CHAPTER 669
REGULATED ACTIVITIES

Table of Contents

Sec. 36a-647. (Formerly Sec. 36-243c). Enforcement powers of commissioner. Regulations.
Sec. 36a-648a. Credit card debt collection actions against parents or legal guardians of students.
Sec. 36a-655. (Formerly Sec. 36-364). Definitions.
Sec. 36a-656. (Formerly Sec. 36-365). Debt adjustment. License application, requirements and fees. Authority of commissioner to deny application for license. Automatic suspension of license or renewal license. Notice. Opportunity for hearing.
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-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-671. Definitions. Debt negotiation. License application, requirements and fees. Authority of commissioner to deny application for license. Automatic suspension of license or renewal license. Notice. Opportunity for hearing.
Sec. 36a-671a. Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner.
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. Notice. Automatic suspension of license. Notice. Opportunity for hearing.
Sec. 36a-718. (Formerly Sec. 36-442p). Orders. Notice. Hearings.
Sec. 36a-746c. Prohibited provisions in loan agreement.
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-760d. Requirements for making nonprime home loans.
Sec. 36a-760e. Restrictions on provisions in nonprime home loans.
Sec. 36a-760j. Prohibition against influencing real estate appraisals.
Sec. 36a-785. (Formerly Sec. 42-98). Foreclosure.
Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Examination of records. Automatic suspension of license or renewal license. Notice. Opportunity for hearing.
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-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.

PART I
CREDITORS' COLLECTION PRACTICES

      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-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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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, "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 from time to time amended; "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; and "debtor" means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.

      (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.)

      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".

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      Sec. 36a-656. (Formerly Sec. 36-365). Debt adjustment. License application, requirements and fees. Authority of commissioner to deny application for license. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (a) No person shall engage in the business of debt adjustment in this state without a debt adjuster license. Any person desiring to obtain such a license shall file with the commissioner an application under oath, setting forth such information as the commissioner may require. Each applicant for a license and each licensee shall notify the commissioner of any change in the applicant's business from that stated in the application for the license.

      (b) An application for a debt adjuster license or renewal of such license shall be in writing on a form provided by the commissioner and shall include (1) the history of criminal convictions for the ten-year period prior to the date of the application of the applicant; the partners, if the applicant is a partnership; the members, if the applicant is a limited liability company or association; or the officers, directors and principal employees if the applicant is a corporation, and (2) sufficient information pertaining to the history of criminal convictions, in a form acceptable to the commissioner, on such applicant, partners, directors, members, officers, directors and principal employees as the commissioner deems necessary to make the findings under subsection (c) of this section.

      (c) If the commissioner finds, upon the filing of an application for a debt adjuster license, that: (1) The financial responsibility, character, reputation, integrity and general fitness of the applicant and of the partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, 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; and (2) 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 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 partner, member, officer, director or principal employee of the applicant has been convicted, during the ten-year period prior to the date of application, of any misdemeanor involving any aspect of the debt adjuster business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. Withdrawal of an application for a license shall become effective upon receipt by the commissioner of a notice of intent to withdraw such application. The commissioner may deny a license up to the date one year after the effective date of withdrawal.

      (d) Each applicant for an original debt adjuster license that is a bona fide nonprofit organization shall, at the time of making such application, pay to the commissioner an application fee of two hundred fifty dollars. Each applicant for an original or a renewal of a debt adjuster license that is not a bona fide nonprofit organization shall, at the time of making such application, pay to the commissioner an application fee of one thousand six hundred dollars or, in the case of an application that is filed not earlier than the date one year before the date of expiration of such license, a license fee of eight hundred dollars. Each such license shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance unless such license is renewed. Each licensee shall, on or before September first of the year in which the license expires, file such renewal application as the commissioner may require.

      (e) If the commissioner determines that a check filed with the commissioner to pay an application fee has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall 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.

      (f) No abatement of the license fee shall be made if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. The fee required by subsection (d) of this section shall be nonrefundable.

      (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.)

      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.

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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 licensee shall: (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) directly or indirectly 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, or (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.

      (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.)

      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).

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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-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 July thirty-first 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. Each licensee shall submit to the commissioner, by September first of each year, 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 July thirty-first of each such year. The report shall be subscribed and affirmed as true by the licensee and shall be in a form prescribed by the commissioner.

