File No. 363

House of Representatives, April 7, 2014

The Committee on Banks reported through REP. TONG of the 147th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING MORTGAGE SERVICERS, CONNECTICUT FINANCIAL INSTITUTIONS, CONSUMER CREDIT LICENSES, THE FORECLOSURE MEDIATION PROGRAM AND MINOR REVISIONS TO THE BANKING STATUTES.

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

Section 1. Section 36a-715 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

As used in sections 36a-715 to 36a-718, inclusive, as amended by this act, and sections 5 to 17, inclusive, of this act, unless the context otherwise requires:

[(1) "First mortgage loan" has the same meaning as provided in section 36a-485.]

(1) "Branch office" means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage servicer.

(2) The terms "control person", "individual", "main office", "mortgage broker", "mortgage correspondent lender", "mortgage lender", "office" and "person" have the same meanings as provided in section 36a-485, as amended by this act.

[(2) "Mortgage servicing company"] (3) "Mortgage servicer" (A) means any person, wherever located, who, for such person or on behalf of the holder of a [first] residential mortgage loan, receives payments of principal and interest in connection with a [first] residential mortgage loan, records such payments on such person's books and records and performs such other administrative functions as may be necessary to properly carry out the mortgage holder's obligations under the mortgage agreement including, when applicable, the receipt of funds from the mortgagor to be held in escrow for payment of real estate taxes and insurance premiums and the distribution of such funds to the taxing authority and insurance company, and (B) includes a person who makes payments to borrowers pursuant to the terms of a home equity conversion mortgage or reverse mortgage.

(4) "Mortgagee" means the grantee of a residential mortgage, provided if the residential mortgage has been assigned of record, "mortgagee" means the last person to whom the residential mortgage has been assigned of record.

[(3)] (5) "Mortgagor" means any person obligated to repay a [first] residential mortgage loan.

(6) "Residential mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling, as defined in Section 103 of the Consumer Credit Protection Act, 15 USC 1602, located in this state, or real property located in this state upon which is constructed or intended to be constructed a dwelling.

(7) "System" means the Nationwide Mortgage Licensing System and Registry, NMLS, NMLSR or such other name or acronym as may be assigned to the multistate system developed by the conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, owned and operated by the State Regulatory Registry, LLC, or any successor or affiliated entity, for the licensing and registration of persons in the mortgage and other financial services industries.

Sec. 2. Section 36a-716 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) Any mortgage [servicing company which] servicer who receives funds from a mortgagor to be held in escrow for payment of taxes and insurance premiums shall pay the taxes and insurance premiums of the mortgagor to the appropriate taxing authority and insurance company in the amount required and at the time such taxes and insurance premiums are due provided (1) the mortgage [servicing company] servicer has been provided with the tax or insurance bills at least fifteen days prior to the date such taxes and insurance premiums are due, and (2) the mortgagor has paid to the mortgage [servicing company] servicer the amounts required to be paid into the escrow account, as determined by the mortgage [servicing company] servicer, for all amounts scheduled to be paid to the mortgage [servicing company] servicer prior to the date such taxes and insurance premiums are due.

(b) Each mortgage [servicing company] servicer shall, through its own effort and expense, determine and notify the mortgagor of the amounts necessary to be paid into the escrow account to assure that sufficient funds will be available for the payment of such taxes and insurance premiums as of the date such payment is due.

(c) If the amount held in the escrow account as of the date such taxes and insurance premiums are due is insufficient to pay the taxes and insurance premiums despite compliance by the mortgagor with subdivision (2) of subsection (a) of this section, the mortgage [servicing company] servicer shall pay such taxes and insurance premiums from its own funds. The mortgage [servicing company] servicer shall then give the mortgagor the option of paying the shortage over a period of not less than one year. The mortgage [servicing company] servicer shall not charge or collect interest on such shortage during the one-year period.

Sec. 3. Section 36a-717 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

Any mortgage [servicing company which] servicer who violates any provision of section 36a-716, as amended by this act, shall be liable to the mortgagor for: (1) Any penalties, interest or other charges levied by the taxing authority or insurance company as a result of such violation; (2) any actual damages suffered by the mortgagor as a result of such violation, including, but not limited to, any amount which would have been paid by an insurer for a casualty or liability claim had the insurance policy not been cancelled for nonpayment by the mortgage [servicing company] servicer; and (3) in the case of any successful action to enforce the foregoing liability, the costs of the action together with reasonable attorney's fees as determined by the court.

Sec. 4. Section 36a-718 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

[If the commissioner determines that any mortgage servicing company has violated any provision of section 36a-716, the commissioner may take action against such mortgage servicing company in accordance with sections 36a-50 and 36a-52. The commissioner may also order the mortgage servicing company to make restitution to the mortgagor upon fourteen days' notice in writing. Such notice shall be sent by certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to the principal place of business of the mortgage servicing company and shall state the grounds for the contemplated action. Within fourteen days of receipt of the notice, the mortgage servicing company may file a written request for a hearing. If a hearing is requested, the commissioner shall not issue an order to make restitution until after such hearing is held. Such hearing shall be conducted in accordance with the provisions of chapter 54.]

(a) On and after January 1, 2015, no person shall act as a mortgage servicer, directly or indirectly, without first obtaining a license under section 5 of this act from the commissioner for its main office and each branch office where such business is conducted, unless such person is exempt from licensure pursuant to subsection (b) of this section.

(b) The following persons are exempt from mortgage servicer licensing requirements: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured, any wholly-owned subsidiary of a federal bank or federally-chartered out-of-state bank, any wholly owned subsidiary of a Connecticut bank or Connecticut credit union or any operating subsidiary of a federal bank or federally-chartered out-of-state bank or any wholly-owned subsidiary of a Connecticut bank or Connecticut credit union where each owner of such operating or wholly-owned subsidiary is wholly-owned by the same bank; and (2) any person licensed as a mortgage lender in this state while acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act, provided (A) such person meets the supplemental mortgage servicer surety bond, fidelity bond and errors and omissions coverage requirements under section 8 of this act, and (B) during any period that the license of the mortgage lender in this state has been suspended, such exemption shall not be effective.

(c) The provisions of sections 10 to 13, inclusive, of this act shall apply to any person, including a person exempt from licensure pursuant to subsection (b) of this section, who acts as a mortgage servicer in this state on or after January 1, 2015.

Sec. 5. (NEW) (Effective October 1, 2014) (a) The Banking Commissioner shall issue a mortgage servicer license to an applicant for such license if the commissioner finds that: (1) The applicant has identified a qualified individual for its main office and a branch manager for each branch office where such business is conducted; (2) notwithstanding the provisions of section 46a-80 of the general statutes, the applicant, the control persons of the applicant, the qualified individual and any branch manager with supervisory authority at the office for which the license is sought have not been convicted of or pled guilty or nolo contendere to, in a domestic, foreign or military court, a felony during the seven-year period preceding the date of the application for licensing or a felony involving an act of fraud or dishonesty, a breach of trust or money laundering at any time preceding the date of application, provided any pardon or expungement of a conviction shall not be a conviction for purposes of this subdivision; (3) the applicant demonstrates that the financial responsibility, character and general fitness of the applicant, the control persons of the applicant, the qualified individual and any branch manager having supervisory authority over the office for which the license is sought command the confidence of the community and warrant a determination that the applicant will operate honestly, fairly and efficiently within the purposes of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act; (4) the applicant has met the surety bond, fidelity bond and errors and omissions coverage requirement under section 8 of this act; (5) the applicant has not made a material misstatement in the application; and (6) the applicant has met any other similar requirements as determined by the commissioner. If the commissioner fails to make such findings, the commissioner shall not issue a license, and shall notify the applicant of the denial and the reasons for such denial. For purposes of this subsection, the level of offense of the crime and the status of any conviction, pardon or expungement shall be determined by reference to the law of the jurisdiction where the case was prosecuted. In the event such jurisdiction does not use the term "felony", "pardon" or "expungement", such terms shall include legally equivalent events.

(b) An application for a license as a mortgage servicer or renewal of such license shall be filed, in a form prescribed by the commissioner, with the system and accompanied by the fees required by section 7 of this act. Each such form shall contain content as set forth by instruction or procedure of the commissioner and may be changed or updated as necessary by the commissioner in order to carry out the purpose of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 6 to 17, inclusive, of this act. The applicant shall, at a minimum, furnish to the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual and any branch manager, including personal history and experience in a form prescribed by the system and information related to any administrative, civil or criminal findings by any governmental jurisdiction. The applicant shall notify the commissioner on the system of any change to the information submitted in connection with its most recent application for licensure not later than fifteen days after the applicant has reason to know of such change. For the purpose of this subsection, evidence of experience of the qualified individual and any branch manager shall include: (1) A statement specifying the duties and responsibilities of such person's employment, the term of employment, including month and year, and the name, address and telephone number of a supervisor, employer or, if self-employed, a business reference; and (2) if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer's letterhead verifying such person's duties and responsibilities and term of employment including month and year, and, if such person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement. The commissioner may conduct a criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager with supervisory authority at the office for which the license is sought and require the applicant to submit the fingerprints of such persons as part of the application.

(c) (1) The minimum standards for license renewal for a mortgage servicer shall include the following: (A) The applicant continues to meet the minimum standards under subsection (a) of this section; and (B) the mortgage servicer has paid all required fees for renewal of the license.

(2) The license of a mortgage servicer failing to satisfy the minimum standards for license renewal shall expire. The commissioner may adopt procedures for the reinstatement of expired licenses consistent with the standards established by the system. The commissioner may automatically suspend a mortgage servicer license if the licensee receives a deficiency on the system indicating that the payment required by section 7 of this act was Returned-ACH or returned pursuant to such other term as may be utilized by the system to indicate that the payment was not accepted. After a license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 15 of this act and an opportunity for a hearing on such action in accordance with section 36a-51 of the general statutes, as amended by this act, and require such licensee to take or refrain from taking such action that, in the opinion of the commissioner, will effectuate the purposes of this section.

(d) (1) Withdrawal of an application for a license filed under this section shall become effective upon receipt by the commissioner of a notice of intent to withdraw such application. The commissioner may deny a license up to one year after the effective date of withdrawal.

(2) If the license of a mortgage servicer expires due to the licensee's failure to renew, the commissioner may institute a revocation or suspension proceeding or issue an order suspending or revoking such license pursuant to subsection (a) of section 15 of this act not later than one year after the date of such expiration.

(e) The commissioner may deem an application for a license under this section abandoned if the applicant fails to respond to any request for information required under sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act or the regulations adopted pursuant to said sections. The commissioner shall notify the applicant on the system that if such information is not submitted not later than sixty days from the date of such request, the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license.

(f) At least annually, as part of its application, a mortgage servicer shall file with the commissioner (1) a current schedule of the ranges of costs and fees it charges mortgagors for its servicing-related activities; and (2) a report in a form and format acceptable to the commissioner detailing the mortgage servicer's activities in the state, including (A) the number of residential mortgage loans the mortgage servicer is servicing, (B) the type and characteristics of the residential mortgage loans in this state, (C) the number of serviced residential mortgage loans in default, along with a breakdown of thirty-day, sixty-day and ninety-day delinquencies, (D) information on loss mitigation activities, including details on workout arrangements undertaken, and (E) information on foreclosures commenced in this state.

Sec. 6. (NEW) (Effective October 1, 2014) (a) A mortgage servicer license shall not be transferable or assignable. No licensee may use any name other than its legal name or a fictitious name approved by the Banking Commissioner, provided such licensee may not use its legal name if the commissioner disapproves use of such name. Any licensee who intends to permanently cease acting as a mortgage servicer at any time during a license period for any cause, including, but not limited to, bankruptcy or voluntary dissolution, shall file a request to surrender the license for each office at which the licensee intends to cease to do business, on the system, not later than fifteen days after the date of such cessation, provided this requirement shall not apply when a license has been suspended pursuant to section 36a-51 of the general statutes, as amended by this act. No surrender shall be effective until accepted by the commissioner.

(b) A mortgage servicer licensee may change the name of the licensee or address of any office specified on the most recent filing with the system if (1) at least thirty calendar days prior to such change, the licensee files such change with the system and, in the case of a main office or branch office, provides, directly to the commissioner, a bond rider or endorsement, or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner that reflects the new name or address of the main office or branch office; and (2) the commissioner does not disapprove such change, in writing, or request further information within such thirty-day period.

(c) The mortgage servicer licensee shall file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, not later than five business days after the licensee has reason to know of the occurrence of any of the following events:

(1) Filing for bankruptcy, or the consummation of a corporate restructuring, of the licensee;

(2) Filing of a criminal indictment against the licensee or receiving notification of the filing of any criminal felony indictment or felony conviction of any of the licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock;

(3) Receiving notification of the institution of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency against the licensee and the reasons for such action;

(4) Receiving notification of the initiation of any action by the Attorney General or the attorney general of any other state and the reasons for such action;

(5) Suspension or termination of the licensee's status as an approved seller or servicer by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association;

(6) Receiving notification that certain servicing rights of the licensee will be rescinded or cancelled, and the reasons provided therefor;

(7) Receiving notification of filing for bankruptcy of any of the licensee's officers, directors, members, partners or shareholders owning ten per cent or more of the outstanding stock of the licensee; or

(8) Receiving notification of the initiation of a class action lawsuit on behalf of consumers against the licensee that is related to the operation of the licensed business.

Sec. 7. (NEW) (Effective October 1, 2014) (a) Each mortgage servicer license shall expire at the close of business on December thirty-first of the year in which it is approved, unless such license is renewed, and provided any such license that is approved on or after November first shall expire at the close of business on December thirty-first of the year following the year in which it is approved. An application for renewal of a license shall be filed between November first and December thirty-first of the year in which the license expires. Each applicant for an initial license or renewal of a license as a mortgage servicer shall pay to the system any required fees or charges and a license fee of one thousand dollars.

(b) All fees paid pursuant to this section, including fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license, shall be nonrefundable. No fee paid pursuant to this section shall be prorated if the license is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.

Sec. 8. (NEW) (Effective October 1, 2014) (a) Each mortgage servicer applicant or licensee and any person exempt from mortgage servicer licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, shall file with the Banking Commissioner (1) a surety bond, written by a surety authorized to write such bonds in this state, covering its main office and any branch office from which it acts as mortgage servicer, in a penal sum of one hundred thousand dollars per office location in accordance with subsection (b) of this section, (2) a fidelity bond, written by a surety authorized to write such bonds in this state, in accordance with the requirements of subsection (c) of this section, and (3) evidence of errors and omissions coverage, written by a surety authorized to write such coverage in this state, in accordance with the requirements of subsection (c) of this section. No mortgage servicer licensee and no person otherwise exempt from mortgage servicer licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, shall act as a mortgage servicer in this state without maintaining the surety bond, fidelity bond and errors and omissions coverage required by this section.

(b) The surety bond required by subsection (a) of this section shall be (1) in a form approved by the Attorney General; and (2) conditioned upon the mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, faithfully performing any and all written agreements or commitments with or for the benefit of mortgagors and mortgagees, truly and faithfully accounting for all funds received from a mortgagor or mortgagee in such person's capacity as a mortgage servicer, and conducting such mortgage business consistent with the provisions of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act. Any mortgagor that may be damaged by the failure of a mortgage servicer licensee or person exempt from mortgage servicer licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, to perform any written agreements or commitments, or by the wrongful conversion of funds paid by a mortgagor to such licensee or person, 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 on such bond, or both, to collect any civil penalty imposed pursuant to subsection (a) of section 36a-50 of the general statutes, any restitution imposed pursuant to subsection (c) of section 36a-50 of the general statutes and any unpaid costs of examination of a licensee as determined pursuant to section 36a-65 of the general statutes, as amended by this act. The proceeds of the bond, even if commingled with other assets of the principal, shall be deemed by operation of law to be held in trust for the benefit of such claimants against the principal in the event of bankruptcy of the principal and shall be immune from attachment by creditors and judgment creditors. The surety bond shall run concurrently with the period of the license for the main office of the mortgage servicer or mortgage lender and the aggregate liability under the bond shall not exceed the penal sum of the bond. The principal shall notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond and immediately on recovery on any action on the bond, the principal shall file a new bond.

(c) The fidelity bond and errors and omissions coverage required by subsection (a) of this section shall name the commissioner as an additional loss payee on drafts the surety issues to pay for covered losses directly or indirectly incurred by mortgagors of residential mortgage loans serviced by the mortgage servicer. The fidelity bond shall cover losses arising from dishonest and fraudulent acts, embezzlement, misplacement, forgery and similar events committed by employees of the mortgage servicer. The errors and omissions coverage shall cover losses arising from negligence, errors and omissions by the mortgage servicer with respect to the payment of real estate taxes and special assessments, hazard and flood insurance or the maintenance of mortgage and guaranty insurance. The fidelity bond and errors and omissions coverage shall each be in the following principal amounts based on the mortgage servicer's volume of servicing activity most recently reported to the commissioner:

(1) If the amount of the residential mortgage loans serviced is one hundred million dollars or less, the principal amount shall be three hundred thousand dollars; or

(2) If the amount of such loans exceeds one hundred million dollars, the principal amount shall be three hundred thousand dollars plus (A) three-twentieths of one per cent of the amount of residential mortgage loans serviced greater than one hundred million dollars but less than or equal to five hundred million dollars; (B) plus one-eighth of one per cent of the amount of residential mortgage loans serviced greater than five hundred million dollars but less than or equal to one billion dollars; and (C) plus one-tenth of one per cent of the amount of residential mortgage loans serviced greater than one billion dollars.

The amount of residential mortgage loans serviced shall be based on the mortgage servicer's volume most recently reported to the commissioner. The fidelity bond and errors and omissions coverage may provide for a deductible amount not to exceed the greater of one hundred thousand dollars or five per cent of the principal amount.

(d) A surety shall have the right to cancel the surety bond, fidelity bond and errors and omissions coverage required by this section at any time by a written notice to the principal stating the date cancellation shall take effect. Such notice shall be sent by certified mail to the principal at least thirty days prior to the date of cancellation. A surety bond, fidelity bond or errors and omissions coverage shall not be cancelled unless the surety notifies the commissioner, in writing, not less than thirty days prior to the effective date of cancellation. After receipt of such notification from the surety, the commissioner shall give written notice to the principal of the date such cancellation shall take effect. The commissioner shall automatically suspend the license of a mortgage servicer on such date. No automatic suspension or inactivation shall occur if, prior to the date that such bond or errors and omissions coverage cancellation shall take effect, (1) the principal submits a letter of reinstatement of the bond or errors and omissions coverage, or a new bond or errors and omissions policy; or (2) the mortgage servicer licensee has ceased business in this state and has surrendered all licenses in accordance with section 36a-51 of the general statutes, as amended by this act, and section 6 of this act. After a mortgage servicer license has been automatically suspended pursuant to this section, the commissioner shall give such licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew pursuant to section 15 of this act and an opportunity for a hearing on such action in accordance with section 36a-51 of the general statutes, as amended by this act, and require such licensee to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this section. A person licensed as a mortgage lender in this state acting as a mortgage servicer from a location licensed as a main office or branch office under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b of the general statutes, as amended by this act, shall cease to be exempt from mortgage servicer licensing requirements in this state upon cancellation of any surety bond, fidelity bond or errors and omissions coverage required by this section.

(e) If the commissioner finds that the financial condition of a mortgage servicer or mortgage lender licensee so requires, as evidenced by the reduction of tangible net worth, financial losses or potential losses as a result of a violation of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, sections 5 to 16, inclusive, of this act, and section 36a-1 of the general statutes, as amended by this act, the commissioner may require one or more additional bonds meeting the standards set forth in this section. The licensee shall file any such additional bonds not later than ten days after receipt of the commissioner's written notice of such requirement. A mortgage servicer or mortgage lender licensee shall file, as the commissioner may require, any bond rider or endorsement or addendum, as applicable, to any bond or evidence of errors and omissions coverage on file with the commissioner to reflect any changes necessary to maintain the surety bond, fidelity bond and errors and omissions coverage required by this section.

