Connecticut Seal

Substitute Senate Bill No. 231

Public Act No. 02-111

AN ACT CONCERNING CONSUMER CREDIT AND MONEY TRANSMITTER LICENSEES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-3 of the general statutes, as amended by section 1 of public act 01-9, section 1 of public act 01-34, section 1 of public act 01-56 and section 1 of public act 01-76, is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

Other definitions applying to this title or to specified parts thereof and the sections in which they appear are:

 

"Account". Sections 36a-155 and 36a-365.

 

"Additional proceeds". Section 7 of [this act] public act 01-34.

 

"Advance fee". Sections 36a-510, 36a-485, as amended by this act,

 

and 36a-615.

 

"Advertise" or "advertisement". Sections 36a-485 and 36a-510, as

 

amended by this act.

 

"Agency bank". Section 36a-285.

 

"Alternative mortgage loan". Section 36a-265.

 

"Amount financed". Section 36a-690.

 

"Annual percentage rate". Section 36a-690.

 

"Annual percentage yield". Section 36a-316, as amended.

 

"Applicant". Section 36a-736.

 

"APR". Section 3 of [this act] public act 01-34.

 

"Assessment area". Section 2 of [this act] public act 01-9.

 

"Associate". Section 36a-184.

 

"Bank". Section 36a-30.

 

"Bankers' bank". Section 36a-70, as amended.

 

"Banking business". Section 36a-425, as amended.

 

"Billing cycle". Section 36a-565.

 

"Bona fide nonprofit organization". Section 36a-655, as amended by

 

this act.

 

"Branch". Sections 36a-145, as amended, and 36a-410.

 

"Branch or agency net payment entitlement". Section 36a-428n, as

 

amended.

 

"Branch or agency net payment obligation". Section 36a-428n, as

 

amended.

 

"Broker". Section [36a-510 and section] 3 of [this act] public act 01-34.

 

"Business and industrial development corporation". Section 36a-626.

 

"Business and property in this state". Section 36a-428n.

 

"Cash advance". Section 36a-564.

 

"Cash price". Section 36a-770, as amended.

 

"Certificate of organization". Section 36a-435.

 

"Closely related activities". Section 36a-250.

 

"Collective managing agency account". Section 36a-365.

 

"Commercial vehicle". Section 36a-770, as amended.

 

"Community bank". Section 36a-70, as amended.

 

"Community credit union". Section 2 of [this act] public act 01-9.

 

"Community development bank". Section 36a-70, as amended.

 

"Community reinvestment performance". Section 2 of [this act]

 

public act 01-9.

 

"Connecticut holding company". Section 36a-410.

 

"Consumer". Sections 36a-155, 36a-676 and 36a-695.

 

"Consumer Credit Protection Act". Section 36a-676.

 

"Consumer debtor" and "debtor". Sections 36a-645 and 36a-800, as

 

amended.

 

"Consumer collection agency". Section 36a-800, as amended.

 

"Consummation". Section 3 of [this act] public act 01-34.

 

"Controlling interest". Section 36a-276.

 

"Credit". Sections 36a-645 and 36a-676.

 

"Creditor". Sections 36a-676, 36a-695 and 36a-800, as amended.

 

"Credit card", "cardholder" and "card issuer". Section 36a-676.

 

"Credit clinic". Section 36a-695.

 

"Credit rating agency". Section 36a-695.

 

"Credit report". Section 36a-695.

 

"Credit sale". Section 36a-676.

 

"De novo branch". Section 36a-410.

 

"Debt". Section 36a-645.

 

"Debt adjustment". Section 36a-655, as amended by this act.

 

"Debt mutual fund". Section 36a-275.

 

"Debt securities". Section 36a-275.

 

"Debtor". Section 36a-655, as amended by this act.

 

"Deliver". Section 36a-316, as amended.

 

"Deposit". Section 36a-316, as amended.

 

"Deposit account". Sections 36a-136 and 36a-316, as amended.

 

"Deposit account charge". Section 36a-316, as amended.

 

"Deposit account disclosures". Section 36a-316, as amended.

 

"Deposit contract". Section 36a-316, as amended.

 

"Deposit services". Section 36a-425, as amended.

 

"Depositor". Section 36a-316, as amended.

 

"Earning period". Section 36a-316, as amended.

 

"Electronic payment instrument". Section 36a-596, as amended.

 

"Eligible account holder". Section 36a-136.

 

"Eligible collateral". Section 36a-330.

 

"Equity mutual fund". Section 36a-276.

 

"Federal Home Mortgage Disclosure Act". Section 36a-736.

 

"Fiduciary". Section 36a-365.

 

"Filing fee". Section 36a-770, as amended.

 

"Finance charge". Sections 36a-690 and 36a-770, as amended.

 

"Financial institution". Sections 36a-41, as amended, 36a-155,

 

36a-316, as amended, 36a-330 and section 3 of [this act] public act

 

01-76.

 

"Financial records". Section 36a-41, as amended.

 

"First mortgage broker". Section 36a-485, as amended by this act.

 

"First mortgage correspondent lender". Section 36a-485, as amended

 

by this act.

 

"First mortgage lender". Section 36a-485, as amended by this act.

 

"First mortgage loan". Sections 36a-485, as amended by this act, 36a-

 

705 and 36a-715.

 

"Fiscal year". Section 36a-435.

 

"Foreign banking corporation". Section 36a-425, as amended.

 

"General facility". Section 36a-580.

 

"Global net payment entitlement". Section 36a-428n, as amended.

 

"Global net payment obligation". Section 36a-428n, as amended.

 

"Goods". Sections 36a-535 and 36a-770, as amended.

 

"Graduated payment mortgage loan". Section 36a-265.

 

"Guardian". Section 36a-365.

 

"High cost home loan". Section 3 of [this act] public act 01-34.

 

"Holder". Section 36a-596, as amended.

 

"Home banking services". Section 36a-170.

 

"Home banking terminal". Section 36a-170.

 

"Home improvement loan". Section 36a-736.

 

"Home purchase loan". Section 36a-736.

 

"Home state". Section 36a-410.

 

"Immediate family". Section 36a-435.

 

"Installment loan contract". Sections 36a-535 and 36a-770, as

 

amended.

 

"Insurance bank". Section 36a-285.

 

"Insurance department". Section 36a-285.

 

"Interest". Section 36a-316, as amended.

 

"Interest rate". Section 36a-316, as amended.

 

"Lender". [Sections 36a-510,] Section 36a-770, as amended, and

 

section 3 of [this act] public act 01-34.

 

"Lessor". Section 36a-676.

 

"License". Section 36a-626.

 

"Licensee". Sections 36a-510, as amended by this act, 36a-596, as

 

amended, and 36a-626.

 

"Limited branch". Section 36a-145, as amended.

 

"Limited facility". Section 36a-580.

 

"Loan broker". Section 36a-615.

 

"Loss". Section 36a-330.

 

"Made in this state". Section 36a-770, as amended.

 

"Managing agent". Section 36a-365.

 

"Material litigation". Section 36a-596.

 

"Member". Section 36a-435.

 

"Membership share". Section 36a-435.

 

"Money order". Section 36a-596, as amended.

 

"Money transmission". Section 36a-365.

 

["Mortgage broker". Section 36a-485. ]

 

"Mortgage insurance". Section 36a-725.

 

"Mortgage lender". Sections 36a-485, 36a-510, as amended by this

 

act, and 36a-705.

 

"Mortgage loan". Sections 36a-261 and 36a-265.

 

"Mortgage rate lock-in". Section 36a-705.

 

"Mortgage servicing company". Section 36a-715.

 

"Mortgagor". Section 36a-715.

 

"Motor vehicle". Section 36a-770, as amended.

 

"Multiple common bond membership". Section 36a-435.

 

"Municipality". Section 36a-800, as amended.

 

"Net worth". Section 36a-596, as amended.

 

"Network". Section 36a-155.

 

"Nonrefundable". Sections 36a-498 and 36a-521, as amended by this

 

act.

 

"Note account". Sections 36a-301 and 36a-445.

 

"Office". Section 36a-316, as amended.

 

"Open-end credit plan". Section 36a-676.

 

"Open-end loan". Section 36a-565.

 

"Organization". Section 36a-800, as amended.

 

"Originator". Sections 36a-485 and 36a-510, as amended by this act.

 

"Out-of-state holding company". Section 36a-410.

 

"Outstanding". Section 36a-596, as amended.

 

"Passbook savings account". Section 36a-316, as amended.

 

"Payment instrument". Section 36a-596, as amended.

 

"Periodic statement". Section 36a-316, as amended.

 

"Permissible investment". Section 36a-596, as amended.

 

"Person". Section 36a-184.

 

"Post". Section 36a-316, as amended.

 

"Prepaid finance charge". Section 3 of [this act] public act 01-34.

 

"Prepayment penalty". Section 3 of [this act] public act 01-34.

 

"Prime quality". Section 36a-596, as amended.

 

"Principal amount of the loan". Section 36a-510, as amended by this

 

act.

 

["Principal officer". Section 36a-485. ]

 

"Processor". Section 36a-155.

 

"Public deposit". Section 36a-330.

 

"Purchaser". Section 36a-596, as amended.

 

"Qualified financial contract". Section 36a-428n, as amended.

 

"Qualified public depository" and "depository". Section 36a-330.

 

"Records". Section 36a-17.

 

"Relocate". Section 36a-145, as amended.

 

"Residential property". Section 36a-485, as amended by this act.

 

"Retail buyer". Sections 36a-535 and 36a-770, as amended.

 

"Retail credit transaction". Section 42-100b.

 

"Retail deposits". Section 36a-70, as amended.

 

"Retail installment contract". Sections 36a-535 and 36a-770, as

 

amended.

