CHAPTER 668
NONDEPOSITORY FINANCIAL INSTITUTIONS

Table of Contents

Sec. 36a-485. (Formerly Sec. 36-440). *(See end of section for amended version and effective date.) Definitions.
Sec. 36a-486. (Formerly Sec. 36-440a). *(See end of section for amended version and effective date.) License required. Registration of originator. Violations.
Sec. 36a-488. (Formerly Sec. 36-440c). *(See end of section for amended version and effective date.) License as first mortgage lender, first mortgage correspondent lender or first mortgage broker. Prerequisites. Application for license or registration.
Sec. 36a-489. (Formerly Sec. 36-440d). *(See end of section for amended version and effective date.) Application for license or registration. Denial of application for license or registration.
Sec. 36a-490. (Formerly Sec. 36-440e). *(See end of section for amended version and effective date.) License.
Sec. 36a-491. (Formerly Sec. 36-440f). *(See end of section for amended version and effective date.) License and registration fees. Automatic suspension of license or registration. Notice. Opportunity for hearing.
Sec. 36a-492. (Formerly Sec. 36-440g). *(See end of section for amended version of subsection (a) and effective date.) Surety bond required. Cancellation of bond. Notice. Automatic suspension of license. Notice. Opportunity for hearing.
Sec. 36a-493. (Formerly Sec. 36-440h). *(See end of section for amended version of subsection (a) and effective date.) Records to be maintained by licensee.
Sec. 36a-494. (Formerly Sec. 36-440i). *(See end of section for amended version and effective date.) Suspension, revocation or refusal to renew license or registration or taking of other action.
Sec. 36a-496. (Formerly Sec. 36-440k). *(See end of section for amended version and effective date.) Applications and referrals from unlicensed first mortgage brokers or unregistered originators.
Sec. 36a-498. (Formerly Sec. 36-440m). *(See end of section for amended version and effective date.) Refundability of advance fees. Exceptions. Prohibited acts by mortgage lenders and first mortgage brokers re borrowers.
Sec. 36a-498a. *(See end of section for amended version and effective date.) Prepaid finance charges; when prohibited.
Sec. 36a-510. (Formerly Sec. 36-224a). *(See end of section for amended version and effective date.) Definitions.
Sec. 36a-511. (Formerly Sec. 36-224b). *(See end of section for amended version and effective date.) License required. Registration of originator. Violations.
Sec. 36a-513. (Formerly Sec. 36-224d). *(See end of section for amended version and effective date.) 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.
Sec. 36a-514. (Formerly Sec. 36-224e). *(See end of section for amended version and effective date.) License and registration fees. Automatic suspension of license or registration. Notice. Opportunity for hearing.
Sec. 36a-515. (Formerly Sec. 36-224f). *(See end of section for amended version and effective date.) License.
Sec. 36a-516. (Formerly Sec. 36-224g). *(See end of section for amended version of subsection (a) and effective date.) Records to be maintained by licensee.
Sec. 36a-517. (Formerly Sec. 36-224h). *(See end of section for amended version of subsection (a) and effective date.) Suspension, revocation or refusal to renew license or registration or taking of other action.
Sec. 36a-521. (Formerly Sec. 36-224l). *(See end of section for amended version of subsection (d) and effective date.) 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.
Sec. 36a-523. (Formerly Sec. 36-224n). *(See end of section for amended version and effective date.) Applications and referrals from unlicensed secondary mortgage brokers.
Sec. 36a-534g*. Participation in the national mortgage licensing system authorized.
Sec. 36a-543. (Formerly Sec. 36-260a). Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner.
Sec. 36a-563. (Formerly Sec. 36-233). Charges. Loan restrictions.
Sec. 36a-570. (Formerly Sec. 36-239). Regulations.
Sec. 36a-572. (Formerly Sec. 36-242). Suspension, revocation or refusal to renew license or taking of other action.
Sec. 36a-587. (Formerly Sec. 36-571). Suspension, revocation or refusal to renew license or taking of other action. Hearings. Enforcement powers of commissioner.
Sec. 36a-596. (Formerly Sec. 36-531). Definitions.
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.
Sec. 36a-603. (Formerly Sec. 36-539). Investments equal to amount of outstanding payment instruments and stored value required. Permissible investments.
Sec. 36a-604. (Formerly Sec. 36-540). Net worth requirements.
Sec. 36a-607. (Formerly Sec. 36-543). Conduct of business by agent or subagent.
Sec. 36a-608. (Formerly Sec. 36-544). Enforcement powers of commissioner.

PART I
MORTGAGE LENDERS, BROKERS AND ORIGINATORS

(A)*

NONDEPOSITORY FIRST MORTGAGE LENDERS, BROKERS
AND ORIGINATORS

      *See Sec. 36a-534g re authorization of Banking Commissioner to participate in the national mortgage licensing system.

      Sec. 36a-485. (Formerly Sec. 36-440). *(See end of section for amended version and effective date.) 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, or otherwise acts on behalf of, a mortgage lender or first mortgage broker that is licensed or 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 take an application for or negotiate, solicit, arrange or find a first mortgage loan. "Originator" does not include (1) 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, or (2) an individual whose responsibilities are limited to clerical and administrative tasks and who does not solicit borrowers, take applications or negotiate the terms of loans;

      (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; P.A. 07-91, S. 1.)

