law22338

Chapter 338

2022 -- H 7781 SUBSTITUTE A
Enacted 06/29/2022

A N A C T

RELATING TO FINANCIAL INSTITUTIONS -- CREATION AND EXPANSION

Introduced By: Representative Joseph J. Solomon

Date Introduced: March 03, 2022

It is enacted by the General Assembly as follows:

SECTION 1. Section 19-2-12 of the General Laws in Chapter 19-2 entitled "Creation and

Expansion" is hereby amended to read as follows:

19-2-12. Relocation of branches.

Any financial institution or credit union may relocate a branch upon sixty (60) days’ prior

written notice to the director, or the director's designee, provided that the relocated branch is:

(1) To be located within the same city or town as the existing branch; or

(2) To be located within a one ten (10) mile radius of the existing branch; and

(3) The existing branch will be closed upon construction and/or occupancy of the relocated

branch.

SECTION 2. Section 19-12-1 of the General Laws in Chapter 19-12 entitled

"Receivership" is hereby amended to read as follows:

19-12-1. Application for receivership.

(a) The director, or the director's designee, is empowered immediately to take possession

of any financial institution, or credit union, or other licensee under this title and its assets if, upon

examination, any financial institution or credit union, which has or has not invoked the

conservatorship provisions or the voluntary liquidation provisions of this title, appears to be

insolvent by reason of:

(1) The financial institution's, or credit union's, or other licensee's financial condition is

such that the sum of the financial institution's, or credit union's, or other licensee's debts are greater

than all of the financial institution's, or credit union's, or other licensee's property at a fair valuation,

exclusive of property transferred, concealed, or removed with intent to hinder, delay, or defraud

the financial institution's, or credit union's, or other licensee's creditors or because it is generally

not paying or is unable to pay its debts as they become due; or

(2) The financial institution's, or credit union's, or other licensee's condition is such as to

render the continuance of its business hazardous to the public or to those having funds in its

custody; or

(3) The financial institution, or credit union, or other licensee has failed to maintain

adequate deposit insurance as required by this title; or

(4) The financial institution, or credit union, or other licensee has failed to remedy unsafe

or unsound practices in violation of a cease and desist order.

(b) The director may apply to the superior court for the appointment of the director, or one

of the director's deputies as receiver. , or both, or in In the case when a financial institution's or

credit union's deposits are insured by the Federal Deposit Insurance Corporation, the National

Credit Union Administration, or any other agency or instrumentality of the United States that

insures the deposits of the financial institution or credit union, as a receiver or receivers of the

financial institution, or credit union, or other licensee, and for the receiver may request an injunction

to restrain the financial institution, or credit union, or other licensee under this title, in whole or in

part, from further proceeding with its business, and the court shall have jurisdiction in equity of the

application.

SECTION 3. Sections 19-14-1, 19-14-3, 19-14-6, 19-14-10, 19-14-16, 19-14-22, 19-14-24

and 19-14-25 of the General Laws in Chapter 19-14 entitled "Licensed Activities" are hereby

amended to read as follows:

19-14-1. Definitions.

Unless otherwise specified, the following terms shall have the following meanings

throughout chapters 14, 14.1, 14.2, 14.3, 14.4, 14.6, 14.8, 14.10, and 14.11 of this title:

(1) "Bona fide employee" shall mean an employee of a licensee who works under the

oversight and supervision of the licensee.

(2) "Check" means any check, draft, money order, personal money order, or other

instrument for the transmission or payment of money. For the purposes of check cashing, travelers

checks or foreign denomination instruments shall not be considered checks. "Check cashing" means

providing currency for checks.

(3) "Check casher" means a person or entity who or that, for compensation, engages, in

whole or in part, in the business of cashing checks.

(4) "Currency transmission" means engaging in the business of any of the following:

(i) Sale or issuance of payment instruments or stored value primarily for personal, family,

or household purposes; or

(ii) Receiving money or monetary value for transmission or holding funds incidental to

transmission within the United States or to locations abroad by any and all means, including

payment instrument, stored value, wire, facsimile, or electronic transfer, primarily for personal,

family, or household purposes. This includes maintaining control of virtual currency or transactions

in virtual currency on behalf of others.

(5) "Deferred-deposit transaction" means any transaction, such as those commonly known

as "payday loans," "payday advances," or "deferred-presentment loans," in which a cash advance

is made to a customer in exchange for the customer's personal check or in exchange for the

customer's authorization to debit the customer's deposit account and where the parties agree either

that the check will not be cashed or deposited, or that the customer's deposit account will not be

debited until a designated future date.

(6) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]

(7) "Deliver" means to deliver a check to the first person who, in payment for the check,

makes, or purports to make, a remittance of, or against, the face amount of the check, whether or

not the deliverer also charges a fee in addition to the face amount and whether or not the deliverer

signs the check.

(8) "Insurance premium finance agreement" means an agreement by which an insured, or

prospective insured, promises to pay to an insurance premium finance company the amount

advanced, or to be advanced, under the agreement to an insurer or to an insurance producer, in

payment of a premium, or premiums, on an insurance contract, or contracts, together with interest

and a service charge, as authorized and limited by this title.

(9) "Insurance premium finance company" means a person or entity engaged in the

business of making insurance premium finance agreements or acquiring insurance premium finance

agreements from other insurance premium finance companies.

