Connecticut Seal

Substitute House Bill No. 5411

Public Act No. 04-69

AN ACT CONCERNING CONSUMER CREDIT LICENSEES AND CREDITORS' COLLECTION PRACTICES.

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

Section 1. Section 36a-485 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

As used in this section and sections 36a-486 to [36a-498] 36a-498a, 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, first mortgage broker or originator required to be licensed or registered pursuant to sections 36a-485 to [36a-498] 36a-498a, 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] 36a-498a, 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 persons 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;

(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;

(7) "Mortgage lender" means a first mortgage lender, a first mortgage correspondent lender, or both;

(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] 36a-498a, 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;

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

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

(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. 2. Section 36a-486 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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 the required license in accordance with the provisions of sections 36a-485 to [36a-498] 36a-498a, inclusive, as amended by this act. 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] 36a-498a, 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, as amended by this act, and 36a-510, 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.

(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. 3. Section 36a-487 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

The following are exempt from licensing under sections 36a-485 to [36a-498] 36a-498a, 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 making five or fewer first mortgage loans within any period of twelve consecutive months;

(3) Bona fide nonprofit corporations 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 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 by this act, 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 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. 4. Section 36a-489 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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, 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-485 to [36a-498] 36a-498a, 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 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] 36a-498a, 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] 36a-498a, inclusive, as amended by this act.

Sec. 5. Subsection (c) of section 36a-490 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(c) 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-498] 36a-498a, inclusive, as amended by this act.

Sec. 6. Section 36a-491 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) (1) Each applicant for a first mortgage lender license or a first mortgage 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 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 36a-489, as amended by this act, shall expire at the close of business on September thirtieth of the even-numbered year following its issuance unless such license is renewed. Such licensee shall, on or before September first of the year in which the license expires, pay to the commissioner the appropriate license fee as provided in this section for the succeeding 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. Whenever an application for a license, other than a renewal application, is filed under sections 36a-485 to [36a-498] 36a-498a, 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.

(3) (A) If the commissioner determines that a check filed with the commissioner to pay a license fee under subdivision (1) of this subsection has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

(B) If the commissioner determines that a check filed with the commissioner to pay a registration fee has been dishonored, the commissioner shall automatically suspend the registration or a registration that has been issued but is not yet effective. The commissioner shall give the originator notice of the automatic suspension and the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

(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. 7. Section 36a-492 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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, 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] 36a-498a, inclusive, as amended by this act. Any borrower or prospective borrower who may be damaged by failure to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a borrower or prospective borrower to a licensee, may proceed on such bond against the principal or surety thereon, or both, to recover damages. 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.

(b) The surety company shall have the right to cancel the bond at any time by a written notice to the licensee stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. The commissioner shall automatically suspend the license on the date the cancellation takes effect, unless the surety bond has been replaced or renewed. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

Sec. 8. Section 36a-494 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) (1) The commissioner may suspend, revoke or refuse to renew any license, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-485 to [36a-498] 36a-498a, 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: (A) Made any material misstatement in the application; (B) committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any first mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information; (C) violated any of the provisions of this title or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business; or (D) failed to perform any agreement with a licensee or a borrower.

(2) The commissioner may suspend, revoke or refuse to renew any registration of an originator, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a registration under sections 36a-485 to [36a-498] 36a-498a, 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.

(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-485 to [36a-498] 36a-498a, inclusive, as amended by this act, or any regulation adopted pursuant thereto, or any licensee has failed to perform any agreement with a borrower, the commissioner may take action against such person or licensee in accordance with [section] sections 36a-50, as amended, and 36a-52.

Sec. 9. Section 36a-496 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

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] 36a-498a, 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. 10. Section 36a-498 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) Except as provided in subsection (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] 36a-498a, inclusive, as amended by this act, shall be refundable.

(b) No originator required to be registered pursuant to sections 36a-485 to [36a-498] 36a-498a, 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.

(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 (d) of this section.

(d) An agreement under subsection (c) of this section shall meet all of the following requirements to be valid and enforceable: (1) The agreement shall be dated, signed by both parties, and be executed prior to the payment of any advance fee; (2) the agreement shall expressly state the total advance fee required to be paid and any amount of the advance fee that shall not be refundable; (3) the agreement shall clearly and conspicuously state any conditions under which the advance fee will be retained by the 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.