      *Note: On and after September 30, 2008, this section, as amended by section 4 of public act 07-156, is to read as follows:

      "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 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, or otherwise acts on behalf of, a mortgage lender or first mortgage broker that is licensed or 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 take an application for or negotiate, solicit, arrange or find a first mortgage loan. "Originator" does not include (1) an officer, if the mortgage lender or first mortgage broker 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, or (2) an individual whose responsibilities are limited to clerical and administrative tasks and who does not solicit borrowers, take applications or negotiate the terms of loans;

      (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; P.A. 07-91, S. 1; 07-156, S. 4.)

      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; P.A. 07-91 redefined "originator" in Subdiv. (8); P.A. 07-156 redefined "advance fee" in Subdiv. (1) to delete "or registered", and redefined "originator" in Subdiv. (8) to insert "mortgage lender or first mortgage broker" re exclusion for officer, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-486. (Formerly Sec. 36-440a). *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 5 of public act 07-156, is to read as follows:

      "Sec. 36a-486. (Formerly Sec. 36-440a). License required. 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 person licensed as a mortgage lender or first mortgage broker shall employ or retain an originator unless such originator is licensed under sections 36a-485 to 36a-498a, inclusive, provided such licensure shall not be required for any originator who is licensed under sections 36a-510 to 36a-524, inclusive. No individual may act as an originator without being licensed, or act as an originator, as defined in sections 36a-485 and 36a-510, for more than one person. The license of an originator is not effective during any period when such originator is not associated with a licensed mortgage lender or first mortgage broker. Both the originator and the mortgage lender and first mortgage broker 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 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; P.A. 07-156, S. 5.)

      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"; P.A. 07-156 amended Subsecs. (b) and (c) to replace registration requirement for originators with licensing requirement and to make conforming changes, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-488. (Formerly Sec. 36-440c). *(See end of section for amended version and effective date.) 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 or for renewal of such registration 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; P.A. 07-91, S. 2.)

      *Note: On and after September 30, 2008, this section, as amended by section 2 of public act 07-91 and section 6 of public act 07-156, is to read as follows:

      "Sec. 36a-488. (Formerly Sec. 36-440c). License as first mortgage lender, first mortgage correspondent lender or first mortgage broker. Prerequisites. Application for license. (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.

      (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; and (8) 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. The commissioner may conduct a criminal history records check of the applicant, of each member, partner, officer or director of the applicant and of the person with supervisory authority at the location for which the license is sought, and require the applicant to submit the fingerprints of such persons as part of the application. The application shall be filed with the national mortgage licensing system, which shall process the fingerprints through the Federal Bureau of Investigation.

      (c) An application for an originator license or renewal of such license shall be made on a form provided by the commissioner. The commissioner may conduct a criminal history records check of the applicant and require the applicant to submit fingerprints as part of the application. The application shall be filed with the national mortgage licensing system, which shall process the fingerprints through the Federal Bureau of Investigation."

      (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; P.A. 07-91, S. 2; 07-156, S. 6.)

      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; P.A. 07-91 amended Subsec. (d) to provide that filing application for renewal of registration of originator with knowledge that application contains a material misstatement by originator shall be a violation of Sec. 36a-53a; P.A. 07-156 amended Subsec. (a)(1) to delete proviso re inapplicability of experience requirements to any person whose license is renewed effective October 1, 2002, amended Subsec. (b) to authorize commissioner to conduct a criminal history records check of applicants and key persons of such applicants, to require applicants to submit fingerprints of such persons, and to require filing of applications with the national mortgage licensing system, amended Subsec. (c) to authorize commissioner to conduct criminal history records check of applicant for an originator license, to require applicant to submit fingerprints as part of application, and to require filing application with such system, and deleted former Subsec. (d) and language in Subsecs. (b)(8) and (c) re registration of originator and substituted language re originator license in Subsec. (c), effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-489. (Formerly Sec. 36-440d). *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 7 of public act 07-156, is to read as follows:

      "Sec. 36a-489. (Formerly Sec. 36-440d). Application for license. Denial of application for license. (a) If the commissioner finds, upon the filing of an application for a mortgage lender or first mortgage broker 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, 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 an originator license, the commissioner shall license the originator named in the application unless the commissioner finds that such 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 license would be in the public interest and consistent with the purposes of sections 36a-485 to 36a-498a, inclusive. If the commissioner denies an application for an originator license, the commissioner shall notify such 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. A 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. 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; P.A. 07-156, S. 7.)

      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; P.A. 07-156 replaced language re application for registration of originator and registration with language re application for originator license and license and made conforming changes, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-490. (Formerly Sec. 36-440e). *(See end of section for amended version and effective date.) 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. No licensee shall use any name other than the name stated on the license issued by the commissioner.

      (b) A licensee may change the name or location specified on its license if (1) at least twenty-one calendar days prior to such change, the licensee notifies the commissioner, in writing, on a form satisfactory to the commissioner, and provides a bond rider or endorsement to the surety bond on file with the commissioner that reflects the new name or location, and (2) the commissioner does not disapprove such change, in writing, or request further information within such twenty-one-day period. The licensee shall promptly notify the commissioner, in writing, of any other 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; P.A. 07-91, S. 3.)

