STATE STATUTES

Rhode Island

Table of Contents

RHODE ISLAND GENERAL LAWS

TITLE 19 – FINANCIAL INSTITUTIONS

CHAPTER 14 – LICENSED ACTIVITIES

 

  • 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;

(C) The loan closes within this state;

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

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

(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;

(C) One or more loans funded by the proceeds of an advance under the line of credit is 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, 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, provides the employee with the equipment 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 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.

(34) “Sell” means to sell, to issue, or to deliver a check.

(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.

(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.

(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.

(38) “Small-loan lender” means a lender engaged in the business of making small loans within this state.

(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.

(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.

(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.

(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;

(C) Native digital token used in a proprietary blockchain service platform; or

(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.

(43) “Writing” means hard-copy writing or electronic writing that meets the requirements of § 42-127.1-2(7).

 

  • 19-14-2. Licenses required.

(a) No person shall engage within this state in the business of: (1) Making or funding loans or acting as a lender or small loan lender; (2) Brokering loans or acting as a loan broker; (3) Providing currency transmission for a fee or other consideration; (4) Cashing checks for a fee or other consideration, which includes any premium charged for the sale of goods in excess of the cash price of the goods; (5) Providing debt-management services; (6) Performing the duties of a mortgage-loan originator; (7) Servicing a loan, directly or indirectly, as a third-party loan servicer without first obtaining a license or registration from the director or the director’s designee. The licensing requirement for any person providing debt-management plans shall apply to all persons, without regard for state of incorporation or a physical presence in this state, who initiate or service debt-management plans for residents of this state. Special exemptions from licensing for each activity are contained in other chapters in this title.

(b) No lender or loan-broker licensee shall permit an employee to act as a mortgage loan originator without first verifying that the originator is licensed under this chapter. No individual may act as a mortgage-loan originator without being licensed, or act as a mortgage-loan originator for more than one person. The license of a mortgage-loan originator is not effective during any period when the mortgage-loan originator is not associated with a lender or loan-broker licensee.

(c) Each loan negotiated, solicited, placed, found, or made without a license as required in subsection (a) shall constitute a separate violation for purposes of this chapter.

(d) No person engaged in the business of making or brokering loans in this state, whether licensed in accordance with the provisions of this chapter or exempt from licensing, shall accept applications, or referral of applicants from, or pay a fee to, any lender, loan broker, or mortgage-loan originator who is required to be licensed or registered under said sections but is not licensed to act as such by the director, or the director’s designee.

(e) No person, except those exempt pursuant to § 19-14.3-1, shall engage in the business of currency transmission in this state without a license as provided in this chapter.

(f) A currency transmission licensee may conduct its business in this state at one or more locations, directly or indirectly owned, or through one or more authorized delegates, or both, pursuant to the license granted under this chapter.

(g) A person is considered to be engaged in the business of currency transmission in this state if that person enters into a transaction with a person physically located in or resident in Rhode Island at the time the transaction is initiated.

 

  • 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. 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 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. Each application for a license shall be accompanied by an investigation fee. The applicant at the time of making application shall pay to the 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. 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 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 multistate licensing system.

(b) [Reserved].

(c) [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.

 

  • 19-14-4. Annual fee.

(a) Each licensee shall pay an annual license fee as follows:

(1) Each small-loan lender license and each branch certificate, the sum of five hundred fifty dollars ($550);

(2) Each loan-broker license and each branch certificate, the sum of five hundred fifty dollars ($550);

(3) Each lender license and each branch certificate, the sum of one thousand one hundred dollars ($1,100);

(4) Each currency transmission license, the sum of one thousand dollars ($1,000);

(5) Each check cashing license, the sum of three hundred sixty dollars ($360);

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

(7) Each registration to provide debt-management services, the sum of two hundred dollars ($200);

(8) Each mortgage-loan originator license, the sum of four hundred dollars ($400); and

(9) Each third-party loan-servicer license and each branch certificate, the sum of one thousand one hundred dollars ($1,100).

(b) Any licensee who shall not pay the annual fee by December 31 of each year shall be subject to a daily penalty of twenty-five dollars ($25) per day, subject to a maximum of seven hundred fifty dollars ($750). The penalty shall be paid to the director to, and for the use of, the state. The penalty may be waived for good cause by the director, or the director’s designee, upon written request.

 

  • 19-14-5. Minimum capital.

Each licensee, licensed pursuant to an application for license filed after June 30, 1995, shall maintain the following minimum-net worth to be evidenced in accordance with regulations promulgated by the director, or the director’s designee.