 

"Retail installment sale". Sections 36a-535 and 36a-770, as amended.

 

"Retail seller". Sections 36a-535 and 36a-770, as amended.

 

"Reverse annuity mortgage loan". Section 36a-265.

 

"Sales finance company". Sections 36a-535 and 36a-770, as amended.

 

"Savings department". Section 36a-285.

 

"Savings deposit". Section 36a-316, as amended.

 

"Secondary mortgage broker". Section 36a-510, as amended by this

 

act.

 

"Secondary mortgage correspondent lender". Section 36a-510, as

 

amended by this act.

 

"Secondary mortgage lender". Section 36a-510, as amended by this

 

act.

 

"Secondary mortgage loan". Section 36a-510, as amended by this act.

 

"Security convertible into a voting security". Section 36a-184.

 

"Share". Section 36a-435.

 

"Simulated check". Sections 36a-485 and 36a-510, as amended by this

 

act.

 

"Single common bond membership". Section 36a-435.

 

"Social purpose investment". Section 36a-277.

 

"Standard mortgage loan". Section 36a-265.

 

"Table funding agreement". Section 36a-485, as amended by this act.

 

"Tax and loan account". Sections 36a-301 and 36a-445.

 

"The Savings Bank Life Insurance Company". Section 36a-285.

 

"Time account". Section 36a-316, as amended.

 

"Transaction". Section 36a-215, as amended.

 

"Travelers check". Section 36a-596, as amended.

 

"Troubled financial institution". Section 36a-215, as amended.

 

"Uninsured bank". Section 36a-70, as amended.

 

"Unsecured loan". Section 36a-615.

 

"Warehouse agreement". Section 36a-485, as amended by this act.

Sec. 2. Section 36a-485 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

As used in this section and sections 36a-486 to 36a-498, inclusive, as amended by this act, unless the context otherwise requires:

(1) "Advance fee" means any consideration paid or given, directly or indirectly, to a mortgage lender, [or] first mortgage broker or originator required to be licensed or registered pursuant to sections 36a-485 to 36a-498, inclusive, as amended by this act, prior to the closing of a first mortgage loan to any person, including, but not limited to, loan fees, points, broker's fees or commissions, transaction fees or similar prepaid finance charges;

(2) "Advertise" or "advertisement" means the use of media, mail, computer, telephone, personal contact or any other means to offer the opportunity for a first mortgage loan;

(3) "First mortgage broker" means a person who, for a fee, commission or other valuable consideration, directly or indirectly, negotiates, solicits, arranges, places or finds a first mortgage loan that is to be made by a mortgage lender, whether or not the mortgage lender is required to be licensed under sections 36a-485 to 36a-498, inclusive, as amended by this act;

(4) "First mortgage correspondent lender" means a person engaged in the business of making first 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;

(5) "First mortgage lender" means a person engaged in the business of making first mortgage loans: (A) In such person's own name utilizing such person's own funds, or (B) by funding loans through a table funding agreement;

[(2)] (6) "First mortgage loan" means a loan or an extension of credit, including, but not limited to, an extension of credit pursuant to a contract or an assigned contract for the sale of goods or services, made to a natural person, the proceeds of which are to be used primarily for personal, family or household purposes, and which is secured by a first mortgage upon any interest in one-to-four-family residential owner-occupied real property located in this state which is not subject to any prior mortgages and includes the renewal or refinancing of an existing first mortgage loan;

[(3) "Mortgage broker" means a person who, for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a first mortgage loan which is to be made by a mortgage lender, whether or not such lender is required to be licensed under sections 36a-485 to 36a-498, inclusive; ]

[(4)] (7) "Mortgage lender" means [any person engaged in the business of making first mortgage loans] a first mortgage lender, a first mortgage correspondent lender, or both;

[(5) "Principal officer" means the president or treasurer of any licensee which is organized as a corporation; ]

(8) "Originator" means an individual who is employed or retained by a mortgage lender or first mortgage broker that is required to be licensed under sections 36a-485 to 36a-498, inclusive, as amended by this act, for, or with the expectation of, a fee, commission or other valuable consideration, to negotiate, solicit, arrange or find a first mortgage loan. "Originator" does not include an officer, if the licensee is a corporation; a general partner, if the licensee is a partnership; a member, if the licensee is a limited liability company; or a sole proprietor, if the licensee is a sole proprietorship;

[(6)] (9) "Residential property" means improved real property used or occupied, or intended to be used or occupied, for residential purposes;

[(7)] (10) "Simulated check" means a document that imitates or resembles a check but is not a negotiable instrument; [and]

[(8) "Advertise" or "advertisement" means the use of media, mail, computer, telephone, personal contact or any other means to offer the opportunity for a first mortgage loan. ]

(11) "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; and

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

Sec. 3. Section 36a-486 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) No person shall engage in the business of making first mortgage loans or act as a first mortgage broker in this state unless such person has first obtained [a] the required license in accordance with the provisions of sections 36a-485 to [36a-495] 36a-498, inclusive, as amended by this act. [No person shall engage in the first mortgage loan business in this state as a mortgage broker unless such person has first obtained a license in accordance with the provisions of said sections. ] A first mortgage correspondent lender shall not be deemed to be acting as a first mortgage lender if such first 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.

(b) No licensee shall employ or retain an originator without first registering such originator under sections 36a-485 to 36a-498, inclusive, as amended by this act, provided such registration shall not be required for any originator who is registered by such licensee under sections 36a-510 to 36a-524, inclusive, as amended by this act. No individual may act as an originator without being registered, or act as an originator, as defined in sections 36a-485 and 36a-510, as amended by this act, for more than one person. The registration of an originator is not effective during any period when such originator is not associated with a licensee. Both the originator and the licensee shall promptly notify the commissioner, in writing, of the termination of employment or services of an originator.

[(b)] (c) Each first mortgage loan negotiated, solicited, placed, found or made without a license or registration shall constitute a separate violation for purposes of section 36a-50, as amended.

Sec. 4. Section 36a-487 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

The following are exempt from licensing under sections 36a-485 to 36a-498, inclusive, as amended by this act:

(1) Any bank, out-of-state bank, Connecticut credit union, federal credit union, or out-of-state credit union, provided subsidiaries of such institutions are not exempt from licensure;

(2) Persons [granting] making five or fewer first mortgage loans within any period of twelve consecutive months;

(3) Bona fide nonprofit corporations [granting] making first mortgage loans to promote home ownership for the economically disadvantaged;

(4) Agencies of the federal government, or any state or municipal government, or any quasi-governmental agency [granting] making first mortgage loans under the specific authority of the laws of any state or the United States;

(5) Persons licensed under sections 36a-555 to 36a-573, inclusive, as amended, when making loans authorized by said sections;

(6) Persons licensed under sections 36a-510 to 36a-524, inclusive, as amended by this act, when making loans authorized by said sections, provided such licensed mortgage lender makes less than twelve first mortgage loans within any period of twelve consecutive months;

(7) Any corporation or its affiliate which makes first mortgage loans exclusively for the benefit of its employees or agents;

(8) Any corporation, licensed in accordance with section 38a-41, or its affiliate or subsidiary, which [grants] makes first mortgage loans to promote home ownership in urban areas; and

(9) 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 first mortgage loans solely to plan participants from plan assets.

Sec. 5. Section 36a-488 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[(a) An application for a license under sections 36a-485 to 36a-498, inclusive, or renewal of such license shall be made in writing, under oath and on a form provided by the commissioner. ]

[(b)] (a) (1) The commissioner shall not issue a license as a first mortgage lender, a first mortgage correspondent lender or a first mortgage broker 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 first mortgage lender shall be two hundred fifty thousand dollars and the minimum tangible net worth requirement for a first mortgage correspondent lender and a first mortgage broker shall be twenty-five thousand dollars, and (B) a mortgage lender shall have, at the location for which the license is sought, a person with supervisory authority over the lending activities who has at least three years experience in the mortgage lending business within the five years immediately preceding the application for the license and a first mortgage broker shall have, at the location for which the license is sought, a person with supervisory authority over the brokerage activities who has at least three years experience in the mortgage lending or mortgage brokerage business within the five years immediately preceding the application for the license, provided such experience requirements shall not apply to any person whose license is renewed effective October 1, 2002.

(2) Each licensee shall maintain the net worth required by this subsection and shall promptly notify the commissioner if such licensee's net worth falls below the net worth required by this subsection.

(b) The commissioner may issue a first mortgage lender license, a first mortgage correspondent lender license, or a first mortgage broker license. Each first mortgage lender licensee may also act as a first mortgage correspondent lender and a first mortgage broker, and each first mortgage correspondent lender licensee may also act as a first mortgage broker. An application for a license or renewal of such license shall be made under oath and on a form provided by the commissioner. The application shall [set forth: (1) The] include: (1) The type of license sought; (2) the name and address of the applicant; [(2) if the applicant is a firm or partnership,] (3) the location for which the license is sought; (4) the name and address of each member, [of the firm or partnership; (3) if the applicant is a corporation, the name and address of each] partner, officer, director, authorized agent and [each] shareholder owning ten per cent or more of the outstanding stock, [of such corporation; (4) whether the applicant is a lender or a mortgage broker, or both, and (5)] as applicable; (5) if the applicant is a trust or the lead lender in one or more participation loans, the name and address of each trustee or lead lender and each beneficiary of the trust or other participant lenders in all outstanding participation loans; (6) a financial statement as of a date not more than six months prior to the filing of the application which reflects tangible net worth, and if such financial statement is unaudited, the proprietor, general partner, or duly authorized officer, trustee or member shall swear to its accuracy under oath before a notary public; (7) evidence that the person with supervisory authority over the lending or brokerage activities at the location for which the license is sought meets the experience required by subsection (a) of this section; (8) an application for registration of each originator or prospective originator of the applicant at such location; and (9) such other information pertaining to the applicant, [its] the applicant's background, the background of its principals and employees, and [its] the applicant's activities as the commissioner may require.