Sec. 9. (NEW) (Effective October 1, 2014) (a) Each mortgage servicer licensee and person exempt from licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, shall maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer or mortgage lender license, or, if requested by the Banking Commissioner, shall make such records available at such office or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the commissioner to do so. Upon request, the commissioner may grant a licensee additional time to make such records available or send them to the commissioner. Such records shall provide the following information: (1) A loan history for residential mortgage loans upon which payments are received or made by the mortgage servicer, itemizing the amount and date of each payment and the unpaid balance at all times; (2) the original or an exact copy of the note, residential mortgage or other evidence of indebtedness and mortgage deed; (3) the name and address of the mortgage lender, mortgage correspondent lender and mortgage broker, if any, involved in the residential mortgage loan transaction; (4) copies of any disclosures or notifications provided to the mortgagor required by state or federal law; (5) a copy of any bankruptcy plan approved in a proceeding filed by the mortgagor or a co-owner of the property subject to the residential mortgage loan; (6) a communications log that documents all verbal communications with the mortgagor or the mortgagor's representative; and (7) a copy of all notices sent to the mortgagor related to any foreclosure proceeding filed against the encumbered property.

(b) Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, shall retain the records of each residential mortgage loan serviced for not less than two years following the final payment on such residential mortgage loan, or the assignment of such residential mortgage loan, whichever occurs first, or such longer period as may be required by any other provision of law. Every mortgage servicer licensee and person exempt from licensure pursuant to subdivision (2) of subsection (b) of section 36a-718 of the general statutes, as amended by this act, shall keep and use in its business books, accounts and records that will enable the commissioner to determine whether such mortgage servicer is complying with the provisions of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act and with any regulations adopted pursuant thereto.

Sec. 10. (NEW) (Effective January 1, 2015) Upon assignment of servicing rights on a residential mortgage loan, the mortgage servicer shall disclose to the mortgagor: (1) Any notice required by the Real Estate Settlement Procedures Act of 1974, 12 USC Section 2601 et seq., as from time to time amended, and the regulations promulgated thereunder, and within the time periods prescribed therein; and (2) a schedule of the ranges and categories of its costs and fees for its servicing-related activities, which shall comply with state and federal law and, if such disclosure is made by a mortgage servicer licensee, shall not exceed those reported to the Banking Commissioner in accordance with subsection (f) of section 5 of this act.

Sec. 11. (NEW) (Effective January 1, 2015) A mortgage servicer shall comply with all applicable federal laws and regulations relating to mortgage loan servicing, including, but not limited to, the Real Estate Settlement Procedures Act of 1974, 12 USC Section 2601 et seq., the Truth-in-Lending Act, 15 USC Section 1601 et seq., as from time to time amended, and the regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this section and a basis upon which the Banking Commissioner may take enforcement action pursuant to section 15 of this act.

Sec. 12. (NEW) (Effective January 1, 2015) (a) A mortgage servicer shall maintain and keep current a schedule of fees that it charges mortgagors for its servicing-related activities. The schedule shall identify each fee, provide a plain English explanation of the fee and state the amount of the fee or range of amounts or, if there is no standard fee, how the fee is calculated or determined. A mortgage servicer shall make its schedule available to the mortgagor or the mortgagor's authorized representative upon request.

(b) A mortgage servicer shall not impose any late fee or delinquency charge when the only delinquency is attributable to late fees or delinquency charges assessed on an earlier payment, and the payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period. Late charges shall not be (1) based on an amount greater than the past due amount; (2) collected from the escrow account or from escrow surplus without the approval of the mortgagor; or (3) deducted from any regular payment.

Sec. 13. (NEW) (Effective January 1, 2015) No mortgage servicer shall:

(1) Directly or indirectly employ any scheme, device or artifice to defraud or mislead mortgagors or mortgagees or to defraud any person;

(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of the residential mortgage loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a residential mortgage loan, the terms and conditions of the servicing agreement or the mortgagor's obligations under the residential mortgage loan;

(3) Obtain property by fraud or misrepresentation;

(4) Knowingly misapply or recklessly apply residential mortgage loan payments to the outstanding balance of a residential mortgage loan;

(5) Knowingly misapply or recklessly apply payments to escrow accounts;

(6) Place hazard, homeowner's or flood insurance on the mortgaged property when the mortgage servicer knows or has reason to know that the mortgagor has an effective policy for such insurance;

(7) Fail to comply with section 49-10a of the general statutes;

(8) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a mortgagor's creditworthiness;

(9) Fail to report both the favorable and unfavorable payment history of the mortgagor to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;

(10) Collect private mortgage insurance beyond the date for which private mortgage insurance is required;

(11) Fail to issue a release of mortgage in accordance with section 49-8 of the general statutes;

(12) Fail to provide written notice to a mortgagor upon taking action to place hazard, homeowner's or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the mortgagor may demonstrate that he or she has the required insurance coverage and by which the mortgage servicer shall terminate the insurance coverage placed by it and refund or cancel any insurance premiums and related fees paid by or charged to the mortgagor;

(13) Place hazard, homeowner's or flood insurance on a mortgaged property, or require a mortgagor to obtain or maintain such insurance, in excess of the replacement cost of the improvements on the mortgaged property as established by the property insurer;

(14) Fail to provide to the mortgagor a refund of unearned premiums paid by a mortgagor or charged to the mortgagor for hazard, homeowner's or flood insurance placed by a mortgagee or the mortgage servicer if the mortgagor provides reasonable proof that the mortgagor has obtained coverage such that the forced placement insurance is no longer necessary and the property is insured. If the mortgagor provides reasonable proof that no lapse in coverage occurred such that the forced placement was not necessary, the mortgage servicer shall promptly refund the entire premium;

(15) Require any amount of funds to be remitted by means more costly to the mortgagor than a bank or certified check or attorney's check from an attorney's account to be paid by the mortgagor;

(16) Refuse to communicate with an authorized representative of the mortgagor who provides a written authorization signed by the mortgagor, provided the mortgage servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the mortgagor;

(17) Conduct any business covered by sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act without holding a valid license as required under said sections, or assist or aid and abet any person in the conduct of business without a valid license as required under title 36a of the general statutes;

(18) Negligently make any false statement or knowingly and wilfully make any omission of a material fact in connection with any information or reports filed with a governmental agency or the system or in connection with any investigation conducted by the Banking Commissioner or another governmental agency; or

(19) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b of the general statutes, as amended by this act.

Sec. 14. (NEW) (Effective October 1, 2014) (a) In addition to any authority provided under title 36a of the general statutes, the Banking Commissioner shall have the authority to conduct investigations and examinations as follows:

(1) For purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or general or specific inquiry or investigation to determine compliance with sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act, the commissioner may access, receive and use any books, accounts, records, files, documents, information or evidence including, but not limited to, (A) criminal, civil and administrative history information; (B) personal history and experience information, including independent credit reports obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a; and (C) any other documents, information or evidence the commissioner deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of such documents, information or evidence.

(2) For the purposes of investigating violations or complaints arising under sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act or for the purposes of examination, the commissioner may review, investigate or examine any mortgage servicer licensee or person subject to said sections as often as necessary in order to carry out the purposes of said sections. The commissioner may direct, subpoena or order the attendance of and examine under oath all persons whose testimony may be required about the residential mortgage loans or the business or subject matter of any such examination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.

(b) Each mortgage servicer licensee or person subject to sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act shall make or compile reports or prepare other information as directed by the commissioner in order to carry out the purposes of this section including accounting compilations, information lists and data concerning residential mortgage loan transactions in a format prescribed by the commissioner or such other information the commissioner deems necessary to carry out the purposes of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act.

(c) In making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the mortgage servicer licensee or person under examination or investigation. The commissioner may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, no person shall remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the commissioner. Unless the commissioner has reasonable grounds to believe the documents or records of the mortgage servicer licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act the mortgage servicer licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.

(d) In order to carry out the purposes of this section, the commissioner may:

(1) Retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;

(2) Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information or evidence obtained under this section;

(3) Use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the mortgage servicer licensee or person subject to sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act;

(4) Accept and rely on examination or investigation reports made by other government officials, within or without this state; and

(5) Accept audit reports made by an independent certified public accountant for the mortgage servicer licensee or person subject to sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the commissioner.

(e) The authority of this section shall remain in effect, whether such mortgage servicer licensee or person subject to sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act, acts or claims to act under any licensing or registration law of this state, or claims to act without such authority.

(f) No mortgage servicer licensee or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.

Sec. 15. (NEW) (Effective October 1, 2014) (a) The Banking Commissioner may suspend, revoke or refuse to renew any mortgage servicer license or take any other action, in accordance with the provisions of section 36a-51 of the general statutes, as amended by this act, for any reason which would be sufficient grounds for the commissioner to deny an application for such license under section 5 of this act, or if the commissioner finds that the licensee, any control person of the licensee, the qualified individual or any branch manager with supervisory authority, trustee, employee or agent of such licensee has done any of the following: (1) Made any material misstatement in the application; (2) committed any fraud or misrepresentation or misappropriated funds; (3) violated any of the provisions of title 36a of the general statutes or of any regulations adopted pursuant thereto, or any other law or regulation applicable to the conduct of its business; or (4) failed to perform any agreement with a mortgagee or a mortgagor.

(b) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate section 49-8 or 49-10a of the general statutes, any of the provisions of title 36a of the general statutes or of any regulations adopted pursuant thereto, or any licensee has failed to perform any agreement with a mortgagee or mortgagor, committed any fraud, made any misrepresentation or misappropriated funds, the commissioner may take action against such person or licensee in accordance with sections 36a-50 and 36a-52 of the general statutes.

Sec. 16. (NEW) (Effective October 1, 2014) The Banking Commissioner may adopt such regulations, in accordance with chapter 54 of the general statutes, as the commissioner deems necessary to administer and enforce the provisions of sections 36a-715 to 36a-718, inclusive, of the general statutes, as amended by this act, and sections 5 to 17, inclusive, of this act.

Sec. 17. (NEW) (Effective October 1, 2014) The provisions of section 36a-718 of the general statutes, as amended by this act, and sections 5 to 13, inclusive, of this act shall not apply to (1) a person exempt from licensure as a mortgage lender or mortgage correspondent lender pursuant to subsection (b) of section 36a-487 of the general statutes while servicing residential mortgage loans made pursuant to such exemption, (2) a person servicing five or fewer residential mortgage loans within any period of twelve consecutive months, (3) any agency of the federal government, any state or municipal government or any quasi-governmental agency servicing residential mortgage loans under the specific authority of the laws of any state or the United States, and (4) a person exempt from licensure as a mortgage servicer pursuant to subdivision (1) of subsection (b) of section 36a-718 of the general statutes, as amended by this act.

Sec. 18. Section 36a-1 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

This title shall be known as the "Banking Law of Connecticut" and shall be applicable to all Connecticut banks, Connecticut credit unions, mortgage lenders, mortgage correspondent lenders, mortgage brokers, mortgage loan originators, loan processors or underwriters, money transmitters, check cashers, trustees under mortgages or deeds of trust of real property securing certain investments, corporations exercising fiduciary powers, small loan lenders, sales finance companies, mortgage [servicing companies] servicers, debt adjusters, debt negotiators, consumer collection agencies and to such other persons as subject themselves to the provisions of this title or who, by violating any of its provisions, become subject to the penalties provided in this title.

Sec. 19. Subdivision (6) of subsection (c) of section 36a-65 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(6) A licensee under section 36a-489, 36a-541, 36a-556, 36a-581, 36a-600, 36a-628, 36a-656, 36a-671, section 5 of this act or 36a-801, as amended by this act, shall pay to the commissioner the actual cost of any examination of the licensee, as such cost is determined by the commissioner. If the licensee fails to pay such cost not later than sixty days after receipt of demand from the commissioner, the commissioner may suspend the license until such costs are paid.

Sec. 20. Subdivision (4) of subsection (a) of section 36a-412 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(4) (A) The laws of this state, including laws regarding (i) community reinvestment pursuant to sections 36a-30 to 36a-33, inclusive; (ii) consumer protection pursuant to sections 36a-41 to 36a-45, inclusive, 36a-290 to 36a-304, inclusive, 36a-306, 36a-307, 36a-315 to 36a-323, inclusive, 36a-645 to 36a-647, inclusive, 36a-690, 36a-695 to 36a-700, inclusive, 36a-705 to 36a-707, inclusive, 36a-715 to 36a-718, inclusive, as amended by this act, sections 5 to 17, inclusive, of this act, 36a-725, 36a-726, 36a-755 to 36a-759, inclusive, 36a-770 to 36a-788, inclusive, and 36a-800 to 36a-810, inclusive; (iii) fair lending pursuant to sections 36a-737, 36a-740 and 36a-741; and (iv) establishment of interstate branches pursuant to section 36a-145, as amended by this act, shall apply to any branch in this state of an out-of-state bank, other than a federally-chartered out-of-state bank, to the same extent as such laws apply to a branch in this state of an out-of-state national banking association.

(B) An out-of-state bank, other than a federally-chartered out-of-state bank, that establishes a branch in this state may conduct any activity at such branch that is permissible under the laws of the home state of such out-of-state bank, to the extent such activity is permissible either for a Connecticut bank or for a branch in this state of an out-of-state national banking association. If the commissioner determines that a branch in this state of an out-of-state bank, other than a federally-chartered out-of-state bank, is being operated in violation of any applicable law of this state or in an unsafe and unsound manner, the commissioner may take any enforcement action authorized under this title against such out-of-state bank to the same extent as if such branch were a Connecticut bank, provided the commissioner shall promptly give notice of such action to the home state banking regulator of such out-of-state bank and, to the extent practicable, shall consult and cooperate with such regulator in pursuing and resolving such action. For purposes of this subparagraph, "activity" includes acquiring or retaining any investment.

Sec. 21. Subsection (a) of section 36a-487 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) The following are exempt from licensing as a mortgage lender, mortgage correspondent lender or mortgage broker under sections 36a-485 to 36a-498f, inclusive, as amended by this act, 36a-534a and 36a-534b, as amended by this act: (1) Any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such bank or credit union is federally insured, any [operating] wholly-owned subsidiary of a federal bank or federally-chartered out-of-state bank, [or] any wholly-owned subsidiary of a Connecticut bank or a Connecticut credit union or any operating subsidiary of a federal bank or federally-chartered out-of-state bank or any wholly-owned subsidiary of a Connecticut bank or Connecticut credit union where each owner of such operating or wholly-owned subsidiary is wholly-owned by the same bank; (2) any person licensed under sections 36a-671 to 36a-671d, inclusive, or exempt from licensure under section 36a-671c, as amended by this act, who is negotiating or offering to negotiate terms of a residential mortgage loan as authorized by said sections 36a-671 to 36a-671d, inclusive; and (3) any person engaged solely in providing loan processing or underwriting services to persons (A) licensed as a mortgage lender, mortgage correspondent lender or mortgage broker, or (B) exempt from such licensure under subdivision (1) of this subsection. Each wholly-owned subsidiary of a Connecticut bank or Connecticut credit union that engages in the business of making residential mortgage loans or acts as a mortgage broker in this state shall provide written notification to the commissioner prior to engaging in such activity.

Sec. 22. Section 36a-671c of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

The provisions of sections 36a-671 to 36a-671d, inclusive, shall not apply to the following: (1) Any attorney admitted to the practice of law in this state who engages or offers to engage in debt negotiation as an ancillary matter to such attorney's representation of a client; (2) any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided subsidiaries of such institutions other than [operating] wholly-owned subsidiaries of federal banks and federally-chartered out-of-state banks and operating subsidiaries where each owner of the operating subsidiary is wholly-owned by the same bank are not exempt from licensure; (3) any person licensed as a debt adjuster pursuant to sections 36a-655 to 36a-665, inclusive, while performing debt adjuster services; (4) any person acting under the order of a court; or (5) any bona fide nonprofit organization organized under Section 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time.

Sec. 23. Section 49-2a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) On and after July 1, 1993, each state bank and trust company, national banking association, state or [federally chartered] federally-chartered savings and loan association, savings bank, insurance company and other mortgagee or mortgage [servicing company] servicer holding funds of a mortgagor in escrow for the payment of taxes and insurance premiums with respect to mortgaged property located in this state shall pay interest on such funds, except as provided in section 49-2c, as amended by this act, at a rate of not less than the average rate paid, as of December 30, 1992, on savings deposits by insured commercial banks as published in the Federal Reserve Board Bulletin and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after January 1, 1994, until September 30, 2012, the rate for each calendar year shall be not less than the deposit index as defined in subsection (c) of this section for that year and rounded to the nearest one-tenth of one percentage point, except in no event shall the rate be less than one and one-half per cent. On and after October 1, 2012, the rate for each calendar year shall be not less than the deposit index as defined in subsection (c) of this section for that year and rounded to the nearest one-tenth of one percentage point. Interest payments shall be credited on the thirty-first day of December annually toward the payment of taxes or insurance premiums as the case may be, on such mortgaged property in the ensuing year. If the mortgage debt is paid prior to December thirty-first in any year, the interest to the date of payment shall be paid to the mortgagor. The provisions of this section shall apply only with respect to mortgages on owner-occupied residential property consisting of not more than four living units and housing cooperatives occupied solely by the shareholders thereof. Any mortgagee or mortgage [servicing company] servicer violating the provisions of this section shall be fined not more than one hundred dollars for each offense.

(b) Each mortgagee or mortgage [servicing company] servicer subject to the provisions of this section may contact the Department of Banking to ascertain the published deposit index to determine the minimum rate paid on funds of a mortgagor held in escrow for the payment of taxes and insurance premiums.

(c) The deposit index for each calendar year shall be equal to the average rate paid on savings deposits by insured commercial banks as last published in the Federal Reserve Board Bulletin in November of the prior year. The commissioner shall determine the deposit index for each calendar year and publish such deposit index in the Department of Banking news bulletin no later than December fifteenth of the prior year. For purposes of this section, "Federal Reserve Board Bulletin" means the monthly survey of selected deposits published as a special supplement to the Federal Reserve Statistical Release Publication H.6 published by the Board of Governors of the Federal Reserve System or, if such bulletin is superseded or becomes unavailable, a substantially similar index or publication.

Sec. 24. Section 49-2c of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) In no event shall interest be required to be paid on escrow accounts where (1) there is a contract between the mortgagor and the mortgagee, entered into before October 1, 1975, which contains an express disclaimer of an obligation on the part of the mortgagee to pay interest on the accounts, (2) the payment of such interest would violate any federal law or regulation, (3) the accounts are maintained with a mortgage [servicing company] servicer, neither affiliated with nor owned in whole or in part by the mortgagee, under a written contract or any mortgage agreements underlying the contracts, entered into before October 1, 1975, which contract does not permit the mortgage [servicing company] servicer to earn or receive a return from the investment of the accounts, or (4) the accounts are maintained in connection with mortgage loans entered into (A) on and after October 1, 1977, and before January 1, 1989, and which are serviced and held for sale for not more than one year by a mortgage [servicing company] servicer, neither affiliated with nor owned in whole or in part by the purchaser of the mortgage loan, and (B) on and after January 1, 1989, and which are serviced and held for sale for not more than six months by any such mortgage [servicing company] servicer, provided such mortgage [servicing company] servicer shall pay interest on an escrow account maintained in connection with such mortgage loan if the loan is sold within such specified periods and the mortgage [servicing company] servicer continues to service the loan.

(b) In no event shall interest be required to be paid at a rate in excess of two per cent per annum where (1) there is a contract between the mortgagor and the mortgagee entered into before October 1, 1977, which contains an express agreement to pay interest at the rate of two per cent per annum, or (2) such accounts are maintained in connection with mortgage loans entered into prior to October 1, 1977, and which are serviced and held for sale for not more than one year by a mortgage [servicing company] servicer, neither affiliated with nor owned in whole or in part by the purchaser of the mortgage loan.