(10)(i) "Lender" means any person who makes or funds a loan within this state with the

person's own funds, regardless of whether the person is the nominal mortgagee or creditor on the

instrument evidencing the loan;

(ii) A loan is made or funded within this state if any of the following conditions exist:

(A) The loan is secured by real property located in this state;

(B) An application for a loan is taken by an employee, agent, or representative of the lender

within this state;

(D) A retail installment contract as defined herein is created;

(D)(E) The loan solicitation is done by an individual with a physical presence in this state;

(E)(F) The lender maintains an office in this state.;

(iii) The term "lender" shall also include any person engaged in a transaction whereby the

person makes or funds a loan within this state using the proceeds of an advance under a line of

credit over which proceeds the person has dominion and control and for the repayment of which

the person is unconditionally liable. This transaction is not a table-funding transaction. A person is

deemed to have dominion and control over the proceeds of an advance under a line of credit used

to fund a loan regardless of whether:

(A) The person may, contemporaneously with, or shortly following, the funding of the

loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an

advance to the person under the line of credit;

(B) The proceeds of an advance are delivered directly to the settlement agent by the line-

of-credit lender, unless the settlement agent is the agent of the line-of-credit lender;

purchased by the line-of-credit lender; or

(D) Under the circumstances, as set forth in regulations adopted by the director, or the

director's designee, pursuant to this chapter.

(11) "Licensee" means any person licensed under this chapter.

(12) "Loan" means any advance of money or credit including, but not limited to:

(i) Loans secured by mortgages;

(ii) Insurance premium finance agreements;

(iii) The purchase or acquisition of retail installment contracts or advances to the holders

of those contracts;

(iv) Educational loans;

(v) Any other advance of money; or

(vi) Any transaction, such as those commonly known as "payday loans," "payday

advances," or "deferred-presentment loans," in which a cash advance is made to a customer in

exchange for the customer's personal check, or in exchange for the customer's authorization to debit

the customer's deposit account, and where the parties agree either, that the check will not be cashed

or deposited, or that customer's deposit account will not be debited, until a designated future date.

(13) "Loan broker" means any person or entity who or that, for compensation or gain, or

in the expectation of compensation or gain, either directly or indirectly, solicits, processes,

negotiates, places, or sells a loan within this state for others in the primary market, or offers to do

so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a table-

funding transaction. A loan is brokered within this state if any of the following conditions exist:

(i) The loan is secured by real property located in this state;

(ii) An application for a loan is taken or received by an employee, agent, or representative

of the loan broker within this state;

(iii) The loan closes within this state;

(iv) The loan solicitation is done by an individual with a physical presence in this state; or

(v) The loan broker maintains an office in this state.

(14) "Loan-closing services" means providing title services, including title searches, title

examinations, abstract preparation, insurability determinations, and the issuance of title

commitments and title insurance policies, conducting loan closings, and preparation of loan-closing

documents when performed by, or under the supervision of, a licensed attorney, licensed title

agency, or licensed title insurance company.

(15) "Loan solicitation" shall mean an effectuation, procurement, delivery and offer, and

or advertisement of a loan. Loan solicitation also includes providing or accepting loan applications

and assisting persons in completing loan applications and/or advising, conferring, or informing

anyone regarding the benefits, terms and/or conditions of a loan product or service. Loan

solicitation does not include loan processing or loan underwriting as defined in this section. Loan

solicitation does not include telemarketing that is defined, for purposes of this section, to mean

contacting a person by telephone with the intention of collecting such person's name, address, and

telephone number for the sole purpose of allowing a mortgage loan originator to fulfill a loan

inquiry.

(16) "Loan underwriting" shall mean a loan process that involves the analysis of risk with

respect to the decision whether to make a loan to a loan applicant based on credit, employment,

assets, and other factors, including evaluating a loan applicant against a lender's various lending

criteria for creditworthiness, making a determination for the lender as to whether the applicant

meets the lender's pre-established credit standards, and/or making a recommendation regarding

loan approval.

(17) "Monetary value" means a medium of exchange, whether or not redeemable in fiat

currency.

(18) "Mortgage loan" means a loan secured in whole, or in part, by real property located in

this state.

(19) "Mortgage loan originator" has the same meaning set forth in § 19-14.10-3(6).

(20) "Nationwide Multistate Licensing System" means a system involving more than one

state, the District of Columbia, or the Commonwealth of Puerto Rico and that is established to

facilitate the sharing of regulatory information and the licensing, application, reporting, and

payment processes, by electronic or other means, for mortgage lenders and loan brokers and other

licensees required to be licensed under this chapter.

(21) "Natural person employee" shall mean any natural person performing services as a

bona fide employee for a person or entity licensed under § 19-14-1 et seq., in return for a salary,

wage, or other consideration, where such salary, wage, or consideration is reported by the licensee

on a federal form W-2 payroll record. The term does not include any natural person or business

entity performing services for a person licensed under the provisions of Rhode Island general laws

in return for a salary, wage, or other consideration, where such salary, wage, or consideration is

reported by the licensee on a federal form 1099.

(22) "Negative equity" means the difference between the value of an asset and the

outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former

amount.

(23) "Negotiates" shall mean, with respect to a loan, to confer directly with, or offer advice

directly to, a loan applicant or prospective loan applicant for a loan product or service concerning

any of the substantive benefits, terms, or conditions of the loan product or service.

(24) "Nonprofit organization" means a corporation qualifying as a 26 U.S.C. § 501(c)(3)

nonprofit organization, in the operation of which no member, director, officer, partner, employee,

agent, or other affiliated person profits financially other than receiving reasonable salaries if

applicable.

(25) "Operating subsidiary" shall mean a majority-owned subsidiary of a financial

institution or banking institution that engages only in activities permitted by the parent financial

institution or banking institution.

(26) "Oversight and supervision of the licensee" shall mean that the licensee provides

training to the employee, sets the employee's hours of work, and provides the employee with the

equipment and physical premises required to perform the employee's duties, and supervises the

services provided by the employee to the licensee.

(27) "Personal money order" means any instrument for the transmission or payment of

money in relation to which the purchaser or remitter appoints, or purports to appoint, the seller as

his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed

by the seller, or by the purchaser, or remitter, or some other person.