(c) An application for registration of an originator or renewal of such registration shall be made on a form provided by the commissioner.

Sec. 6. Section 36a-489 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) If the commissioner finds, upon the filing of an application for a license, that the applicant meets the requirements of subsection (a) of section 36a-488, as amended by this act, and that the financial responsibility, character, reputation, integrity and general fitness of the applicant and of the [members] partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-485 to 36a-498, inclusive, as amended by this act, the commissioner may thereupon issue the applicant [a] the license. [(1) to engage in the business of granting first mortgage loans or (2) to be a mortgage broker. ] If the commissioner fails to make such findings, or if the commissioner finds that the applicant has made a 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. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

(b) Upon the filing of an application for registration, the commissioner shall register the originator named in the application unless the commissioner finds that the applicant has made a material misstatement in the application or that the financial responsibility, character, reputation, integrity and general fitness of the originator named in the application, are not such as to warrant belief that granting such registration would be in the public interest and consistent with the purposes of sections 36a-485 to 36a-498, inclusive, as amended by this act. If the commissioner denies registration, the commissioner shall notify the originator named in the application and the applicant filing the application of the denial and the reasons for such denial. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. A registration shall remain in force and effect until it has been surrendered, revoked, suspended or expires in accordance with the provisions of sections 36a-485 to 36a-498, inclusive, as amended by this act.

Sec. 7. Section 36a-490 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Each license shall state the [address] location at which the business is to be conducted and shall state fully the name of the licensee. If the licensee desires to [grant] make first mortgage loans in more than one location or to act as a first mortgage broker in more than one location, the licensee shall procure a license for each location where the business is to be conducted. Each license shall be [prominently posted in each place of business of the licensee] maintained at the location for which the license was issued and shall be available for public inspection. Such license shall not be transferable or assignable. Any change of location [of a place of business] of a licensee shall require [the prior approval of] only prior written notice to the commissioner. [and requests for relocation shall be in writing. ] No licensee shall use any name other than the name [set forth] stated on the license issued by the commissioner.

(b) The licensee shall promptly notify the commissioner, in writing, of [the name, address and position of each new officer, partner, director or, if the licensee is a corporation, each new shareholder owning ten per cent or more of the outstanding stock of the corporation, and provide such other information as the commissioner may require] any change in the information provided in the application for license or most recent renewal of such license.

(c) [Every] Each license shall remain in force and effect until it has been surrendered, revoked, suspended or expires in accordance with the provisions of sections 36a-485 to [36a-495] 36a-498, inclusive, as amended by this act.

Sec. 8. Section 36a-491 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) (1) Each applicant for a [license to be a] first mortgage lender license or [to be both a mortgage lender and] a first mortgage [broker] correspondent lender license shall, at the time of making such application, pay to the commissioner a license fee of eight hundred dollars, provided if such application is filed not earlier than one year before the date such license will expire, the applicant shall pay to the commissioner a license fee of four hundred dollars. Each applicant for a [license to be a] first mortgage broker license shall, at the time of making such application, pay to the commissioner a license fee of four hundred dollars, provided if such application is filed not earlier than one year before the date such license will expire, the applicant shall pay to the commissioner a license fee of two hundred dollars. Each license issued pursuant to this section shall expire at the close of business on September thirtieth of [each year] the even-numbered year following its issuance unless such license is renewed. Such licensee shall, on or before September first of [each year] the year in which the license expires, pay to the commissioner the appropriate license fee as provided in this section for the succeeding [year] two years, commencing October first, together with such renewal application as the commissioner may require. Any renewal application filed with the commissioner after September first shall be accompanied by a one-hundred-dollar late fee.

[(2)] Whenever an application for a license, other than a renewal application, is filed under sections 36a-485 to 36a-498, inclusive, as amended by this act, by any person who was a licensee under said sections and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee.

(2) A licensee filing an application for registration of an originator shall, at the time of making such application, pay to the commissioner a registration fee of one hundred dollars for such originator, provided if such application is filed not earlier than one year before the date the license of the applicant will expire, the applicant shall pay to the commissioner a registration fee of fifty dollars for such originator. Each registration shall expire at such time as the licensee's license expires unless such registration is renewed. Such licensee shall file an application for renewal of the registration and pay to the commissioner the appropriate registration fee as provided in this subsection for the succeeding two years, commencing October first.

(b) No abatement of the license or registration fee shall be made if the license or registration 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.

Sec. 9. Section 36a-492 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No such license, and no renewal thereof, shall be granted unless the applicant has filed a bond with the commissioner written by a surety authorized to write such bonds in this state, in the sum of forty thousand dollars, the form of which shall be approved by the Attorney General. Such bond shall be conditioned upon such 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 or a first mortgage broker, and conducting such mortgage business consistent with the provisions of sections 36a-485 to 36a-498, inclusive, as amended by this act. Any [person] 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. 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, as amended. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.

Sec. 10. Section 36a-493 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Each licensee shall maintain adequate records of each loan transaction at the [place of business] location named in the license, or shall make such records available at such [place of business] location not later than five business days after requested by the commissioner to do so. Such records shall provide the following information: (1) A copy of any disclosures required under part III of chapter 669; (2) whether the licensee acted as a mortgage lender, a first mortgage broker or both; (3) if the licensee is acting as a mortgage lender, and retains the first 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 and mortgage deed; [and] (6) a statement signed by the borrowers acknowledging the receipt of such statement which discloses the full amount of any fee, commission or consideration paid to the first mortgage broker for all services in connection with the mortgage loan; and (7) the name and address of the broker, if any, involved in the loan transaction.

(b) [Each licensee acting as a mortgage lender] For each loan that is made and serviced by a licensee, the licensee shall retain records of [each] such loan transaction for not less than [one year] 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.

(c) [Each licensee acting as a mortgage broker] For each loan transaction in which a licensee acts as a mortgage lender or first mortgage broker but does not service the loan, the licensee shall retain the records of [each] 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.

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

Sec. 11. Subsection (a) of section 36a-494 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) (1) The commissioner may suspend, revoke or refuse to renew any license, in accordance with the provisions of section 36a-51, as amended by this act, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-485 to 36a-498, inclusive, as amended by this act, or if the commissioner finds that the licensee or any [owner] proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: [(1)] (A) Made any material misstatement in the application; [(2)] (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 first mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, as amended by this act, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; [(3)] (C) violated any of the provisions [of sections 36a-485 to 36a-498, inclusive, as amended by this act, or of parts I, III and V of chapter 669 or] of title 36a or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business; or [(4)] (D) failed to perform any agreement with a licensee or a borrower.

(2) The commissioner may suspend, revoke or refuse to renew any registration of an originator, in accordance with the provisions of section 36a-51, as amended, for any reason which would be sufficient grounds for the commissioner to deny an application for a registration under sections 36a-485 to 36a-498, inclusive, as amended by this act, or if the commissioner finds that the registrant has committed any fraud, misappropriated funds or misrepresented any of the material particulars of any first mortgage loan transaction.

Sec. 12. Section 36a-496 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No person engaged in the business of making first mortgage loans in this state, whether licensed in accordance with the provisions of sections 36a-485 to 36a-498, inclusive, as amended by this act, or exempt from licensing, shall accept applications or referral of applicants from, or pay a fee to, any first mortgage broker or originator who is required to be licensed or registered under said sections but is not licensed or registered to act as such by the commissioner, if the mortgage lender has actual knowledge that the first mortgage broker or originator is not licensed or registered by the commissioner.

Sec. 13. Section 36a-497 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No person licensed pursuant to section 36a-489, as amended by this act, shall:

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

Sec. 14. Section 36a-498 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Except as provided in subsection [(b)] (c) of this section, every advance fee paid or given, directly or indirectly, to a mortgage lender or first mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498, inclusive, as amended by this act, shall be refundable.

(b) No originator required to be registered pursuant to sections 36a-485 to 36a-498, inclusive, as amended by this act, shall accept payment of any advance fee except an advance fee on behalf of a licensee. Nothing in this subsection shall be construed as prohibiting the licensee from paying an originator all or part of an advance fee, provided such advance fee paid is not refundable under this section.

[(b)] (c) Subsection (a) of this section shall not apply if: (1) The person providing the advance fee and the mortgage lender or first 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 [(c)] (d) of this section.

[(c)] (d) An agreement under subsection [(b)] (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 licensee; (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 licensee, (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.