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

Sec. 11. Section 36a-498a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

No licensee under section 36a-489, as amended by this act, and no person exempt from licensure under subdivisions (1), (5) and (6) of section 36a-487, as amended by this act, making a first mortgage loan shall charge, impose or cause to be paid, directly or indirectly, prepaid finance charges that exceed in the aggregate, the greater of five per cent of the principal amount of the loan or two thousand dollars. If the proceeds of the loan are used to refinance an existing loan, the aggregate of the prepaid finance charges for the current refinancing and any previous financings by such licensee or exempt person or affiliate of such licensee or exempt person within two years of the current refinancing shall not exceed the greater of five per cent of the principal amount of the initial loan or two thousand dollars. The provisions of this section shall not prohibit such licensee or exempt person from charging, imposing or causing to be paid, directly or indirectly, prepaid finance charges in addition to those permitted by this section in connection with any additional proceeds received by the borrower in the refinancing, provided such prepaid finance charges on the additional proceeds shall not exceed five per cent of the additional proceeds. For purposes of this section, "additional proceeds" has the meaning given to that term in subdivision (3) of section 36a-746e and "prepaid finance charge" has the meaning given to that term in subdivision [(6)] (7) of section 36a-746a.

Sec. 12. Subsection (b) of section 36a-511 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(b) No licensee shall employ or retain an originator without first registering such originator under sections 36a-510 to 36a-524, inclusive, provided such registration shall not be required for any originator who is registered by such licensee under sections 36a-485 to [36a-498] 36a-498a, 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, as amended by this act, and 36a-510, 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.

Sec. 13. Section 36a-512 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

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 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 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; (6) nonprofit corporations 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 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] 36a-498a, 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; (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 or its affiliate or subsidiary, which 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. 14. Section 36a-514 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) (1) Each applicant for a secondary mortgage lender license or a secondary mortgage correspondent 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, 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 secondary mortgage broker 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 September thirtieth of the even-numbered year following its issuance unless such license is renewed. Each licensee shall, on or before September first of the year in which the license expires, 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. Any renewal application filed with the commissioner after 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 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) 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) (1) If the commissioner determines that a check filed with the commissioner to pay a fee under subsection (a) of this section has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

(2) If the commissioner determines that a check filed with the commissioner to pay a registration fee has been dishonored, the commissioner shall automatically suspend the registration or a registration that has been issued but is not yet effective. The commissioner shall give the originator notice of the automatic suspension and the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

[(c)] (d) 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. 15. Subsection (b) of section 36a-517 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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-510 to 36a-524, inclusive, as amended by this act, or any licensee has failed to perform any agreement with a borrower, the commissioner may take action against such person or licensee in accordance with [section] sections 36a-50, as amended, and 36a-52.

Sec. 16. Section 36a-539 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) Each person applying to the commissioner for a sales finance company license 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 sections 36a-535 to 36a-546, inclusive, as amended by this act, shall expire at the close of business on September thirtieth of 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.

(b) If the commissioner determines that a check filed with the commissioner to pay a fee under subsection (a) of this section has been dishonored, the commissioner shall automatically suspend the license. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation and an opportunity for a hearing on such action in accordance with section 36a-51.

[(b)] (c) 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 and section 36a-542, as amended by this act, shall be nonrefundable.

Sec. 17. Section 36a-542 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) Each person licensed as a sales finance company may renew such license by filing with the commissioner on or before 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 under oath, together with such exhibits and other pertinent information as the commissioner may require. The license fee shall be 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 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.

(b) If the commissioner determines that a check filed with the commissioner to pay a fee under subsection (a) of this section for a renewal application has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

Sec. 18. Subsection (d) of section 36a-543 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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, or that any licensee has defrauded any retail buyer to the buyer's damage or wilfully failed to perform any written agreement with any retail buyer, the commissioner may take action against such person or such licensee in accordance with [section] sections 36a-50, as amended, and 36a-52.

Sec. 19. Section 36a-555 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

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] unless licensed to do so by the commissioner pursuant to sections 36a-555 to 36a-573, inclusive, as amended by this act. The provisions of this section shall not apply to (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 mortgage lender licensed pursuant to sections 36a-485 to [36a-498] 36a-498a, inclusive, as amended by this act, when making first mortgage loans, as defined in section 36a-485, as amended by this act, (9) a mortgage lender licensed pursuant to sections 36a-510 to 36a-524, inclusive, as amended by this act, when making secondary mortgage loans, as defined in section 36a-510, or (10) a licensed pawnbroker. [, unless licensed to do so by the commissioner as provided in sections 36a-555 to 36a-573, inclusive. ]

Sec. 20. Section 36a-558 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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 shall expire at the close of business on September thirtieth of 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 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 license fee of eight hundred dollars to renew the license, 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 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 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.

(b) If the commissioner determines that a check filed with the commissioner to pay a fee under subsection (a) of this section has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

[(b)] (c) 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.

Sec. 21. Section 36a-572 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

The commissioner may, in accordance with section 36a-51, suspend, revoke or refuse to renew any license issued under the provisions of section 36a-556 if the commissioner finds that the licensee 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 a denial of such license.