(28) "Primary market" means the market in which loans are made to borrowers by lenders,

whether or not through a loan broker or other conduit.

(29) "Principal owner" means any person or entity who or that owns, controls, votes, or has

a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital

stock and/or equity interest of a licensee.

(30) "Processes" shall mean, with respect to a loan, any of a series of acts or functions,

including the preparation of a loan application and supporting documents, performed by a person

that leads to, or results in, the acceptance, approval, denial, and/or withdrawal of a loan application,

including, without limitation, the rendering of services, including loan underwriting, obtaining

verifications, credit reports or appraisals, communicating with the applicant and/or the lender or

loan broker, and/or other loan processing and origination services, for consideration by a lender or

loan broker. Loan processing does not include the following:

(i) Providing loan closing services;

(ii) Rendering of credit reports by an authorized credit reporting agency; and

(iii) Rendering of appraisal services.

(31) "Provisional employee" means a natural person who, pursuant to a written agreement

between the natural person and a wholly owned subsidiary of a financial holding company, as

defined in the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.), as amended, a bank-

holding company, savings-bank-holding company, or thrift-holding company, is an exclusive agent

for the subsidiary with respect to mortgage loan originations and the subsidiary: (a) Holds a valid

loan broker's license; and (b) Enters into a written agreement with the director, or the director's

designee, to include:

(i) An "undertaking of accountability," in a form prescribed by the director, or the director's

designee, for all of the subsidiary's exclusive agents to include full-and-direct financial and

regulatory responsibility for the mortgage loan originator activities of each exclusive agent as if

said exclusive agent were an employee of the subsidiary;

(ii) A business plan, to be approved by the director, or the director's designee, for the

education of the exclusive agents, the handling of consumer complaints related to the exclusive

agents, and the supervision of the mortgage loan origination activities of the exclusive agents; and

(iii) A restriction of the exclusive agents' mortgage loan originators' activities to loans to

be made only by the subsidiary's affiliated bank.

(32) "Remote location" means a location meeting the requirements of § 19-14-25(b) at

which an employee of a licensee may provide services for the licensee notwithstanding that such

the location differs from the place of business named in the license or a branch certificate issued to

the licensee.

(33) "Retail installment contract" means any security agreement negotiated or executed in

this state, or under the laws of this state, including, but not limited to, any agreement in the nature

of a mortgage, conditional sale contract, or any other agreement whether or not evidenced by any

written instrument to pay the retail purchase price of goods, or any part thereof, in installments over

any period of time and pursuant to which any security interest is retained or taken by the retail seller

for the payment of the purchase price, or any part thereof, of the retail installment contract.

(32)(34) "Sell" means to sell, to issue, or to deliver a check.

(33)(35) "Servicing" means receiving a scheduled, periodic payment from a borrower,

pursuant to the terms of a loan, including amounts for escrow accounts, and making the payments

to the owner of the loan or other third party of principal and interest and other payments with respect

to the amounts received from the borrower as may be required pursuant to the terms of the servicing

loan documents or servicing contract. In the case of a home equity conversion mortgage or a reverse

mortgage, servicing includes making payment to the borrower.

(34)(36) "Simple interest" means interest computed on the principal balance outstanding

immediately prior to a payment for one plus the actual number of days between payments made on

a loan over the life of a loan.

(35)(37) "Small loan" means a loan of less than five thousand dollars ($5,000), not secured

by real estate, made pursuant to the provisions of chapter 14.2 of this title.

(36)(38) "Small-loan lender" means a lender engaged in the business of making small loans

within this state.

(37)(39) "Stored value" means monetary value representing a claim against the issuer that

is stored on an electronic or digital medium and is evidenced by an electronic or digital record, and

that is intended and accepted for use as a means of redemption for money or monetary value or

payment for goods or services. The term does not include stored value that is redeemable by the

issuer exclusively in goods or services; stored value that is redeemable exclusively in goods or

services limited to transactions involving a defined merchant or location or set of locations, such

as a specific retailer or retail chain, college campus, or program points, miles, or other units issued

in connection with a customer affinity or rewards program, even if there is a secondary market for

the stored value.

(38)(40) "Table-funding transaction" means a transaction in which there is a

contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of

the loan to the lender.

(39)(41) "Third-party loan servicer" means a person or entity who or that, directly or

indirectly, engages in the business of servicing a loan secured by residential real estate located in

Rhode Island, for a personal, family, or household purpose, owed or due, or asserted to be owed or

due, another, or a person or entity that owns the servicing rights to a loan secured by residential

real estate located in Rhode Island whether or not that owner services the loan themselves or

contracts with another person or entity for the servicing.

(40)(42) "Virtual currency":

(i) Means a digital representation of value that:

(A) Is used as a medium of exchange, unit of account, or store of value; and

(B) Is not legal tender, whether or not denominated in legal tender; and

(ii) Does not include:

(A) A transaction in which a merchant grants, as part of an affinity or rewards program,

value that cannot be taken from or exchanged with the merchant for legal tender, bank credit, or

virtual currency;

(B) A digital representation of value issued by or on behalf of a publisher and used solely

within an online game, game platform, or family of games sold by the same publisher or offered

on the same game platform;

(D) A gift certificate; store gift card; general-use prepaid card; or loyalty, award, or

promotional gift card, as these terms are defined in federal Regulation E, 12 C.F.R. 1005.20(a),

without giving effect to any exception as specified in 31 C.F.R. 1010.100(kkk) or any card, code

or device, or other device that can add funds to those products.

(41)(43) "Writing" means hard-copy writing or electronic writing that meets the

requirements of § 42-127.1-2(7).

19-14-3. Application for license.

