SB439: relative to money transmitters and mortgage servicing companies.

CHAPTER 372

SB 439 – FINAL VERSION

02/14/08 0561s

16Apr2008… 1287h

06/05/08 2117eba

2008 SESSION

08-2821

08/10

SENATE BILL 439

AN ACT relative to money transmitters and mortgage servicing companies.

SPONSORS: Sen. Gottesman, Dist 12

COMMITTEE: Commerce, Labor and Consumer Protection

ANALYSIS

This bill makes certain changes to the licensing of money transmitters and regulation of mortgage servicing companies.

This bill is a request of the banking department.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

02/14/08 0561s

16Apr2008… 1287h

06/05/08 2117eba

08-2821

08/10

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eight

AN ACT relative to money transmitters and mortgage servicing companies.

Be it Enacted by the Senate and House of Representatives in General Court convened:

372:1 New Paragraphs; Licensing of Money Transmitters; Definitions. Amend RSA 399-G:1 by inserting after paragraph I the following new paragraphs:

I-a. “Affiliate” means a partnership, corporation, trust, limited liability company, or other organization or person that directly or indirectly owns or controls, or is under common ownership with, or is directly or indirectly owned or controlled by, a money transmitter.

I-b. “Average daily outstanding money transmissions” means the total dollar volume less fees sent by persons in all jurisdictions through the money transmitter and its authorized delegates, that has not yet been received in cash by the intended recipients, calculated for a calendar year, divided by 365.

I-c. “Applicant” means a person who applies for a license or registration under the chapter.

I-d. “Application” means a petition for a license or registration on a form prescribed by the commissioner.

372:2 New Paragraph; Definition. Amend RSA 399-G:1 by inserting after paragraph VIII the following new paragraph:

VIII-a. “Net worth” means assets minus liabilities calculated in accordance with generally accepted accounting principles.

372:3 License Application; Requirements; Investigation. Amend RSA 399-G:5, II(b)-(c) to read as follows:

(b) Each license application shall be accompanied by a nonrefundable application fee of $500 for each principal office and $25 for each authorized delegate registration, up to a maximum annual fee of [$4,000] $5,000. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the commissioner, consumer credit administration division.

(c) Each applicant shall submit detailed financial information sufficient for the commissioner to determine the applicant’s ability to conduct the business of a money transmitter with financial integrity. The application shall include a statement of net worth in all cases and an applicant shall demonstrate and maintain a positive net worth computed in accordance with generally accepted accounting principles. A licensee shall at all times maintain a net worth of the lesser of its average daily outstanding money transmissions for the prior calendar year or $1,000,000. Net worth statements provided in connection with a license application under this section shall be subject to review and verification during the course of any examination or investigation conducted under the authority of RSA 399-G:13. Each money transmitter applicant shall post a continuous surety bond in the amount of $100,000. The surety bond shall be payable to the state of New Hampshire and the bank commissioner of the state of New Hampshire for the benefit of any person who is damaged by any violation of this chapter and shall be conditioned upon the licensee’s compliance with each provision of this chapter. Surety bonds shall include a provision requiring the surety to give written notice to the commissioner 20 days in advance of the cancellation or termination of the bond. Every bond shall provide that no recovery may be made against the bond unless the state makes a claim for recovery or the person brings suit naming the principal within 6 years after the act upon which the recovery or suit is based. The obligations of the surety shall survive the bankruptcy, insolvency, liquidation, or reorganization of the licensee, including, without limitation, any bankruptcy, insolvency, liquidation, or reorganization commenced by or against the licensee under any applicable state or federal law, including the United States Bankruptcy Code.

372:4 New Paragraph; License Grant. Amend RSA 399-G:6 by inserting after paragraph VI the following new paragraph:

VII. Licensees shall create written plans and implement the written plans for compliance with federal laws, including but not limited to the Bank Secrecy Act of 1970 as amended and regulations at 31 C.F.R. 103 et seq. Such plans shall include required recordkeeping and reporting procedures.

372:5 Examinations. Amend RSA 399-G:13, I-II to read as follows:

I. The department may examine the business affairs and records of any licensee, authorized delegate, or any other person, whether licensed or not, as it deems necessary to determine compliance with this chapter and the rules adopted pursuant to it. In determining compliance, the department may examine the books, accounts, records, files, and other documents or matters of any licensee or person. The department shall have the power to subpoena witnesses and administer oaths in any adjudicative proceedings, and to compel, by subpoena duces tecum, the production of all books, records, files, and other documents and materials relevant to its investigation.

II. For the purpose of discovering violations of this chapter, the banking department may examine, during business hours, the records of any licensee, authorized delegate, or any other person and of any person by whom any such [loan] money transmission is made, whether such person shall be licensed to act, or claim to act, as principal, agent, or other representative, or under, or without the authority of this chapter; and for that purpose, the banking department shall have access to the books, papers, records, files, and vaults of all such persons. The banking department shall also have authority to examine, under oath, all persons whose testimony it may require relative to such loans or business.