      (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. 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, stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee 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 or insurance company, the commissioner shall give written notice to the licensee of the date such bond or insurance policy 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 or insurance policy from the surety or insurance company or a new bond or insurance policy or the licensee has surrendered the license. After a license has been automatically suspended, the commissioner shall 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 require the licensee to take or refrain from taking such action as in the opinion of the commissioner will 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.)

      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.

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      Sec. 36a-671. Definitions. Debt negotiation. License application, requirements and fees. Authority of commissioner to deny application for license. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (a) As used in this section and sections 36a-671a to 36a-671d, inclusive, (1) "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; (2) "debtor" means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes; (3) "mortgagee" means the original lender under a mortgage loan secured by residential property or its agents, successors or assigns; (4) "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; (5) "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; (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; and (7) "residential property" means one-to-four family owner-occupied real property.

      (b) No person shall engage or offer to engage in debt negotiation in this state without a license issued under this section for each location where debt negotiation will be conducted. Any person desiring to obtain such a license shall file with the commissioner an application under oath, setting forth such information as the commissioner may require. Each applicant for a license and each licensee shall notify the commissioner of any change in the applicant's business from that stated in the application for the license. 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 contract in person, by mail, by telephone or via the Internet while physically present in this state; or (3) has its place of business located outside of this state and the contract concerns a debt that is secured by property located within this state.

      (c) An application for an original or renewal debt negotiation license shall be in writing on a form provided by the commissioner and shall include (1) the history of criminal convictions for the ten-year period prior to the date of the application of the (A) applicant, (B) partners, if the applicant is a partnership, (C) members, if the applicant is a limited liability company or association, or (D) officers, directors and principal employees, if the applicant is a corporation; and (2) sufficient information pertaining to the history of criminal convictions, in a form acceptable to the commissioner, on such applicant, partners, members, officers, directors and principal employees as the commissioner deems necessary to make the findings under subsection (d) of this section.

      (d) If the commissioner finds, upon the filing of an application for a debt negotiation license, that: (1) The financial responsibility, character, reputation, integrity and general fitness of the (A) applicant, (B) partners thereof, if the applicant is a partnership, (C) members, if the applicant is a limited liability company or association, and (D) officers, directors and principal employees, if the applicant is a corporation, 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-671d, inclusive; and (2) 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 thereupon issue the applicant a debt negotiation license. Such debt negotiation license shall not be transferable. Any change of location of a licensee shall require prior written notice to the commissioner. No licensee shall use any name unless such name has been approved 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 reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any partner, member, officer, director or principal employee of the applicant has been convicted, during the ten-year period prior to the date of application, of any misdemeanor involving any aspect of the debt negotiation business or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. Withdrawal of an application for a license shall become effective upon receipt by the commissioner of a notice of intent to withdraw such application. The commissioner may deny a license up to the date one year after the effective date of withdrawal.

      (e) Each applicant for an original or renewal debt negotiation license shall, at the time of making such application, pay to the commissioner an application fee of one thousand six hundred dollars, provided, if such application is filed not earlier than one year before the date such license will expire, such person shall pay a license fee of eight hundred dollars. Each such license shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance unless such license is renewed. Each licensee shall, on or before September first of the year in which the license expires, file such renewal application as the commissioner may require. Whenever an application for a license is filed under this section by any person who was a licensee under this section and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee.

      (f) If the commissioner determines that a check filed with the commissioner to pay an application fee has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall 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.

      (g) No abatement of the license fee shall be made if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. The fee required by subsection (e) of this section shall be nonrefundable.

      (P.A. 09-208, S. 29; 09-209, S. 41.)

      History: P.A. 09-209 redefined "mortgagor" in Subsec. (a)(4) and made a technical change in Subsec. (b)(3).

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      Sec. 36a-671a. Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner. (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 application for a license under sections 36a-671 to 36a-671d, inclusive, or if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, 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 sections 36a-671 to 36a-671d, inclusive, or any other law or regulation applicable to the conduct of its business; or (4) failed to perform any agreement with a debtor.