(a) The application for a license shall be in the form prescribed by the director and shall

contain the name and address or addresses where the business of the applicant is located and if the

applicant is a partnership, association, corporation, or other form of business organization, the

names and addresses of each member, director, and principal officer thereof or any individual

acting in the capacity of the manager of an office location. Such The application shall also include

a description of the activities of the applicant, in such detail and for such periods as the director

may require, as well as such further information as the director may require. The director may

require a background investigation of each applicant for a license by means of fingerprint checks

pursuant to §§ 19-14-7 and 42-14-14, utilizing the Federal Bureau of Investigation, or other agency

as determined by the director for state and national criminal history record checks. If the applicant

is a partnership, association, corporation, or other form of business organization, the director may

require a background investigation by means of fingerprint checks on each member, director,

trustee, or principal officer of such the applicant and any individual acting in the capacity of the

manager of an office location. The director will determine by rule those items of information

appearing on a criminal records check that will constitute disqualifying information and therefore

render the applicant ineligible for licensing under this chapter in accordance with the provisions of

§ 19-14-7. Receipt of criminal history record information by a private entity is prohibited. Each

application for a license shall be accompanied by an investigation fee. The applicant at the time of

making application shall pay to the director, or the director's designee, department a fee equal to

the annual license fee as provided in this chapter and the sum of one half (½) of the annual license

fee as a fee for investigating the application. If the application for license is approved, the applicant

shall pay a fee equal to the annual license fee as provided in this chapter. The license shall be

continuous and the license fee shall cover the period through December 31 of each year. The annual

license fee for any application approved after November 1 of any given year shall satisfy the annual

license fee requirement through the end of the next succeeding calendar year ending December 31.

The director, or the director's designee, is authorized to participate in a multi-state multistate

licensing system for licensees. The director may establish requirements for participation by an

applicant for a license or a person licensed under this chapter. Any such requirements that may be

established by the director shall be published on the website of the department of business

regulation. Upon implementation, participation by an applicant for a license or by a person licensed

under the provisions of this chapter shall be mandatory. The applicant may be required to an

additional fee for a license or other participation in such multi-state multistate licensing system.

(b) [Reserved].

(d) Any license issued under the provisions of former § 5-66-2 shall remain in full force

and effect until its expiration and shall be subject to the provisions of this chapter.

(e) An applicant for issuance of a mortgage loan originator license shall file with the

director, or the director's designee, evidence acceptable to the director, or the director's designee,

that said applicant has complied with the provisions of §§ 19-14.10-5, 19-14.10-7 and 19-14.10-8.

19-14-6. Bond of applicant.

(a) An applicant for any license shall file with the director, or the director's designee, a

bond to be approved by him or her in which the applicant shall be the obligor.

(b) The amount of the bond shall be as follows:

(1) Small-loan lenders, the sum of ten thousand dollars ($10,000);

(2) Loan brokers, the sum of twenty thousand dollars ($20,000);

(3) Lenders, the sum of fifty thousand dollars ($50,000);

(4) Currency transmission licensees, the sum of fifty thousand dollars ($50,000). If a

currency transmission licensee shows that a surety bond is not generally available in this state at a

commercially reasonable cost, the department may accept an alternative form of security;

(5) Check-cashing licensees who accept checks for collection with deferred payment or

deferred deposit, the sum of fifty thousand dollars ($50,000) subject to a maximum of one hundred

and fifty thousand dollars ($150,000) when aggregated with agent locations;

(6) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]

(7) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]

(8) Each debt-management services registrant, the amount provided in § 19-14.8-13;

(9) Each third-party loan servicer, the sum of fifty thousand dollars ($50,000); or

(10) If a currency transmission licensee shows that a surety bond is not generally available

in this state at a commercially reasonable cost, the department may accept an alternative form of

security. Each debt collector, the sum of fifty thousand dollars ($50,000).

cause of action against the obligor of the bond under the provisions of this title. The bond shall be

perpetual and shall be conditioned upon the obligor faithfully conforming to, and abiding by, the

provisions of this title and of all rules and regulations lawfully made, and the obligor will pay to

the state and to any person any and all money that may become due or owing to the state or to the

person from the obligor under, and by virtue of, the provisions of this title.

(d) [Deleted by P.L. 2019, ch. 226, § 1 and P.L. 2019, ch. 246, § 1.]

(e) The bond shall remain in force and effect until the surety is released from liability by

the director, or the director's designee, or until the bond is cancelled by the surety. The surety may

cancel the bond and be released from further liability under the bond upon receipt by the director,

or the director's designee, of notice in a manner satisfactory to the director, including, but not

limited to, for documentation purpose of the cancellation of the bond at least thirty (30) days in

advance of the cancellation of the bond. The cancellation shall not affect any liability incurred or

accrued under the bond before the termination of the thirty-day (30) period.

(f) Upon receipt of any notice of cancellation, the director may provide notice to the

licensee requiring reinstatement or replacement of the bond. Unless the bond is reinstated by the

surety, or a satisfactory replacement bond is filed with the director prior to the cancellation of the

original bond, the license shall be suspended. The licensee will be provided notice of the suspension

and may request a hearing within thirty (30) days. If the licensee does not request a hearing, the

director, or director's designee, shall issue an order revoking the license for failure to comply with

this section.

19-14-10. Attorney for service of process Agent for service of process.

(a) Every licensee shall appoint, and thereafter maintain, in this state a resident attorney

agent with authority to accept process for the licensee in this state, including the process of

garnishment.

(1) The appointment shall be filed with the director, or the director's designee, in whatever

format he or she directs electronically through the Nationwide Multistate Licensing System. The

power of attorney designation of an agent shall provide all contact information, including the

business address, street, and number, if any, of the resident attorney agent. Thereafter, if the resident

attorney agent changes his or her business address or other contact information, he or she the

licensee shall, within ten (10) days after any change, file in the office of the director, or the director's

designee, electronically through the Nationwide Multistate Licensing System notice of the change

setting forth the attorney's agent's current business address or other contact information.