Sec. 22. Section 36a-633 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) Each applicant for a license, at the time of making such application, shall pay to the commissioner a nonrefundable license fee of four hundred dollars. Each license issued pursuant to this [section] subsection shall expire at the close of business on June thirtieth of each year, unless such license is renewed. Each licensee shall, on or before June twentieth of each year, pay to the commissioner the sum of four hundred dollars as a license fee for the succeeding year, commencing July first. Each applicant or licensee shall pay the expenses of any examination or investigation made under sections 36a-625 to 36a-634, inclusive, as amended by this act.

(b) If the commissioner determines that a check filed with the commissioner to pay a license fee has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

Sec. 23. Subdivision (2) of section 36a-645 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(2) "Creditor" means (i) any person to whom a debt is owed by a consumer debtor and such debt results from a transaction occurring in the ordinary course of such person's business, or (ii) any person to whom such debt is assigned. "Creditor" shall not include a consumer collection agency, as defined in section 36a-800, as amended, or any department or agency of the United States, this state, any other state, or any political subdivision thereof.

Sec. 24. Section 36a-656 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(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. Any bona fide nonprofit organization desiring to obtain such a license shall file with the commissioner an application under oath, setting forth such information as the commissioner may require. Each applicant for a license and each licensee shall notify the commissioner of any change in the applicant's business from that stated in the application for the license.

(b) 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 October 1, 2002, 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) If the commissioner determines that a check filed with the commissioner to pay an application fee has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

[(d)] (e) 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. 25. Section 36a-664 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) (1) [No] Except as provided in subdivision (2) of this subsection, no such license, and no renewal thereof, shall be granted unless the applicant has filed a surety bond with the commissioner written by a surety authorized to write such bonds in this state, [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)] (A) forty thousand dollars, or [(2)] (B) 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] March thirty-first of each year. [The] Each licensee shall submit to the commissioner [such bond or renewal thereof] evidence that the bond complies with the provisions of this subdivision 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. 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. 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. ]

(2) If a licensee or applicant for renewal of a license establishes that such licensee or applicant is unable to comply with the bond required by subdivision (1) of this subsection, it may submit to the commissioner, by July first, a request for an alternative to such requirement. If the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant so warrant, the commissioner may permit the applicant or licensee to supplement the maximum surety bond that it can obtain, provided the principal amount of the surety bond shall be a minimum of forty thousand dollars, with such other bonds or insurance policies, in such amounts, for such period and subject to such conditions as the commissioner may approve. Any such bond or insurance policy shall be written or issued by a surety or insurance company authorized to write such bonds or sell such insurance in this state.

(3) The form of any surety bond submitted pursuant to this section shall be approved by the Attorney General. Any surety bond filed under this section shall be conditioned upon the licensee faithfully performing any and all written agreements with debtors, truly and faithfully accounting for all funds received by the licensee in the licensee's capacity as a debt adjuster, and conducting such business consistent with the provisions of sections 36a-655 to 36a-665, inclusive, 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 any such surety bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on any such surety bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50. The proceeds of any bond or insurance policy, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the licensee in the event of bankruptcy of the licensee and shall be immune from attachment by creditors and judgment creditors. Any bond or insurance policy required by this section shall be maintained during the entire period of the license granted to the applicant, and the aggregate liability under any such bond or insurance policy shall not exceed the principal amount of the bond or the limit of liability of the insurance policy.

(b) The surety or insurance company shall have the right to cancel any bond or insurance policy written or issued under subsection (a) of this section at any time by a written notice to the licensee, stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee at least thirty days prior to the date of cancellation. No such bond shall be cancelled unless the surety or insurance company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. The commissioner shall automatically suspend the license on the date the cancellation takes effect, unless the bond or insurance policy has been replaced or renewed. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

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

Sec. 26. Section 36a-705 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

As used in this section and sections 36a-706 and 36a-707, unless the context otherwise requires:

(1) "First mortgage loan" means any loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage upon any interest in one-to-four-family residential, owner-occupied real property located in this state which is not subject to any prior mortgages. The term includes the renewal or refinancing of an existing first mortgage loan;

(2) "Mortgage lender" means any person engaged in the business of making first mortgage loans, including, but not limited to, banks, out-of-state banks, Connecticut credit unions, federal credit unions, out-of-state credit unions and first mortgage lenders required to be licensed under sections 36a-485 to [36a-498] 36a-498a, inclusive, as amended by this act; and

(3) "Mortgage rate lock-in" means any written agreement with a mortgage applicant made by a mortgage lender or its representative, prior to the issuance of a first mortgage loan commitment, in which the mortgage lender agrees that a particular rate, number of points or variable rate terms will be the rate, number of points, or variable rate terms at which it will lend, provided the first mortgage loan is closed within a specified period, and the applicant qualifies for the loan in accordance with the lender's standards of credit worthiness.