Sec. 25. Subsection (o) of section 36a-145 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(o) (1) With the approval of the commissioner, a Connecticut bank may establish a loan production office in or outside this state.

(2) A Connecticut bank that proposes to close any loan production office shall submit to the commissioner a notice of the proposed closing not later than thirty days prior to the date proposed for such closing. The notice shall include a detailed statement of the reasons for the decision to close the loan production office and the statistical and other information in support of such reasons. After receipt of the notice, the commissioner may require the Connecticut bank to submit any additional information. The Connecticut bank shall provide notice of the proposed closing to its customers by posting a notice in a conspicuous manner on the premises of such loan production office for at least a thirty-day period ending on the date proposed for such closing.

Sec. 26. Subsection (a) of section 36a-633 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) Each applicant for a license, at the time of making such application, shall pay to the commissioner a nonrefundable license fee of four hundred dollars. Each license issued pursuant to this subsection shall expire at the close of business on June thirtieth of each year, unless such license is renewed. The license shall not be transferable or assignable. Each licensee shall, on or before June twentieth of each year, pay to the commissioner the sum of four hundred dollars as a license renewal fee for the succeeding year, commencing July first. Each applicant or licensee shall pay the expenses of any examination or investigation made under sections 36a-625 to 36a-634, inclusive.

Sec. 27. Subsection (q) of section 36a-70 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(q) (1) As used in this subsection, "bankers' bank" means a Connecticut bank that is (A) owned exclusively by any combination of banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions having their principal office in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island or Vermont, and (B) organized to engage exclusively in providing services for, or that indirectly benefit, other banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions and their directors, officers and employees.

(2) One or more persons may organize a bankers' bank in accordance with the provisions of this section, except that subsections (g) and (h) of this section shall not apply. The approving authority for a bankers' bank shall be the commissioner acting alone. Before granting a temporary certificate of authority in the case of an application to organize a bankers' bank, the approving authority shall consider (A) whether the proposed bankers' bank will facilitate the provision of services that such banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions would not otherwise be able to readily obtain, and (B) the character and experience of the proposed directors and officers. The application to organize a bankers' bank shall be approved if the approving authority determines that the interest of the public will be directly or indirectly served to advantage by the establishment of the proposed bankers' bank, and the proposed directors possess capacity and fitness for the duties and responsibilities with which they will be charged.

(3) A bankers' bank shall have all of the powers of and be subject to all of the requirements applicable to a Connecticut bank under this title which are not inconsistent with this subsection, except: (A) A bankers' bank may only provide services for, or that indirectly benefit, other banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions and for the directors, officers and employees of such banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions; (B) only banks, out-of-state banks, Connecticut credit unions, federal credit unions, or out-of-state credit unions having their principal office in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island or Vermont may own the capital stock of or otherwise invest in a bankers' bank; (C) upon the written request of a bankers' bank, the commissioner may waive specific requirements of this title and the regulations adopted thereunder if the commissioner finds that (i) the requirement pertains primarily to banks that provide retail or consumer banking services and is inconsistent with this subsection, and (ii) the requirement may impede the ability of the bankers' bank to compete or to provide desired services to its market provided, any such waiver and the commissioner's findings shall be in writing and shall be made available for public inspection; and (D) the commissioner may, by regulation, limit the powers that may be exercised by a bankers' bank.

(4) The commissioner may adopt regulations, in accordance with chapter 54, to administer the provisions of this subsection.

Sec. 28. Section 36a-2 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

As used in this title, unless the context otherwise requires:

(1) "Affiliate" of a person means any person controlling, controlled by, or under common control with, that person;

(2) "Applicant" with respect to any license or approval provision pursuant to this title means a person who applies for that license or approval;

(3) "Automated teller machine" means a stationary or mobile [unattended] device that is unattended or equipped with a telephone or televideo device that allows contact with bank personnel, including a satellite device but excluding a point of sale terminal, at which banking transactions, including, but not limited to, deposits, withdrawals, advances, payments or transfers, may be conducted;

(4) "Bank" means a Connecticut bank or a federal bank;

(5) "Bank and trust company" means an institution chartered or organized under the laws of this state as a bank and trust company;

(6) "Bank holding company" has the meaning given to that term in 12 USC Section 1841(a), as amended from time to time, except that the term "bank", as used in 12 USC Section 1841(a) includes a bank or out-of-state bank that functions solely in a trust or fiduciary capacity;

(7) "Capital stock" when used in conjunction with any bank or out-of-state bank means a bank or out-of-state bank that is authorized to accumulate funds through the issuance of its capital stock;

(8) "Client" means a beneficiary of a trust for whom the Connecticut bank acts as trustee, a person for whom the Connecticut bank acts as agent, custodian or bailee, or other person to whom a Connecticut bank owes a duty or obligation under a trust or other account administered by such Connecticut bank, regardless of whether such Connecticut bank owes a fiduciary duty to the person;

(9) "Club deposit" means deposits to be received at regular intervals, the whole amount deposited to be withdrawn by the owner or repaid by the bank in not more than fifteen months from the date of the first deposit, and upon which no interest or dividends need to be paid;

(10) "Commissioner" means the Banking Commissioner and, with respect to any function of the commissioner, includes any person authorized or designated by the commissioner to carry out that function;

(11) "Company" means any corporation, joint stock company, trust, association, partnership, limited partnership, unincorporated organization, limited liability company or similar organization, but does not include (A) any corporation the majority of the shares of which are owned by the United States or by any state, or (B) any trust which by its terms shall terminate within twenty-five years or not later than twenty-one years and ten months after the death of beneficiaries living on the effective date of the trust;

(12) "Connecticut bank" means a bank and trust company, savings bank or savings and loan association chartered or organized under the laws of this state;

(13) "Connecticut credit union" means a cooperative, nonprofit financial institution that (A) is organized under chapter 667 and the membership of which is limited as provided in section 36a-438a, (B) operates for the benefit and general welfare of its members with the earnings, benefits or services offered being distributed to or retained for its members, and (C) is governed by a volunteer board of directors elected by and from its membership;

(14) "Connecticut credit union service organization" means a credit union service organization that is incorporated under the laws of this state, located in this state and established by at least one Connecticut credit union;

(15) "Consolidation" means a combination of two or more institutions into a new institution; all institutions party to the consolidation, other than the new institution, are "constituent" institutions; the new institution is the "resulting" institution;

(16) "Control" has the meaning given to that term in 12 USC Section 1841(a), as amended from time to time;

(17) "Credit union service organization" means an entity organized under state or federal law to provide credit union service organization services primarily to its members, to Connecticut credit unions, federal credit unions and out-of-state credit unions other than its members, and to members of any such other credit unions;

(18) "Customer" means any person using a service offered by a financial institution;

(19) "Demand account" means an account into which demand deposits may be made;

(20) "Demand deposit" means a deposit that is payable on demand, a deposit issued with an original maturity or required notice period of less than seven days or a deposit representing funds for which the bank does not reserve the right to require at least seven days' written notice of the intended withdrawal, but does not include any time deposit;

(21) "Deposit" means funds deposited with a depository;

(22) "Deposit account" means an account into which deposits may be made;

(23) "Depositor" includes a member of a mutual savings and loan association;

(24) "Director" means a member of the governing board of a financial institution;

(25) "Equity capital" means the excess of a Connecticut bank's total assets over its total liabilities, as defined in the instructions of the federal Financial Institutions Examination Council for consolidated reports of condition and income;

(26) "Executive officer" means every officer of a Connecticut bank who participates or has authority to participate, otherwise than in the capacity of a director, in major policy-making functions of such bank, regardless of whether such officer has an official title or whether that title contains a designation of assistant and regardless of whether such officer is serving without salary or other compensation. The president, vice president, secretary and treasurer of such bank are deemed to be executive officers, unless, by resolution of the governing board or by such bank's bylaws, any such officer is excluded from participation in major policy-making functions, otherwise than in the capacity of a director of such bank, and such officer does not actually participate in such policy-making functions;

(27) "Federal agency" has the meaning given to that term in 12 USC Section 3101, as amended from time to time;

(28) "Federal bank" means a national banking association, federal savings bank or federal savings and loan association having its principal office in this state;

(29) "Federal branch" has the meaning given to that term in 12 USC Section 3101, as amended from time to time;

(30) "Federal credit union" means any institution chartered or organized as a federal credit union pursuant to the laws of the United States having its principal office in this state;

(31) "Fiduciary" means a person undertaking to act alone or jointly with others primarily for the benefit of another or others in all matters connected with its undertaking and includes a person acting in the capacity of trustee, executor, administrator, guardian, assignee, receiver, conservator, agent, custodian under the Connecticut Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, and acting in any other similar capacity;

(32) "Financial institution" means any Connecticut bank, Connecticut credit union, or other person whose activities in this state are subject to the supervision of the commissioner, but does not include a person whose activities are subject to the supervision of the commissioner solely pursuant to chapter 672a, 672b or 672c or any combination thereof;

(33) "Foreign bank" has the meaning given to that term in 12 USC Section 3101, as amended from time to time;

(34) "Foreign country" means any country other than the United States and includes any colony, dependency or possession of any such country;

(35) "Governing board" means the group of persons vested with the management of the affairs of a financial institution irrespective of the name by which such group is designated;

(36) "Holding company" means a bank holding company or a savings and loan holding company, except, as used in sections 36a-180 to 36a-191, inclusive, "holding company" means a company that controls a bank;

(37) "Insured depository institution" has the meaning given to that term in 12 USC Section 1813, as amended from time to time;

(38) "Licensee" means any person who is licensed or required to be licensed pursuant to the applicable provisions of this title;

(39) "Loan" includes any line of credit or other extension of credit;

(40) "Loan production office" means an office of a bank or out-of-state bank, other than a foreign bank, whose activities are limited to loan production and solicitation;

(41) "Merger" means the combination of one or more institutions with another which continues its corporate existence; all institutions party to the merger are "constituent" institutions; the merging institution which upon the merger continues its existence is the "resulting" institution;

(42) "Mutual" when used in conjunction with any institution that is a bank or out-of-state bank means any such institution without capital stock;

(43) "Mutual holding company" means a mutual holding company organized under sections 36a-192 to 36a-199, inclusive, and unless otherwise indicated, a subsidiary holding company controlled by a mutual holding company organized under sections 36a-192 to 36a-199, inclusive;

(44) "Out-of-state" includes any state other than Connecticut and any foreign country;

(45) "Out-of-state bank" means any institution that engages in the business of banking, but does not include a bank, Connecticut credit union, federal credit union or out-of-state credit union;

(46) "Out-of-state credit union" means any credit union other than a Connecticut credit union or a federal credit union;

(47) "Out-of-state trust company" means any company chartered to act as a fiduciary but does not include a company chartered under the laws of this state, a bank, an out-of-state bank, a Connecticut credit union, a federal credit union or an out-of-state credit union;

(48) "Person" means an individual, company, including a company described in subparagraphs (A) and (B) of subdivision (11) of this section, or any other legal entity, including a federal, state or municipal government or agency or any political subdivision thereof;

(49) "Point of sale terminal" means a device located in a commercial establishment at which sales transactions can be charged directly to the buyer's deposit, loan or credit account, but at which deposit transactions cannot be conducted;

(50) "Prepayment penalty" means any charge or penalty for paying all or part of the outstanding balance owed on a loan before the date on which the principal is due and includes computing a refund of unearned interest by a method that is less favorable to the borrower than the actuarial method, as defined by Section 933(d) of the Housing and Community Development Act of 1992, 15 USC 1615(d), as amended from time to time;

(51) "Reorganized savings bank" means any savings bank incorporated and organized in accordance with sections 36a-192 and 36a-193;

(52) "Reorganized savings and loan association" means any savings and loan association incorporated and organized in accordance with sections 36a-192 and 36a-193;

(53) "Reorganized savings institution" means any reorganized savings bank or reorganized savings and loan association;

(54) "Representative office" has the meaning given to that term in 12 USC Section 3101, as amended from time to time;

(55) "Reserves for loan and lease losses" means the amounts reserved by a Connecticut bank against possible loan and lease losses as shown on the bank's consolidated reports of condition and income;

(56) "Retail deposits" means any deposits made by individuals who are not "accredited investors", as defined in 17 CFR 230.501(a);

(57) "Satellite device" means an automated teller machine which is not part of an office of the bank, Connecticut credit union or federal credit union which has established such machine;

(58) "Savings account" means a deposit account, other than an escrow account established pursuant to section 49-2a, as amended by this act, into which savings deposits may be made and which account must be evidenced by periodic statements delivered at least semiannually or by a passbook;

(59) "Savings and loan association" means an institution chartered or organized under the laws of this state as a savings and loan association;

(60) "Savings bank" means an institution chartered or organized under the laws of this state as a savings bank;

(61) "Savings deposit" means any deposit other than a demand deposit or time deposit on which interest or a dividend is paid periodically;

(62) "Savings and loan holding company" has the meaning given to that term in 12 USC Section 1467a, as amended from time to time;

(63) "Share account holder" means a person who maintains a share account in a Connecticut credit union, federal credit union or out-of-state credit union that maintains in this state a branch, as defined in section 36a-435b;

(64) "State" means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands;

(65) "State agency" has the meaning given to that term in 12 USC Section 3101, as amended from time to time;

(66) "State branch" has the meaning given to that term in 12 USC Section 3101, as amended from time to time;

(67) "Subsidiary" has the meaning given to that term in 12 USC Section 1841(d), as amended from time to time;

(68) "Subsidiary holding company" means a stock holding company, controlled by a mutual holding company, that holds one hundred per cent of the stock of a reorganized savings institution;

(69) "Supervisory agency" means: (A) The commissioner; (B) the Federal Deposit Insurance Corporation; (C) the Resolution Trust Corporation; (D) the Office of Thrift Supervision; (E) the National Credit Union Administration; (F) the Board of Governors of the Federal Reserve System; (G) the United States Comptroller of the Currency; (H) the Bureau of Consumer Financial Protection; and (I) any successor to any of the foregoing agencies or individuals;

(70) "System" means the Nationwide Mortgage Licensing System and Registry, NMLS, NMLSR or such other name or acronym as may be assigned to the multistate system developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and owned and operated by the State Regulatory Registry, LLC, or any successor or affiliated entity, for the licensing and registration of persons in the mortgage and other financial services industries;

[(70)] (71) "Time account" means an account into which time deposits may be made;

[(71)] (72) "Time deposit" means a deposit that the depositor or share account holder does not have a right and is not permitted to make withdrawals from within six days after the date of deposit, unless the deposit is subject to an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit, subject to those exceptions permissible under 12 CFR Part 204, as amended from time to time;

[(72)] (73) "Trust bank" means a Connecticut bank organized to function solely in a fiduciary capacity; and

[(73)] (74) "Uninsured bank" means a Connecticut bank that does not accept retail deposits and for which insurance of deposits by the Federal Deposit Insurance Corporation or its successor agency is not required.

Sec. 29. Section 36a-3 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

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

Sec. 30. Section 36a-485 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

As used in this section and sections 36a-486 to 36a-498f, inclusive, as amended by this act, 36a-534a to 36a-534c, inclusive, unless the context otherwise requires:

(1) "Advance fee" means any consideration paid or given, directly or indirectly, to a mortgage lender, mortgage correspondent lender or mortgage broker required to be licensed pursuant to sections 36a-485 to 36a-498f, inclusive, as amended by this act, and sections 36a-534a and 36a-534b, as amended by this act, prior to the closing of a residential 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", "advertisement" or "advertising" means the use of any announcement, statement, assertion or representation that is placed before the public in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster or over any radio or television station, by means of the Internet, or by other electronic means of distributing information, by personal contact, or in any other way;

(3) "Branch office" means a location other than the main office at which a licensee or any person on behalf of a licensee acts as a mortgage lender, mortgage correspondent lender, [or] mortgage broker or mortgage loan originator;

(4) "Control person" means an individual that directly or indirectly exercises control over another person. Any person that (A) is a director, general partner or executive officer; (B) directly or indirectly has the right to vote ten per cent or more of a class of any voting security or has the power to sell or direct the sale of ten per cent or more of any class of voting securities; (C) in the case of a limited liability company, is a managing member; or (D) in the case of a partnership, has the right to receive upon dissolution, or has contributed, ten per cent or more of the capital, is presumed to be a control person. For purposes of this subdivision, "control" means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract or otherwise;

(5) "Depository institution" has the same meaning as provided in Section 3 of the Federal Deposit Insurance Act, 12 USC 1813, and includes any Connecticut credit union, federal credit union or out-of-state credit union;

(6) "Dwelling" has the same meaning as provided in Section 103 of the Consumer Credit Protection Act, 15 USC 1602;

(7) "Employee" means an individual (A) whose manner and means of work performance are subject to the right of control of, or are controlled by, a person, and (B) whose compensation is reported or required to be reported on a W-2 form issued by the controlling person. For purposes of the definition of "registered mortgage loan originator", "employee" has the foregoing meaning or such other meaning as the federal banking agencies may issue in connection with such agencies' implementation of such agencies' responsibilities under the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC 5101 et seq.;

(8) "Federal banking agency" means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration and the Federal Deposit Insurance Corporation;

(9) "First mortgage loan" means a residential mortgage loan that is secured by a first mortgage;

(10) "Immediate family member" means a spouse, child, sibling, parent, grandparent or grandchild and includes stepparents, stepchildren, stepsiblings and adoptive relationships;

(11) "Independent contractor" means an individual retained on a basis where the individual is not an employee of any person in connection with the services such individual provides and whose compensation is reported or required to be reported on an Internal Revenue Service Form 1099 issued by the retaining person;

(12) "Individual" means a natural person;

(13) "Loan processor or underwriter" means an individual who performs clerical or support duties. The term "clerical or support duties" includes, subsequent to the receipt of an application, (A) the receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan, and (B) communication with a consumer to obtain the information necessary for the processing or underwriting of a loan to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms;

(14) "Main office" means the main address designated on the system;

(15) "Mortgage broker" (A) means a person who (i) for compensation or gain or with the expectation of compensation or gain (I) takes a residential mortgage loan application, or (II) offers or negotiates terms of a residential mortgage loan, and (ii) is not the prospective source of the funds for the residential mortgage loan, and (B) [but] does not include (i) an individual who is licensed as a mortgage loan originator acting as a mortgage loan originator on behalf of such mortgage loan originator's sponsoring mortgage lender, mortgage correspondent lender, mortgage broker or exempt registrant, or (ii) an individual exempt from mortgage loan originator licensure under subdivision (2) of subsection (b) of section 36a-486, as amended by this act, when acting within the scope of such exemption;

(16) "Mortgage correspondent lender" means a person engaged in the business of making residential 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;

(17) "Mortgage lender" means a person engaged in the business of making residential mortgage loans in such person's own name utilizing such person's own funds or by funding loans through a warehouse agreement, table funding agreement or similar agreement;

(18) "Mortgage loan originator" means an individual who for compensation or gain or with the expectation of compensation or gain, either for such individual or for the person employing or retaining such individual, (A) takes a residential mortgage loan application, or (B) offers or negotiates terms of a residential mortgage loan. "Mortgage loan originator" does not include (i) an individual engaged solely as a loan processor or underwriter; (ii) a person who only performs real estate brokerage activities and is licensed in accordance with chapter 392, unless the person is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (iii) a person solely involved in extensions of credit relating to timeshare plans, as that term is defined in Paragraph 53D of 11 USC 101; or (iv) any individual who solely renegotiates terms for existing mortgage loans on behalf of a mortgagee and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development, the Bureau of Consumer Financial Protection or a court of competent jurisdiction determines that the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., requires such individual to be licensed as a mortgage loan originator under state laws implementing said S.A.F.E. Mortgage Licensing Act;

(19) "Office" means a branch office or a main office;

(20) "Person" means a natural person, corporation, company, limited liability company, partnership or association;

(21) "Principal amount of the loan" means the gross amount the borrower is obligated to repay including any prepaid finance charge that is financed, and any other charge that is financed;

(22) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including (A) acting as a real estate agent or real estate broker for a buyer, seller, lessor or lessee of real property; (B) bringing together parties interested in the sale, purchase, lease, rental or exchange of real property; (C) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental or exchange of real property, other than in connection with providing financing with respect to any such transaction; (D) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and (E) offering to engage in any activity, or act in any capacity, described in this subdivision;

(23) "Registered mortgage loan originator" means any individual who (A) meets the definition of mortgage loan originator and is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration; and (B) is registered with and maintains a unique identifier through the system;

(24) "Residential mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling;

(25) "Residential real estate" means any real property located in this state, upon which is constructed or intended to be constructed a dwelling;

(26) "Secondary mortgage loan" means a residential mortgage loan that is secured, in whole or in part, by a mortgage, provided such property is subject to one or more prior mortgages;

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

(28) "Sponsored" means employed or retained as an independent contractor;

[(29) "System" means the Nationwide Mortgage Licensing System and Registry developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage lenders, mortgage correspondent lenders, mortgage brokers, mortgage loan originators and loan processors or underwriters;]

[(30)] (29) "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;

[(31)] (30) "Unique identifier" means a number or other identifier assigned by protocols established by the system; and

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

Sec. 31. Section 36a-21 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Notwithstanding any provision of state law and except as provided in subsections (b) and (d) of this section and subdivision (2) of subsection (a) of section 36a-534b, as amended by this act, the following records of the Department of Banking shall not be disclosed by the commissioner or any employee of the Department of Banking, or be subject to public inspection or discovery:

(1) Examination and investigation reports and information contained in or derived from such reports, including examination reports prepared by the commissioner or prepared on behalf of or for the use of the commissioner;

(2) Confidential supervisory or investigative information obtained from a state, federal or foreign regulatory or law enforcement agency;

(3) Information obtained, collected or prepared in connection with examinations, inspections or investigations, and complaints from the public received by the Department of Banking, if such records are protected from disclosure under federal or state law or, in the opinion of the commissioner, such records would disclose, or would reasonably lead to the disclosure of: (A) Investigative information the disclosure of which would be prejudicial to such investigation, until such time as the investigation and all related administrative and legal actions are concluded; (B) personal or financial information, including account or loan information, without the written consent of the person or persons to whom the information pertains; or (C) information that would harm the reputation of any person or affect the safety and soundness of any person whose activities in this state are subject to the supervision of the commissioner, and the disclosure of such information under this subparagraph would not be in the public interest; and

(4) Information obtained, collected or prepared in connection with the organization of an expedited Connecticut bank prior to the issuance of a final certificate of authority to commence the business of a Connecticut bank pursuant to section 36a-70, as amended by this act.