(2) If the resident attorney agent dies, resigns, or leaves the state, the licensee shall make a

new appointment and file the power of attorney in the office of the director, or the director's

designee new appointment electronically through the Nationwide Multistate Licensing System. The

power of attorney original designation shall not be revoked until this power of attorney new

appointment shall have been given to some other competent person resident in this state and filed

with the director, or the director's designee department.

(3) Service of process upon the resident attorney agent shall be deemed sufficient service

upon the licensee.

(4) Any licensee who fails to appoint a resident attorney agent and file the power of attorney

in the office of the director, or the director's designee, as above provided for appointment

electronically through the Nationwide Multistate Licensing System, or fails to replace a resident

attorney agent for a period of thirty (30) days from vacancy, shall be liable for a penalty not

exceeding five hundred dollars ($500) and shall be subject to suspension or revocation of the

license.

(5) Upon the filing of any power of attorney appointment required by this section, a fee of

twenty-five dollars ($25.00) shall be paid to the director for the use of the state.

(6) Any licensee that is a corporation and complies with the provisions of chapter 1.2 of

title 7 is exempt from the power of attorney filing requirements of this section. Any licensee that is

a limited partnership or limited liability company and complies with the provisions of chapters 13

and 16 of title 7 is exempt from the power of attorney requirements of this section.

(b) Any process, including the process of garnishment, may be served upon the director, or

the director's designee, as agent of the licensee in the event that no resident attorney agent can be

found upon whom service can be made, or in the event that the licensee has failed to designate a

resident attorney agent as required, and process may be served by leaving a copy of the process

with a fee of twenty-five dollars ($25.00) which shall be included in the taxable costs of the suit,

action, or proceeding, in the hands of the director, or the director's designee. This manner of service

upon the licensee shall be sufficient, provided that notice of service and a copy of the process shall

be immediately sent by certified mail by the plaintiff, or the plaintiff's attorney of record, to the

licensee at the latest address filed with the director, or the director's designee. If the licensee has

not filed his or her address pursuant to this chapter, notice of service shall be given in any manner

that the court in which the action is pending may order as affording the licensee reasonable

opportunity to defend the action or to learn of the garnishment. Nothing contained in this section

shall limit or affect the right to serve process upon a licensee in any other manner now or hereafter

permitted by law.

19-14-16. Surrender of license.

Any licensee may surrender any license or branch certificate(s) by delivering to the

director, or the director's designee, written electronic notice through the Nationwide Multistate

Licensing System surrendering the license or branch certificate(s). The surrender shall not affect

the licensee's civil or criminal liability for acts committed prior to the surrender. Written Electronic

notice through the Nationwide Multistate Licensing System of any surrender must be filed with the

director, or the director's designee, within thirty (30) days of the termination of the business

authorized by this chapter at the surrendered location. The surrender of any license does not affect

the licensee's requirement to file an annual report with the fifty-five dollars dollar ($55.00) filing

fee. This report shall be filed within thirty (30) days of the surrender of the license. The licensee

shall give written electronic notification through the Nationwide Multistate Licensing System to

the director, or the director's designee, within twenty-four (24) hours from termination of business.

19-14-22. Reporting requirements.

(a) Each licensee shall annually, on or before March 31, file a report with the director, or

the director's designee, on a quarterly basis, giving any relevant information that the director, or the

director's designee, may reasonably require concerning the business and operations during the

preceding calendar year reporting period of each licensed place of business conducted by the

licensee within the state. The report shall be made under oath and shall be in a form prescribed by

the director, or the director's designee submitted through the Nationwide Mortgage Licensing

System and attested to by the entity. To the extent that the Nationwide Mortgage Licensing System

does not require submission of quarterly reports of condition, each licensee shall, annually, on or

before March 31, file a report with the director, or the director's designee, giving any relevant

information that the director, or the director's designee, may reasonably require concerning the

business and operations during the preceding calendar year of each licensed place of business

conducted by the licensee within the state. At the time of filing each report renewal of the license,

the sum of fifty-five dollars ($55.00) per license and fifty-five dollars ($55.00) per branch

certificate shall be paid by the licensee to the director for the use of the state. Any licensee who or

that shall delay transmission of any report required by the provisions of this title beyond the limit,

unless additional time is granted, in writing, for good cause, by the director, or the director's

designee, shall pay a penalty of twenty-five dollars ($25) for each day of the delay. In lieu of a

report by any licensed mortgage loan originator, the director, or the director's designee, may accept

a report by the licensed lender or licensed loan broker who or that employed the licensed mortgage

loan originator for the activities of the licensed mortgage loan originator while employed by such

lender or loan broker during the applicable calendar year.

(b) Any licensee shall, within twenty-four (24) hours after actual knowledge, notify the

director, or the director's designee, in writing, of the occurrence of any of the following events: the

institution of bankruptcy, receivership, reorganization, or insolvency proceedings regarding a

licensee; the institution of any adverse government action against a licensee; or any felony

indictment or conviction of any licensee or any officers, directors, owners, employees, members,

or partners thereof, as the case may be.

March 31st thereafter, file with the director, or the director's designee, evidence acceptable to the

director, or the director's designee, that said loan originator licensee has filed with the Nationwide

Mortgage Licensing System and Registry a report of condition, which shall be in such form and

shall contain such information as the Nationwide Mortgage Licensing System and Registry may

require.

(d) Both the mortgage loan originator and his or her licensed employer shall promptly

notify the director, or the director's designee, in writing, within fifteen (15) business days of the

termination of employment or services of a mortgage loan originator.