(1) Small-loan lenders, the sum of twenty-five thousand dollars ($25,000);

(2) Loan brokers, the sum of ten thousand dollars ($10,000);

(3) Lenders, the sum of one hundred thousand dollars ($100,000);

(4) Currency transmission licensees, the sum of fifty thousand dollars ($50,000). If a licensee limits its actions to virtual currency, the licensee may include in its calculation of net worth virtual currency, measured by the average value of the virtual currency in U.S. Dollar equivalent over the prior six (6) months; and

(5) Third-party loan servicers, the sum of one hundred thousand dollars ($100,000).

 

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

(c) The bond shall run to the state for the use of the state and of any person who may have 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.

 

  • 19-14-7. Issuance or denial of license.

(a) Upon the filing of a completed application, the payment of fees and the approval of the bond, the director, or the director’s designee, shall commence an investigation of the applicant.

(b) After the investigation determines that a completed application has been filed, the director, or the director’s designee, shall approve the license applied for in accordance with the provisions of this chapter if he or she shall find:

That the financial responsibility, experience, character, and general fitness of the applicant, and of the applicant’s members and of the applicant’s officers, including the designated manager of record of a licensed location, if the applicant is a partnership, limited liability company or association, or of the officers including the designated manager of record of a licensed location, and directors and the principal owner or owners of the issued and outstanding capital stock, if the applicant is a corporation, are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently within the purposes of this title.

(c) A license provided pursuant to this title shall remain in full force and effect until it is surrendered by the licensee or revoked or suspended as provided by law. The licensee is, however, subject to suspension or revocation for failure to comply with any applicable provision of this title or regulation promulgated thereunder.

(d) If the director, or the director’s designee, rejects an application for a license, he or she shall notify the applicant, in writing, and advise the applicant of the reason for the denial of the application for license. When an application for a license is denied by the director, or the director’s designee, or withdrawn by the applicant, the director, or the director’s designee, shall return to the applicant the bond, but shall retain the investigation fee to cover the costs of investigating the application. The applicant may make written demand for hearing upon the director, or director’s designee, within thirty (30) days of the notice to determine the reasonableness of the action to deny the license.

(e) Any applicant or licensee aggrieved by the action of the director, or the director’s designee, in denying a completed application for a license shall have the right to appeal the action, order, or decision pursuant to chapter 35 of title 42.

 

  • 19-14-8. Denial of license due to incomplete application.

If the applicant has failed to provide the information requested by the department to complete the application, the director, or the director’s designee, shall notify the applicant, in writing, that the application shall be considered withdrawn if all information requested is not received within thirty (30) days of the notice. The notice shall specify what information is necessary for completion. The applicant may make a written demand within thirty (30) days for a hearing to determine the reasonableness of the director’s, or the director’s designee’s, action. The hearing shall be conducted pursuant to the Administrative Procedures Act, chapter 35 of title 42. If the applicant fails to provide the information or request a hearing within thirty (30) days from the notice, the application shall be withdrawn on the basis that it is incomplete.

 

  • 19-14-9. Contents of license.

The license or branch certificate shall contain any information that the director, or the director’s designee, shall require, including the type of activity authorized. In his or her discretion, the director, or the director’s designee, may substitute an electronic record as the confirmation of a license status in substitution for a license or branch certificate. When dealing with an applicant, or potential applicant, for a mortgage loan or when dealing with any person providing settlement services (as defined in the Real Estate Settlement Procedures Act, as amended, 12 U.S.C. § 2601 et seq., or the regulations promulgated thereunder from time to time), a mortgage loan originator shall disclose the mortgage loan originator’s nationwide mortgage licensing system unique identification number upon request to the applicant, or potential applicant, and the fact that the mortgage loan originator is licensed by this state.

 

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

(a) Every licensee shall appoint, and thereafter maintain, in this state a resident 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, electronically through the Nationwide Multistate Licensing System. The designation of an agent shall provide all contact information, including the business address, street, and number, if any, of the resident agent. Thereafter, if the resident agent changes his or her business address or other contact information, the licensee shall, within ten (10) days after any change, file electronically through the Nationwide Multistate Licensing System notice of the change setting forth the agent’s current business address or other contact information.

(2) If the resident agent dies, resigns, or leaves the state, the licensee shall make a new appointment and file the new appointment electronically through the Nationwide Multistate Licensing System. The original designation shall not be revoked until new appointment shall have been given to some other competent person resident in this state and filed with the department.

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

(4) Any licensee who fails to appoint a resident agent and file the appointment electronically through the Nationwide Multistate Licensing System, or fails to replace a resident 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 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 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 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 agent can be found upon whom service can be made, or in the event that the licensee has failed to designate a resident 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.

 

  • 19-14-11. Prohibition or transfer or assignment of license.