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

Sec. 15. Section 36a-510 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

As used in sections 36a-510 to 36a-524, inclusive, as amended by this act, unless the context otherwise requires:

(1) "Advance fee" means any consideration paid or given, directly or indirectly, to a [licensee] mortgage lender, secondary mortgage broker or originator required to be licensed or registered pursuant to sections 36a-510 to 36a-524, inclusive, as amended by this act, prior to the closing of a secondary mortgage loan to any person, including, but not limited to, loan fees, points, broker's fees or commissions, transaction fees, [broker's fees or commissions,] or similar prepaid finance charges;

[(2) "Broker" means a person who, for a fee or other consideration, negotiates, solicits, places or finds a secondary mortgage loan which is to be made by a lender;

(3) "Lender" means a person who makes a secondary mortgage loan; ]

(2) "Advertise" or "advertisement" means the use of media, mail, computer, telephone, personal contact or any other means to offer the opportunity for a secondary mortgage loan;

[(4)] (3) "Licensee" means any person who is required to be licensed pursuant to section 36a-511, as amended by this act;

(4) "Mortgage lender" means a secondary mortgage lender or a secondary mortgage correspondent lender, or both;

(5) "Originator" means an individual who is employed or retained by a mortgage lender or secondary mortgage broker that is required to be licensed under sections 36a-510 to 36a-524, inclusive, as amended by this act, for, or with the expectation of, a fee, commission or other valuable consideration, to negotiate, solicit, arrange or find a secondary mortgage loan. "Originator" does not include an officer, if the licensee is a corporation; a general partner, if the licensee is a partnership; a member, if the licensee is a limited liability company; or a sole proprietor, if the licensee is a sole proprietorship;

[(5)] (6) "Principal amount of the loan" means the gross loan amount the borrower is obligated to repay including any prepaid finance charge and other charges which are financed. The provisions of this subdivision apply to all loans negotiated before, on and after June 14, 1993;

(7) "Secondary mortgage broker" means a person who, for a fee, commission or other valuable consideration, directly or indirectly, negotiates, solicits, arranges, places or finds a secondary mortgage loan that is to be made by a mortgage lender, whether or not the mortgage lender is required to be licensed under sections 36a-510 to 36a-524, inclusive, as amended by this act;

(8) "Secondary mortgage correspondent lender" means a person engaged in the business of making secondary 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;

(9) "Secondary mortgage lender" means a person engaged in the business of making secondary mortgage loans: (A) In such person's own name utilizing such person's own funds, or (B) by funding loans through a table funding agreement;

[(6)] (10) "Secondary mortgage loan" means (A) a loan or an extension of credit, including, but not limited to, an extension of credit pursuant to a contract or an assigned contract for the sale of goods or services, made to a person, the proceeds of which are to be used primarily for personal, family or household purposes, and which is secured in whole or in part by a mortgage upon any interest in one-to-four-family residential owner-occupied real property located in this state, provided such real property is subject to one or more prior mortgages, and (B) the renewal or refinancing of any existing loan or extension of credit described in subparagraph (A) of this subdivision;

[(7)] (11) "Simulated check" means a document that imitates or resembles a check but is not a negotiable instrument; [and]

[(8) "Advertise" or "advertisement" means the use of media, mail, computer, telephone, personal contact or any other means to offer the opportunity for a secondary mortgage loan. ]

(12) "Table funding agreement" has the meaning given to that term in subdivision (11) of section 36a-485, as amended by this act; and

(13) "Warehouse agreement" has the meaning given to that term in subdivision (12) of section 36a-485, as amended by this act.

Sec. 16. Section 36a-511 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) No person shall engage in the business of making secondary mortgage [loan business in this state as a lender or a] loans or act as a secondary mortgage broker unless such person has first obtained [a] the required license under sections 36a-510 to 36a-524, inclusive, as amended by this act. [For the purposes of said sections, a] A person shall be deemed to be engaged in the business of making secondary mortgage [loan business] loans if such person advertises, causes to be advertised, solicits, offers to make or makes [a] secondary mortgage [loan] loans, either directly or indirectly. [A person shall not be deemed to be engaging in the secondary mortgage loan business if in the course of the person's business as a licensed real estate broker, an accountant, or an attorney, the person negotiates a secondary mortgage loan, and the beneficiaries of a licensee's estate shall not be deemed to be engaging in such business unless such beneficiaries make new secondary mortgage loans. ] A secondary mortgage correspondent lender shall not be deemed to be acting as a secondary mortgage lender if such secondary 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.

(b) No licensee shall employ or retain an originator without first registering such originator under sections 36a-510 to 36a-524, inclusive, as amended by this act, provided such registration shall not be required for any originator who is registered by such licensee under sections 36a-485 to 36a-498, inclusive, as amended by this act. No individual may act as an originator without being registered, or act as an originator, as defined in sections 36a-485 and 36a-510, as amended by this act, for more than one person. The registration of an originator is not effective during any period when such originator is not associated with a licensee. Both the originator and the licensee shall promptly notify the commissioner, in writing, of the termination of employment or services of an originator.

[(b)] (c) Each secondary mortgage loan negotiated, solicited, placed, found or made without a license shall constitute a separate violation for purposes of section 36a-50, as amended.

Sec. 17. Section 36a-512 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

The following are exempt from the licensing requirements of sections 36a-510 to 36a-524, inclusive, as amended by this act: (1) Persons licensed as small business investment companies by the Small Business Administration; (2) 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; (3) persons [granting] making secondary mortgage loans to persons related to the lender by blood or marriage; (4) any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided subsidiaries of such institutions are not exempt from licensure; (5) persons [granting] making five or fewer secondary mortgage loans within any twelve consecutive months, provided (A) the aggregate total of such loans does not exceed one hundred thousand dollars, (B) each individual loan does not exceed twenty thousand dollars and (C) such loans are written in compliance with section 36a-521, as amended by this act; (6) nonprofit corporations [granting] making secondary mortgage loans to promote home ownership or improvements for the disadvantaged; (7) agencies of the federal government or any state or municipal government or any quasi-governmental agency [granting] making secondary mortgage loans under the specific authority of the laws of this state or the United States; (8) persons licensed under sections 36a-555 to 36a-573, inclusive, as amended by this act, when making loans authorized by said sections; (9) persons licensed under sections 36a-485 to 36a-498, inclusive, as amended by this act, when making loans authorized by said sections, provided such licensed lender makes fewer than twelve secondary mortgage loans within any twelve consecutive months and such loans are written in compliance with section 36a-521, as amended by this act; (10) any corporation or its affiliate which makes mortgage loans exclusively for the benefit of its employees or agents; (11) any corporation, licensed in accordance with section 38a-41, as amended, or its affiliate or subsidiary, which [grants] makes secondary mortgage loans to promote home ownership in urban areas; and (12) 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 secondary mortgage loans solely to plan participants from plan assets.

Sec. 18. Section 36a-513 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[(a) An application for a secondary mortgage loan license or renewal of such license shall be in writing, under oath and on a form provided by the commissioner. ]

[(b)] (a) (1) The commissioner shall not issue a license as a secondary mortgage lender, a secondary mortgage correspondent lender or a secondary mortgage broker 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 secondary mortgage lender shall be one hundred thousand dollars and the minimum tangible net worth requirement for a secondary mortgage correspondent lender and a secondary mortgage broker shall be twenty-five thousand dollars, and (B) a mortgage lender shall have at the location for which the license is sought, a person with supervisory authority over the lending activities who has had at least three years experience in the mortgage lending business within the five years immediately preceding the application for the license, and a secondary mortgage broker shall have, at the location for which the license is sought, a person with supervisory authority over the brokerage activities who has at least three years experience in the mortgage lending or mortgage brokerage business within the five years immediately preceding the application for the license, provided such experience requirements shall not apply to any person whose license is renewed effective July 1, 2003.

(2) Each licensee shall maintain the net worth required by this subsection and shall promptly notify the commissioner if such licensee's net worth falls below the net worth required by this subsection.

(b) The commissioner may issue a secondary mortgage lender license, a secondary mortgage correspondent lender license or a secondary mortgage broker license. Each secondary mortgage lender licensee may also act as a secondary mortgage correspondent lender and a secondary mortgage broker, and each secondary mortgage correspondent lender licensee may also act as a secondary mortgage broker. Any application for a license or renewal of such license shall be under oath and on a form provided by the commissioner. The application shall [set forth: (1) The] include: (1) The type of license sought; (2) the name and address of the applicant; [(2) if the applicant is a firm or partnership,] (3) the location for which the license is sought; (4) the [names] name and address of each member, [of the firm or partnership; (3) if the applicant is a corporation, the names and address of each] partner, officer, director, authorized agent and [each] shareholder owning ten per cent or more of the outstanding stock, [of such corporation] as applicable; [(4)] (5) if the applicant is a trust or the lead lender in one or more participation loans, the name and address of each trustee or lead lender and each beneficiary of the trust or other participant lenders in all outstanding participation loans; [, respectively; and (5) whether the applicant is a lender or a broker, or both] (6) a financial statement as of a date not more than six months prior to the filing of the application which reflects tangible net worth, and if such financial statement is unaudited, the proprietor, general partner, or duly authorized officer, trustee or member shall swear to its accuracy under oath before a notary public; (7) evidence that the person with supervisory authority over the lending or brokerage activities at the location for which the license is sought meets the experience required by subsection (a) of this section; (8) an application for registration of each originator or prospective originator of the applicant at such location; and (9) such other information pertaining to the applicant, the applicant's background, the background of its principals and employees and the applicant's activities as the commissioner may require.

[(c) 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 the applicant is in all respects properly qualified and of good character and that granting such license would not be against the public interest. Any disapproval of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. ]

(c) If the commissioner finds, upon the filing of an application for a license, that the applicant meets the requirements of subsection (a) of this section, and that the financial responsibility, character, reputation, integrity and general fitness of the applicant and of the partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-510 to 36a-524, inclusive, as amended by this act, 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 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. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

(d) An application for registration or renewal of such registration shall be made on a form provided by the commissioner.

