Chapter 668

Sec. 36a-485. (Formerly Sec. 36-440). Definitions. As used in this section and sections 36a-486 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, unless the context otherwise requires:

(1) “Advance fee” means any consideration paid or given, directly or indirectly, by a consumer to a person for a residential mortgage loan prior to the closing of such residential mortgage loan, including, but not limited to, loan fees, points, broker's fees or commissions, transaction fees or similar prepaid finance charges;

(2) “Advertise”, “advertisement” or “advertising” means the use of any announcement, statement, assertion or representation that is placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station, by means of the Internet, or by other electronic means of distributing information, by personal contact, or in any other way;

(3) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator;

(4) “Control person” means an individual that directly or indirectly exercises control over another person. Any person that (A) is a director, general partner or executive officer; (B) in the case of a corporation, directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities; (C) in the case of a limited liability company, is a managing member; or (D) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten per cent or more of the capital, is presumed to be a control person. For purposes of this subdivision, “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise;

(5) “Depository institution” has the same meaning as provided in Section 3 of the Federal Deposit Insurance Act, 12 USC 1813, and includes any Connecticut credit union, federal credit union or out-of-state credit union;

(6) “Dwelling” means a “dwelling”, as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602, that is located in this state;

(7) “Employee” means an individual (A) whose manner and means of work performance are subject to the right of control of, or are controlled by, a person, and (B) whose compensation is reported or required to be reported on a W-2 form issued by the controlling person. For purposes of the definition of “registered mortgage loan originator”, “employee” has the foregoing meaning or such other meaning as the federal banking agencies may issue in connection with such agencies' implementation of such agencies' responsibilities under the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC 5101 et seq.;

(8) “Federal banking agency” means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration and the Federal Deposit Insurance Corporation;

(9) “First mortgage loan” means a residential mortgage loan that is secured by a first mortgage;

(10) “Immediate family member” means a spouse, child, sibling, parent, grandparent or grandchild and includes stepparents, stepchildren, stepsiblings and adoptive relationships;

(11) “Independent contractor” means an individual retained on a basis where the individual is not an employee of any person in connection with the services such individual provides and whose compensation is reported or required to be reported on an Internal Revenue Service Form 1099 issued by the retaining person;

(12) “Individual” means a natural person;

(13) “Lead” means any information identifying a potential consumer of a residential mortgage loan;

(14) “Lead generator” means a person who, for or with the expectation of compensation or gain: (A) Sells, assigns or otherwise transfers one or more leads for a residential mortgage loan; (B) generates or augments one or more leads for another person; or (C) directs a consumer to another person for a residential mortgage loan by performing marketing services, including, but not limited to, online marketing, direct response advertising or telemarketing;

(15) “Loan processor or underwriter” means an individual who performs clerical or support duties. The term “clerical or support duties” includes, subsequent to the receipt of an application, (A) the receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan, and (B) communication with a consumer to obtain the information necessary for the processing or underwriting of a loan to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms;

(16) “Main office” means the main address designated on the system;

(17) “Mortgage broker” (A) means a person who (i) for compensation or gain or with the expectation of compensation or gain (I) takes a residential mortgage loan application, or (II) offers or negotiates terms of a residential mortgage loan, and (ii) is not the prospective source of the funds for the residential mortgage loan, and (B) does not include (i) an individual who is licensed as a mortgage loan originator acting as a mortgage loan originator on behalf of such mortgage loan originator's sponsoring mortgage lender, mortgage correspondent lender, mortgage broker or exempt registrant, or (ii) an individual exempt from mortgage loan originator licensure under subdivision (2) of subsection (b) of section 36a-486 when acting within the scope of such exemption;

(18) “Mortgage correspondent lender” means a person engaged in the business of making residential mortgage loans in such person's own name where the loans are not held by such person for more than ninety days and are funded by another person through a warehouse agreement, table funding agreement or similar agreement;

(19) “Mortgage lender” means a person engaged in the business of making residential mortgage loans in such person's own name utilizing such person's own funds or by funding loans through a warehouse agreement, table funding agreement or similar agreement;

(20) “Mortgage loan originator” means an individual who for compensation or gain or with the expectation of compensation or gain, either for such individual or for the person employing or retaining such individual, (A) takes a residential mortgage loan application, or (B) offers or negotiates terms of a residential mortgage loan. “Mortgage loan originator” does not include (i) an individual engaged solely as a loan processor or underwriter; (ii) a person who only performs real estate brokerage activities and is licensed in accordance with chapter 392, unless the person is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (iii) a person solely involved in extensions of credit relating to timeshare plans, as that term is defined in Paragraph 53D of 11 USC 101; or (iv) any individual who solely renegotiates terms for existing mortgage loans on behalf of a mortgagee and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires such individual to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act;

(21) “Office” means a branch office or a main office;

(22) “Out-of-state mortgage loan originator” means an individual who maintains a unique identifier through the system and holds a valid mortgage loan originator license issued pursuant to the laws of any state other than this state;

(23) “Person” means a natural person, corporation, company, limited liability company, partnership or association;

(24) “Principal amount of the loan” means the gross amount the borrower is obligated to repay including any prepaid finance charge that is financed, and any other charge that is financed;

(25) “Real estate brokerage activity” means any activity that involves offering or providing real estate brokerage services to the public, including (A) acting as a real estate agent or real estate broker for a buyer, seller, lessor or lessee of real property; (B) bringing together parties interested in the sale, purchase, lease, rental or exchange of real property; (C) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental or exchange of real property, other than in connection with providing financing with respect to any such transaction; (D) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (E) offering to engage in any activity, or act in any capacity, described in this subdivision;

(26) “Registered mortgage loan originator” means any individual who (A) meets the definition of mortgage loan originator and is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration; and (B) is registered with and maintains a unique identifier through the system;

(27) “Residential mortgage loan” means any loan, including a shared appreciation agreement, primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling;

(28) “Residential real estate” means any real property located in this state, upon which is constructed or intended to be constructed a dwelling;

(29) “Secondary mortgage loan” means a residential mortgage loan that is secured, in whole or in part, by a mortgage, provided such property is subject to one or more prior mortgages;

(30) “Shared appreciation agreement” means a nonrecourse obligation in which an advance sum of monetary value is extended to a consumer, as a lump sum or otherwise, in exchange for an equity interest in a dwelling, residential real estate or a future obligation to repay a sum upon the occurrence of an event, including, but not limited to, the transfer of ownership, repayment maturity date, death of the consumer or as outlined and explicitly agreed to within said agreement;

(31) “Simulated check” means a document that imitates or resembles a check but is not a negotiable instrument;

(32) “Sponsored” means employed or retained as an independent contractor;

(33) “Table funding agreement” means an agreement wherein a person agrees to fund mortgage loans to be made in another person's name and to purchase such loans after they are made;

(34) “Trigger lead” means a consumer report obtained pursuant to subparagraph (B) of subdivision (1) of subsection (c) of Section 604 of the Fair Credit Reporting Act, 15 USC 1681b, as amended from time to time, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit;

(35) “Unique identifier” means a number or other identifier assigned by protocols established by the system; and

(36) “Warehouse agreement” means an agreement to provide credit to a person to enable the person to have funds to make residential mortgage loans and hold such loans pending sale to other persons.

(P.A. 85-399, S. 1; P.A. 87-9, S. 2, 3; P.A. 89-347, S. 9; P.A. 92-12, S. 87; 92-132, S. 3, 5; P.A. 94-122, S. 229, 340; P.A. 99-36, S. 23; 99-63, S. 2; P.A. 02-111, S. 2; P.A. 04-69, S. 1; P.A. 07-91, S. 1; 07-156, S. 4; P.A. 08-176, S. 31, 38; P.A. 09-209, S. 2; P.A. 11-110, S. 3; 11-216, S. 7–9; P.A. 12-96, S. 7; P.A. 14-7, S. 1; 14-89, S. 30; P.A. 17-38, S. 1; 17-233, S. 7; P.A. 18-173, S. 7; P.A. 21-138, S. 5.)

History: (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 89-347 added Subsec. (g) defining “mortgage broker”; P.A. 92-12 redesignated Subdivs. and made technical changes; P.A. 92-132 added Subdiv. (8) defining “advance fee”; P.A. 94-122 deleted definitions of “commissioner” and “person”, alphabetized remaining definitions and made technical changes, effective January 1, 1995; Sec. 36-440 transferred to Sec. 36a-485 in 1995; P.A. 99-36 made a technical change; P.A. 99-63 amended Subdiv. (2) to redefine “first mortgage loan”, added new Subdivs. (7) and (8) defining “simulated check” and “advertise” or “advertisement”, and made technical changes; P.A. 02-111 redefined “advance fee” and “mortgage lender”, deleted definitions of “mortgage broker” and “principal officer” and added definitions of “first mortgage broker”, “first mortgage correspondent lender”, “first mortgage lender”, “originator”, “table funding agreement” and “warehouse agreement”, renumbering Subdivs. accordingly; P.A. 04-69 substituted “36a-498a” for “36a-498” throughout; P.A. 07-91 redefined “originator” in Subdiv. (8); P.A. 07-156 redefined “advance fee” in Subdiv. (1) to delete “or registered”, and redefined “originator” in Subdiv. (8) to insert “mortgage lender or first mortgage broker” re exclusion for officer, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 4, from September 30, 2008, to July 1, 2008, redefined “advertise” or “advertisement” and “mortgage lender”, deleted definitions of “first mortgage broker”, “first mortgage correspondent lender” and “first mortgage lender”, added definitions of “branch office”, “main office”, “mortgage broker”, “mortgage correspondent lender”, “mortgage loan”, “office”, “principal amount of the loan”, and “secondary mortgage loan”, changed defined term “originator” to “mortgage loan originator” and added arrange or find mortgage loans therein, renumbered existing Subdivs. (6), (8), (9), (10), (11) and (12) as new Subdivs. (4), (10), (13), (15), (16) and (17), respectively, and made conforming and technical changes, effective July 1, 2008; P.A. 09-209 applied definitions to other licensing provisions, redefined “advance fee” in Subdiv. (1), added reference to “advertising” in Subdiv. (2), defined “control person”, “depository institution” and “federal banking agency” in new Subdivs. (4) to (6), redefined “first mortgage loan” in redesignated Subdiv. (7), defined “immediate family member”, “individual” and “loan processor” or “underwriter” in new Subdivs. (8) to (10), redefined “mortgage broker”, “mortgage correspondent lender” and “mortgage lender” in redesignated Subdivs. (12) to (14), deleted former Subdiv. (9) defining “mortgage loan”, redefined “mortgage loan originator” in redesignated Subdiv. (15), defined “person”, “real estate brokerage activity”, “registered mortgage loan originator” and “residential mortgage loan” in new Subdivs. (17) and (19) to (21), deleted former Subdiv. (13) defining “residential property”, defined “residential real estate” in new Subdiv. (22), redefined “secondary mortgage loan” in redesignated Subdiv. (23), defined “sponsored”, “system” and “unique identifier” in new Subdivs. (25), (26) and (28), and redefined “warehouse agreement” in redesignated Subdiv. (29), effective July 31, 2009; P.A. 11-110 amended Subdiv. (15) to add reference to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 11-216 amended Subdiv. (10) to change defined term to “loan processor or underwriter” and redefine same, amended Subdiv. (15) to redefine “mortgage loan originator” and amended Subdiv. (26) to add “loan processors or underwriters”; P.A. 12-96 added reference to Sec. 36a-534c re applicability of definitions, amended Subdiv. (1) to replace “36a-498a” with “36a-498f”, added new Subdivs. (6) and (7) defining “dwelling” and “employee”, redesignated existing Subdivs. (6) to (8) as Subdivs. (8) to (10), added new Subdiv. (11) defining “independent contractor”, redesignated existing Subdivs. (9) to (29) as Subdivs. (12) to (32), redefined “mortgage broker” in redesignated Subdiv. (15) and “mortgage loan originator” in redesignated Subdiv. (18), and made technical changes in redesignated Subdivs. (24) and (25); P.A. 14-7 redefined “branch office” to add reference to mortgage loan originator in Subdiv. (3), effective May 8, 2014; P.A. 14-89 redefined “branch office” to add reference to mortgage loan originator in Subdiv. (3), made a technical change in Subdiv. (15), deleted former Subdiv. (29) re definition of “system” and redesignated existing Subdivs. (30) to (32) as Subdivs. (29) to (31), effective June 3, 2014; P.A. 17-38 replaced “to 36a-534c, inclusive” with references to Secs. 36a-498h and 36a-534b, amended Subdiv. (1) to redefine “advance fee”, amended Subdiv. (6) to redefine “dwelling”, added new Subdiv. (13) defining “lead”, added new Subdiv. (14) defining “lead generator”, redesignated existing Subdivs. (13) to (29) as Subdivs. (15) to (31), added Subdiv. (32) defining “trigger lead”, redesignating Subdivs. (30) and (31) as Subdivs. (33) and (34); P.A. 17-233 amended Subdiv. (4) by redefining “control person”; P.A. 18-173 replaced reference to Sec. 36a-498f with reference to Sec. 36a-498e; P.A. 21-138 defined “out-of-state mortgage loan originator” in new Subdiv. (22), redesignated existing Subdivs. (22) to (28) as new Subdivs. (23) to (29), amended redesignated Subdiv. (27) by adding “, including a shared appreciation agreement,”, defined “shared appreciation agreement” in new Subdiv. (30), and redesignated existing Subdivs. (29) to (34) as new Subdivs. (31) to (36).

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Sec. 36a-486. (Formerly Sec. 36-440a). Licenses required. Exemptions. Prohibited advertisements. Violations. Temporary authority to act as mortgage loan originator. (a) No person shall engage in the business of making residential mortgage loans or act as a mortgage broker in this state unless such person has first obtained a license for its main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b. Any activity subject to licensure pursuant to sections 36a-485 to 36a-498e, inclusive, 36a-534a or 36a-534b shall be conducted from an office located in a state, as defined in section 36a-2. Any such person who is an individual shall also obtain a mortgage loan originator license prior to conducting such business unless such individual does not engage directly in the activities of a mortgage loan originator or conducts such business pursuant to the temporary authority provided in subsection (e) of this section. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage lender or mortgage correspondent lender, shall be deemed to be engaged in the business of making residential mortgage loans if such person advertises, causes to be advertised, solicits or offers to make residential mortgage loans, either directly or indirectly. A person, other than a licensed mortgage loan originator acting on behalf of a mortgage broker, shall be deemed to be acting as a mortgage broker if such person advertises or causes to be advertised that such person will negotiate, solicit, place or find a residential mortgage loan, either directly or indirectly. A mortgage correspondent lender shall not be deemed to be acting as a mortgage lender if such mortgage correspondent lender makes a loan utilizing its own funds in a situation where another person does not honor such person's commitment to fund the loan. A licensed lead generator shall not be deemed to be acting as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator when engaged in the activities of a lead generator, as described in section 36a-485 if such person does not: (1) Obtain compensation or gain contingent upon the consummation of a residential mortgage loan or the receipt of a residential mortgage loan application, or (2) utilize financial criteria particular to the consumer or the residential mortgage loan transaction to selectively place a lead or to steer a consumer to a specific person for a residential mortgage loan.

(b) (1) No person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker shall engage the services of a mortgage loan originator or of a loan processor or underwriter required to be licensed under this section unless such mortgage loan originator or loan processor or underwriter is licensed under section 36a-489 or acting pursuant to the temporary authority provided in subsection (e) of this section. An individual, unless specifically exempted under subdivision (2) of this subsection or acting pursuant to the temporary authority provided in subsection (e) of this section, shall not engage in the business of a mortgage loan originator on behalf of a licensee or a person exempt under section 36a-487 with respect to any residential mortgage loan without first obtaining and maintaining annually a license as a mortgage loan originator under section 36a-489. An individual, unless specifically exempted under subdivision (2) of this subsection, shall be deemed to be engaged in the business of a mortgage loan originator if such individual: (A) Acts as a mortgage loan originator in connection with any residential mortgage loan on behalf of a licensee or person exempt under section 36a-487; or (B) makes any representation to the public through advertising or other means of communication that such individual can or will act as a mortgage loan originator on behalf of a licensee or person exempt under section 36a-487. Each licensed mortgage loan originator and each licensed loan processor or underwriter shall register with and maintain a valid unique identifier issued by the system. No individual may act as a mortgage loan originator for more than one person at the same time. No loan processor or underwriter licensee may be sponsored by more than one person at a time. The license of a mortgage loan originator or a loan processor or underwriter is not effective during any period when such mortgage loan originator or a loan processor or underwriter is not sponsored by a licensed mortgage lender, mortgage correspondent lender or mortgage broker, or by a person registered as an exempt registrant under subsection (d) of section 36a-487, or during any period in which the license of the mortgage lender, mortgage correspondent lender or mortgage broker with whom such originator or loan processor or underwriter is associated has been suspended. Either the mortgage loan originator, the loan processor or underwriter or the sponsor may file a notification of the termination of sponsorship with the system.

(2) The following are exempt from this section: (A) A registered mortgage loan originator or an employee of an institution or subsidiary described in section 36a-485, who is not required to be registered under Section 1507 of the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., when acting for such institution or subsidiary; (B) an individual who offers or negotiates the terms of a residential mortgage loan with or on behalf of an immediate family member of such individual; (C) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as the individual's residence, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition; (D) a Connecticut licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (E) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of a federal, state or local government agency or housing finance agency exempt from licensure pursuant to section 36a-487, and who does so only pursuant to such individual's official duties as an employee of such agency; (F) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of an organization that has obtained bona fide nonprofit status from the commissioner and is exempt from licensure pursuant to section 36a-487, and who does so only pursuant to such individual's official duties as an employee of such organization; and (G) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that is not the individual's residence but is owned by such individual, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition.

(3) No individual shall engage in the activities of a loan processor or underwriter unless such individual obtains and maintains a license as a loan processor or underwriter under section 36a-489. The following individuals are exempt from the foregoing license requirement:

(A) An employee of a licensed mortgage lender, mortgage correspondent lender or mortgage broker who engages in loan processor or underwriter activities (i) in connection with residential mortgage loans either originated or made by such licensee, and (ii) at the direction of and subject to the supervision of a licensed mortgage loan originator of such licensee;

(B) An employee of a person exempt from licensure under subdivision (1), (2) or (3) of subsection (a) of section 36a-487 who engages in loan processor or underwriter activities at the direction of and subject to the supervision of either a licensed mortgage loan originator or a registered mortgage loan originator of such exempt person; or

(C) Any individual engaged, in any capacity, in loan processor or underwriter activities in connection with a residential mortgage loan originated by an individual not required to be licensed or registered as a mortgage loan originator under this part.

(4) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

(5) On and after January 1, 2018, no person shall, directly or indirectly, act as a lead generator without first obtaining a license under section 36a-489, unless such person is exempt from licensure. The following persons shall be exempt from licensure as a lead generator:

(A) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured;

(B) Any wholly owned subsidiary of any such bank or credit union;

(C) Any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union;

(D) Any person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker in this state, provided such exemption shall not be effective during any period in which the license of such person is suspended;

(E) A consumer reporting agency, as defined in Section 603 (f) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time;

(F) An employee of a person licensed as a lead generator or exempt from licensure as a lead generator, while engaged in lead generator activities on behalf of such person; and

(G) An individual employed by an affiliate of a bank or credit union exempt from licensure pursuant to subparagraph (A) of this subdivision, who is registered or licensed with a state or federal regulator to engage in securities brokerage, investment advisory or insurance sales activities and who, incidental to the performance of such regulated activities, performs lead generation activities by referring one or more leads to such bank or credit union. For purposes of this subparagraph, “affiliate” means an entity that is controlled by or is under common control with the bank or credit union, such that the bank or credit union (i) directly or indirectly acting through one or more other persons owns, controls or has the power to vote more than fifty per cent of any class of voting securities of the affiliate, (ii) controls in any manner the election of a majority of directors or trustees of the affiliate, or (iii) directly or indirectly exercises a controlling influence over the management or policies of the affiliate.

(c) If the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires an individual described in subparagraph (B) (iv) of subdivision (20) of section 36a-485 to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act, such individual may continue to act in such individual's current capacity, provided such individual files an application for a mortgage loan originator license not later than the date sixty days from the date of such determination by the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction.

(d) Each residential mortgage loan taken, offered, negotiated, solicited, arranged, placed, found, made, processed or underwritten without a license shall constitute a separate violation for purposes of section 36a-50.

(e) (1) An individual who is employed by a person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker in this state shall have temporary authority to act as a mortgage loan originator in this state for the period of time described in subdivision (3) of this subsection, provided the individual (A) has not had (i) an application for a loan originator license denied in any governmental jurisdiction, or (ii) a loan originator license revoked or suspended in any governmental jurisdiction; (B) has not been subject to, or served with, a cease and desist order in any governmental jurisdiction or by the Bureau of Consumer Financial Protection pursuant to 12 USC 5113(c); (C) has not been convicted of a misdemeanor or felony that would preclude licensure in this state under subdivision (1) of subsection (b) of section 36a-489; (D) has submitted an application for licensure as a mortgage loan originator in this state pursuant to subsection (c) of section 36a-488; and (E) was registered in the system as a registered loan originator, as defined in 12 USC 5102, during the one-year period immediately preceding the date on which the individual submits in connection with such application for licensure in this state the individual's personal history and experience, including authorization to obtain an independent credit report, criminal background check and information relating to administrative, civil or criminal findings by any governmental jurisdiction.

(2) An out-of-state mortgage loan originator employed by a person licensed as a mortgage lender, mortgage correspondent lender or mortgage broker in this state shall have temporary authority to act as a mortgage loan originator in this state for the period described in subdivision (3) of this subsection, provided the individual (A) meets the requirements of subparagraphs (A) to (D), inclusive, of subdivision (1) of this subsection; and (B) was an out-of-state mortgage loan originator during the thirty-day period immediately preceding the date on which the individual submits in connection with the application for licensure as a mortgage loan originator in this state the individual's personal history and experience, including authorization to obtain an independent credit report, criminal background check and information relating to administrative, civil or criminal findings by any governmental jurisdiction.

(3) The period of temporary authority described in subdivisions (1) and (2) of this subsection shall commence on the date the registered loan originator or out-of-state mortgage loan originator submits the information required by subsection (c) of section 36a-488 and shall end on the earliest of (A) the date the individual withdraws the application to be a licensed mortgage loan originator in this state; (B) the date the commissioner denies the application; (C) the date the commissioner issues the mortgage loan originator license; or (D) one hundred twenty days after the date the individual submits the application, provided such application is identified as incomplete on the system.

(4) Any person employing an individual who has temporary authority to act as a mortgage loan originator in this state pursuant to this subsection shall be subject to the laws of this state to the same extent as if the employed individual is licensed as a mortgage loan originator in this state. Any individual who has temporary authority to act as a mortgage loan originator in this state pursuant to this subsection and who engages in residential mortgage loan origination activities shall be subject to the laws of this state to the same extent as if the individual is licensed as a mortgage loan originator in this state.

(P.A. 85-399, S. 2; P.A. 89-347, S. 10; P.A. 93-32; P.A. 94-122, S. 230, 340; P.A. 96-71, S. 1, 8; 96-109, S. 10; 96-180, S. 117, 166; P.A. 02-111, S. 3; P.A. 04-69, S. 2; P.A. 07-156, S. 5; P.A. 08-176, S. 31, 40; P.A. 09-208, S. 2; 09-209, S. 5; P.A. 11-110, S. 4; 11-216, S. 10; P.A. 12-96, S. 8; P.A. 14-7, S. 11; 14-89, S. 34, 48; P.A. 15-14, S. 7; P.A. 17-38, S. 2; P.A. 18-173, S. 8; P.A. 21-138, S. 6.)

History: P.A. 89-347 added requirements re mortgage brokers; P.A. 93-32 made previous provision Subsec. (a) and added new Subsec. (b) imposing civil penalty for those who do not obtain the license required; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440a transferred to Sec. 36a-486 in 1995; P.A. 96-71, 96-109 and 96-180 all amended Subsec. (a) to delete “loan” before “mortgage loan business in this state”, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by rewriting provisions applicable to lenders and brokers and adding provisions re first mortgage correspondent lenders, added new Subsec. (b) re registration of originators, and redesignated existing Subsec. (b) as Subsec. (c), adding “or registration” therein; P.A. 04-69 amended Subsecs. (a) and (b) to substitute “36a-498a” for “36a-498”; P.A. 07-156 amended Subsecs. (b) and (c) to replace registration requirement for originators with licensing requirement and to make conforming changes, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 5, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to add reference to main office and each branch office, to provide that a person, other than a mortgage loan originator, “shall be deemed to be engaged in the business of making mortgage loans if such person advertises, causes to be advertised, solicits, offers to make or makes mortgage loans, either directly or indirectly”, and to make conforming changes, amended Subsec. (b) to add mortgage correspondent lender, to change notification provision from “shall promptly notify the commissioner, in writing” to “may file” with Nationwide Mortgage Licensing System and to make conforming changes, and amended Subsec. (c) to add “arranged” and to make a conforming change, effective July 1, 2008; P.A. 09-208 amended Subsec. (b) by providing that license of mortgage loan originator is not effective during any period in which license of lender, correspondent lender or broker with whom originator is associated has been suspended, effective July 7, 2009; P.A. 09-209 amended Subsec. (a) to apply to persons engaged in business of making residential mortgage loans and by requiring certain individuals to obtain a mortgage loan originator license, adding provision re when a person is considered to be acting as a mortgage broker, making technical changes and inserting reference to other licensing provisions, amended Subsec. (b) by designating existing provisions as Subdiv. (1) and amending same by requiring individuals engaged in business of mortgage loan originator with respect to a dwelling to obtain and maintain a license, and by adding Subdiv. (2) re exemptions, Subdiv. (3) re loan processors or underwriters who are independent contractors and Subdiv. (4) re advertising, added new Subsec. (c) re determinations made by U.S. Department of Housing and Urban Development or court, redesignated existing Subsec. (c) as Subsec. (d) and amended same by adding “residential” re mortgage loan, effective July 31, 2009; P.A. 11-110 amended Subsec. (c) to add references to Bureau of Consumer Financial Protection, effective July 21, 2011; P.A. 11-216 amended Subsec. (b)(1) and (b)(3) to add references to loan processors or underwriters, to prohibit the engagement in business without a license of a mortgage loan originator “on behalf of a licensee or a person exempt under section 36a-487 with respect to any residential mortgage loan”, to permit alternative sponsorship “by a person registered as an exempt registrant under subsection (c) of section 36a-487”, to prohibit a loan processor or underwriter who is employed by any person other than a licensed mortgage lender, mortgage correspondent lender or mortgage broker or any person exempt from licensure under Sec. 36a-487(a)(1) from engaging in activities of a loan processor or underwriter without a license, to eliminate requirement of maintaining valid unique identifier issued by the system, and to make conforming and technical changes; P.A. 12-96 amended Subsec. (b) to add provisions re when individual shall be deemed engaged in the business of a mortgage loan originator and re loan processor or underwriter licensee not to be sponsored by more than one person at a time in Subdiv. (1), to add provision in Subpara. (C) re context demonstrating individual is engaged in activities with a degree of habitualness or repetition and add new Subparas. (E), (F) and (G) re residential mortgage loans in Subdiv. (2), and to replace former Subdiv. (3) with new Subdiv. (3) re loan processor or underwriter activities, amended Subsec. (d) to add “taken, offered” and “processed or underwritten”, and made technical changes; P.A. 14-7 amended Subsec. (b)(1) to replace reference to Sec. 36a-487(c) with reference to Sec. 36a-487(d), effective May 8, 2014; P.A. 14-89 amended Subsec. (b) to replace “licensed attorney” with “Connecticut licensed attorney” in Subdiv. (2)(D) and add reference to Sec. 36a-487(a)(2) or (3) in Subdiv. (3)(B); P.A. 15-14 made a technical change in Subsec. (b)(3)(C); P.A. 17-38 amended Subsec. (a) by deleting reference to April 1, 2010, adding provision re licensed lead generator not deemed to be acting as mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator, amended Subsec. (b) by replacing reference to Sec. 36a-485(23) with reference to Sec. 36a-485(25) in Subdiv. (2)(A), and adding Subdiv. (5) re lead generator licensure and exemptions, amended Subsec. (c) by replacing reference to Sec. 36a-485(18) with reference to Sec. 36a-485(20), and made a technical change; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-498f with reference to Sec. 36a-498e and adding provision re activity subject to licensure to be conducted from office located in the state; P.A. 21-138 amended Subsec. (a) by adding provision re conducting business pursuant to temporary authority provided in subsection (e), amended Subsec. (b)(1) by adding provisions re acting pursuant to temporary authority provided in subsection (e), amended Subsec. (b)(2) by deleting “subdivision (25) of”, amended Subsec. (b)(3) by adding Subpara. (G) re incidental performance of lead generation activities and by making a technical change, and added Subsec.(e) re temporary authority to act as mortgage loan originator.

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Sec. 36a-487. (Formerly Sec. 36-440b). Exemptions from licensure. (a) The following are exempt from licensing as a mortgage lender, mortgage correspondent lender or mortgage broker under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured; (2) any wholly-owned subsidiary of any such bank or credit union; (3) any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same such bank or credit union; (4) any person licensed under sections 36a-671 to 36a-671d, inclusive, or exempt from licensure under section 36a-671c, who is negotiating or offering to negotiate terms of a residential mortgage loan as authorized by said sections 36a-671 to 36a-671d, inclusive; and (5) any person engaged solely in providing loan processing or underwriting services to persons (A) licensed as a mortgage lender, mortgage correspondent lender or mortgage broker, or (B) exempt from such licensure under subdivision (1) of this subsection. Each wholly-owned subsidiary of a Connecticut bank or Connecticut credit union that engages in the business of making residential mortgage loans or acts as a mortgage broker in this state shall provide written notification to the commissioner prior to engaging in such activity.

(b) The following are exempt from licensing as a mortgage lender or mortgage correspondent lender under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b:

(1) Persons making five or fewer residential mortgage loans within any period of twelve consecutive months, provided nothing herein shall relieve such persons from complying with all applicable laws;

(2) Bona fide nonprofit organizations making residential mortgage loans that promote home ownership for the economically disadvantaged;

(3) Agencies of the federal government, or any state or municipal government, or any housing finance agency making residential mortgage loans under the specific authority of the laws of any state or the United States. For purposes of this subdivision, a “housing finance agency” means any authority:

(A) Chartered by a state to help meet the affordable housing needs of the residents of the state; (B) supervised directly or indirectly by the state government; (C) subject to audit and review by the state in which it operates; and (D) whose activities make it eligible to be a member of the National Council of State Housing Agencies;

(4) Persons owning real property who take back from the buyer of such property a secondary mortgage loan in lieu of any portion of the purchase price of the property;

(5) Any corporation or its affiliate that makes residential mortgage loans exclusively for the benefit of its employees or agents;

(6) Any corporation, licensed in accordance with section 38a-41, or its affiliate or subsidiary, that makes residential mortgage loans to promote home ownership in urban areas;

(7) Persons acting as fiduciaries with respect to any employee pension benefit plan qualified under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, who make residential mortgage loans solely to plan participants from plan assets; and

(8) Persons making secondary mortgage loans to immediate family members.

(c) A bona fide nonprofit organization shall be exempt from licensing as a mortgage broker under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b to the extent that such bona fide nonprofit organization acts as a mortgage broker in connection with residential mortgage loans to be exclusively made by persons covered by the exemption set forth in either subdivision (5) or (6) of subsection (b) of this section.

(d) Any person claiming exemption from licensure under this section may register on the system as an exempt registrant for purposes of sponsoring a mortgage loan originator or a loan processor or underwriter pursuant to subdivision (1) of subsection (b) of section 36a-486. Such registration shall not affect the exempt status of such person. Any approval of such registration, or any approval of any renewal of such registration, shall not constitute a determination by the commissioner that such entity is exempt, but rather shall evidence the commissioner's approval to use the system for purposes of sponsoring and bonding.

(e) (1) For purposes of this section, a “bona fide nonprofit organization” means an organization that has filed a written certified submission to the commissioner in a form prescribed by the commissioner and with such documentation as may be required by the commissioner and that demonstrates to the satisfaction of the commissioner that the organization: (A) Has the status of a tax-exempt organization 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; (B) promotes affordable housing or provides home ownership education or similar services; (C) conducts its activities in a manner that serves public or charitable purposes rather than commercial purposes; (D) receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients; (E) compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients; (F) provides or identifies for the borrower residential mortgage loans (i) with terms favorable to the borrower, which means such terms must be consistent with loan origination in a public or charitable context, not a commercial context, and (ii) comparable to mortgage loans and housing assistance provided under government housing assistance programs; and (G) meets such other standards as the commissioner may by regulation require. Any organization that demonstrates to the satisfaction of the commissioner its status as a bona fide nonprofit organization shall timely report any change in any information previously submitted to the commissioner and, not later than December thirty-first of each year, submit to the commissioner a renewed certification and documentation to update all information last filed in support of such bona fide nonprofit organization status or such status shall expire, except that any organization that obtained initial bona fide nonprofit status from the commissioner after November first of a given year shall submit a renewal certification and documentation by December thirty-first of the following year.

(2) The commissioner shall have the authority to periodically examine the books and activities of a certified bona fide nonprofit organization and to revoke the bona fide nonprofit organization status of an entity that does not continue to meet the criteria in subdivision (1) of this subsection.

(P.A. 85-399, S. 3; P.A. 88-65, S. 37; P.A. 89-211, S. 41; P.A. 92-12, S. 88; P.A. 94-122, S. 231, 340; P.A. 99-36, S. 24; P.A. 02-111, S. 4; P.A. 04-69, S. 3; P.A. 08-176, S. 41; P.A. 09-209, S. 6; P.A. 11-216, S. 11; P.A. 12-96, S. 9; P.A. 14-89, S. 21; P.A. 15-235, S. 30; P.A. 18-173, S. 9.)

History: P.A. 88-65 deleted a reference to industrial bank in Subsec. (a); P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 92-12 redesignated Subdivs.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440b transferred to Sec. 36a-487 in 1995; P.A. 99-36 made a technical change; P.A. 02-111 amended Subdivs. (2), (3) and (4) by substituting “making” for “granting”, amended Subdiv. (6) by changing “licensed lender” to “licensed mortgage lender” and amended Subdiv. (8) by substituting “makes” for “grants”; P.A. 04-69 substituted “36a-498a” for “36a-498”; P.A. 08-176 amended Subdiv. (1) to add reference to operating subsidiaries of federal banks and federally-chartered out-of-state banks, amended Subdiv. (2) to add “provided nothing herein shall relieve such persons from complying with all applicable laws”, amended Subdiv. (6) to replace former provision with provision re owners who take back a secondary mortgage loan in lieu of any portion of purchase price, added Subdiv. (10) re making of secondary mortgage loans to relatives, and made conforming changes, effective July 1, 2008; P.A. 09-209 designated existing introductory clause and Subdiv. (1) as Subsec. (a), amended same by adding citations to additional licensing provisions and adding exemptions re certain financial institutions, added Subsec. (b) re exemptions from licensing as a lender or correspondent lender, redesignated existing Subdivs. (2) to (10) as Subsecs. (b)(1) to (b)(9) and added “residential” re mortgage loans throughout, effective July 31, 2009; P.A. 11-216 amended Subsec. (a) to add provision re exemption is from licensing as a mortgage lender, mortgage correspondent lender or mortgage broker, designate provision re exemption for banks and credit unions as Subdiv. (1), add Subdiv. (2) re exemption for any person licensed under Secs. 36a-671 to 36a-671d or exempt from licensure and add Subdiv. (3) re exemption for any person engaged solely in providing loan processing or underwriting services to persons licensed as mortgage lender, correspondent lender or broker or exempt from such licensure, and added Subsec. (c) re persons exempt from licensure registering on the system; P.A. 12-96 amended Subsec. (b) to replace “corporations” with “organizations” in Subdiv. (2), to replace “quasi-governmental” with “housing finance” and add definition of “housing finance agency” in Subdiv. (3) and to make technical changes, added new Subsec. (c) re exemption of bona fide nonprofit organization, redesignated existing Subsec. (c) as Subsec. (d) and added Subsec. (e) defining “bona fide nonprofit organization”; P.A. 14-89 amended Subsec. (a) to designate existing provision re subsidiary as new Subdiv. (2) and amend same to replace “operating subsidiary” with “wholly-owned subsidiary”, delete references to federal bank and federally chartered out-of-state bank and make conforming changes, add new Subdiv. (3) re operating subsidiary and redesignate existing Subdivs. (2) and (3) as Subdivs. (4) and (5); P.A. 15-235 amended Subsec. (d) to add provision re scope of commissioner's approval of registration and to change “exempt” to “claiming exemption”, effective July 7, 2015; P.A. 18-173 amended Subsecs. (a) to (c) by replacing references to Sec. 36a-498f with references to Sec. 36a-498e, further amended Subsec. (b) by deleting former Subdiv. (4) re persons licensed under Secs. 36a-555 to 36a-573, and redesignating existing Subdivs. (5) to (9) as Subdivs. (4) to (8), amended Subsec. (e) by designating existing provisions re definition of “bona fide nonprofit organization” as Subdiv. (1) and amending same by adding provision re expiration of status, and adding Subdiv. (2) re commissioner's authority to examine books and activities of certified bona fide nonprofit organization and revoke status, and made technical and conforming changes.

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Sec. 36a-488. (Formerly Sec. 36-440c). Mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator, loan processor, underwriter and lead generator licenses. Requirements. (a)(1) The commissioner shall not issue a mortgage lender license, a mortgage correspondent lender license or a mortgage broker license to any person unless such person meets the following tangible net worth and experience requirements, as applicable: (A) The minimum tangible net worth requirement for a mortgage lender shall be two hundred fifty thousand dollars and the minimum tangible net worth requirement for a mortgage correspondent lender and a mortgage broker shall be fifty thousand dollars, and (B) a mortgage lender, mortgage correspondent lender or mortgage broker shall have, (i) at the main office for which the license is sought, a qualified individual who has supervisory authority over the lending or brokerage activities of the licensee and who is responsible for the actions of the licensee, and (ii) at each branch office, a branch manager who has supervisory authority over the lending or brokerage activities of the branch office, who is responsible for the actions of the branch office, who has at least three years' experience in the mortgage business within the five years immediately preceding the date of the application for the license, and who is licensed as a mortgage loan originator under section 36a-489. As used in this subdivision, “experience in the mortgage business” means paid experience in the origination, processing or underwriting of residential mortgage loans, the marketing of such loans in the secondary market or in the supervision of such activities, or any other relevant experience as determined by the commissioner. As used in subparagraph (B) of this subdivision, “at the main office” may be established by demonstrating to the satisfaction of the commissioner that the qualified individual is capable of providing full-time supervision of the main office, and “at each branch office” may be established by demonstrating to the satisfaction of the commissioner that the branch manager is capable of providing full-time supervision of the branch office. The commissioner may waive the requirements of subparagraph (B) of this subdivision pertaining to a qualified individual where it is demonstrated to the satisfaction of the commissioner that no activity subject to licensure under sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b will be conducted at the main office and the licensee designates a qualified individual responsible for the actions of the licensee. The commissioner may waive the requirements of subparagraph (B) of this subdivision pertaining to a branch manager where a person licensed as a mortgage lender under section 36a-489 will act only as a mortgage servicer at such branch office, and the individual designated as branch manager meets the requirements for branch manager as set forth in section 36a-719. No person granted a waiver of the requirements of subparagraph (B) of this subdivision shall conduct any activity at the main office or at any branch office that would have precluded issuance of such waiver without first designating a qualified individual or branch manager, as applicable, who meets all applicable requirements and is approved by the commissioner.

(2) Each licensee shall maintain the net worth required by this subsection.

(b) The commissioner may issue a mortgage lender license, a mortgage correspondent lender license, or a mortgage broker license. Each mortgage lender licensee may also act as a mortgage correspondent lender and a mortgage broker, and each mortgage correspondent lender licensee may also act as a mortgage broker. An application for a license as a mortgage lender, mortgage correspondent lender or mortgage broker office or renewal of such license shall be filed, in a form prescribed by the commissioner, with the system. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-21, 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. In the case of an initial application for a license, the following supplementary information shall be filed, as applicable: (1) For a main office license, a financial statement as of a date not more than twelve months prior to the filing of the application which reflects tangible net worth; (2) a bond as required by section 36a-492; (3) evidence that the qualified individual or branch manager meets the experience required by subsection (a) of this section; and (4) such other information pertaining to the applicant, the applicant's background, the background of its principals, employees, mortgage loan originators, and loan processors or underwriters, and the applicant's activities as the commissioner may require. For the purpose of this subsection, evidence of experience of the qualified individual or branch manager shall include: (A) A statement specifying the duties and responsibilities of such person's employment, the term of employment, including month and year, and the name, address and telephone number of a supervisor, employer or, if self-employed, a business reference; and (B) if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer's letterhead verifying such person's duties and responsibilities and term of employment including month and year, and if such person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement. The commissioner may conduct a criminal history records check of the applicant, any control person of the applicant and the qualified individual or branch manager and require the applicant to submit the fingerprints of such persons and authorization of such persons for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as part of the application.

(c) The commissioner may issue a mortgage loan originator license or a loan processor or underwriter license. Each mortgage loan originator licensee may also act as a loan processor or underwriter. Each mortgage loan originator licensee shall be associated with a specified licensed office and be subject to supervision by a qualified individual or branch manager. An application to license an individual as a mortgage loan originator or a loan processor or underwriter or for renewal of such license shall be filed, in a form prescribed by the commissioner, with the system. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b. The applicant shall, at a minimum, furnish to the system, in a form prescribed by the system, information concerning the applicant's identity, including personal history and experience and information related to any administrative, civil or criminal findings by any governmental jurisdiction. Each applicant for a mortgage loan originator license or a loan processor or underwriter license shall furnish to the system fingerprints for submission to the Federal Bureau of Investigation and any governmental agency or entity authorized to receive such information for a state, national and international criminal history background check. Each applicant shall furnish authorization for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a.

(d) The commissioner may issue a lead generator license. An application for a license as a lead generator or an application for a license renewal shall be filed, in a form prescribed by the commissioner, with the system, accompanied by the fees required under section 36a-491. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant and the qualified individual responsible for the actions of the licensee, including, but not limited to, a personal history and experience, in a form prescribed by the system, and information related to any administrative, civil or criminal findings by any governmental jurisdiction. The commissioner, in accordance with section 29-17a, may conduct a state or national criminal history records check of the applicant, any control person of the applicant and the qualified individual, and, in accordance with section 36a-24b, may require the submission of fingerprints of such persons to the Federal Bureau of Investigation or other state, national or international criminal databases as part of the application.

(P.A. 85-399, S. 4; P.A. 89-347, S. 11; P.A. 94-122, S. 232, 340; P.A. 99-36, S. 25; P.A. 02-111, S. 5; P.A. 06-45, S. 1; P.A. 07-91, S. 2; 07-156, S. 6; P.A. 08-176, S. 31, 42; P.A. 09-209, S. 7; P.A. 11-216, S. 12, 13; P.A. 12-96, S. 10; P.A. 17-38, S. 3; P.A. 18-173, S. 10; P.A. 22-94, S. 5.)