      *Note: On and after September 30, 2008, this section, as amended by section 3 of public act 07-91 and section 8 of public act 07-156, is to read as follows:

      "Sec. 36a-490. (Formerly Sec. 36-440e). License. (a) Each mortgage lender and first mortgage broker 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. No licensee shall use any name other than the name stated on the license issued by the commissioner.

      (b) A licensee may change the name or location specified on its license if (1) at least twenty-one calendar days prior to such change, the licensee notifies the commissioner, in writing, on a form satisfactory to the commissioner, and provides a bond rider or endorsement to the surety bond on file with the commissioner that reflects the new name or location, and (2) the commissioner does not disapprove such change, in writing, or request further information within such twenty-one-day period. The licensee shall promptly notify the commissioner, in writing, of any other 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; P.A. 07-91, S. 3; 07-156, S. 8.)

      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"; P.A. 07-91 amended Subsec. (a) to delete provision requiring only prior written notice to commissioner for any change of location of a licensee, and amended Subsec. (b) to allow licensee to change name or location specified on its license if, at least 21 calendar days prior to change, licensee provides written notice to commissioner on a form satisfactory to commissioner and a bond rider or endorsement to surety bond on file and commissioner does not disapprove change, in writing, or request further information within such 21-day period; P.A. 07-156 amended Subsec. (a) to insert "mortgage lender and first mortgage broker" re license, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-491. (Formerly Sec. 36-440f). *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 9 of public act 07-156, is to read as follows:

      "Sec. 36a-491. (Formerly Sec. 36-440f). License and processing fees. Expiration of licenses. Fees nonrefundable. (a)(1) Each applicant for a first mortgage lender license, a first mortgage correspondent lender license or a first mortgage broker license shall, at the time of making such application, pay to the national mortgage licensing system the required license fee and processing fee for an initial or renewal application. Each license issued pursuant to section 36a-489 shall expire at the close of business on December thirty-first of the year following its issuance unless such license is renewed.

      (2) Each applicant for an originator license shall, at the time of making such application, pay to the national mortgage licensing system the required license fee and processing fee for an initial or renewal application. Each such license shall expire at the close of business on December thirty-first of the year following its issuance unless such license is renewed.

      (b) 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."

      (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; P.A. 07-156, S. 9.)

      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 $250 to $400 and increased the fee applicable to broker's licenses from $100 to $200; P.A. 94-104 changed the license renewal deadline from September tenth to September first and added a $100 late fee in Subsec. (a), and added Subsec. (a)(2) re applications filed by a licensee whose license expired within 60 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 $800 for first mortgage lender and first mortgage correspondent lender licenses and fee of $400 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 $50 for originator for application filed not earlier than one year before date license expires; P.A. 07-156 amended Subsec. (a)(1) to delete requirement that applicants pay various license fees to commissioner and substitute requirement that applicants, including applicants for a first mortgage broker license, pay the required license fee and processing fee for an initial or renewal application to the national mortgage licensing system and to change date of expiration of licenses issued pursuant to Sec. 36a-489 from September 30th of even-numbered year following issuance to December 31 of year following issuance, amended Subsec. (a)(2) to delete references to registration and to substitute references to license re originators, to require applicants for originator license to pay required license and processing fees for an initial or renewal application to the national mortgage licensing system in lieu of commissioner and to provide that license shall expire on December 31 of year following issuance, deleted former Subsec. (a)(3), and amended Subsec. (b) to delete references to registration, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-492. (Formerly Sec. 36-440g). *(See end of section for amended version of subsection (a) and effective date.) 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.)

      *Note: On and after September 30, 2008, subsection (a) of this section, as amended by section 10 of public act 07-156, is to read as follows:

      "(a) No mortgage lender or first mortgage broker 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."

      (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; P.A. 07-156, S. 10.)

      History: P.A. 89-347 extended the application of the section to mortgage brokers; P.A. 90-277 reduced the required bond sum from $50,000 to $40,000; 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; P.A. 07-156 amended Subsec. (a) to insert "mortgage lender or first mortgage broker" re license, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-493. (Formerly Sec. 36-440h). *(See end of section for amended version of subsection (a) and effective date.) 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.)

      *Note: On and after September 30, 2008, subsection (a) of this section, as amended by section 11 of public act 07-156, is to read as follows:

      "(a) Each mortgage lender and first mortgage broker 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."

      (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; P.A. 07-156, S. 11.)

      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 Subsec. (a)(6) 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; P.A. 07-156 amended Subsec. (a) to insert "mortgage lender and first mortgage broker" re licensee, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-494. (Formerly Sec. 36-440i). *(See end of section for amended version and effective date.) Suspension, revocation or refusal to renew license or registration or taking of other action. (a)(1) The commissioner may suspend, revoke or refuse to renew any license or take any other action, 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 or take any other action, 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; P.A. 07-91, S. 17.)

      *Note: On and after September 30, 2008, this section, as amended by section 17 of public act 07-91 and section 12 of public act 07-156, is to read as follows:

      "Sec. 36a-494. (Formerly Sec. 36-440i). Suspension, revocation or refusal to renew license or taking of other action. (a)(1) The commissioner may suspend, revoke or refuse to renew any mortgage lender or first mortgage broker license or take any other action, 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 such 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 originator license or take any other action, 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 such license under sections 36a-485 to 36a-498a, inclusive, or if the commissioner finds that the licensee 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 licensee'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 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 or licensee in accordance with sections 36a-50 and 36a-52."