(b) The commissioner may, without waiving any privilege, disclose the records described in subsection (a) of this section for any appropriate supervisory, governmental, law enforcement or other public purpose. Any such disclosure shall be made under safeguards designed to prevent further dissemination of such records. In any proceeding before a court, the court may issue a protective order in appropriate circumstances to protect the confidentiality of any such record and order that any such record on file with the court or filed in connection with the court proceeding be sealed and that the public be excluded from any portion of the proceeding at which any such record is disclosed.

(c) No director, officer, employee or agent of any Connecticut bank, Connecticut credit union or licensee under section 36a-380, as amended by this act, or 36a-628, as amended by this act, shall disclose without the prior written consent of the commissioner any information contained in an examination report about such bank, credit union or licensee which information is not otherwise a matter of public record.

[(d) (1) The provisions of subsections (a) and (b) of this section shall not apply to the disclosure of any record provided to or maintained by the commissioner with the system. Except as otherwise provided in Section 1512 of the federal S.A.F.E. Mortgage Licensing Act of 2008, any requirements under federal law or any law of this state, including this section and chapter 14 and any privilege arising under federal law or any law of this state, including the rules of any federal court or court of this state that protect the disclosure of any record provided to or maintained with the system, shall continue to apply to such record after it has been disclosed to the system. Such record may be shared with all state and federal regulatory officials that have oversight authority over the mortgage industry without the loss of privilege or the loss of confidentiality protections provided by federal law or the laws of this state.]

(d) (1) Except as otherwise provided in this section, the requirements under any federal or state law regarding the privacy or confidentiality of any information or material provided to the system, as defined in section 36a-2, as amended by this act, and any privilege arising under federal or state law, including the rules of any federal or state court, with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to the system. Such information and material may be shared with all federal and state regulatory officials with mortgage or other financial services industry oversight authority without the loss of privilege or the loss of confidentiality protection provided by federal or state law. For purposes of this subsection, the commissioner may enter into agreements or sharing arrangements with other governmental agencies, the Conference of State Bank Supervisors, the American Association of Residential Mortgage Regulators or associations representing governmental agencies.

(2) Any information or material that is [protected from disclosure] under subdivision (1) of this subsection subject to privilege or confidentiality shall not be subject to (A) disclosure under any federal or state law governing disclosure to the public of information held by an officer or agency of the federal government or the respective state; or (B) subpoena, discovery or admission into evidence in any private civil action or administrative process, except a person may, at such person's discretion, waive in whole or in part a privilege held by the system concerning such information and material.

(3) Any law of this state relating to the disclosure of confidential supervisory information or of any information or material described in subdivision (1) of this subsection that is inconsistent with subdivision (1) shall be superseded by the requirements of this subsection.

(e) The confidentiality provisions of this section shall not apply to records relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, [mortgage loan originators or loan processors or underwriters] persons that are included in the system for access by the public.

[(f) For purposes of this section, "system" has the same meaning as provided in section 36a-485.]

Sec. 32. Subsection (c) of section 36a-51 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(c) Any licensee may surrender any license issued by the commissioner under any provision of the general statutes by surrendering the license to the commissioner in person or by registered or certified mail, provided, in the case of a license issued [pursuant to part I of chapter 668] through the system, as defined in section 36a-2, as amended by this act, such surrender shall be initiated by filing a request to surrender on the system. [, as defined in section 36a-485, in accordance with section 36a-490.] No surrender on the system shall be effective until the request to surrender is accepted by the commissioner. Surrender of a license shall not affect the licensee's civil or criminal liability, or affect the commissioner's ability to impose an administrative penalty on the licensee pursuant to section 36a-50 for acts committed prior to the surrender. If, prior to receiving the license, or, in the case of a license issued [pursuant to part I of chapter 668,] through the system prior to the filing of a request to surrender a license, [under section 36a-490,] the commissioner has instituted a proceeding to suspend, revoke or refuse to renew such license, such surrender or request to surrender will not become effective except at such time and under such conditions as the commissioner by order determines. If no proceeding is pending or has been instituted by the commissioner at the time of surrender, or, in the case of a license issued [pursuant to part I of chapter 668] through the system, at the time a request to surrender is filed, the commissioner may still institute a proceeding to suspend, revoke or refuse to renew a license under subsection (a) of this section up to the date one year after the date of receipt of the license by the commissioner, or, in the case of a license issued [pursuant to part I of chapter 668] through the system, up to the date one year after the date of the acceptance by the commissioner of a request to surrender a license. [under section 36a-490.]

Sec. 33. (NEW) (Effective October 1, 2014) (a) In addition to any other duties imposed upon the Banking Commissioner by law, the commissioner is authorized to require persons engaged in a financial services industry subject to the commissioner's jurisdiction to be licensed or registered through the system, as defined in section 36a-2 of the general statutes, as amended by this act.

(b) In the event the commissioner elects to require system-based licensure for persons engaged in a financial services industry subject to the commissioner's jurisdiction, the commissioner shall require all initial or renewal applications for such licenses or registrations in this state to be made and processed through the system in such form as the commissioner may prescribe, and the system shall be authorized to receive and maintain records related to such licenses or registrations to the same extent allowed or required to be maintained by the commissioner. For this purpose, the commissioner may establish requirements by order as necessary for participation in the system, including, but not limited to: (1) Background checks, including in the case of any form of business organization, checks on the individuals comprising the ownership or management of such organization, for criminal history through (A) fingerprint submission to the Federal Bureau of Investigation or other state, national or international criminal databases, (B) civil, criminal or administrative records from any governmental jurisdiction, (C) credit history, including an independent credit report obtained from a consumer reporting agency described in Section 603(p) of the Fair Credit Reporting Act, 15 USC 1681a, or (D) any other information as deemed necessary by the system; (2) the payment of fees to apply for or renew licenses or registrations through the system; (3) the setting or resetting of license expiration, renewal or transition dates or reporting dates or forms; and (4) the requirements for amending or surrendering a license or any other such activities as the commissioner deems necessary for participation in the system. Such information may thereafter be used by the commissioner to determine an applicant's eligibility for licensing under applicable law and any order issued by the commissioner pursuant to this section. For the purpose of participating in the system, the commissioner may by order waive or modify, in whole or in part, any applicable requirement of title 36a of the general statutes and establish new requirements as reasonably necessary. For the purpose of implementing an orderly and efficient licensing process, the commissioner may adopt licensing regulations, in accordance with the provisions of chapter 54 of the general statutes, and interim procedures for licensing and acceptance of applications.

(c) In the event the commissioner elects to require system-based licensure for persons engaged in financial services industries subject to the commissioner's jurisdiction, the commissioner may report regularly to the system violations of and enforcement actions under applicable law and other relevant information. The commissioner may establish relationships or enter into contracts with the system or other entities designated by the system to collect and maintain records and process transaction fees or other fees related to licensees or other persons required or permitted to be licensed or registered on the system.

(d) To reduce the points of contact that the commissioner or the Federal Bureau of Investigation may have to maintain for purposes of title 36a of the general statutes, the commissioner may use the system as a channeling agent for requesting information from and distributing information to the United States Department of Justice, any governmental agency or any other source as directed by the commissioner.

(e) A person required or permitted to be licensed or registered on the system may challenge information entered into the system by the commissioner. Such challenge shall (1) be made in writing to the commissioner, (2) set forth the specific information being challenged, and (3) include any evidence which supports the challenge. A challenge shall be limited to the factual accuracy of information within the system. If the commissioner determines that the information entered into the system is factually inaccurate, the commissioner shall take prompt action to correct such information. Nothing in this subsection shall be construed to permit a challenge under this section to the merits or factual basis of any administrative action taken by the commissioner pursuant to title 36a of the general statutes.

(f) A person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and shall pay applicable fees or charges to the system. Each person required to obtain registration or licensure through the system shall timely submit to the system accurate reports that shall be in such form and contain such information as the system may require.

(g) All fees paid for any initial application for a license or registration or for a renewal application for a license or registration, including, but not limited to, fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license or registration, shall be nonrefundable. No fee shall be prorated if the license or registration is surrendered, revoked or suspended prior to the expiration of the period for which it was approved.

(h) The commissioner may automatically suspend a license or registration of a person on the system if such person receives a deficiency on the system indicating that a required payment was Returned-ACH or returned pursuant to any other term as may be utilized by the system to indicate that payment was not accepted. After a license or registration has been automatically suspended pursuant to this subsection, the commissioner shall give such licensee or registrant notice of the automatic suspension, pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such action in accordance with section 36a-51 of the general statutes, as amended by this act, and require such licensee to take or refrain from taking such action that, in the opinion of the commissioner, will effectuate the purposes of this subsection.

(i) The commissioner may deem an application for a license or registration on the system abandoned if the applicant fails to respond to any request for required information. The commissioner shall notify the applicant on the system that if such information is not submitted within sixty days of the date of such request the application shall be deemed abandoned. An application filing fee paid prior to the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license or registration.

(j) The commissioner may issue a temporary order to cease business under a license or registration if the commissioner determines that such license or registration was issued erroneously. The commissioner shall give the licensee an opportunity for a hearing on such action in accordance with section 36a-52 of the general statutes. Such temporary order shall become effective upon receipt by the licensee and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.

Sec. 34. Subdivision (2) of subsection (b) of section 36a-486 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(2) The following are exempt from this section: (A) A registered mortgage loan originator or an employee of an institution or subsidiary described in subdivision (23) of section 36a-485, as amended by this act, who is not required to be registered under Section 1507 of the S.A.F.E. Mortgage Licensing Act of 2008, 12 USC Section 5101 et seq., when acting for such institution or subsidiary; (B) an individual who offers or negotiates the terms of a residential mortgage loan with or on behalf of an immediate family member of such individual; (C) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as the individual's residence, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition; (D) a Connecticut licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator or by any agent of such mortgage lender, mortgage correspondent lender, mortgage broker or other mortgage loan originator; (E) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of a federal, state or local government agency or housing finance agency exempt from licensure pursuant to section 36a-487, as amended by this act, and who does so only pursuant to such individual's official duties as an employee of such agency; (F) an individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan as an employee of an organization that has obtained bona fide nonprofit status from the commissioner and is exempt from licensure pursuant to section 36a-487, as amended by this act, and who does so only pursuant to such individual's official duties as an employee of such organization; and (G) an individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that is not the individual's residence but is owned by such individual, unless the context demonstrates that such individual engaged in such activities with a degree of habitualness or repetition.

Sec. 35. Subdivision (10) of section 36a-498e of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(10) Negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, as defined in section [36a-485] 36a-2, as amended by this act, or in connection with any investigation conducted by the [Banking Commissioner] commissioner or another governmental agency;

Sec. 36. Section 36a-489a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2014):

(a) (1) In order to meet the prelicensing education and testing requirements referred to in sections 36a-488 and 36a-489, an individual shall complete at least [twenty] twenty-one hours of education approved in accordance with subdivision (2) of this subsection, which shall include at least (A) three hours of instruction on relevant federal law and regulations; (B) three hours of ethics, including instruction on fraud, consumer protection and fair lending issues; [and] (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and (D) one hour of relevant Connecticut law.

(2) For purposes of subdivision (1) of this subsection, prelicensing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a prelicensing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any prelicensing education course, as approved by the system, that is provided by the sponsor or employer of the individual or an entity which is affiliated with the individual by an agency contract, or any subsidiary or affiliate of such sponsor, employer or entity.

(4) Prelicensing education may be offered either in a classroom, online or by any other means approved by the system.

(5) When prelicensing education requirements described in subdivision (1) of this subsection are completed in another state, such out-of-state prelicensing education requirements shall be accepted as credit towards completion of the prelicensing education requirements of this state, provided such out-of-state prelicensing education requirements are approved by the system.

(6) (A) An individual previously licensed under section 36a-489, subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489, who is applying to be relicensed shall prove that such individual has completed all of the continuing education requirements for the year in which the license was last held.

(B) An individual who previously held a position as a qualified individual or branch manager subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-488, at a time when such individual was not required to be licensed as a mortgage loan originator, may not hold such position again until such individual has completed all of the continuing education requirements for the year in which such individual last held such position and, effective November 1, 2012, has obtained the required mortgage loan originator license.

(b) (1) In order to meet the written test requirements referred to in sections 36a-488 and 36a-489, an individual shall pass, in accordance with the standards established under this subsection, a qualified written test developed by the system and administered by a test provider approved by the system based upon reasonable standards.

(2) A written test shall not be treated as a qualified written test for purposes of subdivision (1) of this subsection unless the test adequately measures the individual's knowledge and comprehension in appropriate subject areas, including ethics, federal law and regulation pertaining to mortgage origination, state law and regulation pertaining to mortgage origination, and federal and state law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace and fair lending issues.

(3) Nothing in this subsection shall prohibit a test provider approved by the system from providing a test at the location of the sponsor or employer, any subsidiary or affiliate of the sponsor or employer or any entity with which the individual holds an exclusive arrangement to conduct the business of a mortgage loan originator.

(4) (A) An individual shall not be considered to have passed a qualified written test unless the individual achieves a test score of not less than seventy-five per cent correct answers to questions.

(B) An individual may retake a test three consecutive times with each consecutive taking occurring at least thirty days after the preceding test. After failing three consecutive tests, an individual shall wait at least six months before taking the test again.

(C) (i) An individual who was licensed subsequent to the applicable effective date of the prelicensing and testing requirements referred to in section 36a-489 who has not been licensed as a mortgage loan originator within the five-year period preceding the date of the filing of such individual's application for a mortgage loan originator license, not taking into account any time during which such individual is a registered mortgage loan originator, shall retake such test; and (ii) effective October 1, 2011, an individual licensed as a loan processor or underwriter who applies to be licensed again shall retake the test if such individual has not been licensed as a loan processor or underwriter within the five-year period preceding the date of the filing of such application, not taking into account any time during which such individual is engaged in loan processing or underwriting but not required to be licensed under subdivision (3) of subsection (b) of section 36a-486.

(c) (1) In order to meet the annual continuing education requirements referred to in subsections (a) and (b) of section 36a-489, a licensed mortgage loan originator, a qualified individual or branch manager and, effective October 1, 2011, a licensed loan processor or underwriter, shall complete at least eight hours of education approved in accordance with subdivision (2) of this subsection. Such courses shall include at least (A) three hours of instruction on relevant federal law and regulation; (B) two hours of ethics, including instruction on fraud, consumer protection and fair lending issues; [and] (C) two hours of training related to lending standards for the nontraditional mortgage product marketplace; and (D) effective January 1, 2015, one hour of relevant Connecticut law.

(2) For purposes of subdivision (1) of this subsection, continuing education courses shall be reviewed and approved by the system based upon reasonable standards. Review and approval of a continuing education course shall include review and approval of the course provider.

(3) Nothing in this subsection shall preclude any education course approved by the system that is provided by the sponsor or employer or an entity that is affiliated with the mortgage loan originator, qualified individual or branch manager or, effective October 1, 2011, loan processor or underwriter by an agency contract, or by any subsidiary or affiliate of such sponsor, employer or entity.

(4) Continuing education may be offered either in a classroom, online or by any other means approved by the system.

(5) Except as provided in procedures adopted under subsections (a) and (b) of section 36a-489 or in regulations adopted under subdivision (9) of this subsection, a licensed mortgage loan originator, qualified individual or branch manager or, effective October 1, 2011, a licensed loan processor or underwriter, may only receive credit for a continuing education course in the year for which the course is taken, and may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.

(6) A licensed mortgage loan originator or a qualified individual or branch manager or, effective October 1, 2011, a licensed loan processor or underwriter who is an approved instructor of an approved continuing education course may receive credit for the licensee's own annual continuing education requirement at the rate of two hours credit for every one hour taught.

(7) When education requirements described in subdivision (1) of subsection (a) of this section are completed in another state, such out-of-state education requirements shall be accepted as credit towards completion of the education requirements of this state, provided such out-of-state education requirements are approved by the system.

(8) A licensed mortgage loan originator and, effective October 1, 2011, a licensed loan processor or underwriter who subsequently becomes unlicensed must complete the continuing education requirements for the last year in which the license was held prior to issuance of an initial or renewed license. A qualified individual or branch manager who ceases to hold such position shall complete the continuing education requirements for the last year in which such individual or branch manager held such position prior to licensure as a mortgage loan originator.

(9) A person who meets the requirements of subparagraphs (A)(i) and (A)(iii) of subdivision (2) of subsection (a) or (b) of section 36a-489 may compensate for any deficiency in an individual's continuing education requirements pursuant to regulations adopted by the commissioner.

(d) For purposes of this section "nontraditional mortgage product" means any mortgage product other than a thirty-year fixed rate mortgage.

Sec. 37. Section 49-31l of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Prior to July 1, [2014] 2018: (1) Any action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2008, to June 30, 2009, inclusive, shall be subject to the provisions of subsection (b) of this section, and (2) any action for the foreclosure of a mortgage on (A) residential real property with a return date during the period from July 1, 2009, to June 30, [2014] 2018, inclusive, or (B) real property owned by a religious organization with a return date during the period from October 1, 2011, to June 30, [2014] 2018, inclusive, shall be subject to the provisions of subsection (c) of this section.