19-14-24. Other business in same place Tying with other business.

No licensee shall conduct any business under this title within any office or place of business

in which any other business is solicited or engaged, except as the director, or the director's designee,

may authorize, in writing. Approval shall not be unreasonably withheld if the director, or the

director's designee, finds that the character of the other business is such that the granting of the

authority would not evade the provisions of this chapter condition any sale on the requirement that

the consumer purchase any other product or service from a specified provider including those

providers with whom the licensee is sharing office space.

19-14-25. Transactions and place of business limited by license Transactions and

place of business limited by license -- Remote locations.

(a) No licensee shall transact the business provided for by this chapter under any other

name or at any other place of business than that named in the license or branch certificate, unless

that place is for the exclusive convenience of the customer or meets the requirements for a remote

location. The fact that closings occur at a place other than a licensed place of business shall not be

deemed to be a violation of this section.

(b) Notwithstanding anything to the contrary under this chapter or chapter 14.10 of this

title 19, employees of a licensee may perform services for the licensee or act as a mortgage loan

originator from a remote location subject to each of the following requirements:

(1) The employee is subject to the supervision of the licensee;

(2) The remote location is the employee's residence or other location identified in the

records of the licensee and is within a reasonable distance of a place of business named in the

licensee's license or branch certificate, as established by regulations adopted by the director or the

director's designee;

(3) The licensee has written policies and procedures for supervision of, and employs

appropriate risk-based monitoring and oversight process of work performed by, employees working

from remote locations;

(4) Access to the licensee's computer platforms and to customer information is in

accordance with the licensee's comprehensive written information security plan. The licensee must

maintain appropriate safeguards for licensee and consumer data, information, and records,

including the use of secure virtual private networks ("VPNs") where appropriate;

(5) No in-person customer interaction occurs at the remote location, and the licensee will

not designate the remote location to consumers or customers as a business location unless the

remote location is properly licensed as a branch;

(6) Physical records related to the licensee's business, including consumer information, are

not maintained at the remote location;

(7) The licensee must ensure consumer and licensee information and records remain

accessible and available for regulatory oversight and exams; and

(8) The licensee must provide training to keep all conversations about, and with, consumers

conducted from a remote location confidential, as if conducted from a licensed commercial

location, and to ensure remote employees work in an environment conducive and appropriate to

that privacy.

conducted at a remote location shall be subject to examination under this chapter and § 19-14.10-

(d) The director, or the director's designee, shall have the authority to promulgate rules to

establish requirements and standards relating to remote locations.

SECTION 4. Sections 19-14.10-3, 19-14.10-4, 19-14.10-8, 19-14.10-10 and 19-14.10-21

of the General Laws in Chapter 19-14.10 entitled "An Act Adopting the Federal Secure and Fair

Enforcement for Mortgage Licensing Act of 2009" are hereby amended to read as follows:

19-14.10-3. Definitions.

For purposes of this chapter, the following definitions shall apply:

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

Insurance Act, and includes any credit union.

(2) "Federal banking agencies" 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.

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

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

(4) "Individual" means a natural person.

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

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

a person licensed as a lender or as a loan broker, or exempt from licensing under chapters chapter

14 or 14.1 of this title 19.

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

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

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

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

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

originator.

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

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

gain:

(I) Takes a residential mortgage loan application; or

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

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

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

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

entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any

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

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

timeshare plans, as that term is defined in 11 U.S.C. § 101(53D), as amended; and

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

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

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

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

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

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

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

or permanently, the obligations, or otherwise finalizing collection of the obligation through the

foreclosure process.

(ii) "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;

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 subparagraphs

subsection 6(ii)A), (B), (C), or (D) of this section.

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

licensing system developed and maintained by the Conference of State Bank Supervisors and the

American Association of Residential Mortgage Regulators for the licensing and registration of

licensed mortgage loan originators.

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

year (30), fixed-rate mortgage.

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

partnership, association, or any other entity however organized.

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

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

(A) A depository institution;

(B) A subsidiary that is:

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

(2) (II) Regulated by a Federal banking agency; or

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

Multistate Licensing System and Registry.

(11) "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 § 103(v) of the Truth in Lending Act) or residential real estate

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

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

is constructed, or intended to be constructed, a dwelling.

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

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

289 Pub. L. No. 110-289.

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

established by the nationwide mortgage licensing system and registry Nationwide Multistate

Licensing System.

19-14.10-4. License and registration required.

(a) An individual, unless specifically exempted from this chapter under subsection (b),

shall not engage in the business of a mortgage loan originator with respect to any dwelling located

in this state without first obtaining and maintaining annually a license under this chapter. Each

licensed mortgage loan originator must register with and maintain a valid unique identifier issued

by the nationwide mortgage licensing system and registry.

(b) The following individuals are exempt from this chapter:

(1) Registered mortgage loan originators, when acting for an entity described in § 19-14.10-

3(10)(i)(A), (10)(i)(B), or (10)(i)(C) are exempt from this chapter.

(2) Any individual who offers or negotiates terms of a residential mortgage loan with or on

behalf of an immediate family member of the individual.

(3) Any individual who offers or negotiates terms of a residential mortgage loan secured

by a dwelling that served as the individual's residence.