      (P.A. 85-399, S. 10; P.A. 86-403, S. 78, 132; P.A. 88-230, S. 1, 12; P.A. 89-347, S. 17; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; 93-194, S. 5, 7; P.A. 94-122, S. 237, 340; P.A. 99-36, S. 29; P.A. 00-61, S. 2, 9; P.A. 02-111, S. 11; P.A. 04-69, S. 8; P.A. 05-46, S. 3; P.A. 06-45, S. 4; P.A. 07-91, S. 17; 07-156, S. 12.)

      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 Sec. 36-440h(a)(6) 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; P.A. 07-91 amended Subsec. (a)(1) and (2) to authorize commissioner to take any other action, in accordance with provisions of Sec. 36a-51, effective June 5, 2007; P.A. 07-156 amended Subsec. (a)(1) to insert "mortgage lender or first mortgage broker" re license, amended Subsec. (a)(2) to substitute "license" and "licensee" for "registration" and "registrant", and amended Subsec. (b) to delete references to "registrant", effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-496. (Formerly Sec. 36-440k). *(See end of section for amended version and effective date.) 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. 01-306, S. 2; P.A. 02-111, S. 12; P. A. 04-69, S. 9.)

      *Note: On and after September 30, 2008, this section, as amended by section 13 of public act 07-156, is to read as follows:

      "Sec. 36a-496. (Formerly Sec. 36-440k). Application and referrals from unlicensed first mortgage brokers or 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 under said sections but is not licensed to act as such by the commissioner, if the mortgage lender has actual knowledge that the first mortgage broker or originator is not licensed by the commissioner."

      (P.A. 91-306, S. 2; P.A. 02-111, S. 12; P.A. 04-69, S. 9; P.A. 07-156, S. 13.)

      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"; P.A. 07-156 deleted references to "registered", effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-498. (Formerly Sec. 36-440m). *(See end of section for amended version and effective date.) 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.

      (g) (1) For the purposes of this subsection:

      (A) "Unfair or deceptive act or practice" means (i) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitor is not affiliated with the lender or broker with which the consumer initially applied, (ii) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitation is based on personal information about the consumer that was purchased, directly or indirectly, from a consumer reporting agency without the knowledge or permission of the lender or broker with which the consumer initially applied, (iii) the failure in the initial solicitation to comply with the provisions of the federal Fair Credit Reporting Act relating to prescreening solicitations that use consumer reports, including the requirement to make a firm offer of credit to the consumer, or (iv) knowingly or negligently using information from a mortgage trigger lead (I) to solicit consumers who have opted out of prescreened offers of credit under the federal Fair Credit Reporting Act, or (II) to place telephone calls to consumers who have placed their contact information on a federal or state Do Not Call list; and

      (B) "Mortgage trigger lead" means a consumer report obtained pursuant to Section 604 (c)(1)(B) of the federal Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. "Mortgage trigger lead" does not include a consumer report obtained by a lender that holds or services existing indebtedness of the applicant who is the subject of the report.

      (2) No mortgage lender or first mortgage broker shall engage in an unfair or deceptive act or practice in soliciting an application for a first mortgage loan when such solicitation is based, in whole or in part, on information contained in a mortgage trigger lead. Any violation of this subsection shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.

      (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; P.A. 07-118, S. 1.)

      *Note: On and after September 30, 2008, this section, as amended by section 1 of public act 07-118 and section 14 of public act 07-156, is to read as follows:

      "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 licensed pursuant to sections 36a-485 to 36a-498a, inclusive, shall accept payment of any advance fee except an advance fee on behalf of a mortgage lender or first mortgage broker licensee. Nothing in this subsection shall be construed as prohibiting the mortgage lender or first mortgage broker 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.

      (g) (1) For the purposes of this subsection:

      (A) "Unfair or deceptive act or practice" means (i) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitor is not affiliated with the lender or broker with which the consumer initially applied, (ii) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitation is based on personal information about the consumer that was purchased, directly or indirectly, from a consumer reporting agency without the knowledge or permission of the lender or broker with which the consumer initially applied, (iii) the failure in the initial solicitation to comply with the provisions of the federal Fair Credit Reporting Act relating to prescreening solicitations that use consumer reports, including the requirement to make a firm offer of credit to the consumer, or (iv) knowingly or negligently using information from a mortgage trigger lead (I) to solicit consumers who have opted out of prescreened offers of credit under the federal Fair Credit Reporting Act, or (II) to place telephone calls to consumers who have placed their contact information on a federal or state Do Not Call list; and

      (B) "Mortgage trigger lead" means a consumer report obtained pursuant to Section 604 (c)(1)(B) of the federal Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. "Mortgage trigger lead" does not include a consumer report obtained by a lender that holds or services existing indebtedness of the applicant who is the subject of the report.

      (2) No mortgage lender or first mortgage broker shall engage in an unfair or deceptive act or practice in soliciting an application for a first mortgage loan when such solicitation is based, in whole or in part, on information contained in a mortgage trigger lead. Any violation of this subsection shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b."

      (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; P.A. 07-118, S. 1; 07-156, S. 14.)