      (b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate the provisions of sections 36a-671 to 36a-671d, inclusive, or any licensee or any proprietor, director, officer, member, partner, shareholder, 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) Upon complaint, the Banking Commissioner may review any fees or charges assessed by a person offering 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.

      (P.A. 09-208, S. 33.)

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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" shall have the same meaning as 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.)

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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, when engaged in such practice; (2) any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided subsidiaries of such institutions other than operating subsidiaries of federal banks and federally-chartered out-of-state banks are not exempt from licensure; (3) any person licensed as a debt adjuster pursuant to sections 36a-655 to 36a-665, inclusive, while performing debt adjuster services; (4) any person acting under the order of a court; or (5) 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.)

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      Sec. 36a-671d. Surety bond required. Form of surety bond. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing. (a)(1) No debt negotiation license, and no renewal thereof, shall be granted unless the applicant has filed a surety bond with the commissioner in an aggregate amount of forty thousand dollars for all licensed locations. Such surety bond shall be written by a surety authorized to write such bonds in this state.

      (2) 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 and conducting such business consistent with the provisions of sections 36a-671 to 36a-671d, inclusive. Any debtor who may be damaged by failure to perform any written agreements or by conduct inconsistent with the provisions of sections 36a-671 to 36a-671d, 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. 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.

      (b) 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 licensee stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee 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 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 shall require the licensee to take or refrain from taking such action as, in the opinion of the commissioner, will 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 that states or implies that the licensee is endorsed, sponsored, recommended, bonded or insured by the state.

      (P.A. 09-208, S. 30.)

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PART VII
MORTGAGE SERVICING

      Sec. 36a-718. (Formerly Sec. 36-442p). Orders. Notice. Hearings. If the commissioner determines that any mortgage servicing company has violated any provision of section 36a-716, the commissioner may take action against such mortgage servicing company in accordance with sections 36a-50 and 36a-52. The commissioner may also order the mortgage servicing company to make restitution to the mortgagor upon fourteen days' notice in writing. Such notice shall be sent by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the principal place of business of the mortgage servicing company and shall state the grounds for the contemplated action. Within fourteen days of receipt of the notice, the mortgage servicing company may file a written request for a hearing. If a hearing is requested, the commissioner shall not issue an order to make restitution until after such hearing is held. Such hearing shall be conducted in accordance with the provisions of chapter 54.

      (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.)

      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.

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PART IXa
CONNECTICUT ABUSIVE HOME LOAN
LENDING PRACTICES ACT

      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 226.32, 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.)

      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.

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PART X
OTHER MORTGAGE AND LOAN PRACTICES

      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 required to be licensed by the Department of Banking under chapter 668, or their successors or assigns, and shall also mean any bank, out-of-state bank, Connecticut credit union, federal credit union, out-of-state credit union, or an operating subsidiary of a federal bank or a federally chartered out-of-state bank where such subsidiary engages in the business of making mortgage loans, and their successors and assigns, but shall 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 any person, other than a lender, who (A) for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a mortgage, and (B) who is required to be licensed by the Department of Banking under chapter 668, or their successors or assigns;

      (7) "Nonprime home loan" means any loan or extension of credit, excluding an open-end line of credit, and further excluding a reverse mortgage transaction, as defined in 12 CFR 226.33, 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 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 (i) four hundred seventeen thousand dollars for a loan originated on or after July 1, 2008, but before July 1, 2010; and (ii) the then current conforming loan limit, as established from time to time by the Federal National Mortgage Association, for a loan originated on or after July 1, 2010;

      (E) Where the loan is not a CHFA loan; and

      (F) In which the conditions set forth in clauses (i) and (ii) of this subparagraph apply, subject to any adjustments made pursuant to clause (iii) of this subparagraph:

      (i) The difference, at the time of consummation, between the APR for the loan and the conventional mortgage rate is either equal to or greater than (I) one and three-quarters percentage points, if the loan is a first mortgage loan, or (II) three and three-quarters percentage points, if the loan is a secondary mortgage loan. For purposes of such calculation, "conventional mortgage rate" means the contract interest rate on commitments for fixed-rate mortgages published by the Board of Governors of the Federal Reserve System in its statistical release H.15, or any publication that may supersede it, during the week preceding the week in which the interest rate for the loan is set.

