated thereunder, and within the time periods prescribed therein; and (2) a schedule of the ranges and categories of its costs and fees for its servicing-related activities, which shall comply with state and federal law and, if such disclosure is made by a mortgage servicer licensee, shall not exceed those reported to the commissioner in accordance with subsection (e) of section 36a-719.
(P.A. 14-89, S. 10; P.A. 18-173, S. 75.)
History: P.A. 14-89 effective January 1, 2015; P.A. 18-173 replaced reference to Sec. 36a-719(f) with reference to Sec. 36a-719(e) and made a technical change.
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Sec. 36a-719f. Compliance with federal laws and regulations. A mortgage servicer shall comply with all applicable federal laws and regulations relating to mortgage loan servicing, including, but not limited to, the Real Estate Settlement Procedures Act of 1974, 12 USC Section 2601 et seq., the Truth-in-Lending Act, 15 USC Section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this section and a basis upon which the Banking Commissioner may take enforcement action pursuant to section 36a-719j.
(P.A. 14-89, S. 11.)
History: P.A. 14-89 effective January 1, 2015.
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Sec. 36a-719g. Fee schedule. Imposition of late fee or delinquency charge. (a) A mortgage servicer shall maintain and keep current a schedule of fees that it charges mortgagors for its servicing-related activities. The schedule shall identify each fee, provide a plain English explanation of the fee and state the amount of the fee or range of amounts or, if there is no standard fee, how the fee is calculated or determined. A mortgage servicer shall make its schedule available to the mortgagor or the mortgagor's authorized representative upon request.
(b) A mortgage servicer shall not impose any late fee or delinquency charge when the only delinquency is attributable to late fees or delinquency charges assessed on an earlier payment, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period. Late charges shall not be (1) based on an amount greater than the past due amount; (2) collected from the escrow account or from escrow surplus without the approval of the mortgagor; or (3) deducted from any regular payment.
(P.A. 14-89, S. 12.)
History: P.A. 14-89 effective January 1, 2015.
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Sec. 36a-719h. Prohibited acts. Duty to establish, enforce and maintain policies and procedures for compliance. (a) No mortgage servicer shall, directly or indirectly:
(1) Employ any scheme, device or artifice to defraud or mislead mortgagors or mortgagees or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of the residential mortgage loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a residential mortgage loan, the terms and conditions of the servicing agreement or the mortgagor's obligations under the residential mortgage loan;
(3) Obtain property by fraud or misrepresentation;
(4) Recklessly apply residential mortgage loan payments or knowingly misapply residential mortgage loan payments to the outstanding balance of a residential mortgage loan;
(5) Recklessly apply payments or knowingly misapply payments to escrow accounts;
(6) Place hazard, homeowners or flood insurance on the mortgaged property when the mortgage servicer knew or should have known that the mortgagor has an effective policy for such insurance;
(7) Fail to comply with section 49-10a;
(8) Knowingly or recklessly provide inaccurate information to a credit bureau that results in harm to a mortgagor's creditworthiness;
(9) Fail to report both the favorable and unfavorable payment history of the mortgagor to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;
(10) Collect private mortgage insurance beyond the date for which private mortgage insurance is required;
(11) Fail to issue a release of mortgage in accordance with section 49-8;
(12) Fail to provide written notice to a mortgagor upon taking action to place hazard, homeowners or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the mortgagor may demonstrate that he or she has the required insurance coverage and by which the mortgage servicer shall terminate the insurance coverage placed by it and refund or cancel any insurance premiums and related fees paid by or charged to the mortgagor;
(13) Place hazard, homeowners or flood insurance on a mortgaged property, or require a mortgagor to obtain or maintain such insurance, in excess of the replacement cost of the improvements on the mortgaged property as established by the property insurer;
(14) Fail to provide to the mortgagor a refund of unearned premiums paid by a mortgagor or charged to the mortgagor for hazard, homeowners or flood insurance placed by a mortgagee or the mortgage servicer if the mortgagor provides reasonable proof that the mortgagor has obtained coverage such that the forced placement insurance is no longer necessary and the property is insured. If the mortgagor provides reasonable proof that no lapse in coverage occurred such that the forced placement was not necessary, the mortgage servicer shall promptly refund the entire premium;
(15) Require any amount of funds to be remitted by means more costly to the mortgagor than a bank or certified check or attorney's check from an attorney's account to be paid by the mortgagor;
(16) Refuse to communicate with an authorized representative of the mortgagor who provides a written authorization signed by the mortgagor, provided the mortgage servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the mortgagor;
(17) Conduct any business covered by sections 36a-715 to 36a-719l, inclusive, without holding a valid license as required under said sections, or assist or aid and abet any person in the conduct of business without a valid license as required under this title;
(18) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or the system or in connection with any investigation conducted by the commissioner or another governmental agency; or
(19) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b.
(b) No mortgage servicer shall fail to establish, enforce and maintain policies and procedures reasonably designed to achieve compliance with subsection (a) of this section, and no qualifying individual or branch manager for such mortgage servicer shall fail to enforce such policies and procedures. No violation of this subsection shall be found unless the mortgage servicer, qualifying individual or branch manager's failure to establish, enforce or maintain policies and procedures resulted in conduct in violation of sections 36a-715 to 36a-724, inclusive, or rules or regulations adopted under said sections or any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections.
(P.A. 14-89, S. 13; P.A. 15-118, S. 29; P.A. 16-65, S. 46; P.A. 17-233, S. 28; P.A. 18-173, S. 76.)
History: P.A. 14-89 effective January 1, 2015; P.A. 15-118 made technical changes in Subdivs. (6), (12), (13) and (14); P.A. 16-65 made technical changes in Subdivs. (4), (5), (6) and (8); P.A. 17-233 designated existing provisions re acts by mortgage servicer as Subsec. (a) and amended same to add “, directly or indirectly”, delete “directly or indirectly” in Subdiv. (1), and replace “Banking Commissioner” with “commissioner” in Subdiv. (18), and added Subsec. (b) re failure to establish, enforce and maintain policies and procedures, effective July 1, 2018; P.A. 18-173 amended Subsec. (a)(19) by replacing “36a-498f” with “36a-498e”, effective July 1, 2018.
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Sec. 36a-719i. Authority of commissioner re investigations and examinations. Prohibited acts by subjects of investigation or examination. Section 36a-719i is repealed, effective October 1, 2018.
(P.A. 14-89, S. 14; P.A. 18-173, S. 102.)
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Sec. 36a-719j. Suspension, revocation or refusal to renew license or taking of other action. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any mortgage servicer license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under section 36a-719, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or any branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misrepresentation or misappropriated funds; (3) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's mortgage servicer business; or (4) failed to perform any agreement with a mortgagee or a mortgagor.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate section 49-8 or 49-10a, any of the provisions of this title or of any regulations adopted pursuant thereto, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to perform any agreement with a mortgagee or mortgagor, committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-715 to 36a-719l, inclusive, from office and from employment or retention as an independent contractor in the mortgage loan servicer business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(P.A. 14-89, S. 15; P.A. 18-173, S. 77.)
History: P.A. 18-173 amended Subsec. (a)(3) by replacing “regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business” with “regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's mortgage servicer business”, amended Subsec. (b) by designating existing provision re person violation provisions of title or regulations as Subdiv. (1), adding Subdiv. (2) re person is, was or would be cause of violation of provision of sections or regulation, and designating existing provision re licensee's failure to perform agreement, committed fraud, made misrepresentation or misappropriated funds as Subdiv. (3), added Subsec. (c) re commissioner's authority to order licensee to remove individual conducting business from office, employment or retention as independent contractor, added Subsec. (d) re commissioner's authority to issue temporary order, and made technical and conforming changes.
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Sec. 36a-719k. Regulations. The Banking Commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of sections 36a-715 to 36a-719l, inclusive.
(P.A. 14-89, S. 16.)
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Sec. 36a-719l. Exemptions. The provisions of sections 36a-718 to 36a-719h, inclusive, shall not apply to (1) a person exempt from licensure as a mortgage lender or mortgage correspondent lender pursuant to subsection (b) of section 36a-487 while servicing residential mortgage loans made pursuant to such exemption, (2) a person servicing five or fewer residential mortgage loans within any period of twelve consecutive months, (3) any agency of the federal government, any state or municipal government or any quasi-governmental agency servicing residential mortgage loans under the specific authority of the laws of any state or the United States, and (4) a person exempt from licensure as a mortgage servicer pursuant to subdivisions (1), (2) and (3) of subsection (b) of section 36a-718.
(P.A. 14-89, S. 17.)
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Secs. 36a-720 to 36a-724. Reserved for future use.
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PART VIII
MORTGAGE INSURANCE
Sec. 36a-725. (Formerly Sec. 36-442aa). Definitions. As used in this section and section 36a-726, unless the context otherwise requires:
(1) “First mortgage loan” means any loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage upon any interest in one-to-four-family residential, owner-occupied real property located in this state which is not subject to any prior mortgages. The term includes the renewal or refinancing of an existing first mortgage loan;
(2) “Mortgage insurance” means insurance written by an independent mortgage insurance company to protect the mortgage lender against loss incurred in the event of a default by a borrower under the mortgage loan;
(3) “Mortgage lender” means any person engaged in the business of making first mortgage loans, including, but not limited to, banks, out-of-state banks, Connecticut credit unions, federal credit unions, out-of-state credit unions, and mortgage lenders and mortgage correspondent lenders required to be licensed under sections 36a-485 to 36a-498a, inclusive.
(P.A. 89-95, S. 1; P.A. 92-12, S. 91; P.A. 94-122, S. 314, 340; P.A. 04-69, S. 27; P.A. 08-176, S. 61; P.A. 10-32, S. 113.)
History: P.A. 92-12 redesignated Subdivs. and made technical changes; P.A. 94-122 deleted the definition of “person”, reordered definitions and made other technical changes, effective January 1, 1995; Sec. 36-442aa transferred to Sec. 36a-725 in 1995; P.A. 04-69 amended Subdiv. (3) to substitute “36a-498a” for “36a-498”; P.A. 08-176 added reference to correspondent mortgage lender and made a conforming change in Subdiv. (3), effective July 1, 2008; P.A. 10-32 substituted “mortgage correspondent lenders” for “correspondent mortgage lenders” in Subdiv. (3), effective May 10, 2010.
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Sec. 36a-726. (Formerly Sec. 36-442bb). Disclosure required. (a) Any mortgage lender who requires a borrower to pay for mortgage insurance as a condition of obtaining a first mortgage loan shall disclose to the applicant in writing at the time the first mortgage loan application is filed:
(1) That the purpose of mortgage insurance is to protect the mortgage lender against a loss which may be incurred in the event of a default by the borrower under the mortgage loan;
(2) That mortgage insurance is required as a condition of obtaining the mortgage loan, and under what, if any, conditions the lender may release the borrower from this obligation;
(3) A good faith estimate of the initial cost, if any, and the monthly cost, if any, of the required mortgage insurance. Notwithstanding the foregoing, if the first mortgage loan transaction is subject to the requirements of the federal Real Estate Settlement Procedures Act, the mortgage lender may, in place of the disclosure required under this subdivision, disclose that the cost of mortgage insurance will be disclosed on the good faith estimate of closing costs required to be furnished to the applicant in accordance with the Real Estate Settlement Procedures Act and the Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder.
(b) Any mortgage lender who does not require mortgage insurance but does charge a higher interest rate for first mortgage loans in excess of an eighty per cent loan-to-value ratio shall disclose this fact to the applicant in writing at the time the first mortgage loan application is filed.
(c) The provisions of subsection (a) of this section shall not apply to any first mortgage loan which is to be insured or guaranteed by any agency of the federal government or any state or municipal government or quasi-governmental agency where such agency requires that mortgage insurance be obtained in connection with the loan.
(P.A. 89-95, S. 2; P.A. 15-235, S. 41.)
History: Sec. 36-442bb transferred to Sec. 36a-726 in 1995; P.A. 15-235 amended Subsec. (a)(3) to add reference to Truth-in-Lending Act, effective August 1, 2015.
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Secs. 36a-727 to 36a-734. Reserved for future use.
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PART IX
HOME MORTGAGE DISCLOSURE
Sec. 36a-735. (Formerly Sec. 36-443). Short title: Home Mortgage Disclosure Act. Sections 36a-735 to 36a-744, inclusive, shall be known and may be cited as the “Home Mortgage Disclosure Act”.
(P.A. 77-153, S. 1; P.A. 94-122, S. 315, 340.)
History: P.A. 94-122 made a technical change, effective January 1, 1995; Sec. 36-443 transferred to Sec. 36a-735 in 1995.
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Sec. 36a-736. (Formerly Sec. 36-444). Definitions. As used in sections 36a-735 to 36a-744, inclusive, unless the context otherwise requires:
(1) “Applicant” means any person who applies for a home purchase loan, home improvement loan or other mortgage loan as defined in sections 36a-735 to 36a-744, inclusive, whether or not the loan is granted;
(2) “Federal Home Mortgage Disclosure Act” means the Home Mortgage Disclosure Act of 1975 (12 USC Section 2801 et seq.), as amended from time to time, and any regulations promulgated by the Federal Reserve Board or the Bureau of Consumer Financial Protection pursuant to that act, except, for purposes of sections 36a-735 to 36a-744, inclusive, the supervisory agency shall be the commissioner;
(3) “Financial institution” means any Connecticut bank or Connecticut credit union which makes home purchase loans or home improvement loans or any for profit mortgage lending institution other than a Connecticut bank or Connecticut credit union, whose home purchase loan originations equaled or exceeded ten per cent of its loan origination volume, measured in dollars, in the preceding calendar year, if such mortgage lending institution is licensed under sections 36a-485 to 36a-498a, inclusive;
(4) “Home improvement loan” has the same meaning as provided in the federal Home Mortgage Disclosure Act;
(5) “Home purchase loan” has the same meaning as provided in the federal Home Mortgage Disclosure Act; and
(6) “Mortgage loan” means a loan which is secured by residential real property.
(P.A. 77-153, S. 2; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 262, 345, 348; P.A. 87-9, S. 2, 3; P.A. 90-34, S. 1, 5; P.A. 93-186, S. 1, 9; P.A. 94-122, S. 316, 340; 94-161, S. 1; May 25 Sp. Sess. 94-1, S. 107, 130; P.A. 96-109, S. 16; 96-180, S. 120, 166; P.A. 04-69, S. 28; P.A. 08-176, S. 62; P.A. 11-110, S. 10.)
History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner within the department of business regulation, reflecting incorporation of banking department as a division within that department, effective January 1, 1979; P.A. 80-482 restored banking division as an independent department and abolished the department of business regulation, allowing omission of reference to abolished department in commissioner's title; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 90-34 amended the definitions of “financial institution” and “home improvement loan”, deleted the definition of “census tract”, added a definition of “federal Home Mortgage Disclosure Act” and renumbered each Subsec., effective May 2, 1990, and applicable to all reports and disclosures required under chapter 661 concerning loans originated or purchased, and loan applications received on and after January 1, 1990; P.A. 93-186 amended the definitions of “financial institution”, “federal Home Mortgage Disclosure Act” and “applicant”, deleted the definition of “mortgage loan” and added definition of “home purchase loan” and renumbered Subdivs. accordingly, effective June 23, 1993; P.A. 94-122 deleted the definition of “commissioner” and reordered the definitions, effective January 1, 1995; P.A. 94-161 inserted new Subdiv. (2) defining “mortgage loan”, renumbered the remaining Subdivs., included “or other mortgage loan” in the definition of “applicant” and made technical changes; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994 and applicable January 1, 1995; Sec. 36-444 transferred to Sec. 36a-736 in 1995; P.A. 96-109 and 96-180 both made technical change in definition of “financial institution”, substituting “or” for “and” in reference to licensure under specified sections; P.A. 04-69 amended Subdiv. (3) to substitute “36a-498a” for “36a-498”; P.A. 08-176 made technical changes, effective July 1, 2008; P.A. 11-110 amended Subdiv. (2) to add reference to Bureau of Consumer Financial Protection, effective July 21, 2011.
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Sec. 36a-737. (Formerly Sec. 36-445). Discrimination in making of home purchase, home improvement and mortgage loans. Applications submitted by members of reserves or National Guard. (a) No financial institution and no federal bank or federal credit union shall discriminate, on a basis that is arbitrary or unsupported by a reasonable analysis of the lending risks associated with the applicant for a given loan or the condition of the property to secure it, in the granting, withholding, extending, modifying, renewing or in the fixing of the rates, terms, conditions or provisions of any home purchase loan, home improvement loan or other mortgage loan on one-to-four-family owner-occupied residential real property, solely because such property is located in a low-income or moderate-income neighborhood or geographical area, provided it shall not be a violation of this section if the home purchase loan, home improvement loan or other mortgage loan is made pursuant to a specific public or private program, the purpose of which is to increase the availability of home purchase loans, home improvement loans or other mortgage loans within a low-income or moderate-income neighborhood or geographical area in which such investment capital has generally been denied.
(b) If a member of any reserve component of the armed forces of the United States, as defined in section 27-103, or a member of the National Guard, is called into active duty after submitting an application to a financial institution, federal bank or federal credit union for a home purchase loan, home improvement loan or other mortgage loan on one-to-four-family owner-occupied residential real property and before the financial institution, federal bank or federal credit union makes a determination on the application, such financial institution, federal bank or federal credit union shall maintain the application on file for two years and two months after such member is called into active duty, if the member submits, not later than thirty days after being called into active duty, a written statement to the financial institution, federal bank or federal credit union indicating that the member (1) has been called into active duty, and (2) requests that the application be maintained on file. If the applicant returns from active duty not later than two years after submitting an application under this section and submits a written statement to the financial institution, federal bank or federal credit union not later than sixty days after being discharged from active duty verifying that there has been no material change in the applicant's income, assets, debts and employment, the financial institution, federal bank or federal credit union shall finalize processing of the application in accordance with the same terms and conditions that it made available to the applicant at the time of application, provided the financial institution, federal bank or federal credit union shall offer to the applicant any different terms and conditions that the financial institution, federal bank or federal credit union is offering to the public at the time of the applicant's return from active duty.
(P.A. 77-153, S. 3; P.A. 93-186, S. 2, 9; P.A. 94-161, S. 2; P.A. 95-155, S. 28, 29; P.A. 03-24, S. 1; P.A. 05-46, S. 14.)
History: P.A. 93-186 deleted references to “mortgage loans” in favor of “home purchase loan” and made technical corrections for clarity and accuracy, effective June 23, 1993; P.A. 94-161 included “other mortgage loans” within the antidiscrimination provision and changed “specific neighborhood” to “low-income or moderate-income neighborhood”; Sec. 36-445 transferred to Sec. 36a-737 in 1995; P.A. 95-155 applied section to federal banks, effective June 27, 1995; P.A. 03-24 designated existing provisions as Subsec. (a) and added Subsec. (b) re loan applications by members of reserves or National Guard called into active duty, effective July 1, 2003; P.A. 05-46 applied section to federal credit unions.
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Sec. 36a-738. (Formerly Sec. 36-446). Disclosure requirements for financial institutions. A financial institution shall comply with all applicable provisions of the federal Home Mortgage Disclosure Act, and, in addition, shall report on the federal Home Mortgage Disclosure Act loan application register the reason for denial in connection with each loan application subject to federal reporting that is denied by the financial institution. Each financial institution shall provide the commissioner with any information required to be disclosed to a federal agency pursuant to the federal Home Mortgage Disclosure Act if requested by the commissioner in any case in which the commissioner is unable to obtain such information from the applicable federal agency.
(P.A. 77-153, S. 4; P.A. 81-128, S. 7, 17; P.A. 84-546, S. 159, 173; P.A. 90-34, S. 2, 5; P.A. 92-2; P.A. 93-186, S. 3, 9; P.A. 94-122, S. 317, 340; 94-161, S. 3; May 25 Sp. Sess. P.A. 94-1, S. 108, 130; P.A. 08-119, S. 15.)
History: P.A. 81-128 amended Subsec. (a) by substituting “United States Department of Commerce” for “Federal Office of Management and Budget” and changed the reporting requirement from fiscal to calendar years, amended Subsec. (b) to indicate when data is disclosed by census tracts or by county, and added Subsec. (e) concerning disclosure to federal authorities; P.A. 84-546 made technical change in Subsec. (a), replacing reference to U.S. Department of Commerce with reference to U.S. Office of Management and Budget; P.A. 90-34 deleted former Subsecs. (a) to (d), relettered Subsec. (e) as Subsec. (b) and added new Subsec. (a) re compliance with the federal Home Mortgage Disclosure Act, effective May 2, 1990, and applicable to all reports and disclosures required under chapter 661 concerning loans originated or purchased, and loan applications received on and after January 1, 1990; P.A. 92-2 added Subsec. (c) re disclosure of reason for denial of mortgage loan application; P.A. 93-186 added a reporting requirement for mortgage loans denied and the basis of denial to both the commissioner and any federal agencies which require such a report and deleted the reporting requirements required by the federal Financial Institutions Examination Council, the Secretary of Housing and Urban Development and the federal Home Mortgage Disclosure Act, effective June 23, 1993; P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; P.A. 94-161 changed “each home purchase loan or home improvement loan application” to “each loan application subject to federal reporting”; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994, and applicable January 1, 1995; Sec. 36-446 transferred to Sec. 36a-738 in 1995; P.A. 08-119 changed requirement for financial institutions to provide information “as the commissioner may require” to “if requested by the commissioner in any case in which the commissioner is unable to obtain such information from the applicable federal agency”.
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Sec. 36a-739. (Formerly Sec. 36-448). Reports by financial institutions. Filing requirements. A financial institution which is required to provide the commissioner with information pursuant to section 36a-738 and which fails to submit such information on the date required shall be fined one hundred dollars for each day on which such information has not been filed after the required date.
(P.A. 77-153, S. 6; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 263, 345, 348; P.A. 87-9, S. 2, 3; P.A. 93-186, S. 4, 9.)
History: P.A. 77-614 and P.A. 78-303 made banking department a division within the department of business regulation, effective January 1, 1979; P.A. 80-482 restored banking division as independent department and abolished the department of business regulation; (Revisor's note: Pursuant to P.A. 87-9 “banking department” was changed editorially by the Revisors to “department of banking”); P.A. 93-186 deleted former Subsec. (a) which had required that reports be filed with banking department and maintained for five years, amended Subsec. (b) re reporting requirements of the commissioner and increased the fine for noncompliance from $10 to $100 per day, effective June 23, 1993; Sec. 36-448 transferred to Sec. 36a-739 in 1995.
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Sec. 36a-740. (Formerly Sec. 36-449). Violations by financial institutions. Rights of loan applicant. Any applicant who has been discriminated against as a result of a violation of section 36a-737 and the regulations adopted pursuant to sections 36a-735 to 36a-744, inclusive, may bring an action in a court of competent jurisdiction. Upon finding that a financial institution is in violation of sections 36a-735 to 36a-744, inclusive, the court may award damages, reasonable attorneys' fees and court costs. No class action shall be permitted pursuant to the provisions of this section. Any applicant alleging a violation under this section shall do so in the applicant's own individual complaint and each case resulting from such complaints shall be heard on its own merits unless consolidation of such cases is agreed to by each defendant affected thereby.
(P.A. 77-153, S. 7; P.A. 94-122, S. 318, 340.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-449 transferred to Sec. 36a-740 in 1995.
Annotations to former section 36-449:
Cited. 183 C. 85; 211 C. 648.
Cited. 10 CA 22.
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Sec. 36a-741. (Formerly Sec. 36-451). Cease and desist order. Enforcement action. (a) If the commissioner finds that a financial institution is violating the provisions of sections 36a-735 to 36a-744, inclusive, the commissioner shall order the institution to cease and desist from such practices in accordance with section 36a-52.
(b) Whenever it appears to the commissioner that any financial institution has violated, is violating or is about to violate any provision of sections 36a-735 to 36a-744, inclusive, or any regulation adopted under said sections, the commissioner may take action against such financial institution in accordance with section 36a-50.
(P.A. 77-153, S. 9; P.A. 94-122, S. 319, 340.)
History: P.A. 94-122 deleted the provision making financial institutions which violate cease and desist orders subject to a $5,000 fine, added a reference to the commissioner's cease and desist authority under Sec. 36a-52, and added Subsec. (b) re the commissioner's enforcement authority under Sec. 36a-50, effective January 1, 1995; Sec. 36-451 transferred to Sec. 36a-741 in 1995.
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Sec. 36a-742. (Formerly Sec. 36-452). Protection of confidentiality of an individual's financial status. To insure and protect the confidential nature of an individual's financial status, no provision of sections 36a-735 to 36a-744, inclusive, shall be construed as requiring any financial institution to divulge, other than to an appropriate state agency, the names of individual depositors or mortgagors; neither shall any provisions of said sections be construed as authorizing any officer of this state to require any institution to divulge, other than to an appropriate state agency, the names of individual depositors or mortgagors.
(P.A. 77-153, S. 10.)
History: Sec. 36-452 transferred to Sec. 36a-742 in 1995.
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Sec. 36a-743. (Formerly Sec. 36-454). Commissioner to analyze home financing. The commissioner shall analyze the practices and actions of the financial institutions in the home financing area in relationship to its customers and to the housing needs and conditions of the state.
(P.A. 77-153, S. 12; P.A. 93-186, S. 6, 9; P.A. 94-122, S. 320, 340.)
History: P.A. 93-186 made a technical change, effective June 23, 1993; P.A. 94-122 deleted provision requiring annual report to governor, effective January 1, 1995; Sec. 36-454 transferred to Sec. 36a-743 in 1995.
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Sec. 36a-744. (Formerly Sec. 36-455). Regulations. The commissioner may adopt, in accordance with the provisions of chapter 54, such regulations as the commissioner deems necessary for the proper operation and enforcement of sections 36a-735 to 36a-743, inclusive.
(P.A. 77-153, S. 13; P.A. 90-34, S. 3, 5; P.A. 93-186, S. 7, 9; P.A. 94-122, S. 321, 340.)
History: P.A. 90-34 made technical changes, effective May 2, 1990, and applicable to all reports and disclosures required under chapter 661 concerning loans originated or purchased, and loan applications received on and after January 1, 1990; P.A. 93-186 deleted requirement that regulations be consistent with “sound banking practices” and the federal Home Mortgage Disclosure Act, effective June 23, 1993; P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; Sec. 36-455 transferred to Sec. 36a-744 in 1995.
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Sec. 36a-745. Reserved for future use.
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PART IXa
CONNECTICUT ABUSIVE HOME LOAN
LENDING PRACTICES ACT
Sec. 36a-746. Short title: Connecticut Abusive Home Loan Lending Practices Act. Sections 36a-746 to 36a-746g, inclusive, shall be known and may be cited as the “Connecticut Abusive Home Loan Lending Practices Act”.
(P.A. 01-34, S. 2.)
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Sec. 36a-746a. Definitions. As used in this section and sections 36a-746b to 36a-746g, inclusive:
(1) “APR” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder. For purposes of this subdivision, any variable rate calculation shall use an index value in effect within forty-five days prior to consummation;
(2) “Broker” means a person who, for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a high cost home loan that is to be made by a lender;
(3) “Consummation” means the time that a borrower becomes contractually obligated on a loan or extension of credit;
(4) “High cost home loan” means any loan or extension of credit, including an open-end line of credit but excluding a reverse mortgage transaction, as defined in 12 CFR 1026.33, as amended from time to time:
(A) In which the borrower is a natural person;
(B) The proceeds of which are to be used primarily for personal, family or household purposes;
(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential property, as defined in section 36a-485, located in this state that is, or, when the loan is made, is intended to be used or occupied by the borrower as a principal residence; and
(D) In which the APR applicable to the transaction determined in accordance with 12 CFR 1026.32(a)(3), as amended from time to time, will exceed the average prime offer rate, as defined in 12 CFR 1026.35(a)(2) as amended from time to time, by more than the number of percentage points specified in 12 CFR 1026.32(a)(1)(i), as amended from time to time;
(5) “Interim interest” means interest for the period from funding to the start of amortization paid by a borrower at or before consummation of a closed-end loan where such amortization begins sixty-two days or less after funding;
(6) “Lender” means any person who originates one or more high cost home loans; and
(7) “Prepaid finance charge” means any finance charge determined in accordance with 12 CFR 1026.4, as amended from time to time, that is paid separately in cash or by check before or at consummation of a loan or extension of credit or withheld from the proceeds of such transaction at any time, except the term includes any fees or commissions payable to the lender or broker in connection with the sale of credit life, accident, health, disability or unemployment insurance products or unrelated goods or services sold in conjunction with the loan or extension of credit when the cost of such insurance products or goods or services is prepaid with the proceeds of the loan or extension of credit and financed as part of the principal amount of the loan or extension of credit, and excludes premiums, fees and any other amounts paid to a governmental agency, any amounts required to be escrowed by a governmental agency and interim interest.
(P.A. 01-34, S. 3; P.A. 02-12, S. 1; P.A. 08-176, S. 63; P.A. 14-7, S. 5; P.A. 15-235, S. 16.)
History: P.A. 02-12 redefined “consummation” in Subdiv. (3), added definition of “interim interest” as new Subdiv. (5), redesignated existing Subdivs. (5) to (7) as Subdivs. (6) to (8) and redefined “prepaid finance charge” in redesignated Subdiv. (7), effective April 22, 2002; P.A. 08-176 made technical changes and, in Subdiv. (4)(C), added cite to Sec. 36a-485 and deleted former Subdiv. (8) re definition of “prepayment penalty”, effective July 1, 2008; P.A. 14-7 amended Subdiv. (1) to replace “12 CFR 226.6(a)(2) and 226.14(b)” with “12 CFR 1026.6(a)(2) and 1026.14(b)”, replace “12 CFR 226.6(a)(2) or 226.30” with “12 CFR 1026.6(a)(2) or 1026.30”, replace “12 CFR 226.18(e)” with “12 CFR 1026.18(e)” and replace “12 CFR 226.18(f) or 226.30” with “12 CFR 1026.18(f) or 1026.30”, amended Subdiv. (4) to replace “12 CFR 226.33” with “12 CFR 1026.33” and replace “12 CFR 226.32(a)(1)(i)” with “12 CFR 1026.32(a)(1)(i)”, and amended Subdiv. (7) to replace “12 CFR 226.4” with “12 CFR 1026.4”, effective May 8, 2014; P.A. 15-235 amended Subdiv. (1) to redefine “APR” and amended Subdiv. (4) to redefine “high cost home loan”, effective August 1, 2015.
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Sec. 36a-746b. Disclosures. A lender making a high cost home loan shall disclose to the prospective borrower:
(1) The following statement: “You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan”;
(2) The APR;
(3) The amount of the regular monthly or other periodic payment; and
(4) For variable-rate transactions, a statement that the interest rate and monthly payment may increase, and the amount of the single maximum monthly payment, based on the maximum interest rate that may be imposed during the term of the loan.
(P.A. 01-34, S. 4.)
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Sec. 36a-746c. Prohibited provisions in loan agreement. A high cost home loan shall not provide for or include the following:
(1) For a loan with a term of less than seven years, a payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance, except that this limitation does not apply to a loan with maturities of less than one year if the purpose of the loan is a bridge loan, as used in 12 CFR 1026.32, as amended from time to time, connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling;
(2) A payment schedule with regular periodic payments that cause the principal balance to increase;
(3) A payment schedule that consolidates more than two periodic payments and pays them in advance from the proceeds, unless such payments are required to be escrowed by a governmental agency;
(4) A refund calculated by a method less favorable than the actuarial method, as defined by Section 933(d) of the Housing and Community Development Act of 1992, 15 USC 1615(d), as amended from time to time, for rebates of interest arising from a loan acceleration due to default;
(5) A prepayment penalty;
(6) A waiver of participation in a class action or a provision requiring a borrower, whether acting individually or on behalf of others similarly situated, to assert any claim or defense in a nonjudicial forum that: (A) Utilizes principles which are inconsistent with the law as set forth in the general statutes or common law; (B) limits any claim or defense the borrower may have; or (C) is less convenient, more costly or more dilatory for the resolution of a dispute than a judicial forum established in this state where the borrower may otherwise properly bring a claim or defense; or
(7) A call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This prohibition shall not apply when repayment of the loan is accelerated by bona fide default, pursuant to a due-on-sale clause provision, or pursuant to another provision of the loan agreement unrelated to the payment schedule including, but not limited to, bankruptcy or receivership.
(P.A. 01-34, S. 5; P.A. 02-12, S. 2; P.A. 08-176, S. 64; P.A. 09-207, S. 8; P.A. 14-7, S. 6.)
History: P.A. 02-12 amended Subdivs. (1) and (6) by adding “as from time to time amended” and amended Subdiv. (3) by adding “unless such payments are required to be escrowed by a governmental agency”, effective April 22, 2002; P.A. 08-176 amended Subdivs. (1) and (5) to make technical changes, amended Subdiv. (6) to delete exception re high cost home loan prepayment penalty, and amended Subdiv. (7) to delete “mandatory arbitration clause” and add provision re asserting of any claim or defense in nonjudicial forum, effective July 1, 2008; P.A. 09-207 deleted former Subdiv. (4) re increase in interest rate and redesignated existing Subdivs. (5) to (8) as Subdivs. (4) to (7), effective July 7, 2009; P.A. 14-7 amended Subdiv. (1) to replace “12 CFR 226.32” with “12 CFR 1026.32”, effective May 8, 2014.
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Sec. 36a-746d. Report of payment history. Any lender who makes a high cost home loan shall report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit reporting agency at least annually during such period as the lender holds or services the loan.
(P.A. 01-34, S. 6.)
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Sec. 36a-746e. Prohibited acts by lender. In the making of a high cost home loan no lender shall:
(1) Pay a contractor under a home improvement contract from the proceeds of the loan, other than:
(A) By an instrument payable to the borrower or jointly to the borrower and the contractor; or
(B) At the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender and the contractor prior to the disbursement;
(2) Sell or otherwise assign such loan without furnishing the following statement to the purchaser or assignee: “Notice: This is a loan subject to special rules under the Connecticut Abusive Home Loan Lending Practices Act. Purchasers or assignees of this loan could be liable for all claims and defenses with respect to the loan that the borrower could assert against the lender”;
(3) Charge, impose or cause to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate, the greater of five per cent of the principal amount of the loan or two thousand dollars. If the proceeds of a high cost home loan are used to refinance an existing loan, the aggregate of the prepaid finance charges for the current refinancing and any previous high cost home loan financings or financings subject to the provisions of section 36a-498a, by the same lender or affiliate of the same lender within two years of the current refinancing shall not exceed the greater of five per cent of the principal amount of the initial loan, or two thousand dollars. The provisions of this subdivision do not prohibit a lender from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in addition to those permitted by this subdivision in connection with any additional proceeds received by the borrower in the refinancing, provided such prepaid finance charges on the additional proceeds shall not exceed five per cent of the additional proceeds. For purposes of this subdivision, “additional proceeds” means: (A) For a closed-end loan, the amount by which the new loan exceeds the current principal balance of the existing loan, and (B) for an open-end loan, the amount by which the line of credit on the new loan exceeds the maximum credit limit of the existing loan;
(4) Charge a borrower any fees to modify, renew, extend or amend a high cost home loan or defer any payment due under a high cost home loan, if after the modification, renewal, extension or amendment, the loan is still a high cost home loan, or if no longer a high cost home loan, the APR has not been reduced by at least two percentage points. For purposes of this subdivision, “fees” does not include interest that is otherwise payable and consistent with the provisions of the loan documents. The provisions of this subdivision do not prohibit a lender from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in connection with any additional proceeds, as defined in subdivision (3) of this section, received by the borrower in connection with the modification, renewal, extension or amendment, provided the prepaid finance charges on the additional proceeds do not exceed five per cent of the additional proceeds. The provisions of this subdivision do not apply if the existing high cost home loan is sixty or more days delinquent and the modification, renewal, extension, amendment or deferral is part of a work-out process;
(5) Make such loan unless the lender reasonably believes at the time the loan is consummated that the borrower will be able to make the scheduled payments to repay the loan based upon a consideration of the borrower's current and expected income, current obligations, employment status, and other financial resources, excluding the borrower's equity in the dwelling that secures repayment of the loan. The borrower shall be presumed to be able to make the scheduled payments to repay the loan if at the time the loan is consummated, or at the time of the first rate adjustment in the case of a lower introductory interest rate, the borrower's monthly debts, including amounts owed under the mortgage, do not exceed fifty per cent of the borrower's monthly gross income, as verified by the borrower's signed financial statement, a credit report, and payment records for employment income;
(6) Advertise that refinancing preexisting debt with a high cost home loan will reduce a borrower's aggregate monthly debt payment without also disclosing that the high cost home loan may increase both the borrower's aggregate number of monthly debt payments and the aggregate amount paid by the borrower over the term of the high cost home loan;
(7) Recommend or encourage default or further default by a borrower on an existing loan or other debt, prior to the closing of a high cost home loan that refinances all or any portion of such existing loan or debt;
(8) Make such loan to a borrower that refinances an existing loan unless the high cost home loan provides a benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances;
(9) Make such loan with an interest rate that is unconscionable. A lender shall base the interest rate for a high cost home loan on proper and reasonable factors including, but not limited to, creditworthiness, other risk related standards and sound underwriting. For purposes of this subdivision, an interest rate that is not based on such factors, or that significantly deviates from industry standards for making that type of high cost home loan, shall be deemed unconscionable; and
(10) Charge and retain fees paid by the borrower for services that are not actually performed, or which are not bona fide and reasonable.
(P.A. 01-34, S. 7.)
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Sec. 36a-746f. Purchase of insurance by buyer. Section 36a-746f is repealed, effective July 1, 2008.
(P.A. 01-34, S. 8; P.A. 03-61, S. 8; P.A. 08-176, S. 84.)
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Sec. 36a-746g. Refund or credit of charges. The lender and any assignee of the lender shall have the obligation, jointly and severally, to refund or credit the borrower for any default charges or prepaid finance charges collected in excess of the limits set forth in sections 36a-746c and 36a-746e.
(P.A. 01-34, S. 9; P.A. 08-176, S. 65.)
History: P.A. 08-176 deleted provision re prepayment penalties, effective July 1, 2008.
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Secs. 36a-747 to 36a-754. Reserved for future use.
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PART X
OTHER MORTGAGE AND LOAN PRACTICES
Sec. 36a-755. (Formerly Sec. 36-9h). Mortgage appraisal practices. Definitions. Regulations. (a) As used in this section:
(1) “Applicant” means a natural person who applies for a mortgage loan;
(2) “Financial institution” means a bank, out-of-state bank, Connecticut credit union, federal credit union, out-of-state credit union, mortgage lender, mortgage correspondent lender or mortgage broker licensee; and
(3) “Mortgage loan” means a loan to be secured by a mortgage on one, two, three or four family residential real property, including a unit of a condominium.
(b) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal on real property to secure a mortgage loan shall make available to such applicant at no charge a copy of the appraisal report promptly after the financial institution's receipt of the applicant's written request for a copy of the appraisal report, provided the financial institution receives the written request not later than ninety days after the financial institution has provided the applicant with notice of action taken on the applicant's application or not later than ninety days after the application is withdrawn by the applicant, as applicable.
(c) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal shall either (1) notify such applicant in writing of the availability of a copy of the appraisal report or (2) provide such applicant with a copy of the appraisal report at no charge, such notice or copy to be provided not later than ten days after receipt of the appraisal report, but in any event not later than the date on which the sale of such property is to be consummated.
(d) Any person who prepares such appraisal report shall not be liable to any person with whom the preparer has not contracted to make such appraisal report for opinions or facts stated in or omitted from such appraisal report, unless such statement or omission results from intentional misrepresentation.
(e) The commissioner may adopt such regulations pursuant to chapter 54 as the commissioner deems necessary to carry out the provisions of this section.
(P.A. 78-157, S. 1–5, 7; 78-303, S. 85, 136; P.A. 87-6; 87-9, S. 2, 3; P.A. 88-262, S. 2, 3; P.A. 94-122, S. 322, 340; May 25 Sp. Sess. P.A. 94-1, S. 105, 130; P.A. 08-176, S. 75.)
History: P.A. 78-303 allowed substitution of banking commissioner for bank commissioner to achieve conformity with changes enacted under P.A. 77-614; P.A. 87-6 redefined “financial institution” in Subsec. (a) to include federally chartered institutions and first and second mortgage lenders; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-262 amended Subsec. (b) to require that copies of appraisal reports be made available to mortgage applicants at no charge and deleted provisions in Subsec. (b) re fees for copies of appraisal reports; (Revisor's note: In 1991 the word “the” was inserted editorially by the Revisors before “commissioner” in Subsec. (a)(4)); P.A. 94-122 deleted the definition of “commissioner”, reordered the definitions, added language at the end of Subsec. (b) specifying that the lender must make the appraisal report available promptly after receiving the applicant's written request for a copy within a ninety-day time period, gave lenders the option of giving the applicant a copy of the report whether or not requested in Subsec. (c), and made technical changes, effective January 1, 1995; May 25 Sp. Sess. P.A. 94-1 made technical changes to Subsec. (a), effective January 1, 1994, and applicable January 1, 1995; Sec. 36-9h transferred to Sec. 36a-755 in 1995; P.A. 08-176 redefined “financial institution” in Subdiv. (2) to include references to “mortgage correspondent lender” and “mortgage broker” and to make technical changes, effective July 1, 2008.
Subsec. (d), when read in context of section, applies only to appraisals performed in conjunction with obtaining a mortgage from a financial institution and commissioned either directly or indirectly by such financial institution, and therefore action against party that was not a financial institution was not barred by Subsec. (d). 132 CA 51.
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Sec. 36a-756. (Formerly Sec. 36-9t). Title insurance as condition of mortgage on residential real estate prohibited. No bank or out-of-state bank shall, in connection with any application for a mortgage loan in this state which is secured by mortgage on residential real estate located in this state, require any prospective mortgagor to obtain by purchase or otherwise an owner's title insurance policy as a condition for the granting of such mortgage.
(P.A. 83-61; P.A. 94-122, S. 335, 340.)
History: P.A. 94-122 made a technical change, effective January 1, 1995; Sec. 36-9t transferred to Sec. 36a-756 in 1995.
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Sec. 36a-757. (Formerly Sec. 36-9u). Mortgage insurance requirements limited. No mortgage lender shall, in connection with any application for a mortgage loan in this state which is secured by mortgage on residential real estate located in this state, require any prospective mortgagor to obtain by purchase or otherwise a fire insurance policy, flood insurance policy, other extended coverage policy, or any combination thereof, in excess of the replacement value of the covered premises as a condition for the granting of such mortgage.
(P.A. 84-212; P.A. 00-95.)
History: Sec. 36-9u transferred to Sec. 36a-757 in 1995; P.A. 00-95 added “flood insurance policy, other extended coverage policy, or any combination thereof”.
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Sec. 36a-758. (Formerly Sec. 36-9y). Payment of loan proceeds by certified, bank treasurer's or cashier's check or by wire transfer. Any person who makes any first mortgage loan, as defined in section 36a-485, or any secondary mortgage loan, as defined in section 36a-485, shall, at the time of consummation of such loan or at the termination of any right to rescind the loan transaction under 12 CFR 1026, as amended from time to time, whichever is later, pay the loan proceeds to the mortgagor, to the mortgagor's attorney, to the mortgagee's attorney or to any other person specified in any settlement statement, any written agreement between the mortgagor and the mortgagee or any written instruction of the mortgagor, by a certified, bank treasurer's or cashier's check or by means of wire transfer.
(P.A. 85-430; P.A. 92-12, S. 8; P.A. 94-122, S. 323, 340; P.A. 07-91, S. 12; P.A. 08-176, S. 66; P.A. 14-7, S. 7.)
History: P.A. 92-12 made a technical change; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-9y transferred to Sec. 36a-758 in 1995; P.A. 07-91 required any person who makes any first or secondary mortgage loan to pay loan proceeds at time of consummation of such loan or at termination of right to rescind and allowed payment of proceeds to any person specified in any settlement statement, written agreement between the mortgagor and mortgagee or written instruction of mortgagor; P.A. 08-176 made technical changes, effective July 1, 2008; P.A. 14-7 replaced “12 CFR 226” with “12 CFR 1026”, effective May 8, 2014.
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Sec. 36a-758a. Payment of first or secondary mortgage loan proceeds by wire transfer. Time limits. Penalties. Section 36a-758a is repealed, effective October 1, 2007.
(P.A. 02-112, S. 1, 2; P.A. 03-23, S. 1; 03-84, S. 80; P.A. 07-91, S. 38.)
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Sec. 36a-759. (Formerly Sec. 36-4). Minority of veterans, spouses and widows for purposes of the Servicemen's Readjustment Act. The disability of minority of any person otherwise eligible for a loan, or guaranty or insurance of a loan, pursuant to the act of the Congress of the United States entitled the Servicemen's Readjustment Act of 1944, as from time to time amended, and of the minor spouse or unmarried widow of any eligible veteran, in connection with any transaction entered into pursuant to that act, shall not affect the binding effect of any obligation incurred by such eligible person or spouse or widow as an incident to any such transaction, including incurring of indebtedness and acquiring, encumbering, selling, releasing or conveying property, or any interest therein, if all or part of any such obligation is guaranteed or insured by the federal government or the Administrator of Veterans' Affairs pursuant to that act; or, if the administrator is the creditor, by reason of a loan or a sale pursuant to that act. This section shall not create, or render enforceable, any other or greater rights or liabilities than would exist if such person, such spouse or such widow were not a minor.
(1953, S. 2780d; P.A. 94-122, S. 324, 340.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-4 transferred to Sec. 36a-759 in 1995.
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Sec. 36a-759a. Compliance with John Warner National Defense Authorization Act for Fiscal Year 2007. Limit on interest rate charged on consumer credit to members of armed services. Each financial institution shall comply with the applicable provisions of Section 670 of the John Warner National Defense Authorization Act for Fiscal Year 2007, Public Law 109-364, and 32 CFR 232, as amended from time to time, that limit the interest rate that may be charged on consumer credit to members of the armed services and their dependents. Whenever it appears that any financial institution has violated, is violating or is about to violate any of such applicable provisions, the commissioner may take action against such financial institution in accordance with sections 36a-50 and 36a-52. The Banking Commissioner may enter into agreements with the United States Department of Defense to enhance the communication and exchange of information relating to financial institutions to achieve prompt and effective resolution and redress of consumer complaints and alleged violations of Section 670 of the John Warner National Defense Authorization Act for Fiscal Year 2007, Public Law 109-364, and 32 CFR 232, as amended from time to time. For purposes of this section “financial institution” means any Connecticut bank, Connecticut credit union or other person whose lending activities in this state are subject to 32 CFR 232, as amended from time to time.
(P.A. 09-100, S. 10.)
History: P.A. 09-100 effective June 3, 2009.
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Sec. 36a-760. Nonprime home loans: Definitions; applicability. (a) As used in this section and sections 36a-760a to 36a-760j, inclusive:
(1) “APR” has the same meaning as provided in section 36a-746a;
(2) “CHFA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Connecticut Housing Finance Authority;
(3) “FHA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Federal Housing Administration;
(4) “First mortgage loan” has the same meaning as provided in section 36a-485;
(5) “Lender” means any person engaged in the business of the making of mortgage loans who is (A) required to be licensed by the commissioner under chapter 668, or such person's successors or assigns, or (B) exempt from licensing pursuant to subdivisions (1) to (3), inclusive, of subsection (a) of section 36a-487, and their successors and assigns, but does not include any mortgage broker, as defined in this section, or any mortgage loan originator, as defined in section 36a-485;
(6) “Mortgage broker” means a mortgage broker, as defined in section 36a-485, who is required to be licensed by the commissioner under chapter 668, or such person's successors or assigns;
(7) “Nonprime home loan” means any loan or extension of credit, excluding an open-end line of credit, any mortgage insured under Title II of the National Housing Act, 12 USC 1701 et seq., as amended from time to time, that satisfies the requirements for a qualified mortgage set forth in 24 CFR 203.19(b), as amended from time to time, and a reverse mortgage transaction, as defined in 12 CFR 1026.33, as amended from time to time:
(A) In which the borrower is a natural person;
(B) The proceeds of which are to be used primarily for personal, family or household purposes;
(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential real property located in this state which is, or when the loan is made, intended to be used or occupied by the borrower as a principal residence;
(D) In which the principal amount of the loan does not exceed four hundred seventeen thousand dollars;
(E) Where the loan is not a CHFA loan; and
(F) In which the conditions set forth in subparagraph (F)(i) of this subdivision apply, subject to any adjustments made pursuant to subparagraph (F)(ii) of this subdivision:
(i) The difference, at the time of consummation, between the APR for the loan or extension of credit and the average prime offer rate for a comparable transaction, as of the date the interest rate is set, is greater than one and one-half percentage points if the loan is a first mortgage loan or three and one-half percentage points if the loan is a secondary mortgage loan. For purposes of this subparagraph, “average prime offer rate” has the meaning as provided in 12 CFR 1026.35, as amended from time to time. For purposes of this clause, the date the interest rate is set is the last date the interest rate is set, provided the rate is adjusted on or before consummation.
(ii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in subparagraph (F)(i) of this subdivision. For purposes of this clause, the relevant factors to be considered by the commissioner shall include, but not be limited to, the existence and amount of increases in fees or charges in connection with purchases of mortgages by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and increases in fees or charges imposed by mortgage insurers and the impact, including the magnitude of the impact, that such increases have had, or will likely have, on APRs for mortgage loans in this state. When considering such factors, the commissioner shall focus on those increases that are related to the deterioration in the housing market and credit conditions. The commissioner may refrain from increasing such percentages if it appears that lenders are increasing interest rates or fees in bad faith or if increasing the percentages would be contrary to the purposes of sections 36a-760 to 36a-760f, inclusive. No increase authorized by the commissioner to a particular percentage shall exceed one-quarter of one percentage point, and the total of all increases to a particular percentage under this clause shall not exceed one-half of one percentage point. No increase shall be made unless: (I) The increase is noticed in the Banking Department Bulletin and the Connecticut Law Journal, and (II) a public comment period of twenty days is provided. Any increase made under this clause shall be reduced proportionately when the need for the increase has diminished or no longer exists. The commissioner, in the exercise of his discretion, may authorize an increase in the percentages with respect to all loans or just with respect to a certain class or classes of loans;
(8) “Open-end line of credit” means a mortgage extended by a lender under a plan in which: (A) The lender reasonably contemplates repeated transactions; (B) the lender may impose a finance charge from time to time on an outstanding unpaid balance; (C) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the lender, is generally made available to the extent that any outstanding balance is repaid; and (D) none of the proceeds of the open-end line of credit are used at closing to (i) purchase the borrower's primary residence, or (ii) refinance a mortgage loan that had been used by the borrower to purchase the borrower's primary residence;
(9) “Secondary mortgage loan” has the same meaning as provided in section 36a-485.
(b) The provisions of sections 36a-760a to 36a-760i, inclusive, shall be applicable to nonprime home loans and mortgages, as appropriate, for which applications have been received on or after August 1, 2008.
(P.A. 08-176, S. 21; P.A. 09-207, S. 3; 09-209, S. 43; P.A. 10-32, S. 114; June Sp. Sess. P.A. 10-1, S. 47; P.A. 11-216, S. 45; P.A. 14-7, S. 19; P.A. 15-235, S. 17.)
History: P.A. 08-176 effective July 1, 2008; P.A. 09-207 amended Subsec. (a) by deleting former Subdiv. (1) defining “commissioner”, adding new Subdiv. (1) defining “APR” and redefining “nonprime home loan” in Subdiv. (7); P.A. 09-209 deleted former Subdiv. (1) defining “commissioner” and added new Subdiv. (1) defining “APR” in Subsec. (a); P.A. 10-32 made technical changes in Subsec. (a)(5) and (6), effective May 10, 2010; June Sp. Sess. P.A. 10-1 amended Subsec. (a)(7) (D) to delete provision re period applicable to $417,000 loan limit and delete provision re conforming loan limit for loan originated on or after July 1, 2010, effective June 22, 2010; P.A. 11-216 amended Subsec. (a) by redefining “nonprime home loan” in Subdiv. (7), deleting former Subdiv. (9) re definition of “residential property” and redesignating existing Subdiv. (10) as Subdiv. (9), effective July 13, 2011; P.A. 14-7 amended Subsec. (a)(7) to redefine “nonprime home loan”; P.A. 15-235 amended Subsec. (a) to redefine “lender”, “mortgage broker” and “nonprime home loan”, effective August 1, 2015.
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Sec. 36a-760a. Duties of lenders and mortgage brokers relating to nonprime home loans. (a) A lender shall not engage in conduct in any transaction, practice or course of business in connection with the making of a nonprime home loan that is misleading, deceptive or untruthful.
(b) Lenders and mortgage brokers shall have a duty of good faith with respect to the performance of any contract with a borrower relative to a nonprime home loan. For purposes of this subsection, the duty of good faith is the same as the obligation imposed pursuant to section 42a-1-304 and includes the observance of reasonable common standards of fair dealing. The provisions of this subsection cannot be waived.
(c) In connection with a nonprime home loan that is a first mortgage loan, a lender shall provide the borrower with a notice or letter that generally describes the terms of the transaction. Such notice or letter shall be provided no later than three business days prior to the closing, unless the borrower expressly requests an expedited closing and the lender has not yet, acting in good faith, provided the letter or notice. In cases where a letter or notice is required, the lender shall notify the borrower, within a reasonable time period, of any subsequent material changes to the terms of the transaction. The provisions of this subsection cannot be waived.
(P.A. 08-176, S. 22.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760b. Analysis of obligor's ability to pay. (a) No lender shall make a nonprime home loan unless the lender reasonably believes, at the time the loan is consummated, that one or more of the obligors, when considered individually or collectively, will be able to make the scheduled payments to repay the loan, and to pay related real estate taxes and insurance premiums, based upon a consideration of the obligor's current and expected income, current and expected obligations as disclosed by the obligor, or otherwise known to the lender, including subordinate mortgages made contemporaneously, homeowner's fees, condominium fees, employment status and other financial resources, excluding the equity in the dwelling that secures repayment of the loan. Notwithstanding the provisions of this subsection, in the case of a bridge loan, a lender may consider the equity in the dwelling as a source of repayment for the loan.
(b) A lender's analysis of an obligor's ability to repay under subsection (a) of this section may utilize commercially recognized underwriting standards and methodologies, including automated underwriting systems, provided they comply with the requirements of this subsection and subsection (a) of this section. In determining an obligor's ability to repay a nonprime home loan, the lender shall take reasonable steps to verify the accuracy and completeness of information provided by or on behalf of the obligor using tax returns, consumer reports, payroll receipts, bank records, reasonable alternative methods or reasonable third-party verification. In determining an obligor's ability to repay a nonprime home loan according to its terms when the loan has an adjustable rate feature, the lender shall underwrite the repayment schedule assuming that the interest rate is a fixed rate equal to the fully indexed interest rate at the time of consummation, or within fifteen days thereof, without considering any initial discounted rate. For purposes of this subsection, the “fully indexed rate” means the interest rate that would have been applied had the initial interest rate been determined by the application of the same interest rate formula that applies under the terms of the loan documents to subsequent interest rate adjustments, disregarding any limitations on the amount by which the interest rate may change at any one time. In determining an obligor's ability to repay a nonprime home loan that is not fully amortizing by its terms, the lender shall underwrite the loan based on a fully amortizing repayment schedule based on the maturity set forth in the note.
(c) This section shall not apply to FHA loans.
(P.A. 08-176, S. 23.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760c. Prohibition against making nonprime home loan when proceeds used to pay off special mortgage. (a) No lender shall make a nonprime home loan where all or a portion of the proceeds are used to fully or partially pay off a special mortgage on the same property unless the borrower has obtained a written certification from a counselor with an independent third-party nonprofit organization approved by the United States Department of Housing and Urban Development that the borrower has received mortgage counseling. For purposes of this section, “special mortgage” means a loan originated, subsidized or guaranteed by or through a state, federal, tribal or local government, or nonprofit organization.
(b) The prohibition in subsection (a) of this section shall not apply where the borrower provides the lender with a statement from an organization described in subsection (a) of this section, on the organization's letterhead, stating that the required counseling is not available for at least thirty days from the date of the request for counseling.
(c) For purposes of this section, a lender shall make a good-faith effort to determine whether the loan to be refinanced is a special mortgage, but shall not be required to obtain the certification in subsection (a) of this section if the lender: (1) Makes a good-faith inquiry to the current holder or servicer of the loan and to the borrower as to whether the loan is a special mortgage; and (2) does not receive an affirmative response from either the current holder or servicer of the loan or the borrower indicating that it is a special mortgage.
(P.A. 08-176, S. 24.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760d. Requirements for making nonprime home loans. A lender shall not make a nonprime home loan unless:
(1) With respect to nonprime home loans that are first mortgage loans for which the lender receives an application on or after April 1, 2010, the lender requires and collects a monthly escrow for the payment of real property taxes and homeowners insurance. The provisions of this subdivision shall not apply to: (A) FHA loans; or (B) a nonprime home loan product which, in good faith, is generally designed and marketed to the public as a subordinate lien home equity loan product but is secured by a first mortgage loan;
(2) To the extent applicable, the lender obtains the written certification or statement under section 36a-760c; and
(3) The lender mailed or delivered to applicants, no later than the date three business days after the date of receipt of a completed application for a nonprime home loan, a notice containing a toll-free number that can be used to obtain a list of nonprofit housing counselors approved by the United States Department of Housing and Urban Development. For purposes of this subdivision, a lender may use the toll-free number which satisfies the requirements of Section 106(c)(5) of the Housing and Urban Development Act of 1968 (12 USC 1701(x) Section (c)(5)). No borrower shall have a private right of action for the lender's failure to deliver, on a timely basis, a notice required by this subdivision.
(P.A. 08-176, S. 25; Sept. Sp. Sess. P.A. 09-7, S. 98; P.A. 15-118, S. 30.)
History: P.A. 08-176 effective July 1, 2008; Sept. Sp. Sess. P.A. 09-7 amended Subdiv. (1) by substituting “for which the lender receives an application on or after April 1, 2010” for “originated on or after January 1, 2010”, and amended Subdiv. (3) by making technical changes, effective October 5, 2009; P.A. 15-118 made a technical change in Subdiv. (1).
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Sec. 36a-760e. Restrictions on provisions in nonprime home loans. (a) A lender shall not offer a nonprime home loan that contains:
(1) A prepayment penalty, except that this prohibition shall not apply to FHA loans;
(2) A provision requiring a borrower, whether acting individually or on behalf of others similarly situated, to assert any claim or defense in a nonjudicial forum that: (A) Utilizes principles which are inconsistent with the law as set forth in the general statutes or common law; (B) limits any claim or defense the borrower may have; or (C) is less convenient, more costly or more dilatory for the resolution of a dispute than a judicial forum established in this state where the borrower may otherwise properly bring a claim or defense;
(3) For a loan with a term of less than seven years, a payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance, except that this limitation does not apply to a loan with maturities of less than one year if the purpose of the loan is a bridge loan, as used in 12 CFR 1026.32, as amended from time to time, connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling;
(4) A payment schedule with regular periodic payments that cause the principal balance to increase;
(5) A payment schedule that consolidates more than two periodic payments and pays them in advance from the proceeds, unless such payments are required to be escrowed by a governmental agency;
(6) Default charges in excess of five per cent of the amount in default; or
(7) A call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This prohibition shall not apply when repayment of the loan is accelerated by bona fide default, pursuant to a due-on-sale clause provision or pursuant to another provision of the loan agreement unrelated to the payment schedule, including, but not limited to, bankruptcy or receivership.
(b) If a nonprime home loan contains a provision that violates subsection (a) of this section, that provision shall be void and unenforceable, provided the lender received the application for such nonprime home loan on or after October 1, 2009.
(P.A. 08-176, S. 26; P.A. 09-207, S. 4; Sept. Sp. Sess. P.A. 09-7, S. 97; P.A. 14-7, S. 8.)
History: P.A. 08-176 effective July 1, 2008; P.A. 09-207 amended Subsec. (a) by deleting former Subdiv. (2), redesignating existing Subdiv. (3) as Subdiv. (2) and adding Subdivs. (3) to (7) re payment schedules, default charges and indebtedness acceleration prohibitions and made technical changes in Subsec. (b); Sept. Sp. Sess. P.A. 09-7 amended Subsec. (b) by adding “provided the lender received the application for such nonprime home loan on or after October 1, 2009”, effective October 5, 2009; P.A. 14-7 amended Subsec. (a)(3) to replace “12 CFR 226.32” with “12 CFR 1026.32”, effective May 8, 2014.
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Sec. 36a-760f. Prohibition against dividing or structuring loan to avoid application of nonprime home loan statutory provisions. No lender or mortgage broker shall attempt in bad faith to avoid the application of sections 36a-760a to 36a-760h, inclusive, by dividing any loan transaction into separate parts or to structure in bad faith a residential mortgage loan transaction as an open-end loan for the purpose of evading the applicable provisions of sections 36a-760a to 36a-760h, inclusive, when the loan would have been a nonprime home loan if the loan had been structured as a closed-end loan.
(P.A. 08-176, S. 27.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760g. Restrictions on making and financing under nonprime home loans. Curing of defaults. (a) As used in this section and section 36a-760h, the term “mortgage” means a mortgage deed or other instrument that constitutes a first or secondary consensual lien upon any interest in one-to-four family residential real property located in this state, that is, or when the loan is made, intended to be occupied by the borrower as a principal residence. “Mortgage” includes, but is not limited to, a nonprime home loan.
(b) A lender shall not make and a mortgage broker shall not offer a nonprime home loan that refinances a mortgage unless the nonprime home loan provides or is expected to provide a tangible net benefit to the borrower. A lender or mortgage broker shall not take any action that recommends or encourages a default on an existing mortgage or other debt prior to and in connection with the closing or planned closing of a new nonprime home loan that refinances all or any portion of the existing loan or debt.
(c) A lender may not finance, directly or indirectly in connection with a mortgage, any credit life, credit disability, credit unemployment or credit property insurance, or any other life or health insurance or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis or through regularly scheduled periodic payments shall not be considered financed by the lender for the purposes of this subsection.
(d) If all defaults in connection with a nonprime home loan are cured after the initiation of any action to foreclose, but prior to the entry of judgment, the lender shall take steps as necessary to terminate the foreclosure proceeding or other action. The lender may require that the borrower pay any reasonable costs actually incurred by the lender in connection with the default and protecting its rights in the property, including any costs related to collection, foreclosure and termination of the proceeding or other action. Cure of default reinstates the borrower to the same position as if the default had not occurred and nullifies, as of the date of the cure, any acceleration of any obligation under the security instrument or note arising from the default. The borrower's right to reinstatement, as described in this subsection, may not be exercised by the borrower on more than two occasions over the course of twenty-four consecutive months.
(P.A. 08-176, S. 28.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760h. Additional duties of mortgage brokers. A mortgage broker, in addition to duties imposed by federal statutes, other provisions of the general statutes or at common law, shall: (1) Use reasonable care, skill and diligence in performing the mortgage broker's duties and shall act in good faith and fair dealing in all transactions with the borrower; (2) make reasonable good faith efforts to secure a mortgage that is in the reasonable interests of the borrower considering all the circumstances reasonably available to the mortgage broker, including, but not limited to, the rates, points, fees, charges, costs and product type; (3) ensure that the cost of credit is reasonably appropriate considering the borrower's level of creditworthiness and other bona fide underwriting concerns; and (4) notify, before the closing, each lender of the payment obligations associated with each of the other lender's loans if the mortgage broker knows that more than one mortgage will be made by different lenders contemporaneously to a borrower secured by the same real property. The duties under this section may not be waived.
(P.A. 08-176, S. 29.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760i. Court action based on lender's failure to comply with statutory requirements. (a) A borrower who has been injured by a violation of sections 36a-760a to 36a-760h, inclusive, may bring a claim in a court of competent jurisdiction by the date three years after the date of the closing for the following: The greater of actual damages or one thousand dollars; and costs and reasonable attorney's fees, unless:
(1) By the date ninety days after the date of the loan closing and prior to the commencement of any action against a lender under this section, the borrower is notified by the lender of the compliance failure, the lender tenders appropriate restitution and the lender either (A) makes the nonprime home loan comply with the applicable provisions of sections 36a-760a to 36a-760h, inclusive; or (B) changes the terms of the mortgage in a manner beneficial to the borrower so that the mortgage will no longer be considered a nonprime home loan subject to the provisions of sections 36a-760a to 36a-760h, inclusive; or
(2) The lender is able to show by a preponderance of evidence that the compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors. For the purposes of this subdivision, the phrase “bona fide error” includes, but is not limited to, a clerical, calculation, printing, computer malfunction or programming error, but does not include an error of legal judgment with respect to a lender's obligations under the relevant provisions of sections 36a-760a to 36a-760h, inclusive. In actions where the compliance failure has caused material injury to the borrower, the lender shall also be able to show that it cured the compliance failure or otherwise undertook reasonable remedial steps to address or compensate for the injury; or
(3) The lender and borrower otherwise reach a mutual agreement on an appropriate remedy or curative action.
(b) In addition, the court may grant an injured borrower such relief as it deems just and equitable.
(c) A borrower or mortgagor may assert fraud and any violation of sections 36a-760a to 36a-760h, inclusive, which causes material injury to a borrower as a counterclaim or defense to foreclosure by the date six years after the date of the closing.
(d) Nothing in this section shall be construed as creating or permitting a cause of action or defense or counterclaim against an assignee of a nonprime home loan or other mortgage loan with respect to a violation of sections 36a-760a to 36a-760h, inclusive, by the originating lender or mortgage broker.
(P.A. 08-176, S. 30.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760j. Prohibition against influencing real estate appraisals. No person shall influence real estate appraisals of residential property. For the purposes of this section, “influence real estate appraisals” means to directly or indirectly cause or attempt to cause, through coercion, extortion, inducement, bribery, intimidation, compensation, instruction or collusion, the value assigned to the residential property to be based on any factor other than the independent judgment of the person who prepares the appraisal.
(P.A. 08-176, S. 81; P.A. 09-209, S. 26; P.A. 11-216, S. 46; P.A. 12-96, S. 34.)
History: P.A. 08-176 effective July 1, 2008; P.A. 09-209 changed “A mortgage broker shall not influence” to “No person shall influence”, effective July 31, 2009; P.A. 11-216 added “means to directly or indirectly coerce, influence or otherwise encourage an appraiser to misstate or misrepresent the value of residential property and”, effective July 13, 2011; P.A. 12-96 replaced definition of “influence residential real estate appraisals” with definition of “influence real estate appraisals”, effective June 8, 2012.
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Secs. 36a-761 to 36a-769. Reserved for future use.
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PART XI*
RETAIL INSTALLMENT SALES FINANCING
*See Sec. 36a-676 for definitions under the Truth-in-Lending Act applicable to this part.
Annotations to former chapter 733:
Remedies under chapter not limited to Secs. 42-99 and 42-100. 155 C. 469. Cited. 202 C. 106; 216 C. 458; 231 C. 707.
Cited. 24 CA 455.
Cited. 34 CS 154.
Cited. 6 Conn. Cir. Ct. 745.
Sec. 36a-770. (Formerly Sec. 42-83). Applicability of Uniform Commercial Code. Filing and recording. Definitions. (a) The Uniform Commercial Code. A transaction subject to sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c is also subject to the Uniform Commercial Code, title 42a, but in case of any conflict the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall control.
(b) Filing and recording. Section 42a-9-310 determines the need for filing or recording to perfect a security interest, section 42a-9-317 determines the persons who take subject to an unperfected security interest, and sections 42a-9-311 and 42a-9-501 to 42a-9-526, inclusive, determine the place for such filing or recording.
(c) Definitions. As used in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:
(1) “Boat” means any watercraft, as defined in section 22a-248, other than a seaplane, used or capable of being used as a means of transportation on water, by any power including muscular.
(2) “Cash price” means the total amount in dollars at which the seller and buyer agreed the seller would transfer unqualified title to the goods, if the transaction were a cash sale instead of a sale under a retail installment contract.
(3) “Commercial vehicle” means any domestic or foreign truck or truck tractor of ten thousand or more pounds gross vehicular weight or any trailer or semitrailer designed for use in connection with any truck or truck tractor of ten thousand or more pounds gross vehicular weight and which is not used primarily for personal, family or household use.
(4) “Filing fee” means the fee prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, retained or created by a retail installment contract or installment loan contract.
(5) “Finance charge” means the amount in excess of the cash price of the goods agreed upon by the retail seller and the retail buyer, to be paid by the retail buyer for the privilege of purchasing the goods under the retail installment contract or installment loan contract.
(6) “Goods” means (A) “consumer goods”, as defined in subdivision (23) of subsection (a) of section 42a-9-102 and motor vehicles included under such definition, having an aggregate cash price of fifty thousand dollars or less, and (B) “equipment”, as defined in subdivision (33) of subsection (a) of section 42a-9-102, having an aggregate cash price of sixteen thousand dollars or less, provided such consumer goods or such equipment is included in one retail installment contract or installment loan contract.
(7) “Installment loan contract” means any agreement made in this state to repay in installments the amount loaned or advanced to a retail buyer for the purpose of paying the retail purchase price of goods and by virtue of which a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, is taken in the goods for the payment of the amount loaned or advanced. For purposes of this subdivision, “installment loan contract” does not include agreements to repay in installments loans made by the United States or any department, agency or instrumentality thereof.
(8) “Lender” means a person who extends or offers to extend credit to a retail buyer under an installment loan contract.
(9) A retail installment contract or installment loan contract is “made in this state” if: (A) An offer or agreement is made in Connecticut by a retail seller or a lender to sell or extend credit to a resident retail buyer, including, but not limited to, any verbal or written solicitation or communication to sell or extend credit originating outside the state of Connecticut but forwarded to and received in Connecticut by a resident retail buyer; or (B) an offer to buy or an application for extension of credit, or an acceptance of an offer to buy or to extend credit, is made in Connecticut by a resident retail buyer, regardless of the situs of the contract which may be specified therein, including, but not limited to, any verbal or written solicitation or communication to buy or to have credit extended, originating within the state of Connecticut but forwarded to and received by a retail seller or a lender outside the state of Connecticut. For purposes of this subdivision, a “resident retail buyer” means a retail buyer who is a resident of the state of Connecticut.
(10) “Motor vehicle” means any device in, upon or by which any person or property is or may be transported or drawn upon a highway by any power other than muscular. For purposes of this subdivision, “motor vehicle” does not include self-propelled wheelchairs and invalid tricycles, tractors, power shovels, road machinery, implements of husbandry and other agricultural machinery, or other machinery not designed primarily for highway transportation but which may incidentally transport persons or property on a highway, or devices which move upon or are guided by a track or travel through the air.
(11) “Retail buyer” means a person who buys or agrees to buy one or more articles of goods from a retail seller not for the purpose of resale or lease to others in the course of business and who executes a retail installment contract or an installment loan contract in connection therewith.
(12) “Retail installment contract” means any security agreement, as defined in subdivision (74) of subsection (a) of section 42a-9-102, made in this state, including one in the form of a mortgage, conditional sale contract or other instrument evidencing an agreement to pay the retail purchase price of goods, or any part thereof, in installments over a period of time and pursuant to which a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, is retained or taken by the retail seller for the payment of the amount of such retail installment contract. For purposes of this subdivision, “retail installment contract” does not include a rent-to-own agreement, as defined in section 42-240.
(13) “Retail installment sale” means any sale evidenced by a retail installment contract or installment loan contract wherein a retail buyer buys goods from a retail seller at a time sale price payable in two or more installments. The cash price of the goods, the amount, if any, included for other itemized charges which are included in the amount of the credit extended but which are not part of the finance charge under sections 36a-675 to 36a-686, inclusive, and the finance charge shall together constitute the time sale price. For purposes of this subdivision, “retail installment sale” does not include a rent-to-own agreement, as defined in section 42-240.
(14) “Retail seller” means a person who sells or agrees to sell one or more articles of goods under a retail installment contract to a retail buyer.
(15) “Sales finance company” means any person engaging in this state in the business, in whole or in part, of acquiring retail installment contracts from retail sellers or installment loan contracts from holders thereof, by purchase, discount or pledge, or by loan or advance to the holder of either on the security thereof, or otherwise.