History: P.A. 89-347 amended Subsec. (b) by inserting new Subdiv. (4) re the applicant's status as a lender or a broker and renumbered the remaining Subdiv.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440c transferred to Sec. 36a-488 in 1995; P.A. 99-36 made a technical change in Subsec. (a); P.A. 02-111 replaced former Subsec. (a) with new provisions re obtaining license as first mortgage lender, first mortgage correspondent lender or first mortgage broker and re obligation to notify commissioner if net worth falls below requisite net worth, amended Subsec. (b) to reflect commissioner's authority to issue first mortgage lender license, first mortgage correspondent lender license and first mortgage broker license and to revise application requirements and added new Subsec. (c) re application for registration of originator; P.A. 06-45 added Subsec. (d) to provide that filing application for registration of originator with knowledge that application contains a material misstatement by originator shall be a violation of Sec. 36a-53a, effective May 8, 2006; P.A. 07-91 amended Subsec. (d) to provide that filing application for renewal of registration of originator with knowledge that application contains a material misstatement by originator shall be a violation of Sec. 36a-53a; P.A. 07-156 amended Subsec. (a)(1) to delete proviso re inapplicability of experience requirements to any person whose license is renewed effective October 1, 2002, amended Subsec. (b) to authorize commissioner to conduct a criminal history records check of applicants and key persons of such applicants, to require applicants to submit fingerprints of such persons, and to require filing of applications with the national mortgage licensing system, amended Subsec. (c) to authorize commissioner to conduct criminal history records check of applicant for an originator license, to require applicant to submit fingerprints as part of application, and to require filing application with such system, and deleted former Subsec. (d) and language in Subsecs. (b)(8) and (c) re registration of originator and substituted language re originator license in Subsec. (c), effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 6, from September 30, 2008, to July 1, 2008, amended Subsec. (a)(1) to increase minimum tangible net worth requirement for a mortgage correspondent lender and a mortgage broker, on and after March 2, 2009, to $50,000, to add requirement for branch manager with supervisory authority at each branch office who has at least 3 years' experience in the mortgage business within the 5 years immediately preceding application for license, to define “experience in the mortgage business”, and to make conforming changes, amended Subsec. (b) to substitute, on and after July 1, 2008, application to Nationwide Mortgage Licensing System for application to commissioner, to delete former Subdivs. (1) to (5) re requirements for application to commissioner and to renumber existing Subdiv. (6) as new Subdiv. (1) re financial statement, to change requirement for financial statement to apply to application for license for main office or renewal of license, rather than for all licenses under section, and substitute “twelve” for “six” months, to add new Subdiv. (2) re bond, to renumber existing Subdiv. (7) as new Subdiv. (3) re evidence of experience and existing Subdiv. (8) as new Subdiv. (4) re other information, to add provision re what is included in evidence of experience of the qualified individual or branch manager, and to make conforming changes, and amended Subsec. (c) to include reference to applications for specified offices, to substitute, on and after July 1, 2008, application to Nationwide Mortgage Licensing System for application to commissioner and to make conforming changes, effective July 1, 2008; P.A. 09-209 amended Subsec. (a)(1) by adding provision re branch manager at each branch office, establishing prelicensing education and written test requirements and adding “residential” re mortgage loans, amended Subsec. (a)(2) by deleting requirement that licensee notify commissioner if licensee's net worth falls below required net worth, added Subsec. (a)(3) re prelicensing education and written test requirements, amended Subsec. (b) by authorizing commissioner to create license application and renewal forms and specifying minimum requirements for such forms, by modifying criminal history records check provision and by authorizing commissioner to obtain independent credit report from a consumer reporting agency, amended Subsec. (c) by designating existing provisions as Subdiv. (1), by authorizing commissioner to create license application and renewal forms and specifying minimum application requirements, and by adding Subdiv. (2) re criminal history background checks and credit reports, and made conforming and technical changes throughout, effective July 31, 2009; P.A. 11-216 amended Subsec. (b) to add reference to loan processors or underwriters and make technical changes, effective July 13, 2011, and amended Subsec. (c)(1) to add provisions re loan processor or underwriter, to permit mortgage loan originator licensees to act as a loan processor or underwriter and to make technical changes, effective October 1, 2011; P.A. 12-96 amended Subsec. (a)(1)(B) to add provision re being licensed as a mortgage loan originator under Sec. 36a-489 and make technical changes; P.A. 17-38 amended Subsec. (c) by deleting clauses (i) and (ii) in Subdiv. (1)(A), deleting provisions effective April 1, 2010 and November 1, 2012 in Subdiv. (1)(B)(iii) and (iv), and deleting former Subdiv. (3) re qualified individual and branch manager to have completed prelicensing education requirement and passed written test not later than April 1, 2010, amended Subsec. (b) by deleting reference to July 1, 2008, and adding reference to Sec. 36a-498h, amended Subsec. (c) by deleting Subdiv. (2) re furnishing fingerprints to system not later than April 1, 2010, deleting Subdiv. (1) designator, adding reference to Sec. 36a-498h, deleting references to April 1, 2010 and October 1, 2011, deleting provision re furnishing authorization effective July 31, 2010 or 30 days after system commences accepting authorizations, adding Subsec. (d) re commissioner may issue lead generator license, and made technical changes; P.A. 18-173 amended Subsec. (a)(1) by redesignating existing provision re main office as new clause (i) and amending same by adding provision re supervisory authority over lending or brokerage activities of licensee and responsibility for licensee's actions, designating existing provisions re branch office as new clause (ii) and amending same by adding “of the branch office, who is responsible for the actions of the branch office”, deleting former clause (i) to (iii) designators in Subpara. (B), and adding provisions re establishment of “at the main office” and waiver of requirements of Subpara. (B), amended Subsec. (b) by deleting provision re unaudited financial statement, deleting Subpara. (A) and (B) designators in Subdiv. (1), redesignating provision re bond as new Subdiv. (2), and redesignating existing Subdivs. (2) and (3) as Subdivs. (3) and (4), amended Subsec. (c) by adding provision re mortgage loan originator licensee to be associated with specified licensed office, amended Subsec. (d) by deleting provision re applicant to notify commissioner on system of change to information, replaced references to Sec. 36a-498f with references to Sec. 36a-498e, and made technical and conforming changes; P.A. 22-94 amended Subsec. (a)(1) by deleting language re residing within 100 miles of main office and deleting references to “in-person”, and amended Subsec. (c) by deleting “from which such licensee will operate” and deleting provision stating specified office shall be within 100-mile distance from where licensee resides unless licensee demonstrates that licensee will be subject to supervision by qualified individual or branch manager, effective May 24, 2022.

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Sec. 36a-489. (Formerly Sec. 36-440d). Licenses: Issuance; denial; renewal; suspension; financial responsibility; withdrawal or abandonment of application. (a)(1) The commissioner shall not issue an initial license for a mortgage lender, mortgage correspondent lender or mortgage broker unless the commissioner, at a minimum, finds that: (A) The applicant meets the requirements of subsection (a) of section 36a-488; (B) notwithstanding the provisions of section 46a-80, the applicant, the control persons of the applicant and the qualified individual or branch manager have not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign or military court during the seven-year period preceding the date of the application for licensing or at any time preceding the date of application if such felony involved an act of fraud, dishonesty, a breach of trust or money laundering, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (C) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant and the qualified individual or branch manager are such as to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b; (D) the applicant has met the surety bond requirement under section 36a-492; and (E) the applicant, the control persons of the applicant and the qualified individual or branch manager have not made a material misstatement in the application. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event that such jurisdiction does not use the term “felony”, “pardon” or “expungement”, such terms shall include legally equivalent events.

(2) (A) The minimum standards for license renewal for a mortgage lender, mortgage correspondent lender or mortgage broker shall include the following: (i) The applicant continues to meet the minimum standards under subdivision (1) of this subsection; and (ii) the mortgage lender, mortgage correspondent lender or mortgage broker has paid all required fees for renewal of the license and has paid any outstanding examination fees or other moneys due to the commissioner.

(B) The license of a mortgage lender, mortgage correspondent lender or mortgage broker failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage lender, mortgage correspondent lender or mortgage broker license if the licensee receives a deficiency on the system indicating that the payment required by subparagraph (A) of this subdivision was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (i) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494 and an opportunity for a hearing on such action in accordance with section 36a-51, and (ii) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.

(b) (1) The commissioner shall not issue an initial license for a mortgage loan originator or a loan processor or underwriter unless the commissioner, at a minimum, finds that the applicant has: (A) Never had a mortgage loan originator or equivalent loan processor or underwriter license revoked in any governmental jurisdiction, except that a subsequent formal vacating of such revocation shall not be deemed a revocation; (B) notwithstanding the provisions of section 46a-80, not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign or military court during the seven-year period preceding the date of the application for licensing or at any time preceding such date of application if such felony involved an act of fraud, dishonesty, a breach of trust, or money laundering, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (C) demonstrated financial responsibility, character and general fitness so as to command the confidence of the community and to warrant a determination that the mortgage loan originator or loan processor or underwriter will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b; (D) completed the prelicensing education requirement described in section 36a-489a and passed a written test that meets the test requirement described in section 36a-489a; (E) met the surety bond requirement under section 36a-492 and, in the case of a mortgage loan originator required to be licensed under section 36a-671e, met the surety bond requirements under sections 36a-492 and 36a-671d; and (F) not made a material misstatement in the application. If the commissioner denies an application for a mortgage loan originator or a loan processor or underwriter license, the commissioner shall notify the applicant and may notify the sponsor or any other person the commissioner deems appropriate of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event that such jurisdiction does not use the term “felony”, “pardon” or “expungement”, those terms shall include legally equivalent events.

(2) (A) The minimum standards for license renewal for a mortgage loan originator or a loan processor or underwriter shall include the following: (i) The licensee continues to meet the minimum standards for license issuance under subdivision (1) of this subsection; (ii) the licensee has satisfied the annual continuing education requirements described in subsection (c) of section 36a-489a; and (iii) the licensee has paid all required fees for renewal of the license and any outstanding examination fees or other moneys due to the commissioner.

(B) The license of a mortgage loan originator or a loan processor or underwriter that fails to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage loan originator or a loan processor or underwriter license if the licensee receives a deficiency on the system indicating that the payment of renewal fees required by subparagraph (A) of subdivision (2) of this subsection was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (i) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494 and an opportunity for a hearing on such action in accordance with section 36a-51 and (ii) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.

(c) For purposes of this section, a person has shown that such person is not financially responsible when such person has shown a disregard in the management of such person's own financial condition. A determination that a person has not shown financial responsibility may include, but is not limited to: (1) Current outstanding judgments, except judgments solely as a result of medical expenses; (2) current outstanding tax liens or other government liens and filings; (3) foreclosures during the three years preceding the date of application for an initial license or renewal of a license; or (4) a pattern of seriously delinquent accounts within the past three years.

(d) (1) The commissioner shall not issue a lead generator license to an applicant for such license unless the commissioner, at a minimum, finds that: (A) The applicant demonstrates that the character, reputation, integrity and general fitness of the applicant, any control person of the applicant and the qualified individual are such as to command the confidence of the community and warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b; (B) the applicant has not made a material misstatement in the application; and (C) the applicant has met any other requirements determined by the commissioner. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the denial and the reasons for such denial. Without limiting the foregoing requirements of this subdivision, and subject to the provisions of section 46a-80, the commissioner may deny an application based on the history of criminal convictions of the applicant, any control person of the applicant or the qualified individual.

(2) (A) The minimum standards for license renewal for a lead generator shall include the following: (i) The applicant continues to meet the minimum standards under subdivision (1) of this subsection; and (ii) the lead generator has paid all required fees for renewal of a license and any outstanding examination fees or other moneys due to the commissioner.

(B) The license of a lead generator who fails to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a lead generator license if the licensee receives a deficiency on the system indicating that the payment of renewal fees required by subparagraph (A) of subdivision (2) of this subsection was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall (i) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494, and an opportunity for a hearing on such action in accordance with section 36a-51; and (ii) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.

(e) The commissioner may deem an application for a license under this section abandoned if the applicant fails to respond to any request for information required under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, or the regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days from the date of such request the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b.

(P.A. 85-399, S. 5; P.A. 89-347, S. 12; P.A. 94-122, S. 233, 340; P.A. 99-36, S. 26; P.A. 02-111, S. 6; P.A. 04-69, S. 4; P.A. 06-45, S. 2; P.A. 07-156, S. 7; P.A. 08-176, S. 31, 43; P.A. 09-207, S. 5; 09-208, S. 3; 09-209, S. 8; P.A. 11-216, S. 14–16; P.A. 12-96, S. 1, 11, 12; P.A. 17-38, S. 4; P.A. 18-173, S. 11.)

History: P.A. 89-347 extended the application of the section to mortgage brokers; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440d transferred to Sec. 36a-489 in 1995; P.A. 99-36 made technical changes; P.A. 02-111 designated existing provisions as Subsec. (a) and amended same by requiring commissioner to find that applicant meets requirements of Sec. 36a-488(a), providing that application requirements extend to “partners” in a partnership, and adding provisions re extending application requirements to “members if the applicant is a limited liability company”, re denial of license application based on material misstatement in application, and re denial of application subject to provisions of Sec. 46a-80 and added Subsec. (b) re application for registration of originator; P.A. 04-69 substituted “36a-498a” for “36a-498”; P.A. 06-45 amended Subsec. (a) to require commissioner to deny application for license if commissioner finds that applicant made a material misstatement in application for registration of originator or files application for such registration with knowledge that application contains a material misstatement by originator, and amended Subsec. (b) to require commissioner to register originator named in application unless commissioner finds that originator has made a material misstatement in application and to make technical changes, effective May 8, 2006; P.A. 07-156 replaced language re application for registration of originator and registration with language re application for originator license and license and made conforming changes, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 7, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to add mortgage correspondent lender, amended Subsecs. (a) and (b) to add references to Secs. 36a-760a to 36a-760h and to make conforming changes, and amended Subsec. (b) to delete provision re license remaining in force and effect, effective July 1, 2008; P.A. 09-207 added provisions, codified by the Revisors as Subsec. (e), re circumstances under which commissioner may consider license application to be abandoned, effective July 7, 2009; P.A. 09-208 added provisions, codified by the Revisors as Subsec. (d), re withdrawal of license application, effective July 7, 2009; P.A. 09-209 deleted former Subsecs. (a) and (b), added new Subsec. (a) re commissioner's minimum findings for issuance and renewal of mortgage lender, mortgage correspondent lender or mortgage broker license, added new Subsec. (b) re commissioner's minimum findings for issuance and renewal of mortgage loan originator license, and added Subsec. (c) re determinations of financial responsibility, effective July 31, 2009 (Revisor's note: In Subsecs. (a)(2)(A)(ii) and (b)(2)(A)(ii), references to Sec. 36a-489a(d) were changed editorially by the Revisors to Sec. 36a-489a(c) for accuracy); P.A. 11-216 amended Subsec. (e) to make technical changes, delete reference to Sec. 36a-498a, add references to Secs. 36a-498f, 36a-534a and 36a-534b and require notification to be made “on the system”, effective July 13, 2011, and amended Subsec. (a)(2)(B) to permit automatic suspension of a mortgage lender, correspondent lender or broker license and amended Subsec. (b) to add provisions re loan processor or underwriter, to require that mortgage loan originator applicant meet the surety bond requirements under Secs. 36a-492 and 26a-671d in Subdiv. (1), to permit automatic suspension of a mortgagor loan originator or loan processor or underwriter license in Subdiv. (2)(B), and to make conforming changes, effective October 1, 2011; P.A. 12-96 amended Subsec. (a) by adding reference to expungement of a conviction and adding provisions re determination of conviction, pardon or expungement in Subdiv. (1) and by replacing “person” with “individual” and requiring each qualified individual and branch manager to be licensed as a mortgagee loan originator and have completed continuing education requirements in Subdiv. (2)(A), amended Subsec. (b)(1) by adding reference to expungement of a conviction in Subpara. (B), requiring qualified individuals or branch managers to have completed continuing education requirements in Subpara. (D) and requiring status of a conviction, pardon or expungement to be determined by reference to law of jurisdiction where case was prosecuted, and amended Subsec. (e) to make technical changes; P.A. 17-38 amended Subsec. (a) by adding reference to Sec. 36a-498h in Subdiv. (1)(C), deleting provisions effective April 1, 2010 and November 1, 2012 in Subdiv. (2)(A)(ii) and redesignating clause (iii) as new clause (ii), amended Subsec. (b) by adding reference to Sec. 36a-498h in Subdiv. (1)(C), deleting provisions effective April 1, 2010 and October 1, 2011 in Subdiv. (1)(D), deleting reference to July 31, 2010 in Subdiv. (1)(E), and deleted Subdiv. (3) re completion of prelicensing education requirement and passing written test, added new Subsec. (d) re issuance of lead generator license to applicant, renewal of license and procedures for reinstatement of expired licenses, redesignated existing Subsec. (d) as Subsec. (e) and amended same by designating existing provisions re withdrawal of application for license as Subdiv. (1), and adding Subdiv. (2) re failure to renew license, and redesignated existing Subsec. (e) re application deemed abandoned as Subsec. (f), and made technical and conforming changes; P.A. 18-173 amended Subsec. (a) by deleting references to having supervisory authority at office and adding reference to control persons of applicant and qualified individual or branch manager re material misstatement in application in Subdiv. (1), amended Subsecs. (a) and (b) by adding provisions re payment of outstanding examination fees or other moneys due commissioner in Subdiv. (2)(A), designating existing provision re commissioner to give licensee notice as clause (i), designating existing provision re commissioner to require licensee to take or refrain from taking action as clause (ii) and amending same by replacing “action that, in the opinion of the commissioner, will effectuate” with “action as the commissioner deems necessary to effectuate”, further amended Subsec. (b) by adding reference to renewal fees in Subdiv. (2)(B), amended Subsec. (d) by adding provision re payment of outstanding examination fees or other moneys due commissioner in Subdiv. (2)(A), adding reference to renewal fees, and replacing “action that, in the opinion of the commissioner, will effectuate” with “action as the commissioner deems necessary to effectuate” in Subdiv. (2)(B), deleted former Subsec. (e) re withdrawal of application and expiration of license for failure to renew, redesignated Subsec. (f) as new Subsec. (e), replaced references to Sec. 36a-498f with references to Sec. 36a-498e, and made technical and conforming changes.

Although Subsec. (a) does not expressly address sole proprietorships, it delineates those individuals to whom commissioner looks in determining the general fitness of various corporate organizations, including principal employees of corporations, and it follows that commissioner reasonably would examine acts of the few employees of sole proprietorship, done in furtherance of its business, in assessing the organization's character or general fitness. 94 CA 547.

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Sec. 36a-489a. Prelicensing education, written test and annual continuing education requirements. (a)(1) In order to meet the prelicensing education and testing requirements referred to in section 36a-489, an individual shall complete:

(A) At least twenty hours of education approved in accordance with subdivision (2) of this subsection, which shall include at least (i) three hours of instruction on relevant federal law and regulations; (ii) three hours of ethics training, including instruction on fraud, consumer protection and fair lending issues; and (iii) two hours of training related to lending standards for the nontraditional mortgage product marketplace.

(B) At least one hour of education approved in accordance with subdivision (2) of this subsection on relevant Connecticut law.

(2) For purposes of subdivision (1) of this subsection, prelicensing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a prelicensing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any prelicensing education course, as approved by the system, that is provided by the sponsor or employer of the individual or an entity which is affiliated with the individual by an agency contract, or any subsidiary or affiliate of such sponsor, employer or entity.

(4) Prelicensing education may be offered either in a classroom, online or by any other means approved by the system.

(5) When prelicensing education requirements described in subdivision (1) of this subsection are completed in another state, such out-of-state prelicensing education requirements shall be accepted as credit towards completion of the prelicensing education requirements of this state, provided such out-of-state prelicensing education requirements are approved by the system.

(6) (A) An individual previously licensed under section 36a-489, who is applying to be relicensed shall prove that such individual has completed any continuing education requirements in effect when the license was last held, except that an individual required to retake prelicensing education pursuant to subparagraph (B) of subdivision (7) and subparagraph (B) of subdivision (8) of this subsection shall not be required to complete any outstanding continuing education requirements.

(B) An individual who previously held a position as a qualified individual or branch manager, at a time when such individual was not required to be licensed as a mortgage loan originator, may not hold such position again until such individual has completed all of the continuing education requirements for the year in which such individual last held such position and, effective November 1, 2012, has obtained the required mortgage loan originator license.

(7) (A) If an individual has not obtained a mortgage loan originator license in any state or an active federal registration by the date that is three years from the date such individual completed twenty hours of prelicensing education pursuant to subparagraph (A) of subdivision (1) of this subsection, such individual shall be required to retake twenty hours of prelicensing education in accordance with subparagraph (A) of subdivision (1) of this subsection prior to being licensed as either a mortgage loan originator or a loan processor or underwriter.

(B) If an individual previously held but no longer holds an approved mortgage loan originator license in any state or an active federal registration, such individual shall obtain a mortgage loan originator license in any state or an active federal registration not later than three years from the date such individual last held such license or registration, or such individual shall retake twenty hours of prelicensing education in accordance with subparagraph (A) of subdivision (1) of this subsection prior to being licensed as a mortgage loan originator or loan processor or underwriter.

(8) (A) If an individual has not obtained a mortgage loan originator license or a loan processor or underwriter license in this state by the date that is three years from the date such individual completed one hour of Connecticut specific prelicensing education pursuant to subparagraph (B) of subdivision (1) of this subsection, such individual shall retake one hour of Connecticut specific prelicensing education prior to being licensed as a mortgage loan originator or loan processor or underwriter.

(B) If an individual previously held but no longer holds an approved mortgage loan originator license or loan processor or underwriter license in this state, such individual shall obtain a mortgage loan originator license or loan processor or underwriter license in this state not later than three years from the date such individual last held such license, or such individual shall be required to retake one hour of Connecticut specific prelicensing education in accordance with subparagraph (B) of subdivision (1) of this subsection prior to being licensed as a mortgage loan originator or loan processor or underwriter.

(b) (1) In order to meet the written test requirements referred to in section 36a-489, an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the system and administered by a test provider approved by the system based upon reasonable standards.

(2) A written test shall not be treated as a qualified written test for purposes of subdivision (1) of this subsection unless the test adequately measures the individual's knowledge and comprehension in appropriate subject areas, including ethics, federal law and regulation pertaining to mortgage origination, state law and regulation pertaining to mortgage origination, and federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace and fair lending issues.

(3) Nothing in this subsection shall prohibit a test provider approved by the system from providing a test at the location of the sponsor or employer, any subsidiary or affiliate of the sponsor or employer or any entity with which the individual holds an exclusive arrangement to conduct the business of a mortgage loan originator.

(4) (A) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than seventy-five per cent correct answers to questions.

(B) An individual may retake a test three consecutive times with each consecutive taking occurring at least thirty days after the preceding test. After failing three consecutive tests, an individual shall wait at least six months before taking the test again.

(C) (i) An individual who was previously licensed as a mortgage loan originator who completed the test in connection with such license and who has not been licensed as a mortgage loan originator within the five-year period preceding the date of the filing of such individual's application for a mortgage loan originator license, not taking into account any time during which such individual was a registered mortgage loan originator, shall retake such test; and (ii) an individual previously licensed as a loan processor or underwriter who applies to be licensed again shall retake the test if such individual has not been licensed as a loan processor or underwriter within the five-year period preceding the date of the filing of such application, not taking into account any time during which such individual was engaged in loan processing or underwriting but not required to be licensed under subdivision (3) of subsection (b) of section 36a-486.

(c) (1) In order to meet the annual continuing education requirements referred to in subsection (b) of section 36a-489, a licensed mortgage loan originator, a qualified individual or branch manager and a licensed loan processor or underwriter, shall complete at least eight hours of education approved in accordance with subdivision (2) of this subsection. Such courses shall include at least (A) three hours of instruction on relevant federal law and regulation; (B) two hours of ethics, including instruction on fraud, consumer protection and fair lending issues; (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and (D) effective January 1, 2015, one hour of relevant Connecticut law.

(2) For purposes of subdivision (1) of this subsection, continuing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any education course approved by the system that is provided by the sponsor or employer or an entity that is affiliated with the mortgage loan originator, qualified individual, branch manager or loan processor or underwriter by an agency contract, or by any subsidiary or affiliate of such sponsor, employer or entity.

(4) Continuing education may be offered either in a classroom, online or by any other means approved by the system.

(5) Except as provided in procedures adopted under subsections (a) and (b) of section 36a-489 or in regulations adopted under subdivision (9) of this subsection, a licensed mortgage loan originator, qualified individual, branch manager or a licensed loan processor or underwriter, may only receive credit for a continuing education course in the year for which the course is taken, and may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.

(6) A licensed mortgage loan originator, a qualified individual, a branch manager or a licensed loan processor or underwriter who is an approved instructor of an approved continuing education course may receive credit for the licensee's own annual continuing education requirement at the rate of two hours credit for every one hour taught.

(7) When education requirements described in subparagraphs (A)(i) to (A)(iii), inclusive, of subdivision (1) of subsection (a) of this section are completed in another state, such out-of-state education requirements shall be accepted as credit towards completion of the education requirements of this state, provided such out-of-state education requirements are approved by the system.

(8) A licensed mortgage loan originator and a licensed loan processor or underwriter who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of an initial or renewed license. A qualified individual or branch manager who ceases to hold such position shall complete the continuing education requirements for the last year in which such individual or branch manager held such position prior to licensure as a mortgage loan originator.

(9) A person who meets the requirements of subparagraphs (A)(i) and (A)(ii) of subdivision (2) of subsection (a) or subparagraphs (A)(i) and (A)(iii) of subdivision (2) of subsection (b) of section 36a-489 may compensate for any deficiency in an individual's continuing education requirements pursuant to regulations adopted by the commissioner.

(d) For purposes of this section “nontraditional mortgage product” means any mortgage product other than a thirty-year fixed rate mortgage.

(P.A. 09-209, S. 9; P.A. 11-216, S. 17; P.A. 12-96, S. 13; P.A. 14-89, S. 36; P.A. 17-38, S. 5; 17-233, S. 8; P.A. 18-173, S. 92.)

History: P.A. 09-209 effective July 31, 2009; P.A. 11-216 amended Subsec. (a) to add reference to Sec. 36a-488, replace “applicant” with “individual” and make a technical change in Subdiv. (1), to add “employer” and replace “applicant” with “individual” in Subdiv. (3), and to replace “person” with “individual”, make technical changes and add Subpara. (B) re continuing education requirements for individuals who previously held qualified individual or branch manager positions in Subdiv. (6), amended Subsec. (b) to add reference to Sec. 36a-488 and make a technical change in Subdiv. (1), to replace “applicant's” with “individual's” in Subdiv. (2), to add “employer”, delete “of the applicant”, replace “applicant” with “individual” and add “or acts as a qualified individual or branch manager” in Subdiv. (3), to replace “three” with “four” in Subdiv. (4)(B), and to add clauses (i) to (iii) re requirements for retaking a test in Subdiv. (4)(C), amended Subsec. (c) to revise reference to Sec. 36a-489 and add “a qualified individual or branch manager and, effective October 1, 2011, a licensed loan processor or underwriter” in Subdiv. (1), to delete “of the mortgage loan originator” and add “employer” and “qualified individual or branch manager or, effective October 1, 2011, loan processor or underwriter” in Subdiv. (3), to make technical changes, revise reference to Sec. 36a-489 and add “qualified individual or branch manager or, effective October 1, 2011, a licensed loan processor or underwriter” in Subdiv. (5), to add “or a qualified individual or branch manager or, effective October 1, 2011, a licensed loan processor or underwriter” in Subdiv. (6), and to add “and, effective October 1, 2011, a licensed loan processor or underwriter” and add provision re continuing education requirements for qualified individuals or branch managers in Subdiv. (8), and amended Subsec. (d) to delete definition of “system”, effective July 13, 2011; P.A. 12-96 amended Subsec. (a)(6)(B) to add provisions re previously held position at a time when individual was not required to be licensed as a mortgage loan originator and re individual to obtain required mortgage loan originator license, amended Subsec. (b) to delete provision re acting as a qualified individual or branch manager in Subdiv. (3) and, in Subdiv. (4), replace “four” with “three” re retaking of test in Subpara. (B) and delete former Subpara. (C)(ii), and amended Subsec. (c) to replace “holding such position again” with “licensure as a mortgage loan originator” in Subdiv. (8) and make technical changes in Subdivs. (5) and (9); P.A. 14-89 amended Subsec. (a)(1) to replace “twenty” with “twenty-one” re hours of education and to add Subpara. (D) re 1 hour of relevant Connecticut law and amended Subsec. (c)(1) to add Subpara. (D) re 1 hour of relevant Connecticut law; P.A. 17-38 amended Subsec. (a) by deleting reference to Sec. 36a-488 in Subdiv. (1), deleting provisions re effective date of prelicensing and testing requirements, replacing “all of the” with “any”, replacing “for the year in which” with “in effect when”, and deleting reference to November 1, 2012 in Subdiv. (6), amended Subsec. (b) by deleting reference to Sec. 36a-488 in Subdiv. (1), and adding “previously”, deleting provision re effective date of prelicensing and testing requirements, adding “as a mortgage loan originator who completed the test in connection with such license and”, and deleting reference to October 1, 2011 in Subdiv. (4)(C), amended Subsec. (c) by deleting references to October 1, 2011, deleting reference to Sec. 36a-489(a) in Subdiv. (1), replacing “(A)(iii)” with “(A)(ii)” and adding “subparagraphs (A)(i) and (A)(iii) of subdivision (2) of subsection” in Subdiv. (9), and made technical changes; P.A. 17-233 amended Subsec. (a)(1) by designating existing provisions re instruction and training as new Subpara. (A) and amending same by redesignating existing Subparas. (A) to (C) as clauses (i) to (iii), replacing 21 hours with 20 hours, and deleting former Subpara. (D) re one hour of relevant Connecticut law, adding new Subpara. (B) re at least one hour of approved education on relevant Connecticut law, amended Subsec. (a)(6) by adding provision re individual required to retake prelicensing education, added Subsecs. (a)(7) and (a)(8) re mortgage loan originator, loan processor or underwriter license, amended Subsec. (b)(7) by adding “subparagraphs (A)(i) to (A)(iii), inclusive, of”, and made technical and conforming changes, effective January 1, 2019; P.A. 18-173 amended Subsec. (a) by deleting reference to Sec. 36a-488 in Subdiv. (1), deleting references to applicable effective date of prelicensing and testing requirements, and replacing “all of the continuing education requirements for the year in which” with “any continuing education requirements in effect when” in Subdiv. (6), amended Subsec. (b) by deleting reference to Sec. 36a-488 in Subdiv. (1), replacing “individual who was licensed subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489” with “individual who was previously licensed as a mortgage loan originator who completed the test in connection with such license” in Subdiv. (4)(C)(i), amended Subsec. (c) by deleting reference to Sec. 36a-489(a) in Subdiv. (1), and replacing “(A)(iii)” with “(A)(ii)” and adding “subparagraphs (A)(i) and (A)(iii) of subdivision (2) of subsection” re Sec. 36a-489(b), deleted references to October 1, 2011, and made technical and conforming changes, effective January 1, 2019.

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Sec. 36a-490. (Formerly Sec. 36-440e). License requirements. Request to surrender license. Requirements for filing information with system. (a)(1) Any licensee who intends to permanently cease engaging in the business of making residential mortgage loans or acting as a mortgage broker or lead generator at any time during a license period for any cause, including, but not limited to, bankruptcy or voluntary dissolution, shall file a request to surrender the license for each office at which the licensee intends to cease to do business, on the system, not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.

(2) A mortgage loan originator licensee who intends to permanently cease engaging in the business of a mortgage loan originator at any time during a license period for any cause, including, but not limited to, bankruptcy, shall file a request to surrender the license on the system not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.

(3) A loan processor or underwriter licensee who intends to permanently cease engaging in the activities of a loan processor or underwriter at any time during a license period for any cause, including, but not limited to, bankruptcy, shall file a request to surrender the license on the system not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51. No surrender shall be effective until accepted by the commissioner.

(b) (1) A mortgage lender, mortgage correspondent lender, mortgage broker or lead generator license shall not be transferable or assignable. Any change in any control person of the licensee, except a change of director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system not later than thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. For purposes of this section, “change of control” means any change causing the majority ownership, voting rights or control of a licensee to be held by a different control person or group of control persons.

(2) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address specified on the license issued by the commissioner. A mortgage lender, mortgage correspondent lender, mortgage broker or lead generator licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if (A) at least thirty calendar days prior to such change, the licensee files such change with the system and, in the case of a main or branch office, provides, directly to the commissioner, a bond rider or endorsement, or addendum, as applicable, to the surety bond on file with the commissioner that reflects the new name or address of the main or branch office, and (B) the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.

(3) The commissioner may automatically suspend any license for a violation of this subsection, or upon a failure of the licensee to designate a qualified individual or branch manager who meets the requirements set forth in section 36a-488, within thirty days of a vacancy in the position. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-494 and an opportunity for a hearing in accordance with section 36a-51, and (B) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(c) Except as otherwise specified in subsection (b) of this section, each mortgage lender, mortgage correspondent lender, mortgage broker or lead generator applicant or licensee, and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee, shall file on the system, or, if the information cannot be filed on the system, notify the commissioner, in writing, of any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license not later than fifteen days after the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change. A mortgage lender, mortgage correspondent lender, mortgage broker or lead generator licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date such licensee had reason to know of such development:

(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;

(2) Filing of a criminal indictment against the licensee in any way related to the lending or brokerage activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;

(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor;

(4) Receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor;

(5) Receiving notification of a material adverse action with respect to any existing line of credit or warehouse credit agreement;

(6) Suspension or termination of the licensee's status as an approved seller or servicer by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association;

(7) Exercise of recourse rights by investors or subsequent assignees of residential mortgage loans if such loans for which the recourse rights are being exercised, in the aggregate, exceed the licensee's net worth exclusive of real property and fixed assets;

(8) Receiving notification of filing for bankruptcy of the licensee or of any control person, branch manager or qualified individual of the licensee; or

(9) A decrease in the net worth required by subsection (a) of section 36a-488.

(d) Each mortgage loan originator applicant or licensee and each loan processor or underwriter applicant or licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of any change in the information most recently submitted in connection with the application or license not later than fifteen days after the date such applicant or licensee had reason to know of the change. Each mortgage loan originator licensee and each loan processor or underwriter licensee shall file with the system, or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date that such licensee had reason to know of the development:

(1) Filing for bankruptcy of the licensee;

(2) Filing of a criminal indictment against the licensee;

(3) Receiving notification of the institution of license or registration denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee and the reasons therefor; or

(4) Receiving notification of the initiation of any action against the licensee by the Attorney General or the attorney general of any other state and the reasons therefor.

(e) Each mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator and loan processor or underwriter license shall remain in force and effect until it has been surrendered, revoked or suspended, or until it expires or is no longer effective, in accordance with the provisions of this title.

(P.A. 85-399, S. 6; P.A. 89-347, S. 13; P.A. 94-122, S. 234, 340; P.A. 97-22, S. 1; P.A. 02-111, S. 7; P.A. 04-69, S. 5; P.A. 07-91, S. 3; 07-156, S. 8; P.A. 08-176, S. 31, 44; P.A. 09-208, S. 4; 09-209, S. 10; P.A. 10-32, S. 112; P.A. 11-216, S. 18, 19; P.A. 17-38, S. 6; P.A. 18-173, S. 12; P.A. 21-138, S. 7.)

History: P.A. 89-347 amended Subsec. (a) by adding the reference to a licensee acting as a mortgage broker in more than one location; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440e transferred to Sec. 36a-490 in 1995; P.A. 97-22 made a technical change in Subsec. (a); P.A. 02-111 amended Subsec. (a) by changing requirement re license from “prominently posted in each place of business of the licensee” to “maintained at the location for which the license was issued and shall be available for public inspection”, by changing requirement re change of location from prior approval to prior written notice and by making technical changes, amended Subsec. (b) by deleting former notice requirements and adding provision requiring licensee to promptly notify commissioner of any change in the information provided in the application and amended Subsec. (c) by replacing reference to Sec. 36a-495 with reference to Sec. 36a-498; P.A. 04-69 amended Subsec. (c) to substitute “36a-498a” for “36a-498”; P.A. 07-91 amended Subsec. (a) to delete provision requiring only prior written notice to commissioner for any change of location of a licensee, and amended Subsec. (b) to allow licensee to change name or location specified on its license if, at least 21 calendar days prior to change, licensee provides written notice to commissioner on a form satisfactory to commissioner and a bond rider or endorsement to surety bond on file and commissioner does not disapprove change, in writing, or request further information within such 21-day period; P.A. 07-156 amended Subsec. (a) to insert “mortgage lender and first mortgage broker” re license, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 8, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to add mortgage correspondent lender, to delete provisions re business at more than one location, to substitute legal name or fictitious name approved by commissioner for name stated on license, to add provisions re licensee who ceases to engage in business and to make conforming changes, amended Subsec. (b) to substitute “thirty” for “twenty-one” calendar days and “thirty-day” for “twenty-one-day” period and provide for filing with Nationwide Mortgage Licensing System, added new Subsecs. (c) and (d) re notification requirements, redesignated existing Subsec. (c) as Subsec. (e) and made conforming changes therein, effective July 1, 2008; P.A. 09-208 amended Subsec. (e) by substituting “this title” for “sections 36a-485 to 36a-498a, inclusive”, effective July 7, 2009; P.A. 09-209 changed “mortgage loan” to “residential mortgage loan” and “Nationwide Mortgage Licensing System” to “system” throughout, amended Subsec. (a) to provide that no surrender of license is effective until accepted by commissioner, amended Subsec. (b) to reposition and revise provision re prompt filing of change in information, amended Subsec. (c) by deleting former Subdiv. (9) re notifying commissioner of change in control and adding new Subdiv. (9) re decrease in net worth, and amended Subsec. (e) by inserting reference to other licensing provisions, effective July 31, 2009; P.A. 10-32 made technical changes in Subsec. (e), effective May 10, 2010; P.A. 11-216 amended Subsec. (a) to designate existing provisions as Subdiv. (1) and delete “license revocation” therein and add Subdivs. (2) and (3) re filing request to surrender a license, amended Subsec. (b) to add references to main or branch office and addendum, amended Subsec. (d) to add reference to loan processor or underwriter, require notification of any change in information most recently submitted and delete “mortgage loan originator” in Subdivs. (1) to (4) and amended Subsec. (e) to add reference to loan processor or underwriter, effective July 13, 2011; P.A. 17-38 added references to lead generator, amended Subsec. (a)(3) and (d) to delete reference to October 1, 2011, amended Subsec. (c)(3) and (d)(3) to delete “regulatory”, and made technical changes; P.A. 18-173 amended Subsec. (a)(1) by deleting provision re transfer or assignment of license and use of name other than legal or approved fictitious name, amended Subsec. (b) by adding Subdiv. (1) re transfer or assignment of license and change in control person, designating existing provisions re change to name or address on most recent filing with the system as Subdiv. (2) and amending same to add provision re use of name other than legal name or approved fictitious name, redesignating existing Subdivs. (1) and (2) as Subparas. (A) and (B), deleting provision re licensee to promptly file change in information most recently submitted in connection with license with the system or notify commissioner of change, and adding Subdiv. (3) re automatic suspension of license, amended Subsec. (c) by adding provision re filing or notice to commissioner of change to information, adding provision re notice to commissioner of occurrence of developments not later than 15 days after licensee has reason to know of development, deleting reference to licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock in Subdivs. (2) and (8), adding references to control person, branch manager or qualified individual of licensee in Subdivs. (2), (3), (4) and (8), amended Subsec. (d) by adding references to applicant and application, adding provisions re filing or notice to commissioner of change to information or of certain developments not later than 15 days after date applicant or licensee had reason to know of change or development, and made technical and conforming changes; P.A. 21-138 amended Subsec. (b)(1) by defining “change of control” and making a conforming change.

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Sec. 36a-491. (Formerly Sec. 36-440f). Expiration of licenses. Applications for renewal. Fees. (a) Each mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator and loan processor or underwriter license shall expire at the close of business on December thirty-first of the year in which it is approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for an initial license or renewal of a license as a mortgage lender or mortgage correspondent lender shall pay to the system any required fees or charges and a license fee of one thousand dollars, and each applicant for an initial or renewal license as a mortgage broker or lead generator shall pay to the system any required fees or charges and a license fee of five hundred dollars. Each applicant for an initial license or renewal of a license as a mortgage loan originator or loan processor or underwriter shall pay to the system any required fees or charges and a license fee of three hundred dollars.

(b) All fees paid pursuant to this section, including fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license, shall be nonrefundable. No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.

(P.A. 85-399, S. 7; P.A. 88-150, S. 5; P.A. 89-347, S. 14; P.A. 92-89, S. 7, 20; P.A. 94-104, S. 5; P.A. 96-71, S. 2, 8; P.A. 99-36, S. 27; P.A. 02-111, S. 8; P.A. 04-69, S. 6; P.A. 05-46, S. 2; P.A. 06-45, S. 3; P.A. 07-156, S. 9; P.A. 08-176, S. 31, 45; P.A. 09-209, S. 11; June Sp. Sess. P.A. 09-3, S. 380; P.A. 11-216, S. 20; P.A. 17-38, S. 7.)

History: P.A. 88-150 amended Subsec. (a) by providing that the license fee is nonrefundable and adding the provision re the expiration of licenses on September thirtieth; P.A. 89-347 added references to mortgage brokers, establishing license fee for mortgage brokers; P.A. 92-89 increased the fee applicable to lender's and combination licenses from $250 to $400 and increased the fee applicable to broker's licenses from $100 to $200; P.A. 94-104 changed the license renewal deadline from September tenth to September first and added a $100 late fee in Subsec. (a), and added Subsec. (a)(2) re applications filed by a licensee whose license expired within 60 days of his application; Sec. 36-440f transferred to Sec. 36a-491 in 1995; P.A. 96-71 clarified that all license fees required by this section are nonrefundable, effective July 1, 1996; P.A. 99-36 made a technical change in Subsec. (a); P.A. 02-111 amended Subsec. (a) by providing for license expiration at the close of business on September thirtieth of the even-numbered year following its issuance unless renewed, adding provisions re fee of $800 for first mortgage lender and first mortgage correspondent lender licenses and fee of $400 for first mortgage broker license, adding provisions re lesser fee if application filed not earlier than one year before expiration date, making conforming and technical changes and incorporating provisions of existing Subdiv. (2) into Subdiv. (1) and adding new Subdiv. (2) re application and fees for registration of originator, and amended Subsec. (b) by adding “or registration”; P.A. 04-69 amended Subsec. (a) to change reference to each license issued pursuant to section “36a-489”, in lieu of “this” section, and to substitute “36a-498a” for “36a-498” in Subdiv. (1), and add Subdiv. (3) requiring commissioner to automatically suspend license or registration if commissioner determines that a check filed to pay the license or registration 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; P.A. 05-46 amended Subsec. (a)(1) to provide that renewal application 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. 06-45 amended Subsec. (a)(2) to delete proviso re prorated registration fee of $50 for originator for application filed not earlier than one year before date license expires; P.A. 07-156 amended Subsec. (a)(1) to delete requirement that applicants pay various license fees to commissioner and substitute requirement that applicants, including applicants for a first mortgage broker license, pay the required license fee and processing fee for an initial or renewal application to the national mortgage licensing system and to change date of expiration of licenses issued pursuant to Sec. 36a-489 from September 30th of even-numbered year following issuance to December 31 of year following issuance, amended Subsec. (a)(2) to delete references to registration and to substitute references to license re originators, to require applicants for originator license to pay required license and processing fees for an initial or renewal application to the national mortgage licensing system in lieu of commissioner and to provide that license shall expire on December 31 of year following issuance, deleted former Subsec. (a)(3), and amended Subsec. (b) to delete references to registration, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 9, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to expand provisions re date of expiration of licenses, add time frame for renewal of licenses and license fees and make conforming changes, and amended Subsec. (b) to add provisions allowing certain originator fees to be refundable and preventing prorating, effective July 1, 2008; P.A. 09-209 changed “Nationwide Mortgage Licensing System” to “system” and “license or renewal” to “initial license or renewal” throughout, amended Subsec. (a) by deleting Subdiv. (1) designator, applying provisions to mortgage loan originator license, deleting provision re licensee filing renewal application not later than March first of year following year of expiration, replacing former Subdiv. (2) re expiration of mortgage loan originator license with provision, effective November 1, 2009, increasing license fee for originators from $100 to $300, and amended Subsec. (b) by changing “such fees” to “any license fee”, effective July 31, 2009; June Sp. Sess. P.A. 09-3 amended Subsec. (a) to increase fees; P.A. 11-216 amended Subsec. (a) to add references to loan processor or underwriter and amended Subsec. (b) to delete provision re license fee paid by originator for license not sponsored by mortgage lender, correspondent lender or broker; P.A. 17-38 amended Subsec. (a) by deleting provision re expiration date of mortgage lender, mortgage correspondent lender and mortgage broker license extended to December 31, 2008, deleting references to July 1, 2008 and October 1, 2011, adding references to lead generator, deleting provision re fees to renew mortgage lender or mortgage correspondent lender license for person who is licensee on September 30, 2008 and deleting provision re fees to renew mortgage broker license for person who is licensee on June 30, 2008, and making technical changes.

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Sec. 36a-492. (Formerly Sec. 36-440g). Surety bond required. Cancellation of bond. Automatic suspension of license. Notices. (a)(1) Each licensed mortgage lender, mortgage correspondent lender and mortgage broker shall file with the commissioner a single surety bond, written by a surety authorized to write such bonds in this state, covering its main office and any branch office, in a penal sum determined in accordance with subsection (d) of this section, provided the penal sum of the bond for licensed mortgage lenders and mortgage correspondent lenders shall be not less than one hundred thousand dollars and the penal sum of the bond for mortgage brokers shall be not less than fifty thousand dollars. The bond shall cover all mortgage loan originators sponsored by such licensee.

(2) Each mortgage loan originator licensee shall be covered by a surety bond with a penal sum in an amount that reflects the dollar amount of loans originated by such mortgage loan originator in accordance with subsection (d) of this section, provided such coverage shall be provided through a single surety bond filed with the commissioner by the person who sponsors such mortgage loan originator.

(3) (A) In the case of an exempt registrant under subdivision (1), (2) or (3) of subsection (a) of section 36a-487: (i) The surety bond shall cover all mortgage loan originators sponsored by such exempt registrant and comply with the requirements set forth in this section, and (ii) the penal sum of such bond shall be in an amount determined in accordance with subsection (d) of this section, provided the penal sum of the bond shall be not less than one hundred thousand dollars; (B) in the case of an exempt registrant under subsection (b) of section 36a-487: (i) The surety bond shall cover all mortgage loan originators sponsored by such exempt registrant and comply with the requirements set forth in this section, and (ii) the penal sum of the bond shall be in an amount determined in accordance with subsection (d) of this section, provided the penal sum shall be not less than fifty thousand dollars; and (C) in the case of a person exempt from licensure as a mortgage lender, mortgage correspondent lender or mortgage broker under subdivision (4) of subsection (a) of section 36a-487, the surety bond shall cover all mortgage loan originators sponsored by such person and comply with the requirements set forth in section 36a-671d.

(4) The principal on a bond required by this section shall file quarterly reports on the system reflecting residential mortgage loan volume in accordance with subsection (c) of section 36a-534b to confirm that it maintains the required penal sum in an amount required by subsection (d) of this section. The principal shall file such information as the commissioner may require under subsection (d) of this section and shall file, as the commissioner may require, pursuant to subsection (d) of this section, any bond rider or endorsement to the surety bond on file with the commissioner to reflect any changes necessary to maintain the surety bond coverage required by this section.

(5) The commissioner may adopt regulations in accordance with chapter 54 with respect to the requirements for such surety bonds.

(b) Except for the bond required by subparagraph (C) of subdivision (3) of subsection (a) of this section, the bond required by subsection (a) of this section shall be (1) in a form approved by the Attorney General, and (2) conditioned upon the mortgage lender, mortgage correspondent lender or mortgage broker licensee and any mortgage loan originator licensee sponsored by such mortgage lender, mortgage correspondent lender or mortgage broker or, in the case of a mortgage loan originator licensee sponsored by an exempt registrant, upon such mortgage loan originator licensee faithfully performing any and all written agreements or commitments with or for the benefit of borrowers and prospective borrowers, truly and faithfully accounting for all funds received from a borrower or prospective borrower by the licensee in the licensee's capacity as a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator, and conducting such mortgage business consistent with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b. Any borrower or prospective borrower who may be damaged by failure to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a borrower or prospective borrower to a licensee, may proceed on such bond against the principal or surety thereon, or both, to recover damages. Any borrower or prospective borrower who may be damaged by a mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator licensee's failure to satisfy a judgment against the licensee arising from the making or brokering of a nonprime home loan, as defined in section 36a-760, may proceed on such bond against the principal or surety thereon, or both, to recover the amount of the judgment. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon a licensee pursuant to subsection (a) of section 36a-50 and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65 and, on and after April 1, 2019, any restitution imposed pursuant to subsection (c) of section 36a-50. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license for the main office and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.

