STATE STATUTES

Arizona

Table of Contents

TITLE 6, CHAPTER 13 ADVANCE FEE LOAN BROKERS

 

6-1301.  Definitions

In this chapter, unless the context otherwise requires:

  1. “Advance fee” means a fee, interest or other consideration directly or indirectly received by a person prior to a loan of money or extension of credit or a commitment to loan money or extend credit being made by the person.  Advance fees do not include the actual cost of charges paid to a third party which are incurred in making real estate loans secured in whole or in part by a mortgage deed of trust or other security instrument on real estate, including charges for a preliminary title search, title examination and report, title insurance premiums, property survey and appraisal fees.
  2. “Advance fee loan broker” means a person who is not exempt under section 6 1302 and who for an advance fee or in the expectation of an advance fee either directly or indirectly makes or procures, attempts to make or procure or offers to make or procure or attempt to make or procure a loan of money or extension of credit.

 

6-1302.  Scope of chapter; exemptions

  1. Any person who acts as an advance fee loan broker shall register with the deputy director as provided in this chapter.  A person who is not exempt under subsection B of this section and who advertises for, solicits or purports to be willing to make or procure a loan or extension of credit for an advance fee is presumed to be engaged in the business of an advance fee loan broker.
  2. This chapter does not apply to:
  3. Individuals not regularly engaged in the business of making or procuring loans or extensions of credit for an advance fee.
  4. A person doing business as allowed by any law of any state or of the United States relating to banks, savings banks, trust companies, savings and loan associations, credit unions, insurance companies, consumer lenders or profit sharing and pension trusts.
  5. A person licensed as a mortgage broker, a mortgage banker or a commercial mortgage banker pursuant to chapter 9 of this title.
  6. A person who makes a loan with the person’s own money or for the person’s own investment.
  7. A person licensed as a real estate broker or salesperson pursuant to title 32, chapter 20, article 2.
  8. A person who is licensed to practice law in this state but who is not actively and principally engaged in the business of making or procuring loans or extensions of credit, if this person renders services in the course of the person’s practice as an attorney.
  9. An institutional investor as defined in section 6 971 unless the institutional investor advertises for, solicits or holds himself out as willing to make or procure for an advance fee a loan or extension of credit other than a commercial mortgage loan as defined in section 6 971.
  10. This state including any political subdivision of this state.
  11. The United States or any department or agency of the United States.

 

6-1303.  Application for registration

  1. Application for registration as an advance fee loan broker may be made by any person.  An application for registration shall be signed by the applicant and duly verified by oath.  The application shall be filed with the deputy director and shall contain such information as the deputy director prescribes by rule and deems necessary in determining whether the applicant is entitled to engage in the advance fee loan broker business.
  2. The deputy director shall rule on an application within sixty days following the date the application is filed with the deputy director.

 

6-1305.  Registration; renewal; reporting requirements

  1. The deputy director shall register the applicant as an advance fee loan broker when an applicant has fully complied with this chapter and the rules prescribed by the deputy director.
  2. The deputy director shall immediately notify the applicant on registering the applicant as an advance fee loan broker.
  3. A registered advance fee loan broker shall apply for renewal as prescribed by the deputy director not later than June 30 of each year.  A registration for which a renewal application is not received by the deputy director by June 30 is suspended and the registered advance fee loan broker may not act as an advance fee loan broker until the registration is renewed or a new registration is issued pursuant to this article.  The registration of an advance fee loan broker that has not filed a renewal application and paid the renewal fee by July 31 expires.  A registration may not be granted to the holder of an expired registration except as provided in this article for the issuance of an original registration.
  4. An advance fee loan broker may annually renew the broker’s registration by filing a supplemental statement showing any changes in the facts set forth in the original application for registration or any previously filed supplemental statement made at the time of annual renewal.
  5. An advance fee loan broker shall file a supplemental statement showing any changes in the facts set forth in the original application or in any supplemental statement made at the time of annual renewal within thirty days after a change in any material fact.

 

6-1307.  Records

Advance fee loan brokers shall maintain books, records and accounts in connection with transactions involving the receipt and disbursement of funds received by the advance fee loan broker.  The books, records and accounts shall be maintained in accordance with generally accepted accounting practices and shall be subject to inspection at all times by authorized representatives of the deputy director.

 

6-1308.  Denial, revocation or suspension of registration

  1. The deputy director may deny, revoke or suspend the registration of an advance fee loan broker if the deputy director finds that:
  2. The application for registration, any supplemental statement or any other document filed with the deputy director is incomplete, inaccurate or misleading.
  3. The advance fee loan broker is insolvent or is in an unsound financial condition.
  4. The advance fee loan broker has violated this chapter or any rule or order of the deputy director.
  5. The advance fee loan broker has refused to allow an examination of the books, records and accounts in connection with transactions involving the receipt and disbursement of funds received by the advance fee loan broker.
  6. The advance fee loan broker has failed to pay the original application fee or any supplemental statement fees as required by this chapter.
  7. It is sufficient cause for denial, revocation or suspension of registration of an advance fee loan broker as provided in this section, if the advance fee loan broker is a partnership, corporation, unincorporated association or trust, that a member of the partnership, an officer or a director of the corporation or unincorporated association or the trustee or other fiduciary of the trust or a person controlling, controlled by or under common control with the broker has been guilty of any act or omission that would be sufficient grounds for denying, revoking or suspending the registration of an individual broker.

 

6-1309.  Prohibited acts

  1. An advance fee loan broker shall not advertise, display, distribute, broadcast or televise or cause or permit to be advertised, displayed, distributed, broadcast or televised any false, misleading or deceptive statement or representation with regard to the rates, terms or conditions for loans or the likelihood of the loan or extension of credit being granted.
  2. An advance fee loan broker shall not take any note, promise to pay or instrument of security that does not disclose the amount of the loan, a schedule of payment or description of the payment schedule and the agreed rate of charge or any instruments in which blanks are left to be filled in after the loan is made.
  3. An advance fee loan broker shall not make a false promise or misrepresentation or conceal an essential or material fact in the course of the advance fee loan broker business.
  4. An advance fee loan broker shall not engage in illegal business practices.
  5. An advance fee loan broker may not pay any fees, commissions or bonuses or a gift of anything of value to any merchant, dealer, borrower, or other person for the purpose of attracting applications for loans or as consideration for referring loan business.
  6. A person is not entitled to receive any advance fees in connection with arranging for or negotiating a loan if such person is not registered pursuant to this chapter or is exempt under section 6 1302.

 

6-1310.  Noncompliance not to affect validity of loan

Failure to comply with the provisions of this chapter does not affect the validity or enforceability of any loan or extension of credit.