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.

      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".

      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".

      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.

      (d) It shall be considered a violation of section 36a-53a if a licensee files an application for registration of an originator with knowledge that such application contains a material misstatement by an originator.

      (P.A. 85-399, S. 4; P.A. 89-347, S. 11; P.A. 94-122, S. 232, 340; P.A. 99-36, S. 25; P.A. 02-111, S. 5; P.A. 06-45, S. 1.)

      History: P.A. 89-347 amended Subsec. (b) by inserting new Subdiv. (4) re the applicant's status as a lender or a broker and renumbered the remaining Subdiv.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440c transferred to Sec. 36a-488 in 1995; P.A. 99-36 made a technical change in Subsec. (a); P.A. 02-111 replaced former Subsec. (a) with new provisions re obtaining license as first mortgage lender, first mortgage correspondent lender or first mortgage broker and re obligation to notify commissioner if net worth falls below requisite net worth, amended Subsec. (b) to reflect commissioner's authority to issue first mortgage lender license, first mortgage correspondent lender license and first mortgage broker license and to revise application requirements and added new Subsec. (c) re application for registration of originator; P.A. 06-45 added Subsec. (d) to provide that filing application for registration of originator with knowledge that application contains a material misstatement by originator shall be a violation of Sec. 36a-53a, effective May 8, 2006.

      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 such application or in the application for registration of an originator, or files an application for registration of an originator with knowledge that such application contains a material misstatement by an originator, 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 such originator or the applicant has made a material misstatement in the application or that the financial responsibility, character, reputation, integrity and general fitness of such originator 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 such originator 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; P.A. 06-45, S. 2.)

      History: P.A. 89-347 extended the application of the section to mortgage brokers; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440d transferred to Sec. 36a-489 in 1995; P.A. 99-36 made technical changes; P.A. 02-111 designated existing provisions as Subsec. (a) and amended same by requiring commissioner to find that applicant meets requirements of Sec. 36a-488(a), providing that application requirements extend to "partners" in a partnership, and adding provisions re extending application requirements to "members if the applicant is a limited liability company", re denial of license application based on material misstatement in application, and re denial of application subject to provisions of Sec. 46a-80 and added Subsec. (b) re application for registration of originator; P.A. 04-69 substituted "36a-498a" for "36a-498"; P.A. 06-45 amended Subsec. (a) to require commissioner to deny application for license if commissioner finds that applicant made a material misstatement in application for registration of originator or files application for such registration with knowledge that application contains a material misstatement by originator, and amended Subsec. (b) to require commissioner to register originator named in application unless commissioner finds that originator has made a material misstatement in application and to make technical changes, effective May 8, 2006.

      Subsec. (a):

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

      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".

      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 and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. 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 each 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; P.A. 05-46, S. 2; P.A. 06-45, S. 3.)

      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; P.A. 05-46 amended Subsec. (a)(1) to provide that renewal application filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b); P.A. 06-45 amended Subsec. (a)(2) to delete proviso re prorated registration fee of fifty dollars for originator for application filed not earlier than one year before date license expires.

      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.

      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.

      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, misrepresented any of the material particulars of any first mortgage loan transaction or has violated any of the provisions of this title or of any regulations adopted pursuant to such title or any other law or regulation applicable to the conduct of such registrant's business.

      (b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-485 to 36a-498a, inclusive, or any regulation adopted pursuant thereto, or any licensee or registrant has failed to perform any agreement with a borrower, committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any mortgage loan transaction, including disclosures required by subdivision (6) of subsection (a) of section 36a-493, or part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information, the commissioner may take action against such person, licensee or registrant 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; P.A. 05-46, S. 3; P.A. 06-45, S. 4.)

      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; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensees and registrants who commit fraud, misappropriate funds or misrepresent, conceal, suppress, intentionally omit or otherwise intentionally fail to disclose any material particulars of mortgage loan transaction to anyone entitled to such information; P.A. 06-45 amended Subsec. (a)(2) to provide that violations of title 36a or regulations or any other law applicable to conduct of registrant's business are grounds for suspension, revocation or refusal to renew registration of originator, effective May 8, 2006.

      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.)

      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".

      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".

      Sec. 36a-498. (Formerly Sec. 36-440m). Refundability of advance fees. Exceptions. Prohibited acts by mortgage lenders and first mortgage brokers re borrowers. (a) Except as provided in subsection (c) of this section, every advance fee paid or given, directly or indirectly, to a mortgage lender 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.

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

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

      (P.A. 92-132, S. 4, 5; P.A. 94-122, S. 239, 340; P.A. 02-111, S. 14; P.A. 04-69, S. 10; P.A. 06-45, S. 5.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-440m transferred to Sec. 36a-498 in 1995; P.A. 02-111 replaced references to "mortgage broker" with references to "first mortgage broker" throughout, added new Subsec. (b) re acceptance of advance fee by originator, redesignated existing Subsecs. (b) to (d) as Subsecs. (c) to (e) and made technical changes throughout; P.A. 04-69 amended Subsecs. (a) and (b) to substitute "36a-498a" for "36a-498"; P.A. 06-45 added Subsec. (f) to prohibit mortgage lenders and first mortgage brokers from entering into agreements with borrowers to compensate licensees for fees, commissions or other valuable consideration lost if borrowers fail to close loan unless compensation is collected as advance fee and to prohibit first mortgage brokers from imposing fees, commissions or other valuable consideration on borrowers for prepayment of principal of loan, effective May 8, 2006.

      Sec. 36a-498a. Prepaid finance charges; when prohibited. No licensee under section 36a-489 and no person exempt from licensure under subdivisions (1), (2), (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; P.A. 06-45, S. 6.)

      History: P.A. 04-69 substituted Subdiv. "(7)" for "(6)" in definition of "prepaid finance charge"; P.A. 06-45 included in prohibition against lenders charging borrowers excessive prepaid finance charges, persons making five or fewer first mortgage loans within any period of twelve consecutive months, effective May 8, 2006.

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

(B)*

SECONDARY MORTGAGE LENDERS, BROKERS AND ORIGINATORS

      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. P.A. 93-130 cited. Id. P.A. 93-130 Sec. 1(8) cited. Id.

      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.)

      History: P.A. 77-604 rephrased and relocated provision re beneficiaries of estate and deleted provision which had considered persons becoming subsequent holders of mortgage or promissory notes received in connection with secondary mortgage loans in ordinary course of business to be engaged in the secondary mortgage loan business; P.A. 78-216 added "as a lender or a broker" re engaging in secondary mortgage loan business; P.A. 90-184 designated former section as Subsec. (a) and added Subsec. (b) re civil penalty for engaging in the secondary mortgage loan business without a license; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224b transferred to Sec. 36a-511 in 1995; P.A. 02-111 amended Subsec. (a) by changing "secondary mortgage loan business" to "business of making secondary mortgage loans", making technical changes, deleting provision re person not deemed to be engaging in the secondary mortgage loan business and adding provision re secondary mortgage correspondent lender not deemed to be acting as a secondary mortgage lender and added new Subsec. (b) re registration of originator, redesignating existing Subsec. (b) as Subsec. (c); P.A. 04-69 amended Subsec. (b) to substitute "36a-498a" for "36a-498".

      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.

      Sec. 36a-512. (Formerly Sec. 36-224c). Persons exempt from license requirement. The following are exempt from the licensing requirements of sections 36a-510 to 36a-524, inclusive: (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; (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, when making loans authorized by said sections; (9) persons licensed under sections 36a-485 to 36a-498a, inclusive, 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; (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.

      (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).

      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.

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

      (b) The commissioner may issue a secondary mortgage lender license, a secondary mortgage correspondent lender license or a secondary mortgage broker license. Each secondary mortgage lender licensee may also act as a secondary mortgage correspondent lender and a secondary mortgage broker, and each secondary mortgage correspondent lender licensee may also act as a secondary mortgage broker. Any application for a license or renewal of such license shall be under oath and on a form provided by the commissioner. The application shall 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 such application or in the application for registration of an originator, or files an application for registration of an originator with knowledge that such application contains a material misstatement by an originator, 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 such originator or the applicant has made any material misstatement in the application or that the financial responsibility, character, reputation, integrity and general fitness of such originator, 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 such originator 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.

      (f) It shall be considered a violation of section 36a-53a if a licensee files an application for registration of an originator with knowledge that such application contains a material misstatement by an originator.

      (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; P.A. 06-45, S. 7.)

      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; P.A. 06-45 amended Subsec. (c) to require commissioner to deny application for license if commissioner finds that applicant made a material misstatement in application for registration of originator or files application for such registration with knowledge that application contains a material misstatement by originator, amended Subsec. (e) to require commissioner to register originator named in application unless commissioner finds that originator has made a material misstatement in the application and to make technical changes, and added Subsec. (f) to provide that filing application for registration of originator with knowledge that application contains a material misstatement by originator shall be a violation of Sec. 36a-53a, effective May 8, 2006.

      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 and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. (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 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.

      (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; P.A. 05-46, S. 4; P.A. 06-45, S. 8.)

      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); P.A. 05-46 amended Subsec. (a)(1) to provide that a renewal application filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b); P.A. 06-45 amended Subsec. (b) to eliminate proviso re prorated registration fee of fifty dollars for originator for application filed not earlier than one year before date license expires.

      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.

      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.

      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, misrepresented any of the material particulars of any secondary mortgage loan transaction or has violated any of the provisions of this title or of any regulations adopted pursuant to such title or any other law or regulation applicable to the conduct of such registrant's business.

      (b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any of the provisions of sections 36a-510 to 36a-524, inclusive, or any licensee or registrant has failed to perform any agreement with a borrower, committed any fraud, misappropriated funds or misrepresented, concealed, suppressed, intentionally omitted or otherwise intentionally failed to disclose any of the material particulars of any mortgage loan transaction, including disclosures required by part III of chapter 669 or regulations adopted pursuant thereto, to anyone entitled to such information, the commissioner may take action against such person, licensee or registrant 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; P.A. 05-46, S. 5; P.A. 06-45, S. 9.)

      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; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensees and registrants who commit fraud, misappropriate funds or misrepresent, conceal, suppress, intentionally omit or otherwise intentionally fail to disclose any material particulars of mortgage loan transaction to anyone entitled to such information; P.A. 06-45 amended Subsec. (a)(2) to provide that violations of title 36a or regulations or any other law applicable to conduct of registrant's business are grounds for suspension, revocation or refusal to renew registration of originator, effective May 8, 2006.

      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.)

      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".

      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).

      Sec. 36a-521. (Formerly Sec. 36-224l). Limitation on prepaid finance charges. Demand for payment prior to maturity. Liability of mortgage lender to borrower for noncompliance. Refundability of advance fees. Exceptions. Prohibited acts by mortgage lenders and secondary mortgage brokers re borrowers. (a) No person engaged in the secondary mortgage loan business in this state as a mortgage lender, or a secondary mortgage broker, including any licensee under sections 36a-510 to 36a-524, inclusive, and any person who is exempt from licensing under section 36a-512, may (1) charge, impose or cause to be paid, directly or indirectly, in connection with any secondary mortgage loan transaction, prepaid finance charges that exceed in the aggregate eight per cent of the principal amount of the loan, or (2) include in the loan agreement under which prepaid finance charges have been assessed any provision which permits the mortgage lender to demand payment of the entire loan balance prior to the scheduled maturity, except that such loan agreement may contain a provision which permits the mortgage lender to demand payment of the entire loan balance if any scheduled installment is in default for more than sixty days or if any condition of default set forth in the mortgage note exists. For purposes of this section, "prepaid finance charge" has the meaning given to that term in section 36a-746a.

      (b) Any mortgage lender who fails to comply with the provisions of this section shall be liable to the borrower in an amount equal to the sum of: (1) The amount by which the total of all prepaid finance charges exceeds eight per cent of the principal amount of the loan; (2) eight per cent of the principal amount of the loan or two thousand five hundred dollars, whichever is less; and (3) the costs incurred by the borrower in bringing an action under this section, including reasonable attorney's fees, as determined by the court, provided no such mortgage lender shall be liable for more than the amount specified in this subsection in a secondary mortgage loan transaction involving more than one borrower.

      (c) Except as provided in subsection (e) of this section, every advance fee paid or given, directly or indirectly, to a mortgage lender or secondary mortgage broker required to be licensed pursuant to sections 36a-510 to 36a-524, inclusive, shall be refundable.

      (d) No originator required to be registered pursuant to sections 36a-510 to 36a-524, 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.

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

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

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

      (h) (1) No mortgage lender or secondary mortgage broker required to be licensed pursuant to sections 36a-510 to 36a-524, inclusive, shall enter into an agreement with or otherwise require any person to pay the mortgage lender or secondary mortgage broker for any fee, commission or other valuable consideration lost as a result of such person failing to consummate a secondary mortgage loan, provided the mortgage lender or secondary mortgage broker may collect such fee, commission or consideration as an advance fee subject to the requirements of this section.

      (2) No secondary mortgage broker required to be licensed pursuant to sections 36a-510 to 36a-524, inclusive, shall enter into an agreement with or otherwise require any person to pay the secondary mortgage broker any fee, commission or other valuable consideration for the prepayment of the principal of a secondary mortgage loan by such person before the date on which the principal is due.

      (P.A. 83-460, S. 1-3; P.A. 84-69, S. 1, 3; P.A. 90-184, S. 5; P.A. 91-306, S. 6; P.A. 92-132, S. 2, 5; P.A. 93-130, S. 2, 3; P.A. 01-34, S. 14; P.A. 02-12, S. 3; 02-111, S. 25; P.A. 03-61, S. 2; P.A. 06-45, S. 10.)

      History: P.A. 84-69 repealed section 2 of public act 83-460, which was originally slated for codification as Subsec. (b) of this section, and incorporated its language in section 1 of public act 83-460, i.e., this section, by amendment; P.A. 90-184 designated former section as Subsec. (a), provided that limitation on charges and restriction on demand for payment prior to maturity applies to any person engaged in the secondary mortgage loan business in this state as a lender or a broker, and added Subsec. (b) re liability of lender to borrower for noncompliance with provisions of section; P.A. 91-306 amended Subsec. (a) by adding broker's fees or commissions for which the borrower may be obligated to the limitation on fees and charges in Subdiv. (1); P.A. 92-132 added Subsecs. (c) to (f), inclusive, concerning the refundability of advance fees; P.A. 93-130 decreased from "ten" to "eight" the amount by which the total of all loan fees, points, commissions, transaction fees, other prepaid finance charges and broker's fees and commission exceed the principal amount of the loan, effective July 1, 1993; Sec. 36-224l transferred to Sec. 36a-521 in 1995; (Revisor's note: In 1997 a reference in Subsec. (a) to "sections 36a-510 to 361-524," was changed editorially by the Revisors to "sections 36a-510 to 36a-524," thereby correcting a clerical error which occurred during the preparation of the 1995 revision); P.A. 01-34 amended Subsec. (a) by excepting time-price differential from list of fees; P.A. 02-12 amended Subsec. (a) by deleting "as an incident to or a condition of the extension of credit" and added "connection with", deleting "any loan fees, points, commissions, transaction fees or similar prepaid finance charges determined in accordance with sections 36a-675 to 36a-685, inclusive, and regulations adopted thereunder, except the time-price differential, which, when added to any broker's fee or commission for which the borrower may be obligated," and added "prepaid finance charges that", adding "For purposes of this section, "prepaid finance charge" has the meaning given to that term in section 36a-746a." and making technical and conforming changes, effective April 22, 2002; P.A. 02-111 replaced references to "lender" and "broker" with references to "mortgage lender" and "secondary mortgage broker" throughout, amended Subsec. (c) by adding provisions re advance fee paid or given, directly or indirectly, to lender or broker required to be licensed, added new Subsec. (d) re acceptance of advance fee by originator, redesignated existing Subsecs. (d) to (f) as Subsecs. (e) to (g) and made technical changes throughout; P.A. 03-61 amended Subsec. (b)(1) by deleting "loan fees, points, commissions, transaction fees, other" and by deleting ", and secondary mortgage broker's fees and commissions"; P.A. 06-45 added Subsec. (h) to prohibit mortgage lenders and secondary mortgage brokers from entering into agreements with borrowers to compensate licensees for fees, commissions or other valuable consideration lost if borrowers fail to close loan unless compensation is collected as advance fee and to prohibit secondary mortgage brokers from imposing fees, commissions or other valuable consideration on borrowers for prepayment of principal of loan, effective May 8, 2006.