(1949 Rev., S. 6698; 1949, 1955, S. 2862d; November, 1955, N218; 1957, P.A. 357, S. 1; March, 1958, P.A. 27, S. 33; 1959, P.A. 495; 589, S. 2; 1961, P.A. 116, S. 20; 1969, P.A. 454, S. 28; P.A. 77-317; 77-604, S. 52, 84; P.A. 78-313, S. 1, 3; P.A. 81-158, S. 13, 17; P.A. 82-18, S. 2, 4; P.A. 89-210, S. 1; P.A. 91-162, S. 15, 18; P.A. 93-39; P.A. 94-122, S. 325, 340; 94-134, S. 1, 3; May 25 Sp. Sess. P.A. 94-1, S. 109, 130; P.A. 01-132, S. 170; P.A. 03-19, S. 85; 03-62, S. 21; P.A. 05-109, S. 49; P.A. 11-108, S. 28; P.A. 15-235, S. 20.)
History: 1959 acts amended definitions of “goods” and “retail buyer”; 1961 act coordinated this section with Uniform Commercial Code; 1969 act redefined “retail installment sale” to include the amount of itemized charges included in amount of credit extended but excluded from finance charge rather than the amount of insurances and other benefits and filing fees; P.A. 77-317 redefined goods to raise maximum aggregate cash price from $6,000 to $25,000; P.A. 77-604 revised references to Sec. 42a-9-105; P.A. 78-313 redefined “goods” to include motor vehicles and to establish separate maximum cash value of $8,000 for equipment and added Subsec. (3)(m) and (n) defining “lender” and contracts “made in this state”; P.A. 81-158 amended Subsec. (3)(d) by replacing “section 36-396”, which had been repealed, with “chapter 657”, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 89-210 added Subsec. (3)(o) defining “commercial vehicle”; P.A. 91-162 amended Subsec. (3)(d) and (e) to specifically exclude consumer rent-to-own agreements, as defined in Sec. 42-240, from the definitions of “retail installment sale” and “retail installment contract”; P.A. 93-39 amended Subsec. (3)(b) by increasing the aggregate cash price of a motor vehicle to be included in the definition of “consumer goods” from $25,000 to $50,000 and increasing the aggregate cash price of equipment to be included from $8,000 to $16,000; P.A. 94-122 changed Subsecs. (1), (2) and (3) to Subsecs. (a), (b) and (c), deleted the definition of “person”, reordered the definitions and made technical changes, effective January 1, 1995; P.A. 94-134 added Subsec. (p) defining “boat”, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994, and applicable January 1, 1995; Sec. 42-83 transferred to Sec. 36a-770 in 1995; (Revisor's note: In 1997 a reference in Subsec. (a) to “42-110b” was corrected editorially by the Revisors to “42-100b” thereby correcting a clerical error which occurred during the preparation of the 1995 revision); P.A. 01-132 amended Subsec. (b) to replace reference to Sec. 42a-9-302 with Sec. 42a-9-310, replace reference to Sec. 42a-9-301 with Sec. 42a-9-317 and replace reference to Secs. 42a-9-302(3)(b) and 42a-9-401 to 42a-9-409, inclusive, with Secs. 42a-9-311 and 42a-9-501 to 42a-9-518, inclusive, and amended Subsec. (c) to make a technical change in Subdiv. (4), in Subdiv. (6) replace Secs. 42a-9-105(1)(h) and 42a-9-109(1) with Sec. 42a-9-102(a)(23) as the statutory reference for the definition of “consumer goods”, make a technical change and replace Sec. 42a-9-109(2) with Sec. 42a-9-102(a)(33) as the statutory reference for the definition of “equipment”, make a technical change in Subdiv. (7) and replace in Subdiv. (12) Sec. 42a-9-105(1)(l) with Sec. 42a-9-102(a)(73) as the statutory reference for the definition of “security agreement” and make a technical change; P.A. 03-19 made a technical change in Subsec. (b), effective May 12, 2003; P.A. 03-62 amended Subsec. (b) to replace reference to Sec. 42a-9-518 with Sec. 42a-9-526 and make technical changes; P.A. 05-109 amended Subsec. (c) by replacing references to Sec. 42a-1-201(37) with references to Sec. 42a-1-201(b)(35) in Subdivs. (4), (7) and (12); P.A. 11-108 amended Subsec. (c)(12) re definition of “retail installment contract” to replace reference to Sec. 42a-9-102(a)(73) with reference to Sec. 42a-9-102(a)(74), effective July 1, 2013; P.A. 15-235 amended Subsec. (c)(13) to change “36a-685” to “36a-686”, effective August 1, 2015.
Annotations to former section 42-83:
Cited. 202 C. 106; 216 C. 458; 231 C. 707.
Cited. 2 Conn. Cir. Ct. 640; 4 Conn. Cir. Ct. 351; 6 Conn. Cir. Ct. 709.
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Sec. 36a-771. (Formerly Sec. 42-84). General contract requirements. (a) Every retail installment contract shall be in writing, shall contain all the agreements of the parties and shall be completed as to all essential provisions prior to the signing of the contract by the retail buyer. No installment contract shall be signed by the retail buyer when such contract contains blank spaces to be filled in except that this provision shall not apply to serial number or other identifying marks which are not available for description at the time of execution of such contract. The retail seller shall deliver to the retail buyer a true and complete executed copy of the retail installment contract at the time the retail buyer signs such contract.
(b) Every retail installment contract for the purchase of consumer goods subject to section 36a-774 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.
(c) Retail installment contracts shall contain the following statements, printed in a size equal to at least ten-point bold type: (1) At the top of the contract, the words “RETAIL INSTALLMENT CONTRACT” or “RETAIL INSTALMENT CONTRACT”; (2) a definite statement that the insurance, if any, included in the retail installment sale provides or does not provide coverage for personal liability and property damage caused to others, as the case may be; (3) the following notice directly above the space reserved for the signature of the buyer: “NOTICE TO THE BUYER: 1. Do not sign this contract before you read it or if it contains any blank space. 2. You are entitled to a completely filled-in copy of the contract when you sign it. 3. Under the law, you have the following rights, among others: (a) To pay off in advance the full amount due and obtain a partial refund of any unearned finance charge; (b) to redeem the property if repossessed for a default; (c) to require, under certain conditions, a resale of the property if repossessed.”
(d) Each retail installment contract for the sale of merchandise on a deferred payment schedule shall also contain an explanation of the consequences of the failure of the retail buyer to make the first or future deferred installment payments under the contract in a timely manner, including a clear statement of whether or not interest would be charged for the entire period of deferment under the contract and, if so, the rate of such interest. Such explanation shall be printed in a size equal to at least ten-point bold type. Such deferred payment schedule shall not be effective unless the contract contains such provisions and the retail buyer acknowledges in writing on the contract that he or she has been informed of the consequences of failing to make the first or future deferred installment payments in a timely manner.
(1949 Rev., S. 6699, (a)(1), (b); 1949, S. 2863d; 2864d; 1957, P.A. 361, S. 1 (a)1, (b), (c); 1969, P.A. 454, S. 29; 1971, P.A. 698; P.A. 77-324, S. 1; P.A. 81-163, S. 1, 4; P.A. 82-18, S. 3, 4; 82-472, S. 161, 183; P.A. 03-19, S. 86; 03-105, S. 1; P.A. 15-235, S. 21.)
History: 1969 act rewrote Subsec. (b) re contract contents; 1971 act clarified Subsec. (b), specifying required terminology, inserted new Subdivs. (8), (9), (11) and (14) re total of payments, deferred payment price, date when finance charge begins to accrue and method of computing unearned portion of finance charge, etc., respectively; P.A. 77-324 replaced Subsec. (b) which had detailed required contents of contracts with new provision requiring that contracts conform to requirements of Ch. 657; P.A. 81-163 amended Subsec. (c) to provide that the partial refund would be of “any unearned” finance charge and that until April 1, 1982, a retail seller could use the notice required prior to May 18, 1981; P.A. 82-18 amended Subsec. (c) to extend from April 1, 1982, until the effective date of certain statute sections amended by P.A. 81-158, i.e. October 1, 1982, the date on which a retail seller must use the revised notice concerning refund of unearned finance charges; P.A. 82-472 made technical change in Subsec. (c); Sec. 42-84 transferred to Sec. 36a-771 in 1995; P.A. 03-19, effective May 12, 2003, and P.A. 03-105, effective October 1, 2003, both amended Subsec. (c) by inserting “or “RETAIL INSTALMENT CONTRACT”” in Subdiv. (1) and deleting obsolete provision re notices until October 1, 1982, and P.A. 03-105 further amended section to add Subsec. (d) re retail installment contracts for sale of merchandise on deferred payment schedule; P.A. 15-235 amended Subsec. (b) to change “36a-685” to “36a-686”, effective August 1, 2015.
See Sec. 42a-9-203 re attachment and enforceability of security interest.
Annotations to former section 42-84:
Retail installment contract not completed in conformity with section is voidable at option of retail buyer, but, as condition precedent to rescission, he must restore seller to his former condition as nearly as possible. 155 C. 469. Cited. 209 C. 163.
Cited. 6 Conn. Cir. Ct. 745.
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Sec. 36a-772. (Formerly Sec. 42-85). Maximum finance charge on retail sales of motor vehicles and other goods. (a) A retail seller of motor vehicles may charge, contract for, receive or collect a finance charge expressed as an annual percentage rate on any retail installment contract covering the retail sale of a motor vehicle in this state, which charge shall not exceed the rates indicated for the respective classifications of motor vehicles as follows: (1) On sales made prior to October 1, 1985, of (A) new motor vehicles, eighteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than three years prior to the year in which the sale is made, nineteen and one-quarter per cent; and (C) used motor vehicles of a model designated by the manufacturer by a year more than three years prior to the year in which the sale is made, twenty-one and one-half per cent; (2) on sales made on or after October 1, 1985, and prior to October 1, 1987, (A) new motor vehicles, sixteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, eighteen per cent; (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, twenty per cent; and (3) on sales made on or after October 1, 1987, (A) new motor vehicles, fifteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, seventeen per cent; (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, nineteen per cent.
(b) A retail seller of goods other than motor vehicles may charge, contract for, receive or collect a finance charge on any retail installment contract made on or after July 1, 1981, covering the retail sale of goods other than motor vehicles in this state, which charge shall not exceed an annual percentage rate of twenty-one per cent on sales made prior to October 1, 1985, nineteen per cent on sales made on or after October 1, 1985, and prior to October 1, 1987, and eighteen per cent on sales made on or after October 1, 1987.
(c) The finance charge under subsections (a) and (b) of this section shall be computed on the principal amount financed as determined under sections 36a-675 to 36a-686, inclusive, and the regulations adopted under said sections. On contracts providing for installment payments extending for a period which is less than or greater than one year, the finance charge shall be computed proportionately. The finance charge may be computed on the basis of a full month for any fractional month period in excess of ten days. A minimum finance charge of fifteen dollars may be charged on any retail installment contract in which the finance charge, when computed at the rates indicated, results in a total charge of less than that amount. Nothing contained in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall be construed to prohibit the computation of the interest component of the finance charge by application of an interest rate to the actual balance of such principal amount financed as may be outstanding from time to time.
(1955, S. 2866d; 1957, P.A. 361, S. 1(i); P.A. 76-325; P.A. 77-391, S. 1; P.A. 78-11; P.A. 80-116, S. 1, 2; P.A. 81-158, S. 15, 17; 81-163, S. 2, 4; 81-362, S. 2, 4; 81-452, S. 1, 2; 81-472, S. 145, 159; P.A. 82-18, S. 2, 4; 82-105, S. 2, 3; 82-108; P.A. 83-226, S. 2, 3; 83-231; P.A. 85-522, S. 1; P.A. 15-235, S. 22.)
History: P.A. 76-325 expressed finance charges as annual percentages where previously charges were expressed as so many dollars per $100 per year and raised maximum rates: In Subdiv. (1) from 7% to 12.75%, in Subdiv. (2) from 9% to 16.25%, in Subdiv. (3) from 12% to 21.5%, in Subdiv. (4) from 14% to 25% and in Subdiv. (5) from 15% to 26.75%; P.A. 77-391 incorporated previous provisions as Subsecs. (a) and (c) and inserted new Subsec. (b) re finance charge on goods other than motor vehicles; P.A. 78-11 substituted “subsection (a)(5) of section 36-405 and regulations implementing chapter 657” for “subsection (b)(5) of section 42-84” in Subsec. (c); P.A. 80-116 raised rates on new motor vehicles to 16% temporarily (from May 5, 1980 to January 1, 1982), restoring previous rate on or after January 1, 1982, applied 21.5% rate to used vehicles designated by a year “not more than two years prior to the year in which the sale is made” rather than to used vehicles designated by a year “not more than four years and not less than two years prior to the year in which the sale is made” and deleted Subdivs. (4) and (5) which had set rates for those vehicles more than four model years old; P.A. 81-158 amended Subsec. (c) by replacing “subsection (a)(5) of section 36-405”, which had been repealed, with “chapter 657” and replacing “regulations implementing chapter 657” with “regulations adopted under that chapter”, effective March 31, 1982; P.A. 81-163 amended Subsec. (c) by providing that the computation of the interest component of the finance charge by applying the interest rate to the outstanding balance of the principal amount financed is permitted; P.A. 81-362 amended Subsec. (b) to provide that on contracts made on or after July 1, 1981, the maximum finance charge shall be 21% on sales made prior to March 1, 1983, and 18% thereafter; P.A. 81-452 amended Subsec. (a) to increase the finance charge on sales made prior to March 1, 1983, to 18% for new motor vehicles, 19.25% for used motor vehicles not more than three years old, and 21.5% for used motor vehicles more than three years old; P.A. 81-472 made technical changes; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-105 amended Subsec. (b) by extending from March 1, 1983, to October 1, 1983, the expiration date for the increase in finance charges enacted in 1981; P.A. 82-108 amended Subsec. (a) by extending from March 1, 1983, to October 1, 1983, the expiration date for the increase in finance charges enacted in 1981; P.A. 83-226 amended Subsec. (b) to extend the sunset date for the current maximum statutory interest rate for retail installment sales contracts from October 1, 1983, to October 1, 1985; P.A. 83-231 amended Subsec. (a) to extend from October 1, 1983, to October 1, 1985, the sunset date for the current maximum finance charge which dealers may charge on the sale of new and used automobiles; P.A. 85-522 amended Subsec. (a) to establish a maximum finance charge of (1) 16% for new motor vehicles, 18% for used motor vehicles not more than two years old and 10% for used motor vehicles more than two years old, on sales made on or after October 1, 1985, and prior to October 1, 1987, and (2) 15% for new motor vehicles, 17% for used motor vehicles not more than two years old and 19% for used motor vehicles more than two years old, on sales made on or after October 1, 1987, and amended Subsec. (b) to establish a maximum finance charge on retail sales other than motor vehicles of 19% on sales made on or after October 1, 1985, and prior to October 1, 1987, and 18% on sales made on or after October 1, 1987; Sec. 42-85 transferred to Sec. 36a-772 in 1995; P.A. 15-235 amended Subsec. (c) to change “36a-685” to “36a-686”, effective August 1, 2015.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-773. (Formerly Sec. 42-86). Insurance. Every retail seller or sales finance company, if insurance is included in a retail installment contract, shall, within fifteen days after execution of the retail installment contract, send or cause to be sent to the retail buyer a policy or policies or certificate of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the insurance contract or contracts. In the event of repossession of goods under section 36a-785, where the holder of the retail installment contract has received a refund of all or part of the unearned insurance premiums paid by the retail buyer in connection with the retail installment contract, the holder shall apply such amount toward the balance of the retail buyer's obligations under the retail installment contract. For purposes of this section, “unearned insurance premiums” means the premiums that are collected by an insurer in advance, but subject to return if the coverage under the insurance contract or contracts ends before the term covered by the premiums is complete.
(1949 Rev., S. 6699, (c); 1957, P.A. 361, S. 1 (d); P.A. 16-65, S. 14.)
History: Sec. 42-86 transferred to Sec. 36a-773 in 1995; P.A. 16-65 added provisions re application of refunded unearned insurance premiums in the event of repossession and made a technical change.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-774. (Formerly Sec. 42-87). Installment loan contract requirements. Every installment loan contract shall be in writing executed by the retail buyer and a copy thereof shall be delivered to such retail buyer at the time of the execution thereof. Within fifteen days after the execution of such installment loan contract, the holder thereof shall send or cause to be sent to the retail buyer a policy or policies or certificates of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the insurance contract or contracts. Every installment loan contract for the purchase of consumer goods subject to section 36a-771 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.
(1949 Rev., S. 6699, (e); 1957, P.A. 361, S. 1 (f); 1969, P.A. 454, S. 30; P.A. 77-324, S. 2; P.A. 15-235, S. 23; P.A. 16-65, S. 16.)
History: 1969 act rewrote provisions re contract contents; P.A. 77-324 replaced detailed provisions re contract contents with provision requiring contracts to contain information required under Ch. 657 and associated regulations; Sec. 42-87 transferred to Sec. 36a-774 in 1995; P.A. 15-235 changed “36a-685” to “36a-686”, effective August 1, 2015; P.A. 16-65 made a technical change.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotations to former section 42-87:
Cited. 3 CA 201.
Cited. 34 CS 154.
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Sec. 36a-775. (Formerly Sec. 42-88). Confession of judgment provision invalid. No provision for confession of judgment or power of attorney therefor, contained in any retail installment contract or installment loan contract or contained in a separate agreement relating thereto, shall be valid or enforceable.
(1949 Rev., S. 6699, (a) 3; 1957, P.A. 361, S. 1 (a) 3.)
History: Sec. 42-88 transferred to Sec. 36a-775 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-776. (Formerly Sec. 42-89). Inclusion of other goods in contract void. Any provision of a retail installment contract as originally written or subsequently amended which purports to provide for the inclusion of title to or a lien upon any goods subsequently or previously sold under a retail installment contract not paid in full, other than that originally sold as the subject of such specific installment sale or other than substitution in whole or in part therefor, as security for payment of the time sale price or any part thereof shall be void; but the other provisions shall not be affected thereby.
(1949 Rev., S. 6699, (a) 2; 1957, P.A. 361, S. 1 (a) 2.)
History: Sec. 42-89 transferred to Sec. 36a-776 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-777. (Formerly Sec. 42-90). Acknowledgment of receipt of notice and statement. An acknowledgment by the retail buyer of the delivery of any such copy, notice or statement as is required in section 36a-771 or 36a-774 contained in the body of the statement or contract shall be conclusive proof of delivery in any action or proceeding by or against any assignee without knowledge to the contrary when he acquires the obligation.
(1949, Rev., S. 6699, (f); 1957, P.A. 361, S. 1 (g); 1969, P.A. 454, S. 31.)
History: 1969 act described assignee as assignee “without knowledge to the contrary when he acquires the obligation” rather than as assignee “of a retail installment contract or installment loan contract”; Sec. 42-90 transferred to Sec. 36a-777 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-778. (Formerly Sec. 42-91). Delinquency and collection charges. The holder of any retail installment contract or any installment loan contract shall not receive or collect any charges or expenses for collecting any delinquent payment, including, but not limited to, any service fees for accepting delinquent payments over the telephone or Internet, except as follows: The holder of a retail installment contract or installment loan contract, except a contract for the purchase of a commercial vehicle or an installment loan contract regulated by sections 36a-555 to 36a-573, inclusive, may collect a delinquency and collection charge for default in the payment of any such contract or installment of such contract, when such default has continued for a period of ten days, such charge not to exceed five per cent of the amount of the installments in default or the sum of ten dollars, whichever is the lesser. The holder of any retail installment contract or any installment loan contract for the purchase of a commercial vehicle, as defined in section 36a-770, except an installment loan contract regulated by sections 36a-555 to 36a-573, inclusive, may collect a delinquency and collection charge for default in the payment of any such contract or installment of such contract, when such default has continued for a period of ten days, such charge not to exceed five per cent of the amount of the installments in default. In addition to any such delinquency and collection charge, the retail installment contract or the installment loan contract may provide for the payment of attorney's fees not exceeding fifteen per cent of the amount due and payable under such contract when such contract is referred to an attorney, who is not a salaried employee of the holder of the contract, for collection, plus the court costs. The restriction on charges under this section shall not apply to any expenses permitted under section 36a-785.
(1949 Rev., S. 6699, (a) 4; 1957, P.A. 361, S. 1 (a) 4; P.A. 80-69, S. 2, 3; P.A. 89-210, S. 2; P.A. 16-65, S. 17.)
History: P.A. 80-69 raised flat fee charge allowed as alternative to 5% of amount in default from $5 to $10; P.A. 89-210 added provisions re commercial vehicles; Sec. 42-91 transferred to Sec. 36a-778 in 1995; P.A. 16-65 replaced reference to charges or expenses for delinquency and collection with provision re charges or expenses for collecting any delinquent payment, including any service fees, and made technical changes.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotation to former section 42-91:
Cited. 34 CS 154.
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Sec. 36a-779. (Formerly Sec. 42-92). Assignment of contract. Any sales finance company may purchase or acquire from the original holder thereof or from any other sales finance company any retail installment contract or any installment loan contract on such terms and conditions as may be mutually agreed upon not inconsistent with the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c. Such contracts constitute chattel paper, as defined in subdivision (11) of subsection (a) of section 42a-9-102, and are governed by article 9 of title 42a except as otherwise provided in said sections.
(1949 Rev., S. 6699, (d); 1957, P.A. 361, S. 1 (e); 1961, P.A. 116, S. 21; P.A. 01-132, S. 171.)
History: 1961 act coordinated this section with the Uniform Commercial Code; Sec. 42-92 transferred to Sec. 36a-779 in 1995; P.A. 01-132 replaced reference to Sec. 42a-9-105(1)(b) with Sec. 42a-9-102(a)(11).
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotation to former section 42-92:
Waiver of defense clause in consumer goods credit transaction void as against public policy in Connecticut. 158 C. 543.
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Sec. 36a-780. (Formerly Sec. 42-93). Payments after assignment. Unless notice has been given to the retail buyer of actual or intended assignment of a retail installment contract or installment loan contract, payment thereunder or tender thereof made by the retail buyer to the last-known holder of such contract shall be binding upon such subsequent holder or assignee.
(1949 Rev., S. 6699, (a) 5; 1957, P.A. 361, S. 1 (a) 5.)
History: Sec. 42-93 transferred to Sec. 36a-780 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-781. (Formerly Sec. 42-94). Statement of payments made. Receipts. Upon written request from the retail buyer, the holder of the retail installment contract or the installment loan contract shall give or forward to the retail buyer a written statement of the dates and amounts of payments and the total amount unpaid under such contract. A retail buyer shall, upon written request, be entitled to a written receipt for any cash payment.
(1949 Rev., S. 6699, (a) 6; 1957, P.A. 361, S. 1 (a) 6.)
History: Sec. 42-94 transferred to Sec. 36a-781 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-782. (Formerly Sec. 42-95). Cancellation of contract on payment in full. Upon payment in full of the balance and other amounts lawfully due under a retail installment contract or installment loan contract by the retail buyer, the holder shall mark the contract and note signed by the retail buyer with the word “paid” or “cancelled” and shall, at the time of payment, return such contract and note or, in lieu thereof, transmit or deliver to the retail buyer a certificate clearly identifying the goods covered by the contract and showing such contract has been paid in full. This requirement shall not apply to any retail installment contract or installment loan contract covering goods for which the cash price is one hundred dollars or less.
(1949, S. 2865d; 1957, P.A. 361, S. 1 (h).)
History: Sec. 42-95 transferred to Sec. 36a-782 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-783. (Formerly Sec. 42-96). Rebate and refund upon prepayment of contract. (a) Notwithstanding the provisions of any retail installment contract to the contrary, any retail buyer may satisfy in full at any time before maturity the debt of any retail installment contract and, in so satisfying any such debt on which there are unearned finance charges, shall receive a rebate thereon for such anticipation of payments as provided for by this section. Subject to the provisions of section 36a-690, the amount of such rebate on a retail installment contract other than any such contract for the sale of a commercial vehicle, shall represent at least as great a proportion of the total finance charge less an acquisition cost or minimum finance charge of fifteen dollars, as the sum of the periodical time balances, after the date of prepayment, bears to the sum of all the periodical time balances under the schedule of payments in the original retail installment contract. On a retail installment contract for the sale of a commercial vehicle, the amount of such rebate shall represent at least as great a proportion of the total finance charge as the sum of the periodical time balances, after the date of prepayment, bears to the sum of all the periodical time balances under the schedule of payments in the original retail installment contract and from which resulting amount is deducted an acquisition cost or minimum finance charge of one hundred fifty dollars. When any such rebate is less than one dollar, no rebate need be made.
(b) In the event of prepayment by the retail buyer of any such renewed or extended retail installment contract in full prior to the revised final date of maturity thereof, the sales finance company or retail seller shall refund to the retail buyer a monthly pro rata portion of the renewal or extension charge. When such refund is less than one dollar, no refund need be made.
(c) Whenever such refund is made, the holder of the contract shall, upon request therefor, deliver to the retail buyer a statement clearly setting forth separately the refund of finance charges and insurance premiums.
(1949 Rev., S. 6701; 1949, 1953, S. 2867d; 1957, P.A. 361, S. 2; P.A. 81-163, S. 3, 4; P.A. 89-210, S. 3.)
History: P.A. 81-163 amended Subsec. (a) by providing that if a retail buyer satisfies in full prior to maturity a debt on which there are unearned finance charges he shall receive a rebate thereon, providing that the calculation of the rebate is subject to the provisions of Sec. 36-417z and that a minimum finance charge may be deducted from the total finance charge, and by replacing “refund” with “rebate”; P.A. 89-210 amended Subsec. (a) by adding provisions re commercial vehicles; Sec. 42-96 transferred to Sec. 36a-783 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotations to former section 42-96:
Cited. 24 CA 455.
Cited. 34 CS 154.
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Sec. 36a-784. (Formerly Sec. 42-97). Renewals and extensions. Whenever any sales finance company or retail seller renews or extends the installments remaining unpaid so that the retail installment contract is both extended beyond its original date of final payment and the installments are reduced or increased in amount, such renewal or extension agreement shall be in writing. Such sales finance company or retail seller may, any law to the contrary notwithstanding, make or collect a total additional charge therefor not exceeding an amount equivalent to a true rate of interest of twelve per cent per annum on the respective descending balances computed from the date of the oldest unpaid installment existing prior to such renewal or extension. When the renewal or extension does not include both an extension beyond the original date of final payment and a reduction or increase in the amount of the installments, such sales finance company or retail seller may make a total additional charge therefor up to the maximum lawful contract rate of interest permitted under the laws of this state but not exceeding twelve per cent true interest per annum, on the payment or payments extended for the period or periods of the extension.
(1949 Rev., S. 6702.)
History: Sec. 42-97 transferred to Sec. 36a-784 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure. (a) Repossession. When the retail buyer is in default in the payment of any sum due under the retail installment contract or installment loan contract, or in the performance of any other condition that such contract requires the retail buyer to perform, or in the performance of any promise, the breach of which is by such contract expressly made a ground for the retaking of the goods, the holder of the contract may retake possession of such goods, provided the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle. Unless the goods can be retaken without breach of the peace, the goods shall be retaken by legal process, provided nothing contained in this section shall be construed to authorize a violation of the criminal law. In the case of repossession of any motor vehicle without the knowledge of the retail buyer, the local police department shall be notified of such repossession not later than two hours after repossession. In the absence of a local police department or if the local police department cannot be reached for notification, the state police shall be promptly notified of such repossession.
(b) Notice of intention to repossess. Not less than ten days prior to the retaking, the holder of such contract may serve upon the retail buyer, personally or by registered or certified mail, a notice of intention to retake the goods on account of the retail buyer's default. The notice shall state that the retail buyer is in default and the period at the end of which such goods will be retaken, and designate (1) the obligations required to be performed in order to cure the default, including the dollar amount of any required payment, and (2) the date by which such obligations must be performed. The notice shall briefly and clearly state the retail buyer's rights under this subsection in the event such goods are retaken. In the case of repossession of any motor vehicle, the notice shall inform the retail buyer that he or she is responsible for removing all of his or her personal property from the motor vehicle prior to the date such repossession can take place. If the notice is so served and the retail buyer does not perform the conditions and provisions required under the contract to cure the default before the day set for retaking, the holder of the contract may retake such goods and hold such goods subject to the provisions of subsections (d), (e), (f), (g) and (h) of this section regarding resale, but without any right of redemption.
(c) Redemption. If the holder of such contract does not give the notice of intention to retake, described in subsection (b) of this section, the holder shall retain such goods for fifteen days after the retaking within the state in which such goods were located when retaken. During such period the retail buyer, upon payment or tender of the unaccelerated amount due under such contract at the time of retaking and interest, or upon performance or tender of performance of such other condition as may be named in such contract as precedent to the retail buyer's continued possession of such goods, or upon performance or tender of performance of any other promise for the breach of which such goods were retaken, and upon payment of the actual and reasonable expenses of any retaking and storing, may redeem such goods and become entitled to take possession of such goods and to continue in the performance of such contract as if no default had occurred. The holder of such contract shall, not later than three days after the date of the retaking, furnish or mail, by registered or certified mail, to the last-known address of the retail buyer, a written statement indicating (1) the unaccelerated sum due under such contract and the actual and reasonable expense of any retaking and storing, and (2) in the case of repossession of any motor vehicle, the holder of such contract shall also, not later than three days after the date of the retaking, and without regard to whether notice of intention to retake was given to the buyer, send a written notice (A) that the buyer is responsible for retrieving items of personal property that may have been left in the motor vehicle, other than items that may have been turned over to law enforcement, (B) that such property, if any, will be available for retrieval for at least sixty days after the date on which the motor vehicle was repossessed, unless the holder of the contract specifies, or the terms of the contract specify a date at least sixty days after the repossession after which the buyer may no longer retrieve the property, and (C) the contact and business hours information that the buyer can use to make arrangements for retrieval of the property. If the buyer retrieves some or all of the personal property more than fifteen days after the date on which the motor vehicle was repossessed, the holder of the contract, or an agent thereof maintaining custody of the personal property, may charge the buyer a reasonable storage fee not to exceed twenty-five dollars. Failure to furnish or mail such statement as required by this section shall result in forfeiture of the holder's right to claim payment for the actual and reasonable expenses of retaking and storage, and the holder shall be liable for the actual damages suffered because of such failure. If such goods are perishable so that retention for fifteen days under this subsection would result in their destruction or substantial injury, the provisions of this subsection shall not apply and the holder of the contract may resell the goods immediately upon such retaking.
(d) Compulsory resale. If the retail buyer does not redeem such goods within fifteen days after the holder of the contract has retaken possession, the holder of the contract shall sell such goods at public or private sale not less than fifteen days and not more than one hundred eighty days after the retaking. When the holder of the contract retakes possession by legal process, and an answer is interposed, the holder of the contract may, at the holder's election, hold such retaken goods for a period not to exceed thirty days after the entry of final judgment by a court of competent jurisdiction entitling the holder of the contract to possession of such goods before holding such resale. The holder of the contract shall give the retail buyer not less than ten days' written notice of the time and place of any public sale, or the time after which any private sale or other intended disposition is to be made, either personally or by registered mail or by certified mail, return receipt requested, directed to the retail buyer at such retail buyer's last-known place of business or residence. The holder of the contract may bid for such goods at any public sale. The proceeds of the resale shall be considered to be either the amount paid for such goods at such sale or the fair cash retail market value of such goods at the time of repossession, whichever is the greater, except as otherwise provided in subsection (g) of this section.
(e) Proceeds of resale. Proceeds of the resale shall be applied in the following order of priority: (1) First, to the payment of the actual and reasonable expenses of such resale, (2) if, after application pursuant to subdivision (1) of this subsection, there are proceeds remaining, then to the payment of the actual and reasonable expenses of any retaking and storing of said goods, and (3) if, after application pursuant to subdivisions (1) and (2) of this subsection, there are proceeds remaining, then to the satisfaction of the balance due under the contract. Not later than thirty days after the resale, the holder of the contract shall give the retail buyer a written statement itemizing the disposition of the proceeds. Any sum remaining after the satisfaction of such claims shall be paid to the retail buyer.
(f) Deficiency on resale. Even if the proceeds of the resale are insufficient to defray the actual and reasonable expenses of such resale, and such actual and reasonable expenses of any retaking and storing of such goods and the balance due under the contract, the holder of the contract may not recover the deficiency from the retail buyer or any surety or guarantor for the retail buyer, or from anyone who has succeeded to the obligations of such retail buyer, except as provided in subsection (g) of this section.
(g) Fair market value. If the goods retaken consist of a motor vehicle the aggregate cash price of which was more than four thousand dollars, the prima facie fair market value of such motor vehicle shall be calculated by adding together the average trade-in value for such motor vehicle and the highest-stated retail value for such motor vehicle and dividing the sum of such values by two. Such average trade-in value and highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Used Car Guide, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest-stated trade-in value stated in said guide for the motor vehicle shall be used. If the goods retaken consist of a boat the aggregate cash price of which was more than four thousand dollars, the prima facie fair market value of such boat shall be calculated by adding together the average trade-in value for such boat and the highest-stated retail value for such boat and dividing the sum of such values by two. Such average trade-in value and highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Appraisal Guide for Boats, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest-stated trade-in value stated in said guide for the boat shall be used. In the event that the value of such motor vehicle or boat is not stated in such publication, the fair market value at retail minus the reasonable costs of resale shall be determined by the court. The prima facie evidence of fair market value of such motor vehicle or boat so determined may be rebutted only by direct in-court testimony. If such value of the motor vehicle or boat is less than the balance due under the contract, plus the actual and reasonable expenses of the retaking of possession, the holder of the contract may recover from the retail buyer, or from anyone who has succeeded to such retail buyer's obligations, as a deficiency, the amount by which such liability exceeds such fair market value, as defined in this subsection. If the actual resale price received by the holder exceeds such fair market value, as defined in this subsection, the actual resale price shall govern.
(h) Election of remedies. After the holder retakes possession as provided in subsection (a) of this section, or if the holder obtains a prejudgment remedy against the goods under chapter 903a, the retail buyer or anyone who has succeeded to such retail buyer's obligations shall not be liable for any balance due, except to the extent permitted by subsection (g) of this section. The holder may seek a monetary judgment on the contract against the retail buyer unless the goods have been repossessed, with or without judicial process. Goods purchased under the contract shall not be executed upon to satisfy such judgment. When such judgment becomes final, the holder's security interest in the goods shall be extinguished. If the contract covers a retail sale of a motor vehicle required to be registered, the holder shall comply with section 14-188.
(i) Recovery of part payments. If the holder of the contract fails to comply with the provisions of subsections (c), (d), (e), (f), (g) and (h) of this section, after retaking the goods, the retail buyer may recover from the holder of the contract such retail buyer's actual damages, if any, and in no event less than one-fourth of the sum of all payments which have been made under the contract.
(j) Waiver of statutory protection. No act or agreement of the retail buyer before or at the time of the making of a retail installment contract or installment loan contract nor any agreement or statement by the retail buyer in such contract shall constitute a valid waiver of the provisions of subsections (c), (d), (e), (f), (g), (h) and (i) of this section.
(k) Loss. After the delivery of the goods to the retail buyer and prior to any retaking of such goods by the holder of the contract, the risk of injury and loss shall rest upon the retail buyer.
(1949 Rev., S. 6700; 1957, P.A. 357, S. 2, 3; 1959, P.A. 301; 1961, P.A. 116, S. 22, 23; P.A. 76-258, S. 1, 2; P.A. 77-506; 77-614, S. 486, 587, 610; P.A. 78-303, S. 85, 136; P.A. 94-134, S. 2, 3; May 25 Sp. Sess. P.A. 94-1, S. 61, 130; P.A. 09-189, S. 1; P.A. 15-42, S. 7; P.A. 16-65, S. 18, 58; 16-193, S. 34.)
History: 1959 act added provisions re notification of police where vehicle is repossessed without its buyer's knowledge in Subsec. (a); 1961 act amended Subsecs. (d) and (e) for conformity with Uniform Commercial Code; P.A. 76-258 amended Subsec. (d) to require that sale be held within 180, rather than 90 days, to require that buyer be notified of “the time after which any private sale or other intended disposition is to be made”, deleted Subsec. (e) re procedure where contract holder not required to resell repossessed goods, relettering as necessary, required that contract holder notify buyer of disposition of proceeds in new Subsec. (e), formerly (f), changed force of Subsec. (f), formerly (g), so that deficiency is not recoverable from buyer (“except as provided in subsection (g)”) where previously deficiency was recoverable, added new Subsecs. (g) and (h), deleted former Subsecs. (h) and (i), and relettered former Subsecs. (j) to (l) as (i) to (k); P.A. 77-506 substituted “retail” buyer for “installment” buyer in Subsec. (a), referred to “unaccelerated” amounts due, required that buyer be notified of amount due within 3 days of retaking rather than “immediately” upon buyer's written demand and stated that failure to meet notice requirement resulted in forfeiture of right to claim payment for retaking and storage expenses rather than in forfeiture of $10 to the buyer, specified that Subsec. (h) is applicable where holder obtains a prejudgment remedy and made minor language changes in Subsecs. (e) and (g); P.A. 77-614 and P.A. 78-303 placed state police within the department of public safety, effective January 1, 1979; P.A. 94-134 amended Subsec. (g) to include a boat the aggregate price of which was more than $2,000 and reworded for clarity the formula for calculating a motor vehicle's fair market value, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 amended Subsec. (g) by making a technical change, effective July 1, 1994; Sec. 42-98 transferred to Sec. 36a-785 in 1995; P.A. 09-189 amended Subsec. (a) by adding proviso re “the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle” and by making a technical change; P.A. 15-42 amended Subsec. (a) by changing notification to police of motor vehicle repossession from “immediately thereafter” to “within two hours”; P.A. 16-65 amended Subsec. (b) by deleting “if he so desires”, adding Subdivs. (1) and (2) re designation of obligations required to be performed to cure default and date by which obligations must be performed, adding provision re notice in the case of repossession of any motor vehicle and replacing “conditions and provisions as to which he is in default” with “conditions and provisions required under the contract to cure the default”, amended Subsec. (c) by designating existing provision re unaccelerated sum due and expenses of retaking and storing as Subdiv. (1) and adding Subdiv. (2) re notice requirements in the case of repossession of any motor vehicle, and adding provision re personal property storage fee, amended Subsec. (e) by adding provisions re order of priority and proceeds remaining after application pursuant to Subdivs. (1) and (2), amended Subsec. (g) by replacing “two thousand dollars” with “four thousand dollars”, replacing “average retail value” with “highest-stated retail value” and adding provisions re use of highest-stated trade-in value if average trade-in value is not stated in guides, and made technical and conforming changes throughout; P.A. 16-193 made technical changes in Subsec. (f).
Annotations to former section 42-98:
Actual receipt of notice to resell repossessed automobile not necessary. 150 C. 631. Cited. 198 C. 34. Notification requirements mandatory. 209 C. 163. Cited. 216 C. 458; 231 C. 707.
Cited. 7 CA 613; 24 CA 455.
A bid is merely an offer to purchase; where plaintiff did nothing to consummate sale other than to place in its own file a bid to purchase, held no resale having taken place, plaintiff was not entitled to recover any deficiency. 23 CS 362. Cited. Id., 365. Compliance with section mandatory under act. 30 CS 604. Cited. 31 CS 152.
Cited. 2 Conn. Cir. Ct. 495, 499, 681. Court held day of retaking was to be excluded and last day included in computing the 15 days for redemption; sale by repossessor before statutory time limit defeated his right to deficiency judgment. Id., 708. Sale by holder of retail installment contract who repossessed automobile need not be given notice by publication nor be conducted by licensed auctioneer. 4 Conn. Cir. Ct. 351. Applicable only to retail buyers. 6 Conn. Cir. Ct. 709.
Annotation to present section:
Repossession under Subsec. (g) does not terminate operation of parties' contract or prohibit the recovery of postmaturity interest at either the contractual or legal rate under Sec. 37-1(b). 315 C. 433.
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Sec. 36a-786. (Formerly Sec. 42-99). Recovery of charges barred by wilful violations. A wilful violation of any provision of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, except a violation with respect to disclosure which is subject to the provisions of section 36a-683, by any person, firm, association or corporation shall bar recovery of any finance, delinquency or collection charge by the owner or holder of the retail installment contract or any interest, delinquency or collection charge by the owner or holder of an installment loan contract involved, provided such owner or holder approved of or had knowledge of such violation and after such approval or knowledge retained the benefits, proceeds, profits or advantages accruing from such violation or otherwise ratified such violation.
(1949 Rev., S. 6703; 1969, P.A. 454, S. 32.)
History: 1969 act added exception re violations with respect to disclosures; Sec. 42-99 transferred to Sec. 36a-786 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotations to former section 42-99:
This section and Sec. 42-100 are not exclusive of other remedies. 155 C. 469.
Cited. 3 CA 201; 7 CA 613.
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Sec. 36a-787. (Formerly Sec. 42-100). Penalty. Any person and any responsible officer, partner or employee of such person who wilfully and deliberately fails to comply with or violates any of the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c except a violation with respect to disclosure which is subject to the provisions of section 36a-681, shall, in addition to the penalty prescribed in section 36a-786, be fined not less than twenty-five dollars nor more than five hundred dollars for each offense, except that in the case of a violation by a licensed motor vehicle dealer the penalty provided in section 14-64 shall apply.
(1949, S. 2868d; 1969, P.A. 454, S. 33; P.A. 94-122, S. 326, 340.)
History: 1969 act added exception re violations with respect to disclosures; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-100 transferred to Sec. 36a-787 in 1995; (Revisor's note: In 1997 a reference to Sec. “42-110b” was changed editorially by the Revisors to “42-100b” thereby correcting a clerical error which occurred during the preparation of the 1995 revision).
Annotations to former section 42-100:
This section and Sec. 42-99 are not exclusive of other remedies. 155 C. 469.
Cited. 7 CA 613.
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Sec. 36a-788. (Formerly Sec. 42-100a). Enforcement action. Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, the commissioner may take action against such person in accordance with sections 36a-50 and 36a-52.
(P.A. 78-313, S. 2, 3; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 327, 340; P.A. 04-69, S. 29.)
History: (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 rewrote the section to allow the commissioner to enforce Sec. 36a-50, effective January 1, 1995; Sec. 42-100a transferred to Sec. 36a-788 in 1995; P.A. 04-69 authorized commissioner to take action against violator in accordance with Sec. 36a-52.
Annotation to former section 42-100a:
Cited. 7 CA 613.
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Secs. 36a-789 to 36a-799. Reserved for future use.
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PART XII
CONSUMER COLLECTION AGENCIES
Sec. 36a-800. (Formerly Sec. 42-127). Consumer collection agency. Definitions. As used in this section and sections 36a-801 to 36a-814, inclusive, unless the context otherwise requires:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485;
(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a consumer collection agency;
(3) “Consumer collection agency” means any person (A) engaged as a third party in the business of collecting or receiving payment for others on any account, bill or other indebtedness from a consumer debtor, (B) engaged in the business of debt buying, or (C) engaged in the business of collecting or receiving tax payments, including, but not limited to, property tax and federal income tax payments, from a property tax debtor or federal income tax debtor on behalf of a municipality or the United States Department of the Treasury, including, but not limited to, any person who, by any device, subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts from any other person, municipality or taxing authority of such indebtedness for the purpose of evading the provisions of this section and sections 36a-801 to 36a-814, inclusive. “Consumer collection agency” includes persons who furnish collection systems carrying a name which simulates the name of a consumer collection agency and who supply forms or form letters to be used by the creditor, even though such forms direct the consumer debtor, property tax debtor or federal income tax debtor to make payments directly to the creditor rather than to such fictitious agency. “Consumer collection agency” further includes any person who, in attempting to collect or in collecting such person's own accounts or claims from a consumer debtor, uses a fictitious name or any name other than such person's own name which would indicate to the consumer debtor that a third person is collecting or attempting to collect such account or claim. “Consumer collection agency” does not include (i) an individual employed on the staff of a licensed consumer collection agency, or by a creditor who is exempt from licensing, when attempting to collect on behalf of such consumer collection agency, (ii) persons not primarily engaged in the collection of debts from consumer debtors who receive funds in escrow for subsequent distribution to others, including, but not limited to, real estate brokers and lenders holding funds of borrowers for payment of taxes or insurance, (iii) any public officer or a person acting under the order of any court, (iv) any member of the bar of this state, (v) a person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent, (vi) a bank or out-of-state bank, as defined in section 36a-2, and (vii) a subsidiary or affiliate of a bank or out-of-state bank, provided such affiliate or subsidiary is not primarily engaged in the business of purchasing and collecting upon delinquent debt, other than delinquent debt secured by real property. Any person not included in the definition contained in this subdivision is, for purposes of sections 36a-645 to 36a-647, inclusive, a “creditor”, as defined in section 36a-645;
(4) “Consumer debtor” means any natural person, not an organization, who has incurred indebtedness or owes a debt for personal, family or household purposes, including current or past due child support, who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a personal property tax or who has incurred indebtedness or owes a debt to the United States Department of the Treasury under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;
(5) “Control person” has the same meaning as provided in section 36a-485;
(6) “Creditor” means a person, including, but not limited to, a municipality or the United States Department of the Treasury, that retains, hires, or engages the services of a consumer collection agency;
(7) “Debt buying” means collecting or receiving payment on any account, bill or other indebtedness from a consumer debtor for such person's own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired;
(8) “Federal income tax” means all federal taxes levied on the income of a natural person or organization by the United States Department of the Treasury under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;
(9) “Federal income tax debtor” means any natural person or organization who owes a debt to the United States Department of the Treasury;
(10) “Main office” means the main address designated on the system;
(11) “Municipality” means any town, city or borough, consolidated town and city, consolidated town and borough, district as defined in section 7-324 or municipal special services district established under chapter 105a;
(12) “Organization” means a corporation, partnership, association, trust or any other legal entity or an individual operating under a trade name or a name having appended to it a commercial, occupational or professional designation;
(13) “Property tax” has the meaning given to the term in section 7-560;
(14) “Property tax debtor” means any natural person or organization who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a property tax; and
(15) “Unique identifier” has the same meaning as provided in section 36a-485.
(1953, 1955, S. 3310d; 1967, P.A. 882, S. 19; 1971, P.A. 539, S. 1; P.A. 75-486, S. 64, 69; P.A. 77-614, S. 161, 162, 610; P.A. 78-226, S. 1; 78-303, S. 54, 136; P.A. 80-482, S. 333, 348; P.A. 84-61, S. 1, 3; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 56; P.A. 91-357, S. 61, 78; P.A. 92-12, S. 103; P.A. 93-127, S. 1, 3; P.A. 94-122, S. 328, 340; P.A. 01-207, S. 3, 12; P.A. 02-111, S. 46; P.A. 03-262, S. 1; P.A. 04-8, S. 11; P.A. 07-72, S. 8; P.A. 13-253, S. 22; P.A. 14-7, S. 2; P.A. 15-235, S. 33; P.A. 16-65, S. 47; P.A. 17-233, S. 29; P.A. 18-173, S. 78.)
History: 1967 act deleted language which had specifically included debt adjustment and prorate companies in definition of “collection agency”; 1971 act defined “consumer collection agency” rather than “collection agency”, expanding definition and specifically excluding lender licensed by banking commission under Ch. 647, and added definitions of “commissioner”, “consumer debtor” and “organization”; P.A. 75-486 substituted replaced public utilities commission with public utilities control authority in Subdiv. (b); P.A. 77-614 replaced bank commissioner and public utilities commission with banking commissioner (within the department of business regulation, the banking department having been made a division within that department) and division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 78-226 defined “creditor”; P.A. 78-303 confirmed change in bank commissioner's title and replaced banking commission with banking commissioner to conform with P.A. 77-614 which abolished said commission; P.A. 80-482 restored division of banking to prior status as independent department, made division of public utility control an independent department and abolished the department of business regulation; P.A. 84-61 amended Subsec. (b) to exempt from the definition of “consumer collection agency” those persons delineated in Subdivs. (1) through (5), inclusive, replacing prior exemption provision; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-65 substituted a reference to Sec. 42-133a for Sec. 42-133 in the introductory language; P.A. 91-357 made a technical change in Subsec. (c); P.A. 92-12 redesignated Subsecs. and Subdivs. and made technical changes; P.A. 93-127 amended Subdiv. (2) to include “municipality” in the definition of “consumer collection agency”, amended Subdiv. (4) to include debts owed to a municipality in the definition of “consumer debtor”, added a new Subdiv. (6) defining “municipality” and renumbered the former Subdiv. (6) as (7), effective July 1, 1993; P.A. 94-122 deleted the definitions of “person” and “commissioner”, reordered definitions and made other technical changes, effective January 1, 1995; Sec. 42-127 transferred to Sec. 36a-800 in 1995; (Revisor's note: In 1997 the Revisors editorially changed the reference at the end of Subdiv. (1) from “creditor”, as defined in “subsection (2)” of section 36a-645; to “creditor” as defined in “subdivision (3)” of section 36a-645; to reflect correctly P.A. 94-122, S. 293); P.A. 01-207 made a technical change in Subdiv. (1) and amended definition of “consumer debtor” in Subdiv. (2) to add the phrase “including current or past due child support”, effective July 1, 2001; P.A. 02-111 redefined “consumer collection agency” in Subdiv. (1) and added Subdivs. (6) and (7) defining “property tax” and “property tax debtor”, effective July 1, 2002; P.A. 03-262 redefined “consumer collection agency” in Subdiv. (1) by substituting “or receiving for payment” for “, without receiving,” effective July 9, 2003; P.A. 04-8 made a technical change in Subdiv. (3), effective April 16, 2004; P.A. 07-72 made technical changes in Subdiv. (1); P.A. 13-253 added new Subdiv. (1) defining “branch office”, redesignated existing Subdiv. (1) as Subdiv. (2) and amended same to redefine “consumer collection agency”, redesignated existing Subdivs. (2) and (3) as Subdivs. (3) and (4), added new Subdiv. (5) defining “main office” and redesignated existing Subdivs. (4) to (7) as Subdivs. (6) to (9); P.A. 14-7 amended Subdiv. (2) to redefine “consumer collection agency” by deleting reference to account, bill or other indebtedness and making technical changes, effective May 8, 2014; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015; P.A. 16-65 redefined “consumer collection agency”, “consumer debtor” and “creditor”, defined “federal income tax” and “federal income tax debtor”, and made technical and conforming changes; P.A. 17-233 deleted “directly or indirectly” in Subdiv. (2)(B), added new Subdiv. (4) defining “control person” and redesignated existing Subdivs. (4) to (11) as Subdivs. (5) to (12); P.A. 18-173 added new Subdiv. (1) defining “advertise” or “advertising”, redesignated existing Subdivs. (1) to (5) as new Subdivs. (2) to (6), amended redesignated Subdiv. (3)(B) by replacing provision re collecting on certain accounts, bills or other indebtedness with reference to debt buying, replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, added new Subdiv. (7) defining “debt buying”, redesignated existing Subdivs. (6) to (12) as Subdivs. (8) to (14), amended redesignated Subdiv. (10) by replacing “application” with “system”, added Subdiv. (15) defining “unique identifier”, and made technical changes.
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Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Surrender of license. Required system filing or notice of commissioner. Automatic suspension of license. Name and place of business. Change in any control persons. Unique identifier of license. Advertising of license. (a) No person shall act within this state as a consumer collection agency, directly or indirectly, unless such person has first obtained a required consumer collection agency license for such person's main office and for each branch office where such person's business is conducted. A consumer collection agency is acting within this state if it (1) has its place of business located within this state; (2) has its place of business located outside this state and (A) collects from consumer debtors, property tax debtors or federal income tax debtors who reside within this state for creditors who are located within this state, or (B) collects from consumer debtors, property tax debtors or federal income tax debtors who reside within this state for such consumer collection agency's own account; (3) has its place of business located outside this state and regularly collects from consumer debtors, property tax debtors or federal income tax debtors who reside within this state for creditors who are located outside this state; or (4) has its place of business located outside this state and is engaged in the business of collecting child support for creditors located within this state from consumer debtors who are located outside this state. Any activity subject to licensure pursuant to sections 36a-800 to 36a-814, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(b) An application for a license as a consumer collection agency or for renewal of such license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-800 to 36a-814, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction. As part of the application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager, and (2) in accordance with section 36a-24b (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. Such application shall be accompanied by a financial statement prepared by a certified public accountant and, for any applicant not solely engaged in the business of debt buying, such application shall evidence that the applicant has a minimum tangible net worth of fifty thousand dollars. The commissioner shall cause to be made such inquiry and examination as to the qualifications of each such applicant or any control person, qualified individual or branch manager of the applicant as the commissioner deems necessary. Each applicant shall furnish satisfactory evidence to the commissioner that the applicant is a person of good moral character and is financially responsible.
(c) (1) Each applicant for a consumer collection agency license shall pay to the system any required fees or charges and a license fee of five hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a consumer collection agency license shall pay to the system any required fees or charges and a renewal fee of four hundred dollars.
(2) If the commissioner finds, upon the filing of an application for a consumer collection agency, that (A) the financial responsibility, character, reputation, integrity and general fitness of the applicant, the control persons of the applicant, the qualified individual and any branch manager are such to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-800 to 36a-814, inclusive, and (B) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant, the commissioner may, upon such finding, issue the applicant a consumer collection agency license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of such applicant has been convicted of any misdemeanor involving any aspect of the consumer collection agency business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.
(3) The minimum standards for renewal of a consumer collection agency license shall include the following: (A) The applicant continues to meet the minimum standards under this section; (B) the applicant has paid all required fees for renewal of the license; and (C) the applicant has paid all outstanding examination fees or other moneys due to the commissioner. The license of a consumer collection agency licensee failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. Every license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-800 to 36a-814, inclusive.
(d) To further the enforcement of this section and to determine the eligibility of any person holding a license, the commissioner may, as often as the commissioner deems necessary, examine the licensee's books and records, and may, at any time, require the licensee to submit such a financial statement for the examination of the commissioner, so that the commissioner may determine whether the licensee is financially responsible to carry on a consumer collection agency business within the intents and purposes of sections 36a-800 to 36a-814, inclusive. Any financial statement submitted by a licensee shall be confidential and shall not be a public record unless introduced in evidence at a hearing conducted by the commissioner.
(e) The commissioner may deem an application for a license to act as a consumer collection agency abandoned if the applicant fails to respond to any request for information required under sections 36a-801 to 36a-814, inclusive, or any regulations adopted pursuant to said sections 36a-801 to 36a-814, inclusive. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-801 to 36a-814, inclusive.
(f) (1) Not later than thirty days before a licensee ceases to engage in the business of a consumer collection agency for any reason, including, but not limited to, a business decision to terminate operations in this state, bankruptcy or voluntary dissolution, such licensee shall request surrender of the license on the system in accordance with subsection (c) of section 36a-51 for each location in which such licensee has ceased to engage in such business.
(2) Except as otherwise specified in subsection (i) of this section, each consumer collection agency applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file on the system any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days after the date the applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.
(3) A consumer collection agency licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following developments:
(A) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(B) Filing of a criminal indictment against the licensee in any way related to the consumer collection activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(C) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(D) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor;
(E) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee; or
(F) Any decrease in tangible net worth from the minimum amount required pursuant to subsection (b) of this section.
(g) The commissioner may automatically suspend a license if the licensee receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-804 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(h) No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by this section shall be nonrefundable.
(i) No person licensed to act within this state as a consumer collection agency shall do so under any other name or at any other place of business than that named in the license. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, (1) the licensee files such change with the system and provides a bond rider, endorsement or addendum, as applicable, to the surety bond on file with the commissioner that reflects the new name or address, and (2) the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-800 to 36a-814, inclusive, as to each new licensee. A license shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. Any licensee holding, applying for, or seeking renewal of more than one license may, at its option, file the bond required under section 36a-802 separately for each place of business licensed, or to be licensed, or a single bond, naming each place of business, in an amount equal to twenty-five thousand dollars for each place of business. The commissioner may automatically suspend a license for any violation of this subsection. After a license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-804 and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(j) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each consumer collection agency licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(k) The unique identifier of any person licensed under section 36a-801 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under section 36a-801: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-801 to 36a-814, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(1971, P.A. 539, S. 2, 3; P.A. 73-284; 73-328; 73-341; P.A. 81-292, S. 12; P.A. 88-150, S. 9; P.A. 92-89, S. 17, 20; P.A. 93-127, S. 2, 3; P.A. 94-104, S. 6; 94-122, S. 329, 340; P.A. 96-71, S. 7, 8; P.A. 01-207, S. 4, 12; P.A. 02-111, S. 47; P.A. 04-69, S. 30; P.A. 05-46, S. 15; 05-74, S. 5; P.A. 06-35, S. 11; P.A. 09-208, S. 35; Sept. Sp. Sess. P.A. 09-7, S. 101; P.A. 11-216, S. 47; P.A. 13-253, S. 23; P.A. 14-89, S. 39; P.A. 15-235, S. 34; P.A. 16-65, S. 48; P.A. 17-233, S. 30; 17-236, S. 14; P.A. 18-173, S. 79.)
History: P.A. 73-284 required that financial statements be “prepared” rather than “certified” by accountant and required that their accuracy be sworn to by proprietor, general partner or corporate officer in Subsec. (b); P.A. 73-328 defined acting within state with regard to consumer collection agencies in Subsec. (a); P.A. 73-341 added Subsec. (c); P.A. 81-292 amended Subsec. (b) by increasing the license fee from $100 to $200 and the renewal fee from $50 to $200; P.A. 88-150 amended Subsec. (b) by providing that license and investigation fees are nonrefundable; P.A. 92-89 amended Subsec. (b) to increase the license fee from $200 to $400, to increase the investigation fee from $50 to $100 and to increase the renewal fee from $200 to $400; P.A. 93-127 amended Subsec. (a) by substituting “who are” for “whose place of business is”, effective July 1, 1993; P.A. 94-104 changed the license expiration date from May first to April thirtieth, made April first the renewal application deadline and added a $100 late fee in Subsec. (a), and made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-127a transferred to Sec. 36a-801 in 1995; P.A. 96-71 amended Subsec. (b) to make technical changes and to add Subdiv. (2) to make all fees required by this section nonrefundable, effective July 1, 1996; P.A. 01-207 amended Subsec. (a) to add Subdiv. (4) defining acting within state re consumer collection agencies to include having its place of business located outside this state and engaging in the business of collecting child support for creditors located within this state from consumer debtors located outside this state, effective July 1, 2001; P.A. 02-111 amended Subsec. (a) by replacing provision re holding a license then in force with provision re consumer collection agency license and adding references to “property tax debtors”, amended Subsec. (b) by adding reference to “a member” in Subdiv. (1)(A), by providing that license fee is $800 or, in the case of initial application filed not earlier than one year before the expiration date of license, fee is $400 in Subdiv. (1)(B), by adding provisions re expiration of license at the close of business on September thirtieth of the odd-numbered year following its issuance, renewal fee of $800 and exceptions for license, renewed effective May 1, 2003, and licenses that expire on April 30, 2003, and by adding provision re $100 processing fee and amended Subsec. (c) by adding provisions re prior written notice to commissioner of any change of location of a place of business and re license shall not be transferable or assignable; P.A. 04-69 amended Subsec. (b) by adding new Subdiv. (2), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignating existing Subdiv. (2) as Subdiv. (3); P.A. 05-46 amended Subsec. (b)(1) to make a technical change and provide that renewal application for licensees filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b); P.A. 05-74 amended Subsec. (c) to make a technical change, effective June 2, 2005; P.A. 06-35 amended Subsec. (b)(1) to require applicants or licensees to notify commissioner, in writing, of any changes in information in initial or most recent renewal application for license within ten business days after occurrence of event that results in information becoming inaccurate; P.A. 09-208 amended Subsec. (b)(1) by adding new Subpara. (B) requiring applicants to submit history of criminal convictions, by redesignating existing Subparas. (B) and (C) as Subparas. (C) and (D), by authorizing commissioner to deny application or renewal application based on certain convictions, and by deleting outdated provisions re license expiration and renewal, effective July 7, 2009; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (c) by changing bond amount from $5,000 to $25,000, effective October 5, 2009; P.A. 11-216 amended Subsec. (b)(1) to add provisions requiring history of criminal convictions of partners, members, officers, directors and principal employees of applicant in a form acceptable to commissioner, add provision authorizing commissioner to conduct criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant, delete references to ten-year period prior to date of application and add provisions re abandonment of application; P.A. 13-253 amended Subsec. (a) to add provision re license for the main office and each branch office, designate existing provisions re collecting from in-state debtors for in-state creditors as Subpara. (A) and add Subpara. (B) re collecting for the agency's own account, amended Subsec. (b) to make technical changes and delete provision re issuance of license if commissioner is satisfied that applicant is properly qualified and trustworthy, redesignated provisions of existing Subsec. (b) re denial of application as Subsec. (c) and amended same to add provisions re commissioner's belief that the business will be operated soundly and efficiently and findings re solvency and bankruptcy proceedings, designated provisions of existing Subsec. (b) re enforcement as Subsec. (d), designated provisions of existing Subsec. (b) re notification of change in application information provided as Subsec. (e), designated provisions of existing Subsec. (b) re abandonment as Subpara. (f), designated provisions re dishonored checks as Subsec. (g), designated provisions of existing Subsec. (b) re abatement of license fee as Subsec. (h) and redesignated existing Subsec. (c) as Subsec. (i); P.A. 14-89 amended Subsec. (g) to replace “subdivision (1) of this subsection” with “subsection (b) of this section”, effective June 3, 2014; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015; P.A. 16-65 amended Subsec. (a) by adding references to federal income tax debtors; P.A. 17-233 amended Subsec. (a) by adding “, directly or indirectly,” re person acting as consumer collection agency; P.A. 17-236 amended Subsec. (b)(1) by adding provision re financial statement evidencing applicant's minimum tangible net worth of $50,000; P.A. 18-173 amended Subsec. (a) by replacing “consumer collection agency license” with “required consumer collection agency license”, and adding provision re activity to be conducted from office located in a state, substantially amended Subsec. (b) including by deleting provisions re written application to commissioner, accuracy of applicant's tangible net worth to be sworn to under oath and license fee and adding provisions re application to be made and processed on the system, information to be furnished on application, and commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition of person, deleting reference to public accountant and adding reference to applicant not solely engaged in business of debt buying re applicant's tangible net worth, and replacing “partner, member, officer, director or principal employee” with “control person, qualified individual or branch manager”, amended Subsec. (c) by adding new Subdiv. (1) re applicant's payment of fees or charges to the system, designating existing provisions re commissioner's findings as new Subdiv. (2), redesignating existing Subdivs. (1) and (2) as Subparas. (A) and (B), replacing references to partners, members, officers, directors and employees with reference to control persons, qualified individual and branch manager, replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, deleting provisions re renewal of license, and adding Subdiv. (3) re renewal of license and license in force and effect until license surrendered, revoked, suspended or expired, amended Subsec. (d) by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, deleted Subsec. (e) re notification to commissioner of change in information, redesignated existing Subsec. (f) as new Subsec. (e) and amending same by replacing references to Sec. 36a-812 with references to Sec. 36a-814, replacing provision re notification to applicant in writing with provision re notification to applicant on the system, added new Subsec. (f) re surrender of license, change in information, and filing information on the system or notification to commissioner, substantially amended Subsec. (g) by replacing provisions re payment of fee dishonored and automatic suspension with provisions re automatic suspension for deficiency on the system indicating returned payment, amended Subsec. (h) by adding reference to application denied or withdrawn, amended Subsec. (i) by replacing provisions re written notice to commissioner re change of location of business with provisions re licensee's use of name other than approved legal or fictitious name, filing change of name or address with the system, replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, adding provisions re change in control person to be subject of advance change notice, and automatic suspension of license for violation of subsection, added Subsec. (j) re filing of information on the system in accordance with procedures, payment of fees or charges and submission of timely and accurate report of condition, added Subsec. (k) re unique identifier and solicitations and advertisements, and made technical changes.
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Sec. 36a-801a. Persons engaged in business of collecting child support. For the purposes of this part, any person who is engaged in the business of collecting child support pursuant to subsection (a) of section 36a-801 shall be a consumer collection agency.
(P.A. 01-207, S. 5, 12.)
History: P.A. 01-207 effective July 1, 2001.
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Sec. 36a-801b. Collection of child support. Written agreement. No consumer collection agency may collect child support payments unless such consumer collection agency has entered into a written agreement with the creditor to whom the child support is owed. The agreement shall specify the charge or fee for collecting the child support and state, in bold type, that child support collection services are offered by the state of Connecticut or any other state for a nominal fee.
(P.A. 01-207, S. 7, 12.)
History: P.A. 01-207 effective July 1, 2001.
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Sec. 36a-802. (Formerly Sec. 42-128a). Surety bond required. Authority of commissioner to proceed on bond. Cancellation of bond; notice. Automatic suspension of license; notice. Opportunity for hearing. (a) No such license and no renewal thereof shall be granted to a consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying, unless the applicant has filed with the commissioner a bond to the people of the state in the penal sum of twenty-five thousand dollars, approved by the Attorney General as to form and by the commissioner as to sufficiency of the security thereof. Such bond shall be conditioned that such licensee shall well, truly and faithfully account for all funds entrusted to the licensee and collected and received by the licensee in the licensee's capacity as a consumer collection agency. Any person who may be damaged by the wrongful conversion of any creditor, consumer debtor, property tax debtor or federal income tax debtor funds received by such consumer collection agency may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50 and, effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50, and any unpaid costs of examination as determined pursuant to section 36a-65. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.
(b) The surety company shall have the right to cancel the bond at any time by a written notice to the licensee and the commissioner stating the date cancellation shall take effect. If the bond is issued electronically on the system, written notice of cancellation may be provided by the surety company to the licensee and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety company, the commissioner shall give written notice to the licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless the licensee prior to such date submits a letter of reinstatement of the bond from the surety company or a new bond or the licensee has ceased business and has surrendered its license. After a license has been automatically suspended, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(1971, P.A. 539, S. 4; P.A. 02-111, S. 48; P.A. 03-262, S. 2; P.A. 04-69, S. 31; P.A. 09-208, S. 36; P.A. 13-253, S. 29; P.A. 16-65, S. 49; P.A. 18-173, S. 80.)
History: Sec. 42-128a transferred to Sec. 36a-802 in 1995; P.A. 02-111 amended section by changing “him” to “the licensee”, changing “him in his” to “the licensee in the licensee's”, changing “trust funds” to “creditor, consumer debtor or property tax debtor funds” and adding provision authorizing commissioner to proceed on bond to collect civil penalty imposed on licensee pursuant to Sec. 36a-50(a); P.A. 03-262 substituted “funds received” for “funds held” and made a technical change, effective July 9, 2003; P.A. 04-69 designated existing provisions as Subsec. (a) and added Subsec. (b) re cancellation of surety bond and automatic suspension of license; P.A. 09-208 amended Subsec. (a) by changing amount of required bond from $5,000 to $25,000 and amended Subsec. (b) by requiring commissioner to give written notice to licensee of effective date of a bond cancellation and to automatically suspend a license on effective date of a bond cancellation unless licensee takes certain actions before such date, and by authorizing commissioner to require licensee to take or refrain from taking certain actions; P.A. 13-253 amended Subsec. (a) to add “to a third party consumer collection agency”; P.A. 16-65 amended Subsec. (a) by adding reference to federal income tax debtor; P.A. 18-173 amended Subsec. (a) by replacing “third party consumer collection agency” with “consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying,”, and adding provision effective April 1, 2019 re restitution imposed and unpaid costs of examination, amended Subsec. (b) by adding reference to commissioner, deleting provision re sending notice by certified mail, adding provisions re notice of cancellation if bond issued electronically on the system, adding provision re notice of cancellation not provided through the system to be sent by certified mail to licensee and commissioner, designated existing provisions re notice to licensee of automatic suspension as Subdiv. (1), and provision re commissioner's authority to require licensee to take or refrain from taking action as Subdiv. (2) and amending same by replacing “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”.
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Sec. 36a-803. (Formerly Sec. 42-129). Conviction of certain crimes disqualification to engage in consumer collection business. Section 36a-803 is repealed, effective October 1, 2002.
(1953, S. 3312d; 1971, P.A. 539, S. 5; P.A. 94-122, S. 330, 340; P.A. 02-111, S. 51.)
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Sec. 36a-804. (Formerly Sec. 42-129a). Suspension, revocation or refusal to renew license or taking other action. Removal from office and from employement or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-800 to 36a-814, inclusive, or if the commissioner finds that the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application or in any filing made in connection with the license; (2) committed any fraud or misrepresentation or misappropriated funds; or (3) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's consumer collection agency business.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-800 to 36a-814, inclusive, or any regulation adopted pursuant thereto, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-800 to 36a-814, inclusive, from office and from employment or retention as an independent contractor in the consumer collection agency business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(1971, P.A. 539, S. 6; 1972, P.A. 108, S. 8; P.A. 74-254, S. 8; P.A. 94-122, S. 331, 340; P.A. 02-111, S. 49; P.A. 05-46, S. 16; P.A. 07-91, S. 24; P.A. 15-235, S. 35; P.A. 18-173, S. 81.)
History: 1972 act replaced superior court with court of common pleas, effective September 1, 1972, except that courts with cases pending retain jurisdiction; P.A. 74-254 replaced detailed appeal provisions with statement requiring that appeals be made in accordance with chapter 54; P.A. 94-122 replaced notice, hearing and appeal provisions with a reference to Sec. 36a-51, effective January 1, 1995; Sec. 42-129a transferred to Sec. 36a-804 in 1995; P.A. 02-111 replaced former provisions with new Subsecs. (a) and (b) re commissioner's authority to suspend, revoke or refuse to renew license and the grounds for such action and commissioner's authority re violations of Secs. 36a-800 to 36a-810; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee who has committed fraud, made any misrepresentation or misappropriated funds; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, adding “or in any filing made in connection with the license” in Subdiv. (1), and replacing “provisions of sections 36a-800 to 36a-812, inclusive, or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business” with “provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's consumer collection agency business” in Subdiv. (3), amended Subsec. (b) by designating existing provisions re violations of sections as Subdiv. (1), and amending same by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, adding Subdiv. (2) re person is, was or would be cause of violation of provision of section or regulation, designating existing provision re fraud, misrepresentation or misappropriation of funds, as Subdiv. (3) and amending same by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, added Subsec. (c) re commissioner's authority to order licensee to remove individual from office, employment or retention as independent contractor, and added Subsec. (d) re temporary order.
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Sec. 36a-805. (Formerly Sec. 42-131). Prohibited practices. Exception. (a) No consumer collection agency or control person shall: (1) Furnish legal advice or perform legal services or represent that it is competent to do so, or institute judicial proceedings on behalf of others; (2) communicate with consumer debtors, property tax debtors or federal income tax debtors in the name of an attorney or upon the stationery of an attorney, or prepare any forms or instruments which only attorneys are authorized to prepare; (3) receive assignments as a third party of claims for the purpose of collection or institute suit thereon in any court; (4) assume authority on behalf of a creditor to employ or terminate the services of an attorney unless such creditor has authorized such agency in writing to act as such creditor's agent in the selection of an attorney to collect the creditor's accounts; (5) demand or obtain in any manner a share of the proper compensation for services performed by an attorney in collecting a claim, whether or not such agency has previously attempted collection thereof; (6) solicit claims for collection under an ambiguous or deceptive contract; (7) refuse to return any claim or claims upon written request of the creditor, claimant or forwarder, which claims are not in the process of collection after the tender of such amounts, if any, as may be due and owing to the agency; (8) advertise or threaten to advertise for sale any claim as a means of forcing payment thereof, unless such agency is acting as the assignee for the benefit of creditors; (9) refuse or fail to account for and remit to its clients all money collected which is not in dispute within sixty days from the last day of the month in which said money is collected; (10) refuse or intentionally fail to return to the creditor all valuable papers deposited with a claim when such claim is returned; (11) refuse or fail to furnish at intervals of not less than ninety days, upon the written request of the creditor, claimant or forwarder, a written report upon claims received from such creditor, claimant or forwarder; (12) add any post-charge-off charge or fee for cost of collection, unless such cost is a court cost, to the amount of any claim which it receives for collection or knowingly accept for collection any claim to which any such charge or fee has already been added to the amount of the claim unless (A) the consumer debtor is legally liable for such charge or fee as determined by the contract or other evidence of an agreement between the consumer debtor and creditor, a copy of which shall be obtained by or available to the consumer collection agency from the creditor and maintained as part of the records of the consumer collection agency or the creditor, or both, and (B) the total charge or fee for cost of collection does not exceed fifteen per cent of the total amount actually collected and accepted as payment in full satisfaction of the debt; (13) use or attempt to use or make reference to the term “bonded by the state of Connecticut”, “bonded” or “bonded collection agency” or any combination of such terms or words, except the word “bonded” may be used on the stationery of any such agency in type not larger than twelve-point; (14) when the debt is beyond the statute of limitations, fail to provide the following disclosure in type not less than ten-point informing the consumer debtor in its initial communication with such consumer debtor that (A) when collecting on debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 USC 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) will not sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and (B) when collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 USC 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) will not sue you for it and (INSERT OWNER NAME) will not report it to any credit reporting agencies.”; (15) engage in any activities prohibited by sections 36a-800 to 36a-814, inclusive; or (16) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable consumer collection laws and regulations.