(e) Upon the filing of an application for registration, the commissioner shall register the originator named in the application unless the commissioner finds that the applicant has made any material misstatement in the application or that the financial responsibility, character, reputation, integrity and general fitness of the originator named in the application, are not such as to warrant belief that granting such registration would be in the public interest and consistent with the purposes of sections 36a-510 to 36a-524, inclusive, as amended by this act. If the commissioner denies registration, the commissioner shall notify the originator named in the application and the applicant filing the application of the denial and the reasons for such denial. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

Sec. 19. Section 36a-514 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) (1) Each applicant for a [license to be a] secondary mortgage lender license or [to be both] a secondary mortgage correspondent lender [and broker] license, at the time of making such application, shall pay to the commissioner a license fee of eight hundred dollars, provided if such application is filed not earlier than one year before the date such license will expire, the applicant shall pay to the commissioner a license fee of four hundred dollars, and if such application is for renewal of a license that expires on June 30, 2003, the applicant shall pay to the commissioner a license fee of five hundred dollars. Each applicant for a [license to be a] secondary mortgage broker [, but not a lender] license, at the time of making such application, shall pay to the commissioner a license fee of four hundred dollars, provided if such application is filed not earlier than one year before the date such license will expire, the applicant shall pay to the commissioner a license fee of two hundred dollars, and if such application is for renewal of a license that expires on June 30, 2003, the applicant shall pay to the commissioner a license fee of two hundred fifty dollars. Each license issued pursuant to this section shall expire at the close of business on [June] September thirtieth of [each year] the even-numbered year following its issuance unless such license is renewed. Each licensee shall, on or before [June] September first of [each year] the 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, file a renewal application and pay to the commissioner the appropriate license fee as provided in this section to renew the license. [for the succeeding year, commencing July first. ] Any renewal application filed with the commissioner after [June first] September first, or in the case of a license that expires on June 30, 2003, after June 1, 2003, shall be accompanied by a one-hundred-dollar late fee. (2) Whenever an application for a license, other than a renewal application, is filed under this section by any person who was a licensee [under sections 36a-510 to 36a-524, inclusive,] and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee.

[(b) Each applicant or licensee shall pay the expenses of any examination or investigation made under sections 36a-510 to 36a-524, inclusive. ]

(b) A licensee filing an application for registration of an originator shall, at the time of making such application pay to the commissioner a registration fee of one hundred dollars for each originator, provided if such application is filed not earlier than one year before the date the license of the applicant will expire, the applicant shall pay to the commissioner a registration fee of fifty dollars for each originator. Each registration shall expire at such time as the licensee's license expires unless such registration is renewed. Such licensee shall file an application for renewal of the registration and pay to the commissioner the appropriate registration fee as provided in this subsection for the succeeding two years, commencing October first.

(c) No abatement of the license or registration fee shall be made if the license or registration 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.

Sec. 20. Section 36a-515 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[No license shall be assignable nor shall any license or certificate be transferable to cover a place of business located in another city or town unless the licensee moves his place of business to another city or town after written notice of such move is given to the commissioner. Each such license shall be kept conspicuously posted in the respective place of business of the licensee for which such license was issued. Every license shall remain in force and effect until the same has been surrendered, revoked or suspended in accordance with the provisions of sections 36a-510 to 36a-524, inclusive. Any license which is revoked or suspended shall be immediately surrendered to the commissioner. If any change occurs in the personnel of the partners, directors or officers of a licensee or, if the licensee is a trust or lead lender in any participation loans, a change in the trustees or other participant lenders, respectively, the licensee shall forthwith notify the commissioner, and the commissioner may require a statement under oath giving such information as he may reasonably require with respect to such change. ]

(a) Each license shall state the location at which the business is to be conducted and shall state fully the name of the licensee. If the licensee desires to make secondary mortgage loans in more than one location or to act as a mortgage broker in more than one location, the licensee shall procure a license for each location where the business is to be conducted. Each license shall be maintained at the location for which the license was issued and shall be available for public inspection. Such license shall not be transferable or assignable. Any change of location of a licensee shall require only prior written notice to the commissioner. No licensee shall use any name other than the name stated on the license issued by the commissioner.

(b) The licensee shall promptly notify the commissioner, in writing, of any change in the information provided in the application for license or most recent renewal of such license.

(c) Each license and registration shall remain in force and effect until it has been surrendered, revoked, suspended or expires in accordance with the provisions of sections 36a-510 to 36a-524, inclusive, as amended by this act.

Sec. 21. Section 36a-516 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Each licensee shall maintain adequate records of each loan transaction at the place of business named in the license or shall make such records available at such place of business not later than five business days after requested by the commissioner to do so. Such records shall provide the following information: (1) A copy of any disclosures required under part III of chapter 669; (2) whether the licensee acted as mortgage lender, secondary mortgage broker, or both; (3) in the case of a licensee acting as a mortgage lender, an adequate loan history, 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, contract or other evidence of indebtedness and the mortgage deed; and (6) the name and address of the mortgage broker, if any, involved in the loan transaction.

(b) [Each licensee acting as a lender] For each loan that is made and serviced by a licensee, the licensee shall retain records of [each] such loan transaction as required under subsection (a) of this section, for not less than [one year from the date of] two years following the final payment [to the licensee on such loan transaction] thereon, or the assignment of such loan, whichever occurs first, or such longer period as may be required by any other provision of law.

(c) [Each licensee acting as a broker] For each loan transaction in which a licensee acts as a mortgage lender or secondary mortgage broker but does not service the loan, the licensee shall retain the records [required under subsection (a) of this section] 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.

Sec. 22. Subsection (a) of section 36a-517 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) (1) The commissioner may suspend, revoke or refuse to renew any license, in accordance with section 36a-51, as amended, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-510 to 36a-524, inclusive, as amended by this act, or if the commissioner finds that the licensee or any [owner] proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: [(1)] (A) Made any material misstatement in the application; [(2)] (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 secondary mortgage loan transaction, including disclosures required by part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; [(3)] (C) violated any of the provisions of [sections 36a-510 to 36a-524, inclusive, parts I, III and V of chapter 669, sections 46a-65 to 46a-67, inclusive, or section 46a-98] title 36a, or of any regulations adopted pursuant thereto or any other law or regulation applicable to the conduct of its business; or [(4)] (D) failed to perform any agreement with a licensee or a borrower.

(2) The commissioner may suspend, revoke or refuse to renew any registration of an originator, in accordance with the provisions of section 36a-51, as amended, for any reason which would be sufficient grounds for the commissioner to deny an application for a registration under sections 36a-510 to 36a-524, inclusive, as amended by this act, or if the commissioner finds that the registrant has committed any fraud, misappropriated funds or misrepresented any of the material particulars of any secondary mortgage loan transaction.

Sec. 23. Section 36a-519 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

In any transaction subject to part III of chapter 669, no licensee shall impose any charge as a penalty for the prepayment of principal of a [second] secondary mortgage loan which exceeds five per cent of the balance prepaid, provided no penalty shall be imposed for any prepayment occurring more than three years after the date of such loan.

Sec. 24. Section 36a-520 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Each licensee shall deliver to the mortgagor a release of a [second] 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, as amended, of any check which is payable to such licensee or its assignee in the amount of the outstanding balance of the obligation secured by such mortgage.

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

Sec. 25. Section 36a-521 of the general statutes, as amended by section 14 of public act 01-34, is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) No person engaged in the secondary mortgage loan business in this state as a mortgage lender, or a secondary mortgage broker, including any licensee under sections 36a-510 to 36a-524, inclusive, as amended by this act, and any person who is exempt from licensing under section 36a-512, as amended by this act, may (1) charge, impose or cause to be paid, directly or indirectly, as an incident to or a condition of the extension of credit in any secondary mortgage loan transaction, any loan fees, points, commissions, transaction fees or similar prepaid finance charges determined in accordance with sections 36a-675 to 36a-685, inclusive, as amended, and regulations adopted thereunder, except the time-price differential, which, when added to any secondary mortgage broker's fee or commission for which the borrower may be obligated, exceed in the aggregate eight per cent of the principal amount of the loan, or (2) include in the loan agreement upon which loan fees, points, commissions, transaction fees or similar prepaid finance charges have been assessed any provision which permits the mortgage lender to demand payment of the entire loan balance prior to the scheduled maturity, except that such loan agreement may contain a provision which permits the mortgage 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.

(b) Any mortgage lender who fails to comply with the provisions of this section shall be liable to the borrower in an amount equal to the sum of: (1) The amount by which the total of all loan fees, points, commissions, transaction fees, other prepaid finance charges, and secondary mortgage broker's fees and commissions exceeds eight per cent of the principal amount of the loan; (2) eight per cent of the principal amount of the loan or two thousand five hundred dollars, whichever is less; and (3) the costs incurred by the borrower in bringing an action under this section, including reasonable attorney's fees, as determined by the court, provided no such mortgage 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) Except as provided in subsection [(d)] (e) of this section, every advance fee paid or given, directly or indirectly, to a mortgage lender or secondary mortgage broker required to be licensed pursuant to sections 36a-510 to 36a-524, inclusive, as amended by this act, shall be refundable.

(d) No originator required to be registered pursuant to sections 36a-510 to 36a-524, inclusive, as amended by this act, shall accept payment of any advance fee except an advance fee on behalf of a licensee. Nothing in this subsection shall be construed as prohibiting the licensee from paying an originator all or part of an advance fee, provided such advance fee paid is not refundable under this section.

[(d)] (e) Subsection (c) of this section shall not apply if: (1) The person providing the advance fee and the licensee 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 [(e)] (f) of this section.

[(e)] (f) An agreement under subsection [(d)] (e) 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 licensee; (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 licensee, (B) contain a heading printed 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.

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

Sec. 26. Section 36a-523 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No person engaged in the business of making secondary mortgage [loan business] loans in this state, [as a lender,] whether licensed in accordance with the provisions of sections 36a-510 to 36a-524, inclusive, as amended by this act, or exempt from licensing, shall accept applications or referral of applicants from, or pay a fee to, any secondary mortgage broker who is required to be licensed under said sections but is not licensed to act as such by the commissioner, if the lender has actual knowledge that the broker is not licensed by the commissioner.

Sec. 27. Section 36a-524 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No person licensed pursuant to section 36a-513, as amended by this act, shall:

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

Sec. 28. Section 36a-534a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Any first mortgage broker or mortgage lender, as defined in section 36a-485, as amended by this act, and licensed pursuant to section 36a-486, as amended by this act, and any secondary mortgage broker or mortgage lender, as defined in section 36a-510, as amended by this act, and licensed pursuant to section 36a-511, as amended by this act, shall notify the commissioner by written affidavit if any such broker or lender, as a result of a transaction in which such broker or lender was involved, reasonably believes that the lending practices of a financial institution or federal bank violate section 36a-737 or 46a-66. Such broker or lender shall provide the commissioner with any written document containing lending restrictions which a financial institution or federal bank has provided to such broker or 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.

