CHAPTER 668 NONDEPOSITORY FINANCIAL INSTITUTIONS

CHAPTER 668
NONDEPOSITORY FINANCIAL INSTITUTIONS

PART I
MORTGAGE LENDERS, BROKERS AND ORIGINATORS

(A)

NONDEPOSITORY FIRST MORTGAGE LENDERS, BROKERS
AND ORIGINATORS

Sec. 36a-485. (Formerly Sec. 36-440). Definitions. As used in this section and sections 36a-486 to 36a-498a, inclusive, 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-498a, inclusive, 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-498a, inclusive;

(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;

(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-498a, inclusive, 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.

(P.A. 85-399, S. 1; P.A. 87-9, S. 2, 3; P.A. 89-347, S. 9; P.A. 92-12, S. 87; 92-132, S. 3, 5; P.A. 94-122, S. 229, 340; P.A. 99-36, S. 23; 99-63, S. 2; P.A. 02-111, S. 2; P.A. 04-69, S. 1.)

History: (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 89-347 added Subsec. (g) defining "mortgage broker"; P.A. 92-12 redesignated Subdivs. and made technical changes; P.A. 92-132 added Subdiv. (8) defining "advance fee"; P.A. 94-122 deleted definitions of "commissioner" and "person", alphabetized remaining definitions and made technical changes, effective January 1, 1995; Sec. 36-440 transferred to Sec. 36a-485 in 1995; P.A. 99-36 made a technical change; P.A. 99-63 amended Subdiv. (2) to redefine "first mortgage loan", added new Subdivs. (7) and (8) defining "simulated check" and "advertise" or "advertisement", and made technical changes; P.A. 02-111 redefined "advance fee" and "mortgage lender", deleted definitions of "mortgage broker" and "principal officer" and added definitions of "first mortgage broker", "first mortgage correspondent lender", "first mortgage lender", "originator", "table funding agreement" and "warehouse agreement", renumbering Subdivs. accordingly; P.A. 04-69 substituted "36a-498a" for "36a-498" throughout.

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Sec. 36a-486. (Formerly Sec. 36-440a). License required. Registration of originator. Violations. (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-498a, inclusive. 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-498a, inclusive, provided such registration shall not be required for any originator who is registered by such licensee under sections 36a-510 to 36a-524, inclusive. No individual may act as an originator without being registered, or act as an originator, as defined in sections 36a-485 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.

(P.A. 85-399, S. 2; P.A. 89-347, S. 10; P.A. 93-32; P.A. 94-122, S. 230, 340; P.A. 96-71, S. 1, 8; 96-109, S. 10; 96-180, S. 117, 166; P.A. 02-111, S. 3; P.A. 04-69, S. 2.)

History: P.A. 89-347 added requirements re mortgage brokers; P.A. 93-32 made previous provision Subsec. (a) and added new Subsec. (b) imposing civil penalty for those who do not obtain the license required; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440a transferred to Sec. 36a-486 in 1995; P.A. 96-71, 96-109 and 96-180 all amended Subsec. (a) to delete "loan" before "mortgage loan business in this state", effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by rewriting provisions applicable to lenders and brokers and adding provisions re first mortgage correspondent lenders, added new Subsec. (b) re registration of originators, and redesignated existing Subsec. (b) as Subsec. (c), adding "or registration" therein; P.A. 04-69 amended Subsecs. (a) and (b) to substitute "36a-498a" for "36a-498".

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Sec. 36a-487. (Formerly Sec. 36-440b). Exemptions from licensure. The following are exempt from licensing under sections 36a-485 to 36a-498a, inclusive:

(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, when making loans authorized by said sections;

(6) Persons licensed under sections 36a-510 to 36a-524, inclusive, 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.

(P.A. 85-399, S. 3; P.A. 88-65, S. 37; P.A. 89-211, S. 41; P.A. 92-12, S. 88; P.A. 94-122, S. 231, 340; P.A. 99-36, S. 24; P.A. 02-111, S. 4; P.A. 04-69, S. 3.)

History: P.A. 88-65 deleted a reference to industrial bank in Subsec. (a); P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 92-12 redesignated Subdivs.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440b transferred to Sec. 36a-487 in 1995; P.A. 99-36 made a technical change; P.A. 02-111 amended Subdivs. (2), (3) and (4) by substituting "making" for "granting", amended Subdiv. (6) by changing "licensed lender" to "licensed mortgage lender" and amended Subdiv. (8) by substituting "makes" for "grants"; P.A. 04-69 substituted "36a-498a" for "36a-498".

