Note:
Article X. Loan Brokers
Title
9-a.
Article
X. Loan Brokers (Refs & Annos)
Part
1. General Provisions (Refs & Annos)
§ 10-101. Short title
This
article may be known and cited as the “Maine Consumer Credit Code- Loan
Brokers.”
§ 10-102. Definitions
As
used in this article, unless the context otherwise indicates, the following
terms have the following meanings.
1. “Loan broker” is defined as follows.
A. “Loan broker” means any person who, with respect to the extension of consumer credit by others, provides or offers to provide, in return for the separate payment of money or other valuable consideration, any of the following services:
(1) Improving a consumer's credit record, history or rating;
(2) Arranging for or obtaining an extension of credit for a consumer;
or
(3) Providing advice or assistance to a consumer with respect to
subparagraph (1) or (2).
B. “ Loan broker” does not include:
(1) A supervised financial organization;
(2) A supervised lender other than a supervised financial
organization, except that, with respect to any transaction in which a
supervised lender other than a supervised financial organization is acting
solely as a loan broker, section 10-302 applies;
(3) A person licensed by the Real Estate Commission to the extent
that the person is engaged in activities regulated by that commission;
(4) A person currently admitted to the practice of law in this State;
(5) Any nonprofit organization exempt from taxation under the United States Internal Revenue Code, Section 501(c)(3) [FN1] to the extent that the
organization's activities are consistent with those set forth in its
application for tax exemption to the Internal Revenue Service;
(6) A consumer reporting agency, as defined in the Fair Credit
Reporting Act, Title 10, chapter 210; [FN2]
(7) An affiliate of a supervised lender when the affiliate provides
services described in paragraph A, subparagraph (1), (2) or (3) for or on
behalf of that supervised lender and when the affiliate is not compensated by
the consumer for those services;
(8) An employee of a supervised lender or an employee of an affiliate
of a supervised lender when the employee provides services described in
paragraph A, subparagraph (1), (2) or (3) for or on behalf of that supervised
lender or affiliate and when the employee or the affiliate is not compensated
by the consumer for those services;
(9) A person paid by a supervised lender or a consumer to document a
loan, attend or conduct a loan closing, disburse loan proceeds or record or
file loan documents;
(10) A person who performs marketing services for a creditor, such as
a telemarketer, an advertising agency or a mailing house, when the person is
not compensated by the consumer for those services;
(11) A seller of consumer goods or services that provides services
described in paragraph A, subparagraph (1), (2) or (3) in connection with a
sale or proposed sale of consumer goods or services by that seller when the
seller is not compensated by a consumer for those services; or
(12) An employee of a seller of consumer goods or services that
provides services described in paragraph A, subparagraph (1), (2) or (3) in
connection with a sale or proposed sale of consumer goods or services by that
seller when the employee or seller is not compensated by a consumer for those
services.
For the purposes of this
paragraph, “affiliate” has the same meaning as defined in Title 9-B, section
131, subsection 1-A.
2. “Bona fide 3rd-party fee” means a verifiable fee paid to a 3rd
party for a credit report, appraisal, investigation, title examination or
survey.
3. “Loan officer” has the same meaning as in section 1-301,
subsection 22-A.
[FN1] 26 U.S.C.A. § 501.
[FN2] 10 M.R.S.A. § 1311 et seq.
§ 10-201. Licensing and biennial relicensing
A
person desiring to engage or continue in business in this State as a loan
broker shall apply to the administrator for a license under this article on or
before January 31st of each even-numbered year. The application must be in a
form prescribed by the administrator. The administrator may refuse the
application if it contains erroneous or incomplete information. At the time of
application and on an ongoing basis during the term of any such license, the
applicant shall apply to the administrator for registration of all loan
officers employed or retained by the applicant. An application for registration
as a loan officer must be filed in a manner prescribed by the administrator and
include the name, address and work location of the loan officer and such
additional information as is reasonably requested by the administrator. An
applicant's registration of a loan officer within 90 days of the date that
registration would otherwise be required does not constitute a violation of
this section. A license may not be issued unless the administrator, upon
investigation, finds that the financial responsibility, character and fitness
of the applicant and, where applicable, its partners, officers or directors and
the character and fitness of its loan officers, warrant belief that the
business will be operated honestly and fairly within the purposes of this
Title. The administrator may adopt rules requiring that applicants, applicants'
partners, officers or directors and employees of applicants satisfy initial and
continuing educational requirements. The reasonable costs of meeting such
educational requirements are assessed to applicants. Rules adopted pursuant to
this section are routine technical rules pursuant to Title 5, chapter 375,
subchapter 2-A. [FN1]
The
initial application for a license as a loan broker must include a fee of $400.
The biennial relicensing application must include a fee of $200. Initial
applicants and biennial relicensing applicants must pay an additional fee of up
to $20 for registration of each loan officer, up to a maximum of $200 in total.
A
licensee may conduct business only at or from a place of business for which the
licensee holds a license and not under any other name than that on the license.