(b) (1) Prior to July 1, [2014] 2018, when a mortgagee commences an action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2008, to June 30, 2009, inclusive, the mortgagee shall give notice to the mortgagor of the foreclosure mediation program established in section 49-31m by attaching to the front of the foreclosure complaint that is served on the mortgagor: (A) A copy of the notice of the availability of foreclosure mediation, in such form as the Chief Court Administrator prescribes, and (B) a foreclosure mediation request form, in such form as the Chief Court Administrator prescribes.

(2) Except as provided in subdivision (3) of this subsection, a mortgagor may request foreclosure mediation by submitting the foreclosure mediation request form to the court and filing an appearance not more than fifteen days after the return date for the foreclosure action. Upon receipt of the foreclosure mediation request form, the court shall notify each appearing party that a foreclosure mediation request form has been submitted by the mortgagor.

(3) The court may grant a mortgagor permission to submit a foreclosure mediation request form and file an appearance after the fifteen-day period established in subdivision (2) of this subsection, for good cause shown.

(4) No foreclosure mediation request form may be submitted to the court under this subsection on or after July 1, [2014] 2018.

(5) If at any time on or after July 1, 2008, but prior to July 1, [2014] 2018, the court determines that the notice requirement of subdivision (1) of this subsection has not been met, the court may, upon its own motion or upon the written motion of the mortgagor, issue an order that no judgment may enter for fifteen days during which period the mortgagor may submit a foreclosure mediation request form to the court.

(6) Notwithstanding any provision of the general statutes or any rule of law to the contrary, prior to July 1, [2014] 2018, no judgment of strict foreclosure nor any judgment ordering a foreclosure sale shall be entered in any action subject to the provisions of this subsection and instituted by the mortgagee to foreclose a mortgage on residential real property unless: (A) Notice to the mortgagor has been given by the mortgagee in accordance with subdivision (1) of this subsection and the time for submitting a foreclosure mediation request form has expired and no foreclosure mediation request form has been submitted, or if such notice has not been given, the time for submitting a foreclosure mediation request form pursuant to subdivision (2) or (3) of this subsection has expired and no foreclosure mediation request form has been submitted, or (B) the mediation period set forth in subdivision (b) of section 49-31n, as amended by this act, has expired or has otherwise terminated, whichever is earlier.

(7) None of the mortgagor's or mortgagee's rights in the foreclosure action shall be waived by the mortgagor's submission of a foreclosure mediation request form to the court.

(c) (1) Prior to July 1, [2014] 2018, when a mortgagee commences an action for the foreclosure of a mortgage on residential real property with a return date on or after July 1, 2009, or, with respect to real property owned by a religious organization, a return date on or after October 1, 2011, the mortgagee shall give notice to the mortgagor of the foreclosure mediation program established in section 49-31m by attaching to the front of the writ, summons and complaint that is served on the mortgagor: (A) A copy of the notice of foreclosure mediation, in such form as the Chief Court Administrator prescribes, (B) a copy of the foreclosure mediation certificate form described in subdivision (3) of this subsection, in such form as the Chief Court Administrator prescribes, (C) a blank appearance form, in such form as the Chief Court Administrator prescribes, (D) with respect to an action for the foreclosure of a mortgage on residential real property with a return date on or after October 1, 2011, to September 30, 2013, inclusive, a mediation information form and a notice containing contact information for authority-approved consumer credit counseling agencies, which form and notice shall be in such form as the Chief Court Administrator prescribes, and which form shall be designed to elicit current financial information and such other nonfinancial information from the mortgagor as the Chief Court Administrator, in consultation with representatives from the banking industry and consumer advocates, determines will further the objectives of the mediation program. The instructions to the mediation information form shall explain that the completed mediation information form, along with accompanying documentation reasonably requested from the mortgagor by way of such instructions, shall be delivered to the mortgagee's counsel not later than fifteen business days prior to the date of the initial mediation session, as identified in the notice provided pursuant to subdivision (2) of subsection (c) of section 49-31n, as amended by this act, and (E) for an action to foreclose a mortgage on residential real property with a return date on or after October 1, 2013, the mediation information form shall instruct the mortgagor as to the objectives of the mediation program, explain the preliminary process of meeting with the mediator as described in subdivision (4) of this subsection, instruct the mortgagor to begin gathering financial documentation commonly used in foreclosure mediation for use in meeting with the mediator and in mediation, and include a notice containing contact information for authority-approved consumer counseling agencies, which shall be in such form as the Chief Court Administrator prescribes. The content of the mediation information form shall be designed by the Chief Court Administrator in consultation with representatives from the banking industry and consumer advocates.

(2) The court shall issue a notice of foreclosure mediation described in subdivision (3) of this subsection to the mortgagor not later than the date three business days after the date the mortgagee returns the writ to the court.

(3) The notice of foreclosure mediation shall instruct the mortgagor to file the appearance and foreclosure mediation certificate forms with the court not later than the date fifteen days from the return date for the foreclosure action. With respect to actions with a return date on or after October 1, 2011, to September 30, 2013, inclusive, such notice shall remind the mortgagor to deliver the completed mediation information form and the accompanying documentation described in subdivision (1) of this subsection and encourage such delivery in advance of the required date. With respect to actions with a return date on or after October 1, 2013, to June 30, [2014] 2018, inclusive, such notice shall instruct the mortgagor to begin gathering financial information commonly used in foreclosure mediation for use in meeting with the mediator and in mediation. The mediation information form and accompanying documentation shall not, without the explicit written instruction of the mortgagor, be publicly available. Such notice of foreclosure mediation shall be accompanied by materials from the Department of Banking, as prescribed by the Chief Court Administrator, which shall describe the community-based resources available to the mortgagor, including authority-approved housing counseling agencies that may assist with preparation for mediation and application for mortgage assistance programs. The foreclosure mediation certificate form shall require the mortgagor to provide sufficient information to permit the court to confirm that the defendant in the foreclosure action is a mortgagor, and to certify that said mortgagor has sent a copy of the mediation certificate form to the plaintiff in the action.

(4) Upon receipt of the mortgagor's appearance and foreclosure mediation certificate forms, and provided the court confirms the defendant in the foreclosure action is a mortgagor and that said mortgagor has sent a copy of the mediation certificate form to the plaintiff, the court shall assign the case to mediation and issue notice of such assignment to all appearing parties, which notice shall include an electronic mail address for all communications related to the mediation. The court shall issue such notice not earlier than the date five business days after the return date or by the date three business days after the date on which the court receives the mortgagor's appearance and foreclosure mediation certificate forms, whichever is later, except that if the court does not receive the appearance and foreclosure mediation certificate forms from the mortgagor by the date fifteen days after the return date for the foreclosure action, the court shall not assign the case to mediation. Promptly upon receipt of the notice of assignment, but not later than the thirty-fifth day following the return date, the mortgagee or its counsel shall deliver to the mediator, via the electronic mail address provided for communications related to the mediation, and to the mortgagor, via first class, priority or overnight mail, (A) an account history identifying all credits and debits assessed to the loan account and any related escrow account in the immediately preceding twelve-month period and an itemized statement of the amount required to reinstate the mortgage loan with accompanying information, written in plain language, to explain any codes used in the history and statement which are not otherwise self-explanatory, (B) the name, business mailing address, electronic mail address, facsimile number and direct telephone number of an individual able to respond with reasonable adequacy and promptness to questions relative to the information submitted to the mediator pursuant to this subdivision, and any subsequent updates to such contact information, which shall be provided reasonably promptly to the mediator via the electronic mail address provided for communication related to the mediation, (C) all reasonably necessary forms and a list of all documentation reasonably necessary for the mortgagee to evaluate the mortgagor for common alternatives to foreclosure that are available through the mortgagee, if any, (D) a copy of the note and mortgage, (E) summary information regarding the status of any pending foreclosure avoidance efforts being undertaken by the mortgagee, (F) a copy of any loss mitigation affidavit filed with the court, and (G) at the mortgagee's option, (i) the history of foreclosure avoidance efforts with respect to the mortgagor, (ii) information regarding the condition of mortgaged property, and (iii) such other information as the mortgagee may determine is relevant to meeting the objectives of the mediation program. Following the mediator's receipt of such information, the court shall assign a mediator to the mediation and schedule a meeting with the mediator and the mortgagor and shall endeavor to schedule such meeting on or prior to the forty-ninth day following the return date. The notice of such meeting shall instruct the mortgagor to complete the forms prior to the meeting and to furnish such forms together with the documentation contained in the list, as provided by the mortgagee following the filing of the foreclosure mediation certificate, at the meeting. At such meeting, the mediator shall review such forms and documentation with the mortgagor, along with the information supplied by the mortgagee, in order to discuss the options that may be available to the mortgagor, including any community-based resources, and assist the mortgagor in completing the forms and furnishing the documentation necessary for the mortgagee to evaluate the mortgagor for alternatives to foreclosure. The mediator may elect to schedule subsequent meetings with the mortgagor and determine whether any mortgagor may be excused from an in-person appearance at such subsequent meeting. As soon as practicable, but in no case later than the eighty-fourth day following the return date, the mediator shall facilitate and confirm the submission by the mortgagor of the forms and documentation to the mortgagee's counsel via electronic means and, at the mortgagee's election, directly to the mortgagee per the mortgagee's instruction, and determine, based on the mortgagor's attendance at the meetings and the extent the mortgagor completed the forms and furnished the documentation contemplated in this subdivision, or failed to perform such tasks through no material fault of the mortgagee, and file a report with the court indicating, (I) whether mediation shall be scheduled with the mortgagee, (II) whether the mortgagor attended scheduled meetings with the mediator, (III) whether the mortgagor fully or substantially completed the forms and furnished the documentation requested by the mortgagee, (IV) the date on which the mortgagee supplied the forms and documentation, and (V) any other information the mediator determines to be relevant to the objectives of the mediation program. No meeting or communication between the mediator and mortgagor under this subdivision shall be treated as an impermissible ex parte communication. If the mediator determines that the mortgagee shall participate in mediation, the court shall promptly issue notice to all parties of such determination and schedule a mediation session between the mortgagee and mortgagor in accordance with subsection (c) of section 49-31n, as amended by this act, to be held not later than five weeks following the submission to the mortgagee of the forms and documentation contemplated in this subdivision. If the mediator determines that no sessions between the mortgagee and mortgagor shall be scheduled, the court shall promptly issue notice to all parties regarding such determination and mediation shall be terminated. Any mortgagor wishing to contest such determination shall petition the court and show good cause for reinclusion in the mediation program, including, but not limited to, a material change in financial circumstances or a mistake or misunderstanding of the facts by the mediator.

(5) Notwithstanding the provisions of this subsection, the court may refer a foreclosure action brought by a mortgagee to the foreclosure mediation program at any time, for good cause shown, provided the mortgagor has filed an appearance in said action and further provided the court shall, not later than the date three business days after the date on which it makes such referral, send a notice to each appearing party assigning the case to mediation and requiring the parties to participate in the premediation process described in subdivision (4) of this subsection, with the court establishing deadlines to ensure that the premediation process is to be completed by the parties as expeditiously as the circumstances warrant and permit. When determining whether good cause exists, the court shall consider whether the parties are likely to benefit from mediation and, in the case of a referral after prior attempts at mediation have been terminated, whether there has been a material change in circumstances.

(6) Notwithstanding any provision of the general statutes or any rule of law, prior to July 1, [2014] 2018, (A) for the period of time which shall not exceed eight months from the return date, the mortgagor shall be permitted to file an answer, special defenses or counterclaims, but no mortgagee or mortgagor shall make any motion, request or demand with respect to the other, except those motions, requests or demands that relate to the mediation program described in section 49-31m and the mediation sessions held pursuant to such program, provided (i) a mortgagor seeking to contest the court's jurisdiction may file a motion to dismiss and the mortgagee may object to such motion to dismiss in accordance with applicable law and the rules of the courts, and (ii) if the mortgagor elects to make any other motion, request or demand with respect to the mortgagee, the eight-month limit shall no longer apply to either party; and (B) no judgment of strict foreclosure nor any judgment ordering a foreclosure sale shall be entered in any action subject to the provisions of this subsection and instituted by the mortgagee to foreclose a mortgage on residential real property or real property owned by a religious organization unless: (i) The mediation period set forth in subsection (c) of section 49-31n, as amended by this act, has expired or has otherwise terminated, whichever is earlier, and, if fewer than eight months has elapsed from the return date at the time of termination, fifteen days have elapsed since such termination and any pending motion or request to extend the mediation period has been heard and denied by the court, or (ii) the mediation program is not otherwise required or available. Nothing in this subdivision shall affect any motion made or any default or judgment entered on or before June 30, 2011.

(7) With respect to foreclosure actions with a return date on or after July 1, 2011, to June 30, [2014] 2018, inclusive, notwithstanding any provision of the general statutes or any rule of law to the contrary, the mortgagee shall be permitted following the eight-month or fifteen-day period described in subdivision (6) of this subsection, to simultaneously file, as applicable, (A) a motion for default, and (B) a motion for judgment of strict foreclosure or a motion for judgment of foreclosure by sale with respect to the mortgagor in the foreclosure action.

(8) None of the mortgagor's or mortgagee's rights in the foreclosure action shall be waived by participation in the foreclosure mediation program.

Sec. 38. Section 49-31n of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Prior to July 1, [2014] 2018: (1) Any action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2008, to June 30, 2009, inclusive, shall be subject to the provisions of subsection (b) of this section, and (2) any action for the foreclosure of a mortgage on (A) residential real property with a return date during the period from July 1, 2009, to June 30, [2014] 2018, inclusive, or (B) real property owned by a religious organization with a return date during the period from October 1, 2011, to June 30, [2014] 2018, inclusive, shall be subject to the provisions of subsection (c) of this section.

(b) (1) For any action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2008, to June 30, 2009, inclusive, the mediation period under the foreclosure mediation program established in section 49-31m shall commence when the court sends notice to each appearing party that a foreclosure mediation request form has been submitted by a mortgagor to the court, which notice shall be sent not later than three business days after the court receives a completed foreclosure mediation request form. The mediation period shall conclude not later than the conclusion of the third mediation session between the mortgagor and mortgagee or seven months after the return date, whichever is earlier, except that the court may, in its discretion, for good cause shown, upon the motion of any party or the mediator, (A) extend the mediation period subject to the provisions of subdivision (9) of this subsection or shorten the mediation period.

(2) The first mediation session shall be held not later than fifteen business days after the court sends notice to all parties that a foreclosure mediation request form has been submitted to the court. The mortgagor and mortgagee shall appear in person at each mediation session and shall have the ability to mediate, except that (A) if a party is represented by counsel, the party's counsel may appear in lieu of the party to represent the party's interests at the mediation, provided the party has the ability to mediate, the mortgagor attends the first mediation session in person, and the party is available (i) during the mediation session by telephone, and (ii) to participate in the mediation session by speakerphone, provided an opportunity is afforded for confidential discussions between the party and party's counsel, (B) following the initial mediation session, if there are two or more mortgagors who are self-represented, only one mortgagor shall be required to appear in person at each subsequent mediation session unless good cause is shown, provided the other mortgagors are available (i) during the mediation session, and (ii) to participate in the mediation session by speakerphone, and (C) if a party suffers from a disability or other significant hardship that imposes an undue burden on such party to appear in person, the mediator may grant permission to such party to participate in the mediation session by telephone. A mortgagor's spouse, who is not a mortgagor but who lives in the subject property, may appear at each mediation session, provided all appearing mortgagors consent, in writing, to such spouse's appearance or such spouse shows good cause for his or her appearance and the mortgagors consent in writing to the disclosure of nonpublic personal information to such spouse. If the mortgagor has submitted a complete package of financial documentation in connection with a request for a particular foreclosure alternative, the mortgagee shall have thirty-five days from the receipt of the completed package to respond with a decision and, if the decision is a denial of the request, provide the reasons for such denial. If the mortgagor has, in connection with a request for a foreclosure alternative, submitted a financial package that is not complete, or if the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the mortgagee shall request the missing or additional information within a reasonable period of time of such evaluation. If the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the thirty-five-day deadline for a response shall be extended but only for so long as is reasonable given the timing of the mortgagor's submission of such additional information and the nature and context of the required underwriting. Not later than the third business day after each mediation session held on or after June 18, 2013, the mediator shall file with the court a report indicating, to the extent applicable, (i) the extent to which each of the parties complied with the requirements set forth in this subdivision, including the requirement to engage in conduct that is consistent with the objectives of the mediation program and to possess the ability to mediate, (ii) whether the mortgagor submitted a complete package of financial documentation to the mortgagee, (iii) a general description of the foreclosure alternative being requested by the mortgagor, (iv) whether the mortgagor has previously been evaluated for similar requests, whether prior to mediation or in mediation, and, if so, whether there has been any apparent change in circumstances since a decision was made with respect to that prior evaluation, (v) whether the mortgagee has responded to the mortgagor's request for a foreclosure alternative and, if so, a description of the response and whether the mediator is aware of any material reason not to agree with the response, (vi) whether the mortgagor has responded to an offer made by the mortgagee on a reasonably timely basis, and if so, an explanation of the response, (vii) whether the mortgagee has requested additional information from the mortgagor and, if so, the stated reasons for the request and the date by which such additional information shall be submitted so that information previously submitted by the mortgagor, to the extent possible, may still be used by the mortgagee in conducting its review, (viii) whether the mortgagor has supplied, on a reasonably timely basis, any additional information that was reasonably requested by the mortgagee, and, if not, the stated reason for not doing so, (ix) if information provided by the mortgagor is no longer current for purposes of evaluating a foreclosure alternative, a description of the out-of-date information and an explanation as to how and why such information is no longer current, (x) whether the mortgagee has provided a reasonable explanation of the basis for a decision to deny a request for a loss mitigation option or foreclosure alternative and whether the mediator is aware of any material reason not to agree with that decision, (xi) whether the mortgagee has complied with the time frames set forth in this subdivision for responding to requests for decisions, (xii) if a subsequent mediation session is expected to occur, a general description of the expectations for such subsequent session and for the parties prior to such subsequent session and, if not otherwise addressed in the report, whether the parties satisfied the expectations set forth in previous reports, and (xiii) a determination of whether the parties will benefit from further mediation. The mediator shall deliver a copy of such report to each party to the mediation when the mediator files the report. The parties shall have the opportunity to submit their own supplemental information following the filing of the report, provided such supplemental information shall be submitted not later than five business days following the receipt of the mediator's report. Any request by the mortgagee to the mortgagor for additional or updated financial documentation shall be made in writing. The court may impose sanctions on any party or on counsel to a party if such party or such counsel engages in intentional or a pattern or practice of conduct during the mediation process that is contrary to the objectives of the mediation program. Any sanction that is imposed shall be proportional to the conduct and consistent with the objectives of the mediation program. Available sanctions shall include, but not be limited to, terminating mediation, ordering the mortgagor or mortgagee to mediate in person, forbidding the mortgagee from charging the mortgagor for the mortgagee's attorney's fees, awarding attorney's fees, and imposing fines. In the case of egregious misconduct, the sanctions shall be heightened. The court shall not award attorney's fees to any mortgagee for time spent in any mediation session if the court finds that such mortgagee has failed to comply with this subdivision, unless the court finds reasonable cause for such failure.

(3) If the mediator reports to the court that the parties will not benefit from further mediation, the mediation period shall terminate automatically. If the mediator reports to the court after the first or second mediation session that the parties may benefit from further mediation, the mediation period shall continue.

(4) If the mediation period concludes and certain issues have not been resolved pursuant to the mediation, the mediator may refer the mortgagor to any appropriate community-based services that are available.

(5) The Chief Court Administrator shall establish policies and procedures to implement this subsection. Such policies and procedures shall, at a minimum, provide that the mediator shall advise the mortgagor at the first meeting required by subdivision (4) of subsection (c) of section 49-31l, as amended by this act, that a judgment of strict foreclosure or foreclosure by sale may cause the mortgagor to lose the residential real property to foreclosure.