Sec. 29. Subsection (a) of section 36a-539 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Each person applying to the commissioner for a sales finance company license [under sections 36a-535 to 36a-546, inclusive,] shall pay a license fee of eight hundred dollars, provided if such application is filed not earlier than one year before the date such license will expire, such person shall pay a license fee of four hundred dollars. Each license issued pursuant to [said] sections 36a-535 to 36a-546, inclusive, as amended by this act, shall expire at the close of business on [June] September thirtieth of [each year] the odd-numbered year following its issuance unless such license is renewed, provided any license that is renewed effective July 1, 2003, shall expire on September 30, 2005. Whenever an application for a license is filed under this section by any person who was a licensee under sections 36a-535 to 36a-546, inclusive, as amended by this act, and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee. Not more than one place of business shall be maintained under the same license, but the commissioner may issue more than one license to the same licensee upon receipt of an application and the payment of the appropriate license fee.

Sec. 30. Section 36a-540 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

Each license shall specify the location [of the office and shall be conspicuously displayed there. If such location is changed, the commissioner shall endorse the change of location on the license without charge. No other reference to the licensing or supervision by the commissioner may be made] at which the business is to be conducted. Each license shall be maintained at the location for which it was issued and shall be available for public inspection. Such license shall not be transferable or assignable. Any change of location of a licensee shall require only prior written notice to the commissioner. No licensee shall use any name other than the name specified on the license issued by the commissioner.

Sec. 31. Section 36a-541 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[(a) Upon the filing of an application for a license as a sales finance company and receipt of the fee therefor, the commissioner (1) may refuse to issue the license if the commissioner finds that the applicant, or any person who at the time of the filing of such application is an owner, director, officer, member, partner, employee, agent or spouse of the applicant, has suffered revocation of a license under sections 36a-535 to 36a-546, inclusive, or has been found to have violated any of the provisions of sections 36a-535 to 36a-546, inclusive, or part XI of chapter 669 or of any other law regulating retail installment sales contracts, or has been responsible for any act or omission in consequence of which a license issued under sections 36a-535 to 36a-546, inclusive, to any person was revoked. The commissioner may likewise refuse to issue a license if the commissioner finds the experience, character or general fitness of the applicant are not such as to command the confidence of the community and to warrant the belief that the business will be conducted honestly and fairly within the purposes and intent of sections 36a-535 to 36a-546, inclusive. For the purpose of this subsection, the applicant shall be deemed to include all the members of the applicant if it is a partnership or an unincorporated association, and all the trustees, officers and directors of the applicant if it is a corporation; or (2) shall issue and deliver to the applicant a nonassignable license to engage in the business of a sales finance company in accordance with the provisions of sections 36a-535 to 36a-546, inclusive, for a period which shall expire on June thirtieth next following the date of its issuance.

(b) No licensee shall transact any business provided for by sections 36a-535 to 36a-546, inclusive, under any other name. ]

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 and of the partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-535 to 36a-546, inclusive, as amended by this act, 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. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

Sec. 32. Section 36a-542 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

Each person licensed as a sales finance company may renew such license [for the succeeding year commencing July first] by filing with the commissioner on or before [June first] September first of the 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, a renewal application on a form prescribed by the commissioner [, in writing and] under oath, together with such exhibits and other pertinent information as the commissioner may require. The license fee shall be [four] eight hundred dollars, provided the license fee for renewal of a license that expires on June 30, 2003, shall be nine hundred dollars. Any renewal application filed with the commissioner under this section after [June first] September first, or in the case of a license that expires on June 30, 2003, after June 1, 2003, shall be accompanied by a one-hundred-dollar late fee.

Sec. 33. Section 36a-543 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) The commissioner may suspend, revoke or refuse to renew any sales finance company license, in accordance with section 36a-51, as amended, if the commissioner finds that: (1) The licensee, knowingly or without the exercise of due care to prevent such violation, has violated any provision of sections 36a-535 to 36a-546, inclusive, as amended by this act, or of any other law regulating installment sales financing, or has failed to comply with any demand or requirement, made by the commissioner under and within the authority of sections 36a-535 to 36a-546, inclusive, as amended by this act; or (2) there has been any material misstatement or failure to give a true reply to a question in the application for the license; or (3) the licensee has defrauded any retail buyer to the buyer's damage; or wilfully failed to perform any written agreement with any retail buyer; or (4) 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 [refusal to issue] denial of such license originally; or (5) in the case of a licensee other than a natural person, (A) any officer, director, trustee, member or partner of such licensee has been guilty of any act or omission which would be cause for revoking or suspending a license of such party as an individual; or (B) any other agent or employee of such licensee has been guilty of such act or omission and the licensee has approved or had knowledge thereof and, after such approval or knowledge, has retained the benefit, proceeds, profit or advantage of such act or omission or otherwise ratified it.

(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 [places of business] locations, or if to more than one [place of business] 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) The commissioner shall establish rules as to the form of hearings, findings and orders, which shall be reasonable and in the public interest. ]

[(e)] (d) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-535 to 36a-546, inclusive, as amended by this act, or any regulation adopted under said sections, the commissioner may take action against such person in accordance with section 36a-50, as amended.

Sec. 34. Section 36a-555 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No person shall engage in the business of making loans of money or credit in the amount or to the value of fifteen thousand dollars or less for loans made under section 36a-563 or section 36a-565, and charge, contract for or receive a greater rate of interest, charge or consideration than twelve per cent per annum therefor, except (1) a bank, (2) an out-of-state bank, (3) a Connecticut credit union, (4) a federal credit union, (5) an out-of-state credit union, (6) a savings and loan association wholly owned subsidiary service corporation, (7) a person to the extent that such person makes loans for agricultural, commercial, industrial or governmental use or extends credit through an open-end credit plan, as defined in subdivision (8) of section 36a-676, for the retail purchase of consumer goods or services, (8) a [nondepository first] mortgage lender licensed pursuant to sections 36a-485 to 36a-498, inclusive, as amended by this act, (9) a [secondary] mortgage lender licensed pursuant to sections 36a-510 to 36a-524, inclusive, as amended by this act, or (10) a licensed pawnbroker, unless licensed to do so by the commissioner as provided in sections 36a-555 to 36a-573, inclusive, as amended by this act.

Sec. 35. Section 36a-556 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[Before filing an application for a license under sections 36a-555 to 36a-573, inclusive, the applicant shall give public notice of the applicant's intention to apply for a license by advertising daily, in a newspaper published or having a circulation in the town where the applicant's place of business is to be located, for two successive weeks, in a manner approved by the commissioner, and satisfactory proof of such advertising shall be filed with the commissioner. ] Upon the filing of the required application and license fee, the commissioner shall investigate the facts and, if the commissioner finds that (1) the experience, character and general fitness of the applicant, and of the members thereof if the applicant is a partnership, limited liability company or association, and of the officers and directors thereof if the applicant is a corporation, are satisfactory, (2) a license to such applicant will be for the convenience and advantage of the community in which the applicant's business is to be conducted and (3) the applicant has the capital investment required by this section, the commissioner shall issue a license to the applicant to make loans in accordance with sections 36a-555 to 36a-573, inclusive, as amended by this act. If the commissioner fails to make such findings or finds that the applicant made a 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. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. The capital investment shall be not less than twenty-five thousand dollars for each licensed [place of business] location in a city or town with a population of ten thousand or more inhabitants and ten thousand dollars for each licensed [place of business] location in a city or town with a smaller population. Population shall be determined according to the last United States census at the time a license is granted. [The required capital investment shall be maintained permanently at the licensed place of business. The requirement for a capital investment shall not apply to any person who has been continuously licensed under sections 36a-555 to 36a-573, inclusive, on and after May 14, 1929. ]

Sec. 36. Section 36a-557 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

An application for such license shall be in writing, under oath and in the form prescribed by the commissioner. [The application shall contain the full name and the address, both of the residence and place of business, of the applicant, and, if the applicant is a partnership, of each member thereof, or, if a corporation, of each director and officer thereof. The application shall also contain the county and municipality, with street and number, if any, where the business is to be conducted and such other pertinent information as the commissioner may require. ]

Sec. 37. Subsection (a) of section 36a-558 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) Each applicant for a small loan lender license, at the time of making such application, shall pay to the commissioner a license fee of eight hundred dollars, provided if such application is filed not earlier than one year before the date such license will expire, the applicant shall pay to the commissioner a license fee of four hundred dollars. Each such license [issued pursuant to sections 36a-555 to 36a-573, inclusive,] shall expire at the close of business on [June] September thirtieth of [each year] the odd-numbered year following its issuance, unless such license is renewed, provided any license that is renewed effective July 1, 2003, shall expire on September 30, 2005. Each licensee shall, on or before [June first of each year] September first of the 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, file a renewal application and pay to the commissioner a [four-hundred-dollar] license fee of eight hundred dollars to renew the license, [for the succeeding year, commencing July first] provided if such application is for renewal of a license that expires on June 30, 2003, the applicant shall pay the commissioner a license fee of nine hundred dollars. Any renewal application filed with the commissioner after [June first] September first, or in the case of a license that expires on June 30, 2003, after June 1, 2003, shall be accompanied by a one-hundred-dollar late fee. Whenever an application for a license, other than a renewal application, is filed under this section by any person who was a licensee [under sections 36a-555 to 36a-573, inclusive,] and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee. Each applicant shall pay the expenses of any examination or investigation made under sections 36a-555 to 36a-573, inclusive, as amended by this act.