No license shall be transferable or assignable. A change in ownership of less than twenty-five percent (25%) of the voting stock or equity interests of a licensee shall not be considered a transfer or assignment of the license. A change in ownership of twenty-five percent (25%) or more of the voting stock or equity interests shall require notification to the director within fifteen (15) days of the change in ownership. Change in ownership application procedures, including reasonable response time requirements, shall be established by regulations promulgated by the director, or the director’s designee.

 

  • 19-14-12. Place of business — Branch offices — Name changes.

(a) Additional places of business may be maintained under the same license upon written application to the director, or the director’s designee, for the establishment of an additional branch office. A separate application must be filed for each additional branch office being requested. At the time of the application, the licensee shall pay to, and for the use of, the state an investigation fee as provided for in § 19-14-3. Upon the filing of the application, the director, or the director’s designee, shall investigate the facts, and if he or she finds that the requirements for licensure have been met, the director, or the director’s designee, shall grant authority for the operation of the business under the license at the branch location. If the director, or the director’s designee, shall not so find, he or she shall deny the licensee permission to establish the branch location in a manner consistent with the licensing application process. Upon approval of a branch location request, the licensee shall pay an additional annual licensing fee for each branch location in the manner consistent with the licensing application process.

(b) Whenever a licensee wishes to change his or her place of business or branch location to a street address other than that designated in the license, the licensee shall notify the director, or the director’s designee, in the manner directed by the director, or the director’s designee, prior to conducting business at that location. Unless the director, or the director’s designee, finds that the new location is not in the best interests of the public, the director, or the director’s designee, will reflect the change in the records of the department. At the time of notification, the licensee shall pay to the state the sum of fifty dollars ($50.00) as a processing fee.

(c) No licensee shall transact the business provided for by this chapter under any other name than that named in the license or branch certificate. Whenever a licensee shall wish to change the name, the licensee shall make written application to the director, or the director’s designee. If the director, or the director’s designee, shall find that the change of name is appropriate and all requirements for the name change have been met by the licensee, the director, or the director’s designee, shall approve the change and reflect the new name in the records of the department. At the time of application for change of name, the licensee shall pay to, and for the use of, the state the sum of fifty dollars ($50.00) as a processing fee.

 

  • 19-14-13. Revocation of license.

(a) The director, or the director’s designee, may, upon ten (10) days’ notice to the licensee, stating his or her intent to revoke and the grounds for revocation, and upon reasonable opportunity for the licensee to be heard, revoke any license issued under this chapter, upon finding that:

(1) The licensee has failed to comply with any demand, ruling, order, or requirement of the director, or the director’s designee, lawfully made pursuant to and within the authority of this title;

(2) The licensee has violated any provisions of this title or § 6-26-2, or any rule or regulation lawfully made by the director, or the director’s designee, under and within the authority of this chapter;

(3) Any fact or condition exists that, if it had existed at the time of the original application for the license, would have warranted the director, or the director’s designee, in refusing originally to issue the license;

(4) The licensee has committed any fraud, engaged in any dishonest activities, or made any misrepresentation;

(5) The licensee has violated any provisions of this title or any regulation issued pursuant to this title;

(6) The licensee has made a false statement in the application for the license or failed to give a true reply to a question in the application; or

(7) The licensee has demonstrated incompetency or untrustworthiness to act as a licensee pursuant to this chapter.

(b) The burden of proving the existence of these facts or conditions as grounds for revocation of a license under this section shall be upon the director, or the director’s designee. The director, or the director’s designee, if he or she has reasonable cause to believe that the grounds for revocation exist, may subpoena and investigate the business, books, and records of the licensee.

 

  • 19-14-14. Revocation by default.

(a) The director, or the director’s designee, may revoke any license without a hearing by default if the licensee fails to respond to notifications informing the licensee of a failure to pay the annual license fee; maintain in effect the required bond or bonds; or maintain net worth requirements as required by this title.

(b) For the purposes of revocation by default, the director, or the director’s designee, shall send, in writing, to the licensee and to the licensee’s registered attorney for service of process at their current respective addresses according to the records of the department, notice of the deficiency and potential revocation of the license. Should the licensee, or the licensee’s registered attorney, fail to respond within fifteen (15) days of the notification, the director, or the director’s designee, may revoke the license by default and without hearing. The director, or the director’s designees, shall notify the licensee of such revocation in writing.

(c) Any action taken under this section may be appealed pursuant to the Administrative Procedures Act, chapter 35 of title 42.

 

  • 19-14-15. Suspension of license.

The director, or the director’s designee, may, upon three (3) days’ notice and an opportunity for hearing, suspend any license for a period not exceeding thirty (30) days, pending investigation.

 

  • 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, 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. 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 dollar ($55.00) filing fee. This report shall be filed within thirty (30) days of the surrender of the license. The licensee shall give 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.

 

  • 19-14-17. Contracts unimpaired by revocation, suspension, or surrender of license.