(c) The surety company shall have the right to cancel the bond at any time by a written notice to the principal stating the date cancellation shall take effect, provided the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. If the bond is issued electronically on the system, written notice of cancellation may be provided by the surety company to the principal and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the principal and the commissioner at least thirty days prior to the date of cancellation. A surety bond 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 principal of the date such bond cancellation shall take effect and such notice shall be deemed notice to each mortgage loan originator licensee sponsored by such principal. The commissioner shall automatically suspend the licenses of a mortgage lender, mortgage correspondent lender or mortgage broker on such date and inactivate the licenses of the mortgage loan originators sponsored by such lender, correspondent lender or broker. In the case of a cancellation of an exempt registrant's bond, the commissioner shall inactivate the licenses of the mortgage loan originators sponsored by such exempt registrant. No automatic suspension or inactivation shall occur if, prior to the date that the bond cancellation shall take effect, (1) the principal submits a letter of reinstatement of the bond from the surety company or a new bond, (2) the mortgage lender, mortgage correspondent lender or mortgage broker licensee has ceased business and has surrendered all licenses in accordance with subsection (a) of section 36a-490, or (3) in the case of a mortgage loan originator licensee, the sponsorship with the mortgage lender, mortgage correspondent lender or mortgage broker who was automatically suspended pursuant to this section or, with the exempt registrant who failed to provide the bond required by this section, has been terminated and a new sponsor has been requested and approved. After a mortgage lender, mortgage correspondent lender or mortgage broker license has been automatically suspended pursuant to this section, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 36a-494 and an opportunity for a hearing on such action in accordance with section 36a-51, and (B) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section. The commissioner may provide information to an exempt registrant concerning actions taken by the commissioner pursuant to this subsection against any mortgage loan originator licensee that was sponsored and bonded by such exempt registrant.

(d) The penal sum of the bond required by subdivisions (1) to (3), inclusive, of subsection (a) of this section shall be determined as follows:

(1) An applicant for an initial mortgage lender license or mortgage correspondent lender license shall file a bond in a penal sum of one hundred thousand dollars in connection with its application for the main office.

(2) An applicant for an initial mortgage broker license shall file a bond in a penal sum of fifty thousand dollars in connection with its application for the main office.

(3) An exempt registrant under subsection (d) of section 36a-487 who is exempt from licensure under subdivision (1), (2) or (3) of subsection (a) of section 36a-487 shall file a bond in a penal sum of one hundred thousand dollars the first time such exempt registrant sponsors a mortgage loan originator.

(4) An exempt registrant under subsection (d) of section 36a-487 who is exempt from licensure under subsection (b) of section 36a-487 shall file a bond in a penal sum of fifty thousand dollars the first time such exempt registrant sponsors a mortgage loan originator.

(5) Persons exempt from licensure under subdivision (4) of subsection (a) of section 36a-487, shall file a bond in a penal sum as set forth in section 36a-671d.

(6) (A) For mortgage lender and mortgage correspondent lender licensees and persons sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subsection (d) of section 36a-487 and who are exempt from licensing under subdivision (1), (2) or (3) of subsection (a) of section 36a-487, if: (i) The aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is less than thirty million dollars, the penal sum of the bond shall be one hundred thousand dollars; (ii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is thirty million dollars or more but less than one hundred million dollars, the penal sum of the bond shall be two hundred thousand dollars; (iii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is one hundred million dollars or more but less than two hundred fifty million dollars, the penal sum of the bond shall be three hundred thousand dollars; and (iv) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is two hundred fifty million dollars or more, the penal sum of the bond shall be five hundred thousand dollars.

(B) For mortgage broker licensees and persons who are sponsoring and bonding at least one mortgage loan originator as an exempt registrant under subsection (d) of section 36a-487 and who are exempt from licensing under subsection (b) or (c) of section 36a-487, if: (i) The aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is less than thirty million dollars, the penal sum of the bond shall be fifty thousand dollars; (ii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is thirty million dollars or more but less than fifty million dollars, the penal sum of the bond shall be one hundred thousand dollars; and (iii) the aggregate dollar amount of all residential mortgage loans originated by such licensee at all licensed locations or by the exempt registrant during the preceding four quarters ending June thirtieth is fifty million dollars or more, the penal sum of the bond shall be one hundred fifty thousand dollars.

(7) For purposes of this subsection, the aggregate dollar amount of all residential mortgage loans originated by such licensee or exempt registrant includes the aggregate dollar amount of all closed residential mortgage loans that the licensee or exempt registrant originated, brokered or made, as applicable.

(8) Financial information necessary to verify the aggregate dollar amount of residential mortgage loans originated shall be filed with the commissioner, as the commissioner may require, and shall be reported on the system at such time and in such form as the system may require.

(9) The commissioner may require a change in the penal sum of the bond if the commissioner determines at any time that the aggregate dollar amount of all residential mortgage loans originated warrants a change in the penal sum of the bond.

(P.A. 85-399, S. 8; P.A. 89-347, S. 15; P.A. 90-277; P.A. 94-122, S. 235, 340; P.A. 99-36, S. 28; P.A. 02-111, S. 9; P.A. 04-69, S. 7; P.A. 07-156, S. 10; P.A. 08-176, S. 31, 46, 47; P.A. 09-208, S. 5; 09-209, S. 12; P.A. 11-216, S. 21; P.A. 14-7, S. 12; 14-89, S. 47; P.A. 15-235, S. 29; P.A. 17-38, S. 8; P.A. 18-173, S. 13; P.A. 22-94, S. 6.)

History: P.A. 89-347 extended the application of the section to mortgage brokers; P.A. 90-277 reduced the required bond sum from $50,000 to $40,000; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440g transferred to Sec. 36a-492 in 1995; P.A. 99-36 made technical changes; P.A. 02-111 added provision re performance “for the benefit” of borrowers and prospective borrowers, changed any “person” to any “borrower or perspective borrower”, added provisions re commissioner to proceed on bond to collect civil penalty imposed pursuant to Sec. 36a-50(a) and re bond proceeds deemed to be held in trust and immune from attachment, and made conforming and technical changes; P.A. 04-69 designated existing provisions as Subsec. (a), substituting “36a-498a” for “36a-498” therein, and added Subsec. (b) giving surety company the right to cancel the bond at any time by written notice to licensee, specifying manner of notice, requiring surety company to notify commissioner in writing prior to cancellation, requiring commissioner to automatically suspend license on date cancellation takes effect, unless bond has been replaced or renewed, and requiring commissioner to give licensee notice of automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51; P.A. 07-156 amended Subsec. (a) to insert “mortgage lender or first mortgage broker” re license, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 10, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to add “mortgage correspondent lender”, to increase amount of bond to $80,000 on and after August 1, 2009, to add provision, commencing August 1, 2009, for borrower or prospective borrower of nonprime home loan to proceed on bond to recover amount of judgment, to allow commissioner to proceed on bond to collect any unpaid costs of examination of licensee and to make conforming changes, and amended Subsec. (b) to delete provision re automatic suspension of license when bond is cancelled, effective July 1, 2008; P.A. 09-208 amended Subsec. (b) by adding provisions re automatic suspension of license and opportunity for hearing upon cancellation of bond; P.A. 09-209 amended Subsec. (a) by designating existing provisions as Subdiv. (1), deleting provisions re conditions of surety bond and proceeding on bonds, adding provision re penal sum of bond reflecting dollar amount of loans originated by lender or broker as determined by commissioner and adding Subdiv. (2) re surety bonds for originators, added new Subsec. (b) re conditions of surety bond and proceeding on bonds and redesignated existing Subsec. (b) as Subsec. (c), effective July 31, 2009; P.A. 11-216 replaced former Subsec. (a)(1) and (2) with new Subsec. (a)(1) to (5) re surety bond requirements, amended Subsec. (b) to require bond to be in form approved by Attorney General, add provision re mortgage loan originator licensee sponsored by an exempt registrant, make technical changes, and replace “licensee” with “principal”, amended Subsec. (c) to replace “licensee” with “principal”, permit notice from commissioner to principal of bond cancellation to be deemed notice to each mortgage loan originator licensee sponsored by such principal, add requirements re suspension or inactivation of license and prevention of suspension or inactivation for mortgage loan originator licensees whose sponsorship has been terminated and who have requested and received approval for new sponsor, permit commissioner to provide information re exempt registrants concerning actions taken against any mortgage loan originator licensees sponsored by such registrants and make technical changes, and added Subsec. (d) re determination of penal sum of bond required, effective July 1, 2011; P.A. 14-7 amended Subsec. (d) by replacing references to Sec. 36a-487(c) with references to Sec. 36a-487(d) in Subdivs. (3) to (6) and adding reference to Sec. 36a-487(c) in Subdiv. (6)(B), effective May 8, 2014; P.A. 14-89 added references to Sec. 36a-487(a)(2) or (3) in Subsecs. (a)(3), (d)(3) and (d)(6) and replaced references to Sec. 36a-487(a)(2) with references to Sec. 36a-487(a)(4) in Subsecs. (a)(3) and (d)(5); P.A. 15-235 replaced references to not later than September 1, 2011, and every September first thereafter with references to after review of preceding four-quarter period ending June thirtieth re deadline for principal on bond to file information with commissioner in Subsec. (a)(4), replaced references to twelve-month period ending July thirty-first of current year with references to four quarters ending June thirtieth re time period for determination of penal sum on bond in Subsec. (d)(6), and made technical changes, effective July 7, 2015; P.A. 17-38 deleted references to October 1, 2011, amended Subsec. (b) to delete reference to August 1, 2009, and made technical changes; P.A. 18-173 amended Subsec. (a) by replacing references to exempt registrant with references to person exempt from licensure as mortgage lender, mortgage correspondent lender or mortgage broker in Subdiv. (3), replacing provision re annual confirmation in connection with renewal request with provision re filing quarterly reports on system, and deleting provision re reviewing preceding four-quarter period, deleting Subpara. (B) re principal on bond to annually confirm it maintains required penal sum and filing information as commissioner may require, and deleting Subpara. (A) designator in Subdiv. (4), amended Subsec. (b) by adding reference to bond required by Subsec. (a)(3)(C), replacing reference to Sec. 36a-498f with reference to Sec. 36a-498e, and adding provision re restitution imposed on and after April 1, 2019, amended Subsec. (c) by adding provisions re surety company to notify commissioner prior to effective date of cancellation, designating existing provisions re notice to licensee and requiring licensee to take or refrain from taking action as Subparas. (A) and (B), respectively, replacing “action as in the opinion of the commissioner will effectuate” with “action as the commissioner deems necessary to effectuate” in Subpara. (B), amended Subsec. (d)(5) by deleting reference to exempt registrant, and made technical and conforming changes; P.A. 22-94 amended Subsec. (a)(1) by deleting “file an addendum to such bond to cover”, effective May 24, 2022.

Subsec. (c): Use of the word “shall” is mandatory and directs the commissioner to suspend a mortgage lender license in the event of surety bond cancellation unless the lender satisfies one of two exceptions to the requirement of automatic suspension. 342 C. 273.

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Sec. 36a-493. (Formerly Sec. 36-440h). Records to be maintained by licensee. (a) Each mortgage lender, mortgage correspondent lender and mortgage broker licensee, and each bona fide nonprofit organization exempt from licensure under subdivision (2) of subsection (b) of section 36a-487 shall maintain adequate records of each residential mortgage loan transaction at the office named in the license, or, if requested by the commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee or exempt bona fide nonprofit organization additional time to make such records available or send them to the commissioner. Such records shall provide the following information: (1) A copy of any disclosures required under part III of chapter 669; (2) whether the licensee or exempt bona fide nonprofit organization acted as a mortgage lender, a mortgage correspondent lender, a mortgage broker, a mortgage lender and a mortgage broker, or a mortgage correspondent lender and a mortgage broker; (3) if the licensee or exempt bona fide nonprofit organization is acting as a mortgage lender or mortgage correspondent lender, and retains the residential mortgage loan or receives payments thereon, an adequate loan history for those loans retained or upon which payments are received, itemizing the amount and date of each payment and the unpaid balance at all times; (4) the purpose for which the loan was made; (5) the original or an exact copy of the note, loan agreement or other evidence of indebtedness and mortgage deed; (6) a statement signed by the borrower acknowledging the receipt of such statement which discloses the full amount of any fee, commission or consideration paid to the mortgage lender, mortgage correspondent lender and mortgage broker for all services in connection with the origination and settlement of the residential mortgage loan; (7) the name and address of the mortgage lender, mortgage correspondent lender and the mortgage broker, if any, involved in the loan transaction; (8) a copy of the initial and a copy of the final residential mortgage loan application taken from the borrower; and (9) a copy of all information used in evaluating the application.

(b) For each loan that is made and serviced by a licensee or exempt bona fide nonprofit organization, the licensee or exempt bona fide nonprofit organization shall retain: (1) The records of such loan transaction for not less than two years following the final payment thereon, or the assignment of such loan, whichever occurs first, or such longer period as may be required by any other provision of law, and (2) copies of the note, Closing Disclosure or other settlement statement, or such other records as are sufficient to verify the mortgage lender's or mortgage correspondent lender's compliance with section 36a-498a for not less than five years from the date of the transaction.

(c) For each loan transaction in which a licensee or exempt bona fide nonprofit organization acts as a mortgage lender, mortgage correspondent lender or mortgage broker but does not service the loan, the licensee or exempt bona fide nonprofit organization shall retain: (1) The records of such loan transaction for not less than two years from the date of the transaction or such longer period as may be required by any other provision of law, and (2) copies of the note, Closing Disclosure or other settlement statement, or such other records as are sufficient to verify the mortgage lender's or mortgage correspondent lender's compliance with section 36a-498a for not less than five years from the date of the transaction.

(d) Each lead generator licensee shall maintain adequate records of its lead generation activities at the office named in the license, or, if requested by the commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after such records are requested by the commissioner. Upon request, the commissioner may grant a lead generator licensee additional time to make such records available or send such records to the commissioner. Such records shall include, for the preceding two-year period: (1) Copies of all solicitation materials used in the lead generator's business regardless of medium, including, but not limited to, business cards, telephone scripts, mailers, electronic mail and radio, television and Internet advertisements; (2) records of any contact or attempted contact with a consumer, including the name, date, method and nature of contact, and any information provided to or received from the consumer; and (3) the name, address and, if applicable, unique identifier of any person who received, requested or contracted for leads or referrals and any fees or consideration charged or received for such services.

(e) Any person who furnishes to a licensee or an exempt bona fide nonprofit organization any records required to be maintained under this section or any information necessary to complete such records may charge a fee to the licensee or exempt bona fide nonprofit organization in an amount not to exceed fifty dollars.

(P.A. 85-399, S. 9; P.A. 89-347, S. 16; P.A. 90-184, S. 8; P.A. 94-122, S. 236, 340; P.A. 02-111, S. 10; P.A. 07-156, S. 11; P.A. 08-176, S. 31, 48, 49; P.A. 09-209, S. 13; P.A. 15-235, S. 38; P.A. 17-38, S. 9; P.A. 18-173, S. 14.)

History: P.A. 89-347 amended Subsec. (a) by inserting new Subdiv. (2) requiring the licensee to state whether it acted as a mortgage lender, a mortgage broker or any combination thereof and renumbering the remaining subdivisions in Subsec. (a) and adding Subsec. (a)(6) re the borrower's statement, made a technical change in Subsec. (c) and added Subsec. (d) re record retention requirements for mortgage brokers; P.A. 90-184 added Subsec. (e) authorizing a fee to be charged for records or information furnished to a licensee; P.A. 94-122 changed “commissioner or his representative” to “commissioner” and “any combination thereof” to “both” in Subsec. (a), deleted Subsec. (b) re examination of books and records of licensees, and relettered former Subsecs. (c) through (e) as Subsecs. (b) through (d), effective January 1, 1995; Sec. 36-440h transferred to Sec. 36a-493 in 1995; P.A. 02-111 amended Subsec. (a) to change where records are maintained or made available from “place of business” to “location” named in the license, to replace references to “mortgage broker” with reference to “first mortgage broker”, to add new Subdiv. (7) re name and address of broker and to make technical changes, amended Subsec. (b) to increase record retention period for licensees who make or service loans from one to two years following final payment or assignment, or such longer retention period as may be required by law, and amended Subsec. (c) by deleting reference to licensee acting as a “mortgage broker” and substituting “mortgage lender or first mortgage broker but does not service the loan” and by making technical changes; P.A. 07-156 amended Subsec. (a) to insert “mortgage lender and first mortgage broker” re licensee, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 11, from September 30, 2008, to July 1, 2008, amended Subsec. (a) to add provisions re sending records to commissioner and re granting of additional time, to add “mortgage correspondent lender”, to add, in Subdiv. (5), “loan agreement or other evidence of indebtedness”, to add Subdivs. (8) and (9) re copy of loan application and information used in evaluating application, and to make conforming changes, amended Subsecs. (b) and (c) to designate existing provisions re records of loan transaction as Subdiv. (1) and add Subdiv. (2) re copies of note, HUD-1 settlement statement or other settlement statement or other records, and further amended Subsec. (c) to add “mortgage correspondent lender” and make a conforming change, effective July 1, 2008; P.A. 09-209 amended Subsec. (a) by changing “mortgage loan” to “residential mortgage loan”, effective July 31, 2009; P.A. 15-235 amended Subsecs. (b) and (c) to change “HUD-1 settlement statement” to “Closing Disclosure”, effective August 1, 2015; P.A. 17-38 added new Subsec. (d) re maintenance of records by lead generator licensee, and redesignated existing Subsec. (d) as Subsec. (e); P.A. 18-173 added references to exempt bona fide nonprofit organization.

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Sec. 36a-494. (Formerly Sec. 36-440i). Suspension, revocation or refusal to renew license or taking other action. Removal from office and from employment or retention. Temporary order to cease business. (a)(1) The commissioner may suspend, revoke or refuse to renew any mortgage lender, mortgage correspondent lender or mortgage broker license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or branch manager, trustee, employee or agent of such licensee has done any of the following: (A) Made any material misstatement in the application; (B) committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; (C) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of its business; or (D) failed to perform any agreement with a licensee or a borrower. For purposes of this subdivision, “agent” includes any settlement agent used by the licensee and “settlement agent” means the person specified in any Closing Disclosure or other settlement statement, provided such settlement agent has been selected by the licensee. Any settlement agent whose name appears on the licensee's list of approved settlement agents shall be deemed selected by the licensee even if the settlement agent is selected from such list by the borrower.

(2) The commissioner may suspend, revoke or refuse to renew any mortgage loan originator license or any loan processor or underwriter license or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, or if the commissioner finds that the licensee has committed any fraud, misappropriated funds, misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction or has violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's business.

(3) The commissioner may suspend, revoke or refuse to renew any lead generator license or take any other action, in accordance with the provisions of section 36a-51, for any reason that would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, or if the commissioner finds that the licensee, any control person of the licensee or qualified individual, trustee, employee or agent of such licensee has done any of the following: (A) Made any material misstatement in the application for licensure; (B) committed any fraud or misrepresentation in connection with such licensee's lead generator business; or (C) violated any of the provisions of this title or of any regulation or order adopted or issued pursuant thereto, and pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's lead generator business.

(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, or any regulation adopted pursuant thereto, (2) any person is, was, or would be a cause of the violation of any such provisions or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to perform any agreement with a borrower, committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any residential mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b from office and from employment or retention as an independent contractor in the mortgage business in this state in accordance with section 36a-51a.

(d) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b and section 36a-52.

(P.A. 85-399, S. 10; P.A. 86-403, S. 78, 132; P.A. 88-230, S. 1, 12; P.A. 89-347, S. 17; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; 93-194, S. 5, 7; P.A. 94-122, S. 237, 340; P.A. 99-36, S. 29; P.A. 00-61, S. 2, 9; P.A. 02-111, S. 11; P.A. 04-69, S. 8; P.A. 05-46, S. 3; P.A. 06-45, S. 4; P.A. 07-91, S. 17; 07-156, S. 12; P.A. 08-176, S. 31, 50; P.A. 09-209, S. 14; P.A. 11-216, S. 22; P.A. 12-96, S. 14; P.A. 15-235, S. 39; P.A. 17-38, S. 10; 17-236, S. 1; P.A. 18-173, S. 15.)

History: P.A. 86-403 deleted reference to chapter 657a in Subsec. (a); P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 89-347 amended Subsec. (a) by adding failure to make disclosures required by Sec. 36-440h(a)(6) as grounds for suspending, revoking or refusing to renew a license; 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. 93-194 specified that provisions apply to persons who are not licensed as well as to licensees, effective June 23, 1993; P.A. 94-122 deleted Subsec. (c) re cease and desist provisions and made technical changes, effective January 1, 1995; Sec. 36-440i transferred to Sec. 36a-494 in 1995; P.A. 99-36 made technical changes; P.A. 00-61 amended Subsec. (b) by adding language re licensee's failure to perform an agreement with a borrower, effective July 1, 2000; P.A. 02-111 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and, within said Subdiv., redesignating existing Subdivs. (1) to (4) as Subparas. (A) to (D), replacing “owner” with “proprietor”, adding reference to misappropriated funds in Subpara. (B), replacing former statutory references with reference to “this title” in Subpara. (C) and adding reference to licensee in Subpara. (D), and by adding new Subdiv. (2) re commissioner's authority to suspend, revoke or refuse to renew registration of originator; P.A. 04-69 substituted “36a-498a” for “36a-498” throughout and amended Subsec. (b) to allow commissioner to take action against violator or licensee in accordance with Sec. 36a-52; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensees and registrants who commit fraud, misappropriate funds or misrepresent, conceal, suppress, intentionally omit or otherwise intentionally fail to disclose any material particulars of mortgage loan transaction to anyone entitled to such information; P.A. 06-45 amended Subsec. (a)(2) to provide that violations of title 36a or regulations or any other law applicable to conduct of registrant's business are grounds for suspension, revocation or refusal to renew registration of originator, effective May 8, 2006; P.A. 07-91 amended Subsec. (a)(1) and (2) to authorize commissioner to take any other action, in accordance with provisions of Sec. 36a-51, effective June 5, 2007; P.A. 07-156 amended Subsec. (a)(1) to insert “mortgage lender or first mortgage broker” re license, amended Subsec. (a)(2) to substitute “license” and “licensee” for “registration” and “registrant”, and amended Subsec. (b) to delete references to “registrant”, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 12, from September 30, 2008, to July 1, 2008, and amended Subsec. (a) to add “mortgage correspondent lender”, make conforming changes and, in Subdiv. (2), include findings that licensee has “concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose” any material particulars, effective July 1, 2008; P.A. 09-209 changed “mortgage loan” to “residential mortgage loan” throughout, amended Subsec. (a) by changing “proprietor, director, officer, member, partner, shareholder” to “any control person of the licensee, the qualified individual or branch manager with supervisory authority”, added Subsec. (c) re removal from office and from employment or retention as independent contractor and opportunity for hearing, added Subsec. (d) re temporary order to cease business under license and opportunity for hearing, and inserted references to other licensing provisions throughout, effective July 31, 2009; P.A. 11-216 amended Subsec. (a)(2) to add “any loan processor or underwriter licensee or”; P.A. 12-96 amended Subsec. (a)(1) to add definitions of “agent” and “settlement agent” and provide that any settlement agent whose name appears on list of approved settlement agents shall be deemed selected by licensee, and amended Subsec. (b) to designate existing provisions re violations as Subdivs. (1) and (3) and to add Subdiv. (2) re violation due to an act or omission the person knew or should have known would contribute to the violation; P.A. 15-235 amended Subsec. (a) to change “HUD-1 settlement statement” to “Closing Disclosure”, effective August 1, 2015; P.A. 17-38 added references to Sec. 36a-498h, amended Subsec. (a) to add Subdiv. (3) re commissioner may suspend, revoke or refuse to renew lead generator license or take other action, and amended Subsec. (c) to add “order a licensee to” in Subdiv. (1) and replace “person” with “individual”; P.A. 17-236 amended Subsec. (a)(1)(C) to replace “any regulations adopted pursuant thereto,” with “any regulation or order adopted or issued pursuant thereto, and pertaining to any such person,”; P.A. 18-173 amended Subsec. (a) by deleting reference to supervisory authority in Subdiv. (1), and replacing provisions re violation of regulations adopted pursuant to title with provisions re regulation or order adopted or issued pursuant to title and pertaining to certain persons in Subdivs. (2) and (3), amended Subsec. (c) by deleting provisions re commissioner's findings as a result of investigation and adding reference to Sec. 36a-51a, deleting Subdiv. (2) re hearing, and deleting Subdiv. (1) designator, amended Subsec. (d) by deleting provisions re opportunity for hearing and effective dates of temporary order and adding provision re temporary order to be issued in accordance with Secs. 36a-24b(j) and 36a-52, replaced references to Sec. 36a-498f with references to Sec. 36a-498e, and made technical and conforming changes.

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Sec. 36a-495. (Formerly Sec. 36-440j). Regulations. Section 36a-495 is repealed, effective October 1, 2002.

(P.A. 85-399, S. 11; P.A. 99-36, S. 30; P.A. 02-111, S. 51.)

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Sec. 36a-496. (Formerly Sec. 36-440k). Applications and referrals from unlicensed mortgage brokers or mortgage loan originators. No person engaged in the business of making residential mortgage loans in this state, whether licensed in accordance with the provisions of sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b or exempt from licensing, shall accept applications or referral of applicants from, or pay a fee to, any mortgage broker or mortgage loan originator who is required to be licensed under said sections but was not, as of the time of the performance of such mortgage broker's or mortgage loan originator's services in connection with loans made or to be made by the mortgage lender or mortgage correspondent lender, licensed to act as such by the commissioner, if the mortgage lender or mortgage correspondent lender has actual knowledge that the mortgage broker or mortgage loan originator was not licensed by the commissioner.

(P.A. 91-306, S. 2; P.A. 02-111, S. 12; P.A. 04-69, S. 9; P.A. 07-156, S. 13; P.A. 08-176, S. 31, 51; P.A. 09-209, S. 15; P.A. 18-173, S. 16.)

History: Sec. 36-440k transferred to Sec. 36a-496 in 1995; P.A. 02-111 extended prohibition to include accepting applications or referrals of applications from, or payment of fees to, unregistered originators and replaced references to “mortgage broker” with references to “first mortgage broker”; P.A. 04-69 substituted “36a-498a” for “36a-498”; P.A. 07-156 deleted references to “registered”, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 13, from September 30, 2008, to July 1, 2008, added language re person not licensed at the time of performance of services, added references to “mortgage correspondent lender” and made conforming changes, effective July 1, 2008; P.A. 09-209 changed “mortgage loans” to “residential mortgage loans”, effective July 31, 2009; P.A. 18-173 replaced reference to Sec. 36a-498a with reference to Sec. 36a-498e and added references to Secs. 36a-534a and 36a-534b.

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Sec. 36a-497. (Formerly Sec. 36-440l). Advertisements. (a) No mortgage lender licensee, mortgage correspondent lender licensee or mortgage broker licensee shall:

(1) Advertise or cause to be advertised in this state, any residential mortgage loan in which such person intends to act only as a mortgage broker unless the advertisement includes the following statement, clearly and conspicuously expressed: “MORTGAGE BROKER ONLY, NOT A MORTGAGE LENDER OR MORTGAGE CORRESPONDENT LENDER”; or

(2) In connection with an advertisement in this state, use (A) a simulated check; (B) a comparison between the loan payments under the residential mortgage loan offered and the loan payments under a hypothetical loan or extension of credit, unless the advertisement includes, with respect to both the hypothetical loan or extension of credit and the residential mortgage loan being offered, the interest rate, the loan balance, the total amount of finance charges, the total number of payments and the monthly payment amount that would be required to pay off the outstanding loan balance shown; (C) representations such as “verified as eligible”, “eligible”, “preapproved”, “prequalified” or similar words or phrases, without also disclosing, in immediate proximity to and in similar size print, language which sets forth prerequisites to qualify for the residential mortgage loan, including, but not limited to, income verification, credit check, and property appraisal or evaluation; or (D) any words or symbols in the advertisement or on the envelope containing the advertisement that give the appearance that the mailing was sent by a government agency.

(b) (1) Each lead generator licensee shall include the following statement in all advertisements of residential mortgage loans and solicitations of leads by mail, electronic mail or through such licensee's Internet web site, clearly and conspicuously expressed: “LEAD GENERATOR ONLY, NOT ACTING IN THE CAPACITY OF A MORTGAGE LOAN ORIGINATOR, MORTGAGE BROKER, MORTGAGE CORRESPONDENT LENDER OR MORTGAGE LENDER. INFORMATION RECEIVED WILL BE SHARED WITH ONE OR MORE THIRD PARTIES IN CONNECTION WITH YOUR RESIDENTIAL MORTGAGE LOAN INQUIRY.”.

(2) No person required to be licensed as a lead generator shall: (A) Accept payment of any advance fee, as defined in section 36a-485, in connection with a residential mortgage loan, or (B) use, sell, lease, exchange or otherwise transfer or release information received from a consumer in connection with a residential mortgage loan inquiry for purposes other than as necessary to facilitate a residential mortgage loan transaction.

(P.A. 91-306, S. 3; P.A. 94-122, S. 238, 340; P.A. 99-63, S. 3; P.A. 02-111, S. 13; P.A. 08-176, S. 52; P.A. 09-209, S. 16; P.A. 17-38, S. 11; P.A. 18-173, S. 94.)

History: P.A. 94-122 made a technical change, effective January 1, 1995; Sec. 36-440l transferred to Sec. 36a-497 in 1995; P.A. 99-63 designated existing provisions as Subdiv. (1), changing “in any medium” to “in this state” and making technical changes, and added Subdiv. (2) re advertising restrictions; P.A. 02-111 amended Subdiv. (1) to replace reference to “mortgage broker” with reference to “first mortgage broker”; P.A. 08-176 added references to mortgage lender, mortgage correspondent lender and mortgage broker licensees and made conforming changes, effective July 1, 2008; P.A. 09-209 changed “mortgage loan” to “residential mortgage loan”, effective July 31, 2009; P.A. 17-38 designated existing provisions re mortgage lender licensee, mortgage correspondent lender licensee or mortgage broker licensee advertisements as Subsec. (a), and added Subsec. (b) re lead generator licensee; P.A. 18-173 made technical changes.

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Sec. 36a-498. (Formerly Sec. 36-440m). Refundability of advance fees. Exceptions. Prohibited acts by mortgage lenders, correspondent lenders, brokers and loan originators re borrowers. (a) Except as provided in subsection (c) of this section, every advance fee paid or given, directly or indirectly, to a mortgage lender, mortgage correspondent lender or mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b shall be refundable.

(b) No mortgage loan originator required to be licensed pursuant to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b shall accept payment of any advance fee except an advance fee on behalf of a mortgage lender, mortgage correspondent lender or mortgage broker licensee. Nothing in this subsection shall be construed as prohibiting the mortgage lender, mortgage correspondent lender or mortgage broker licensee from paying a mortgage loan originator all or part of an advance fee, provided such advance fee paid is not refundable under this section.

(c) Subsection (a) of this section shall not apply if: (1) The person providing the advance fee and the mortgage lender, mortgage correspondent lender or mortgage broker agree in writing that the advance fee shall not be refundable, in whole or in part; and (2) the written agreement complies in all respects with the provisions of subsection (d) of this section.

(d) An agreement under subsection (c) of this section shall meet all of the following requirements to be valid and enforceable: (1) The agreement shall be dated, signed by both parties, and be executed prior to the payment of any advance fee; (2) the agreement shall expressly state the total advance fee required to be paid and any amount of the advance fee that shall not be refundable; (3) the agreement shall clearly and conspicuously state any conditions under which the advance fee will be retained by the mortgage lender, mortgage correspondent lender or mortgage broker; (4) the term “nonrefundable” shall be used to describe each advance fee or portion thereof to which the term is applicable, and shall appear in boldface type in the agreement each time it is used; and (5) the form of the agreement shall (A) be separate from any other forms, contracts, or applications utilized by the mortgage lender, mortgage correspondent lender or mortgage broker, (B) contain a heading in a size equal to at least ten-point boldface type that shall title the form “AGREEMENT CONCERNING NONREFUNDABILITY OF ADVANCE FEE”, (C) provide for a duplicate copy which shall be given to the person paying the advance fee at the time of payment of the advance fee, and (D) include such other specifications as the commissioner may by regulation prescribe.

(e) An agreement under subsection (c) of this section that does not meet the requirements of subsection (d) of this section shall be voidable at the election of the person paying the advance fee.

(f) (1) No mortgage lender, mortgage correspondent lender or mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b shall enter into an agreement with or otherwise require any person to pay the mortgage lender, mortgage correspondent lender or mortgage broker for any fee, commission or other valuable consideration lost as a result of such person failing to consummate a residential mortgage loan, provided the mortgage lender, mortgage correspondent lender or mortgage broker may collect such fee, commission or consideration as an advance fee subject to the requirements of this section.

(2) No mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b shall enter into an agreement with or otherwise require any person to pay the mortgage broker any fee, commission or other valuable consideration for the prepayment of the principal of a residential mortgage loan by such person before the date on which the principal is due.

(g) (1) For the purposes of this subsection:

(A) “Unfair or deceptive act or practice” means (i) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitor is not affiliated with the mortgage lender, mortgage correspondent lender or mortgage broker with which the consumer initially applied, (ii) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitation is based on personal information about the consumer that was purchased, directly or indirectly, from a consumer reporting agency without the knowledge or permission of the mortgage lender, mortgage correspondent lender or mortgage broker with which the consumer initially applied, (iii) the failure in the initial solicitation to comply with the provisions of the federal Fair Credit Reporting Act relating to prescreening solicitations that use consumer reports, including the requirement to make a firm offer of credit to the consumer, or (iv) knowingly or negligently using information from a mortgage trigger lead (I) to solicit consumers who have opted out of prescreened offers of credit under the federal Fair Credit Reporting Act, or (II) to place telephone calls to consumers who have placed their contact information on a federal or state Do Not Call list; and

(B) “Mortgage trigger lead” means a consumer report obtained pursuant to Section 604(c)(1)(B) of the federal Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. “Mortgage trigger lead” does not include a consumer report obtained by a mortgage lender or mortgage correspondent lender that holds or services existing indebtedness of the applicant who is the subject of the report.

(2) No mortgage lender, mortgage correspondent lender, mortgage broker or mortgage loan originator shall engage in an unfair or deceptive act or practice in soliciting an application for a residential mortgage loan when such solicitation is based, in whole or in part, on information contained in a mortgage trigger lead. Any violation of this subsection shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.

(h) No mortgage lender or mortgage correspondent lender shall include in a residential mortgage loan for which an application is received by such lender on or after October 1, 2009, a provision that increases the interest rate as a result of a default other than a failure to comply with a provision to maintain an automatic electronic payment feature where such maintenance provision has been provided in return for an interest rate reduction and the increase is no greater than such reduction.

(P.A. 92-132, S. 4, 5; P.A. 94-122, S. 239, 340; P.A. 02-111, S. 14; P.A. 04-69, S. 10; P.A. 06-45, S. 5; P.A. 07-118, S. 1; 07-156, S. 14; P.A. 08-176, S. 31, 53; P.A. 09-207, S. 6; 09-209, S. 17; Sept. Sp. Sess. P.A. 09-7, S. 100; P.A. 11-216, S. 23; P.A. 18-173, S. 17.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440m transferred to Sec. 36a-498 in 1995; P.A. 02-111 replaced references to “mortgage broker” with references to “first mortgage broker” throughout, added new Subsec. (b) re acceptance of advance fee by originator, redesignated existing Subsecs. (b) to (d) as Subsecs. (c) to (e) and made technical changes throughout; P.A. 04-69 amended Subsecs. (a) and (b) to substitute “36a-498a” for “36a-498”; P.A. 06-45 added Subsec. (f) to prohibit mortgage lenders and first mortgage brokers from entering into agreements with borrowers to compensate licensees for fees, commissions or other valuable consideration lost if borrowers fail to close loan unless compensation is collected as advance fee and to prohibit first mortgage brokers from imposing fees, commissions or other valuable consideration on borrowers for prepayment of principal of loan, effective May 8, 2006; P.A. 07-118 added Subsec. (g) to define “unfair or deceptive act or practice” and “mortgage trigger lead”, to prohibit mortgage lenders and first mortgage brokers from engaging in an unfair or deceptive act or practice in soliciting application for a first mortgage loan if solicitation is based in any way on a mortgage trigger lead, and to provide that violation is deemed an unfair or deceptive trade practice under Sec. 42-110b(a); P.A. 07-156 amended Subsec. (b) to substitute “licensed” for “registered” and to insert “mortgage lender or first mortgage broker” re licensee, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 14, from September 30, 2008, to July 1, 2008, added references to “mortgage correspondent lender” and “mortgage loan originator” and made conforming changes, effective July 1, 2008; P.A. 09-207 added Subsec. (h) re prohibition against mortgage loan provisions that increase interest rate as result of default other than failure to comply with provision to maintain an automatic electronic payment feature; P.A. 09-209 changed “mortgage loan” to “residential mortgage loan” in Subsecs. (f) and (g)(2) and inserted references to other licensing provisions in Subsecs. (a), (b) and (f), effective July 31, 2009; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (h) to add “for which an application is received by such lender on or after October 1, 2009”, effective October 5, 2009; P.A. 11-216 amended Subsec. (h) to add “residential” re mortgage loan, effective July 13, 2011; P.A. 18-173 replaced references to Sec. 36a-498f with references to Sec. 36a-498e.

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Sec. 36a-498a. Prepaid finance charges; restrictions. Secondary mortgage loan; demand for payment prior to maturity; liability for noncompliance; deed. (a) No mortgage lender licensee or mortgage correspondent lender licensee under section 36a-489 and no person exempt from licensure under subdivisions (1) to (3), inclusive, of subsection (a) and subdivisions (1) and (4) of subsection (b) of section 36a-487 making a first mortgage loan may charge, impose or cause to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate, the greater of five per cent of the principal amount of the loan or two thousand dollars. If the proceeds of the loan are used to refinance an existing loan, the aggregate of the prepaid finance charges for the current refinancing and any previous financings by such licensee or exempt person or affiliate of such licensee or exempt person within two years of the current refinancing shall not exceed the greater of five per cent of the principal amount of the initial loan or two thousand dollars. The provisions of this section shall not prohibit such licensee or exempt person from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in addition to those permitted by this section in connection with any additional proceeds received by the borrower in the refinancing, provided such prepaid finance charges on the additional proceeds shall not exceed five per cent of the additional proceeds.

(b) (1) No mortgage lender or mortgage correspondent lender making a secondary mortgage loan may (A) charge, impose or cause to be paid, directly or indirectly, in connection with any secondary mortgage loan transaction, prepaid finance charges that exceed in the aggregate eight per cent of the principal amount of the loan, or (B) include in the loan agreement, under which prepaid finance charges have been assessed, any provision that permits the mortgage lender or mortgage correspondent lender to demand payment of the entire loan balance prior to the scheduled maturity, except that such loan agreement may contain a provision that permits the mortgage lender or mortgage correspondent lender to demand payment of the entire loan balance if any scheduled installment is in default for more than sixty days or if any condition of default set forth in the mortgage note exists.

(2) Any mortgage lender or mortgage correspondent lender who fails to comply with the provisions of this subsection shall be liable to the borrower in an amount equal to the sum of: (A) The amount by which the total of all prepaid finance charges exceeds eight per cent of the principal amount of the loan; (B) eight per cent of the principal amount of the loan or two thousand five hundred dollars, whichever is less; and (C) the costs incurred by the borrower in bringing an action under this subsection, including reasonable attorney's fees, as determined by the court, provided no such mortgage lender or mortgage correspondent lender shall be liable for more than the amount specified in this subsection in a secondary mortgage loan transaction involving more than one borrower.

(c) For purposes of this section, “additional proceeds” has the same meaning as provided in subdivision (3) of section 36a-746e and “prepaid finance charge” has the same meaning as provided in subdivision (7) of section 36a-746a.

(d) Any mortgage deed to secure a secondary mortgage loan that is recorded in the land records of any town shall contain the word “Mortgage” in the heading, either in capital letters or underscored and shall contain the principal amount of the loan.

(P.A. 01-34, S. 13; P.A. 04-69, S. 11; P.A. 06-45, S. 6: P.A. 07-156, S. 15; P.A. 08-176, S. 31, 54; P.A. 09-207, S. 7; 09-209, S. 23; P.A. 12-96, S. 15; P.A. 18-173, S. 18.)

History: P.A. 04-69 substituted Subdiv. “(7)” for “(6)” in definition of “prepaid finance charge”; P.A. 06-45 included in prohibition against lenders charging borrowers excessive prepaid finance charges, persons making five or fewer first mortgage loans within any period of 12 consecutive months, effective May 8, 2006; P.A. 07-156 inserted “mortgage lender or first mortgage broker” re licensee, effective September 30, 2008; P.A. 08-176 changed effective date of P.A. 07-156, S. 15, from September 30, 2008, to July 1, 2008, designated existing provisions as Subsec. (a) and amended same to add “mortgage correspondent lender licensee”, make a technical change and delete definitions of “additional proceeds” and “prepaid finance charge”, added said definitions as Subsec. (c), added Subsec. (b) re secondary mortgage loan and added Subsec. (d) re mortgage deed to secure a secondary mortgage loan, effective July 1, 2008; P.A. 09-207 amended Subsec. (b)(2) by deleting references to mortgage brokers and making technical changes, effective July 7, 2009; P.A. 09-209 amended Subsec. (a) by making a technical change, effective July 31, 2009; P.A. 12-96 amended Subsec. (a) to make a technical change; P.A. 18-173 amended Subsec. (a) by replacing reference to Sec. 36a-487(a)(1) and (b)(1), (4) and (5) with reference to Sec. 36a-487(a)(1) to (3) and (b)(1) and (4).

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Sec. 36a-498b. Release of secondary mortgage. Notice of outstanding balance of obligation secured by secondary mortgage. (a) Each mortgage lender, mortgage correspondent lender and mortgage broker, all as defined in section 36a-485 and licensed under section 36a-489, shall deliver to the mortgagor a release of a secondary mortgage: (1) Upon receipt by such licensee of cash or a certified check in the amount of the outstanding balance of the obligation secured by such mortgage; or (2) upon payment by the payor bank, as defined in section 42a-4-105, of any check that is payable to such licensee or its assignee in the amount of the outstanding balance of the obligation secured by such mortgage.

(b) Each such licensee shall advise any person designated by the mortgagor of the amount of the outstanding balance of the obligation secured by the secondary mortgage granted to such licensee no later than the second business day after the licensee receives a request for such information.

(P.A. 08-176, S. 55.)

History: P.A. 08-176 effective July 1, 2008.

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Sec. 36a-498c. Adoption of mortgage loan policy with respect to subprime mortgage loans and nontraditional mortgage loans. At least once a year, each mortgage lender and mortgage correspondent lender, both as defined in section 36a-485 and licensed under section 36a-489, shall adopt a mortgage loan policy with respect to subprime mortgage loans and nontraditional mortgage loans made by such mortgage lender or such mortgage correspondent lender based on and consistent with the most current version of the Conference of State Bank Supervisors, American Association of Residential Mortgage Regulators and National Association of Consumer Credit Administrators Statement on Subprime Mortgage Lending, and the Conference of State Bank Supervisors and American Association of Residential Mortgage Regulators Guidance on Nontraditional Mortgage Product Risks. Such licensees shall comply with such policy and develop and implement internal controls that are reasonably designed to ensure such compliance. The mortgage loan policy and any residential mortgage loan, as defined in section 36a-485, made pursuant to the policy shall be subject to examination concerning prudent lending practices by the commissioner.

(P.A. 08-176, S. 56; P.A. 09-209, S. 4.)

History: P.A. 08-176 effective July 1, 2008; P.A. 09-209 changed “mortgage loan” to “residential mortgage loan” and “Banking Commissioner” to “commissioner”, effective July 31, 2009.

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Sec. 36a-498d. Unique identifier of licensee. Advertising of licensee. (a)(1) The unique identifier of any mortgage loan originator or loan processor or underwriter licensed under section 36a-489 shall be clearly shown on all residential mortgage loan application forms.

(2) The unique identifier of any mortgage lender, mortgage correspondent lender, mortgage broker or lead generator licensed under section 36a-489 shall be clearly shown on all solicitations or advertisements, including business cards or Internet web sites, and any other documents as established by rule, regulation or order of the commissioner and shall be clearly stated in all audio solicitations or advertisements.

(3) The unique identifier of a mortgage loan originator or loan processor or underwriter licensed under section 36a-489 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements when disseminated by: (A) A mortgage loan originator or loan processor or underwriter regarding such individual's own services, or (B) the sponsor of such mortgage loan originator or loan processor or underwriter if such solicitation or advertisement identifies the services of a particular mortgage loan originator or loan processor or underwriter.

(b) The advertising of any person licensed under section 36a-489: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such advertising may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is false, deceptive or misleading; (3) shall otherwise conform to the requirements of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of its use.

(P.A. 09-209, S. 21; P.A. 11-216, S. 24; P.A. 18-173, S. 19.)

History: P.A. 09-209 effective July 31, 2009; P.A. 11-216 deleted reference to Sec. 36a-485, added reference to loan processor or underwriter, deleted “originating a residential mortgage loan” and made technical changes; P.A. 18-173 amended Subsec. (a) by designating existing provision re clearly showing unique identifier on residential mortgage loan application forms as Subdiv. (1), designating existing provisions re solicitations and advertisements as Subdiv. (2), and amending same by adding provision re unique identifier to be clearly stated in audio solicitations or advertisements, adding Subdiv. (3) re unique identifier of mortgage loan originator or loan processor or underwriter to be clearly shown on solicitations and advertisements and clearly stated in audio solicitations and advertisements disseminated by certain persons, and making technical and conforming changes, and added Subsec. (b) re advertising of person licensed under Sec. 36a-489.

