2015 -- H 5769

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LC001889

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO FINANCIAL INSTITUTIONS -- COMMUNITY OBLIGATIONS AND

BANKING OFFENSES

     

     Introduced By: Representative Robert B. Jacquard

     Date Introduced: February 26, 2015

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 19-9 of the General Laws entitled "Community Obligations and

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Banking Offenses" is hereby amended by adding thereto the following section:

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     19-9-35. Consumer privacy in mortgage applications. – (a) For purposes of this

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section, "mortgage trigger lead" means a consumer report obtained pursuant to section

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604(c)(l)(B) of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681b, where the issuance of

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the report is triggered by an inquiry made with a consumer reporting agency in response to an

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application for credit. "Mortgage trigger lead" does not include a consumer report obtained by a

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lender or servicer that holds or services existing indebtedness of the applicant who is the subject

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of the report.

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     (b) With regard to a solicitation of a consumer for a residential mortgage loan, as defined

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in § 19-14.10-3, which solicitation is based, in whole or in part, on information contained in a

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mortgage trigger lead, the following shall be deemed to be a prohibited act or practice for

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purposes of §§ 19-4-12, 19-14-26 and 19-14.10-17:

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     (1) The failure to clearly and conspicuously state in the initial phase of the solicitation

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that the solicitor is not affiliated with the lender or broker with which the consumer initially

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applied;

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     (2) The failure to clearly and conspicuously state in the initial phase of the solicitation

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that the solicitation is based on personal information about the consumer that was purchased,

 

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directly or indirectly, from a consumer reporting agency without the knowledge or permission of

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the lender or broker with which the consumer initially applied;

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     (3) The failure in the initial solicitation to comply with the provisions of the federal Fair

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Credit Reporting Act relating to prescreening solicitations that use consumer reports, including

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the requirement to make a firm offer of credit to the consumer; or

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     (4) Knowingly or negligently using information from a mortgage trigger lead:

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     (i) To solicit consumers who have opted out of prescreened offers of credit under the

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federal Fair Credit Reporting Act; or

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     (ii) To place telephone calls to consumers who have placed their contact information on a

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federal or state "do not call" list.

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     (c) In addition to any other remedy provided by law, any lender or broker aggrieved by a

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prohibited act or practice under this section may bring an action in the superior court in which

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venue the lender or broker has an office to enjoin an act in violation of this section and recover

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damages. The court shall award damages in the amount of actual damages or one thousand dollars

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($1,000) per violation whichever is greater. In any successful action for injunctive relief or for

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damages, the court shall award the lender or broker attorneys' fees and costs, including court

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costs.

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     (d) The director or the director's designee may adopt reasonable rules and regulations for

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the implementation of the provisions of this section.

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     SECTION 2. Section 19-14.10-3 of the General Laws in Chapter 19-14.10 entitled "An

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Act Adopting the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2009" is

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hereby amended to read as follows:

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     19-14.10-3. Definitions. -- For purposes of this chapter, the following definitions shall

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apply:

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      (1) "Depository institution" has the same meaning as in section 3 of the Federal Deposit

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Insurance Act, and includes any credit union.

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      (2) "Federal banking agencies" means the Board of Governors of the Federal Reserve

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System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the

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National Credit Union Administration, and the Federal Deposit Insurance Corporation.

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      (3) "Immediate family member" means a spouse, child, sibling, parent, grandparent, or

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grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.

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      (4) "Individual" means a natural person.

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      (5) (i) "Loan processor or underwriter" means an individual who performs clerical or

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support duties as an employee at the direction of and subject to the supervision and instruction of

 

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a person licensed as a lender or as a loan broker, or exempt from licensing under chapters 19-14,

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or 19-14.1.

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      (ii) For purposes of subsection (5)(i), "clerical or support duties" may include subsequent

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to the receipt of an application:

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      (A) The receipt, collection, distribution, and analysis of information common for the

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processing or underwriting of a residential mortgage loan; and

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      (B) Communicating with a consumer to obtain the information necessary for the

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processing or underwriting of a loan, to the extent that such communication does not include

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offering or negotiating loan rates or terms, or counseling consumers about residential mortgage

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loan rates or terms.

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      (iii) An individual engaging solely in loan processor or underwriter activities, shall not

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represent to the public, through advertising or other means of communicating or providing

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information including the use of business cards, stationery, brochures, signs, rate lists, or other

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promotional items, that such individual can or will perform any of the activities of a mortgage

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loan originator.