(b) No consumer collection agency shall impose a charge or fee for any child support payments collected through the efforts of a governmental agency. If the imposition of a charge or fee is permitted under section 36a-801b, no consumer collection agency shall impose a charge or fee for the collection of any child support overdue at the time of the contract in excess of twenty-five per cent of overdue support actually collected.
(c) (1) No consumer collection agency shall receive any property tax on behalf of a creditor that is a municipality, unless the consumer collection agency has procured from an insurer authorized to transact business in this state an insurance policy providing coverage against loss of money, securities or other property, including loss arising from any fraudulent or dishonest act of any employee, officer or director of the consumer collection agency, with limits of at least two million dollars. It shall be the obligation of the municipality to ensure compliance with the requirements of this subdivision.
(2) A municipality that enters into an agreement with a consumer collection agency to collect and receive for payment property tax on behalf of the municipality may also require such consumer collection agency to file a bond with the municipality in an amount not exceeding the total amount of the property tax to be collected on behalf of the municipality. Such bond, the form of which shall be approved by the municipality, shall be written by a surety authorized to write bonds in this state and shall contain a provision requiring the surety to provide the municipality with written notice of cancellation of such bond. Such notice shall be sent by certified mail to the municipality at least thirty days prior to the date of cancellation. The bond shall be conditioned that such consumer collection agency shall well, truly and faithfully account for all funds collected and received by the consumer collection agency for the municipality pursuant to such agreement. If the municipality is damaged by the wrongful conversion of any property tax debtor funds received by the consumer collection agency, the municipality may proceed on such bond against the principal or surety on the bond, or both, to recover damages. The proceeds of the bond, even if commingled with the other assets of the consumer collection agency, shall be deemed by operation of law to be held in trust for the benefit of the municipality in the event of bankruptcy of the consumer collection agency and shall be immune from attachment by creditors and judgment creditors.
(1953, S. 3314d; 1971, P.A. 539, S. 8; P.A. 81-183; P.A. 84-61, S. 2, 3; P.A. 92-12, S. 104; P.A. 01-207, S. 6, 12; P.A. 02-111, S. 50; P.A. 03-262, S. 3; P.A. 13-253, S. 26; P.A. 15-235, S. 36; P.A. 16-65, S. 50; P.A. 17-233, S. 31; 17-236, S. 11; P.A. 18-173, S. 82.)
History: 1971 act specified applicability to “consumer” collection agencies, deleted provisions prohibiting use of slogans in collection letters, etc., which threaten legal suit or wage garnishment or list attorney name and title, use of justices of the peace, constables, sheriffs, etc., for claims collection, use or threat of physical violence, use of instruments simulating judicial process, publication of list of debtors and threats to do so and use of “shame cards”, “shame automobiles”, etc., intimidation or methods in violation of postal regulations, clarified remaining provisions and required accounting to clients of moneys collected within sixty rather than 90 days from end of month in which collected and added prohibitions contained in Subdivs. (l) to (r); P.A. 81-183 required that consumer collection agencies not add any charge or collection fee to the amount of a claim greater than 15% of amount actually collected on the debt; P.A. 84-61 amended Subdiv. (i) to provide that no agency shall refuse or fail to remit as well as account for all money collected which is not in dispute and amended Subdiv. (m) to prohibit such agency from knowingly accepting for collection any claim to which any fee or charge has been already added to the amount of the claim; P.A. 92-12 redesignated Subdivs.; Sec. 42-131 transferred to Sec. 36a-805 in 1995; P.A. 01-207 designated existing provisions as Subsec. (a) and made a technical change therein for purposes of gender neutrality and added Subsec. (b) re charge or fee for collection of child support payments, effective July 1, 2001 (Revisor's note: In codifying Subsec. (b), the reference to “section 10 of this act” was deemed by the Revisors to be a reference to “section 7 of this act”, codified as Sec. 36a-801b, since section “10” of P.A. 01-207 had been renumbered as section “7” during the amendment process); P.A. 02-111 amended Subsec. (a)(2) by changing “communicate with debtors” to “communicate with consumer debtors or property tax debtors” and (a)(13) by changing “charge or collection fee” to “collection charge or fee” and added new Subsec. (c) prohibiting consumer collection agency from receiving property tax on behalf of creditor that is a municipality, effective July 1, 2002; P.A. 03-262 amended Subsec. (c) by designating existing provisions as Subdiv. (1), amending Subdiv. (1) to add exception re procurement of insurance policy, and adding Subdiv. (2) authorizing municipality that enters into agreement with consumer collection agency to require agency to file bond, effective July 9, 2003; P.A. 13-253 amended Subsec. (a) to delete “purchase or” and add “as a third party” in Subdiv. (3), delete former Subdiv. (12) re comingling of money, redesignate existing Subdiv. (13) as Subdiv. (12) and amend same by adding “post charge-off”, adding provision re fee for cost of collection other than a court cost, designating provision re consumer debtor being legally liable for charge or fee as Subpara. (A) and amending same to add provision re determination by contract or other evidence of agreement between consumer debtor and creditor, and adding Subpara. (B) re total charge or fee for cost of collection not to exceed 15 per cent of total amount collected and accepted as payment in full satisfaction of the debt, redesignate existing Subdiv. (14) as Subdiv. (13), and add new Subdiv. (14) re disclosure when debt is beyond statute of limitations; P.A. 15-235 amended Subsec. (a) to change “36a-810” to “36a-812”, effective July 7, 2015; P.A. 16-65 amended Subsec. (a) by adding reference to federal income tax debtors and making a technical change; P.A. 17-233 amended Subsec. (a) by adding reference to control persons, adding new Subdiv. (16) re failure to establish, enforce and maintain policies and procedures, and making a technical change; P.A. 17-236 amended Subsec. (a)(12) to make a technical change, effective July 11, 2017; P.A. 18-173 amended Subsec. (a)(15) by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814.
Annotation to former section 42-131:
Cited. 5 CA 427.
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Sec. 36a-806. (Formerly Sec. 42-131a). Prohibited practices within and without state. Examination of affairs. (a) No consumer collection agency shall engage in this state in any practice which is prohibited in section 36a-805 or determined pursuant to section 36a-808 to be an unfair or deceptive act or practice, nor shall any consumer collection agency engage outside of this state in any act or practice prohibited in said section 36a-805. The commissioner shall have power to examine the affairs of every consumer collection agency in this state in order to determine whether it has been or is engaged in any act or practice prohibited by sections 36a-805 to 36a-808, inclusive.
(b) No creditor or consumer collection agency shall retain, hire, or engage the services or continue to retain or engage the services of any person who engages in the business of a consumer collection agency and who is not licensed to act as such by the commissioner, if such creditor has actual knowledge that such person is not licensed by the commissioner to act as a consumer collection agency.
(1971, P.A. 539, S. 7; P.A. 78-226, S. 2; P.A. 09-208, S. 37; P.A. 17-236, S. 15.)
History: P.A. 78-226 added Subsec. (b) prohibiting hiring unlicensed persons; Sec. 42-131a transferred to Sec. 36a-806 in 1995; P.A. 09-208 amended Subsec. (a) by deleting reference to Sec. 36a-807 re determination of unfair or deceptive act or practice; P.A. 17-236 amended Subsec. (b) by adding reference to consumer collection agency.
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Sec. 36a-807. (Formerly Sec. 42-131b). Liability. No order of the commissioner under sections 36a-805 to 36a-808, inclusive, shall relieve or absolve any person affected by such order from any liability under any other laws of this state.
(1971, P.A. 539, S. 9; 1972, P.A. 108, S. 9; P.A. 74-254, S. 9, 11; P.A. 76-436, S. 638, 681; P.A. 78-226, S. 3; 78-280, S. 1, 5, 127; P.A. 82-174, S. 9, 13, 14; P.A. 88-230, S, 1, 12; P.A. 90-98, S. 1, 2; P.A. 92-12, S. 105; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 332, 340; P.A. 09-208, S. 38.)
History: 1972 act replaced superior court with court of common pleas, effective September 1, 1972, except that courts with cases pending retain jurisdiction; P.A. 74-254 required that notice be “in the form required under subsection (b) of section 4-177” and deleted reference to serving of statement of charges in Subsec. (a) and repealed Subsec. (c) re appeal procedure; P.A. 76-436 replaced court of common pleas with superior court and added reference to judicial districts in Subsec. (a), effective July 1, 1978; P.A. 78-226 substituted “person” for “consumer collection agency” and, with P.A. 78-280, substituted “judicial district of Hartford-New Britain” for “Hartford county”, dropped general reference to counties in Subsec. (a) and rephrased Subsec. (e); P.A. 82-174 entirely replaced Subsec. (a) and repealed Subsec. (b) outright, both of which concerned the issuance of cease and desist orders after a hearing and the conduct of such hearing, inserting new provisions authorizing the commissioner to issue, after notice, cease and desist orders, unless a hearing is requested; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 92-12 redesignated Subsecs. and made technical changes; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted Subsec. (c) re violations of cease and desist orders and made technical changes, effective January 1, 1995; Sec. 42-131b transferred to Sec. 36a-807 in 1995; P.A. 09-208 deleted former Subsec. (a) re cease and desist order and made a conforming change.
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Sec. 36a-808. (Formerly Sec. 42-131c). Unfair or deceptive practices. Enforcement action. Whenever the commissioner has reason to believe that any consumer collection agency is engaging in this state in any act or practice in the conduct of such business which is not defined in section 36a-805, and that such act or practice is unfair or deceptive, the commissioner may take action against such consumer collection agency in accordance with sections 36a-50 and 36a-52.
(1971, P.A. 539, S. 10; P.A. 74-254, S. 10; P.A. 78-226, S. 4; 78-280, S. 2, 127; P.A. 82-174, S. 10, 14; P.A. 94-122, S. 333, 340; P.A. 09-208, S. 39; P.A. 13-253, S. 27.)
History: P.A. 74-254 specified that notice be “in the form required under subsection (b) of section 4-177” and deleted reference to serving of statement of charges; P.A. 78-226 added Subsec. (b) re actions brought against unlicensed persons; P.A. 78-280 substituted “judicial district” for “county” in Subsec. (a); P.A. 82-174 amended Subsec. (a) by replacing the provision that hearings be conducted as provided in “section 42-131b” with “chapter 54”; P.A. 94-122 deleted Subsec. (b) re injunctions against unlicensed consumer collection agencies, deleted provisions in Subsec. (a) re hearings to enjoin unfair or deceptive actions and added a reference to enforcement actions under Sec. 36a-50, effective January 1, 1995; Sec. 42-131c transferred to Sec. 36a-808 in 1995; P.A. 09-208 deleted provision re violation by agency or other person of Secs. 36a-800 to 36a-810 or regulation adopted pursuant to Sec. 36a-809, and deleted “or person” re enforcement action in accordance with Sec. 36a-50; P.A. 13-253 added reference to Sec. 36a-52.
Annotation to former section 42-131c:
Cited. 215 C. 277.
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Sec. 36a-809. (Formerly Sec. 42-131d). Commissioner's powers. Regulations. The powers vested in the commissioner by sections 36a-805 to 36a-808, inclusive, shall be additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices prohibited or declared to be unfair or deceptive, and the commissioner may adopt such regulations, in accordance with chapter 54, as may be necessary for the conduct of the consumer collection agency business.
(1971, P.A. 539, S. 11; P.A. 73-428; P.A. 94-122, S. 334, 340.)
History: P.A. 73-428 authorized issuance of regulations “as may be necessary for the conduct of the consumer collection agency business” rather than regulations “implementing the provisions of section 42-131”; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-131d transferred to Sec. 36a-809 in 1995.
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Sec. 36a-810. (Formerly Sec. 42-133a). Penalty. Any person who operates a consumer collection agency without a license as required by sections 36a-800 to 36a-812, inclusive, shall be fined not more than one thousand dollars or imprisoned not more than one year, or both. Any person who violates any other provision of said sections shall be fined not more than five hundred dollars, or imprisoned not more than six months, or both. The state's attorney or assistant state's attorney for the superior court having jurisdiction in each town shall diligently inquire and make due complaint to the court of all violations of said sections which come to his knowledge, by investigation of report.
(1971, P.A. 539, S. 12; P.A. 74-183, S. 270, 291; P.A. 76-436, S. 233, 681; P.A. 15-235, S. 37.)
History: P.A. 74-183 replaced circuit court with court of common pleas, effective December 31, 1974; P.A. 76-436 replaced “prosecuting” attorney with “state's attorney or assistant state's” attorney and court of common pleas with superior court, effective July 1, 1978; Sec. 42-133a transferred to Sec. 36a-810 in 1995; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015.
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Sec. 36a-811. Maintenance of consumer debtor and creditor records. (a) Each consumer collection agency shall maintain its consumer debtor and creditor records so as to clearly identify the amounts and dates of all payments collected or received from consumer debtors and all remittances made to creditors. Consumer debtor and creditor records shall be kept so as to be readily available to the Banking Commissioner and retained for a period of not less than two years after the date of final entry thereon. All accounting records shall be maintained in accordance with generally accepted accounting practices. Each consumer collection agency engaged in the business of collecting child support shall maintain originals or copies of the written agreements entered into with the creditors to whom the child support is owed for a period of not less than two years after the date of the last payment made by the consumer debtor to the consumer collection agency.
(b) Each consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying, shall deposit funds collected or received from consumer debtors for payment for others on an account, bill or other indebtedness in one or more trust accounts maintained at a federally insured bank, Connecticut credit union, federal credit union or an out-of-state bank that maintains in this state a branch as defined in section 36a-410, which accounts shall be reconciled monthly. Such funds shall not be commingled with funds of the consumer collection agency or used in the conduct of the consumer collection agency's business. Such account shall not be used for any purpose other than (1) the deposit of funds received from consumer debtors, (2) the payment of such funds to creditors, (3) the refund of any overpayments to be made to consumer debtors, and (4) the payment of earned fees to the consumer collection agency, which shall be withdrawn on a monthly basis. Except for payments authorized by subdivisions (2) to (4), inclusive, of this subsection, any withdrawal from such account, including, but not limited to, any service charge or other fee imposed against such account by a depository institution, shall be reimbursed by the consumer collection agency to such account not more than thirty days after the withdrawal. Funds received from consumer debtors shall be posted to their respective accounts in accordance with generally accepted accounting principles.
(P.A. 13-253, S. 24; P.A. 16-65, S. 51; P.A. 18-173, S. 83.)
History: P.A. 16-65 amended Subsec. (b) by adding “federally insured” and replacing “accounting practices” with “accounting principles”; P.A. 18-173 amended Subsec. (b) by replacing “third party consumer collection agency” with “consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying”.
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Sec. 36a-812. Compliance with Fair Debt Collection Practices Act. Each consumer collection agency shall comply with the applicable provisions of the Fair Debt Collection Practices Act, 15 USC Section 1692 et seq., as from time to time amended, and any regulations adopted under said act. In addition to any other remedies provided by law, a violation of such federal law or regulation shall be deemed to be a violation of this section and a basis upon which the Banking Commissioner may take enforcement action pursuant to section 36a-804.
(P.A. 13-253, S. 25.)
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Sec. 36a-813. Evidence in cause of action for purchased debt owed by consumer debtor. (a) In any cause of action initiated by a consumer collection agency that purchased debt from a creditor for liability on the debt owed by a consumer debtor, the consumer collection agency shall file with the court evidence in accordance with the rules of the Superior Court to establish the amount and nature of the debt prior to the court's entry of a judgment against the consumer debtor. Such evidence shall include a copy of the assignment or other documentation (1) establishing that the plaintiff is the owner of the debt, (2) containing the original or charge-off account number, if any, which can be partially redacted to protect the privacy of the consumer debtor, and the name associated with the debt, and (3) if the debt has been assigned more than once, the name, address and dates of ownership of each assignor, and a copy of each assignment or other documentation that establishes an unbroken chain of ownership of the debt by the plaintiff.
(b) In the case of a claim for default judgment the plaintiff shall file, in addition to the evidence required under the rules of the Superior Court, a sworn affidavit that lists the name, address and dates of ownership of each owner of the debt, from the charge-off creditor to the current owner. The plaintiff shall attach documentation to the affidavit that fully substantiates the amount of the debt. If the debt is a credit card debt subject to federal charge-off requirements, the following documents shall, subject to subsection (c) of this section, suffice to substantiate the debt: (1) A copy of the most recent monthly statement recording a purchase transaction, service billed, last payment or balance transfer, (2) a statement that reflects the charge-off balance, (3) with respect to consumer debt purchased on or after October 1, 2016, an additional monthly account statement sent to the consumer debtor while the account was active, which shows the consumer debtor's name and address, (4) such other statements, if any, required by the federal consumer financial protection bureau in its regulations, and (5) post-charge-off itemization of the balance if the balance is different from the charge-off amount.
(c) Nothing in this section shall prevent the judicial authority or the rules of the Superior Court from requiring the submission of additional written documentation or the presence of the plaintiff, the authorized representative of the plaintiff or other affiants or counsel before the judicial authority prior to rendering judgment if it appears to the judicial authority that additional information or evidence is required in order to enter judgment.
(d) This section shall apply prospectively and shall not apply to any debt collection action commenced prior to October 1, 2016, or to debt purchased by a licensed mortgage lender pursuant to a recourse requirement.
(e) A consumer collection agency that purchased the debt shall indicate when any of the items produced pursuant to subsections (b) and (c) of this section have been redacted by either blacking out the text or otherwise indicating in writing on such document that text has been redacted.
(P.A. 16-65, S. 52; P.A. 17-236, S. 8.)
History: P.A. 17-236 amended Subsec. (b)(5) by making a technical change, effective July 11, 2017.
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Sec. 36a-814. Initiation of cause of action for purchased debt prohibited when statute of limitations has expired. Limitations period not extended by payment or affirmation. (a) For the purposes of this section, “creditor” has the same meaning as in section 36a-645.
(b) No creditor or consumer collection agency that purchased debt shall initiate a cause of action to collect the debt owed by a consumer debtor when such creditor or consumer collection agency knows or reasonably should know that the applicable statute of limitations on such cause of action has expired.
(c) Notwithstanding any other provision of law, when the applicable statute of limitations on a cause of action to collect debt owed by a consumer has expired, any subsequent payment toward or oral or written affirmation of the debt owed by the consumer shall not extend the limitations period within which the creditor or consumer collection agency that purchased the debt may bring the cause of action.
(P.A. 16-65, S. 53.)
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Secs. 36a-815 to 36a-829. Reserved for future use.
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PART XIII
EXCHANGE FACILITATORS
Sec. 36a-830. Exchange facilitator. Definitions. As used in this section and sections 36a-831 to 36a-836, inclusive:
(1) “Affiliated with” means that a person, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with another specified person;
(2) “Client” means a taxpayer with whom an exchange facilitator enters into an agreement, as described in subparagraph (B) of subdivision (3) of this section;
(3) “Exchange facilitator” means a person who: (A) Maintains an office in this state for the purpose of soliciting business facilitating the exchange of like-kind property, as described in subparagraph (B) of this subdivision; or (B) for a fee (i) facilitates an exchange of like-kind property by entering into an agreement with a client pursuant to which the exchange facilitator acquires from such client the contractual rights to sell such client's relinquished property located in this state and transfer a replacement property to such client as a qualified intermediary, within the meaning of 26 CFR 1.1031(k)-1(g)(4), (ii) enters into an agreement with a client to take title to a property in this state as an exchange accommodation titleholder, as defined in Revenue Procedure 2000-37 issued by the Internal Revenue Service, or (iii) enters into an agreement with a client to act as a qualified trustee or qualified escrow holder, as such terms are defined in 26 CFR 1.1031(k)-1(g)(3); but shall not include:
(I) Any financial institution, as defined in subdivision (6) of this section, that is acting solely as a depository for exchange funds or solely as a qualified escrow holder or qualified trustee, as such terms are defined in 26 CFR 1.1031(k)-1(g)(3), and is not otherwise facilitating exchanges in accordance with this subparagraph;
(II) An individual or entity that is teaching seminars or classes or giving other presentations to attorneys, accountants, real estate professionals, tax professionals or other professionals where the primary purpose is to teach about tax deferred exchanges or to train such professionals to act as exchange facilitators, or any individual or entity advertising for such seminars, classes or other presentations; or
(III) An entity that is wholly owned by an exchange facilitator or by a person representing the exchange facilitator and used by such exchange facilitator or person to facilitate exchanges or take title to property in this state as an exchange accommodation titleholder;
(4) “Exchange funds” means the funds received by an exchange facilitator from or on behalf of a client for the purpose of facilitating an exchange of like-kind property;
(5) “Fee” means compensation of any nature, direct or indirect, monetary or in-kind, that is received by a person or related person, as defined in Section 267(b) or Section 707(b) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for any services relating or incidental to the exchange of like-kind property under Section 1031 of said Internal Revenue Code;
(6) “Financial institution” means any bank, federal credit union, Connecticut credit union, savings and loan holding company, savings and loan association, savings bank, trust company or trust bank, as such terms are defined in section 36a-2, chartered under the laws of this state or the United States whose accounts are insured by the full faith and credit of the United States of America, the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund or other similar or successor programs;
(7) “Person” means a natural person, cooperative association, limited liability company, firm, partnership, corporation or other legal entity, and includes any agent or employee of any such person;
(8) “Pool” means to (A) aggregate exchange funds of multiple taxpayers for investment purposes to achieve common investment goals and efficiencies, and (B) ensure that such exchange funds are readily identifiable as to each taxpayer for whom they are held, through an accounting or subaccounting system;
(9) “Prudent investor standard” means the prudent investor rule, as set forth by the Connecticut Uniform Prudent Investor Act, or as otherwise defined by part VII of chapter 802c; and
(10) “Publicly traded company” means a corporation whose securities are publicly traded on the New York Stock Exchange, the American Stock Exchange, or the national market system of the National Association of Securities Dealers Automated Quotation System established pursuant to the Securities Exchange Act of 1934, and the subsidiaries of any such corporation.
(P.A. 13-135, S. 5.)
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Sec. 36a-831. Change in control of exchange facilitator. Notification to clients. An exchange facilitator shall notify each client whose relinquished property, as defined in 26 CFR 1.1031(k)-1(a), is located in this state or whose replacement property, as defined in 26 CFR 1.1031(k)-1(a), held under a qualified exchange accommodation agreement is located in this state, of any change in control of the exchange facilitator. The exchange facilitator shall notify each such client not later than ten business days after the effective date of such change in control by facsimile, electronic mail transmission or first class mail and by posting such notice of change of control on the exchange facilitator's Internet web site for a period ending not earlier than ninety days after the change in control. Such notification shall set forth the name, address and other contact information of the persons to whom control was transferred. Notwithstanding the provisions of this section, if the exchange facilitator is a publicly traded company and remains a publicly traded company after a change in control, the publicly traded company shall not be required to notify its existing clients of such change in control. For purposes of this section, “change in control” means any transfer or transfers within a twelve-month period of more than fifty per cent of the assets or ownership interests, directly or indirectly, of the exchange facilitator.
(P.A. 13-135, S. 6.)
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Sec. 36a-832. Fidelity bond. Deposit of exchange funds. An exchange facilitator at all times shall:
(1) Maintain a fidelity bond in an amount of not less than one million dollars executed by an insurer authorized to do business in this state;
(2) Deposit all exchange funds in a separately identified account, as defined in 26 CFR 1.468B-6(c)(2)(ii)(A), and provide that any withdrawals from such separately identified account require the written authorizations of both the client and the exchange facilitator. Deliver authorization for withdrawals by any commercially reasonable means, including (A) the client's delivery to the exchange facilitator of the client's authorization to disburse exchange funds and the exchange facilitator's delivery to the depository institution of the exchange facilitator's sole authorization to disburse exchange funds, or (B) delivery to the depository institution of both the client's and the exchange facilitator's authorizations to disburse exchange funds; or
(3) Deposit all exchange funds in a qualified escrow or qualified trust, as such terms are defined in 26 CFR 1.1031(k)-1(g)(3), with a financial institution and provide that any withdrawals from such qualified escrow or qualified trust require the taxpayer's and the exchange facilitator's written authorization.
(P.A. 13-135, S. 7.)
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Sec. 36a-833. Errors and omissions insurance policy; cash or securities deposit; letters of credit. An exchange facilitator at all times shall: (1) Maintain an errors and omissions policy of insurance in an amount not less than two hundred fifty thousand dollars executed by an insurer authorized to do business in this state; or (2) deposit an amount of cash or securities or provide irrevocable letters of credit in an amount not less than two hundred fifty thousand dollars.
(P.A. 13-135, S. 8; 13-253, S. 28.)
History: P.A. 13-253 made a technical change.
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Sec. 36a-834. Regulations. Damage claims. The Banking Commissioner may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of sections 36a-830 to 36a-837, inclusive. Any person claiming to have suffered damage by reason of the failure of an exchange facilitator to comply with the provisions of sections 36a-831 to 36a-836, inclusive, may file a claim with the commissioner against the exchange facilitator to recover such damage from (1) the fidelity bond maintained in accordance with subdivision (1) of section 36a-832, (2) cash or securities deposited in accordance with subdivision (2) of section 36a-833, (3) letters of credit provided in accordance with subdivision (2) of section 36a-833, or (4) the errors and omissions policy maintained in accordance with subdivision (1) of section 36a-833.
(P.A. 13-135, S. 9.)
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Sec. 36a-835. Holding and investment of exchange funds. (a) An exchange facilitator shall hold all exchange funds, including money, property, other consideration or instruments received by the exchange facilitator from or on behalf of the client, but not including funds received as the exchange facilitator's compensation, in a manner that provides liquidity and preserves principal. An exchange facilitator shall provide the client with written notification of the manner in which the exchange funds will be invested or deposited and shall deposit or invest exchange funds in investments which meet the prudent investor standard and which satisfy investment goals of liquidity and preservation of principal. Exchange funds may be pooled. For purposes of this section, an exchange facilitator violates the prudent investor standard if:
(1) Exchange funds are knowingly commingled by the exchange facilitator with the operating accounts of the exchange facilitator; or
(2) Exchange funds are loaned or otherwise transferred to any person or entity affiliated with or related to the exchange facilitator except that this subdivision shall not apply to a transfer made pursuant to the exchange contract (A) for payment of an exchange expense or completion of the acquisition of the replacement property, (B) for depositing exchange funds with a financial institution, or (C) to an exchange accommodation titleholder, a trustee of a qualified trust or a qualified escrow agent.
(b) Exchange funds are not subject to execution or attachment on any claim against the exchange facilitator. An exchange facilitator shall not knowingly keep or cause to be kept any money in any financial institution under any name designating the money as belonging to a client of the exchange facilitator unless the money equitably belongs to the client and was actually entrusted to the exchange facilitator by the client.
(P.A. 13-135, S. 10.)
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Sec. 36a-836. Prohibited activities of exchange facilitators. No exchange facilitator or, in the case of an exchange facilitator that is an entity, no owner, officer, director or employee of such exchange facilitator, shall knowingly:
(1) Make any material misrepresentations concerning any exchange facilitator transaction that are intended to mislead;
(2) Pursue a continued or flagrant course of misrepresentation or making false statements through advertising or by any other means;
(3) Fail, within a reasonable time, to account for any money or property belonging to another person that may be in the possession or under the control of the exchange facilitator;
(4) Engage in any conduct constituting fraudulent or dishonest dealings;
(5) Commit any crime related to the exchange facilitation business involving fraud, misrepresentation, deceit, embezzlement, misappropriation of funds, robbery or other theft of property, except that commission of such crime by an officer, director or employee shall not be considered a violation of this section, provided (A) the employment or appointment of such officer, director or employee has been terminated, and (B) no clients of the exchange facilitator were harmed or full restitution has been made to all harmed clients;
(6) Materially fail to fulfill the exchange facilitator's contractual duties to the client to deliver property or funds to the client unless such failure is due to circumstances beyond the control of the exchange facilitator; and
(7) Materially violate any provision of sections 36a-831 to 36a-835, inclusive, or the regulations adopted by the Banking Commissioner in accordance with section 36a-834.
(P.A. 13-135, S. 11.)
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Sec. 36a-837. Civil action. Notice. (a) A person who violates any provision of sections 36a-831 to 36a-836, inclusive, is subject to civil suit in a court of competent jurisdiction.
(b) Any person who commences a civil action pursuant to subsection (a) of this section shall notify the Department of Banking upon filing such action.
(P.A. 13-135, S. 12.)
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Secs. 36a-838 to 36a-845. Reserved for future use.
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PART XIV
STUDENT LOAN SERVICERS
Sec. 36a-846. Definitions. As used in this section and sections 36a-847 to 36a-854:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485;
(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a student loan servicer;
(3) “Control person” has the same meaning as provided in section 36a-485;
(4) “Main office” has the same meaning as provided in section 36a-485;
(5) “Student loan borrower” means any individual who resides within this state who has agreed to repay a student education loan;
(6) “Student loan servicer” means any person, wherever located, responsible for the servicing of any student education loan to any student loan borrower;
(7) “Servicing” means (A) receiving any scheduled periodic payments from a student loan borrower pursuant to the terms of a student education loan; (B) applying the payments of principal and interest and such other payments with respect to the amounts received from a student loan borrower, as may be required pursuant to the terms of a student education loan; or (C) performing other administrative services with respect to a student education loan;
(8) “Student education loan” means any loan primarily for personal use to finance education or other school-related expenses;
(9) “Unique identifier” has the same meaning as provided in section 36a-485.
(P.A. 15-162, S. 2; P.A. 17-233, S. 32; P.A. 18-173, S. 84.)
History: P.A. 17-233 added new Subdiv. (1) defining “advertise” or “advertising”, added new Subdiv. (2) defining “control person” and redesignated existing Subdivs. (1) to (4) as Subdivs. (3) to (6); P.A. 18-173 added new Subdiv. (2) defining “branch office”, redesignated existing Subdiv. (2) as new Subdiv. (3), added new Subdiv. (4) defining “main office”, redesignated existing Subdiv. (3) as new Subdiv. (5) and amended same to redefine “student loan borrower”, redesignated existing Subdivs. (4) to (6) as Subdivs. (6) to (8), and added Subdiv. (9) defining “unique identifier”.
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Sec. 36a-847. License required. Exemptions. Application. Authority to conduct criminal history records check. Fees. Examination of records. Automatic suspension of license. Abandonment of application. (a)(1) No person shall act as a student loan servicer, directly or indirectly, without first obtaining a license for its main office and for each branch office where such business is conducted from the commissioner under subsection (b) of this section, unless such person is exempt from licensure pursuant to subdivision (2) of this subsection. Any activity subject to licensure pursuant to sections 36a-846 to 36a-854, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(2) The following persons are exempt from student loan servicer licensing requirements: (A) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union; (B) any wholly owned subsidiary of any such bank or credit union; and (C) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same bank or credit union.
(b) (1) An application for a license as a student loan servicer or for renewal of such license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-846 to 36a-854, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction. As part of the application the commissioner may (A) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager, and (B) in accordance with section 36a-24b, (i) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (ii) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. Such application shall be accompanied by a financial statement prepared by a certified public accountant, except that the commissioner may waive such requirement in connection with any renewal application, provided the system requires annual reports of condition that capture financial statement information and the applicant has filed such information in accordance with section 36a-848.
(2) Each applicant for a student loan servicer license shall pay to the system any required fees or charges and a license fee of nine hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a student loan servicer license shall pay to the system any required fees or charges and a renewal fee of nine hundred dollars.
(3) Each license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-846 to 36a-854, inclusive. No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by this section shall be nonrefundable.
(c) Upon the filing of an application for an initial license and the payment of required fees, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The commissioner may issue a license if the commissioner finds that:
(1) The applicant's financial condition is sound;
(2) The applicant's business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes and intent of sections 36a-846 to 36a-854, inclusive, and in a manner commanding the confidence and trust of the community;
(3) Each control person, qualified individual, branch manager and trustee of the applicant is in all respects properly qualified and of good character, including, but not limited to, assessment of such person's financial responsibility and any criminal convictions, provided any license denial based on a criminal conviction shall be subject to the provisions of section 46a-80;
(4) No control person, qualified individual, branch manager or other person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to sections 36a-846 to 36a-854, inclusive;
(5) No control person, qualified individual, branch manager or other person on behalf of the applicant knowingly has omitted to state any material fact necessary to give the commissioner any information lawfully required by the commissioner;
(6) The applicant has paid the fees required under subsection (b) of this section; and
(7) The applicant has met any other similar requirements as determined by the commissioner.
(d) Not later than fifteen days after the date a licensee ceases to engage in the business of student loan servicing in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner, in accordance with subsection (c) of section 36a-51, its license for each location in which such licensee has ceased to engage in such business. The licensee shall also identify to the commissioner, in writing, the location where the records of the licensee will be stored and the name, address and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the commissioner to revoke or suspend a license, assess a civil penalty, order restitution or exercise any other authority provided to the commissioner.
(e) If an application for a renewal license has been filed with the commissioner on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the issuance by the commissioner of the renewal license applied for or until the commissioner has notified the licensee in writing of the commissioner's refusal to issue such renewal license together with the grounds upon which such refusal is based. The commissioner may refuse to issue a renewal license (1) on any ground on which the commissioner might refuse to issue an initial license, or (2) if the applicant has not paid any required fee for renewal or has not paid any outstanding examination fees or other moneys due to the commissioner. The license of a student loan servicer failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(f) The commissioner may automatically suspend a license if the licensee receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-852 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(g) Except as specified in section 36a-848, the applicant or licensee, and each individual designated as a control person, qualified individual or branch manager, shall file to the system any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days after the date the applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.
(h) The commissioner may deem an application for a license abandoned if the applicant fails to respond to any request for information required under sections 36a-846 to 36a-854, inclusive, or any regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under the provisions of sections 36a-846 to 36a-854, inclusive.
(P.A. 15-162, S. 3; P.A. 18-173, S. 85.)
History: P.A. 15-162 effective July 1, 2016; P.A. 18-173 amended Subsec. (a)(1) by adding “for its main office and for each branch office where such business is conducted” re obtaining license, and adding provision re activity to be conducted from office located in a state, substantially amended Subsec. (b) including by deleting provisions re written application to commissioner, financial statement to be sworn to under oath, fees and commissioner's authority to conduct criminal history records check, and adding provisions re application to be made and processed on the system, commissioner's authority to conduct criminal history records check, require submission of fingerprints, and investigate financial condition of person, and commissioner's authority to waive requirement of financial statement prepared by certified public accountant in connection with renewal application in new Subdiv. (1), adding new Subdiv. (2) re applicant to pay to system fees and charges, expiration of license, and renewal, and adding new Subdiv. (3) re license to remain in force and effect until surrendered, revoked, suspended or expired, no abatement of licensee fee to be made if application is denied or withdrawn, and fees are nonrefundable, amended Subsec. (c) by replacing “payment of the fees for license and investigation,” with “payment of the required fees,”, replacing provisions re applicant properly qualified and of good character with provisions re same in Subdiv. (3), adding “control person, qualified individual, branch manager or other” in Subdivs. (4) and (5), and replacing “paid the investigation fee and the license fee” with “paid the fees” in Subdiv. (6), amended Subsec. (d) by deleting provisions re expiration of license at close of business September thirtieth of odd-numbered year, and written notice of surrender, adding reference to Sec. 36a-51(c), and adding reference to commissioner, substantially amended Subsec. (e) by deleting provisions re renewal of license, designating existing provision re ground on which commissioner might refuse initial license as Subdiv. (1), and adding Subdiv. (2) re applicant has not paid required fee, failure of student loan servicer to satisfy minimum standards, and commissioner's adoption of procedures for reinstatement of expired licenses, substantially amended Subsec. (f) by replacing provisions re check to pay fee dishonored and automatic suspension with provisions re automatic suspension of license if deficiency on system indicating returned payment, substantially amended Subsec. (g) by replacing provision re notice to commissioner in writing of change in information provided on application with provision re filing to system change in information, and amended Subsec. (h) by replacing provision re notice to applicant in writing with provision re notice to applicant on the system, and made technical and conforming changes.
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Sec. 36a-848. Name and place of business. Change of name or location. License not transferable or assignable. Change in any control persons. Automatic suspension of license. Required system filing or notice of commissioner. Unique identifier of licensee. Advertisements of licensee. (a) No person licensed to act within this state as a student loan servicer shall do so under any other name or at any other place of business than that named in the license. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, the licensee files such change with the system and the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-846 to 36a-854, inclusive, as to each new licensee.
(b) A license shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval.
(c) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of such automatic suspension pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-852 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
(d) A student loan servicer licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following developments:
(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(2) Filing of a criminal indictment against the licensee in any way related to the student loan servicer activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; or
(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.
(e) Any person filing or submitting any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each student loan servicer licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(f) The unique identifier of any person licensed under section 36a-847 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under section 36a-847: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-846 to 36a-854, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(P.A. 15-162, S. 4; P.A. 18-173, S. 86.)
History: P.A. 15-162 effective July 1, 2016; P.A. 18-173 designated existing provisions re person licensed to act as student loan servicer as Subsec. (a) and amended same by deleting provision re written notice to commissioner re change of location of business and adding provisions re licensee's use of name other than approved legal name or fictitious name, filing change of name or address of licensee with the system, designated existing provisions re license not transferable or assignable as Subsec. (b) and amended same by adding provisions re change in control person to be subject of advance change notice, added Subsec.(c) re automatic suspension of license for violation of section, adding Subsec. (d) re filing information on the system or notifying commissioner in writing of occurrence of certain developments, added Subsec. (e) re filing or submitting information on system in accordance with procedures and requirements of system, payment of fees, and timely submission of accurate reports of condition to the system, added Subsec. (f) re unique identifier and solicitations and advertisements.
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Sec. 36a-849. Records to be maintained by licensee. (a) Each student loan servicer licensee shall maintain adequate records of each student education loan transaction for not less than two years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or such longer period as may be required by any other provision of law.
(b) If requested by the commissioner, each student loan servicer licensee shall make such records available or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send the records to the commissioner.
(P.A. 15-162, S. 5; P.A. 16-65, S. 61.)
History: P.A. 15-162 effective July 1, 2016; P.A. 16-65 amended Subsec. (a) by deleting provision re persons exempt from licensure and amended Subsec. (b) by adding “licensee” re student loan servicer, effective July 1, 2016.
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Sec. 36a-850. Prohibited activities of student loan servicer licensees and control persons. No person who is required to be licensed and who is subject to the provisions of sections 36a-846 to 36a-854, inclusive, and no control person shall, directly or indirectly:
(1) Employ any scheme, device or artifice to defraud or mislead student loan borrowers;
(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement or the borrower's obligations under the loan;
(3) Obtain property by fraud or misrepresentation;
(4) Knowingly misapply or recklessly apply student education loan payments to the outstanding balance of a student education loan;
(5) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a student loan borrower's creditworthiness;
(6) Fail to report both the favorable and unfavorable payment history of the student loan borrower to a nationally recognized consumer credit bureau at least annually if the student loan servicer licensee regularly reports information to a credit bureau;
(7) Refuse to communicate with an authorized representative of the student loan borrower who provides a written authorization signed by the student loan borrower, provided the student loan servicer licensee may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student loan borrower;
(8) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the commissioner or another governmental agency;
(9) Fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable student loan servicing laws and regulations; or
(10) Fail to comply with the service standards set by the commissioner in accordance with section 59 of public act 16-65*.
(P.A. 15-162, S. 6; P.A. 16-65, S. 62; P.A. 17-233, S. 33; P.A. 18-173, S. 87.)
*Note: Section 59 of public act 16-65 is special in nature and therefore has not been codified but remains in full force and effect according to its terms.
History: P.A. 15-162 effective July 1, 2016; P.A. 16-65 added “licensee” re student loan servicer, effective July 1, 2016; P.A. 17-233 replaced “No student loan servicer licensee shall” with “No person who is required to be licensed and who is subject to the provisions of sections 36a-846 to 36a-854, inclusive, and no control person shall, directly or indirectly”, amended Subdiv. (1) by deleting “Directly or indirectly”, amended Subdiv. (8) by replacing “Banking Commissioner” with “commissioner”, added Subdiv. (9) re the failure to establish, enforce and maintain policies and procedures, and made technical changes; P.A. 18-173 added Subdiv. (10) re failure to comply with standards set by commissioner and made a technical change.
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Sec. 36a-851. Commissioner's authority re investigations and examinations. Prohibited acts by subjects of investigation or examination. (a) In addition to any authority provided under this title, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:
(1) For purposes of initial licensing, license renewal, license suspension, license revocation or termination, or general or specific inquiry or investigation to determine compliance with sections 36a-846 to 36a-854, inclusive, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to, (A) criminal, civil and administrative history information; (B) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a; and (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.
(2) For the purposes of investigating violations or complaints arising under sections 36a-846 to 36a-854, inclusive, or for the purposes of examination, the commissioner may review, investigate or examine any student loan servicer licensee or person subject to said sections as often as necessary in order to carry out the purposes of said sections. The commissioner may direct, subpoena or order the attendance of and examine under oath all persons whose testimony may be required about the student education loan or the business or subject matter of any such examination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.
(b) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the student loan servicer licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the student loan servicer licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of sections 36a-846 to 36a-854, inclusive, the student loan servicer licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
(c) In order to carry out the purposes of this section, the commissioner may:
(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;
(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section;
(3) Use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive;
(4) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and
(5) Accept audit reports made by an independent certified public accountant for the student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive, in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the commissioner.
(d) The authority of this section shall remain in effect, whether such student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive, acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.
(e) No student loan servicer licensee or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.
(P.A. 15-162, S. 7.)
History: P.A. 15-162 effective July 1, 2016.
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Sec. 36a-852. Suspension, revocation or refusal to renew license. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license issued under section 36a-847, or take any other action, in accordance with section 36a-51, if the commissioner finds that (1) the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of the licensee has violated any provision of this title or any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's student loan servicing business, or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted a denial of such license.
(b) Whenever it appears to the commissioner that any (1) person has violated, is violating or is about to violate any of the provisions of sections 36a-846 to 36a-854, inclusive, or any regulation adopted pursuant to said sections, (2) person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, engaged in dishonest activities or made any misrepresentation, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-846 to 36a-854, inclusive, from office and from employment or retention as an independent contractor in the student loan servicer business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(P.A. 15-162, S. 8; P.A. 18-173, S. 88.)
History: P.A. 15-162 effective July 1, 2016; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-847(c) with reference to Sec. 36a-847, adding reference to control person, qualified individual, branch manager, trustee, employee or agent of licensee, replacing “any provision of sections 36a-846 to 36a-854, inclusive, or any regulation or order lawfully made pursuant to and within the authority of said sections” with “any provision of this title or any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's student loan servicing business” in Subdiv. (1), and deleting provision re abatement of license fee in Subdiv. (2), amended Subsec. (b) by designating existing provision re violation of sections or regulation as Subdiv. (1), adding Subdiv. (2) re person is, was or would be cause of violation of provision of section or regulation, designating existing provision re fraud, dishonest activities or misrepresentation as Subdiv. (3) and amending same by replacing owner, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, added Subsec. (c) re commissioner's authority to order licensee to remove individual from office, employment or retention as independent contractor, and added Subsec. (d) re temporary order.
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Sec. 36a-853. Compliance with federal laws and regulations. A student loan servicer shall comply with all applicable federal laws and regulations relating to student loan servicing, including, but not limited to, the Truth-in-Lending Act, 15 USC Section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this section and a basis upon which the commissioner may take enforcement action pursuant to section 36a-852.
(P.A. 15-162, S. 9.)
History: P.A. 15-162 effective July 1, 2016.
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Sec. 36a-854. Regulations. The Banking Commissioner shall adopt such regulations, in accordance with chapter 54, to implement the provisions of this section and sections 36a-846 to 36a-853, inclusive.
(P.A. 15-162, S. 10.)
History: P.A. 15-162 effective July 1, 2016.
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Secs. 36a-855 to 36a-859. Reserved for future use.
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PART XV
FINANCIAL PLANNERS
Sec. 36a-860. Financial planners. (a) For purposes of this section and section 36a-860a, (1) “fiduciary duty” means a duty to act with prudence in the best interests of a consumer with undivided loyalty to such consumer, and (2) “financial planner” means a person offering individualized financial planning or investment advice to a consumer for compensation where such activity is not otherwise regulated by state or federal law.
(b) No financial planner shall, in connection with an agreement with a consumer to provide financial planning or investment advice for compensation, use a certificate, professional designation or form of advertising expressing or implying that such person has special training, education or experience in advising or serving senior citizens, unless such person has obtained a certificate, title or designation as described in section 36b-4.
(c) A financial planner shall disclose to a consumer, upon request, whether or not such financial planner has a fiduciary duty to such consumer for each recommendation such financial planner makes to such consumer.
(P.A. 17-120, S. 1.)
History: P.A. 17-120 effective July 5, 2017.
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Sec. 36a-860a. Links to educational materials re financial planning and investment advisers on department's Internet web site. (a) To the extent practicable, the Banking Commissioner shall provide on the department's Internet web site links to educational materials on (1) financial planning and other designations, including associated prerequisites, and (2) information on requirements for investment advisers pursuant to chapter 672a. The Banking Commissioner shall also include on the department's Internet web site information concerning a consumer's right to ask for disclosure from financial planners or other financial planning professionals about fees and compensation as required under applicable state and federal law.
(b) The Department of Banking shall share the information provided on the department's Internet web site pursuant to subsection (a) of this section with the Department of Consumer Protection. The Department of Consumer Protection shall provide such shared information on its own department's Internet web site.
(P.A. 17-120, S. 2.)
History: P.A. 17-120 effective July 5, 2017.
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REGULATED ACTIVITIES
*Creditors' Collection Practices Act cited. 231 C. 707.
Table of Contents
Sec. 36a-645. (Formerly Sec. 36-243a). Definitions.
Sec. 36a-646. (Formerly Sec. 36-243b). Prohibited acts.
Sec. 36a-647. (Formerly Sec. 36-243c). Enforcement powers of commissioner. Regulations.
Sec. 36a-648. Abusive, harassing, fraudulent, deceptive or misleading debt collection practices. Liability. Exemptions. Limitations on actions.
Sec. 36a-648a. Credit card debt collection actions against parents or legal guardians of students.
Secs. 36a-649 to 36a-654. Reserved
Sec. 36a-655. (Formerly Sec. 36-364). Definitions.
Sec. 36a-656. (Formerly Sec. 36-365). License requirements and fees. Required system filings. Authority of commissioner to conduct criminal history records checks and deny application for license. Renewal of license. Automatic suspension of license.
Sec. 36a-657. (Formerly Sec. 36-369). Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-658. (Formerly Sec. 36-370). License required. Change in control persons, name or place of business. Use of name. Automatic suspension of license. Surrender of license. Required system filing or notice to commissioner. Unique identifier of license. Advertising of license.
Sec. 36a-659. (Formerly Sec. 36-372). Separate bank account for benefit of debtors. Books and records.
Sec. 36a-660. (Formerly Sec. 36-375). Licensee's duties. Written agreement required.
Sec. 36a-661. (Formerly Sec. 36-376). Prohibited acts.
Sec. 36a-661a. Written agreement voidable. Licensee claims for restitution.
Sec. 36a-662. (Formerly Sec. 36-377). Regulations.
Sec. 36a-663. (Formerly Sec. 36-378). Exceptions.
Sec. 36a-664. (Formerly Sec. 36-380). Surety bond required. Form of surety bond. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing.
Sec. 36a-665. (Formerly Sec. 36-381). Penalties.
Secs. 36a-666 to 36a-670. Reserved
Sec. 36a-671. Definitions. Debt negotiation. License application, requirements and fees. Authority of commissioner to conduct criminal history records checks and deny application for license. Abandonment of application. License renewal. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. License not assignable or transferable. Use of name. Surrender of license. Required system filing or notice to commissioner. Unique identifier. Advertisements of licensee.
Sec. 36a-671a. Suspension, revocation or refusal to renew license or taking other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-671b. Debt negotiation service contract required. Fees, commissions and other valuable consideration. Noncompliant contracts voidable by consumer.
Sec. 36a-671c. Exceptions.
Sec. 36a-671d. Surety bond required. Form of surety bond. Cancellation of bond. Automatic suspension of license. Notice. Opportunity for hearing. Determination of penal sum. Aggregate amount of residential loans.
Sec. 36a-671e. Requirements re mortgage loan originator license.
Sec. 36a-671f. Prohibited practices.
Secs. 36a-672 to 36a-674. Reserved
Sec. 36a-675. (Formerly Sec. 36-416). Short title: Connecticut Truth-in-Lending Act.
Sec. 36a-676. (Formerly Sec. 36-393). Definitions.
Sec. 36a-677. (Formerly Sec. 36-393a). State policy.
Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions.
Sec. 36a-679. (Formerly Sec. 36-395). Regulations.
Sec. 36a-680. (Formerly Sec. 36-398). Effect of inconsistent law.
Sec. 36a-681. (Formerly Sec. 36-399). Penalty.
Sec. 36a-682. (Formerly Sec. 36-400). Compliance of governmental instruments. Exemptions from penalties.
Sec. 36a-683. (Formerly Sec. 36-407). Failure to comply; liability. Civil action. Right to rescind.
Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments.
Sec. 36a-685. (Formerly Sec. 36-415). Unenforceable agreements.
Sec. 36a-686. Civil penalty. Liability.
Secs. 36a-687 to 36a-689. Reserved
Sec. 36a-690. (Formerly Sec. 36-417z). Calculation of interest or finance charge rebates. Prohibited methods. Transactions affected.
Secs. 36a-691 to 36a-694. Reserved
Sec. 36a-695. (Formerly Sec. 36-431). Definitions.
Sec. 36a-696. (Formerly Sec. 36-432). Disclosure to consumer of information re credit report.
Sec. 36a-697. (Formerly Sec. 36-433). Exceptions.
Sec. 36a-698. (Formerly Sec. 36-434). Regulations.
Sec. 36a-699. (Formerly Sec. 36-435). Penalty.
Sec. 36a-699a. Written summary of consumer's rights.
Sec. 36a-699b. Dispute by consumer re completeness or accuracy of information.
Sec. 36a-699c. Procedures by credit rating agency to assure accuracy.
Sec. 36a-699d. Credit report for use in credit transaction not initiated by consumer.
Sec. 36a-699e. Existing consent judgment or settlement with Attorney General.
Sec. 36a-699f. Blocking of information appearing on credit report as result of identity theft.
Sec. 36a-700. (Formerly Sec. 36-435l). Credit clinics. Definitions. Contracts. Prohibited acts. Penalties.
Sec. 36a-701. Security freeze on credit report: Definitions.
Sec. 36a-701a. Security freeze on credit report. Timing. Disclosure of report to third party during freeze. Procedures for freeze. Refusal by credit rating agency to implement freeze. Exceptions. Prohibition on fees.
Sec. 36a-701b. *(See end of section for amended version of subparagraph (B) of subdivision (2) of subsection (b) and effective date.) Breach of security re computerized data containing personal information. Notice of breach. Provision of identity theft prevention services and identity theft mitigation services. Delay for criminal investigation. Means of notice. Unfair trade practice.
Sec. 36a-701c. Regulations.
Secs. 36a-702 to 36a-704. Reserved
Sec. 36a-705. (Formerly Sec. 36-442). Definitions.
Sec. 36a-706. (Formerly Sec. 36-442a). Mortgage rate lock-in.
Sec. 36a-707. (Formerly Sec. 36-442b). Applicant's remedies.
Sec. 36a-708. Prohibited acts by mortgage brokers.
Secs. 36a-709 to 36a-714. Reserved
Sec. 36a-715. (Formerly Sec. 36-442m). Definitions.
Sec. 36a-716. (Formerly Sec. 36-442n). Escrow accounts.
Sec. 36a-717. (Formerly Sec. 36-442o). Penalties.
Sec. 36a-718. (Formerly Sec. 36-442p). Licenses required. Exemptions.
Sec. 36a-719. Mortgage servicer license. Issuance. Application. Criminal history records checks. Renewal standards. Automatic suspension of license. Abandonment of application. Schedule and report. Unique identifier of license. Advertising of license.
Sec. 36a-719a. License not assignable or transferable. Change in any control persons. Surrender of license. Change of name or address. Required filings on system or notification of commissioner. Automatic suspension of license.
Sec. 36a-719b. Expiration of license. Application for renewal. Fees.
Sec. 36a-719c. Surety bond, fidelity bond and errors and omissions coverage. Cancellation. Automatic suspension of license. Notices.
Sec. 36a-719d. Records to be maintained by licensee.
Sec. 36a-719e. Disclosure of notice and schedule of ranges and categories of costs and fees.
Sec. 36a-719f. Compliance with federal laws and regulations.
Sec. 36a-719g. Fee schedule. Imposition of late fee or delinquency charge.
Sec. 36a-719h. Prohibited acts. Duty to establish, enforce and maintain policies and procedures for compliance.
Sec. 36a-719i. Authority of commissioner re investigations and examinations. Prohibited acts by subjects of investigation or examination.
Sec. 36a-719j. Suspension, revocation or refusal to renew license or taking of other action. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-719k. Regulations.
Sec. 36a-719l. Exemptions.
Secs. 36a-720 to 36a-724. Reserved
Sec. 36a-725. (Formerly Sec. 36-442aa). Definitions.
Sec. 36a-726. (Formerly Sec. 36-442bb). Disclosure required.
Secs. 36a-727 to 36a-734. Reserved
Sec. 36a-735. (Formerly Sec. 36-443). Short title: Home Mortgage Disclosure Act.
Sec. 36a-736. (Formerly Sec. 36-444). Definitions.
Sec. 36a-737. (Formerly Sec. 36-445). Discrimination in making of home purchase, home improvement and mortgage loans. Applications submitted by members of reserves or National Guard.
Sec. 36a-738. (Formerly Sec. 36-446). Disclosure requirements for financial institutions.
Sec. 36a-739. (Formerly Sec. 36-448). Reports by financial institutions. Filing requirements.
Sec. 36a-740. (Formerly Sec. 36-449). Violations by financial institutions. Rights of loan applicant.
Sec. 36a-741. (Formerly Sec. 36-451). Cease and desist order. Enforcement action.
Sec. 36a-742. (Formerly Sec. 36-452). Protection of confidentiality of an individual's financial status.
Sec. 36a-743. (Formerly Sec. 36-454). Commissioner to analyze home financing.
Sec. 36a-744. (Formerly Sec. 36-455). Regulations.
Sec. 36a-745. Reserved
Sec. 36a-746. Short title: Connecticut Abusive Home Loan Lending Practices Act.
Sec. 36a-746a. Definitions.
Sec. 36a-746b. Disclosures.
Sec. 36a-746c. Prohibited provisions in loan agreement.
Sec. 36a-746d. Report of payment history.
Sec. 36a-746e. Prohibited acts by lender.
Sec. 36a-746f. Purchase of insurance by buyer.
Sec. 36a-746g. Refund or credit of charges.
Secs. 36a-747 to 36a-754. Reserved
Sec. 36a-755. (Formerly Sec. 36-9h). Mortgage appraisal practices. Definitions. Regulations.
Sec. 36a-756. (Formerly Sec. 36-9t). Title insurance as condition of mortgage on residential real estate prohibited.
Sec. 36a-757. (Formerly Sec. 36-9u). Mortgage insurance requirements limited.
Sec. 36a-758. (Formerly Sec. 36-9y). Payment of loan proceeds by certified, bank treasurer's or cashier's check or by wire transfer.
Sec. 36a-758a. Payment of first or secondary mortgage loan proceeds by wire transfer. Time limits. Penalties.
Sec. 36a-759. (Formerly Sec. 36-4). Minority of veterans, spouses and widows for purposes of the Servicemen's Readjustment Act.
Sec. 36a-759a. Compliance with John Warner National Defense Authorization Act for Fiscal Year 2007. Limit on interest rate charged on consumer credit to members of armed services.
Sec. 36a-760. Nonprime home loans: Definitions; applicability.
Sec. 36a-760a. Duties of lenders and mortgage brokers relating to nonprime home loans.
Sec. 36a-760b. Analysis of obligor's ability to pay.
Sec. 36a-760c. Prohibition against making nonprime home loan when proceeds used to pay off special mortgage.
Sec. 36a-760d. Requirements for making nonprime home loans.
Sec. 36a-760e. Restrictions on provisions in nonprime home loans.
Sec. 36a-760f. Prohibition against dividing or structuring loan to avoid application of nonprime home loan statutory provisions.
Sec. 36a-760g. Restrictions on making and financing under nonprime home loans. Curing of defaults.
Sec. 36a-760h. Additional duties of mortgage brokers.
Sec. 36a-760i. Court action based on lender's failure to comply with statutory requirements.
Sec. 36a-760j. Prohibition against influencing real estate appraisals.
Secs. 36a-761 to 36a-769. Reserved
Sec. 36a-770. (Formerly Sec. 42-83). Applicability of Uniform Commercial Code. Filing and recording. Definitions.
Sec. 36a-771. (Formerly Sec. 42-84). General contract requirements.
Sec. 36a-772. (Formerly Sec. 42-85). Maximum finance charge on retail sales of motor vehicles and other goods.
Sec. 36a-773. (Formerly Sec. 42-86). Insurance.
Sec. 36a-774. (Formerly Sec. 42-87). Installment loan contract requirements.
Sec. 36a-775. (Formerly Sec. 42-88). Confession of judgment provision invalid.
Sec. 36a-776. (Formerly Sec. 42-89). Inclusion of other goods in contract void.
Sec. 36a-777. (Formerly Sec. 42-90). Acknowledgment of receipt of notice and statement.
Sec. 36a-778. (Formerly Sec. 42-91). Delinquency and collection charges.
Sec. 36a-779. (Formerly Sec. 42-92). Assignment of contract.
Sec. 36a-780. (Formerly Sec. 42-93). Payments after assignment.
Sec. 36a-781. (Formerly Sec. 42-94). Statement of payments made. Receipts.
Sec. 36a-782. (Formerly Sec. 42-95). Cancellation of contract on payment in full.
Sec. 36a-783. (Formerly Sec. 42-96). Rebate and refund upon prepayment of contract.
Sec. 36a-784. (Formerly Sec. 42-97). Renewals and extensions.
Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure.
Sec. 36a-786. (Formerly Sec. 42-99). Recovery of charges barred by wilful violations.
Sec. 36a-787. (Formerly Sec. 42-100). Penalty.
Sec. 36a-788. (Formerly Sec. 42-100a). Enforcement action.
Secs. 36a-789 to 36a-799. Reserved
Sec. 36a-800. (Formerly Sec. 42-127). Consumer collection agency. Definitions.
Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Surrender of license. Required system filing or notice of commissioner. Automatic suspension of license. Name and place of business. Change in any control persons. Unique identifier of license. Advertising of license.
Sec. 36a-801a. Persons engaged in business of collecting child support.
Sec. 36a-801b. Collection of child support. Written agreement.
Sec. 36a-802. (Formerly Sec. 42-128a). Surety bond required. Authority of commissioner to proceed on bond. Cancellation of bond; notice. Automatic suspension of license; notice. Opportunity for hearing.
Sec. 36a-803. (Formerly Sec. 42-129). Conviction of certain crimes disqualification to engage in consumer collection business.
Sec. 36a-804. (Formerly Sec. 42-129a). Suspension, revocation or refusal to renew license or taking other action. Removal from office and from employement or retention. Temporary order to cease business.
Sec. 36a-805. (Formerly Sec. 42-131). Prohibited practices. Exception.
Sec. 36a-806. (Formerly Sec. 42-131a). Prohibited practices within and without state. Examination of affairs.
Sec. 36a-807. (Formerly Sec. 42-131b). Liability.
Sec. 36a-808. (Formerly Sec. 42-131c). Unfair or deceptive practices. Enforcement action.
Sec. 36a-809. (Formerly Sec. 42-131d). Commissioner's powers. Regulations.
Sec. 36a-810. (Formerly Sec. 42-133a). Penalty.
Sec. 36a-811. Maintenance of consumer debtor and creditor records.
Sec. 36a-812. Compliance with Fair Debt Collection Practices Act.
Sec. 36a-813. Evidence in cause of action for purchased debt owed by consumer debtor.
Sec. 36a-814. Initiation of cause of action for purchased debt prohibited when statute of limitations has expired. Limitations period not extended by payment or affirmation.
Secs. 36a-815 to 36a-829. Reserved
Sec. 36a-830. Exchange facilitator. Definitions.
Sec. 36a-831. Change in control of exchange facilitator. Notification to clients.
Sec. 36a-832. Fidelity bond. Deposit of exchange funds.
Sec. 36a-833. Errors and omissions insurance policy; cash or securities deposit; letters of credit.
Sec. 36a-834. Regulations. Damage claims.
Sec. 36a-835. Holding and investment of exchange funds.
Sec. 36a-836. Prohibited activities of exchange facilitators.
Sec. 36a-837. Civil action. Notice.
Secs. 36a-838 to 36a-845. Reserved
Sec. 36a-846. Definitions.
Sec. 36a-847. License required. Exemptions. Application. Authority to conduct criminal history records check. Fees. Examination of records. Automatic suspension of license. Abandonment of application.
Sec. 36a-848. Name and place of business. Change of name or location. License not transferable or assignable. Change in any control persons. Automatic suspension of license. Required system filing or notice of commissioner. Unique identifier of licensee. Advertisements of licensee.
Sec. 36a-849. Records to be maintained by licensee.
Sec. 36a-850. Prohibited activities of student loan servicer licensees and control persons.
Sec. 36a-851. Commissioner's authority re investigations and examinations. Prohibited acts by subjects of investigation or examination.
Sec. 36a-852. Suspension, revocation or refusal to renew license. Removal from office and from employment or retention. Temporary order to cease business.
Sec. 36a-853. Compliance with federal laws and regulations.
Sec. 36a-854. Regulations.
Secs. 36a-855 to 36a-859. Reserved
Sec. 36a-860. Financial planners.
Sec. 36a-860a. Links to educational materials re financial planning and investment advisers on department's Internet web site.
PART I*
CREDITORS' COLLECTION PRACTICES
*See Sec. 36a-675 et seq. re Truth-in-Lending Act.
See Sec. 36a-800 et seq. re consumer collection agencies.
Annotation to former chapter 647a:
Creditors' Collection Practices Act cited. 216 C. 458.
Sec. 36a-645. (Formerly Sec. 36-243a). Definitions. As used in sections 36a-645 to 36a-647, inclusive, unless the context otherwise requires:
(1) “Consumer debtor” means any natural person residing in this state who owes a debt to a creditor.
(2) “Creditor” means (A) any person to whom a debt is owed by a consumer debtor and such debt results from a transaction occurring in the ordinary course of such person's business, or (B) any person to whom such debt is assigned. “Creditor” shall not include a consumer collection agency, as defined in section 36a-800, or any department or agency of the United States, this state, any other state, or any political subdivision thereof.
(3) “Debt” means an obligation or alleged obligation arising out of a transaction in which the money, property, goods or services which are the subject of the transaction are for personal, family or household purposes, whether or not such obligation has been reduced to judgment.
(P.A. 77-418, S. 1; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 252, 345, 348; P.A. 87-9, S. 2, 3; P.A. 91-357, S. 53, 78; P.A. 92-12, S. 70; P.A. 94-122, S. 293, 340; P.A. 97-207, S. 1; P.A. 04-69, S. 23; P.A. 05-288, S. 208.)
History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner and made banking department a division within the department of business regulation, effective January 1, 1979; P.A. 80-482 restored banking division as independent department with commissioner as its head and abolished the department of business regulation, thereby allowing revision of commissioner's title to omit reference to that department; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 91-357 made a technical change in Subsec. (c); P.A. 92-12 redesignated Subdivs.; P.A. 94-122 deleted the definitions of “person” and “commissioner” and alphabetized the remaining definitions, effective January 1, 1995; Sec. 36-243a transferred to Sec. 36a-645 in 1995; P.A. 97-207 redefined “consumer debtor”, “creditor” and “debt”, and deleted definition of “credit”; P.A. 04-69 amended Subdiv. (2) to insert clause (i) and (ii) designators and add “any person to whom such debt is assigned” as clause (ii); P.A. 05-288 made technical changes in Subdiv. (2), effective July 13, 2005.
Annotation to former section 36-243a:
Cited. 231 C. 707.
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Sec. 36a-646. (Formerly Sec. 36-243b). Prohibited acts. No creditor shall use any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice to collect or attempt to collect any debt.
(P.A. 77-418, S. 2.)
History: Sec. 36-243b transferred to Sec. 36a-646 in 1995.
Annotations to former section 36-243b:
Cited. 216 C. 458; 231 C. 707.
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Sec. 36a-647. (Formerly Sec. 36-243c). Enforcement powers of commissioner. Regulations. (a) The commissioner may adopt such regulations in accordance with the provisions of chapter 54 as may be necessary to carry out the purposes of sections 36a-645 to 36a-647, inclusive, including, but not limited to, specifying those acts which are deemed to be in violation of section 36a-646.
(b) The commissioner may receive and investigate complaints and may receive assurances of voluntary compliance with the provisions of sections 36a-645 to 36a-647, inclusive, or forward such complaints to the appropriate prosecuting officials at the commissioner's discretion. No action taken by the commissioner against a creditor in accordance with section 36a-50 relieves the creditor from civil liability.
(c) Whenever the commissioner has reason to believe that any person has violated, is violating or is about to violate any provision of sections 36a-645 to 36a-647, inclusive, or any regulation adopted under this section, the commissioner may take action against such person in accordance with sections 36a-50 and 36a-52.
(d) Nothing contained in sections 36a-645 to 36a-647, inclusive, shall be construed as a limitation upon the power or authority of the state, the Attorney General or the commissioner to seek administrative, legal or equitable relief as provided by other statutes or at common law.
(P.A. 77-418, S. 3; P.A. 82-174, S. 3, 14; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 294, 340; P.A. 09-208, S. 22.)
History: P.A. 82-174 amended Subsec. (b) by authorizing the commissioner to issue, after notice, cease and desist orders, unless a hearing is requested, and authorizing him to bring an action to enforce any such order; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-243c transferred to Sec. 36a-647 in 1995; P.A. 09-208 amended Subsec. (c) to add reference to Sec. 36a-52.
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Sec. 36a-648. Abusive, harassing, fraudulent, deceptive or misleading debt collection practices. Liability. Exemptions. Limitations on actions. (a) A creditor, as defined in section 36a-645, who uses any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice with respect to any person to collect or attempt to collect a debt in violation of section 36a-646, section 36a-805 or the regulations adopted pursuant to section 36a-647 or 36a-809 shall be liable to such person in an amount equal to the sum of: (1) Any actual damages sustained by such person, (2) if such person is an individual, such additional damages as the court may award, not to exceed one thousand dollars, and (3) in the case of any successful action to enforce liability under the provisions of this subsection, the costs of the action and, in the discretion of the court, a reasonable attorney's fee.
(b) In determining the amount of liability in an action brought pursuant to subsection (a) of this section, the trier of fact shall consider, among other relevant factors, the frequency and persistence of noncompliance by the creditor, the nature of such noncompliance and the extent to which such noncompliance was intentional.
(c) A creditor may not be held liable in an action brought under this section if the creditor shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adopted by the creditor to avoid any such error.
(d) An action to enforce liability under this section may be brought in any court of competent jurisdiction not later than one year after the date on which the violation occurs.
(P.A. 07-176, S. 1; P.A. 16-65, S. 54.)
History: P.A. 07-176 effective July 1, 2007, and applicable to any cause of action accruing on or after that date; P.A. 16-65 amended Subsec. (a) by adding “with respect to any person”, adding reference to Secs. 36a-805 and 36a-809 and replacing “a person who is harmed by such conduct” with “such person”.
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Sec. 36a-648a. Credit card debt collection actions against parents or legal guardians of students. (a) No credit card issuer shall take any debt collection action, including, but not limited to, telephone calls or demand letters, against the parent or legal guardian of a student to whom a credit card has been issued, unless the parent or legal guardian has agreed in writing to be liable for the debts of the student pursuant to the terms of the credit card agreement.
(b) For purposes of this section, “student” means a person who is under twenty-one years of age and is enrolled in a public institution of higher education on a full or part-time basis.
(P.A. 09-167, S. 2.)
History: P.A. 09-167 effective July 1, 2009.
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Secs. 36a-649 to 36a-654. Reserved for future use.
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PART II
DEBT ADJUSTERS AND DEBT NEGOTIATION
Sec. 36a-655. (Formerly Sec. 36-364). Definitions. As used in sections 36a-655 to 36a-665, inclusive:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485.
(2) “Bona fide nonprofit organization” means any organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.
(3) “Branch office” means a location other than the main office at which a licensee or any other person on behalf of a licensee engages in the business of debt adjustment.
(4) “Control person” has the same meaning as provided in section 36a-485.
(5) “Debt adjustment” means, for or with the expectation of a fee, commission or other valuable consideration, receiving, as agent of a debtor, money or evidences thereof for the purpose of distributing such money or evidences thereof among creditors in full or partial payment of obligations of the debtor.
(6) “Debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.
(7) “Main office” has the same meaning as provided in section 36a-485.
(8) “Unique identifier” has the same meaning as provided in section 36a-485.
(1967, P.A. 882, S. 1; P.A. 77-614, S. 161, 610; P.A. 79-160, S. 1; P.A. 80-482, S. 258, 345, 348; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 295, 340; P.A. 95-79, S. 135, 189; P.A. 02-111, S. 40; P.A. 09-208, S. 23; P.A. 17-233, S. 22; P.A. 18-173, S. 62.)
History: P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation and made banking department a division within that department, effective January 1, 1979; P.A. 79-160 defined “bona fide nonprofit organization” and deleted reference to receipt of fee or compensation in definition of “debt adjustment”; P.A. 80-482 restored banking division as independent department and abolished the department of business regulation, allowing revision of commissioner's name to omit reference to abolished department; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 deleted the definition of “commissioner”, effective January 1, 1995; Sec. 36-364 transferred to Sec. 36a-655 in 1995; P.A. 95-79 redefined “bona fide nonprofit organization” to include a limited liability company, effective May 31, 1995; P.A. 02-111 redefined “bona fide nonprofit organization” and added definition of “debtor”; P.A. 09-208 redefined “debt adjustment”; P.A. 17-233 added Subdiv. (1) re definition of “advertise” or “advertising”, designated existing provisions re “bona fide nonprofit organization” as Subdiv. (2), added Subdiv. (3) re definition of “control person”, designated existing provisions re “debt adjustment” as Subdiv. (4), designated existing provisions re “debtor” as Subdiv. (5), and made technical changes; P.A. 18-173 added new Subdiv. (3) re definition of “branch office”, redesignated existing Subdivs. (3) to (5) as Subdivs. (4) to (6), added Subdiv. (7) re definition of “main office”, and added Subdiv. (8) re definition of “unique identifier”.
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Sec. 36a-656. (Formerly Sec. 36-365). License requirements and fees. Required system filings. Authority of commissioner to conduct criminal history records checks and deny application for license. Renewal of license. Automatic suspension of license. (a) No person shall engage in the business of debt adjustment in this state unless such person has first obtained a license for the main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-655 to 36a-665, inclusive. Any activity subject to licensure pursuant to sections 36a-655 to 36a-665, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(b) An application for a debt adjuster license or renewal of such license shall be processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-655 to 36a-665, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience and any administrative, civil or criminal findings by any governmental jurisdiction. As part of an application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager, and (2) in accordance with section 36a-24b (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual and any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time.
(c) (1) If the commissioner finds, upon the filing of an application for a debt adjuster license, that: (A) The financial responsibility, character, reputation, integrity and general fitness of the applicant and any control person, qualified individual and branch manager of the applicant are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-655 to 36a-665, inclusive, (B) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant, and (C) the applicant has the bond required pursuant to section 36a-664, the commissioner may thereupon issue the applicant a debt adjuster license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of the applicant has been convicted of any misdemeanor involving any aspect of the debt adjuster business, or any felony or has made a material misstatement in the application. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.