Any revocation, suspension, or surrender of a license shall not impair or affect the obligation of any preexisting lawful contract between the licensee and any customer.

 

  • 19-14-18. Reinstatement of license.

Every license issued under this chapter shall remain in force and effect until it shall have been surrendered, revoked, or suspended in accordance with the provisions of this chapter. The director, or the director’s designee, shall have authority on his or her own initiative to reinstate suspended licenses or to issue new licenses to a licensee whose licenses have been revoked if no fact or condition then exists that clearly would have warranted the director, or the director’s designee, in refusing originally to issue the license under this chapter. A license reinstatement fee equal to one half (½) of the annual license fee shall be paid to the director to and for the use of the state.

 

  • 19-14-19. Filing findings on revocation or suspension.

Whenever the director, or the director’s designee, shall revoke or suspend a license issued pursuant to this chapter, the director shall file, in his or her office, a written order to that effect containing the evidence and the reason(s) supporting the revocation or suspension, and serve upon the licensee a copy thereof.

 

  • 19-14-20. Books, accounts, and records.

(a) The licensee shall keep and use any books, accounts, and records, that may be maintained by optical imaging, as will enable the director, or the director’s designee, to determine whether the licensee is complying with the provisions of this title and with the rules and regulations lawfully made by the director, or the director’s designee.

(b) If the licensee maintains its records outside of the state of Rhode Island, the licensee shall be responsible for all reasonable costs and expenses incurred by the examining personnel to examine such records.

 

  • 19-14-21. Advertising and misrepresentations.

(a) No licensee or other person shall advertise, print, display, publish, distribute, telecast, or broadcast, or cause or permit to be advertised, printed, displayed, published, distributed, telecast, or broadcast, in any manner whatsoever any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions for licensed activities. The director, or the director’s designee, may order any licensee or other person to desist from any conduct that he or she shall find to be a violation of the foregoing provisions.

(b) The director, or the director’s designee, may require that rates of interest or charges, if stated by a licensee, be stated fully and clearly in any manner the director, or the director’s designee, may deem necessary to prevent misunderstanding of the rates or charges by prospective customers.

(c) The licensee shall disclose in any written or oral advertisements or representation disseminated primarily in this state, the type of license held.

 

  • 19-14-22. Reporting requirements.

(a) Each licensee shall annually 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 reporting period of each licensed place of business conducted by the licensee within the state. The report shall be submitted through the Nationwide Multistate Licensing System and attested to by the entity. To the extent that the Nationwide Multistate 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 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.

(c) Each mortgage loan originator licensee shall, on or before March 31, 2010, and every 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 Multistate Licensing System and Registry a report of condition, which shall be in such form and shall contain such information as the Nationwide Multistate 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.

 

  • 19-14-23. Examinations and investigations.

(a) For the purpose of discovering violations of this title or securing information lawfully required, the director, or the director’s designee(s), may at any time investigate the loans and business and examine the books, accounts, records, and files used therein, of every licensee and person who shall be engaged in any activity that requires a license under this title, whether the person shall act, or claim to act, as principal or agent, or under or without the authority of this title. For that purpose, the director, or the director’s designee(s), shall have free access to the offices and places of business, books, accounts, paper, records, files, and safes, of all such persons. The director, or the director’s designee(s), shall have authority to require the attendance of, and to examine under oath, any person whose testimony may be required relative to the loans or the business or to the subject matter of any examination, investigation, or hearing.

(b) The director, or the director’s designee, shall make an examination of the affairs, business, office, and records of each licensee and branch location as often as is necessary, based upon all relevant factors, including the volume of activity within the state. The department shall provide a report to the legislature after July 1, 2017, but no later than December 31, 2017, regarding the timing of examinations conducted pursuant to this section and shall make recommendations regarding the sufficiency of conducting examinations based on these factors versus on a stated, periodic basis. The director, or the director’s designee, may accept, in lieu of an examination of the business of a licensed mortgage loan originator, the examination by the director, or the director’s designee, of the licensed lender(s) or licensed loan broker who employ the licensed mortgage loan originator and/or who employed the licensed mortgage loan originator during the period under examination. The total cost of an examination made pursuant to this section shall be paid by the licensee or person being examined and shall include the following expenses:

(1) One hundred fifty percent (150%) of the total salaries and benefits plus one hundred percent (100%) for the travel and transportation expenses for the examining personnel engaged in the examinations. The cost of an examination of a mortgage loan originator licensee shall be limited to twenty-five percent (25%) of the total salary and benefits for the personnel engaged in an examination specific to a mortgage loan originator. The fees shall be paid to the director to, and for the use of, the state. The examination fees shall be in addition to any taxes and fees otherwise payable to the state;

(2) All reasonable technology costs related to the examination process. Technology costs shall include the actual cost of software and hardware utilized in the examination process and the cost of training examination personnel in the proper use of the software or hardware; and

(3) All necessary and reasonable education and training costs incurred by the state to maintain the proficiency and competence of the examination personnel. All such costs shall be incurred in accordance with appropriate state of Rhode Island regulations, guidelines, and procedures.