(4) A 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 lender, a mortgage broker, or other mortgage loan originator or by any agent of

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

(5) A licensed attorney when performing loan closing services for a licensed lender,

licensed loan broker, or for an entity exempt from licensing under § 19-14.1-10(a)(4);

(6) A mortgage loan originator: (i) Who is employed by a lender or loan broker licensed

under chapter 14 of title 19 and/or chapter 14.1 of this title 19; (ii) Who works at a qualified

location; (iii) Who is registered with, and maintains a unique identifier through, the Nationwide

Mortgage Multistate Licensing System and Registry; (iv) Who acts only as a mortgage loan

originator for residential mortgage loans secured by dwellings (as defined in Section 103(v) of the

Truth in Lending Act) constructed, or to be constructed, on real property located in states other than

Rhode Island; and (v) Who is licensed or registered as required by applicable law in each state in

which such real property is located. As used herein, the term "qualified location" means a location

licensed under this chapter 14 of this title 19 that serves as the primary place of employment of at

least one mortgage loan originator licensed under this chapter 14.10 of title 19 or a remote location.

engage in the activities of a loan processor or underwriter unless such the independent contractor

loan processor or underwriter obtains and maintains a license under chapters chapter 14 of this

title and 14.10 of title 19 this chapter. Each independent contractor loan processor or underwriter

licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by

the nationwide mortgage licensing system and registry.

(d) For the purposes of implementing an orderly and efficient licensing process the director,

or the director's designee, may establish licensing rules or regulations and interim procedures for

licensing and acceptance of applications. For previously registered or licensed individuals the

director, or the director's designee, may establish expedited review and licensing procedures as

follows:

(1) A mortgage loan originator applicant whose employer at the time of application for a

mortgage loan originator license is an entity described in § 19-14.10-3(10)(i)(A), (10)(i)(B), or

(10)(i)(C) and who has been assigned a unique identifier through the nationwide mortgage licensing

system and registry and who has completed and filed with the director, or the director's designee,

all information, documents, and requirements for licensure pursuant to this chapter shall be

permitted to continue to act as a mortgage loan originator for the period prior to action being taken

on his or her application by the director, or the director's designee;

(2) A mortgage loan originator applicant who has been assigned a unique identifier through

the Nationwide Mortgage Multistate Licensing System and Registry and who has completed and

filed with the director, or the director's designee, all information, documents, and requirements for

licensure pursuant to this chapter and whose employer at the time of application for a mortgage

loan originator license is a lender or loan broker licensed under chapters 14 and 14.1 of this title

19, shall be permitted to continue to act as a mortgage loan originator for the period prior to action

being taken on his or her application by the director, or director's designee, if the applicant and a

senior officer or principal of such lender or loan broker files written attestation to the director, or

the director's designee that:

(i) The applicant is currently, or has within the six-month (6) period prior to the date of the

application, been acting as a registered mortgage loan originator in this state or as a state-licensed

mortgage loan originator in another state, in either case under the provisions of Section 1507 of the

SAFE Act, 12 U.S.C. § 5106;

(ii) The applicant has never had a mortgage loan license or registration denied, revoked, or

suspended in any governmental jurisdiction; and

(iii) The applicant has not been convicted of a felony that would otherwise authorize the

director, or the director's designee, to deny the applicant a license.

(3) Any provisional authority to act as a mortgage loan originator issued pursuant to this

subsection (d) shall expire on the earlier of: (i) The date on which the director, or the director's

designee, issues or denies the application for the license; or (ii) One hundred twenty (120) days

from the date of application for the license.

(4) The director, or the director's designee, may deny or suspend the rights of a lender or

loan broker licensed under chapter 14 or 14.1 of this title 19 to employ a mortgage loan originator

under this subsection (d) if the director, or the director's designee, finds that such lender or loan

broker, a senior official or principal thereof, or the applicant failed to exercise due diligence and

good faith when submitting the attestations required in subsection (d)(1) or (d)(2).

19-14.10-8. Testing of loan originators.

(a) In order to meet the written test requirement referred to in this chapter, an individual

shall pass, in accordance with the standards established under this subsection, a qualified written

test developed by the Nationwide Mortgage Multistate Licensing System and Registry and

administered by a test provider approved by the Nationwide Mortgage Multistate Licensing System

and Registry based upon reasonable standards.

(b) A written test shall not be treated as a qualified written test for purposes of this section

unless the test adequately measures the applicant's knowledge and comprehension in appropriate

subject areas, including:

(1) Ethics;

(2) Federal law and regulation pertaining to mortgage origination;

(3) State law and regulation pertaining to mortgage origination;

(4) Federal and state law and regulation, including instruction on fraud, consumer

protection, the nontraditional mortgage marketplace, and fair-lending issues.

Mortgage Multistate Licensing System and Registry from providing a test at the location of the

employer of the applicant or the location of any subsidiary or affiliate of the employer of the

applicant, or the location of any entity with which the applicant holds an exclusive arrangement to

conduct the business of a mortgage loan originator.

(d)(1) 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 percent (75%) correct answers to

questions.

(2) An individual may retake a test three (3) consecutive times with each consecutive taking

occurring at least thirty (30) days after the preceding test.

(3) After failing three (3) consecutive tests, an individual shall wait at least six (6) months

before taking the test again.

(4) A licensed mortgage loan originator who fails to maintain a valid license for a period

of five (5) three (3) years or longer shall retake the test, not taking into account any time during

which such individual is a registered mortgage loan originator.

19-14.10-10. Continuing education for mortgage loan originators.

(a) In order to meet the annual continuing education requirements referred to in § 19-14.10-

9, a licensed mortgage loan originator shall complete at least (8) hours of education approved in

accordance with subsection (b), which shall include at least:

(1) Three (3) hours of Federal federal law and regulations;

(2) Two (2) hours of ethics, which shall include instruction on fraud, consumer protection,

and fair-lending issues;

(3) Two (2) hours of training related to lending standards for the nontraditional mortgage

product marketplace; and

(4) One hour of Rhode Island law and regulations.

(b) For purposes of this section, continuing education courses shall be reviewed and

approved by the Nationwide Mortgage Multistate Licensing System and Registry based upon

reasonable standards. Review and approval of a continuing education course shall include review

and approval of the course provider.