(2) The minimum standards for renewal of a debt adjuster license shall include the following: (A) The applicant continues to meet the minimum standards under subdivision (1) of this subsection; (B) the applicant has paid all required fees for renewal of the license; and (C) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a debt adjuster that fails to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(d) Each applicant for a debt adjuster license shall pay to the system any required fees or charges and a license fee in the amount of (1) two hundred fifty dollars if such applicant is a bona fide nonprofit organization, and (2) eight hundred dollars if such applicant is not a bona fide nonprofit organization. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, and provided any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a debt adjuster license shall pay to the system any required fees or charges and, if not a bona fide nonprofit organization, a license fee of eight hundred dollars.
(e) In accordance with section 36a-24b, the commissioner may automatically suspend any license if such person receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew pursuant to section 36a-657 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(f) No abatement of the license fee shall be made if the application is denied or withdrawn prior to the issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by subsection (d) of this section shall be nonrefundable.
(g) The commissioner may deem an application for a license to engage in the business of debt adjustment abandoned if the applicant fails to respond to any request for information required under sections 36a-655 to 36a-665, inclusive, or any regulations adopted pursuant to said sections 36a-655 to 36a-665, inclusive. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. In the event an application is deemed abandoned, any application filing fee paid prior to the date on which the application was filed is deemed abandoned and shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-655 to 36a-665, inclusive.
(h) Every debt adjuster license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-655 to 36a-665, inclusive. Not later than fifteen days after the date a licensee ceases to engage in the business of a debt adjuster in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business in accordance with subsection (c) of section 36a-51.
(1967, P.A. 882, S. 2; P.A. 79-160, S. 2; P.A. 94-122, S. 296, 340; P.A. 02-111, S. 41; P.A. 04-69, S. 24; P.A. 09-208, S. 24; P.A. 11-216, S. 38; P.A. 18-173, S. 63.)
History: P.A. 79-160 made provisions applicable to bona fide nonprofit organizations rather than to persons, firms or corporations generally, replaced detailed provisions re contents of application with statement re information required by commissioner, added provisions re notification of changes in business, location, number of offices, etc. and specified that license continues in effect as long as licensee continues in debt adjustment business, deleting former Subsecs. (b) to (e) which had required informing commissioner of contract intended to be used and any changes thereto, which had set June thirtieth as annual expiration date, which had required appointment of commissioner as applicant's agent for service of process and which had required that application contain names of persons, firms and corporations with financial interest in the business; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-365 transferred to Sec. 36a-656 in 1995; P.A. 02-111 designated existing provisions as Subsec. (a) and added reference to “debt adjuster” license, deleted reference to Secs. 36a-655 to 36a-665, inclusive, replaced “material changes” with “change”, deleted provisions re changes in location or additional locations and re effective period of license and made technical changes and added Subsecs. (b), (c) and (d) re requirements for obtaining debt adjuster license, licensing fees and renewal requirements and abatement and nonrefundability of license fee, respectively; P.A. 04-69 added new Subsec. (d), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay application fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (d) as Subsec. (e); P.A. 09-208 amended Subsec. (a) to authorize persons, in addition to bona fide nonprofit organizations, to engage in business of debt adjustment, added new Subsec. (b) re application for debt adjuster license to include criminal conviction information, redesignated existing Subsec. (b) as Subsec. (c) and amended same by authorizing commissioner to deny application based on certain criminal convictions and by adding language re when withdrawal of application for license becomes effective, redesignated existing Subsec. (c) as Subsec. (d) and amended same by creating separate fee schedule for bona fide nonprofit organizations and by deleting provision re licenses issued prior to October 1, 2002, redesignated existing Subsecs. (d) and (e) as Subsecs. (e) and (f) and made conforming changes; P.A. 11-216 amended Subsec. (b) to delete provision re ten-year period re history of criminal convictions and requirement re criminal history of applicant's directors and add provision authorizing commissioner to conduct state and national criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant, amended Subsec. (c) to delete provision re ten-year period re misdemeanor and felony convictions, and added Subsec. (g) re abandonment of application; P.A. 18-173 substantially amended Subsec. (a) by replacing provisions re person desiring to obtain debt adjuster license with provisions re obtaining license for main office and each branch office where business is conducted in accordance with Secs. 36a-655 to 36a-665, substantially amended Subsec. (b) by replacing provisions re application for debt adjuster license to be in writing on form provided by commissioner with provisions re application to be processed on the system and form to contain content set forth by instruction or procedure of commissioner and commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition, amended Subsec. (c) by designating existing provisions re commissioner's findings as new Subdiv. (1), redesignating existing Subdiv. (1) as Subpara. (A) and amending same to replace references to applicant partners if a partnership, applicant members if a limited liability company or association and officers, directors, and principal employees if a corporation with references to control person, qualified individual and branch manager, redesignating Subdiv. (2) as Subpara. (B), and adding Subpara. (C) re applicant has bond required pursuant to Sec. 36a-664, adding provision re material misstatement in application, deleting provision re withdrawal of application, and adding new Subdiv. (2) re minimum standards for renewal of debt adjuster license, substantially amended Subsec. (d) by replacing provisions re bona fide nonprofit organization, application fee and license fee, and renewal application with provisions re payment to the system of fees and charges, expiration of license, application for renewal, and payment of renewal and license fees, substantially amended Subsec. (e) by replacing provisions re check to pay application fee is dishonored and automatic suspension with provisions re automatic suspension if deficiency on system due to returned payment, amended Subsec. (f) by adding provision re application is denied or withdrawn prior to issuance, amended Subsec. (g) by replacing “in writing” with “on the system”, added Subsec. (h) re debt adjuster license to remain in force and effect and surrendering of license, and made technical and conforming changes.
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Sec. 36a-657. (Formerly Sec. 36-369). Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-655 to 36a-665, inclusive, or if the commissioner finds that the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misappropriated funds; (3) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any person or any other law or regulation applicable to the conduct of such licensee's debt adjustment business; or (4) failed to perform any agreement with a debtor.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate the provisions of sections 36a-655 to 36a-665, inclusive, or any regulation adopted thereunder; (2) any person is, was or would be the cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation; or (3) any licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, misappropriated funds or failed to perform any agreement with a debtor, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-655 to 36a-665, inclusive, from office and from employment or retention as an independent contractor in the debt adjuster business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(1967, P.A. 882, S. 6; P.A. 79-160, S. 3; P.A. 82-174, S. 11, 14; P.A. 94-122, S. 297, 340; P.A. 02-111, S. 42; P.A. 05-46, S. 13; P.A. 07-91, S. 23; P.A. 18-173, S. 64.)
History: P.A. 79-160 rephrased provisions, added in Subdiv. (3) ground of material error if licensee was not at time of application entitled to obtain license and remains unentitled to do so, inserted new Subdiv. (4) and renumbered former Subdivs. (4) and (5) accordingly; P.A. 82-174 replaced the provision that the commissioner may revoke or suspend a license after notice and hearing with provisions concerning the form and manner of the notice and authorizing the commissioner to revoke or suspend a license “after allowing the licensee a reasonable opportunity to be heard”; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-369 transferred to Sec. 36a-657 in 1995; P.A. 02-111 replaced former provisions re denial, revocation or suspension of a license by the commissioner with new provisions re suspension, revocation or refusal to renew license; P.A. 05-46 designated existing provisions as Subsec. (a) and added Subsec. (b) re commissioner's authority to impose civil penalty or issue cease and desist order against person or licensee; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 18-173 amended Subsec. (a) by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, replacing “provisions of sections 36a-655 to 36a-665, inclusive, or any other law or regulation” with “provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any person or any other law or regulation”, amended Subsec. (b) by designating existing provision re person violating Secs. 36a-655 to 36a-665 as Subdiv. (1), and amending same to add reference to regulation adopted under sections, adding Subdiv. (2) re person is, was or would be cause of violation of provision of section or regulation, designating existing provisions re misappropriation of funds or failure to perform agreement as Subdiv. (3), and amended same by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, added Subsec. (c) re commissioner's authority to order licensee to remove individual from office and from employment or retention as an independent contractor, added Subsec. (d) re commissioner's authority to issue temporary order, and made technical changes.
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Sec. 36a-658. (Formerly Sec. 36-370). License required. Change in control persons, name or place of business. Use of name. Automatic suspension of license. Surrender of license. Required system filing or notice to commissioner. Unique identifier of license. Advertising of license. (a) Each license shall state the location at which the business is to be conducted and shall state fully the name of the licensee. If the licensee desires to engage in the business of debt adjustment in more than one location, the licensee shall procure a license for each location where the business is to be conducted. A license issued under section 36a-656 shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval.
(b) No licensee shall use any name or address other than the name and address stated on the license issued by the commissioner. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system and provides to the commissioner a bond rider, endorsement or addendum, as applicable; and (2) the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period.
(c) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of such automatic suspension pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-657 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
(d) Not later than fifteen days after the date a licensee ceases to engage in this state in the business of debt adjustment for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business in accordance with subsection (c) of section 36a-51.
(e) Except as otherwise specified in subsections (a) and (b) of this section, each debt adjuster applicant or licensee, and each control person, qualified individual or branch manager of such applicant or licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license not later than fifteen days after the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.
(f) A debt adjuster licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following developments:
(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(2) Filing of a criminal indictment against the licensee in any way related to the debt adjuster activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; or
(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.
(g) Any person filing or submitting any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each debt adjuster licensee, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(h) The unique identifier of any person licensed under section 36a-656 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations or advertisements of any person licensed under section 36a-656: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-655 to 36a-665, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(1967, P.A. 882, S. 7; P.A. 79-160, S. 4; P.A. 02-111, S. 43; P.A. 08-119, S. 14; P.A. 18-173, S. 65.)
History: P.A. 79-160 rephrased prior provisions, authorized conduct of business which does not conflict with interests of clients or business of debt adjustment and deleted provision prohibiting change in office location unless authorized by commissioner; Sec. 36-370 transferred to Sec. 36a-658 in 1995; P.A. 02-111 replaced former provisions with provisions re license to specify location at which business is conducted and name of licensee, procurement of license for each business location, license maintenance and availability for public inspection, license not transferable or assignable and licensee's use of stated name; P.A. 08-119 added requirement for surrender of license when licensee ceases to engage in the business of debt adjustment; P.A. 18-173 designated existing provisions re license requirements as Subsec. (a) and amended same by deleting provision re license to be made available for public inspection, adding reference to Sec. 36a-656, deleting provision re prior written notice to commissioner to change location of licensee, adding provision re filing of advance change notice on the system, designated existing provision prohibiting use of any name other than name stated on license as Subsec. (b) and amended same by adding provisions re use of name or address of licensee and requirements to change the same, added Subsec. (c) re commissioner's authority to automatically suspend a license, designated existing provisions re surrender of license as Subsec. (d) and amended same by deleting “in person or by registered or certified mail” and adding reference to Sec. 36a-51(c), added Subsec. (e) requiring system filing or notification to commissioner of change in information most recently submitted to the system in connection with application or license, added Subsec. (f) requiring system filing or notification of commissioner of certain developments, added Subsec. (g) re submission of timely and accurate report on system, added Subsec. (h) re unique identifier of licensee and solicitation or advertisements by licensee, and made technical and conforming changes.
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Sec. 36a-659. (Formerly Sec. 36-372). Separate bank account for benefit of debtors. Books and records. Each licensee shall maintain a separate bank account for the benefit of debtors in which all payments received from debtors who are residents of Connecticut for the benefit of creditors shall be deposited. Every licensee shall keep and use in its business, books, accounts and records which will enable the commissioner to determine whether such licensee is complying with the provisions of sections 36a-655 to 36a-665, inclusive, and with the regulations adopted pursuant thereto. Every licensee shall preserve such books, accounts and records for at least seven years after making the final entry on any transaction recorded therein.
(1967, P.A. 882, S. 9; P.A. 94-122, S. 298, 340; P.A. 02-111, S. 44.)
History: P.A. 94-122 changed “his” to “the licensee's”, effective January 1, 1995; Sec. 36-372 transferred to Sec. 36a-659 in 1995; P.A. 02-111 changed “payments received from debtors” to “payments received from debtors who are residents of Connecticut”, deleted provision re payments to remain in bank account until remittance made to a debtor or creditor, and made technical changes.
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Sec. 36a-660. (Formerly Sec. 36-375). Licensee's duties. Written agreement required. Each licensee shall: (1) Provide the debtor with a written agreement that sets forth the services to be provided by the licensee and any fees to be charged for such services; (2) provide individualized credit counseling and budgeting assistance to the debtor without charge prior to entering into a written agreement with the debtor; (3) determine that the debtor has the financial ability to make the payments stated in the written agreement and that the payments stated in the written agreement are suitable for the debtor; (4) contact each creditor of the debtor to determine whether such creditors will accept payment of the debtor's debts as contemplated by the written agreement; (5) keep complete and adequate records during the term of the written agreement and for a period of seven years from the date of cancellation or completion of the written agreement with each debtor, which records shall contain complete information regarding the written agreement, extensions thereof, payments, disbursements and charges, and shall be open to inspection by the commissioner during normal business hours; (6) make remittances to creditors within a reasonable time after receipt of any funds, less prorated fees and costs, unless the reasonable payment of one or more of the debtor's obligations requires that such funds be held for a longer period so as to accumulate a sum certain; and (7) furnish the debtor a written statement of the debtor's account periodically, and no less than quarterly, and not later than the date ninety days after the date of completion of the adjustment of the debtor's debts, and shall furnish the debtor a verbal accounting at any time the debtor may request it during normal business hours.
(1967, P.A. 882, S. 12; P.A. 79-160, S. 6; P.A. 94-122, S. 299, 340; P.A. 09-208, S. 25.)
History: P.A. 79-160 required that remittances to creditors be made “within a reasonable time” rather than within 10 days, required that statement of account be likewise made within reasonable time after debtor requests it and in all cases within 90 days after adjustment completed rather than made each 90 days and deleted former Subsecs. (b) and (c) which required that budget analysis indicate debtor can meet requirements and that debtors have full benefit of any compromise of debt arranged by a licensee with any one or more creditors; P.A. 94-122 deleted “and his duly appointed agents” from Subdiv. (1) and changed “his” to “the debtor's” in Subdiv. (2), effective January 1, 1995; Sec. 36-375 transferred to Sec. 36a-660 in 1995; P.A. 09-208 added new Subdivs. (1) to (4) re licensee's duties, redesignated existing Subdivs. (1) to (3) as Subdivs. (5) to (7), amended redesignated Subdiv. (7) to require licensee to furnish debtor with written statement of the debtor's account no less than quarterly, changed “contract” to “written agreement” throughout, and made technical changes.
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Sec. 36a-661. (Formerly Sec. 36-376). Prohibited acts. No person who is required to be licensed and who is subject to the provisions of sections 36a-655 to 36a-665, inclusive, and no control person shall, directly or indirectly: (1) Purchase from a creditor any obligation of a debtor; (2) operate as a collection agent and as a licensee as to the same debtor's account; (3) execute any contract or agreement to be signed by the debtor unless the contract or agreement is fully and completely filled in and finished; (4) require the debtor to purchase other services or materials as a condition to enter into a written agreement for services; (5) pay any bonus or other consideration to any person for the referral of a debtor to the licensee's business or accept or receive any bonus, commission or other consideration for referring any debtor to any person for any reason; (6) advertise, display, distribute, broadcast or televise or permit to be displayed, advertised, distributed, broadcast or televised the licensee's services, rates or terms in any manner whatsoever wherein any false, misleading or deceptive statement or representation is made with regard to the services to be performed by the licensee or the charges to be made therefor; (7) employ any scheme, device or artifice to defraud or mislead any person in connection with a debt adjustment; (8) engage in any unfair or deceptive practice toward any person in connection with debt adjustment activities; (9) obtain property by fraud or misrepresentation; (10) fail to comply with the provisions of sections 36a-655 to 36a-665, inclusive, or regulations adopted under said sections, or any other state or federal law, including the rules and regulations thereunder; (11) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (12) fail to truthfully account for moneys belonging to a debtor; (13) fail to comply with any demand or requirement made by the commissioner under and within the authority of sections 36a-655 to 36a-665, inclusive; (14) collect any fee or charge or receive money or payment prohibited by section 36a-661a; or (15) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt adjustment laws and regulations.
(1967, P.A. 882, S. 13; P.A. 79-160, S. 7; P.A. 94-122, S. 300, 340; P.A. 09-208, S. 26; P.A. 17-233, S. 23.)
History: P.A. 79-160 deleted former Subdiv. (4) prohibiting receipt or charge of fee in form of promissory note or other promise to pay or receipt or acceptance of wage assignment, mortgage or other security for any fee, renumbering remaining Subsecs. accordingly; P.A. 94-122 changed “his” to “the licensee's”, effective January 1, 1995; Sec. 36-376 transferred to Sec. 36a-661 in 1995; P.A. 09-208 added new Subdiv. (4) re directly or indirectly requiring debtor to purchase other services or materials as a condition to enter into written agreement for services, and redesignated existing Subdivs. (4) and (5) as Subdivs. (5) and (6); P.A. 17-233 replaced “licensee shall” with “person who is required to be licensed and who is subject to the provisions of sections 36a-655 to 36a-665, inclusive, and no control person shall, directly or indirectly”, deleted “directly or indirectly” in Subdiv. (4), added Subdivs. (7) to (15) re prohibited acts, and made technical changes.
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Sec. 36a-661a. Written agreement voidable. Licensee claims for restitution. (a) If a debt adjuster licensee imposes a fee or other charge or receives money or other payments not specified in the written agreement with the debtor, the debtor may void the agreement and recover any fees paid.
(b) If any person is not licensed as required by section 36a-656, the written agreement is voidable by the debtor.
(c) If a debtor voids a written agreement under this section, the licensee shall not have a claim against the debtor for breach of contract or for restitution.
(P.A. 09-208, S. 27.)
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Sec. 36a-662. (Formerly Sec. 36-377). Regulations. The commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of sections 36a-655 to 36a-665, inclusive.
(1967, P.A. 882, S. 14; P.A. 94-122, S. 301, 340.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-377 transferred to Sec. 36a-662 in 1995.
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Sec. 36a-663. (Formerly Sec. 36-378). Exceptions. The provisions of sections 36a-655 to 36a-665, inclusive, shall not apply to the following: (1) Any attorney admitted to the practice of law in this state who engages in debt adjustment as an ancillary matter to such attorney's representation of a client; (2) any bank, fiduciary or financing or lending institution authorized to transact business in this state or any other state, which performs debt adjustment in the regular course of its principal business; (3) any title insurance or abstract company authorized to transact business in this state or any other state, while doing an escrow business; and (4) any person acting pursuant to any law of this state or of the United States or acting under the order of a court.
(1967, P.A. 882, S. 15; P.A. 73-357; P.A. 79-160, S. 8; P.A. 92-67, S. 8, 9; P.A. 11-216, S. 37.)
History: P.A. 73-357 added Subsec. (b) exempting bona fide nonprofit cooperative organizations offering debt adjustment services exclusively for members from chapter provisions except Secs. 36-364, 36-371, 36-372, 36-374, 36-375, 36-376, 36-377, 36-379 and 36-381; P.A. 79-160 deleted exemption from bona fide nonprofit, religious, fraternal or cooperative organization (Subsec. (a)(5) and Subsec. (b)) and exemption for employees of licensees when acting in the regular course of employment; P.A. 92-67 added exception for banks, fiduciaries or financing or lending institutions authorized to transact business in any other state; Sec. 36-378 transferred to Sec. 36a-663 in 1995; P.A. 11-216 amended Subdiv. (1) to replace “when engaged in such practice” with “who engages in debt adjustment as an ancillary matter to such attorney's representation of a client”.
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Sec. 36a-664. (Formerly Sec. 36-380). Surety bond required. Form of surety bond. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing. (a)(1) Except as provided in subdivision (2) of this subsection, no such license, and no renewal thereof, shall be granted unless the applicant has filed a surety bond with the commissioner written by a surety authorized to write such bonds in this state, provided any applicant that files applications for licenses for more than one location shall file a single bond. Except as provided in this subdivision, for every applicant, the principal amount of the bond shall be the greater of (A) forty thousand dollars, or (B) (i) twice the amount of the average daily balance of the payments received by the applicant from Connecticut debtors in connection with the applicant's debt adjustment activity during the preceding twelve months ending June thirtieth of each year, or (ii) in the case of an applicant that has acquired the business of a predecessor debt adjuster, the lesser of the amount of the predecessor's debt adjustment activity during such preceding period or one million dollars. The commissioner may require a larger bond if the commissioner determines that a licensee has engaged in a pattern of conduct resulting in bona fide consumer complaints of misconduct and that such increased bond is necessary for the protection of consumers, or may increase or decrease the amount of the bond based upon the applicant's or licensee's financial condition, business plan and the actual or estimated aggregate amount of payments and fees paid by Connecticut debtors to such applicant. To the extent not captured on a required report of condition on the system, each licensee shall submit to the commissioner, by September first of each year, in a form and manner as may be prescribed by the commissioner, a report containing information on the average daily balance of the payments received by the licensee from Connecticut debtors during the preceding twelve months ending June thirtieth of each such year.
(2) If a licensee or applicant for renewal of a license establishes that such licensee or applicant is unable to comply with the bond required by subdivision (1) of this subsection, it shall file a bond for the highest principal amount it can obtain, provided such amount shall be a minimum of forty thousand dollars, and the licensee or applicant for renewal shall, in lieu of the balance of the required amount of the bond, deposit a sum equal to the amount of the bond required by subdivision (1) of this subsection, less the amount of the bond filed with the commissioner, in cash or cash equivalents, with such bank, out-of-state bank that has a branch in this state, Connecticut credit union or federal credit union as such applicant or licensee may designate and the commissioner may approve, and subject to such conditions as the commissioner deems necessary for the protection of consumers and in the public interest. No licensee or applicant shall make such deposit until the depository institution and the licensee or applicant executes a deposit agreement satisfactory to the commissioner. The deposit agreement shall pledge the amount deposited to the commissioner and provide that the depository institution shall not release any of the moneys pledged without the authorization of the commissioner. The amount deposited shall secure the same obligation as would a surety bond filed under this section and shall be held at such banks or credit unions to cover claims during the period the license remains in full force and effect and the succeeding two years after such license has been surrendered, revoked or suspended or has expired. The licensee or applicant may collect interest on such deposit in accordance with its deposit agreement. The deposits made pursuant to this section shall be deemed, by operation of law, to be held in trust for the benefit of any debtor, who may be damaged by failure of a licensee or applicant to perform any written agreements or by the wrongful conversion of funds paid to a licensee in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.
(3) The form of any surety bond submitted pursuant to this section shall be approved by the Attorney General. Any surety bond filed under this section shall be conditioned upon the licensee faithfully performing any and all written agreements with debtors, truly and faithfully accounting for all funds received by the licensee in the licensee's capacity as a debt adjuster, and conducting such business consistent with the provisions of sections 36a-655 to 36a-665, inclusive. Any debtor who may be damaged by failure to perform any written agreements, or by the wrongful conversion of funds paid to a licensee, may proceed on any such surety bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on any such surety bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50. On and after April 1, 2019, the commissioner may also proceed on any restitution imposed pursuant to subsection (c) of section 36a-50, and any unpaid costs of examination of a license as determined pursuant to section 36a-65. The proceeds of any bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. Any bond required by this section shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under any such bond shall not exceed the principal amount of the bond or the limit of liability.
(b) The surety shall have the right to cancel any bond filed under subsection (a) of this section at any time by a written notice to the licensee and the commissioner, stating the date cancellation shall take effect. If such bond is issued electronically on the system, written notice of cancellation may be provided by the surety to the principal and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. No such bond shall be cancelled unless the surety notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless prior to such date the licensee submits a letter of reinstatement of the bond from the surety or a new bond or the licensee has surrendered the license. After a license has been automatically suspended, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(c) No licensee shall use, attempt to use or make reference to, either directly or indirectly, any word or phrase which states or implies that the licensee is endorsed, sponsored, recommended or bonded by the state.
(1967, P.A. 882, S. 17; P.A. 94-122, S. 302, 340; P.A. 02-111, S. 45; P.A. 04-69, S. 25; P.A. 06-35, S. 10; P.A. 09-23, S. 1; P.A. 09-208, S. 28; P.A. 11-216, S. 39; P.A. 18-173, S. 66.)
History: P.A. 94-122 changed “he” to “the licensee”, effective January 1, 1995; Sec. 36-380 transferred to Sec. 36a-664 in 1995; P.A. 02-111 added new Subsec. (a) re surety bond, designated existing provisions as Subsec. (b) and, in said Subsec., changed “bonded, approved, bonded by the state or approved by the state” to “endorsed, sponsored, recommended or bonded by the state”; P.A. 04-69 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and amending same to add exception for provisions of Subdiv. (2) and reference to “surety” bond, to delete provision re approval of form by Attorney General, to replace “July thirty-first” with “March thirty-first” and provision re submission of bond or renewal thereof with provision re submission of evidence that bond complies with subdivision, to delete former requirements for bond and proceeding thereon and to make technical changes, and by adding Subdiv. (2) re supplemental bond or insurance policy and Subdiv. (3) re requirements for bond or insurance policy and proceeding thereon, added new Subsec. (b) re cancellation of bond or insurance policy and automatic suspension of license, redesignated existing Subsec. (b) as Subsec. (c) and amended same by adding “or insured”; P.A. 06-35 amended Subsec. (a)(1)(B) to substitute July thirty-first for March thirty-first of each year as date marking end of 12-month period, effective May 8, 2006; P.A. 09-23 amended Subsec. (a)(1)(B) by designating existing provision as Subsec. (a)(1)(B)(i) and replacing “highest total payments” with “average daily balance of the payments” therein, by adding Subpara. (B)(ii) re applicants that acquired business of a predecessor debt adjuster and providing that commissioner may require larger bond upon certain findings and may increase or decrease amount of bond, and by replacing requirement that licensees submit evidence that bond complies with subdivision with requirement that licensees submit annual report containing the average daily balance of payments received from Connecticut debtors, amended Subsec. (a)(2) by adding provision re depositing cash or cash equivalents with certain depository institutions and making conforming changes, and amended Subsecs. (a)(3), (b) and (c) by removing provisions re insurance policies, effective July 1, 2009; P.A. 09-208 amended Subsec. (b) by requiring commissioner to provide written notice to licensee of date a bond or insurance policy cancellation shall take effect, by providing that commissioner shall automatically suspend a license unless licensee submits letter of reinstatement prior to date on which license suspension takes effect, authorizing commissioner to require licensee to take or refrain from taking certain actions, and by making technical changes, effective July 7, 2009; P.A. 11-216 amended Subsec. (b) to delete references to insurance company and insurance policy, effective July 1, 2011; P.A. 18-173 amended Subsec. (a)(1) by replacing “July thirty-first” with “June thirtieth”, adding “To the extent not captured on a required report of condition on the system,”, adding “in a form and manner as may be prescribed by the commissioner,”, deleting provision re report to be subscribed and affirmed as true and in form prescribed by commissioner, amended Subsec. (a)(3) by adding provision re commissioner's authority to proceed on restitution imposed pursuant to Sec. 36a-50(c) and certain unpaid costs, amended Subsec. (b) by adding provision re written notice to commissioner for cancellation of bond, adding provisions re cancellation of bond issued electronically on the system, designating existing provisions re notice of automatic suspension as Subdiv. (1), designating existing provision re requiring licensee to take or refrain from taking action as Subdiv. (2), and amending same by replacing “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”, and made technical and conforming changes.
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Sec. 36a-665. (Formerly Sec. 36-381). Penalties. (a) Any person who engages in debt adjustment without a license as required by sections 36a-655 to 36a-665, inclusive, shall be fined not more than one thousand dollars or imprisoned more than one year, or both, for each violation. Each day on which a person engages in debt adjustment without a license as required by said sections shall be construed as a separate violation.
(b) Any person who violates any other provision of sections 36a-655 to 36a-665, inclusive, shall be fined not more than one thousand dollars for the first offense, and for each subsequent offense shall be fined not more than one thousand dollars and imprisoned not less than thirty days nor more than one year.
(1967, P.A. 882, S. 18; P.A. 79-160, S. 9.)
History: P.A. 79-160 made no change; Sec. 36-381 transferred to Sec. 36a-665 in 1995.
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Secs. 36a-666 to 36a-670. Reserved for future use.
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Sec. 36a-671. Definitions. Debt negotiation. License application, requirements and fees. Authority of commissioner to conduct criminal history records checks and deny application for license. Abandonment of application. License renewal. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. License not assignable or transferable. Use of name. Surrender of license. Required system filing or notice to commissioner. Unique identifier. Advertisements of licensee. (a) As used in this section and sections 36a-671a to 36a-671f, inclusive:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485.
(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee engages or offers to engage in debt negotiation.
(3) “Control person” has the same meaning as provided in section 36a-485.
(4) “Debt negotiation” means, for or with the expectation of a fee, commission or other valuable consideration, assisting a debtor in negotiating or attempting to negotiate on behalf of a debtor the terms of a debtor's obligations with one or more mortgagees or creditors of the debtor, including the negotiation of short sales of residential property or foreclosure rescue services.
(5) “Debtor” means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.
(6) “Foreclosure rescue services” means services related to or promising assistance in connection with (A) avoiding or delaying actual or anticipated foreclosure proceedings concerning residential property, or (B) curing or otherwise addressing a default or failure to timely pay with respect to a mortgage loan secured by residential property, and includes, but is not limited to, the offer, arrangement or placement of a mortgage loan secured by residential property or other extension of credit when those services are advertised, offered or promoted in the context of foreclosure related services.
(7) “Main office” has the same meaning as provided in section 36a-485.
(8) “Mortgagee” means the original lender under a mortgage loan secured by residential property or its agents, successors or assigns.
(9) “Mortgagor” means a debtor who is an owner of residential property, including, but not limited to, a single-family unit in a common interest community, who is also the borrower under a mortgage encumbering such residential property.
(10) “Residential property” means a one-to-four family owner-occupied real property.
(11) “Short sale” means the sale of residential property by a mortgagor for an amount less than the outstanding balance owed on the loan secured by such property where, prior to the sale, the mortgagee or an assignee of the mortgagee agrees to accept less than the outstanding loan balance in full or partial satisfaction of the mortgage debt and the proceeds of the sale are paid to the mortgagee or an assignee of the mortgagee.
(12) “Unique identifier” has the same meaning as provided in section 36a-485.
(b) No person shall engage or offer to engage in debt negotiation in this state unless such person has first obtained a license for its main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-671 to 36a-671f, inclusive. Any activity subject to licensure pursuant to sections 36a-671 to 36a-671f, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2. A person is engaging in debt negotiation in this state if such person: (1) Has a place of business located within this state; (2) has a place of business located outside of this state and the debtor is a resident of this state who negotiates or agrees to the terms of the services in person, by mail, by telephone or via the Internet; or (3) has its place of business located outside of this state and the services concern a debt that is secured by property located within this state.
(c) An application for an original or renewal debt negotiation license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-671 to 36a-671f, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the applicant, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction. As part of the application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager, and (2) in accordance with section 36a-24b (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. The commissioner may deem an application for a debt negotiation license abandoned if the applicant fails to respond to any request for information required under sections 36a-671 to 36a-671f, inclusive, or any regulations adopted pursuant to said sections 36a-671 to 36a-671f, inclusive. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-671 to 36a-671f, inclusive.
(d) (1) If the commissioner finds, upon the filing of an application for a debt negotiation license, that: (A) The financial responsibility, character, reputation, integrity and general fitness of the applicant and any control person, qualified individual and branch manager of the applicant are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-671 to 36a-671f, inclusive; (B) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant; and (C) the applicant has the bond required by section 36a-671d, the commissioner may thereupon issue the applicant a debt negotiation license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of the applicant has been convicted of any misdemeanor involving any aspect of the debt negotiation business or any felony or has made a material misstatement in the application. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.
(2) The minimum standards for renewal of a debt negotiation license shall include the following: (A) The applicant continues to meet the minimum standards for license issuance under subdivision (1) of this subsection; (B) the applicant has paid all required fees for renewal of the license; and (C) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a debt negotiator failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(e) Each applicant for a debt negotiation license shall pay to the system any required fees or charges and a license fee of eight hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a debt negotiation license shall pay to the system any required fees or charges and a renewal fee of eight hundred dollars.
(f) The commissioner may automatically suspend a license if the licensee receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-671a and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(g) No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by subsection (e) of this section shall be nonrefundable.
(h) The license shall not be transferable or assignable. Any change in any control person of the license, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval.
(i) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address specified on the license issued by the commissioner. A licensee may change the name of the licensee or the address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, the licensee files such change with the system and provides to the commissioner a bond rider, endorsement or addendum, as applicable, and the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.
(j) The commissioner may automatically suspend any license for a violation of subsection (h) or (i) of this section. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-671a and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
(k) Not later than fifteen days after the date a licensee ceases to engage in the business of debt negotiation in this state for any reason, including, but not limited to, a business decision to terminate operations in this state, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner its license for each location in which such licensee has ceased to engage in such business in accordance with subsection (c) of section 36a-51.
(l) Except as otherwise specified in subsections (h) and (i) of this section, each debt negotiation applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file on the system any change in the information most recently submitted to the system by such applicant, licensee, control person, qualified individual or branch manager in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days from the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change. A debt negotiation licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following events:
(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(2) Filing of a criminal indictment against the licensee for activities related to debt negotiation, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; or
(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.
(m) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each debt negotiation licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(n) The unique identifier of any person licensed under section 36a-671 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under section 36a-671: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-671 to 36a-671f, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(P.A. 09-208, S. 29; 09-209, S. 41; P.A. 11-216, S. 40; P.A. 14-7, S. 9; P.A. 17-233, S. 24; P.A. 18-173, S. 67.)
History: P.A. 09-209 redefined “mortgagor” in Subsec. (a)(4) and made a technical change in Subsec. (b)(3); P.A. 11-216 amended Subsec. (b) to delete references to contract and eliminate requirement re debtor being physically present in this state, amended Subsec. (c) to delete provision re ten-year period re history of criminal convictions, add provision authorizing commissioner to conduct a state and criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant and add provisions re abandonment of application, and amended Subsec. (d) to delete provision re ten-year period re misdemeanor and felony convictions; P.A. 14-7 replaced references to Sec. 36a-671d with references to Sec. 36a-671e in Subsecs. (a), (c) and (d), effective May 8, 2014; P.A. 17-233 amended Subsec. (a) to replace “36a-671e” with “36a-671f”, add new Subdiv. (1) defining “advertise” or “advertising”, add new Subdiv. (2) defining “control person”, redesignate existing Subdivs. (1) and (2) as Subdivs. (3) and (4), add new Subdiv. (5) defining “foreclosure rescue services”, redesignate existing Subdivs. (3) and (4) as Subdivs. (6) and (7), add new Subdiv. (8) defining “residential property”, redesignate existing Subdiv. (5) as Subdiv. (9), delete former Subdivs. (6) and (7), and make technical changes, and amended Subsec. (d)(1)(D) to replace “36a-671e” with “36a-671f”; P.A. 18-173 amended Subsec. (a) by adding new Subdiv. (2) re definition of “branch office”, redesignating existing Subdivs. (2) to (5) as new Subdivs. (3) to (6), adding new Subdiv. (7) re definition of “main office”, redesignating existing Subdivs. (6) to (9) as Subdivs. (8) to (11), adding Subdiv. (12) re definition of “unique identifier”, amended Subsec. (b) by replacing provisions re filing application for license with commissioner and notifying commissioner of change in applicant's business with provisions re obtaining license for main office and each branch office and activity to be conducted from office located in a state, amended Subsec. (c) by replacing provisions re application to be in writing on form provided by commissioner, information to be included and commissioner's authority to conduct criminal history records check with provisions re application to be processed on the system in form prescribed by commissioner, information to be furnished to the system, and commissioner's authority to conduct criminal history records checks, require submission of fingerprints and investigate financial condition of person, replacing references to Sec. 36a-671e with references to Sec. 36a-671f, and replacing provision re commissioner to notify applicant in writing with provision re commissioner to notify applicant on the system, amended Subsec. (d) by designating existing provisions re commissioner's findings as new Subdiv. (1) and amending same by redesignating existing Subdivs. (1) and (2) as Subparas. (A) and (B), deleting former Subpara. (A) designator, deleting former Subparas. (B) to (D) re partners, members, officers, directors and principal employees, adding references to control person, qualified individual and branch manager, adding new Subpara. (C) re applicant having required bond, deleting provisions re license not transferrable, written notice to commissioner required for change of location, licensee not to use any name unless approved, replacing “partner, member, officer, director of principal employee” with “control person, qualified individual or branch manager”, and adding provision re making material misstatement in application, deleting provision re withdrawal of application, adding new Subdiv. (2) re minimum standards for renewal of debt negotiation license, substantially amended Subsec. (e) by replacing provisions re application fees, and renewal of license with provisions re payment of required fees or charges to system, expiration of license and renewal of license, substantially amended Subsec. (f) by replacing provisions re check for application fee dishonored and automatic suspension of license with provisions re automatic suspension of license if deficiency on system indicating payment returned, amended Subsec. (g) by adding provision re application denied or withdrawn, added Subsec. (h) re license not transferable or assignable, filing of advance change notice on the system, adding Subsec. (i) re licensee's use of name other than legal name or approved fictitious name, use of name or address specified on license, and change to name or address, added Subsec. (j) re automatic suspension of license, added Subsec. (k) re surrender of license, added Subsec. (l) re change in information to be filed on the system or notification to commissioner re occurrence of certain events, added Subsec. (m) re filing or submission of information on the system, timely submission to the system of accurate reports of condition, added Subsec. (n) re solicitations and advertisements, and made technical and conforming changes.
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Sec. 36a-671a. Suspension, revocation or refusal to renew license or taking other action. Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, in accordance with the provisions of section 36a-51, for any reason that would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-671 to 36a-671f, inclusive, or if the commissioner finds that the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misappropriated funds; (3) violated any provision of this title or of any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's debt negotiation business; or (4) failed to perform any agreement with a debtor.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate the provisions of sections 36a-671 to 36a-671f, inclusive, or any regulation adopted thereunder; (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation; or (3) any licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, misappropriated funds or failed to perform any agreement with a debtor, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52. For purposes of sections 36a-671 to 36a-671f, inclusive, each engagement and each offer to engage in debt negotiation shall constitute a separate violation.
(c) Upon complaint, the commissioner may review any fees or charges assessed by a person engaging or offering to engage in debt negotiation services and order the reduction of such fees or charges or repayment of such amount of the fees or charges that the commissioner deems excessive, taking into consideration the fees that other persons performing similar debt negotiation services charge for such services and the benefit to the consumer of such services. In conducting an investigation pursuant to this subsection, the commissioner shall have the same authority as specified in section 36a-17.
(d) The commissioner may order a licensee to remove any individual conducting business under sections 36a-671 to 36a-671f, inclusive, from office and from employment or retention as an independent contractor in the debt negotiation business in this state in accordance with section 36a-51a.
(e) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(P.A. 09-208, S. 33; P.A. 11-216, S. 42; P.A. 14-7, S. 10; P.A. 18-173, S. 68.)
History: P.A. 11-216 amended Subsec. (a) to add reference to Sec. 36a-671e, amended Subsec. (b) to add references to Sec. 36a-671e and add provision re each engagement and offer to engage in debt negotiation to constitute a separate violation, and amended Subsec. (c) to make technical changes, effective July 13, 2011; P.A. 14-7 amended Subsec. (a) to replace reference to Sec. 36a-671d with reference to Sec. 36a-671e, effective May 8, 2014; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-671e with reference to Sec. 36a-671f, replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, replacing reference to provisions of Secs. 36a-671 to 36a-671e with reference to provisions of title or any regulation or order adopted or issued pursuant to title in Subdiv. (3), amended Subsec. (b) by designating existing provisions re person violating provisions of sections as Subdiv. (1) and amending same by replacing reference to Sec. 36a-671e with reference to Sec. 36a-671f, and adding reference to regulation adopted under section, adding Subdiv. (2) re person is, was or would be cause of violation, designating existing provisions re fraud, misappropriated funds or failure to perform agreement as Subdiv. (3) and amending same by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, and replacing reference to Sec. 36a-671e with reference to Sec. 36a-671f, added Subsec. (d) re commissioner's authority to order licensee to remove individual from office, employment or retention as independent contractor, added Subsec. (e) re commissioner's authority to issue temporary order, and made technical changes.
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Sec. 36a-671b. Debt negotiation service contract required. Fees, commissions and other valuable consideration. Noncompliant contracts voidable by consumer. (a) A debt negotiator shall provide to each debtor a contract that shall include a complete, detailed list of services to be performed, the costs of such services and the results to be achieved. Each debt negotiation service contract shall contain (1) a statement certifying that the person offering debt negotiation services has reviewed the consumer's debt, and (2) an individualized evaluation of the likelihood that the proposed debt negotiation services would reduce the consumer's debt or debt service or, if appropriate, prevent the consumer's residential home from being foreclosed. Each contract shall allow the consumer to cancel or rescind such contract within three business days after the date on which the consumer signed the contract. Such contract shall contain a clear and conspicuous caption that shall read, “Debtor's three-day right to cancel”, along with the following statement: “If you wish to cancel this contract, you may cancel by mailing a written notice by certified or registered mail to the address specified below. The notice shall state that you do not wish to be bound by this contract and must be delivered or mailed before midnight of the third business day after you sign this contract.” As used in this section, “business day” has the same meaning as provided in section 42-134a.
(b) No person offering debt negotiation services may receive a fee, commission or other valuable consideration for the performance of any service the person offering debt negotiation services has agreed to perform for any consumer until the person offering debt negotiation services has fully performed such service. A person offering debt negotiation services may receive reasonable periodic payments as services are rendered, provided such payments are clearly stated in the contract. The commissioner may establish a schedule of maximum fees that a debt negotiator may charge for specific services.
(c) Any contract that does not comply with the provisions of this section shall be voidable by the consumer.
(P.A. 09-208, S. 32; P.A. 14-122, S. 160.)
History: P.A. 14-122 made technical changes in Subsec. (a).
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Sec. 36a-671c. Exceptions. The provisions of sections 36a-671 to 36a-671d, inclusive, shall not apply to the following: (1) Any attorney admitted to the practice of law in this state who engages or offers to engage in debt negotiation as an ancillary matter to such attorney's representation of a client; (2) any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union; (3) any wholly-owned subsidiary of any such bank or credit union; (4) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union; (5) any person licensed as a debt adjuster pursuant to sections 36a-655 to 36a-665, inclusive, while performing debt adjuster services; (6) any person acting under the order of a court; or (7) any bona fide nonprofit organization organized under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.
(P.A. 09-208, S. 31; P.A. 11-216, S. 43; P.A. 14-89, S. 22.)
History: P.A. 11-216 amended Subdiv. (1) to replace “when engaged in such practice” with “who engages or offers to engage in debt negotiation as an ancillary matter to such attorney's representation of a client”; P.A. 14-89 deleted proviso in Subdiv. (2), added new Subdiv. (3) re wholly-owned subsidiary and new Subdiv. (4) re operating subsidiary and redesignated existing Subdivs. (3) to (5) as Subdivs. (5) to (7).
Subdiv. (1) re inapplicability of provisions to attorneys offends the separation of powers provision of Art. 2 of the Connecticut Constitution and is unenforceable with respect to Connecticut attorneys engaged in the bona fide practice of law; assuming the facts alleged in the complaint by plaintiff to be true, the debt negotiation services provided by plaintiff are inextricably bound together with the practice of law by licensed Connecticut attorneys and their regulation falls under the exclusive authority of the Judicial Branch. 318 C. 652.
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Sec. 36a-671d. Surety bond required. Form of surety bond. Cancellation of bond. Automatic suspension of license. Notice. Opportunity for hearing. Determination of penal sum. Aggregate amount of residential loans. (a)(1) No debt negotiation license, and no renewal thereof, shall be granted unless the applicant has filed the surety bond required by this section, which bond shall be written by a surety authorized to write such bonds in this state.
(2) No application for a debt negotiation license for a main office, and no renewal of such a license, shall be granted unless the applicant has filed a single surety bond with the commissioner in an aggregate amount of fifty thousand dollars, or such other amount required by subdivision (4) of this subsection. No application for a debt negotiation license branch office, and no renewal of such a license, shall be granted unless the applicant has identified such branch office as a bonded location by addendum to the main office surety bond required by this section.
(3) Each debt negotiation licensee shall file a single surety bond that complies with the requirements of this section in connection with the main office license with the commissioner in an aggregate amount of fifty thousand dollars or such other amount required in subdivision (4) of this subsection, which bond shall identify any licensed branch office as a bonded location on such bond by addendum.
(4) In the case of a debt negotiation licensee engaging or offering to engage in the business of negotiating residential mortgage loans on behalf of mortgagors, such debt negotiation licensee shall file a bond in the penal sum amount set forth in subsection (e) of this section based on the aggregate dollar amount of the residential mortgage loans negotiated or offered to be negotiated by its sponsored mortgage loan originator licensees. The principal on a bond required by this subdivision shall file quarterly reports on the system reflecting residential mortgage loan volume in accordance with subsection (g) of this section and subsection (m) of section 36a-671 to confirm that it maintains the required penal sum in the amount required by this subdivision.
(5) Each debt negotiation licensee shall file with the commissioner such information as the commissioner may require to confirm that the penal sum of the bond remains consistent with the amount required by this section. The principal shall file, as the commissioner may require, any bond rider or endorsement to the surety bond on file with the commissioner to reflect any changes necessary to maintain the surety bond coverage required by this section.
(b) The form of any surety bond submitted pursuant to subsection (a) of this section shall be approved by the Attorney General. Any surety bond filed under subsection (a) of this section shall be conditioned upon the debt negotiation licensee and any sponsored mortgage loan originator licensee faithfully performing any and all written agreements or commitments with or for the benefit of debtors and mortgagors, as applicable, truly and faithfully accounting for all funds received from a debtor or mortgagor by the principal or a mortgage loan originator sponsored by the principal in the principal's capacity as debt negotiation licensee, and conducting such business consistent with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a, 36a-534b and 36a-671 to 36a-671f, inclusive. Any debtor or mortgagor who may be damaged by a failure to perform any written agreements, by the wrongful conversion of funds paid by a debtor or mortgagor to a debt negotiation licensee or mortgage loan originator licensee, or by conduct inconsistent with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a, 36a-534b and 36a-671 to 36a-671f, inclusive, may proceed on any such surety bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on any such surety bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65 and effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50. The proceeds of any bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. Any bond required by this section shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under any such bond shall not exceed the penal amount of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond. Any mortgagor or prospective mortgagor who may be damaged by a failure of the debt negotiation licensee or mortgage loan originator licensee to satisfy a judgment against the licensee arising from the negotiation of or offer to negotiate a nonprime home loan, as defined in section 36a-760, may proceed on such bond against the principal or surety on such bond, or both, to recover the amount of the judgment.
(c) The surety shall have the right to cancel any bond written or issued under subsection (a) of this section at any time by a written notice to the debt negotiation licensee and the commissioner stating the date cancellation shall take effect. If such bond is issued electronically on the system, written notice of cancellation may be provided by the surety to the licensee and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. No such bond shall be cancelled unless the surety notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the debt negotiation licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the licenses of the debt negotiation licensee on such date and inactivate the license of any sponsored mortgage loan originator, unless prior to such date the debt negotiation licensee submits a letter of reinstatement of the bond from the surety or a new bond, surrenders all licenses or, in the case of a mortgage loan originator sponsored by a debt negotiation licensee, the sponsorship has been terminated and a new sponsor has been requested and approved. After a license has been automatically suspended, the commissioner shall (1) give the debt negotiation licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the debt negotiation licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(d) No licensee shall use, attempt to use or make reference to, either directly or indirectly, any word or phrase that states or implies that the licensee is endorsed, sponsored, recommended, bonded or insured by the state.
(e) The penal sum of the bond required by subdivision (4) of subsection (a) of this section shall be determined as follows:
(1) An initial applicant for a debt negotiation license shall file a bond in a penal sum of fifty thousand dollars.
(2) A debt negotiation licensee exempt from licensure as a mortgage lender, mortgage correspondent lender or mortgage broker pursuant to subdivision (4) of subsection (a) of section 36a-487 and sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subdivision (2) of subsection (a) and subsection (d) of section 36a-487 shall file a bond with a penal sum in the following amount:
(A) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July thirty-first of the current year is less than thirty million dollars, the penal sum of the bond shall be fifty thousand dollars;
(B) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July thirty-first of the current year is thirty million dollars or more but less than fifty million dollars, the penal sum of the bond shall be one hundred thousand dollars; and
(C) If the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated by all sponsored mortgage loan originators during the preceding twelve-month period ending July thirty-first of the current year is fifty million dollars or more, the penal sum of the bond shall be one hundred fifty thousand dollars.
(f) For purposes of subsection (e) of this section, “the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated” means the aggregate underlying dollar amount of all residential mortgage loans for which a sponsored mortgage loan originator provides debt negotiation services.
(g) Financial information necessary to verify the aggregate amount of residential mortgage loans negotiated or offered to be negotiated shall be filed with the commissioner as the commissioner may require, and shall be reported on the system at such time and in such form as the system may require. The commissioner may require a change in the penal sum of the bond if the commissioner determines at any time that the aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated warrants a change in the penal sum of the bond.
(h) The commissioner may adopt regulations in accordance with chapter 54 with respect to the requirements for such surety bonds.
(P.A. 09-208, S. 30; P.A. 11-216, S. 44; P.A. 14-7, S. 3, 4; 14-122, S. 161; P.A. 18-173, S. 69.)
History: P.A. 11-216 amended Subsec. (a) to make a conforming change in Subdiv. (1) and add new Subdivs. (2) to (4) re surety bond requirements, redesignated existing Subsec. (a)(2) as Subsec. (b) and amended same to add references to debt negotiation and sponsored mortgage loan originator licensees, require a true and faithful accounting for all funds received from a debtor or mortgagor, add references to Secs. 36a-485 to 36a-498f, 36a-534a and 36a-534b, to permit debtor or mortgagor damaged by wrongful conversion of funds paid by a debtor or mortgagor to a debt negotiation or mortgage loan originator licensee to proceed on surety bond to recover damages, to permit commissioner to collect unpaid costs of examination of a licensee, to require principal to notify commissioner of commencement of action on the bond, to permit commissioner to require filing of a new bond when action is commenced, to permit any negotiator or prospective mortgagor damaged by failure to satisfy a judgment to proceed on surety to recover amount of judgment and to make conforming changes, redesignated existing Subsec. (b) as Subsec. (c) and amended same to add references to debt negotiation and mortgage loan originator licensees and make conforming changes, redesignated existing Subsec. (c) as Subsec. (d), and added Subsec. (e) re penal sum of bond, Subsec. (f) re aggregate dollar amount of all residential mortgage loans negotiated or offered to be negotiated, Subsec. (g) re financial information required to verify aggregate amount and Subsec. (h) re regulations; P.A. 14-7 amended Subsec. (a)(4) to replace reference to Subsec. (f) with reference to Subsec. (e) and replace reference to Subsec. (h) with reference to Subsec. (g), amended Subsec. (b) to replace references to Sec. 36a-671d with references to Sec. 36a-671e and amended Subsec. (e)(2) to replace reference to Sec. 36a-487(c) with reference to Sec. 36a-487(d), effective May 8, 2014; P.A. 14-122 made a technical change in Subsec. (f); P.A. 18-173 amended Subsec. (a) by replacing provision re principal on bond to confirm annually that it maintains required penal sum with provision re principal on bond to file quarterly reports on the system to confirm it maintains required penal sum, designating existing provisions re licensee to file information with commissioner as Subdiv. (5) and amending same by deleting reference to September 1, 2012 and each September first thereafter, and deleting reference to Subsec. (g), amended Subsec. (b) by replacing references to Sec. 36a-498f with references to Sec. 36a-498e, replacing references to Sec. 36a-671e with references to Sec. 36a-671f, and adding “and effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50”, amended Subsec. (c) by adding references to commissioner, adding provision re notice of cancellation if bond issued electronically, designating existing provisions re notice of automatic suspension as Subdiv. (1), designating existing provisions re commissioner's authority to require licensee to take or refrain from taking action as Subdiv. (2), and amending same to replace “action as, in the opinion of the commissioner, will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”, amended Subsec. (e)(2) by adding provision re exemption from licensure as mortgage lender, mortgage correspondent lender or mortgage broker, and amended Subsec. (g) by deleting reference to Sec. 36a-485, and made technical and conforming changes.
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Sec. 36a-671e. Requirements re mortgage loan originator license. (a) No person licensed to engage or offer to engage in debt negotiation or exempt from such licensure shall permit any individual to engage or offer to engage in debt negotiation of a residential mortgage loan on behalf of a mortgagor for compensation or gain or with the expectation of compensation or gain unless such individual is licensed as a mortgage loan originator under section 36a-489 or exempt from such licensure under subdivision (2) of subsection (b) of section 36a-486.
(b) No individual shall engage or offer to engage in debt negotiation of a residential mortgage loan on behalf of a mortgagor for compensation or gain or with the expectation of compensation or gain without first obtaining and maintaining annually a license as a mortgage loan originator under section 36a-489 unless such individual is exempt from such licensure under subdivision (2) of subsection (b) of section 36a-486.
(c) Any individual required to obtain and annually maintain a license as a mortgage loan originator under subsection (b) of this section shall comply with all requirements imposed on a mortgage loan originator licensee under chapter 668.
(P.A. 11-216, S. 41.)
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Sec. 36a-671f. Prohibited practices. No person who is required to be licensed and who is subject to the provisions of this section and sections 36a-671 to 36a-671e, inclusive, and no control person, shall, directly or indirectly: (1) Employ any scheme, device or artifice to defraud or mislead any person in connection with a debt negotiation; (2) engage in any unfair or deceptive practice toward any person in connection with a debt negotiation; (3) obtain property by fraud or misrepresentation; (4) fail to comply with the provisions of sections 36a-671 to 36a-671e, inclusive, or regulations adopted under said sections, or any other state or federal law, including the rules and regulations thereunder; (5) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (6) fail to truthfully account for moneys belonging to a debtor or mortgagor; (7) fail to comply with any demand or requirement made by the commissioner under and within the authority of sections 36a-671 to 36a-671e, inclusive; (8) make, in any manner, any false or deceptive statement or representation in connection with a debt negotiation or engage in bait and switch advertising; or (9) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable debt negotiation laws and regulations.
(P.A. 17-233, S. 25.)
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Secs. 36a-672 to 36a-674. Reserved for future use.
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PART III*
CONNECTICUT TRUTH-IN-LENDING ACT
*Annotations to former chapter 657:
Cited. 205 C. 319; 223 C. 80.
Cited. 12 CA 670; 18 CA 16; 27 CA 628.
Cited. 34 CS 154; 35 CS 508. Since extension of credit was to other than a natural person, transaction was not a consumer credit transaction and disclosure provisions of chapter did not apply. 36 CS 158. Cited. Id., 183; Id., 506. Federally chartered banking institution subject to Federal Truth-in-Lending Act. Id., 512. Cited. Id., 629; 37 CS 606.
Sec. 36a-675. (Formerly Sec. 36-416). Short title: Connecticut Truth-in-Lending Act. Sections 36a-675 to 36a-686, inclusive, shall be known and may be cited as the “Connecticut Truth-in-Lending Act”.
(1969, P.A. 454, S. 24; P.A. 15-235, S. 1.)
History: Sec. 36-416 transferred to Sec. 36a-675 in 1995; (Revisor's note: In 1997 the Revisors editorially reinstated the word “shall” before the words “be known and may be cited” to correct a clerical error in the preparation of the 1995 revision); P.A. 15-235 added reference to Sec. 36a-686 and replaced “Truth-in-Lending Act” with “Connecticut Truth-in-Lending Act”, effective August 1, 2015.
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Sec. 36a-676. (Formerly Sec. 36-393). Definitions. (a) As used in part II of chapter 668, the Connecticut Truth-in-Lending Act, sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:
(1) “Consumer Credit Protection Act” means 15 USC Chapter 41, Subchapter I, as from time to time amended, and includes regulations adopted by the Federal Reserve Board or the Bureau of Consumer Financial Protection pursuant to said act;
(2) “Creditor” means “creditor” as defined in 15 USC 1602, as amended from time to time, but does not include any department or agency of the United States; and
(3) “Lessor” means “lessor” as defined in 15 USC 1667, as amended from time to time, but does not include any department or agency of the United States.
(b) Any word or phrase in the Connecticut Truth-in-Lending Act that is not defined in said act but is defined in the Consumer Credit Protection Act has the meaning set forth in the Consumer Credit Protection Act.
(1969, P.A. 454, S. 1; P.A. 76-169, S. 1; P.A. 77-614, S. 161, 610; P.A. 80-482, S. 260, 345, 348; P.A. 81-158, S. 1, 17; P.A. 82-18, S. 2, 4; P.A. 83-136, S. 1, 2; P.A. 85-613, S. 104, 154; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 40; P.A. 90-230, S. 55, 101; P.A. 92-12, S. 81; P.A. 94-122, S. 303, 340; P.A. 11-110, S. 5; P.A. 14-122, S. 162; P.A. 15-235, S. 2.)
History: P.A. 76-169 redefined “creditor” to include credit card issuers and to specify credit “payable by agreement in more than four installments”; P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation, reflecting incorporation of banking department as division within that department, effective January 1, 1979; P.A. 80-482 abolished department of business regulation and restored banking division to prior status as independent department, thus allowing omission of reference to business regulation department in commissioner's title; P.A. 81-158 redefined the terms to make them conform to the definitions in the Consumer Credit Protection Act, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Sec. 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 83-136 corrected reference to public law in Subsec. (i), substituting “97-320” for “96-221”; P.A. 85-613 made technical changes; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-65 made a technical change by adding U.S. code citations; P.A. 90-230 made technical changes; P.A. 92-12 redesignated Subsecs. and Subdivs.; P.A. 94-122 deleted the definitions of “commissioner”, “organization”, and “person” and alphabetized the remainder, effective January 1, 1995; Sec. 36-393 transferred to Sec. 36a-676 in 1995; P.A. 11-110 amended Subsec. (a)(2) to delete reference to Public Law 90-321, add references to Consumer Credit Protection Act and Bureau of Consumer Financial Protection and make a technical change, effective July 21, 2011; P.A. 14-122 made a technical change in Subsec. (b); P.A. 15-235 amended Subsec. (a) to delete former Subdiv. (1) defining “consumer”, to redesignate existing Subdiv. (2) as Subdiv. (1), to delete former Subdivs. (3) and (4) defining “credit” and “credit card, cardholder and card issuer”, to redesignate existing Subdiv. (5) as Subdiv. (2), to delete former Subdiv. (6) defining “credit sale”, to redesignate existing Subdiv. (7) as Subdiv. (3), to delete former Subdiv. (8) defining “open-end credit plan” and to make technical changes, and amended Subsec. (b) to make technical changes, effective August 1, 2015.
Annotations to former section 36-393:
Cited. 158 C. 543.
Cited. 33 CS 203. Nonstock corporation falls within definition of organization; since party to whom credit was offered was a nonstock corporation and not a “natural person”, transaction was not a consumer credit transaction subject to provisions of chapter. 36 CS 158. Cited. Id., 506.
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Sec. 36a-677. (Formerly Sec. 36-393a). State policy. (a) It is the policy of this state to (1) enhance economic stabilization and strengthen competition among the various businesses engaged in the extension of consumer credit or in the leasing of consumer goods and to serve the interests of consumers of credit and leased goods by requiring meaningful disclosure of credit and lease terms so that prospective debtors and lessees have the opportunity to compare more readily the various credit and lease terms available to them and the opportunity to avoid the uninformed use of credit and leases, and (2) protect consumers against inaccurate and unfair credit billing practices.
(b) It is also the policy of this state to provide that the commissioner administer and enforce the requirements for such disclosures of credit and lease terms for transactions in this state.
(c) It is also the policy of this state to avoid duplication between the federal government and the government of this state in the administration and enforcement of statutes which are designed to accomplish an identical purpose, and therefore to obtain an exemption from the Consumer Credit Protection Act by subjecting various classes of credit and lease transactions in this state to requirements which are substantially similar to those imposed under said federal act.
(P.A. 81-158, S. 2, 17; P.A. 82-18, S. 2, 4; 82-472, S. 114, 183; P.A. 15-235, S. 3.)
History: P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-472 made technical changes and corrections; Sec. 36-393a transferred to Sec. 36a-677 in 1995; P.A. 15-235 amended Subsec. (a) by adding provisions re economic stabilization and protection of consumers against inaccurate and unfair credit billing practices and amended Subsec. (b) to make a technical change, effective August 1, 2015.
Annotation to former section 36-393a:
Cited. 27 CA 628.
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Sec. 36a-678. (Formerly Sec. 36-393b). Compliance with Consumer Credit Protection Act. Exempt transactions. (a) Except as otherwise provided in the Connecticut Truth-in-Lending Act or regulations adopted by the commissioner, each person shall comply with all provisions of the Consumer Credit Protection Act that apply to such person, including the delivery of integrated disclosures required by 12 USC 5301 et seq. and implemented through regulations adopted by the Bureau of Consumer Financial Protection.
(b) Any transaction that is exempt from the provisions of the Consumer Credit Protection Act, pursuant to 15 USC 1603, as amended from time to time, or by regulation promulgated pursuant to 15 USC 1604, as amended from time to time, is exempt from the provisions of the Connecticut Truth-in-Lending Act.
(c) Notwithstanding subsection (b) of this section, each person shall comply with all provisions of the Real Estate Settlement Procedures Act of 1974 (12 USC Chapter 27), as amended from time to time, and the regulations promulgated thereunder that apply to such person.
(P.A. 81-158, S. 3, 17; P.A. 82-18, S. 2, 4; 82-174, S. 12, 14; P.A. 88-65, S. 41; P.A. 94-122, S. 304, 340; P.A. 15-235, S. 4.)
History: P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-174 amended Subsec. (a) by deleting the provision that a person “who is a creditor or lessor” shall comply with all applicable provisions; P.A. 88-65 made a technical change by adding U.S. code citations; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-393b transferred to Sec. 36a-678 in 1995; P.A. 15-235 amended Subsecs. (a) and (b) to add provisions re federal integrated disclosure requirements and to make technical changes and added Subsec. (c) re compliance with the Real Estate Settlement Procedures Act of 1974, effective August 1, 2015.
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Sec. 36a-679. (Formerly Sec. 36-395). Regulations. (a) The commissioner may adopt regulations, in accordance with chapter 54, to carry out the provisions of the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. Such regulations shall be consistent with the policy of this state as provided in section 36a-677 and the Consumer Credit Protection Act.
(b) No liability shall be imposed under the Connecticut Truth-in-Lending Act for an act done or omitted in conformity with any provision of said act, the Consumer Credit Protection Act or a regulation of the commissioner notwithstanding that after the act or omission the provision may be amended, repealed or determined to be invalid for any reason.
(1969, P.A. 454, S. 3; P.A. 81-158, S. 4, 17; P.A. 82-18, S. 2, 4; P.A. 88-65, S. 43; P.A. 94-122, S. 305, 340; P.A. 96-109, S. 11; P.A. 15-235, S. 5; P.A. 18-173, S. 93.)
History: P.A. 81-158 amended Subsec. (a) by replacing “prescribe” with “adopt” and by providing that the regulations be consistent with the policy of the state, deleted the language concerning the mandatory and optional provisions of the regulations, and redesignated Subsec. (c) as Subsec. (b) and added “any provision of this chapter, the Consumer Credit Protection Act or”, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 88-65 made technical changes by adding U.S. code citations; (Revisor's note: In 1991 the incorrect internal reference to section “42-83(2)(d)” was changed editorially by the Revisors to “42-83(3)(d)”); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-395 transferred to Sec. 36a-679 in 1995; P.A. 96-109 made technical changes in Subsec. (a), deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c); P.A. 15-235 amended Subsec. (a) by deleting provisions re substantive and procedural regulations, adding reference to adoption in accordance with Ch. 54 and making technical changes, and amended Subsec. (b) by making technical changes, effective August 1, 2015; P.A. 18-173 deleted reference to Secs. 36a-567 and 36a-568.
Annotation to former section 36-395:
Cited. 34 CS 154.
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Sec. 36a-680. (Formerly Sec. 36-398). Effect of inconsistent law. (a) If the commissioner finds that the requirements of any other law of this state relating to the disclosure of information in connection with consumer credit transactions are inconsistent with the provisions of the Connecticut Truth-in-Lending Act or regulations adopted thereunder, creditors may not make disclosures using the inconsistent term or form, and shall incur no liability under the other law of this state for failure to use such term or form, notwithstanding that such finding is subsequently amended, rescinded or determined by judicial or other authority to be invalid for any reason. For purposes of this subsection, disclosure statutes are inconsistent if both require disclosure of the same information even though the prescribed definition, method of calculation or manner of expression is different and, in case of such conflict or inconsistency, the provisions of the Connecticut Truth-in-Lending Act shall control, provided sections 36a-746b to 36a-746g, inclusive, shall not be deemed inconsistent with the provisions of the Connecticut Truth-in-Lending Act.
(b) Except as provided in this section, the provisions of 15 USC 1639, as amended from time to time, do not annul, alter or affect the applicability of the laws of this state imposing requirements on high-cost mortgages as defined in 15 USC 1602(bb), as amended from time to time, or exempt any person subject to the provisions of 15 USC 1639, as amended from time to time, from complying with such laws. If any such law is inconsistent with any provision of 15 USC 1639, as amended from time to time, such provision shall prevail to the extent of such inconsistency.
(c) In any action or proceeding in any court involving a consumer credit sale, the disclosure of an annual percentage rate required by the Connecticut Truth-in-Lending Act may not be received as evidence that the sale was a loan or any type of transaction other than a credit sale, and in any consumer credit transaction, the disclosure of an annual percentage rate required by said sections shall not in itself indicate that a transaction is usurious or that the rate of charge exceeds a statutory ceiling.
(d) Except as provided in 15 USC 1635, 15 USC 1640 and 15 USC 1666e, as amended from time to time, the Connecticut Truth-in-Lending Act and any regulations adopted thereunder do not affect the validity or enforceability of any contract or obligation under state or federal law.
(e) The provisions of 15 USC 1632(c) and 15 USC 1637(c), (d), (e) and (f), as amended from time to time, shall supersede any law of this state relating to the disclosure of information in any credit or charge card application or solicitation that is subject to the requirements of 15 USC 1637(c), as amended from time to time, or any renewal notice that is subject to the requirements of 15 USC 1637(d), as amended from time to time, except the laws of this state employed or established for the purpose of enforcing the requirements of said sections.
(1969, P.A. 454, S. 6; P.A. 81-158, S. 5, 17; P.A. 82-18, S. 2, 4; 82-472, S. 115, 183; P.A. 94-122, S. 306, 340; P.A. 01-34, S. 12; P.A. 15-235, S. 6.)
History: P.A. 81-158 deleted references to Secs. 36-97a, 36-235, 36-236, 36-254(c), 42-83(2)(d), 42-84, 42-87, 42-90 and 42-99, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-472 made technical grammatical change in Subsec. (a); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-398 transferred to Sec. 36a-680 in 1995; P.A. 01-34 amended Subsec. (a) by changing “shall by regulation exempt” to “may exempt” and added provision re applicability of Secs. 36a-746b to 36a-746g; P.A. 15-235 amended Subsec. (a) to add provision re disclosures using inconsistent term or form, added new Subsec. (b) re compliance with state laws imposing requirements on high-cost mortgages, redesignated existing Subsec. (b) as Subsec. (c), added Subsec. (d) re validity or enforceability of any contract or obligation under state or federal law, added Subsec. (e) re federal act superseding state laws relating to disclosure of information in credit or charge card application or solicitation, and made technical changes, effective August 1, 2015.
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Sec. 36a-681. (Formerly Sec. 36-399). Penalty. Any person who wilfully and knowingly (1) gives false or inaccurate information or fails to provide information which such person is required to disclose under the provisions of sections 36a-567, 36a-568 and the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774, 36a-777 and 36a-786, or any regulation adopted thereunder, (2) uses any chart or table authorized by the Federal Reserve Board or the Bureau of Consumer Financial Protection under 15 USC 1606, as amended from time to time, in such manner as to consistently understate the annual percentage rate determined under said sections, or (3) otherwise fails to comply with any requirement imposed under said sections shall be fined not more than five thousand dollars or imprisoned not more than one year or both.
(1949 Rev., S. 6699, (a) 6; 1957, P.A. 361, S. 1 (a) 6; P.A. 94-122, S. 307, 340; P.A. 96-109, S. 12; P.A. 11-110, S. 6; P.A. 15-235, S. 7.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-94 transferred to Sec. 36a-681 in 1995; P.A. 96-109 made technical changes, deleting reference to Sec. 36a-535(c) and substituting reference to Subdiv. (13) for Subdiv. (12) of Sec. 36a-770(c); P.A. 11-110 added reference to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 15-235 made technical changes, effective August 1, 2015.
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Sec. 36a-682. (Formerly Sec. 36-400). Compliance of governmental instruments. Exemptions from penalties. (a) Any department or agency of the state or any political subdivision thereof which administers a credit program in which it extends, insures or guarantees consumer credit and in which it provides instruments to a creditor which contain any disclosures required by the Connecticut Truth-in-Lending Act shall, prior to the issuance or continued use of such instruments, consult with the commissioner to assure that such instruments comply with said sections.
(b) No civil or criminal penalty provided under the Connecticut Truth-in-Lending Act for any violation thereof may be imposed upon the United States or any department or agency thereof, or upon this state or any other state, or any political subdivision thereof, or any department or agency of any such state or political subdivision.
(c) A creditor shall not be held liable for a civil or criminal penalty under the Connecticut Truth-in-Lending Act in any case in which the violation results from the use of an instrument required by any department or agency of: (1) The United States, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency; or (2) this state or of any political subdivision of this state, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency, provided such department or agency has consulted with the commissioner to assure that such instrument complies with said act as provided in subsection (a) of this section.
(d) A creditor shall not be held liable for a civil or criminal penalty under the laws of this state for any technical or procedural failure, such as a failure to use a specific form, to make information available at a specific place on an instrument, or to use a specific typeface, as required by the laws of this state, which is caused by the use of an instrument required to be used by any department or agency of: (1) The United States with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency; or (2) this state or any political subdivision of this state, with regard to any transaction which is part of a credit program administered, insured or guaranteed by such department or agency, provided that such department or agency has consulted with the commissioner to assure that such instrument complies with the Connecticut Truth-in-Lending Act as provided in subsection (a) of this section.
(1969, P.A. 454, S. 8; P.A. 81-158, S. 7, 17; P.A. 82-18, S. 2, 4; P.A. 96-109, S. 13; 96-180, S. 118, 166; P.A. 15-235, S. 8.)
History: P.A. 81-158 added Subsec. (a) to provide that any department, agency or political subdivision of the state consult with the commissioner to assure that the instruments it provides to a creditor comply with this chapter, clarified the governmental exemptions from penalties in Subsec. (b), and added Subsecs. (c) and (d) to provide that a creditor is not liable in certain cases where the violation results from the use of an instrument required by a federal department or agency or the state or a political subdivision of the state, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; Sec. 36-400 transferred to Sec. 36a-682 in 1995; P.A. 96-109 and 96-180 both substituted “36a-675 to 36a-685” for “36a-665 to 36a-675”, where appearing, effective June 3, 1996; (Revisor's note: In 1997 the word “as” was reinstated editorially by the Revisors at the end of Subsec. (d) before the phrase “... provided in subsection (a) of this section.” thereby correcting an omission which occurred in the preparation of the 1995 revision); P.A. 15-235 amended Subsec. (b) to add reference to the United States or any department or agency thereof, and made technical changes, effective August 1, 2015.
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Sec. 36a-683. (Formerly Sec. 36-407). Failure to comply; liability. Civil action. Right to rescind. (a) Except as otherwise provided in this section, any creditor who fails to comply with any requirement of the Connecticut Truth-in-Lending Act, or of section 36a-771 or 36a-774, with respect to any person is liable to that person as provided for in 15 USC 1640, as amended from time to time.
(b) Any action under this section shall be brought in any court of competent jurisdiction pursuant to the time frames established in 15 USC 1640(e), as amended from time to time, provided a person may assert a violation of the Connecticut Truth-in-Lending Act in an action to collect the debt in accordance with the provisions of 15 USC 1640(e), as amended from time to time.
(c) No provision of this section, subsection (d) of section 36a-684 or section 36a-681 imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion, final decision or order adopted by the commissioner, any rule, regulation or interpretation adopted by the Bureau of Consumer Financial Protection pursuant to the Consumer Credit Protection Act, or any interpretation or approval by an official or employee of the Federal Reserve System as provided in 15 USC 1640(f), as amended from time to time, notwithstanding that after such act or omission has occurred, such rule, regulation, approval, opinion, decision, order or interpretation is amended, rescinded or determined by judicial or other authority to be invalid for any reason.