(c) All expenses incurred pursuant to subsections (b)(2) and (b)(3) shall be allocated equally to each licensee, other than licensed mortgage loan originators, no more frequently than annually and shall not exceed an annual average assessment of fifty dollars ($50.00) per company for any given three calendar-year (3) period. All revenues collected pursuant to this section shall be deposited as general revenues. That assessment shall be in addition to any taxes and fees otherwise payable to the state.

(d) The provisions of § 19-4-3 shall apply to records of examinations or investigations of licensees; provided, however, the director, or the director’s designee, is authorized to make public the number of valid consumer complaints as determined by the director, or the director’s designee, filed against the licensee for a twelve-month (12) period immediately preceding the request for the information; and provided, further, that promptly following the completion of any examination under § 19-14-23(b), the director, or the director’s designee, shall provide to the person examined a copy of the written report of the examination, together with a notice requiring the person examined to file a written response or rebuttal to the comments and recommendations contained in the examination report within thirty (30) days of receipt thereof or such longer period as the director, or the director’s designee, may specify.

(e) If the director, or the director’s designee, has reason to believe that any person required to be licensed under this chapter is conducting a business without having first obtained a license under this chapter, or who, after the denial, suspension, or revocation of a license is conducting that business, the director, or the director’s designee, may issue an order to that person commanding him or her to cease and desist from conducting that business. The order shall provide an opportunity to request a hearing to be held not sooner than three (3) days after issuance of that order to show cause why the order should not become final. Any order issued pursuant to this section shall become final if no request for a hearing is received by the director, or the director’s designee, within thirty (30) days of the issuance of the order. The order may be served on any person by mailing a copy of the order, certified mail, return receipt requested, and first-class mail to that person at any address at which that person has done business or at which that person lives. Any hearing held pursuant to this section shall be governed in accordance with chapter 35 of title 42. If that person fails to comply with an order of the director, or the director’s designee, after being afforded an opportunity for a hearing, the superior court for Providence County has jurisdiction upon complaint of the department to restrain and enjoin that person from violating this chapter.

(f) The director may impose an administrative assessment, as well as the penalties provided for under § 19-14-26, against any person named in an order issued under subsection (e) or, in accordance with the rules and regulations promulgated pursuant to § 19-14-30, against any person who violates, or participates in the violation of, any of the applicable provisions of this title, or any regulation promulgated pursuant to any provisions of this title. The amount of the administrative assessment may not exceed one thousand dollars ($1,000) for each violation of this chapter or each act or omission that constitutes a basis for issuing the order. Any person aggrieved by an administrative assessment shall have the opportunity to request a hearing to be held in accordance with chapter 35 of title 42 within thirty (30) days of the imposition of such administrative assessment.

 

  • 19-14-24. Tying with other business.

No licensee shall 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 — 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, 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.

(c) A remote location shall not be considered a branch of the licensee; however, activities conducted at a remote location shall be subject to examination under this chapter and § 19-14.10-5.

(d) The director, or the director’s designee, shall have the authority to promulgate rules to establish requirements and standards relating to remote locations.

 

  • 19-14-26. Penalty for violations.

(a) If a person other than a licensee engages in activity for which licensure is required by this title with or on behalf of a resident in violation of this chapter, the department may assess a civil penalty against the person in an amount not to exceed five thousand dollars ($5,000) for each day of violation and/or may order that the person cease and desist from all activities requiring licensure.

(b) If a licensee materially violates or participates in the violation of any of the applicable provisions of this title, or any regulation promulgated under this title, the department may assess a civil penalty of not more than one thousand dollars ($1,000) for each violation or in the case of identifiable measured transactions per transaction, or by imprisonment not exceeding one year, or both. Each violation constitutes a separate offense. Complaints under the provisions of this chapter may be made by the director, or the director’s designee, and shall not be required to give surety for costs. The attorney general shall prosecute all criminal activities under this chapter.

(c) A civil penalty under this section continues to accrue until the earlier of the following:

(1) The date the violation ceases; or

(2) A date specified by the department.

(d) In addition to the remedies set forth in subsections (a) and (b) of this section, upon proof of a material violation by a licensee, the department may take any of the following actions:

(1) Suspend or revoke a license or registration under this chapter;

(2) Order a person to cease and desist from doing activity for which a license or registration is required with or on behalf of a resident;

(3) Request the court to appoint a receiver for the assets of a licensee or registrant;

(4) Request the court to issue temporary, preliminary, or permanent injunctive relief against a licensee or registrant;

(5) Recover on the bond or security posted by the licensee or registrant; or

(6) Impose necessary or appropriate conditions on the conduct of business activity with or on behalf of a resident.