      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; P.A. 07-118 added Subsec. (g) to define "unfair or deceptive act or practice" and "mortgage trigger lead", to prohibit mortgage lenders and first mortgage brokers from engaging in an unfair or deceptive act or practice in soliciting application for a first mortgage loan if solicitation is based in any way on a mortgage trigger lead, and to provide that violation is deemed an unfair or deceptive trade practice under Sec. 42-110b(a); P.A. 07-156 amended Subsec. (b) to substitute "licensed" for "registered" and to insert "mortgage lender or first mortgage broker" re licensee, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-498a. *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 15 of public act 07-156, is to read as follows:

Sec. 36a-498a. Prepaid finance charges; when prohibited. No mortgage lender or first mortgage broker 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: P.A. 07-156, S. 15.)

      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 12 consecutive months, effective May 8, 2006; P.A. 07-156 inserted "mortgage lender or first mortgage broker" re licensee, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

(B)*

SECONDARY MORTGAGE LENDERS, BROKERS AND ORIGINATORS


      *See Sec. 36a-534g re authorization of Banking Commissioner to participate in the national mortgage licensing system.

      Sec. 36a-510. (Formerly Sec. 36-224a). *(See end of section for amended version and effective date.) 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, or otherwise acts on behalf of, a mortgage lender or secondary mortgage broker that is licensed or 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 take an application for or negotiate, solicit, arrange or find a secondary mortgage loan. "Originator" does not include (1) 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, or (2) an individual whose responsibilities are limited to clerical and administrative tasks and who does not solicit borrowers, take applications or negotiate the terms of loans;

      (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; P.A. 07-91, S. 4.)

      *Note: On and after September 30, 2008, this section, as amended by section 4 of public act 07-91 and section 16 of public act 07-156, is to read as follows:

      "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 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 mortgage lender or secondary mortgage broker 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; P.A. 07-91, S. 4; 07-156, S. 16.)

      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; P.A. 07-91 redefined "originator" in Subdiv. (5); P.A. 07-156 redefined "advance fee" in Subdiv. (1) to delete "or registered", and redefined "originator" in Subdiv. (5) to insert "mortgage lender or secondary mortgage broker" in exclusion re officer, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-511. (Formerly Sec. 36-224b). *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 17 of public act 07-156, is to read as follows:

      "Sec. 36a-511. (Formerly Sec. 36-224b). License required. 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 person licensed as a mortgage lender or secondary mortgage broker shall employ or retain an originator unless such originator is licensed under sections 36a-510 to 36a-524, inclusive, provided such license shall not be required for any originator who is licensed under sections 36a-485 to 36a-498a, inclusive. No individual may act as an originator without being licensed, or act as an originator, as defined in sections 36a-485 and 36a-510, for more than one person. The license of an originator is not effective during any period when such originator is not associated with a licensed mortgage lender or secondary mortgage broker. Both the originator and the mortgage lender and secondary mortgage broker 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; P.A. 07-156, S. 17.)

      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"; P.A. 07-156 amended Subsec. (b) to substitute mortgage lender or secondary mortgage broker for "licensee" and to substitute "license" and "licensed" for "registration" and "registered", effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-513. (Formerly Sec. 36-224d). *(See end of section for amended version and effective date.) 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 or for renewal of such registration 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; P.A. 07-91, S. 5.)

      *Note: On and after September 30, 2008, this section, as amended by section 5 of public act 07-91 and section 18 of public act 07-156, is to read as follows:

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

      (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; and (8) 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. The commissioner may conduct a criminal history records check of the applicant, of each member, partner, officer or director of the applicant and of the person with supervisory authority at the location for which the license is sought, and require the applicant to submit the fingerprints of such persons as part of the application. The application shall be filed with the national mortgage licensing system, which shall process the fingerprints through the Federal Bureau of Investigation.

      (c) If the commissioner finds, upon the filing of an application for a mortgage lender or secondary mortgage broker 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, 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 an originator license or renewal of such license shall be made on a form provided by the commissioner. The commissioner may conduct a criminal history records check of the applicant and require the applicant to submit fingerprints as part of the application. The application shall be filed with the national mortgage licensing system, which shall process the fingerprints through the Federal Bureau of Investigation.

      (e) Upon the filing of an application for an originator license, the commissioner shall license the originator named in the application unless the commissioner finds that such 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 license would be in the public interest and consistent with the purposes of sections 36a-510 to 36a-524, inclusive. If the commissioner denies an application for an originator license, the commissioner shall notify such 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. Each license shall remain in force and effect until it has been surrendered, revoked or suspended or expires in accordance with the provisions of sections 36a-510 to 36a-524, inclusive."

      (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; P.A. 07-91, S. 5; 07-156, S. 18.)