      (ii) 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 226.35, as amended from time to time.

      (iii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in clauses (i) and (ii) of this subparagraph. The authority of the commissioner, and any increases or decreases made under this clause, shall expire on August 31, 2010. 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) "Residential property" has the same meaning as provided in section 36a-485;

      (10) "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.)

      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).

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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 homeowner's 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.)

      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.

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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 226.32, 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.)

      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.

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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 residential real estate appraisals" includes, but is not limited to: (1) Refusal, or intentional failure, to pay an appraiser for an appraisal that reflects a fair market value estimate that is less than the sale contract price; or (2) refusal, or intentional failure, to utilize, or encouraging other mortgage brokers not to utilize, an appraiser based solely on the fact that the appraiser provided an appraisal reflecting a fair market value estimate that was less than the sale contract price.

      (P.A. 08-176, S. 81; P.A. 09-209, S. 26.)

      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.

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PART XI
RETAIL INSTALLMENT SALES FINANCING

      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 him to perform, or in the performance of any promise, the breach of which is by such contract expressly made a ground for the retaking of the goods, the holder of the contract may retake possession thereof, provided the filing of a petition in bankruptcy under 11 USC Chapter 7 by a retail buyer of a motor vehicle, or such retail buyer's status as a debtor in bankruptcy, shall not be considered a default of a retail installment contract or ground for repossession of such motor vehicle. Unless the goods can be retaken without breach of the peace, it shall be retaken by legal process, but nothing herein contained 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 immediately thereafter. 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, if he so desires, may serve upon the retail buyer, personally or by registered or certified mail, a notice of intention to retake the goods on account of the buyer's default. The notice shall state the default and the period at the end of which such goods will be retaken, and shall briefly and clearly state what the retail buyer's rights under this subsection will be in case such goods are retaken. If the notice is so served and the buyer does not perform the conditions and provisions as to which he is in default before the day set for retaking, the holder of the contract may retake said goods and hold such 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), he shall retain such goods for fifteen days after the retaking within the state in which they were located when retaken. During such period the retail buyer, upon payment or tender of the unaccelerated amount due under such contract at the time of retaking and interest, or upon performance or tender of performance of such other condition as may be named in such contract as precedent to the retail buyer's continued possession of such goods, or upon performance or tender of performance of any other promise for the breach of which such goods were retaken, and upon payment of the actual and reasonable expenses of any retaking and storing, may redeem such goods and become entitled to take possession of the same and to continue in the performance of such contract as if no default had occurred. The holder of such contract shall within three days of the retaking furnish or mail, by registered or certified mail, to the last known address of the buyer a written statement of the unaccelerated sum due under such contract and the actual and reasonable expense of any retaking and storing. For failure to furnish or mail such statement as required by this section, the holder of the contract shall forfeit the right to claim payment for the actual and reasonable expenses of retaking and storage, and also shall be liable for the actual damages suffered because of such failure. If such goods are perishable so that retention for fifteen days as herein prescribed 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 which sale may be held not less than fifteen days and shall be held not more than one hundred eighty days after the retaking. When the holder of the contract retakes possession by legal process, and an answer is interposed, the holder of the contract may, at his election, hold such retaken goods for a period not to exceed thirty days after the entry of final judgment by a court of competent jurisdiction entitling the holder of the contract to possession of such goods before holding such resale. The holder of the contract shall give the retail buyer not less than ten days' written notice of the time and place of any public sale, or the time after which any private sale or other intended disposition is to be made, either personally or by registered mail or by certified mail receipted for on mailing directed to the retail buyer at his 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 (1) to the payment of the actual and reasonable expenses thereof, (2) to the payment of the actual and reasonable expenses of any retaking and storing of said goods, (3) to the satisfaction of the balance due under the contract. Within thirty days of 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. Notwithstanding that the proceeds of the resale are not sufficient to defray the actual and reasonable expenses thereof, and also such actual and reasonable expenses of any retaking and storing of such goods and the balance due under the contract, the holder of the contract may not recover the deficiency from the retail buyer or any surety or guarantor for him, or from any one 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 two thousand dollars, the prima facie fair market value of such motor vehicle shall be calculated by adding together the average trade-in value for that motor vehicle and the average retail value for that motor vehicle and dividing that sum by two. Such average trade-in value and average 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 the goods retaken consist of a boat the aggregate cash price of which was more than two thousand dollars, the prima facie fair market value of such boat shall be calculated by adding together the average trade-in value for that boat and the average retail value for that boat and dividing that sum by two. Such average trade-in value and average 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. In the event that the value of such motor vehicle or boat is not stated in such publication, then the fair market value at retail minus the reasonable costs of resale shall be determined by the court. The prima facie evidence of fair market value of such motor vehicle or boat so determined may be rebutted only by direct in-court testimony. If such value of the motor vehicle or boat is less than the balance due under the contract, plus the actual and reasonable expenses of the retaking of possession, the holder of the contract may recover from the retail buyer, or from anyone who has succeeded to his 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), or if the holder obtains a prejudgment remedy against the goods under chapter 903a, the retail buyer or anyone who has succeeded to his 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 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), after retaking the goods, the retail buyer may recover from the holder of the contract his 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).