(e) All actions of the department under this section shall be taken in accordance with the requirements of chapter 35 of title 42 (the administrative procedures act).

 

  • 19-14-26.1. Additional penalties.

(a) Any person who makes or brokers a loan not invalid for any other reason who knowingly violates § 19-14-2 shall, in the discretion of the court, forfeit and have no right to collect or receive any interest, fees, or charges whatsoever.

(b) In the case of any unlicensed transaction involving lending or loan brokering activities, the amount of interest, fees, or charges previously collected shall be credited to the principal balance of the loan then due and owing or paid to the debtor, at the option of the holder of the loan.

(c) In the case of any unlicensed check cashing, sale of check, or electronic money transfer transaction, the amount of any fees or charges previously collected shall be paid to the person from whom the fee or charge was collected. In the event that the person who collected the fee or charge is unable to identify the person from whom the fee or charge was collected, the fee or charge shall be paid to the director to and for the use of the state.

 

  • 19-14-27. Modification or repeal of chapter.

This chapter, or any part of this chapter, may be modified, amended, or repealed so as to effect a cancellation or alteration of any license or right of a licensee hereunder, provided that the cancellation or alteration shall not impair or affect the obligation of any pre-existing lawful contract between any licensee and any customer.

 

  • 19-14-28. Appeal from director.

Any applicant or licensee aggrieved by an action of the director, or the director’s designee, in denying an application for a license or in revoking or suspending a license, or by any order or decision of the director, or the director’s designee, shall have the right to appeal the action, order, or decision pursuant to chapter 35 of title 42.

 

  • 19-14-29. Appropriations — Fees.

The general assembly shall annually appropriate any sums it may deem sufficient for clerical assistance and necessary expenses in carrying out the provisions of this chapter. The state controller is authorized and directed to draw orders upon the general treasurer for the payment of the sums appropriated, or so much of the sums as may from time to time be required, upon receipt by him or her of proper vouchers approved by the director, or the director’s designee. All fees received under the provisions of this title shall be turned over to the general treasurer.

 

  • 19-14-30. Rules and regulations.

The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter. The director, or the director’s designee, shall adopt and amend reasonable rules and regulations, not later than March 31, 2008, as may be necessary to effectuate and implement the provisions of §§ 19-14-1, 19-14-2, 19-14-3, 19-14-4, 19-14-6, 19-14-7, 19-14-9, 19-14-22, 19-14-23 and 19-14-33 pertaining to mortgage loan originators in order that those provisions pertaining to mortgage loan originators are in effect and force on January 1, 2009.

 

  • 19-14-31. Pre-existing contracts.

Nothing contained in this chapter shall be construed to impair or affect the obligation of any contract or loan lawfully entered into prior to July 1, 1995.

 

  • 19-14-32. Severability.

If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.

 

  • 19-14-33. Compliance with federal law governing licensed activities.

(a) Each licensee shall comply with all applicable federal laws, rules, and regulations, as amended, governing activities conducted under its license.

(b) Each licensee shall exercise due diligence in accordance with the rules and regulations promulgated pursuant to § 19-14-30 in confirming its compliance with applicable state/federal statutes and/or regulations at all phases of activities conducted under the license.

 

  • 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 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.

 

 

CHAPTER 14.1 – LENDERS AND LOAN BROKERS

 

  • 19-14.1-1. Confessions of judgment — Incomplete instruments prohibited.

No lender or loan broker shall take any confession of judgment, or any power of attorney, except a power of attorney or power of sale authorizing the lender or loan broker in case of default in payment of interest or principal, to enforce the provisions of any chattel mortgage or pledge. No lender or loan broker shall take any note, promise to pay, or security that does not accurately disclose the actual amount of the loan, the time for which it is made, and the agreed rate of interest nor any instrument in which blanks are left to be filled in after execution. The provisions of this section related to confessions of judgment and power of attorney shall not apply to real estate secured loans.

 

  • 19-14.1-2. Maximum rate of interest.

(a) Every lender may lend or loan broker may negotiate the lending of any sum of money and may charge, contract for, and receive points, fees, charges, and interest on the unpaid balance of the loan at a rate not to exceed that provided in § 6-26-2, or as otherwise permitted under applicable federal law or regulation.

 

(b) Rebates of finance charges on precomputed loans, made for an original term of sixty (60) months or less, may be calculated on the method commonly referred to as the rule of 78 or sum of the digits. Rebates of finance charges on precomputed loans, made for an original term greater than sixty (60) months, must be calculated on the simple interest method.