      Annotations to former section 36-224l:

      Cited. 223 C. 80.

      Subsec. (a):

      Cited. 27 CA 628.

      Annotations to present section:

      Cited. 41 CA 754. P.A. 93-130 cited. Id.

      Sec. 36a-522. (Formerly Sec. 36-224m). Mortgage deeds. Any mortgage deed to secure a secondary mortgage loan that is recorded in the land records of any town shall contain the word "Mortgage" in the heading, either in capital letters or underscored, and shall contain the principal amount of the loan.

      (P.A. 90-184, S. 6.)

      History: Sec. 36-224m transferred to Sec. 36a-522 in 1995.

      Sec. 36a-523. (Formerly Sec. 36-224n). Applications and referrals from unlicensed secondary mortgage brokers. No person engaged in the business of making secondary mortgage loans in this state, whether licensed in accordance with the provisions of sections 36a-510 to 36a-524, inclusive, or exempt from licensing, shall accept applications or referral of applicants from, or pay a fee to, any secondary mortgage broker who is required to be licensed under said sections but is not licensed to act as such by the commissioner, if the lender has actual knowledge that the broker is not licensed by the commissioner.

      (P.A. 91-306, S. 4; P.A. 94-122, S. 247, 340; P.A. 02-111, S. 26.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224n transferred to Sec. 36a-523 in 1995; P.A. 02-111 substituted "business of making secondary mortgage loans" for "secondary mortgage loan business", deleted "as a lender", and replaced reference to "broker" with reference to "secondary mortgage broker".

      Sec. 36a-524. (Formerly Sec. 36-224o). Advertisements. No person licensed pursuant to section 36a-513 shall:

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

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

      (P.A. 91-306, S. 5; P.A. 94-122, S. 248, 340; P.A. 99-63, S. 5; P.A. 02-111, S. 27.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224o transferred to Sec. 36a-524 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 "broker" with reference to "secondary mortgage broker".

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

(C)

GENERAL PROVISIONS

      Sec. 36a-534a. Notice of discriminatory lending practices. Violation as grounds for license suspension, revocation or nonrenewal. (a) Any first mortgage broker or mortgage lender, as defined in section 36a-485 and licensed pursuant to section 36a-486, and any secondary mortgage broker or mortgage lender, as defined in section 36a-510 and licensed pursuant to section 36a-511, shall notify the commissioner by written affidavit if any such broker or lender, as a result of a transaction in which such broker or lender was involved, reasonably believes that the lending practices of a financial institution or federal bank violate section 36a-737 or 46a-66. Such broker or lender shall provide the commissioner with any written document containing lending restrictions which a financial institution or federal bank has provided to such broker or lender. In the event the commissioner finds that there is a reasonable basis for said notification, the commissioner shall notify the Commission on Human Rights and Opportunities of said notification and the action the commissioner plans to take with respect thereto.

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

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

      History: P.A. 99-36 made technical changes; P.A. 02-111 amended Subsec. (a) by adding references to "first" mortgage broker, "secondary mortgage" broker and "mortgage" lender and made a technical change in Subsec. (b).

PART II*
FINANCE COMPANIES

      Sec. 36a-535. (Formerly Sec. 36-254). Definitions. As used in sections 36a-535 to 36a-546, inclusive, unless the context otherwise requires:

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

      (2) "Sales finance company" means any person engaging in this state in the business, in whole or in part, of acquiring retail installment contracts from retail sellers, or installment loan contracts from the holders thereof, by purchase, discount or pledge, or by loan or advance to the holder of either on the security thereof, or otherwise, but does not include a bank, out-of-state bank, Connecticut credit union, federal credit union, or out-of-state credit union, if so engaged.

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

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

      Sec. 36a-536. (Formerly Sec. 36-255). License required. No person, unless excluded from the definition of a "sales finance company" as provided in section 36a-535, shall engage in the business of a sales finance company unless licensed as provided in sections 36a-535 to 36a-546, inclusive. A licensee under said sections shall not be required to obtain any other license in this state in order to perform any act permitted or required to be performed by such licensee under said sections.

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

      History: P.A. 81-128 eliminated reference to repealed Subsec. (h) of Sec. 36-254 and clarified licensing exemption; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-255 transferred to Sec. 36a-536 in 1995.

      Sec. 36a-537. (Formerly Sec. 36-256a). Application. The application for a license as a sales finance company shall be on a form prescribed by the commissioner, in writing and under oath, together with such exhibits and other pertinent information as the commissioner may require.

      (1967, P.A. 631, S. 1; P.A. 77-614, S. 161, 610; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 251, 340.)

      History: P.A. 77-614 replaced bank commissioner with banking commissioner, effective January 1, 1979; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 94-122 changed "commissioner of banking" to "commissioner", effective January 1, 1995; Sec. 36-256a transferred to Sec. 36a-537 in 1995.

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

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

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

      Sec. 36a-539. (Formerly Sec. 36-257). License fee. Automatic suspension of license. Notice. Opportunity for hearing. (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, 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, 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.

      (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 shall be nonrefundable.

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

      History: 1959 act increased fees by 50%; 1967 act added provision requiring applicant to pay fee for period ending June thirtieth next succeeding the issuance of license and specifying that fee will be returned if application is denied or withdrawn, retaining fee amounts and dates as before; P.A. 73-392 increased one hundred fifty and seventy-five dollars fees previously in effect to two hundred and one hundred dollars, respectively; P.A. 88-150 amended the section by providing that the license fee is nonrefundable, increasing the fee to two hundred dollars and adding the provision re expiration of licenses on June thirtieth; P.A. 92-89 increased the license fee from two hundred to four hundred dollars; P.A. 94-104 added a one-hundred-dollar processing fee for a person whose license expired within sixty days of his application; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-257 transferred to Sec. 36a-539 in 1995; P.A. 96-71 deleted "nonrefundable" in Subsec. (a) and added Subsec. (b) to make all fees required by this section and section 36a-542 nonrefundable, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by providing that the license fee for "sales finance company" license is eight hundred dollars, provided if application is filed not earlier than one year before the expiration date of license, fee is four hundred dollars, adding provision re license that is renewed effective July 1, 2003, shall expire on September 30, 2005, and adding provision re licenses issued pursuant to Secs. 36a-535 to 36a-546, inclusive, shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance; P.A. 04-69 inserted new Subsec. (b), requiring commissioner to automatically suspend license if commissioner determines that a check filed to pay the license fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (b) as Subsec. (c).

      Sec. 36a-540. (Formerly Sec. 36-258). License. Each license shall specify the location at which the business is to be conducted. Each license shall be maintained at the location for which it was issued and shall be available for public inspection. Such license shall not be transferable or assignable. Any change of location of a licensee shall require only prior written notice to the commissioner. No licensee shall use any name other than the name specified on the license issued by the commissioner.

      (1949 Rev., S. 5964 (4); 1957, P.A. 356, S. 2; P.A. 02-111, S. 30.)

      History: Sec. 36-258 transferred to Sec. 36a-540 in 1995; P.A. 02-111 replaced former provisions with provisions re license to specify location at which business is conducted, license maintenance and availability for public inspection, license not transferable or assignable, notice to commissioner of change of location and licensee's use of specified name.

      Sec. 36a-541. (Formerly Sec. 36-259a). Authority of commissioner to issue license or deny application for license. If the commissioner finds, upon the filing of an application for a license as a sales finance company, that the financial responsibility, character, reputation, integrity and general fitness of the applicant and of the partners thereof if the applicant is a partnership, of the members if the applicant is a limited liability company or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated soundly and efficiently, in the public interest and consistent with the purposes of sections 36a-535 to 36a-546, inclusive, the commissioner may thereupon issue the applicant the license. If the commissioner fails to make such findings, or if the commissioner finds that the applicant has made any material misstatement in the application, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80.

      (1967, P.A. 631, S. 3; P.A. 94-122, S. 254, 340; P.A. 02-111, S. 31.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-259a transferred to Sec. 36a-541 in 1995; P.A. 02-111 replaced former Subsecs. (a) and (b) with provisions re findings, issuance of license and denial of application.

      Sec. 36a-542. (Formerly Sec. 36-259b). Renewal of license. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (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 and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182.

      (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.

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

      History: P.A. 74-235 raised fee from one hundred fifty to two hundred dollars; P.A. 94-104 changed fee to nonrefundable fee, increased the fee from two to four hundred dollars and added a one-hundred-dollar late fee; P.A. 94-122 changed "him" to "the commissioner", effective January 1, 1995; Sec. 36-259b transferred to Sec. 36a-542 in 1995; P.A. 96-71 substituted "license fee" for "nonrefundable fee", effective July 1, 1996; P.A. 02-111 changed time for filing renewal application to on or before September first of year in which the license expires or, in the case of a license that expires on June 30, 2003, on or before June 1, 2003, revising dates constituting untimely filing accordingly, increased license fee to eight hundred dollars, and added provision re nine-hundred-dollar fee for license that expires on June 30, 2003; P.A. 04-69 designated existing provisions as Subsec. (a) and added new Subsec. (b) requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay the fee for a renewal application has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51; P.A. 05-46 amended Subsec. (a) to provide that renewal application filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b).

      Sec. 36a-543. (Formerly Sec. 36-260a). Suspension, revocation or refusal to renew license. Enforcement powers of commissioner. (a) The commissioner may suspend, revoke or refuse to renew any sales finance company license, in accordance with section 36a-51, if the commissioner finds that: (1) The licensee, knowingly or without the exercise of due care to prevent such violation, has violated any provision of sections 36a-535 to 36a-546, inclusive, or of any other law regulating installment sales financing, or has failed to comply with any demand or requirement, made by the commissioner under and within the authority of sections 36a-535 to 36a-546, inclusive; or (2) there has been any material misstatement or failure to give a true reply to a question in the application for the license; or (3) the licensee has defrauded any retail buyer to the buyer's damage; or wilfully failed to perform any written agreement with any retail buyer; or (4) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner's denial of such license originally; or (5) in the case of a licensee other than a natural person, (A) any officer, director, trustee, member or partner of such licensee has been guilty of any act or omission which would be cause for revoking or suspending a license of such party as an individual; or (B) any other agent or employee of such licensee has been guilty of such act or omission and the licensee has approved or had knowledge thereof and, after such approval or knowledge, has retained the benefit, proceeds, profit or advantage of such act or omission or otherwise ratified it.

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

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

      (d) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-535 to 36a-546, inclusive, 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 sections 36a-50 and 36a-52.

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

      History: 1971 acts required appeal to return day between twelve and thirty days after service rather than to "next" or "next but one" return day after service and, effective September 1, 1971, replaced superior court with court of common pleas except that courts with cases pending retain jurisdiction unless pending matters deemed transferable; P.A. 74-254 repealed Subsec. (g) which had contained appeal provisions; P.A. 82-174 amended Subsec. (a) by authorizing the commissioner to "refuse to renew" a license and providing that after ten days written notice and allowing the licensee a reasonable opportunity to be heard the commissioner may suspend, revoke or refuse to renew a license repealing former Subsec. (b) re mandatory hearing prior to revocation or suspension; P.A. 92-12 redesignated Subsecs. and made technical changes; P.A. 93-194 amended Subsec. (c) re effectiveness of a surrender of any license by a licensee when the commissioner has instituted a proceeding to suspend, revoke or refuse to renew such license, effective June 23, 1993; P.A. 94-122 deleted Subsec. (c) re surrender of licenses, relettered former Subsecs. (d) and (e) as Subsecs. (c) and (d), deleted Subsec. (f) re investigating complaints of violations by licensees, added new Subsec. (e) re enforcement actions against violators and made technical changes, effective January 1, 1995; Sec. 36-260a transferred to Sec. 36a-543 in 1995; P.A. 02-111 amended Subsec. (a) by adding provision re "sales finance company" license, changing "refusal to issue" to "denial of" such license, and adding "member" in Subdiv. (5)(A), amended Subsec. (b) to change "place of business" to "location", deleted former Subsec. (d) re rules and redesignated existing Subsec. (e) as Subsec. (d); P.A. 04-69 amended Subsec. (d) to allow commissioner to take action against violator or licensee in accordance with Sec. 36a-52 and added provision authorizing action whenever it appears that any licensee has defrauded any retail buyer to the buyer's damage or wilfully failed to perform any written agreement with any retail buyer.

      Sec. 36a-544. (Formerly Sec. 36-260b). Regulations. (a) The commissioner may adopt regulations, in accordance with chapter 54, as necessary to carry out the provisions of sections 36a-535 to 36a-546, inclusive, including the defining of any terms, whether or not used in said sections, so far as the definitions are not inconsistent with the provisions of said sections.

      (b) No regulation may be adopted under this section unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of purchasers and consistent with the purposes fairly intended by the policy and provisions of sections 36a-535 to 36a-546, inclusive.

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

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-260b transferred to Sec. 36a-544 in 1995.

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

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

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

      Sec. 36a-546. (Formerly Sec. 36-263). Penalty. Any individual, corporation, partnership, limited partnership, association or other unincorporated enterprise, and any responsible officer, partner or employee thereof, who wilfully fails to comply with or violates any of the provisions of sections 36a-535 to 36a-545, inclusive, or who engages in business as a sales finance company without being licensed as a sales finance company by the commissioner in accordance with the provisions of said sections, shall be fined not more than five hundred dollars or imprisoned not more than six months or both.

      (1949 Rev., S. 5968.)

      History: Sec. 36-263 transferred to Sec. 36a-546 in 1995.

      Annotation to former section 36-263:

      Cited. 139 C. 425.

      Secs. 36a-547 to 36a-554. Reserved for future use.

PART III*
SMALL LOAN LENDERS

      Sec. 36a-555. (Formerly Sec. 36-225). Loan business to be licensed. 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, unless licensed to do so by the commissioner pursuant to sections 36a-555 to 36a-573, inclusive. 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-498a, inclusive, when making first mortgage loans, as defined in section 36a-485, (9) a mortgage lender licensed pursuant to sections 36a-510 to 36a-524, inclusive, when making secondary mortgage loans, as defined in section 36a-510, or (10) a licensed pawnbroker.