      History: P.A. 78-216 required that application set forth whether applicant is a lender and/or broker in Subsec. (b); P.A. 80-67 included renewal of licenses in Subsec. (a), reworded Subsec. (b) and specified applicability of Subdiv. (4) to lead and participant lenders and added Subsec. (c); P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-224d transferred to Sec. 36a-513 in 1995; P.A. 02-111 replaced former Subsec. (a) with new provisions re obtaining license as secondary mortgage lender, secondary mortgage correspondent lender or secondary mortgage broker and re obligation to notify commissioner if net worth falls below requisite net worth, amended Subsec. (b) to reflect commissioner's authority to issue secondary mortgage lender license, secondary mortgage correspondent lender license and secondary mortgage broker license and to revise application requirements, deleted former Subsec. (c) re investigation and issuance of license, added new Subsec. (c) re findings and issuance of license, added new Subsec. (d) re application for registration of originator and added new Subsec. (e) re commissioner's denial of originator registration; 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; P.A. 07-91 amended Subsec. (f) to provide that filing application for renewal of registration of originator with knowledge that application contains a material misstatement by originator shall be a violation of Sec. 36a-53a; P.A. 07-156 amended Subsec. (a)(1) to delete proviso re inapplicability of experience requirements to any person whose license is renewed effective July 1, 2003, amended Subsec. (b) to authorize commissioner to conduct a criminal history records check of applicants and key persons of applicants and require applicants to submit fingerprints of such persons, and to require filing applications with the national mortgage licensing system, amended Subsec. (c) to insert "mortgage lender or secondary mortgage broker" re license and to delete language re application for registration of an originator, amended Subsec. (d) to authorize commissioner to conduct a criminal history records check of applicant for originator license and require applicant to submit fingerprints as part of the application and to require filing of application with such system, amended Subsec. (e) to provide that each license shall remain in force and effect until it has been surrendered, revoked or suspended or expires in accordance with Secs. 36a-510 to 36a-524, and deleted former Subsec. (f) and other language in Subsecs. (b)(8), (c), (d) and (e) re application for registration of an originator and registration and substituted language re application for an originator license and license, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-514. (Formerly Sec. 36-224e). *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 19 of public act 07-156, is to read as follows:

      "Sec. 36a-514. (Formerly Sec. 36-224e). License and processing fees. Expiration of licenses. Fees nonrefundable. (a) Each applicant for a secondary mortgage lender license, a secondary mortgage correspondent lender license or a secondary mortgage broker license, at the time of making such application, shall pay to the national mortgage licensing system the required license fee and processing fee for an initial or renewal application. Each license issued pursuant to this section shall expire at the close of business on December thirty-first of the year following its issuance unless such license is renewed.

      (b) Each applicant for an originator license shall, at the time of making such application, pay to the national mortgage licensing system the required license fee and processing fee for an initial or renewal application. Each such license shall expire at the close of business on December thirty-first of the year following its issuance unless such license is renewed.

      (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."

      (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; P.A. 07-156, S. 19.)

      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 $200 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 $250 to $400; P.A. 94-104 changed the license renewal deadline from June twentieth to June first, added a $100 late fee and added a $100 processing fee for a person whose license expired within 60 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 $800 for secondary mortgage lender license and secondary mortgage correspondent lender license and fee of $400 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 $50 for originator for application filed not earlier than one year before date license expires; P.A. 07-156 amended Subsec. (a) to delete requirement that applicants pay various license fees to commissioner and substitute requirement that applicants, including applicants for secondary mortgage broker license, pay the required license fee and processing fee for initial or renewal application to the national mortgage licensing system and to change date of expiration of licenses from September 30th of even-numbered year following issuance to December 31st of year following issuance, amended Subsec. (b) to delete references to registration and to substitute references to license re originators, to require applicants for originator license to pay required license and processing fees for initial or renewal application to the national mortgage licensing system in lieu of commissioner, and to provide that license shall expire on December 31st of year following issuance, deleted former Subsec. (c), redesignated existing Subsec. (d) as Subsec. (c), and amended same to delete references to registration, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-515. (Formerly Sec. 36-224f). *(See end of section for amended version and effective date.) 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. No licensee shall use any name other than the name stated on the license issued by the commissioner.

      (b) A licensee may change the name or location specified on its license if (1) at least twenty-one calendar days prior to such change, the licensee notifies the commissioner, in writing, on a form satisfactory to the commissioner, and (2) the commissioner does not disapprove such change, in writing, or request further information within such twenty-one-day period. The licensee shall promptly notify the commissioner, in writing, of any other 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; P.A. 07-91, S. 6.)

      *Note: On and after September 30, 2008, this section, as amended by section 6 of public act 07-91 and section 20 of public act 07-156, is to read as follows:

      "Sec. 36a-515. (Formerly Sec. 36-224f). License. (a) Each mortgage lender and secondary mortgage broker 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. No licensee shall use any name other than the name stated on the license issued by the commissioner.

      (b) A licensee may change the name or location specified on its license if (1) at least twenty-one calendar days prior to such change, the licensee notifies the commissioner, in writing, on a form satisfactory to the commissioner, and (2) the commissioner does not disapprove such change, in writing, or request further information within such twenty-one-day period. The licensee shall promptly notify the commissioner, in writing, of any other 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-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; P.A. 07-91, S. 6; 07-156, 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; P.A. 07-91 amended Subsec. (a) to delete provision requiring only prior written notice to commissioner for any change of location of a licensee, and amended Subsec. (b) to allow licensee to change name or location specified on its license if at least 21 calendar days prior to such change, licensee provides written notice of change to commissioner on a form satisfactory to commissioner and commissioner does not disapprove change, in writing, or request further information within such 21-day period; P.A. 07-156 amended Subsec. (a) to insert "mortgage lender and secondary mortgage broker" re license and amended Subsec. (c) to delete reference to "registration", effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-516. (Formerly Sec. 36-224g). *(See end of section for amended version of subsection (a) and effective date.) 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.)