 

  • 19-14.1-3. Unemployment insurance defined.

For the purposes of this chapter, involuntary unemployment insurance coverage shall not be a factor in the approval by the lender or loan broker of any loan. The lender or loan broker shall give and maintain specific written indication that the cost of this coverage is disclosed to the debtor; that the coverage is not a condition for the extension of credit; and that the debtor voluntarily desires the coverage. The debtor shall be given written notice of his or her right to cancel within thirty (30) days of the receipt of the insurance policy and that the cancellation will result in a full refund of any premiums paid. Unemployment resulting from a labor dispute shall be deemed involuntary unemployment.

 

  • 19-14.1-4. Documents delivered to borrower — Advance payments — Release of security.

Every lender or loan broker, as applicable, who is the holder of any note shall:

(1) Give to any borrower, or the borrower’s agent, making a loan payment a plain and complete receipt for all payments on the loan at the time the payment is made in person at the lender’s or loan broker’s office;

 

(2) Except for an open-end loan, upon written request from the borrower, the holder of a subordinate mortgage loan instrument shall deliver to the borrower, within ten (10) days from receipt of a written request, a statement of the borrower’s account showing the date and amount of all payments made or credited to the account and the total unpaid balance. Not more than two (2) such statements shall be required in any twelve-month (12) period;

 

(3) Permit payment to be made in advance in any amount on any contract of loan at any time, but the lender or loan broker may apply the payment first to all interest in full at the agreed rate and other permitted charges, up to the date of the payment. Any broker fees, points, or origination fees shall not be subject to any required refund;

 

(4) Upon repayment of the loan in full, mark indelibly every obligation and security signed by the borrower with the word “paid” or “canceled” and release any mortgage, restore any pledge, cancel and return any note, or a copy of the note, and cancel and return any assignment, or a copy of the assignment, given to the lender or loan broker by the borrower;

 

(5) Issue mortgage discharges in accordance with the provision of chapter 26 of title 34; and

 

(6) In the case of educational loans, deliver to the borrower a written statement that discloses the name and address of the borrower and licensee; the name of each payee to whom disbursements will be made; the date and total amount of the loan commitment; a description of the payment schedule; the amount of any insurance procured by the lender with a summary of the nature and extent of coverage; the total amount of all insurance premiums to be collected by the licensee; the schedule of any disbursements to be made to the borrower; and the method by which the schedule of any disbursements to an educational institution will be determined.

 

  • 19-14.1-5. Instrument evidencing loan, contents.

No loan document shall contain:

(1) Any acceleration clause under which any part or all of the unpaid balance of the obligation not yet matured may be declared due and payable because the holder deems himself or herself to be insecure;

 

(2) Any power of attorney to confess judgment or any other power of attorney except a statutory power of sale;

 

(3) Any provision whereby the debtor waives any rights accruing to him or her under the provisions of this title or any other law expressly prohibiting such waiver;

 

(4) Except for a change in the payment schedule as a result of the borrower’s default or delinquency, or pursuant to an agreement involving a court proceeding, any requirement that more than one installment be payable in any one installment period; or

 

(5) Any assignment of or order for the payment of any salary, wages, commission, or other compensation for services, or any part thereof, earned or to be earned.

 

  • 19-14.1-6. Assignment of earnings.

The payment in money, credit, goods, or things in action, as consideration for any sale or assignment of, or order for, the payment of wages, salary, commissions, or other compensation for services, whether earned or to be earned, shall, for the purposes of regulation under this chapter, be deemed a loan secured by the assignment, and the amount that the assigned compensation exceeds the amount of consideration actually paid shall, for the purposes of regulation under this chapter, be deemed interest upon the loan from the date of the payment to the date the compensation is payable. The transaction shall be governed by and subject to the provisions of this chapter.

 

  • 19-14.1-7. Assignment of wages simultaneous with loan — Liens on furniture.

No assignment of, or order for, payment of any salary, wages, commissions, or other compensation for services, earned or to be earned, given to secure any loan made by any licensee under this chapter, shall be valid unless the amount of the loan is paid to the borrower simultaneously with its execution; nor shall the assignment or order, or any chattel mortgage or other lien on household furniture then in the possession and use of the borrower be valid unless it is in writing, signed in person by the borrower, nor if the borrower is married unless it is signed in person by both husband and wife, provided that written assent of a spouse shall not be required when husband and wife have been living separate and apart for a period of at least five (5) months prior to the making of the assignment, order, mortgage, or lien.

 

  • 19-14.1-8. Escrow accounts.

(a) All fees paid by clients or residential mortgage loan applicants to a lender or loan broker prior to the closing of the loan in connection with which those fees are paid, shall be deposited in one or more escrow accounts maintained at a federally-insured-deposit-taking institution. The account(s) shall contain only those funds collected from clients or residential mortgage loan applicants. Fees shall include, but are not limited to: application fees, appraisal fees, title attorney fees, title insurance fees, credit report fees, rate lock fees, or other similar fees.