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Sec. 36a-488. (Formerly Sec. 36-440c). License as first mortgage lender, first mortgage correspondent lender or first mortgage broker. Prerequisites. Application for license or registration. (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 include: (1) The type of license sought; (2) the name and address of the applicant; (3) the location for which the license is sought; (4) the name and address of each member, partner, officer, director, authorized agent and shareholder owning ten per cent or more of the outstanding stock, 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, the applicant's background, the background of its principals and employees, and 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.

(P.A. 85-399, S. 4; P.A. 89-347, S. 11; P.A. 94-122, S. 232, 340; P.A. 99-36, S. 25; P.A. 02-111, S. 5.)

History: P.A. 89-347 amended Subsec. (b) by inserting new Subdiv. (4) re the applicant's status as a lender or a broker and renumbered the remaining Subdiv.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440c transferred to Sec. 36a-488 in 1995; P.A. 99-36 made a technical change in Subsec. (a); P.A. 02-111 replaced former Subsec. (a) with new provisions re obtaining license as first mortgage lender, first mortgage correspondent lender or first mortgage broker and re obligation to notify commissioner if net worth falls below requisite net worth, amended Subsec. (b) to reflect commissioner's authority to issue first mortgage lender license, first mortgage correspondent lender license and first mortgage broker license and to revise application requirements and added new Subsec. (c) re application for registration of originator.

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Sec. 36a-489. (Formerly Sec. 36-440d). Application for license or registration. Denial of application for license or registration. (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-498a, inclusive, the commissioner may thereupon issue the applicant the license. If the commissioner fails to make such findings, or if the commissioner finds that the applicant has made 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-498a, inclusive. 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-498a, inclusive.

(P.A. 85-399, S. 5; P.A. 89-347, S. 12; P.A. 94-122, S. 233, 340; P.A. 99-36, S. 26; P.A. 02-111, S. 6; P.A. 04-69, S. 4.)

History: P.A. 89-347 extended the application of the section to mortgage brokers; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440d transferred to Sec. 36a-489 in 1995; P.A. 99-36 made technical changes; P.A. 02-111 designated existing provisions as Subsec. (a) and amended same by requiring commissioner to find that applicant meets requirements of Sec. 36a-488(a), providing that application requirements extend to "partners" in a partnership, and adding provisions re extending application requirements to "members if the applicant is a limited liability company", re denial of license application based on material misstatement in application, and re denial of application subject to provisions of Sec. 46a-80 and added Subsec. (b) re application for registration of originator; P.A. 04-69 substituted "36a-498a" for "36a-498".

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Sec. 36a-490. (Formerly Sec. 36-440e). License. (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 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 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 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-498a, inclusive.

(P.A. 85-399, S. 6; P.A. 89-347, S. 13; P.A. 94-122, S. 234, 340; P.A. 97-22, S. 1; P.A. 02-111, S. 7; P.A. 04-69, S. 5.)

History: P.A. 89-347 amended Subsec. (a) by adding the reference to a licensee acting as a mortgage broker in more than one location; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440e transferred to Sec. 36a-490 in 1995; P.A. 97-22 made a technical change in Subsec. (a); P.A. 02-111 amended Subsec. (a) by changing requirement re license from "prominently posted in each place of business of the licensee" to "maintained at the location for which the license was issued and shall be available for public inspection", by changing requirement re change of location from prior approval to prior written notice and by making technical changes, amended Subsec. (b) by deleting former notice requirements and adding provision requiring licensee to promptly notify commissioner of any change in the information provided in the application and amended Subsec. (c) by replacing reference to Sec. 36a-495 with reference to Sec. 36a-498; P.A. 04-69 amended Subsec. (c) to substitute "36a-498a" for "36a-498".

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Sec. 36a-491. (Formerly Sec. 36-440f). License and registration fees. Automatic suspension of license or registration. Notice. Opportunity for hearing. (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 section 36a-489 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-498a, inclusive, 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.

(P.A. 85-399, S. 7; P.A. 88-150, S. 5; P.A. 89-347, S. 14; P.A. 92-89, S. 7, 20; P.A. 94-104, S. 5; P.A. 96-71, S. 2, 8; P.A. 99-36, S. 27; P.A. 02-111, S. 8; P.A. 04-69, S. 6.)