(6) In no event shall any determination issued by a mediator under this program form the basis of an appeal of any foreclosure judgment.

(7) Foreclosure mediation request forms shall not be accepted by the court under this subsection on or after July 1, [2014] 2018, and the foreclosure mediation program shall terminate when all mediation has concluded with respect to any applications submitted to the court prior to July 1, [2014] 2018.

(8) At any time during the mediation period, the mediator may refer a mortgagor who is the owner-occupant of one-to-four family residential real property to the mortgage assistance programs, except that any such referral shall not prevent a mortgagee from proceeding to judgment when the conditions specified in subdivision (6) of subsection (b) of section 49-31l, as amended by this act, have been satisfied.

(9) (A) The mediation period shall conclude following the third mediation session or if more than seven months have elapsed since the return date. Not later than fifteen days following the conclusion of the mediation period, and any extended mediation sessions held in accordance with this subdivision, any party may move for, or the mediator may request, an extension of the mediation period. The court shall grant only one additional mediation session per motion or request upon a finding that it is highly probable the parties will reach an agreement through mediation. The court may also grant one additional mediation session per motion or request upon a finding that any party has engaged, either intentionally or by a pattern or practice, in conduct that is contrary to the objectives of the mediation program. The court shall make its ruling not later than twenty days after the filing of such motion or request, and no judgment of strict foreclosure or any judgment ordering a foreclosure sale shall be entered until (i) the court denies the motion or request, or (ii) the conclusion of the extended mediation session, except as provided in subparagraph (B) of this subdivision. Upon the grant of an additional mediation session following the proper finding, the court shall establish an expeditious deadline for such extended mediation session to occur. Such extended mediation period shall conclude following such extended mediation session.

(B) The mediation period may be extended for one additional mediation session without a hearing held pursuant to this subdivision provided all parties to the mediation agree that such parties would benefit from such a session and, in consultation with the mediator, establish an expeditious deadline for such session to take place.

(C) To determine whether to extend mediation, the court may consider all matters that have arisen in the mediation, including, but not limited to, the number of motions to extend mediation, the reasons for which an agreement has not been reached, the objectives of the mediation program, the extent to which the parties will benefit from further mediation, the reports submitted by the mediator, papers submitted in connection with any motion, and any supplemental reports submitted by a party. The court shall articulate its reasons in the order granting or denying any such motion or request to extend mediation.

(10) For any case pending as of October 1, 2013, in which mediation is ongoing, (A) if three or fewer sessions have been held, such case shall be treated as if no sessions have been held as of said date for purposes of subdivision (9) of this subsection, and (B) if four or more sessions have been held, then any party or the mediator may move to terminate the mediation period or extend such period in accordance with subdivision (9) of this subsection and, if no such motion to extend is made, the mediation period shall conclude after the third mediation session occurring after October 1, 2013.

(c) (1) For any action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2009, to June 30, [2014] 2018, inclusive, or for any action for the foreclosure of a mortgage on real property owned by a religious organization with a return date during the period from October 1, 2011, to June 30, [2014] 2018, inclusive, the mediation period under the foreclosure mediation program established in section 49-31m shall commence when the court sends notice to each appearing party scheduling the first foreclosure mediation session. The mediation period shall conclude not later than the conclusion of the third mediation session between the mortgagor and mortgagee or seven months after the return date, whichever is earlier, except that the court may, in its discretion, for good cause shown, upon the motion of any party or request by the mediator, extend the mediation period subject to the provisions of subdivision (9) of this subsection or shorten the mediation period.

(2) The mortgagor and mortgagee shall appear in person at each mediation session and shall have the ability to mediate, except that (A) if a party is represented by counsel, the party's counsel may appear in lieu of the party to represent the party's interests at the mediation, provided the party has the ability to mediate, the mortgagor attends the first mediation session in person and the party is available (i) during the mediation session by telephone, and (ii) to participate in the mediation session by speakerphone, provided an opportunity is afforded for confidential discussions between the party and party's counsel, (B) following the initial mediation session, if there are two or more mortgagors who are self-represented, only one mortgagor shall be required to appear in person at each subsequent mediation session unless good cause is shown, provided the other mortgagors are available (i) during the mediation session, and (ii) to participate in the mediation session by speakerphone, and (C) if a party suffers from a disability or other significant hardship that imposes an undue burden on such party to appear in person, the mediator may grant permission to such party to participate in the mediation session by telephone. A mortgagor's spouse, who is not a mortgagor but who lives in the subject property, may appear at each mediation session, provided all appearing mortgagors consent, in writing, to such spouse's appearance or such spouse shows good cause for his or her appearance and the mortgagors consent, in writing, to the disclosure of nonpublic personal information to such spouse. If the mortgagor has submitted a complete package of financial documentation in connection with a request for a particular foreclosure alternative, the mortgagee shall have thirty-five days from the receipt of the completed package to respond with a decision and, if the decision is a denial of the request, provide the reasons for such denial. If the mortgagor has, in connection with a request for a foreclosure alternative, submitted a financial package that is not complete, or if the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the mortgagee shall request the missing or additional information within a reasonable period of time of such evaluation. If the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the thirty-five-day deadline for a response shall be extended but only for so long as is reasonable given the timing of the mortgagor's submission of such additional information and the nature and context of the required underwriting. Not later than the third business day after each mediation session, the mediator shall file with the court a report indicating, to the extent applicable, (i) the extent to which each of the parties complied with the requirements set forth in this subdivision, including the requirement to engage in conduct that is consistent with the objectives of the mediation program and to possess the ability to mediate, (ii) whether the mortgagor submitted a complete package of financial documentation to the mortgagee, (iii) a general description of the foreclosure alternative being requested by the mortgagor, (iv) whether the mortgagor has previously been evaluated for similar requests, whether prior to mediation or in mediation, and, if so, whether there has been any apparent change in circumstances since a decision was made with respect to that prior evaluation, (v) whether the mortgagee has responded to the mortgagor's request for a foreclosure alternative and, if so, a description of the response and whether the mediator is aware of any material reason not to agree with the response, (vi) whether the mortgagor has responded to an offer made by the mortgagee on a reasonably timely basis, and if so, an explanation of the response, (vii) whether the mortgagee has requested additional information from the mortgagor and, if so, the stated reasons for the request and the date by which such additional information shall be submitted so that information previously submitted by the mortgagor, to the extent possible, may still be used by the mortgagee in conducting its review, (viii) whether the mortgagor has supplied, on a reasonably timely basis, any additional information that was reasonably requested by the mortgagee, and, if not, the stated reason for not doing so, (ix) if information provided by the mortgagor is no longer current for purposes of evaluating a foreclosure alternative, a description of the out-of-date information and an explanation as to how and why such information is no longer current, (x) whether the mortgagee has provided a reasonable explanation of the basis for a decision to deny a request for a loss mitigation option or foreclosure alternative and whether the mediator is aware of any material reason not to agree with that decision, (xi) whether the mortgagee has complied with the time frames set forth in this subdivision for responding to requests for decisions, (xii) if a subsequent mediation session is expected to occur, a general description of the expectations for such subsequent session and for the parties prior to such subsequent session and, if not otherwise addressed in the report, whether the parties satisfied the expectations set forth in previous reports, and (xiii) a determination of whether the parties will benefit from further mediation. The mediator shall deliver a copy of such report to each party to the mediation when the mediator files the report. The parties shall have the opportunity to submit their own supplemental information following the filing of the report, provided such supplemental information shall be submitted not later than five business days following the receipt of the mediator's report. Any request by the mortgagee to the mortgagor for additional or updated financial documentation shall be made in writing. The court may impose sanctions on any party or on counsel to a party if such party or such counsel engages in intentional or a pattern or practice of conduct during the mediation process that is contrary to the objectives of the mediation program. Any sanction that is imposed shall be proportional to the conduct and consistent with the objectives of the mediation program. Available sanctions shall include, but not be limited to, terminating mediation, ordering the mortgagor or mortgagee to mediate in person, forbidding the mortgagee from charging the mortgagor for the mortgagee's attorney's fees, awarding attorney's fees, and imposing fines. In the case of egregious misconduct, the sanctions shall be heightened. The court shall not award attorney's fees to any mortgagee for time spent in any mediation session if the court finds that such mortgagee has failed to comply with this subdivision, unless the court finds reasonable cause for such failure.

(3) If the mediator reports to the court that the parties will not benefit from further mediation, the mediation period shall terminate automatically. If the mediator reports to the court after the first or second mediation session that the parties may benefit from further mediation, the mediation period shall continue.

(4) If the mediation period concludes and certain issues have not been resolved pursuant to the mediation, the mediator may refer the mortgagor to any appropriate community-based services that are available in the judicial district, but any such referral shall not cause a delay in the mediation process.

(5) The Chief Court Administrator shall establish policies and procedures to implement this subsection. Such policies and procedures shall, at a minimum, provide that the mediator shall advise the mortgagor at the first meeting required by subdivision (4) of subsection (c) of section 49-31l, as amended by this act, that: (A) Such mediation does not suspend the mortgagor's obligation to respond to the foreclosure action beyond the limited time frame described in subdivision (6) of subsection (c) of section 49-31l, as amended by this act; and (B) a judgment of strict foreclosure or foreclosure by sale may cause the mortgagor to lose the residential real property or real property owned by a religious organization to foreclosure.

(6) In no event shall any determination issued by a mediator under this program form the basis of an appeal of any foreclosure judgment.

(7) The foreclosure mediation program shall terminate when all mediation has concluded with respect to any foreclosure action with a return date during the period from July 1, 2009, to June 30, [2014] 2018, inclusive.

(8) At any time during the mediation period, the mediator may refer a mortgagor who is the owner-occupant of one-to-four family residential real property to the mortgage assistance programs, except that any such referral shall not prevent a mortgagee from proceeding to judgment when the conditions specified in subdivision (6) of subsection (c) of section 49-31l, as amended by this act, have been satisfied.

(9) (A) The mediation period shall conclude following the third mediation session or if more than seven months have elapsed since the return date. Not later than fifteen days following the conclusion of the mediation period, and any subsequent extended mediation sessions held in accordance with this subdivision, any party may move for, or the mediator may request, an extension of the mediation period. The court shall grant only one additional mediation session per motion or request upon a finding that it is highly probable the parties will reach an agreement through mediation. The court may also grant one additional mediation session per motion or request upon a finding that any party has engaged, either intentionally or by a pattern or practice, in conduct that is contrary to the objectives of the mediation program. The court shall make its ruling not later than twenty days after the filing of such motion or request, and no judgment of strict foreclosure or any judgment ordering a foreclosure sale shall be entered until (i) the court denies the motion or request, or (ii) the conclusion of the subsequent extended mediation session, except as provided in subparagraph (B) of this subdivision. Upon the grant of an additional mediation session following the proper finding, the court shall establish a reasonably expeditious deadline for such subsequent extended mediation session to occur. Such extended mediation period shall conclude following such subsequent extended mediation session.

(B) The mediation period may be extended for one additional mediation session without a hearing held pursuant to this subdivision provided all parties to the mediation agree that such parties would benefit from such a session and, in consultation with the mediator, establish a reasonably expeditious deadline for such session to take place.

(C) To determine whether to extend mediation, the court may consider all matters that have arisen in the mediation, including, but not limited to, the number of motions to extend mediation, the reasons for which an agreement has not been reached, the objectives of the mediation program, the extent to which the parties will benefit from further mediation, the reports submitted by the mediator, papers submitted in connection with any motion, and any supplemental reports submitted by a party. The court shall articulate its reasons in the order granting or denying any such motion or request to extend mediation.

(10) For any case pending as of October 1, 2013, in which mediation is ongoing, (A) if three or fewer sessions have been held, such case shall be treated as if no sessions have been held as of said date for purposes of subdivision (9) of this subsection, and (B) if four or more sessions have been held, then any party or the mediator may move to terminate the mediation period or extend such period in accordance with subdivision (9) of this subsection and, if no such motion to extend is made, the mediation period shall conclude after the third mediation session occurring after October 1, 2013.

(d) (1) Not later than February 14, 2014, the Chief Court Administrator shall submit, in accordance with the provisions of section 11-4a, to the joint standing committee of the General Assembly having cognizance of matters relating to banks, a summary regarding the mediation program and a general summary of the data collected in the reports submitted pursuant to subdivision (2) of subsections (b) and (c) of this section from July 1, 2013, to December 31, 2013, inclusive. Such summaries shall include, but not be limited to, the aggregate data regarding the number of cases in mediation, the number of mediation sessions held, the number of agreements reached before the conclusion of the mediation period, the number of motions or requests for an extension or continuance and the identity of the party that made such a motion or request, whether the loan at issue was serviced by a third party, the judicial district in which the mediation took place and whether the mortgagor was self-represented.

(2) Not later than February 14, 2015, the Chief Court Administrator shall submit, in accordance with the provisions of section 11-4a, to the joint standing [committee] committees of the General Assembly having cognizance of matters relating to banks and housing, a summary of the reports submitted from July 1, 2013, to December 31, 2014, inclusive, pursuant to subdivision (2) of subsections (b) and (c) of this section. The detailed data points for such summary, including data to be collected but not reported, shall be developed by the Chief Court Administrator in consultation with representatives from the Governor's office, the banking industry and consumer advocates.

Sec. 39. Subsection (g) of section 36a-801 of the 2014 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(g) If the commissioner determines that a check filed with the commissioner to pay a fee under [subdivision (1) of this subsection] subsection (b) 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, as amended by this act.

Sec. 40. Subdivisions (30) and (31) of section 34-600 of the general statutes are repealed and the following is substituted in lieu thereof (Effective from passage):

(30) "Private organic rules" means the rules, whether or not in a record, that govern the internal affairs of an entity, are binding on all of its interest holders and are not part of its public organic document, if any.

(31) "Protected agreement" means (A) a record evidencing indebtedness and any related agreement in effect on or after [October 1, 2011] January 1, 2014; (B) an agreement that is binding on an entity on or after [October 1, 2011] January 1, 2014; (C) the organic rules of an entity in effect on or after [October 1, 2011] January 1, 2014; or (D) an agreement that is binding on any of the governors or interest holders of an entity on or after [October 1, 2011] January 1, 2014.

Sec. 41. Subdivision (38) of section 34-600 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(38) "Type", with regard to an entity, means a generic form of entity (A) recognized at common law, or (B) organized under an organic law, whether or not an entity organized under such organic law is subject to the provisions of such organic law creating different categories of the form of entity.

Sec. 42. Subsection (a) of section 36a-17 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The commissioner, in the commissioner's discretion, may, subject to the provisions of section 36a-21, as amended by this act, and the Freedom of Information Act, as defined in section 1-200, [;] (1) make such public or private investigations or examinations within or outside this state, concerning any person subject to the jurisdiction of the commissioner, as the commissioner deems necessary to carry out the duties of the commissioner, (2) require or permit any person to testify, produce a record or file a statement in writing, under oath, or otherwise as the commissioner determines, as to all the facts and circumstances concerning the matter to be investigated or about which an action or proceeding is pending, and (3) publish information concerning any violation of any provision of the general statutes within the jurisdiction of the commissioner or any regulation or order adopted or issued under such provision.

Sec. 43. Subsection (a) of section 36a-196 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Following the reorganization of any mutual savings bank or mutual savings and loan association pursuant to sections 36a-192 to 36a-199, inclusive, the reorganized savings institution of such mutual holding company shall not sell or offer to sell its common stock or securities convertible into common stock unless each eligible account holder of the reorganized savings institution receives, without payment, nontransferable subscription rights to purchase common stock or securities convertible into common stock, as the case may be, of the reorganized savings institution pursuant to a subscription offering: (1) In which every eligible account holder may receive the right, subject to modification in the event of an over-subscription to the subscription offering by all eligible account holders, to purchase up to a maximum of one-half of one per cent of the total number of the shares of common stock or securities convertible into common stock, as the case may be, being offered by the reorganized savings institution; (2) in which every eligible account holder, regardless of such account holder's relationship to the reorganized savings institution, may participate at the same time as every other eligible account holder; and (3) which offering shall precede any offering of the reorganized savings institution's common stock or securities convertible into common stock, as the case may be, to the members of the general public. The terms of the subscription offering may provide that any savings account with total balances of less than five hundred dollars, or any lesser amount as determined by the governing board of the reorganized savings institution, shall not constitute a qualifying deposit for participation in the subscription offering. Not later than fifteen days from the date of submission to the commissioner of a plan outlining the terms of the subscription offering, the reorganized savings institution shall mail by first class mail a notice to each eligible account holder as of the eligibility record date indicating that: [(1)] (A) The governing board of the reorganized savings institution has approved the sale of a certain number of shares of common stock or securities convertible into common stock, as the case may be; [(2)] (B) such eligible account holder shall have nontransferable rights to subscribe for shares of the common stock or securities convertible into common stock, as the case may be, of the reorganized savings institution; [(3)] (C) the holders of capital stock of the reorganized savings bank shall have exclusive voting rights; [(4)] (D) the right to subscribe to shares of common stock or securities convertible into common stock, as the case may be, will expire unless such rights are exercised by the eligible account holder within the time period specified in such notice, which date shall not be less than sixty days from the date of the submission to the commissioner of the plan outlining the terms of the subscription offering; and [(5)] (E) in order to obtain further information with respect to the subscription offering, the eligible account holder shall indicate such eligible account holder's interest to the reorganized savings institution by returning a postage prepaid expression of interest sent by the reorganized savings institution not later than the date set forth in the notice, which date shall be not less than thirty days from the date of the submission to the commissioner of the plan outlining the terms of the subscription offering. In mailing such notice to eligible account holders, the reorganized savings institution may rely upon the last-known valid address of such account holder in its possession. The reorganized savings institution shall have no further obligation to forward information regarding the conversion offering to eligible account holders who have not returned postage prepaid expressions of interest or responded otherwise in writing to such notice.

Sec. 44. Subsection (c) of section 36a-380 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(c) As used in sections 36a-380 to 36a-386, inclusive, "entity" means a corporation, joint stock company, association, partnership, limited partnership, unincorporated organization, limited liability company or similar organization, but does not include any corporation of which the majority of the shares are owned by the United States or by any state.

Sec. 45. Subdivision (3) of subsection (c) of section 36a-534b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(3) Any person making any filing or submission of any information on the system shall do so in accordance with the procedures and requirements of the system and pay the applicable fees or charges to the system. Each mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator and loan processor or underwriter licensee and each exempt registrant, to the extent required by the system, shall timely submit to the system accurate reports of condition that shall be in such form and shall contain such information as the system may require. Failure by a licensee to submit a timely and accurate report of condition shall constitute a violation of this provision. Failure of an exempt registrant to timely and accurately submit a report of condition shall form a basis to inactivate the licenses of all sponsored mortgage loan originators or loan processor or underwriters. To the extent that the system does not require submission of reports of condition by individual mortgage loan originator or loan processor or underwriter licensees, such individual licensees shall timely and accurately report all required information in their possession to their sponsor for purposes of their sponsor's reporting obligation. Failure of an individual licensee to timely and accurately report required information in [their] such licensee's possession to [their] such licensee's sponsor shall constitute a violation of this provision.

Statement of Legislative Commissioners:

In section 9(b), "subdivision (1)" was changed to "subdivision (2)" for the purpose of accuracy; section 25, a repeat of section 34, was deleted for clarity; in section 29, the brackets around the terms "mortgage servicer" and "mortgagee" were deleted for consistency; and in section 36, "Banking Commissioner" was changed to "commissioner" for the purpose of consistency with the general statutes.

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Municipal Impact: None

Explanation

The bill results in a revenue gain of up to $50,000 in FY 15 to the Banking Fund by expanding the scope of services subject to licensure to include mortgage servicers. It is anticipated that up to 50 mortgage servicers may be licensed as a result of the bill. The fee ($1,000) is paid biennially and it is possible some of the anticipated revenue could occur in FY 16 rather than FY 15.