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

      History: 1963 act increased limit from six hundred to one thousand dollars and added reference to charge or consideration in provision re twelve per cent interest; 1969 act increased limit to one thousand eight hundred dollars and deleted reference to loans of "goods or things in action"; P.A. 77-129 increased limit to five thousand dollars; P.A. 77-183 authorized loans by building or savings and loan associations and wholly owned subsidiary service corporations; P.A. 78-121 included federal credit unions, deleted private bankers and referred to savings and loan associations rather than "building or" savings and loan associations in authority to make loans; P.A. 78-303 replaced banking commission with banking commissioner in keeping with requirements of P.A. 77-614 which repealed the commission; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 88-65 deleted a reference to industrial banks; P.A. 89-338 increased the limit from five thousand to ten thousand dollars for loans made under Sec. 36-233b, clarified that the section applies to out-of-state institutions and added the exception for entities making loans for agricultural, commercial, industrial or governmental use or extending credit through certain open-end credit plans; P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-225 transferred to Sec. 36a-555 in 1995; P.A. 97-13 increased limit from five thousand to fifteen thousand dollars for loans made under Sec. 36a-563, deleted reference to limit of ten thousand dollars for loans made under Sec. 36a-565, and made reference to limit of fifteen thousand dollars applicable to loans made under Sec. 36a-565 to conform to existing provisions of Sec. 36a-565; P.A. 98-264 added exceptions for licensed nondepository first mortgage lenders and secondary mortgage lenders and made technical changes; P.A. 02-111 amended Subdiv. (8) by deleting "nondepository first" and amended Subdiv. (9) by deleting "secondary"; P.A. 04-69 made technical changes, and amended Subdiv. (8) by substituting "36a-498a" for "36a-498" and inserting "when making first mortgage loans, as defined in section 36a-485", and amended Subdiv. (9) by inserting "when making secondary mortgage loans, as defined in section 36a-510".

      Annotation to former section 36-225:

      Cited. 149 C. 158.

      Sec. 36a-556. (Formerly Sec. 36-226). Requirements for granting license. Authority of commissioner to deny application for license. Upon the filing of the required application and license fee, the commissioner shall investigate the facts and, if the commissioner finds that (1) the experience, character and general fitness of the applicant, and of the members thereof if the applicant is a partnership, limited liability company or association, and of the officers and directors thereof if the applicant is a corporation, are satisfactory, (2) a license to such applicant will be for the convenience and advantage of the community in which the applicant's business is to be conducted and (3) the applicant has the capital investment required by this section, the commissioner shall issue a license to the applicant to make loans in accordance with sections 36a-555 to 36a-573, inclusive. If the commissioner fails to make such findings or finds that the applicant made a material misstatement in the application, the commissioner shall not issue a license and shall notify the applicant of the denial and the reasons for such denial. Any denial of an application by the commissioner shall, when applicable, be subject to the provisions of section 46a-80. The capital investment shall be not less than twenty-five thousand dollars for each licensed location in a city or town with a population of ten thousand or more inhabitants and ten thousand dollars for each licensed location in a city or town with a smaller population. Population shall be determined according to the last United States census at the time a license is granted.

      (1949 Rev., S. 5940; 1949, S. 2756d; P.A. 78-303, S. 51, 136; P.A. 87-9, S. 2, 3; P.A. 91-357, S. 52, 78; P.A. 92-12, S. 66; P.A. 94-122, S. 259, 340; P.A. 02-111, S. 35.)

      History: P.A. 78-303 specified commissioner referred to in section as banking commissioner and substituted banking commissioner for banking commission elsewhere in section in keeping with P.A. 77-614 which repealed the banking commission; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 91-357 made technical changes; P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-226 transferred to Sec. 36a-556 in 1995; P.A. 02-111 deleted provisions re public notice, added "limited liability company" in Subdiv. (1), added provisions re commissioner's authority to deny application for license, changed "place of business" to "location", and deleted provisions re maintenance of capital investment and exception.

      Sec. 36a-557. (Formerly Sec. 36-227). Application. An application for such license shall be in writing, under oath and in the form prescribed by the commissioner.

      (1949 Rev., S. 5938; 1949, S. 2754d; P.A. 94-122 S. 260, 340; P.A. 02-111, S. 36.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-227 transferred to Sec. 36a-557 in 1995; P.A. 02-111 deleted provisions re content of application.

      Sec. 36a-558. (Formerly Sec. 36-228). Fees. Examination expenses. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (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 and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. 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.

      (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.

      (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.

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

      History: P.A. 88-150 specified that the license fee is nonrefundable and added the provision re expiration of licenses on June thirtieth; P.A. 92-89 increased the license fees from two hundred 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; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-228 transferred to Sec. 36a-558 in 1995; P.A. 96-71 amended Subsec. (a) to delete "nonrefundable" modifying "license fee" and added Subsec. (b) to make all fees required by this section nonrefundable, effective July 1, 1996; P.A. 02-111 amended Subsec. (a) by providing that license fee for "small loan lender" license is eight hundred dollars, provided if application is filed not earlier than one year before the expiration date of license, fee is four hundred dollars, by adding provision re license that is renewed effective July 1, 2003, shall expire on September 30, 2005, by adding provisions re expiration of license at the close of business on September thirtieth of the odd-numbered year following its issuance, renewal fee of eight hundred dollars and exceptions for licenses that expire on June 30, 2003, and by making conforming and technical changes; P.A. 04-69 inserted new Subsec. (b), requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsec. (b) as Subsec. (c); P.A. 05-46 amended Subsec. (a) to provide that renewal application filed with commissioner after September first, accompanied by late fee, shall be deemed to be timely and sufficient for purposes of Sec. 4-182(b).

      Sec. 36a-559. (Formerly Sec. 36-229). Miscellaneous license provisions. No license shall be assignable nor shall any license be transferable to cover a place of business not located in either the same or an adjacent city or town. Any change in a licensee's place of business either within the same or to an adjacent city or town shall be in accordance with section 36a-562. The license shall be kept conspicuously posted in the place of business of the licensee. Every license shall remain in force and effect until the same has been surrendered, revoked or suspended, or has expired in accordance with the provisions of sections 36a-555 to 36a-573, inclusive. Any license which is revoked or suspended shall be immediately surrendered to the commissioner. If any change occurs in the personnel of the partners, principals, directors, officers or managers of any licensee, the licensee shall forthwith notify the commissioner, and the commissioner may require a statement under oath giving such information as the commissioner may reasonably require with respect to such change.

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

      History: P.A. 84-32 permitted a license to be transferred to cover a place of business located in an adjacent city or town; P.A. 94-122 changed "he" to "the commissioner", effective January 1, 1995; Sec. 36-229 transferred to Sec. 36a-559 in 1995; P.A. 06-35 required that change in licensee's place of business be in accordance with Sec. 36a-562 and provided that license shall remain in force and effect until expiration, effective May 8, 2006.

      Sec. 36a-560. (Formerly Sec. 36-230). Separate license for each place of business. No licensee shall make any loan provided for by sections 36a-555 to 36a-573, inclusive, under any other name or at any other place of business than that named in the license. 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-555 to 36a-573, inclusive, as to each new license.

      (1949 Rev., S. 5943; P.A. 78-303, S. 52, 136; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 262, 340.)

      History: P.A. 78-303 replaced banking commission with banking commissioner in keeping with provisions of P.A. 77-614; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-230 transferred to Sec. 36a-560 in 1995.

      Sec. 36a-561. (Formerly Sec. 36-231). Conduct of business in association with other business. No licensee shall conduct the business of making loans under the provisions of sections 36a-555 to 36a-573, inclusive, in association or conjunction with any other type of business or within any office or room where any other type of business is solicited or engaged in, except as may be authorized in writing by the commissioner upon being satisfied that such other business is of such a character that the granting of such authority would not permit or easily facilitate evasions of the provisions of sections 36a-555 to 36a-573, inclusive, or of any regulations adopted under section 36a-570.

      (1949 Rev., S. 5948 (1); P.A. 94-122, S. 263, 340.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-231 transferred to Sec. 36a-561 in 1995.

      Sec. 36a-562. (Formerly Sec. 36-232). Change of location. Prior to changing a licensee's place of business either within the same city or town or to an adjacent city or town, the licensee shall apply to the commissioner, who shall investigate the facts and, if the commissioner finds (1) that allowing the licensee to engage in business in the proposed location is not detrimental to the convenience and advantage of the community, and (2) that the proposed location is reasonably accessible to borrowers under existing loan contracts, the commissioner shall approve the change. If the commissioner does not so find, the commissioner shall deny the application.

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

      History: P.A. 84-32 permitted a licensee to change his place of business to an adjacent city or town with the approval of the banking commissioner; P.A. 92-12 made technical changes; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-232 transferred to Sec. 36a-562 in 1995; P.A. 06-35 required licensees to apply to commissioner prior to changing place of business within the same city or town or to an adjacent city or town, rather than giving written notice of change to commissioner, and made technical and conforming changes, effective May 8, 2006.

      Sec. 36a-563. (Formerly Sec. 36-233). Charges. Loan restrictions. (a) Every licensee under sections 36a-555 to 36a-573, inclusive, may loan any sum of money not exceeding fifteen thousand dollars, excluding charges, and may charge, contract for and receive thereon charges at a rate not to exceed the following: (1) On any loan which does not exceed one thousand eight hundred dollars, excluding charges, or on any unsecured loan or on any loan secured only by credit life insurance, seventeen dollars per one hundred dollars on that part of the cash advance, not exceeding six hundred dollars, and eleven dollars per one hundred dollars on any remainder when the loan is made payable over a period of one year, and proportionately at those rates over a longer or shorter term of loan; (2) on a loan which exceeds one thousand eight hundred dollars, excluding charges, and which is secured by property other than credit life insurance, eleven dollars per one hundred dollars on the entire cash advance when the loan is made payable over a period of one year, and proportionately at that rate over a longer or shorter term of loan. Such charges shall be computed at the time the loan is made on the full amount of the cash advance for the full term of the loan contract, notwithstanding any agreement to repay the loan in installments. Such charges shall be added to the cash advance and the resulting sum may become the face amount of the note. All payments made on account of any loan, except those applied to default and deferment charges, shall be deemed to be applied to the unpaid installments in the order in which they are due.

      (b) For the purpose of computations, whether at the maximum rate or less, a month shall be that period of time from any date in one month to the corresponding date in the next month, but if there is no such corresponding date, then to the last day of the next month, and a day shall be considered one-thirtieth of a month when such computation is made for a fraction of a month. For loans originally scheduled to be repaid over a period of forty-eight months and fifteen days or less, the portion of the charges applicable to any particular monthly installment period, as originally scheduled or following a deferment, shall bear the same ratio to the total charges, excluding any adjustment made under subsection (c) of this section, as the balance scheduled to be outstanding during that monthly period bears to the sum of all the monthly balances scheduled originally by the contract of loan. For loans originally scheduled to be repaid over a period in excess of forty-eight months and fifteen days, the portion of the charges applicable to any particular monthly installment period, as originally scheduled or following a deferment, shall be the charges which would be incurred for that monthly installment period if the annual percentage rate disclosed to the borrower pursuant to sections 36a-675 to 36a-685, inclusive, were charged, by the actuarial method, on the disclosed amount financed and all payments were made according to schedule.

      (c) Notwithstanding the requirement in subsection (a), a borrower and licensee may agree that the first installment due date may be not more than fifteen days more than one month, and the charge for each day in excess of one month shall be one-thirtieth of the portion of the charges applicable to a first installment period of one month. The charges for the extra days shall be added to the first installment, but shall be excluded in computing deferment charges and refunds. When a loan contract provides for extra days in a first installment period, for the purposes of sections 36a-555 to 36a-573, inclusive, such extra days shall be treated as the first days in the first installment period and the due dates of the remaining installments shall be calculated from the due date of such first installment.

      (d) If any installment remains unpaid for ten or more consecutive days, including Sundays and holidays, after it is due, the licensee may charge and collect a default charge not exceeding the lesser of seven dollars and fifty cents or five cents per dollar, or fraction thereof, of such scheduled installment, except a minimum default charge of three dollars may be charged and collected. Default charges may be collected when due or at any time thereafter, but may not be accumulated until the last payment date.

      (e) If, as of an installment due date, the payment date of all wholly unpaid installments is deferred one or more full months and the maturity of the contract is extended for a corresponding period, the licensee may charge and collect a deferment charge not exceeding the charge applicable to the first of the installments deferred, multiplied by the number of months in the deferment period. The deferment period is that period during which no payment is made or required by reason of such deferment, except that no deferment made pursuant to this subsection shall extend the maturity of any contract made under sections 36a-555 to 36a-573, inclusive, for more than (1) three months, for loans originally repayable in twenty-four months or less, (2) five months, for loans originally repayable in more than twenty-four months but not more than forty-eight months, and (3) eight months, for loans originally repayable in more than forty-eight months. The deferment charge may be collected at the time of deferment or at any time thereafter. The portion of the charges contracted for under subsection (a) applicable to each deferred balance and installment period following the deferment period shall remain the same as that applicable to such balance and period under the original contract of loan. No installment on which a default charge has been collected, or on account of which any partial payment has been made, shall be deferred or included in the computation of the deferment charge unless such default charge or partial payment is refunded to the borrower or credited to the deferment charge. Any payment received at the time of deferment may be applied first to the deferment charge and the remainder, if any, applied to the unpaid balance of the contract, but if such payment is sufficient to pay, in addition to the appropriate deferment charge, any installment which is in default and the applicable default charge, it shall be first so applied and any such installment shall not be deferred or subject to the deferment charge. If a loan is prepaid in full during the deferment period, the borrower shall receive, in addition to the refund required under subsection (f) of this section, a refund of that portion of the deferment charge applicable to any unexpired full month or months of such deferment period.

      (f) If the contract of loan is prepaid in full by cash, a new loan or otherwise, before the final installment date, the portion of the charges applicable to the full installment periods, as scheduled originally in the loan contract or as rescheduled by reason of any deferment made pursuant to sections 36a-555 to 36a-573, inclusive, following the date of prepayment shall be refunded or credited to the borrower. Where prepayment occurs on other than a monthly installment due date, it shall be deemed to have occurred on the preceding or succeeding installment due date nearest to the date of prepayment. Where prepayment occurs on a date midpoint between the preceding and succeeding monthly installment due dates, it shall be deemed to have occurred on the preceding monthly due date. In all cases where prepayment occurs before the first monthly installment due date, it shall be deemed to have occurred on the first monthly installment due date. If judgment is obtained before the final installment date, the judgment shall reflect the refund which would be required for prepayment in full as of the date judgment is obtained. No refund of less than one dollar or for partial prepayments need be made.

      (g) If part or all of the consideration for a loan contract is the unpaid balance, excluding default charges, of a prior loan with the same licensee, the cash advance under such new loan contract may include the balance of the prior contract which remains after giving the required refund.