Sec. 27. Section 36a-725 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

As used in this section and section 36a-726, unless the context otherwise requires:

(1) "First mortgage loan" means any loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage upon any interest in one-to-four-family residential, owner-occupied real property located in this state which is not subject to any prior mortgages. The term includes the renewal or refinancing of an existing first mortgage loan;

(2) "Mortgage insurance" means insurance written by an independent mortgage insurance company to protect the mortgage lender against loss incurred in the event of a default by a borrower under the mortgage loan;

(3) "Mortgage lender" means any person engaged in the business of making first mortgage loans, including, but not limited to, banks, out-of-state banks, Connecticut credit unions, federal credit unions, out-of-state credit unions, and first mortgage lenders required to be licensed under sections 36a-485 to [36a-498] 36a-498a, inclusive, as amended by this act.

Sec. 28. Section 36a-736 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

As used in sections 36a-735 to 36a-744, inclusive, as amended by this act, unless the context otherwise requires:

(1) "Applicant" means any person who applies for a home purchase loan, home improvement loan or other mortgage loan as defined in sections 36a-735 to 36a-744, inclusive, as amended by this act, whether or not the loan is granted;

(2) "Federal Home Mortgage Disclosure Act" means the Home Mortgage Disclosure Act of 1975 (12 USC section 2801 et seq. ), as from time to time amended, and any regulations promulgated by the Federal Reserve Board pursuant to that act, except, for purposes of sections 36a-735 to 36a-744, inclusive, as amended by this act, the supervisory agency shall be the commissioner;

(3) "Financial institution" means any Connecticut bank or Connecticut credit union which makes home purchase loans or home improvement loans or any for profit mortgage lending institution other than a Connecticut bank or Connecticut credit union, whose home purchase loan originations equaled or exceeded ten per cent of its loan origination volume, measured in dollars, in the preceding calendar year, if such mortgage lending institution is licensed under sections 36a-485 to [36a-498] 36a-498a, inclusive, as amended by this act, or 36a-510 to 36a-524, inclusive, as amended by this act;

(4) "Home improvement loan" has the same meaning as provided in the federal Home Mortgage Disclosure Act;

(5) "Home purchase loan" has the same meaning as provided in the federal Home Mortgage Disclosure Act; and

(6) "Mortgage loan" means a loan which is secured by residential real property.

Sec. 29. Section 36a-788 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-770 to 36a-788, inclusive, as amended by this act, 42-100b and 42-100c, the commissioner may take action against such person in accordance with [section] sections 36a-50, as amended, and 36a-52.

Sec. 30. Section 36a-801 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

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

(b) (1) Any person desiring to act within this state as a consumer collection agency shall make a written application to the commissioner for such license in such form as the commissioner prescribes. Such application shall be accompanied by (A) a financial statement prepared by a certified public accountant or a public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner or a corporate officer or a member duly authorized to execute such documents, (B) 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 September thirtieth of 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 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 on or before September first of 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 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) If the commissioner determines that a check filed with the commissioner to pay a fee under subdivision (1) of this subsection has been dishonored, the commissioner shall automatically suspend the license or a renewal license that has been issued but is not yet effective. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

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

(c) No person, licensed to act within this state as a consumer collection agency shall do so under any other name or at any other place of business than that named in the license. Any change of location of a place of business of a licensee shall require prior written notice to the commissioner. Not more than one place of business shall be maintained under the same license but the commissioner may issue more than one license to the same licensee upon compliance with the provisions of sections 36a-800 to 36a-810, inclusive, as 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. 31. Section 36a-802 of the general statutes, as amended by section 2 of public act 03-262, is repealed and the following is substituted in lieu thereof (Effective October 1, 2004):

(a) No such license and no renewal thereof shall be granted unless the applicant has filed with the commissioner a bond to the people of the state in the penal sum of five thousand dollars, approved by the Attorney General as to form and by the commissioner as to sufficiency of the security thereof. Such bond shall be conditioned that such licensee shall well, truly and faithfully account for all funds entrusted to the licensee and collected and received by the licensee in the licensee's capacity as a consumer collection agency. Any person who may be damaged by the wrongful conversion of any creditor, consumer debtor or property tax debtor funds received by such consumer collection agency may proceed on such bond against the principal or surety thereon, or both, to recover damages. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50, 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.

(b) The surety company shall have the right to cancel the bond at any time by a written notice to the licensee stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the licensee at least thirty days prior to the date of cancellation. A surety bond shall not be cancelled unless the surety company notifies the commissioner in writing not less than thirty days prior to the effective date of cancellation. The commissioner shall automatically suspend the license on the date the cancellation takes effect, unless the surety bond has been replaced or renewed. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with section 36a-51.

Approved May 10, 2004