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Sec. 36a-498e. Prohibited acts. (a) No person who is required to be licensed and who is subject to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, may, directly or indirectly:

(1) Employ any scheme, device or artifice to defraud or mislead borrowers or lenders or to defraud any person;

(2) Engage in any unfair or deceptive practice toward any person;

(3) Obtain property by fraud or misrepresentation;

(4) Solicit or enter into a contract with a borrower that provides in substance that such person or individual may earn a fee or commission through “best efforts” to obtain a loan even though no loan is actually obtained for the borrower;

(5) Solicit, advertise or enter into a contract for specific interest rates, points or other financing terms unless the terms are actually available at the time of soliciting, advertising or contracting;

(6) Conduct any business as a mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator or loan processor or underwriter without holding a valid license as required under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b or assist or aid and abet any person in the conduct of business as a mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator or loan processor or underwriter without a valid license as required under said sections;

(7) Fail to make disclosures as required by sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b and any other applicable state or federal law including regulations thereunder;

(8) Fail to comply with sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b or rules or regulations adopted under said sections or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections;

(9) Make, in any manner, any false or deceptive statement or representation including, with regard to the rates, points or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising;

(10) Negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, as defined in section 36a-2, or in connection with any investigation conducted by the commissioner or another governmental agency;

(11) Make any payment, threat or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan as defined in section 36a-485 or make any payment, threat or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property;

(12) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b;

(13) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer; or

(14) Fail to truthfully account for moneys belonging to a party to a residential mortgage loan transaction.

(b) (1) No person, other than an individual, who is required to be licensed and is subject to sections 36a-485 to 36a-498h, inclusive, 36a-534a and 36a-534b, and no qualifying individual or branch manager shall fail to establish, enforce and maintain policies and procedures reasonably designed to achieve compliance with subsection (a) of this section.

(2) No individual who (A) is required to be licensed as a mortgage loan originator, (B) is subject to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, and (C) supervises loan processors or loan underwriters shall fail to enforce any policies and procedures established in accordance with subdivision (1) of this subsection.

(3) No violation of this subsection shall be found unless the failure to establish, enforce and maintain policies and procedures resulted in conduct in violation of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, inclusive, or rules or regulations adopted under said sections or any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections.

(P.A. 09-209, S. 20; Sept. Sp. Sess. P.A. 09-7, S. 96; P.A. 11-216, S. 25; P.A. 14-89, S. 35; P.A. 17-38, S. 12; 17-233, S. 9; 17-236, S. 24; P.A. 18-173, S. 20.)

History: P.A. 09-209 effective July 31, 2009; Sept. Sp. Sess. P.A. 09-7 added “who is required to be licensed and who is” in introductory language, effective October 5, 2009; P.A. 11-216 amended Subdiv. (6) to add references to loan processor or underwriter; P.A. 14-89 amended Subdiv. (10) to replace reference to Sec. 36a-485 with reference to Sec. 36a-2 and replace “Banking Commissioner” with “commissioner”; P.A. 17-38 deleted “or individual” re requirement to be licensed, added reference to lead generator in Subdiv. (6), and added references to Sec. 36a-498h; P.A. 17-233 designated provisions re requirement to be licensed as Subsec. (a) and amended same to delete “or individual”, add “, directly or indirectly”, delete “directly or indirectly” in Subdiv. (1), and make a technical change, added Subsec. (b) re establishment, enforcement and maintenance of policies and procedures; P.A. 17-236 changed effective date of P.A. 17-233, S. 9, from October 1, 2017, to July 1, 2018, effective July 11, 2017; P.A. 18-173 amended Subsec. (a) by replacing “36a-498f” with “36a-489e”, adding “lead generator” in Subdiv. (6), and adding reference to Sec. 36a-498h in Subdivs. (6), (7), (8) and (12), amended Subsec. (b)(1) by replacing “36a-498f” with “36a-498h”, amended Subsecs. (b)(2) and (b)(3) by replacing “36a-498f” with “36a-498e”, and made technical and conforming changes.

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Sec. 36a-498f. Authority of commissioner re investigations and examinations. Prohibited acts by subjects of investigation or examination. Section 36a-498f is repealed, effective October 1, 2018.

(P.A. 09-209, S. 19; P.A. 17-38, S. 13; P.A. 18-173, S. 101.)

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Sec. 36a-498g. Severability. If any provision or application of section 36a-21, sections 36a-485 to 36a-498e, inclusive, or sections 36a-498h, 36a-534a and 36a-534b to any person or circumstance is held invalid by a court of this state, the remainder of said sections or the application of such provision to other persons or circumstances shall not be affected.

(P.A. 09-209, S. 22; P.A. 18-173, S. 21.)

History: P.A. 09-209 effective July 31, 2009; P.A. 18-173 replaced reference to Sec. 36a-498f with reference to Sec. 36a-498e, added reference to Sec. 36a-498h, and made a technical change.

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Sec. 36a-498h. Lead generator licensees. Prohibited acts. (a) No person required to be licensed as a lead generator shall, while engaged in lead generation activities:

(1) Initiate any outbound telephone call using an automatic telephone dialing system or an artificial or prerecorded voice without the prior express written consent of the recipient;

(2) Fail to transmit the lead generator's name and telephone number to any caller identification service in use by a consumer;

(3) Initiate an outbound telephone call to a consumer's residence between nine o'clock p.m. and eight o'clock a.m. local time in the consumer's location;

(4) Fail to clearly and conspicuously identify the lead generator and the purpose of the contact in its written and oral communications with a consumer;

(5) Fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an electronic mail address;

(6) Initiate an unsolicited advertisement via electronic mail to a consumer more than ten business days after the receipt of a request from such consumer to opt out of such unsolicited advertisements;

(7) Use a subject heading or electronic mail address in a commercial electronic mail message that would likely mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the sender, contents or subject matter of the message;

(8) Sell, lease, exchange or otherwise transfer or release the electronic mail address or telephone number of a consumer who has requested to opt out of future solicitations;

(9) Collect, buy, lease, exchange or otherwise transfer or receive an individual's Social Security number or bank account number;

(10) Use information from a trigger lead to solicit consumers who have opted out of firm offers of credit under the federal Fair Credit Reporting Act;

(11) Initiate a telephone call to a consumer who has placed his or her contact information on a federal or state Do Not Call list, unless the consumer has provided express written consent;

(12) Represent to the public, through advertising or other means of communicating or providing information, including, but not limited to, the use of business cards or stationery, brochures, signs or other promotional items, that such lead generator can or will perform any other activity requiring licensure under this title, unless such lead generator is duly licensed to perform such other activity or exempt from such licensure requirements; or

(13) Refer applicants to, or receive a fee from, any person who is required to be licensed under this title but was not so licensed as of the time of performance of such lead generator's services.

(b) A violation of any provision of this section shall be deemed an unfair or deceptive act or practice pursuant to subsection (a) of section 42-110b.

(P.A. 17-38, S. 16.)

History: P.A. 17-38 effective January 1, 2018.

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Secs. 36a-499 to 36a-509. Reserved for future use.

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(B)

SECONDARY MORTGAGE LENDERS, BROKERS AND ORIGINATORS

(P.A. 77-228, S. 1–8; 77-604, S. 81, 84; 77-614, S. 161, 587, 610; P.A. 78-216, S. 1–7; 78-303, S. 85, 136; P.A. 80-67, S. 1–5; 80-482, S. 251, 345, 348; P.A. 81-472, S. 69, 159; P.A. 82-174, S. 1, 14; P.A. 86-403, S. 76, 132; P.A. 87-9, S. 2, 3; 87-66; P.A. 88-14; 88-150, S. 2; 88-230, S. 1, 12; P.A. 89-211, S. 40; P.A. 90-98, S. 1, 2; 90-184, S. 1–4; P.A. 92-12, S. 64; 92-89, S. 4, 20; 92-132, S. 1, 5; P.A. 93-130, S. 1, 3; 93-142, S. 4, 7, 8; P.A. 94-104, S. 1; 94-122, S. 240–245, 340; P.A. 96-71, S. 3, 8; P.A. 99-63, S. 4; P.A. 00-61, S. 3, 9; P.A. 02-111, S. 15–22; P.A. 04-69, S. 12–15; P.A. 05-46, S. 4, 5; P.A. 06-45, S. 7–9; P.A. 07-91, S. 4–6, 18; 07-156, S. 16–22; P.A. 08-176, S. 31, 83, 84.)

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Sec. 36a-518. (Formerly Sec. 36-224i). Regulations. Section 36a-518 is repealed, effective October 1, 2002.

(P.A. 77-228, S. 9; P.A. 02-111, S. 51.)

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(P.A. 80-67, S. 6, 7; P.A. 83-460, S. 1–3; P.A. 84-69, S. 1, 3; P.A. 90-184, S. 5, 6; P.A. 91-306, S. 4–6; P.A. 92-132, S. 2, 5; P.A. 93-130, S. 2, 3; P.A. 94-122, S. 246–248, 340; P.A. 99-63, S. 5; P.A. 01-34, S. 14; P.A. 02-12, S. 3; 02-111, S. 23–27; P.A. 03-61, S. 1, 2; P.A. 06-45, S. 10; P.A. 07-118, S. 2; 07-156, S. 23, 24; P.A. 08-176, S. 31, 83, 84.)

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Secs. 36a-525 to 36a-534. Reserved for future use.

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(C)

GENERAL PROVISIONS

Sec. 36a-534a. Notice of discriminatory lending practices. Violation as grounds for license suspension, revocation or nonrenewal. (a) Any mortgage broker, or mortgage lender or mortgage correspondent lender, as defined in section 36a-485 and licensed pursuant to section 36a-489, shall notify the commissioner by written affidavit if any such mortgage broker, mortgage lender or mortgage correspondent lender, as a result of a transaction in which such mortgage broker, mortgage lender or mortgage correspondent lender was involved, reasonably believes that the lending practices of a financial institution or federal bank violate section 36a-737 or 46a-66. Such mortgage broker, mortgage lender or mortgage correspondent lender shall provide the commissioner with any written document containing lending restrictions which a financial institution or federal bank has provided to such mortgage broker, mortgage lender or mortgage correspondent lender. In the event the commissioner finds that there is a reasonable basis for said notification, the commissioner shall notify the Commission on Human Rights and Opportunities of said notification and the action the commissioner plans to take with respect thereto.

(b) The commissioner may suspend, revoke or refuse to renew the license of any such broker or lender who violates subsection (a) of this section.

(P.A. 98-221; P.A. 99-36, S. 31; P.A. 02-111, S. 28; P.A. 08-176, S. 57.)

History: P.A. 99-36 made technical changes; P.A. 02-111 amended Subsec. (a) by adding references to “first” mortgage broker, “secondary mortgage” broker and “mortgage” lender and made a technical change in Subsec. (b); P.A. 08-176 amended Subsec. (a) to add references to “mortgage correspondent lender” and make conforming changes, effective July 1, 2008.

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Sec. 36a-534b. Participation in system. Authority of commissioner to establish requirements. Reports. (a)(1) In addition to any other duties imposed upon the commissioner by law, the commissioner shall require mortgage lenders, mortgage correspondent lenders, mortgage brokers, lead generators, mortgage loan originators and loan processors or underwriters to be licensed and registered through the system. In order to carry out this requirement, the commissioner shall participate in the system and permit the system to process applications for mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator and loan processor or underwriter licenses in this state and receive and maintain records related to such licenses that are allowed or required to be maintained by the commissioner. For this purpose, the commissioner may establish requirements as necessary for participation in the system, including: (A) Background checks for criminal history through (i) fingerprint or other databases, (ii) civil or administrative records, or (iii) credit history or any other information as deemed necessary by the system; (B) the payment of fees to apply for or renew licenses through the system; (C) the setting or resetting of renewal or reporting dates; and (D) the requirements for amending or surrendering a license or any other such activities as the commissioner deems necessary for participation in the system. For the purpose of participating in the system, the commissioner may waive or modify, in whole or in part, by regulation or order, any requirement of this section and sections 36a-485 to 36a-498e, inclusive, 36a-498h, and 36a-534a and establish new requirements as reasonably necessary to participate in the system. For the purposes of implementing an orderly and efficient licensing process, the commissioner may adopt licensing regulations, in accordance with the provisions of chapter 54, and interim procedures for licensing and acceptance of applications. For previously licensed individuals, the commissioner may establish expedited review and licensing procedures.

(2) The commissioner shall report regularly to the system violations of and enforcement actions under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b and other relevant information.

(3) The commissioner may establish relationships or enter into contracts with the system or other entities designated by the system to collect and maintain records and process transaction fees or other fees related to licensees or other persons subject to sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b.

(4) For the purposes of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, and to reduce the points of contact that the Federal Bureau of Investigation may have to maintain for purposes of subsections (b) to (d), inclusive, of section 36a-488, the commissioner may use the system as a channeling agent for requesting information from and distributing information to the United States Department of Justice or any governmental agency.

(5) For the purposes of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, and to reduce the points of contact that the commissioner may have to maintain for purposes of subsections (b) to (d), inclusive, of section 36a-488, and section 36a-498h, the commissioner may use the system as a channeling agent for requesting and distributing information to and from any source, as directed by the commissioner.

(6) Mortgage lenders, mortgage correspondent lenders, mortgage brokers, lead generators, mortgage loan originators and loan processors or underwriters may challenge information entered into the system by the commissioner. Such challenge shall (A) be made in writing to the commissioner, (B) set forth the specific information being challenged, and (C) include any evidence which supports the challenge. Challenges shall be limited to the factual accuracy of information within the system. If the commissioner determines that the information entered into the system is factually inaccurate, the commissioner shall take prompt action to correct such information. Nothing in this subdivision shall be construed to permit a challenge under this section to the merits or factual basis of any administrative action taken by the commissioner pursuant to this title.

(b) Any licensing or license-related filings shall be submitted exclusively through the system, except as directed by the commissioner.

(c) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator and loan processor or underwriter licensee and each exempt registrant, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision. Failure of an exempt registrant to timely and accurately submit a report of condition shall form a basis to inactivate the licenses of all sponsored mortgage loan originators or loan processor or underwriters. To the extent that the system does not require submission of reports of condition by individual mortgage loan originator or loan processor or underwriter licensees, such individual licensees shall timely and accurately report all required information in their possession to their sponsor for purposes of their sponsor's reporting obligation. Failure of an individual licensee to timely and accurately report required information in such licensee's possession to such licensee's sponsor shall constitute a violation of this provision.

(P.A. 08-176, S. 39; P.A. 09-209, S. 3; P.A. 11-216, S. 26–28; P.A. 12-96, S. 2, 16; P.A. 14-89, S. 45; P.A. 17-38, S. 14; P.A. 18-173, S. 22.)

History: P.A. 08-176 effective July 1, 2008; P.A. 09-209 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and amending same to add provisions re system licensing and participation requirements for mortgage lenders, mortgage correspondent lenders, mortgage brokers and mortgage loan originators to be established by commissioner, and by adding Subdivs. (2) to (6) re collecting and sharing information and establishing process by which to challenge information entered into system, amended Subsec. (c)(3) by requiring lenders, brokers and loan originators to submit reports of condition to system, and changed “Nationwide Mortgage Licensing System” to “system” in Subsecs. (a), (c) and (d), effective July 31, 2009; P.A. 11-216 amended Subsec. (a)(6) to delete provision requiring commissioner to establish process, add provision re loan processors or underwriters licensees and add requirements re challenge of information, effective July 13, 2011, and amended Subsecs. (a)(1) and (c)(3) to add references to loan processor or underwriter and make technical changes, effective October 1, 2011; P.A. 12-96 amended Subsec. (a)(1) to make a technical change and amended Subsec. (c)(3) to add “and each exempt registrant, to the extent required by the system”, insert “timely” re submission, insert “accurate” re reports and add provisions re consequences of failure to submit timely and accurate report of condition or required information in licensee's possession; P.A. 14-89 made technical changes in Subsec. (c)(3), effective June 3, 2014; P.A. 17-38 amended Subsec. (a) to add references to lead generators, add references to Sec. 36a-498h, replace “subsections (b) and (c) of section 36a-488” with “subsections (b) to (d), inclusive, of section 36a-488” in Subdivs. (4) and (5) and delete “, effective October 1, 2011, individuals licensed as” in Subdiv. (6), deleted former Subsec. (b) re licenses in existence on June 30, 2008, amended Subsec. (c) to delete former Subdiv. (1) re person licensed on July 1, 2008, redesignated existing Subdiv. (2) as new Subsec. (b) and amended same to delete reference to July 1, 2008, and add “, except as directed by the commissioner”, and delete Subdiv. (3) designator, deleted former Subsec. (d) re initial application for license submitted between October 1, 2008 and December 31, 2008, and made a technical change; P.A. 18-173 amended Subsec. (a) by replacing references to Sec. 36a-498f with references to Sec. 36a-498e.

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Sec. 36a-534c. Reports re system. Section 36a-534c is repealed, effective June 9, 2017.

(P.A. 07-156, S. 25; P.A. 08-176, S. 67; P.A. 12-96, S. 17; P.A. 17-38, S. 17.)

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PART II*

FINANCE COMPANIES

*See Sec. 36a-676 for definitions under the Truth-in-Lending Act applicable to this part.

Annotation to former chapter 650:

Cited. 139 C. 425.

Sec. 36a-535. (Formerly Sec. 36-254). Definitions. As used in sections 36a-535 to 36a-547, inclusive, unless the context otherwise requires:

(1) The terms “goods”, “retail installment sale”, “retail installment contract”, “installment loan contract”, “retail seller” and “retail buyer” have the same meanings as provided in section 36a-770;

(2) “Sales finance company” means any person engaging in this state in the business, in whole or in part, of (A) acquiring retail installment contracts or installment loan contracts from the holders thereof, by purchase, discount or pledge, or by loan or advance to the holder of either on the security thereof, or otherwise, or (B) receiving payments of principal and interest from a retail buyer under a retail installment contract or installment loan contract. “Sales finance company” does not include a bank, out-of-state bank, Connecticut credit union, federal credit union, or out-of-state credit union, if so engaged;

(3) “Advertise” or “advertising” has the same meaning as provided in section 36a-485;

(4) “Control person” has the same meaning as provided in section 36a-485;

(5) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a sales finance company;

(6) “Main office” has the same meaning as provided in section 36a-485; and

(7) “Unique identifier” has the same meaning as provided in section 36a-485.

(1949 Rev., S. 5963; 1949, 1955, S. 2767d; 1957, P.A. 356, S. 1; March, 1958, P.A. 27, S. 50; 1959, P.A. 589, S. 1; 1961, P.A. 116, S. 18; 1969, P.A. 454, S. 27; P.A. 77-604, S. 51, 84; 77-614, S. 161, 610; P.A. 78-121, S. 108, 113; P.A. 80-482, S. 256, 345, 348; P.A. 81-128, S. 5; 81-158, S. 12, 17; P.A. 82-18, S. 2, 4; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 34; P.A. 91-69; P.A. 92-12, S. 74; P.A. 94-122, S. 249, 340; P.A. 17-233, S. 10; 17-236, S. 12; P.A. 18-173, S. 23; P.A. 22-94, S. 1.)

History: 1959 act amended Subdiv. (b) by specifying goods means all chattels included in one contract and raising the aggregate price to $6000; 1961 act made various changes to conform to uniform commercial code; 1969 act specified that amount for “other itemized charges ...” is part of time sale price where previously reference was to amount for insurance, other benefits and filing fees in Subsec. (c); P.A. 77-604 revised references to Sec. 42a-9-105; P.A. 77-614 replaced bank commissioner with banking commissioner within the department of business regulation and made banking department a division within said department, effective January 1, 1979; P.A. 78-121 deleted reference to private bankers in Subdiv. (h); P.A. 80-482 restored banking division as independent department and abolished the department of business regulation, allowing corresponding revision of commissioner's name; P.A. 81-128 eliminated the specific definitions for “goods”, “retail installment sale”, “retail installment contract”, “installment loan contract”, “retail seller” and “retail buyer” and provided those terms would have the definitions found in Sec. 42-83; P.A. 81-158 amended Subsec. (c) by replacing “section 36-396”, which had been repealed, with chapter 657, effective March 31, 1982; P.A. 82-18 changed effective date of P.A. 81-158 from March 31, 1982, to “the effective date of Title VI of Public Law 96-221, as contained in Section 625(a) of Public Law 96-221, as amended”, i.e. October 1, 1982; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed by the Revisors to “commissioner of banking”); P.A. 88-65 redefined “sales finance company” by deleting reference to industrial banks; P.A. 91-69 made technical changes and amended Subsec. (c) to provide that the term “sales finance company” does not include a bank, savings bank, savings and loan association, industrial bank or credit union; P.A. 92-12 redesignated Subdivs.; P.A. 94-122 deleted the definitions of “person” and “commissioner”, renumbered the remaining Subdivs. and made technical changes, effective January 1, 1995; Sec. 36-254 transferred to Sec. 36a-535 in 1995; P.A. 17-233 added Subdiv. (3) defining “advertise” or advertising” and added Subdiv. (4) defining “control person”; P.A. 17-236 amended Subdiv. (2) to redefine “sales finance company”; P.A. 18-173 replaced reference to Sec. 36a-546 with reference to Sec. 36a-547, amended Subdiv. (2) by redefining “sales finance company”, added Subdiv. (5) defining “branch office”, added Subdiv. (6) defining “main office”, added Subdiv. (7) defining “unique identifier”, and made technical changes; P.A. 22-94 redefined “sales finance company” in Subdiv. (2).

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Sec. 36a-536. (Formerly Sec. 36-255). License required. Location of licensed activity. No person, unless excluded from the definition of a “sales finance company” as provided in section 36a-535, shall engage in the business of a sales finance company unless such person has obtained a license for its main office and for each branch office where such business is conducted in accordance with the provisions of sections 36a-535 to 36a-547, inclusive. Any activity subject to licensure pursuant to sections 36a-535 to 36a-547, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2. A licensee under sections 36a-535 to 36a-547, inclusive, shall not be required to obtain any other license in this state in order to perform any act permitted or required to be performed by such licensee under said sections.

(1949 Rev., S. 5964 (1), (6); March, 1958, P.A. 27, S. 32; P.A. 81-128, S. 6; P.A. 94-122, S. 250, 340; P.A. 18-173, S. 24.)

History: P.A. 81-128 eliminated reference to repealed Subsec. (h) of Sec. 36-254 and clarified licensing exemption; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-255 transferred to Sec. 36a-536 in 1995; P.A. 18-173 replaced reference to person licensed as provided in Secs. 36a-535 to 36a-546 with provision re person obtaining license for main office and each branch office, added provision re activities to be conducted from office located in a state, and made a conforming change.

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Sec. 36a-537. (Formerly Sec. 36-256a). Application. Criminal history records check, fingerprints, investigation of financial condition. Abandonment of application. (a) An application for a license as a sales finance company or for renewal of such license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-535 to 36a-547, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction.

(b) As part of an application, the commissioner may (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual or any branch manager; and (2) in accordance with section 36a-24b, (A) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual or any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization of any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. The commissioner may deem an application for a license as a sales finance company abandoned if the applicant fails to respond to any request for information required under sections 36a-535 to 36a-547, inclusive, or any regulations adopted pursuant to said sections 36a-535 to 36a-547, inclusive. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days after such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this section shall not be refunded. Abandonment of an application pursuant to this section shall not preclude the applicant from submitting a new application for a license under sections 36a-535 to 36a-547, inclusive.

(1967, P.A. 631, S. 1; P.A. 77-614, S. 161, 610; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 251, 340; P.A. 09-208, S. 6; 09-209, S. 39; P.A. 11-216, S. 29; P.A. 18-173, S. 25.)

History: P.A. 77-614 replaced bank commissioner with banking commissioner, effective January 1, 1979; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 changed “commissioner of banking” to “commissioner”, effective January 1, 1995; Sec. 36-256a transferred to Sec. 36a-537 in 1995; P.A. 09-208 added requirements that application include a history of criminal convictions and sufficient information pertaining to such convictions, effective July 7, 2009; P.A. 09-209 made technical changes, effective July 9, 2009; P.A. 11-216 deleted provision re ten-year period re history of criminal convictions, added provision authorizing commissioner to conduct state and national criminal history records checks of applicant and each partner, member, officer, director and principal employee of applicant and added provisions re abandonment of application; P.A. 18-173 replaced provisions re form of, and information to be included in, application for license as sales finance company with provisions re same and designated same as Subsec. (a), designated existing provisions re application for license to be abandoned and notification to applicant as Subsec. (b) and amended same by adding provisions re commissioner to conduct state or national criminal history records check of applicant, control person, qualified individual or branch manager, replacing “in writing” with “on the system” re notice to applicant, and replacing reference to Sec. 36a-546 with reference to Sec. 36a-547.

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Sec. 36a-538. (Formerly Sec. 36-256b). Payment of cost of investigation. Each person applying for a license as a sales finance company or a renewal thereof shall pay the actual cost, at the discretion of and as determined by the commissioner, of any investigation or examination made of such person by the commissioner.

(1967, P.A. 631, S. 7; P.A. 94-122, S. 252, 340.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-256b transferred to Sec. 36a-538 in 1995.

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Sec. 36a-539. (Formerly Sec. 36-257). License fee. Automatic suspension of license. Notice. Opportunity for hearing. Prohibited acts. (a) Each applicant for a sales finance company license shall pay to the system any required fees or charges and a license fee of four hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which such license expires. Each applicant for renewal of a license shall pay to the system any required fees or charges and a renewal fee of four hundred dollars.

(b) In accordance with section 36a-24b, the commissioner may automatically suspend any license if the licensee has received a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew pursuant to section 36a-543 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purposes of this section.

(c) No abatement of the license fee shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by this section shall be nonrefundable.

(d) No person who is required to be licensed and who is subject to the provisions of sections 36a-535 to 36a-547, inclusive, and no control person shall, directly or indirectly: (1) Employ any scheme, device or artifice to defraud or mislead any person in connection with a retail installment contract or a retail installment loan; (2) engage in any unfair or deceptive practice toward any person in connection with a retail installment contract or a retail installment loan; (3) obtain property by fraud or misrepresentation; (4) solicit, advertise or offer rates or other financing terms for a retail installment contract or a retail installment loan unless those rates or terms are actually available at the time of soliciting, advertising or offering such rates or terms; (5) fail to comply with the provisions of sections 36a-535 to 36a-547, inclusive, or the rules or regulations adopted under said sections, or fail to comply with any other state or federal law, including the rules and regulations thereunder; (6) make, in any manner, any false or deceptive statement or representation, including with regard to rates or other financing terms or conditions or engage in bait and switch advertising; (7) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (8) make any payment, threat or promise to any person for the purposes of influencing the independent judgment of the person in connection with the business of a sales finance company; (9) fail to truthfully account for moneys belonging to a party to a retail installment contract or retail installment loan; or (10) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable laws and regulations concerning sales finance companies.

(1949 Rev., S. 5964 (3); 1953, S. 2768d; 1959, P.A. 204, S. 1; 1967, P.A. 631, S. 2; P.A. 73-392; P.A. 88-150, S. 4; P.A. 92-89, S. 6, 20; P.A. 94-104, S. 3; 94-122, S. 253, 340; P.A. 96-71, S. 4, 8; P.A. 02-111, S. 29; P.A. 04-69, S. 16; P.A. 17-233, S. 11; P.A. 18-173, S. 26.)

History: 1959 act increased fees by 50%; 1967 act added provision requiring applicant to pay fee for period ending June thirtieth next succeeding the issuance of license and specifying that fee will be returned if application is denied or withdrawn, retaining fee amounts and dates as before; P.A. 73-392 increased $150 and $75 fees previously in effect to $200 and $100, respectively; P.A. 88-150 amended the section by providing that the license fee is nonrefundable, increasing the fee to $200 and adding the provision re expiration of licenses on June thirtieth; P.A. 92-89 increased the license fee from $200 to $400; P.A. 94-104 added a $100 processing fee for a person whose license expired within 60 days of his application; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-257 transferred to Sec. 36a-539 in 1995; P.A. 96-71 deleted “nonrefundable” in Subsec. (a) and added Subsec. (b) to make all fees required by this section and section 36a-542 nonrefundable, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by providing that the license fee for “sales finance company” license is $800, provided if application is filed not earlier than one year before the expiration date of license, fee is $400, adding provision re license that is renewed effective July 1, 2003, shall expire on September 30, 2005, and adding provision re licenses issued pursuant to Secs. 36a-535 to 36a-546, inclusive, shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance; P.A. 04-69 inserted new Subsec. (b), requiring commissioner to automatically suspend license if commissioner determines that a check filed to pay the license fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (b) as Subsec. (c); P.A. 17-233 added Subsec. (d) re persons who are required to be licensed and are subject to provisions of Secs. 36a-535 to 36a-546; P.A. 18-173 substantially amended Subsec. (a) including by replacing provisions re applying for license to commissioner and paying fee of $800 with provisions re paying to system fees and charges and license fee of $400, deleting provision re fee if application not filed earlier than one year before expiration date, replacing provision re license to expire September 30^th of odd-numbered year following issuance with provision re license to expire December 31^st of year in which license was approved, replacing provisions re license renewal and fee with provisions re same, substantially amended Subsec. (b) by replacing provisions re automatic suspension when check filed with commissioner to pay fee is dishonored with provision re automatic suspension when deficiency received on system indicating payment returned or not accepted, amended Subsec. (c) by adding reference to application denied or withdrawn prior to issuance and deleting reference to Sec. 36a-542, amended Subsec. (d) by replacing references to Sec. 36a-546 with references to Sec. 36a-547, and made technical and conforming changes.

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Sec. 36a-540. (Formerly Sec. 36-258). License. Change in control person. Automatic suspension of license. Surrender of license. (a) Each license shall specify the location at which the business is to be conducted. Such license shall not be transferable or assignable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system not later than thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. For purposes of this section, “change of control” means any change causing the majority ownership, voting rights or control of a licensee to be held by a different control person or group of control persons.

(b) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address specified on the license issued by the commissioner. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if at least thirty calendar days prior to such change, the licensee files such change with the system and the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period.

(c) The commissioner may automatically suspend any license for a violation of subsection (a) or (b) of this section. After the license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-543 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(d) Not later than fifteen days after the date a licensee ceases to engage in this state in the business of a sales finance company for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender to the commissioner, in accordance with subsection (c) of section 36a-51, its license for each location in which such licensee has ceased to engage in such business.

(1949 Rev., S. 5964 (4); 1957, P.A. 356, S. 2; P.A. 02-111, S. 30; P.A. 08-119, S. 6; P.A. 18-173, S. 27; P.A. 21-138, S. 8.)

History: Sec. 36-258 transferred to Sec. 36a-540 in 1995; P.A. 02-111 replaced former provisions with provisions re license to specify location at which business is conducted, license maintenance and availability for public inspection, license not transferable or assignable, notice to commissioner of change of location and licensee's use of specified name; P.A. 08-119 added requirement for surrender of license when licensee ceases to engage in the business of a sales finance company; P.A. 18-173 designated existing provisions re license to specify location at which business is conducted and license not transferrable or assignable as Subsec. (a) and substantially amended same, including by deleting provisions re location where license is to be maintained, change in location of licensee and use of name other than name specified on license with provisions re change in control person of licensee or change in control of licensee to be subject of advance change notice filed on system, added Subsec. (b) re licensee use of name other than legal name or approved fictitious name, added Subsec. (c) re automatic suspension of license, notice to licensee and opportunity for hearing, designated existing provisions re surrendering license to commissioner, and amended same by replacing provision re surrender in person or by registered or certified mail with provision re surrender in accordance with Sec. 36a-51(c); P.A. 21-138 amended Subsec. (a) by defining “change of control” and making a conforming change.

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Sec. 36a-541. (Formerly Sec. 36-259a). Authority of commissioner to issue license or deny application for license. Standards for renewal. (a) If the commissioner finds, upon the filing of an application for a license as a sales finance company, that the financial responsibility, character, reputation, integrity and general fitness of the applicant, the applicant's control persons, qualified individual and any branch manager 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-535 to 36a-547, inclusive, the commissioner may thereupon issue the applicant the license. If the commissioner fails to make such findings, or if the commissioner finds that the applicant has made any material misstatement in the application, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or the applicant's control persons, qualified individual or any branch manager has been convicted of any misdemeanor involving any aspect of the sales finance business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

(b) The minimum standards for renewal of a sales finance license shall include the following: (1) The applicant continues to meet the minimum standards under subsection (a) of this section; (2) the applicant has paid all required fees for renewal of the license; and (3) the applicant has paid all outstanding examination fees or other moneys due to the commissioner. If the commissioner finds that requirements for license renewal set forth in this subsection are not met, the applicant's license shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.

(c) Each license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-535 to 36a-547, inclusive.

(1967, P.A. 631, S. 3; P.A. 94-122, S. 254, 340; P.A. 02-111, S. 31; P.A. 09-208, S. 7; P.A. 11-216, S. 30; P.A. 18-173, S. 28.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-259a transferred to Sec. 36a-541 in 1995; P.A. 02-111 replaced former Subsecs. (a) and (b) with provisions re findings, issuance of license and denial of application; P.A. 09-208 authorized commissioner to deny application based on certain criminal convictions, specified when withdrawal of application becomes effective, and provided that commissioner may deny license up to 1 year after date the withdrawal became effective, effective July 7, 2009; P.A. 11-216 deleted provision re ten-year period re misdemeanor and felony convictions; P.A. 18-173 designated existing provisions re finding by commissioner that business will be operated soundly and efficiently and in the public interest as Subsec. (a) and amended same by replacing references to partners, members, officers, directors and principal employees with references to control persons, qualified individual and branch manager, replacing reference to Sec. 36a-546 with reference to Sec. 36a-547, and deleting provisions re withdrawal of application, added Subsec. (b) re minimum standards for renewal of license, and added Subsec. (c) re license to remain in force and effect until surrendered, revoked, suspended or it has expired.

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Sec. 36a-542. (Formerly Sec. 36-259b). Requirements for filing with system. Unique identifier of licensee. Advertising of license. (a) Except as otherwise specified in subsections (a) and (b) of section 36a-540, each sales finance company applicant or licensee, and each control person, qualified individual or branch manager of such applicant or licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of any change in the information such applicant, licensee, control person, qualified individual or branch manager most recently submitted to the system in connection with a sales finance company application or license not later than fifteen days from the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change.

(b) A sales finance company licensee shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the occurrence of any such development:

(1) Filing of a bankruptcy petition by the licensee or the consummation of a corporate restructuring of the licensee;

(2) Filing of a criminal indictment against the licensee in any way related to the sales finance activities of the licensee, or receipt of notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;

(3) Receiving notification of the initiation of license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch managers or qualified individual of the licensee and the reasons therefor;

(5) Receiving notification of the filing for bankruptcy of any control person, branch manager or qualified individual of the licensee.

(c) Any person filing or submitting any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay the applicable fees or charges to the system. Each sales finance company licensee, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision.

(d) The unique identifier of any person licensed under section 36a-541 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations or advertisements of any person licensed under section 36a-541: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-535 to 36a-547, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.

(1967, P.A. 631, S. 4; P.A. 74-235, S. 1, 2; P.A. 94-104, S. 4; 94-122, S. 255, 340; P.A. 96-71, S. 5, 8; P.A. 02-111, S. 32; P.A. 04-69, S. 17; P.A. 05-46, S. 6; P.A. 18-173, S. 29.)

History: P.A. 74-235 raised fee from $150 to $200; P.A. 94-104 changed fee to nonrefundable fee, increased the fee from $200 to $400 and added a $100 late fee; P.A. 94-122 changed “him” to “the commissioner”, effective January 1, 1995; Sec. 36-259b transferred to Sec. 36a-542 in 1995; P.A. 96-71 substituted “license fee” for “nonrefundable fee”, effective July 1, 1996; P.A. 02-111 changed time for filing renewal application to on or before September first of year in which the license expires or, in the case of a license that expires on June 30, 2003, on or before June 1, 2003, revising dates constituting untimely filing accordingly, increased license fee to $800, and added provision re $900 fee for license that expires on June 30, 2003; P.A. 04-69 designated existing provisions as Subsec. (a) and added new Subsec. (b) requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay the fee for a renewal application 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; P.A. 05-46 amended Subsec. (a) to provide that renewal application 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. 18-173 deleted former Subsec. (a) re renewal of sales finance company license, added new Subsec. (a) re sales finance company applicant or licensee, control person, qualified individual or branch manager to file on system or notify commissioner in writing of change in information, deleted former Subsec. (b) re automatic license suspension when check to pay fee for renewal application is dishonored, added new Subsec. (b) re sales finance company licensee to file on system occurrence of certain developments or notify commissioner in writing of occurrence, added Subsec. (c) re filing or submitting information in accordance with procedures and requirements of system, payment of fees or charges to system, and submission of reports of condition, added Subsec. (d) re unique identifier of person licensed to be clearly shown on solicitations and advertisements and clearly stated in audio solicitations and advertisements.

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Sec. 36a-543. (Formerly Sec. 36-260a). 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 sales finance company license or take any other action, in accordance with section 36a-51, if any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner's denial of such license or if the commissioner finds that the licensee or any control person of the licensee, qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (1) Knowingly or without the exercise of due care to prevent such violation, has violated any provision of this title, or of any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's installment sales financing business; (2) failed to comply with any demand or requirement made by the commissioner under and within the commissioner's authority; (3) made any material misstatement in the application or in any filing made in connection with the license; (4) defrauded any retail buyer to the buyer's damage; or (5) wilfully failed to perform any written agreement with any retail buyer.

(b) The commissioner in the commissioner's discretion may revoke or suspend only the particular license with respect to which grounds for revocation or suspension are of general application to all locations, or if to more than one location, operated by such licensee, the commissioner shall revoke or suspend all of the licenses issued to such licensee or those licenses to which the grounds for revocation or suspension apply, as the case may be.

(c) No suspension, revocation or surrender of any license shall impair or affect the obligation of any installment contract, obligation or credit agreement lawfully acquired previously thereto by the licensee.

(d) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any provision of sections 36a-535 to 36a-547, inclusive, within the jurisdiction of the commissioner or any regulation adopted under said sections, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation; or (3) any licensee has defrauded any retail buyer to the buyer's damage or wilfully failed to perform any written agreement with any retail buyer, the commissioner may take action against such person or such licensee in accordance with sections 36a-50 and 36a-52.

(e) The commissioner, in accordance with section 36a-51a, may order a licensee to remove any individual conducting business under sections 36a-535 to 36a-547, inclusive, from office and from employment or retention as an independent contractor in the sales finance business in this state.

(f) The commissioner may issue a temporary order to cease business under a license if the commissioner determines that such license was issued erroneously. Such temporary order shall be issued in accordance with subsection (j) of section 36a-24b.

(1967, P.A. 631, S. 5; 1971, P.A. 179, S. 22; 870, S. 93; P.A. 74-254, S. 11; P.A. 82-174, S. 4, 13, 14; P.A. 92-12, S. 75; P.A. 93-194, S. 3, 7; P.A. 94-122, S. 256, 340; P.A. 02-111, S. 33; P.A. 04-69, S. 18; P.A. 07-91, S. 19; P.A. 18-173, S. 30.)

History: 1971 acts required appeal to return day between 12 and 30 days after service rather than to “next” or “next but one” return day after service and, effective September 1, 1971, replaced superior court with court of common pleas except that courts with cases pending retain jurisdiction unless pending matters deemed transferable; P.A. 74-254 repealed Subsec. (g) which had contained appeal provisions; P.A. 82-174 amended Subsec. (a) by authorizing the commissioner to “refuse to renew” a license and providing that after 10 days' written notice and allowing the licensee a reasonable opportunity to be heard the commissioner may suspend, revoke or refuse to renew a license repealing former Subsec. (b) re mandatory hearing prior to revocation or suspension; P.A. 92-12 redesignated Subsecs. and made technical changes; P.A. 93-194 amended Subsec. (c) re effectiveness of a surrender of any license by a licensee when the commissioner has instituted a proceeding to suspend, revoke or refuse to renew such license, effective June 23, 1993; P.A. 94-122 deleted Subsec. (c) re surrender of licenses, relettered former Subsecs. (d) and (e) as Subsecs. (c) and (d), deleted Subsec. (f) re investigating complaints of violations by licensees, added new Subsec. (e) re enforcement actions against violators and made technical changes, effective January 1, 1995; Sec. 36-260a transferred to Sec. 36a-543 in 1995; P.A. 02-111 amended Subsec. (a) by adding provision re “sales finance company” license, changing “refusal to issue” to “denial of” such license, and adding “member” in Subdiv. (5)(A), amended Subsec. (b) to change “place of business” to “location”, deleted former Subsec. (d) re rules and redesignated existing Subsec. (e) as Subsec. (d); P.A. 04-69 amended Subsec. (d) to allow commissioner to take action against violator or licensee in accordance with Sec. 36a-52 and added provision authorizing action whenever it appears that any licensee has defrauded any retail buyer to the buyer's damage or wilfully failed to perform any written agreement with any retail buyer; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 18-173 substantially amended Subsec. (a) including by adding provisions re condition exists which would have warranted commissioner's denial of license, adding references to control person of licensee, qualified individual or branch manager with supervisory authority, trustee, employee or agent of licensee, and deleting provisions re officer, director, trustee member or partner guilty of act or omission which would be cause for revoking or suspending license and agent or employee guilty of act or omission and licensee approved or had knowledge and retained benefit, proceeds, profit or advantage of act or omission, amended Subsec. (d) by designating existing provision re person violating provision of sections or regulations as Subdiv. (1), and amending same by replacing reference to Sec. 36a-546 with reference to Sec. 36a-547, and adding reference to jurisdiction of commissioner, adding Subdiv. (2) re person cause of violation of provision or regulation due to act or omission person knew or should have known would contribute to violation, and designating existing provision re licensee defrauded retail buyer as Subdiv. (3), added Subsec. (e) re commissioner's authority to order licensee to remove individual from office, employment or retention as an independent contractor, added Subsec. (f) re commissioner's authority to issue temporary order to cease business, and made technical and conforming changes.

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Sec. 36a-544. (Formerly Sec. 36-260b). Regulations. (a) The commissioner may adopt regulations, in accordance with chapter 54, as necessary to carry out the provisions of sections 36a-535 to 36a-547, inclusive, including the defining of any terms, whether or not used in said sections, so far as the definitions are not inconsistent with the provisions of said sections.

(b) No regulation may be adopted under this section unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of purchasers and consistent with the purposes fairly intended by the policy and provisions of sections 36a-535 to 36a-547, inclusive.

(1967, P.A. 631, S. 6; P.A. 94-122, S. 257, 340; P.A. 18-173, S. 90.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-260b transferred to Sec. 36a-544 in 1995; P.A. 18-173 replaced references to Sec. 36a-546 with references to Sec. 36a-547.

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Sec. 36a-545. (Formerly Sec. 36-262a). Books and records. Each applicant or licensee shall have established bookkeeping methods and shall keep books and records at the place of business specified in the license in a form and manner satisfactory to the commissioner, or shall make such books and records available at such place of business not later than five business days after requested by the commissioner. All such books and records shall be preserved for at least two years after the making of the final entry therein.

(1967, P.A. 631, S. 8; P.A. 00-61, S. 4, 9.)

History: Sec. 36-262a transferred to Sec. 36a-545 in 1995; P.A. 00-61 added provision re availability of books and records at place of business, effective July 1, 2000.

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Sec. 36a-546. (Formerly Sec. 36-263). Penalty. Any individual, corporation, partnership, limited partnership, association or other unincorporated enterprise, and any responsible officer, partner or employee thereof, who wilfully fails to comply with or violates any of the provisions of sections 36a-535 to 36a-547, inclusive, or who engages in business as a sales finance company without being licensed as a sales finance company by the commissioner in accordance with the provisions of said sections, shall be fined not more than five hundred dollars or imprisoned not more than six months or both.

(1949 Rev., S. 5968; P.A. 18-173, S. 91.)

History: Sec. 36-263 transferred to Sec. 36a-546 in 1995; P.A. 18-173 replaced “36a-545” with “36a-547”.

Annotation to former section 36-263:

Cited. 139 C. 425.

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Sec. 36a-547. Retail installment contract records. On and after October 1, 2018, a sales finance company, as defined in section 36a-535, shall acquire and maintain adequate records in the form and manner as the commissioner shall direct in each retail installment contract acquired by purchase, discount, pledge, loan, advance or otherwise, and any application for a retail installment contract, covering the retail sale of a motor vehicle in the state that has been reviewed by the sales finance company or relates to a retail installment contract acquired by the sales finance company, including, but not limited to, the: (1) Name, address, income, credit score, ethnicity, race and sex of the applicant and any coapplicants; (2) type, amount and annual percentage rate of the loan; and (3) disposition of the application. Such records shall be made available to the Banking Commissioner not later than five business days after a request for such records by the commissioner. Each sales finance company shall retain such records for not less than two years after the date of the application for applications that were denied or, for any retail installment contract that was acquired, for not less than two years after the date of final payment or sale or assignment of such contract, whichever occurs first, or such longer period as may be required by any other provision of law. On or before July 1, 2019, each licensee shall provide to the commissioner the records collected between October 1, 2018, to June 30, 2019, inclusive.

(P.A. 16-65, S. 15; P.A. 17-236, S. 5; P.A. 18-173, S. 97.)

History: P.A. 16-65 effective May 26, 2016; P.A. 17-236 made a technical change, effective July 11, 2017; P.A. 18-173 replaced “October 1, 2016” with “October 1, 2018”, amended Subdiv. (1) by adding “, ethnicity, race and sex” and deleting “and, if known, the ethnicity, race and sex of such individuals”, replaced “January 30, 2017” with “July 1, 2019”, and replaced “December 31, 2016” with “June 30, 2019”, and made technical changes.

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Secs. 36a-548 to 36a-554. Reserved for future use.

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PART III*

SMALL LOAN LENDING AND RELATED ACTIVITIES

*See Sec. 42a-9-203 re attachment of security interest.

Annotation to former chapter 647:

Cited. 23 CS 184.