      *Note: On and after September 30, 2008, subsection (a) of this section, as amended by section 21 of public act 07-156, is to read as follows:

      "(a) Each mortgage lender and secondary mortgage broker 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."

      (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; P.A. 07-156, 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; P.A. 07-156 amended Subsec. (a) to insert "mortgage lender and secondary mortgage broker" re licensee, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-517. (Formerly Sec. 36-224h). *(See end of section for amended version of subsection (a) and effective date.) Suspension, revocation or refusal to renew license or registration or taking of other action. *(a)(1) The commissioner may suspend, revoke or refuse to renew any license or take any other action, 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 or take any other action, 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; P.A. 07-91, S. 18.)

      *Note: On and after September 30, 2008, this section, as amended by section 18 of public act 07-91 and section 22 of public act 07-156, is to read as follows:

      "Sec. 36a-517. (Formerly Sec. 36-224h). Suspension, revocation or refusal to renew license or taking of other action. (a)(1) The commissioner may suspend, revoke or refuse to renew any mortgage lender or secondary mortgage broker license or take any other action, in accordance with section 36a-51, for any reason which would be sufficient grounds for the commissioner to deny an application for such 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 originator license or take any other action, 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 such license under sections 36a-510 to 36a-524, inclusive, or if the commissioner finds that the licensee 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 licensee'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 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 or licensee in accordance with sections 36a-50 and 36a-52."

      (P.A. 77-228, S. 8; P.A. 80-67, S. 5; P.A. 82-174, S. 1, 14; P.A. 86-403, S. 76, 132; P.A. 88-230, S. 1, 12; P.A. 90-98, S. 1, 2; P.A. 93-142, S. 4, 7, 8; P.A. 94-122, S. 245, 340; P.A. 00-61, S. 3, 9; P.A. 02-111, S. 22; P.A. 04-69, S. 15; P.A. 05-46, S. 5; P.A. 06-45, S. 9; P.A. 07-91, S. 18; 07-156, S. 22.)

      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; P.A. 07-91 amended Subsec. (a)(1) and (2) to authorize commissioner to take any other action, in accordance with provisions of Sec. 36a-51, effective June 5, 2007; P.A. 07-156 amended Subsec. (a)(1) to insert "mortgage lender or secondary mortgage broker" re license, amended Subsec. (a)(2) to substitute "license" and "licensee" for "registration" and "registrant", and amended Subsec. (b) to delete references to "registrant", effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-521. (Formerly Sec. 36-224l). *(See end of section for amended version of subsection (d) and effective date.) 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 the 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.

      (i) (1) For the purposes of this subsection:

      (A) "Unfair or deceptive act or practice" means (i) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitor is not affiliated with the lender or broker with which the consumer initially applied, (ii) the failure to clearly and conspicuously state in the initial phase of the solicitation that the solicitation is based on personal information about the consumer that was purchased, directly or indirectly, from a consumer reporting agency without the knowledge or permission of the lender or broker with which the consumer initially applied, (iii) the failure in the initial solicitation to comply with the provisions of the federal Fair Credit Reporting Act relating to prescreening solicitations that use consumer reports, including the requirement to make a firm offer of credit to the consumer, or (iv) knowingly or negligently using information from a mortgage trigger lead (I) to solicit consumers who have opted out of prescreened offers of credit under the federal Fair Credit Reporting Act, or (II) to place telephone calls to consumers who have placed their contact information on a federal or state Do Not Call list; and

      (B) "Mortgage trigger lead" means a consumer report obtained pursuant to Section 604(c)(1)(B) of the federal Fair Credit Reporting Act, 15 USC 1681b, where the issuance of the report is triggered by an inquiry made with a consumer reporting agency in response to an application for credit. "Mortgage trigger lead" does not include a consumer report obtained by a lender that holds or services existing indebtedness of the applicant who is the subject of the report.

      (2) No mortgage lender or secondary mortgage broker shall engage in any unfair or deceptive act or practice in soliciting an application for a secondary mortgage loan when such solicitation is based, in whole or in part, on information contained in a mortgage trigger lead. Any violation of this subsection shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b.

      (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; P.A. 07-118, S. 2.)

      *Note: On and after September 30, 2008, subsection (d) of this section, as amended by section 23 of public act 07-156, is to read as follows:

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

      (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; P.A. 07-118, S. 2; 07-156, S. 23.)

      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)(1) by adding broker's fees or commissions for which the borrower may be obligated to the limitation on fees and charges; 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; P.A. 07-118 amended Subsec. (a) to make a technical change and added Subsec. (i) to define "unfair or deceptive act or practice" and "mortgage trigger lead", to prohibit mortgage lenders and secondary mortgage brokers from engaging in an unfair or deceptive act or practice in soliciting application for a secondary mortgage loan if solicitation is based in any way on a mortgage trigger lead, and to provide that violation is deemed an unfair or deceptive trade practice under Sec. 42-110b(a); P.A. 07-156 amended Subsec. (d) to substitute "licensed" for "registered" re originator and to insert "mortgage lender or secondary mortgage broker" re licensee, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-523. (Formerly Sec. 36-224n). *(See end of section for amended version and effective date.) 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.)