History: P.A. 88-150 amended Subsec. (a) by providing that the license fee is nonrefundable and adding the provision re the expiration of licenses on September thirtieth; P.A. 89-347 added references to mortgage brokers, establishing license fee for mortgage brokers; P.A. 92-89 increased the fee applicable to lender's and combination licenses from two hundred fifty to four hundred dollars and increased the fee applicable to broker's licenses from one hundred to two hundred dollars; P.A. 94-104 changed the license renewal deadline from September tenth to September first and added a one-hundred-dollar late fee in Subsec. (a), and added Subdiv. (2) to Subsec. (a) re applications filed by a licensee whose license expired within sixty days of his application; Sec. 36-440f transferred to Sec. 36a-491 in 1995; P.A. 96-71 clarified that all license fees required by this section are nonrefundable, effective July 1, 1996; P.A. 99-36 made a technical change in Subsec. (a); P.A. 02-111 amended Subsec. (a) by providing for license expiration at the close of business on September thirtieth of the even-numbered year following its issuance unless renewed, adding provisions re fee of eight hundred dollars for first mortgage lender and first mortgage correspondent lender licenses and fee of four hundred dollars for first mortgage broker license, adding provisions re lesser fee if application filed not earlier than one year before expiration date, making conforming and technical changes and incorporating provisions of existing Subdiv. (2) into Subdiv. (1) and adding new Subdiv. (2) re application and fees for registration of originator, and amended Subsec. (b) by adding "or registration"; P.A. 04-69 amended Subsec. (a) to change reference to each license issued pursuant to section "36a-489", in lieu of "this" section, and to substitute "36a-498a" for "36a-498" in Subdiv. (1), and add Subdiv. (3) requiring commissioner to automatically suspend license or registration if commissioner determines that a check filed to pay the license or registration fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51.

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Sec. 36a-492. (Formerly Sec. 36-440g). Surety bond required. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing. (a) No such license, and no renewal thereof, shall be granted unless the applicant has filed 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-498a, inclusive. 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. 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.

(P.A. 85-399, S. 8; P.A. 89-347, S. 15; P.A. 90-277; P.A. 94-122, S. 235, 340; P.A. 99-36, S. 28; P.A. 02-111, S. 9; P.A. 04-69, S. 7.)

History: P.A. 89-347 extended the application of the section to mortgage brokers; P.A. 90-277 reduced the required bond sum from fifty thousand dollars to forty thousand dollars; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440g transferred to Sec. 36a-492 in 1995; P.A. 99-36 made technical changes; P.A. 02-111 added provision re performance "for the benefit" of borrowers and prospective borrowers, changed any "person" to any "borrower or perspective borrower", added provisions re commissioner to proceed on bond to collect civil penalty imposed pursuant to Sec. 36a-50(a) and re bond proceeds deemed to be held in trust and immune from attachment, and made conforming and technical changes; P.A. 04-69 designated existing provisions as Subsec. (a), substituting "36a-498a" for "36a-498" therein, and added Subsec. (b) giving surety company the right to cancel the bond at any time by written notice to licensee, specifying manner of notice, requiring surety company to notify commissioner in writing prior to cancellation, requiring commissioner to automatically suspend license on date cancellation takes effect, unless bond has been replaced or renewed, and requiring commissioner to give licensee notice of automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51.

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Sec. 36a-493. (Formerly Sec. 36-440h). Records to be maintained by licensee. (a) Each licensee shall maintain adequate records of each loan transaction at the location named in the license, or shall make such records available at such 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; (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) For each loan that is made and serviced by a licensee, the licensee shall retain records of such loan transaction for not less than two years following the final payment thereon, or the assignment of such loan, whichever occurs first, or such longer period as may be required by any other provision of law.

(c) 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 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.

(P.A. 85-399, S. 9; P.A. 89-347, S. 16; P.A. 90-184, S. 8; P.A. 94-122, S. 236, 340; P.A. 02-111, S. 10.)