The bill results in a cost of approximately $5.9 million in FY 15 and $6.3 million in FY 16 to the Banking Fund by extending the foreclosure mediation program in the Judicial Department. This includes 50 positions and programmatic funding. The program is currently scheduled to end in FY 14. PA 13-184, the FY 14 and FY 15 Budget, includes a $5.9 million Banking Fund appropriation for the foreclosure mediation program.

The bill makes other changes that do not result in a fiscal impact to the Department of Banking.

The Out Years

State Impact:

Municipal Impact: None

OLR Bill Analysis

sHB 5353

AN ACT CONCERNING MORTGAGE SERVICERS, CONNECTICUT FINANCIAL INSTITUTIONS, CONSUMER CREDIT LICENSES, THE FORECLOSURE MEDIATION PROGRAM AND MINOR REVISIONS TO THE BANKING STATUTES.

SUMMARY:

This bill makes numerous unrelated changes. Among other things, it:

1. renames mortgage servicing companies “mortgage servicers”, expands the scope of services subject to licensure, adds new licensing, application, fee, bonding, and recordkeeping requirements, specifies standards of conduct for servicers, and provides the commissioner with authority to conduct investigations and examinations and take enforcement actions against violators;

2. limits the exemptions from mortgage lender, mortgage correspondent lender, mortgage broker, and debt negotiator licensure that apply to certain subsidiaries of banks and credit unions;

3. establishes procedural requirements for a Connecticut bank that proposes to close a loan production office;

4. prohibits the transfer and assignment of a business and industry development corporation's license;

5. allows certain New Jersey and Pennsylvania banks to join a group of banks that own Connecticut-chartered “bankers' bank”;

6. expands the definition of an “automatic teller machine” to include those equipped with a telephone or televideo device that allows contact with bank employees;

7. extends the banking commissioner's authority to use the Nationwide Mortgage Licensing System and Registry, authorizes the system to receive and maintain licensing and registration records, and establishes filing, licensing, fees, reports and other system procedures and requirements;

8. narrows the scope of the exemption from mortgage loan originator licensure that applies to certain attorneys;

9. increases the prelicensing and continuing education and testing requirements for mortgage lenders, mortgage correspondent lenders, and mortgage brokers;

10. extends the state's foreclosure mediation program by four years, until July 1, 2018;

11. limits the automatic suspension of a consumer collection agency license due to a dishonored payment of licensing fees; and

12. establishes a mechanism for specified business entities to change their entity type.

The bill also makes technical and conforming changes and corrects improper references (§§ 2 & 3, 23 & 24, and 42-46).

EFFECTIVE DATE: Various, see section-by-section analysis below.

§§ 1-20 AND 23 & 24 MORTGAGE SERVICERS

§ 1 — Definition

By law, a mortgage servicing company is any person, who services a first mortgage loan. The bill changes the term “mortgage servicing company” to “mortgage servicer” and expands the scope of services to include (1) residential mortgage loans beyond the first loan, (2) home equity conversion mortgages, and (3) reverse mortgages.

The bill defines a “branch office” as a location other than the main office at which a licensee or any person on the licensee's behalf acts as a mortgage servicer.

Under current law, a “mortgagor” is any person who is obligated to repay a first mortgage loan. The bill expands this beyond the first loan, but limits it to residential mortgage loans.

The bill defines “mortgagee” as the grantee of a residential mortgage or the last person to whom the residential mortgage has been assigned of record. A “residential mortgage loan” is any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a (1) single or multi-family (up to four units) residence located in Connecticut or (2) real property located in the state and slated as the future site for residential home(s).

Under the bill, “system” means the Nationwide Mortgage Licensing System and Registry, NMLS, NMLSR or any other name or acronym that may be assigned to the multistate system developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, owned and operated by the State Regulatory Registry, LLC, or any successor or affiliated entity, for the licensing and registration of persons in the mortgage and other financial services industries.

EFFECTIVE DATE: October 1, 2014

§ 4 — Licensure Requirement

The bill generally requires any person acting as a mortgage servicer to obtain a license from the banking commissioner for its main office and each branch office from which it conducts business, effective January 1, 2015.

The bill exempts the following from the mortgage servicer licensing requirements:

1. any bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, if it is federally insured, any wholly owned subsidiary of a federal bank, or federally chartered out-of-state bank, or of any Connecticut bank, or Connecticut credit union, or any operating subsidiary of a federal bank, federally chartered out-of-state bank or any wholly owned subsidiary of a Connecticut bank or credit union where each owner of the operating or wholly owned subsidiary is wholly owned by the same bank; and

2. any person licensed as a mortgage lender in this state while acting as a mortgage servicer from a location licensed as a main office or branch office, if the person meets the bond and errors and omissions coverage requirements. This exemption does not apply when the mortgage lenders state licenses is suspended.

It suspends provisions related to the banking commissioner's powers to take action against a mortgage servicing company for failing to provide services, including paying the mortgagor's taxes and insurance premiums from the designated escrow account. The bill provides new enforcement authority.

EFFECTIVE DATE: October 1, 2014

§ 5 — Application Requirements

Prerequisites to Licensure. The bill requires the commissioner to issue a mortgage servicer license if he finds that:

1. the applicant has identified a “qualified individual” within its main office and each branch office who (a) has supervisory authority over the mortgage servicer activities at his or her office location and (b) has at least three years' experience in the mortgage servicing business within the five years immediately preceding the application date;

2. the applicant's control persons, the qualified individual, and any branch manager with supervisory authority at the office for which the license is sought have not been convicted of, or pled guilty or nolo contendere in a domestic, foreign, or military court at any time before the application date to (a) a felony during the seven-year period before the date of the application or (b) a felony involving an act of fraud or dishonesty, a breach of trust, or money laundering;

3. demonstrates that the financial responsibility, character, and general fitness of the applicant, the control persons of the applicant, the qualified individual, and any branch manager having supervisory authority over the office for which the license is sought warrant a determination that the applicant will operate honestly, fairly, and efficiently, and consistent with the bill's and law's purpose;

4. has met the bill's surety bond, fidelity bond, and errors and omissions coverage requirement;

5. has not made a material misstatement in the application; and

6. other similar requirements.

The bill prohibits the commissioner from issuing a license if he fails to make these findings and requires him to notify the applicant of a denial and the reasons for it.

The bill does not count pardons and expungements under Connecticut law as convictions for the purpose of a mortgage servicer license application. It specifies that the level and status of such events must be determined by the law of the jurisdiction where the case was prosecuted. If that jurisdiction does not use the term “felony,” “pardon,” or “expungement,” then legally equivalent terms apply.

Application. An applicant for a mortgage servicer license or license renewal must:

1. file an application form, prescribed by the commissioner, along with the required $1,000 licensing fee with the Nationwide Mortgage Licensing System and Registry;

2. furnish the system information concerning the identity of the applicant, any control person of the applicant, the qualified individual, and any branch manager, including personal history and experience in a form the system prescribes; and

3. furnish information related to any administrative, civil, or criminal findings by any governmental jurisdiction.

The applicant must promptly notify the commissioner, in the system, of any change to the information submitted in connection with its most recent application, within 15 days of becoming aware of the changes.

The bill specifies that evidence of the qualified individual's and any branch manager's experience must include:

1. a statement specifying the duties and responsibilities of the person's employment, the term of employment, including month and year, and the name, address, and telephone number of a supervisor, employer or, if self-employed, a business reference and

2. if required by the commissioner, copies of W-2 forms, 1099 tax forms or, if self-employed, 1120 corporate tax returns, signed letters from the employer on the employer's letterhead verifying that person's duties and responsibilities and employment term, including month and year, and, if the person is unable to provide such letters, other proof satisfactory to the commissioner that such person meets the experience requirement.

The bill allows the commissioner to (1) conduct a criminal history records check of the applicant, any control person of the applicant, the qualified individual and any branch manager with supervisory authority at the office for which the license is sought and (2) require the applicant to submit fingerprints as part of the application.

License Renewal. Under current law, applicant seeking to renew a mortgage servicer license must (1) continue to meet the minimum standards for licensure and (2) pay the required renewal fees. The license expires if the minimum standards for renewal are not met.

The commissioner may adopt procedures for the reinstating expired licenses consistent with the standards established by the system.

The commissioner may automatically suspend a mortgage servicer license if payment of the required fees is returned or not accepted. The commissioner must (1) give the licensee notice of the automatic suspension, pending proceedings for revocation or refusal to renew set out in the bill and an opportunity for a hearing and (2) require the licensee to take or refrain from taking action as specified by the commissioner.

The bill allows the commissioner to institute a revocation or suspension proceeding or issue an order suspending or revoking the license within one year after the expiration date, if the mortgage servicer's license expires due to the licensee's failure to renew.

Withdrawn or Abandoned Application. An applicant who wishes to withdraw an application for a license must submit a notice of that intent to the commissioner. The withdrawal becomes effective when the commissioner receives the notice. The bill allows the commissioner to deny a subsequent license application up to one year after the effective date of withdrawal.

The bill allows the commissioner to consider an application abandoned if the applicant fails to respond to any request for information required by law. The commissioner must notify the applicant, on the system, that if the information is not submitted within 60 days from the request date, the application will be considered abandoned. Application fees for abandoned applications can not be refunded. However, the bill allows the applicant to submit a new application with another fee.

Annual Application Filing. The bill requires a mortgage servicer to file with the commissioner, at least annually, (1) a current schedule of the ranges of costs and fees it charges mortgagors for its servicing-related activities and (2) a report in a form and format acceptable to the commissioner detailing the mortgage servicer's activities in the state, including:

1. the number of residential mortgage loans the mortgage servicer is servicing;

2. the type and characteristics of the loans;

3. the number of serviced loans in default, along with a breakdown of 30-day, 60-day, and 90-day delinquencies;

4. information on loss mitigation activities, including details on workout arrangements undertaken; and

5. information on foreclosures commenced in the state.

EFFECTIVE DATE: October 1, 2014

§ 6 — Filing Requirements

The bill specifies various filing requirements concerning a mortgage servicer license, including (1) the process for surrendering a license, (2) name requirements, and (3) the timeframe within which the commissioner must be notified of certain events.

Transferability and Surrender of License. The bill prohibits the transfer or assignment of a mortgage servicer license. A licensee must file a request, on the system, to surrender the license for each office at which the licensee intends to cease doing business, within 15 days after it ceases acting as a mortgage servicer. The surrender takes effect when the commissioner accepts the request.

Name and Address. A licensee must use its legal name, unless the commissioner disapproves, or a fictitious name approved by the commissioner.

A mortgage servicer licensee may change its name or the address of any office specified on the most recent filing with the system if (1) the licensee files the change, with the system, at least 30 calendar days before it occurs and (2) the commissioner does not disapprove the change, in writing, or request further information within the 30-day period. In the case of a main office or branch office, the licensee must provide the commissioner a bond rider or endorsement, or addendum, as applicable, to the bond and errors and omissions coverage on file that reflects the new name or address of the main office or branch office.

Other Filing Requirements. The mortgage servicer licensee must file with the system or, if the information cannot be filed on the system, directly notify the commissioner, in writing, within five business days of having reason to know, if the licensee:

1. files for bankruptcy or consummates a corporate restructuring;

2. is criminally indicted, or receives notice that any of its officers, directors, members, partners, or shareholders owning 10% or more of its outstanding stock is indicted for, or convicted of, a felony;

3. receives notice of the institution against it of license denial, cease and desist, suspension or revocation procedures, or other formal or informal regulatory action by any governmental agency and the reasons for the action;

4. receives notice that the attorney general of this or any other state has initiated an action, presumably against the licensee, and the reasons for it;

5. knows that its status as an approved seller or servicer has been suspended or terminated by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association;

6. receives notice that certain of its servicing rights will be rescinded or cancelled, and the reasons why;

7. receives notice that any of its officers, directors, members, partners, or shareholders owning 10% or more of its outstanding stock has filed for bankruptcy; or

8. receives notice of a consumer class action lawsuit against it that is related to the operation of the licensed business.

EFFECTIVE DATE: October 1, 2014

§ 7 — License Terms and Fees

A mortgage servicer license expires at the close of business on December 31 of the year in which it is approved, unless it is renewed. If the license was approved on or after November 1, it expires at the close of business on December 31 of the year following the year in which it is approved.

Renewal applications must be filed between November 1 and December 31 of the year in which the license expires. A license fee of $1,000 along with any required fees or charges must be paid to the system for an initial license or renewal. All fees are nonrefundable and cannot be prorated.

EFFECTIVE DATE: October 1, 2014

§ 8 — Bond Requirements

A mortgage servicer applicant or licensee and any person, other than a bank, exempt from mortgage servicer licensure must file with the commissioner, a surety bond, a fidelity bond, and errors and omissions coverage written by a surety authorized to do business in the state. The bill prohibits anyone from acting as a mortgage servicer in the state without maintaining the required bonds, and errors and omissions coverage.

Surety Bond. The surety bond must cover the main office and any branch office where a person acts as a mortgage servicer. Under the bill, the required bond amount is $100,000 per office location and the bond must run concurrently with the license period for the main office. The aggregate liability under the bond must not exceed $100,000. It must be (1) in a form approved by the attorney general and (2) conditioned on the mortgage servicer licensee or person exempt from mortgage servicer licensure faithfully performing any and all written agreements or commitments with, or for the benefit of, mortgagors and mortgagees; truly and faithfully accounting for all funds the licensee receives from a mortgagor or mortgagee in its capacity as a mortgage servicer; and conducting the mortgage business in compliance with the law.

Any mortgagor or mortgagee may proceed on the bond against the principal or surety of the bond, or both, to recover damages. The commissioner may proceed on the bond against the principal or surety of the bond, or both, to collect (1) any civil penalty or restitution imposed on a licensee and (2) any unpaid costs of an examination of a licensee.

Under the bill, bond proceeds are deemed to be held in trust for the benefit of claimants in the event of the principal's bankruptcy and must be immune from attachment by creditors and judgment creditors.

The bill requires the principal to notify the commissioner of the commencement of an action on the bond. When an action is commenced on a principal's bond, the commissioner may require the filing of a new bond. If the action results in any recovery on the bond, the principal must immediately file a new bond.

Fidelity Bond and Errors and Omissions Coverage

The required fidelity bond and errors and omissions coverage must name the commissioner as an additional loss payee on drafts the surety issues to pay for covered losses directly or indirectly incurred by mortgagors of residential mortgage loans serviced by the mortgage servicer.

The fidelity bond must cover losses arising from dishonest and fraudulent acts, embezzlement, misplacement, forgery, and similar events committed by the mortgage service's employees. The errors and omissions coverage must cover losses arising from the mortgage servicer negligence, errors, and omissions with respect to the payment of real estate taxes and special assessments, hazard and flood insurance, or the maintenance of mortgage and guaranty insurance.

The required fidelity bond and errors and omissions coverage amounts are based on the mortgage servicer's volume of servicing activity most recently reported to the commissioner, as follows:

1. $300,000 if the amount of the residential mortgage loans serviced is $100 million dollars or less or

2. if the loan amount exceeds $100 million, the principal amount must be $300,000 plus (a) 0.15% of the amount of residential mortgage loans serviced between $100 million and $500 million; (b) plus 0.125% of the amount of residential mortgage loans serviced from $500 million to $1 billion; and (c) plus 0.1% of the amount of residential mortgage loans serviced above $1 billion.

The fidelity bond and errors and omissions coverage may include a deductible of no more than the greater of $100,000 or 5% of the principal amount.

Cancellation of the Bond and Errors and Omissions Coverage. The surety company has the right to cancel the surety bond, fidelity bond, and errors and omissions coverage at any time by a written notice to the principal and the commissioner stating the effective date of the cancellation. The notice must be sent by certified mail to the principal at least 30 days prior to the cancellation date. The commissioner must give the principal, notice of the pending cancellation and suspend its license on the cancellation date.

Automatic suspension or inactivation is halted if, prior to the effective date of the cancellation, (1) the principal submits a letter of reinstatement of, or new, bond or errors or omissions coverage or (2) the mortgage servicer licensee has ceased business in the state and has surrendered all licenses.

The commissioner must (1) give a licensee notice of an automatic suspension, pending proceedings for revocation or refusal to renew and an opportunity for a hearing and (2) require the licensee to take or refrain from taking action as specified by the commissioner.

Under the bill, a state-licensed mortgage lender acting as a mortgage servicer from a location licensed as a main office or branch office loses its exemption from the mortgage services licensing requirements if the required surety bond, fidelity bond, or errors and omissions coverage is cancelled.

Additional Bonds Based on Financial Conditions. Under the bill, the commissioner may require one or more additional bonds meeting the standards described above, if he finds a mortgage servicer's or mortgage lender licensee's financial condition warrants it. The licensee must file any additional bonds within 10 days after receiving the commissioner's written notice of a requirement to do so. A mortgage servicer or mortgage lender licensee must file any bond rider or endorsement or addendum the commissioner requires.

EFFECTIVE DATE: October 1, 2014

§ 9 — Records Retention

A mortgage servicer licensee and person exempt from licensure must (1) maintain adequate records of each residential mortgage loan transaction at the office named in the mortgage servicer or mortgage lender license or (2) if requested by the commissioner, make the records available at the office or send them to the commissioner within five business days of the request. The records must be sent by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The commissioner may grant additional time. The records must provide the following information:

1. an adequate loan history for residential mortgage loans on which makes or receives the mortgage servicer payments, itemizing the amount and date of each payment and the unpaid balance at all times;

2. the original or an exact copy of the note, residential mortgage, or other evidence of indebtedness and mortgage deed;

3. the name and address of the mortgage lender, mortgage correspondent lender, and mortgage broker, if any, involved in the residential mortgage loan transaction;

4. copies of any disclosures or notification provided to the mortgagor required by state or federal law;

5. a copy of any bankruptcy plan approved in a proceeding filed by the mortgagor or a co-owner of the property subject to the residential mortgage loan;

6. a communications log which documents all verbal communication with the mortgagor or his or her representative; and

7. a copy of all notices sent to the mortgagor related to any foreclosure proceeding filed against the encumbered property.

The bill requires every mortgage servicer licensee and person exempt from licensure licensee to retain the records of each residential mortgage loan serviced for (1) at least two years following the final payment on each residential mortgage loan it services or the assignment of the loan, whichever occurs first, or (2) any longer period required by law.

The bill also requires every mortgage servicer licensee and person exempt from licensure to keep and use books, accounts, and records that will enable the commissioner to determine whether the mortgage servicer is complying with the provisions of the mortgage servicers' law.

EFFECTIVE DATE: October 1, 2014

§ 10 — Assignment and Disclosure Requirements

The bill requires a mortgage servicer who has assigned the servicing rights on a residential mortgage loan, to disclose to the mortgagor (1) any notice required by the Real Estate Settlement Procedures Act of 1974 (12 USC § 2601 et seq.) and related regulations within the prescribed time periods and (2) a schedule of the ranges and categories of the servicer's costs and fees for servicing-related activities, which must comply with state and federal law and cannot exceed those reported to the commissioner if the servicer is a licensee.

EFFECTIVE DATE: January 1, 2015

§§ 11 & 12 — Standards of Conduct

Violation of Federal Law. The bill requires a mortgage servicer to comply with all applicable federal laws and regulations relating to mortgage loan servicing and allows the commissioner to, in addition to any other remedies provided by law, take enforcement action against any such a violation.

Limitations on Mortgage Servicer Fees. A mortgage servicer must maintain and keep current a schedule of the fees it charges mortgagors for servicing related activities. The schedule must (1) identify each fee, (2) provide a plain English explanation of it, and (3) state the fee amount or range of amounts or, if there is no standard fee, how the fee is calculated or determined. A mortgage servicer must make its schedule available to the mortgagor or the mortgagor's authorized representative on request.

The bill prohibits any late fee or delinquency charge when (1) the only delinquency is attributable to late fees or delinquency charges assessed on an earlier payment and (2) the payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period.