Sec. 36a-555. (Formerly Sec. 36-225). Definitions. As used in this section and sections 36a-556 to 36a-573, inclusive:

(1) “Advertise” or “advertising” means any announcement, statement, assertion or representation that is placed before the public in a newspaper, magazine or other publication, in the form of a notice, circular, pamphlet, letter or poster, over any radio or television station, by means of the Internet, by other electronic means of distributing information, by personal contact, or in any other way or medium;

(2) “APR” means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act, 15 USC 1601 et seq., as amended from time to time, and the regulations promulgated thereunder, and the “disclosed APR” shall mean the APR disclosed, as applicable, pursuant to 12 CFR Section 1026.6 or 12 CFR Section 1026.18. If more than one APR is disclosed pursuant to 12 CFR Section 1026.6, the “disclosed APR” shall be the highest APR disclosed pursuant to said section;

(3) “Branch office” means a location other than the main office where the licensee, or any person on behalf of the licensee, will engage in activities that require a small loan license;

(4) “Connecticut borrower” means any borrower who resides in or maintains a domicile in this state and who (A) negotiates or agrees to the terms of the small loan in person, by mail, by telephone or via the Internet while physically present in this state, (B) enters into or executes a small loan agreement with the lender in person, by mail, by telephone or via the Internet while physically present in this state, or (C) makes a payment on the loan in this state. For purposes of this subdivision, “payment on the loan” includes a debit on an account the borrower holds in a branch of a financial institution or the use of a negotiable instrument drawn on an account at a financial institution. For purposes of this subdivision, “financial institution” means any bank or credit union chartered or licensed under the laws of this state, any other state or the United States and having its main office or a branch office in this state;

(5) “Control person” means an individual that directly or indirectly exercises control over another person, and includes any person that (A) is a director, general partner or executive officer; (B) in the case of a corporation, directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities; (C) in the case of a limited liability company, is a managing member; or (D) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten per cent or more of the capital. For purposes of this subdivision, “control” means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise;

(6) “Generating leads” means (A) engaging in the business of selling leads for small loans; (B) generating or augmenting leads for small loans for other persons for or with the expectation of compensation or gain; or (C) referring consumers to other persons for a small loan for or with the expectation of compensation or gain for such referral, except “generating leads” shall not include generating or augmenting leads for small loans for an exempt person, as described in subsection (b) of section 36a-557, using the exempt person's data or customer information;

(7) “Lead” means any information identifying a potential consumer of a small loan;

(8) “Main office” means the main address designated on the system;

(9) “Open-end small loan” has the same meaning as “open-end credit”, as defined in 12 CFR 1026.2, as amended from time to time;

(10) “Person” means a natural person, corporation, company, limited liability company, partnership or association;

(11) “Small loan” means any loan of money or extension of credit, or the purchase of, or an advance of money on, a borrower's future income where the following conditions are present: (A) The amount or value is fifteen thousand dollars or less; and (B) the APR is greater than twelve per cent. For purposes of this subdivision, “future income” means any future potential source of money, and expressly includes, but is not limited to, a future pay or salary, pension or tax refund. For purposes of this section and sections 36a-556 to 36a-573, inclusive, “small loan” shall not include: (i) A retail installment contract made in accordance with section 36a-772; (ii) a loan or extension of credit for agricultural, commercial, industrial or governmental use; (iii) a residential mortgage loan, as defined in section 36a-485; or (iv) an open-end credit account that is accessed by a credit card issued by an exempt entity, as described in subdivision (1) of subsection (b) of section 36a-557;

(12) “Trigger lead” means a consumer report obtained pursuant to Section 604(C)(1)(B) of the Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. “Trigger lead” does not include a consumer report obtained by a small loan lender that holds or services existing indebtedness of the applicant who is the subject of the report; and

(13) “Unique identifier” means a number or other identifier assigned by protocols established by the system.

(1949 Rev., S. 5937; 1949, S. 2753d; 1957, P.A. 439, S. 1; 1963, P.A. 175, S. 1; 1969, P.A. 242, S. 1; P.A. 77-129, S. 1; 77-183, S. 1, 2; P.A. 78-121, S. 71, 113; 78-303, S. 50, 136; P.A. 87-9, S. 2, 3; P.A. 88-65, S. 33; P.A. 89-338, S. 1; P.A. 92-12, S. 65; P.A. 94-122, S. 258, 340; P.A. 97-13, S. 1; P.A. 98-264; P.A. 02-111, S. 34; P.A. 04-69, S. 19; P.A. 08-176, S. 58; P.A. 09-208, S. 40; 09-209, S. 18; P.A. 15-235, S. 13; P.A. 16-65, S. 19; P.A. 17-233, S. 12.)

History: 1963 act increased limit from $600 to $1,000 and added reference to charge or consideration in provision re 12% interest; 1969 act increased limit to $1,800 and deleted reference to loans of “goods or things in action”; P.A. 77-129 increased limit to $5,000; P.A. 77-183 authorized loans by building or savings and loan associations and wholly owned subsidiary service corporations; P.A. 78-121 included federal credit unions, deleted private bankers and referred to savings and loan associations rather than “building or” savings and loan associations in authority to make loans; P.A. 78-303 replaced banking commission with banking commissioner in keeping with requirements of P.A. 77-614 which repealed the commission; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 88-65 deleted a reference to industrial banks; P.A. 89-338 increased the limit from $5,000 to $10,000 for loans made under Sec. 36-233b, clarified that the section applies to out-of-state institutions and added the exception for entities making loans for agricultural, commercial, industrial or governmental use or extending credit through certain open-end credit plans; P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-225 transferred to Sec. 36a-555 in 1995; P.A. 97-13 increased limit from $5,000 to $15,000 for loans made under Sec. 36a-563, deleted reference to limit of $10,000 for loans made under Sec. 36a-565, and made reference to limit of $15,000 applicable to loans made under Sec. 36a-565 to conform to existing provisions of Sec. 36a-565; P.A. 98-264 added exceptions for licensed nondepository first mortgage lenders and secondary mortgage lenders and made technical changes; P.A. 02-111 amended Subdiv. (8) by deleting “nondepository first” and amended Subdiv. (9) by deleting “secondary”; P.A. 04-69 made technical changes, and amended Subdiv. (8) by substituting “36a-498a” for “36a-498” and inserting “when making first mortgage loans, as defined in section 36a-485”, and amended Subdiv. (9) by inserting “when making secondary mortgage loans, as defined in section 36a-510”; P.A. 08-176 added reference to “mortgage correspondent lender” in Subdiv. (8), deleted former Subdiv. (9), renumbered existing Subdiv. (10) as new Subdiv. (9) and made a technical change, effective July 1, 2008; P.A. 09-208 inserted Subdiv. (1) designator, added Subdivs. (2) and (3) re loan prohibitions and made conforming changes; P.A. 09-209 replaced reference to Secs. 36a-485 to 36a-498a with reference to Sec. 36a-489 and changed “first mortgage loans” to “residential mortgage loans”, effective July 31, 2009; P.A. 15-235 replaced reference to Sec. 36a-676(a)(8) with reference to 15 USC 1602, effective August 1, 2015; P.A. 16-65 replaced former provisions with introductory language and Subdivs. (1) to (13) re definitions, effective July 1, 2016; P.A. 17-233 amended Subdiv. (8) by redefining “main office”.

Annotation to former section 36-225:

Cited. 149 C. 158.

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Sec. 36a-556. (Formerly Sec. 36-226). Small loan lending and related activities prohibited without license or exemption. (a) Without having first obtained a small loan license from the commissioner pursuant to section 36a-565, no person shall, by any method, including, but not limited to, mail, telephone, Internet or other electronic means, unless exempt pursuant to section 36a-557:

(1) Make a small loan to a Connecticut borrower;

(2) Offer, solicit, broker, directly or indirectly arrange, place or find a small loan for a prospective Connecticut borrower;

(3) Engage in any other activity intended to assist a prospective Connecticut borrower in obtaining a small loan, including, but not limited to, generating leads;

(4) Receive payments of principal and interest in connection with a small loan made to a Connecticut borrower;

(5) Purchase, acquire or receive assignment of a small loan made to a Connecticut borrower; and

(6) Advertise or cause to be advertised in this state a small loan or any of the services described in subdivisions (1) to (5), inclusive, of this subsection.

(b) No person shall accept any lead, referral or application for a small loan to a prospective Connecticut borrower from a person who is not (1) licensed pursuant to section 36a-565, or (2) exempt from licensure pursuant to section 36a-557.

(c) No person shall sell, transfer, pledge, assign or otherwise dispose of any small loan made to a Connecticut borrower to any person who is not (1) licensed pursuant to section 36a-565, or (2) exempt from licensure pursuant to section 36a-557.

(1949 Rev., S. 5940; 1949, S. 2756d; P.A. 78-303, S. 51, 136; P.A. 87-9, S. 2, 3; P.A. 91-357, S. 52, 78; P.A. 92-12, S. 66; P.A. 94-122, S. 259, 340; P.A. 02-111, S. 35; P.A. 09-208, S. 8; P.A. 11-216, S. 31; P.A. 16-65, S. 20.)

History: P.A. 78-303 specified commissioner referred to in section as banking commissioner and substituted banking commissioner for banking commission elsewhere in section in keeping with P.A. 77-614 which repealed the banking commission; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 91-357 made technical changes; P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-226 transferred to Sec. 36a-556 in 1995; P.A. 02-111 deleted provisions re public notice, added “limited liability company” in Subdiv. (1), added provisions re commissioner's authority to deny application for license, changed “place of business” to “location”, and deleted provisions re maintenance of capital investment and exception; P.A. 09-208 authorized commissioner to deny application based on certain criminal convictions, specified when withdrawal of application becomes effective, and provided that commissioner may deny license up to 1 year after date the withdrawal became effective, effective July 7, 2009; P.A. 11-216 deleted provision re ten-year period re misdemeanor and felony convictions; P.A. 16-65 replaced former provisions with Subsecs. (a) to (c) re small loan lending and related activities prohibited without license or exemption, effective July 1, 2016.

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Sec. 36a-557. (Formerly Sec. 36-227). Exemptions. (a) The following persons are exempt from the requirement for licensure set forth in section 36a-556:

(1) A licensed pawnbroker;

(2) A person licensed as a consumer collection agency in accordance with section 36a-801 when engaged in the activities of a consumer collection agency in the normal course of business;

(3) A person who services small loans for an exempt person described in subsection (b) of this section, when such exempt person owns the small loans, provided the servicing arrangements include, in addition to receiving payments of principal and interest in connection with the small loans, the provision of accounting, recordkeeping and data processing services;

(4) A person who is a passive buyer of a small loan. For purposes of this subdivision, “passive buyer” means a person who: (A) Has acquired a small loan for investment purposes from a person who is either licensed or exempt from licensure under subdivisions (1) to (3), inclusive, of subsection (b) of this section; (B) will receive the principal and interest and any other moneys due under the small loan through a person who is either licensed or exempt from licensure under subdivisions (1) to (3), inclusive, of subsection (b) of this section; and (C) has had and will have no communications of any kind with the Connecticut borrower regarding the small loan it has acquired;

(5) A consumer reporting agency, as defined in Section 603(f) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time, when generating leads; and

(6) A retail seller who offers, extends or facilitates credit through an open-end or closed-end credit plan for the purchase of goods or services from such retail seller.

(b) The following persons are exempt from the provisions of sections 36a-555 to 36a-573, inclusive:

(1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured;

(2) Any wholly-owned subsidiary of such bank or credit union; and

(3) Any operating subsidiary where each owner of such operating subsidiary is wholly owned by the same bank or credit union.

(c) Loans made by an exempt person described in subsection (b) of this section shall be exempt from the provisions of sections 36a-555 to 36a-573, inclusive, including, without limitation, the provisions applicable to licensed persons, even if: (1) The exempt person utilizes the services of a person exempt from licensing or required to be licensed pursuant to section 36a-556 in connection with the small loans that are made or offered to be made by the exempt person described in subsection (b) of this section; and (2) a person exempt from licensing or required to be licensed pursuant to section 36a-556 engages in activities intended to assist a prospective Connecticut borrower or a Connecticut borrower in obtaining a small loan that is made or offered to be made by an exempt person described in subsection (b) of this section. Nothing in this subsection shall be construed as exempting persons required to be licensed pursuant to section 36a-556 from the requirements to obtain and maintain a license or from the provisions of sections 36a-562 to 36a-573, inclusive. Notwithstanding the foregoing, no person licensed or required to be licensed under section 36a-556 shall engage in any of the activities described in subsection (a) of section 36a-556 for any small loan that has a disclosed APR in excess of thirty-six per cent if that small loan contains any condition or provision inconsistent with the requirements of subsections (d) to (g), inclusive, of section 36a-558.

(1949 Rev., S. 5938; 1949, S. 2754d; P.A. 94-122 S. 260, 340; P.A. 02-111, S. 36; P.A. 09-208, S. 9; P.A. 11-216, S. 32; P.A. 16-65, S. 21; P.A. 18-173, S. 31, 32.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-227 transferred to Sec. 36a-557 in 1995; P.A. 02-111 deleted provisions re content of application; P.A. 09-208 designated existing provisions as Subsec. (a), added Subdivs. (1) and (2) therein re criminal conviction information to be included in application and added Subsec. (b) specifying when withdrawal of application becomes effective and providing that commissioner may deny license up to 1 year after date the withdrawal became effective, effective July 7, 2009; P.A. 11-216 amended Subsec. (a) to delete provision re ten-year period re history of criminal convictions, add provisions authorizing commissioner to conduct state and national criminal history records check of applicant and each member, officer and director of applicant and add provisions re abandonment of application; P.A. 16-65 replaced former provisions with new Subsecs. (a) to (c) re exemptions, effective July 1, 2016; P.A. 18-173 amended Subsec. (a)(4) by replacing references to Subsecs. (a)(1) to (a)(3) with references to Subsecs. (b)(1) to (b)(3) and amended Subsec. (c) by adding “or offered to be made” and “or offered” re small loan.

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Sec. 36a-558. (Formerly Sec. 36-228). Prohibitions re small loans and related activities. Permitted small loan provisions. Open-end small loans. Lead generation activities. (a) Except as provided in subsection (c) of section 36a-557, no person licensed or required to be licensed under section 36a-556 shall engage in any of the activities described in subsection (a) of section 36a-556 for any small loan that contains any condition or provision inconsistent with the requirements in subsections (d) to (g), inclusive, of this section.

(b) No person exempt from licensure under section 36a-557 shall engage in any of the activities described in subdivision (4), (5) or (6) of subsection (a) of section 36a-556 for any small loan made by a person who was licensed or who was required to be licensed under section 36a-556 that contains any condition or provision inconsistent with the requirements in subsections (d) to (g), inclusive, of this section.

(c) (1) Except as the result of a bona fide error or as set forth in subdivision (2) of this subsection, any small loan described in subsection (a) or (b) of this section that contains any condition or provision inconsistent with the requirements in subsections (d) to (g), inclusive, of this section shall not be enforced in this state. Such small loan shall be void and no person shall have the right to collect or receive any principal, interest, charge or other consideration thereon. Any person attempting to collect or receive principal, interest, charge or other consideration on such small loan shall be subject to the provisions of section 36a-570.

(2) Subdivision (1) of this subsection shall not apply when: (A) The inconsistent condition or provision is the result of a bona fide error; or (B) the small loan was lawfully made in compliance with a validly enacted licensed loan law of another state to a borrower who was not, at the time of the making of such loan, a Connecticut borrower but who has since become a Connecticut borrower.

(3) For the purposes of this subsection, the term “bona fide error” includes, but is not limited to, clerical, calculation and computer malfunction, programming and printing errors, but does not include an error of legal judgment with respect to a person's obligations under sections 36a-555 to 36a-573, inclusive, or under regulations implemented pursuant to section 36a-573.

(d) Small loans that are the subject of the activities set forth in subsections (a) and (b) of this section shall not contain:

(1) For a small loan that is under five thousand dollars, an annual percentage rate that exceeds the lesser of thirty-six per cent or the maximum annual percentage rate for interest that is permitted with respect to the consumer credit extended under the Military Lending Act, 10 USC 987 et seq., as amended from time to time, or for a small loan that is between five thousand and fifteen thousand dollars, an annual percentage rate that exceeds twenty-five per cent;

(2) For other than an open-end small loan, a provision that increases the interest rate due to payment default;

(3) A payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance;

(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) A prepayment penalty;

(7) An adjustable rate provision;

(8) 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 that are inconsistent with the law as set forth in the general statutes or common law; or (B) limits any claim or defense the borrower may have;

(9) A call provision that permits the lender, in its sole discretion, to accelerate the indebtedness, except when repayment of the loan is accelerated by a bona fide default pursuant to a due-on-sale clause;

(10) A security interest, except as provided in subsection (e) of this section; or

(11) Fees or charges of any kind, except as expressly permitted by subsection (e) of this section.

(e) Small loans as described in subsections (a) and (b) of this section may contain provisions:

(1) For late fees, if: (A) Such fees are assessed after an installment remains unpaid for ten or more consecutive days, including Sundays and holidays; (B) such fees do not exceed five per cent of the outstanding installment payment, excluding any previously assessed late fees, or a total of twenty-five dollars per month, whichever is less; and (C) no interest is charged on such fees;

(2) Allowing charges for a dishonored check or any other form of returned payment, provided the total fee for such returned payment shall not exceed twenty dollars;

(3) Allowing for collection of deferral charges, but only upon the specific written authorization of the borrower and in a total amount not to exceed the interest due during the applicable billing cycle;

(4) Allowing for the accrual of interest after the maturity date or the deferred maturity date, provided such interest shall not exceed twelve per cent per annum computed on a daily basis on the respective unpaid balances;

(5) Providing for reasonable attorney's fees subject to the conditions and restrictions set forth in section 42-150aa;

(6) Including credit life insurance or credit accident and health insurance subject to the conditions and restrictions set forth in section 36a-559;

(7) Taking a security interest in a motor vehicle in connection with a closed-end small loan made solely for the purchase or refinancing of such motor vehicle, provided the APR of such loan shall not exceed the rates indicated for the respective classifications of motor vehicles as follows: (A) New motor vehicles, fifteen per cent; (B) used motor vehicles of a model designated by the manufacturer by a year not more than two years prior to the year in which the sale is made, seventeen per cent; and (C) used motor vehicles of a model designated by the manufacturer by a year more than two years prior to the year in which the sale is made, nineteen per cent.

(f) Open-end small loans as described in subsections (a) and (b) of this section shall, in addition to the requirements set forth in subsections (d) and (e) of this section:

(1) Not provide for an advance of money exceeding at any one time an unpaid principal of fifteen thousand dollars;

(2) Provide for payments and credits to be made to the same borrower's account from which advances, interests, charges and costs on such loan are debited;

(3) Provide for interest to be computed on any unpaid principal balance of the account in each billing cycle by one of the following methods: (A) By converting the APR to a daily rate and multiplying such daily rate by the daily unpaid principal balance of the account, in which case the daily rate is determined by dividing the APR by three hundred sixty-five; or (B) by converting the APR to a monthly rate and multiplying the monthly rate by the average daily unpaid principal balance of the account in the billing cycle, in which case (i) the monthly rate is determined by dividing the APR by twelve, and (ii) the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle. In either of such computations, the billing cycle shall be monthly and the unpaid principal balance on any day shall be determined by adding to any balance unpaid as of the beginning of such day all advances and other permissible amounts charged to the borrower and deducting all payments and other credits made or received that day;

(4) Not compound interest or charges by adding any unpaid interest or charges authorized by sections 36a-555 to 36a-573, inclusive, to the unpaid principal balance of the borrower's account; or

(5) Not include any other fees or charges of any kind, except as expressly permitted by subsection (g) of this section.

(g) Open-end small loans as described in subsections (a) and (b) of this section, in addition to the requirements set forth in subsections (d) to (f), inclusive, of this section, may:

(1) Provide for an annual fee for the privileges made available to the borrower under the open-end loan agreement, provided such annual fee shall not exceed fifty dollars; and

(2) Include credit life insurance or credit accident and health insurance, subject to the conditions and restrictions set forth in section 36a-559.

(h) No person licensed or required to be licensed under sections 36a-555 to 36a-573, inclusive, who is engaged in generating leads shall in connection with lead generation activities:

(1) Initiate any outbound telephone call using an automatic telephone dialing system or an artificial or prerecorded voice without the prior express written consent of the recipient;

(2) Fail to transmit or cause to transmit the lead generator's name and telephone number to any caller identification service in use by a consumer;

(3) Initiate an outbound telephone call to a consumer's residence between nine o'clock p.m. and eight o'clock a.m. local time at the consumer's location;

(4) Fail to clearly and conspicuously identify the lead generator and the purpose of the contact in its written and oral communications with a consumer;

(5) Fail to provide the ability to opt out of any unsolicited advertisement communicated to a consumer via an electronic mail address;

(8) Sell, lease, exchange or otherwise transfer or release the electronic mail address or telephone number of a consumer who has requested to be opted out of future solicitations;

(9) Collect, buy, lease, exchange or otherwise transfer or receive an individual's Social Security number or bank account number;

(10) Use information from a trigger lead to solicit consumers who have opted out of firm offers of credit under the federal Fair Credit Reporting Act;

(11) Initiate a telephone call to a consumer who has placed his or her contact information on a federal or state Do Not Call list, unless the consumer has provided express written consent;

(13) Refer applicants to, or receive a fee from, any person who is required to be licensed under this title, but was not so licensed as of the time of the performance of such lead generator's services; or

(14) Assist or aid and abet any person in the conduct of business requiring licensure under this title when such person does not hold the license required.

(1949 Rev., S. 5938; 1949, S. 2754d; March, 1958, P.A. 27, S. 47; P.A. 88-150, S. 3; P.A. 92-89, S. 5, 20; P.A. 94-104, S. 2; 94-122, S. 338, 340; P.A. 96-71, S. 6, 8; P.A. 02-111, S. 37; P.A. 04-69, S. 20; P.A. 05-46, S. 7; P.A. 16-65, S. 22; P.A. 17-233, S. 13, 14; P.A. 18-173, S. 96.)

History: P.A. 88-150 specified that the license fee is nonrefundable and added the provision re expiration of licenses on June thirtieth; P.A. 92-89 increased the license fees from $200 to $400; P.A. 94-104 changed the license renewal deadline from June twentieth to June first, added a $100 late fee and added a $100 processing fee for a person whose license expired within 60 days of his application; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-228 transferred to Sec. 36a-558 in 1995; P.A. 96-71 amended Subsec. (a) to delete “nonrefundable” modifying “license fee” and added Subsec. (b) to make all fees required by this section nonrefundable, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by providing that license fee for “small loan lender” license is $800, provided if application is filed not earlier than one year before the expiration date of license, fee is $400, by adding provision re license that is renewed effective July 1, 2003, shall expire on September 30, 2005, 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 licenses that expire on June 30, 2003, and by making conforming and technical changes; P.A. 04-69 inserted new Subsec. (b), 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 redesignated existing Subsec. (b) as Subsec. (c); P.A. 05-46 amended Subsec. (a) to provide that renewal application 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. 16-65 replaced former provisions with new Subsecs. (a) to (h) re small loan prohibitions and permitted provisions, open-end small loans and lead generation activities, effective July 1, 2016; P.A. 17-233 amended Subsec. (d) by deleting provision re calculation under Military Lending Act in Subdiv. (1), and adding “payment” in Subdiv. (2), and amended Subsec. (e)(1)(B) by deleting “the lesser of”; P.A. 18-173 amended Subsec. (d)(1) by adding “lesser of thirty-six per cent or the”.

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Sec. 36a-559. (Formerly Sec. 36-229). Credit life insurance. Credit accident and health insurance. (a) Subject to the conditions provided in this section, insurance may be sold to a Connecticut borrower by a licensee at the request of the borrower (1) for insuring the life of persons obligated on a small loan pursuant to sections 38a-645 to 38a-658, inclusive, and (2) providing accident and health insurance covering one person on a small loan pursuant to sections 38a-645 to 38a-658, inclusive. In the case of credit life insurance sold under subdivision (1) of this subsection, the amount of the insurance shall be sufficient to pay the total balance of the loan due on the date of the insured's death. Credit accident and health insurance sold under subdivision (2) of this subsection shall not provide indemnity against the risk of a borrower becoming disabled for a period of less than fourteen days, except that it may provide for retroactive coverage if the disability continues for the period stated in the policy. Irrespective of the number of obligors, only one obligor may be insured, except that life insurance may cover both a borrower and such borrower's spouse where both are obligors on a small loan. A licensee shall not require the purchase of insurance as a condition precedent to the making of a small loan. A licensee shall, both verbally and in writing, inform the borrower prior to entering into any small loan contract of his or her right not to purchase credit insurance. In order to be excluded from the APR calculation, the charge for insurance shall be reasonable, the licensee may not receive any direct or indirect compensation relating to the sale of the insurance and the charge for the insurance may not be paid to an affiliate of the licensee.

(b) If a borrower obtains credit accident and health insurance, the borrower shall have the right to cancel such credit accident and health insurance at any time by giving written notice of cancellation to the licensee. Notification of this right shall be made in the borrower's insurance election. All persons obligated on the loan shall agree, in writing, to the cancellation and return all certificates of insurance. Upon cancellation, the licensee shall, at the licensee's option, either refund the insurance charges to the borrower or apply them to the unpaid balance of the loan.

(c) For the purposes of this section, in the case of an open-end small loan, the additional charge for credit life insurance or credit accident and health insurance shall be calculated in each billing cycle by applying the current monthly premium rate for such insurance, as such rate may be determined by the Insurance Commissioner, to the unpaid balances in the account, using any of the methods for the calculation of loan charges specified in subdivision (4) of subsection (f) of section 36a-558. No credit life insurance or credit accident and health insurance written in connection with an open-end small loan shall be cancelled by the licensee because of delinquency of the borrower in the making of the required minimum payments on the loan unless (1) one or more of such payments is past due for a period of ninety days or more, and (2) the licensee advances to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited from the borrower's account. Any cancellation shall be effective at the end of the billing cycle in which the notice is received and the licensee shall discontinue any further charges for credit accident and health insurance.

(1949 Rev., S. 5940; 1949, S. 2756d; P.A. 84-32, S. 2; P.A. 94-122, S. 261, 340; P.A. 06-35, S. 1; P.A. 16-65, S. 23.)

History: P.A. 84-32 permitted a license to be transferred to cover a place of business located in an adjacent city or town; P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; Sec. 36-229 transferred to Sec. 36a-559 in 1995; P.A. 06-35 required that change in licensee's place of business be in accordance with Sec. 36a-562 and provided that license shall remain in force and effect until expiration, effective May 8, 2006; P.A. 16-65 replaced former provisions with Subsecs. (a) to (c) re credit life, accident and health insurance, effective July 1, 2016.

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Sec. 36a-560. (Formerly Sec. 36-230). Restrictions on licensee. No licensee shall:

(1) Cause a borrower, including, but not limited to, a comaker or guarantor, to owe at any time more than fifteen thousand dollars in principal on one or more small loans;

(2) Induce or permit a borrower to split or divide any small loan or loans, or induce or permit a borrower to become obligated, directly or indirectly, under more than one contract of loan at the same time, primarily for the purpose of obtaining rates or charges that would otherwise be prohibited by any applicable provision of sections 36a-555 to 36a-573, inclusive;

(3) Take any (A) confession of judgment, (B) power of attorney, (C) note or promise to pay that does not state the actual amount of the loan, the time period for which the loan is made and the charges for such loan, or (D) instrument related to the loan in which blanks are left to be filled after the loan is made;

(4) Offer the borrower any other product or service for which there is or will ever be any cost to the borrower in connection with a small loan unless (A) permitted by sections 36a-555 to 36a-573, inclusive, (B) authorized under another license, or by applicable exemption from any requirement for such licensure, to offer such product or services, or (C) if no separate license or exemption therefrom is required to offer such product or services, authorized in advance, in writing, by the commissioner upon being satisfied that such other product or service is of such a character that the granting of such authority would not permit or easily facilitate evasion of the provisions of sections 36a-555 to 36a-573, inclusive, or of any regulations promulgated thereunder; or

(5) Renew or refinance a small loan unless the renewal or refinancing of the loan will result in a distinct advantage to the borrower, provided restoration to a contractually up-to-date condition shall not, in itself, constitute a distinct advantage to the borrower.

(1949 Rev., S. 5943; P.A. 78-303, S. 52, 136; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 262, 340; P.A. 08-119, S. 7; P.A. 16-65, S. 24; P.A. 18-173, S. 33.)

History: P.A. 78-303 replaced banking commission with banking commissioner in keeping with provisions of P.A. 77-614; (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-230 transferred to Sec. 36a-560 in 1995; P.A. 08-119 added requirement for surrender of license when licensee ceases to engage in the business of a small loan lender; P.A. 16-65 replaced former provisions with introductory language and Subdivs. (1) to (5) re restrictions on licensee, effective July 1, 2016; P.A. 18-173 made a technical change.

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Sec. 36a-561. (Formerly Sec. 36-231). Prohibited practices. No person licensed or required to be licensed and no control person shall, directly or indirectly:

(1) Assist or aid and abet any person in conduct prohibited by sections 36a-555 to 36a-573, inclusive;

(2) Employ any scheme, device or artifice to defraud or mislead any person in connection with a small loan;

(3) Make, in any manner, any false, misleading or deceptive statement or representation in connection with a small loan or engage in bait and switch advertising;

(4) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with a small loan; or

(5) Fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable laws and regulations concerning small loan lenders.

(1949 Rev., S. 5948 (1); P.A. 94-122, S. 263, 340; P.A. 16-65, S. 25; P.A. 17-233, S. 15.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-231 transferred to Sec. 36a-561 in 1995; P.A. 16-65 replaced former provisions with introductory language and Subdivs. (1) to (4) re prohibited practices, effective July 1, 2016; P.A. 17-233 added reference to control persons, added Subdiv. (5) re failure to establish, enforce and maintain policies and procedures, and made a technical change.

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Sec. 36a-562. (Formerly Sec. 36-232). Main and branch offices. In each case where a license is required by section 36a-556, the licensee shall have a main office license and may have a branch office license. All offices shall be located in the United States. Each main office shall have a qualified individual, who shall be responsible for the actions of the licensee and for supervising all aspects of the licensee's small loan business. Each branch shall have a branch manager, who shall be responsible for the actions of the licensee and for supervising all aspects of the branch's small loan business.

(1949 Rev., S. 5944; 1949, S. 2759d; P.A. 84-32, S. 1; P.A. 92-12, S. 67; P.A. 94-122, S. 264, 340; P.A. 06-35, S. 2; P.A. 16-65, S. 26; P.A. 18-173, S. 34.)

History: P.A. 84-32 permitted a licensee to change his place of business to an adjacent city or town with the approval of the banking commissioner; P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-232 transferred to Sec. 36a-562 in 1995; P.A. 06-35 required licensees to apply to commissioner prior to changing place of business within the same city or town or to an adjacent city or town, rather than giving written notice of change to commissioner, and made technical and conforming changes, effective May 8, 2006; P.A. 16-65 replaced former provisions with provisions re main and branch offices, effective July 1, 2016; P.A. 18-173 added “the actions of the licensee and for”.

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Sec. 36a-563. (Formerly Sec. 36-233). Application for small loan license. (a) An application for a small loan license shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner on the system. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-555 to 36a-573, inclusive. The applicant shall, at a minimum, furnish to the system, in a form prescribed by the system, information concerning the identity of the applicant and any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. The commissioner, in accordance with section 29-17a, may conduct a state and national criminal history records check of the applicant and its control persons, qualified individual and branch manager, and, in accordance with section 36a-24b, may require the submission of fingerprints to the Federal Bureau of Investigation or other state, national or international criminal databases and may require control persons, qualified individuals and branch managers to furnish authorization for the system and the commissioner to obtain an independent credit report from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. Applicants may also be required to upload on the system an audited financial statement prepared by a certified public accountant in accordance with generally accepted accounting principles dated not later than ninety days after the end of the applicant's fiscal year. Such financial statement shall include a balance sheet, income statement, statement of cash flows and all relevant notes thereto. If the applicant is a start-up company, only an initial statement of condition shall be required.

(b) The commissioner may deem an application for a small loan license abandoned if the applicant fails to respond to any request for information required under sections 36a-555 to 36a-573, inclusive, or any regulation adopted pursuant to section 36a-573. The commissioner shall notify the applicant on the system that if such information is not submitted on or before sixty days after the date of such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-555 to 36a-573, inclusive.

(1949 Rev., S. 5949; 1949, S. 2762d; 1957, P.A. 439, S. 3; 1963, P.A. 175, S. 2; 1969, P.A. 242, S. 2, 3; P.A. 73-419; P.A. 75-99, S. 1–4, 6; P.A. 77-129, S. 2–5; P.A. 80-45, S. 1, 2; P.A. 81-102, S. 1–3; P.A. 83-358, S. 1, 2; P.A. 92-12, S. 68; P.A. 97-13, S. 2; P.A. 00-164, S. 1; P.A. 07-217, S. 153, 154; P.A. 15-235, S. 18; P.A. 16-65, S. 27.)

History: 1963 act incorporated previous provisions as Subsecs. (a) and (h) substituting “charges” for “interest” where occurring, raised loan limit in Subsec. (a) from $600 to $1,000 “excluding charges” and changing method of calculating charges, raised limit in Subsec. (h) from $600 to $1,000, substituted 24 months and 15 days for 20 months, deleted prohibition against granting additional loan to borrower until unpaid balance of previous loan is paid in full and required consideration of renewed or refinanced contract as separate loan transaction in same Subsec. and inserted Subsecs. (b) to (g); 1969 act increased loan limit in Subsecs. (a) and (h) to $1,800, raised amount charged on excess of $300 from $9 to $11 per $100 in Subsec. (a), specified applicability of provisions to loans under chapter in Subsec. (h) and made 24-month and 15-day period applicable where cash advance was $1,000 or less and allowed 36-month and 15-day period where advance exceeded that amount; P.A. 73-419 added provisions governing date when prepayment is deemed to have occurred in Subsec. (f); P.A. 75-99 raised loan limit in Subsecs. (a) and (h) from $1,800 to $5,000 and in Subsec. (a) made previous charge rates applicable to loans not exceeding former limit and added rates for other allowed loans, amending Subsec. (h) accordingly and adding reference to loans secured by real estate, replaced default charge of $0.05 per dollar with charge consisting of the lesser of $5 or $0.05 per dollar and added Subsec. (i) authorizing loans in excess of $1,800 if secured by real estate; P.A. 77-129 clarified loan limits in Subsec. (a) by referring to unsecured or secured loans and to types of security, made previous provisions of Subsec. (b) applicable to loans originally scheduled for repayment within 48 months and 15 days and added provisions re loans with longer repayment period, deleted references to loans secured by real estate in Subsec. (h) and added provision which allowed extension of renewal period to the number of months loan maturity day has been extended through deferred payments and repealed Subsec. (i); P.A. 80-45 raised amount which determines charge rate in Subsec. (a)(1) from $300 to $600; P.A. 81-102 amended Subsec. (d) by increasing the maximum default charge from $5 to $7.50 and establishing a minimum default charge of $3, and amended Subsec. (e) to make the length of the extension of the maturity of a contract subject to the original repayment period of the loan; P.A. 83-358 added Subsec. (j) concerning allowable closing costs on loans secured by real estate and added Subsec. (k) prohibiting unauthorized charges for default on any loan; P.A. 92-12 made technical changes; Sec. 36-233 transferred to Sec. 36a-563 in 1995; P.A. 97-13 increased limit from $5,000 to $15,000 in Subsecs. (a) and (h) and made technical changes (Revisor's note: A reference in Subsec. (a) to Secs. “36-555 to 36a-573”, inclusive, was changed editorially by the Revisors to Secs. “36a-555 to 36a-573”, inclusive); P.A. 00-164 amended Subsec. (h) by adding provision re service charges imposed for dishonored checks; P.A. 07-217 made technical changes in Subsecs. (c) and (e), effective July 12, 2007; P.A. 15-235 amended Subsec. (b) to change “36a-685” to “36a-686”, effective August 1, 2015; P.A. 16-65 replaced former provisions with new Subsecs. (a) and (b) re small loan license application, effective July 1, 2016.

Annotations to former section 36-233:

Under former statute which applied to loans not exceeding $300, loan violates section and is void where it results in accommodation comaker becoming obligated for more than $300. 109 C. 116. Cited. 115 C. 104; 120 C. 155. Provision in chattel mortgage for attorney's fees in case of reclamation will render note void. Id., 193. Effect of receipt showing more than 3% interest was charged. 124 C. 349. Where no security was in fact given, erroneous printed statement as to security was not fatal. Id., 353. Cited. 149 C. 159; 201 C. 89.

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Sec. 36a-564. (Formerly Sec. 36-233a). License fees. Renewal. Automatic suspension. (a) Each applicant for a small loan license shall pay to the system any required fees or charges and a license fee of four hundred dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a small loan license shall pay to the system any required fees or charges and a renewal fee of four hundred dollars.

(b) In accordance with section 36a-24b, the commissioner may automatically suspend any license if such person receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After the license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew pursuant to section 36a-570 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require such licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.

(c) No abatement of the license fee shall be made if an application is denied or withdrawn prior to the issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which the license was issued. All fees required by this section shall be nonrefundable.

(1963, P.A. 175, S. 8; P.A. 94-122, S. 265, 340; P.A. 16-65, S. 28; P.A. 18-173, S. 35.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-233a transferred to Sec. 36a-564 in 1995; P.A. 16-65 replaced former provisions with Subsecs. (a) to (c) re license fees, license renewal and automatic suspension of license, effective July 1, 2016; P.A. 18-173 amended Subsec. (b) by replacing reference to Sec. 36a-27b with reference to Sec. 36a-24b, replacing “shall” with “may” re automatically suspending license, designating existing provisions re giving licensee notice of automatic suspension as Subdiv. (1), designating existing provisions re requiring licensee to take or refrain from taking action as Subdiv. (2) and amending same to replace “action that, in the opinion of the commissioner, will effectuate” with “action as the commissioner deems necessary to effectuate”, and amended Subsec. (c) by adding “an application is denied or withdrawn prior to the issuance of the license or if”.

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Sec. 36a-565. (Formerly Sec. 36-233b). Findings required for issuance of license. Denial of application. Minimum funds. Standards for renewal. Surrender of license. (a) Upon the filing of the required application and license fee under sections 36a-563 and 36a-564, the commissioner shall investigate the facts and no license shall be granted unless the commissioner finds that: (1) The experience, character and general fitness of the applicant and its control persons, qualified individual and any branch manager are satisfactory; (2) the activities to be conducted by the applicant will be for the convenience and advantage of the consumers it seeks to serve; (3) the applicant has available the funds required by subsection (d) of this section; and (4) the applicant and its control persons and any qualified individual and branch manager have not made a material misstatement in the application. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the denial and the reasons for such denial.

(b) Notwithstanding the provisions of subsection (a) of this section, the commissioner may deny an application if the applicant or its control persons or qualified individual or branch manager have demonstrated a lack of financial responsibility. For purposes of this subsection, a person has shown that he or she is not financially responsible when such person has shown a disregard in the management of such person's own financial condition. A determination that a person has not shown financial responsibility may include, but is not limited to: (1) Current outstanding judgments, except judgments solely as a result of medical expenses; (2) current outstanding tax liens or other government liens and filings; (3) foreclosures during the three years preceding the date of application for an initial license or renewal of a license; or (4) a pattern of seriously delinquent accounts within the past three years.

(c) Notwithstanding the provisions of subsection (a) of this section, and subject to the provisions of section 46a-80, the commissioner may deny an application based on the history of criminal convictions of the applicant or of its control persons or qualified individual or branch manager.

(d) Applicants shall have a minimum of fifty thousand dollars continuously available for each licensed location. The requirement of this subsection may be met by cash on hand, cash in bank or lines of credit.

(e) The minimum standards for renewal of a small loan license shall include the following: (1) The applicant continues to meet the minimum standards under subsections (a) to (d), inclusive, of this section; (2) the applicant has paid all required fees for renewal of the license; and (3) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a small loan lender failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.

(f) Surrender of a license shall be governed by subsection (c) of section 36a-51. Not later than fifteen days after the date a licensee ceases to engage in this state in the business of a small loan lender for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall request surrender of the license on the system for each location in which such licensee has ceased to engage in such business.

(g) Every license shall remain in force and effect until the license has been surrendered, revoked or suspended, or has expired in accordance with the provisions of sections 36a-555 to 36a-573, inclusive.

(P.A. 79-249; P.A. 89-338, S. 2; P.A. 90-99, S. 1, 2; P.A. 91-25, S. 1, 2; P.A. 95-28; P.A. 96-38; P.A. 00-164, S. 2; P.A. 16-65, S. 29; P.A. 17-236, S. 6; P.A. 18-173, S. 36.)

History: P.A. 89-338 increased the loan limit in Subsecs. (a) and (c) from $5,000 to $10,000 and made one-hundred-twenty-month and 15-day payment period where a cash advance brought the balance in excess of $5,000; P.A. 90-99 amended Subsec. (c) by defining “bona fide error” and amended Subsec. (h) by authorizing the sale of credit accident and health insurance on open-end loans and specifying borrowers right to terminate coverage; P.A. 91-25 amended Subsec. (a) by adding “interest” to Subdiv. (2) and changing “charges are” to read “interest is” in Subdiv. (3), amended Subsec. (c) by limiting interest on open-end loans to an annual percentage rate not to exceed 19.8% and adding Subdivs. (1) to (4), inclusive, re permissible loan charges, amended Subsec. (d) by adding “interest or”, amended Subsec. (e) by changing “charges” to read “interest” and made technical changes to Subdivs. (f) and (g); Sec. 36-233b transferred to Sec. 36a-565 in 1995; P.A. 95-28 changed “ten” to “fifteen” in Subsecs. (a)(1), defining “open-end loan”, and (c), deleted Subsec. (g) re maximum term for full payment and re maximum specified annual percentage rates, and relettered Subsecs. (h) to (k), inclusive, as Subsecs. (g) to (j) (Revisor's note: A reference in Subsec. (g) to “Commissioner of Insurance” was changed editorially by the Revisors to “Insurance Commissioner” for consistency with customary statutory usage); P.A. 96-38 amended Subsec. (c)(1) to increase permitted annual fee from $35 to $50; P.A. 00-164 amended Subsec. (c)(3) by replacing language re bad check charge with language re service charges for dishonored check; P.A. 16-65 replaced former provisions with new Subsecs. (a) to (g) re findings required for issuance of license, denial of application, minimum funds, standards for renewal, withdrawal of application, surrender of license and failure to renew, effective July 1, 2016; P.A. 17-236 amended Subsec. (c) by making a technical change, effective July 11, 2017; P.A. 18-173 amended Subsec. (e) by replacing “subsection (a)” with “subsections (a) to (d), inclusive,” and adding provisions re failure to satisfy standards for license renewal and commissioner's authority to adopt procedures for reinstatement of expired licenses, amended Subsec. (f) by deleting provisions re withdrawal of application for license and commissioner's authority to deny license prior to withdrawal and deleting former Subdiv. (2) re license that expires due to licensee's failure to renew, and made a technical change.

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Sec. 36a-566. (Formerly Sec. 36-234). License not assignable or transferable. Use of name. Change in control person, name or place of business. Automatic suspension of license. (a) No license issued under section 36a-556 shall be assignable or transferable. Any change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. For purposes of this section, “change of control” means any change causing the majority ownership, voting rights or control of a licensee to be held by a different control person or group of control persons.

(b) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves of such name. No licensee shall engage in any activity requiring a small loan license under any other name or at any other place of business than that named in the license. Any proposed change in a licensee's name or to the licensee's place of business shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change to the licensee's name or place of business shall be made without the commissioner's approval of such change.

(c) The commissioner may automatically suspend any license for a violation of this section or upon a failure of the licensee to designate a qualified individual or branch manager who meets the requirements set forth in section 36a-562 not later than thirty-days after such position becomes vacant. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-570 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(1957, P.A. 439, S. 5; 1959, P.A. 555; 1963, P.A. 175, S. 3; 1969, P.A. 242, S. 4; P.A. 79-134; P.A. 83-345, S. 1, 2; P.A. 16-65, S. 30; P.A. 18-173, S. 37; P.A. 21-138, S. 9.)

History: 1959 act expanded and clarified insurance refund provisions; 1963 act clarified provision re amount of life insurance required; 1969 act deleted detailed provisions re insurance amounts, charges and refunds and specified that gain or benefit to licensee not deemed additional or excess charges; P.A. 79-134 added exception re coverage of married couple; P.A. 83-345 authorized the providing of accident and health insurance covering one person on a loan, required licensees to inform the borrower of his right not to purchase credit insurance and permitted borrowers to cancel any insurance coverage up to 15 days after the loan is made; Sec. 36-234 transferred to Sec. 36a-566 in 1995; P.A. 16-65 replaced former provisions with new Subsecs. (a) and (b) re license not to be assignable or transferable, use of name and change in control persons, name or place of business, effective July 1, 2016; P.A. 18-173 amended Subsec. (a) by replacing “proposed change” with “change”, replacing “persons” with “person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee,”, and deleting “to the control persons”, added new Subsec. (c) re automatic suspension of license, and made technical and conforming changes; P.A. 21-138 defined “change of control” in Subsec. (a).

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Sec. 36a-567. (Formerly Sec. 36-235). Change in information. Required system filing or notice to commissioner. (a) Except as otherwise specified in section 36a-566, each small loan license applicant or licensee, and each control person, qualified individual and branch manager of the applicant or licensee shall file any change in the information most recently submitted to the system by such licensee, control person, qualified individual or branch manager in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner, in writing, of such change in the information not later than fifteen days after the date the applicant, licensee, control person, qualified individual or branch manager has reason to know of such change.

(b) A licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the licensee had reason to know of the occurrence: (1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee; (2) filing of a criminal indictment against the licensee in any way related to the activities of the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee's control persons or qualified individual or branch manager; (3) receiving notification of the institution of a license denial, cease and desist, suspension or revocation procedures, or other formal or informal action by any governmental agency against the licensee or any control person, branch manager or qualified individual of the licensee and the reasons therefor; (4) receiving notification of the initiation of any action against the licensee or any control person, branch manager or qualified individual of the licensee by the Attorney General or the attorney general of any other state and the reasons therefor; (5) receiving notification of a material adverse action against the licensee or any control person, branch manager or qualified individual of the licensee with respect to any existing line of credit or warehouse credit agreement; (6) receiving notification of any of the licensee's control persons or qualified individual or branch manager filing or having filed for bankruptcy; or (7) a decrease in the available funds required by section 36a-565.

(1949 Rev., S. 5950; 1949, S. 2763d; 1963, P.A. 175, S. 4; 1969, P.A. 454, S. 35; P.A. 92-12, S. 69; P.A. 94-84; P.A. 16-65, S. 31; P.A. 18-173, S. 38.)