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      (6) (i) "Mortgage loan originator" means:

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      (A) An individual who, for compensation or gain or in the expectation of compensation

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or gain:

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      (I) Takes a residential mortgage loan application; or

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      (II) Offers or negotiates terms of a residential mortgage loan;

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      (B) Does not include an individual engaged solely as a loan processor or underwriter

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except as otherwise provided in subsection 19-14.10-4(c);

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      (C) Does not include a person or entity that only performs real estate brokerage activities

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and is licensed or registered in accordance with Rhode Island law, unless the person or entity is

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compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of

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such lender, mortgage broker, or other mortgage loan originator;

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      (D) Does not include a person or entity solely involved in extensions of credit relating to

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timeshare plans, as that term is defined in § 101(53D) of title 11, United States Code, as

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amended; and

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      (E) Does not include a person (or its employees) engaged in servicing mortgage loans.

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For purposes of this exclusion, "servicing mortgage loans" means, on behalf of the note holder,

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collecting and receiving payments, including payments of principal, interest, escrow amounts,

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and other sums due, on obligations due and owing to the note holder pursuant to a residential

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mortgage loan, and, when the borrower is in default, or in reasonably foreseeable likelihood of

 

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default, working with the borrower on behalf of the note holder and pursuant to the contract

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between the person servicing mortgage loans and the note holder, to modify but not refinance,

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either temporarily or permanently, the obligations, or otherwise finalizing collection of the

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obligation through the foreclosure process.

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      (ii) "Real estate brokerage activity" means any activity that involves offering or

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providing real estate brokerage services to the public, including:

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      (A) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee

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of real property;

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      (B) Bringing together parties interested in the sale, purchase, lease, rental, or exchange

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of real property;

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      (C) Negotiating, on behalf of any party, any portion of a contract relating to the sale,

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purchase, lease, rental, or exchange of real property (other than in connection with providing

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financing with respect to any such transaction);

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      (D) Engaging in any activity for which a person engaged in the activity is required to be

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registered or licensed as a real estate agent or real estate broker under any applicable law; and

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      (E) Offering to engage in any activity, or act in any capacity, described in subparagraphs

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(A), (B), (C), or (D) of this section.

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      (7) "Nationwide Mortgage Licensing System and Registry" means a mortgage licensing

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system developed and maintained by the conference of state bank supervisors and the American

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association of residential mortgage regulators for the licensing and registration of licensed

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mortgage loan originators.

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      (8) "Nontraditional mortgage product" means any mortgage product other than a thirty

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(30) year fixed rate mortgage.

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      (9) "Person" means a natural person, corporation, company, limited liability company,

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partnership, association, or any other entity however organized.

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      (10) "Registered mortgage loan originator" means any individual who:

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      (i) Meets the definition of mortgage loan originator and is an employee of:

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      (A) A depository institution;

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      (B) A subsidiary that is:

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      (1) Owned and controlled by a depository institution; and

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      (2) Regulated by a Federal banking agency; or

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      (C) An institution regulated by the farm credit administration; and

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      (ii) Is registered with, and maintains a unique identifier through, the nationwide

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mortgage licensing system and registry.

 

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      (11) "Residential mortgage loan" means any loan primarily for personal, family, or

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household use that is secured by a mortgage, deed of trust, or other equivalent consensual security

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interest on a dwelling (as defined in § 103(v) of the Truth in Lending Act) or residential real

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estate upon which is constructed or intended to be constructed a dwelling (as so defined).

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      (12) "Residential real estate" means any real property located in Rhode Island, upon

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which is constructed or intended to be constructed a dwelling.

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      (13) "SAFE Act" means the Secure and Fair Enforcement for Mortgage Licensing Act,

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comprising §§ 1501-1517 of the Housing and Economic Recovery Act of 2008, Public Laws 110-

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289.

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      (14) "Unique identifier" means a number or other identifier assigned by protocols

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established by the nationwide mortgage licensing system and registry.

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     SECTION 3. This act shall take effect upon passage.

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LC001889

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO FINANCIAL INSTITUTIONS -- COMMUNITY OBLIGATIONS AND

BANKING OFFENSES

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     This act would define a mortgage trigger lead with regard to consumer privacy in

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mortgage applications, and would specify prohibited acts or practices which may result from

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solicitations based upon information contained in a mortgage trigger lead.

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     This act would take effect upon passage.

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