      (h) In addition to the charges provided for by sections 36a-555 to 36a-573, inclusive, and service charges that are imposed for a check that is dishonored as provided in subsection (i) of section 52-565a, no further or other charge or amount for any examination, service, brokerage, commission or other thing, or otherwise, shall be directly or indirectly charged, contracted for or received. If interest or any other charges in excess of those permitted by said sections are charged, contracted for or received, except as the result of a bona fide error, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges. No person shall owe any licensee, as such, at any time more than fifteen thousand dollars for principal as a borrower, comaker or guarantor for loans made under said sections. No licensee shall induce or permit any borrower or borrowers to split or divide any loan or loans made under said sections, or permit any borrower to become obligated, directly or indirectly, under more than one contract of loan under said sections at the same time primarily for the purpose of obtaining a higher rate of charge than would otherwise be permitted by said sections. No contract made under said sections, except as deferred in accordance with subsection (e) of this section, shall provide for a greater rate of interest than twelve per cent per annum on the balance remaining unpaid twenty-four months and fifteen days after the date of making such contract if the original cash advance was one thousand dollars or less or thirty-six months and fifteen days if the original cash advance was in excess of one thousand dollars but not in excess of one thousand eight hundred dollars. No contract made under said sections with an original cash advance in excess of one thousand eight hundred dollars, except as deferred in accordance with subsection (e) of this section, shall provide for a greater rate of interest than twelve per cent per annum on the balance remaining unpaid on the scheduled maturity date of said contract. No part of the principal balance remaining unpaid by a borrower twenty-four months and fifteen days after making such contract where the original cash advance was one thousand dollars or less or thirty-six months and fifteen days where the original cash advance was in excess of one thousand dollars but not in excess of one thousand eight hundred dollars, shall directly or indirectly be renewed or refinanced by the lender who made such loan. If the maturity date of a loan made under said sections has been extended by deferred payments, the maximum renewal period that such loan may be extended shall be the number of months such loan is deferred. When a contract is renewed or refinanced prior to twenty-four months and fifteen days where the original cash advance was one thousand dollars or less or thirty-six months and fifteen days where the original cash advance exceeded one thousand dollars but did not exceed one thousand eight hundred dollars, from the date of making such contract, such renewal or refinancing shall, for the purposes of this section, be deemed a separate loan transaction.

      (i) Notwithstanding the provisions of subsection (a) of this section, on any loan secured by real property a licensee may include in the amount of the loan the following closing costs, provided such costs are bona fide, reasonable in amount and not assessed for the purpose of circumventing or otherwise limiting any applicable provision of sections 36a-555 to 36a-573, inclusive: (1) Fees or premiums for title examination, abstract of title, title insurance, surveys, or similar purposes; (2) appraisals, if made by a person who is not an employee or affiliated with the licensee, and (3) fees and taxes paid to public officials for the recording and release of any document related to the real estate security. A licensee may collect costs incurred in the event of foreclosure which shall not include any attorney's fee.

      (j) No agreement with respect to a loan under sections 36a-555 to 36a-573, inclusive, may provide for charges resulting from default by the borrower, other than those authorized by said sections.

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

      History: 1963 act incorporated previous provisions as Subsecs. (a) and (h) substituting "charges" for "interest" where occurring, raised loan limit in Subsec. (a) from six hundred to one thousand dollars "excluding charges" and changing method of calculating charges, raised limit in Subsec. (h) from six hundred to one thousand dollars, substituted twenty-four months and fifteen days for twenty months, deleted prohibition against granting additional loan to borrower until unpaid balance of previous loan is paid in full and required consideration of renewed or refinanced contract as separate loan transaction in same Subsec. and inserted Subsecs. (b) to (g); 1969 act increased loan limit in Subsecs. (a) and (h) to one thousand eight hundred dollars, raised amount charged on excess of three hundred dollars from nine to eleven dollars per hundred in Subsec. (a), specified applicability of provisions to loans under chapter in Subsec. (h) and made twenty-four month and fifteen day period applicable where cash advance was one thousand dollars or less and allowed thirty-six month and fifteen day period where advance exceeded that amount; P.A. 73-419 added provisions governing date when prepayment is deemed to have occurred in Subsec. (f); P.A. 75-99 raised loan limit in Subsecs. (a) and (h) from one thousand eight hundred to five thousand dollars and in Subsec. (a) made previous charge rates applicable to loans not exceeding former limit and added rates for other allowed loans, amending Subsec. (h) accordingly and adding reference to loans secured by real estate, replaced default charge of five cents per dollar with charge consisting of the lesser of five dollars or five cents per dollar and added Subsec. (i) authorizing loans in excess of one thousand eight hundred dollars if secured by real estate; P.A. 77-129 clarified loan limits in Subsec. (a) by referring to unsecured or secured loans and to types of security, made previous provisions of Subsec. (b) applicable to loans originally scheduled for repayment within forty-eight months and fifteen days and added provisions re loans with longer repayment period, deleted references to loans secured by real estate in Subsec. (h) and added provision which allowed extension of renewal period to the number of months loan maturity day has been extended through deferred payments and repealed Subsec. (i); P.A. 80-45 raised amount which determines charge rate in Subsec. (a)(1) from three hundred to six hundred dollars; P.A. 81-102 amended Subsec. (d) by increasing the maximum default charge from five dollars to seven dollars and fifty cents and establishing a minimum default charge of three dollars, and amended Subsec. (e) to make the length of the extension of the maturity of a contract subject to the original repayment period of the loan; P.A. 83-358 added Subsec. (j) concerning allowable closing costs on loans secured by real estate and added Subsec. (k) prohibiting unauthorized charges for default on any loan; P.A. 92-12 made technical changes; Sec. 36-233 transferred to Sec. 36a-563 in 1995; P.A. 97-13 increased limit from five thousand to fifteen thousand dollars in Subsecs. (a) and (h) and made technical changes (Revisor's note: A reference in Subsec. (a) to Secs. "36-555 to 36a-573", inclusive, was changed editorially by the Revisors to Secs. "36a-555 to 36a-573", inclusive); P.A. 00-164 amended Subsec. (h) by adding provision re service charges imposed for dishonored checks.

      See Sec. 36a-565 (j) re inapplicability of section to certain open-end loans.

      Annotations to former section 36-233:

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

      Cited. 149 C. 159.

      Subsec. (a):

      Cited. 201 C. 89.

      Sec. 36a-564. (Formerly Sec. 36-233a). "Cash advance" defined. As used in section 36a-563 and section 36a-568, "cash advance" means the cash or its equivalent received by the borrower or paid out on the borrower's behalf or at the borrower's direction or request.

      (1963, P.A. 175, S. 8; P.A. 94-122, S. 265, 340.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-233a transferred to Sec. 36a-564 in 1995.

      Sec. 36a-565. (Formerly Sec. 36-233b). Open-end loans. Annual percentage rate. Computation of interest. Loan charges. Credit life, accident and health insurance. (a) "Open-end loan" means a loan made by a licensee under sections 36a-555 to 36a-573, inclusive, pursuant to an agreement between the licensee and the borrower whereby: (1) The licensee may permit the borrower to obtain advances of money from the licensee from time to time or the licensee may advance money on behalf of the borrower from time to time as directed by the borrower, not exceeding at any one time an unpaid principal balance of fifteen thousand dollars; (2) the amount of each advance and permitted interest, charges and costs are debited to the borrower's account and payments and other credits are credited to the same account; (3) the interest is computed on the unpaid principal balance or balances of the account from time to time; (4) the borrower has the privilege of paying the account in full at any time or, if the account is not in default, in monthly installments of fixed or determinable amounts as provided in the agreement; and (5) the agreement expressly states that it covers open-end loans pursuant to said sections.

      (b) "Billing cycle" means the time interval between periodic billing dates. A billing cycle shall be considered monthly if the closing date of the cycle is the same date each month or does not vary by more than four days from such date.

      (c) A licensee may make open-end loans and may charge, contract for and receive thereon interest at an annual percentage rate not to exceed nineteen and eight-tenths per cent for any open-end loan agreement entered into on and after July 1, 1991. A licensee may also receive, pursuant to any such agreement entered into on and after July 1, 1991, one or more of the following charges if the agreement so provides: (1) An annual fee not to exceed fifty dollars for the privileges made available to the borrower under the open-end loan agreement; (2) a default charge subject to the conditions and restrictions set forth in subsection (d) of section 36a-563; (3) service charges that are imposed for a check that is dishonored as provided in subsection (i) of section 52-565a; and (4) reasonable attorneys' fees subject to the conditions and restrictions set forth in section 42-150aa. In addition to the charges provided for by this section, no further or other charge or amount for any examination, service, brokerage, commission or other thing, or otherwise, shall be directly or indirectly charged, contracted for or received. If interest or any charges in excess of those permitted by this section are charged, contracted for or received, except as the result of a bona fide error, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges. No person shall owe any licensee, as such, at any time more than fifteen thousand dollars for principal as a borrower, comaker or guarantor for loans made under this section. As used in this section, the term "bona fide error" includes, but shall not be limited to, clerical, calculation, computer malfunction and programming and printing errors, but does not include an error of legal judgment with respect to a person's obligations under sections 36a-555 to 36a-573, inclusive.

      (d) A licensee shall not compound interest or charges by adding any unpaid interest or charges authorized by this section to the unpaid principal balance of the borrower's account.

      (e) Interest authorized by this section shall be computed in each billing cycle by any of the following methods: (1) By converting the annual percentage rate to a daily rate and multiplying such daily rate by the daily unpaid principal balance of the account, in which case the daily rate is determined by dividing the annual percentage rate by three hundred and sixty-five; or (2) by converting the annual percentage rate to a monthly rate and multiplying the monthly rate by the average daily unpaid principal balance of the account in the billing cycle, in which case the monthly rate is determined by dividing the annual percentage rate by twelve and the average daily unpaid principal balance is the sum of the amount unpaid each day during the cycle divided by the number of days in the cycle.

      (f) For all of the methods of computation specified in subsection (e) of this section, the billing cycle shall be monthly and the unpaid principal balance on any day shall be determined by adding to any balance unpaid as of the beginning of that day all advances and other permissible amounts charged to the borrower and deducting all payments and other credits made or received that day.

      (g) Credit life insurance and credit accident and health insurance may be sold to the borrower on open-end loans subject to the conditions and restrictions set forth in section 36a-566. In the case of credit life insurance, the amount of the insurance shall be sufficient to pay the total balance of the loan due on the date of the insured's death. The additional charge for credit life insurance and credit accident and health insurance shall be calculated in each billing cycle by applying the current monthly premium rate for such insurance, as such rate may be determined by the Insurance Commissioner, to the unpaid balances in the account, using any of the methods specified in subsection (e) of this section for the calculation of loan charges. No credit life insurance or credit accident and health insurance written in connection with an open-end loan shall be cancelled by the licensee because of delinquency of the borrower in the making of the required minimum payments on the loan unless one or more of such payments is past due for a period of ninety days or more; and the licensee shall advance to the insurer the amounts required to keep the insurance in force during such period, which amounts may be debited to the borrower's account. The borrower shall have the right to cancel credit accident and health insurance at any time by giving written notice of cancellation to the licensee. Such cancellation shall be effective at the end of the billing cycle in which the notice is received and the licensee shall discontinue any further charges for credit accident and health insurance.

      (h) No licensee shall take any confession of judgment or any power of attorney. No licensee shall take a mortgage, lien, security interest in or assignment or pledge of household goods or assignment of wages as security for any open-end loan made pursuant to this section. No licensee shall take a security interest in chattels, tangible or intangible personal property, motor vehicles or real property to secure an open-end loan made pursuant to this section.

      (i) A copy of the open-end loan agreement shall be delivered by the licensee to the borrower at the time the open-end account is opened.

      (j) Sections 36a-563, 36a-567 and 36a-568 shall not apply to open-end loans made in accordance with the provisions of this section.

      (P.A. 79-249; P.A. 89-338, S. 2; P.A. 90-99, S. 1, 2; P.A. 91-25, S. 1, 2; P.A. 95-28; P.A. 96-38; P.A. 00-164, S. 2.)

      History: P.A. 89-338 increased the loan limit in Subsecs. (a) and (c) from five to ten thousand dollars and made one-hundred-twenty-month and fifteen-day payment period where a cash advance brought the balance in excess of five thousand dollars; P.A. 90-99 amended Subsec. (c) by defining "bona fide error" and amended Subsec. (h) by authorizing the sale of credit accident and health insurance on open-end loans and specifying borrowers right to terminate coverage; P.A. 91-25 amended Subsec. (a) by adding "interest" to Subdiv. (2) and changing "charges are" to read "interest is" in Subdiv. (3), amended Subsec. (c) by limiting interest on open-end loans to an annual percentage rate not to exceed nineteen and eight-tenths per cent and adding Subdivs. (1) to (4), inclusive, re permissible loan charges, amended Subsec. (d) by adding "interest or", amended Subsec. (e) by changing "charges" to read "interest" and made technical changes to Subdivs. (f) and (g); Sec. 36-233b transferred to Sec. 36a-565 in 1995; P.A. 95-28 changed "ten" to "fifteen" in Subsecs. (a)(1), defining "open-end loan", and (c), deleted Subsec. (g) re maximum term for full payment and re maximum specified annual percentage rates, and relettered Subsecs. (h) to (k), inclusive, as Subsecs. (g) to (j) (Revisor's note: A reference in Subsec. (g) to "Commissioner of Insurance" was changed editorially by the Revisors to "Insurance Commissioner" for consistency with customary statutory usage); P.A. 96-38 amended Subsec. (c)(1) to increase permitted annual fee from "thirty-five" to "fifty" dollars; P.A. 00-164 amended Subsec. (c)(3) by replacing language re bad check charge with language re service charges for dishonored check.

      Sec. 36a-566. (Formerly Sec. 36-234). Credit life and accident and health insurance. (a) Subject to the conditions provided in this section, insurance may be sold to the borrower at his request (1) for insuring the life of persons obligated on a loan pursuant to sections 38a-645 to 38a-658, inclusive, and (2) providing accident and health insurance covering one person on a loan pursuant to sections 38a-645 to 38a-658, inclusive. Credit accident and health insurance shall not provide indemnity against the risk of a borrower becoming disabled for a period of less than fourteen days, except that it may provide for retroactive coverage if the disability continues for the period stated in the policy. Irrespective of the number of obligors only one obligor may be insured, except that life insurance may cover both a borrower and such borrower's spouse where both are obligors on a loan. A licensee shall not require the purchasing of insurance as a condition precedent to the making of a loan. A licensee shall, both verbally and in writing, inform the borrower prior to his entering into any loan contract of his right not to purchase credit insurance. Any gain or benefit to the licensee directly or indirectly from such insurance or the sale or provision thereof shall not be deemed to be additional or further charges, interest or consideration in connection with a loan made under sections 36a-555 to 36a-573, inclusive, nor a charge in excess of that permitted by said sections.

      (b) If a borrower obtains credit accident and health insurance, the borrower shall have the right for a period of fifteen days after the loan is made to cancel the entire insurance coverage. Notification of this right shall be made in the borrower's insurance election. All persons obligated on the loan must agree in writing to the cancellation and return all certificates. Upon cancellation, the licensee shall, at his option, either refund the insurance charges to the borrower or apply them to the unpaid balance of the loan.

      (1957, P.A. 439, S. 5; 1959, P.A. 555; 1963, P.A. 175, S. 3; 1969, P.A. 242, S. 4; P.A. 79-134; P.A. 83-345, S. 1, 2.)

      History: 1959 act expanded and clarified insurance refund provisions; 1963 act clarified provision re amount of life insurance required; 1969 act deleted detailed provisions re insurance amounts, charges and refunds and specified that gain or benefit to licensee not deemed additional or excess charges; P.A. 79-134 added exception re coverage of married couple; P.A. 83-345 authorized the providing of accident and health insurance covering one person on a loan, required licensees to inform the borrower of his right not to purchase credit insurance and permitted borrowers to cancel any insurance coverage up to fifteen days after the loan is made; Sec. 36-234 transferred to Sec. 36a-566 in 1995.

      Sec. 36a-567. (Formerly Sec. 36-235). Prepayment of loan; receipts to borrower. Every licensee shall (1) permit payment of the loan in whole or in part prior to its maturity, and (2) upon repayment of the loan in full, mark indelibly each paper signed by the borrower with the word "paid" or "cancelled", and cancel and return any note or, in lieu thereof, transmit or deliver to the borrower a duplicate of the original document clearly identifying the loan, showing such loan has been paid in full and the note cancelled.