Sec. 38. Section 36a-572 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

The commissioner may, in accordance with section 36a-51, as amended, revoke any license issued under the provisions of section 36a-556 if the commissioner finds that the licensee [has failed to pay the annual license fee or] has violated any provision of sections 36a-555 to 36a-573, inclusive, as amended by this act, or any regulation or order lawfully made pursuant to and within the authority of said sections, or if the commissioner finds that any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted [refusing to issue] a denial of such license.

Sec. 39. Subsection (a) of section 36a-602 of the general statutes, as amended by section 9 of public act 01-56, is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) As a condition for the issuance and retention of the license, applicants for a license and licensees shall file with the commissioner a corporate surety bond in a form satisfactory to the commissioner and issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the commissioner, shall remain in place for two years after such licensee ceases to engage in business in this state, and shall be in the principal sum of (1) three hundred thousand dollars for any applicant and any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters of three hundred thousand dollars or less or any licensee that engages in the business of money transmission with an average weekly amount of money or equivalent thereof transmitted during the two previous reporting quarters of one hundred fifty thousand dollars or less; (2) five hundred thousand dollars for any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters of greater than three hundred thousand dollars but less than five hundred thousand dollars or any licensee that engages in the business of money transmission with an average weekly amount of money equivalent thereof transmitted during the two previous reporting quarters of greater than one hundred fifty thousand dollars but less than two hundred fifty thousand dollars; and (3) one million dollars for any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters equal to or greater than five hundred thousand dollars or any licensee that engages in the business of money transmission with an average weekly amount of money or equivalent thereof transmitted during the two previous reporting quarters of two hundred fifty thousand dollars or greater. 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 with respect to the receipt, handling, transmission or payment of money in connection with the sale and issuance of payment instruments or transmission of money in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors. 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, as amended.

Sec. 40. Section 36a-655 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

As used in sections 36a-655 to 36a-665, inclusive, as amended by this act, "bona fide nonprofit organization" means [an individual, partnership, corporation, limited liability company, association, organization or other person in the operation of which no shareholder, member, director, officer, partner, employee, agent or other affiliated person profits financially other than receiving reasonable salaries if applicable, and which provides debt adjustment services for individuals at no cost or at a cost not exceeding that required to defray necessary, reasonable and bona fide expenses in order to provide such services; and] any organization that is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; "debt adjustment" means receiving, as agent of a debtor, money or evidences thereof for the purpose of distributing such money or evidences thereof among creditors in full or partial payment of obligations of the debtor; and "debtor" means any individual who has incurred indebtedness or owes a debt for personal, family or household purposes.

Sec. 41. Section 36a-656 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) No person, other than a bona fide nonprofit organization, shall engage in the business of debt adjustment in this state. No bona fide nonprofit organization shall engage in the business of debt adjustment in this state without a debt adjuster license. [issued in accordance with the provisions of sections 36a-655 to 36a-665, inclusive. ] Any bona fide nonprofit organization desiring to obtain such a license shall file with the commissioner an application [in writing,] under oath, setting forth such information as the commissioner may require. Each applicant for a license and each licensee shall notify the commissioner of any [material changes] change in the applicant's business from that stated in the application for [a] the license. [including, but not limited to, any changes in location or additional locations of the business. Except as provided in section 36a-657, a license issued under sections 36a-655 to 36a-665, inclusive, shall be effective as long as the licensee remains in the business of debt adjustment. ]

(b) If the commissioner finds, upon the filing of an application for a debt adjuster license, that: (1) The financial responsibility, character, reputation, integrity and general fitness of the applicant and of the partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-655 to 36a-665, inclusive, as amended by this act; and (2) the applicant is solvent and no proceeding in bankruptcy, receivership or assignment for the benefit of creditors has been commenced against the applicant, the commissioner may thereupon issue the applicant a debt adjuster license. If the commissioner fails to make such findings, the commissioner shall not issue a license and shall notify the applicant of the reasons for such denial. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

(c) Each applicant for an original debt adjuster license shall, at the time of making such application, pay to the commissioner an application fee of two hundred fifty dollars. Each such license shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance unless such license is renewed. Any license issued prior to the effective date of this act shall expire on September 30, 2003, unless renewed. Each licensee shall, on or before September first of the year in which the license expires, file such renewal application as the commissioner may require.

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

Sec. 42. Section 36a-657 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[The commissioner may deny any application for a license under sections 36a-655 to 36a-665, inclusive. The commissioner may revoke or suspend any license under said sections in accordance with section 36a-51 for the following causes: (1) Conviction of a crime involving moral turpitude; (2) violation of any provision of sections 36a-655 to 36a-665, inclusive; (3) fraud or deceit or, if the licensee was not at the time of application and still is not entitled to obtain a license under said sections, material error in procuring the issuance of a license under said sections; (4) the licensee no longer meets the requirements necessary to obtain a license under said sections; (5) maintenance of a continuous course of unfair conduct, or (6) insolvency, commencement of any proceeding in bankruptcy, receivership, or assignment for the benefit of creditors by any licensee or applicant for a license under said sections. ]

The commissioner may suspend, revoke or refuse to renew any license, in accordance with the provisions of section 36a-51, as amended, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-655 to 36a-665, inclusive, as amended by this act, or if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misappropriated funds; (3) violated any of the provisions of sections 36a-655 to 36a-665, inclusive, as amended by this act, or any other law or regulation applicable to the conduct of its business; or (4) failed to perform any agreement with a debtor.

Sec. 43. Section 36a-658 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[Each license or a copy thereof shall be posted conspicuously in each office of the licensee. No license shall be transferable or assignable. The licensee shall be limited solely to the business of debt adjustment and any other business which does not conflict with the interests of persons for whom the licensee is adjusting debts or with the business of debt adjustment. ]

Each license shall state the location at which the business is to be conducted and shall state fully the name of the licensee. If the licensee desires to engage in the business of debt adjustment in more than one location, the licensee shall procure a license for each location where the business is to be conducted. Each license shall be maintained at the location for which the license was issued and shall be available for public inspection. Such license shall not be transferable or assignable, provided any change of location of a licensee shall require only prior written notice to the commissioner. No licensee shall use any name other than the name stated on the license issued by the commissioner.

Sec. 44. Section 36a-659 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

Each licensee shall maintain a separate bank account for the benefit of debtors in which all payments received from debtors who are residents of Connecticut for the benefit of creditors shall be deposited. [and in which all payments shall remain until a remittance is made to either a debtor or a creditor. ] Every licensee shall keep [,] and use in [the licensee's] its business, books, accounts and records which will enable the commissioner to determine whether such licensee is complying with the provisions of sections 36a-655 to 36a-665, inclusive, as amended by this act, and with the regulations [of the commissioner] adopted pursuant thereto. Every licensee shall preserve such books, accounts and records for at least seven years after making the final entry on any transaction recorded therein.

Sec. 45. Section 36a-664 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) No such license, and no renewal thereof, shall be granted unless the applicant has filed a bond with the commissioner written by a surety authorized to write such bonds in this state, the form of which shall be approved by the Attorney General, provided any applicant that files applications for licenses for more than one location shall file a single bond. For every applicant, the principal amount of the bond shall be the greater of (1) forty thousand dollars, or (2) twice the amount of the highest total payments received by the applicant from Connecticut debtors in connection with the applicant's debt adjustment activity in any month during the preceding twelve months ending July thirty-first of each year. The licensee shall submit to the commissioner such bond or renewal thereof by September first of each year. Such bond shall be conditioned upon such licensee faithfully performing any and all written agreements with debtors, truly and faithfully accounting for all funds received by the licensee in the licensee's capacity as a debt adjuster, and conducting such business consistent with the provisions of sections 36a-655 to 36a-665, inclusive, as amended by this act. Any debtor who may be damaged by failure to perform any written agreements, or by the wrongful conversion of funds paid to a licensee, may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50, as amended. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. The bond shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.

(b) No licensee shall use, attempt to use or make reference to, either directly or indirectly, any word or phrase which states or implies that the licensee is [bonded, approved,] endorsed, sponsored, recommended or bonded by the state. [or approved by the state. ]

Sec. 46. Section 36a-800 of the general statutes, as amended by section 3 of public act 01-207, is repealed and the following is substituted in lieu thereof (Effective July 1, 2002):

As used in sections 36a-800 to 36a-810, inclusive, as amended, unless the context otherwise requires:

(1) "Consumer collection agency" means any person engaged in the business of collecting or receiving for payment for others of any account, bill or other indebtedness from a consumer debtor or engaged in the business of collecting, without receiving, property tax from a property tax debtor on behalf of a municipality, including any person who, by any device, subterfuge or pretense, makes a pretended purchase or takes a pretended assignment of accounts from any other person or municipality of such indebtedness for the purpose of evading the provisions of sections 36a-800 to 36a-810, inclusive, as amended. It includes persons who furnish collection systems carrying a name which simulates the name of a consumer collection agency and who supply forms or form letters to be used by the creditor, even though such forms direct the consumer debtor or property tax debtor to make payments directly to the creditor rather than to such fictitious agency. "Consumer collection agency" further includes any person who, in attempting to collect or in collecting such person's own accounts or claims from a consumer debtor, uses a fictitious name or any name other than such person's own name which would indicate to the consumer debtor that a third person is collecting or attempting to collect such account or claim. "Consumer collection agency" does not include (A) an individual employed on the staff of a licensed consumer collection agency, or by a creditor who is exempt from licensing, when attempting to collect on behalf of such consumer collection agency, (B) persons not primarily engaged in the collection of debts from consumer debtors who receive funds in escrow for subsequent distribution to others, including, but not limited to, real estate brokers and lenders holding funds of borrowers for payment of taxes or insurance, (C) any public officer or a person acting under the order of any court, (D) any member of the bar of this state, and (E) a person who services loans or accounts for the owners thereof when the arrangement includes, in addition to requesting payment from delinquent consumer debtors, the providing of other services such as receipt of payment, accounting, record-keeping, data processing services and remitting, for loans or accounts which are current as well as those which are delinquent. Any person not included in the definition contained in this subsection is, for purposes of sections 36a-645 to 36a-647, inclusive, a "creditor", as defined in subdivision (3) of section 36a-645;

(2) "Consumer debtor" means any natural person, not an organization, who has incurred indebtedness or owes a debt for personal, family or household purposes, including current or past due child support, or who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a personal property tax;

(3) "Creditor" means a person, including a municipality, who retains, hires, or engages the services of a consumer collection agency;

(4) "Municipality" means any town, city or borough, consolidated town and city, consolidated town and borough, district as defined in section 7-324 or municipal special services district established under chapter 105a;

(5) "Organization" means a corporation, partnership, association, trust or any other legal entity or an individual operating under a trade name or a name having appended to it a commercial, occupational or professional designation;

(6) "Property tax" has the meaning given to the term in section 7-560;

(7) "Property tax debtor" means any natural person or organization who has incurred indebtedness or owes a debt to a municipality due to a levy by such municipality of a property tax.