(d) Notwithstanding any other provision of the Connecticut Truth-in-Lending Act, (1) no person shall be entitled in any action to a recovery under this section for the failure to disclose any information required under said act if a recovery is awarded in the same action under 15 USC 1640, as amended from time to time, for the failure to disclose any information required under said act; and (2) no person shall be entitled in any action brought under this section to a recovery if, prior to an award in any such action, a recovery has been awarded to such person in any action brought under 15 USC 1640, as amended from time to time, in which the same act or omission was the basis of that action.
(e) (1) Except as otherwise provided in this subsection, an obligor shall have the right to rescind as provided in 15 USC 1635, as amended from time to time.
(2) An obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs earlier, notwithstanding the fact that the information and forms required under this section and 15 USC 1635, as amended from time to time, or any other disclosures required under the Connecticut Truth-in-Lending Act, have not been delivered to the obligor, except that if (A) the commissioner institutes a proceeding to enforce the provisions of this section, or 15 USC 1635, as amended from time to time, made a part of said sections as provided in section 36a-678 within three years after the date of consummation of the transaction, (B) the commissioner finds a violation of this subsection or 15 USC 1635, as amended from time to time, and (C) the obligor's right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding or any judicial review or period for judicial review thereof, whichever is later.
(3) (A) In any credit transaction in which an obligor has the right to rescind under 15 USC 1635, as amended from time to time, and the obligor does not exercise that right, a finance charge may not begin to accrue in connection with such transaction until after midnight of the third business day following the consummation of the transaction. (B) Any obligor required to pay a finance charge, in violation of the provisions of this subdivision, may recover from the creditor twice the amount of such finance charge, costs and reasonable attorney's fees.
(f) (1) Except as otherwise specifically provided in the Connecticut Truth-in-Lending Act, any civil action for a violation of said act or proceeding by the commissioner which may be brought against a creditor may be maintained against any assignee of that creditor as provided in 15 USC 1641, as amended from time to time, and creditors and assignees shall comply with the notice requirements of said section.
(2) Any consumer who has the right to rescind a transaction under subsection (e) of this section or 15 USC 1635, as amended from time to time, may rescind the transaction as against any assignee of the obligation.
(g) A card issuer who has issued a credit card to a cardholder pursuant to an open-end consumer credit plan shall be subject to all claims, other than tort claims, and defenses arising out of any transaction in which the credit card is used as a method of payment or extension of credit as provided in 15 USC 1666i, as amended from time to time.
(h) (1) Any lessor who fails to comply with any requirement imposed under 15 USC 1667a or 1667b, as amended from time to time, with respect to any person is liable to such person as provided in this section as if such lessor is a creditor.
(2) Any lessor who fails to comply with any requirement imposed under 15 USC 1667c, as amended from time to time, with respect to any person who suffers actual damage from the violation is liable to such person as provided in this section as if such lessor is a creditor.
(i) Any mortgage originator who fails to comply with any requirement imposed by 15 USC 1639b, as amended from time to time, or any regulation promulgated thereunder shall be liable as provided in 15 USC 1639b(d), as amended from time to time.
(j) In the case of any consumer credit transaction subject to the provisions of the Connecticut Truth-in-Lending Act that is consummated before September 30, 1995, the civil, administrative and criminal liability of a creditor or any assignee of a creditor under said act and a consumer's extended rescission rights under subdivision (2) of subsection (e) of this section, shall be limited to the extent provided in and subject to the exceptions contained in 15 USC 1649, as amended from time to time.
(1969, P.A. 454, S. 15; P.A. 75-55; 75-436, S. 6, 7; P.A. 77-315, S. 1; P.A. 81-158, S. 8, 17; P.A. 82-18, S. 2, 4; P.A. 87-65; P.A. 88-65, S. 45; P.A. 96-40, S. 1, 2; 96-109, S. 14; 96-180, S. 119, 166; P.A. 11-110, S. 7, 8; P.A. 15-235, S. 9; P.A. 16-193, S. 14.)
History: P.A. 75-55 required that action be brought within three years, rather than one year, in Subsec. (e); P.A. 75-436 rewrote Subsec. (a) to distinguish between class actions and individual actions, returned time for bringing action to one year in Subsec. (e) and added Subsecs. (f) to (j); P.A. 77-315 specified applicability in Subsec. (a) to failure to comply with requirements of chapter 657a, this chapter and previously listed sections rather than to failure to disclose information required under this chapter and listed sections; P.A. 81-158 inserted new Subsecs. (i) to (m) and made extensive changes to the existing Subsecs. to make the provisions of the section conform to federal law, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 87-65 added Subsec. (j)(4) re the accrual of finance charges during the rescission period; P.A. 88-65 made technical changes by adding U.S. code citations; Sec. 36-407 transferred to Sec. 36a-683 in 1995; P.A. 96-40 made technical changes, and made specific changes to conform with the federal Truth in Lending Act by amending Subsecs. (a) and (k) re consumer credit secured by real property, adding Subdivs. (j)(6) and (7) re obligor rescission rights, adding Subdivs. (k)(4) and (5) re assignments, and adding Subsec. (n) re consumer rescission rights and re liability of creditors and assignees for transactions before September 30, 1995, effective May 2, 1996; P.A. 96-109 and 96-180 both substituted “36a-675 to 36a-685” for “36a-665 to 36a-675” where appearing and substituted references to Subsec. (d) for Subsec. (g) of Sec. 36a-684, effective June 3, 1996; P.A. 11-110 amended Subsecs. (f) and (j)(6) to add references to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 15-235 substantially revised section to incorporate provisions of the federal Truth-in-Lending Act, deleted former Subsecs. (b) to (d), redesignated existing Subsec. (e) as Subsec. (b) and amended same to add reference to time frames established in 15 USC 1640(e), redesignated existing Subsec. (f) as Subsec. (c) and amended same to provide creditor with immunity from liability for any act done in reliance on commissioner's advisory opinion, final decision or order, Bureau of Consumer Financial Protection interpretation or federal Consumer Credit Protection Act, deleted former Subsecs. (g) and (h), redesignated existing Subsec. (i) as Subsec. (d), redesignated existing Subsec. (j) as Subsec. (e) and amended same to add provision re right to rescind in Subdiv. (1), to delete former Subdiv. (2), to redesignate existing Subdivs. (3) and (4) as Subdivs. (2) and (3) and to delete former Subdivs. (5) to (7), redesignated existing Subsec. (k) as Subsec. (f) and amended same to add provisions re notice requirements of 15 USC 1641, to delete former Subdiv. (2), to redesignate existing Subdiv. (3) as Subdiv. (2) and to delete former Subdivs. (4) and (5), redesignated existing Subsec. (l) as Subdiv. (g) and amended same to add reference to 15 USC 1666i and to delete former Subdiv. (2), deleted former Subsec. (m)(1) re definition of “creditor”, redesignated existing Subsec. (m)(2) as Subsec. (h)(1) and amended same to add reference to 15 USC 1667a and 1667b, redesignated existing Subsec. (m)(3) as Subsec. (h)(2) and amended same to add reference to 15 USC 1667c, added new Subsec. (i) re mortgage originator compliance with 15 USC 1639b, redesignated existing Subsec. (n) as Subsec. (j), and made conforming and technical changes, effective August 1, 2015; P.A. 16-193 made technical changes in Subsec. (d)(1).
Annotations to former section 36-407:
Cited. 183 C. 85.
Cited. 3 CA 201.
1-year limitation for bringing action under state Truth-in-Lending Act is not bar to common law defense of recoupment. 33 CS 201. Statute of limitations does not bar defendant's counterclaim by way of recoupment. 35 CS 508. Cited. 36 CS 629; 37 CS 606.
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Sec. 36a-684. (Formerly Sec. 36-414). Enforcement. Disclosure errors and adjustments. (a) The commissioner shall enforce the requirements of sections 36a-567, 36a-568, the Connecticut Truth-in-Lending Act, subdivision (13) of subsection (c) of section 36a-770, and sections 36a-771, 36a-774 and 36a-777. The commissioner shall, in addition to other powers granted by said sections or by other provisions of law, receive and act on complaints, take action designed to obtain voluntary compliance with said sections or commence proceedings on the commissioner's own initiative pursuant to sections 36a-50 to 36a-53, inclusive.
(b) In order to accomplish the purposes of the Connecticut Truth-in-Lending Act and the provisions of the general statutes referred to in subsection (a) of this section, the commissioner may (1) counsel persons and groups on their rights and duties under said act and provisions, (2) establish programs for the education of consumers with respect to credit and leasing practices and problems, and (3) make studies appropriate to effectuate the purposes and policies of said act and provisions and make the results available to the public.
(c) The commissioner may by regulation require the maintenance of records related to consumer credit sales, loans and leases sufficient to evidence the adoption of policies calculated to produce compliance with the Connecticut Truth-in-Lending Act and the provisions of the general statutes referred to in subsection (a) of this section which shall be in addition to the record retention requirements imposed under the Consumer Credit Protection Act.
(d) (1) In carrying out enforcement activities under this section, the commissioner, in cases where an annual percentage rate or finance charge was inaccurately disclosed, shall notify the creditor of such disclosure error and may require the creditor to make an adjustment to the account of the person to whom credit was extended, to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. For the purposes of this subsection, except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, in determining whether a disclosure error has occurred and in calculating any adjustment, the commissioner shall apply the tolerances set forth in 15 USC 1607(e)(1), as amended from time to time.
(2) The commissioner shall require such an adjustment when the commissioner determines that such disclosure error resulted from a clear and consistent pattern or practice of violations, from gross negligence, or from a wilful violation which was intended to mislead the person to whom the credit was extended. Notwithstanding the preceding sentence, except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, the commissioner need not require such an adjustment if the commissioner determines that such disclosure error: (A) Resulted from an error involving the disclosure of a fee or charge that would otherwise be excludable in computing the finance charge, including but not limited to, violations involving the disclosures described in 15 USC 1605(b), (c) and (d), as amended from time to time, in which event the commissioner may require such remedial action as the commissioner determines to be equitable, except that for transactions consummated after March 31, 1982, such an adjustment shall be ordered for violations of 15 USC 1605(b), as amended from time to time; (B) involved a disclosed amount which was ten per cent or less of the amount that should have been disclosed and (i) in cases where the error involved a disclosed finance charge, the annual percentage rate was disclosed correctly, and (ii) in cases where the error involved a disclosed annual percentage rate, the finance charge was disclosed correctly; in which event the commissioner may require such adjustment as the commissioner determines to be equitable; (C) involved a total failure to disclose either the annual percentage rate or the finance charge, in which event the commissioner may require such adjustment as the commissioner determines to be equitable; or (D) resulted from any other unique circumstance involving clearly technical and nonsubstantive disclosure violations that do not adversely affect information provided to the consumer and that have not misled or otherwise deceived the consumer. In the case of other such disclosure errors, the commissioner may require such an adjustment.
(3) Notwithstanding subdivision (2) of this subsection, no adjustment shall be ordered: (A) If it would have a significantly adverse impact upon the safety or soundness of the creditor, but in any such case, the commissioner may require a partial adjustment in an amount which does not have such an impact except that with respect to any transaction consummated after May 18, 1981, the commissioner shall require the full adjustment, but permit the creditor to make the required adjustment in partial payments over an extended period of time which the commissioner considers to be reasonable, if the commissioner determines that a partial adjustment or making partial adjustments over an extended period is necessary to avoid causing the creditor to become undercapitalized pursuant to 12 USC 1831o, as amended from time to time, (B) if the amount of the adjustment would be less than one dollar, except that if more than one year has elapsed since the date of the violation, the commissioner may require that such amount be paid to the commissioner, or (C) except where such disclosure error resulted from a wilful violation which was intended to mislead the person to whom credit was extended, in the case of an open-end credit plan, more than two years after the violation, or in the case of any other extension of credit, as follows: (i) With respect to creditors that have been examined by the commissioner, except in connection with violations arising from practices identified in the current examination and only in connection with transactions that are consummated after the date of the immediately preceding examination, except that where practices giving rise to violations identified in earlier examinations have not been corrected, adjustments for those violations shall be required in connection with transactions consummated after the date of the examination in which such practices were first identified; (ii) with respect to creditors that have not been examined by the commissioner, except in connection with transactions that are consummated after May 10, 1978; and (iii) in no event after the later of (I) the expiration of the life of the credit extension, or (II) two years after the agreement to extend credit was consummated.
(4) In addition to the enforcement powers authorized by the provisions of this section, the commissioner may order any creditor to make an adjustment as provided in this subsection. After such an order is issued, the persons named therein may, within fourteen days after receipt of the order, file a written request for a hearing. The hearing shall be held in accordance with the provisions of chapter 54.
(5) Except as otherwise specifically provided in this subsection and notwithstanding any other provision of law, the commissioner may not require a creditor to make dollar adjustments for errors in any requirements under the Consumer Credit Protection Act, except with regard to the requirements of 15 USC 1666d, as amended from time to time.
(6) A creditor shall not be subject to an order to make an adjustment, if within sixty days after discovering a disclosure error, whether pursuant to a final written examination report or through the creditor's own procedures, the creditor notifies the person concerned of the error and adjusts the account so as to assure that such person will not be required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower.
(1969, P.A. 454, S. 22; P.A. 74-254, S. 7; P.A. 78-280, S. 6, 127; P.A. 81-158, S. 9, 10, 17; P.A. 82-18, S. 2, 4; 82-174, S. 7, 14; P.A. 88-65, S. 46; 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 308, 340; P.A. 96-109, S. 15; P.A. 03-61, S. 7; P.A. 15-235, S. 10; P.A. 16-193, S. 15.)
History: P.A. 74-254 substituted reference to chapter 54 for reference to chapter 637 in Subsec. (f); P.A. 78-280 substituted “judicial district of Hartford-New Britain” for “Hartford county” in Subsec. (d); P.A. 81-158 amended Subsec. (b) to include leasing practices and problems in the education programs of the commissioner, amended Subsec. (c) to require the intention of records related to consumer leases, provide that the record retention requirements are in addition to those imposed by federal law and provide that examination of records related to required disclosures may take place on the premises of a lessor or an assignee of a creditor or lessor, amended Subsec. (d) to provide that the commissioner is not required to post a bond, amended Subsec. (e) to delete provisions concerning the specific topics to be covered by the report, amended Subsec. (f) to add “or lessor or assignee thereof”, effective March 31, 1982, and added Subsec. (g) concerning disclosure errors and required adjustments by a creditor to conform to federal law; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-174 amended Subsec. (f) by deleting provisions authorizing the commissioner, after a hearing, to order a creditor, lessor or assignee to cease and desist from violating the chapter and authorizing an aggrieved person to appeal in the manner provided in chapter 54, and by adding provisions authorizing the commissioner to issue, after notice, cease and desist orders unless a hearing is requested and authorizing him to bring an action to enforce any such order; P.A. 88-65 made technical changes by adding U.S. code citations; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; (Revisor's note: In 1991 the incorrect internal reference in Subsec. (a) to section “42-83(2)(d)” was changed editorially by the Revisors to “42-83(3)(d)”); P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted a provision authorizing the commissioner or his representative to examine records on a creditor's or lessor's premises in Subsec. (c), deleted Subsecs. (d) re court injunctions, (e) re annual reports to the governor and (f) re cease and desist orders, relettered former Subsec. (g) as Subsec. (d) and made technical changes, effective January 1, 1995; Sec. 36-414 transferred to Sec. 36a-684 in 1995; P.A. 96-109 made technical change in Subsec. (a), deleting reference to Subsec. (c) of Sec. 36a-535 and substituting reference to Subdiv. (13) for reference to Subdiv. (12) of Sec. 36a-770(c); P.A. 03-61 deleted Subsec. (d)(7) re adjustments for annual percentage rate disclosure errors with respect to transactions consummated between January 1, 1977, and May 18, 1981; P.A. 15-235 amended Subsec. (a) to add reference to Secs. 36a-50 to 36a-53, amended Subsec. (d) to add reference to tolerances set forth in 15 USC 1607(e)(1) and to add provisions re creditors at risk of becoming undercapitalized, and made technical changes, effective August 1, 2015; P.A. 16-193 made a technical change in Subsec. (d)(4).
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Sec. 36a-685. (Formerly Sec. 36-415). Unenforceable agreements. (a) If it is the understanding of the creditor and the debtor at the time an extension of credit is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation or property of any person, the repayment of the extension of credit is unenforceable through civil judicial processes against the debtor.
(b) Proof that an extension of credit was made at an annual rate exceeding forty-five per cent calculated according to the actuarial method, and that the creditor then had a reputation for the use or threat of use of violence or other criminal means to cause harm to the person, reputation or property of any person to collect extensions of credit or to punish the nonrepayment thereof, is prima facie evidence that the extension of credit was unenforceable under subsection (a) of this section.
(1969, P.A. 454, S. 23; P.A. 05-288, S. 209.)
History: Sec. 36-415 transferred to Sec. 36a-685 in 1995; P.A. 05-288 made a technical change in Subsec. (b), effective July 13, 2005.
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Sec. 36a-686. Civil penalty. Liability. (a) In addition to the enforcement provisions in the Connecticut Truth-in-Lending Act, the Banking Commissioner may order any person who violates 15 USC 1639e, as amended from time to time, to pay a civil penalty as provided in subsection (k) of said section. Such order shall be issued in accordance with section 36a-50, provided the amount of any civil penalty imposed shall be determined in accordance with 15 USC 1639e(k), as amended from time to time.
(b) In addition to any other liability allowed by the Connecticut Truth-in-Lending Act, a creditor found to have wilfully failed to obtain an appraisal as required by 15 USC 1639h, as amended from time to time, shall be liable to the applicant or borrower as provided in subsection (e) of said section.
(P.A. 15-235, S. 11.)
History: P.A. 15-235 effective August 1, 2015.
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Secs. 36a-687 to 36a-689. Reserved for future use.
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PART IV
INTEREST AND FINANCE CHARGE REBATES
Sec. 36a-690. (Formerly Sec. 36-417z). Calculation of interest or finance charge rebates. Prohibited methods. Transactions affected. (a) As used in this section:
(1) “Amount financed” means the amount of credit a borrower will actually be able to use as determined in accordance with sections 36a-675 to 36a-686, inclusive.
(2) “Annual percentage rate” means the annual percentage rate of finance charge determined in accordance with sections 36a-675 to 36a-686, inclusive.
(3) “Finance charge” means the cost of credit determined in accordance with sections 36a-675 to 36a-686, inclusive.
(b) Except as provided in this section, no creditor shall use any method of calculating interest rebates or finance charge rebates in any transaction described in subsection (c) of this section which originated on or after December 1, 1980, if such method would cause the actual interest or finance charge earned for the period during which the indebtedness is outstanding after deduction of an acquisition charge of twenty-five dollars to exceed the finance charge which would be earned if the annual percentage rate were calculated by the actuarial method on the amount financed in accordance with the disclosed schedule of payments. When such rebate is less than one dollar, no rebate need be made.
(c) Notwithstanding any section of the general statutes to the contrary, this section shall apply to any transaction which is subject to sections 36a-675 to 36a-686, inclusive, and which originated on or after December 1, 1980, but before October 1, 1987, if in such transaction: (1) The finance charge is precomputed; (2) the annual percentage rate is greater than fourteen per cent; and (3) the original term of the contract exceeds forty-eight months and fifteen days; and to any such transaction which originated on or after October 1, 1987, if in such transaction: (A) The finance charge is precomputed; and (B) the original term of the contract exceeds forty-eight months and fifteen days.
(P.A. 79-135, S. 1–4; P.A. 81-472, S. 70, 159; P.A. 87-13; P.A. 15-235, S. 19.)
History: P.A. 81-472 made technical changes; P.A. 87-13 amended Subsec. (c) to expand the application of the section after October 1, 1987, by deleting the requirement that the interest rate of the loan exceeds 14%; Sec. 36-417z transferred to Sec. 36a-690 in 1995; (Revisor's note: In 1997 an obsolete reference in Subsec. (c) to “chapter 657” was changed editorially by the Revisors to “sections 36a-675 to 36a-685, inclusive,” to reflect the renumbering in 1995 of the sections contained in former chapter 657); P.A. 15-235 amended section to change “36a-685” to “36a-686”, effective August 1, 2015.
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Secs. 36a-691 to 36a-694. Reserved for future use.
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PART V
CONSUMER CREDIT REPORTS
Sec. 36a-695. (Formerly Sec. 36-431). Definitions. As used in sections 36a-695 to 36a-699e, inclusive, unless the context otherwise requires:
(1) “Consumer” means an individual seeking credit for personal, family or household purposes;
(2) “Creditor” means any person who extends credit in the ordinary course of business;
(3) “Credit report” means any written or oral report, recommendation or representation of a credit rating agency as to the credit worthiness, credit standing, or credit capacity of any consumer, and includes any information which is sought or given for the purpose of serving as the basis for determining eligibility for credit to be used primarily for personal, family or household purposes;
(4) “Credit rating agency” means any person whose business is the assembling and evaluating of information as to the credit standing and credit worthiness of a consumer, for the purposes of furnishing credit reports, for monetary fees and dues to third parties.
(1971, P.A. 868, S. 1; P.A. 86-403, S. 100, 132; P.A. 92-12, S. 85; P.A. 94-122, S. 309, 340; P.A. 98-177, S. 5.)
History: P.A. 86-403 made technical change in Subdiv. (c); P.A. 92-12 redesignated Subdivs. and made technical changes; P.A. 94-122 added “unless the context otherwise requires” and deleted “firm, company, partnership, corporation, bureau or agency” from the definition of “credit rating agency” in Subdiv. (4), effective January 1, 1995; Sec. 36-431 transferred to Sec. 36a-695 in 1995; P.A. 98-177 made a technical change.
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Sec. 36a-696. (Formerly Sec. 36-432). Disclosure to consumer of information re credit report. (a) No creditor shall take adverse action based wholly or in part on a credit report on any consumer applying to such creditor for credit for personal, family or household purposes without first disclosing to the consumer the name and address of the credit rating agency which issued the report.
(b) Upon written request and proper identification of any consumer, a credit rating agency shall disclose to the consumer, within five business days of receipt of the consumer's request, the nature and substance of all information in its files, including (1) any credit score or predictor relating to the consumer, as required by and in a form and manner that complies with the federal Fair Credit Reporting Act and commentary adopted and enforced by the Federal Trade Commission or the Bureau of Consumer Financial Protection; (2) a record of all inquiries, by recipient, including the recipient's name which resulted in providing a credit report concerning the consumer during the preceding twelve-month period; (3) a clear and concise explanation of the information; and (4) a written summary of the consumer's rights under state and federal consumer credit reporting statutes in a form substantially similar to the summary in section 36a-699a. The credit rating agency may charge no more than five dollars for the first request for such information within the preceding twelve months and no more than seven dollars and fifty cents for any additional request within the same twelve-month period for such information, provided such disclosure shall be made without charge to the consumer if the request for disclosure is made not more than sixty days after notification to the consumer of an adverse action by a creditor.
(1971, P.A. 868, S. 2; P.A. 87-146, S. 2; P.A. 92-12, S. 86; P.A. 95-104, S. 1; P.A. 11-110, S. 9.)
History: P.A. 87-146 amended Subsec. (b) by requiring disclosure to be made without charge to the consumer if the request for disclosure is made not more than 30 days after notification to the consumer of an adverse action by a creditor; P.A. 92-12 made technical changes; Sec. 36-432 transferred to Sec. 36a-696 in 1995; P.A. 95-104 divided section into Subsecs. and amended Subsec. (b) by adding a 5-day disclosure deadline, adding Subdiv. (1) providing for disclosure of any credit score or predictor relating to the customer, Subdiv. (2) requiring a record of all inquiries by recipient, Subdiv. (3) requiring a clear and concise explanation of the information and Subdiv. (4) requiring a written summary of the consumer's rights, and adding the maximum charge by the credit rating agency and changing the request period from 30 to 60 days for disclosures without charge; P.A. 11-110 amended Subsec. (b)(1) to add reference to Bureau of Consumer Financial Protection, effective July 21, 2011.
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Sec. 36a-697. (Formerly Sec. 36-433). Exceptions. The provisions of sections 36a-691 to 36a-699, inclusive, shall not apply to any disclosure made at the request of a law enforcement or investigative officer in his capacity as such, who is employed on a full-time basis in that capacity, by the United States, or by any state or political subdivision thereof, or upon the order of any court.
(1971, P.A. 868, S. 3.)
History: Sec. 36-433 transferred to Sec. 36a-697 in 1995.
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Sec. 36a-698. (Formerly Sec. 36-434). Regulations. The commissioner shall adopt such regulations, in accordance with chapter 54, as may be necessary to carry out the provisions of sections 36a-695 to 36a-699, inclusive.
(1971, P.A. 868, S. 4; P.A. 77-614, S. 161, 610; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 310, 340.)
History: P.A. 77-614 replaced bank commissioner with banking commissioner, effective January 1, 1979; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-434 transferred to Sec. 36a-698 in 1995.
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Sec. 36a-699. (Formerly Sec. 36-435). Penalty. Any person who wilfully violates any provision of sections 36a-695 to 36a-699, inclusive, or section 36a-699f shall be fined not more than one hundred dollars for a first offense and not more than five hundred dollars for a second offense, and shall be fined not more than one thousand dollars or be imprisoned for not more than six months, or both, for each subsequent offense.
(1971, P.A. 868, S. 5; P.A. 03-156, S. 10.)
History: Sec. 36-435 transferred to Sec. 36a-699 in 1995; P.A. 03-156 included a violation of Sec. 36a-699f.
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Sec. 36a-699a. Written summary of consumer's rights. Each written summary of a consumer's rights under state and federal consumer credit reporting statutes shall be in a form substantially similar to the following:
“You have a right to obtain a copy of your credit file from a credit rating agency. You may be charged a reasonable fee not exceeding five dollars for your first request in twelve months or seven dollars and fifty cents for any subsequent request in that same twelve-month period. There is no fee, however, if you have been turned down for credit, employment, insurance or a rental dwelling because of information in your credit report within the preceding sixty days. The credit rating agency must provide someone to help you interpret the information in your credit file.
You have a right to dispute inaccurate information by contacting the credit rating agency directly. However, neither you nor any credit repair company or credit service organization has the right to have accurate, current and verifiable information removed from your credit report. Under the federal Fair Credit Reporting Act, the credit rating agency must remove accurate, negative information from your report only if it is over seven years old. Bankruptcy information can be reported for ten years.
If you have notified a credit rating agency in writing that you dispute the accuracy of information in your file, the credit rating agency must then, within thirty business days, reinvestigate and modify or remove inaccurate information. If you provide additional information to the credit rating agency, the agency may extend this time period by fifteen business days. The credit rating agency shall provide you with a toll-free telephone number to use in resolving the dispute.
The credit rating agency may not charge a fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit rating agency.
If reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit rating agency to keep in your file, explaining why you think the record is inaccurate. The credit rating agency must include your statement about disputed information in a report it issues about you.
You have a right to receive a record of all inquiries relating to a credit transaction initiated in twelve months preceding your request which resulted in the provision of a credit report.
You may request in writing that the information contained in your file not be provided to a third party for marketing purposes.
If you have reviewed your credit report with the credit rating agency and are dissatisfied, you may contact the Connecticut Department of Banking. You have a right to bring civil action against anyone who knowingly or wilfully misuses file data or improperly obtains access to your file.”
(P.A. 95-104, S. 2.)
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Sec. 36a-699b. Dispute by consumer re completeness or accuracy of information. (a) If the completeness or accuracy of any item of information contained in any credit file of a credit rating agency is disputed by the consumer, the consumer may notify, in writing, the credit rating agency of the disputed information. The credit rating agency shall, no later than after a written dispute has been submitted by the consumer to the credit rating agency, provide the credit rating agency's toll-free telephone number to the consumer for use in resolving the dispute. The credit rating agency shall reinvestigate the disputed information without fee to the consumer. Within five business days of receipt of the notice from the consumer, the credit rating agency shall provide notice of the dispute to all persons who provided any item of the information in dispute. Within thirty business days of receipt of the notice of dispute from the consumer, the credit rating agency shall complete its reinvestigation and provide notice to the consumer of the results of the reinvestigation provided the time period for completing the reinvestigation may be extended for a period not exceeding fifteen business days if the credit rating agency receives additional information from the consumer which the credit rating agency determines is necessary to the accuracy of the reinvestigation and provides written notice to the consumer of such extension. The notice of the results of the reinvestigation shall contain a statement that the reinvestigation is completed, a copy of the credit file indicating the results of the reinvestigation, a notice of the consumer's right to file a statement with the credit rating agency disputing the accuracy or completeness of the information, a notice that the consumer may request, in writing or by a toll-free telephone call at the consumer's option, that the credit rating agency disclose the company name, address and telephone number of each information source contacted during the reinvestigation and a notice of the consumer's right to request a revised credit report be sent to any recipient of information in the consumer's file who requested such information within twelve months preceding the consumer's filing of the notice of disputed information. If the credit rating agency fails to complete the reinvestigation and provide notice of the results of the reinvestigation (1) within thirty business days of receipt of the notice of dispute, or (2) if an extension was noticed, within forty-five business days of such receipt, such information shall be deleted.
(b) If the credit rating agency determines, upon reinvestigation, that an item of information is inaccurate or cannot be verified, the credit rating agency shall promptly delete that item. At the request of the consumer, the credit rating agency shall promptly notify, without charge, those recipients specifically designated by the consumer who received a credit report within twelve months of completion of the reinvestigation that such information was deleted. Such information may be reinserted only upon verification of the completeness and accuracy of the information by the furnisher of the information. The credit rating agency shall notify the consumer within five business days of reinsertion of such information.
(c) If the credit rating agency determines, upon reinvestigation, that an item of information is accurate and complete or that the consumer has not provided sufficient information, the credit rating agency may retain such information.
(d) If the credit rating agency determines, upon reinvestigation, that an item of information is inaccurate or incomplete, but can be modified so as to make such information accurate and complete, the credit rating agency shall promptly modify such information.
(P.A. 95-104, S. 3.)
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Sec. 36a-699c. Procedures by credit rating agency to assure accuracy. Each credit rating agency shall maintain reasonable procedures to assure maximum possible accuracy of the information concerning the consumer and to avoid the reinsertion of previously deleted information without verification.
(P.A. 95-104, S. 4.)
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Sec. 36a-699d. Credit report for use in credit transaction not initiated by consumer. (a) A credit rating agency shall not provide a credit report for use in a credit transaction which is not initiated by the consumer if the consumer notifies, in writing, the credit rating agency that the consumer does not consent to that use.
(b) Each credit rating agency shall annually publish in a publication of general circulation in the state a notice that information in its credit files may be used in connection with a credit transaction which is not initiated by the consumer. A consumer may notify the credit rating agency of his election to be excluded from credit transactions which are not initiated by the consumer by writing to the address provided in the notice for such election. Compliance with the requirements of this section by any credit rating agency constitutes compliance by the agency's affiliates.
(c) As used in this section, “credit transaction which is not initiated by the consumer” does not include a request for a consumer report by a person with which the consumer has an account for purposes of reviewing the account or collecting on the account or a request for a consumer report by an employer in accordance with 15 USC 1681b.
(P.A. 95-104, S. 5.)
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Sec. 36a-699e. Existing consent judgment or settlement with Attorney General. Nothing in sections 36a-696 or 36a-699a to 36a-699d, inclusive, shall prohibit a credit rating agency from complying with any requirement contained in any existing consent judgment or settlement with the Attorney General.
(P.A. 95-104, S. 6.)
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Sec. 36a-699f. Blocking of information appearing on credit report as result of identity theft. (a) A consumer, as defined in section 36a-695, who believes he or she is a victim of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-129b, 53a-129c or 53a-129d may request a credit rating agency, as defined in section 36a-695, to block and not report information appearing on his or her credit report, as defined in section 36a-695, as a result of such violation. Such consumer shall submit such request, in writing, to the credit rating agency, together with proof of such consumer's identity and a copy of a police report prepared pursuant to section 54-1n. Not later than thirty days after receipt of such request, the credit rating agency shall block reporting any information that the consumer alleges appears on his or her credit report as a result of such violation so that the information cannot be reported. The credit rating agency shall promptly notify the furnisher of the information that a police report has been filed, that a block has been requested and the effective date of the block.
(b) A credit rating agency may decline to block or may rescind any block of consumer information if the credit rating agency believes in good faith that: (1) The information was blocked due to a misrepresentation of fact by the consumer relevant to the request to block under this section, (2) the consumer agrees that the blocked information or portions of the blocked information were blocked in error, (3) the consumer knowingly obtained possession of goods, services or moneys as a result of the blocked transaction or transactions or the consumer should have known that he or she obtained possession of goods, services or moneys as a result of the blocked transaction or transactions, (4) the information was blocked due to fraud in which the consumer participated or of which the consumer had knowledge, and which may for purposes of this section be demonstrated by circumstantial evidence, or (5) the credit rating agency, in the exercise of good faith and reasonable judgment, has substantial reason based on specific, verifiable facts to doubt the authenticity of the consumer's report of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-129b, 53a-129c or 53a-129d.
(c) If the credit rating agency declines to block information or rescinds the block of information pursuant to subsection (b) of this section, the credit rating agency shall promptly notify the consumer in the same manner as consumers are notified of the reinsertion of information pursuant to subsection (b) of section 36a-699b. The prior presence of the blocked information in the credit rating agency's file on the consumer is not evidence of whether the consumer knew or should have known that he or she obtained possession of any goods, services or moneys.
(d) A credit rating agency shall accept the consumer's version of the disputed information and correct the disputed item when the consumer submits to the credit rating agency documentation obtained from the source of the item in dispute or from public records confirming that the report was inaccurate or incomplete, unless the credit rating agency, in the exercise of good faith and reasonable judgment, has substantial reason based on specific, verifiable facts to doubt the authenticity of the documentation submitted and notifies the consumer in writing of that decision, explaining its reasons for unblocking the information and setting forth specific, verifiable facts on which the decision is based.
(e) A credit rating agency shall delete from a credit report inquiries for credit reports based upon credit requests that the credit rating agency verifies were initiated as a result of a violation of section 53a-129a of the general statutes, revision of 1958, revised to January 1, 2003, or section 53a-129b, 53a-129c or 53a-129d.
(f) The provisions of this section do not apply to: (1) A credit rating agency that acts as a reseller of credit information by assembling and merging information contained in the databases of other credit rating agencies, and that does not maintain a permanent database of credit information from which new credit reports are produced, (2) a check services or fraud prevention services company that issues reports on incidents of fraud or authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers or similar payment methods, or (3) a demand deposit account information service company that issues reports regarding account closures due to fraud, substantial overdrafts, automated teller machine abuse or similar negative information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing a consumer request for a demand deposit account at the inquiring bank or financial institution.
(P.A. 03-156, S. 9; P.A. 05-288, S. 224.)
History: P.A. 05-288 made a technical change in Subsec. (f)(3), effective July 13, 2005.
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Sec. 36a-700. (Formerly Sec. 36-435l). Credit clinics. Definitions. Contracts. Prohibited acts. Penalties. (a) As used in this section, “credit clinic” means any person who sells, provides or performs, or who represents that such person can or will sell, provide or perform, a service for the express or implied purpose of correcting, changing or deleting adverse entries on a consumer's credit record, history or rating or providing advice or assistance to a consumer with regard to correcting, changing or deleting adverse entries on a consumer's credit record, history or rating in return for the payment of a fee. “Credit clinic” does not include: (1) Credit rating agencies as defined in section 36a-695; (2) any person licensed to practice law in this state provided such person renders services as a credit clinic, as defined in this subsection, within the course and scope of his practice as an attorney; or (3) any organization which is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended.
(b) A credit clinic shall provide to each purchaser of the services of a credit clinic a contract which contract shall include, in boldface type a minimum size of ten points, the following statements:
RIGHT TO REVIEW YOUR FILE
The federal Fair Credit Reporting Act gives you the right to know what your credit file contains and the credit rating agency must provide someone to help you interpret the data. Sections 36a-695 to 36a-699, inclusive, of the Connecticut general statutes gives you the right to receive an actual copy of your credit report. You will be required to identify yourself to the credit rating agency and you may be charged a small fee. There is no fee, however, if you have been turned down for credit, employment or insurance because of information contained in a report within the preceding thirty days.
INCORRECT INFORMATION
If you notify the credit rating agency that you dispute the accuracy of information, the agency must reinvestigate and modify or remove inaccurate data. The credit rating agency may not charge any fee for this investigation or for modifying or removing inaccurate data. If reinvestigation does not resolve the dispute, you may enter a statement of one hundred words or less in your file, explaining why you dispute the accuracy of your record or file. This statement or a coded version of it must be included with all reports which the credit rating agency issues on you. If the error is corrected, the credit rating agency must notify any person who requested a report on you during the previous two years for employment purposes and the previous six months for any other purpose.
TIME LIMITS ON ADVERSE DATA
Most kinds of information in your file may be reported for a period of seven years. If you have declared personal bankruptcy, however, that fact may be reported for ten years. After seven or ten years, the information cannot be disclosed by a credit rating agency unless you are being investigated for a credit application of fifty thousand dollars or more, for an application to purchase life insurance of fifty thousand dollars or more, or for employment at an annual salary of twenty thousand dollars or more.
(c) In addition to statements required in subsection (b) of this section, each contract shall contain a complete, detailed list of services to be performed by the credit clinic and the results to be achieved by the credit clinic. A copy of the consumer's current credit report shall be attached to the contract with the adverse entries to be modified clearly marked.
(d) Any contract which does not comply with the provisions of subsections (b) and (c) of this section shall be void and the credit clinic shall return to the consumer any payments made by the consumer to the credit clinic under the voided contract.
(e) No credit clinic may charge a fee or receive any money or other valuable consideration for the performance of any service the credit clinic has agreed to perform for any consumer until the credit clinic has fully performed such service.
(f) A violation of any provision of this section shall be deemed an unfair or deceptive trade practice pursuant to section 42-110b.
(P.A. 87-146, S. 1; P.A. 91-357, S. 57, 78; P.A. 97-22, S. 2; P.A. 99-40.)
History: P.A. 91-357 made a technical change in Subsec. (a); Sec. 36-435l transferred to Sec. 36a-700 in 1995; P.A. 97-22 made technical changes in Subsec. (a); P.A. 99-40 added new Subsec. (e) prohibiting credit clinics from charging consumers prior to fully performing services and relettered former Subsec. (e) accordingly.
Annotations to former section 36-435l:
Cited. 228 C. 375; 231 C. 707.
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Sec. 36a-701. Security freeze on credit report: Definitions. As used in this section and section 36a-701a:
(1) “Consumer” means any person who is utilizing or seeking credit for personal, family or household purposes;
(2) “Credit rating agency” means credit rating agency, as defined in section 36a-695;
(3) “Credit report” means credit report, as defined in section 36a-695;
(4) “Creditor” means creditor, as defined in section 36a-695;
(5) “Minor child” means an individual under sixteen years of age at the time a request for placement of a security freeze is submitted;
(6) “Security freeze” means a notice placed in a consumer's credit report, at the request of the consumer, that prohibits the credit rating agency from releasing the consumer's credit report or any information from it without the express authorization of the consumer. In the case of a minor child under subsections (j) and (k) of section 36a-701a, “security freeze” means (A) a restriction that is placed on the minor child's credit report prohibiting the credit rating agency from releasing the minor child's credit report or any information derived from the minor child's credit report, provided a credit rating agency has information in its files pertaining to such minor child; or (B) a restriction that is placed on the minor child's record prohibiting the credit rating agency from releasing the minor child's record, provided a credit rating agency does not have any information in its files pertaining to such minor child; and
(7) “Sufficient proof of authority” means documentation showing that a parent or legal guardian has authority to act on behalf of a minor child, including, but not limited to, a court order, an original copy of the minor child's birth certificate or a written notarized statement expressly describing the authority of the parent or legal guardian to act on behalf of the minor child that is signed by the parent or legal guardian and acknowledged, in accordance with the provisions of chapter 6, by (A) a judge of a court of record or a family support magistrate, (B) a clerk or deputy clerk of a court having a seal, (C) a town clerk, (D) a notary public, (E) a justice of the peace, or (F) an attorney admitted to the bar of this state.
(P.A. 05-148, S. 1; P.A. 15-62, S. 1; P.A. 16-65, S. 55.)
History: P.A. 05-148 effective January 1, 2006; P.A. 15-62 added new Subdiv. (5) defining “minor child”, redesignated existing Subdiv. (5) as Subdiv. (6) and amended same to redefine “security freeze” by adding provisions re minor child, and added Subdiv. (7) defining “sufficient proof of authority”; P.A. 16-65 redefined “minor child” in Subdiv. (5).
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Sec. 36a-701a. Security freeze on credit report. Timing. Disclosure of report to third party during freeze. Procedures for freeze. Refusal by credit rating agency to implement freeze. Exceptions. Prohibition on fees. (a) Any consumer may submit a written request, by certified mail or such other secure method as authorized by a credit rating agency, to a credit rating agency to place a security freeze on such consumer's credit report. Such credit rating agency shall place a security freeze on a consumer's credit report as soon as practicable, but not later than five business days after receipt of such request. Not later than ten business days after placing a security freeze on a consumer's credit report, such credit rating agency shall send a written confirmation of such security freeze to such consumer that provides the consumer with a unique personal identification number or password to be used by the consumer when providing authorization for the release of such consumer's report to a third party or for a period of time. Nothing in this subsection shall be deemed to require a consumer reporting agency to provide to a minor child or the parent or legal guardian of a minor child, on behalf of the minor child, a unique personal identification number, password or similar device to be used to authorize the consumer reporting agency to release such minor child's credit report.
(b) In the event such consumer, other than a minor child or the parent or legal guardian of a minor child, wishes to authorize the disclosure of such consumer's credit report to a third party, or for a period of time, while such security freeze is in effect, such consumer shall contact such credit rating agency and provide: (1) Proper identification, (2) the unique personal identification number or password described in subsection (a) of this section, and (3) proper information regarding the third party who is to receive the credit report or the time period for which the credit report shall be available. Any credit rating agency that receives a request from a consumer pursuant to this section shall lift such security freeze not later than three business days after receipt of such request.
(c) Except for the temporary lifting of a security freeze as provided in subsection (b) of this section, any security freeze authorized pursuant to the provisions of this section shall remain in effect until such time as such consumer requests such security freeze to be removed. A credit rating agency shall remove such security freeze as soon as practicable, but not later than three business days after receipt of such request provided such consumer provides proper identification to such credit rating agency and the unique personal identification number or password described in subsection (a) of this section at the time of such request for removal of the security freeze. In the case of a minor child, the credit rating agency shall remove such security freeze not later than fifteen business days after receipt of such request, provided the minor child or the parent or legal guardian of the minor child uses the unique personal identification number, password or similar device provided under subsection (a) of this section at the time of such request, if applicable.
(d) Any credit rating agency may develop procedures to receive and process such request from a consumer to temporarily lift or remove a security freeze on a credit report pursuant to subsection (b) of this section. Such procedures, at a minimum, shall include, but not be limited to, the ability of a consumer to send such temporary lift or removal request by electronic means, letter or facsimile.
(e) In the event that a third party requests access to a consumer's credit report that has such a security freeze in place and such third party request is made in connection with an application for credit or any other use and such consumer has not authorized the disclosure of such consumer's credit report to such third party, such third party may deem such credit application as incomplete.
(f) Any credit rating agency may refuse to implement or may remove such security freeze if such agency believes, in good faith, that: (1) The request for a security freeze was made as part of a fraud that the consumer participated in, had knowledge of, or that can be demonstrated by circumstantial evidence, or (2) the consumer credit report was frozen due to a material misrepresentation of fact by the consumer. In the event any such credit rating agency refuses to implement or removes a security freeze pursuant to this subsection, such credit rating agency shall promptly notify such consumer in writing of such refusal not later than five business days after such refusal or, in the case of a removal of a security freeze, prior to removing the freeze on the consumer's credit report.
(g) Nothing in this section shall be construed to prohibit disclosure of a consumer's credit report to: (1) A person, or the person's subsidiary, affiliate, agent or assignee with which the consumer has or, prior to assignment, had an account, contract or debtor-creditor relationship for the purpose of reviewing the account or collecting the financial obligation owing for the account, contract or debt; (2) a subsidiary, affiliate, agent, assignee or prospective assignee of a person to whom access has been granted under subsection (b) of this section for the purpose of facilitating the extension of credit or other permissible use; (3) any person acting pursuant to a court order, warrant or subpoena; (4) any person for the purpose of using such credit information to prescreen as provided by the federal Fair Credit Reporting Act; (5) any person for the sole purpose of providing a credit file monitoring subscription service to which the consumer has subscribed; (6) a credit rating agency for the sole purpose of providing a consumer with a copy of his or her credit report upon the consumer's request; or (7) a federal, state or local governmental entity, including a law enforcement agency, or court, or their agents or assignees pursuant to their statutory or regulatory duties. For purposes of this subsection, “reviewing the account” includes activities related to account maintenance, monitoring, credit line increases and account upgrades and enhancements.
(h) The following persons shall not be required to place a security freeze on a consumer's credit report, provided such persons shall be subject to any security freeze placed on a credit report by another credit rating agency: (1) A check services or fraud prevention services company that reports on incidents of fraud or issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers or similar methods of payment; (2) a deposit account information service company that issues reports regarding account closures due to fraud, substantial overdrafts, automated teller machine abuse, or similar information regarding a consumer to inquiring banks or other financial institutions for use only in reviewing a consumer request for a deposit account at the inquiring bank or financial institution; or (3) a credit rating agency that: (A) Acts only to resell credit information by assembling and merging information contained in a database of one or more credit reporting agencies; and (B) does not maintain a permanent database of credit information from which new credit reports are produced.
(i) (1) A credit rating agency shall not (A) charge a fee to a consumer for a security freeze, removal of such freeze, temporary lift of such freeze for a period of time or a temporary lift of such freeze for a specific party, or (B) require as a condition for placing a security freeze that a consumer enter into an agreement that limits any claim the consumer may have against such credit rating agency.
(2) No credit rating agency shall charge a fee to a consumer for a personal identification number.
(j) The parent or legal guardian of a minor child may place a security freeze on the credit report of a minor child by submitting a written request to the credit rating agency in the manner described in this section and subject to the same conditions and by providing the credit rating agency with proper identification and sufficient proof of authority to act on behalf of the minor child. The credit rating agency shall place the security freeze on the credit report of a minor child as soon as practicable, but not later than five business days after receipt of such request. If the credit rating agency does not have any information in its files pertaining to the minor child at the time the credit rating agency receives a request pursuant to this subsection, the credit rating agency shall create a record for the minor child and place a security freeze on such record. Such record shall consist of a compilation of information created by a credit rating agency that identifies a minor child. A credit rating agency shall not create or use such record to consider the minor child's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. A credit rating agency shall not release a minor child's credit report, any information derived from a minor child's credit report or any record created for a minor child.
(k) The parent or legal guardian of a minor child may request the removal of a security freeze placed on the credit report or record of a minor child by submitting a written request to the credit rating agency in the manner described in this section and subject to the same conditions and by providing the credit rating agency with proper identification and sufficient proof of authority to act on behalf of the minor child. The credit rating agency shall remove the security freeze on the credit report or record of a minor child not later than fifteen business days after receipt of such request.
(l) An insurer, as defined in section 38a-1, may deny an application for insurance if an applicant has placed a security freeze on such applicant's credit report and fails to authorize the disclosure of such applicant's credit report to such insurer pursuant to the provisions of subsection (b) of this section.
(m) Any security freeze in a credit report in effect as of October 1, 2016, shall continue to be in effect until the consumer or the parent or legal guardian of a minor child requests the removal of the security freeze.
(P.A. 05-148, S. 2; 05-288, S. 230; P.A. 15-53, S. 9; 15-62, S. 2; P.A. 16-65, S. 56; P.A. 18-90, S. 1.)
History: P.A. 05-148 effective January 1, 2006; P.A. 05-288 made a technical change in Subsec. (f), effective January 1, 2006; P.A. 15-53 amended Subsec. (i) by designating existing provisions as Subdiv. (1) and amending same to add exception re Subdiv. (2), and by adding Subdiv. (2) re credit rating agencies not to charge fees to certain persons, effective June 19, 2015; P.A. 15-62 added Subsecs. (j) and (k) re request by parent or legal guardian of minor child for placement or removal of security freeze on minor child's credit report or record, prohibited uses of minor child's record by credit rating agency and timeline for agencies to respond to such requests, and redesignated existing Subsec. (j) as Subsec. (l); P.A. 16-65 amended Subsec. (a) by adding provision re nothing in Subsec. deemed to require unique personal identification number, password or similar device to be provided for minor child, amended Subsec. (b) by adding “other than a minor child or the parent or legal guardian of a minor child”, amended Subsec. (c) by adding provision re removal of security freeze in the case of a minor child and added Subsec. (m) re security freeze to continue to be in effect; P.A. 18-90 amended Subsec. (a) by adding “as soon as practicable, but” re placing security freeze, amended Subsec. (c) by adding “as soon as practicable, but” re removing security freeze, amended Subsec. (d) by replacing “electronic mail” with “electronic means”, substantially amended Subsec. (i) including by deleting reference to Subdiv. (2), replacing provisions re credit rating agency may charge fee of not more than $10 for security freeze, removal of freeze or temporary lift of freeze with provisions re credit rating agency shall not charge fee for security freeze, removal of freeze, temporary lift of freeze or require as condition for placing freeze that consumer enter into agreement that limits claim against credit rating agency in Subdiv. (1), deleting provisions re fees not to be charged to certain persons, and deleting references to replacement personal identification number, amended Subsec. (j) by adding “as soon as practicable, but” re placing security freeze on credit report of minor child, and made technical and conforming changes.
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Sec. 36a-701b. *(See end of section for amended version of subparagraph (B) of subdivision (2) of subsection (b) and effective date.) Breach of security re computerized data containing personal information. Notice of breach. Provision of identity theft prevention services and identity theft mitigation services. Delay for criminal investigation. Means of notice. Unfair trade practice. (a) For purposes of this section, (1) “breach of security” means unauthorized access to or unauthorized acquisition of electronic files, media, databases or computerized data, containing personal information when access to the personal information has not been secured by encryption or by any other method or technology that renders the personal information unreadable or unusable; and (2) “personal information” means an individual's first name or first initial and last name in combination with any one, or more, of the following data: (A) Social Security number; (B) driver's license number or state identification card number; (C) credit or debit card number; or (D) financial account number in combination with any required security code, access code or password that would permit access to such financial account. “Personal information” does not include publicly available information that is lawfully made available to the general public from federal, state or local government records or widely distributed media.
(b) (1) Any person who conducts business in this state, and who, in the ordinary course of such person's business, owns, licenses or maintains computerized data that includes personal information, shall provide notice of any breach of security following the discovery of the breach to any resident of this state whose personal information was breached or is reasonably believed to have been breached. Such notice shall be made without unreasonable delay but not later than ninety days after the discovery of such breach, unless a shorter time is required under federal law, subject to the provisions of subsection (d) of this section and the completion of an investigation by such person to determine the nature and scope of the incident, to identify the individuals affected, or to restore the reasonable integrity of the data system. Such notification shall not be required if, after an appropriate investigation and consultation with relevant federal, state and local agencies responsible for law enforcement, the person reasonably determines that the breach will not likely result in harm to the individuals whose personal information has been acquired and accessed.
(2) If notice of a breach of security is required by subdivision (1) of this subsection:
(A) The person who conducts business in this state, and who, in the ordinary course of such person's business, owns, licenses or maintains computerized data that includes personal information, shall, not later than the time when notice is provided to the resident, also provide notice of the breach of security to the Attorney General; and
*(B) The person who conducts business in this state, and who, in the ordinary course of such person's business, owns or licenses computerized data that includes personal information, shall offer to each resident whose personal information under subparagraph (A) of subdivision (4) of subsection (a) of section 38a-999b or subparagraph (A) of subdivision (2) of subsection (a) of this section was breached or is reasonably believed to have been breached, appropriate identity theft prevention services and, if applicable, identity theft mitigation services. Such service or services shall be provided at no cost to such resident for a period of not less than twenty-four months. Such person shall provide all information necessary for such resident to enroll in such service or services and shall include information on how such resident can place a credit freeze on such resident's credit file.
(c) Any person that maintains computerized data that includes personal information that the person does not own shall notify the owner or licensee of the information of any breach of the security of the data immediately following its discovery, if the personal information of a resident of this state was breached or is reasonably believed to have been breached.
(d) Any notification required by this section shall be delayed for a reasonable period of time if a law enforcement agency determines that the notification will impede a criminal investigation and such law enforcement agency has made a request that the notification be delayed. Any such delayed notification shall be made after such law enforcement agency determines that notification will not compromise the criminal investigation and so notifies the person of such determination.
(e) Any notice to a resident, owner or licensee required by the provisions of this section may be provided by one of the following methods: (1) Written notice; (2) telephone notice; (3) electronic notice, provided such notice is consistent with the provisions regarding electronic records and signatures set forth in 15 USC 7001; (4) substitute notice, provided such person demonstrates that the cost of providing notice in accordance with subdivision (1), (2) or (3) of this subsection would exceed two hundred fifty thousand dollars, that the affected class of subject persons to be notified exceeds five hundred thousand persons or that the person does not have sufficient contact information. Substitute notice shall consist of the following: (A) Electronic mail notice when the person has an electronic mail address for the affected persons; (B) conspicuous posting of the notice on the web site of the person if the person maintains one; and (C) notification to major state-wide media, including newspapers, radio and television.
(f) Any person that maintains such person's own security breach procedures as part of an information security policy for the treatment of personal information and otherwise complies with the timing requirements of this section, shall be deemed to be in compliance with the security breach notification requirements of this section, provided such person notifies, as applicable, residents of this state, owners and licensees in accordance with such person's policies in the event of a breach of security and in the case of notice to a resident, such person also notifies the Attorney General not later than the time when notice is provided to the resident. Any person that maintains such a security breach procedure pursuant to the rules, regulations, procedures or guidelines established by the primary or functional regulator, as defined in 15 USC 6809(2), shall be deemed to be in compliance with the security breach notification requirements of this section, provided (1) such person notifies, as applicable, such residents of this state, owners, and licensees required to be notified under and in accordance with the policies or the rules, regulations, procedures or guidelines established by the primary or functional regulator in the event of a breach of security, and (2) if notice is given to a resident of this state in accordance with subdivision (1) of this subsection regarding a breach of security, such person also notifies the Attorney General not later than the time when notice is provided to the resident.
(g) Failure to comply with the requirements of this section shall constitute an unfair trade practice for purposes of section 42-110b and shall be enforced by the Attorney General.
(P.A. 05-148, S. 3; 05-288, S. 231, 232; June 12 Sp. Sess. P.A. 12-1, S. 130; P.A. 15-142, S. 6; P.A. 18-90, S. 2.)
*Note: On and after October 1, 2021, subparagraph (B) of subdivision (2) of subsection (b) of this section, as amended by section 231 of public act 19-117 and section 9 of public act 19-196, is to read as follows:
“(B) The person who conducts business in this state, and who, in the ordinary course of such person's business, owns or licenses computerized data that includes personal information, shall offer to each resident whose nonpublic information under subparagraph (B)(i) of subdivision (9) of subsection (b) of section 38a-38 or personal information as defined in subparagraph (A) of subdivision (2) of subsection (a) of this section was breached or is reasonably believed to have been breached, appropriate identity theft prevention services and, if applicable, identity theft mitigation services. Such service or services shall be provided at no cost to such resident for a period of not less than twenty-four months. Such person shall provide all information necessary for such resident to enroll in such service or services and shall include information on how such resident can place a credit freeze on such resident's credit file.”
(P.A. 05-148, S. 3; 05-288, S. 231, 232; June 12 Sp. Sess. P.A. 12-1, S. 130; P.A. 15-142, S. 6; P.A. 18-90, S. 2; P.A. 19-117, S. 231; 19-196, S. 9.)
History: P.A. 05-148 effective January 1, 2006; P.A. 05-288 made technical changes in Subsecs. (b) and (f), effective January 1, 2006; June 12 Sp. Sess. P.A. 12-1 amended Subsec. (a) by adding “unauthorized” re acquisition, amended Subsec. (b) by designating existing provisions as Subdiv. (1) and amending same to replace “disclose” with “provide notice of” and “disclosure” with “notice” and by adding Subdiv. (2) re notice of breach of security to Attorney General, amended Subsec. (c) by adding “of a resident of this state” re personal information, amended Subsec. (e) by adding “to a resident, owner or licensee” re notice, replacing “person, business or agency” with “person” and making a technical change, and amended Subsec. (f) by replacing references to subject persons with references to residents of this state, owners and licensees, as applicable, adding provisions re notice to Attorney General and deleting reference to system; P.A. 15-142 made technical changes in Subsec. (a), amended Subsec. (b) to replace “was, or is reasonably believed to have been, accessed by an unauthorized person through such breach of security” with “was breached or is reasonably believed to have been breached” and add provision re notice of breach of security not later than 90 days after discovery unless shorter time is required under federal law in Subdiv. (1), to designate existing provision re notice of breach to Attorney General as Subpara. (A) in Subdiv. (2) and amend same to add Subpara. (B) re provision of identity theft prevention services and identity theft mitigation services, and amended Subsec. (c) to replace “was, or is reasonably believed to have been accessed by an unauthorized person” with “was breached or is reasonably believed to have been breached”; P.A. 18-90 amended Subsec. (a)(1) by deleting “account number,” in Subpara. (C), adding Subpara. (D) re financial account number, and making a technical change, and amended Subsec. (b)(2)(B) by replacing “twelve months” with “twenty-four months” re period for which service is to be provided at no cost to resident; P.A. 19-117 amended Subsec. (b)(2)(B) by replacing provision re personal information under Sec. 38a-999b(a)(4)(A) with provision re nonpublic information under Sec. 38a-38(b)(9)(B)(i) and made a conforming change, effective October 1, 2020; P.A. 19-196 changed effective date of P.A. 19-117 from October 1, 2020, to October 1, 2021, effective July 8, 2019.
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Sec. 36a-701c. Regulations. The Banking Commissioner shall adopt regulations in accordance with chapter 54 to require credit rating agencies to provide to the Banking Commissioner dedicated points of contact through which the Department of Banking may assist consumers in the event of a data breach.
(P.A. 18-90, S. 3.)
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Secs. 36a-702 to 36a-704. Reserved for future use.
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PART VI
MORTGAGE PROCESSING
Sec. 36a-705. (Formerly Sec. 36-442). Definitions. As used in this section and sections 36a-706, 36a-707 and 36a-708, unless the context otherwise requires:
(1) “First mortgage loan” means “first mortgage loan”, as defined in section 36a-485;
(2) “Mortgage broker” means a “mortgage broker”, as defined in section 36a-485, who is licensed or required to be licensed under sections 36a-485 to 36a-498a, inclusive;
(3) “Mortgage lender” means a “mortgage lender” or “mortgage correspondent lender”, as defined in section 36a-485, who is required to be licensed under sections 36a-485 to 36a-498a, inclusive, except that the term shall include a bank, out-of-state bank, Connecticut credit union, federal credit union and out-of-state credit union; and
(4) “Mortgage rate lock-in” means a written or electronically transmitted confirmation issued to a mortgage applicant or the representative of such applicant by a mortgage lender or mortgage correspondent lender or the mortgage lender's or mortgage correspondent lender's representative, prior to the issuance of a first mortgage loan commitment, stating that a particular rate, number of points or variable rate terms will be the rate, number of points, or variable rate terms at which the mortgage lender or mortgage correspondent lender will make the loan, provided the first mortgage loan is closed by a specified date, and the applicant qualifies for the loan in accordance with the mortgage lender's or mortgage correspondent lender's standards of creditworthiness.
(P.A. 87-73, S. 1; P.A. 92-12, S. 89; P.A. 94-122, S. 311, 340; P.A. 04-69, S. 26; 04-105, S. 1; P.A. 05-74, S. 4; P.A. 08-176, S. 59.)
History: P.A. 92-12 redesignated Subdivs.; P.A. 94-122 deleted the definition of “person”, reordered definitions and made technical changes, effective January 1, 1995; Sec. 36-442 transferred to Sec. 36a-705 in 1995; P.A. 04-69 amended Subdiv. (2) to substitute “36a-498a” for “36a-498”; P.A. 04-105 added reference to Sec. 36a-708, redefined “first mortgage loan” in Subdiv. (1), added new Subdiv. (2) defining “mortgage lender”, redesignated existing Subdivs. (2) and (3) as new Subdivs. (3) and (4), respectively, and redefined “mortgage lender” and “mortgage rate lock-in” therein, effective May 21, 2004; P.A. 05-74 amended Subdiv. (3) to make a technical change, effective June 2, 2005; P.A. 08-176 added references to “mortgage correspondent lender” and made conforming and technical changes, effective July 1, 2008.
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Sec. 36a-706. (Formerly Sec. 36-442a). Mortgage rate lock-in. (a) Duration. (1) No mortgage lender shall commit to a first mortgage loan applicant or the applicant's representative that the lender will make the loan at a specified rate if the loan is closed by the expiration of a specified period of time except by issuing a mortgage rate lock-in, and the period for which the terms are locked in is at least as long as the mortgage lender's good faith estimate of the anticipated time from when the mortgage loan application is submitted to the lender to the time when such lender will be ready to close such loan, taking into consideration current market conditions and the processing requirements for the type of first mortgage loan in question. (2) In the event a mortgage rate lock-in is issued after the mortgage loan application is submitted to the lender, the minimum period for which the terms may be locked in shall be the period determined in accordance with subdivision (1) of this subsection, less the number of days elapsed since the application was submitted to the lender.
(b) Closing required in accordance with lock-in. Exceptions. Any first mortgage loan application for which a mortgage rate lock-in has been issued shall, unless it is denied in accordance with the mortgage lender's standards of creditworthiness, be closed at the terms specified in the mortgage rate lock-in regardless of whether the specified lock-in date has expired, unless the failure to close the first mortgage loan is the result of the following: (1) The applicant has failed to provide information or documentation required by the lender in a timely manner; (2) the applicant or the applicant's attorney has failed to close the first mortgage loan on or before the date specified by the mortgage lender; (3) the applicant has failed to produce, at or before the closing, all of the documentation specified by the mortgage loan commitment as being required for closing; or (4) the applicant has provided or omitted any information, in the application or subsequently, which upon verification proves to be significantly inaccurate causing the need for review or further investigation by the lender. Information is significantly inaccurate if the information as verified would cause the applicant to be disqualified for the type of first mortgage loan for which the applicant has applied or would cause the secondary market source for which the first mortgage loan is being originated to refuse to purchase the loan.
(c) Refund of fees. In any case where a first mortgage loan has not been closed, and the application has not been rejected in accordance with the mortgage lender's standards of creditworthiness, ninety days after the filing of an application for a first mortgage loan with an initial loan to value ratio of eighty per cent or less or one hundred twenty days after filing an application for a first mortgage loan with an initial loan to value ratio of more than eighty per cent, or a first mortgage loan to be insured or guaranteed by any agency of the federal government, or any state or municipal government, or any quasi-governmental agency, whether or not there has been a mortgage rate lock-in, the applicant shall be entitled upon written request, which shall be made not later than thirty days after the expiration of the ninety or one-hundred-twenty-day period, as applicable, to a full refund of all funds paid to the mortgage lender unless the failure to close was caused by the applicant for one of the reasons set forth in subdivisions (1) to (4), inclusive, of subsection (b) of this section or the applicant has requested a closing date which is later than ninety days after application for a first mortgage loan with an initial loan to value ratio of eighty per cent or less or one hundred twenty days for a first mortgage loan with an initial loan to value ratio of more than eighty per cent or which is to be insured or guaranteed by any agency of the federal government, or any state or municipal government, or any quasi-governmental agency.
(d) Mortgage rate lock-in generally. Information requested by lender. For the purposes of subsections (b) and (c) of this section:
(1) An applicant shall be deemed to have provided information or documentation in a timely manner if such information or documentation is delivered to the mortgage lender or a representative of the mortgage lender not later than seven calendar days after it is requested.
(2) If a written first mortgage loan commitment issued by a mortgage lender contains any conditions to be satisfied by the applicant, the mortgage lender shall specify a closing date no sooner than seven calendar days after the issuance of such commitment unless an earlier date is requested by the applicant.
(3) Any new information or documentation requested by the mortgage lender within seven calendar days before the expiration of any rate lock-in period shall serve to extend the rate lock-in period by seven calendar days from the date of such request. Information or documentation is not new if the request is made necessary by inaccuracies in or omissions from previously provided information, by changes in the information previously provided by the applicant, or questions raised as the result of appraisals, pest inspections, water or sewer tests, engineering reports or reports of a similar nature.
(4) If an applicant chooses to change the type or amount of a first mortgage loan for which application is made, or does not qualify for a particular type or amount of first mortgage loan and chooses to apply for another, any mortgage rate lock-in shall be void and any subsequent rate lock-in shall be evidenced by a new mortgage rate lock-in and the application shall be considered a new application for the purposes of sections 36a-705 to 36a-707, inclusive.
(5) A mortgage rate lock-in shall not be binding on the mortgage lender in connection with the application for any first mortgage loan which is to be insured or guaranteed by any agency of the federal government or any state or municipal government or quasi-governmental agency in the event the loan program for which the applicant has applied becomes unavailable subsequent to filing an application because of actions taken by that governmental agency. In such cases the applicant shall be entitled to a refund of all funds paid by the applicant which have not actually been expended by the mortgage lender.
(6) If the mortgage lender requires that the closing of the first mortgage loan be conducted by a particular attorney or law firm, and that attorney or law firm is not available to conduct the closing before a first mortgage loan commitment period or rate lock-in period expires, the mortgage lender shall extend the first mortgage loan commitment or rate lock-in period until the designated attorney is available to conduct the closing.
(P.A. 87-73, S. 2; P.A. 88-364, S. 54, 123; P.A. 04-105, S. 2.)
History: P.A. 88-364 made a technical change; Sec. 36-442a transferred to Sec. 36a-706 in 1995; P.A. 04-105 amended Subsec. (a)(1) to substitute requirement that no mortgage lender shall commit to a first mortgage loan applicant or the applicant's representative that lender will make the loan at a specified rate if loan is closed by expiration of specified time period except by issuing a mortgage rate lock-in for requirement that no mortgage lender shall “enter into a mortgage rate lock-in agreement unless such agreement is in writing”, amended Subsec. (a)(2) to substitute “is issued” for “agreement is executed”, amended Subsec. (b) to eliminate references to “agreement”, to substitute “date” for “period” and to make a technical change, amended Subsecs. (c) and (d)(1) to make technical changes, amended Subsec. (d)(2) to insert “first mortgage loan” to qualify “written commitment” and to make a technical change, amended Subsec. (d)(4) to substitute “mortgage rate lock-in” for “rate lock-in agreement” and “written agreement” and to make a technical change, amended Subsec. (d)(5) to eliminate reference to “agreement”, and amended Subsec. (d)(6) to insert “first mortgage loan” to qualify “commitment”, effective May 21, 2004.
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Sec. 36a-707. (Formerly Sec. 36-442b). Applicant's remedies. (a) Any mortgage lender who violates any provision of sections 36a-705 to 36a-707, inclusive, with respect to any applicant shall be liable to such applicant for all fees and charges paid by the applicant in connection with the application for a first mortgage loan.
(b) No provision of sections 36a-705 to 36a-707, inclusive, shall be construed or implied to impose an obligation on any party by implication unless expressly stated in said sections.
(c) No provision of sections 36a-705 to 36a-707, inclusive, shall be considered as a limitation of the applicant's ability to seek such equitable relief as may be provided by any other statute or at common law.
(P.A. 87-73, S. 3.)
History: Sec. 36-442b transferred to Sec. 36a-707 in 1995.
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Sec. 36a-708. Prohibited acts by mortgage brokers. No mortgage broker shall collect a rate lock-in fee, except where required by a governmental agency to be collected directly by the mortgage broker, issue a mortgage rate lock-in or otherwise represent to a first mortgage loan applicant or the applicant's representative that the loan will be made at a specified rate if the loan is closed by the expiration of a specified period of time. Notwithstanding the provisions of this section, a mortgage broker may provide a mortgage lender's mortgage rate lock-in to a mortgage loan applicant or the applicant's representative on behalf of such mortgage lender and collect a rate lock-in fee on the mortgage lender's behalf payable to the mortgage lender.
(P.A. 04-105, S. 3.)
History: P.A. 04-105 effective May 21, 2004.
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Secs. 36a-709 to 36a-714. Reserved for future use.
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PART VII
MORTGAGE SERVICING
Sec. 36a-715. (Formerly Sec. 36-442m). Definitions. As used in sections 36a-715 to 36a-719l, inclusive, unless the context otherwise requires:
(1) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage servicer.
(2) The terms “advertise or advertising”, “control person”, “individual”, “main office”, “mortgage broker”, “mortgage correspondent lender”, “mortgage lender”, “office”, “person” and “unique identifier” have the same meanings as provided in section 36a-485.
(3) “Mortgage servicer” (A) means any person, wherever located, who, for such person or on behalf of the holder of a residential mortgage loan, receives payments of principal and interest in connection with a residential mortgage loan, records such payments on such person's books and records and performs such other administrative functions as may be necessary to properly carry out the mortgage holder's obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of such funds to the taxing authority and insurance company, and (B) includes a person who makes payments to borrowers pursuant to the terms of a home equity conversion mortgage or reverse mortgage.
(4) “Mortgagee” means the grantee of a residential mortgage, provided if the residential mortgage has been assigned of record, “mortgagee” means the last person to whom the residential mortgage has been assigned of record.
(5) “Mortgagor” means any person obligated to repay a residential mortgage loan.
(6) “Residential mortgage loan” means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling, as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602, located in this state, or real property located in this state upon which is constructed or intended to be constructed a dwelling.
(P.A. 89-347, S. 3; P.A. 92-12, S. 90; P.A. 94-122, S. 312, 340; P.A. 04-257, S. 107; P.A. 08-176, S. 60; P.A. 14-89, S. 1; P.A. 18-173, S. 70.)
History: P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-442m transferred to Sec. 36a-715 in 1995; P.A. 04-257 made a technical change in Subdiv. (1), effective June 14, 2004; P.A. 08-176 made a technical change in Subdiv. (1), effective July 1, 2008; P.A. 14-89 added reference to Secs. 36a-719 to 36a-719l, deleted former Subdiv. (1) re definition of “first mortgage loan”, added new Subdiv. (1) defining “branch office” and new Subdiv. (2) defining “control person”, “individual”, “main office”, “mortgage broker”, “mortgage correspondent lender”, “mortgage lender”, “office” and “person”, redesignated existing Subdiv. (2) as Subdiv. (3) and amended same to replace “mortgage servicing company” with “mortgage servicer”, added new Subdiv. (4) defining “mortgagee”, redesignated existing Subdiv. (3) as Subdiv. (5), added Subdiv. (6) defining “residential mortgage loan” and made technical and conforming changes; P.A. 18-173 amended Subdiv. (2) by adding “advertise or advertising,” and “unique identifier” and made technical changes.
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Sec. 36a-716. (Formerly Sec. 36-442n). Escrow accounts. (a) Any mortgage servicer who receives funds from a mortgagor to be held in escrow for payment of taxes and insurance premiums shall:
(1) Keep records that (A) reflect the mortgage servicer's handling of each mortgagor's escrow account, which may involve electronic storage, microfiche storage or any method of computerized storage of information, provided the information is readily retrievable, and (B) shall include, but need not be limited to, the payment of amounts into and from the escrow account and the submission of initial and annual escrow account statements to the mortgagor in accordance with subsections (g) and (i) of 12 CFR 1024.17. Such records shall be maintained for each such account for a period of at least five years after the mortgage servicer last serviced the escrow account.
(2) Pay the taxes and insurance premiums of the mortgagor to the appropriate taxing authority and insurance company in the amount required and at the time such taxes and insurance premiums are due, provided (A) the mortgage servicer has been provided with the tax or insurance bills at least fifteen days prior to the date such taxes and insurance premiums are due, and (B) the mortgagor has paid to the mortgage servicer the amounts required to be paid into the escrow account, as determined by the mortgage servicer, for all amounts scheduled to be paid to the mortgage servicer prior to the date such taxes and insurance premiums are due.
(b) Each mortgage servicer shall, through its own effort and expense, determine and notify the mortgagor of the amounts necessary to be paid into the escrow account to assure that sufficient funds will be available for the payment of such taxes and insurance premiums as of the date such payment is due.