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

      History: 1963 act specified in Subdiv. (a) that only certain Subsecs. of Sec. 36-233 need be stated, and amended Subdiv. (b) to require receipt for cash payments only where previously receipt required for all forms of payments; 1969 act deleted former Subdivs. (a) and (b) which required delivery to borrower of statement containing amount owed, scheduled payments, etc. and receipts for cash payments, relettering accordingly; P.A. 92-12 made technical changes; P.A. 94-84 authorized returning to the borrower a duplicate of the original document clearly identifying the loan, showing such loan has been paid in full and the note cancelled; Sec. 36-235 transferred to Sec. 36a-567 in 1995.

      See Sec. 36a-565 (j) re inapplicability of section to certain open-end loans.

      Annotations to former section 36-235:

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

      Sec. 36a-568. (Formerly Sec. 36-236). Form of security restricted. Loan contract. No licensee shall take any confession of judgment or any power of attorney, nor shall he take any note or promise to pay that does not state the actual amount of the loan, the time for which it is made and the charges, or any instrument in which blanks are left to be filled after the loan is made. No licensee shall take a mortgage, lien, security interest in or assignment or pledge of household goods or an assignment of wages as security for any loan made under sections 36a-555 to 36a-573, inclusive. A licensee may take a security interest in chattels or personal property other than household goods, except a security interest in an automobile may not be taken as security for any loan where the cash advance is one thousand eight hundred dollars or less. A licensee may take a security interest in real estate on loans made under said sections where the cash advance is in excess of one thousand eight hundred dollars, but may not take such a security interest in real estate where the cash advance is one thousand eight hundred dollars or less. A contract for a loan under said sections shall not originally schedule any repayment of the cash advance over a period in excess of twenty-four months and fifteen days if the amount of the original cash advance was one thousand dollars or less or thirty-six months and fifteen days if the amount of the original cash advance was more than one thousand dollars but not in excess of one thousand eight hundred dollars or seventy-two months and fifteen days if the amount of the original cash advance was in excess of one thousand eight hundred dollars, and shall be repayable in installments of cash advance and charges combined which are substantially equal in amount or so arranged that no installment is substantially greater in amount than any preceding installment and which are payable at approximately equal intervals not exceeding one month, except that the first installment may be payable not more than one month and fifteen days after the date of such contract. The requirements of section 36a-785 shall apply to any repossession under sections 36a-555 to 36a-573, inclusive, of property other than real estate.

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

      History: 1963 act rephrased provisions and increased maximum repayment period from twenty months to twenty-four months and fifteen days and time for payment of first installment from forty-five days to one month and fifteen days; 1969 acts prohibited taking mortgage or lien except as authorized in Sec. 36-234, made previous repayment period applicable to loans not exceeding one thousand dollars and allowed thirty-six months and fifteen days for larger loans and deleted provision prohibiting licensee from taking any note or promise to pay which "does not state the actual amount of the loan, the time for which it is made and the charges" and from taking "any instrument in which blanks are left to be filled after the loan is made"; P.A. 75-99 specified conditions for taking security interest in real estate and stated that time for repayment of loan secured by real estate may not be restricted; P.A. 77-129 clarified use of chattels and personal property as loan security and deleted reference to security authorized in Sec. 36-234, allowed repayment period of seventy-two months and fifteen days in cases where cash advance exceeded one thousand eight hundred dollars, deleted statement that time for loan repayment where loan secured by real estate is not to be limited and added provision re applicability of Sec. 42-98 to repossession of property other than real estate; Sec. 36-236 transferred to Sec. 36a-568 in 1995.

      See Sec. 36a-564 re definition of "cash advance".

      See Sec. 36a-565(j) re inapplicability of section to certain open-end loans.

      Annotation to former section 36-236:

      Cited. 115 C. 105.

      Sec. 36a-569. (Formerly Sec. 36-237). Records. Reports to commissioner. Each licensee shall keep books and records at the place of business specified in the license in such form and in such manner as the commissioner prescribes and shall preserve all books, accounts and records, including cards used in the card system, if any, for at least two years after making the final entry recorded therein. Each such licensee shall, annually, on or before January thirtieth, furnish a sworn statement of the condition of the business of such licensee as of December thirty-first, together with such other information and statements as the commissioner may, from time to time, require. Each licensee which fails to furnish any such sworn statement or required information in connection with this section, shall pay to the state ten dollars for each day that such failure continues, unless excused by the commissioner for cause. The commissioner may, upon the failure of any such licensee to furnish such sworn statement or other information, after a hearing thereon, cancel the license of such licensee.

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

      History: 1971 act imposed ten-dollar penalty for each day that licensee fails to furnish required information or sworn statement; Sec. 36-237 transferred to Sec. 36a-569 in 1995.

      Sec. 36a-570. (Formerly Sec. 36-239). Regulations. The commissioner may adopt such regulations, in accordance with chapter 54, and make such findings as may be necessary for the conduct of the small loan business and the enforcement of the provisions of sections 36a-555 to 36a-573, inclusive.

      (1949 Rev., S. 5948 (3); P.A. 94-122, S. 266, 340.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-239 transferred to Sec. 36a-570 in 1995.

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

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

      Sec. 36a-572. (Formerly Sec. 36-242). Suspension, revocation or refusal to renew license. 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, 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.

      (1949 Rev., 5942; 1949, S. 2758d; P.A. 74-254, S. 5; P.A. 78-303, S. 53, 136; P.A. 94-122, S. 267, 340; P.A. 02-111, S. 38; P.A. 04-69, S. 21.)

      History: P.A. 74-254 required that notice be in form required in Sec. 4-177(b) rather than that it state "the contemplated action and in general the grounds therefor"; P.A. 78-303 deleted requirement that at least one member of banking commission (in addition to commissioner) find fact or condition which would warrant refusal to issue license as ground for revocation, that commission having been abolished by P.A. 77-614; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-242 transferred to Sec. 36a-572 in 1995; P.A. 02-111 deleted "has failed to pay annual license fee or" and changed "refusing to issue such license" to "a denial of such license"; P.A. 04-69 amended section to allow commissioner to suspend or refuse to renew a license.

      Sec. 36a-573. (Formerly Sec. 36-243). Charge of greater than legal interest. No person, except as authorized by the provisions of sections 36a-555 to 36a-573, inclusive, shall, directly or indirectly, charge, contract for or receive any interest, charge or consideration greater than twelve per cent per annum upon the loan, use or forbearance of money or credit of the amount or value of (1) five thousand dollars or less for any such transaction entered into before October 1, 1997, and (2) fifteen thousand dollars or less for any such transaction entered into on and after October 1, 1997. The provisions of this section shall apply to any person who, as security for any such loan, use or forbearance of money or credit, makes a pretended purchase of property from any person and permits the owner or pledgor to retain the possession thereof, or who, by any device or pretense of charging for the person's services or otherwise, seeks to obtain a greater compensation than twelve per cent per annum. No loan for which a greater rate of interest or charge than is allowed by the provisions of sections 36a-555 to 36a-573, inclusive, has been contracted for or received, wherever made, shall be enforced in this state, and any person in any way participating therein in this state shall be subject to the provisions of said sections, provided, a loan lawfully made after June 5, 1986, in compliance with a validly enacted licensed loan law of another state to a borrower who was not, at the time of the making of such loan, a resident of Connecticut but who has become a resident of Connecticut, may be acquired by a licensee and its interest provision shall be enforced in accordance with its terms.

      (1949 Rev., S. 5952; 1949, S. 2765d; 1957, P.A. 439, S. 4; 1963, P.A. 175, S. 7; 1969, P.A. 242, S. 7; P.A. 77-129, S. 7; P.A. 86-216, S. 1, 3; P.A. 94-122, S. 268, 340; P.A. 97-13, S. 3.)

      History: 1963 act included "charge" in provision re twelve per cent interest and raised applicable loan limit from six hundred to one thousand dollars; 1969 act raised limit to one thousand eight hundred dollars and deleted reference to loan, etc. of "goods or things in action"; P.A. 77-129 raised limit to five thousand dollars and added proviso re loans exceeding allowed interest rate or charge; P.A. 86-216 amended section to permit a licensed small loan company to enforce an interest provision against an out of state borrower who becomes a Connecticut resident, even if the interest rate exceeds the maximum rate permitted under Connecticut law; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-243 transferred to Sec. 36a-573 in 1995; P.A. 97-13 increased limit from five thousand to fifteen thousand dollars for loan transactions entered into on and after October 1, 1997.

      Annotations to former section 36-243:

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

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

PART IV
CHECK CASHING SERVICES

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

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

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

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

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

      History: Sec. 21-111 transferred to Sec. 36-564 in 1991; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-564 transferred to Sec. 36a-580 in 1995; P.A. 95-253 added the definitions of "general facility" and "limited facility" as Subsec. (a) and designated prior provisions as Subsec. (b), effective July 6, 1995; P.A. 05-192 amended Subsec. (b)(3) to substitute "bank" for "entity"; P.A. 06-35 amended Subsec. (b)(3) to exempt Connecticut credit unions from licensure as check cashing licensees and to make a technical change, effective May 8, 2006.

      Sec. 36a-581. (Formerly Sec. 36-565). License required. Application. (a) Except as provided for in section 36a-580, no person shall engage in the business of cashing checks, drafts or money orders for consideration without obtaining a license to operate a general facility or a license to operate a limited facility for each location where such business is to be conducted.

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

      (c) An application for a check cashing license or renewal of such license shall be in writing, under oath and on a form provided by the commissioner. The application shall set forth: (1) The name and address of the applicant; (2) if the applicant is a firm or partnership, the names and addresses of each member of the firm or partnership; (3) if the applicant is a corporation, the names and addresses of each officer, director, authorized agent and each shareholder owning ten per cent or more of the outstanding stock of such corporation; (4) if the applicant is a limited liability company, the names and addresses of each manager and authorized agent of such limited liability company; (5) each location where the check cashing business is to be conducted and the type of facility that will be operated at that location; (6) the business plan, which shall include the proposed days and hours of operation; (7) the amount of liquid assets available for each location which shall not be less than the amount specified in subdivision (7) of subsection (e) of this section; (8) for each limited facility, a copy of the executed contract evidencing the proposed arrangement between the applicant and the employer; and (9) any other information the commissioner may require.

      (d) A licensee shall not change the name or the location specified on its license unless, prior to such change in name or location, the licensee files an application with the commissioner accompanied by the applicable name change fee or location transfer fee specified in section 36a-582 and receives the approval of the commissioner. A licensee of a limited facility shall not change its approved days and hours of operation unless, prior to any such change, the licensee files an application with and receives the approval of the commissioner. No licensee shall use any name other than the name specified on the license issued by the commissioner.

      (e) Upon the filing of the required application and the applicable license and location fees, the commissioner shall investigate the facts and may issue a license if the commissioner finds that (1) the applicant is in all respects properly qualified and of good character, (2) if the applicant is a firm or partnership, each member of the firm or partnership is in all respects properly qualified and of good character, (3) if the applicant is a corporation, each officer, director, authorized agent and each shareholder owning ten per cent or more of the outstanding stock of such corporation is in all respects properly qualified and of good character, (4) if the applicant is a limited liability company, each manager and authorized agent is in all respects properly qualified and of good character, (5) granting such license would not be against the public interest, (6) the applicant has a feasible plan for conducting business, and (7) the applicant has available and shall continuously maintain liquid assets of at least ten thousand dollars for each general facility location and at least two thousand five hundred dollars for each limited facility location specified in the application.

      (f) An applicant or licensee shall promptly notify the commissioner, in writing, of any change in the information provided in its initial or renewal application for licensure or most recent renewal of such license.

      (P.A. 88-200, S. 2; P.A. 89-178, S. 2, 8; P.A. 91-11, S. 1; P.A. 94-122, S. 270, 340; P.A. 95-253, S. 13, 19; P.A. 04-14, S. 1; P.A. 05-46, S. 8; 05-288, S. 223; P.A. 06-35, S. 4.)

      History: P.A. 89-178 substituted the commissioner of banking for the commissioner of consumer protection in Subsec. (a); Sec. 21-112 transferred to Sec. 36-565 in 1991; P.A. 91-11 amended Subsec. (c) to insert Subdiv. indicators, adding provisions to require the commissioner, prior to issuing a license, to find a need in the community for the services to be provided by the applicant and that the applicant has a feasible business plan; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-565 transferred to Sec. 36a-581 in 1995; P.A. 95-253 amended Subsec. (a) to provide for separate licenses for general and limited facilities, added a new Subsec. (b) to require a licensee of a limited facility to maintain at least one general facility, relettered Subsec. (b) as (c) and amended Subsec. (c) by providing for the form of application and by adding Subdivs. (4) to (7), inclusive, re the contents of the application, added a new Subsec. (d) re change in location, in type of facility or in time of operation, relettered Subsec. (c) as (e) and amended Subsec. (e) by adding new Subdivs. (2) and (3) re applications by firms, partnerships or corporations, deleting former Subdiv. (3) re need for services, renumbering Subdivs. (4) and (5) as (5) and (6), respectively, and adding a fee for each limited facility in Subdiv. (6), effective July 6, 1995; P.A. 04-14 amended Subsec. (c) to insert new Subdiv. (4) requiring application to set forth the names and addresses of each manager and authorized agent if applicant is a limited liability company and to redesignate existing Subdivs. (4) to (8) as Subdivs. (5) to (9), respectively, amended Subsec. (d) to restate provisions and require approval of the commissioner for application for change in location, to provide that licensee of limited facility shall not change approved days and hours of operation unless licensee files application with and receives approval of commissioner, and to eliminate prohibition re change in the type of facility, amended Subsec. (e) to insert new Subdiv. (4) authorizing commissioner to issue license if commissioner finds that each manager and authorized agent is in all respects properly qualified and of good character if applicant is a limited liability company and to redesignate existing Subdivs. (4) to (6) as Subdivs. (5) to (7), respectively, and added Subsec. (f) requiring applicant or licensee to notify commissioner of any change in information provided; P.A. 05-46 amended Subsec. (d) to prohibit licensee from changing the name specified on license unless licensee files application, pays applicable name change fee specified in Sec. 36a-582 and receives approval of commissioner; P.A. 05-288 made a technical change in Subsec. (c)(7), effective July 13, 2005; P.A. 06-35 amended Subsec. (d) to prohibit licensee from using any name other than the name specified on the license issued by commissioner, and amended Subsec. (e) to delete reference to application fees and to insert reference to location fees.

      Sec. 36a-582. (Formerly Sec. 36-566). License and location fees. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. Expenses of examination. (a) Each applicant for a check cashing license shall pay to the commissioner a nonrefundable initial license fee of two thousand dollars and a nonrefundable location fee of two hundred dollars for each location, except that 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 nonrefundable initial license fee of one thousand dollars and a nonrefundable location fee of one hundred dollars for each location. Each licensee shall pay to the commissioner a nonrefundable (1) name change fee of one hundred dollars for each application to change a name, and (2) location transfer fee of one hundred dollars for each application to transfer a location. Each license issued pursuant to section 36a-581 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, 2007, shall expire on September 30, 2009, unless renewed. Each licensee shall, on or before September first of the year in which the license expires, pay to the commissioner a renewal license fee of one thousand five hundred dollars and a renewal location fee for each location of one hundred dollars for the succeeding two years, commencing October first. In the case of a license that expires on June 30, 2007, each licensee shall, on or before June 1, 2007, pay to the commissioner a renewal license fee of one thousand six hundred eighty-eight dollars and a renewal location fee of one hundred thirteen dollars. Any renewal application filed with the commissioner after September first, or in the case of a license that expires on June 30, 2007, after June 1, 2007, shall be accompanied by a one-hundred-dollar late fee and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. Each licensee shall file with the commissioner, not later than September first of each even-numbered year, the information required by subdivision (7) of subsection (c) of section 36a-581.