Sec. 47. Section 36a-801 of the general statutes, as amended by section 4 of public act 01-207, is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

(a) No person shall act within this state as a consumer collection agency [, unless such person holds a license then in force from the commissioner authorizing such person so to act] without a consumer collection agency license. A consumer collection agency is acting within this state if it (1) has its place of business located within this state; (2) has its place of business located outside this state and collects from consumer debtors or property tax debtors who reside within this state for creditors who are located within this state; (3) has its place of business located outside this state and regularly collects from consumer debtors or property tax debtors who reside within this state for creditors who are located outside this state; or (4) has its place of business located outside this state and is engaged in the business of collecting child support for creditors located within this state from consumer debtors who are located outside this state.

(b) (1) Any person desiring to act within this state as a consumer collection agency shall make a written application to the commissioner for such license in such form as the commissioner prescribes. Such application shall be accompanied by (A) a financial statement prepared by a certified public accountant or a public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner or a corporate officer or a member duly authorized to execute such documents, (B) a license fee of eight hundred dollars, or in the case of an initial application that is filed not earlier than one year before the date such license will expire, a license fee of four hundred dollars, and (C) an investigation fee of one hundred dollars. The commissioner shall cause to be made such inquiry and examination as to the qualifications of each such applicant as the commissioner deems necessary. Each applicant shall furnish satisfactory evidence to the commissioner that the applicant is a person of good moral character and is financially responsible. If the commissioner is satisfied that such applicant is in all respects properly qualified and trustworthy and that the granting of such license is not against the public interest, the commissioner may issue to such applicant a license, in such form as the commissioner may adopt, to act within this state as a consumer collection agency. Any such license issued by the commissioner shall expire at the close of business on [April] September thirtieth of [each year, but may be renewed by the] the odd-numbered year following its issuance, unless such license is renewed, provided any license that is renewed effective May 1, 2003, shall expire on September 30, 2005. The commissioner may renew such application, in the commissioner's discretion, and upon filing of a proper renewal application accompanied by a license fee of [four] eight hundred dollars, or in the case of an application for renewal of a license that expires on April 30, 2003, a license fee of one thousand dollars, and satisfactory proof that such applicant at that time possesses the required qualifications for the license. Such renewal application shall be filed with the commissioner [prior to April] on or before September first of [each year] the year in which the license expires, or in the case of a license that expires on April 30, 2003, on or before April 1, 2003. Any renewal application filed with the commissioner after [April first] September first, or in the case of a license that expires on April 30, 2003, after April 1, 2003, shall be accompanied by a one-hundred-dollar late fee. Whenever an application for a license, other than a renewal application, is filed under sections 36a-800 to 36a-810, inclusive, as amended by this act, by any person who was a licensee under said sections 36a-800 to 36a-810, inclusive, as amended by this act, and whose license expired less than sixty days prior to the date such application was filed, such application shall be accompanied by a one-hundred-dollar processing fee in addition to the application fee. To further the enforcement of this section and to determine the eligibility of any person holding a license, the commissioner may, as often as the commissioner deems necessary, examine the licensee's books and records, and may, at any time, require the licensee to submit such a financial statement for the examination of the commissioner, so that the commissioner may determine whether the licensee is financially responsible to carry on a consumer collection agency business within the intents and purposes of sections 36a-800 to 36a-810, inclusive, as amended by this act. Any financial statement submitted by a licensee shall be confidential and shall not be a public record unless introduced in evidence at a hearing conducted by the commissioner.

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

(c) No person, licensed to act within this state as a consumer collection agency shall do so under any other name or at any other place of business than that named in the license. Any change of location of a place of business of a licensee shall require prior written notice to the commissioner. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-800 to 36a-810, inclusive, as amended by this act as to each new licensee. A license shall not be transferable or assignable. Any licensee holding, applying for, or seeking renewal of more than one license may, at its option, file the bond required under section 36a-802, as amended by this act, separately for each place of business licensed, or to be licensed, or a single bond, naming each place of business, in an amount equal to five thousand dollars for each place of business.

Sec. 48. Section 36a-802 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

No such license and no renewal thereof shall be granted unless the applicant has filed with the commissioner a bond to the people of the state in the penal sum of five thousand dollars, approved by the Attorney General as to form and by the commissioner as to sufficiency of the security thereof. Such bond shall be conditioned that such licensee shall well and truly and faithfully account for all funds entrusted to [him] the licensee and collected and received by [him in his] the licensee in the licensee's capacity as a consumer collection agency. Any person who may be damaged by the wrongful conversion of any [trust] creditor, consumer debtor or property tax debtor funds held by such consumer collection agency may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50, as amended. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. The bond shall run concurrently with the period of the license granted to the applicant, and the aggregate liability under the bond shall not exceed the penal sum of the bond.

Sec. 49. Section 36a-804 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2002):

[The commissioner may suspend or revoke such license for cause shown, in accordance with section 36a-51. ]

(a) The commissioner may suspend, revoke or refuse to renew any license, in accordance with the provisions of section 36a-51, as amended, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-800 to 36a-810, inclusive, as amended by this act, or if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misrepresentation or misappropriated funds; or (3) violated any of the provisions of sections 36a-800 to 36a-810, inclusive, as amended by this act, or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business.

(b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-800 to 36a-810, inclusive, as amended by this act, or any regulation adopted pursuant thereto, the commissioner may take action against such person or licensee in accordance with section 36a-50, as amended.

Sec. 50. Section 36a-805 of the general statutes, as amended by section 6 of public act 01-207, is repealed and the following is substituted in lieu thereof (Effective July 1, 2002):

(a) No consumer collection agency shall: (1) Furnish legal advice or perform legal services or represent that it is competent to do so, or institute judicial proceedings on behalf of others; (2) communicate with consumer debtors or property tax debtors in the name of an attorney or upon the stationery of an attorney, or prepare any forms or instruments which only attorneys are authorized to prepare; (3) purchase or receive assignments of claims for the purpose of collection or institute suit thereon in any court; (4) assume authority on behalf of a creditor to employ or terminate the services of an attorney unless such creditor has authorized such agency in writing to act as such creditor's agent in the selection of an attorney to collect the creditor's accounts; (5) demand or obtain in any manner a share of the proper compensation for services performed by an attorney in collecting a claim, whether or not such agency has previously attempted collection thereof; (6) solicit claims for collection under an ambiguous or deceptive contract; (7) refuse to return any claim or claims upon written request of the creditor, claimant or forwarder, which claims are not in the process of collection after the tender of such amounts, if any, as may be due and owing to the agency; (8) advertise or threaten to advertise for sale any claim as a means of forcing payment thereof, unless such agency is acting as the assignee for the benefit of creditors; (9) refuse or fail to account for and remit to its clients all money collected which is not in dispute within sixty days from the last day of the month in which said money is collected; (10) refuse or intentionally fail to return to the creditor all valuable papers deposited with a claim when such claim is returned; (11) refuse or fail to furnish at intervals of not less than ninety days, upon the written request of the creditor, claimant or forwarder, a written report upon claims received from such creditor, claimant or forwarder; (12) commingle money collected for a creditor, claimant or forwarder with its own funds or use any part of a creditor's, claimant's or forwarder's money in the conduct of its business; (13) add any charge or fee to the amount of any claim which it receives for collection or knowingly accept for collection any claim to which any charge or fee has already been added to the amount of the claim unless the consumer debtor is legally liable therefor, in which case, the collection charge or [collection] fee may not be in excess of fifteen per cent of the amount actually collected on the debt; (14) use or attempt to use or make reference to the term "bonded by the state of Connecticut", "bonded" or "bonded collection agency" or any combination of such terms or words, except that the word "bonded" may be used on the stationery of any such agency in type not larger than twelve-point; or (15) engage in any activities prohibited by sections 36a-800 to 36a-810, inclusive, as amended.

(b) No consumer collection agency shall impose a charge or fee for any child support payments collected through the efforts of a governmental agency. If the imposition of a charge or fee is permitted under section 10 of [this act] public act 01-207, no consumer collection agency shall impose a charge or fee for the collection of any child support overdue at the time of the contract in excess of twenty-five per cent of overdue support actually collected.

(c) No consumer collection agency shall receive any property tax on behalf of a creditor that is a municipality.

Sec. 51. (Effective October 1, 2002) Sections 36a-495, 36a-518, 36a-571 and 36a-803 of the general statutes are repealed.

Approved June 7, 2002