History: 1963 act specified in Subdiv. (a) that only certain Subsecs. of Sec. 36-233 need be stated, and amended Subdiv. (b) to require receipt for cash payments only where previously receipt required for all forms of payments; 1969 act deleted former Subdivs. (a) and (b) which required delivery to borrower of statement containing amount owed, scheduled payments, etc. and receipts for cash payments, relettering accordingly; P.A. 92-12 made technical changes; P.A. 94-84 authorized returning to the borrower a duplicate of the original document clearly identifying the loan, showing such loan has been paid in full and the note cancelled; Sec. 36-235 transferred to Sec. 36a-567 in 1995; P.A. 16-65 replaced former provisions with Subsecs. (a) and (b) re change in information and required system filing or notice to commissioner, effective July 1, 2016; P.A. 18-173 substantially amended Subsec. (a) including by adding references to control person, qualified individual and branch manager, adding references to application and applicant, and replacing “directly notify” with “notify”, amended Subsec. (b) by replacing “directly notify” with “notify”, adding references to control person, branch manager, and qualified individual in Subdivs. (3) to (5), and made technical and conforming changes.

Annotations to former section 36-235:

Actual amount of loan must be stated; “for value received” and amount of note are not sufficient; rate of interest must be clearly stated. 115 C. 102. Under former requirement of statement re maturity, failure to state all contingencies which would accelerate payment of principal rendered note unenforceable. 120 C. 152; 124 C. 349. Not necessary that receipt state period for which interest was due or state balance due. Id., 351. Statement held insufficient because it stated different day of week for installment payments from day designated in note. 127 C. 523.

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Sec. 36a-568. (Formerly Sec. 36-236). Unique identifier of licensee. Advertising of licensee. (a) The unique identifier of any small loan licensee shall be clearly shown on the licensee's application forms for a small loan and all of the licensee's solicitations or advertisements, including business cards or Internet web sites, and any other documents as established by rule, regulation or order of the commissioner.

(b) The advertising of a licensee: (1) Shall not include any statement that such licensee is endorsed in any way by this state, except it may include a statement that such licensee is licensed in this state; (2) shall not include any statement or claim which is deceptive, false or misleading; (3) shall be retained for two years from the date of its use; and (4) shall otherwise conform to the requirements of sections 36a-555 to 36a-573, inclusive, and any regulations issued thereunder.

(1949 Rev., S. 5951; 1949, S. 2764d; 1963, P.A. 175, S. 5; 1969, P.A. 242, S. 5; 454, S. 36; P.A. 75-99, S. 5, 6; P.A. 77-129, S. 6; P.A. 16-65, S. 32; P.A. 18-173, S. 39.)

History: 1963 act rephrased provisions and increased maximum repayment period from 20 months to 24 months and 15 days and time for payment of first installment from 45 days to 1 month and 15 days; 1969 acts prohibited taking mortgage or lien except as authorized in Sec. 36-234, made previous repayment period applicable to loans not exceeding $1,000 and allowed 36 months and 15 days for larger loans and deleted provision prohibiting licensee from taking any note or promise to pay which “does not state the actual amount of the loan, the time for which it is made and the charges” and from taking “any instrument in which blanks are left to be filled after the loan is made”; P.A. 75-99 specified conditions for taking security interest in real estate and stated that time for repayment of loan secured by real estate may not be restricted; P.A. 77-129 clarified use of chattels and personal property as loan security and deleted reference to security authorized in Sec. 36-234, allowed repayment period of 72 months and 15 days in cases where cash advance exceeded $1,800, deleted statement that time for loan repayment where loan secured by real estate is not to be limited and added provision re applicability of Sec. 42-98 to repossession of property other than real estate; Sec. 36-236 transferred to Sec. 36a-568 in 1995; P.A. 16-65 replaced former provisions with Subsecs. (a) and (b) re unique identifier and advertising of licensee, effective July 1, 2016; P.A. 18-173 amended Subsec. (b) by making technical changes and replacing “one year” with “two years” in Subdiv. (3).

Annotation to former section 36-236:

Cited. 115 C. 105.

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Sec. 36a-569. (Formerly Sec. 36-237). Books and records. Reports of condition. Submission of sworn statement and other information. (a) Each small loan licensee shall keep adequate books and records at the place of business specified in the license in such form and in such manner as the commissioner prescribes and shall preserve all books, accounts and records for the following time periods: (1) If the licensee offered, solicited, brokered, directly or indirectly arranged, placed, found or generated leads for a small loan, at least two years after the date it engaged in such activity; (2) if the licensee made, owns or services a small loan, at least two years after the date the licensee (A) no longer owns the small loan, or (B) has made the final entry on the small loan.

(b) Each licensee shall make such books and records available at such office or send such books and records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested to do so by the commissioner. Upon request, the commissioner may grant a licensee additional time to make such books and records available or send them to the commissioner.

(c) Licensees shall be required to complete any reports of condition required by the system. Any such reports of condition shall be accurately and timely filed on the system in accordance with the due dates and formats required by the system.

(d) Until such time as information is able to be captured by a system-based report, each licensee shall furnish annually, on or before January thirtieth, a sworn statement of the condition of the business of such licensee as of the preceding December thirty-first, together with such other information and statements as the commissioner may, from time to time, require. Any licensee that fails to furnish any such report of condition pursuant to subsection (c) of this section or such sworn statement or any other information required by this subsection shall be in violation of this section.

(1949 Rev., S. 5946; 1951, S. 2760d; 1971, P.A. 199; P.A. 16-65, S. 33.)

History: 1971 act imposed $10 penalty for each day that licensee fails to furnish required information or sworn statement; Sec. 36-237 transferred to Sec. 36a-569 in 1995; P.A. 16-65 replaced former provisions with Subsecs. (a) to (d) re books and records, reports of condition and submission of sworn statement and other information, effective July 1, 2016.

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Sec. 36a-570. (Formerly Sec. 36-239). Suspension, revocation or refusal to renew license or taking of other action. Enforcement action and orders. Removal from office and employment. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license issued under sections 36a-555 to 36a-573, inclusive, or take any other action, in accordance with the provisions of section 36a-51, for any reason that would be sufficient grounds for the commissioner to deny an application for such license under sections 36a-555 to 36a-573, inclusive, or if the commissioner finds that the licensee or any control person of the licensee, qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any small loan transaction to anyone entitled to such information, including, but not limited to, any disclosures required by part III of chapter 669 or regulations adopted pursuant thereto; (3) violated any of the provisions of this title or any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's small loan business; or (4) failed to perform any agreement with a licensee or a borrower.

(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-555 to 36a-573, inclusive, or any regulation adopted pursuant thereto, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to perform any agreement with a borrower, committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any small loan transaction to anyone entitled to such information, including disclosures required by part III of chapter 669 or regulations adopted pursuant thereto, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-555 to 36a-573, inclusive, from office and from employment or retention as an independent contractor in the small loan business in this state in accordance with section 36a-51a.

(1949 Rev., S. 5948 (3); P.A. 94-122, S. 266, 340; P.A. 07-91, S. 7; P.A. 16-65, S. 34; P.A. 18-173, S. 40.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-239 transferred to Sec. 36a-570 in 1995; P.A. 07-91 authorized commissioner to adopt regulations and make findings as necessary for the association of small loan business with other businesses and the conduct of associated businesses, effective June 5, 2007; P.A. 16-65 replaced former provisions with Subsecs. (a) to (d) re enforcement powers of commissioner, effective July 1, 2016; P.A. 18-173 amended Subsec. (a) by replacing “, any regulations adopted pursuant thereto or any other law or regulation applicable to the conduct of its business”, with “or any regulation or order adopted or issued pursuant thereto pertaining to any such person, or any other law or regulation applicable to the conduct of such licensee's small loan business” in Subdiv. (3), amended Subsec. (c) by deleting Subdiv. (2) re hearing, deleting Subdiv. (1) designator, replacing provisions re commissioner's findings as a result of investigation with reference to Sec. 36a-51a, and amended Subsec. (d) by deleting provisions re opportunity for a hearing and temporary order with provision re temporary order to be issued in accordance with Sec. 36a-24b(j).

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Sec. 36a-571. (Formerly Sec. 36-241). License suspension. Section 36a-571 is repealed, effective October 1, 2002.

(1949 Rev., S. 5948 (2); P.A. 02-111, S. 51.)

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Sec. 36a-572. (Formerly Sec. 36-242). Investigations and examinations. Section 36a-572 is repealed, effective October 1, 2018.

(1949 Rev., 5942; 1949, S. 2758d; P.A. 74-254, S. 5; P.A. 78-303, S. 53, 136; P.A. 94-122, S. 267, 340; P.A. 02-111, S. 38; P.A. 04-69, S. 21; P.A. 07-91, S. 20; P.A. 16-65, S. 35; P.A. 18-173, S. 102.)

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Sec. 36a-573. (Formerly Sec. 36-243). Regulations. The commissioner may adopt such regulations, in accordance with chapter 54, as the commissioner deems necessary to administer and enforce the provisions of this section and sections 36a-555 to 36a-570, inclusive.

(1949 Rev., S. 5952; 1949, S. 2765d; 1957, P.A. 439, S. 4; 1963, P.A. 175, S. 7; 1969, P.A. 242, S. 7; P.A. 77-129, S. 7; P.A. 86-216, S. 1, 3; P.A. 94-122, S. 268, 340; P.A. 97-13, S. 3; P.A. 09-208, S. 41; P.A. 11-216, S. 33; P.A. 15-53, S. 4; P.A. 16-65, S. 36; P.A. 18-173, S. 41.)

History: 1963 act included “charge” in provision re 12% interest and raised applicable loan limit from $600 to $1,000; 1969 act raised limit to $1,800 and deleted reference to loan, etc. of “goods or things in action”; P.A. 77-129 raised limit to $5,000 and added proviso re loans exceeding allowed interest rate or charge; P.A. 86-216 amended section to permit a licensed small loan company to enforce an interest provision against an out of state borrower who becomes a Connecticut resident, even if the interest rate exceeds the maximum rate permitted under Connecticut law; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-243 transferred to Sec. 36a-573 in 1995; P.A. 97-13 increased limit from $5,000 to $15,000 for loan transactions entered into on and after October 1, 1997; P.A. 09-208 designated existing provisions as Subsec. (a) and added Subsecs. (b) and (c) re applicability to loans made or renewed in this state and enforcement of provisions; P.A. 11-216 amended Subsec. (c) to make a technical change, effective July 13, 2011; P.A. 15-53 added new Subsec. (c) re interest, consideration or charges in excess of those permitted, added Subsec. (d) re assisting or aiding and abetting persons in prohibited conduct re small loans, and redesignated existing Subsec. (c) as Subsec. (e) and made conforming changes therein, effective June 19, 2015; P.A. 16-65 replaced former provisions with provisions re regulations, effective July 1, 2016; P.A. 18-173 replaced “36a-572” with “36a-570”.

Annotations to former section 36-243:

Under former statute, note is void and unenforceable if maker owes licensee more than $300. 109 C. 116. Cited. 115 C. 106; 149 C. 159; 201 C. 89.

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Secs. 36a-574 to 36a-579. Reserved for future use.

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PART IV

CHECK CASHING SERVICES

Sec. 36a-580. (Formerly Sec. 36-564). Definitions. Applicability of provisions. (a) For purposes of this chapter:

(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485.

(2) “Branch office” means a location other than the main office at which a licensee or any person on behalf of a licensee engages in the business of cashing checks, drafts or money orders for consideration.

(3) “Control person” has the same meaning as provided in section 36a-485.

(4) “General facility” means a facility at a fixed location where a licensee may engage in the business of cashing checks, drafts or money orders and which is open to the general public for at least six hours per day four days per week.

(5) “Limited facility” means a mobile facility, where on no more than two days per week, on property occupied by an employer, a licensed operator of a general facility may, under written contract with such employer, engage in the business of cashing payroll checks for the employees of the employer.

(6) “Main office” has the same meaning as provided in section 36a-485.

(7) “Unique identifier” has the same meaning as provided in section 36a-485.

(b) The provisions of this section and sections 36a-581 to 36a-589, inclusive, shall not apply to: (1) Checks, drafts or money orders cashed without consideration or charge; (2) checks, drafts or money orders cashed as an incident to the conduct of any other lawful business where not more than fifty cents is charged for cashing such check, draft or money order; or (3) any institution subject to and under the general supervision of any agency of the United States or any Connecticut bank or Connecticut credit union.

(P.A. 88-200, S. 1; P.A. 94-122, S. 269, 340; P.A. 95-253, S. 12, 19; P.A. 05-192, S. 1; P.A. 06-35, S. 3; P.A. 17-233, S. 16; P.A. 18-173, S. 42.)

History: Sec. 21-111 transferred to Sec. 36-564 in 1991; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-564 transferred to Sec. 36a-580 in 1995; P.A. 95-253 added the definitions of “general facility” and “limited facility” as Subsec. (a) and designated prior provisions as Subsec. (b), effective July 6, 1995; P.A. 05-192 amended Subsec. (b)(3) to substitute “bank” for “entity”; P.A. 06-35 amended Subsec. (b)(3) to exempt Connecticut credit unions from licensure as check cashing licensees and to make a technical change, effective May 8, 2006; P.A. 17-233 amended Subsec. (a) by adding new Subdiv. (1) defining “advertise” or “advertising”, adding new Subdiv. (2) defining “control person” and redesignating existing Subdivs. (1) and (2) as Subdivs. (3) and (4); P.A. 18-173 amended Subsec. (a) by adding new Subdiv. (2) re definition of “branch office”, redesignating existing Subdivs. (2) to (4) as Subdivs. (3) to (5), and adding Subdivs. (6) and (7) re definitions of “main office” and “unique identifier”, respectively.

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Sec. 36a-581. (Formerly Sec. 36-565). License required. Application. Criminal history records check. Change in information. Required system filing or notice to commissioner. Authority of commissioner to deny application for license. Abandonment of application. (a) Except as provided for in section 36a-580, no person shall engage in the business of cashing checks, drafts or money orders for consideration without obtaining a general facility license for its main office and a general or limited facility license for each branch office location where such business is to be conducted. Any activity subject to licensure pursuant to sections 36a-580 to 36a-589, inclusive, shall be conducted from an office located in the state, as defined in section 36a-2.

(b) Each licensee of a limited facility shall continuously maintain at least one operating general facility. A licensee of a limited facility shall not pay any compensation or consideration to any employer.

(c) An application for a check cashing license or renewal of such license shall be made and processed on the system pursuant to section 36a-24b, in the form provided by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-580 to 36a-589, inclusive. The applicant shall, at minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience, and any administrative, civil or criminal findings by any governmental jurisdiction relating to such person. Each application for an initial license shall also include: (1) Each location where the check cashing business is to be conducted and the type of facility that will be operated at that location; (2) the business plan of each location, which shall include the proposed days and hours of operation; (3) the amount of liquid assets available for each location, which shall not be less than the amount specified in subdivision (4) of subsection (e) of this section; (4) for each limited facility, a copy of the executed contract evidencing the proposed arrangement between the applicant and the employer; and (5) any other information that the commissioner may require. As part of an application, the commissioner may (A) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager, and (B) in accordance with section 36a-24b, (i) require the submission of fingerprints of the applicant, any control person of the applicant, the qualified individual and any branch manager to the Federal Bureau of Investigation or other state, national or international criminal databases, and (ii) investigate the financial condition of each such person and require authorization of each such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time.

(d) (1) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name and address other than the name and address specified on the license issued by the commissioner. A licensee may change the name of the licensee or address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, the licensee files such change with the system and the commissioner does not disapprove such change, in writing, or request further information from the licensee within such thirty-day period.

(2) A licensee of a limited facility shall not change its approved days and hours of operation, unless the licensee files an amendment on the system at least thirty days prior to the effective date of such change and receives the approval of the commissioner.

(e) Upon the filing of the required application, the applicable license fee and any other required fees or charges, the commissioner shall investigate the facts and may issue a license if the commissioner finds that (1) the applicant and the applicant's control persons, qualified individual and any branch managers are in all respects properly qualified and of good character, including, but not limited to, financial character, (2) granting such license would not be against the public interest, (3) the applicant has a feasible plan for conducting business, (4) the applicant has available and shall continuously maintain liquid assets of at least ten thousand dollars for each general facility location and at least two thousand five hundred dollars for each limited facility location specified in the application, and (5) the name of the applicant is not likely to cause a consumer to reasonably believe that such applicant is in any way endorsed by or affiliated with this state. If the commissioner fails to make such findings or if the commissioner finds that the applicant has made any material misstatement in the application, the commissioner shall not issue a license and shall notify the applicant of the denial and the reasons for such denial. The commissioner may deny an application if the commissioner finds that the applicant or any control person, qualified individual or branch manager of the applicant has been convicted of any misdemeanor involving any aspect of the check cashing services business, or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

(f) Except as otherwise specified in subdivision (1) of subsection (a) of section 36a-583 and subdivision (1) of subsection (d) of this section, each check cashing applicant or licensee and each individual designated as a control person, qualified individual or branch manager of such applicant or licensee shall file on the system any change in the information such licensee, applicant, control person, qualified individual or branch manager most recently submitted to the system in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner, in writing, not later than fifteen days after the date such applicant, licensee, control person, qualified individual or branch manager had reason to know of the change. A check cashing licensee shall file with the system or, if the information cannot be filed on the system, notify the commissioner, in writing, of the occurrence of any of the following developments not later than fifteen days after the date the licensee had reason to know of the development:

(1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee;

(2) Filing of a criminal indictment against the licensee in any way related to the check cashing activities of the licensee, or receiving notification of the filing of any criminal felony indictment or felony conviction of any control person, branch manager or qualified individual of the licensee;

(5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee; or

(6) Any decrease in the amount of liquid assets available for each location below the minimum amount required pursuant to subdivision (4) of subsection (e) of this section.

(g) The commissioner may deem an application for a license for a general facility or limited facility abandoned if the applicant fails to respond to any request for information required under sections 36a-580 to 36a-589, inclusive, or any regulations adopted pursuant to said sections 36a-580 to 36a-589, inclusive. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days after such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-580 to 36a-589, inclusive.

(h) The minimum standards for renewal of a check cashing license shall include the following: (1) The applicant continues to meet the minimum standards under subsection (c) of this section; (2) the applicant has paid all required fees for renewal of the license; and (3) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a check cashing licensee failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. Each license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-580 to 36a-589, inclusive.

(P.A. 88-200, S. 2; P.A. 89-178, S. 2, 8; P.A. 91-11, S. 1; P.A. 94-122, S. 270, 340; P.A. 95-253, S. 13, 19; P.A. 04-14, S. 1; P.A. 05-46, S. 8; 05-288, S. 223; P.A. 06-35, S. 4; P.A. 08-119, S. 8, 9; P.A. 09-208, S. 10, 12; 09-209, S. 40; P.A. 11-216, S. 34; P.A. 17-233, S. 34; P.A. 18-173, S. 43.)

History: P.A. 89-178 substituted the commissioner of banking for the commissioner of consumer protection in Subsec. (a); Sec. 21-112 transferred to Sec. 36-565 in 1991; P.A. 91-11 amended Subsec. (c) to insert Subdiv. indicators, adding provisions to require the commissioner, prior to issuing a license, to find a need in the community for the services to be provided by the applicant and that the applicant has a feasible business plan; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-565 transferred to Sec. 36a-581 in 1995; P.A. 95-253 amended Subsec. (a) to provide for separate licenses for general and limited facilities, added a new Subsec. (b) to require a licensee of a limited facility to maintain at least one general facility, relettered Subsec. (b) as (c) and amended Subsec. (c) by providing for the form of application and by adding Subdivs. (4) to (7), inclusive, re the contents of the application, added a new Subsec. (d) re change in location, in type of facility or in time of operation, relettered Subsec. (c) as (e) and amended Subsec. (e) by adding new Subdivs. (2) and (3) re applications by firms, partnerships or corporations, deleting former Subdiv. (3) re need for services, renumbering Subdivs. (4) and (5) as (5) and (6), respectively, and adding a fee for each limited facility in Subdiv. (6), effective July 6, 1995; P.A. 04-14 amended Subsec. (c) to insert new Subdiv. (4) requiring application to set forth the names and addresses of each manager and authorized agent if applicant is a limited liability company and to redesignate existing Subdivs. (4) to (8) as Subdivs. (5) to (9), respectively, amended Subsec. (d) to restate provisions and require approval of the commissioner for application for change in location, to provide that licensee of limited facility shall not change approved days and hours of operation unless licensee files application with and receives approval of commissioner, and to eliminate prohibition re change in the type of facility, amended Subsec. (e) to insert new Subdiv. (4) authorizing commissioner to issue license if commissioner finds that each manager and authorized agent is in all respects properly qualified and of good character if applicant is a limited liability company and to redesignate existing Subdivs. (4) to (6) as Subdivs. (5) to (7), respectively, and added Subsec. (f) requiring applicant or licensee to notify commissioner of any change in information provided; P.A. 05-46 amended Subsec. (d) to prohibit licensee from changing the name specified on license unless licensee files application, pays applicable name change fee specified in Sec. 36a-582 and receives approval of commissioner; P.A. 05-288 made a technical change in Subsec. (c)(7), effective July 13, 2005; P.A. 06-35 amended Subsec. (d) to prohibit licensee from using any name other than the name specified on the license issued by commissioner, and amended Subsec. (e) to delete reference to application fees and to insert reference to location fees; P.A. 08-119 amended Subsec. (c)(4) and Subsec. (e)(4) by replacing “manager” with “member”; P.A. 09-208 amended Subsec. (c) by adding new Subdiv. (5) requiring license application to include a history of criminal convictions and by redesignating existing Subdivs. (5) to (9) as Subdivs. (6) to (10), and amended Subsec. (e) by authorizing commissioner to deny application based on certain criminal convictions, effective July 7, 2009; P.A. 09-209 made a technical change, effective July 9, 2009; P.A. 11-216 amended Subsec. (c) to delete provision re ten-year period re history of criminal convictions and add provision authorizing commissioner to conduct state and national criminal history records check of applicant and each member, officer, director, authorized agent and shareholder owning at least 10% of outstanding stock of applicant, amended Subsec. (e) to delete provision re ten-year period re misdemeanor and felony convictions, and added Subsec. (g) re abandonment of application; P.A. 17-233 amended Subsec. (e) by adding Subdiv. (8) re name of applicant not likely to cause consumer to believe applicant is endorsed or affiliated with this state, and making a technical change; P.A. 18-173 amended Subsec. (a) by adding “general facility”, replacing “to operate a general facility or a license to operate a limited facility” with “for its main office and a general or limited facility license”, adding “branch office” and adding provision re licensed activity to be conducted from an office in the state, amended Subsec. (c) by replacing “in writing, under oath on a” with “made and processed on the system pursuant to section 36a-24b in the”, adding provision re content of form, deleting former Subdivs. (1) to (10) re application requirements, adding new Subdivs. (1) to (5) re same, adding provisions re commissioner's authority to conduct background checks, require submission of fingerprints and investigate financial condition of certain persons, amended Subsec. (d) by deleting provisions re change to licensee's name and location specified on license, change to limited facility's approved days and hours of operation, and licensee's use of name other than name specified on license, adding Subdiv. (1) re use of and change to name and address of licensee, and adding Subdiv. (2) re change to approved days and hours of operation, amended Subsec. (e) by replacing “license and location fees” with “license fee and any other required fees or charges”, adding “and the applicant's control persons, qualified individual and any branch managers are” and “including, but not limited to, financial character” in Subdiv. (1), deleting former Subdivs. (2) to (4) re if applicant is a firm or partnership, a corporation, or a limited liability company, respectively, redesignating existing Subdivs. (5) to (7) as Subdivs. (2) to (5), adding provision re commissioner's failure to make certain findings or findings of material misstatement in application, replacing “or any member, officer, director, or authorized agent or shareholder owning ten per cent or more of the outstanding stock of the applicant” with “or any control person, qualified individual or branch manager of the applicant”, amended Subsec. (f) by replacing existing provisions re notification by applicant or licensee, adding provisions re filing certain information on the system or notification to commissioner, amended Subsec. (g) by replacing “in writing” with “on the system” and replacing “36a-560” with “36a-580”, added Subsec. (h) re check cashing license, and made technical and conforming changes.

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Sec. 36a-582. (Formerly Sec. 36-566). License and location fees. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. Expenses of examination. (a) Each applicant for a check cashing license shall pay to the system any required fees or charges and a nonrefundable initial license fee of one thousand one hundred dollars. Each license issued pursuant to section 36a-581 shall expire at the close of business on December thirty-first of the year in which the license is approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which such license expires. Each applicant for the renewal of such license shall pay to the system any required fees or charges and a nonrefundable renewal fee of eight hundred dollars.

(b) The commissioner may, in accordance with section 36a-24b, automatically suspend the license of any licensee who has received a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of such automatic suspension pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-587 and an opportunity for a hearing in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(c) Each licensee shall pay the expenses of any examination or other investigation under sections 36a-580 to 36a-589, inclusive.

(d) No abatement of any fee required by this section shall be made if the application is denied or withdrawn prior to issuance of the license or if the license is surrendered, cancelled, revoked or suspended prior to the expiration of the period for which it was issued.

(P.A. 88-200, S. 3; P.A. 89-178, S. 3, 8; P.A. 92-89, S. 16, 20; P.A. 94-122, S. 271, 340; P.A. 95-253, S. 14, 19; P.A. 04-14, S. 2; 04-257, S. 106; P.A. 05-46, S. 9; P.A. 06-35, S. 5; P.A. 09-208, S. 11; P.A. 18-173, S. 44.)

History: P.A. 89-178 substituted the commissioner of banking for the commissioner of consumer protection in Subsec. (a); Sec. 21-113 transferred to Sec. 36-566 in 1991; P.A. 92-89 increased the license fees in Subsec. (a) from $250 to $1,000; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-566 transferred to Sec. 36a-582 in 1995; P.A. 95-253 amended Subsec. (a) to change the license fee and renewal license fee and to add application and location transfer fees, and made technical changes to Subsecs. (b) and (c), effective July 6, 1995; P.A. 04-14 inserted new Subsec. (b), requiring commissioner to automatically suspend license or approval or renewal license if commissioner determines that a check filed to pay an application or license 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 providing that if commissioner determines a check filed to pay a location transfer fee has been dishonored, commissioner shall automatically suspend the location transfer approval pending revocation of such approval by commissioner and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsecs. (b) and (c) as Subsecs. (c) and (d), respectively; P.A. 04-257 made a technical change in Subsec. (a); P.A. 05-46 amended Subsec. (a) to add Subdiv. (1) re nonrefundable name change fee of $100 for each application to change a name and to designate provision re location transfer fee as Subdiv. (2), amended Subsec. (b) to delete requirement for automatic suspension of location transfer approval if commissioner determines that check filed with commissioner to pay location transfer fee has been dishonored, and amended Subsec. (d) to delete provision re no abatement of location transfer fee; P.A. 06-35 amended Subsec. (a) to revise procedures and fees for application, renewal and expiration of licenses, changing period of validity of licenses from one to two years, deleting reference to application fee and inserting references to license and location fees, and imposing a $100 late fee for late filings of renewal applications, and amended Subsecs. (b) and (d) to delete reference to application fee and insert reference to location fee; P.A. 09-208 made a technical change in Subsec. (a), effective July 7, 2009; P.A. 18-173 amended Subsec. (a) by replacing “commissioner” with “system any required fees or charges and”, changing initial license fee from $2,000 to $1,100, deleting provision re nonrefundable location fee, deleting provision re fees when application is filed not earlier than one year before license expiration, deleting provisions re nonrefundable fees in former Subdivs. (1) and (2) and replacing provisions re license expiration and renewal with provisions re same, amended Subsec. (b) by replacing provisions re automatic suspension of license with provisions re same, amended Subsec. (c) by deleting “applicant or”, amended Subsec. (d) by replacing “the license or location fee” with “any fee required by this section” and adding “application is denied or withdrawn prior to issuance of the license or if the”, and made technical and conforming changes.

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Sec. 36a-583. (Formerly Sec. 36-567). License not transferable or assignable. Change in control person. Automatic suspension. Surrender of license. (a)(1) A license issued under section 36a-581 shall not be transferable or assignable. A change in any control person of the licensee, except a change of a director, general partner or executive officer that is not the result of an acquisition or change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. For purposes of this section, “change of control” means any change causing the majority ownership, voting rights or control of a licensee to be held by a different control person or group of control persons.

(2) The commissioner may automatically suspend any license for a violation of subdivision (1) of this subsection or for a violation of subdivision (1) of subsection (d) of section 36a-581. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-587 and an opportunity for a hearing in accordance with section 36a-51, and (B) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(b) Not later than fifteen days after the date a licensee ceases to engage in this state in the business of cashing checks, drafts or money orders for consideration at a general facility or limited facility for any reason, including, but not limited to, a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall surrender, in accordance with subsection (c) of section 36a-51, its license for each location in which such licensee has ceased to engage in such business.

(P.A. 88-200, S. 4; P.A. 95-253, S. 15, 19; P.A. 08-119, S. 10; P.A. 18-173, S. 45; P.A. 21-138, S. 10.)

History: Sec. 21-114 transferred to Sec. 36-567 in 1991; Sec. 36-567 transferred to Sec. 36a-583 in 1995; P.A. 95-253 made technical changes re the contents, location and timing of the postings, effective July 6, 1995; P.A. 08-119 added requirement for surrender of license when licensee ceases to engage in the business of cashing checks, drafts or money orders for consideration; P.A. 18-173 designated existing provisions re license not transferable or assignable as Subsec. (a)(1) and substantially amended same by deleting provision re license to be conspicuously posted in facility, adding reference to Sec. 36a-581 and adding provision re change in control person of licensee, added Subsec. (a)(2) re automatic suspension of license, designated existing provisions re surrender of license as Subsec. (b) and amended same by replacing “to the commissioner in person or by registered or certified mail” with “in accordance with subsection (c) of section 36a-51”, and made technical and conforming changes; P.A. 21-138 defined “change of control” in Subsec. (a)(1).

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Sec. 36a-584. (Formerly Sec. 36-568). Maximum fees for the cashing of state checks. Regulations. Maximum amount of check that may be cashed by check cashing licensee. Exceptions. Report. (a) A check cashing licensee shall not charge or collect in fees, charges or otherwise, a sum in excess of one per cent of the check for cashing a check drawn by the state of Connecticut and payable within this state to a recipient of public assistance, as provided in section 36a-304, if the check is negotiated to the licensee by the original payee of the check, and if the payee produces reasonable identification, as provided for in regulations adopted pursuant to section 36a-305.

(b) No check cashing licensee shall cash an item if the amount exceeds six thousand dollars. This subsection shall not apply to (1) the cashing of any check, draft or money order drawn by the United States, any state or any political subdivision of a state, or by any department, bureau, agency, authority, instrumentality or officer, acting in such officer's official capacity, of the United States, any state or any political subdivision of a state, (2) the cashing of any check which has been certified by the depository institution on which it has been drawn, (3) the cashing of any check drawn by an insurance company for the payment of a claim, (4) the cashing of any check drawn by an attorney from the attorney's clients' funds account, and (5) the cashing of any check, draft or money order where the payee is not an individual as long as the licensee complies with all recordkeeping and reporting requirements specified in sections 36a-580 to 36a-589, inclusive.

(c) Not later than January 15, 2019, and quarterly thereafter, each check cashing licensee shall submit a report to the commissioner that specifies the number and type of checks cashed by such licensee that exceed six thousand dollars during the previous calendar quarter, unless no such activity occurred in the previous quarter, in which case the licensee shall file a written statement to that effect. Each check cashing licensee shall, to the extent required by the system, timely submit to the system accurate reports of condition that shall be in such form and contain such information as the system may require. Failure by a licensee to submit timely and accurate reports shall constitute a violation of this provision. Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system.

(P.A. 88-200, S. 5; P.A. 89-178, S. 4, 8; P.A. 91-11, S. 2; P.A. 94-122, S. 272, 340; P.A. 95-253, S. 16, 19; P.A. 05-74, S. 2; 05-192, S. 2; P.A. 18-173, S. 46.)

History: P.A. 89-178 amended Subsec. (a) by imposing a cap of 1% per check on certain state checks and requiring the commissioner of banking to establish by regulation a fee schedule for other checks; Sec. 21-115 transferred to Sec. 36-568 in 1991; P.A. 91-11 added Subsec. (b)(1) to (4), inclusive, re exceptions to the maximum amount of a check that may be cashed by a check cashing service; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-568 transferred to Sec. 36a-584 in 1995; P.A. 95-253 changed “check cashing service” to “check cashing licensee”, effective July 6, 1995; P.A. 05-74 amended Subsec. (a) to make a technical change, effective June 2, 2005; P.A. 05-192 amended Subsec. (b) to substitute $6,000 for $2,500 as the maximum amount of check that may be cashed by check cashing licensee and add Subdiv. (5) re exception for cashing of any check where payee is not an individual, and added Subsec. (c) re quarterly report to commissioner; P.A. 18-173 amended Subsec. (c) by replacing “2006” with “2019”, replacing $2,500 with $6,000, adding provisions re filing of statement when activity in previous quarter and submission of accurate reports of condition, and making technical changes.

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Sec. 36a-585. (Formerly Sec. 36-569). Maximum fees set by Banking Commissioner. The commissioner shall, by regulation adopted in accordance with the provisions of chapter 54, establish the maximum fees which may be charged by a licensee for cashing a check, draft or money order drawn on a depository institution. No check cashing licensee shall charge any sum in excess of that established by such regulation or one dollar, whichever is greater. In establishing maximum fees under this section, the commissioner shall consider: (1) The effect any change in rates will have on consumers; (2) start-up costs, operational expenses, volume of business, and any other information the commissioner deems relevant. The licensee shall conspicuously post and at all times display, at each place of business, a schedule of fees permitted under sections 36a-580 to 36a-589, inclusive. The sum of any payment made by an employee or by an employer on behalf of the employee to a licensee of a limited facility for cashing payroll checks shall not exceed the percentage limitation for maximum fees established by the commissioner in regulations adopted pursuant to this section.

(P.A. 89-178, S. 5, 8; P.A. 94-122, S. 273, 340; P.A. 95-253, S. 17, 19; P.A. 05-192, S. 3.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-569 transferred to Sec. 36a-585 in 1995; P.A. 95-253 added the ceiling on the sum of payments to a licensee of a limited facility and changed “check cashing service” to “checking cashing licensee”, effective July 6, 1995; P.A. 05-192 established maximum fee of $1 or that established by regulation, “whichever is greater”.

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Sec. 36a-586. (Formerly Sec. 36-570). Records to be maintained by check cashing license. Reporting requirements. Prohibited acts. Advertisements. (a) Each check cashing licensee shall use and maintain at a general facility in this state, in the form satisfactory to the commissioner, such books, records and accounts as will enable the commissioner to determine whether the licensee is complying with the provisions of sections 36a-580 to 36a-589, inclusive. Each licensee shall retain such books, records and accounts for not less than the periods of time specified in regulations adopted by the commissioner in accordance with section 36a-588.

(b) Before a check cashing licensee deposits with any financial institution a check, draft or money order cashed by such licensee, the item shall be endorsed with the actual name under which the licensee is doing business and have the words “licensed check cashing service” legibly written or stamped immediately after or below such name.

(c) Each check cashing licensee shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq., as from time to time amended, and any regulations adopted under such provisions, as from time to time amended.

(d) No person required to be licensed and who is subject to the provisions of sections 36a-580 to 36a-589, inclusive, and no control person shall, directly or indirectly: (1) Employ any scheme, device or artifice to defraud or mislead any person in connection with a check cashing transaction; (2) engage in any unfair or deceptive practice toward any person in connection with a check cashing transaction; (3) obtain property by fraud or misrepresentation; (4) fail to comply with the provisions of sections 36a-580 to 36a-589, inclusive, or the rules or regulations adopted under said sections, or fail to comply with any other state or federal law, including the rules and regulations thereunder; (5) make, in any manner, any false or deceptive statement or representation in connection with a check cashing transaction or engage in bait and switch advertising; (6) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (7) collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-580 to 36a-589, inclusive; (8) fail to truthfully account for moneys belonging to a party to a check cashing transaction; (9) fail to comply with any demand or requirement made by the commissioner under and within the authority of sections 36a-580 to 36a-589, inclusive; or (10) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable check cashing laws and regulations.

(e) The unique identifier of any person licensed under section 36a-581 shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations or advertisements of any person licensed under section 36a-581: (1) Shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (2) shall not include any statement or claim that is deceptive, false or misleading; (3) shall otherwise conform to the requirements of sections 36a-580 to 36a-589, inclusive, any regulations issued thereunder and any other applicable law; and (4) shall be retained for two years from the date of use of such solicitation or advertisement.

(P.A. 88-200, S. 6; P.A. 89-178, S. 6, 8; P.A. 94-122, S. 274, 340; P.A. 95-253, S. 18, 19; P.A. 98-192, S. 2; P.A. 17-233, S. 17; P.A. 18-173, S. 47.)

History: P.A. 89-178 amended Subsec. (a) by substituting the commissioner of banking for the commissioner of consumer protection; Sec. 21-116 transferred to Sec. 36-570 in 1991; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-570 transferred to Sec. 36a-586 in 1995; P.A. 95-253 changed “check cashing service” to “check cashing licensee” and made technical changes in Subsec. (a), effective July 6, 1995; P.A. 98-192 added new Subsec. (c) re compliance with federal Currency and Foreign Transactions Reporting Act; P.A. 17-233 added Subsec. (d) re acts by person required to be licensed and subject to provisions of Secs. 36a-580 to 36a-589 and control person; P.A. 18-173 amended Subsec. (b) by adding Subsec. (e) re solicitations and advertisements and made technical changes.

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Sec. 36a-587. (Formerly Sec. 36-571). Suspension, revocation or refusal to renew license or taking of other action. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner may suspend, revoke or refuse to renew any license issued pursuant to section 36a-581 or take any other action, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-580 to 36a-589, inclusive, or if the commissioner finds that the licensee or any control person of the licensee, qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud, engaged in dishonest activities or made any misrepresentation; (3) violated any provision of this title or any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's check cashing business; or (4) demonstrated incompetency or untrustworthiness to act as a licensed check cashing service.

(b) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any of the provisions of sections 36a-580 to 36a-589, inclusive, or any regulation adopted pursuant to said sections, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation; or (3) any licensee or any control person of the licensee, qualified individual or branch manager with supervisory authority, trustee, employee or agent of such licensee has committed any fraud, engaged in dishonest activities or made any misrepresentation, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

(c) The commissioner may order a licensee to remove any individual conducting business under sections 36a-580 to 36a-589, inclusive, from office and from employment or retention as an independent contractor in the check cashing business in this state in accordance with section 36a-51a.

(P.A. 88-200, S. 7; 88-230, S. 1, 12; P.A. 89-178, S. 7, 8; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 275, 340; P.A. 05-46, S. 10; P.A. 06-35, S. 6; P.A. 07-91, S. 21; P.A. 18-173, S. 48.)

History: P.A. 88-230 replaced “judicial district of Hartford-New Britain” with “judicial district of Hartford”, effective September 1, 1991; P.A. 89-178 amended Subsec. (a) by substituting the commissioner of banking for the commissioner of consumer protection; Sec. 21-117 transferred to Sec. 36-571 in 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 Subsec. (c) re cease and desist provisions and made technical changes, effective January 1, 1995; Sec. 36-571 transferred to Sec. 36a-587 in 1995; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensee or owner, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee who has committed fraud, engaged in dishonest activities or made any misrepresentation; P.A. 06-35 amended Subsec. (b) to authorize commissioner to take enforcement action under Secs. 36a-50 and 36a-52 for violation of “any of” the provisions of Secs. 36a-580 to 36a-589, inclusive, or any regulation adopted pursuant to said Secs., effective May 8, 2006; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 18-173 amended Subsec. (a) by replacing “owner, director, officer, member, partner, shareholder” with “control person of the licensee, qualified individual or branch manager with supervisory authority”, replacing reference to Secs. 36a-580 to 36a-589 with reference to title in Subdiv. (3), replacing “promulgated under said sections” with “or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's check cashing business” in Subdiv. (3), amended Subsec. (b) by designating provision re violation of Secs. 36a-580 to 36a-589 as Subdiv. (1), adding Subdiv. (2) re violation of provision of sections or regulation, designating provision re fraud, dishonest activity and misrepresentations as Subdiv. (3) and amended same by replacing “owner, director, officer, member, partner, shareholder” with “control person of the licensee, qualified individual or branch manager with supervisory authority”, added Subsec. (c) re commissioner's authority to order removal of individual from office and from employment or retention as an independent contractor, added Subsec. (d) re temporary order to cease business under license, and made technical changes.

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Sec. 36a-588. (Formerly Sec. 36-572). Regulations. The commissioner shall adopt, pursuant to chapter 54, such regulations as may be necessary to carry out the provisions of sections 36a-580 to 36a-589, inclusive.

(P.A. 88-200, S. 8.)

History: Sec. 21-118 transferred to Sec. 36-572 in 1991; Sec. 36-572 transferred to Sec. 36a-588 in 1995.

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Sec. 36a-589. (Formerly Sec. 36-573). Violations. A violation of any of the provisions of sections 36a-580 to 36a-589, inclusive, shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.

(P.A. 88-200, S. 9.)

History: Sec. 21-119 transferred to Sec. 36-573 in 1991; Sec. 36-573 transferred to Sec. 36a-589 in 1995.

Annotation to former section 36-573:

Cited. 231 C. 707.

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Secs. 36a-590 to 36a-594. Reserved for future use.

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PART V

PAYMENT INSTRUMENTS. MONEY TRANSMISSION

Sec. 36a-595. (Formerly Sec. 36-530). Short title: Money Transmission Act. Sections 36a-595 to 36a-612, inclusive, shall be known and may be cited as the “Money Transmission Act”.

(P.A. 81-264, S. 1; P.A. 01-56, S. 2; P.A. 13-253, S. 1.)

History: Sec. 36-530 transferred to Sec. 36a-595 in 1995; P.A. 01-56 changed citation from “Money Order and Travelers Check Licensees Act” to “Money Transmission Act”; P.A. 13-253 added reference to Secs. 36a-611 and 36a-612.

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Sec. 36a-596. (Formerly Sec. 36-531). Definitions. As used in sections 36a-595 to 36a-612, inclusive:

(1) “Advertise” or “advertising” has the same meaning as provided in section 36a-485.

(2) “Authorized delegate” means a person designated by a person licensed pursuant to sections 36a-595 to 36a-612, inclusive, to provide money transmission services on behalf of such licensed person.

(3) “Control” means (A) the power to vote, directly or indirectly, at least twenty-five per cent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee; (B) the power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees or other persons exercising managerial authority of a person in control of a licensee; or (C) the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee. For purposes of this subdivision: (i) A person is presumed to exercise a controlling influence when the person holds the power to vote, directly or indirectly, at least ten per cent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee, (ii) a person presumed to exercise a controlling influence can rebut such presumption if the person is a passive investor, and (iii) to determine the percentage of control, a person's interest shall be aggregated with the interest of any other immediate family member, including the person's spouse, parent, child, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law and any other person who shares the person's home.

(4) “Control person” means any individual in control of a licensee or applicant, any individual who seeks to acquire control of a licensee or a key individual.

(5) “Electronic payment instrument” means a card or other tangible object for the transmission of money or monetary value or payment of money which contains a microprocessor chip, magnetic stripe, or other means for the storage of information, that is prefunded and for which the value is decremented upon each use, but does not include a card or other tangible object that is redeemable by the issuer in the issuer's goods or services.

(6) “Holder” means a person, other than a purchaser, who is either in possession of a payment instrument and is the named payee thereon or in possession of a payment instrument issued or endorsed to such person or bearer or in blank. “Holder” does not include any person who is in possession of a lost, stolen or forged payment instrument.

(7) “Key individual” means any individual ultimately responsible for establishing or directing policies and procedures of the licensee, including, but not limited to, an executive officer, manager, director or trustee.

(8) “Licensee” means any person licensed or required to be licensed pursuant to sections 36a-595 to 36a-612, inclusive.

(9) “Main office” has the same meaning as provided in section 36a-485.

(10) “Monetary value” means a medium of exchange, whether or not redeemable in money.

(11) “Money transmission” means engaging in the business of issuing or selling payment instruments or stored value, receiving money or monetary value for current or future transmission or the business of transmitting money or monetary value within the United States or to locations outside the United States by any and all means including, but not limited to, payment instrument, wire, facsimile or electronic transfer.

(12) “Outstanding” means (A) in the case of a payment instrument or stored value, that: (i) It is sold or issued in the United States; (ii) a report of it has been received by a licensee from its authorized delegates; and (iii) it has not yet been paid by the issuer, and (B) for all other money transmissions, the value reported to the licensee for which the licensee or any authorized delegate has received money or its equivalent value from the customer for transmission, but has not yet completed the money transmission by delivering the money or monetary value to the person designated by the customer.

(13) “Passive investor” means a person that: (A) Does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees or other persons exercising managerial authority of a person in control of a licensee; (B) is not employed by and does not have any managerial duties of the licensee or person in control of a licensee; (C) does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and (D) attests to subparagraphs (A), (B) and (C) of this subdivision in the form and manner prescribed by the commissioner.

(14) “Payment instrument” means a check, draft, money order, travelers check or electronic payment instrument that evidences either an obligation for the transmission of money or monetary value or payment of money, or the purchase or the deposit of funds for the purchase of such check, draft, money order, travelers check or electronic payment instrument.

(15) “Permissible investment” means: (A) Cash in United States currency; (B) time deposits, as defined in section 36a-2, or other debt instruments of a bank; (C) bills of exchange or bankers acceptances which are eligible for purchase by member banks of the Federal Reserve System; (D) commercial paper of prime quality; (E) interest-bearing bills, notes, bonds, debentures or other obligations issued or guaranteed by: (i) The United States or any of its agencies or instrumentalities, or (ii) any state, or any agency, instrumentality, political subdivision, school district or legally constituted authority of any state if such investment is of prime quality; (F) interest-bearing bills or notes, or bonds, debentures or preferred stocks, traded on any national securities exchange or on a national over-the-counter market, if such debt or equity investments are of prime quality; (G) receivables due from authorized delegates consisting of the proceeds of the sale of payment instruments which are not past due or doubtful of collection; (H) gold; and (I) any other investments approved by the commissioner. Notwithstanding the provisions of this subdivision, if the commissioner at any time finds that an investment of a licensee is unsatisfactory for investment purposes, the investment shall not qualify as a permissible investment.

(16) “Prime quality” of an investment means that it is within the top four rating categories in any rating service recognized by the commissioner unless the commissioner determines for any licensee that only those investments in the top three rating categories qualify as prime quality.

(17) “Purchaser” means a person who buys or has bought a payment instrument or who has given money or monetary value for current or future transmission.