(c) If the amount held in the escrow account as of the date such taxes and insurance premiums are due is insufficient to pay the taxes and insurance premiums despite compliance by the mortgagor with subparagraph (B) of subdivision (2) of subsection (a) of this section, the mortgage servicer shall pay such taxes and insurance premiums from its own funds. The mortgage servicer shall then give the mortgagor the option of paying the shortage over a period of not less than one year. The mortgage servicer shall not charge or collect interest on such shortage during the one-year period.
(d) Whenever a mortgage servicer licensee receives funds from a mortgagor to be held in escrow for the payment of taxes and insurance, the mortgage servicer licensee shall deposit or invest such funds in one or more segregated deposit or trust accounts maintained at a federally insured bank, Connecticut credit union, federal credit union or out-of-state bank, which account or accounts shall be reconciled monthly. Such reconciliation may be evidenced by a monthly account statement or statements furnished by the depository institution, provided (1) such account or accounts shall be maintained with the depository institution in a manner that reasonably reflects the fact that the funds held therein are being maintained for escrow purposes, (2) such funds shall not be commingled with funds belonging to the mortgage servicer licensee and may not be used to pay business operating expenses of the mortgage servicer licensee, and (3) the mortgage servicer licensee shall adopt, implement and maintain internal accounting controls that are reasonably designed to ensure compliance with this section. For purposes of this subsection, “mortgage servicer licensee” means a person who is licensed pursuant to section 36a-719 or exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718.
(P.A. 89-347, S. 4; P.A. 14-89, S. 2; P.A. 16-65, S. 8.)
History: Sec. 36-442n transferred to Sec. 36a-716 in 1995; P.A. 14-89 replaced references to mortgage servicing company with references to mortgage servicer; P.A. 16-65 amended Subsec. (a) by adding new Subdiv. (1) re records and designating existing provisions re payment of taxes and insurance premiums as new Subdiv. (2), added new Subsec. (d) re mortgage servicer licensee requirements, and made conforming changes, effective July 1, 2016.
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Sec. 36a-717. (Formerly Sec. 36-442o). Penalties. Any mortgage servicer who violates any provision of section 36a-716 shall be liable to the mortgagor for: (1) Any penalties, interest or other charges levied by the taxing authority or insurance company as a result of such violation; (2) any actual damages suffered by the mortgagor as a result of such violation, including, but not limited to, any amount which would have been paid by an insurer for a casualty or liability claim had the insurance policy not been cancelled for nonpayment by the mortgage servicer; and (3) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney's fees as determined by the court.
(P.A. 89-347, S. 5; P.A. 14-89, S. 3.)
History: Sec. 36-442o transferred to Sec. 36a-717 in 1995; P.A. 14-89 replaced references to mortgage servicing company with references to mortgage servicer.
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Sec. 36a-718. (Formerly Sec. 36-442p). Licenses required. Exemptions. (a) On and after January 1, 2015, no person shall act as a mortgage servicer, directly or indirectly, without first obtaining a license under section 36a-719 from the commissioner for its main office and for each branch office where such business is conducted, unless such person is exempt from licensure pursuant to subsection (b) of this section. Any activity subject to licensure pursuant to sections 36a-715 to 36a-719l, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(b) The following persons are exempt from mortgage servicer licensing requirements: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured; (2) any wholly-owned subsidiary of such bank or credit union; (3) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union; (4) any person licensed as a mortgage lender in this state while acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, provided (A) such person meets the supplemental mortgage servicer surety bond, fidelity bond and errors and omissions coverage requirements under section 36a-719c, and (B) during any period that the license of the mortgage lender in this state has been suspended, such exemption shall not be effective; and (5) any person licensed as a mortgage correspondent lender in this state while acting as a mortgage servicer with respect to any residential mortgage loan it has made and during the permitted ninety-day holding period for such loan from a location licensed as a main office or branch office under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, provided during any period the license of the mortgage correspondent lender in this state has been suspended, such exemption shall not be effective.
(c) The provisions of sections 36a-719e to 36a-719h, inclusive, shall apply to any person, including a person exempt from licensure pursuant to subsection (b) of this section, who acts as a mortgage servicer in this state on or after January 1, 2015.
(P.A. 88-230, S. 1, 12; P.A. 89-347, S. 6; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 313, 340; P.A. 01-48, S. 13; P.A. 09-208, S. 34; P.A. 14-89, S. 4; P.A. 15-53, S. 1; P.A. 18-173, S. 71.)
History: (Revisor's note: P.A. 88-230 authorized substitution of “judicial district of Hartford” for “judicial district of Hartford-New Britain” in the public and special acts of 1989, effective September 1, 1991); P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted provisions allowing the commissioner to bring an enforcement action in superior court and to fine violators up to $2,500 and made technical changes, effective January 1, 1995; Sec. 36-442p transferred to Sec. 36a-718 in 1995; P.A. 01-48 added provision re express delivery; P.A. 09-208 added “take action against such mortgage servicing company” and reference to Sec. 36a-50 and deleted “, order the mortgage servicing company to cease and desist from such violation”, effective July 7, 2009; P.A. 14-89 replaced former provisions re violation by mortgage servicing company with Subsec. (a) re mortgage servicers to be licensed, Subsec. (b) re exemptions from licensure and Subsec. (c) re application of requirements to person acting as a mortgage servicer in this state on or after January 1, 2015; P.A. 15-53 amended Subsec. (b) to add Subdiv. (5) re exemption for licensed mortgage correspondent lender, effective June 19, 2015; P.A. 18-173 amended Subsec. (a) by adding provision re activity subject to licensure to be conducted from an office located in a state, and amended Subsec. (b) by replacing references to Sec. 36a-498f with references to Sec. 36a-498e in Subdivs. (4) and (5).
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Sec. 36a-719. Mortgage servicer license. Issuance. Application. Criminal history records checks. Renewal standards. Automatic suspension of license. Abandonment of application. Schedule and report. Unique identifier of license. Advertising of license. (a) The commissioner shall issue a mortgage servicer license to an applicant for such license if the commissioner finds that: (1) The applicant has identified a qualified individual for its main office and a branch manager for each branch office where such business is conducted, provided such qualified individual and branch manager have supervisory authority over the mortgage servicer activities at the respective office location and at least three years' experience in the mortgage servicing business within the five years immediately preceding the date of the application for licensure; (2) notwithstanding the provisions of section 46a-80, the applicant, the control persons of the applicant, the qualified individual and any branch manager have not been convicted of or pled guilty or nolo contendere to, in a domestic, foreign or military court, a felony during the seven-year period preceding the date of the application for licensing or a felony involving an act of fraud or dishonesty, a breach of trust or money laundering at any time preceding the date of application, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (3) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant, the qualified individual and any branch manager command the confidence of the community and warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-715 to 36a-719l, inclusive; (4) the applicant has met the surety bond, fidelity bond and errors and omissions coverage requirement under section 36a-719c; (5) the applicant, the control persons of the applicant, the qualified individual and any branch manager have not made a material misstatement in the application; and (6) the applicant has met any other similar requirements as determined by the commissioner. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. The commissioner may waive the requirements of subdivision (1) of this subsection relating to the supervision and experience of (A) a qualified individual where the applicant establishes to the satisfaction of the commissioner that the applicant (i) will not conduct any activity subject to licensure under sections 36a-715 to 36a-719l, inclusive, at the main office, and (ii) has designated a qualified individual who is responsible for the actions of the applicant; and (B) a qualified individual or a branch manager where the applicant establishes to the satisfaction of the commissioner that the applicant (i) holds only mortgage servicing rights at the main office or branch office and conducts no other activity at such office, and (ii) has designated a qualified individual or branch manager at such main office or branch office who is responsible for the actions of the application. No person licensed as a mortgage servicer and granted a waiver by the commissioner shall engage in any activity that would have precluded the issuance of such waiver without first designating a qualified individual or branch manager, as the case may be, who meets all applicable requirements of subdivision (1) of this subsection and is approved by the commissioner. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event such jurisdiction does not use the term “felony”, “pardon” or “expungement”, such terms shall include legally equivalent events. For purposes of subdivision (1) of this subsection, “experience in the mortgage servicing business” means paid experience in the (I) servicing of mortgage loans, (II) accounting, receipt and processing of payments on behalf of mortgagees or creditors, or (III) supervision of such activities, or any other relevant experience as determined by the commissioner, and “at the respective office location” may be established if the qualified individual or branch manager resides not more than one hundred miles from the location of the office or otherwise demonstrates to the satisfaction of the commissioner an ability to provide full-time, in-person supervision of the office.
(b) An application for a license as a mortgage servicer or renewal of such license shall be made and processed on the system pursuant to section 36a-24b in a form prescribed by the commissioner and accompanied by the fees required by section 36a-719b. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-715 to 36a-719l, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. For the purpose of this subsection, evidence of experience of the qualified individual and any branch manager shall include: (1) A statement specifying the duties and responsibilities of such person's employment, the term of employment, including month and year, and the name, address and telephone number of a supervisor, employer or, if self-employed, a business reference; and (2) if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer's letterhead verifying such person's duties and responsibilities and term of employment including month and year, and, if such person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement. As part of an application, the commissioner may (A) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager, and (B) in accordance with section 36a-24b (i) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual and any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (ii) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time.
(c) (1) The minimum standards for license renewal for a mortgage servicer shall include the following: (A) The applicant continues to meet the minimum standards under subsection (a) of this section; (B) the mortgage servicer has paid all required fees for renewal of the license; and (C) the applicant has paid any outstanding examination fees or other moneys due to the commissioner.
(2) The license of a mortgage servicer failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage servicer license if the licensee receives a deficiency on the system indicating that the payment required by section 36a-719b was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(d) The commissioner may deem an application for a license under this section abandoned if the applicant fails to respond to any request for information required under sections 36a-715 to 36a-719l, inclusive, or the regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days from the date of such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license.
(e) As part of its application and upon a change to such information, a mortgage servicer shall file with the commissioner a current schedule of the ranges of costs and fees it charges mortgagors for its servicing-related activities.
(f) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each mortgage servicer licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision. At least annually, a licensee shall file with the commissioner a report in a form and format acceptable to the commissioner detailing the mortgage servicer's activities in the state, including (1) the number of residential mortgage loans the mortgage servicer is servicing, (2) the type and characteristics of the residential mortgage loans in this state, (3) the number of serviced residential mortgage loans in default, along with a breakdown of thirty-day, sixty-day and ninety-day delinquencies, (4) information on loss mitigation activities, and (5) information on foreclosures commenced in this state.
(g) The unique identifier of any person licensed under this section shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under this section: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-715 to 36a-719l, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(P.A. 14-89, S. 5; P.A. 17-38, S. 15, 17-233, S. 26; P.A. 18-173, S. 72.)
History: P.A. 17-38 amended Subsec. (d)(1) by replacing “receipt by the commissioner of a notice of intent to withdraw such application” with “the commissioner's acceptance on the system of a withdrawal request”; P.A. 17-233 amended Subsec. (f) by deleting “At least annually” and adding “and upon a change to such information” re filing with commissioner current schedule of ranges of costs and fees charged for servicing-related activities, deleting Subdiv. (1) and (2) designators and redesignating existing Subparas. (A) to (E) as Subdivs. (1) to (5), adding “At least annually, a licensee shall file with the commissioner” re report, deleting “including details on workout arrangements undertaken,” in redesignated Subdiv. (4), and making technical changes; P.A. 18-173 amended Subsec. (a) by deleting provision re branch manager to have supervisory authority over office for which license is sought in Subdivs. (2) and (3), adding “the control persons of the applicant, the qualified individual and the branch manager” in Subdiv. (5), adding provisions re commissioner's authority to waive supervision and experience requirements, replacing Subpara. (A) to (C) designators with clause (I) to (III) designators, and adding provision re establishment of “at the respective office location”, amended Subsec. (b) by replacing provision re application to be filed with the system with provision re application to be made and processed on the system pursuant to Sec. 36a-24b, deleting “36a-718, inclusive, and sections 36a-719a to”, deleting provision re applicant to notify commissioner on the system of change to information, deleting provision re commissioner's authority to conduct criminal history records check and require applicant to submit fingerprints, and adding provisions re commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition of person, amended Subsec. (c) by adding Subpara. (C) re applicant has paid outstanding examination fees or other moneys due in Subdiv. (1), adding Subpara. (A) and (B) designators and replacing “action that, in the opinion of the commissioner, will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section” in Subdiv. (2), deleted former Subsec. (d) re withdrawal of application, redesignated existing Subsecs. (e) and (f) as Subsecs. (d) and (e), amended Subsec. (f) by adding provisions re person filing or submitting information on the system to do so in accordance with procedures and requirements and timely submission of accurate reports of condition, added Subsec. (g) re unique identifier and solicitations and advertisements, and made technical and conforming changes.
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Sec. 36a-719a. License not assignable or transferable. Change in any control persons. Surrender of license. Change of name or address. Required filings on system or notification of commissioner. Automatic suspension of license. (a) A mortgage servicer license shall not be transferable or assignable. Any change in any control person of a licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. Any licensee who intends to permanently cease acting as a mortgage servicer at any time during a license period for any cause, including, but not limited to, bankruptcy or voluntary dissolution, shall file a request to surrender the license in accordance with subsection (c) of section 36a-51, for each office at which the licensee intends to cease to do business, on the system, not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.
(b) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address stated on the license issued by the commissioner. A mortgage servicer licensee may change the name of the licensee or address of any office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system and, in the case of a main office or branch office, provides the commissioner a bond rider or endorsement, or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner that reflects the new name or address of the main office or branch office; and (2) the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.
(c) Except as otherwise specified in subsections (a) and (b) of this section, each mortgage servicer applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file to the system any change in the information most recently submitted to the system by such applicant, licensee, control person, qualified individual or branch manager in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days from the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change. A mortgage servicer licensee shall file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, not later than fifteen business days after the licensee has reason to know of the occurrence of any of the following events:
(1) Filing for bankruptcy, or the consummation of a corporate restructuring, of the licensee;
(2) Filing of a criminal indictment against the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, qualified individual or branch manager of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee or any control person, qualified individual or branch manager of the licensee and the reasons for such action;
(4) Receiving notification of the initiation of any action against the licensee or any control person, qualified individual or branch manager of the licensee by the Attorney General or the attorney general of any other state and the reasons for such action;
(5) Suspension or termination of the licensee's status as an approved seller or servicer by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association;
(6) Receiving notification that certain servicing rights of the licensee will be rescinded or cancelled, and the reasons provided therefor;
(7) Receiving notification of filing for bankruptcy of any control person, qualified individual or branch manager of the licensee; or
(8) Receiving notification of the initiation of a class action lawsuit on behalf of consumers against the licensee that is related to the operation of the licensed business.
(d) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section or upon a failure of the licensee to designate a qualified individual or branch manager who meets the requirements set forth in section 36a-719 not later than thirty days after a vacancy in the position. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(P.A. 14-89, S. 6; P.A. 18-173, S. 73.)
History: P.A. 18-173 amended Subsec. (a) by replacing provision re licensee's use of name other than approved legal or fictitious name with provision re filing of advance change notice on the system, and adding reference to Sec. 36a-51(c), amended Subsec. (b) by adding provisions re licensee's use of approved legal or fictitious name and use of name or address stated on license, deleting “, directly to” re providing bond rider or endorsement or addendum to commissioner in Subdiv. (1), amended Subsec. (c) by adding provisions re filing change in information to the system or notification to commissioner in writing, replacing reference to 5 business days with reference to 15 business days re notice to commissioner, replacing references to officers, directors, members, partners or shareholders with references to control person, qualified individual or branch manager in Subdivs. (2) and (7), and adding references to control person, qualified individual or branch manager in Subdivs. (3) and (4), added Subsec. (d) re automatic suspension of license, and made technical changes.
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Sec. 36a-719b. Expiration of license. Application for renewal. Fees. (a) Each mortgage servicer license shall expire at the close of business on December thirty-first of the year in which it is approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for an initial license or renewal of a license as a mortgage servicer shall pay to the system any required fees or charges and a license fee of one thousand dollars.
(b) All fees paid pursuant to this section, including fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license, shall be nonrefundable. No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.
(P.A. 14-89, S. 7.)
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Sec. 36a-719c. Surety bond, fidelity bond and errors and omissions coverage. Cancellation. Automatic suspension of license. Notices. (a) Each mortgage servicer applicant or licensee and any person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 shall file with the commissioner (1) a surety bond, written by a surety authorized to write such bonds in this state, covering its main office and any branch office from which it acts as mortgage servicer, in a penal sum of one hundred thousand dollars per office location in accordance with subsection (b) of this section, (2) a fidelity bond, written by a surety authorized to write such bonds in this state, in accordance with the requirements of subsection (c) of this section, and (3) evidence of errors and omissions coverage, written by a surety authorized to write such coverage in this state, in accordance with the requirements of subsection (c) of this section. No mortgage servicer licensee and no person otherwise exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 shall act as a mortgage servicer in this state without maintaining the surety bond, fidelity bond and errors and omissions coverage required by this section.
(b) The surety bond required by subsection (a) of this section shall be (1) in a form approved by the Attorney General; and (2) conditioned upon the mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 faithfully performing any and all written agreements or commitments with or for the benefit of mortgagors and mortgagees, truly and faithfully accounting for all funds received from a mortgagor or mortgagee in such person's capacity as a mortgage servicer, and conducting such mortgage business consistent with the provisions of sections 36a-715 to 36a-719l, inclusive. Any mortgagor that may be damaged by the failure of a mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (4) of subsection (b) of section 36a-718 to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a mortgagor to such licensee or person, may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety on such bond, or both, to collect any civil penalty imposed pursuant to subsection (a) of section 36a-50, any restitution imposed pursuant to subsection (c) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The surety bond shall run concurrently with the period of the license for the main office of the mortgage servicer or mortgage lender and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.
(c) The fidelity bond and errors and omissions coverage required by subsection (a) of this section shall name the commissioner as an additional loss payee on drafts the surety issues to pay for covered losses directly or indirectly incurred by mortgagors of residential mortgage loans serviced by the mortgage servicer. The fidelity bond shall cover losses arising from dishonest and fraudulent acts, embezzlement, misplacement, forgery and similar events committed by employees of the mortgage servicer. The errors and omissions coverage shall cover losses arising from negligence, errors and omissions by the mortgage servicer with respect to the payment of real estate taxes and special assessments, hazard and flood insurance or the maintenance of mortgage and guaranty insurance. The fidelity bond and errors and omissions coverage shall each be in the following principal amounts based on the mortgage servicer's volume of servicing activity most recently reported to the commissioner:
(1) If the amount of the residential mortgage loans serviced is one hundred million dollars or less, the principal amount shall be at least three hundred thousand dollars; or
(2) If the amount of such loans exceeds one hundred million dollars, the principal amount shall be at least three hundred thousand dollars plus (A) three-twentieths of one per cent of the amount of residential mortgage loans serviced greater than one hundred million dollars but less than or equal to five hundred million dollars; (B) plus one-eighth of one per cent of the amount of residential mortgage loans serviced greater than five hundred million dollars but less than or equal to one billion dollars; and (C) plus one-tenth of one per cent of the amount of residential mortgage loans serviced greater than one billion dollars.
The fidelity bond and errors and omissions coverage may provide for a deductible amount not to exceed the greater of one hundred thousand dollars or five per cent of the face amount of such bond or coverage.
(d) A surety shall have the right to cancel the surety bond, fidelity bond and errors and omissions coverage required by this section at any time by a written notice to the principal and the commissioner stating the date cancellation shall take effect. If the surety bond required by this section was issued electronically on the system, written notice of cancellation may be provided by the surety company to the principal and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the principal and the commissioner at least thirty days prior to the date of cancellation. A surety bond, fidelity bond or errors and omissions coverage shall not be cancelled unless the surety notifies the commissioner, in writing, not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the principal of the date such cancellation shall take effect. The commissioner shall automatically suspend the license of a mortgage servicer on such date or on any date when a fidelity bond or errors and omissions coverage expires or is no longer in effect. No automatic suspension or inactivation shall occur if, prior to the date that such bond or errors and omissions coverage cancellation or expiration shall take effect, (1) the principal submits a letter of reinstatement of the bond or errors and omissions coverage, or a new bond or errors and omissions policy; or (2) the mortgage servicer licensee has ceased business in this state and has surrendered all licenses in accordance with section 36a-51 and section 36a-719a. After a mortgage servicer license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-719j and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section. A person licensed as a mortgage lender in this state acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b shall cease to be exempt from mortgage servicer licensing requirements in this state upon cancellation or expiration of any surety bond, fidelity bond or errors and omissions coverage required by this section.
(e) If the commissioner finds that the financial condition of a mortgage servicer or mortgage lender licensee so requires, as evidenced by the reduction of tangible net worth, financial losses or potential losses as a result of a violation of sections 36a-715 to 36a-719k, inclusive, the commissioner may require one or more additional bonds meeting the standards set forth in this section. The licensee shall file any such additional bonds not later than ten days after receipt of the commissioner's written notice of such requirement. A mortgage servicer or mortgage lender licensee shall file, as the commissioner may require, any bond rider or endorsement or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner to reflect any changes necessary to maintain the surety bond, fidelity bond and errors and omissions coverage required by this section.
(P.A. 14-89, S. 8; P.A. 15-53, S. 2; P.A. 18-173, S. 74.)
History: P.A. 15-53 amended Subsec. (c) by adding “at least” re principal amount of bond and replacing “principal amount” with “face amount of such bond or coverage”, effective June 19, 2015; P.A. 18-173 amended Subsec. (d) by adding references to commissioner re cancellation of surety bond by written notice, adding provision re written notice of cancellation through the system if surety bond was issued electronically, adding provision re on date when fidelity bond or errors and omissions coverage expires or is no longer in effect re automatic suspension of license, designating existing provisions re notice of automatic suspension as Subpara. (A), designating existing provisions re requiring licensee to take or refrain from taking action as Subpara. (B) and amending same to replace “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”, and replacing reference to Sec. 36a-498f with reference to Sec. 36a-498e, and made technical and conforming changes.
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Sec. 36a-719d. Records to be maintained by licensee. (a) Each mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer or mortgage lender license, or, if requested by the commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send them to the commissioner. Such records shall provide the following information: (1) A loan history for residential mortgage loans upon which payments are received or made by the mortgage servicer, itemizing the amount and date of each payment and the unpaid balance at all times; (2) the original or an exact copy of the note, residential mortgage or other evidence of indebtedness and mortgage deed; (3) the name and address of the mortgage lender, mortgage correspondent lender and mortgage broker, if any, involved in the residential mortgage loan transaction; (4) copies of any disclosures or notifications provided to the mortgagor required by state or federal law; (5) a copy of any bankruptcy plan approved in a proceeding filed by the mortgagor or a co-owner of the property subject to the residential mortgage loan; (6) a communications log that documents all verbal communications with the mortgagor or the mortgagor's representative; (7) a copy of all notices sent to the mortgagor related to any foreclosure proceeding filed against the encumbered property; and (8) information on loss mitigation activities, included details on workout arrangements undertaken.
(b) Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall retain the records of each residential mortgage loan serviced for not less than two years following the final payment on such residential mortgage loan, or the assignment of such residential mortgage loan, whichever occurs first, or such longer period as may be required by any other provision of law. Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (4) or (5) of subsection (b) of section 36a-718 shall keep and use in its business books, accounts and records that will enable the commissioner to determine whether such mortgage servicer is complying with the provisions of sections 36a-715 to 36a-719l, inclusive, and with any regulations adopted pursuant thereto.
(P.A. 14-89, S. 9; P.A. 15-53, S. 3; P.A. 17-233, S. 27.)
History: P.A. 15-53 added references to Sec. 36a-718(b)(5) and made a technical change, effective June 19, 2015; P.A. 17-233 amended Subsec. (a) to add Subdiv. (8) re information on loss mitigation activities, and make a technical change.
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Sec. 36a-719e. Disclosure of notice and schedule of ranges and categories of costs and fees. Upon assignment of servicing rights on a residential mortgage loan, the mortgage servicer shall disclose to the mortgagor: (1) Any notice required by the Real Estate Settlement Procedures Act of 1974, 12 USC Section 2601 et seq., as from time to time amended, and the regulations promulgated thereunder, and within the time periods prescribed therein; and (2) a schedule of the ranges and categories of its costs and fees for its servicing-related activities, which shall comply with state and federal law and, if such disclosure is made by a mortgage servicer licensee, shall not exceed those reported to the commissioner in accordance with subsection (e) of section 36a-719.
(P.A. 14-89, S. 10; P.A. 18-173, S. 75.)
History: P.A. 14-89 effective January 1, 2015; P.A. 18-173 replaced reference to Sec. 36a-719(f) with reference to Sec. 36a-719(e) and made a technical change.
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Sec. 36a-719f. Compliance with federal laws and regulations. A mortgage servicer shall comply with all applicable federal laws and regulations relating to mortgage loan servicing, including, but not limited to, the Real Estate Settlement Procedures Act of 1974, 12 USC Section 2601 et seq., the Truth-in-Lending Act, 15 USC Section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this section and a basis upon which the Banking Commissioner may take enforcement action pursuant to section 36a-719j.
(P.A. 14-89, S. 11.)
History: P.A. 14-89 effective January 1, 2015.
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Sec. 36a-719g. Fee schedule. Imposition of late fee or delinquency charge. (a) A mortgage servicer shall maintain and keep current a schedule of fees that it charges mortgagors for its servicing-related activities. The schedule shall identify each fee, provide a plain English explanation of the fee and state the amount of the fee or range of amounts or, if there is no standard fee, how the fee is calculated or determined. A mortgage servicer shall make its schedule available to the mortgagor or the mortgagor's authorized representative upon request.
(b) A mortgage servicer shall not impose any late fee or delinquency charge when the only delinquency is attributable to late fees or delinquency charges assessed on an earlier payment, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period. Late charges shall not be (1) based on an amount greater than the past due amount; (2) collected from the escrow account or from escrow surplus without the approval of the mortgagor; or (3) deducted from any regular payment.
(P.A. 14-89, S. 12.)
History: P.A. 14-89 effective January 1, 2015.
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Sec. 36a-719h. Prohibited acts. Duty to establish, enforce and maintain policies and procedures for compliance. (a) No mortgage servicer shall, directly or indirectly:
(1) Employ any scheme, device or artifice to defraud or mislead mortgagors or mortgagees or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of the residential mortgage loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a residential mortgage loan, the terms and conditions of the servicing agreement or the mortgagor's obligations under the residential mortgage loan;
(3) Obtain property by fraud or misrepresentation;
(4) Recklessly apply residential mortgage loan payments or knowingly misapply residential mortgage loan payments to the outstanding balance of a residential mortgage loan;
(5) Recklessly apply payments or knowingly misapply payments to escrow accounts;
(6) Place hazard, homeowners or flood insurance on the mortgaged property when the mortgage servicer knew or should have known that the mortgagor has an effective policy for such insurance;
(7) Fail to comply with section 49-10a;
(8) Knowingly or recklessly provide inaccurate information to a credit bureau that results in harm to a mortgagor's creditworthiness;
(9) Fail to report both the favorable and unfavorable payment history of the mortgagor to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;
(10) Collect private mortgage insurance beyond the date for which private mortgage insurance is required;
(11) Fail to issue a release of mortgage in accordance with section 49-8;
(12) Fail to provide written notice to a mortgagor upon taking action to place hazard, homeowners or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the mortgagor may demonstrate that he or she has the required insurance coverage and by which the mortgage servicer shall terminate the insurance coverage placed by it and refund or cancel any insurance premiums and related fees paid by or charged to the mortgagor;
(13) Place hazard, homeowners or flood insurance on a mortgaged property, or require a mortgagor to obtain or maintain such insurance, in excess of the replacement cost of the improvements on the mortgaged property as established by the property insurer;
(14) Fail to provide to the mortgagor a refund of unearned premiums paid by a mortgagor or charged to the mortgagor for hazard, homeowners or flood insurance placed by a mortgagee or the mortgage servicer if the mortgagor provides reasonable proof that the mortgagor has obtained coverage such that the forced placement insurance is no longer necessary and the property is insured. If the mortgagor provides reasonable proof that no lapse in coverage occurred such that the forced placement was not necessary, the mortgage servicer shall promptly refund the entire premium;
(15) Require any amount of funds to be remitted by means more costly to the mortgagor than a bank or certified check or attorney's check from an attorney's account to be paid by the mortgagor;
(16) Refuse to communicate with an authorized representative of the mortgagor who provides a written authorization signed by the mortgagor, provided the mortgage servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the mortgagor;
(17) Conduct any business covered by sections 36a-715 to 36a-719l, inclusive, without holding a valid license as required under said sections, or assist or aid and abet any person in the conduct of business without a valid license as required under this title;
(18) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or the system or in connection with any investigation conducted by the commissioner or another governmental agency; or
(19) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b.
(b) No mortgage servicer shall fail to establish, enforce and maintain policies and procedures reasonably designed to achieve compliance with subsection (a) of this section, and no qualifying individual or branch manager for such mortgage servicer shall fail to enforce such policies and procedures. No violation of this subsection shall be found unless the mortgage servicer, qualifying individual or branch manager's failure to establish, enforce or maintain policies and procedures resulted in conduct in violation of sections 36a-715 to 36a-724, inclusive, or rules or regulations adopted under said sections or any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections.
(P.A. 14-89, S. 13; P.A. 15-118, S. 29; P.A. 16-65, S. 46; P.A. 17-233, S. 28; P.A. 18-173, S. 76.)
History: P.A. 14-89 effective January 1, 2015; P.A. 15-118 made technical changes in Subdivs. (6), (12), (13) and (14); P.A. 16-65 made technical changes in Subdivs. (4), (5), (6) and (8); P.A. 17-233 designated existing provisions re acts by mortgage servicer as Subsec. (a) and amended same to add “, directly or indirectly”, delete “directly or indirectly” in Subdiv. (1), and replace “Banking Commissioner” with “commissioner” in Subdiv. (18), and added Subsec. (b) re failure to establish, enforce and maintain policies and procedures, effective July 1, 2018; P.A. 18-173 amended Subsec. (a)(19) by replacing “36a-498f” with “36a-498e”, effective July 1, 2018.
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Sec. 36a-719i. Authority of commissioner re investigations and examinations. Prohibited acts by subjects of investigation or examination. Section 36a-719i is repealed, effective October 1, 2018.
(P.A. 14-89, S. 14; P.A. 18-173, S. 102.)
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Sec. 36a-719j. Suspension, revocation or refusal to renew license or taking of other action. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any mortgage servicer license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under section 36a-719, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or any branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misrepresentation or misappropriated funds; (3) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's mortgage servicer business; or (4) failed to perform any agreement with a mortgagee or a mortgagor.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate section 49-8 or 49-10a, any of the provisions of this title or of any regulations adopted pursuant thereto, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to perform any agreement with a mortgagee or mortgagor, committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-715 to 36a-719l, inclusive, from office and from employment or retention as an independent contractor in the mortgage loan servicer business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(P.A. 14-89, S. 15; P.A. 18-173, S. 77.)
History: P.A. 18-173 amended Subsec. (a)(3) by replacing “regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business” with “regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's mortgage servicer business”, amended Subsec. (b) by designating existing provision re person violation provisions of title or regulations as Subdiv. (1), adding Subdiv. (2) re person is, was or would be cause of violation of provision of sections or regulation, and designating existing provision re licensee's failure to perform agreement, committed fraud, made misrepresentation or misappropriated funds as Subdiv. (3), added Subsec. (c) re commissioner's authority to order licensee to remove individual conducting business from office, employment or retention as independent contractor, added Subsec. (d) re commissioner's authority to issue temporary order, and made technical and conforming changes.
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Sec. 36a-719k. Regulations. The Banking Commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of sections 36a-715 to 36a-719l, inclusive.
(P.A. 14-89, S. 16.)
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Sec. 36a-719l. Exemptions. The provisions of sections 36a-718 to 36a-719h, inclusive, shall not apply to (1) a person exempt from licensure as a mortgage lender or mortgage correspondent lender pursuant to subsection (b) of section 36a-487 while servicing residential mortgage loans made pursuant to such exemption, (2) a person servicing five or fewer residential mortgage loans within any period of twelve consecutive months, (3) any agency of the federal government, any state or municipal government or any quasi-governmental agency servicing residential mortgage loans under the specific authority of the laws of any state or the United States, and (4) a person exempt from licensure as a mortgage servicer pursuant to subdivisions (1), (2) and (3) of subsection (b) of section 36a-718.
(P.A. 14-89, S. 17.)
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Secs. 36a-720 to 36a-724. Reserved for future use.
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PART VIII
MORTGAGE INSURANCE
Sec. 36a-725. (Formerly Sec. 36-442aa). Definitions. As used in this section and section 36a-726, unless the context otherwise requires:
(1) “First mortgage loan” means any loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage upon any interest in one-to-four-family residential, owner-occupied real property located in this state which is not subject to any prior mortgages. The term includes the renewal or refinancing of an existing first mortgage loan;
(2) “Mortgage insurance” means insurance written by an independent mortgage insurance company to protect the mortgage lender against loss incurred in the event of a default by a borrower under the mortgage loan;
(3) “Mortgage lender” means any person engaged in the business of making first mortgage loans, including, but not limited to, banks, out-of-state banks, Connecticut credit unions, federal credit unions, out-of-state credit unions, and mortgage lenders and mortgage correspondent lenders required to be licensed under sections 36a-485 to 36a-498a, inclusive.
(P.A. 89-95, S. 1; P.A. 92-12, S. 91; P.A. 94-122, S. 314, 340; P.A. 04-69, S. 27; P.A. 08-176, S. 61; P.A. 10-32, S. 113.)
History: P.A. 92-12 redesignated Subdivs. and made technical changes; P.A. 94-122 deleted the definition of “person”, reordered definitions and made other technical changes, effective January 1, 1995; Sec. 36-442aa transferred to Sec. 36a-725 in 1995; P.A. 04-69 amended Subdiv. (3) to substitute “36a-498a” for “36a-498”; P.A. 08-176 added reference to correspondent mortgage lender and made a conforming change in Subdiv. (3), effective July 1, 2008; P.A. 10-32 substituted “mortgage correspondent lenders” for “correspondent mortgage lenders” in Subdiv. (3), effective May 10, 2010.
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Sec. 36a-726. (Formerly Sec. 36-442bb). Disclosure required. (a) Any mortgage lender who requires a borrower to pay for mortgage insurance as a condition of obtaining a first mortgage loan shall disclose to the applicant in writing at the time the first mortgage loan application is filed:
(1) That the purpose of mortgage insurance is to protect the mortgage lender against a loss which may be incurred in the event of a default by the borrower under the mortgage loan;
(2) That mortgage insurance is required as a condition of obtaining the mortgage loan, and under what, if any, conditions the lender may release the borrower from this obligation;
(3) A good faith estimate of the initial cost, if any, and the monthly cost, if any, of the required mortgage insurance. Notwithstanding the foregoing, if the first mortgage loan transaction is subject to the requirements of the federal Real Estate Settlement Procedures Act, the mortgage lender may, in place of the disclosure required under this subdivision, disclose that the cost of mortgage insurance will be disclosed on the good faith estimate of closing costs required to be furnished to the applicant in accordance with the Real Estate Settlement Procedures Act and the Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder.
(b) Any mortgage lender who does not require mortgage insurance but does charge a higher interest rate for first mortgage loans in excess of an eighty per cent loan-to-value ratio shall disclose this fact to the applicant in writing at the time the first mortgage loan application is filed.
(c) The provisions of subsection (a) of this section shall not apply to any first mortgage loan which is to be insured or guaranteed by any agency of the federal government or any state or municipal government or quasi-governmental agency where such agency requires that mortgage insurance be obtained in connection with the loan.
(P.A. 89-95, S. 2; P.A. 15-235, S. 41.)
History: Sec. 36-442bb transferred to Sec. 36a-726 in 1995; P.A. 15-235 amended Subsec. (a)(3) to add reference to Truth-in-Lending Act, effective August 1, 2015.
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Secs. 36a-727 to 36a-734. Reserved for future use.
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PART IX
HOME MORTGAGE DISCLOSURE
Sec. 36a-735. (Formerly Sec. 36-443). Short title: Home Mortgage Disclosure Act. Sections 36a-735 to 36a-744, inclusive, shall be known and may be cited as the “Home Mortgage Disclosure Act”.
(P.A. 77-153, S. 1; P.A. 94-122, S. 315, 340.)
History: P.A. 94-122 made a technical change, effective January 1, 1995; Sec. 36-443 transferred to Sec. 36a-735 in 1995.
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Sec. 36a-736. (Formerly Sec. 36-444). Definitions. As used in sections 36a-735 to 36a-744, inclusive, unless the context otherwise requires:
(1) “Applicant” means any person who applies for a home purchase loan, home improvement loan or other mortgage loan as defined in sections 36a-735 to 36a-744, inclusive, whether or not the loan is granted;
(2) “Federal Home Mortgage Disclosure Act” means the Home Mortgage Disclosure Act of 1975 (12 USC Section 2801 et seq.), as amended from time to time, and any regulations promulgated by the Federal Reserve Board or the Bureau of Consumer Financial Protection pursuant to that act, except, for purposes of sections 36a-735 to 36a-744, inclusive, the supervisory agency shall be the commissioner;
(3) “Financial institution” means any Connecticut bank or Connecticut credit union which makes home purchase loans or home improvement loans or any for profit mortgage lending institution other than a Connecticut bank or Connecticut credit union, whose home purchase loan originations equaled or exceeded ten per cent of its loan origination volume, measured in dollars, in the preceding calendar year, if such mortgage lending institution is licensed under sections 36a-485 to 36a-498a, inclusive;
(4) “Home improvement loan” has the same meaning as provided in the federal Home Mortgage Disclosure Act;
(5) “Home purchase loan” has the same meaning as provided in the federal Home Mortgage Disclosure Act; and
(6) “Mortgage loan” means a loan which is secured by residential real property.
(P.A. 77-153, S. 2; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 262, 345, 348; P.A. 87-9, S. 2, 3; P.A. 90-34, S. 1, 5; P.A. 93-186, S. 1, 9; P.A. 94-122, S. 316, 340; 94-161, S. 1; May 25 Sp. Sess. 94-1, S. 107, 130; P.A. 96-109, S. 16; 96-180, S. 120, 166; P.A. 04-69, S. 28; P.A. 08-176, S. 62; P.A. 11-110, S. 10.)
History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner within the department of business regulation, reflecting incorporation of banking department as a division within that department, effective January 1, 1979; P.A. 80-482 restored banking division as an independent department and abolished the department of business regulation, allowing omission of reference to abolished department in commissioner's title; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 90-34 amended the definitions of “financial institution” and “home improvement loan”, deleted the definition of “census tract”, added a definition of “federal Home Mortgage Disclosure Act” and renumbered each Subsec., effective May 2, 1990, and applicable to all reports and disclosures required under chapter 661 concerning loans originated or purchased, and loan applications received on and after January 1, 1990; P.A. 93-186 amended the definitions of “financial institution”, “federal Home Mortgage Disclosure Act” and “applicant”, deleted the definition of “mortgage loan” and added definition of “home purchase loan” and renumbered Subdivs. accordingly, effective June 23, 1993; P.A. 94-122 deleted the definition of “commissioner” and reordered the definitions, effective January 1, 1995; P.A. 94-161 inserted new Subdiv. (2) defining “mortgage loan”, renumbered the remaining Subdivs., included “or other mortgage loan” in the definition of “applicant” and made technical changes; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994 and applicable January 1, 1995; Sec. 36-444 transferred to Sec. 36a-736 in 1995; P.A. 96-109 and 96-180 both made technical change in definition of “financial institution”, substituting “or” for “and” in reference to licensure under specified sections; P.A. 04-69 amended Subdiv. (3) to substitute “36a-498a” for “36a-498”; P.A. 08-176 made technical changes, effective July 1, 2008; P.A. 11-110 amended Subdiv. (2) to add reference to Bureau of Consumer Financial Protection, effective July 21, 2011.
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Sec. 36a-737. (Formerly Sec. 36-445). Discrimination in making of home purchase, home improvement and mortgage loans. Applications submitted by members of reserves or National Guard. (a) No financial institution and no federal bank or federal credit union shall discriminate, on a basis that is arbitrary or unsupported by a reasonable analysis of the lending risks associated with the applicant for a given loan or the condition of the property to secure it, in the granting, withholding, extending, modifying, renewing or in the fixing of the rates, terms, conditions or provisions of any home purchase loan, home improvement loan or other mortgage loan on one-to-four-family owner-occupied residential real property, solely because such property is located in a low-income or moderate-income neighborhood or geographical area, provided it shall not be a violation of this section if the home purchase loan, home improvement loan or other mortgage loan is made pursuant to a specific public or private program, the purpose of which is to increase the availability of home purchase loans, home improvement loans or other mortgage loans within a low-income or moderate-income neighborhood or geographical area in which such investment capital has generally been denied.
(b) If a member of any reserve component of the armed forces of the United States, as defined in section 27-103, or a member of the National Guard, is called into active duty after submitting an application to a financial institution, federal bank or federal credit union for a home purchase loan, home improvement loan or other mortgage loan on one-to-four-family owner-occupied residential real property and before the financial institution, federal bank or federal credit union makes a determination on the application, such financial institution, federal bank or federal credit union shall maintain the application on file for two years and two months after such member is called into active duty, if the member submits, not later than thirty days after being called into active duty, a written statement to the financial institution, federal bank or federal credit union indicating that the member (1) has been called into active duty, and (2) requests that the application be maintained on file. If the applicant returns from active duty not later than two years after submitting an application under this section and submits a written statement to the financial institution, federal bank or federal credit union not later than sixty days after being discharged from active duty verifying that there has been no material change in the applicant's income, assets, debts and employment, the financial institution, federal bank or federal credit union shall finalize processing of the application in accordance with the same terms and conditions that it made available to the applicant at the time of application, provided the financial institution, federal bank or federal credit union shall offer to the applicant any different terms and conditions that the financial institution, federal bank or federal credit union is offering to the public at the time of the applicant's return from active duty.
(P.A. 77-153, S. 3; P.A. 93-186, S. 2, 9; P.A. 94-161, S. 2; P.A. 95-155, S. 28, 29; P.A. 03-24, S. 1; P.A. 05-46, S. 14.)
History: P.A. 93-186 deleted references to “mortgage loans” in favor of “home purchase loan” and made technical corrections for clarity and accuracy, effective June 23, 1993; P.A. 94-161 included “other mortgage loans” within the antidiscrimination provision and changed “specific neighborhood” to “low-income or moderate-income neighborhood”; Sec. 36-445 transferred to Sec. 36a-737 in 1995; P.A. 95-155 applied section to federal banks, effective June 27, 1995; P.A. 03-24 designated existing provisions as Subsec. (a) and added Subsec. (b) re loan applications by members of reserves or National Guard called into active duty, effective July 1, 2003; P.A. 05-46 applied section to federal credit unions.
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Sec. 36a-738. (Formerly Sec. 36-446). Disclosure requirements for financial institutions. A financial institution shall comply with all applicable provisions of the federal Home Mortgage Disclosure Act, and, in addition, shall report on the federal Home Mortgage Disclosure Act loan application register the reason for denial in connection with each loan application subject to federal reporting that is denied by the financial institution. Each financial institution shall provide the commissioner with any information required to be disclosed to a federal agency pursuant to the federal Home Mortgage Disclosure Act if requested by the commissioner in any case in which the commissioner is unable to obtain such information from the applicable federal agency.
(P.A. 77-153, S. 4; P.A. 81-128, S. 7, 17; P.A. 84-546, S. 159, 173; P.A. 90-34, S. 2, 5; P.A. 92-2; P.A. 93-186, S. 3, 9; P.A. 94-122, S. 317, 340; 94-161, S. 3; May 25 Sp. Sess. P.A. 94-1, S. 108, 130; P.A. 08-119, S. 15.)
History: P.A. 81-128 amended Subsec. (a) by substituting “United States Department of Commerce” for “Federal Office of Management and Budget” and changed the reporting requirement from fiscal to calendar years, amended Subsec. (b) to indicate when data is disclosed by census tracts or by county, and added Subsec. (e) concerning disclosure to federal authorities; P.A. 84-546 made technical change in Subsec. (a), replacing reference to U.S. Department of Commerce with reference to U.S. Office of Management and Budget; P.A. 90-34 deleted former Subsecs. (a) to (d), relettered Subsec. (e) as Subsec. (b) and added new Subsec. (a) re compliance with the federal Home Mortgage Disclosure Act, effective May 2, 1990, and applicable to all reports and disclosures required under chapter 661 concerning loans originated or purchased, and loan applications received on and after January 1, 1990; P.A. 92-2 added Subsec. (c) re disclosure of reason for denial of mortgage loan application; P.A. 93-186 added a reporting requirement for mortgage loans denied and the basis of denial to both the commissioner and any federal agencies which require such a report and deleted the reporting requirements required by the federal Financial Institutions Examination Council, the Secretary of Housing and Urban Development and the federal Home Mortgage Disclosure Act, effective June 23, 1993; P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; P.A. 94-161 changed “each home purchase loan or home improvement loan application” to “each loan application subject to federal reporting”; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994, and applicable January 1, 1995; Sec. 36-446 transferred to Sec. 36a-738 in 1995; P.A. 08-119 changed requirement for financial institutions to provide information “as the commissioner may require” to “if requested by the commissioner in any case in which the commissioner is unable to obtain such information from the applicable federal agency”.
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Sec. 36a-739. (Formerly Sec. 36-448). Reports by financial institutions. Filing requirements. A financial institution which is required to provide the commissioner with information pursuant to section 36a-738 and which fails to submit such information on the date required shall be fined one hundred dollars for each day on which such information has not been filed after the required date.
(P.A. 77-153, S. 6; 77-614, S. 161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 263, 345, 348; P.A. 87-9, S. 2, 3; P.A. 93-186, S. 4, 9.)
History: P.A. 77-614 and P.A. 78-303 made banking department a division within the department of business regulation, effective January 1, 1979; P.A. 80-482 restored banking division as independent department and abolished the department of business regulation; (Revisor's note: Pursuant to P.A. 87-9 “banking department” was changed editorially by the Revisors to “department of banking”); P.A. 93-186 deleted former Subsec. (a) which had required that reports be filed with banking department and maintained for five years, amended Subsec. (b) re reporting requirements of the commissioner and increased the fine for noncompliance from $10 to $100 per day, effective June 23, 1993; Sec. 36-448 transferred to Sec. 36a-739 in 1995.
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Sec. 36a-740. (Formerly Sec. 36-449). Violations by financial institutions. Rights of loan applicant. Any applicant who has been discriminated against as a result of a violation of section 36a-737 and the regulations adopted pursuant to sections 36a-735 to 36a-744, inclusive, may bring an action in a court of competent jurisdiction. Upon finding that a financial institution is in violation of sections 36a-735 to 36a-744, inclusive, the court may award damages, reasonable attorneys' fees and court costs. No class action shall be permitted pursuant to the provisions of this section. Any applicant alleging a violation under this section shall do so in the applicant's own individual complaint and each case resulting from such complaints shall be heard on its own merits unless consolidation of such cases is agreed to by each defendant affected thereby.
(P.A. 77-153, S. 7; P.A. 94-122, S. 318, 340.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-449 transferred to Sec. 36a-740 in 1995.
Annotations to former section 36-449:
Cited. 183 C. 85; 211 C. 648.
Cited. 10 CA 22.
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Sec. 36a-741. (Formerly Sec. 36-451). Cease and desist order. Enforcement action. (a) If the commissioner finds that a financial institution is violating the provisions of sections 36a-735 to 36a-744, inclusive, the commissioner shall order the institution to cease and desist from such practices in accordance with section 36a-52.
(b) Whenever it appears to the commissioner that any financial institution has violated, is violating or is about to violate any provision of sections 36a-735 to 36a-744, inclusive, or any regulation adopted under said sections, the commissioner may take action against such financial institution in accordance with section 36a-50.
(P.A. 77-153, S. 9; P.A. 94-122, S. 319, 340.)
History: P.A. 94-122 deleted the provision making financial institutions which violate cease and desist orders subject to a $5,000 fine, added a reference to the commissioner's cease and desist authority under Sec. 36a-52, and added Subsec. (b) re the commissioner's enforcement authority under Sec. 36a-50, effective January 1, 1995; Sec. 36-451 transferred to Sec. 36a-741 in 1995.
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Sec. 36a-742. (Formerly Sec. 36-452). Protection of confidentiality of an individual's financial status. To insure and protect the confidential nature of an individual's financial status, no provision of sections 36a-735 to 36a-744, inclusive, shall be construed as requiring any financial institution to divulge, other than to an appropriate state agency, the names of individual depositors or mortgagors; neither shall any provisions of said sections be construed as authorizing any officer of this state to require any institution to divulge, other than to an appropriate state agency, the names of individual depositors or mortgagors.
(P.A. 77-153, S. 10.)
History: Sec. 36-452 transferred to Sec. 36a-742 in 1995.
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Sec. 36a-743. (Formerly Sec. 36-454). Commissioner to analyze home financing. The commissioner shall analyze the practices and actions of the financial institutions in the home financing area in relationship to its customers and to the housing needs and conditions of the state.
(P.A. 77-153, S. 12; P.A. 93-186, S. 6, 9; P.A. 94-122, S. 320, 340.)
History: P.A. 93-186 made a technical change, effective June 23, 1993; P.A. 94-122 deleted provision requiring annual report to governor, effective January 1, 1995; Sec. 36-454 transferred to Sec. 36a-743 in 1995.
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Sec. 36a-744. (Formerly Sec. 36-455). Regulations. The commissioner may adopt, in accordance with the provisions of chapter 54, such regulations as the commissioner deems necessary for the proper operation and enforcement of sections 36a-735 to 36a-743, inclusive.
(P.A. 77-153, S. 13; P.A. 90-34, S. 3, 5; P.A. 93-186, S. 7, 9; P.A. 94-122, S. 321, 340.)
History: P.A. 90-34 made technical changes, effective May 2, 1990, and applicable to all reports and disclosures required under chapter 661 concerning loans originated or purchased, and loan applications received on and after January 1, 1990; P.A. 93-186 deleted requirement that regulations be consistent with “sound banking practices” and the federal Home Mortgage Disclosure Act, effective June 23, 1993; P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; Sec. 36-455 transferred to Sec. 36a-744 in 1995.
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Sec. 36a-745. Reserved for future use.
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PART IXa
CONNECTICUT ABUSIVE HOME LOAN
LENDING PRACTICES ACT
Sec. 36a-746. Short title: Connecticut Abusive Home Loan Lending Practices Act. Sections 36a-746 to 36a-746g, inclusive, shall be known and may be cited as the “Connecticut Abusive Home Loan Lending Practices Act”.
(P.A. 01-34, S. 2.)
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Sec. 36a-746a. Definitions. As used in this section and sections 36a-746b to 36a-746g, inclusive:
(1) “APR” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder. For purposes of this subdivision, any variable rate calculation shall use an index value in effect within forty-five days prior to consummation;
(2) “Broker” means a person who, for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a high cost home loan that is to be made by a lender;
(3) “Consummation” means the time that a borrower becomes contractually obligated on a loan or extension of credit;
(4) “High cost home loan” means any loan or extension of credit, including an open-end line of credit but excluding a reverse mortgage transaction, as defined in 12 CFR 1026.33, as amended from time to time:
(A) In which the borrower is a natural person;
(B) The proceeds of which are to be used primarily for personal, family or household purposes;
(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential property, as defined in section 36a-485, located in this state that is, or, when the loan is made, is intended to be used or occupied by the borrower as a principal residence; and
(D) In which the APR applicable to the transaction determined in accordance with 12 CFR 1026.32(a)(3), as amended from time to time, will exceed the average prime offer rate, as defined in 12 CFR 1026.35(a)(2) as amended from time to time, by more than the number of percentage points specified in 12 CFR 1026.32(a)(1)(i), as amended from time to time;
(5) “Interim interest” means interest for the period from funding to the start of amortization paid by a borrower at or before consummation of a closed-end loan where such amortization begins sixty-two days or less after funding;
(6) “Lender” means any person who originates one or more high cost home loans; and
(7) “Prepaid finance charge” means any finance charge determined in accordance with 12 CFR 1026.4, as amended from time to time, that is paid separately in cash or by check before or at consummation of a loan or extension of credit or withheld from the proceeds of such transaction at any time, except the term includes any fees or commissions payable to the lender or broker in connection with the sale of credit life, accident, health, disability or unemployment insurance products or unrelated goods or services sold in conjunction with the loan or extension of credit when the cost of such insurance products or goods or services is prepaid with the proceeds of the loan or extension of credit and financed as part of the principal amount of the loan or extension of credit, and excludes premiums, fees and any other amounts paid to a governmental agency, any amounts required to be escrowed by a governmental agency and interim interest.
(P.A. 01-34, S. 3; P.A. 02-12, S. 1; P.A. 08-176, S. 63; P.A. 14-7, S. 5; P.A. 15-235, S. 16.)
History: P.A. 02-12 redefined “consummation” in Subdiv. (3), added definition of “interim interest” as new Subdiv. (5), redesignated existing Subdivs. (5) to (7) as Subdivs. (6) to (8) and redefined “prepaid finance charge” in redesignated Subdiv. (7), effective April 22, 2002; P.A. 08-176 made technical changes and, in Subdiv. (4)(C), added cite to Sec. 36a-485 and deleted former Subdiv. (8) re definition of “prepayment penalty”, effective July 1, 2008; P.A. 14-7 amended Subdiv. (1) to replace “12 CFR 226.6(a)(2) and 226.14(b)” with “12 CFR 1026.6(a)(2) and 1026.14(b)”, replace “12 CFR 226.6(a)(2) or 226.30” with “12 CFR 1026.6(a)(2) or 1026.30”, replace “12 CFR 226.18(e)” with “12 CFR 1026.18(e)” and replace “12 CFR 226.18(f) or 226.30” with “12 CFR 1026.18(f) or 1026.30”, amended Subdiv. (4) to replace “12 CFR 226.33” with “12 CFR 1026.33” and replace “12 CFR 226.32(a)(1)(i)” with “12 CFR 1026.32(a)(1)(i)”, and amended Subdiv. (7) to replace “12 CFR 226.4” with “12 CFR 1026.4”, effective May 8, 2014; P.A. 15-235 amended Subdiv. (1) to redefine “APR” and amended Subdiv. (4) to redefine “high cost home loan”, effective August 1, 2015.
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Sec. 36a-746b. Disclosures. A lender making a high cost home loan shall disclose to the prospective borrower:
(1) The following statement: “You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan”;
(2) The APR;
(3) The amount of the regular monthly or other periodic payment; and
(4) For variable-rate transactions, a statement that the interest rate and monthly payment may increase, and the amount of the single maximum monthly payment, based on the maximum interest rate that may be imposed during the term of the loan.
(P.A. 01-34, S. 4.)
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Sec. 36a-746c. Prohibited provisions in loan agreement. A high cost home loan shall not provide for or include the following:
(1) For a loan with a term of less than seven years, a payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance, except that this limitation does not apply to a loan with maturities of less than one year if the purpose of the loan is a bridge loan, as used in 12 CFR 1026.32, as amended from time to time, connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling;
(2) A payment schedule with regular periodic payments that cause the principal balance to increase;
(3) A payment schedule that consolidates more than two periodic payments and pays them in advance from the proceeds, unless such payments are required to be escrowed by a governmental agency;
(4) A refund calculated by a method less favorable than the actuarial method, as defined by Section 933(d) of the Housing and Community Development Act of 1992, 15 USC 1615(d), as amended from time to time, for rebates of interest arising from a loan acceleration due to default;
(5) A prepayment penalty;
(6) A waiver of participation in a class action or a provision requiring a borrower, whether acting individually or on behalf of others similarly situated, to assert any claim or defense in a nonjudicial forum that: (A) Utilizes principles which are inconsistent with the law as set forth in the general statutes or common law; (B) limits any claim or defense the borrower may have; or (C) is less convenient, more costly or more dilatory for the resolution of a dispute than a judicial forum established in this state where the borrower may otherwise properly bring a claim or defense; or
(7) A call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This prohibition shall not apply when repayment of the loan is accelerated by bona fide default, pursuant to a due-on-sale clause provision, or pursuant to another provision of the loan agreement unrelated to the payment schedule including, but not limited to, bankruptcy or receivership.
(P.A. 01-34, S. 5; P.A. 02-12, S. 2; P.A. 08-176, S. 64; P.A. 09-207, S. 8; P.A. 14-7, S. 6.)
History: P.A. 02-12 amended Subdivs. (1) and (6) by adding “as from time to time amended” and amended Subdiv. (3) by adding “unless such payments are required to be escrowed by a governmental agency”, effective April 22, 2002; P.A. 08-176 amended Subdivs. (1) and (5) to make technical changes, amended Subdiv. (6) to delete exception re high cost home loan prepayment penalty, and amended Subdiv. (7) to delete “mandatory arbitration clause” and add provision re asserting of any claim or defense in nonjudicial forum, effective July 1, 2008; P.A. 09-207 deleted former Subdiv. (4) re increase in interest rate and redesignated existing Subdivs. (5) to (8) as Subdivs. (4) to (7), effective July 7, 2009; P.A. 14-7 amended Subdiv. (1) to replace “12 CFR 226.32” with “12 CFR 1026.32”, effective May 8, 2014.
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Sec. 36a-746d. Report of payment history. Any lender who makes a high cost home loan shall report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit reporting agency at least annually during such period as the lender holds or services the loan.
(P.A. 01-34, S. 6.)
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Sec. 36a-746e. Prohibited acts by lender. In the making of a high cost home loan no lender shall:
(1) Pay a contractor under a home improvement contract from the proceeds of the loan, other than:
(A) By an instrument payable to the borrower or jointly to the borrower and the contractor; or
(B) At the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender and the contractor prior to the disbursement;
(2) Sell or otherwise assign such loan without furnishing the following statement to the purchaser or assignee: “Notice: This is a loan subject to special rules under the Connecticut Abusive Home Loan Lending Practices Act. Purchasers or assignees of this loan could be liable for all claims and defenses with respect to the loan that the borrower could assert against the lender”;
(3) Charge, impose or cause to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate, the greater of five per cent of the principal amount of the loan or two thousand dollars. If the proceeds of a high cost home loan are used to refinance an existing loan, the aggregate of the prepaid finance charges for the current refinancing and any previous high cost home loan financings or financings subject to the provisions of section 36a-498a, by the same lender or affiliate of the same lender within two years of the current refinancing shall not exceed the greater of five per cent of the principal amount of the initial loan, or two thousand dollars. The provisions of this subdivision do not prohibit a lender from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in addition to those permitted by this subdivision in connection with any additional proceeds received by the borrower in the refinancing, provided such prepaid finance charges on the additional proceeds shall not exceed five per cent of the additional proceeds. For purposes of this subdivision, “additional proceeds” means: (A) For a closed-end loan, the amount by which the new loan exceeds the current principal balance of the existing loan, and (B) for an open-end loan, the amount by which the line of credit on the new loan exceeds the maximum credit limit of the existing loan;
(4) Charge a borrower any fees to modify, renew, extend or amend a high cost home loan or defer any payment due under a high cost home loan, if after the modification, renewal, extension or amendment, the loan is still a high cost home loan, or if no longer a high cost home loan, the APR has not been reduced by at least two percentage points. For purposes of this subdivision, “fees” does not include interest that is otherwise payable and consistent with the provisions of the loan documents. The provisions of this subdivision do not prohibit a lender from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in connection with any additional proceeds, as defined in subdivision (3) of this section, received by the borrower in connection with the modification, renewal, extension or amendment, provided the prepaid finance charges on the additional proceeds do not exceed five per cent of the additional proceeds. The provisions of this subdivision do not apply if the existing high cost home loan is sixty or more days delinquent and the modification, renewal, extension, amendment or deferral is part of a work-out process;
(5) Make such loan unless the lender reasonably believes at the time the loan is consummated that the borrower will be able to make the scheduled payments to repay the loan based upon a consideration of the borrower's current and expected income, current obligations, employment status, and other financial resources, excluding the borrower's equity in the dwelling that secures repayment of the loan. The borrower shall be presumed to be able to make the scheduled payments to repay the loan if at the time the loan is consummated, or at the time of the first rate adjustment in the case of a lower introductory interest rate, the borrower's monthly debts, including amounts owed under the mortgage, do not exceed fifty per cent of the borrower's monthly gross income, as verified by the borrower's signed financial statement, a credit report, and payment records for employment income;
(6) Advertise that refinancing preexisting debt with a high cost home loan will reduce a borrower's aggregate monthly debt payment without also disclosing that the high cost home loan may increase both the borrower's aggregate number of monthly debt payments and the aggregate amount paid by the borrower over the term of the high cost home loan;
(7) Recommend or encourage default or further default by a borrower on an existing loan or other debt, prior to the closing of a high cost home loan that refinances all or any portion of such existing loan or debt;
(8) Make such loan to a borrower that refinances an existing loan unless the high cost home loan provides a benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances;
(9) Make such loan with an interest rate that is unconscionable. A lender shall base the interest rate for a high cost home loan on proper and reasonable factors including, but not limited to, creditworthiness, other risk related standards and sound underwriting. For purposes of this subdivision, an interest rate that is not based on such factors, or that significantly deviates from industry standards for making that type of high cost home loan, shall be deemed unconscionable; and
(10) Charge and retain fees paid by the borrower for services that are not actually performed, or which are not bona fide and reasonable.
(P.A. 01-34, S. 7.)
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Sec. 36a-746f. Purchase of insurance by buyer. Section 36a-746f is repealed, effective July 1, 2008.
(P.A. 01-34, S. 8; P.A. 03-61, S. 8; P.A. 08-176, S. 84.)
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Sec. 36a-746g. Refund or credit of charges. The lender and any assignee of the lender shall have the obligation, jointly and severally, to refund or credit the borrower for any default charges or prepaid finance charges collected in excess of the limits set forth in sections 36a-746c and 36a-746e.
(P.A. 01-34, S. 9; P.A. 08-176, S. 65.)
History: P.A. 08-176 deleted provision re prepayment penalties, effective July 1, 2008.
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Secs. 36a-747 to 36a-754. Reserved for future use.
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PART X
OTHER MORTGAGE AND LOAN PRACTICES
Sec. 36a-755. (Formerly Sec. 36-9h). Mortgage appraisal practices. Definitions. Regulations. (a) As used in this section:
(1) “Applicant” means a natural person who applies for a mortgage loan;
(2) “Financial institution” means a bank, out-of-state bank, Connecticut credit union, federal credit union, out-of-state credit union, mortgage lender, mortgage correspondent lender or mortgage broker licensee; and
(3) “Mortgage loan” means a loan to be secured by a mortgage on one, two, three or four family residential real property, including a unit of a condominium.
(b) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal on real property to secure a mortgage loan shall make available to such applicant at no charge a copy of the appraisal report promptly after the financial institution's receipt of the applicant's written request for a copy of the appraisal report, provided the financial institution receives the written request not later than ninety days after the financial institution has provided the applicant with notice of action taken on the applicant's application or not later than ninety days after the application is withdrawn by the applicant, as applicable.
(c) Any financial institution which directly or indirectly imposes a fee on any applicant for an appraisal shall either (1) notify such applicant in writing of the availability of a copy of the appraisal report or (2) provide such applicant with a copy of the appraisal report at no charge, such notice or copy to be provided not later than ten days after receipt of the appraisal report, but in any event not later than the date on which the sale of such property is to be consummated.
(d) Any person who prepares such appraisal report shall not be liable to any person with whom the preparer has not contracted to make such appraisal report for opinions or facts stated in or omitted from such appraisal report, unless such statement or omission results from intentional misrepresentation.
(e) The commissioner may adopt such regulations pursuant to chapter 54 as the commissioner deems necessary to carry out the provisions of this section.
(P.A. 78-157, S. 1–5, 7; 78-303, S. 85, 136; P.A. 87-6; 87-9, S. 2, 3; P.A. 88-262, S. 2, 3; P.A. 94-122, S. 322, 340; May 25 Sp. Sess. P.A. 94-1, S. 105, 130; P.A. 08-176, S. 75.)
History: P.A. 78-303 allowed substitution of banking commissioner for bank commissioner to achieve conformity with changes enacted under P.A. 77-614; P.A. 87-6 redefined “financial institution” in Subsec. (a) to include federally chartered institutions and first and second mortgage lenders; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-262 amended Subsec. (b) to require that copies of appraisal reports be made available to mortgage applicants at no charge and deleted provisions in Subsec. (b) re fees for copies of appraisal reports; (Revisor's note: In 1991 the word “the” was inserted editorially by the Revisors before “commissioner” in Subsec. (a)(4)); P.A. 94-122 deleted the definition of “commissioner”, reordered the definitions, added language at the end of Subsec. (b) specifying that the lender must make the appraisal report available promptly after receiving the applicant's written request for a copy within a ninety-day time period, gave lenders the option of giving the applicant a copy of the report whether or not requested in Subsec. (c), and made technical changes, effective January 1, 1995; May 25 Sp. Sess. P.A. 94-1 made technical changes to Subsec. (a), effective January 1, 1994, and applicable January 1, 1995; Sec. 36-9h transferred to Sec. 36a-755 in 1995; P.A. 08-176 redefined “financial institution” in Subdiv. (2) to include references to “mortgage correspondent lender” and “mortgage broker” and to make technical changes, effective July 1, 2008.
Subsec. (d), when read in context of section, applies only to appraisals performed in conjunction with obtaining a mortgage from a financial institution and commissioned either directly or indirectly by such financial institution, and therefore action against party that was not a financial institution was not barred by Subsec. (d). 132 CA 51.
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Sec. 36a-756. (Formerly Sec. 36-9t). Title insurance as condition of mortgage on residential real estate prohibited. No bank or out-of-state bank shall, in connection with any application for a mortgage loan in this state which is secured by mortgage on residential real estate located in this state, require any prospective mortgagor to obtain by purchase or otherwise an owner's title insurance policy as a condition for the granting of such mortgage.
(P.A. 83-61; P.A. 94-122, S. 335, 340.)
History: P.A. 94-122 made a technical change, effective January 1, 1995; Sec. 36-9t transferred to Sec. 36a-756 in 1995.
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Sec. 36a-757. (Formerly Sec. 36-9u). Mortgage insurance requirements limited. No mortgage lender shall, in connection with any application for a mortgage loan in this state which is secured by mortgage on residential real estate located in this state, require any prospective mortgagor to obtain by purchase or otherwise a fire insurance policy, flood insurance policy, other extended coverage policy, or any combination thereof, in excess of the replacement value of the covered premises as a condition for the granting of such mortgage.
(P.A. 84-212; P.A. 00-95.)
History: Sec. 36-9u transferred to Sec. 36a-757 in 1995; P.A. 00-95 added “flood insurance policy, other extended coverage policy, or any combination thereof”.
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Sec. 36a-758. (Formerly Sec. 36-9y). Payment of loan proceeds by certified, bank treasurer's or cashier's check or by wire transfer. Any person who makes any first mortgage loan, as defined in section 36a-485, or any secondary mortgage loan, as defined in section 36a-485, shall, at the time of consummation of such loan or at the termination of any right to rescind the loan transaction under 12 CFR 1026, as amended from time to time, whichever is later, pay the loan proceeds to the mortgagor, to the mortgagor's attorney, to the mortgagee's attorney or to any other person specified in any settlement statement, any written agreement between the mortgagor and the mortgagee or any written instruction of the mortgagor, by a certified, bank treasurer's or cashier's check or by means of wire transfer.
(P.A. 85-430; P.A. 92-12, S. 8; P.A. 94-122, S. 323, 340; P.A. 07-91, S. 12; P.A. 08-176, S. 66; P.A. 14-7, S. 7.)
History: P.A. 92-12 made a technical change; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-9y transferred to Sec. 36a-758 in 1995; P.A. 07-91 required any person who makes any first or secondary mortgage loan to pay loan proceeds at time of consummation of such loan or at termination of right to rescind and allowed payment of proceeds to any person specified in any settlement statement, written agreement between the mortgagor and mortgagee or written instruction of mortgagor; P.A. 08-176 made technical changes, effective July 1, 2008; P.A. 14-7 replaced “12 CFR 226” with “12 CFR 1026”, effective May 8, 2014.
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Sec. 36a-758a. Payment of first or secondary mortgage loan proceeds by wire transfer. Time limits. Penalties. Section 36a-758a is repealed, effective October 1, 2007.
(P.A. 02-112, S. 1, 2; P.A. 03-23, S. 1; 03-84, S. 80; P.A. 07-91, S. 38.)
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Sec. 36a-759. (Formerly Sec. 36-4). Minority of veterans, spouses and widows for purposes of the Servicemen's Readjustment Act. The disability of minority of any person otherwise eligible for a loan, or guaranty or insurance of a loan, pursuant to the act of the Congress of the United States entitled the Servicemen's Readjustment Act of 1944, as from time to time amended, and of the minor spouse or unmarried widow of any eligible veteran, in connection with any transaction entered into pursuant to that act, shall not affect the binding effect of any obligation incurred by such eligible person or spouse or widow as an incident to any such transaction, including incurring of indebtedness and acquiring, encumbering, selling, releasing or conveying property, or any interest therein, if all or part of any such obligation is guaranteed or insured by the federal government or the Administrator of Veterans' Affairs pursuant to that act; or, if the administrator is the creditor, by reason of a loan or a sale pursuant to that act. This section shall not create, or render enforceable, any other or greater rights or liabilities than would exist if such person, such spouse or such widow were not a minor.
(1953, S. 2780d; P.A. 94-122, S. 324, 340.)
History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-4 transferred to Sec. 36a-759 in 1995.
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Sec. 36a-759a. Compliance with John Warner National Defense Authorization Act for Fiscal Year 2007. Limit on interest rate charged on consumer credit to members of armed services. Each financial institution shall comply with the applicable provisions of Section 670 of the John Warner National Defense Authorization Act for Fiscal Year 2007, Public Law 109-364, and 32 CFR 232, as amended from time to time, that limit the interest rate that may be charged on consumer credit to members of the armed services and their dependents. Whenever it appears that any financial institution has violated, is violating or is about to violate any of such applicable provisions, the commissioner may take action against such financial institution in accordance with sections 36a-50 and 36a-52. The Banking Commissioner may enter into agreements with the United States Department of Defense to enhance the communication and exchange of information relating to financial institutions to achieve prompt and effective resolution and redress of consumer complaints and alleged violations of Section 670 of the John Warner National Defense Authorization Act for Fiscal Year 2007, Public Law 109-364, and 32 CFR 232, as amended from time to time. For purposes of this section “financial institution” means any Connecticut bank, Connecticut credit union or other person whose lending activities in this state are subject to 32 CFR 232, as amended from time to time.
(P.A. 09-100, S. 10.)
History: P.A. 09-100 effective June 3, 2009.
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Sec. 36a-760. Nonprime home loans: Definitions; applicability. (a) As used in this section and sections 36a-760a to 36a-760j, inclusive:
(1) “APR” has the same meaning as provided in section 36a-746a;
(2) “CHFA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Connecticut Housing Finance Authority;
(3) “FHA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Federal Housing Administration;
(4) “First mortgage loan” has the same meaning as provided in section 36a-485;
(5) “Lender” means any person engaged in the business of the making of mortgage loans who is (A) required to be licensed by the commissioner under chapter 668, or such person's successors or assigns, or (B) exempt from licensing pursuant to subdivisions (1) to (3), inclusive, of subsection (a) of section 36a-487, and their successors and assigns, but does not include any mortgage broker, as defined in this section, or any mortgage loan originator, as defined in section 36a-485;
(6) “Mortgage broker” means a mortgage broker, as defined in section 36a-485, who is required to be licensed by the commissioner under chapter 668, or such person's successors or assigns;
(7) “Nonprime home loan” means any loan or extension of credit, excluding an open-end line of credit, any mortgage insured under Title II of the National Housing Act, 12 USC 1701 et seq., as amended from time to time, that satisfies the requirements for a qualified mortgage set forth in 24 CFR 203.19(b), as amended from time to time, and a reverse mortgage transaction, as defined in 12 CFR 1026.33, as amended from time to time:
(A) In which the borrower is a natural person;
(B) The proceeds of which are to be used primarily for personal, family or household purposes;
(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential real property located in this state which is, or when the loan is made, intended to be used or occupied by the borrower as a principal residence;
(D) In which the principal amount of the loan does not exceed four hundred seventeen thousand dollars;
(E) Where the loan is not a CHFA loan; and
(F) In which the conditions set forth in subparagraph (F)(i) of this subdivision apply, subject to any adjustments made pursuant to subparagraph (F)(ii) of this subdivision:
(i) The difference, at the time of consummation, between the APR for the loan or extension of credit and the average prime offer rate for a comparable transaction, as of the date the interest rate is set, is greater than one and one-half percentage points if the loan is a first mortgage loan or three and one-half percentage points if the loan is a secondary mortgage loan. For purposes of this subparagraph, “average prime offer rate” has the meaning as provided in 12 CFR 1026.35, as amended from time to time. For purposes of this clause, the date the interest rate is set is the last date the interest rate is set, provided the rate is adjusted on or before consummation.