      (b) If the commissioner determines that a check filed with the commissioner to pay a license or location fee has been dishonored, the commissioner shall automatically suspend the license or approval 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 such license and an opportunity for a hearing on such actions in accordance with section 36a-51.

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

      (d) No abatement of the license or location fee shall be made if the license is surrendered, cancelled, revoked or suspended prior to the expiration of the period for which it was issued.

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

      History: P.A. 89-178 substituted the commissioner of banking for the commissioner of consumer protection in Subsec. (a); Sec. 21-113 transferred to Sec. 36-566 in 1991; P.A. 92-89 increased the license fees in Subsec. (a) from two hundred fifty to one thousand dollars; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-566 transferred to Sec. 36a-582 in 1995; P.A. 95-253 amended Subsec. (a) to change the license fee and renewal license fee and to add application and location transfer fees, and made technical changes to Subsecs. (b) and (c), effective July 6, 1995; P.A. 04-14 inserted new Subsec. (b), requiring commissioner to automatically suspend license or approval or renewal license if commissioner determines that a check filed to pay an application or license fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51, and providing that if commissioner determines a check filed to pay a location transfer fee has been dishonored, commissioner shall automatically suspend the location transfer approval pending revocation of such approval by commissioner and an opportunity for a hearing in accordance with Sec. 36a-51, and redesignated existing Subsecs. (b) and (c) as Subsecs. (c) and (d), respectively; P.A. 04-257 made a technical change in Subsec. (a); P.A. 05-46 amended Subsec. (a) to add Subdiv. (1) re nonrefundable name change fee of one hundred dollars for each application to change a name and to designate provision re location transfer fee as Subdiv. (2), amended Subsec. (b) to delete requirement for automatic suspension of location transfer approval if commissioner determines that check filed with commissioner to pay location transfer fee has been dishonored, and amended Subsec. (d) to delete provision re no abatement of location transfer fee; P.A. 06-35 amended Subsec. (a) to revise procedures and fees for application, renewal and expiration of licenses, changing period of validity of licenses from one to two years, deleting reference to application fee and inserting references to license and location fees, and imposing a one-hundred-dollar late fee for late filings of renewal applications, and amended Subsecs. (b) and (d) to delete reference to application fee and insert reference to location fee.

      Sec. 36a-583. (Formerly Sec. 36-567). Posting of license required. License not transferable or assignable. The license for each facility shall be conspicuously posted in that facility during the hours of operation. Such license shall not be transferable or assignable.

      (P.A. 88-200, S. 4; P.A. 95-253, S. 15, 19.)

      History: Sec. 21-114 transferred to Sec. 36-567 in 1991; Sec. 36-567 transferred to Sec. 36a-583 in 1995; P.A. 95-253 made technical changes re the contents, location and timing of the postings, effective July 6, 1995.

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

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

      (c) Not later than January 15, 2006, and quarterly thereafter, each check cashing licensee shall submit a report to the commissioner that specifies the type of checks cashed by such licensee and the number of checks cashed that exceed two thousand five hundred dollars during the previous calendar quarter.

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

      History: P.A. 89-178 amended Subsec. (a) by imposing a cap of one per cent per check on certain state checks and requiring the commissioner of banking to establish by regulation a fee schedule for other checks; Sec. 21-115 transferred to Sec. 36-568 in 1991; P.A. 91-11 amended Subsec. (b) by adding Subdivs. (1) to (4), inclusive, re exceptions to the maximum amount of a check that may be cashed by a check cashing service; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-568 transferred to Sec. 36a-584 in 1995; P.A. 95-253 changed "check cashing service" to "check cashing licensee", effective July 6, 1995; P.A. 05-74 amended Subsec. (a) to make a technical change, effective June 2, 2005; P.A. 05-192 amended Subsec. (b) to substitute six thousand dollars for two thousand five hundred dollars as the maximum amount of check that may be cashed by check cashing licensee and add Subdiv. (5) re exception for cashing of any check where payee is not an individual, and added Subsec. (c) re quarterly report to commissioner.

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

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

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

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

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

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

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

      History: P.A. 89-178 amended Subsec. (a) by substituting the commissioner of banking for the commissioner of consumer protection; Sec. 21-116 transferred to Sec. 36-570 in 1991; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-570 transferred to Sec. 36a-586 in 1995; P.A. 95-253 changed "check cashing service" to "check cashing licensee" and made technical changes in Subsec. (a), effective July 6, 1995; P.A. 98-192 added new Subsec. (c) re compliance with federal Currency and Foreign Transactions Reporting Act.

      Sec. 36a-587. (Formerly Sec. 36-571). Suspension, revocation or refusal to renew license. Hearings. Enforcement powers of commissioner. (a) The commissioner may suspend, revoke or refuse to renew any license issued pursuant to section 36a-581, in accordance with the provisions of section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for a license under sections 36a-580 to 36a-589, inclusive, or if the commissioner finds that the licensee or any owner, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud, engaged in dishonest activities or made any misrepresentation; (3) violated any provision of sections 36a-580 to 36a-589, inclusive, or any regulation promulgated under said sections; or (4) demonstrated incompetency or untrustworthiness to act as a licensed check cashing service.

      (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-580 to 36a-589, inclusive, or any regulation adopted pursuant to said sections, or any licensee or any owner, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee has committed any fraud, engaged in dishonest activities or made any misrepresentation, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52.

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

      History: P.A. 88-230 replaced "judicial district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991; P.A. 89-178 amended Subsec. (a) by substituting the commissioner of banking for the commissioner of consumer protection; Sec. 21-117 transferred to Sec. 36-571 in 1991; P.A. 90-98 changed the effective date of P.A. 88-230 from September 1, 1991, to September 1, 1993; P.A. 93-142 changed the effective date of P.A. 88-230 from September 1, 1993, to September 1, 1996, effective June 14, 1993; P.A. 94-122 deleted Subsec. (c) re cease and desist provisions and made technical changes, effective January 1, 1995; Sec. 36-571 transferred to Sec. 36a-587 in 1995; P.A. 05-46 amended Subsec. (b) to allow commissioner to impose civil penalty or issue cease and desist order against licensee or owner, director, officer, member, partner, shareholder, trustee, employee or agent of such licensee who has committed fraud, engaged in dishonest activities or made any misrepresentation; P.A. 06-35 amended Subsec. (b) to authorize commissioner to take enforcement action under Secs. 36a-50 and 36a-52 for violation of "any of" the provisions of Secs. 36a-580 to 36a-589, inclusive, or any regulation adopted pursuant to said Secs., effective May 8, 2006.

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

      (P.A. 88-200, S. 8.)

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

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

      (P.A. 88-200, S. 9.)

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

      Annotation to former section 36-573:

      Cited. 231 C. 707.

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

PART V
PAYMENT INSTRUMENTS. MONEY TRANSMISSION

      Sec. 36a-595. (Formerly Sec. 36-530). Short title: Money Transmission Act. Sections 36a-595 to 36a-610, inclusive, shall be known and may be cited as the "Money Transmission Act".

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

      History: Sec. 36-530 transferred to Sec. 36a-595 in 1995; P.A. 01-56 changed citation from "Money Order and Travelers Check Licensees Act" to "Money Transmission Act".

      Sec. 36a-596. (Formerly Sec. 36-531). Definitions. As used in sections 36a-595 to 36a-610, inclusive:

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

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

      (3) "Licensee" means any person licensed pursuant to sections 36a-595 to 36a-610, inclusive.

      (4) "Material litigation" means any litigation that, according to generally accepted accounting principles, is deemed significant to a person's financial health and would be required to be referenced in a person's annual audited financial statements, report to shareholders or similar documents.

      (5) "Monetary value" means a medium of exchange, whether or not redeemable in money.

      (6) "Money order" means any check, draft, money order or other payment instrument. "Money order" does not include a travelers check or electronic payment instrument.

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

      (8) "Net worth" means the excess of assets over liabilities as determined by generally accepted accounting principles.

      (9) "Outstanding" means, in the case of a money order, travelers check, electronic payment instrument or stored value, that: (A) It is sold or issued in the United States; (B) a report of it has been received by a licensee from its agents or subagents; and (C) it has not yet been paid by the issuer.

      (10) "Payment instrument" means a money order, travelers check or electronic payment instrument that evidences either an obligation for the transmission or payment of money, or the purchase or the deposit of funds for the purchase of such money order, travelers check or electronic payment instrument. A payment instrument is a "Connecticut payment instrument" if it is sold in this state.

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

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

      (13) "Purchaser" means a person who buys or has bought a Connecticut payment instrument.

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

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

      (P.A. 81-264, S. 2; P.A. 87-9, S. 2, 3; P.A. 92-12, S. 96; P.A. 94-122, S. 276, 340; P.A. 98-192, S. 3; 98-258, S. 4; P.A. 01-56, S. 3; P.A. 02-73, S. 84; P.A. 04-14, S. 3; 04-136, S. 43.)

      History: (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the Revisors to "commissioner of banking"); P.A. 92-12 redesignated Subdivs. and Subparas.; P.A. 94-122 deleted former Subdivs. (1) and (2) defining "commissioner" and "financial institution", renumbered former Subdivs. (3) through (9) as Subdivs. (1) through (7), deleted Subdiv. (10) defining "person" and renumbered former Subdivs. (11) through (13) as Subdivs. (8) through (10), effective January 1, 1995; Sec. 36-531 transferred to Sec. 36a-596 in 1995; (Revisor's note: In 1997 the reference in Subdiv. (7) to "... time deposits, as defined in subdivision (55) of section 36a-2 ..." was corrected editorially by the Revisors to "... time deposits, as defined in subdivision (62) of section 36a-2 ..." to reflect the current internal numbering of that section); P.A. 98-192 added new Subdiv. (1) defining "electronic payment instrument", made conforming changes and redesignated existing Subdivs. (1) to (10) as Subdivs. (2) to (11); P.A. 98-258 made a technical change in Subdiv. (7); P.A. 01-56 made technical changes in Subdiv. (2) defining "holder", deleted former Subdiv. (3) defining "instrument" and renumbered existing Subdiv. (4) as Subdiv. (3), added new Subdiv. (4) defining "material litigation", made technical changes in Subdiv. (5) defining "money order", added new Subdiv. (6) defining "money transmission" and renumbered existing Subdivs. (6) and (7) as Subdivs. (7) and (8), redefined "outstanding" in redesignated Subdiv. (8), added new Subdiv. (9) defining "payment instrument", renumbered existing Subdivs. (8) to (11) as Subdivs. (10) to (13) and made technical changes in redesignated Subdivs. (10) to (13); P.A. 02-73 amended Subdiv.(10)(B) by changing reference from Subdiv. (63) to Subdiv. (65) of Sec. 36a-2; P.A. 04-14 added definitions of "monetary value" in new Subdiv. (5) and "stored value" and "electronic record" in new Subdiv. (14), renumbering the existing Subdivs. accordingly, inserted references to "monetary value" and "current or future" transmission in definition of "money transmission", inserted references to "stored value" in definitions of "money transmission" and "outstanding" and, in Subpara. (A) of the latter definition, inserted "or issued", and made a technical change in definition of "permissible investment", effective April 16, 2004; P.A. 04-136 amended Subdiv. (10)(B) to make a technical change, effective May 12, 2004.

      Sec. 36a-597. (Formerly Sec. 36-532). License required. Penalty. (a) No person shall engage in the business of issuing Connecticut payment instruments, or engage in the business of money transmission, without first obtaining a license from the commissioner as provided in section 36a-600. No person shall engage in such business or in the business of selling Connecticut payment instruments as an agent or subagent, except as an agent or subagent of a licensee or an entity or a person exempt under section 36a-609 and in accordance with section 36a-607.

      (b) Any person who knowingly engages in the business of issuing Connecticut payment instruments, or who knowingly engages in the business of money transmission, without obtaining a license, as provided in section 36a-600, shall be guilty of a class D felony. Each transaction in violation of the provisions of this subsection shall constitute a separate offense.

      (P.A. 81-264, S. 3; P.A. 01-56, S. 4; P.A. 03-61, S. 3; P.A. 04-61, S. 1.)

      History: Sec. 36-532 transferred to Sec. 36a-597 in 1995; P.A. 01-56 changed "Connecticut instruments" to "Connecticut payment instruments" and reworded language re money transmission; P.A. 03-61 substituted "or an entity or a person exempt under section 36a-609 and in accordance with" for "as provided in"; P.A. 04-61 designated existing provisions as Subsec. (a) and added new Subsec. (b) re criminal penalty for knowingly engaging in business of issuing Connecticut payment instruments or money transmission without a license.

      Sec. 36a-598. (Formerly Sec. 36-533). Application. (a) Each application for an original or renewal license required under sections 36a-595 to 36a-610, inclusive, shall be made in writing and under oath to the commissioner in such form as the commissioner may prescribe. The application shall include:

      (1) The exact name of the applicant and, if incorporated, the date of incorporation and the state where incorporated;

      (2) The complete address of the principal office from which the business is to be conducted, and of the office where the books and records of the applicant are maintained and to be maintained, including the street and number, if any, and the municipality and county of such offices;

      (3) The complete name and address of each of the applicant's branches, subsidiaries, affiliates and agents and subagents, if any, engaging in this state in the business of selling or issuing Connecticut payment instruments, or engaging in the business of money transmission;

      (4) The name, title, address and telephone number of the person to whom notice of the commissioner's approval or disapproval of the application shall be sent and to whom any inquiries by the commissioner concerning the application shall be directed;

      (5) The name and residence address of (A) the individual, if the applicant is an individual; (B) the partners, if the applicant is a partnership; (C) the directors, trustees, principal officers, and any shareholder owning ten per cent or more of each class of its securities, if the applicant is a corporation or association; or (D) the managers, if the applicant is a limited liability company, and sufficient information pertaining to the name and address, in a form acceptable to the commissioner, on such partners, directors, trustees, principal officers, managers, and any shareholder owning ten per cent or more of each class of its securities, as the commissioner deems necessary to make the findings under section 36a-600;

      (6) The most recently audited unconsolidated financial statement of the applicant, including its balance sheet and receipts and disbursements for the preceding year, prepared by an independent certified public accountant acceptable to the commissioner;

      (7) A list of the applicant's permissible investments, the book and market values of such investments, and the dollar amount of the applicant's aggregate outstanding payment instruments (A) as of the date of the financial statement filed in accordance with subdivision (6) of this subsection; and (B) as of a date no earlier than thirty business days prior to the filing of the application;

      (8) The history of material litigation and criminal convictions for the five-year period prior to the date of the application of (A) the individual, if the applicant is an individual; (B) the partners, if the applicant is a partnership; (C) the directors, trustees, principal officers and any shareholder owning ten per cent or more of each class of its securities, if the applicant is a corporation or association; or (D) the managers, if the applicant is a limited liability company, and sufficient information pertaining to the history of material litigation and criminal convictions, in a form acceptable to the commissioner, on such partners, directors, trustees, principal officers and any shareholder owning ten per cent or more of each class of its securities;

      (9) (A) The surety bond required by subsection (a) of section 36a-602, if applicable;

      (B) A list of the investments maintained in accordance with subsection (c) of section 36a-602, if applicable, and the book and market values of any such investments (i) as of the date of the financial statement filed in accordance with subdivision (6) of this subsection; and (ii) as of a date no earlier than thirty business days prior to the filing of the application;

      (C) The commissioner may defer compliance with the provisions of this subdivision until after the commissioner rules on the application, but the commissioner shall not issue a license until an applicant complies with the provisions of this subdivision;

      (10) A statement of whether the applicant will engage in the business of issuing money orders, travelers checks or electronic payment instruments or engage in the business of money transmission in this state;

      (11) Any other information the commissioner may require.

