Banking Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-7019

Title:

AN ACT CONCERNING THE DEPARTMENT OF BANKING'S ENFORCEMENT AUTHORITY OVER MORTGAGE LENDERS, BROKERS, ORIGINATORS AND LOAN PROCESSORS OR UNDERWRITERS.

Vote Date:

3/7/2017

Vote Action:

Joint Favorable Substitute

PH Date:

2/14/2017

File No.:

SPONSORS OF BILL:

Banking Committee.

REASONS FOR BILL:

This bill makes various changes to the banking statutes.

SUBSTITUTE LANGUAGE:

The following changes were made to the original bill:

● To increase the maximum draw periods that credit unions can establish for a second mortgage (to match federal law), update the process for approval of changes to a credit union's bylaws and to expand the documentation a bank is required to file with the Commissioner of Banking as part of its annual audit. (Originally SB 800)

● To make technical changes to certain banking statutes. (Originally SB 781)

● Additional language was added that provides additional protections for retail buyers in retail installment contracts and installment loan contracts. (Originally HB 7033).

● To require money transmission licensees to establish anti-money-laundering programs. (Originally SB 782).

● To require that consumer collection agencies have a minimum tangible net worth of fifty thousand dollars. (Originally HB 7018).

● To enable the Commissioner of Banking to impose monetary fines against persons who have engaged in dishonest or unethical practices in the securities or commodities business. (Originally HB 7143).

● To clarify that persons sixty-two years of age or older may demand that a landlord return the portion of a security deposit that exceeds one month's rent. (Originally HB 7149).

● To study methods to prevent the issuance of mortgages to persons with excessive blight fines or who have violated nuisance abatement laws. (Originally HB 5223).

● To require the Commission of Banking to report on what is being done at designated Martin Luther King, Jr. Corridors. (Originally HB 7144).

● To require the Commissioner of Banking to report on the Student Loan Ombudsman. (Originally HB 7145).

RESPONSE FROM ADMINISTRATION/AGENCY:

IN RESPONSE TO HB 7019:

Jorge Perez, Commissioner, Connecticut Department of Banking

The bill clarifies that the Commissioner's enforcement authority includes orders issued by the department for different license types.

IN RESPONSE TO SB 800:

Jorge Perez, Commissioner, Connecticut Department of Banking

This bill makes various changes to Connecticut banking law for second mortgages held by state-chartered credit unions; addresses the bylaws of credit unions and makes a small change to the filing requirements of certain documents to be filed with the Commissioner.

IN RESPONSE TO SB 781:

None submitted (in response to SB 781).

IN RESPONSE TO HB 7033:

Jorge Perez, Commissioner, Connecticut Department of Banking

This bill extends the definition of Sales Finance Company to include companies that have ceased acquiring loans but continue to serve existing loans that they have. This proposal closes a loophole by requiring that sales finance companies be licensed even if they are only servicing loans.

IN RESPONSE TO SB 782:

Jorge Perez, Commissioner, Connecticut Department of Banking

This bill makes a clarifying change to eliminate confusion and ensure full compliance with federal law for money transmission licensees.

IN RESPONSE TO HB 7018:

Jorge Perez, Commissioner, Connecticut Department of Banking

“This bill would require consumer collection agencies to have a minimum net worth of at least $50,000 to obtain a license”. The bill reflects a common-sense change to ensure that licensees have the resources to operate their businesses under fiscally sound conditions.

IN RESPONSE TO HB 7143:

Matt Smith, Director of Government Affairs, Connecticut Department of Banking

The Department of Banking occasionally encounters actors that engage in dishonest or unethical conduct in the securities and commodities business. This bill would authorize the Commissioner to impose administrative fines on individuals given cease and desist orders.

IN RESPONSE TO HB 7149:

Matt Smith, Director of Government Affairs, Connecticut Department of Banking

This bill corrects an error in a bill submitted to the Connecticut General Assembly by the Department of Banking in 2016. The bill clarifies that seniors who turn 62 during the course of a lease request can “request back any money held in excess of one month's rent for a security deposit”.

IN RESPONSE TO HB 5223:

None submitted (in response to HB 5223).

IN RESPONSE TO HB 7144:

Subira Gordon, Executive Director, Commission on Equity and Opportunity

This bill will create economic incentives in regions of the state where high proportions of the African American, Latino, and/or Asian communities reside.

IN RESPONSE TO HB 7145:

None submitted (in response to HB 7145).

NATURE AND SOURCES OF SUPPORT:

IN RESPONSE TO HB 7019:

None submitted (in response to HB 7019).

IN RESPONSE TO SB 800:

None submitted (in response to SB 800).

IN RESPONSE TO SB 781:

None submitted (in response to SB 781).

IN RESPONSE TO HB 7033:

None submitted (in response to HB 7033).

IN RESPONSE TO SB 782:

None submitted (in response to SB 782).

IN RESPONSE TO HB 7018:

None submitted (in response to HB 7018).

IN RESPONSE TO HB 7143:

None submitted (in response to HB 7143).

IN RESPONSE TO HB 7149:

Rapahel Podolsky, Public Policy Advocate, Connecticut Legal Services

This bill corrects an error in PA 16-65 regarding security deposits and restores the substance of a deleted sentence.

IN RESPONSE TO HB 5223:

Bob De Cosmo, President, Connecticut Property Owners Association

This bill will aid in curbing blight and public nuisances in the state, and will help to protect tenants from the damage caused by blight fines.

IN RESPONSE TO HB 7144:

None submitted (in response to HB 7144).

IN RESPONSE TO HB 7145:

None submitted (in response to HB 7145).

NATURE AND SOURCES OF OPPOSITION:

IN RESPONSE TO HB 7019:

Connecticut Mortgage Association

The Connecticut Mortgage Association suggested that the committee should clarify the bill and limit the application of the bill to violations of orders by licensees by amending line 22 of the original bill as follows: following “pursuant thereto,” , insert “and pertaining to any such person”.

IN RESPONSE TO SB 800:

None submitted (in response to SB 800).

IN RESPONSE TO SB 781:

None submitted (in response to SB 781).

IN RESPONSE TO HB 7033:

None submitted (in response to HB 7033).

IN RESPONSE TO SB 782:

None submitted (in response to SB 782).

IN RESPONSE TO HB 7018:

Sonia Gibson, Senior Manager, Government Affairs, Encore Capital Group

Encore Capital Group requested an amendment that “minimum tangible net worth” be changed to “positive net worth” based on standards set by Generally Accepted Accounting Principles.

IN RESPONSE TO HB 7143:

None submitted (in response to HB 7143).

IN RESPONSE TO HB 7149:

None submitted (in response to HB 7149).

IN RESPONSE TO HB 5223:

Kelly Fuhlbrigge, VP, Government Relations, Credit Union League of Connecticut

CULCT urged rejection of this bill on the grounds that it was unclear how the financial institution is supposed to know if the person applying for a mortgage has blight fines against them. If this bill passes, it will put Connecticut financial institutions at a disadvantage in comparison to loan servicers that are based outside of the state.

Connecticut Bankers Association

This bill would create costly logistical burdens for banks and borrowers. This bill would also prevent a lender from extending credit to a landlord for abating nuisance violations or resolving blight conditions and would prohibit loans to improve troubled properties.

IN RESPONSE TO HB 7144:

None submitted (in response to HB 7144).

IN RESPONSE TO HB 7145:

None submitted (in response to HB 7145).

Reported by: Sara LeMaster

Date: 03/26/2017