Nationwide Mortgage Licensing System and Registry, that is provided by the employer of the

mortgage loan originator or an entity that is affiliated with the mortgage loan originator by an

agency contract, or any subsidiary or affiliate of such employer or entity.

(d) Continuing education may be offered either in a classroom, online, or by any other

means approved by the Nationwide Mortgage Multistate Licensing System and Registry.

(e) A licensed mortgage loan originator:

(1) Except for § 19-14.10-9(b) and subsection (i) of this section, may only receive credit

for a continuing education course in the year in which the course is taken; and

(2) May not take the same approved course in the same or successive years to meet the

annual requirements for continuing education.

(f) A licensed mortgage loan originator who is an approved instructor of an approved

continuing education course may receive credit for the licensed mortgage loan originator's own

annual continuing education requirement at the rate of two (2) hours credit for every one hour

taught.

(g) A person having successfully completed the education requirements approved by the

Nationwide Mortgage Multistate Licensing System and Registry in subsections (a)(1), (a)(2), and

(a)(3) for any state shall be accepted as credit towards completion of continuing education

requirements in Rhode Island. Nothing herein shall relieve an applicant of the obligation to satisfy

educational requirements specifically related to Rhode Island law and regulations.

(h) A licensed mortgage loan originator who subsequently becomes unlicensed must

complete the continuing education requirements for the last year in which the license was held prior

to issuance of a new or renewed license.

An individual who:

(1) Fails to acquire a valid mortgage loan originator license or federal registration within

three (3) years from the date of federal compliance with any approved pre-licensure education (PE)

program; or

(2) Has obtained a mortgage loan originator license or federal registration but did not

maintain an active license or federal registration for at least three (3) years must complete at least

twenty (20) hours of PE in order to be eligible for state mortgage loan originator licensure.

(i) A person meeting the requirements of § 19-14.10-9(a)(1) and (a)(3) may make up any

deficiency in continuing education as established by rule or regulation of the director, or the

director's designee.

19-14.10-21. Unique identifier shown.

The name and the unique identifier assigned by the Nationwide Multistate Licensing

System of any person originating a residential mortgage loan shall be clearly shown on all

residential mortgage loan application forms, solicitations or advertisements, including business

cards or websites, and any other documents as established by rule, regulation, or order of the

director, or the director's designee.

SECTION 5. Chapter 19-4 of the General Laws entitled "Regulatory Oversight" is hereby

amended by adding thereto the following section:

19-4-19. Resident agent -- Financial Institutions institutions.

Each bank and lending institution doing business in this state, whether acting under state

or federal authority, shall maintain a resident agent in this state who shall have authority to endorse

insurance claim checks on behalf of those banks and lending institutions, which banks and lending

institutions shall include, but are not limited to:

(1) A bank, savings bank, or trust company, as defined in this title, its affiliates or

subsidiaries,;

(2) A bank holding company, as defined in 12 U.S.C. § 1841, its affiliates or subsidiaries,;

(3) Mortgage companies,; and

(4) Any other individual, corporation, partnership, or association authorized to take

deposits and/or to make loans of money under the provisions of this title 19.

SECTION 6. Chapter 19-14 of the General Laws entitled "Licensed Activities" is hereby

amended by adding thereto the following section:

19-14-34. Resident agent -- Loss payee.

(a) Each licensee shall maintain a resident agent in this state who shall have authority to

endorse insurance claim checks on behalf of such the licensee.

(b) A licensee that has not and will not be included as a loss payee on any insurance policy

may be exempted from the provisions of subsection (a) of this section and §§ 5-38-26 and 27-5-

3.3. An applicant that wishes to obtain an exemption must clearly state in its business plan that it

is not a loss payee on any insurance policy and must provide the department with a statement that

it will not be designated as a loss payee on any insurance policy. A licensee that obtains an

exemption should expect that compliance will be evaluated on examination.

SECTION 7. Sections 19-4-5 and 19-4-7 of the General Laws in Chapter 19-4 entitled

"Regulatory Oversight" are hereby repealed.

19-4-5. Quarterly statement of condition of regulated institutions.

At least once every three (3) months, every regulated institution shall prepare a statement

showing the condition of the regulated institution as it appears upon its books, in the form of a

balance sheet prepared in accordance with generally accepted accounting principles. This statement

shall be posted in a conspicuous place, where it may be easily read by the public.

19-4-7. Balance sheet form -- Publication of report.

Once each calendar year, every financial institution, at its own expense, shall publish a

report in the form of a balance sheet, in a newspaper in the city or town in which the financial

institution is located. If there is no newspaper published in the city or town where the financial

institution is located, then the report shall be published in a newspaper published in a city or town

nearby.

SECTION 8. Section 19-14.8-12 of the General Laws in Chapter 19-14.8 entitled "Uniform

Debt-Management Services Act" is hereby repealed.

19-14.8-12. Registration in another state.

If a provider holds a license or certificate of registration in another state authorizing it to

provide debt-management services, the provider may submit a copy of that license or certificate

and the application for it instead of an application in the form prescribed by § 19-14.8-5(a), § 19-

14.8-6, or § 19-14.8-11(b). The director shall accept the application and the license or certificate

from the other state as an application for registration as a provider or for renewal of registration as

a provider, as appropriate, in this state if:

(1) The application in the other state contains information substantially similar to, or more

comprehensive than, that required in an application submitted in this state;

(2) The applicant provides the information required by § 19-14.8-6(1), (3), (10), (12), and

(13); and

(3) The applicant, under oath or certified under the penalties of perjury, certifies that the

information contained in the application is current or, to the extent it is not current, supplements

the application to make the information current.

SECTION 9. This act shall take effect upon passage.

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LC004834/SUB A

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