History: P.A. 89-347 amended Subsec. (a) by inserting new Subdiv. (2) requiring the licensee to state whether it acted as a mortgage lender, a mortgage broker or any combination thereof and renumbering the remaining subdivisions in Subsec. (a) and adding Subdiv. (6) in Subsec. (a) re the borrower's statement, made a technical change in Subsec. (c) and added Subsec. (d) re record retention requirements for mortgage brokers; P.A. 90-184 added Subsec. (e) authorizing a fee to be charged for records or information furnished to a licensee; P.A. 94-122 changed "commissioner or his representative" to "commissioner" and "any combination thereof" to "both" in Subsec. (a), deleted Subsec. (b) re examination of books and records of licensees, and relettered former Subsecs. (c) through (e) as Subsecs. (b) through (d), effective January 1, 1995; Sec. 36-440h transferred to Sec. 36a-493 in 1995; P.A. 02-111 amended Subsec. (a) to change where records are maintained or made available from "place of business" to "location" named in the license, to replace references to "mortgage broker" with reference to "first mortgage broker", to add new Subdiv. (7) re name and address of broker and to make technical changes, amended Subsec. (b) to increase record retention period for licensees who make or service loans from one to two years following final payment or assignment, or such longer retention period as may be required by law, and amended Subsec. (c) by deleting reference to licensee acting as a "mortgage broker" and substituting "mortgage lender or first mortgage broker but does not service the loan" and by making technical changes.

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Sec. 36a-494. (Formerly Sec. 36-440i). Suspension, revocation or refusal to renew license or registration. (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-498a, inclusive, or if the commissioner finds that the licensee or any proprietor, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: (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-498a, inclusive, 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-498a, inclusive, 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 sections 36a-50 and 36a-52.

(P.A. 85-399, S. 10; P.A. 86-403, S. 78, 132; P.A. 88-230, S. 1, 12; P.A. 89-347, S. 17; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; 93-194, S. 5, 7; P.A. 94-122, S. 237, 340; P.A. 99-36, S. 29; P.A. 00-61, S. 2, 9; P.A. 02-111, S. 11; P.A. 04-69, S. 8.)

History: P.A. 86-403 deleted reference to chapter 657a in Subsec. (a); P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 89-347 amended Subsec. (a) by adding failure to make disclosures required by Subdiv. (6) of Subsec. (a) of Sec. 36-440h as grounds for suspending, revoking or refusing to renew a license; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 93-194 specified that provisions apply to persons who are not licensed as well as to licensees, effective June 23, 1993; P.A. 94-122 deleted Subsec. (c) re cease and desist provisions and made technical changes, effective January 1, 1995; Sec. 36-440i transferred to Sec. 36a-494 in 1995; P.A. 99-36 made technical changes; P.A. 00-61 amended Subsec. (b) by adding language re licensee's failure to perform an agreement with a borrower, effective July 1, 2000; P.A. 02-111 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and, within said Subdiv., redesignating existing Subdivs. (1) to (4) as Subparas. (A) to (D), replacing "owner" with "proprietor", adding reference to misappropriated funds in Subpara. (B), replacing former statutory references with reference to "this title" in Subpara. (C) and adding reference to licensee in Subpara. (D), and by adding new Subdiv. (2) re commissioner's authority to suspend, revoke or refuse to renew registration of originator; P.A. 04-69 substituted "36a-498a" for "36a-498" throughout and amended Subsec. (b) to allow commissioner to take action against violator or licensee in accordance with Sec. 36a-52.

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

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

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Sec. 36a-496. (Formerly Sec. 36-440k). Applications and referrals from unlicensed first mortgage brokers or unregistered originators. 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-498a, inclusive, 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.

(P.A. 91-306, S. 2; P.A. 02-111, S. 12; P.A. 04-69, S. 9.)

History: Sec. 36-440k transferred to Sec. 36a-496 in 1995; P.A. 02-111 extended prohibition to include accepting applications or referrals of applications from, or payment of fees to, unregistered originators and replaced references to "mortgage broker" with references to "first mortgage broker"; P.A. 04-69 substituted "36a-498a" for "36a-498".

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Sec. 36a-497. (Formerly Sec. 36-440l). Advertisements. No person licensed pursuant to section 36a-489 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.

(P.A. 91-306, S. 3; P.A. 94-122, S. 238, 340; P.A. 99-63, S. 3; P.A. 02-111, S. 13.)

History: P.A. 94-122 made a technical change, effective January 1, 1995; Sec. 36-440l transferred to Sec. 36a-497 in 1995; P.A. 99-63 designated existing provisions as Subdiv. (1), changing "in any medium" to "in this state" and making technical changes, and added Subdiv. (2) re advertising restrictions; P.A. 02-111 amended Subdiv. (1) to replace reference to "mortgage broker" with reference to "first mortgage broker".

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Sec. 36a-498. (Formerly Sec. 36-440m). Refundability of advance fees. Exceptions. (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-498a, inclusive, shall be refundable.