(ii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in subparagraph (F)(i) of this subdivision. For purposes of this clause, the relevant factors to be considered by the commissioner shall include, but not be limited to, the existence and amount of increases in fees or charges in connection with purchases of mortgages by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and increases in fees or charges imposed by mortgage insurers and the impact, including the magnitude of the impact, that such increases have had, or will likely have, on APRs for mortgage loans in this state. When considering such factors, the commissioner shall focus on those increases that are related to the deterioration in the housing market and credit conditions. The commissioner may refrain from increasing such percentages if it appears that lenders are increasing interest rates or fees in bad faith or if increasing the percentages would be contrary to the purposes of sections 36a-760 to 36a-760f, inclusive. No increase authorized by the commissioner to a particular percentage shall exceed one-quarter of one percentage point, and the total of all increases to a particular percentage under this clause shall not exceed one-half of one percentage point. No increase shall be made unless: (I) The increase is noticed in the Banking Department Bulletin and the Connecticut Law Journal, and (II) a public comment period of twenty days is provided. Any increase made under this clause shall be reduced proportionately when the need for the increase has diminished or no longer exists. The commissioner, in the exercise of his discretion, may authorize an increase in the percentages with respect to all loans or just with respect to a certain class or classes of loans;
(8) “Open-end line of credit” means a mortgage extended by a lender under a plan in which: (A) The lender reasonably contemplates repeated transactions; (B) the lender may impose a finance charge from time to time on an outstanding unpaid balance; (C) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the lender, is generally made available to the extent that any outstanding balance is repaid; and (D) none of the proceeds of the open-end line of credit are used at closing to (i) purchase the borrower's primary residence, or (ii) refinance a mortgage loan that had been used by the borrower to purchase the borrower's primary residence;
(9) “Secondary mortgage loan” has the same meaning as provided in section 36a-485.
(b) The provisions of sections 36a-760a to 36a-760i, inclusive, shall be applicable to nonprime home loans and mortgages, as appropriate, for which applications have been received on or after August 1, 2008.
(P.A. 08-176, S. 21; P.A. 09-207, S. 3; 09-209, S. 43; P.A. 10-32, S. 114; June Sp. Sess. P.A. 10-1, S. 47; P.A. 11-216, S. 45; P.A. 14-7, S. 19; P.A. 15-235, S. 17.)
History: P.A. 08-176 effective July 1, 2008; P.A. 09-207 amended Subsec. (a) by deleting former Subdiv. (1) defining “commissioner”, adding new Subdiv. (1) defining “APR” and redefining “nonprime home loan” in Subdiv. (7); P.A. 09-209 deleted former Subdiv. (1) defining “commissioner” and added new Subdiv. (1) defining “APR” in Subsec. (a); P.A. 10-32 made technical changes in Subsec. (a)(5) and (6), effective May 10, 2010; June Sp. Sess. P.A. 10-1 amended Subsec. (a)(7) (D) to delete provision re period applicable to $417,000 loan limit and delete provision re conforming loan limit for loan originated on or after July 1, 2010, effective June 22, 2010; P.A. 11-216 amended Subsec. (a) by redefining “nonprime home loan” in Subdiv. (7), deleting former Subdiv. (9) re definition of “residential property” and redesignating existing Subdiv. (10) as Subdiv. (9), effective July 13, 2011; P.A. 14-7 amended Subsec. (a)(7) to redefine “nonprime home loan”; P.A. 15-235 amended Subsec. (a) to redefine “lender”, “mortgage broker” and “nonprime home loan”, effective August 1, 2015.
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Sec. 36a-760a. Duties of lenders and mortgage brokers relating to nonprime home loans. (a) A lender shall not engage in conduct in any transaction, practice or course of business in connection with the making of a nonprime home loan that is misleading, deceptive or untruthful.
(b) Lenders and mortgage brokers shall have a duty of good faith with respect to the performance of any contract with a borrower relative to a nonprime home loan. For purposes of this subsection, the duty of good faith is the same as the obligation imposed pursuant to section 42a-1-304 and includes the observance of reasonable common standards of fair dealing. The provisions of this subsection cannot be waived.
(c) In connection with a nonprime home loan that is a first mortgage loan, a lender shall provide the borrower with a notice or letter that generally describes the terms of the transaction. Such notice or letter shall be provided no later than three business days prior to the closing, unless the borrower expressly requests an expedited closing and the lender has not yet, acting in good faith, provided the letter or notice. In cases where a letter or notice is required, the lender shall notify the borrower, within a reasonable time period, of any subsequent material changes to the terms of the transaction. The provisions of this subsection cannot be waived.
(P.A. 08-176, S. 22.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760b. Analysis of obligor's ability to pay. (a) No lender shall make a nonprime home loan unless the lender reasonably believes, at the time the loan is consummated, that one or more of the obligors, when considered individually or collectively, will be able to make the scheduled payments to repay the loan, and to pay related real estate taxes and insurance premiums, based upon a consideration of the obligor's current and expected income, current and expected obligations as disclosed by the obligor, or otherwise known to the lender, including subordinate mortgages made contemporaneously, homeowner's fees, condominium fees, employment status and other financial resources, excluding the equity in the dwelling that secures repayment of the loan. Notwithstanding the provisions of this subsection, in the case of a bridge loan, a lender may consider the equity in the dwelling as a source of repayment for the loan.
(b) A lender's analysis of an obligor's ability to repay under subsection (a) of this section may utilize commercially recognized underwriting standards and methodologies, including automated underwriting systems, provided they comply with the requirements of this subsection and subsection (a) of this section. In determining an obligor's ability to repay a nonprime home loan, the lender shall take reasonable steps to verify the accuracy and completeness of information provided by or on behalf of the obligor using tax returns, consumer reports, payroll receipts, bank records, reasonable alternative methods or reasonable third-party verification. In determining an obligor's ability to repay a nonprime home loan according to its terms when the loan has an adjustable rate feature, the lender shall underwrite the repayment schedule assuming that the interest rate is a fixed rate equal to the fully indexed interest rate at the time of consummation, or within fifteen days thereof, without considering any initial discounted rate. For purposes of this subsection, the “fully indexed rate” means the interest rate that would have been applied had the initial interest rate been determined by the application of the same interest rate formula that applies under the terms of the loan documents to subsequent interest rate adjustments, disregarding any limitations on the amount by which the interest rate may change at any one time. In determining an obligor's ability to repay a nonprime home loan that is not fully amortizing by its terms, the lender shall underwrite the loan based on a fully amortizing repayment schedule based on the maturity set forth in the note.
(c) This section shall not apply to FHA loans.
(P.A. 08-176, S. 23.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760c. Prohibition against making nonprime home loan when proceeds used to pay off special mortgage. (a) No lender shall make a nonprime home loan where all or a portion of the proceeds are used to fully or partially pay off a special mortgage on the same property unless the borrower has obtained a written certification from a counselor with an independent third-party nonprofit organization approved by the United States Department of Housing and Urban Development that the borrower has received mortgage counseling. For purposes of this section, “special mortgage” means a loan originated, subsidized or guaranteed by or through a state, federal, tribal or local government, or nonprofit organization.
(b) The prohibition in subsection (a) of this section shall not apply where the borrower provides the lender with a statement from an organization described in subsection (a) of this section, on the organization's letterhead, stating that the required counseling is not available for at least thirty days from the date of the request for counseling.
(c) For purposes of this section, a lender shall make a good-faith effort to determine whether the loan to be refinanced is a special mortgage, but shall not be required to obtain the certification in subsection (a) of this section if the lender: (1) Makes a good-faith inquiry to the current holder or servicer of the loan and to the borrower as to whether the loan is a special mortgage; and (2) does not receive an affirmative response from either the current holder or servicer of the loan or the borrower indicating that it is a special mortgage.
(P.A. 08-176, S. 24.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760d. Requirements for making nonprime home loans. A lender shall not make a nonprime home loan unless:
(1) With respect to nonprime home loans that are first mortgage loans for which the lender receives an application on or after April 1, 2010, the lender requires and collects a monthly escrow for the payment of real property taxes and homeowners insurance. The provisions of this subdivision shall not apply to: (A) FHA loans; or (B) a nonprime home loan product which, in good faith, is generally designed and marketed to the public as a subordinate lien home equity loan product but is secured by a first mortgage loan;
(2) To the extent applicable, the lender obtains the written certification or statement under section 36a-760c; and
(3) The lender mailed or delivered to applicants, no later than the date three business days after the date of receipt of a completed application for a nonprime home loan, a notice containing a toll-free number that can be used to obtain a list of nonprofit housing counselors approved by the United States Department of Housing and Urban Development. For purposes of this subdivision, a lender may use the toll-free number which satisfies the requirements of Section 106(c)(5) of the Housing and Urban Development Act of 1968 (12 USC 1701(x) Section (c)(5)). No borrower shall have a private right of action for the lender's failure to deliver, on a timely basis, a notice required by this subdivision.
(P.A. 08-176, S. 25; Sept. Sp. Sess. P.A. 09-7, S. 98; P.A. 15-118, S. 30.)
History: P.A. 08-176 effective July 1, 2008; Sept. Sp. Sess. P.A. 09-7 amended Subdiv. (1) by substituting “for which the lender receives an application on or after April 1, 2010” for “originated on or after January 1, 2010”, and amended Subdiv. (3) by making technical changes, effective October 5, 2009; P.A. 15-118 made a technical change in Subdiv. (1).
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Sec. 36a-760e. Restrictions on provisions in nonprime home loans. (a) A lender shall not offer a nonprime home loan that contains:
(1) A prepayment penalty, except that this prohibition shall not apply to FHA loans;
(2) A provision requiring a borrower, whether acting individually or on behalf of others similarly situated, to assert any claim or defense in a nonjudicial forum that: (A) Utilizes principles which are inconsistent with the law as set forth in the general statutes or common law; (B) limits any claim or defense the borrower may have; or (C) is less convenient, more costly or more dilatory for the resolution of a dispute than a judicial forum established in this state where the borrower may otherwise properly bring a claim or defense;
(3) For a loan with a term of less than seven years, a payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance, except that this limitation does not apply to a loan with maturities of less than one year if the purpose of the loan is a bridge loan, as used in 12 CFR 1026.32, as amended from time to time, connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling;
(4) A payment schedule with regular periodic payments that cause the principal balance to increase;
(5) A payment schedule that consolidates more than two periodic payments and pays them in advance from the proceeds, unless such payments are required to be escrowed by a governmental agency;
(6) Default charges in excess of five per cent of the amount in default; or
(7) A call provision that permits the lender, in its sole discretion, to accelerate the indebtedness. This prohibition shall not apply when repayment of the loan is accelerated by bona fide default, pursuant to a due-on-sale clause provision or pursuant to another provision of the loan agreement unrelated to the payment schedule, including, but not limited to, bankruptcy or receivership.
(b) If a nonprime home loan contains a provision that violates subsection (a) of this section, that provision shall be void and unenforceable, provided the lender received the application for such nonprime home loan on or after October 1, 2009.
(P.A. 08-176, S. 26; P.A. 09-207, S. 4; Sept. Sp. Sess. P.A. 09-7, S. 97; P.A. 14-7, S. 8.)
History: P.A. 08-176 effective July 1, 2008; P.A. 09-207 amended Subsec. (a) by deleting former Subdiv. (2), redesignating existing Subdiv. (3) as Subdiv. (2) and adding Subdivs. (3) to (7) re payment schedules, default charges and indebtedness acceleration prohibitions and made technical changes in Subsec. (b); Sept. Sp. Sess. P.A. 09-7 amended Subsec. (b) by adding “provided the lender received the application for such nonprime home loan on or after October 1, 2009”, effective October 5, 2009; P.A. 14-7 amended Subsec. (a)(3) to replace “12 CFR 226.32” with “12 CFR 1026.32”, effective May 8, 2014.
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Sec. 36a-760f. Prohibition against dividing or structuring loan to avoid application of nonprime home loan statutory provisions. No lender or mortgage broker shall attempt in bad faith to avoid the application of sections 36a-760a to 36a-760h, inclusive, by dividing any loan transaction into separate parts or to structure in bad faith a residential mortgage loan transaction as an open-end loan for the purpose of evading the applicable provisions of sections 36a-760a to 36a-760h, inclusive, when the loan would have been a nonprime home loan if the loan had been structured as a closed-end loan.
(P.A. 08-176, S. 27.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760g. Restrictions on making and financing under nonprime home loans. Curing of defaults. (a) As used in this section and section 36a-760h, the term “mortgage” means a mortgage deed or other instrument that constitutes a first or secondary consensual lien upon any interest in one-to-four family residential real property located in this state, that is, or when the loan is made, intended to be occupied by the borrower as a principal residence. “Mortgage” includes, but is not limited to, a nonprime home loan.
(b) A lender shall not make and a mortgage broker shall not offer a nonprime home loan that refinances a mortgage unless the nonprime home loan provides or is expected to provide a tangible net benefit to the borrower. A lender or mortgage broker shall not take any action that recommends or encourages a default on an existing mortgage or other debt prior to and in connection with the closing or planned closing of a new nonprime home loan that refinances all or any portion of the existing loan or debt.
(c) A lender may not finance, directly or indirectly in connection with a mortgage, any credit life, credit disability, credit unemployment or credit property insurance, or any other life or health insurance or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis or through regularly scheduled periodic payments shall not be considered financed by the lender for the purposes of this subsection.
(d) If all defaults in connection with a nonprime home loan are cured after the initiation of any action to foreclose, but prior to the entry of judgment, the lender shall take steps as necessary to terminate the foreclosure proceeding or other action. The lender may require that the borrower pay any reasonable costs actually incurred by the lender in connection with the default and protecting its rights in the property, including any costs related to collection, foreclosure and termination of the proceeding or other action. Cure of default reinstates the borrower to the same position as if the default had not occurred and nullifies, as of the date of the cure, any acceleration of any obligation under the security instrument or note arising from the default. The borrower's right to reinstatement, as described in this subsection, may not be exercised by the borrower on more than two occasions over the course of twenty-four consecutive months.
(P.A. 08-176, S. 28.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760h. Additional duties of mortgage brokers. A mortgage broker, in addition to duties imposed by federal statutes, other provisions of the general statutes or at common law, shall: (1) Use reasonable care, skill and diligence in performing the mortgage broker's duties and shall act in good faith and fair dealing in all transactions with the borrower; (2) make reasonable good faith efforts to secure a mortgage that is in the reasonable interests of the borrower considering all the circumstances reasonably available to the mortgage broker, including, but not limited to, the rates, points, fees, charges, costs and product type; (3) ensure that the cost of credit is reasonably appropriate considering the borrower's level of creditworthiness and other bona fide underwriting concerns; and (4) notify, before the closing, each lender of the payment obligations associated with each of the other lender's loans if the mortgage broker knows that more than one mortgage will be made by different lenders contemporaneously to a borrower secured by the same real property. The duties under this section may not be waived.
(P.A. 08-176, S. 29.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760i. Court action based on lender's failure to comply with statutory requirements. (a) A borrower who has been injured by a violation of sections 36a-760a to 36a-760h, inclusive, may bring a claim in a court of competent jurisdiction by the date three years after the date of the closing for the following: The greater of actual damages or one thousand dollars; and costs and reasonable attorney's fees, unless:
(1) By the date ninety days after the date of the loan closing and prior to the commencement of any action against a lender under this section, the borrower is notified by the lender of the compliance failure, the lender tenders appropriate restitution and the lender either (A) makes the nonprime home loan comply with the applicable provisions of sections 36a-760a to 36a-760h, inclusive; or (B) changes the terms of the mortgage in a manner beneficial to the borrower so that the mortgage will no longer be considered a nonprime home loan subject to the provisions of sections 36a-760a to 36a-760h, inclusive; or
(2) The lender is able to show by a preponderance of evidence that the compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors. For the purposes of this subdivision, the phrase “bona fide error” includes, but is not limited to, a clerical, calculation, printing, computer malfunction or programming error, but does not include an error of legal judgment with respect to a lender's obligations under the relevant provisions of sections 36a-760a to 36a-760h, inclusive. In actions where the compliance failure has caused material injury to the borrower, the lender shall also be able to show that it cured the compliance failure or otherwise undertook reasonable remedial steps to address or compensate for the injury; or
(3) The lender and borrower otherwise reach a mutual agreement on an appropriate remedy or curative action.
(b) In addition, the court may grant an injured borrower such relief as it deems just and equitable.
(c) A borrower or mortgagor may assert fraud and any violation of sections 36a-760a to 36a-760h, inclusive, which causes material injury to a borrower as a counterclaim or defense to foreclosure by the date six years after the date of the closing.
(d) Nothing in this section shall be construed as creating or permitting a cause of action or defense or counterclaim against an assignee of a nonprime home loan or other mortgage loan with respect to a violation of sections 36a-760a to 36a-760h, inclusive, by the originating lender or mortgage broker.
(P.A. 08-176, S. 30.)
History: P.A. 08-176 effective July 1, 2008.
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Sec. 36a-760j. Prohibition against influencing real estate appraisals. No person shall influence real estate appraisals of residential property. For the purposes of this section, “influence real estate appraisals” means to directly or indirectly cause or attempt to cause, through coercion, extortion, inducement, bribery, intimidation, compensation, instruction or collusion, the value assigned to the residential property to be based on any factor other than the independent judgment of the person who prepares the appraisal.
(P.A. 08-176, S. 81; P.A. 09-209, S. 26; P.A. 11-216, S. 46; P.A. 12-96, S. 34.)
History: P.A. 08-176 effective July 1, 2008; P.A. 09-209 changed “A mortgage broker shall not influence” to “No person shall influence”, effective July 31, 2009; P.A. 11-216 added “means to directly or indirectly coerce, influence or otherwise encourage an appraiser to misstate or misrepresent the value of residential property and”, effective July 13, 2011; P.A. 12-96 replaced definition of “influence residential real estate appraisals” with definition of “influence real estate appraisals”, effective June 8, 2012.
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Secs. 36a-761 to 36a-769. Reserved for future use.
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PART XI*
RETAIL INSTALLMENT SALES FINANCING
*See Sec. 36a-676 for definitions under the Truth-in-Lending Act applicable to this part.
Annotations to former chapter 733:
Remedies under chapter not limited to Secs. 42-99 and 42-100. 155 C. 469. Cited. 202 C. 106; 216 C. 458; 231 C. 707.
Cited. 24 CA 455.
Cited. 34 CS 154.
Cited. 6 Conn. Cir. Ct. 745.
Sec. 36a-770. (Formerly Sec. 42-83). Applicability of Uniform Commercial Code. Filing and recording. Definitions. (a) The Uniform Commercial Code. A transaction subject to sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c is also subject to the Uniform Commercial Code, title 42a, but in case of any conflict the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall control.
(b) Filing and recording. Section 42a-9-310 determines the need for filing or recording to perfect a security interest, section 42a-9-317 determines the persons who take subject to an unperfected security interest, and sections 42a-9-311 and 42a-9-501 to 42a-9-526, inclusive, determine the place for such filing or recording.
(c) Definitions. As used in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, unless the context otherwise requires:
(1) “Boat” means any watercraft, as defined in section 22a-248, other than a seaplane, used or capable of being used as a means of transportation on water, by any power including muscular.
(2) “Cash price” means the total amount in dollars at which the seller and buyer agreed the seller would transfer unqualified title to the goods, if the transaction were a cash sale instead of a sale under a retail installment contract.
(3) “Commercial vehicle” means any domestic or foreign truck or truck tractor of ten thousand or more pounds gross vehicular weight or any trailer or semitrailer designed for use in connection with any truck or truck tractor of ten thousand or more pounds gross vehicular weight and which is not used primarily for personal, family or household use.
(4) “Filing fee” means the fee prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, retained or created by a retail installment contract or installment loan contract.
(5) “Finance charge” means the amount in excess of the cash price of the goods agreed upon by the retail seller and the retail buyer, to be paid by the retail buyer for the privilege of purchasing the goods under the retail installment contract or installment loan contract.
(6) “Goods” means (A) “consumer goods”, as defined in subdivision (23) of subsection (a) of section 42a-9-102 and motor vehicles included under such definition, having an aggregate cash price of fifty thousand dollars or less, and (B) “equipment”, as defined in subdivision (33) of subsection (a) of section 42a-9-102, having an aggregate cash price of sixteen thousand dollars or less, provided such consumer goods or such equipment is included in one retail installment contract or installment loan contract.
(7) “Installment loan contract” means any agreement made in this state to repay in installments the amount loaned or advanced to a retail buyer for the purpose of paying the retail purchase price of goods and by virtue of which a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, is taken in the goods for the payment of the amount loaned or advanced. For purposes of this subdivision, “installment loan contract” does not include agreements to repay in installments loans made by the United States or any department, agency or instrumentality thereof.
(8) “Lender” means a person who extends or offers to extend credit to a retail buyer under an installment loan contract.
(9) A retail installment contract or installment loan contract is “made in this state” if: (A) An offer or agreement is made in Connecticut by a retail seller or a lender to sell or extend credit to a resident retail buyer, including, but not limited to, any verbal or written solicitation or communication to sell or extend credit originating outside the state of Connecticut but forwarded to and received in Connecticut by a resident retail buyer; or (B) an offer to buy or an application for extension of credit, or an acceptance of an offer to buy or to extend credit, is made in Connecticut by a resident retail buyer, regardless of the situs of the contract which may be specified therein, including, but not limited to, any verbal or written solicitation or communication to buy or to have credit extended, originating within the state of Connecticut but forwarded to and received by a retail seller or a lender outside the state of Connecticut. For purposes of this subdivision, a “resident retail buyer” means a retail buyer who is a resident of the state of Connecticut.
(10) “Motor vehicle” means any device in, upon or by which any person or property is or may be transported or drawn upon a highway by any power other than muscular. For purposes of this subdivision, “motor vehicle” does not include self-propelled wheelchairs and invalid tricycles, tractors, power shovels, road machinery, implements of husbandry and other agricultural machinery, or other machinery not designed primarily for highway transportation but which may incidentally transport persons or property on a highway, or devices which move upon or are guided by a track or travel through the air.
(11) “Retail buyer” means a person who buys or agrees to buy one or more articles of goods from a retail seller not for the purpose of resale or lease to others in the course of business and who executes a retail installment contract or an installment loan contract in connection therewith.
(12) “Retail installment contract” means any security agreement, as defined in subdivision (74) of subsection (a) of section 42a-9-102, made in this state, including one in the form of a mortgage, conditional sale contract or other instrument evidencing an agreement to pay the retail purchase price of goods, or any part thereof, in installments over a period of time and pursuant to which a security interest, as defined in subdivision (35) of subsection (b) of section 42a-1-201, is retained or taken by the retail seller for the payment of the amount of such retail installment contract. For purposes of this subdivision, “retail installment contract” does not include a rent-to-own agreement, as defined in section 42-240.
(13) “Retail installment sale” means any sale evidenced by a retail installment contract or installment loan contract wherein a retail buyer buys goods from a retail seller at a time sale price payable in two or more installments. The cash price of the goods, the amount, if any, included for other itemized charges which are included in the amount of the credit extended but which are not part of the finance charge under sections 36a-675 to 36a-686, inclusive, and the finance charge shall together constitute the time sale price. For purposes of this subdivision, “retail installment sale” does not include a rent-to-own agreement, as defined in section 42-240.
(14) “Retail seller” means a person who sells or agrees to sell one or more articles of goods under a retail installment contract to a retail buyer.
(15) “Sales finance company” means any person engaging in this state in the business, in whole or in part, of acquiring retail installment contracts from retail sellers or installment loan contracts from holders thereof, by purchase, discount or pledge, or by loan or advance to the holder of either on the security thereof, or otherwise.
(1949 Rev., S. 6698; 1949, 1955, S. 2862d; November, 1955, N218; 1957, P.A. 357, S. 1; March, 1958, P.A. 27, S. 33; 1959, P.A. 495; 589, S. 2; 1961, P.A. 116, S. 20; 1969, P.A. 454, S. 28; P.A. 77-317; 77-604, S. 52, 84; P.A. 78-313, S. 1, 3; P.A. 81-158, S. 13, 17; P.A. 82-18, S. 2, 4; P.A. 89-210, S. 1; P.A. 91-162, S. 15, 18; P.A. 93-39; P.A. 94-122, S. 325, 340; 94-134, S. 1, 3; May 25 Sp. Sess. P.A. 94-1, S. 109, 130; P.A. 01-132, S. 170; P.A. 03-19, S. 85; 03-62, S. 21; P.A. 05-109, S. 49; P.A. 11-108, S. 28; P.A. 15-235, S. 20.)
History: 1959 acts amended definitions of “goods” and “retail buyer”; 1961 act coordinated this section with Uniform Commercial Code; 1969 act redefined “retail installment sale” to include the amount of itemized charges included in amount of credit extended but excluded from finance charge rather than the amount of insurances and other benefits and filing fees; P.A. 77-317 redefined goods to raise maximum aggregate cash price from $6,000 to $25,000; P.A. 77-604 revised references to Sec. 42a-9-105; P.A. 78-313 redefined “goods” to include motor vehicles and to establish separate maximum cash value of $8,000 for equipment and added Subsec. (3)(m) and (n) defining “lender” and contracts “made in this state”; P.A. 81-158 amended Subsec. (3)(d) by replacing “section 36-396”, which had been repealed, with “chapter 657”, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 89-210 added Subsec. (3)(o) defining “commercial vehicle”; P.A. 91-162 amended Subsec. (3)(d) and (e) to specifically exclude consumer rent-to-own agreements, as defined in Sec. 42-240, from the definitions of “retail installment sale” and “retail installment contract”; P.A. 93-39 amended Subsec. (3)(b) by increasing the aggregate cash price of a motor vehicle to be included in the definition of “consumer goods” from $25,000 to $50,000 and increasing the aggregate cash price of equipment to be included from $8,000 to $16,000; P.A. 94-122 changed Subsecs. (1), (2) and (3) to Subsecs. (a), (b) and (c), deleted the definition of “person”, reordered the definitions and made technical changes, effective January 1, 1995; P.A. 94-134 added Subsec. (p) defining “boat”, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 made technical changes, effective January 1, 1994, and applicable January 1, 1995; Sec. 42-83 transferred to Sec. 36a-770 in 1995; (Revisor's note: In 1997 a reference in Subsec. (a) to “42-110b” was corrected editorially by the Revisors to “42-100b” thereby correcting a clerical error which occurred during the preparation of the 1995 revision); P.A. 01-132 amended Subsec. (b) to replace reference to Sec. 42a-9-302 with Sec. 42a-9-310, replace reference to Sec. 42a-9-301 with Sec. 42a-9-317 and replace reference to Secs. 42a-9-302(3)(b) and 42a-9-401 to 42a-9-409, inclusive, with Secs. 42a-9-311 and 42a-9-501 to 42a-9-518, inclusive, and amended Subsec. (c) to make a technical change in Subdiv. (4), in Subdiv. (6) replace Secs. 42a-9-105(1)(h) and 42a-9-109(1) with Sec. 42a-9-102(a)(23) as the statutory reference for the definition of “consumer goods”, make a technical change and replace Sec. 42a-9-109(2) with Sec. 42a-9-102(a)(33) as the statutory reference for the definition of “equipment”, make a technical change in Subdiv. (7) and replace in Subdiv. (12) Sec. 42a-9-105(1)(l) with Sec. 42a-9-102(a)(73) as the statutory reference for the definition of “security agreement” and make a technical change; P.A. 03-19 made a technical change in Subsec. (b), effective May 12, 2003; P.A. 03-62 amended Subsec. (b) to replace reference to Sec. 42a-9-518 with Sec. 42a-9-526 and make technical changes; P.A. 05-109 amended Subsec. (c) by replacing references to Sec. 42a-1-201(37) with references to Sec. 42a-1-201(b)(35) in Subdivs. (4), (7) and (12); P.A. 11-108 amended Subsec. (c)(12) re definition of “retail installment contract” to replace reference to Sec. 42a-9-102(a)(73) with reference to Sec. 42a-9-102(a)(74), effective July 1, 2013; P.A. 15-235 amended Subsec. (c)(13) to change “36a-685” to “36a-686”, effective August 1, 2015.
Annotations to former section 42-83:
Cited. 202 C. 106; 216 C. 458; 231 C. 707.
Cited. 2 Conn. Cir. Ct. 640; 4 Conn. Cir. Ct. 351; 6 Conn. Cir. Ct. 709.
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Sec. 36a-771. (Formerly Sec. 42-84). General contract requirements. (a) Every retail installment contract shall be in writing, shall contain all the agreements of the parties and shall be completed as to all essential provisions prior to the signing of the contract by the retail buyer. No installment contract shall be signed by the retail buyer when such contract contains blank spaces to be filled in except that this provision shall not apply to serial number or other identifying marks which are not available for description at the time of execution of such contract. The retail seller shall deliver to the retail buyer a true and complete executed copy of the retail installment contract at the time the retail buyer signs such contract.
(b) Every retail installment contract for the purchase of consumer goods subject to section 36a-774 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.
(c) Retail installment contracts shall contain the following statements, printed in a size equal to at least ten-point bold type: (1) At the top of the contract, the words “RETAIL INSTALLMENT CONTRACT” or “RETAIL INSTALMENT CONTRACT”; (2) a definite statement that the insurance, if any, included in the retail installment sale provides or does not provide coverage for personal liability and property damage caused to others, as the case may be; (3) the following notice directly above the space reserved for the signature of the buyer: “NOTICE TO THE BUYER: 1. Do not sign this contract before you read it or if it contains any blank space. 2. You are entitled to a completely filled-in copy of the contract when you sign it. 3. Under the law, you have the following rights, among others: (a) To pay off in advance the full amount due and obtain a partial refund of any unearned finance charge; (b) to redeem the property if repossessed for a default; (c) to require, under certain conditions, a resale of the property if repossessed.”
(d) Each retail installment contract for the sale of merchandise on a deferred payment schedule shall also contain an explanation of the consequences of the failure of the retail buyer to make the first or future deferred installment payments under the contract in a timely manner, including a clear statement of whether or not interest would be charged for the entire period of deferment under the contract and, if so, the rate of such interest. Such explanation shall be printed in a size equal to at least ten-point bold type. Such deferred payment schedule shall not be effective unless the contract contains such provisions and the retail buyer acknowledges in writing on the contract that he or she has been informed of the consequences of failing to make the first or future deferred installment payments in a timely manner.
(1949 Rev., S. 6699, (a)(1), (b); 1949, S. 2863d; 2864d; 1957, P.A. 361, S. 1 (a)1, (b), (c); 1969, P.A. 454, S. 29; 1971, P.A. 698; P.A. 77-324, S. 1; P.A. 81-163, S. 1, 4; P.A. 82-18, S. 3, 4; 82-472, S. 161, 183; P.A. 03-19, S. 86; 03-105, S. 1; P.A. 15-235, S. 21.)
History: 1969 act rewrote Subsec. (b) re contract contents; 1971 act clarified Subsec. (b), specifying required terminology, inserted new Subdivs. (8), (9), (11) and (14) re total of payments, deferred payment price, date when finance charge begins to accrue and method of computing unearned portion of finance charge, etc., respectively; P.A. 77-324 replaced Subsec. (b) which had detailed required contents of contracts with new provision requiring that contracts conform to requirements of Ch. 657; P.A. 81-163 amended Subsec. (c) to provide that the partial refund would be of “any unearned” finance charge and that until April 1, 1982, a retail seller could use the notice required prior to May 18, 1981; P.A. 82-18 amended Subsec. (c) to extend from April 1, 1982, until the effective date of certain statute sections amended by P.A. 81-158, i.e. October 1, 1982, the date on which a retail seller must use the revised notice concerning refund of unearned finance charges; P.A. 82-472 made technical change in Subsec. (c); Sec. 42-84 transferred to Sec. 36a-771 in 1995; P.A. 03-19, effective May 12, 2003, and P.A. 03-105, effective October 1, 2003, both amended Subsec. (c) by inserting “or “RETAIL INSTALMENT CONTRACT”” in Subdiv. (1) and deleting obsolete provision re notices until October 1, 1982, and P.A. 03-105 further amended section to add Subsec. (d) re retail installment contracts for sale of merchandise on deferred payment schedule; P.A. 15-235 amended Subsec. (b) to change “36a-685” to “36a-686”, effective August 1, 2015.
See Sec. 42a-9-203 re attachment and enforceability of security interest.
Annotations to former section 42-84:
Retail installment contract not completed in conformity with section is voidable at option of retail buyer, but, as condition precedent to rescission, he must restore seller to his former condition as nearly as possible. 155 C. 469. Cited. 209 C. 163.
Cited. 6 Conn. Cir. Ct. 745.
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Sec. 36a-772. (Formerly Sec. 42-85). Maximum finance charge on retail sales of motor vehicles and other goods. (a) A retail seller of motor vehicles may charge, contract for, receive or collect a finance charge expressed as an annual percentage rate on any retail installment contract covering the retail sale of a motor vehicle in this state, which charge shall not exceed the rates indicated for the respective classifications of motor vehicles as follows: (1) On sales made prior to October 1, 1985, of (A) new motor vehicles, eighteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than three years prior to the year in which the sale is made, nineteen and one-quarter per cent; and (C) used motor vehicles of a model designated by the manufacturer by a year more than three years prior to the year in which the sale is made, twenty-one and one-half per cent; (2) on sales made on or after October 1, 1985, and prior to October 1, 1987, (A) new motor vehicles, sixteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, eighteen per cent; (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, twenty per cent; and (3) on sales made on or after October 1, 1987, (A) new motor vehicles, fifteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, seventeen per cent; (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, nineteen per cent.
(b) A retail seller of goods other than motor vehicles may charge, contract for, receive or collect a finance charge on any retail installment contract made on or after July 1, 1981, covering the retail sale of goods other than motor vehicles in this state, which charge shall not exceed an annual percentage rate of twenty-one per cent on sales made prior to October 1, 1985, nineteen per cent on sales made on or after October 1, 1985, and prior to October 1, 1987, and eighteen per cent on sales made on or after October 1, 1987.
(c) The finance charge under subsections (a) and (b) of this section shall be computed on the principal amount financed as determined under sections 36a-675 to 36a-686, inclusive, and the regulations adopted under said sections. On contracts providing for installment payments extending for a period which is less than or greater than one year, the finance charge shall be computed proportionately. The finance charge may be computed on the basis of a full month for any fractional month period in excess of ten days. A minimum finance charge of fifteen dollars may be charged on any retail installment contract in which the finance charge, when computed at the rates indicated, results in a total charge of less than that amount. Nothing contained in sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c shall be construed to prohibit the computation of the interest component of the finance charge by application of an interest rate to the actual balance of such principal amount financed as may be outstanding from time to time.
(1955, S. 2866d; 1957, P.A. 361, S. 1(i); P.A. 76-325; P.A. 77-391, S. 1; P.A. 78-11; P.A. 80-116, S. 1, 2; P.A. 81-158, S. 15, 17; 81-163, S. 2, 4; 81-362, S. 2, 4; 81-452, S. 1, 2; 81-472, S. 145, 159; P.A. 82-18, S. 2, 4; 82-105, S. 2, 3; 82-108; P.A. 83-226, S. 2, 3; 83-231; P.A. 85-522, S. 1; P.A. 15-235, S. 22.)
History: P.A. 76-325 expressed finance charges as annual percentages where previously charges were expressed as so many dollars per $100 per year and raised maximum rates: In Subdiv. (1) from 7% to 12.75%, in Subdiv. (2) from 9% to 16.25%, in Subdiv. (3) from 12% to 21.5%, in Subdiv. (4) from 14% to 25% and in Subdiv. (5) from 15% to 26.75%; P.A. 77-391 incorporated previous provisions as Subsecs. (a) and (c) and inserted new Subsec. (b) re finance charge on goods other than motor vehicles; P.A. 78-11 substituted “subsection (a)(5) of section 36-405 and regulations implementing chapter 657” for “subsection (b)(5) of section 42-84” in Subsec. (c); P.A. 80-116 raised rates on new motor vehicles to 16% temporarily (from May 5, 1980 to January 1, 1982), restoring previous rate on or after January 1, 1982, applied 21.5% rate to used vehicles designated by a year “not more than two years prior to the year in which the sale is made” rather than to used vehicles designated by a year “not more than four years and not less than two years prior to the year in which the sale is made” and deleted Subdivs. (4) and (5) which had set rates for those vehicles more than four model years old; P.A. 81-158 amended Subsec. (c) by replacing “subsection (a)(5) of section 36-405”, which had been repealed, with “chapter 657” and replacing “regulations implementing chapter 657” with “regulations adopted under that chapter”, effective March 31, 1982; P.A. 81-163 amended Subsec. (c) by providing that the computation of the interest component of the finance charge by applying the interest rate to the outstanding balance of the principal amount financed is permitted; P.A. 81-362 amended Subsec. (b) to provide that on contracts made on or after July 1, 1981, the maximum finance charge shall be 21% on sales made prior to March 1, 1983, and 18% thereafter; P.A. 81-452 amended Subsec. (a) to increase the finance charge on sales made prior to March 1, 1983, to 18% for new motor vehicles, 19.25% for used motor vehicles not more than three years old, and 21.5% for used motor vehicles more than three years old; P.A. 81-472 made technical changes; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; P.A. 82-105 amended Subsec. (b) by extending from March 1, 1983, to October 1, 1983, the expiration date for the increase in finance charges enacted in 1981; P.A. 82-108 amended Subsec. (a) by extending from March 1, 1983, to October 1, 1983, the expiration date for the increase in finance charges enacted in 1981; P.A. 83-226 amended Subsec. (b) to extend the sunset date for the current maximum statutory interest rate for retail installment sales contracts from October 1, 1983, to October 1, 1985; P.A. 83-231 amended Subsec. (a) to extend from October 1, 1983, to October 1, 1985, the sunset date for the current maximum finance charge which dealers may charge on the sale of new and used automobiles; P.A. 85-522 amended Subsec. (a) to establish a maximum finance charge of (1) 16% for new motor vehicles, 18% for used motor vehicles not more than two years old and 10% for used motor vehicles more than two years old, on sales made on or after October 1, 1985, and prior to October 1, 1987, and (2) 15% for new motor vehicles, 17% for used motor vehicles not more than two years old and 19% for used motor vehicles more than two years old, on sales made on or after October 1, 1987, and amended Subsec. (b) to establish a maximum finance charge on retail sales other than motor vehicles of 19% on sales made on or after October 1, 1985, and prior to October 1, 1987, and 18% on sales made on or after October 1, 1987; Sec. 42-85 transferred to Sec. 36a-772 in 1995; P.A. 15-235 amended Subsec. (c) to change “36a-685” to “36a-686”, effective August 1, 2015.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-773. (Formerly Sec. 42-86). Insurance. Every retail seller or sales finance company, if insurance is included in a retail installment contract, shall, within fifteen days after execution of the retail installment contract, send or cause to be sent to the retail buyer a policy or policies or certificate of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the insurance contract or contracts. In the event of repossession of goods under section 36a-785, where the holder of the retail installment contract has received a refund of all or part of the unearned insurance premiums paid by the retail buyer in connection with the retail installment contract, the holder shall apply such amount toward the balance of the retail buyer's obligations under the retail installment contract. For purposes of this section, “unearned insurance premiums” means the premiums that are collected by an insurer in advance, but subject to return if the coverage under the insurance contract or contracts ends before the term covered by the premiums is complete.
(1949 Rev., S. 6699, (c); 1957, P.A. 361, S. 1 (d); P.A. 16-65, S. 14.)
History: Sec. 42-86 transferred to Sec. 36a-773 in 1995; P.A. 16-65 added provisions re application of refunded unearned insurance premiums in the event of repossession and made a technical change.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-774. (Formerly Sec. 42-87). Installment loan contract requirements. Every installment loan contract shall be in writing executed by the retail buyer and a copy thereof shall be delivered to such retail buyer at the time of the execution thereof. Within fifteen days after the execution of such installment loan contract, the holder thereof shall send or cause to be sent to the retail buyer a policy or policies or certificates of insurance clearly setting forth the amount of the premium, the kind or kinds of insurance and the scope of the coverage and all of the terms, exceptions, limitations, restrictions and conditions of the insurance contract or contracts. Every installment loan contract for the purchase of consumer goods subject to section 36a-771 and this section shall set forth the information required to be disclosed under sections 36a-675 to 36a-686, inclusive, and the regulations thereunder, using the form, content and terminology provided therein.
(1949 Rev., S. 6699, (e); 1957, P.A. 361, S. 1 (f); 1969, P.A. 454, S. 30; P.A. 77-324, S. 2; P.A. 15-235, S. 23; P.A. 16-65, S. 16.)
History: 1969 act rewrote provisions re contract contents; P.A. 77-324 replaced detailed provisions re contract contents with provision requiring contracts to contain information required under Ch. 657 and associated regulations; Sec. 42-87 transferred to Sec. 36a-774 in 1995; P.A. 15-235 changed “36a-685” to “36a-686”, effective August 1, 2015; P.A. 16-65 made a technical change.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotations to former section 42-87:
Cited. 3 CA 201.
Cited. 34 CS 154.
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Sec. 36a-775. (Formerly Sec. 42-88). Confession of judgment provision invalid. No provision for confession of judgment or power of attorney therefor, contained in any retail installment contract or installment loan contract or contained in a separate agreement relating thereto, shall be valid or enforceable.
(1949 Rev., S. 6699, (a) 3; 1957, P.A. 361, S. 1 (a) 3.)
History: Sec. 42-88 transferred to Sec. 36a-775 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-776. (Formerly Sec. 42-89). Inclusion of other goods in contract void. Any provision of a retail installment contract as originally written or subsequently amended which purports to provide for the inclusion of title to or a lien upon any goods subsequently or previously sold under a retail installment contract not paid in full, other than that originally sold as the subject of such specific installment sale or other than substitution in whole or in part therefor, as security for payment of the time sale price or any part thereof shall be void; but the other provisions shall not be affected thereby.
(1949 Rev., S. 6699, (a) 2; 1957, P.A. 361, S. 1 (a) 2.)
History: Sec. 42-89 transferred to Sec. 36a-776 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-777. (Formerly Sec. 42-90). Acknowledgment of receipt of notice and statement. An acknowledgment by the retail buyer of the delivery of any such copy, notice or statement as is required in section 36a-771 or 36a-774 contained in the body of the statement or contract shall be conclusive proof of delivery in any action or proceeding by or against any assignee without knowledge to the contrary when he acquires the obligation.
(1949, Rev., S. 6699, (f); 1957, P.A. 361, S. 1 (g); 1969, P.A. 454, S. 31.)
History: 1969 act described assignee as assignee “without knowledge to the contrary when he acquires the obligation” rather than as assignee “of a retail installment contract or installment loan contract”; Sec. 42-90 transferred to Sec. 36a-777 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-778. (Formerly Sec. 42-91). Delinquency and collection charges. The holder of any retail installment contract or any installment loan contract shall not receive or collect any charges or expenses for collecting any delinquent payment, including, but not limited to, any service fees for accepting delinquent payments over the telephone or Internet, except as follows: The holder of a retail installment contract or installment loan contract, except a contract for the purchase of a commercial vehicle or an installment loan contract regulated by sections 36a-555 to 36a-573, inclusive, may collect a delinquency and collection charge for default in the payment of any such contract or installment of such contract, when such default has continued for a period of ten days, such charge not to exceed five per cent of the amount of the installments in default or the sum of ten dollars, whichever is the lesser. The holder of any retail installment contract or any installment loan contract for the purchase of a commercial vehicle, as defined in section 36a-770, except an installment loan contract regulated by sections 36a-555 to 36a-573, inclusive, may collect a delinquency and collection charge for default in the payment of any such contract or installment of such contract, when such default has continued for a period of ten days, such charge not to exceed five per cent of the amount of the installments in default. In addition to any such delinquency and collection charge, the retail installment contract or the installment loan contract may provide for the payment of attorney's fees not exceeding fifteen per cent of the amount due and payable under such contract when such contract is referred to an attorney, who is not a salaried employee of the holder of the contract, for collection, plus the court costs. The restriction on charges under this section shall not apply to any expenses permitted under section 36a-785.
(1949 Rev., S. 6699, (a) 4; 1957, P.A. 361, S. 1 (a) 4; P.A. 80-69, S. 2, 3; P.A. 89-210, S. 2; P.A. 16-65, S. 17.)
History: P.A. 80-69 raised flat fee charge allowed as alternative to 5% of amount in default from $5 to $10; P.A. 89-210 added provisions re commercial vehicles; Sec. 42-91 transferred to Sec. 36a-778 in 1995; P.A. 16-65 replaced reference to charges or expenses for delinquency and collection with provision re charges or expenses for collecting any delinquent payment, including any service fees, and made technical changes.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotation to former section 42-91:
Cited. 34 CS 154.
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Sec. 36a-779. (Formerly Sec. 42-92). Assignment of contract. Any sales finance company may purchase or acquire from the original holder thereof or from any other sales finance company any retail installment contract or any installment loan contract on such terms and conditions as may be mutually agreed upon not inconsistent with the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c. Such contracts constitute chattel paper, as defined in subdivision (11) of subsection (a) of section 42a-9-102, and are governed by article 9 of title 42a except as otherwise provided in said sections.
(1949 Rev., S. 6699, (d); 1957, P.A. 361, S. 1 (e); 1961, P.A. 116, S. 21; P.A. 01-132, S. 171.)
History: 1961 act coordinated this section with the Uniform Commercial Code; Sec. 42-92 transferred to Sec. 36a-779 in 1995; P.A. 01-132 replaced reference to Sec. 42a-9-105(1)(b) with Sec. 42a-9-102(a)(11).
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotation to former section 42-92:
Waiver of defense clause in consumer goods credit transaction void as against public policy in Connecticut. 158 C. 543.
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Sec. 36a-780. (Formerly Sec. 42-93). Payments after assignment. Unless notice has been given to the retail buyer of actual or intended assignment of a retail installment contract or installment loan contract, payment thereunder or tender thereof made by the retail buyer to the last-known holder of such contract shall be binding upon such subsequent holder or assignee.
(1949 Rev., S. 6699, (a) 5; 1957, P.A. 361, S. 1 (a) 5.)
History: Sec. 42-93 transferred to Sec. 36a-780 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-781. (Formerly Sec. 42-94). Statement of payments made. Receipts. Upon written request from the retail buyer, the holder of the retail installment contract or the installment loan contract shall give or forward to the retail buyer a written statement of the dates and amounts of payments and the total amount unpaid under such contract. A retail buyer shall, upon written request, be entitled to a written receipt for any cash payment.
(1949 Rev., S. 6699, (a) 6; 1957, P.A. 361, S. 1 (a) 6.)
History: Sec. 42-94 transferred to Sec. 36a-781 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-782. (Formerly Sec. 42-95). Cancellation of contract on payment in full. Upon payment in full of the balance and other amounts lawfully due under a retail installment contract or installment loan contract by the retail buyer, the holder shall mark the contract and note signed by the retail buyer with the word “paid” or “cancelled” and shall, at the time of payment, return such contract and note or, in lieu thereof, transmit or deliver to the retail buyer a certificate clearly identifying the goods covered by the contract and showing such contract has been paid in full. This requirement shall not apply to any retail installment contract or installment loan contract covering goods for which the cash price is one hundred dollars or less.
(1949, S. 2865d; 1957, P.A. 361, S. 1 (h).)
History: Sec. 42-95 transferred to Sec. 36a-782 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-783. (Formerly Sec. 42-96). Rebate and refund upon prepayment of contract. (a) Notwithstanding the provisions of any retail installment contract to the contrary, any retail buyer may satisfy in full at any time before maturity the debt of any retail installment contract and, in so satisfying any such debt on which there are unearned finance charges, shall receive a rebate thereon for such anticipation of payments as provided for by this section. Subject to the provisions of section 36a-690, the amount of such rebate on a retail installment contract other than any such contract for the sale of a commercial vehicle, shall represent at least as great a proportion of the total finance charge less an acquisition cost or minimum finance charge of fifteen dollars, as the sum of the periodical time balances, after the date of prepayment, bears to the sum of all the periodical time balances under the schedule of payments in the original retail installment contract. On a retail installment contract for the sale of a commercial vehicle, the amount of such rebate shall represent at least as great a proportion of the total finance charge as the sum of the periodical time balances, after the date of prepayment, bears to the sum of all the periodical time balances under the schedule of payments in the original retail installment contract and from which resulting amount is deducted an acquisition cost or minimum finance charge of one hundred fifty dollars. When any such rebate is less than one dollar, no rebate need be made.
(b) In the event of prepayment by the retail buyer of any such renewed or extended retail installment contract in full prior to the revised final date of maturity thereof, the sales finance company or retail seller shall refund to the retail buyer a monthly pro rata portion of the renewal or extension charge. When such refund is less than one dollar, no refund need be made.
(c) Whenever such refund is made, the holder of the contract shall, upon request therefor, deliver to the retail buyer a statement clearly setting forth separately the refund of finance charges and insurance premiums.
(1949 Rev., S. 6701; 1949, 1953, S. 2867d; 1957, P.A. 361, S. 2; P.A. 81-163, S. 3, 4; P.A. 89-210, S. 3.)
History: P.A. 81-163 amended Subsec. (a) by providing that if a retail buyer satisfies in full prior to maturity a debt on which there are unearned finance charges he shall receive a rebate thereon, providing that the calculation of the rebate is subject to the provisions of Sec. 36-417z and that a minimum finance charge may be deducted from the total finance charge, and by replacing “refund” with “rebate”; P.A. 89-210 amended Subsec. (a) by adding provisions re commercial vehicles; Sec. 42-96 transferred to Sec. 36a-783 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotations to former section 42-96:
Cited. 24 CA 455.
Cited. 34 CS 154.
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Sec. 36a-784. (Formerly Sec. 42-97). Renewals and extensions. Whenever any sales finance company or retail seller renews or extends the installments remaining unpaid so that the retail installment contract is both extended beyond its original date of final payment and the installments are reduced or increased in amount, such renewal or extension agreement shall be in writing. Such sales finance company or retail seller may, any law to the contrary notwithstanding, make or collect a total additional charge therefor not exceeding an amount equivalent to a true rate of interest of twelve per cent per annum on the respective descending balances computed from the date of the oldest unpaid installment existing prior to such renewal or extension. When the renewal or extension does not include both an extension beyond the original date of final payment and a reduction or increase in the amount of the installments, such sales finance company or retail seller may make a total additional charge therefor up to the maximum lawful contract rate of interest permitted under the laws of this state but not exceeding twelve per cent true interest per annum, on the payment or payments extended for the period or periods of the extension.
(1949 Rev., S. 6702.)
History: Sec. 42-97 transferred to Sec. 36a-784 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
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Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure. (a) Repossession. When the retail buyer is in default in the payment of any sum due under the retail installment contract or installment loan contract, or in the performance of any other condition that such contract requires the retail buyer to perform, or in the performance of any promise, the breach of which is by such contract expressly made a ground for the retaking of the goods, the holder of the contract may retake possession of such goods, provided the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle. Unless the goods can be retaken without breach of the peace, the goods shall be retaken by legal process, provided nothing contained in this section shall be construed to authorize a violation of the criminal law. In the case of repossession of any motor vehicle without the knowledge of the retail buyer, the local police department shall be notified of such repossession not later than two hours after repossession. In the absence of a local police department or if the local police department cannot be reached for notification, the state police shall be promptly notified of such repossession.
(b) Notice of intention to repossess. Not less than ten days prior to the retaking, the holder of such contract may serve upon the retail buyer, personally or by registered or certified mail, a notice of intention to retake the goods on account of the retail buyer's default. The notice shall state that the retail buyer is in default and the period at the end of which such goods will be retaken, and designate (1) the obligations required to be performed in order to cure the default, including the dollar amount of any required payment, and (2) the date by which such obligations must be performed. The notice shall briefly and clearly state the retail buyer's rights under this subsection in the event such goods are retaken. In the case of repossession of any motor vehicle, the notice shall inform the retail buyer that he or she is responsible for removing all of his or her personal property from the motor vehicle prior to the date such repossession can take place. If the notice is so served and the retail buyer does not perform the conditions and provisions required under the contract to cure the default before the day set for retaking, the holder of the contract may retake such goods and hold such goods subject to the provisions of subsections (d), (e), (f), (g) and (h) of this section regarding resale, but without any right of redemption.
(c) Redemption. If the holder of such contract does not give the notice of intention to retake, described in subsection (b) of this section, the holder shall retain such goods for fifteen days after the retaking within the state in which such goods were located when retaken. During such period the retail buyer, upon payment or tender of the unaccelerated amount due under such contract at the time of retaking and interest, or upon performance or tender of performance of such other condition as may be named in such contract as precedent to the retail buyer's continued possession of such goods, or upon performance or tender of performance of any other promise for the breach of which such goods were retaken, and upon payment of the actual and reasonable expenses of any retaking and storing, may redeem such goods and become entitled to take possession of such goods and to continue in the performance of such contract as if no default had occurred. The holder of such contract shall, not later than three days after the date of the retaking, furnish or mail, by registered or certified mail, to the last-known address of the retail buyer, a written statement indicating (1) the unaccelerated sum due under such contract and the actual and reasonable expense of any retaking and storing, and (2) in the case of repossession of any motor vehicle, the holder of such contract shall also, not later than three days after the date of the retaking, and without regard to whether notice of intention to retake was given to the buyer, send a written notice (A) that the buyer is responsible for retrieving items of personal property that may have been left in the motor vehicle, other than items that may have been turned over to law enforcement, (B) that such property, if any, will be available for retrieval for at least sixty days after the date on which the motor vehicle was repossessed, unless the holder of the contract specifies, or the terms of the contract specify a date at least sixty days after the repossession after which the buyer may no longer retrieve the property, and (C) the contact and business hours information that the buyer can use to make arrangements for retrieval of the property. If the buyer retrieves some or all of the personal property more than fifteen days after the date on which the motor vehicle was repossessed, the holder of the contract, or an agent thereof maintaining custody of the personal property, may charge the buyer a reasonable storage fee not to exceed twenty-five dollars. Failure to furnish or mail such statement as required by this section shall result in forfeiture of the holder's right to claim payment for the actual and reasonable expenses of retaking and storage, and the holder shall be liable for the actual damages suffered because of such failure. If such goods are perishable so that retention for fifteen days under this subsection would result in their destruction or substantial injury, the provisions of this subsection shall not apply and the holder of the contract may resell the goods immediately upon such retaking.
(d) Compulsory resale. If the retail buyer does not redeem such goods within fifteen days after the holder of the contract has retaken possession, the holder of the contract shall sell such goods at public or private sale not less than fifteen days and not more than one hundred eighty days after the retaking. When the holder of the contract retakes possession by legal process, and an answer is interposed, the holder of the contract may, at the holder's election, hold such retaken goods for a period not to exceed thirty days after the entry of final judgment by a court of competent jurisdiction entitling the holder of the contract to possession of such goods before holding such resale. The holder of the contract shall give the retail buyer not less than ten days' written notice of the time and place of any public sale, or the time after which any private sale or other intended disposition is to be made, either personally or by registered mail or by certified mail, return receipt requested, directed to the retail buyer at such retail buyer's last-known place of business or residence. The holder of the contract may bid for such goods at any public sale. The proceeds of the resale shall be considered to be either the amount paid for such goods at such sale or the fair cash retail market value of such goods at the time of repossession, whichever is the greater, except as otherwise provided in subsection (g) of this section.
(e) Proceeds of resale. Proceeds of the resale shall be applied in the following order of priority: (1) First, to the payment of the actual and reasonable expenses of such resale, (2) if, after application pursuant to subdivision (1) of this subsection, there are proceeds remaining, then to the payment of the actual and reasonable expenses of any retaking and storing of said goods, and (3) if, after application pursuant to subdivisions (1) and (2) of this subsection, there are proceeds remaining, then to the satisfaction of the balance due under the contract. Not later than thirty days after the resale, the holder of the contract shall give the retail buyer a written statement itemizing the disposition of the proceeds. Any sum remaining after the satisfaction of such claims shall be paid to the retail buyer.
(f) Deficiency on resale. Even if the proceeds of the resale are insufficient to defray the actual and reasonable expenses of such resale, and such actual and reasonable expenses of any retaking and storing of such goods and the balance due under the contract, the holder of the contract may not recover the deficiency from the retail buyer or any surety or guarantor for the retail buyer, or from anyone who has succeeded to the obligations of such retail buyer, except as provided in subsection (g) of this section.
(g) Fair market value. If the goods retaken consist of a motor vehicle the aggregate cash price of which was more than four thousand dollars, the prima facie fair market value of such motor vehicle shall be calculated by adding together the average trade-in value for such motor vehicle and the highest-stated retail value for such motor vehicle and dividing the sum of such values by two. Such average trade-in value and highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Used Car Guide, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest-stated trade-in value stated in said guide for the motor vehicle shall be used. If the goods retaken consist of a boat the aggregate cash price of which was more than four thousand dollars, the prima facie fair market value of such boat shall be calculated by adding together the average trade-in value for such boat and the highest-stated retail value for such boat and dividing the sum of such values by two. Such average trade-in value and highest-stated retail value shall be determined by the values as stated in the National Automobile Dealers Association Appraisal Guide for Boats, Eastern Edition, as of the date of repossession. If an average trade-in value is not stated in said guide, the highest-stated trade-in value stated in said guide for the boat shall be used. In the event that the value of such motor vehicle or boat is not stated in such publication, the fair market value at retail minus the reasonable costs of resale shall be determined by the court. The prima facie evidence of fair market value of such motor vehicle or boat so determined may be rebutted only by direct in-court testimony. If such value of the motor vehicle or boat is less than the balance due under the contract, plus the actual and reasonable expenses of the retaking of possession, the holder of the contract may recover from the retail buyer, or from anyone who has succeeded to such retail buyer's obligations, as a deficiency, the amount by which such liability exceeds such fair market value, as defined in this subsection. If the actual resale price received by the holder exceeds such fair market value, as defined in this subsection, the actual resale price shall govern.
(h) Election of remedies. After the holder retakes possession as provided in subsection (a) of this section, or if the holder obtains a prejudgment remedy against the goods under chapter 903a, the retail buyer or anyone who has succeeded to such retail buyer's obligations shall not be liable for any balance due, except to the extent permitted by subsection (g) of this section. The holder may seek a monetary judgment on the contract against the retail buyer unless the goods have been repossessed, with or without judicial process. Goods purchased under the contract shall not be executed upon to satisfy such judgment. When such judgment becomes final, the holder's security interest in the goods shall be extinguished. If the contract covers a retail sale of a motor vehicle required to be registered, the holder shall comply with section 14-188.
(i) Recovery of part payments. If the holder of the contract fails to comply with the provisions of subsections (c), (d), (e), (f), (g) and (h) of this section, after retaking the goods, the retail buyer may recover from the holder of the contract such retail buyer's actual damages, if any, and in no event less than one-fourth of the sum of all payments which have been made under the contract.
(j) Waiver of statutory protection. No act or agreement of the retail buyer before or at the time of the making of a retail installment contract or installment loan contract nor any agreement or statement by the retail buyer in such contract shall constitute a valid waiver of the provisions of subsections (c), (d), (e), (f), (g), (h) and (i) of this section.
(k) Loss. After the delivery of the goods to the retail buyer and prior to any retaking of such goods by the holder of the contract, the risk of injury and loss shall rest upon the retail buyer.
(1949 Rev., S. 6700; 1957, P.A. 357, S. 2, 3; 1959, P.A. 301; 1961, P.A. 116, S. 22, 23; P.A. 76-258, S. 1, 2; P.A. 77-506; 77-614, S. 486, 587, 610; P.A. 78-303, S. 85, 136; P.A. 94-134, S. 2, 3; May 25 Sp. Sess. P.A. 94-1, S. 61, 130; P.A. 09-189, S. 1; P.A. 15-42, S. 7; P.A. 16-65, S. 18, 58; 16-193, S. 34.)
History: 1959 act added provisions re notification of police where vehicle is repossessed without its buyer's knowledge in Subsec. (a); 1961 act amended Subsecs. (d) and (e) for conformity with Uniform Commercial Code; P.A. 76-258 amended Subsec. (d) to require that sale be held within 180, rather than 90 days, to require that buyer be notified of “the time after which any private sale or other intended disposition is to be made”, deleted Subsec. (e) re procedure where contract holder not required to resell repossessed goods, relettering as necessary, required that contract holder notify buyer of disposition of proceeds in new Subsec. (e), formerly (f), changed force of Subsec. (f), formerly (g), so that deficiency is not recoverable from buyer (“except as provided in subsection (g)”) where previously deficiency was recoverable, added new Subsecs. (g) and (h), deleted former Subsecs. (h) and (i), and relettered former Subsecs. (j) to (l) as (i) to (k); P.A. 77-506 substituted “retail” buyer for “installment” buyer in Subsec. (a), referred to “unaccelerated” amounts due, required that buyer be notified of amount due within 3 days of retaking rather than “immediately” upon buyer's written demand and stated that failure to meet notice requirement resulted in forfeiture of right to claim payment for retaking and storage expenses rather than in forfeiture of $10 to the buyer, specified that Subsec. (h) is applicable where holder obtains a prejudgment remedy and made minor language changes in Subsecs. (e) and (g); P.A. 77-614 and P.A. 78-303 placed state police within the department of public safety, effective January 1, 1979; P.A. 94-134 amended Subsec. (g) to include a boat the aggregate price of which was more than $2,000 and reworded for clarity the formula for calculating a motor vehicle's fair market value, effective October 1, 1994, and applicable to retail installment contracts and installment loan contracts executed on or after that date; May 25 Sp. Sess. P.A. 94-1 amended Subsec. (g) by making a technical change, effective July 1, 1994; Sec. 42-98 transferred to Sec. 36a-785 in 1995; P.A. 09-189 amended Subsec. (a) by adding proviso re “the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle” and by making a technical change; P.A. 15-42 amended Subsec. (a) by changing notification to police of motor vehicle repossession from “immediately thereafter” to “within two hours”; P.A. 16-65 amended Subsec. (b) by deleting “if he so desires”, adding Subdivs. (1) and (2) re designation of obligations required to be performed to cure default and date by which obligations must be performed, adding provision re notice in the case of repossession of any motor vehicle and replacing “conditions and provisions as to which he is in default” with “conditions and provisions required under the contract to cure the default”, amended Subsec. (c) by designating existing provision re unaccelerated sum due and expenses of retaking and storing as Subdiv. (1) and adding Subdiv. (2) re notice requirements in the case of repossession of any motor vehicle, and adding provision re personal property storage fee, amended Subsec. (e) by adding provisions re order of priority and proceeds remaining after application pursuant to Subdivs. (1) and (2), amended Subsec. (g) by replacing “two thousand dollars” with “four thousand dollars”, replacing “average retail value” with “highest-stated retail value” and adding provisions re use of highest-stated trade-in value if average trade-in value is not stated in guides, and made technical and conforming changes throughout; P.A. 16-193 made technical changes in Subsec. (f).
Annotations to former section 42-98:
Actual receipt of notice to resell repossessed automobile not necessary. 150 C. 631. Cited. 198 C. 34. Notification requirements mandatory. 209 C. 163. Cited. 216 C. 458; 231 C. 707.
Cited. 7 CA 613; 24 CA 455.
A bid is merely an offer to purchase; where plaintiff did nothing to consummate sale other than to place in its own file a bid to purchase, held no resale having taken place, plaintiff was not entitled to recover any deficiency. 23 CS 362. Cited. Id., 365. Compliance with section mandatory under act. 30 CS 604. Cited. 31 CS 152.
Cited. 2 Conn. Cir. Ct. 495, 499, 681. Court held day of retaking was to be excluded and last day included in computing the 15 days for redemption; sale by repossessor before statutory time limit defeated his right to deficiency judgment. Id., 708. Sale by holder of retail installment contract who repossessed automobile need not be given notice by publication nor be conducted by licensed auctioneer. 4 Conn. Cir. Ct. 351. Applicable only to retail buyers. 6 Conn. Cir. Ct. 709.
Annotation to present section:
Repossession under Subsec. (g) does not terminate operation of parties' contract or prohibit the recovery of postmaturity interest at either the contractual or legal rate under Sec. 37-1(b). 315 C. 433.
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Sec. 36a-786. (Formerly Sec. 42-99). Recovery of charges barred by wilful violations. A wilful violation of any provision of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, except a violation with respect to disclosure which is subject to the provisions of section 36a-683, by any person, firm, association or corporation shall bar recovery of any finance, delinquency or collection charge by the owner or holder of the retail installment contract or any interest, delinquency or collection charge by the owner or holder of an installment loan contract involved, provided such owner or holder approved of or had knowledge of such violation and after such approval or knowledge retained the benefits, proceeds, profits or advantages accruing from such violation or otherwise ratified such violation.
(1949 Rev., S. 6703; 1969, P.A. 454, S. 32.)
History: 1969 act added exception re violations with respect to disclosures; Sec. 42-99 transferred to Sec. 36a-786 in 1995.
See Sec. 42a-9-203 re attachment and enforceability of security interests.
Annotations to former section 42-99:
This section and Sec. 42-100 are not exclusive of other remedies. 155 C. 469.
Cited. 3 CA 201; 7 CA 613.
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Sec. 36a-787. (Formerly Sec. 42-100). Penalty. Any person and any responsible officer, partner or employee of such person who wilfully and deliberately fails to comply with or violates any of the provisions of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c except a violation with respect to disclosure which is subject to the provisions of section 36a-681, shall, in addition to the penalty prescribed in section 36a-786, be fined not less than twenty-five dollars nor more than five hundred dollars for each offense, except that in the case of a violation by a licensed motor vehicle dealer the penalty provided in section 14-64 shall apply.
(1949, S. 2868d; 1969, P.A. 454, S. 33; P.A. 94-122, S. 326, 340.)
History: 1969 act added exception re violations with respect to disclosures; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-100 transferred to Sec. 36a-787 in 1995; (Revisor's note: In 1997 a reference to Sec. “42-110b” was changed editorially by the Revisors to “42-100b” thereby correcting a clerical error which occurred during the preparation of the 1995 revision).
Annotations to former section 42-100:
This section and Sec. 42-99 are not exclusive of other remedies. 155 C. 469.
Cited. 7 CA 613.
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Sec. 36a-788. (Formerly Sec. 42-100a). Enforcement action. Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-770 to 36a-788, inclusive, 42-100b and 42-100c, the commissioner may take action against such person in accordance with sections 36a-50 and 36a-52.
(P.A. 78-313, S. 2, 3; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 327, 340; P.A. 04-69, S. 29.)
History: (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 rewrote the section to allow the commissioner to enforce Sec. 36a-50, effective January 1, 1995; Sec. 42-100a transferred to Sec. 36a-788 in 1995; P.A. 04-69 authorized commissioner to take action against violator in accordance with Sec. 36a-52.
Annotation to former section 42-100a:
Cited. 7 CA 613.
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Secs. 36a-789 to 36a-799. Reserved for future use.
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PART XII
CONSUMER COLLECTION AGENCIES
Sec. 36a-800. (Formerly Sec. 42-127). Consumer collection agency. Definitions. As used in this section and sections 36a-801 to 36a-814, inclusive, unless the context otherwise requires:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485;
(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a consumer collection agency;
(3) “Consumer collection agency” means any person (A) engaged as a third party in the business of collecting or receiving payment for others on any account, bill or other indebtedness from a consumer debtor, (B) engaged in the business of debt buying, or (C) engaged in the business of collecting or receiving tax payments, including, but not limited to, property tax and federal income tax payments, from a property tax debtor or federal income tax debtor on behalf of a municipality or the United States Department of the Treasury, including, but not limited to, any person who, by any device, subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts from any other person, municipality or taxing authority of such indebtedness for the purpose of evading the provisions of this section and sections 36a-801 to 36a-814, inclusive. “Consumer collection agency” includes persons who furnish collection systems carrying a name which simulates the name of a consumer collection agency and who supply forms or form letters to be used by the creditor, even though such forms direct the consumer debtor, property tax debtor or federal income tax debtor to make payments directly to the creditor rather than to such fictitious agency. “Consumer collection agency” further includes any person who, in attempting to collect or in collecting such person's own accounts or claims from a consumer debtor, uses a fictitious name or any name other than such person's own name which would indicate to the consumer debtor that a third person is collecting or attempting to collect such account or claim. “Consumer collection agency” does not include (i) an individual employed on the staff of a licensed consumer collection agency, or by a creditor who is exempt from licensing, when attempting to collect on behalf of such consumer collection agency, (ii) persons not primarily engaged in the collection of debts from consumer debtors who receive funds in escrow for subsequent distribution to others, including, but not limited to, real estate brokers and lenders holding funds of borrowers for payment of taxes or insurance, (iii) any public officer or a person acting under the order of any court, (iv) any member of the bar of this state, (v) a person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent, (vi) a bank or out-of-state bank, as defined in section 36a-2, and (vii) a subsidiary or affiliate of a bank or out-of-state bank, provided such affiliate or subsidiary is not primarily engaged in the business of purchasing and collecting upon delinquent debt, other than delinquent debt secured by real property. Any person not included in the definition contained in this subdivision is, for purposes of sections 36a-645 to 36a-647, inclusive, a “creditor”, as defined in section 36a-645;
(4) “Consumer debtor” means any natural person, not an organization, who has incurred indebtedness or owes a debt for personal, family or household purposes, including current or past due child support, who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a personal property tax or who has incurred indebtedness or owes a debt to the United States Department of the Treasury under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;
(5) “Control person” has the same meaning as provided in section 36a-485;
(6) “Creditor” means a person, including, but not limited to, a municipality or the United States Department of the Treasury, that retains, hires, or engages the services of a consumer collection agency;
(7) “Debt buying” means collecting or receiving payment on any account, bill or other indebtedness from a consumer debtor for such person's own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired;
(8) “Federal income tax” means all federal taxes levied on the income of a natural person or organization by the United States Department of the Treasury under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time;
(9) “Federal income tax debtor” means any natural person or organization who owes a debt to the United States Department of the Treasury;
(10) “Main office” means the main address designated on the system;
(11) “Municipality” means any town, city or borough, consolidated town and city, consolidated town and borough, district as defined in section 7-324 or municipal special services district established under chapter 105a;
(12) “Organization” means a corporation, partnership, association, trust or any other legal entity or an individual operating under a trade name or a name having appended to it a commercial, occupational or professional designation;
(13) “Property tax” has the meaning given to the term in section 7-560;
(14) “Property tax debtor” means any natural person or organization who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a property tax; and
(15) “Unique identifier” has the same meaning as provided in section 36a-485.
(1953, 1955, S. 3310d; 1967, P.A. 882, S. 19; 1971, P.A. 539, S. 1; P.A. 75-486, S. 64, 69; P.A. 77-614, S. 161, 162, 610; P.A. 78-226, S. 1; 78-303, S. 54, 136; P.A. 80-482, S. 333, 348; P.A. 84-61, S. 1, 3; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 56; P.A. 91-357, S. 61, 78; P.A. 92-12, S. 103; P.A. 93-127, S. 1, 3; P.A. 94-122, S. 328, 340; P.A. 01-207, S. 3, 12; P.A. 02-111, S. 46; P.A. 03-262, S. 1; P.A. 04-8, S. 11; P.A. 07-72, S. 8; P.A. 13-253, S. 22; P.A. 14-7, S. 2; P.A. 15-235, S. 33; P.A. 16-65, S. 47; P.A. 17-233, S. 29; P.A. 18-173, S. 78.)