(18) “Stored value” means monetary value that is evidenced by an electronic record. For the purposes of this subdivision, “electronic record” means information that is stored in an electronic medium and is retrievable in perceivable form.

(19) “Travelers check” means a payment instrument for the payment of money that contains a provision for a specimen signature of the purchaser to be completed at the time of a purchase of the instrument and a provision for a countersignature of the purchaser to be completed at the time of negotiation.

(20) “Unique identifier” has the same meaning as provided in section 36a-485.

(21) “Virtual currency” means any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology. Virtual currency shall be construed to include digital units of exchange that (A) have a centralized repository or administrator; (B) are decentralized and have no centralized repository or administrator; or (C) may be created or obtained by computing or manufacturing effort. Virtual currency shall not be construed to include digital units that are used (i) solely within online gaming platforms with no market or application outside such gaming platforms, or (ii) exclusively as part of a consumer affinity or rewards program, and can be applied solely as payment for purchases with the issuer or other designated merchants, but cannot be converted into or redeemed for fiat currency.

(P.A. 81-264, S. 2; P.A. 87-9, S. 2, 3; P.A. 92-12, S. 96; P.A. 94-122, S. 276, 340; P.A. 98-192, S. 3; 98-258, S. 4; P.A. 01-56, S. 3; P.A. 02-73, S. 84; P.A. 04-14, S. 3; 04-136, S. 43; P.A. 07-91, S. 8; P.A. 09-208, S. 13; P.A. 13-253, S. 2; P.A. 15-53, S. 5; P.A. 17-233, S. 18; P.A. 18-173, S. 49; P.A. 22-94, S. 2; 22-96, S. 2.)

History: (Revisor's note: Pursuant to P.A. 87-9 “banking commissioner” was changed editorially by the Revisors to “commissioner of banking”); P.A. 92-12 redesignated Subdivs. and Subparas.; P.A. 94-122 deleted former Subdivs. (1) and (2) defining “commissioner” and “financial institution”, renumbered former Subdivs. (3) through (9) as Subdivs. (1) through (7), deleted Subdiv. (10) defining “person” and renumbered former Subdivs. (11) through (13) as Subdivs. (8) through (10), effective January 1, 1995; Sec. 36-531 transferred to Sec. 36a-596 in 1995; (Revisor's note: In 1997 the reference in Subdiv. (7) to “... time deposits, as defined in subdivision (55) of section 36a-2 ...” was corrected editorially by the Revisors to “... time deposits, as defined in subdivision (62) of section 36a-2 ...” to reflect the current internal numbering of that section); P.A. 98-192 added new Subdiv. (1) defining “electronic payment instrument”, made conforming changes and redesignated existing Subdivs. (1) to (10) as Subdivs. (2) to (11); P.A. 98-258 made a technical change in Subdiv. (7); P.A. 01-56 made technical changes in Subdiv. (2) defining “holder”, deleted former Subdiv. (3) defining “instrument” and renumbered existing Subdiv. (4) as Subdiv. (3), added new Subdiv. (4) defining “material litigation”, made technical changes in Subdiv. (5) defining “money order”, added new Subdiv. (6) defining “money transmission” and renumbered existing Subdivs. (6) and (7) as Subdivs. (7) and (8), redefined “outstanding” in redesignated Subdiv. (8), added new Subdiv. (9) defining “payment instrument”, renumbered existing Subdivs. (8) to (11) as Subdivs. (10) to (13) and made technical changes in redesignated Subdivs. (10) to (13); P.A. 02-73 amended Subdiv. (10)(B) by changing reference from Subdiv. (63) to Subdiv. (65) of Sec. 36a-2; P.A. 04-14 added definitions of “monetary value” in new Subdiv. (5) and “stored value” and “electronic record” in new Subdiv. (14), renumbering the existing Subdivs. accordingly, inserted references to “monetary value” and “current or future” transmission in definition of “money transmission”, inserted references to “stored value” in definitions of “money transmission” and “outstanding” and, in Subpara. (A) of the latter definition, inserted “or issued”, and made a technical change in definition of “permissible investment”, effective April 16, 2004; P.A. 04-136 amended Subdiv. (10)(B) to make a technical change, effective May 12, 2004; P.A. 07-91 inserted references to transmission “of money or monetary value” in definitions of “electronic payment instrument” and “payment instrument” in Subdivs. (1) and (10); P.A. 09-208 redefined “licensee” in Subdiv. (3), “outstanding” in Subdiv. (9) and “purchaser” in Subdiv. (13) and defined “unsafe or unsound practice” in Subdiv. (16), effective July 7, 2009; P.A. 13-253 added reference to Secs. 36a-611 and 36a-612, added new Subdiv. (1) defining “authorized delegate”, redesignated existing Subdivs. (1) to (3) as Subdivs. (2) to (4), deleted former Subdiv. (4) defining “material litigation”, deleted former Subdiv. (6) defining “money order”, redesignated existing Subdiv. (7) as Subdiv. (6) and amended same to redefine “money transmission”, deleted former Subdiv. (8) defining “net worth”, redesignated existing Subdiv. (9) as Subdiv. (7) and amended same to redefine “outstanding”, redesignated existing Subdiv. (10) as Subdiv. (8) and amended same to redefine “payment instrument”, redesignated existing Subdiv. (11) as Subdiv. (9) and amended same to redefine “permissible investment”, redesignated existing Subdivs. (12) to (15) as Subdivs. (10) to (13), deleted former Subdiv. (16) defining “unsafe or unsound practice”, and made technical and conforming changes; P.A. 15-53 added Subdiv. (14) defining “virtual currency”; P.A. 17-233 added new Subdiv. (1) defining “advertise” or “advertising”, redesignated existing Subdiv. (1) as Subdiv. (2), added new Subdiv. (3) defining “control person” and redesignated existing Subdivs. (2) to (14) as Subdivs. (4) to (16); P.A. 18-173 added new Subdiv. (7) re definition of “main office”, redesignated existing Subdivs. (7) to (15) as new Subdivs. (8) to (16), added Subdiv. (17) re definition of “unique identifier”, and redesignated existing Subdiv. (16) as Subdiv. (18); P.A. 22-94 added new Subdiv. (3) to define “control”, redesignated existing Subdivs. (3) to (5) as Subdivs. (4) to (6), redefined “control person” in new Subdiv. (4), added new Subdiv. (7) to define “key individual”, redesignated existing Subdivs. (6) to (10) as Subdivs. (8) to (12), added new Subdiv. (13) to define “passive investor”, redesignated existing Subdivs. (11) to (18) as Subdivs. (14) to (21) and made a technical change in new Subdiv. (16); P.A. 22-96 redefined “control person” in Subdiv. (4) and “key individual” in Subdiv. (7).

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Sec. 36a-597. (Formerly Sec. 36-532). License required. Penalty. (a) No person shall engage in the business of money transmission in this state, or advertise or solicit such services, without a main office license issued by the commissioner as provided in sections 36a-595 to 36a-612, inclusive, except as an authorized delegate of a person that has been issued a license by the commissioner and in accordance with section 36a-607. Any activity subject to licensure pursuant to sections 36a-595 to 36a-612, inclusive, shall be conducted from an office located in a state, as defined in section 36a-2. A person engaged in the business of money transmission is acting in this state under this section if such person: (1) Has a place of business located in this state, (2) receives money or monetary value in this state or from a person located in this state, (3) transmits money or monetary value from a location in this state or to a person located in this state, (4) issues stored value or payment instruments that are sold in this state, or (5) sells stored value or payment instruments in this state.

(b) Any person who knowingly engages in the business of money transmission in this state, without obtaining a license, as provided in sections 36a-595 to 36a-612, inclusive, shall be guilty of a class D felony. Each transaction in violation of the provisions of this subsection shall constitute a separate offense.

(P.A. 81-264, S. 3; P.A. 01-56, S. 4; P.A. 03-61, S. 3; P.A. 04-61, S. 1; P.A. 09-208, S. 14; P.A. 13-253, S. 3; P.A. 16-65, S. 7; P.A. 18-173, S. 50.)

History: Sec. 36-532 transferred to Sec. 36a-597 in 1995; P.A. 01-56 changed “Connecticut instruments” to “Connecticut payment instruments” and reworded language re money transmission; P.A. 03-61 substituted “or an entity or a person exempt under section 36a-609 and in accordance with” for “as provided in”; P.A. 04-61 designated existing provisions as Subsec. (a) and added new Subsec. (b) re criminal penalty for knowingly engaging in business of issuing Connecticut payment instruments or money transmission without a license; P.A. 09-208 amended Subsec. (a) by removing references to “subagents” of licensees, requiring licensee and agent to notify commissioner in writing of the termination of the contract between them, and making technical changes, effective July 7, 2009; P.A. 13-253 amended Subsec. (a) by deleting references to issuing Connecticut payment instruments, adding provision requiring that money transmission occur in this state and prohibiting the advertising or soliciting of money transmission services without a license, deleting references to Sec. 36a-600, adding reference to Secs. 36a-611 and 36a-612, changing “agent” to “authorized delegate”, deleting provision re entity or person exempt under Sec. 36a-609, adding provision re when person deemed to be engaged in the business of money transmission and making technical changes, and amended Subsec. (b) by deleting reference to issuing Connecticut payment instruments, adding provision requiring that money transmission occur in this state and replacing reference to Sec. 36a-600 with reference to Secs. 36a-595 to 36a-612; P.A. 16-65 amended Subsec. (a) by replacing “person shall be deemed to be engaged in the business of money transmission in this state” with “person engaged in the business of money transmission is acting in this state under this section” and, in Subdiv. (1), adding “located”, effective July 1, 2016; P.A. 18-173 amended Subsec. (a) by adding “main office”, adding provision re licensed activity to be conducted from office located in a state and deleting provision re licensee to notify the commissioner of termination of contract between the licensee and authorized delegate.

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Sec. 36a-598. (Formerly Sec. 36-533). Application. Criminal history records check. Abandonment of application. Required system filing or notice to commissioner. License not assignable or transferable. Use of name. Automatic suspension. (a) Each application for an initial or renewal license required under sections 36a-595 to 36a-612, inclusive, shall be made and processed on the system pursuant to section 36a-24b, in the form prescribed by the commissioner. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purposes of sections 36a-595 to 36a-612, inclusive. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager responsible for the actions of the licensee, including, but not limited to, information related to such person's personal history and experience and any administrative, civil or criminal findings by any governmental jurisdiction. As part of an application, the commissioner may, (1) in accordance with section 29-17a, conduct a state or national criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager, and, (2) in accordance with section 36a-24b, (A) require the submission of fingerprints of any such person to the Federal Bureau of Investigation or other state, national or international criminal databases, and (B) investigate the financial condition of any such person and require authorization from any such person for the system and the commissioner to obtain an independent credit report from a consumer reporting agency, as described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, as amended from time to time. An application for an initial license shall also include:

(i) A copy of the applicant's audited financial statements for the most recent fiscal year, and (I) if the applicant is a wholly-owned subsidiary of another corporation, the most recent audited consolidated annual financial statements of the parent corporation, (II) if the applicant is publicly traded, a copy of the most recent 10-K report that such applicant filed with the Securities and Exchange Commission, or, if the applicant is a wholly-owned subsidiary of a publicly traded company, a copy of the parent company's most recent 10-K report that was filed with the Securities and Exchange Commission, and (III) if the applicant or parent company of a wholly-owned subsidiary applicant is publicly traded on a foreign exchange, a copy of documentation similar to the 10-K report that was filed with the applicable securities regulator for the applicant or the parent company of the wholly-owned subsidiary applicant, as applicable. Notwithstanding the provisions of this clause, if the applicant has operated for not more than one calendar year, the applicant shall only be required to include an initial statement of condition;

(ii) A list of the applicant's permissible investments, the book and market values of such investments, and the dollar amount of the applicant's aggregate outstanding money transmissions (I) as of the date of the financial statement filed in accordance with clause (i) of this subparagraph; and (II) as of a date no earlier than thirty business days prior to the filing of the application;

(iii) (I) The surety bond required by subsection (a) of section 36a-602, if applicable; and

(II) A list of the investments maintained in accordance with subsection (d) of section 36a-602, if applicable, and the book and market values of any such investments as of the date of the financial statement filed in accordance with clause (i) of this subparagraph; and as of a date no earlier than thirty business days prior to the filing of the application;

(iv) A statement describing the type of money transmission business that will be conducted by the applicant in this state and whether such money transmission will include the transmission of monetary value in the form of virtual currency;

(v) The name and address of any financial institution used by the applicant for its money transmission business in this state;

(vi) For each authorized delegate, a sample of the contract evidencing the proposed arrangement between the applicant and the authorized delegate; and

(vii) Any other information the commissioner may require.

(b) The commissioner may deem an application for a license to engage in the business of money transmission in this state abandoned if the applicant fails to respond to any request for information required under sections 36a-595 to 36a-612, inclusive, or any regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if the applicant fails to submit such information not later than sixty days after such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under sections 36a-595 to 36a-612, inclusive.

(c) Except as otherwise specified in subsections (d) and (e) of this section, each applicant, licensee, control person and qualified individual shall file with the system any change in the information most recently submitted to the system by such licensee, control person or qualified individual in connection with the application or license, or, if the information cannot be filed on the system, notify the commissioner, in writing, of such change in the information not later than fifteen days after the date the applicant, licensee, control person or qualified individual has reason to know of such change.

(d) (1) A money transmission license shall not be transferable or assignable, but a licensee may be acquired in accordance with the requirements of this subsection. Any change in any control person of the licensee, except a change of a key individual that is not the result of an acquisition or a change of control of the licensee, shall be the subject of an advance change notice filed on the system at least thirty days prior to the effective date of such change and no such change shall occur without the commissioner's approval. For purposes of this section, “change of control” means any change causing the majority ownership, voting rights or control of a licensee to be held by a different control person or group of control persons.

(2) No licensee may use any name other than its legal name or a fictitious name approved by the commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. No licensee shall use any name or address other than the name and address specified on the license issued by the commissioner. A licensee may change the name of the licensee or the address of the office specified on the most recent filing with the system if, at least thirty calendar days prior to such change, the licensee files such change with the system and provides a bond rider, endorsement or addendum, as applicable, to the surety bond on file with the commissioner that reflects the new name or address, and the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.

(3) The commissioner may automatically suspend any license for a violation of this subsection. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (A) give the licensee notice of the automatic suspension, pending proceedings for revocation of or refusal to renew the license pursuant to section 36a-608 and an opportunity for a hearing in accordance with section 36a-51, and (B) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(e) A licensee shall file with the system or, if the information cannot be filed on the system, provide a written notice to the commissioner not later than one business day after the licensee has reason to know of the occurrence of any of the following events:

(1) The filing of a petition by or against the licensee under the United States Bankruptcy Code for bankruptcy or reorganization or the filing of a petition under the United States Bankruptcy Code for bankruptcy or reorganization by any control person, qualified individual or authorized delegate of the licensee;

(2) The filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors;

(3) The commencement of a proceeding to revoke or suspend its license to engage in money transmission in another state or a foreign country, or other formal or informal regulatory action by any governmental agency against the licensee or any control person, qualified individual or authorized delegate of the licensee and the reasons therefor;

(4) The commencement of any action by the Attorney General or the attorney general of any other state against the licensee or any control person, qualified individual or authorized delegate of the licensee and the reasons therefor;

(5) The cancellation or other impairment of the licensee's bond or other security, including notice of claims filed against the licensee's bond or other security;

(6) A conviction or indictment of the licensee or of any control person or qualified individual of the licensee for a misdemeanor involving the money transmission business or a felony; or

(7) A conviction or indictment of an authorized delegate for a misdemeanor involving the money transmission business or a felony.

(P.A. 81-264, S. 4; P.A. 92-12, S. 97; P.A. 94-122, S. 277, 340; P.A. 98-192, S. 4; P.A. 01-56, S. 5; P.A. 03-19, S. 84; P.A. 04-14, S. 4; P.A. 05-46, S. 11; P.A. 08-119, S. 11; P.A. 09-208, S. 15; P.A. 11-216, S. 35; P.A. 13-253, S. 4; P.A. 15-53, S. 6; P.A. 17-233, S. 19; P.A. 18-173, S. 51; P.A. 21-138, S. 11; P.A. 22-94, S. 3.)

History: P.A. 92-12 redesignated Subsecs. and Subdivs.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-533 transferred to Sec. 36a-598 in 1995; P.A. 98-192 amended Subdiv. (9) by adding reference to electronic payment instrument and making conforming changes; P.A. 01-56 amended Subdiv. (5) by changing 20% stock ownership threshold to 10% ownership of securities and required name and addresses of persons holding securities, added new Subdiv. (8) re history of material litigation and criminal convictions, renumbered existing Subdivs. (8) to (10) as Subdivs. (9) to (11), added language re money transmission in Subdivs. (3) and (10) and made technical and conforming changes throughout; P.A. 03-19 made a technical change in Subdiv. (10), effective May 12, 2003; P.A. 04-14 designated existing provisions as Subsec. (a), and amended same by inserting in Subdivs. (5) and (8) new Subpara. (D) re managers, if applicant is a limited liability company, inserting reference to “managers” in Subdiv. (5), and making technical changes in Subdivs. (7)(A) and (9)(B), and inserted new Subsec. (b) requiring applicant or licensee to notify commissioner of any change in information provided; P.A. 05-46 added Subsec. (c) to prohibit licensee from changing the name specified on license unless licensee files application, pays name change fee specified in Sec. 36a-599(a) and receives approval of commissioner; P.A. 08-119 amended Subsec. (a) to make a technical change and to replace “managers” with “members” in Subdivs. (5)(D) and (8)(D); P.A. 09-208 amended Subsec. (a) by deleting provision in Subdiv. (5) requiring applicants to submit sufficient information to commissioner as commissioner deems necessary to make the findings required under Sec. 36a-600, adding new Subdiv. (9) requiring applicants to submit information concerning criminal convictions, redesignating existing Subdiv. (9) as Subdiv. (10), deleting Subpara. (C) therein re commissioner to defer compliance, redesignating existing Subdivs. (10) and (11) as Subdivs. (11) and (12), and making conforming and technical changes, and added Subsec. (d) requiring licensee to provide written notice to commissioner upon the occurrence of events listed in Subdivs. (1) to (7); P.A. 11-216 amended Subsec. (a)(9) to delete provision re ten-year period re history of criminal convictions, added new Subsec. (b) authorizing commissioner to conduct state and national criminal history records check of applicant and each partner, director, trustee, principal officer, member and shareholder owning at least 10% of each class of securities of applicant and re abandonment of application, and redesignated existing Subsecs. (b) to (d) as Subsecs. (c) to (e); P.A. 13-253 amended Subsec. (a) by adding reference to Secs. 36a-611 and 36a-612, by changing “branches, subsidiaries, affiliates and agents” to “locations and authorized delegates” and adding provision requiring that money transmission occur in this state in Subdiv. (3), by adding provision re a copy of audited financial statements for the most recent fiscal year and, if a wholly-owned subsidiary, the most recent audited consolidated annual financial statements of the parent corporation or most recent audited consolidated annual financial statement of the applicant, deleting requirement that financial statements be prepared by an independent certified public accountant, and adding provision re a 10-K report for publicly traded applicants or a report similar to a 10-K if publicly traded on a foreign exchange in Subdiv. (6), by changing “payment instruments” to “money transmissions” in Subdiv. (7), by adding definition of “material litigation” in Subdiv. (8), by replacing former provision with provision requiring a statement describing the type of money transmission business to be conducted in the state in Subdiv. (11), by adding new Subdivs. (12) and (13) re name and address of financial institution used and sample of contract, and by redesignating existing Subdiv. (12) as Subdiv. (14), amended Subsec. (b) by adding provision requiring that money transmission occur in this state and adding references to Secs. 36a-611 and 36a-612, amended Subsec. (c) by deleting “promptly” and adding provision re notification to occur not later than 15 days after the applicant or licensee has reason to know of the change, amended Subsec. (e) by adding “or indictment” in Subdivs. (6) and (7), deleting reference to Connecticut payment instruments in Subdiv. (6) and changing “agent” to “authorized delegate” and adding “misdemeanor involving the money transmission business” in Subdiv. (7), and made technical changes; P.A. 15-53 amended Subsec. (a)(11) by adding provision re applicant to indicate on application whether money transmission business will include transmitting monetary value in form of virtual currency; P.A. 17-233 amended Subsec. (a) by deleting Subdiv. (8) re history of material litigation and by redesignating existing Subdivs. (9) to (14) as Subdivs. (8) to (13); P.A. 18-173 substantially amended Subsec. (a) including by deleting former Subdivs. (1) to (5), adding provisions re processing of application for license on system, adding new Subdivs. (1) and (2) re commissioner's authority to conduct criminal history records check, require submission of fingerprints and investigate financial condition of person, redesignating Subdivs. (6) and (7) as new Subdivs. (5)(i) and (ii), deleting Subdiv. (8), and redesignating Subdivs. (9) to (13) as Subdivs. (5)(iii) to (viii), amended Subsec. (b) by deleting provision re commissioner's authority to conduct criminal history records check, and replacing provision re commissioner to notify applicant in writing with provision re commissioner to notify applicant on system, substantially amended Subsec. (c) including by adding references to control person and qualified individual, replacing provision re notification to commissioner in writing with provision re filing with system, and adding provision re filing change in information on system or notifying commissioner of change in writing, amended Subsec. (d) by deleting provisions re licensee's change to name specified on license, adding Subdivs. (1) to (3) re money transmission license not transferable or assignable and change in control person to be subject of advance change notice filed on system, licensee's use of name and address specified on license and change of licensee's name or address, and commissioner's automatic suspension of license, respectively, amended Subsec. (e) by adding reference to filing with system, adding provision re filing petition under U.S. Bankruptcy Code in Subdiv. (1), adding references to control person, qualified individual or authorized delegate of licensee in Subdivs. (3) and (4), replacing references to partner, director, trustee, principal officer, member or shareholder with references to control person or qualified individual in Subdiv. (6), and made technical and conforming changes; P.A. 21-138 amended Subsec. (a)(2)(B)(i) by deleting provision re applicant's most recent audited consolidated and unconsolidated financial statements and adding provision re applicants that have not operated for more than 1 calendar year, amended Subsec. (d)(1) by defining “change of control”, and made technical and conforming changes; P.A. 22-94 amended Subsec. (d)(1) by adding provision stating licensee may be acquired in accordance with Subsec. (d) and changed “director, general partner or executive officer” to “key individual”.

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Sec. 36a-599. (Formerly Sec. 36-534). License fees. Surrender of license. (a) Each applicant for a money transmission license shall pay to the system any required fees or charges and a license fee of one thousand eight hundred seventy-five dollars. Each such license shall expire at the close of business on December thirty-first of the year in which the license was approved, unless such license is renewed, except that any such license approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for renewal of a money transmission license shall pay to the system any required fees or charges and a renewal fee of one thousand one hundred twenty-five dollars.

(b) Not later than fifteen days after the date a licensee ceases to engage in the business of money transmission in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall request surrender of the license in accordance with subsection (c) of section 36a-51 for each location where such licensee has ceased to engage in such business. The licensee shall also identify, in writing, to the commissioner the location where the records of the licensee will be stored and the name, address and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the commissioner to revoke or suspend a license, assess a civil penalty, order restitution or exercise any other authority provided to the commissioner.

(c) Each license shall remain in force and effect until the license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-595 to 36a-612, inclusive. No abatement of the license fee shall be made if the applicant is denied or withdrawn prior to issuance of the license or if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was issued. All fees required by this section shall be nonrefundable.

(P.A. 81-264, S. 5; P.A. 88-150, S. 8; P.A. 92-89, S. 15, 20; P.A. 98-192, S. 5; P.A. 01-56, S. 6; P.A. 05-46, S. 12; P.A. 06-35, S. 7; P.A. 08-119, S. 12; June Sp. Sess. P.A. 09-3, S. 381; P.A. 13-253, S. 5; P.A. 18-173, S. 52.)

History: P.A. 88-150 amended Subsec. (a) by increasing the investigation fee to $500 and increasing the license fee to $500, and deleted obsolete Subsec. (c) concerning license fees and the term of a license; P.A. 92-89 deleted the $500 investigation fee and increased the license fee from $500 to $1,000 in Subsec. (a); Sec. 36-534 transferred to Sec. 36a-599 in 1995; P.A. 98-192 amended Subsec. (a) by imposing a nonrefundable investigation fee of $500; P.A. 01-56 amended Subsec. (a) by eliminating the investigation fee for a renewal license and by making conforming language changes re renewal license fee and refund of fees; P.A. 05-46 amended Subsec. (a) to add provision re nonrefundable name change fee of $100 for each application to change a name; P.A. 06-35 amended Subsec. (a) to increase fee for original license from $1,000 to $2,000, to add exception that if application is filed not earlier than one year before date the license expires, applicant shall pay nonrefundable investigation fee of $500 and license fee of $1,000, to increase license fee for renewal license from $1,000 to $2,000, to provide that if license expires on June 30, 2007, fee shall be $2,250, and to prohibit licensee from using any name other than that specified on license issued by commissioner, and amended Subsec. (b) to provide that license expires at close of business on September thirtieth of odd-numbered year following issuance, unless renewed, surrendered, suspended or revoked, except that license renewed effective July 1, 2007, expires on September 30, 2009, and to delete reference to license expiration on thirtieth day of June following date of issuance; P.A. 08-119 amended Subsec. (b) to add requirement for surrender of license when licensee ceases to engage in the business of issuing Connecticut payment instruments or of money transmission; June Sp. Sess. P.A. 09-3 amended Subsec. (a) to increase fees; P.A. 13-253 amended Subsec. (a) by changing “original” to “initial”, making the license fee nonrefundable and deleting provision re license that expires on June 30, 2007, and amended Subsec. (b) to add reference to Secs. 36a-611 and 36a-612, delete reference to renewals effective July 1, 2007, delete reference to issuing Connecticut payment instruments, add provisions re written notice of surrender, delete requirement that surrender be in person or by registered or certified mail, and add provision re surrender of a license does not reduce or eliminate the licensee's civil or criminal liability; P.A. 18-173 substantially amended Subsec. (a) by replacing provisions re application for initial license and renewal license with provisions re applicant for money transmission license and renewal, amended Subsec. (b) by deleting provision re expiration of license, replacing provision re licensee to provide written notice of surrender to commissioner with provision re licensee to request surrender of license in accordance with Sec. 36a-51(c), added Subsec. (c) re license to remain in force and effect, abatement of licensee fee and fees nonrefundable, and made technical and conforming changes.

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Sec. 36a-600. (Formerly Sec. 36-536). Investigation of applicant. Issuance of license. Authority of commissioner to deny application for license. (a) Upon the filing of an application for an initial license, and the payment of required fees, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant, and the applicant's control persons and qualified individual. The commissioner may issue a license if the commissioner finds that:

(1) The applicant's financial condition is sound;

(2) The applicant's business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes and intent of sections 36a-595 to 36a-612, inclusive, and in a manner commanding the confidence and trust of the community;

(3) The applicant's control persons and qualified individual demonstrate financial responsibility and are in all respects properly qualified and of good character;

(4) The applicant is in compliance with the provisions of sections 36a-602 to 36a-604, inclusive;

(5) No person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to sections 36a-595 to 36a-612, inclusive;

(6) No person on behalf of the applicant knowingly has omitted to state any material fact necessary to give the commissioner any information lawfully required by the commissioner; and

(7) The applicant has paid the investigation fee and license fee required under section 36a-599.

(b) The commissioner may deny an application if the commissioner finds that the applicant or the applicant's control persons or qualified individual (1) is listed on the specially designated nationals and blocked persons list prepared by the United States Department of the Treasury, or (2) has been convicted of any misdemeanor involving any aspect of the money transmission business or any felony. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

(c) Notwithstanding the provisions of this section, the commissioner may deny any application of a person who will or may engage in the business of transmitting monetary value in the form of virtual currency if, in the commissioner's discretion, the issuance of such a license would represent undue risk of financial loss to consumers, considering the applicant's proposed business model.

(d) The commissioner may, in the commissioner's discretion, place additional requirements, restrictions or conditions upon the license of any applicant who will or may engage in the business of transmitting monetary value in the form of virtual currency, including the amount of surety bond required by section 36a-602.

(P.A. 81-264, S. 7; P.A. 94-122, S. 278, 340; P.A. 01-56, S. 7; P.A. 04-14, S. 5; P.A. 08-119, S. 13; P.A. 09-208, S. 16; P.A. 11-216, S. 36; P.A. 13-253, S. 6; P.A. 15-53, S. 7; P.A. 18-173, S. 53.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-536 transferred to Sec. 36a-600 in 1995; P.A. 01-56 amended Subsec. (a) by adding new Subdiv. (3) re good character of various persons as applicants and by renumbering existing Subdivs. (3) to (5) as Subdivs. (4) to (6); P.A. 04-14 amended Subsec. (b) to require that applicant pay investigation and license fee required under Sec. 36a-599; P.A. 08-119 added Subsec. (a)(3)(D) re applicant that is a limited liability company; P.A. 09-208 added Subsec. (c) authorizing commissioner to deny application based on certain convictions; P.A. 11-216 amended Subsec. (c) to delete provision re ten-year period re misdemeanor and felony convictions and delete “Connecticut” re payment instruments; P.A. 13-253 amended Subsec. (a) by changing “original” to “initial”, deleting provision re conditional approval and adding provision authorizing commissioner to issue a license, adding reference to Secs. 36a-611 and 36a-612 in Subdiv. (2), deleting reference to Sec. 36a-603 and adding reference to Sec. 36a-602 in Subdiv. (4), adding reference to Sec. 36a-611 and 36a-612 in Subdiv. (5) and adding Subdiv. (7) re payment of fees, deleted former Subsec. (b) re conditional approval, and redesignated existing Subsec. (c) as Subsec. (b) and amended same by adding Subdiv. (1) re applicants or members listed on the specially designated nationals and blocked persons list, designating existing provision re conviction as Subdiv. (2) and making a technical change; P.A. 15-53 added Subsecs. (c) and (d) re commissioner may deny, or place additional requirements on, money transmission license for persons engaging in business involving virtual currency; P.A. 18-173 amended Subsec. (a) by replacing “payment of the fees for investigation and license” with “payment of required fees”, adding “and the applicant's control persons and qualified individual”, deleting Subparas. (A) to (D) and adding provision re applicant's control persons and qualified individual demonstrate financial responsibility and are in all respects properly qualified and of good character in Subdiv. (3), amended Subsec. (b) by deleting references to partners, directors, trustees, principal officers or shareholders with references to applicant's control persons or qualified individual, and made technical and conforming changes.

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Sec. 36a-601. (Formerly Sec. 36-537). Renewal of license. Automatic suspension of renewal license. Notice. Opportunity for hearing. (a) The minimum standards for renewal of a license shall include the following: (1) The applicant continues to meet the minimum standards under section 36a-600; (2) the applicant has paid all required fees for renewal of the license; and (3) the applicant has paid any outstanding examination fees or other moneys due to the commissioner. The license of a money transmitter failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system.

(b) In accordance with section 36a-24b, the commissioner may automatically suspend any license if such person receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After a license has been automatically suspended pursuant to this subsection, the commissioner shall (1) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew pursuant to section 36a-608 and an opportunity for a hearing on such action in accordance with section 36a-51, and (2) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.

(P.A. 81-264, S. 8; P.A. 94-122, S. 279, 340; P.A. 01-56, S. 8; P.A. 04-14, S. 6; P.A. 06-35, S. 8; P.A. 13-253, S. 7; P.A. 18-173, S. 54.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-537 transferred to Sec. 36a-601 in 1995; P.A. 01-56 added reference to Sec. 36a-598(9) and eliminated fee for investigation associated with renewal; P.A. 04-14 designated existing provisions as Subsec. (a), making a technical change therein, and added new Subsec. (b) requiring commissioner to automatically suspend renewal license if commissioner determines that a check filed to pay an investigation or license fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for refusal to renew such license and an opportunity for a hearing in accordance with Sec. 36a-51; P.A. 06-35 amended Subsec. (a) to provide that license may be renewed for ensuing twenty-four-month period, rather than twelve-month period, to delete reference to information required by Sec. 36a-598 (a)(6) to (9), to require that renewal application be filed on or before September first of year in which license expires, or in the case of license that expires on June 30, 2007, on or before June 1, 2007, to provide that renewal application filed after September first, or in the case of license that expires on June 30, 2007, after June 1, 2007, shall be accompanied by $100 late fee and that any such filing shall be deemed timely and sufficient for purposes of Sec. 4-182(b), and to substitute reference to the date “the license expires” for the date “the commissioner has specified”; P.A. 13-253 amended Subsec. (a) by deleting references to application for license that expires on June 30, 2007, and changing “original” to “initial” and amended Subsec. (b) by adding reference to a check made by ACH that has been returned; P.A. 18-173 substantially amended Subsec. (a) by replacing provisions re application for license renewal with provisions re minimum standards for license renewal and commissioner's authority to adopt procedures for reinstatement of expired licenses, substantially amended Subsec. (b) by replacing provisions check for license fee dishonored and automatic suspension of license with provisions re same.

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Sec. 36a-602. (Formerly Sec. 36-538). Surety bond. Investments in lieu of surety bond. (a) As a condition for the issuance and retention of the license, applicants for a license and licensees shall file with the commissioner a surety bond, the form of which shall be approved by the Attorney General, issued by a bonding company or insurance company authorized to do business in this state. The bond shall be conditioned upon the licensee and the licensee's authorized delegates faithfully performing all obligations with respect to the licensee's money transmission business in this state and conducting such business in this state consistent with the provisions of sections 36a-595 to 36a-612, inclusive. The bond shall be in favor of the commissioner and run concurrently with the period of the license. For applicants and licensees who will not be engaged in the business of transmitting monetary value in the form of virtual currency, such bond shall be in the principal sum of not less than: (1) Three hundred thousand dollars for any applicant and any licensee with an average weekly amount of money transmissions in this state of less than three hundred thousand dollars for the most recent twelve-month period ending June thirtieth, (2) five hundred thousand dollars for any licensee with an average weekly amount of money transmissions in this state equal to or greater than three hundred thousand dollars but less than or equal to five hundred thousand dollars for the most recent twelve-month period ending June thirtieth, or (3) one million dollars for any licensee with an average weekly amount of money transmissions in this state exceeding five hundred thousand dollars for the most recent twelve-month period ending June thirtieth. For purposes of this section, “money transmissions” includes (A) money or monetary value received or transmitted in this state, and (B) stored value and payment instruments issued or sold in this state. For applicants and licensees who will or may engage in the business of transmitting monetary value in the form of virtual currency, such bond shall be in a principal sum as determined by the commissioner and shall be calculated reasonably to address the current and prospective volatility of the market in such currency or currencies.

(b) 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 any claimants against the licensee to serve the faithful performance of the obligations of the licensee and the licensee's authorized delegates with respect to the licensee's money transmission business in this state in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors. Any person who may be damaged as a result of the failure by the licensee or the licensee's authorized delegates to perform obligations with respect to the licensee's money transmission business in this state may proceed against the licensee's bond 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, any restitution imposed pursuant to subsection (c) of section 36a-50, and any unpaid costs of examination of the licensee as determined pursuant to subdivision (6) of subsection (c) of section 36a-65. The bond shall cover claims for damages arising from the licensee's money transmission business in this state made not later than two years from the date of the act, error or omission that allegedly caused or resulted in such damages. When an action is commenced on a licensee's bond, the commissioner may require the filing of a new bond and, immediately upon recovery on any action on the bond, the licensee shall file a new bond. If the commissioner finds that the financial condition of a licensee so requires, as evidenced by the reduction of tangible net worth, financial losses or potential losses as a result of a violation of sections 36a-595 to 36a-612, inclusive, the commissioner may require one or more additional bonds meeting the standards set forth in this section. The licensee shall file any such additional bonds not later than ten days after receipt of the commissioner's written notice of such requirement.

(c) The surety company may cancel the bond at any time by a written notice to the licensee and the commissioner, stating the date cancellation shall take effect. If the bond is issued electronically on the system, such written notice may be provided by the surety company to the licensee and the commissioner through the system at least thirty days prior to the date of cancellation. Any notice of cancellation not provided through the system shall be sent by certified mail to the licensee and the commissioner at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety company, the commissioner shall give written notice to the licensee of the date such bond cancellation shall take effect. The commissioner shall automatically suspend the license on such date, unless the licensee, prior to such date, submits (1) a letter of reinstatement of the bond from the surety company, (2) a new bond, (3) evidence that all of the principal sum of such surety bond has been invested as provided in subsection (d) of this section, (4) a new bond that replaces the surety bond in part and evidence that the remaining part of the principal sum of such surety bond has been invested as provided in subsection (d) of this section, or (5) evidence that the licensee has ceased business and has surrendered the license. After a license has been automatically suspended, the commissioner shall (A) give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew such license and an opportunity for a hearing on such actions in accordance with section 36a-51, and (B) require the licensee to take or refrain from taking such action as the commissioner deems necessary to effectuate the purposes of this section.

(d) In lieu of all or part of the principal sum of such surety bonds, applicants for a license and licensees may invest such sum as provided in this subsection. The book or market value, whichever is lower, of such investments shall be equal to the amount of the bond required by subsection (a) of this section less the amount of the bond filed with the commissioner by the applicant or licensee. Such applicants and licensees shall keep such investments with such banks, Connecticut credit unions or federal credit unions as such applicants or licensees 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. As used in this subsection, “investments” means: (1) Dollar deposits; and (2) interest-bearing bills, notes, bonds, debentures or other obligations issued or guaranteed by (A) the United States or any of its agencies or instrumentalities, or (B) any state, or any agency, instrumentality, political subdivision, school district or legally constituted authority of any state if such investment is of prime quality. The investments shall secure the same obligation as would a surety bond filed under this section. The investments 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 in accordance with the provisions of sections 36a-595 to 36a-612, inclusive. The licensee shall be permitted to collect interest on such investments and at any time to exchange, examine and compare such investments. The investments made pursuant to this section, 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 any claimants against the licensee to serve the faithful performance of the obligations of the licensee and the licensee's authorized delegates with respect to the licensee's money transmission business in this state in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

(P.A. 81-264, S. 9; P.A. 91-306, S. 1; P.A. 94-122, S. 280, 340; P.A. 98-192, S. 6; P.A. 01-56, S. 9; P.A. 02-111, S. 39; P.A. 03-61, S. 4; P.A. 04-14, S. 7; P.A. 06-35, S. 9; P.A. 07-91, S. 9; P.A. 09-208, S. 17; P.A. 13-253, S. 8; P.A. 15-53, S. 8; P.A. 18-173, S. 55.)

History: P.A. 91-306 amended Subsec. (a) by deleting existing provisions re amount of bond and added Subdivs. (1), (2) and (3) re principal sum of bond; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-538 transferred to Sec. 36a-602 in 1995; P.A. 98-192 amended Subsec. (a) by adding provision re two-year time period for bond to remain in place and adding specific requirements for licensees that engage in the business of receiving money for transmitting the same; P.A. 01-56 amended Subsec. (a) by changing “Connecticut instruments” to “Connecticut payment instruments”, by rewording language re money transmission and by replacing provisions re trust fund with provisions re proceeds of bond deemed to be held in trust for benefit of claimants, and amended Subsec. (c) by replacing provisions re investment maintained in trust with provisions re investments deemed to be held in trust for benefit of claimants; P.A. 02-111 amended Subsec. (a) by adding provision re authority of commissioner to proceed on bond to collect civil penalty imposed pursuant to Sec. 36a-50(a); P.A. 03-61 changed “corporate surety bond” to “surety bond” throughout, amended Subsec. (a) by revising provisions re approval of form, coverage of bond and beginning of two-year period and by adding provision re surrendered, revoked, suspended or expired license and amended Subsec. (c) by inserting “Connecticut”; P.A. 04-14 amended Subsec. (a)(1), (2) and (3) to replace references to “equivalent thereof” with references to “monetary value received or transmitted, whichever amount is greater”, and to insert references to “monetary value” in provisions re proceeds of the bond to be held in trust for benefit of claimants against licensee, added new Subsec. (b) re cancellation of surety bond and automatic suspension of license and redesignated existing Subsecs. (b) and (c) as new Subsecs. (c) and (d), respectively, revising internal reference accordingly, effective April 16, 2004; P.A. 06-35 amended Subsec. (c) to require applicants and licensees to keep investments with such banks, Connecticut credit unions or federal credit unions as applicants or licensees designate, to require that investments be held subject to such conditions as commissioner deems necessary for protection of consumers and in the public interest and to define “investments” to include “dollar deposits” and “interest-bearing” bills, notes, bonds, debentures or other obligations, deleting former Subdiv. designators (1) and (2), reference to “in accordance with such regulations as the commissioner may adopt”, and Subsec. designator (d), to add provision requiring investments to be held at banks or credit unions to cover claims during period license remains in effect and the succeeding two years after license has been surrendered, revoked or suspended or has expired, and to make conforming changes, effective May 8, 2006; P.A. 07-91 amended Subsec. (a) to insert references to “Connecticut” payment instruments and transmission of “monetary value”, and amended Subsec. (c) to insert references to transmission or payment of “monetary value” and to make a technical change; P.A. 09-208 amended Subsec. (b) by requiring commissioner to give written notice to licensee of the effective date of a bond cancellation, by providing that license shall be automatically suspended unless licensee submits letter of reinstatement from the surety company or a new bond, and by making conforming and technical changes; P.A. 13-253 amended Subsec. (a) by adding provision requiring that bond be conditioned upon faithful performance of all obligations with respect to money transmission business in this state, deleting provisions re bond covering claims arising during licensure period and bond amounts being dependent upon daily balances and adding provisions re bond running concurrently with period of the license and being in a sum dependent upon the amount of applicant's average weekly transmissions, designated provisions re proceeds of the bond as new Subsec. (b) and amended same to add reference to licensee's authorized delegates, replace provision re sale and issuance of Connecticut payment instruments or transmission of money with provision re licensee's money transmission business in this state, add provision re person damaged as a result of a failure to perform obligations may proceed against the bond to recover damages, delete provision re lowering principal sum of bond, add provision re commissioner to proceed on bond to collect any restitution imposed pursuant to Sec. 36a-50 and any unpaid costs of examination, add provision re bond to cover claims for damages and add provision re commissioner to require filing of new bond when action is commenced on licensee's bond or if licensee's financial condition so requires, redesignated existing Subsec. (b) as Subsec. (c) and amended same by making technical changes, and redesignated existing Subsec. (c) as Subsec. (d) and amended same to add reference to Secs. 36a-611 and 36a-612, add reference to the licensee's authorized delegates and replace provision re sale and issuance of Connecticut payment instruments or transmission of money with provision re licensee's money transmission business in this state; P.A. 15-53 amended Subsec. (a) by adding provisions re surety bond requirements for engaging in transmissions involving virtual currency; P.A. 18-173 amended Subsec. (c) by adding references to the commissioner, and adding provision re notice of cancellation for bond issued electronically, designating provision re notice of automatic suspension as Subpara. (A) and designating provision re commissioner to require licensee take or refrain from taking action as Subpara. (B), and making technical and conforming changes.

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Sec. 36a-603. (Formerly Sec. 36-539). Investments equal to amount of money transmissions. Virtual currency equal to amount owed or obligated. Investments and virtual currency held in trust. (a) Each licensee shall at all times maintain permissible investments having a value, computed in accordance with generally accepted accounting principles, at least equal to the aggregate amount of its outstanding money transmissions in this state, provided the value of receivables due from authorized delegates consisting of the proceeds of the sale of payment instruments that are not past due or doubtful of collection shall not exceed thirty per cent of the permissible investments held by the licensee and receivables due from any one person shall not exceed ten per cent of the value of permissible investments held by the licensee.

(b) Each licensee that engages in the business of money transmission in this state by receiving, transmitting, storing or maintaining custody or control of virtual currency on behalf of another person shall at all times hold virtual currency of the same type and amount owed or obligated to such other person. As used in subsection (a) of this section, outstanding money transmissions does not include any virtual currency held pursuant to this subsection, and “value” means the lower of book or market value, except that with regard to debt obligations which the licensee as a matter of policy retains until maturity, “value” means the greater of book or market value unless the commissioner orders that for some or all investments of a particular licensee, “value” means the lower of book or market value.

(c) Permissible investments and virtual currency held pursuant to subsection (b) of this section, 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 any claimants against the licensee to serve the faithful performance of the obligations of the licensee and the licensee's authorized delegates with respect to the licensee's money transmission business in this state in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

(P.A. 81-264, S. 10; P.A. 01-56, S. 10; P.A. 04-14, S. 8; P.A. 07-91, S. 10; P.A. 13-253, S. 9; P.A. 17-233, S. 20.)

History: Sec. 36-539 transferred to Sec. 36a-603 in 1995; P.A. 01-56 amended Subsec. (a) by making a technical change and added new Subsec. (c) re permissible investments deemed to be held in trust for benefit of claimants; P.A. 04-14 amended Subsec. (a) to insert reference to “stored value”, and amended Subsec. (c) to insert references to “monetary value”, effective April 16, 2004; P.A. 07-91 amended Subsecs. (a) and (c) to insert reference to “Connecticut” payment instruments; P.A. 13-253 amended Subsec. (a) to change “Connecticut payment instruments and stored value” to “money transmissions in this state” and add provision re value of receivables due from authorized delegates and amended Subsec. (c) to add reference to licensee's authorized delegates and replace provision re sale and issuance of Connecticut payment instruments or transmission of money with provision re licensee's money transmission business in this state; P.A. 17-233 amended Subsec. (b) by adding provisions licensees engaging in business of money transmission to hold virtual currency equal to the amount owed or obligated to other persons and re outstanding money transmissions, and amended Subsec. (c) by adding “and virtual currency held pursuant to subsection (b) of this section”.

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Sec. 36a-604. (Formerly Sec. 36-540). Net worth requirements. (a) Each licensee which issues or sells payment instruments in this state which are checks, drafts or money orders shall at all times have a tangible net worth of at least one hundred thousand dollars.

(b) Each licensee which issues or sells payment instruments in this state which are travelers checks or electronic payment instruments shall at all times have a tangible net worth of at least one million dollars.

(c) Each licensee that engages in the business of money transmission in this state, except by issuing or selling stored value or payment instruments, shall at all times have a tangible net worth of at least five hundred thousand dollars. Each licensee that issues or sells stored value in this state shall at all times have a tangible net worth of at least one million dollars or a higher amount as determined by the commissioner, in accordance with generally accepted accounting principles.