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

(P.A. 92-132, S. 4, 5; P.A. 94-122, S. 239, 340; P.A. 02-111, S. 14; P.A. 04-69, S. 10.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440m transferred to Sec. 36a-498 in 1995; P.A. 02-111 replaced references to "mortgage broker" with references to "first mortgage broker" throughout, added new Subsec. (b) re acceptance of advance fee by originator, redesignated existing Subsecs. (b) to (d) as Subsecs. (c) to (e) and made technical changes throughout; P.A. 04-69 amended Subsecs. (a) and (b) to substitute "36a-498a" for "36a-498".

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Sec. 36a-498a. Prepaid finance charges; when prohibited. No licensee under section 36a-489 and no person exempt from licensure under subdivisions (1), (5) and (6) of section 36a-487 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 (7) of section 36a-746a.

(P.A. 01-34, S. 13; P.A. 04-69, S. 11.)

History: P.A. 04-69 substituted Subdiv. "(7)" for "(6)" in definition of "prepaid finance charge".

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

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(B)*

SECONDARY MORTGAGE LENDERS, BROKERS AND ORIGINATORS

*Annotation to former chapter 646a (Sec. 36-224a et seq.):

Secondary mortgage act cited. 27 CA 628, 629, 631.

Sec. 36a-510. (Formerly Sec. 36-224a). Definitions. As used in sections 36a-510 to 36a-524, inclusive, unless the context otherwise requires:

(1) "Advance fee" means any consideration paid or given, directly or indirectly, to a mortgage lender, secondary mortgage broker or originator required to be licensed or registered pursuant to sections 36a-510 to 36a-524, inclusive, 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, 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 secondary mortgage loan;

(3) "Licensee" means any person who is required to be licensed pursuant to section 36a-511;

(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, 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;

(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;

(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;

(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;

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

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

(13) "Warehouse agreement" has the meaning given to that term in subdivision (12) of section 36a-485.

(P.A. 77-228, S. 1; 77-614, S. 161, 587, 610; P.A. 78-216, S. 1, 7; 78-303, S. 85, 136; P.A. 80-482, S. 251, 345, 348; P.A. 87-9, S. 2, 3; P.A. 90-184, S. 1; P.A. 92-12, S. 64; 92-132, S. 1, 5; P.A. 93-130, S. 1, 3; P.A. 94-122, S. 240, 340; P.A. 99-63, S. 4; P.A. 02-111, S. 15.)

History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner within the department of business regulation, effective January 1, 1979; P.A. 78-216 added Subdivs. (e) and (f) defining "lender" and "broker"; P.A. 80-482 deleted reference to abolished department of business regulation and restored commissioner as head of independent banking department (as was the case before P.A. 77-614 which had made banking department a division within the department of business regulation); (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 90-184 amended the definition of "secondary mortgage loan" in Subsec. (a) and amended the definition of "broker" in Subsec. (f); P.A. 92-12 redesignated Subsecs. and Subdivs. and made technical changes; P.A. 92-132 added Subdiv. (7) defining "advance fee"; P.A. 93-130 added Subdiv. (8) defining "principal amount of the loan", effective June 14, 1993; P.A. 94-122 deleted definitions of "commissioner" and "person" and alphabetized remaining definitions with technical changes, effective January 1, 1995; Sec. 36-224a transferred to Sec. 36a-510 in 1995; P.A. 99-63 added new Subdivs. (7) and (8) defining "simulated check" and "advertise" or "advertisement"; P.A. 02-111 deleted definitions of "broker" and "lender", redefined "advance fee", and added definitions of "mortgage lender", "originator", "secondary mortgage broker", "secondary mortgage correspondent lender", "secondary mortgage lender", "table funding agreement" and "warehouse agreement", renumbering Subdivs. accordingly.

Cited. 41 CA 754, 756, 764-767. P.A. 93-130 cited. Id. P.A. 93-130 Sec. 1(8) cited. Id.

Subdiv. (5):

Cited erroneously as Sec. 36a-510a(5). 41 CA 754, 756.