      (k) Loss. After the delivery of the goods to the retail buyer and prior to any retaking thereof 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.)

      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.

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PART XII
CONSUMER COLLECTION AGENCIES

      Sec. 36a-801. (Formerly Sec. 42-127a). License required. Application, issuance, renewal. Examination of records. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (a) No person shall act within this state as a consumer collection agency without a consumer collection agency license. 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 collects from consumer debtors or property tax debtors who reside within this state for creditors who are located within this state; (3) has its place of business located outside this state and regularly collects from consumer debtors or property 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.

      (b) (1) Any person desiring to act within this state as a consumer collection agency shall make a written application to the commissioner for such license in such form as the commissioner prescribes. Such application shall be accompanied by (A) a financial statement prepared by a certified public accountant or a public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner or a corporate officer or a member duly authorized to execute such documents, (B) the history of criminal convictions for the ten-year period prior to the date of the application of the applicant, (C) a license fee of eight hundred dollars, or in the case of an initial application that is filed not earlier than one year before the date such license will expire, a license fee of four hundred dollars, and (D) an investigation fee of one hundred dollars. The commissioner shall cause to be made such inquiry and examination as to the qualifications of each such 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. If the commissioner is satisfied that such applicant is in all respects properly qualified and trustworthy and that the granting of such license is not against the public interest, the commissioner may issue to such applicant a license, in such form as the commissioner may adopt, to act within this state as a consumer collection agency. The commissioner may deny an application if the commissioner finds that the applicant has been convicted, during the ten-year period prior to the date of application, 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. Any such license issued by the commissioner shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance, unless such license is renewed. The commissioner may renew such application, in the commissioner's discretion, upon filing of a proper renewal application accompanied by a license fee of eight hundred dollars, and satisfactory proof that such applicant at that time possesses the required qualifications for the license. The commissioner may deny a renewal application if the commissioner finds that the applicant has been convicted, during the ten-year period prior to the date of application, 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. Such renewal application shall be filed with the commissioner on or before September first of the year in which the license expires. Any renewal application filed with the commissioner after September first shall be accompanied by a one-hundred-dollar late fee and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. Whenever an application for a license, other than a renewal application, is filed under sections 36a-800 to 36a-810, inclusive, by any person who was a licensee under said sections 36a-800 to 36a-810, inclusive, and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee. 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-810, 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. The applicant or licensee shall notify the commissioner, in writing, of any change in the information provided in its initial application for license or most recent renewal application for such license, as applicable, not later than ten business days after the occurrence of the event that results in such information becoming inaccurate.

      (2) If the commissioner determines that a check filed with the commissioner to pay a fee under subdivision (1) of this subsection has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall 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.

      (3) No abatement of the license fee shall be made 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) 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. Any change of location of a place of business of a licensee shall require prior written notice to the commissioner. 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-810, inclusive, as to each new licensee. A license shall not be transferable or assignable. 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.

      (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.)

      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.

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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 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 or property 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. 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 stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee 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 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 require the licensee to take or refrain from taking such action as in the opinion of the commissioner will 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.)

      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.

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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 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.)

      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.

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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 section 36a-50.

      (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.)

      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.

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