It prohibits late charges (1) in excess of the past-due amount, (2) being collected from the escrow account or from escrow surplus without the approval of the mortgagor, or (3) being deducted from any regular payment.

EFFECTIVE DATE: January 1, 2015

§ 13 — Prohibited Practices

The bill prohibits a mortgage servicer from:

1. directly or indirectly employing any scheme, device, or artifice to defraud or mislead mortgagors or mortgagees or to defraud any person;

2. engaging in any unfair or deceptive practice toward any person or misrepresenting or omitting any material information in connection with servicing the residential mortgage loan;

3. obtaining property by fraud or misrepresentation;

4. knowingly misapplying or recklessly applying residential mortgage loan payments to the outstanding balance of a residential mortgage loan;

5. knowingly misapplying or recklessly applying payments to escrow accounts;

6. placing hazard, homeowner's, or flood insurance on the mortgaged property when the mortgage servicer knows or has reason to know that the mortgagor has an effective policy for such insurance;

7. failing to comply with a request for a payoff or reinstatement statement;

8. knowingly or recklessly providing inaccurate information to a credit bureau, causing harm to a mortgagor's creditworthiness;

9. failing to report both the favorable and unfavorable payment history of the mortgagor to a nationally recognized consumer credit bureau at least annually if the mortgage servicer regularly reports information to a credit bureau;

10. collecting payments for private mortgage insurance beyond the date when private mortgage insurance is required;

11. failing to issue a release of mortgage;

12. failing to provide written notice to a mortgagor upon taking action to place hazard, homeowner's or flood insurance on the mortgaged property, including a clear and conspicuous statement of the procedures by which the mortgagor may demonstrate that he or she has the required insurance coverage and by which the mortgage servicer will terminate the insurance coverage placed by it and refund or cancel any insurance premiums and related fees paid by or charged to the mortgagor;

13. placing hazard, homeowner's, or flood insurance on mortgaged property, or requiring a mortgagor to obtain or maintain such insurance, that exceeds the replacement cost of the improvements on the mortgaged property as established by the property insurer;

14. failing to provide to the mortgagor a refund of unearned premiums paid by or charged to the mortgagor for hazard, homeowner's, or flood insurance placed by a mortgagee or the mortgage servicer if the mortgagor provides reasonable proof that the mortgagor has obtained coverage so that the forced placement insurance is no longer necessary and the property is insured (if the mortgagor provides reasonable proof that no lapse in coverage occurred, the mortgage servicer must promptly refund the entire premium);

15. requiring any amount of funds to be remitted by means more costly to the mortgagor than a bank or certified check or attorney's check from an attorney's account;

16. refusing to communicate with a mortgagor's authorized representative who provides a written authorization signed by the mortgagor (licensee is allowed to adopt procedures to verify that the representative is authorized to act on behalf of the mortgagor);

17. conducting any business as a mortgage servicer without holding a valid license, or while assisting or aiding and abetting any person to conduct business without a valid license;

18. negligently making any false statement or knowingly and willfully omitting a material fact in connection with any information or reports filed with a governmental agency or the system, or in connection with any investigation conducted by the commissioner or another governmental agency; and

19. collecting, charging, attempting to collect or charge, or using or proposing any agreement purporting to collect or charge any fee prohibited by law.

EFFECTIVE DATE: January 1, 2015

§ 17 — Exemptions From Mortgage Servicer Requirements

The mortgage servicer requirements discussed above, do not apply to a person:

1. exempt from licensure as a mortgage lender or mortgage correspondent lender while servicing residential mortgage loans made under the exemption;

2. servicing five or fewer residential mortgage loans within any period of 12 consecutive months;

3. any agency of the federal government, state or municipal government, or quasi-governmental agency servicing residential mortgage loans as authorized under any state or federal law; and

4. exempt from licensure as a mortgage servicer under the bill (see § 4).

§§ 14, 16, & 19 — Investigation and Examination

The bill allows the commissioner to conduct investigations and examinations for purposes of initial licensing, license renewal, license suspension, license conditioning, license revocation or termination, or any general or specific inquiry or investigation to determine compliance with the law. He may also investigate violations or complaints as often as he considers necessary.

It requires the commissioner to have full access to any books, accounts, records, files, documents, information or evidence relevant to the inquiry or investigation regardless of the location, possession, control, or custody of such documents, information, or evidence; and allows him to direct, subpoena, or order the attendance of and examine under oath any person whose testimony may be required or any books, accounts, records, files or documents he deems relevant.

A licensee or anyone subject to this bill must make or compile reports or prepare other information as the commissioner directed.

The commissioner may (1) control access to any documents and records of the licensee or person under examination or investigation, and (2) take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. The bill prohibits the removal or attempted removal of any of the documents and records during the control period, except by court order or with the commissioner's consent. The mortgage servicer licensee or owner of the documents and records must have access to the documents or records as needed to conduct ordinary business, unless the commissioner has reason to believe that the documents or records risk being altered or destroyed.

Under the bill, the commissioner may:

1. retain attorneys, accountants, or other professionals and specialists as examiners, auditors or investigators to conduct or assist in conducting examinations or investigations;

2. enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce the regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under its authority;

3. use, hire, contract, or employ public or privately available analytical systems, methods, or software to examine or investigate the mortgage servicer licensee;

4. accept and rely on examination or investigation reports made by other government officials, within or outside this state; and

5. accept audit reports made by an independent certified public accountant for the mortgage servicer licensee in the course of that part of the examination covering the same general subject as the audit, and incorporate the audit report in the commissioner's report of examination, report of investigation, or other writing.

A mortgage servicer licensee or person subject to investigation or examination under this bill cannot knowingly withhold, abstract, remove, mutilate, destroy, or conceal any books, records, computer records, or other information.

Licensees must pay the actual cost of any examination of the licensee, as determined by the commissioner. The commissioner may suspend the license for nonpayment after 60 days.

EFFECTIVE DATE: October 1, 2014

§ 15 — Enforcement

The commissioner may suspend, revoke or refuse to renew any mortgage servicer license or take any other action (1) for any reason that would be sufficient grounds for him to deny an application for the license or (2) if he finds that the licensee, any control person of the licensee, the qualified individual or any branch manager with supervisory authority, or trustee, employee or agent of such licensee has:

1. made any material misstatement in the application;

2. committed any fraud or misrepresentation or misappropriated funds;

3. violated any of the provisions of the banking statutes or related regulations, or any other law or regulation applicable to the conduct of its business; or

4. failed to perform any agreement with a mortgagee or a mortgagor.

The commissioner may take any action allowed under state banking laws against any person whenever it appears to him that the person has violated, is violating, or is about to violate the law. By law, such actions include sending notice of a violation after holding an investigation, offering a hearing on the matter, civil penalties up to $100,000 per violation, orders of restitution, and other actions.

The bill allows the commissioner to adopt implementing regulations.

EFFECTIVE DATE: October 1, 2014

§§ 18-20 & 23-24 — Conforming Changes

The bill makes numerous conforming changes to reflect the retitled term (mortgage servicer) and its revised definition.

EFFECTIVE DATE: October 1, 2014

§ 21 — MORTGAGE LENDER, MORTGAGE CORRESPONDENT LENDER, OR MORTGAGE BROKER LICENSURE EXCEPTIONS

The bill limits the banks and credit unions that are exempt from the mortgage lender, mortgage correspondent lender, or mortgage broker licensure requirements by limiting the current exemption to only certain of their subsidiaries.

Under current law, any operating subsidiary of a federal bank or federally chartered out-of-state bank, or any wholly owned subsidiary of a Connecticut bank or a Connecticut credit union is exempt from such licensing. Under the bill, the exemption applies to any wholly owned subsidiary of a federal bank or federally chartered out-of-state bank, any wholly owned subsidiary of a Connecticut bank or a Connecticut credit union or any operating subsidiary of a federal bank or federally chartered out-of-state bank or any wholly-owned subsidiary of a Connecticut bank or Connecticut credit union where each owner of such operating or wholly owned subsidiary is wholly owned by the same bank.

EFFECTIVE DATE: October 1, 2014

§ 22 — DEBT NEGOTIATOR LICENSURE EXCEPTIONS

The bill limits the banks and credit unions that are exempt from the debt negotiator licensure requirements by excluding certain of their subsidiaries.

Under current law, operating subsidiaries of federal banks and federally chartered out-of-state banks are subject to the debt negotiator licensure requirements. The bill requires licensure only for (1) wholly owned subsidiaries of federal banks and federally chartered out-of-state banks and (2) operating subsidiaries where each owner of the operating subsidiary is wholly-owned by the same bank.

EFFECTIVE DATE: October 1, 2014

§ 25 — LOAN PRODUCTION OFFICES

By law, Connecticut banks, with the banking commissioner's approval, can establish loan production offices in and out of state. A “loan production office” is an office whose activities are limited to producing and soliciting loan.

Under the bill, a Connecticut bank that proposes to close a loan production office must notify the commissioner within 30 days before the proposed closing date. The notice must include (1) a detailed statement of the reasons for the purpose closing and (2) the statistical and other information supporting the reasons. The commissioner may require the Connecticut bank to submit any additional information.

The bill requires the Connecticut bank to provide notice of the proposed closing to its customers by posting a conspicuous notice, for at least 30 days leading up to the proposed closing date, on of the loan production office premises.

EFFECTIVE DATE: October 1, 2014

§ 26 — BUSINESS AND INDUSTRIAL DEVELOPMENT CORPORATION (BIDCO)

By law, an entity must receive a state license to operate as a BIDCO to participate under the loan guarantee programs of the federal Small Business Administration. The bill prohibits such a license from being transferred and assigned.

The bill also specifies that the $400 license fee due from BIDCOs to the commissioner by June 20 each year, for the succeeding year, is a license renewal fee.

EFFECTIVE DATE: October 1, 2014

§ 27 — BANKERS' BANK

The bill allows banks and credit unions with principal offices in New Jersey or Pennsylvania to join a group of banks that owns a Connecticut-chartered bankers' bank and permits the bank to provide services to them. Current law allows banks and credit unions in Connecticut, other New England states, and New York to join and receive services. A “bankers' bank” is a wholesale bank that provides services only to the institutions that own it and their directors, officers, and employees. It does not engage in retail banking. Connecticut currently has one such bank, Bankers' Bank Northeast.

EFFECTIVE DATE: Upon passage

§§ 28-33 & 35 — MORTGAGE LICENSING SYSTEM AND REGISTRY

The bill extends the banking commissioner's authority to use the Nationwide Mortgage Licensing System and Registry, which he currently uses for mortgage industry licensing, for all financial services industry licensing and registration.

The bill authorizes the system to receive and maintain these licensing and registration records if the commissioner elects to use system-based licensing and registration for people engaged in the financial services industry. It provides the commissioner with additional authority to change requirements as reasonably necessary to enable expanded participation in the system.

The bill makes fees paid to the system nonrefundable, requires that filings be consistent with system procedures and requirements, requires applicants and licensees to timely and accurately submit any required reports, and allows someone to challenge the factual accuracy of information on the system.

The bill makes several conforming changes to apply existing provisions about the system to the new uses authorized by the bill.

It also makes technical and conforming changes.

EFFECTIVE DATE: Upon passage, except for the provisions extending the commissioner's authority to use the system, which are effective October 1, 2014.

§§ 28-30 — System

Current law defines the term “system” used in mortgage industry licensing as the Nationwide Mortgage Licensing System and Registry developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage lenders, mortgage correspondent lenders, mortgage brokers, mortgage loan originators and loan processors, or underwriters.

The bill allows the system's use in licensing and registration in the financial services industries beyond the mortgage industry. It also specifies that the system (1) may be referred to as NMLS, NMLSR, or any other name or acronym as may be assigned and (2) is owned and operated by the State Regulatory Registry LLC, or any successor or affiliated entity.

§§ 33 & 35 — Commissioner's Authority to Use the System in Licensure

Authority to Require System-Based Licensure. Under current law, the commissioner may require persons engaged in the mortgage industry to be licensed or registered through the system.

The bill authorizes the commissioner to require anyone engaged in a financial services industry subject to the commissioner's jurisdiction to be licensed or registered through the system. It prohibits a person from making false statements or omissions of material fact in connection with information reported with the system.

System-Based Licensure. Under the bill, the commissioner must require all initial or renewal applications for a license or registration in Connecticut, on forms prescribed by him, to be made and processed through the system if he elects to require system-based licensure. If he does, the system must be authorized to receive and maintain records on the licenses or registrations to the same extent allowed or required to be maintained by the commissioner.

The commissioner may, by order, establish requirements for participation in the system, including:

1. background checks, including criminal history checks for owners or managers of business organizations;

2. payment of license application or renewal or registration fees through the system;

3. setting or resetting of license expiration, renewal, or transition dates, reporting dates, or forms; and

4. requirements for amending or surrendering a license or any other activities as the commissioner deems necessary for participation in the system.

The bill specifies that background checks include:

1. fingerprint submission to the FBI or other state, national, or international database;

2. civil, criminal, or administrative records from any government jurisdiction;

3. credit history; and

4. any other activities the commissioner deems necessary.

The commissioner may use the information collected to determine the applicant's eligibility for licensing under applicable law and any order he issues under this section. The commissioner may, by order, waive or modify, in whole or in part, any applicable requirement of the banking statutes and establish new requirements to participate in the system, as reasonably necessary. He may adopt licensing regulations and interim procedures for licensing and acceptance of applications.

Commissioner's Report to the System. If the commissioner elects to require system-based licensure for people engaged in a financial services industry, he may report regularly to the system any (1) violation of an enforcement action under applicable law and (2) other relevant information.

The commissioner may establish a relationship or enter into a contract with the system or any other entity the system designates. He may also collect and maintain records and process transaction fees or other fees related to licensees or others required or permitted to be licensed or registered on the system.

Channeling Information Through the System. The bill allows the commissioner to use the system as a channeling agent for requesting information from, and distributing information to, the U.S. Department of Justice, any government agency, and any other source he directs.

Challenging Information Entered into the System. Under the bill, any person required or permitted to be licensed or registered on the system may challenge information the commissioner enters into it. The bill requires any such challenges to (1) be made in writing to the commissioner, (2) identify the specific information being challenged, and (3) include any evidence that supports the challenge. Challenges must be limited to the factual accuracy of information within the system.

The bill requires the commissioner to take prompt action to correct information that he determines is factually inaccurate. It does not permit challenges to the merits or factual basis of any administrative action taken by the commissioner under the banking statutes.

System Policies and Procedures. Anyone filing or submitting any information to the system must follow its procedures and requirements and pay any applicable fees or charges to the system.

Each person required to obtain registration or licensure through the system must timely submit accurate reports to it, in the form and with the information it requires.

Fees. Under the bill, any fee paid for an initial or renewal application for a license or registration, including fees paid in connection with an application that is denied or withdrawn before the issuance of the license or registration, is nonrefundable. Fees cannot be prorated if a license or registration is surrendered, revoked, or suspended before it expires.

Automatic Suspension. The bill allows the commissioner to automatically suspend the license or registration of a person if the system indicates that a required payment was not accepted. It requires the commissioner to (1) give the licensee or registrant notice of the suspension or pending proceedings for revocation or refusal to renew, and an opportunity for a hearing on the action and (2) require the licensee to take or refrain from taking action, as specified by the commissioner.

Abandoned License and Registration Application. Under the bill, the commissioner may deem an application for a license or registration on the system abandoned if the applicant fails to respond to any request for required information. He must notify the applicant, on the system, that if the information is not submitted within 60 days from the date of the request, the application will be deemed abandoned and the application filing fee will not be refunded.

Abandonment of an application does not preclude the applicant from submitting a new application.

License or Registration Issued in Error. The commissioner may issue a temporary order to cease business under a license or registration if he determines that it was issued in error. He must give the licensee an opportunity for a hearing. The temporary order is effective when the licensee receives it and, unless set aside or modified by a court, remains in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.

§ 31 — Confidential or Privileged Information

Under current law, information or material disclosed to or on the system that is protected by state and federal privacy or confidentiality privilege must retain the protections. The bill extends the confidentiality provisions to the new uses of the system related to financial services industry licenses and registration and allows sharing with federal and other state financial industry regulators.

§ 32 — System-Based License Surrenders

Under current law, financial services licensees may surrender a license to the commissioner in person or by registered or certified mail. For mortgage industry licenses issued through the system, surrenders must be initiated by filing a request on the system. The bill extends current law on surrendering a license through the system to the financial services industry licensees using the system.

§ 34 — ATTORNEY EXEMPTION FROM MORTGAGE LOAN ORIGINATOR LICENSURE

The bill narrows the scope of the exemption for certain attorneys from mortgage loan originator licensure to those licensed in Connecticut. The exemption applies to attorneys who negotiate the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, mortgage correspondent lender, mortgage broker, other mortgage loan originator, or one of their agents.

EFFECTIVE DATE: October 1, 2014

§ 36 — LICENSEES' EDUCATION REQUIREMENTS

The bill increases licensing education and testing requirements for a mortgage lenders, mortgage correspondent lenders, and mortgage brokers from 20 to 21 hours of approved instruction, by adding one hour in relevant Connecticut law. The bill also requires one hour of approved instruction in relevant Connecticut law but does not increase the eight hours total required for continuing education.

The prelicensing education requirement is effective October 1, 2014 and the continuing education requirement on October 1, 2015. Under existing law, unchanged by the bill, prelicensing and continuing education courses must be reviewed and approved by the system based on reasonable standards.

EFFECTIVE DATE: October 1, 2014

§§ 37 & 38 — FORECLOSURE MEDIATION PROGRAM

The bill extends the state's foreclosure mediation program for four years, until July 1, 2018.

The state's foreclosure mediation program determines whether parties can reach an agreement that will avoid foreclosure. The program uses the judicial branch's foreclosure mediators to conduct mediation sessions in a statutorily prescribed timeframe. Under existing law, the program will sunset on July 1, 2014.

EFFECTIVE DATE: Upon passage

§ 39 — DISHONORED PAYMENT OF COLLECTION AGENCY LICENSING FEES

Current law requires the banking commissioner to automatically suspend a consumer collection agency's initial or renewed license due to a dishonored payment of licensing fees, but has an outdated reference to the appropriate fees that agencies must pay. The bill appears to limit this provision to dishonored payments of the initial licensing fee.

EFFECTIVE DATE: Upon passage

§ 40 — PROTECTED AGREEMENTS AND ENTITY TRANSACTIONS

The law, beginning on January 1, 2014, established a mechanism for specified business entities to change their entity type through mergers, conversions, and interest exchanges (“entity transactions”). Current law protects certain types of agreements that were in effect on or after October 1, 2011. The bill instead applies to agreements in effect on or after January 1, 2014, the date the entity transaction provisions took effect.

By law, a protected agreement is:

1. a record evidencing indebtedness and related agreements,

2. an agreement binding on one entity,

3. an entity's organic rules, or

4. an agreement binding on an entity's governors or interest holders.

By law, a provision in a protected agreement applicable to a merger can also apply to other entity transactions.

EFFECTIVE DATE: Upon passage

§§ 41-45 — TECHNICAL CHANGES

The bill makes technical changes and corrects an improper reference.

EFFECTIVE DATE: Upon passage

BACKGROUND

Related Bill

sSB 283, favorably reported by the Banks Committee, among other things, (1) expands the licensure and bond requirements for businesses that make residential mortgage loans or act as mortgage lenders, mortgage correspondent lenders, or mortgage brokers that engage the services of a mortgage loan originator to act on their behalf; (2) expands the licensure requirements for debt negotiators who are also mortgage loan originators; and (3) requires a mortgagee to provide a certificate of good standing to a mortgagor who has completed the foreclosure mediation program, if specified conditions are met.

HB 5483 (File 99), favorably reported by the Housing Committee, extends the foreclosure mediation program by four years, until July 1, 2018. It also adds the Housing Committee to the required recipients of two reports the Judicial Branch's chief court administrator must submit concerning the foreclosure mediation program.

COMMITTEE ACTION

Banks Committee

Joint Favorable Substitute