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Sec. 36a-511. (Formerly Sec. 36-224b). License required. Registration of originator. Violations. (a) No person shall engage in the business of making secondary mortgage loans or act as a secondary mortgage broker unless such person has first obtained the required license under sections 36a-510 to 36a-524, inclusive. A person shall be deemed to be engaged in the business of making secondary mortgage loans if such person advertises, causes to be advertised, solicits, offers to make or makes secondary mortgage loans, either directly or indirectly. 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, provided such registration shall not be required for any originator who is registered by such licensee under sections 36a-485 to 36a-498a, inclusive. No individual may act as an originator without being registered, or act as an originator, as defined in sections 36a-485 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 secondary mortgage loan negotiated, solicited, placed, found or made without a license shall constitute a separate violation for purposes of section 36a-50.

(P.A. 77-228, S. 2; 77-604, S. 81, 84; P.A. 78-216, S. 2, 7; P.A. 90-184, S. 2; P.A. 94-122, S. 241, 340; P.A. 02-111, S. 16; P.A. 04-69, S. 12.)

Secondary mortgage loan issued by lender in violation of licensing requirements is not enforceable in foreclosure action. 248 C. 769.

Trial court properly rendered summary judgment in favor of plaintiffs; because plaintiff's failure to meet licensing requirements of section to issue secondary mortgage loans did not render mortgage agreement a nullity or an illegal act relieving defendants of their obligations, defendant's claim that trial court was misled by plaintiff's affidavit stating plaintiffs were exempt from requirements of section did not create an issue of material fact. 48 CA 80.

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(P.A. 77-228, S. 3; 77-614, S. 161, 587, 610; P.A. 78-216, S. 3, 7; 78-303, S. 85, 136; P.A. 80-67, S. 1; P.A. 87-66; P.A. 89-211, S. 40; P.A. 90-184, S. 3; P.A. 94-122, S. 242, 340; P.A. 02-111, S. 17; P.A. 04-69, S. 13.)

History: P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking commissioner, effective January 1, 1979; P.A. 78-216 rephrased and clarified Subdiv. (4); P.A. 80-67 deleted former Subpara. (B), i.e. "secondary mortgage loans, the aggregate total of which is less than twenty-five thousand dollars" in Subdiv. (4); P.A. 87-66 replaced former exemption (4) re persons granting fewer than three secondary mortgage loans with exemption re banks and credit unions, inserted new exemption as (5) re persons granting five or fewer secondary mortgage loans, renumbering former Subdivs. (6) and (7) accordingly, deleted former Subdiv. (8) re entities subject to banking commissioner, etc. and added new exemptions as Subdivs. (9) to (13); P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 90-184 deleted former Subdiv. (8) re exemption for persons granting secondary mortgage loans used primarily for other than personal, family or household purposes, and renumbered remaining Subdivs. accordingly; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224c transferred to Sec. 36a-512 in 1995; P.A. 02-111 amended Subdivs. (3) and (5) to (7) by changing "granting" to "making" and amended Subdiv. (11) by changing "grants" to "makes"; P.A. 04-69 made a technical change in Subdiv. (5) and substituted "36a-498a" for "36a-498" in Subdiv. (9).

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Sec. 36a-513. (Formerly Sec. 36-224d). License as secondary mortgage lender, secondary mortgage correspondent lender or secondary mortgage broker. Prerequisites. Application for license or registration. Denial of application for license or registration. (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.

(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 include: (1) The type of license sought; (2) the name and address of the applicant; (3) the location for which the license is sought; (4) the name and address of each member, partner, officer, director, authorized agent and shareholder owning ten per cent or more of the outstanding stock, 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, the applicant's background, the background of its principals and employees and the applicant's activities as the commissioner may require.

(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, 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. 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.

(P.A. 77-228, S. 4; P.A. 78-216, S. 4, 7; P.A. 80-67, S. 2; P.A. 94-122, S. 243, 340; P.A. 02-111, S. 18.)

History: P.A. 78-216 required that application set forth whether applicant is a lender and/or broker in Subsec. (b); P.A. 80-67 included renewal of licenses in Subsec. (a), reworded Subsec. (b) and specified applicability of Subdiv. (4) to lead and participant lenders and added Subsec. (c); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224d transferred to Sec. 36a-513 in 1995; P.A. 02-111 replaced former Subsec. (a) with new provisions re obtaining license as secondary mortgage lender, secondary mortgage correspondent lender or secondary mortgage broker and re obligation to notify commissioner if net worth falls below requisite net worth, amended Subsec. (b) to reflect commissioner's authority to issue secondary mortgage lender license, secondary mortgage correspondent lender license and secondary mortgage broker license and to revise application requirements, deleted former Subsec. (c) re investigation and issuance of license, added new Subsec. (c) re findings and issuance of license, added new Subsec. (d) re application for registration of originator and added new Subsec. (e) re commissioner's denial of originator registration.