      (b) An applicant or 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) A licensee shall not change the name specified on its license unless, prior to such change in name, the licensee files an application with the commissioner accompanied by the name change fee specified in subsection (a) of section 36a-599 and receives the approval of the commissioner.

      (P.A. 81-264, S. 4; P.A. 92-12, S. 97; P.A. 94-122, S. 277, 340; P.A. 98-192, S. 4; P.A. 01-56, S. 5; P.A. 03-19, S. 84; P.A. 04-14, S. 4; P.A. 05-46, S. 11.)

      History: P.A. 92-12 redesignated Subsecs. and Subdivs.; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-533 transferred to Sec. 36a-598 in 1995; P.A. 98-192 amended Subdiv. (9) by adding reference to electronic payment instrument and making conforming changes; P.A. 01-56 amended Subdiv. (5) by changing twenty per cent stock ownership threshold to ten per cent ownership of securities and required name and addresses of persons holding securities, added new Subdiv. (8) re history of material litigation and criminal convictions, renumbered existing Subdivs. (8) to (10) as Subdivs. (9) to (11), added language re money transmission in Subdivs. (3) and (10) and made technical and conforming changes throughout; P.A. 03-19 made a technical change in Subdiv. (10), effective May 12, 2003; P.A. 04-14 designated existing provisions as Subsec. (a), and amended same by inserting in Subdivs. (5) and (8) new Subpara. (D) re managers, if applicant is a limited liability company, inserting reference to "managers" in Subdiv. (5), and making technical changes in Subdivs. (7)(A) and (9)(B), and inserted new Subsec. (b) requiring applicant or licensee to notify commissioner of any change in information provided; P.A. 05-46 added Subsec. (c) to prohibit licensee from changing the name specified on license unless licensee files application, pays name change fee specified in Sec. 36a-599(a) and receives approval of commissioner.

      Sec. 36a-599. (Formerly Sec. 36-534). Investigation, license and name change fees. Term of license. (a) Each application for an original license shall be accompanied by a nonrefundable investigation fee of five hundred dollars and a license fee of two thousand dollars, except that if such application is filed not earlier than one year before the date such license will expire, the applicant shall pay a nonrefundable investigation fee of five hundred dollars and a license fee of one thousand dollars. Each application for a renewal license shall be accompanied by a license fee of two thousand dollars, or in the case of a license that expires on June 30, 2007, a license fee of two thousand two hundred fifty dollars. The license fee shall be refunded if the application for an original license is denied, the commissioner refuses to issue a renewal license or an application for a license or renewal license is withdrawn prior to issuance of a license or renewal license by the commissioner. Each licensee shall pay to the commissioner a nonrefundable name change fee of one hundred dollars for each application to change a name. No licensee shall use any name other than the name specified on the license issued by the commissioner.

      (b) A license issued pursuant to sections 36a-595 to 36a-610, inclusive, shall expire at the close of business on September thirtieth of the odd-numbered year following its issuance, unless renewed or earlier surrendered, suspended or revoked pursuant to said sections, provided any license that is renewed effective July 1, 2007, shall expire on September 30, 2009.

      (P.A. 81-264, S. 5; P.A. 88-150, S. 8; P.A. 92-89, S. 15, 20; P.A. 98-192, S. 5; P.A. 01-56, S. 6; P.A. 05-46, S. 12; P.A. 06-35, S. 7.)

      History: P.A. 88-150 amended Subsec. (a) by increasing the investigation fee to five hundred dollars and increasing the license fee to five hundred dollars, and deleted obsolete Subsec. (c) concerning license fees and the term of a license; P.A. 92-89 deleted the five-hundred-dollar investigation fee and increased the license fee from five hundred to one thousand dollars in Subsec. (a); Sec. 36-534 transferred to Sec. 36a-599 in 1995; P.A. 98-192 amended Subsec. (a) by imposing a nonrefundable investigation fee of five hundred dollars; P.A. 01-56 amended Subsec. (a) by eliminating the investigation fee for a renewal license and by making conforming language changes re renewal license fee and refund of fees; P.A. 05-46 amended Subsec. (a) to add provision re nonrefundable name change fee of one hundred dollars for each application to change a name; P.A. 06-35 amended Subsec. (a) to increase fee for original license from one thousand dollars to two thousand dollars, to add exception that if application is filed not earlier than one year before date the license expires, applicant shall pay nonrefundable investigation fee of five hundred dollars and license fee of one thousand dollars, to increase license fee for renewal license from one thousand dollars to two thousand dollars, to provide that if license expires on June 30, 2007, fee shall be two thousand two hundred fifty dollars, and to prohibit licensee from using any name other than that specified on license issued by commissioner, and amended Subsec. (b) to provide that license expires at close of business on September thirtieth of odd-numbered year following issuance, unless renewed, surrendered, suspended or revoked, except that license renewed effective July 1, 2007, expires on September 30, 2009, and to delete reference to license expiration on thirtieth day of June following date of issuance.

      Sec. 36a-600. (Formerly Sec. 36-536). Investigation of applicant. Issuance of license. (a) Upon the filing of an application for an original license, and the payment of the fees for investigation and license, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The commissioner shall approve conditionally any application, if the commissioner finds that:

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

      (2) The applicant's business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes and intent of sections 36a-595 to 36a-610, inclusive, and in a manner commanding the confidence and trust of the community;

      (3) (A) If the applicant is an individual, such individual is in all respects properly qualified and of good character, (B) if the applicant is a partnership, each partner is in all respects properly qualified and of good character, (C) if the applicant is a corporation or association, each president, chairperson of the executive committee, senior officer responsible for the corporation's business, chief financial officer or any other person who performs similar functions as determined by the commissioner, director, trustee and each shareholder owning ten per cent or more of each class of the securities of such corporation is in all respects properly qualified and of good character;

      (4) The applicant is in compliance with the provisions of sections 36a-603 and 36a-604;

      (5) No person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to sections 36a-595 to 36a-610, inclusive;

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

      (b) If the commissioner conditionally approves an application, the applicant shall have thirty days, which the commissioner may extend for cause, to comply with the requirements of section 36a-602. Upon such compliance, the commissioner's conditional approval shall become final, and the commissioner shall issue a license to the applicant. The commissioner shall not issue a license to any applicant unless the applicant is in compliance with all the requirements of subsection (a) of this section and section 36a-602 and has paid the investigation and license fee required under section 36a-599.

      (P.A. 81-264, S. 7; P.A. 94-122, S. 278, 340; P.A. 01-56, S. 7; P.A. 04-14, S. 5.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-536 transferred to Sec. 36a-600 in 1995; P.A. 01-56 amended Subsec. (a) by adding new Subdiv. (3) re good character of various persons as applicants and by renumbering existing Subdivs. (3) to (5) as Subdivs. (4) to (6); P.A. 04-14 amended Subsec. (b) to require that applicant pay investigation and license fee required under Sec. 36a-599.

      Sec. 36a-601. (Formerly Sec. 36-537). Renewal of license. Automatic suspension of renewal license. Notice. Opportunity for hearing. (a) A license may be renewed for the ensuing twenty-four-month period upon the filing of an application containing all information required by section 36a-598. Such renewal application shall be filed on or before September first of the year in which the license expires, or in the case of an application for renewal of a license that expires on June 30, 2007, on or before June 1, 2007. Any renewal application filed with the commissioner after September first, or in the case of a license that expires on June 30, 2007, after June 1, 2007, shall be accompanied by a one-hundred-dollar late fee and any such filing shall be deemed to be timely and sufficient for purposes of subsection (b) of section 4-182. If an application for a renewal license has been filed with the commissioner on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the issuance by the commissioner of the renewal license applied for or until the commissioner has notified the licensee in writing of the commissioner's refusal to issue such renewal license together with the grounds upon which such refusal is based. The commissioner may refuse to issue a renewal license on any ground on which the commissioner might refuse to issue an original license.

      (b) If the commissioner determines that a check filed with the commissioner to pay an investigation or license fee has been dishonored, the commissioner shall automatically suspend 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 refusal to renew such license and an opportunity for a hearing on such actions in accordance with section 36a-51.

      (P.A. 81-264, S. 8; P.A. 94-122, S. 279, 340; P.A. 01-56, S. 8; P.A. 04-14, S. 6; P.A. 06-35, S. 8.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-537 transferred to Sec. 36a-601 in 1995; P.A. 01-56 added reference to Sec. 36a-598(9) and eliminated fee for investigation associated with renewal; P.A. 04-14 designated existing provisions as Subsec. (a), making a technical change therein, and added new Subsec. (b) requiring commissioner to automatically suspend renewal license if commissioner determines that a check filed to pay an investigation or license fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for refusal to renew such license and an opportunity for a hearing in accordance with Sec. 36a-51; P.A. 06-35 amended Subsec. (a) to provide that license may be renewed for ensuing twenty-four-month period, rather than twelve-month period, to delete reference to information required by Sec. 36a-598 (a)(6) to (9), to require that renewal application be filed on or before September first of year in which license expires, or in the case of license that expires on June 30, 2007, on or before June 1, 2007, to provide that renewal application filed after September first, or in the case of license that expires on June 30, 2007, after June 1, 2007, shall be accompanied by one-hundred-dollar late fee and that any such filing shall be deemed timely and sufficient for purposes of Sec. 4-182(b), and to substitute reference to the date "the license expires" for the date "the commissioner has specified".

      Sec. 36a-602. (Formerly Sec. 36-538). Surety bond or investments required. Authority of commissioner to proceed on bond. Cancellation of surety bond. Notice of cancellation. Automatic suspension of license. Notice. Opportunity for hearing. (a) As a condition for the issuance and retention of the license, applicants for a license and licensees shall file with the commissioner a surety bond, the form of which shall be approved by the Attorney General, issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the commissioner, cover claims that arise during the period the license remains in full force and effect and the succeeding two years after such license has been surrendered, revoked or suspended or has expired, in accordance with the provisions of sections 36a-595 to 36a-610, inclusive, and be in the principal sum of (1) three hundred thousand dollars for any applicant and any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters of three hundred thousand dollars or less or any licensee that engages in the business of money transmission with an average weekly amount of money or monetary value received or transmitted, whichever amount is greater, during the two previous reporting quarters of one hundred fifty thousand dollars or less; (2) five hundred thousand dollars for any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters of greater than three hundred thousand dollars but less than five hundred thousand dollars or any licensee that engages in the business of money transmission with an average weekly amount of money or monetary value received or transmitted, whichever amount is greater, during the two previous reporting quarters of greater than one hundred fifty thousand dollars but less than two hundred fifty thousand dollars; and (3) one million dollars for any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters equal to or greater than five hundred thousand dollars or any licensee that engages in the business of money transmission with an average weekly amount of money or monetary value received or transmitted, whichever amount is greater, during the two previous reporting quarters of two hundred fifty thousand dollars or greater. The proceeds of the bond, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission or payment of money or monetary value in connection with the sale and issuance of payment instruments or transmission of money in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors. The commissioner may proceed on such bond against the principal or surety thereon, or both, to collect any civil penalty imposed upon the licensee pursuant to subsection (a) of section 36a-50. In the event a license has been surrendered, revoked or suspended or has expired, in accordance with the provisions of sections 36a-595 to 36a-610, inclusive, the commissioner, in the commissioner's discretion, may lower the required principal sum of the bond based on the licensee's level of business and outstanding Connecticut payment instruments.

      (b) The surety company may 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, all of the principal sum of such surety bond has been invested as provided in subsection (c) of this section, or the surety bond has been replaced in part and the remaining part of the principal sum of such surety bond has been invested as provided in subsection (c) of this section or unless the licensee has ceased business and has voluntarily surrendered the license. The commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew such license and an opportunity for a hearing on such actions in accordance with section 36a-51.

      (c) In lieu of all or part of the principal sum of such surety bonds, applicants for a license and licensees may invest such sum as provided in this subsection. The book or market value, whichever is lower, of such investments shall be equal to the amount of the bond required by subsection (a) of this section less the amount of the bond filed with the commissioner by the applicant or licensee. Such applicants and licensees shall keep such investments with such banks, Connecticut credit unions or federal credit unions as such applicants or licensees may designate and the commissioner may approve, and subject to such conditions as the commissioner deems necessary for the protection of consumers and in the public interest. As used in this subsection, "investments" means: (1) Dollar deposits; and (2) interest-bearing bills, notes, bonds, debentures or other obligations issued or guaranteed by (A) the United States or any of its agencies or instrumentalities, or (B) any state, or any agency, instrumentality, political subdivision, school district or legally constituted authority of any state if such investment is of prime quality. The investments shall secure the same obligation as would a surety bond filed under this section. The investments shall be held at such banks or credit unions to cover claims during the period the license remains in full force and effect and the succeeding two years after such license has been surrendered, revoked or suspended or has expired in accordance with the provisions of sections 36a-595 to 36a-610, inclusive. The licensee shall be permitted to collect interest on such investments and at any time to exchange, examine, and compare such investments. The investments made pursuant to this section, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission or payment of money in connection with the sale and issuance of Connecticut payment instruments or transmission of money in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

      (P.A. 81-264, S. 9; P.A. 91-306, S. 1; P.A. 94-122, S. 280, 340; P.A. 98-192, S. 6; P.A. 01-56, S. 9; P.A. 02-111, S. 39; P.A. 03-61, S. 4; P.A. 04-14, S. 7; P.A. 06-35, S. 9.)

      History: P.A. 91-306 amended Subsec. (a) by deleting existing provisions re amount of bond and added Subdivs. (1), (2) and (3) re principal sum of bond; P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-538 transferred to Sec. 36a-602 in 1995; P.A. 98-192 amended Subsec. (a) by adding provision re two-year time period for bond to remain in place and adding specific requirements for licensees that engage in the business of receiving money for transmitting the same; P.A. 01-56 amended Subsec. (a) by changing "Connecticut instruments" to "Connecticut payment instruments", by rewording language re money transmission and by replacing provisions re trust fund with provisions re proceeds of bond deemed to be held in trust for benefit of claimants, and amended Subsec. (c) by replacing provisions re investment maintained in trust with provisions re investments deemed to be held in trust for benefit of claimants; P.A. 02-111 amended Subsec. (a) by adding provision re authority of commissioner to proceed on bond to collect civil penalty imposed pursuant to Sec. 36a-50(a); P.A. 03-61 changed "corporate surety bond" to "surety bond" throughout, amended Subsec. (a) by revising provisions re approval of form, coverage of bond and beginning of two-year period and by adding provision re surrendered, revoked, suspended or expired license and amended Subsec. (c) by inserting "Connecticut"; P.A. 04-14 amended Subsec. (a)(1), (2) and (3) to replace references to "equivalent thereof" with references to "monetary value received or transmitted, whichever amount is greater", and to insert references to "monetary value" in provisions re proceeds of the bond to be held in trust for benefit of claimants against licensee, added new Subsec. (b) re cancellation of surety bond and automatic suspension of license and redesignated existing Subsecs. (b) and (c) as new Subsecs. (c) and (d), respectively, revising internal reference accordingly, effective April 16, 2004; P.A. 06-35 amended Subsec. (c) to require applicants and licensees to keep investments with such banks, Connecticut credit unions or federal credit unions as applicants or licensees designate, to require that investments be held subject to such conditions as commissioner deems necessary for protection of consumers and in the public interest and to define "investments" to include "dollar deposits" and "interest-bearing" bills, notes, bonds, debentures or other obligations, deleting former Subdiv. designators (1) and (2), reference to "in accordance with such regulations as the commissioner may adopt", and Subsec. designator (d), to add provision requiring investments to be held at banks or credit unions to cover claims during period license remains in effect and the succeeding two years after license has been surrendered, revoked or suspended or has expired, and to make conforming changes, effective May 8, 2006.