II-a. Licensees shall implement a system of education, training, monitoring, and periodic inspection designed to inform their authorized delegates of their responsibilities, consistent with the Bank Secrecy Act and the requirements to file reports required by federal law.

372:6 Definitions. Amend RSA 397-B:1, III-IV to read as follows:

III. “Mortgage servicing company” means an individual, partnership, corporation, association, or other entity however organized and wherever located which, for itself or on behalf of the holder of a first or second mortgage loan, records such payments on its books and records and performs such other administrative functions as may be necessary to properly carry out the mortgage holder’s obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of such funds to the taxing authority and insurance company.

IV. “Mortgagor” means any person or persons obligated to repay a first or second mortgage loan.

372:7 New Paragraph; Definitions. Amend RSA 397-B:1 by inserting after paragraph VI the following new paragraph:

VII. “Second mortgage loan” shall have the same meaning as defined in RSA 397–A:1, XXII.

372:8 Application of the Chapter. Amend RSA 397-B:2, I to read as follows:

I. This chapter shall provide for the banking department’s regulation of mortgage servicing companies that engage in the business of servicing first or second mortgage loans secured by real property located in the state of New Hampshire, which is or shall be occupied in whole or in part as a primary domicile or place of residence by the mortgagor and which consists of not more than 4 living units. Persons registered under this chapter shall be responsible for the supervision of their employees, agents, and branch offices.

372:9 Application of the Chapter. Amend RSA 397-B:2, III to read as follows:

III. Persons subject to or registered under this chapter that service first or second mortgage home loans on real property located in the state of New Hampshire shall, within 5 days of receipt of a written request, provide a net payoff amount as of a specific date with a daily interest rate charge. Persons who fail to provide a net payoff amount within 5 days of receipt of a written request shall be assessed a fine of $100 per day up to a maximum penalty of $2500 per violation.

372:10 Registration. Amend RSA 397-B:4, I(a) to read as follows:

(a) Any mortgage servicing company which services first or second mortgage loans secured by real property located in the state of New Hampshire shall be required to register with the banking department by filing a registration statement on a form prescribed by the commissioner and paying an original registration fee of $500. Each such registration shall expire on December 31 of each calendar year. A registration may be renewed by filing a renewal statement on a form prescribed by the commissioner and paying a renewal registration fee of $500, on or before, December 1 for registration for the ensuing year. Sums collected under this chapter shall be payable to the state treasurer as restricted revenue and credited to the appropriation of the commissioner, consumer credit administration division.

372:11 License Revocation; Suspension. Amend the introductory paragraph of RSA 399-G:18, I to read as follows:

I. The commissioner may issue an order requiring a person to whom any license has been granted or any person under the commissioner's jurisdiction to show cause why the license should not be revoked, suspended, or penalties imposed, or both, for violations of this chapter. The order shall give reasonable notice of the opportunity for a hearing and shall state the reasons for the issuance of the order. The commissioner may by order summarily postpone or suspend any license or application pending final determination of any order to show cause, or other order, or of any other proceeding under this section, provided the commissioner finds that the public interest would be irreparably harmed by delay in issuing such order. Upon the entry of the order, the commissioner shall promptly notify the respondent, applicant, or licensee that the order has been entered and of the reasons for the order and that within 10 calendar days after receipt of a written request the matter will be scheduled for hearing. Valid delivery of such order shall be by hand or certified mail at the last known principal office of the licensee, or respondent, to an officer, director, 5 percent or more owner, member, partner, or legal representative of the licensee or respondent. If the person to whom an order to show cause or other order is issued fails to request a hearing within 30 calendar days of receipt or valid delivery of the order and no hearing is ordered by the commissioner, then such person shall be deemed in default, and the order shall, on the thirty-first day, become permanent, and shall remain in full force and effect until and unless later modified or vacated by the commissioner, for good cause shown. A hearing, if requested, shall be scheduled not later than 10 calendar days after the written request for such hearing is received by the commissioner, after which and within 20 calendar days from the date of the hearing the commissioner shall enter an order making such disposition of the matter as the facts require. If the licensee or respondent fails to request a hearing within 30 calendar days of receipt or valid delivery of such order or fails to appear at a hearing after being duly notified, or cannot be located after a reasonable search, such person shall be deemed in default and the proceeding may be decided against the person upon consideration of the order to show cause or other order, the allegations of which may be deemed to be true. The commissioner may by order, upon due notice and opportunity for hearing, assess penalties or deny, suspend, or revoke a license, registration, or application if it is in the public interest and the applicant, respondent, authorized delegate, or licensee, any partner, officer, member, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the applicant, respondent, authorized delegate, or licensee:

372:12 Effective Date. This act shall take effect January 1, 2009.

Approved: July 11, 2008

Effective Date: January 1, 2009