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Sec. 36a-514. (Formerly Sec. 36-224e). License and registration fees. Automatic suspension of license or registration. Notice. Opportunity for hearing. (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.

(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.

(P.A. 77-228, S. 5; P.A. 78-216, S. 5, 7; P.A. 88-150, S. 2; P.A. 92-89, S. 4, 20; P.A. 94-104, S. 1; P.A. 96-71, S. 3, 8; P.A. 02-111, S. 19; P.A. 04-69, S. 14.)

History: P.A. 78-216 made previous license fees applicable to lender's and combination licenses and added provisions for broker's fee; P.A. 88-150 amended Subsec. (a) by providing that the license fees are nonrefundable, increasing the license fee to be a broker to two hundred dollars and adding the provision re expiration of licenses on June thirtieth of each year; P.A. 92-89 increased the fee applicable to lender's and combination licenses from two hundred fifty to four hundred dollars; P.A. 94-104 changed the license renewal deadline from June twentieth to June first, added a one-hundred-dollar late fee and added a one-hundred-dollar processing fee for a person whose license expired within sixty days of his application in Subsec. (a); Sec. 36-224e transferred to Sec. 36a-514 in 1995; P.A. 96-71 clarified that all fees required by this section are nonrefundable, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by providing for license expiration at the close of business on September thirtieth of the even-numbered year following its issuance unless renewed, adding provisions re fee of eight hundred dollars for secondary mortgage lender license and secondary mortgage correspondent lender license and fee of four hundred dollars for secondary mortgage broker license, adding provisions re lesser fees if application filed not earlier than one year before expiration date or if license expires on June 30, 2003, and making conforming changes, replaced former Subsec. (b) with new provisions re application for registration of originator and amended Subsec. (c) by adding "or registration"; P.A. 04-69 added new Subsec. (c), requiring commissioner to automatically suspend license or registration if commissioner determines that a check filed to pay the license or registration fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (c) as Subsec. (d).

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Sec. 36a-515. (Formerly Sec. 36-224f). License. (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.

(P.A. 77-228, S. 6; P.A. 80-67, S. 3; P.A. 81-472, S. 69, 159; P.A. 02-111, S. 20.)

History: P.A. 80-67 clarified provision re posting of license and added reference to lead and participant lenders; P.A. 81-472 made technical changes; Sec. 36-224f transferred to Sec. 36a-515 in 1995; P.A. 02-111 replaced former provisions with new Subsecs. (a), (b) and (c) re license requirements, licensee location and name, change of information and effectiveness of license and registration.

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Sec. 36a-516. (Formerly Sec. 36-224g). Records to be maintained by licensee. (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) For each loan that is made and serviced by a licensee, the licensee shall retain records of such loan transaction as required under subsection (a) of this section, for not less than two years following the final payment thereon, or the assignment of such loan, whichever occurs first, or such longer period as may be required by any other provision of law.

(c) 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 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.

(P.A. 77-228, S. 7; P.A. 78-216, S. 6, 7; P.A. 80-67, S. 4; P.A. 87-9, S. 2, 3; P.A. 88-14; P.A. 90-184, S. 4; P.A. 94-122, S. 244, 340; P.A. 02-111, S. 21.)

History: P.A. 78-216 revised requirements re records to be maintained in Subsec. (a); P.A. 80-67 authorized examination of books and records in Subsec. (b) and added Subsec. (c); (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 88-14 amended Subsec. (c) and added a new Subsec. (d) re record retention schedule; P.A. 90-184 amended Subsec. (a) by requiring records of secondary mortgage loan transactions to include the original or an exact copy of the contract or other evidence of indebtedness and the name and address of the broker, if any, involved in the transaction, and amended Subsec. (b) by authorizing a representative of the commissioner of banking to examine books and records of licensees; P.A. 94-122 deleted Subsec. (b) re examination of books and records, relettered Subsecs. (c) and (d) as Subsecs. (b) and (c) and made technical changes, effective January 1, 1995; Sec. 36-224g transferred to Sec. 36a-516 in 1995; P.A. 02-111 amended Subsec. (a) by specifying that records of each loan transaction shall be maintained and be made available at the place of business named in the license, adding "mortgage" in Subdivs. (1), (3) and (6) and "secondary mortgage" in Subdiv. (6) and by making technical changes, amended Subsec. (b) by extending record retention period for licensees who make or service loans from one to two years following final payment or assignment and by making technical changes, and amended Subsec. (c) by deleting reference to licensee acting as a broker and substituting "mortgage lender or secondary mortgage broker but does not service the loan" and by making technical changes.