History: 1967 act deleted language which had specifically included debt adjustment and prorate companies in definition of “collection agency”; 1971 act defined “consumer collection agency” rather than “collection agency”, expanding definition and specifically excluding lender licensed by banking commission under Ch. 647, and added definitions of “commissioner”, “consumer debtor” and “organization”; P.A. 75-486 substituted replaced public utilities commission with public utilities control authority in Subdiv. (b); P.A. 77-614 replaced bank commissioner and public utilities commission with banking commissioner (within the department of business regulation, the banking department having been made a division within that department) and division of public utility control within the department of business regulation, effective January 1, 1979; P.A. 78-226 defined “creditor”; P.A. 78-303 confirmed change in bank commissioner's title and replaced banking commission with banking commissioner to conform with P.A. 77-614 which abolished said commission; P.A. 80-482 restored division of banking to prior status as independent department, made division of public utility control an independent department and abolished the department of business regulation; P.A. 84-61 amended Subsec. (b) to exempt from the definition of “consumer collection agency” those persons delineated in Subdivs. (1) through (5), inclusive, replacing prior exemption provision; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-65 substituted a reference to Sec. 42-133a for Sec. 42-133 in the introductory language; P.A. 91-357 made a technical change in Subsec. (c); P.A. 92-12 redesignated Subsecs. and Subdivs. and made technical changes; P.A. 93-127 amended Subdiv. (2) to include “municipality” in the definition of “consumer collection agency”, amended Subdiv. (4) to include debts owed to a municipality in the definition of “consumer debtor”, added a new Subdiv. (6) defining “municipality” and renumbered the former Subdiv. (6) as (7), effective July 1, 1993; P.A. 94-122 deleted the definitions of “person” and “commissioner”, reordered definitions and made other technical changes, effective January 1, 1995; Sec. 42-127 transferred to Sec. 36a-800 in 1995; (Revisor's note: In 1997 the Revisors editorially changed the reference at the end of Subdiv. (1) from “creditor”, as defined in “subsection (2)” of section 36a-645; to “creditor” as defined in “subdivision (3)” of section 36a-645; to reflect correctly P.A. 94-122, S. 293); P.A. 01-207 made a technical change in Subdiv. (1) and amended definition of “consumer debtor” in Subdiv. (2) to add the phrase “including current or past due child support”, effective July 1, 2001; P.A. 02-111 redefined “consumer collection agency” in Subdiv. (1) and added Subdivs. (6) and (7) defining “property tax” and “property tax debtor”, effective July 1, 2002; P.A. 03-262 redefined “consumer collection agency” in Subdiv. (1) by substituting “or receiving for payment” for “, without receiving,” effective July 9, 2003; P.A. 04-8 made a technical change in Subdiv. (3), effective April 16, 2004; P.A. 07-72 made technical changes in Subdiv. (1); P.A. 13-253 added new Subdiv. (1) defining “branch office”, redesignated existing Subdiv. (1) as Subdiv. (2) and amended same to redefine “consumer collection agency”, redesignated existing Subdivs. (2) and (3) as Subdivs. (3) and (4), added new Subdiv. (5) defining “main office” and redesignated existing Subdivs. (4) to (7) as Subdivs. (6) to (9); P.A. 14-7 amended Subdiv. (2) to redefine “consumer collection agency” by deleting reference to account, bill or other indebtedness and making technical changes, effective May 8, 2014; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015; P.A. 16-65 redefined “consumer collection agency”, “consumer debtor” and “creditor”, defined “federal income tax” and “federal income tax debtor”, and made technical and conforming changes; P.A. 17-233 deleted “directly or indirectly” in Subdiv. (2)(B), added new Subdiv. (4) defining “control person” and redesignated existing Subdivs. (4) to (11) as Subdivs. (5) to (12); P.A. 18-173 added new Subdiv. (1) defining “advertise” or “advertising”, redesignated existing Subdivs. (1) to (5) as new Subdivs. (2) to (6), amended redesignated Subdiv. (3)(B) by replacing provision re collecting on certain accounts, bills or other indebtedness with reference to debt buying, replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, added new Subdiv. (7) defining “debt buying”, redesignated existing Subdivs. (6) to (12) as Subdivs. (8) to (14), amended redesignated Subdiv. (10) by replacing “application” with “system”, added Subdiv. (15) defining “unique identifier”, and made technical changes.
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Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Authority to conduct criminal history records check. Examination of records. Abandonment of application. Surrender of license. Required system filing or notice of commissioner. Automatic suspension of license. Name and place of business. Change in any control persons. Unique identifier of license. Advertising of license. (a) No person shall act within this state as a consumer collection agency, directly or indirectly, unless such person has first obtained a required consumer collection agency license for such person's main office and for each branch office where such person's business is conducted. A consumer collection agency is acting within this state if it (1) has its place of business located within this state; (2) has its place of business located outside this state and (A) collects from consumer debtors, property tax debtors or federal income tax debtors who reside within this state for creditors who are located within this state, or (B) collects from consumer debtors, property tax debtors or federal income tax debtors who reside within this state for such consumer collection agency's own account; (3) has its place of business located outside this state and regularly collects from consumer debtors, property tax debtors or federal income tax debtors who reside within this state for creditors who are located outside this state; or (4) has its place of business located outside this state and is engaged in the business of collecting child support for creditors located within this state from consumer debtors who are located outside this state. Any activity subject to licensure pursuant to sections 36a-800 to 36a-814, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(b) An application for a license as a consumer collection agency or for renewal of such license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-800 to 36a-814, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction. As part of the application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager, and (2) in accordance with section 36a-24b (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. Such application shall be accompanied by a financial statement prepared by a certified public accountant and, for any applicant not solely engaged in the business of debt buying, such application shall evidence that the applicant has a minimum tangible net worth of fifty thousand dollars. The commissioner shall cause to be made such inquiry and examination as to the qualifications of each such applicant or any control person, qualified individual or branch manager of the applicant as the commissioner deems necessary. Each applicant shall furnish satisfactory evidence to the commissioner that the applicant is a person of good moral character and is financially responsible.
(c) (1) Each applicant for a consumer collection agency license shall pay to the system any required fees or charges and a license fee of five hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a consumer collection agency license shall pay to the system any required fees or charges and a renewal fee of four hundred dollars.
(2) If the commissioner finds, upon the filing of an application for a consumer collection agency, that (A) the financial responsibility, character, reputation, integrity and general fitness of the applicant, the control persons of the applicant, the qualified individual and any branch manager are such to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-800 to 36a-814, inclusive, and (B) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant, the commissioner may, upon such finding, issue the applicant a consumer collection agency license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of such applicant has been convicted of any misdemeanor involving any aspect of the consumer collection agency business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.
(3) The minimum standards for renewal of a consumer collection agency license shall include the following: (A) The applicant continues to meet the minimum standards under this section; (B) the applicant has paid all required fees for renewal of the license; and (C) the applicant has paid all outstanding examination fees or other moneys due to the commissioner. The license of a consumer collection agency licensee failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. Every license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-800 to 36a-814, inclusive.
(d) To further the enforcement of this section and to determine the eligibility of any person holding a license, the commissioner may, as often as the commissioner deems necessary, examine the licensee's books and records, and may, at any time, require the licensee to submit such a financial statement for the examination of the commissioner, so that the commissioner may determine whether the licensee is financially responsible to carry on a consumer collection agency business within the intents and purposes of sections 36a-800 to 36a-814, inclusive. Any financial statement submitted by a licensee shall be confidential and shall not be a public record unless introduced in evidence at a hearing conducted by the commissioner.
(e) The commissioner may deem an application for a license to act as a consumer collection agency abandoned if the applicant fails to respond to any request for information required under sections 36a-801 to 36a-814, inclusive, or any regulations adopted pursuant to said sections 36a-801 to 36a-814, inclusive. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-801 to 36a-814, inclusive.
(f) (1) Not later than thirty days before a licensee ceases to engage in the business of a consumer collection agency for any reason, including, but not limited to, a business decision to terminate operations in this state, bankruptcy or voluntary dissolution, such licensee shall request surrender of the license on the system in accordance with subsection (c) of section 36a-51 for each location in which such licensee has ceased to engage in such business.
(2) Except as otherwise specified in subsection (i) of this section, each consumer collection agency applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file on the system any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days after the date the applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.
(3) A consumer collection agency licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following developments:
(A) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(B) Filing of a criminal indictment against the licensee in any way related to the consumer collection activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(C) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(D) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor;
(E) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee; or
(F) Any decrease in tangible net worth from the minimum amount required pursuant to subsection (b) of this section.
(g) The commissioner may automatically suspend a license if the licensee receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-804 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(h) No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by this section shall be nonrefundable.
(i) No person licensed to act within this state as a consumer collection agency shall do so under any other name or at any other place of business than that named in the license. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, (1) the licensee files such change with the system and provides a bond rider, endorsement or addendum, as applicable, to the surety bond on file with the commissioner that reflects the new name or address, and (2) the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-800 to 36a-814, inclusive, as to each new licensee. A license shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. Any licensee holding, applying for, or seeking renewal of more than one license may, at its option, file the bond required under section 36a-802 separately for each place of business licensed, or to be licensed, or a single bond, naming each place of business, in an amount equal to twenty-five thousand dollars for each place of business. The commissioner may automatically suspend a license for any violation of this subsection. After a license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-804 and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(j) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each consumer collection agency licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(k) The unique identifier of any person licensed under section 36a-801 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under section 36a-801: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-801 to 36a-814, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(1971, P.A. 539, S. 2, 3; P.A. 73-284; 73-328; 73-341; P.A. 81-292, S. 12; P.A. 88-150, S. 9; P.A. 92-89, S. 17, 20; P.A. 93-127, S. 2, 3; P.A. 94-104, S. 6; 94-122, S. 329, 340; P.A. 96-71, S. 7, 8; P.A. 01-207, S. 4, 12; P.A. 02-111, S. 47; P.A. 04-69, S. 30; P.A. 05-46, S. 15; 05-74, S. 5; P.A. 06-35, S. 11; P.A. 09-208, S. 35; Sept. Sp. Sess. P.A. 09-7, S. 101; P.A. 11-216, S. 47; P.A. 13-253, S. 23; P.A. 14-89, S. 39; P.A. 15-235, S. 34; P.A. 16-65, S. 48; P.A. 17-233, S. 30; 17-236, S. 14; P.A. 18-173, S. 79.)
History: P.A. 73-284 required that financial statements be “prepared” rather than “certified” by accountant and required that their accuracy be sworn to by proprietor, general partner or corporate officer in Subsec. (b); P.A. 73-328 defined acting within state with regard to consumer collection agencies in Subsec. (a); P.A. 73-341 added Subsec. (c); P.A. 81-292 amended Subsec. (b) by increasing the license fee from $100 to $200 and the renewal fee from $50 to $200; P.A. 88-150 amended Subsec. (b) by providing that license and investigation fees are nonrefundable; P.A. 92-89 amended Subsec. (b) to increase the license fee from $200 to $400, to increase the investigation fee from $50 to $100 and to increase the renewal fee from $200 to $400; P.A. 93-127 amended Subsec. (a) by substituting “who are” for “whose place of business is”, effective July 1, 1993; P.A. 94-104 changed the license expiration date from May first to April thirtieth, made April first the renewal application deadline and added a $100 late fee in Subsec. (a), and made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-127a transferred to Sec. 36a-801 in 1995; P.A. 96-71 amended Subsec. (b) to make technical changes and to add Subdiv. (2) to make all fees required by this section nonrefundable, effective July 1, 1996; P.A. 01-207 amended Subsec. (a) to add Subdiv. (4) defining acting within state re consumer collection agencies to include having its place of business located outside this state and engaging in the business of collecting child support for creditors located within this state from consumer debtors located outside this state, effective July 1, 2001; P.A. 02-111 amended Subsec. (a) by replacing provision re holding a license then in force with provision re consumer collection agency license and adding references to “property tax debtors”, amended Subsec. (b) by adding reference to “a member” in Subdiv. (1)(A), by providing that license fee is $800 or, in the case of initial application filed not earlier than one year before the expiration date of license, fee is $400 in Subdiv. (1)(B), by adding provisions re expiration of license at the close of business on September thirtieth of the odd-numbered year following its issuance, renewal fee of $800 and exceptions for license, renewed effective May 1, 2003, and licenses that expire on April 30, 2003, and by adding provision re $100 processing fee and amended Subsec. (c) by adding provisions re prior written notice to commissioner of any change of location of a place of business and re license shall not be transferable or assignable; P.A. 04-69 amended Subsec. (b) by adding new Subdiv. (2), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignating existing Subdiv. (2) as Subdiv. (3); P.A. 05-46 amended Subsec. (b)(1) to make a technical change and provide that renewal application for licensees filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b); P.A. 05-74 amended Subsec. (c) to make a technical change, effective June 2, 2005; P.A. 06-35 amended Subsec. (b)(1) to require applicants or licensees to notify commissioner, in writing, of any changes in information in initial or most recent renewal application for license within ten business days after occurrence of event that results in information becoming inaccurate; P.A. 09-208 amended Subsec. (b)(1) by adding new Subpara. (B) requiring applicants to submit history of criminal convictions, by redesignating existing Subparas. (B) and (C) as Subparas. (C) and (D), by authorizing commissioner to deny application or renewal application based on certain convictions, and by deleting outdated provisions re license expiration and renewal, effective July 7, 2009; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (c) by changing bond amount from $5,000 to $25,000, effective October 5, 2009; P.A. 11-216 amended Subsec. (b)(1) to add provisions requiring history of criminal convictions of partners, members, officers, directors and principal employees of applicant in a form acceptable to commissioner, add provision authorizing commissioner to conduct criminal history records check of applicant and each partner, member, officer, director and principal employee of applicant, delete references to ten-year period prior to date of application and add provisions re abandonment of application; P.A. 13-253 amended Subsec. (a) to add provision re license for the main office and each branch office, designate existing provisions re collecting from in-state debtors for in-state creditors as Subpara. (A) and add Subpara. (B) re collecting for the agency's own account, amended Subsec. (b) to make technical changes and delete provision re issuance of license if commissioner is satisfied that applicant is properly qualified and trustworthy, redesignated provisions of existing Subsec. (b) re denial of application as Subsec. (c) and amended same to add provisions re commissioner's belief that the business will be operated soundly and efficiently and findings re solvency and bankruptcy proceedings, designated provisions of existing Subsec. (b) re enforcement as Subsec. (d), designated provisions of existing Subsec. (b) re notification of change in application information provided as Subsec. (e), designated provisions of existing Subsec. (b) re abandonment as Subpara. (f), designated provisions re dishonored checks as Subsec. (g), designated provisions of existing Subsec. (b) re abatement of license fee as Subsec. (h) and redesignated existing Subsec. (c) as Subsec. (i); P.A. 14-89 amended Subsec. (g) to replace “subdivision (1) of this subsection” with “subsection (b) of this section”, effective June 3, 2014; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015; P.A. 16-65 amended Subsec. (a) by adding references to federal income tax debtors; P.A. 17-233 amended Subsec. (a) by adding “, directly or indirectly,” re person acting as consumer collection agency; P.A. 17-236 amended Subsec. (b)(1) by adding provision re financial statement evidencing applicant's minimum tangible net worth of $50,000; P.A. 18-173 amended Subsec. (a) by replacing “consumer collection agency license” with “required consumer collection agency license”, and adding provision re activity to be conducted from office located in a state, substantially amended Subsec. (b) including by deleting provisions re written application to commissioner, accuracy of applicant's tangible net worth to be sworn to under oath and license fee and adding provisions re application to be made and processed on the system, information to be furnished on application, and commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition of person, deleting reference to public accountant and adding reference to applicant not solely engaged in business of debt buying re applicant's tangible net worth, and replacing “partner, member, officer, director or principal employee” with “control person, qualified individual or branch manager”, amended Subsec. (c) by adding new Subdiv. (1) re applicant's payment of fees or charges to the system, designating existing provisions re commissioner's findings as new Subdiv. (2), redesignating existing Subdivs. (1) and (2) as Subparas. (A) and (B), replacing references to partners, members, officers, directors and employees with reference to control persons, qualified individual and branch manager, replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, deleting provisions re renewal of license, and adding Subdiv. (3) re renewal of license and license in force and effect until license surrendered, revoked, suspended or expired, amended Subsec. (d) by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, deleted Subsec. (e) re notification to commissioner of change in information, redesignated existing Subsec. (f) as new Subsec. (e) and amending same by replacing references to Sec. 36a-812 with references to Sec. 36a-814, replacing provision re notification to applicant in writing with provision re notification to applicant on the system, added new Subsec. (f) re surrender of license, change in information, and filing information on the system or notification to commissioner, substantially amended Subsec. (g) by replacing provisions re payment of fee dishonored and automatic suspension with provisions re automatic suspension for deficiency on the system indicating returned payment, amended Subsec. (h) by adding reference to application denied or withdrawn, amended Subsec. (i) by replacing provisions re written notice to commissioner re change of location of business with provisions re licensee's use of name other than approved legal or fictitious name, filing change of name or address with the system, replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, adding provisions re change in control person to be subject of advance change notice, and automatic suspension of license for violation of subsection, added Subsec. (j) re filing of information on the system in accordance with procedures, payment of fees or charges and submission of timely and accurate report of condition, added Subsec. (k) re unique identifier and solicitations and advertisements, and made technical changes.
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Sec. 36a-801a. Persons engaged in business of collecting child support. For the purposes of this part, any person who is engaged in the business of collecting child support pursuant to subsection (a) of section 36a-801 shall be a consumer collection agency.
(P.A. 01-207, S. 5, 12.)
History: P.A. 01-207 effective July 1, 2001.
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Sec. 36a-801b. Collection of child support. Written agreement. No consumer collection agency may collect child support payments unless such consumer collection agency has entered into a written agreement with the creditor to whom the child support is owed. The agreement shall specify the charge or fee for collecting the child support and state, in bold type, that child support collection services are offered by the state of Connecticut or any other state for a nominal fee.
(P.A. 01-207, S. 7, 12.)
History: P.A. 01-207 effective July 1, 2001.
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Sec. 36a-802. (Formerly Sec. 42-128a). Surety bond required. Authority of commissioner to proceed on bond. Cancellation of bond; notice. Automatic suspension of license; notice. Opportunity for hearing. (a) No such license and no renewal thereof shall be granted to a consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying, unless the applicant has filed with the commissioner a bond to the people of the state in the penal sum of twenty-five thousand dollars, approved by the Attorney General as to form and by the commissioner as to sufficiency of the security thereof. Such bond shall be conditioned that such licensee shall well, truly and faithfully account for all funds entrusted to the licensee and collected and received by the licensee in the licensee's capacity as a consumer collection agency. Any person who may be damaged by the wrongful conversion of any creditor, consumer debtor, property tax debtor or federal income tax debtor funds received by such consumer collection agency may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50 and, effective April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50, and any unpaid costs of examination as determined pursuant to section 36a-65. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.
(b) The surety company shall have the right to cancel the bond at any time by a written notice to the licensee and the commissioner stating the date cancellation shall take effect. If the bond is issued electronically on the system, written notice of cancellation may be provided by the surety company to the licensee and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety company, the commissioner shall give written notice to the licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless the licensee prior to such date submits a letter of reinstatement of the bond from the surety company or a new bond or the licensee has ceased business and has surrendered its license. After a license has been automatically suspended, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(1971, P.A. 539, S. 4; P.A. 02-111, S. 48; P.A. 03-262, S. 2; P.A. 04-69, S. 31; P.A. 09-208, S. 36; P.A. 13-253, S. 29; P.A. 16-65, S. 49; P.A. 18-173, S. 80.)
History: Sec. 42-128a transferred to Sec. 36a-802 in 1995; P.A. 02-111 amended section by changing “him” to “the licensee”, changing “him in his” to “the licensee in the licensee's”, changing “trust funds” to “creditor, consumer debtor or property tax debtor funds” and adding provision authorizing commissioner to proceed on bond to collect civil penalty imposed on licensee pursuant to Sec. 36a-50(a); P.A. 03-262 substituted “funds received” for “funds held” and made a technical change, effective July 9, 2003; P.A. 04-69 designated existing provisions as Subsec. (a) and added Subsec. (b) re cancellation of surety bond and automatic suspension of license; P.A. 09-208 amended Subsec. (a) by changing amount of required bond from $5,000 to $25,000 and amended Subsec. (b) by requiring commissioner to give written notice to licensee of effective date of a bond cancellation and to automatically suspend a license on effective date of a bond cancellation unless licensee takes certain actions before such date, and by authorizing commissioner to require licensee to take or refrain from taking certain actions; P.A. 13-253 amended Subsec. (a) to add “to a third party consumer collection agency”; P.A. 16-65 amended Subsec. (a) by adding reference to federal income tax debtor; P.A. 18-173 amended Subsec. (a) by replacing “third party consumer collection agency” with “consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying,”, and adding provision effective April 1, 2019 re restitution imposed and unpaid costs of examination, amended Subsec. (b) by adding reference to commissioner, deleting provision re sending notice by certified mail, adding provisions re notice of cancellation if bond issued electronically on the system, adding provision re notice of cancellation not provided through the system to be sent by certified mail to licensee and commissioner, designated existing provisions re notice to licensee of automatic suspension as Subdiv. (1), and provision re commissioner's authority to require licensee to take or refrain from taking action as Subdiv. (2) and amending same by replacing “action as in the opinion of the commissioner will effectuate the purposes of this section” with “action as the commissioner deems necessary to effectuate the purposes of this section”.
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Sec. 36a-803. (Formerly Sec. 42-129). Conviction of certain crimes disqualification to engage in consumer collection business. Section 36a-803 is repealed, effective October 1, 2002.
(1953, S. 3312d; 1971, P.A. 539, S. 5; P.A. 94-122, S. 330, 340; P.A. 02-111, S. 51.)
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Sec. 36a-804. (Formerly Sec. 42-129a). Suspension, revocation or refusal to renew license or taking other action. Removal from office and from employement or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-800 to 36a-814, inclusive, or if the commissioner finds that the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application or in any filing made in connection with the license; (2) committed any fraud or misrepresentation or misappropriated funds; or (3) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's consumer collection agency business.
(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-800 to 36a-814, inclusive, or any regulation adopted pursuant thereto, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-800 to 36a-814, inclusive, from office and from employment or retention as an independent contractor in the consumer collection agency business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(1971, P.A. 539, S. 6; 1972, P.A. 108, S. 8; P.A. 74-254, S. 8; P.A. 94-122, S. 331, 340; P.A. 02-111, S. 49; P.A. 05-46, S. 16; P.A. 07-91, S. 24; P.A. 15-235, S. 35; P.A. 18-173, S. 81.)
History: 1972 act replaced superior court with court of common pleas, effective September 1, 1972, except that courts with cases pending retain jurisdiction; P.A. 74-254 replaced detailed appeal provisions with statement requiring that appeals be made in accordance with chapter 54; P.A. 94-122 replaced notice, hearing and appeal provisions with a reference to Sec. 36a-51, effective January 1, 1995; Sec. 42-129a transferred to Sec. 36a-804 in 1995; P.A. 02-111 replaced former provisions with new Subsecs. (a) and (b) re commissioner's authority to suspend, revoke or refuse to renew license and the grounds for such action and commissioner's authority re violations of Secs. 36a-800 to 36a-810; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee who has committed fraud, made any misrepresentation or misappropriated funds; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, adding “or in any filing made in connection with the license” in Subdiv. (1), and replacing “provisions of sections 36a-800 to 36a-812, inclusive, or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business” with “provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's consumer collection agency business” in Subdiv. (3), amended Subsec. (b) by designating existing provisions re violations of sections as Subdiv. (1), and amending same by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814, adding Subdiv. (2) re person is, was or would be cause of violation of provision of section or regulation, designating existing provision re fraud, misrepresentation or misappropriation of funds, as Subdiv. (3) and amending same by replacing “proprietor, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, added Subsec. (c) re commissioner's authority to order licensee to remove individual from office, employment or retention as independent contractor, and added Subsec. (d) re temporary order.
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Sec. 36a-805. (Formerly Sec. 42-131). Prohibited practices. Exception. (a) No consumer collection agency or control person shall: (1) Furnish legal advice or perform legal services or represent that it is competent to do so, or institute judicial proceedings on behalf of others; (2) communicate with consumer debtors, property tax debtors or federal income tax debtors in the name of an attorney or upon the stationery of an attorney, or prepare any forms or instruments which only attorneys are authorized to prepare; (3) receive assignments as a third party of claims for the purpose of collection or institute suit thereon in any court; (4) assume authority on behalf of a creditor to employ or terminate the services of an attorney unless such creditor has authorized such agency in writing to act as such creditor's agent in the selection of an attorney to collect the creditor's accounts; (5) demand or obtain in any manner a share of the proper compensation for services performed by an attorney in collecting a claim, whether or not such agency has previously attempted collection thereof; (6) solicit claims for collection under an ambiguous or deceptive contract; (7) refuse to return any claim or claims upon written request of the creditor, claimant or forwarder, which claims are not in the process of collection after the tender of such amounts, if any, as may be due and owing to the agency; (8) advertise or threaten to advertise for sale any claim as a means of forcing payment thereof, unless such agency is acting as the assignee for the benefit of creditors; (9) refuse or fail to account for and remit to its clients all money collected which is not in dispute within sixty days from the last day of the month in which said money is collected; (10) refuse or intentionally fail to return to the creditor all valuable papers deposited with a claim when such claim is returned; (11) refuse or fail to furnish at intervals of not less than ninety days, upon the written request of the creditor, claimant or forwarder, a written report upon claims received from such creditor, claimant or forwarder; (12) add any post-charge-off charge or fee for cost of collection, unless such cost is a court cost, to the amount of any claim which it receives for collection or knowingly accept for collection any claim to which any such charge or fee has already been added to the amount of the claim unless (A) the consumer debtor is legally liable for such charge or fee as determined by the contract or other evidence of an agreement between the consumer debtor and creditor, a copy of which shall be obtained by or available to the consumer collection agency from the creditor and maintained as part of the records of the consumer collection agency or the creditor, or both, and (B) the total charge or fee for cost of collection does not exceed fifteen per cent of the total amount actually collected and accepted as payment in full satisfaction of the debt; (13) use or attempt to use or make reference to the term “bonded by the state of Connecticut”, “bonded” or “bonded collection agency” or any combination of such terms or words, except the word “bonded” may be used on the stationery of any such agency in type not larger than twelve-point; (14) when the debt is beyond the statute of limitations, fail to provide the following disclosure in type not less than ten-point informing the consumer debtor in its initial communication with such consumer debtor that (A) when collecting on debt that is not past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 USC 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) will not sue you for it. If you do not pay the debt, (INSERT OWNER NAME) may report or continue to report it to the credit reporting agencies as unpaid”; and (B) when collecting on debt that is past the date for obsolescence provided for in Section 605(a) of the Fair Credit Reporting Act, 15 USC 1681c: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) will not sue you for it and (INSERT OWNER NAME) will not report it to any credit reporting agencies.”; (15) engage in any activities prohibited by sections 36a-800 to 36a-814, inclusive; or (16) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable consumer collection laws and regulations.
(b) No consumer collection agency shall impose a charge or fee for any child support payments collected through the efforts of a governmental agency. If the imposition of a charge or fee is permitted under section 36a-801b, no consumer collection agency shall impose a charge or fee for the collection of any child support overdue at the time of the contract in excess of twenty-five per cent of overdue support actually collected.
(c) (1) No consumer collection agency shall receive any property tax on behalf of a creditor that is a municipality, unless the consumer collection agency has procured from an insurer authorized to transact business in this state an insurance policy providing coverage against loss of money, securities or other property, including loss arising from any fraudulent or dishonest act of any employee, officer or director of the consumer collection agency, with limits of at least two million dollars. It shall be the obligation of the municipality to ensure compliance with the requirements of this subdivision.
(2) A municipality that enters into an agreement with a consumer collection agency to collect and receive for payment property tax on behalf of the municipality may also require such consumer collection agency to file a bond with the municipality in an amount not exceeding the total amount of the property tax to be collected on behalf of the municipality. Such bond, the form of which shall be approved by the municipality, shall be written by a surety authorized to write bonds in this state and shall contain a provision requiring the surety to provide the municipality with written notice of cancellation of such bond. Such notice shall be sent by certified mail to the municipality at least thirty days prior to the date of cancellation. The bond shall be conditioned that such consumer collection agency shall well, truly and faithfully account for all funds collected and received by the consumer collection agency for the municipality pursuant to such agreement. If the municipality is damaged by the wrongful conversion of any property tax debtor funds received by the consumer collection agency, the municipality may proceed on such bond against the principal or surety on the bond, or both, to recover damages. The proceeds of the bond, even if commingled with the other assets of the consumer collection agency, shall be deemed by operation of law to be held in trust for the benefit of the municipality in the event of bankruptcy of the consumer collection agency and shall be immune from attachment by creditors and judgment creditors.
(1953, S. 3314d; 1971, P.A. 539, S. 8; P.A. 81-183; P.A. 84-61, S. 2, 3; P.A. 92-12, S. 104; P.A. 01-207, S. 6, 12; P.A. 02-111, S. 50; P.A. 03-262, S. 3; P.A. 13-253, S. 26; P.A. 15-235, S. 36; P.A. 16-65, S. 50; P.A. 17-233, S. 31; 17-236, S. 11; P.A. 18-173, S. 82.)
History: 1971 act specified applicability to “consumer” collection agencies, deleted provisions prohibiting use of slogans in collection letters, etc., which threaten legal suit or wage garnishment or list attorney name and title, use of justices of the peace, constables, sheriffs, etc., for claims collection, use or threat of physical violence, use of instruments simulating judicial process, publication of list of debtors and threats to do so and use of “shame cards”, “shame automobiles”, etc., intimidation or methods in violation of postal regulations, clarified remaining provisions and required accounting to clients of moneys collected within sixty rather than 90 days from end of month in which collected and added prohibitions contained in Subdivs. (l) to (r); P.A. 81-183 required that consumer collection agencies not add any charge or collection fee to the amount of a claim greater than 15% of amount actually collected on the debt; P.A. 84-61 amended Subdiv. (i) to provide that no agency shall refuse or fail to remit as well as account for all money collected which is not in dispute and amended Subdiv. (m) to prohibit such agency from knowingly accepting for collection any claim to which any fee or charge has been already added to the amount of the claim; P.A. 92-12 redesignated Subdivs.; Sec. 42-131 transferred to Sec. 36a-805 in 1995; P.A. 01-207 designated existing provisions as Subsec. (a) and made a technical change therein for purposes of gender neutrality and added Subsec. (b) re charge or fee for collection of child support payments, effective July 1, 2001 (Revisor's note: In codifying Subsec. (b), the reference to “section 10 of this act” was deemed by the Revisors to be a reference to “section 7 of this act”, codified as Sec. 36a-801b, since section “10” of P.A. 01-207 had been renumbered as section “7” during the amendment process); P.A. 02-111 amended Subsec. (a)(2) by changing “communicate with debtors” to “communicate with consumer debtors or property tax debtors” and (a)(13) by changing “charge or collection fee” to “collection charge or fee” and added new Subsec. (c) prohibiting consumer collection agency from receiving property tax on behalf of creditor that is a municipality, effective July 1, 2002; P.A. 03-262 amended Subsec. (c) by designating existing provisions as Subdiv. (1), amending Subdiv. (1) to add exception re procurement of insurance policy, and adding Subdiv. (2) authorizing municipality that enters into agreement with consumer collection agency to require agency to file bond, effective July 9, 2003; P.A. 13-253 amended Subsec. (a) to delete “purchase or” and add “as a third party” in Subdiv. (3), delete former Subdiv. (12) re comingling of money, redesignate existing Subdiv. (13) as Subdiv. (12) and amend same by adding “post charge-off”, adding provision re fee for cost of collection other than a court cost, designating provision re consumer debtor being legally liable for charge or fee as Subpara. (A) and amending same to add provision re determination by contract or other evidence of agreement between consumer debtor and creditor, and adding Subpara. (B) re total charge or fee for cost of collection not to exceed 15 per cent of total amount collected and accepted as payment in full satisfaction of the debt, redesignate existing Subdiv. (14) as Subdiv. (13), and add new Subdiv. (14) re disclosure when debt is beyond statute of limitations; P.A. 15-235 amended Subsec. (a) to change “36a-810” to “36a-812”, effective July 7, 2015; P.A. 16-65 amended Subsec. (a) by adding reference to federal income tax debtors and making a technical change; P.A. 17-233 amended Subsec. (a) by adding reference to control persons, adding new Subdiv. (16) re failure to establish, enforce and maintain policies and procedures, and making a technical change; P.A. 17-236 amended Subsec. (a)(12) to make a technical change, effective July 11, 2017; P.A. 18-173 amended Subsec. (a)(15) by replacing reference to Sec. 36a-812 with reference to Sec. 36a-814.
Annotation to former section 42-131:
Cited. 5 CA 427.
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Sec. 36a-806. (Formerly Sec. 42-131a). Prohibited practices within and without state. Examination of affairs. (a) No consumer collection agency shall engage in this state in any practice which is prohibited in section 36a-805 or determined pursuant to section 36a-808 to be an unfair or deceptive act or practice, nor shall any consumer collection agency engage outside of this state in any act or practice prohibited in said section 36a-805. The commissioner shall have power to examine the affairs of every consumer collection agency in this state in order to determine whether it has been or is engaged in any act or practice prohibited by sections 36a-805 to 36a-808, inclusive.
(b) No creditor or consumer collection agency shall retain, hire, or engage the services or continue to retain or engage the services of any person who engages in the business of a consumer collection agency and who is not licensed to act as such by the commissioner, if such creditor has actual knowledge that such person is not licensed by the commissioner to act as a consumer collection agency.
(1971, P.A. 539, S. 7; P.A. 78-226, S. 2; P.A. 09-208, S. 37; P.A. 17-236, S. 15.)
History: P.A. 78-226 added Subsec. (b) prohibiting hiring unlicensed persons; Sec. 42-131a transferred to Sec. 36a-806 in 1995; P.A. 09-208 amended Subsec. (a) by deleting reference to Sec. 36a-807 re determination of unfair or deceptive act or practice; P.A. 17-236 amended Subsec. (b) by adding reference to consumer collection agency.
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Sec. 36a-807. (Formerly Sec. 42-131b). Liability. No order of the commissioner under sections 36a-805 to 36a-808, inclusive, shall relieve or absolve any person affected by such order from any liability under any other laws of this state.
(1971, P.A. 539, S. 9; 1972, P.A. 108, S. 9; P.A. 74-254, S. 9, 11; P.A. 76-436, S. 638, 681; P.A. 78-226, S. 3; 78-280, S. 1, 5, 127; P.A. 82-174, S. 9, 13, 14; P.A. 88-230, S, 1, 12; P.A. 90-98, S. 1, 2; P.A. 92-12, S. 105; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 332, 340; P.A. 09-208, S. 38.)
History: 1972 act replaced superior court with court of common pleas, effective September 1, 1972, except that courts with cases pending retain jurisdiction; P.A. 74-254 required that notice be “in the form required under subsection (b) of section 4-177” and deleted reference to serving of statement of charges in Subsec. (a) and repealed Subsec. (c) re appeal procedure; P.A. 76-436 replaced court of common pleas with superior court and added reference to judicial districts in Subsec. (a), effective July 1, 1978; P.A. 78-226 substituted “person” for “consumer collection agency” and, with P.A. 78-280, substituted “judicial district of Hartford-New Britain” for “Hartford county”, dropped general reference to counties in Subsec. (a) and rephrased Subsec. (e); P.A. 82-174 entirely replaced Subsec. (a) and repealed Subsec. (b) outright, both of which concerned the issuance of cease and desist orders after a hearing and the conduct of such hearing, inserting new provisions authorizing the commissioner to issue, after notice, cease and desist orders, unless a hearing is requested; P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 92-12 redesignated Subsecs. and made technical changes; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted Subsec. (c) re violations of cease and desist orders and made technical changes, effective January 1, 1995; Sec. 42-131b transferred to Sec. 36a-807 in 1995; P.A. 09-208 deleted former Subsec. (a) re cease and desist order and made a conforming change.
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Sec. 36a-808. (Formerly Sec. 42-131c). Unfair or deceptive practices. Enforcement action. Whenever the commissioner has reason to believe that any consumer collection agency is engaging in this state in any act or practice in the conduct of such business which is not defined in section 36a-805, and that such act or practice is unfair or deceptive, the commissioner may take action against such consumer collection agency in accordance with sections 36a-50 and 36a-52.
(1971, P.A. 539, S. 10; P.A. 74-254, S. 10; P.A. 78-226, S. 4; 78-280, S. 2, 127; P.A. 82-174, S. 10, 14; P.A. 94-122, S. 333, 340; P.A. 09-208, S. 39; P.A. 13-253, S. 27.)
History: P.A. 74-254 specified that notice be “in the form required under subsection (b) of section 4-177” and deleted reference to serving of statement of charges; P.A. 78-226 added Subsec. (b) re actions brought against unlicensed persons; P.A. 78-280 substituted “judicial district” for “county” in Subsec. (a); P.A. 82-174 amended Subsec. (a) by replacing the provision that hearings be conducted as provided in “section 42-131b” with “chapter 54”; P.A. 94-122 deleted Subsec. (b) re injunctions against unlicensed consumer collection agencies, deleted provisions in Subsec. (a) re hearings to enjoin unfair or deceptive actions and added a reference to enforcement actions under Sec. 36a-50, effective January 1, 1995; Sec. 42-131c transferred to Sec. 36a-808 in 1995; P.A. 09-208 deleted provision re violation by agency or other person of Secs. 36a-800 to 36a-810 or regulation adopted pursuant to Sec. 36a-809, and deleted “or person” re enforcement action in accordance with Sec. 36a-50; P.A. 13-253 added reference to Sec. 36a-52.
Annotation to former section 42-131c:
Cited. 215 C. 277.
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Sec. 36a-809. (Formerly Sec. 42-131d). Commissioner's powers. Regulations. The powers vested in the commissioner by sections 36a-805 to 36a-808, inclusive, shall be additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts and practices prohibited or declared to be unfair or deceptive, and the commissioner may adopt such regulations, in accordance with chapter 54, as may be necessary for the conduct of the consumer collection agency business.
(1971, P.A. 539, S. 11; P.A. 73-428; P.A. 94-122, S. 334, 340.)
History: P.A. 73-428 authorized issuance of regulations “as may be necessary for the conduct of the consumer collection agency business” rather than regulations “implementing the provisions of section 42-131”; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 42-131d transferred to Sec. 36a-809 in 1995.
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Sec. 36a-810. (Formerly Sec. 42-133a). Penalty. Any person who operates a consumer collection agency without a license as required by sections 36a-800 to 36a-812, inclusive, shall be fined not more than one thousand dollars or imprisoned not more than one year, or both. Any person who violates any other provision of said sections shall be fined not more than five hundred dollars, or imprisoned not more than six months, or both. The state's attorney or assistant state's attorney for the superior court having jurisdiction in each town shall diligently inquire and make due complaint to the court of all violations of said sections which come to his knowledge, by investigation of report.
(1971, P.A. 539, S. 12; P.A. 74-183, S. 270, 291; P.A. 76-436, S. 233, 681; P.A. 15-235, S. 37.)
History: P.A. 74-183 replaced circuit court with court of common pleas, effective December 31, 1974; P.A. 76-436 replaced “prosecuting” attorney with “state's attorney or assistant state's” attorney and court of common pleas with superior court, effective July 1, 1978; Sec. 42-133a transferred to Sec. 36a-810 in 1995; P.A. 15-235 changed “36a-810” to “36a-812”, effective July 7, 2015.
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Sec. 36a-811. Maintenance of consumer debtor and creditor records. (a) Each consumer collection agency shall maintain its consumer debtor and creditor records so as to clearly identify the amounts and dates of all payments collected or received from consumer debtors and all remittances made to creditors. Consumer debtor and creditor records shall be kept so as to be readily available to the Banking Commissioner and retained for a period of not less than two years after the date of final entry thereon. All accounting records shall be maintained in accordance with generally accepted accounting practices. Each consumer collection agency engaged in the business of collecting child support shall maintain originals or copies of the written agreements entered into with the creditors to whom the child support is owed for a period of not less than two years after the date of the last payment made by the consumer debtor to the consumer collection agency.
(b) Each consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying, shall deposit funds collected or received from consumer debtors for payment for others on an account, bill or other indebtedness in one or more trust accounts maintained at a federally insured bank, Connecticut credit union, federal credit union or an out-of-state bank that maintains in this state a branch as defined in section 36a-410, which accounts shall be reconciled monthly. Such funds shall not be commingled with funds of the consumer collection agency or used in the conduct of the consumer collection agency's business. Such account shall not be used for any purpose other than (1) the deposit of funds received from consumer debtors, (2) the payment of such funds to creditors, (3) the refund of any overpayments to be made to consumer debtors, and (4) the payment of earned fees to the consumer collection agency, which shall be withdrawn on a monthly basis. Except for payments authorized by subdivisions (2) to (4), inclusive, of this subsection, any withdrawal from such account, including, but not limited to, any service charge or other fee imposed against such account by a depository institution, shall be reimbursed by the consumer collection agency to such account not more than thirty days after the withdrawal. Funds received from consumer debtors shall be posted to their respective accounts in accordance with generally accepted accounting principles.
(P.A. 13-253, S. 24; P.A. 16-65, S. 51; P.A. 18-173, S. 83.)
History: P.A. 16-65 amended Subsec. (b) by adding “federally insured” and replacing “accounting practices” with “accounting principles”; P.A. 18-173 amended Subsec. (b) by replacing “third party consumer collection agency” with “consumer collection agency, except a consumer collection agency engaged solely in the business of debt buying”.
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Sec. 36a-812. Compliance with Fair Debt Collection Practices Act. Each consumer collection agency shall comply with the applicable provisions of the Fair Debt Collection Practices Act, 15 USC Section 1692 et seq., as from time to time amended, and any regulations adopted under said act. In addition to any other remedies provided by law, a violation of such federal law or regulation shall be deemed to be a violation of this section and a basis upon which the Banking Commissioner may take enforcement action pursuant to section 36a-804.
(P.A. 13-253, S. 25.)
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Sec. 36a-813. Evidence in cause of action for purchased debt owed by consumer debtor. (a) In any cause of action initiated by a consumer collection agency that purchased debt from a creditor for liability on the debt owed by a consumer debtor, the consumer collection agency shall file with the court evidence in accordance with the rules of the Superior Court to establish the amount and nature of the debt prior to the court's entry of a judgment against the consumer debtor. Such evidence shall include a copy of the assignment or other documentation (1) establishing that the plaintiff is the owner of the debt, (2) containing the original or charge-off account number, if any, which can be partially redacted to protect the privacy of the consumer debtor, and the name associated with the debt, and (3) if the debt has been assigned more than once, the name, address and dates of ownership of each assignor, and a copy of each assignment or other documentation that establishes an unbroken chain of ownership of the debt by the plaintiff.
(b) In the case of a claim for default judgment the plaintiff shall file, in addition to the evidence required under the rules of the Superior Court, a sworn affidavit that lists the name, address and dates of ownership of each owner of the debt, from the charge-off creditor to the current owner. The plaintiff shall attach documentation to the affidavit that fully substantiates the amount of the debt. If the debt is a credit card debt subject to federal charge-off requirements, the following documents shall, subject to subsection (c) of this section, suffice to substantiate the debt: (1) A copy of the most recent monthly statement recording a purchase transaction, service billed, last payment or balance transfer, (2) a statement that reflects the charge-off balance, (3) with respect to consumer debt purchased on or after October 1, 2016, an additional monthly account statement sent to the consumer debtor while the account was active, which shows the consumer debtor's name and address, (4) such other statements, if any, required by the federal consumer financial protection bureau in its regulations, and (5) post-charge-off itemization of the balance if the balance is different from the charge-off amount.
(c) Nothing in this section shall prevent the judicial authority or the rules of the Superior Court from requiring the submission of additional written documentation or the presence of the plaintiff, the authorized representative of the plaintiff or other affiants or counsel before the judicial authority prior to rendering judgment if it appears to the judicial authority that additional information or evidence is required in order to enter judgment.
(d) This section shall apply prospectively and shall not apply to any debt collection action commenced prior to October 1, 2016, or to debt purchased by a licensed mortgage lender pursuant to a recourse requirement.
(e) A consumer collection agency that purchased the debt shall indicate when any of the items produced pursuant to subsections (b) and (c) of this section have been redacted by either blacking out the text or otherwise indicating in writing on such document that text has been redacted.
(P.A. 16-65, S. 52; P.A. 17-236, S. 8.)
History: P.A. 17-236 amended Subsec. (b)(5) by making a technical change, effective July 11, 2017.
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Sec. 36a-814. Initiation of cause of action for purchased debt prohibited when statute of limitations has expired. Limitations period not extended by payment or affirmation. (a) For the purposes of this section, “creditor” has the same meaning as in section 36a-645.
(b) No creditor or consumer collection agency that purchased debt shall initiate a cause of action to collect the debt owed by a consumer debtor when such creditor or consumer collection agency knows or reasonably should know that the applicable statute of limitations on such cause of action has expired.
(c) Notwithstanding any other provision of law, when the applicable statute of limitations on a cause of action to collect debt owed by a consumer has expired, any subsequent payment toward or oral or written affirmation of the debt owed by the consumer shall not extend the limitations period within which the creditor or consumer collection agency that purchased the debt may bring the cause of action.
(P.A. 16-65, S. 53.)
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Secs. 36a-815 to 36a-829. Reserved for future use.
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PART XIII
EXCHANGE FACILITATORS
Sec. 36a-830. Exchange facilitator. Definitions. As used in this section and sections 36a-831 to 36a-836, inclusive:
(1) “Affiliated with” means that a person, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with another specified person;
(2) “Client” means a taxpayer with whom an exchange facilitator enters into an agreement, as described in subparagraph (B) of subdivision (3) of this section;
(3) “Exchange facilitator” means a person who: (A) Maintains an office in this state for the purpose of soliciting business facilitating the exchange of like-kind property, as described in subparagraph (B) of this subdivision; or (B) for a fee (i) facilitates an exchange of like-kind property by entering into an agreement with a client pursuant to which the exchange facilitator acquires from such client the contractual rights to sell such client's relinquished property located in this state and transfer a replacement property to such client as a qualified intermediary, within the meaning of 26 CFR 1.1031(k)-1(g)(4), (ii) enters into an agreement with a client to take title to a property in this state as an exchange accommodation titleholder, as defined in Revenue Procedure 2000-37 issued by the Internal Revenue Service, or (iii) enters into an agreement with a client to act as a qualified trustee or qualified escrow holder, as such terms are defined in 26 CFR 1.1031(k)-1(g)(3); but shall not include:
(I) Any financial institution, as defined in subdivision (6) of this section, that is acting solely as a depository for exchange funds or solely as a qualified escrow holder or qualified trustee, as such terms are defined in 26 CFR 1.1031(k)-1(g)(3), and is not otherwise facilitating exchanges in accordance with this subparagraph;
(II) An individual or entity that is teaching seminars or classes or giving other presentations to attorneys, accountants, real estate professionals, tax professionals or other professionals where the primary purpose is to teach about tax deferred exchanges or to train such professionals to act as exchange facilitators, or any individual or entity advertising for such seminars, classes or other presentations; or
(III) An entity that is wholly owned by an exchange facilitator or by a person representing the exchange facilitator and used by such exchange facilitator or person to facilitate exchanges or take title to property in this state as an exchange accommodation titleholder;
(4) “Exchange funds” means the funds received by an exchange facilitator from or on behalf of a client for the purpose of facilitating an exchange of like-kind property;
(5) “Fee” means compensation of any nature, direct or indirect, monetary or in-kind, that is received by a person or related person, as defined in Section 267(b) or Section 707(b) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, for any services relating or incidental to the exchange of like-kind property under Section 1031 of said Internal Revenue Code;
(6) “Financial institution” means any bank, federal credit union, Connecticut credit union, savings and loan holding company, savings and loan association, savings bank, trust company or trust bank, as such terms are defined in section 36a-2, chartered under the laws of this state or the United States whose accounts are insured by the full faith and credit of the United States of America, the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund or other similar or successor programs;
(7) “Person” means a natural person, cooperative association, limited liability company, firm, partnership, corporation or other legal entity, and includes any agent or employee of any such person;
(8) “Pool” means to (A) aggregate exchange funds of multiple taxpayers for investment purposes to achieve common investment goals and efficiencies, and (B) ensure that such exchange funds are readily identifiable as to each taxpayer for whom they are held, through an accounting or subaccounting system;
(9) “Prudent investor standard” means the prudent investor rule, as set forth by the Connecticut Uniform Prudent Investor Act, or as otherwise defined by part VII of chapter 802c; and
(10) “Publicly traded company” means a corporation whose securities are publicly traded on the New York Stock Exchange, the American Stock Exchange, or the national market system of the National Association of Securities Dealers Automated Quotation System established pursuant to the Securities Exchange Act of 1934, and the subsidiaries of any such corporation.
(P.A. 13-135, S. 5.)
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Sec. 36a-831. Change in control of exchange facilitator. Notification to clients. An exchange facilitator shall notify each client whose relinquished property, as defined in 26 CFR 1.1031(k)-1(a), is located in this state or whose replacement property, as defined in 26 CFR 1.1031(k)-1(a), held under a qualified exchange accommodation agreement is located in this state, of any change in control of the exchange facilitator. The exchange facilitator shall notify each such client not later than ten business days after the effective date of such change in control by facsimile, electronic mail transmission or first class mail and by posting such notice of change of control on the exchange facilitator's Internet web site for a period ending not earlier than ninety days after the change in control. Such notification shall set forth the name, address and other contact information of the persons to whom control was transferred. Notwithstanding the provisions of this section, if the exchange facilitator is a publicly traded company and remains a publicly traded company after a change in control, the publicly traded company shall not be required to notify its existing clients of such change in control. For purposes of this section, “change in control” means any transfer or transfers within a twelve-month period of more than fifty per cent of the assets or ownership interests, directly or indirectly, of the exchange facilitator.
(P.A. 13-135, S. 6.)
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Sec. 36a-832. Fidelity bond. Deposit of exchange funds. An exchange facilitator at all times shall:
(1) Maintain a fidelity bond in an amount of not less than one million dollars executed by an insurer authorized to do business in this state;
(2) Deposit all exchange funds in a separately identified account, as defined in 26 CFR 1.468B-6(c)(2)(ii)(A), and provide that any withdrawals from such separately identified account require the written authorizations of both the client and the exchange facilitator. Deliver authorization for withdrawals by any commercially reasonable means, including (A) the client's delivery to the exchange facilitator of the client's authorization to disburse exchange funds and the exchange facilitator's delivery to the depository institution of the exchange facilitator's sole authorization to disburse exchange funds, or (B) delivery to the depository institution of both the client's and the exchange facilitator's authorizations to disburse exchange funds; or
(3) Deposit all exchange funds in a qualified escrow or qualified trust, as such terms are defined in 26 CFR 1.1031(k)-1(g)(3), with a financial institution and provide that any withdrawals from such qualified escrow or qualified trust require the taxpayer's and the exchange facilitator's written authorization.
(P.A. 13-135, S. 7.)
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Sec. 36a-833. Errors and omissions insurance policy; cash or securities deposit; letters of credit. An exchange facilitator at all times shall: (1) Maintain an errors and omissions policy of insurance in an amount not less than two hundred fifty thousand dollars executed by an insurer authorized to do business in this state; or (2) deposit an amount of cash or securities or provide irrevocable letters of credit in an amount not less than two hundred fifty thousand dollars.
(P.A. 13-135, S. 8; 13-253, S. 28.)
History: P.A. 13-253 made a technical change.
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Sec. 36a-834. Regulations. Damage claims. The Banking Commissioner may adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of sections 36a-830 to 36a-837, inclusive. Any person claiming to have suffered damage by reason of the failure of an exchange facilitator to comply with the provisions of sections 36a-831 to 36a-836, inclusive, may file a claim with the commissioner against the exchange facilitator to recover such damage from (1) the fidelity bond maintained in accordance with subdivision (1) of section 36a-832, (2) cash or securities deposited in accordance with subdivision (2) of section 36a-833, (3) letters of credit provided in accordance with subdivision (2) of section 36a-833, or (4) the errors and omissions policy maintained in accordance with subdivision (1) of section 36a-833.
(P.A. 13-135, S. 9.)
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Sec. 36a-835. Holding and investment of exchange funds. (a) An exchange facilitator shall hold all exchange funds, including money, property, other consideration or instruments received by the exchange facilitator from or on behalf of the client, but not including funds received as the exchange facilitator's compensation, in a manner that provides liquidity and preserves principal. An exchange facilitator shall provide the client with written notification of the manner in which the exchange funds will be invested or deposited and shall deposit or invest exchange funds in investments which meet the prudent investor standard and which satisfy investment goals of liquidity and preservation of principal. Exchange funds may be pooled. For purposes of this section, an exchange facilitator violates the prudent investor standard if:
(1) Exchange funds are knowingly commingled by the exchange facilitator with the operating accounts of the exchange facilitator; or
(2) Exchange funds are loaned or otherwise transferred to any person or entity affiliated with or related to the exchange facilitator except that this subdivision shall not apply to a transfer made pursuant to the exchange contract (A) for payment of an exchange expense or completion of the acquisition of the replacement property, (B) for depositing exchange funds with a financial institution, or (C) to an exchange accommodation titleholder, a trustee of a qualified trust or a qualified escrow agent.
(b) Exchange funds are not subject to execution or attachment on any claim against the exchange facilitator. An exchange facilitator shall not knowingly keep or cause to be kept any money in any financial institution under any name designating the money as belonging to a client of the exchange facilitator unless the money equitably belongs to the client and was actually entrusted to the exchange facilitator by the client.
(P.A. 13-135, S. 10.)
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Sec. 36a-836. Prohibited activities of exchange facilitators. No exchange facilitator or, in the case of an exchange facilitator that is an entity, no owner, officer, director or employee of such exchange facilitator, shall knowingly:
(1) Make any material misrepresentations concerning any exchange facilitator transaction that are intended to mislead;
(2) Pursue a continued or flagrant course of misrepresentation or making false statements through advertising or by any other means;
(3) Fail, within a reasonable time, to account for any money or property belonging to another person that may be in the possession or under the control of the exchange facilitator;
(4) Engage in any conduct constituting fraudulent or dishonest dealings;
(5) Commit any crime related to the exchange facilitation business involving fraud, misrepresentation, deceit, embezzlement, misappropriation of funds, robbery or other theft of property, except that commission of such crime by an officer, director or employee shall not be considered a violation of this section, provided (A) the employment or appointment of such officer, director or employee has been terminated, and (B) no clients of the exchange facilitator were harmed or full restitution has been made to all harmed clients;
(6) Materially fail to fulfill the exchange facilitator's contractual duties to the client to deliver property or funds to the client unless such failure is due to circumstances beyond the control of the exchange facilitator; and
(7) Materially violate any provision of sections 36a-831 to 36a-835, inclusive, or the regulations adopted by the Banking Commissioner in accordance with section 36a-834.
(P.A. 13-135, S. 11.)
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Sec. 36a-837. Civil action. Notice. (a) A person who violates any provision of sections 36a-831 to 36a-836, inclusive, is subject to civil suit in a court of competent jurisdiction.
(b) Any person who commences a civil action pursuant to subsection (a) of this section shall notify the Department of Banking upon filing such action.
(P.A. 13-135, S. 12.)
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Secs. 36a-838 to 36a-845. Reserved for future use.
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PART XIV
STUDENT LOAN SERVICERS
Sec. 36a-846. Definitions. As used in this section and sections 36a-847 to 36a-854:
(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485;
(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a student loan servicer;
(3) “Control person” has the same meaning as provided in section 36a-485;
(4) “Main office” has the same meaning as provided in section 36a-485;
(5) “Student loan borrower” means any individual who resides within this state who has agreed to repay a student education loan;
(6) “Student loan servicer” means any person, wherever located, responsible for the servicing of any student education loan to any student loan borrower;
(7) “Servicing” means (A) receiving any scheduled periodic payments from a student loan borrower pursuant to the terms of a student education loan; (B) applying the payments of principal and interest and such other payments with respect to the amounts received from a student loan borrower, as may be required pursuant to the terms of a student education loan; or (C) performing other administrative services with respect to a student education loan;
(8) “Student education loan” means any loan primarily for personal use to finance education or other school-related expenses;
(9) “Unique identifier” has the same meaning as provided in section 36a-485.
(P.A. 15-162, S. 2; P.A. 17-233, S. 32; P.A. 18-173, S. 84.)
History: P.A. 17-233 added new Subdiv. (1) defining “advertise” or “advertising”, added new Subdiv. (2) defining “control person” and redesignated existing Subdivs. (1) to (4) as Subdivs. (3) to (6); P.A. 18-173 added new Subdiv. (2) defining “branch office”, redesignated existing Subdiv. (2) as new Subdiv. (3), added new Subdiv. (4) defining “main office”, redesignated existing Subdiv. (3) as new Subdiv. (5) and amended same to redefine “student loan borrower”, redesignated existing Subdivs. (4) to (6) as Subdivs. (6) to (8), and added Subdiv. (9) defining “unique identifier”.
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Sec. 36a-847. License required. Exemptions. Application. Authority to conduct criminal history records check. Fees. Examination of records. Automatic suspension of license. Abandonment of application. (a)(1) No person shall act as a student loan servicer, directly or indirectly, without first obtaining a license for its main office and for each branch office where such business is conducted from the commissioner under subsection (b) of this section, unless such person is exempt from licensure pursuant to subdivision (2) of this subsection. Any activity subject to licensure pursuant to sections 36a-846 to 36a-854, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2.
(2) The following persons are exempt from student loan servicer licensing requirements: (A) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union; (B) any wholly owned subsidiary of any such bank or credit union; and (C) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same bank or credit union.
(b) (1) An application for a license as a student loan servicer or for renewal of such license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-846 to 36a-854, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction. As part of the application the commissioner may (A) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager, and (B) in accordance with section 36a-24b, (i) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (ii) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. Such application shall be accompanied by a financial statement prepared by a certified public accountant, except that the commissioner may waive such requirement in connection with any renewal application, provided the system requires annual reports of condition that capture financial statement information and the applicant has filed such information in accordance with section 36a-848.
(2) Each applicant for a student loan servicer license shall pay to the system any required fees or charges and a license fee of nine hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a student loan servicer license shall pay to the system any required fees or charges and a renewal fee of nine hundred dollars.
(3) Each license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-846 to 36a-854, inclusive. No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by this section shall be nonrefundable.
(c) Upon the filing of an application for an initial license and the payment of required fees, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The commissioner may issue a license if the commissioner finds that:
(1) The applicant's financial condition is sound;
(2) The applicant's business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes and intent of sections 36a-846 to 36a-854, inclusive, and in a manner commanding the confidence and trust of the community;
(3) Each control person, qualified individual, branch manager and trustee of the applicant is in all respects properly qualified and of good character, including, but not limited to, assessment of such person's financial responsibility and any criminal convictions, provided any license denial based on a criminal conviction shall be subject to the provisions of section 46a-80;
(4) No control person, qualified individual, branch manager or other person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to sections 36a-846 to 36a-854, inclusive;
(5) No control person, qualified individual, branch manager or other person on behalf of the applicant knowingly has omitted to state any material fact necessary to give the commissioner any information lawfully required by the commissioner;
(6) The applicant has paid the fees required under subsection (b) of this section; and
(7) The applicant has met any other similar requirements as determined by the commissioner.
(d) Not later than fifteen days after the date a licensee ceases to engage in the business of student loan servicing in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner, in accordance with subsection (c) of section 36a-51, its license for each location in which such licensee has ceased to engage in such business. The licensee shall also identify to the commissioner, in writing, the location where the records of the licensee will be stored and the name, address and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the commissioner to revoke or suspend a license, assess a civil penalty, order restitution or exercise any other authority provided to the commissioner.
(e) If an application for a renewal license has been filed with the commissioner on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the issuance by the commissioner of the renewal license applied for or until the commissioner has notified the licensee in writing of the commissioner's refusal to issue such renewal license together with the grounds upon which such refusal is based. The commissioner may refuse to issue a renewal license (1) on any ground on which the commissioner might refuse to issue an initial license, or (2) if the applicant has not paid any required fee for renewal or has not paid any outstanding examination fees or other moneys due to the commissioner. The license of a student loan servicer failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.
(f) The commissioner may automatically suspend a license if the licensee receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-852 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.
(g) Except as specified in section 36a-848, the applicant or licensee, and each individual designated as a control person, qualified individual or branch manager, shall file to the system any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner of such change, in writing, not later than fifteen days after the date the applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.
(h) The commissioner may deem an application for a license abandoned if the applicant fails to respond to any request for information required under sections 36a-846 to 36a-854, inclusive, or any regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under the provisions of sections 36a-846 to 36a-854, inclusive.
(P.A. 15-162, S. 3; P.A. 18-173, S. 85.)
History: P.A. 15-162 effective July 1, 2016; P.A. 18-173 amended Subsec. (a)(1) by adding “for its main office and for each branch office where such business is conducted” re obtaining license, and adding provision re activity to be conducted from office located in a state, substantially amended Subsec. (b) including by deleting provisions re written application to commissioner, financial statement to be sworn to under oath, fees and commissioner's authority to conduct criminal history records check, and adding provisions re application to be made and processed on the system, commissioner's authority to conduct criminal history records check, require submission of fingerprints, and investigate financial condition of person, and commissioner's authority to waive requirement of financial statement prepared by certified public accountant in connection with renewal application in new Subdiv. (1), adding new Subdiv. (2) re applicant to pay to system fees and charges, expiration of license, and renewal, and adding new Subdiv. (3) re license to remain in force and effect until surrendered, revoked, suspended or expired, no abatement of licensee fee to be made if application is denied or withdrawn, and fees are nonrefundable, amended Subsec. (c) by replacing “payment of the fees for license and investigation,” with “payment of the required fees,”, replacing provisions re applicant properly qualified and of good character with provisions re same in Subdiv. (3), adding “control person, qualified individual, branch manager or other” in Subdivs. (4) and (5), and replacing “paid the investigation fee and the license fee” with “paid the fees” in Subdiv. (6), amended Subsec. (d) by deleting provisions re expiration of license at close of business September thirtieth of odd-numbered year, and written notice of surrender, adding reference to Sec. 36a-51(c), and adding reference to commissioner, substantially amended Subsec. (e) by deleting provisions re renewal of license, designating existing provision re ground on which commissioner might refuse initial license as Subdiv. (1), and adding Subdiv. (2) re applicant has not paid required fee, failure of student loan servicer to satisfy minimum standards, and commissioner's adoption of procedures for reinstatement of expired licenses, substantially amended Subsec. (f) by replacing provisions re check to pay fee dishonored and automatic suspension with provisions re automatic suspension of license if deficiency on system indicating returned payment, substantially amended Subsec. (g) by replacing provision re notice to commissioner in writing of change in information provided on application with provision re filing to system change in information, and amended Subsec. (h) by replacing provision re notice to applicant in writing with provision re notice to applicant on the system, and made technical and conforming changes.
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Sec. 36a-848. Name and place of business. Change of name or location. License not transferable or assignable. Change in any control persons. Automatic suspension of license. Required system filing or notice of commissioner. Unique identifier of licensee. Advertisements of licensee. (a) No person licensed to act within this state as a student loan servicer shall do so under any other name or at any other place of business than that named in the license. No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, the licensee files such change with the system and the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-846 to 36a-854, inclusive, as to each new licensee.
(b) A license shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval.
(c) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of such automatic suspension pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-852 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.
(d) A student loan servicer licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any of the following developments:
(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;
(2) Filing of a criminal indictment against the licensee in any way related to the student loan servicer activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;
(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;
(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; or
(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.
(e) Any person filing or submitting any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each student loan servicer licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.
(f) The unique identifier of any person licensed under section 36a-847 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations and advertisements of any person licensed under section 36a-847: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-846 to 36a-854, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.
(P.A. 15-162, S. 4; P.A. 18-173, S. 86.)
History: P.A. 15-162 effective July 1, 2016; P.A. 18-173 designated existing provisions re person licensed to act as student loan servicer as Subsec. (a) and amended same by deleting provision re written notice to commissioner re change of location of business and adding provisions re licensee's use of name other than approved legal name or fictitious name, filing change of name or address of licensee with the system, designated existing provisions re license not transferable or assignable as Subsec. (b) and amended same by adding provisions re change in control person to be subject of advance change notice, added Subsec.(c) re automatic suspension of license for violation of section, adding Subsec. (d) re filing information on the system or notifying commissioner in writing of occurrence of certain developments, added Subsec. (e) re filing or submitting information on system in accordance with procedures and requirements of system, payment of fees, and timely submission of accurate reports of condition to the system, added Subsec. (f) re unique identifier and solicitations and advertisements.
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Sec. 36a-849. Records to be maintained by licensee. (a) Each student loan servicer licensee shall maintain adequate records of each student education loan transaction for not less than two years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or such longer period as may be required by any other provision of law.
(b) If requested by the commissioner, each student loan servicer licensee shall make such records available or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send the records to the commissioner.
(P.A. 15-162, S. 5; P.A. 16-65, S. 61.)
History: P.A. 15-162 effective July 1, 2016; P.A. 16-65 amended Subsec. (a) by deleting provision re persons exempt from licensure and amended Subsec. (b) by adding “licensee” re student loan servicer, effective July 1, 2016.
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Sec. 36a-850. Prohibited activities of student loan servicer licensees and control persons. No person who is required to be licensed and who is subject to the provisions of sections 36a-846 to 36a-854, inclusive, and no control person shall, directly or indirectly:
(1) Employ any scheme, device or artifice to defraud or mislead student loan borrowers;
(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement or the borrower's obligations under the loan;
(3) Obtain property by fraud or misrepresentation;
(4) Knowingly misapply or recklessly apply student education loan payments to the outstanding balance of a student education loan;
(5) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a student loan borrower's creditworthiness;
(6) Fail to report both the favorable and unfavorable payment history of the student loan borrower to a nationally recognized consumer credit bureau at least annually if the student loan servicer licensee regularly reports information to a credit bureau;
(7) Refuse to communicate with an authorized representative of the student loan borrower who provides a written authorization signed by the student loan borrower, provided the student loan servicer licensee may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student loan borrower;
(8) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or in connection with any investigation conducted by the commissioner or another governmental agency;
(9) Fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable student loan servicing laws and regulations; or
(10) Fail to comply with the service standards set by the commissioner in accordance with section 59 of public act 16-65*.
(P.A. 15-162, S. 6; P.A. 16-65, S. 62; P.A. 17-233, S. 33; P.A. 18-173, S. 87.)
*Note: Section 59 of public act 16-65 is special in nature and therefore has not been codified but remains in full force and effect according to its terms.
History: P.A. 15-162 effective July 1, 2016; P.A. 16-65 added “licensee” re student loan servicer, effective July 1, 2016; P.A. 17-233 replaced “No student loan servicer licensee shall” with “No person who is required to be licensed and who is subject to the provisions of sections 36a-846 to 36a-854, inclusive, and no control person shall, directly or indirectly”, amended Subdiv. (1) by deleting “Directly or indirectly”, amended Subdiv. (8) by replacing “Banking Commissioner” with “commissioner”, added Subdiv. (9) re the failure to establish, enforce and maintain policies and procedures, and made technical changes; P.A. 18-173 added Subdiv. (10) re failure to comply with standards set by commissioner and made a technical change.
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Sec. 36a-851. Commissioner's authority re investigations and examinations. Prohibited acts by subjects of investigation or examination. (a) In addition to any authority provided under this title, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:
(1) For purposes of initial licensing, license renewal, license suspension, license revocation or termination, or general or specific inquiry or investigation to determine compliance with sections 36a-846 to 36a-854, inclusive, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to, (A) criminal, civil and administrative history information; (B) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a; and (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.
(2) For the purposes of investigating violations or complaints arising under sections 36a-846 to 36a-854, inclusive, or for the purposes of examination, the commissioner may review, investigate or examine any student loan servicer licensee or person subject to said sections as often as necessary in order to carry out the purposes of said sections. The commissioner may direct, subpoena or order the attendance of and examine under oath all persons whose testimony may be required about the student education loan or the business or subject matter of any such examination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.
(b) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the student loan servicer licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the student loan servicer licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of sections 36a-846 to 36a-854, inclusive, the student loan servicer licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.
(c) In order to carry out the purposes of this section, the commissioner may:
(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;
(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section;
(3) Use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive;
(4) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and
(5) Accept audit reports made by an independent certified public accountant for the student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive, in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the commissioner.
(d) The authority of this section shall remain in effect, whether such student loan servicer licensee or person subject to sections 36a-846 to 36a-854, inclusive, acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.
(e) No student loan servicer licensee or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.
(P.A. 15-162, S. 7.)
History: P.A. 15-162 effective July 1, 2016.
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Sec. 36a-852. Suspension, revocation or refusal to renew license. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license issued under section 36a-847, or take any other action, in accordance with section 36a-51, if the commissioner finds that (1) the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of the licensee has violated any provision of this title or any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's student loan servicing business, or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted a denial of such license.
(b) Whenever it appears to the commissioner that any (1) person has violated, is violating or is about to violate any of the provisions of sections 36a-846 to 36a-854, inclusive, or any regulation adopted pursuant to said sections, (2) person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee or any control person, qualified individual, branch manager, trustee, employee or agent of such licensee has committed any fraud, engaged in dishonest activities or made any misrepresentation, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.
(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-846 to 36a-854, inclusive, from office and from employment or retention as an independent contractor in the student loan servicer business in this state in accordance with section 36a-51a.
(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.
(P.A. 15-162, S. 8; P.A. 18-173, S. 88.)
History: P.A. 15-162 effective July 1, 2016; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-847(c) with reference to Sec. 36a-847, adding reference to control person, qualified individual, branch manager, trustee, employee or agent of licensee, replacing “any provision of sections 36a-846 to 36a-854, inclusive, or any regulation or order lawfully made pursuant to and within the authority of said sections” with “any provision of this title or any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's student loan servicing business” in Subdiv. (1), and deleting provision re abatement of license fee in Subdiv. (2), amended Subsec. (b) by designating existing provision re violation of sections or regulation as Subdiv. (1), adding Subdiv. (2) re person is, was or would be cause of violation of provision of section or regulation, designating existing provision re fraud, dishonest activities or misrepresentation as Subdiv. (3) and amending same by replacing owner, director, officer, member, partner, shareholder” with “control person, qualified individual, branch manager”, added Subsec. (c) re commissioner's authority to order licensee to remove individual from office, employment or retention as independent contractor, and added Subsec. (d) re temporary order.
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Sec. 36a-853. Compliance with federal laws and regulations. A student loan servicer shall comply with all applicable federal laws and regulations relating to student loan servicing, including, but not limited to, the Truth-in-Lending Act, 15 USC Section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this section and a basis upon which the commissioner may take enforcement action pursuant to section 36a-852.
(P.A. 15-162, S. 9.)
History: P.A. 15-162 effective July 1, 2016.
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Sec. 36a-854. Regulations. The Banking Commissioner shall adopt such regulations, in accordance with chapter 54, to implement the provisions of this section and sections 36a-846 to 36a-853, inclusive.
(P.A. 15-162, S. 10.)
History: P.A. 15-162 effective July 1, 2016.
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Secs. 36a-855 to 36a-859. Reserved for future use.
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PART XV
FINANCIAL PLANNERS
Sec. 36a-860. Financial planners. (a) For purposes of this section and section 36a-860a, (1) “fiduciary duty” means a duty to act with prudence in the best interests of a consumer with undivided loyalty to such consumer, and (2) “financial planner” means a person offering individualized financial planning or investment advice to a consumer for compensation where such activity is not otherwise regulated by state or federal law.
(b) No financial planner shall, in connection with an agreement with a consumer to provide financial planning or investment advice for compensation, use a certificate, professional designation or form of advertising expressing or implying that such person has special training, education or experience in advising or serving senior citizens, unless such person has obtained a certificate, title or designation as described in section 36b-4.
(c) A financial planner shall disclose to a consumer, upon request, whether or not such financial planner has a fiduciary duty to such consumer for each recommendation such financial planner makes to such consumer.
(P.A. 17-120, S. 1.)
History: P.A. 17-120 effective July 5, 2017.
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Sec. 36a-860a. Links to educational materials re financial planning and investment advisers on department's Internet web site. (a) To the extent practicable, the Banking Commissioner shall provide on the department's Internet web site links to educational materials on (1) financial planning and other designations, including associated prerequisites, and (2) information on requirements for investment advisers pursuant to chapter 672a. The Banking Commissioner shall also include on the department's Internet web site information concerning a consumer's right to ask for disclosure from financial planners or other financial planning professionals about fees and compensation as required under applicable state and federal law.
(b) The Department of Banking shall share the information provided on the department's Internet web site pursuant to subsection (a) of this section with the Department of Consumer Protection. The Department of Consumer Protection shall provide such shared information on its own department's Internet web site.
(P.A. 17-120, S. 2.)
History: P.A. 17-120 effective July 5, 2017.
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