A
licensed loan broker may conduct business only through a loan officer who
possesses a current, valid registration. A loan officer must be registered at
the loan officer's principal licensed work location and may then work from any
licensed location of the loan broker. The registration of a loan officer is
valid only when that person is employed or retained and supervised by a
licensed loan broker. When a loan officer ceases to be employed by a licensed
loan broker, the loan broker shall promptly notify the administrator in
writing.
[FN1] 5 M.R.S.A. § 8071 et seq.
§ 10-202. Bond
Each
application must be accompanied by evidence of a surety bond, in a form
approved by the administrator in the aggregate amount of $25,000, to run to the
State for use by the State and any person or persons who may have a cause of
action against a loan broker. The terms of the bond must run concurrent with
the period of time during which the license is in effect.
§ 10-301. Escrow of funds
Each
loan broker shall place fees from consumers, other than bona fide 3rd-party
fees, in an escrow account separate from any operating accounts of the
business, pending completion of services offered. With respect to loan brokers
offering to arrange for or obtain extensions of credit for consumers, or
provide advice or assistance to arrange for or obtain extensions of credit,
“completion of services offered” means procurement of credit under the terms
agreed to by the parties.
§ 10-302. Requirement for written agreement
Each
agreement between a consumer and a loan broker must be in writing, dated and
signed by the consumer and must include the following:
1. A full and detailed description of the services to be performed
for the consumer, including all guarantees and all promises of full or partial
refund of fees paid, whether or not services are completed, and the length of
time for which the agreement remains in effect before return of the fees for
nonperformance can be required by the consumer;
2. The terms and conditions of payment, including the total of all
payments to be made by the consumer for the service, whether to the loan broker
or to some other person; and
3. The following notice:
NOTICE TO CONSUMER: Do not sign this agreement before you read it. You are entitled to a copy of this agreement.
§ 10-303. Requirement for written disclosure
Before
any agreement is entered into, or before any money is paid by a consumer,
whichever occurs first, the loan broker shall provide the consumer with written
disclosure of material consumer protections, including the following:
1. The existence and purpose of the surety bond on file with the
State, and the procedure for instituting an action against that bond;
2. The requirement that all fees from the consumer, other than bona
fide 3rd-party fees, be placed in an escrow account; and
3. The requirement for a written, signed agreement between the
parties.
§ 10-304. Advertising
1. A loan broker may not engage in this State in false or misleading
advertising concerning the terms and conditions of any services or assistance
offered.
2. This section imposes no liability on the owner or personnel of
any medium in which an advertisement appears or through which it is
disseminated.
3. A loan broker shall include its license number in all print
advertising in this State.
§ 10-305. Rulemaking
The
administrator may adopt reasonable rules pursuant to the Maine Administrative
Procedure Act, Title 5, chapter 375, [FN1] and in accordance with
this article governing loan brokers.
[FN1] 5 M.R.S.A. § 8001 et seq.
§ 10-306. Privacy of consumer financial information
A
loan broker shall comply with the provisions of the federal Gramm-Leach-Bliley
Act, 15 United States Code,
Section 6801 et seq. (1999) and the applicable implementing federal
Privacy of Consumer Information regulations, as adopted by the Office of the
Comptroller of the Currency, 12 Code of Federal Regulations, Part 40 (2001);
the Board of Governors of the Federal Reserve System, 12 Code of Federal
Regulations, Part 216 (2001); the Federal Deposit Insurance Corporation, 12
Code of Federal Regulations, Part 332 (2001); the Office of Thrift Supervision,
12 Code of Federal Regulations, Part 573 (2001); the National Credit Union
Administration, 12 Code of Federal Regulations, Part 716 (2001); the Federal
Trade Commission, 16 Code of Federal Regulations, Part 313 (2001); or the
Securities and Exchange Commission, 17 Code of Federal Regulations, Part 248
(2001), if the loan broker is a financial institution as defined in those
regulations. This section is not intended to permit the release of health care
information except as permitted by Title 22, section 1711-C or Title 24-A,
chapter 24.
§ 10-401. Effects of violations on rights of parties
Any
loan broker or loan officers of any loan broker that violate any provision of
this Title or any rule issued by the administrator, or that through any unfair,
unconscionable or deceptive practice cause actual damage to a consumer, are
subject to the following:
1. After notice and hearing, a
cease and desist order from the administrator;
2. After notice and hearing,
forfeiture of such portion of the required bond as proportionately may make
aggrieved parties whole;
3. A civil action, by the
administrator through the Attorney General, after which a court may assess a
civil penalty of not more than $5,000;
4. A civil action by an aggrieved
consumer in which that consumer has the right to recover actual damages from
the loan broker or its loan officers in an amount determined by the court, plus
costs of the action together with reasonable attorney's fees; and
5. Revocation, suspension or
nonrenewal of its license.
Current
with emergency legislation through Chapter 50 of the 2007 First Regular Session
of the 123rd Legislature
Case Law
I identified no significant cases construing the act.