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Sec. 36a-517. (Formerly Sec. 36-224h). Suspension, revocation or refusal to renew license or registration. (a)(1) The commissioner may suspend, revoke or refuse to renew any license, in accordance with section 36a-51, 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, 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 secondary mortgage loan transaction, including disclosures required by 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-510 to 36a-524, inclusive, 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.

(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, 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 sections 36a-50 and 36a-52.

(P.A. 77-228, S. 8; P.A. 80-67, S. 5; P.A. 82-174, S. 1, 14; P.A. 86-403, S. 76, 132; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 245, 340; P.A. 00-61, S. 3, 9; P.A. 02-111, S. 22; P.A. 04-69, S. 15.)

History: P.A. 80-67 specified that commissioner may suspend, revoke etc. license "for any reason which would be sufficient grounds for the commissioner to deny an application under this chapter" in Subsec. (a), specified "intentional" omission or failure to disclose information in Subdiv. (2) "including disclosures required by chapter 657 or regulations adopted thereto", added reference to chapters 647a, 657, 657a, 659 and 660 and substituted "adopted" for "promulgated" in Subdiv. (3) and added Subsec. (b); P.A. 82-174 amended Subsec. (b) by deleting a provision authorizing the commissioner to issue cease and desist orders and added Subsec. (c) containing new provisions re issuance of cease and desist orders; P.A. 86-403 amended Subsec. (a) to delete reference to Chapters 657a and 660 and to add reference to Secs. 46a-65 to 46a-67 and 46a-98; P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted Subsec. (c) re cease and desist provisions and made technical changes, effective January 1, 1995; Sec. 36-224h transferred to Sec. 36a-517 in 1995; P.A. 00-61 amended Subsec. (a)(4) by replacing "a written agreement" with "any agreement" and amended Subsec. (b) by adding language re licensee's failure to perform an agreement with a borrower, effective July 1, 2000; P.A. 02-111 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and, within said Subdiv., redesignating existing Subdivs. (1) to (4) as Subparas. (A) to (D), replacing "owner" with "proprietor", adding reference to misappropriated funds in Subpara. (B), replacing former statutory references with reference to "this title" and adding provision re other law or regulation applicable to the conduct of business in Subpara. (C) and adding reference to licensee in Subpara. (D), and by adding new Subdiv. (2) re commissioner's authority to suspend, revoke or refuse to renew registration of originator; P.A. 04-69 amended Subsec. (b) to allow commissioner to take action against violator or licensee in accordance with Sec. 36a-52.

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

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

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Sec. 36a-519. (Formerly Sec. 36-224j). Prepayment penalties. In any transaction subject to part III of chapter 669, no mortgage lender licensee shall impose any charge as a penalty for the prepayment of principal of a 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.

(P.A. 80-67, S. 6; P.A. 94-122, S. 246, 340; P.A. 02-111, S. 23; P.A. 03-61, S. 1.)

History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224j transferred to Sec. 36a-519 in 1995; P.A. 02-111 substituted "secondary" for "second"; P.A. 03-61 inserted "mortgage lender".

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Sec. 36a-520. (Formerly Sec. 36-224k). Release of secondary mortgage. Notice of loan balance. (a) Each licensee shall deliver to the mortgagor a release of a secondary mortgage: (1) Upon receipt by such licensee of cash or a certified check in the amount of the outstanding balance of the obligation secured by such mortgage; or (2) upon payment by the payor bank, as defined in section 42a-4-105, of any check 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 secondary mortgage granted to such licensee no later than the second business day after the licensee receives a request for such information.

(P.A. 80-67, S. 7; P.A. 02-111, S. 24.)

History: Sec. 36-224k transferred to Sec. 36a-520 in 1995; P.A. 02-111 substituted "secondary" for "second" in Subsecs. (a) and (b).

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Sec. 36a-521. (Formerly Sec. 36-224l)

CHAPTER 668 NONDEPOSITORY FINANCIAL INSTITUTIONS

PART I MORTGAGE LENDERS, BROKERS AND ORIGINATORS

CHAPTER 668
NONDEPOSITORY FINANCIAL INSTITUTIONS

PART I
MORTGAGE LENDERS, BROKERS AND ORIGINATORS