      *Note: On and after September 30, 2008, this section, as amended by section 24 of public act 07-156, is to read as follows:

      "Sec. 36a-523. (Formerly Sec. 36-224n). Applications and referrals from unlicensed secondary mortgage brokers or originators. 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 or originator who is required to be licensed under said sections but is not licensed to act as such by the commissioner, if the mortgage lender has actual knowledge that the secondary mortgage broker or originator 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; P.A. 07-156, S. 24.)

      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"; P.A. 07-156 placed originators within purview of section and made conforming changes, effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

(C)

GENERAL PROVISIONS

      Sec. 36a-534g*. Participation in the national mortgage licensing system authorized. The Banking Commissioner may participate in the national mortgage licensing system and permit such system to process applications for first mortgage lender, first mortgage correspondent lender, first mortgage broker, secondary mortgage lender, secondary mortgage correspondent lender, secondary mortgage broker and originator licenses in this state and receive and maintain records related to such licenses that are allowed or required to be maintained by the commissioner.

      (P.A. 07-156, S. 1.)

      *Note: This section is effective September 30, 2008.

      History: P.A. 07-156 effective September 30, 2008.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

PART II
FINANCE COMPANIES

      Sec. 36a-543. (Formerly Sec. 36-260a). Suspension, revocation or refusal to renew license or taking of other action. Enforcement powers of commissioner. (a) The commissioner may suspend, revoke or refuse to renew any sales finance company license or take any other action, 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; P.A. 07-91, S. 19.)

      History: 1971 acts required appeal to return day between 12 and 30 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 10 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; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

PART III
SMALL LOAN LENDERS

      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) of this section, 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) of this section 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; P.A. 07-217, S. 153, 154.)

      History: 1963 act incorporated previous provisions as Subsecs. (a) and (h) substituting "charges" for "interest" where occurring, raised loan limit in Subsec. (a) from $600 to $1,000 "excluding charges" and changing method of calculating charges, raised limit in Subsec. (h) from $600 to $1,000, substituted 24 months and 15 days for 20 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 $1,800, raised amount charged on excess of $300 from $9 to $11 per $100 in Subsec. (a), specified applicability of provisions to loans under chapter in Subsec. (h) and made 24-month and 15-day period applicable where cash advance was $1,000 or less and allowed 36-month and 15-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 $1,800 to $5,000 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 $0.05 per dollar with charge consisting of the lesser of $5 or $0.05 per dollar and added Subsec. (i) authorizing loans in excess of $1,800 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 48 months and 15 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 $300 to $600; P.A. 81-102 amended Subsec. (d) by increasing the maximum default charge from $5 to $7.50 and establishing a minimum default charge of $3, 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 $5,000 to $15,000 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; P.A. 07-217 made technical changes in Subsecs. (c) and (e), effective July 12, 2007.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      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 its association with other businesses, the conduct of the associated businesses 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; P.A. 07-91, S. 7.)

      History: P.A. 94-122 made technical changes, effective January 1, 1995; Sec. 36-239 transferred to Sec. 36a-570 in 1995; P.A. 07-91 authorized commissioner to adopt regulations and make findings as necessary for the association of small loan business with other businesses and the conduct of associated businesses, effective June 5, 2007.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      Sec. 36a-572. (Formerly Sec. 36-242). Suspension, revocation or refusal to renew license or taking of other action. The commissioner may suspend, revoke or refuse to renew any license issued under the provisions of section 36a-556 or take any other action, in accordance with section 36a-51, 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; P.A. 07-91, S. 20.)

      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; P.A. 07-91 authorized commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

PART IV
CHECK CASHING SERVICES

      Sec. 36a-587. (Formerly Sec. 36-571). Suspension, revocation or refusal to renew license or taking of other action. Hearings. Enforcement powers of commissioner. (a) The commissioner may suspend, revoke or refuse to renew any license issued pursuant to section 36a-581 or take any other action, 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; P.A. 07-91, S. 21.)

      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; P.A. 07-91 amended Subsec. (a) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

PART V
PAYMENT INSTRUMENTS. MONEY TRANSMISSION

      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 of money or monetary value 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 of money or monetary value 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; P.A. 07-91, S. 8.)

      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; P.A. 07-91 inserted references to transmission "of money or monetary value" in definitions of "electronic payment instrument" and "payment instrument" in Subdivs. (1) and (10).

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      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 Connecticut 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. 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 or monetary value in connection with the sale and issuance of Connecticut 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. 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; P.A. 07-91, 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; P.A. 07-91 amended Subsec. (a) to insert references to "Connecticut" payment instruments and transmission of "monetary value", and amended Subsec. (c) to insert references to transmission or payment of "monetary value" and to make a technical change.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      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 Connecticut 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 Connecticut 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; P.A. 07-91, S. 10.)

      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; P.A. 07-91 amended Subsecs. (a) and (c) to insert reference to "Connecticut" payment instruments.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      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; P.A. 07-72, S. 7.)

      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 $500,000 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; P.A. 07-72 made a technical change in Subsec. (c).

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      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 or monetary value 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; P.A. 07-91, S. 11.)

      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; P.A. 07-91 amended Subsec. (a)(4) to insert reference to "monetary value".

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)

      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 or take any other action, 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; P.A. 07-91, S. 22.)

      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; P.A. 07-91 amended Subsec. (b) to authorize commissioner to take any other action, in accordance with Sec. 36a-51, effective June 5, 2007.

(Return to
Chapter Table of Contents)
(Return to
List of Chapters)
(Return to
List of Titles)