      Sec. 36a-603. (Formerly Sec. 36-539). Investments equal to amount of outstanding payment instruments and stored value required. Permissible investments. (a) Each licensee shall at all times maintain permissible investments having a value, computed in accordance with generally accepted accounting principles, at least equal to the aggregate amount of its outstanding payment instruments and stored value.

      (b) As used in subsection (a) of this section, "value" means the lower of book or market value, except that with regard to debt obligations which the licensee as a matter of policy retains until maturity, "value" means the greater of book or market value unless the commissioner orders that for some or all investments of a particular licensee, "value" means the lower of book or market value.

      (c) Permissible investments, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission or payment of money or monetary value in connection with the sale and issuance of payment instruments or transmission of money or monetary value in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

      (P.A. 81-264, S. 10; P.A. 01-56, S. 10; P.A. 04-14, S. 8.)

      History: Sec. 36-539 transferred to Sec. 36a-603 in 1995; P.A. 01-56 amended Subsec. (a) by making a technical change and added new Subsec. (c) re permissible investments deemed to be held in trust for benefit of claimants; P.A. 04-14 amended Subsec. (a) to insert reference to "stored value", and amended Subsec. (c) to insert references to "monetary value", effective April 16, 2004.

      Sec. 36a-604. (Formerly Sec. 36-540). Net worth requirements. (a) Each licensee which issues Connecticut payment instruments which are money orders shall at all times have a net worth of at least one hundred thousand dollars.

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

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

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

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

      Sec. 36a-605. (Formerly Sec. 36-541). Examination of licensees. Information sharing. (a) In connection with the examination of a licensee under section 36a-17, the commissioner may also examine the agents and subagents of such licensee. The commissioner, in lieu of conducting an examination, may accept the report of examination of any other state or federal supervisory agency or any organization affiliated with or representing such supervisory agency with respect to the examination or other supervision of any person subject to the provisions of sections 36a-595 to 36a-610, inclusive, or a report prepared by an independent accounting firm, and reports so accepted are considered for purposes of sections 36a-595 to 36a-610, inclusive, as an official examination report of the commissioner.

      (b) The commissioner may enter into cooperative, coordinating and information-sharing agreements with any other state or federal supervisory agency or any organization affiliated with or representing such supervisory agency with respect to the examination, examination fees or other supervision of any person subject to the provisions of sections 36a-595 to 36a-610, inclusive. Any such agreement may include provisions concerning the assessment or sharing of fees for such examination or supervision.

      (P.A. 81-264, S. 12; P.A. 87-9, S. 2, 3; P.A. 94-122, S. 281, 340; P.A. 01-56, S. 12; P.A. 04-14, S. 10.)

      History: (Revisor's note: Pursuant to P.A. 87-9 "banking department" was changed editorially by the Revisors to "department of banking"); P.A. 94-122 deleted language allowing authorized employees of the commissioner to examine a licensee's books and records, language allowing employees of a licensee to be examined by the commissioner and language requiring a licensee to pay the cost of such examination, effective January 1, 1995; Sec. 36-541 transferred to Sec. 36a-605 in 1995; P.A. 01-56 deleted existing provisions re commissioner's examination of licensee, added new Subsec. (a) re examination under Sec. 36a-17 or acceptance of a report in lieu thereof and added new Subsec. (b) permitting the commissioner to enter into cooperative, coordinating and information-sharing agreements; P.A. 04-14 amended Subsec. (b) to provide that agreement may include provisions re assessment or sharing of fees for examination or supervision.

      Sec. 36a-606. (Formerly Sec. 36-542). Annual financial reports required. (a) On or before the thirtieth day of April each year, each licensee shall file with the commissioner:

      (1) Its most recently audited unconsolidated financial statement, including its balance sheet and receipts and disbursements for the preceding year, prepared by an independent certified public accountant acceptable to the commissioner;

      (2) A list of permissible investments, the book and market value of such investments, and the dollar amount of the licensee's aggregate outstanding payment instruments; and

      (3) A list of investments maintained in accordance with subsection (c) of section 36a-602, if applicable, the book and market values of such investments and the dollar amount of the licensee's aggregate outstanding Connecticut payment instruments and stored value.

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

      (c) The commissioner may require of any licensee such additional reports, under oath, certified, or otherwise, concerning such licensee's business in this state as the commissioner may consider necessary for the enforcement of sections 36a-595 to 36a-610, inclusive.

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

      History: P.A. 94-122 changed "he" to "the commissioner", effective January 1, 1995; Sec. 36-542 transferred to Sec. 36a-606 in 1995; P.A. 01-56 amended Subsec. (a) by changing "instruments" to "payment instruments" in Subdivs. (2) and (3); P.A. 04-14 amended Subsec. (a)(3) to substitute "subsection (c)" for "subsection (b)" in reference to Sec. 36a-602 and to add reference to "stored value", effective April 16, 2004.

      Sec. 36a-606a. Federal reporting requirements. Each licensee shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq., as from time to time amended, and any regulations adopted under such provisions, as from time to time amended.

      (P.A. 98-192, S. 8; P.A. 99-36, S. 32.)

      History: P.A. 99-36 made a technical change.

      Sec. 36a-607. (Formerly Sec. 36-543). Conduct of business by agent or subagent. (a) A licensee may conduct its business at one or more locations within this state as follows:

      (1) The business may be conducted by the licensee or through or by means of such agents and subagents as the licensee may periodically designate or appoint.

      (2) No license under sections 36a-595 to 36a-610, inclusive, shall be required of any agent or subagent of a licensee.

      (3) Each agent and subagent shall, from the moment of receipt, hold the proceeds of a sale or delivery of a licensee's Connecticut payment instruments in trust for the benefit of such licensee or of an agent of the licensee on behalf of such licensee.

      (4) A licensee shall be liable for the loss caused to any purchaser or holder of the licensee's Connecticut payment instruments by the failure of an agent or subagent of the licensee to forward to the licensee the amount due from the proceeds of a sale or delivery of the licensee's Connecticut payment instruments, or money received for transmission.

      (b) For purposes of subsection (a) of this section, a licensee shall include any entity or person exempt under section 36a-609.

      (P.A. 81-264, S. 14; P.A. 92-12, S. 98; P.A. 01-56, S. 14; P.A. 03-61, S. 5.)

      History: P.A. 92-12 redesignated Subdivs.; Sec. 36-543 transferred to Sec. 36a-607 in 1995; P.A. 01-56 amended Subdivs. (3) and (4) by changing "Connecticut instruments" to "Connecticut payment instruments" and amended Subdiv. (4) by adding language re money transmission; P.A. 03-61 designated existing provisions as Subsec. (a) and added Subsec. (b) providing that licensee includes entity or person exempt under Sec. 36a-609.

      Sec. 36a-608. (Formerly Sec. 36-544). Enforcement powers of commissioner. (a) The commissioner shall make such investigations and conduct such hearings as the commissioner considers necessary to determine whether any licensee or any other person has violated or is about to violate any of the provisions of sections 36a-595 to 36a-610, inclusive, or whether any licensee has acted in such manner as otherwise would justify the suspension or revocation of the license. The provisions of section 36a-17 shall apply to such investigation.

      (b) The commissioner may suspend or revoke a license, in accordance with section 36a-51, on any ground on which the commissioner might refuse to issue an original license, for any violation of sections 36a-595 to 36a-610, inclusive, or of any regulation adopted under said sections, for noncompliance with an order which the commissioner may issue under said sections to a licensee, or for failure of the licensee to pay a judgment ordered by any court within or outside this state within thirty days after the judgment becomes final or within thirty days after expiration or termination of a stay of execution of the judgment.

      (c) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-595 to 36a-610, inclusive, or any regulation adopted under said sections, the commissioner may take action against such person in accordance with section 36a-50.

      (d) The commissioner may order a licensee to terminate its agency relationship with any agent or subagent who refuses to allow an examination of its books and records regarding the business of such licensee as provided in section 36a-605.

      (P.A. 81-264, S. 15; P.A. 94-122, S. 283, 340; P.A. 01-56, S. 15.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-544 transferred to Sec. 36a-608 in 1995; P.A. 01-56 amended Subsec. (a) to add provision re person who "is about to violate", amended Subsec. (b) by eliminating requirement that violation be wilful and amended Subsec. (d) by referencing subagent.

      Sec. 36a-609. (Formerly Sec. 36-545). Exemptions. The provisions of sections 36a-597 to 36a-606a, inclusive, shall not apply to:

      (1) Any federally insured federal bank, out-of-state bank, federal credit union or out-of-state credit union, provided such institution does not issue or sell Connecticut payment instruments or transmit money or monetary value through an agent or subagent which is not a federally insured bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union;

      (2) Any Connecticut bank or Connecticut credit union;

      (3) The United States Postal Service; and

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

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

      History: P.A. 91-357 deleted reference to the Federal Savings and Loan Insurance Corporation from Subsec. (a); P.A. 92-12 redesignated Subdivs.; P.A. 94-122 changed "financial institution" to "bank", effective January 1, 1995; Sec. 36-545 transferred to Sec. 36a-609 in 1995; P.A. 01-56 amended Subdiv. (1) by replacing reference to banks with insurable deposits with list of specific types of financial institutions and amended Subdiv. (3) by replacing former provisions re telegraph or cable company with language re electronic funds transfer of governmental benefits; P.A. 03-61 substituted "36a-597 to 36a-606a" for "36a-595 to 36a-610", amended Subdiv. (1) by deleting "Except in its capacity as an agent of a licensee", substituting "federally insured federal bank" for "federally insured bank" and deleting "Connecticut credit union", inserted new Subdiv. (2) re exemption for any Connecticut bank or Connecticut credit union and redesignated existing Subdivs. (2) and (3) as new Subdivs. (3) and (4); P.A. 04-14 amended Subdiv. (1) to add reference to "monetary value", effective April 16, 2004.

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

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

      History: Sec. 36-546 transferred to Sec. 36a-610 in 1995; P.A. 01-56 changed "enforcement" to "administration" and made technical changes.

      Secs. 36a-611 to 36a-614. Reserved for future use.

PART VI
LOAN BROKERS

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

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

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

      (3) "Unsecured loan" means any loan of money or extension of credit that is not secured by a security interest, as defined in Regulation Z, 12 CFR Section 226.2(a)(25), as from time to time amended.

      (P.A. 92-67, S. 1, 9; P.A. 94-122, S. 285, 340.)

      History: P.A. 94-122 deleted definition of "commissioner" in Subdiv. (2), renumbered the remaining Subdivs. and made technical changes, effective January 1, 1995; Sec. 36-577 transferred to Sec. 36a-615 in 1995.

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

      (P.A. 92-67, S. 2, 9.)

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

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

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

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

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

      (P.A. 92-67, S. 5, 9.)

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

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

      (P.A. 92-67, S. 6, 9.)

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

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

      (P.A. 92-67, S. 7, 9.)

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

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

PART VII
CONNECTICUT BUSINESS AND INDUSTRIAL
DEVELOPMENT CORPORATION ACT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      (P.A. 93-382, S. 59, 69; P.A. 94-122, S. 290, 340.)

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

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

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

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

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

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

      (P.A. 93-382, S. 61, 69.)

      History: P.A. 93-382 effective July 1, 1993.

      Sec. 36a-631. Books and records. Annual financial reports. (a) Each licensee shall make and keep such books, accounts and other records in such form and in such manner as the commissioner may by regulation or order require. All records so required shall be kept at such place and shall be preserved for such time as the commissioner may by regulation or order specify.

      (b) Each licensee shall, not more than ninety days after the close of each of its fiscal years or within such longer period as the commissioner may by regulation specify, file with the commissioner an annual report containing:

      (1) A financial statement, including balance sheet, statement of income or loss, statement of changes in capital accounts and statement of changes in financial position, for or as of the end of such fiscal year, prepared with an audit by an independent certified public accountant in accordance with generally accepted accounting principles;

      (2) A report, certificate or opinion of such independent certified public accountant, stating that such financial statements were prepared in accordance with generally accepted accounting principles;

      (3) A report as to (A) the number and aggregate dollar amount of loans made by such licensee during such fiscal year; (B) the geographic distribution, by census tract, of the borrowers that received such loans; (C) the percentage of such loans that were made in the principal amount of fifty thousand dollars or less; (D) the percentage of such loans that were made to minority or women-owned businesses; (E) the dollar amount of the licensee's loan portfolio as of the end of such fiscal year; (F) the percentage amount of the licensee's loan portfolio that represents loans for which scheduled loan payments were more than ninety days past due as of the end of such fiscal year; (G) the number and dollar amount of loans in liquidation as of the end of such fiscal year; and (H) a summary of the licensee's policies and performance with regard to management assistance provided to small business firms during such fiscal year; and

      (4) Such other information as the commissioner may require.

      (P.A. 93-382, S. 62, 69.)

      History: P.A. 93-382 effective July 1, 1993 (Revisor's note: In Subsec. (b)(3)(D) the reference to "woman-owned businesses" was changed editorially by the Revisors to "women-owned businesses" for consistency with other statutory references).

      Sec. 36a-632. Jurisdiction of Banking Commissioner. Each licensee shall be an institution subject to the jurisdiction of the commissioner for purposes of sections 36a-17 and 36a-53.

      (P.A. 93-382, S. 64, 69; P.A. 94-122, S. 292, 340.)

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

      Sec. 36a-633. License fee. Costs of examination to be borne by applicants. Automatic suspension of license or renewal license. Notice. Opportunity for hearing. (a) Each applicant for a license, at the time of making such application, shall pay to the commissioner a nonrefundable license fee of four hundred dollars. Each license issued pursuant to this subsection shall expire at the close of business on June thirtieth of each year, unless such license is renewed. 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.

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

      (P.A. 93-382, S. 65, 69; P.A. 04-69, S. 22.)

      History: P.A. 93-382 effective July 1, 1993; P.A. 04-69 designated existing provisions as Subsec. (a), making a technical change therein, and added new Subsec. (b) requiring commissioner to automatically suspend license or renewal license if commissioner determines that a check filed to pay license fee has been dishonored and requiring commissioner to give notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing in accordance with Sec. 36a-51.

      Sec. 36a-634. Regulations. The commissioner shall adopt, pursuant to chapter 54, such regulations as may be necessary to carry out the provisions of sections 36a-625 to 36a-633, inclusive.

      (P.A. 93-382, S. 66, 69.)

      History: P.A. 93-382 effective July 1, 1993.

      Secs. 36a-635 to 36a-644. Reserved for future use.