(P.A. 81-264, S. 11; P.A. 98-192, S. 7; P.A. 01-56, S. 11; P.A. 04-14, S. 9; P.A. 05-74, S. 3; P.A. 07-72, S. 7; P.A. 13-253, S. 10.)

History: Sec. 36-540 transferred to Sec. 36a-604 in 1995; P.A. 98-192 amended Subsec. (b) by adding reference to electronic payment instruments and added new Subsec. (c) re net worth requirements for licensees that engage in the business of receiving money for transmitting the same; P.A. 01-56 amended Subsecs. (a) and (b) by changing “Connecticut instruments” to “Connecticut payment instruments” and amended Subsec. (c) by rewording language re money transmission; P.A. 04-14 amended Subsec. (c) to insert exception re issuing stored value and provision requiring each licensee that engages in business of money transmission by issuing stored value to have at all times a net worth of at least $500,000 or a higher amount as determined by the commissioner, effective April 16, 2004; P.A. 05-74 amended Subsec. (c) to make a technical change, effective June 2, 2005; P.A. 07-72 made a technical change in Subsec. (c); P.A. 13-253 amended Subsec. (a) to delete “Connecticut” and add “or sells”, “in this state”, “checks, drafts or” and “tangible”, amended Subsec. (b) to delete “Connecticut” and add “or sells”, “in this state” and “tangible” and amended Subsec. (c) to add “in this state”, “or selling”, “or payment instruments” and “tangible”, change “engages in the business of money transmission by issuing” to “issues or sells” and change “five hundred thousand dollars” to “one million dollars”.

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Sec. 36a-605. (Formerly Sec. 36-541). Examination of licensees. In connection with the examination of a licensee under section 36a-17, the commissioner may also examine the authorized delegates of such licensee.

(P.A. 81-264, S. 12; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 281, 340; P.A. 01-56, S. 12; P.A. 04-14, S. 10; P.A. 08-176, S. 78; P.A. 09-208, S. 18; P.A. 13-253, S. 11; P.A. 18-173, S. 56.)

History: (Revisor's note: Pursuant to P.A. 87-9 “banking department” was changed editorially by the Revisors to “department of banking”); P.A. 94-122 deleted language allowing authorized employees of the commissioner to examine a licensee's books and records, language allowing employees of a licensee to be examined by the commissioner and language requiring a licensee to pay the cost of such examination, effective January 1, 1995; Sec. 36-541 transferred to Sec. 36a-605 in 1995; P.A. 01-56 deleted existing provisions re commissioner's examination of licensee, added new Subsec. (a) re examination under Sec. 36a-17 or acceptance of a report in lieu thereof and added new Subsec. (b) permitting the commissioner to enter into cooperative, coordinating and information-sharing agreements; P.A. 04-14 amended Subsec. (b) to provide that agreement may include provisions re assessment or sharing of fees for examination or supervision; P.A. 08-176 deleted former Subsec. (b) re information sharing agreements and made a technical change, effective July 1, 2008; P.A. 09-208 removed reference to subagents of licensee; P.A. 13-253 changed “agents” to “authorized delegates” and added references to Secs. 36a-611 and 36a-612; P.A. 18-173 deleted provisions re commissioner's authority to accept certain reports as official examination report.

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Sec. 36a-606. (Formerly Sec. 36-542). Reports. Annual financial reports required. (a) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Licensees shall complete any reports of condition and any reports relating to authorized delegates required by the system. Any such report shall be timely and accurately filed on the system in accordance with the due dates and formats required by the system.

(b) Each licensee shall file with the commissioner not later than ninety days from the licensee's fiscal year end:

(1) A copy of audited financial statements for the most recent fiscal year. If the licensee is a wholly-owned subsidiary of another corporation, it shall file (A) the most recent audited consolidated annual financial statements of the parent corporation or the licensee's most recent audited consolidated annual financial statement, and (B) the most recent audited unconsolidated financial statement of the licensee, including its balance sheet and receipts and disbursements for the preceding year. If the licensee is publicly traded, it shall file a copy of the most recent 10-K report that was filed with the Securities and Exchange Commission or, if the licensee is a wholly-owned subsidiary of a publicly-traded company, a copy of the parent company's most recent 10-K report that was filed with said commission. If the licensee or parent company of a wholly-owned subsidiary licensee is publicly traded on a foreign exchange, it shall file a copy of documentation similar to the 10-K report that was filed with the applicable securities regulator;

(2) To the extent it is not already captured by a report of condition, a list of permissible investments, the book and market value of such investments, and the dollar amount of the licensee's aggregate outstanding money transmissions; and

(3) To the extent it is not already captured by a report of condition, a list of investments maintained in accordance with subsection (d) of section 36a-602, if applicable, the book and market values of such investments and the dollar amount of the licensee's aggregate outstanding money transmissions in this state.

(c) The lists and other information filed as provided in subdivisions (2) and (3) of subsection (b) of this section shall be as of the same date as the financial statement filed in accordance with subdivision (1) of subsection (b) of this section.

(d) The commissioner may require of any licensee such additional reports, under oath, certified, or otherwise, concerning such licensee's business in this state as the commissioner may consider necessary for the enforcement of sections 36a-595 to 36a-612, inclusive. Any licensee that fails to timely and accurately furnish any report required by this section shall be in violation of this section.

(P.A. 81-264, S. 13; P.A. 94-122, S. 282, 340; P.A. 01-56, S. 13; P.A. 04-14, S. 11; P.A. 13-253, S. 12; P.A. 18-173, S. 57.)

History: P.A. 94-122 changed “he” to “the commissioner”, effective January 1, 1995; Sec. 36-542 transferred to Sec. 36a-606 in 1995; P.A. 01-56 amended Subsec. (a)(2) and (3) by changing “instruments” to “payment instruments”; P.A. 04-14 amended Subsec. (a)(3) to substitute “subsection (c)” for “subsection (b)” in reference to Sec. 36a-602 and to add reference to “stored value”, effective April 16, 2004; P.A. 13-253 amended Subsec. (a) to replace former provisions with requirement that licensee file a copy of audited financial statements for most recent fiscal year or the most recent 10-K report or similar report in Subdiv. (1), to change “payment instruments” to “money transmissions” in Subdiv. (2) and to change “(c)” to “(d)” and “Connecticut payment instruments and stored value” to “money transmissions in this state” in Subdiv. (3), and amended Subsec. (c) to add reference to Secs. 36a-611 and 36a-612; P.A. 18-173 amended Subsec. (a) by replacing provisions re information to be filed with commissioner with provisions re submission of information on system and licensee's completion of reports, added new Subsec. (b) re information to be filed with commissioner not later than 90 days from licensee's fiscal year end, redesignated Subsecs. (a)(1) to (3) as Subsecs. (b)(1) to (3), replaced reference to report filed pursuant to Subpara. (C) with reference to 10-K report in redesignated Subsec. (b)(1), added “To the extent it is not already captured by a report of condition,” in redesignated Subsecs. (b)(2) and (3), redesignated existing Subsecs. (b) and (c) as Subsecs. (c) and (d), amended redesignated Subsec. (d) by adding provision re licensee's failure to timely and accurately furnish report, and made technical and conforming changes.

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Sec. 36a-606a. Federal reporting requirements. Anti-money-laundering program. (a) Each licensee shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq., as from time to time amended, and any regulations adopted under such provisions, as from time to time amended and, upon request, shall provide proof of such compliance to the commissioner. In addition to any other remedies provided by law, a violation of such federal law or regulation shall be deemed a violation of this section and a basis upon which the commissioner may take enforcement action pursuant to section 36a-608.

(b) Each licensee shall establish an anti-money-laundering program, which shall include, but need not be limited to, (1) internal policies, procedures and controls, (2) a designated compliance officer, (3) an ongoing employee training program, and (4) an independent audit function to test the effectiveness of such anti-money-laundering program.

(P.A. 98-192, S. 8; P.A. 99-36, S. 32; P.A. 13-253, S. 13; P.A. 17-236, S. 13.)

History: P.A. 99-36 made a technical change; P.A. 13-253 added provisions re proof of compliance to be sent to commissioner upon request and re enforcement action by commissioner; P.A. 17-236 designated existing provisions re compliance with Currency and Foreign Transactions Reporting Act as Subsec. (a) and added Subsec. (b) reestablishment of anti-money-laundering program.

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Sec. 36a-607. (Formerly Sec. 36-543). Conduct of business authorized by delegate. Prohibited practices. Deadline to remit value received for transmission. (a) A licensee may conduct its business at one or more locations within this state as follows:

(1) The business may be conducted by the licensee or through or by means of such authorized delegates as the licensee may periodically designate or appoint on the system in such form and manner as required by the commissioner. The licensee shall pay any associated processing fees imposed by the system. The licensee shall notify the commissioner on the system of all authorized delegates that act on its behalf. An authorized delegate may not engage in the business of money transmission in this state on behalf of a licensee through or by means of any person who is not identified on the system as an authorized delegate of the licensee.

(2) No license under sections 36a-595 to 36a-612, inclusive, shall be required of any authorized delegate.

(3) Each authorized delegate shall, from the moment of receipt, hold the proceeds of a sale or delivery of a licensee's money transmissions in this state in trust for the benefit of such licensee.

(4) A licensee shall be liable for the loss caused to any purchaser or holder of the licensee's payment instruments or stored value sold in this state by the failure of an authorized delegate to forward to the licensee the amount due from the proceeds of a sale or delivery of the licensee's payment instruments or stored value, or money or monetary value received for transmission.

(5) The licensee shall enter into a contract with each of its authorized delegates that requires the authorized delegate to operate in full compliance with sections 36a-595 to 36a-612, inclusive, and provides that appointment of the authorized delegate is not effective during any period when the license of the licensee has been suspended. The licensee shall provide each authorized delegate with policies and procedures sufficient to ensure compliance with sections 36a-595 to 36a-612, inclusive.

(6) An authorized delegate shall remit all money owing to the licensee in accordance with the terms of the contract between the licensee and the authorized delegate.

(7) An authorized delegate shall not provide money transmission services in this state outside the scope of activity permissible under the contract between the authorized delegate and the licensee.

(b) For purposes of subsection (a) of this section, “licensee” means any person that has obtained a license from the commissioner as provided in section 36a-600.

(c) No person who is required to be licensed and who is subject to the provisions of sections 36a-595 to 36a-612, inclusive, and no control person shall, directly or indirectly: (1) Employ any scheme, device or artifice to defraud or mislead any person in connection with a money transmission; (2) engage in any unfair or deceptive practice toward any person in connection with a money transmission; (3) obtain property by fraud or misrepresentation; (4) fail to comply with the provisions of sections 36a-595 to 36a-612, inclusive, or the rules or regulations adopted under said sections, or fail to comply with any other state or federal law, including the rules and regulations thereunder; (5) make, in any manner, any false or deceptive statement or representation in connection with a money transmission or engage in bait and switch advertising; (6) negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; (7) fail to truthfully account for moneys belonging to a party to a money transmission transaction; (8) fail to perform any written agreement with any party to a money transmission transaction; (9) fail to comply with any demand or requirement made by the commissioner under and within the authority of sections 36a-595 to 36a-612, inclusive; and (10) fail to establish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to achieve compliance with applicable money transmission laws and regulations.

(d) Each licensee shall remit any money or monetary value received for transmission by the licensee or its authorized delegates to the person designated by the purchaser of such transmission not later than seven calendar days from the date of receipt of such money or monetary value from the purchaser unless otherwise directed by the purchaser.

(P.A. 81-264, S. 14; P.A. 92-12, S. 98; P.A. 01-56, S. 14; P.A. 03-61, S. 5; P.A. 07-91, S. 11; P.A. 09-208, S. 19; P.A. 13-253, S. 14; P.A. 17-233, S. 21; P.A. 18-173, S. 58.)

History: P.A. 92-12 redesignated Subdivs.; Sec. 36-543 transferred to Sec. 36a-607 in 1995; P.A. 01-56 amended Subdivs. (3) and (4) by changing “Connecticut instruments” to “Connecticut payment instruments” and amended Subdiv. (4) by adding language re money transmission; P.A. 03-61 designated existing provisions as Subsec. (a) and added Subsec. (b) providing that licensee includes entity or person exempt under Sec. 36a-609; P.A. 07-91 amended Subsec. (a)(4) to insert reference to “monetary value”; P.A. 09-208 amended Subsec. (a) by prohibiting agent of a licensee from engaging in the business of issuing Connecticut payment instruments or of money transmission on behalf of a licensee through or by means of a subagent in Subdiv. (1), by deleting references to subagents in Subdivs. (1) to (4) and making a conforming change in Subdiv. (3), and by adding Subdivs. (5) to (7) re contracts between licensees and their agents and amended Subsec. (b) by redefining “licensee”; P.A. 13-253 amended Subsec. (a) by changing references to agent to references to authorized delegate, requiring notification of authorized delegates acting on licensee's behalf, deleting reference to issuing Connecticut payment instruments, adding requirement that money transmission occur in this state and changing “subagent” to “any person who is not an authorized delegate of the licensee” in Subdiv. (1), adding reference to Secs. 36a-611 and 36a-612 and changing “agent of a licensee” to “authorized delegate” in Subdiv. (2), changing “agent of a licensee” to “authorized delegate” and “Connecticut payment instruments” to “money transmissions in this state” in Subdiv. (3), deleting “Connecticut”, adding “or stored value sold in this state” and changing “agent of the licensee” to “authorized delegate” in Subdiv. (4), changing references to agent to references to authorized delegate and adding references to Secs. 36a-611 and 36a-612 in Subdiv. (5), and changing references to agent to references to authorized delegate in Subdivs. (6) and (7), and amended Subsec. (b) by deleting reference to any entity or person exempt under Sec. 36a-609 and making a technical change; P.A. 17-233 added Subsec. (c) re acts by persons required to be licensed and subject to provisions of Secs. 36a-595 to 36a-612 and control persons, and added Subsec. (d) re licensees to remit money or monetary value received for transmission not later than seven calendar days from date of receipt; P.A. 18-173 amended Subsec. (a)(1) by adding references to the system and adding provision re licensee to pay any associated processing fees imposed by the system.

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Sec. 36a-608. (Formerly Sec. 36-544). Enforcement powers of commissioner. Removal from office and from employment or retention. Temporary order to cease business. (a) The commissioner shall make such investigations as the commissioner considers necessary to determine whether any licensee or any other person has violated, is violating or is about to violate any of the provisions of sections 36a-595 to 36a-612, inclusive, or whether any licensee has acted in such manner as otherwise would justify the suspension or revocation of the license or a refusal to renew the license. The provisions of section 36a-17 shall apply to such investigation. For purposes of this section, “unsafe or unsound practice” means a practice or conduct by a licensee or an authorized delegate that is likely to result in a material loss, insolvency or dissipation of the licensee's assets or otherwise materially prejudice the interests of purchasers.

(b) The commissioner may suspend, revoke or refuse to renew a license or take any other action, in accordance with section 36a-51, (1) on any ground on which the commissioner might deny an initial license, (2) for any violation by the licensee, or by the licensee's control persons, qualified individual, trustee, employee or agent, including, but not limited to, the licensee's authorized delegates, of any provision of sections 36a-595 to 36a-612, inclusive, or of any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or regulation applicable to the conduct of such licensee's money transmission business, (3) for failure of the licensee to pay a judgment ordered by any court within or outside this state within thirty days after the judgment becomes final or within thirty days after expiration or termination of a stay of execution of the judgment, (4) for engaging in fraud, intentional misrepresentation or gross negligence, or (5) for engaging in an unsafe or unsound practice.

(c) Whenever it appears to the commissioner that (1) any person has violated, is violating or is about to violate any provision of sections 36a-595 to 36a-612, inclusive, or any regulation adopted under said sections, (2) any person is, was or would be a cause of the violation of any such provision or regulation due to an act or omission such person knew or should have known would contribute to such violation, or (3) any licensee has failed to pay a judgment ordered by any court within or outside of this state thirty days after the date on which the judgment becomes final or thirty days after the date of the expiration or termination of a stay of execution of the judgment, or engaged in fraud, intentional misrepresentation or gross negligence, or engaged in an unsafe or unsound practice, the commissioner may take action against such person in accordance with sections 36a-50 and 36a-52.

(d) The commissioner may order a licensee to terminate its relationship with any authorized delegate if the commissioner finds that: (1) The authorized delegate violated any provision of sections 36a-595 to 36a-612, inclusive, or any regulation adopted under said sections or any other law or regulation applicable to the conduct of its business; (2) the authorized delegate failed to cooperate with an examination or investigation by the commissioner; (3) the authorized delegate engaged in fraud, intentional misrepresentation, or gross negligence or misappropriated funds; (4) the authorized delegate has been convicted of a violation of a state or federal anti-money laundering statute; (5) the competence, experience, character or general fitness of the authorized delegate or any control person of the authorized delegate demonstrates that it would not be in the public interest to permit such authorized delegate to engage in the business of money transmission in this state on behalf of a licensee; (6) the authorized delegate is engaging in an unsafe or unsound practice; or (7) the authorized delegate is convicted of any act involving fraud or dishonesty.

(e) The commissioner may, in accordance with section 36a-51a, order a licensee to (1) remove a director, general partner, executive officer or employee of a licensee, and (2) terminate retention of an independent contractor in the money transmission business in this state.

(P.A. 81-264, S. 15; P.A. 94-122, S. 283, 340; P.A. 01-56, S. 15; P.A. 07-91, S. 22; P.A. 09-208, S. 20; P.A. 13-253, S. 15; P.A. 18-173, S. 59.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-544 transferred to Sec. 36a-608 in 1995; P.A. 01-56 amended Subsec. (a) to add provision re person who “is about to violate”, amended Subsec. (b) by eliminating requirement that violation be wilful and amended Subsec. (d) by referencing subagent; P.A. 07-91 amended Subsec. (b) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007; P.A. 09-208 amended Subsec. (b) by authorizing commissioner to suspend or revoke a license or to take any other authorized action if the licensee engaged in fraud, intentional misrepresentation or gross negligence, or engaged in an unsafe and unsound practice, and by making technical changes, amended Subsec. (c) to authorize commissioner to take action against any licensee who has failed to pay a judgment ordered by a court or has engaged in fraud, intentional misrepresentation or gross negligence, or engaged in an unsafe and unsound practice, and by referencing Sec. 36a-52, and amended Subsec. (d) by replacing former provisions with Subdivs. (1) to (6) authorizing commissioner to order licensee to terminate its agency relationship under certain circumstances; P.A. 13-253 amended Subsec. (a) to add “is violating”, add reference to Secs. 36a-611 and 36a-612 and amended definition of “unsafe or unsound practice”, amended Subsec. (b) to change “original” to “initial”, add reference to Secs. 36a-611 and 36a-612 and make a technical change, amended Subsec. (c) to add reference to Secs. 36a-611 and 36a-612 and make a technical change, and amended Subsec. (d) to change references to agent to references to authorized delegate, add reference to Secs. 36a-611 and 36a-612, replace provision re refusal of agent to allow examination with provision re failure of authorized delegate to cooperate with an examination or investigation by commissioner in Subdiv. (2), add Subdiv. (7) re conviction of an authorized delegate and make a technical change; P.A. 18-173 amended Subsec. (a) by adding “or a refusal to renew the license”, amended Subsec. (b) by inserting Subdiv. (1) to (5) designators, adding “or refuse to renew”, adding reference to control persons, qualified individual, trustee, employee or agent, adding reference to order, and replacing provision re violation under sections for noncompliance with order with provision re violation issued pursuant to sections, other law or regulation applicable to conduct of licensee's money transmission business in Subdiv. (2), amended Subsec. (c) by inserting Subdiv. (1) designator, adding Subdiv. (2) re person is, was or would be cause of violation of provision or regulation, inserting Subdiv. (3) designator, amended Subsec. (d) by replacing references to manager, partner, director, trustee, principal officer, member or shareholder with reference to control person of authorized delegate, added Subsec. (e) re commissioner's authority to order licensee to remove director, general partner, executive officer or employee and terminate retention of independent contractor, added Subsec. (f) re commissioner's authority to issue temporary order, and made technical changes.

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Sec. 36a-609. (Formerly Sec. 36-545). Exemptions. The provisions of sections 36a-597 to 36a-607, inclusive, and sections 36a-611 and 36a-612 shall not apply to:

(1) Any federally insured federal bank, out-of-state bank, Connecticut bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such institution does not engage in the business of money transmission in this state through any person who is not (A) a federally insured federal bank, out-of-state bank, Connecticut bank, Connecticut credit union, federal credit union or out-of-state credit union, (B) a person licensed pursuant to sections 36a-595 to 36a-612, inclusive, or an authorized delegate acting on behalf of such licensed person, or (C) a person exempt pursuant to subdivision (2) or (3) of this section;

(2) The United States Postal Service and any contractor that engages in the business of money transmission in this state on behalf of the United States Postal Service; and

(3) A person whose activity is limited to the electronic funds transfer of governmental benefits for or on behalf of a federal, state or other governmental agency, quasi-governmental agency or government sponsored enterprise.

(P.A. 81-264, S. 16; P.A. 91-357, S. 58, 78 P.A. 92-12, S. 99; P.A. 94-122, S. 284, 340; P.A. 01-56, S. 16; P.A. 03-61, S. 6; P.A. 04-14, S. 12; P.A. 09-208, S. 21; P.A. 13-253, S. 16.)

History: P.A. 91-357 deleted reference to the Federal Savings and Loan Insurance Corporation from Subsec. (a); P.A. 92-12 redesignated Subdivs.; P.A. 94-122 changed “financial institution” to “bank”, effective January 1, 1995; Sec. 36-545 transferred to Sec. 36a-609 in 1995; P.A. 01-56 amended Subdiv. (1) by replacing reference to banks with insurable deposits with list of specific types of financial institutions and amended Subdiv. (3) by replacing former provisions re telegraph or cable company with language re electronic funds transfer of governmental benefits; P.A. 03-61 substituted “36a-597 to 36a-606a” for “36a-595 to 36a-610”, amended Subdiv. (1) by deleting “Except in its capacity as an agent of a licensee”, substituting “federally insured federal bank” for “federally insured bank” and deleting “Connecticut credit union”, inserted new Subdiv. (2) re exemption for any Connecticut bank or Connecticut credit union and redesignated existing Subdivs. (2) and (3) as new Subdivs. (3) and (4); P.A. 04-14 amended Subdiv. (1) to add reference to “monetary value”, effective April 16, 2004; P.A. 09-208 deleted reference to subagent in Subdiv. (1); P.A. 13-253 replaced reference to Sec. 36a-606a with reference to Sec. 36a-607 and added references to Secs. 36a-611 and 36a-612, amended Subdiv. (1) to add references to Connecticut bank and Connecticut credit union, change “issue or sell Connecticut payment instruments or transmit money or monetary value” to “engage in the business of money transmission in this state”, change “agent” to “any person”, add Subparas. (B) and (C) re licensed or exempt person and designate provision re federally insured institutions as Subpara. (A), deleted former Subdiv. (2) re Connecticut bank or credit union, redesignated existing Subdiv. (3) as Subdiv. (2) and amended same to add “any contractor that engages in the business of money transmission in this state on behalf of the United States Postal Service”, and redesignated existing Subdiv. (4) as Subdiv. (3).

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Sec. 36a-610. (Formerly Sec. 36-546). Regulations. The commissioner may adopt regulations, in accordance with chapter 54, which are necessary or appropriate for the administration of sections 36a-595 to 36a-609, inclusive, and sections 36a-611 and 36a-612.

(P.A. 81-264, S. 17; P.A. 01-56, S. 17; P.A. 13-253, S. 17.)

History: Sec. 36-546 transferred to Sec. 36a-610 in 1995; P.A. 01-56 changed “enforcement” to “administration” and made technical changes; P.A. 13-253 added references to Secs. 36a-611 and 36a-612.

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Sec. 36a-611. Maintenance of records. Unique identifier of license. Advertising of license. (a) Each licensee shall maintain and prepare such records as will enable the commissioner to determine whether the licensee and any of its authorized delegates are complying with the provisions of sections 36a-595 to 36a-612, inclusive, at the office named in the license, or, if requested by the commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after such request by the commissioner. Upon request, the commissioner may grant a licensee additional time to make such records available or send such records to the commissioner.

(b) Each licensee shall maintain the following records for at least five years:

(1) A record of each payment instrument or stored-value obligation sold within this state;

(2) A general ledger posted at least monthly containing all asset, liability, capital, income and expense accounts;

(3) Bank statements and bank reconciliation records;

(4) Records of outstanding money transmissions in this state;

(5) Records of each payment instrument and stored value obligation paid during the previous five years;

(6) A list of the last known names and addresses of all of the licensee's authorized delegates; and

(7) Any other records the commissioner may require.

(c) (1) The unique identifier of any person licensed under section 36a-600 shall be clearly shown on all solicitations and advertisements, including any business card used to solicit money transmission business and Internet web site, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements. The solicitations or advertisements of any person licensed under section 36a-600 (A) shall not include any statement that such person is endorsed in any way by this state, except that such solicitations and advertisements may include a statement that such person is licensed in this state; (B) shall not include any statement or claim that is deceptive, false or misleading; (C) shall otherwise conform to the requirements of sections 36a-595 to 36a-612, inclusive, any regulations issued thereunder and any other applicable law; and (D) shall be retained for two years from the date of use of such solicitation or advertising.

(2) Notwithstanding the provisions of subdivision (1) of this subsection, an advertisement or solicitation on a third-party Internet web site need not include the unique identifier of a person licensed under section 36a-600, provided such advertisement or solicitation contains a link to a solicitation, advertisement or Internet web site that clearly shows the unique identifier of such person.

(P.A. 13-253, S. 18; P.A. 18-173, S. 60.)

History: P.A. 18-173 amended Subsec. (a) by deleting reference to Sec. 36a-596, added Subsec. (c) re unique identifier of license and requirements for solicitations or advertisements, and made technical changes, effective July 1, 2019.

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Sec. 36a-612. Notification of change in list of authorized delegates or locations. A licensee shall notify the commissioner on the system not later than fifteen days after the date of any change in the list of the licensee's authorized delegates or locations where the licensee or the licensee's authorized delegates engage in the business of money transmission in this state. Such notice shall state the name and address of each location and authorized delegate removed or added to the licensee's list.

(P.A. 13-253, S. 19; P.A. 18-173, S. 61.)

History: P.A. 18-173 deleted reference to Sec. 36a-596, replaced provision re notification to commissioner in writing with provision re notification to commissioner on the system, and made a technical change.

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Secs. 36a-613 and 36a-614. Reserved for future use.

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PART VI

LOAN BROKERS

Sec. 36a-615. (Formerly Sec. 36-577). Definitions. As used in sections 36a-615 to 36a-620, inclusive, unless the context otherwise requires:

(1) “Advance fee” means any consideration paid or given, directly or indirectly, to a loan broker prior to the distribution of the proceeds of an unsecured loan to any person.

(2) “Loan broker” means any person who: (A) For or in expectation of a fee (i) arranges, negotiates, places, solicits or finds an unsecured loan; (ii) assists or advises a person in obtaining an unsecured loan; or (iii) offers or attempts to engage in the activities described in subparagraph (i) or (ii) of this subdivision; (B) acts for or on behalf of a loan broker; (C) holds himself out to the public generally as a person engaging in the activities described in subdivision (A) of this subsection. A principal, officer, director, partner, joint venturer, manager or other person with similar supervisory or managerial responsibility for persons engaging in the activities described in subdivisions (A) to (C), inclusive, of this subsection shall be deemed to be a loan broker. “Loan broker” shall not include any bank, out-of-state bank, Connecticut credit union, federal credit union, out-of-state credit union, small loan licensee, nondepository mortgage lender, mortgage correspondent lender or mortgage broker, sales finance company, securities broker-dealer or investment adviser, investment company as defined in the Investment Company Act of 1940, as amended from time to time, forwarder of money, trustee under a mortgage or deed of trust of real property, corporation exercising fiduciary powers, money order and travelers check licensee, check cashing licensee, real estate broker or agent, attorney, Federal Housing Authority or United States Department of Veterans Affairs approved lender, or insurance company; provided any such person or entity so excluded is licensed by and subject to the regulation and supervision of the appropriate regulatory agency of the United States or this state or any other state and is acting within the scope of the license.

(3) “Unsecured loan” means any loan of money or extension of credit that is not secured by a security interest, as defined in Regulation Z, 12 CFR Section 1026.2(a)(25), as from time to time amended.

(P.A. 92-67, S. 1, 9; P.A. 94-122, S. 285, 340; P.A. 08-176, S. 74; P.A. 15-235, S. 40; P.A. 18-72. S. 35.)

History: P.A. 94-122 deleted definition of “commissioner” in Subdiv. (2), renumbered the remaining Subdivs. and made technical changes, effective January 1, 1995; Sec. 36-577 transferred to Sec. 36a-615 in 1995; P.A. 08-176 amended Subdiv. (2) to add reference to “mortgage correspondent lender” and make conforming and technical changes, effective July 1, 2008; P.A. 15-235 amended Subdiv. (3) to change “226.2(a)(25)” to “1026.2(a)(25)”, effective August 1, 2015; P.A. 18-72 amended Subdiv. (2) to replace “Veterans' Administration” with “United States Department of Veterans Affairs”.

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Sec. 36a-616. (Formerly Sec. 36-578). Advance fees imposed by loan brokers prohibited. No loan broker may assess, collect, charge, impose or cause to be paid, directly or indirectly, an advance fee as an incident to, condition of or in connection with providing the services of a loan broker.

(P.A. 92-67, S. 2, 9.)

History: Sec. 36-578 transferred to Sec. 36a-616 in 1995.

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Sec. 36a-617. (Formerly Sec. 36-580). Penalties for violations. Any loan broker who knowingly violates any provision of sections 36a-615 to 36a-620, inclusive, or any regulation or order adopted or issued under said sections, shall be fined not more than one thousand dollars or imprisoned not more than one year, or both, for each violation. Each loan of money or extension of credit in which an advance fee was charged, imposed or caused to be paid shall constitute a separate violation.

(P.A. 92-67, S. 4, 9; P.A. 94-122, S. 286, 340.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-580 transferred to Sec. 36a-617 in 1995.

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Sec. 36a-618. (Formerly Sec. 36-581). Remedies. Any loan broker who violates any provision of sections 36a-615 to 36a-620, inclusive, with respect to any person shall be liable to such person for actual damages, a reasonable attorney's fee, court costs and such punitive damages as may be awarded by the Superior Court. In addition to such remedies, such person shall have a right of rescission of any contract such person may have with the loan broker.

(P.A. 92-67, S. 5, 9.)

History: Sec. 36-581 transferred to Sec. 36a-618 in 1995.

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Sec. 36a-619. (Formerly Sec. 36-582). Remedies provided by sections 36a-615 to 36a-620, inclusive, not exclusive. The remedies provided by sections 36a-615 to 36a-620, inclusive, are in addition to any other remedies provided by state or federal law.

(P.A. 92-67, S. 6, 9.)

History: Sec. 36-582 transferred to Sec. 36a-619 in 1995.

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Sec. 36a-620. (Formerly Sec. 36-583). Regulations. The commissioner may adopt regulations, in accordance with the provisions of chapter 54, as may be necessary to carry out the provisions of sections 36a-615 to 36a-620, inclusive.

(P.A. 92-67, S. 7, 9.)

History: Sec. 36-583 transferred to Sec. 36a-620 in 1995.

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Secs. 36a-621 to 36a-624. Reserved for future use.

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PART VII

CONNECTICUT BUSINESS AND INDUSTRIAL
DEVELOPMENT CORPORATION ACT

Sec. 36a-625. Short title: Connecticut Business and Industrial Development Corporation Act. Sections 36a-625 to 36a-634, inclusive, shall be known and may be cited as the “Connecticut Business and Industrial Development Corporation Act”.

(P.A. 93-382, S. 56, 69; P.A. 94-122, S. 287, 340.)

History: P.A. 93-382 effective July 1, 1993; P.A. 94-122 made a technical change, effective January 1, 1995.

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Sec. 36a-626. Definitions. As used in sections 36a-625 to 36a-634, inclusive, unless the context otherwise requires:

(1) “Business and industrial development corporation” means a person approved or seeking approval by the federal Small Business Administration as a participating lender under its loan guarantee programs, which applies to the commissioner for a license in accordance with sections 36a-625 to 36a-634, inclusive.

(2) “License” means a license issued under sections 36a-625 to 36a-634, inclusive, authorizing a person to transact business as a business and industrial development corporation.

(3) “Licensee” means a person that is licensed under sections 36a-625 to 36a-634, inclusive.

(P.A. 93-382, S. 57, 69; P.A. 94-122, S. 288, 340.)

History: P.A. 93-382 effective July 1, 1993; P.A. 94-122 deleted definitions of “commissioner” and “person” and made technical changes, effective January 1, 1995.

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Sec. 36a-627. License required. Exemptions. (a) No person shall engage in the business of a business and industrial development corporation as a participating lender under the loan guarantee programs of the federal Small Business Administration in this state without having received a license under sections 36a-625 to 36a-634, inclusive.

(b) Notwithstanding subsection (a) of this section, the following shall be exempt from the provisions of sections 36a-625 to 36a-634, inclusive: (1) Any person licensed by the federal Small Business Administration as a small business investment company or a small business lending company; (2) any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union; or (3) any person that is not approved or is not seeking approval by the federal Small Business Administration as a participating lender under one or more of its loan guarantee programs.

(P.A. 93-382, S. 58, 69; P.A. 94-122, S. 289, 340.)

History: P.A. 93-382 effective July 1, 1993; P.A. 94-122 made technical changes, effective January 1, 1995.

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Sec. 36a-628. Application. Fee. Examination. Criminal history records check. (a) An application for a license shall be in writing upon forms to be furnished by the commissioner and shall contain the full name and address of the applicant and, if the applicant is a corporation, each of the officers and directors thereof, and a statement of the assets and liabilities of the applicant in such form as the commissioner requires. Such application shall be accompanied by a copy of the applicant's business plan and such other information and exhibits as the commissioner shall require.

(b) Upon the filing of the required application and license fee, the commissioner shall investigate the facts and may issue a license if the commissioner finds that:

(1) The applicant has a net worth which is not less than two million five hundred thousand dollars and which is adequate for the applicant to transact business as a business and industrial development corporation;

(2) If the applicant is a corporation, the directors and officers of the applicant are each of good character, each competent to perform their functions with respect to the applicant and collectively adequate to manage the business of the applicant as a business and industrial development corporation;

(3) It is reasonable to believe that the applicant, if licensed, will comply with all applicable provisions of sections 36a-625 to 36a-634, inclusive, and of any regulation adopted pursuant to said sections; and

(4) The licensing of the applicant will promote the public convenience and advantage.

(c) In connection with an application for such license and at any other time, the commissioner may, in accordance with section 29-17a, arrange for a criminal history records check requiring the fingerprinting of each principal, executive officer and director of the business and industrial development corporation or for conducting any other method of positive identification of such individuals required by the State Police Bureau of Identification.

(P.A. 93-382, S. 59, 69; P.A. 94-122, S. 290, 340; P.A. 11-50, S. 14; P.A. 12-96, S. 3.)

History: P.A. 93-382 effective July 1, 1993; P.A. 94-122 made technical changes, effective January 1, 1995; P.A. 11-50 added Subsec. (c) authorizing commissioner to arrange for criminal history records check of each principal, executive officer and director, effective July 1, 2011; P.A. 12-96 amended Subsec. (c) to make a technical change, effective June 8, 2012.

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Sec. 36a-629. Safe and sound business practice required. (a) Each licensee shall transact its business in a safe and sound manner and shall maintain itself in a safe and sound condition.

(b) No licensee or the directors or officers of such licensee, if such licensee is a corporation, shall commit any unsafe or unsound act.

(P.A. 93-382, S. 60, 69; P.A. 94-122, S. 291, 340.)

History: P.A. 93-382 effective July 1, 1993; P.A. 94-122 inserted “if such licensee is a corporation” in Subsec. (b), effective January 1, 1995.

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Sec. 36a-630. Licensees to provide financing and management assistance to small businesses. Each licensee shall use its best efforts to provide financing assistance to small business firms in cooperation with the federal Small Business Administration pursuant to Section 7(a) of the Small Business Act of 1953 (15 USC Section 631 et seq.), as from time to time amended, and otherwise to cooperate with the federal Small Business Administration for the purpose of providing financing assistance and management assistance to business firms.

(P.A. 93-382, S. 61, 69.)

History: P.A. 93-382 effective July 1, 1993.

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Sec. 36a-631. Books and records. Annual financial reports. (a) Each licensee shall make and keep such books, accounts and other records in such form and in such manner as the commissioner may by regulation or order require. All records so required shall be kept at such place and shall be preserved for such time as the commissioner may by regulation or order specify.

(b) Each licensee shall, not more than ninety days after the close of each of its fiscal years or within such longer period as the commissioner may by regulation specify, file with the commissioner an annual report containing:

(1) A financial statement, including balance sheet, statement of income or loss, statement of changes in capital accounts and statement of changes in financial position, for or as of the end of such fiscal year, prepared with an audit by an independent certified public accountant in accordance with generally accepted accounting principles;

(2) A report, certificate or opinion of such independent certified public accountant, stating that such financial statements were prepared in accordance with generally accepted accounting principles;

(3) A report as to (A) the number and aggregate dollar amount of loans made by such licensee during such fiscal year; (B) the geographic distribution, by census tract, of the borrowers that received such loans; (C) the percentage of such loans that were made in the principal amount of fifty thousand dollars or less; (D) the percentage of such loans that were made to minority or women-owned businesses; (E) the dollar amount of the licensee's loan portfolio as of the end of such fiscal year; (F) the percentage amount of the licensee's loan portfolio that represents loans for which scheduled loan payments were more than ninety days past due as of the end of such fiscal year; (G) the number and dollar amount of loans in liquidation as of the end of such fiscal year; and (H) a summary of the licensee's policies and performance with regard to management assistance provided to small business firms during such fiscal year; and

(4) Such other information as the commissioner may require.

(P.A. 93-382, S. 62, 69.)

History: P.A. 93-382 effective July 1, 1993 (Revisor's note: In Subsec. (b)(3)(D) the reference to “woman-owned businesses” was changed editorially by the Revisors to “women-owned businesses” for consistency with other statutory references).

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Sec. 36a-632. Jurisdiction of Banking Commissioner. Each licensee shall be an institution subject to the jurisdiction of the commissioner for purposes of sections 36a-17 and 36a-53.

(P.A. 93-382, S. 64, 69; P.A. 94-122, S. 292, 340.)

History: P.A. 93-382 effective July 1, 1993; P.A. 94-122 made a technical change, effective January 1, 1995.

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Sec. 36a-633. License fee. Costs of examination to be borne by applicants. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (a) Each applicant for a license, at the time of making such application, shall pay to the commissioner a nonrefundable license fee of four hundred dollars. Each license issued pursuant to this subsection shall expire at the close of business on June thirtieth of each year, unless such license is renewed. The license shall not be transferable or assignable. Each licensee shall, on or before June twentieth of each year, pay to the commissioner the sum of four hundred dollars as a license renewal fee for the succeeding year, commencing July first. Each applicant or licensee shall pay the expenses of any examination or investigation made under sections 36a-625 to 36a-634, inclusive.

(b) If the commissioner determines that a check filed with the commissioner to pay a license 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.

(P.A. 93-382, S. 65, 69; P.A. 04-69, S. 22; P.A. 14-89, S. 26.)

History: P.A. 93-382 effective July 1, 1993; P.A. 04-69 designated existing provisions as Subsec. (a), making a technical change therein, and added new Subsec. (b) requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay license 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; P.A. 14-89 amended Subsec. (a) to add provision prohibiting transfer or assignment of license and to replace “license fee” with “license renewal fee”.

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Sec. 36a-634. Regulations. The commissioner shall adopt, pursuant to chapter 54, such regulations as may be necessary to carry out the provisions of sections 36a-625 to 36a-633, inclusive.

(P.A. 93-382, S. 66, 69.)

History: P.A. 93-382 effective July 1, 1993.

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Sec. 36a-635. Reserved for future use.

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PART VIII

INTERNATIONAL TRADE AND INVESTMENT
CORPORATIONS

Sec. 36a-636. Defintions. As used in this section and sections 36a-636a to 36a-636f, inclusive, unless the context otherwise requires:

(1) “International trade and investment corporation” means a person, as defined in section 36a-2, approved or seeking approval by the Export-Import Bank of the United States, Overseas Private Investment Corporation or United States Department of Agriculture to participate as a lender under a financing guarantee program;

(2) “License” means a license issued under this section and sections 36a-636a to 36a-636f, inclusive; and

(3) “Licensee” means an international trade and investment corporation that is licensed under this section and sections 36a-636a to 36a-636f, inclusive.

(P.A. 16-65, S. 65.)

History: P.A. 16-65 effective May 26, 2016.

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Sec. 36a-636a. License. (a) The Banking Commissioner may issue a license to any international trade and investment corporation that submits an application pursuant to subsection (b) of this section and meets the requirements of this section and sections 36a-636b to 36a-636e, inclusive.

(b) An application for a license shall be in writing upon forms acceptable to the commissioner and shall contain: (1) The full name and address of the applicant; (2) if the applicant is a corporation, each of the officers and directors thereof; (3) a statement of the assets and liabilities of the applicant in such form as the commissioner requires; (4) a copy of the applicant's business plan; (5) proof that the applicant is in compliance with applicable state and federal laws; and (6) such other information and exhibits as the commissioner shall require.

(c) The commissioner, at any time and in accordance with section 29-17a, may arrange for a state and national criminal history records check of each principal, executive officer and director of the applicant or licensee.

(d) Upon the filing of the required application and license fee, the commissioner shall investigate the facts and may issue a license if the commissioner finds that:

(1) The applicant has a net worth that is adequate for the applicant to transact business as an international trade and investment corporation, but in no case less than two million five hundred thousand dollars;

(3) It is reasonable to believe that the applicant, if licensed, will comply with all applicable provisions of sections 36a-636 to 36a-636e, inclusive, and of any regulation adopted pursuant to section 36a-636f; and

(4) The licensing of the applicant will promote the public convenience and advantage.

(e) Nothing in this section, section 36a-636 and sections 36a-636b to 36a-636f, inclusive, shall be deemed to require an international trade and investment corporation to be licensed by the commissioner.

(P.A. 16-65, S. 66; P.A. 17-236, S. 9.)

History: P.A. 16-65 effective May 26, 2016; P.A. 17-236 amended Subsec. (c) to make a technical change, effective July 11, 2017.

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Sec. 36a-636b. Duties of licensees. (a) Each licensee shall use its best efforts to provide financing in conjunction with, and fulfill the expectations of, the federal financing guarantee programs in which the licensee participates.

(b) Each licensee shall transact its business in a safe and sound manner and shall maintain itself in a safe and sound condition. No licensee or the directors or officers of such licensee, if such licensee is a corporation, shall commit any unsafe or unsound act.

(P.A. 16-65, S. 67.)

History: P.A. 16-65 effective May 26, 2016.

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Sec. 36a-636c. Books and records. Annual report. (a) Each licensee shall make and keep such books, accounts and other records in such form and in such manner as the commissioner may by regulation or order require.

(b) Each licensee shall, not more than ninety days after the close of its fiscal year, or within such longer period as the commissioner may by regulation specify, file with the commissioner an annual report containing:

(1) A financial statement, including balance sheet, statement of income or loss, statement of changes in capital accounts and statement of changes in financial position, for its fiscal year or as of the end of such fiscal year, prepared with an audit by an independent certified public accountant in accordance with generally accepted accounting principles;

(2) A report, certificate or opinion of such independent certified public accountant stating that the financial statement was prepared in accordance with generally accepted accounting principles, and that such accountant agrees to provide related working papers, policies and procedures to the commissioner, if requested;

(3) A report as to (A) the number and aggregate dollar amount of loans made by such licensee during its fiscal year; (B) the geographic distribution, including by United States census tract, if applicable, of the borrowers that received such loans; (C) the percentage of such loans that were made to minority or women-owned United States and foreign businesses; (D) the dollar amount of the licensee's loan portfolio as of the end of its fiscal year; (E) the percentage amount of the licensee's loan portfolio that represents loans for which scheduled loan payments were more than ninety days past due as of the end of its fiscal year; (F) the number and dollar amount of loans in liquidation as of the end of its fiscal year; (G) the dollar amount of the licensee's reserve for loan and lease losses; and (H) percentage of reserves to total loans and leases; and

(4) Such other information as the commissioner may require.

(P.A. 16-65, S. 68.)

History: P.A. 16-65 effective May 26, 2016.

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Sec. 36a-636d. Licensees subject to jurisdiction of commissioner. Each licensee shall be an institution subject to the jurisdiction of the commissioner for purposes of sections 36a-17 and 36a-53.

(P.A. 16-65, S. 69.)

History: P.A. 16-65 effective May 26, 2016.

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Sec. 36a-636e. License fees and expenses. Expiration and renewal. Automatic suspension. Surrender or termination of license. (a) Each applicant for a license, at the time of making such application, shall pay to the commissioner a nonrefundable license fee of two thousand five hundred dollars. Each license issued pursuant to section 36a-636a shall expire at the close of business on June thirtieth of each year, unless such license is renewed. The license shall not be transferable or assignable. Each licensee shall, on or before June twentieth of each year, pay to the commissioner the sum of one thousand dollars as a license renewal fee for the succeeding year, commencing July first. Each applicant or licensee shall pay all the expenses associated with any examination or investigation made under sections 36a-636a to 36a-636e, inclusive, or any regulation adopted pursuant to section 36a-636f.

(c) Upon surrender or termination of the license, the licensee shall promptly notify all customers and provide confirmation of the notification to the commissioner not later than fifteen days after the date of such surrender or termination.

(P.A. 16-65, S. 70; P.A. 17-236, S. 7.)

History: P.A. 16-65 effective May 26, 2016; P.A. 17-236 amended Subsec. (c) by replacing “suspension” with “surrender”, effective July 11, 2017.

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Sec. 36a-636f. Regulations. The commissioner may adopt regulations, in accordance with the provisions of chapter 54, to administer the provisions of sections 36a-636 to 36a-636e, inclusive.

(P.A. 16-65, S. 71.)

History: P.A. 16-65 effective May 26, 2016.

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Secs. 36a-637 to 36a-644. Reserved for future use.

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