 

(b) A lender or loan broker may offset related funds in the escrow account(s) against commissions to which it is entitled in accordance with the contract for services actually performed or for reimbursement for the fees described in the immediately preceding paragraph paid directly by the lender or loan broker to third parties. All offsets shall be accounted for through written documentation evidencing the amount of offset.

 

(c) The lender or loan broker shall maintain complete and accurate records of all escrow accounts and shall produce, upon request, all documents pertaining to escrow account activity including, but not limited to: bank statements, check stubs, canceled, voided, or unused checks, deposit tickets, and reconciliations or other comparable account records.

 

(d) No licensee governed by this chapter shall commingle money collected for fees from clients or residential mortgage loan applicants with its own funds or use any part of a client’s or residential mortgage loan applicant’s money in the conduct of the lender’s or loan broker’s business until those fees or moneys have been offset as provided for in this section.

 

  • 19-14.1-9. Penalties.

(a) Any person or entity and the several members, officers, directors, agents and employees thereof, who or that knowingly violates, or participates in the violation of any of the applicable provisions of this chapter, or any regulation promulgated thereunder, shall be guilty of a misdemeanor and, upon conviction of this violation, shall be punished by a fine of not more than one thousand dollars ($1,000), or imprisoned for not more than one year, or both. Each violation shall constitute a separate offense. Complaints under the provisions of this chapter may be made by the director, or the director’s designee, and the director, or the director’s designee, shall not be required to give surety for costs. The attorney general shall prosecute all complaints under this chapter.

 

(b) Any person who shall violate any provision of this chapter may also be subject to a civil monetary penalty, in the discretion of the court. For unintentional violations, to be determined by the court, the award may include actual damages sustained by the applicant or borrower, as the case may be, as a result of the violation, plus a penalty in an amount not greater than one hundred dollars ($100) per violation. For intentional violations, to be determined by the court, the award may include actual damages sustained by the applicant or borrower, as the case may be, as a result of the violation, plus a penalty in an amount not greater than five hundred dollars ($500) per violation. A person’s failure to take action to correct the violation within a reasonable period of time, as determined by the court, following notice to the person of the violation by the director, or the director’s designee, pursuant to a final written report or other written notice, may be evidence of an intentional violation under this subsection (b) with respect to violations committed after the notice and the expiration of a reasonable time period for correction of the violation.

 

  • 19-14.1-10. Special exemptions.

(a) The licensing provisions of chapter 14 of this title shall not apply to:

(1) Nonprofit charitable, educational, or religious corporations or associations;

 

(2) Any person who makes less than six (6) loans in this state in any consecutive twelve-month (12) period; there is no similar exemption from licensing for loan brokers for brokering loans or acting as a loan broker;

 

(3) Any person acting as an agent for a licensee for the purpose of conducting closings at a location other than that stipulated in the license;

 

(4) Regulated institutions and banks or credit unions organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which such bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of originating or brokering loans in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless such bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of title 19;

 

(5) Any natural person employee who is employed by a licensee when acting on the licensee’s behalf; provided that this exemption shall not apply to a mortgage loan originator required to be licensed under § 19-14-2 or § 19-14.10-4; or

 

(6) A licensed attorney when performing loan closing services for a licensee or for an entity identified in subdivision (4) above.

 

(b) The provisions of this chapter and chapter 14 of this title shall not apply to:

(1) Loans to corporations, joint ventures, partnerships, limited liability companies or other business entities;

 

(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for business or commercial, as opposed to personal, family or household purposes;

 

(3) Loans principally secured by accounts receivable and/or business inventory;

 

(4) Loans made by a life insurance company wholly secured by the cash surrender value of a life insurance policy;

 

(5) Education-purpose loans made by the Rhode Island health and educational building corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as vested in chapter 62 of title 16;

 

(6) The acquisition of retail or loan installment contracts by an entity whose sole business in this state is acquiring them from federal banks receivers or liquidators;

 

(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods, services or insurance for a part or all of the purchase price;

 

(8) Any municipal, state or federal agency that makes, brokers, or funds loans or acts as a lender or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency specifically designated by the agency to perform those functions on behalf of the agency and which has notified the director, in writing, of the exclusive agency or contract; or

 

(9) Notes evidencing the indebtedness of a retail buyer to a retail motor vehicle dealer that include as part of the amount financed, disclosed in accordance with 12 C.F.R. § 226.18 as amended, an amount representing negative equity related to the motor vehicle being traded in as part of the purchase price of the motor vehicle being purchased.

 

(c) No license to make or fund loans, or to act as a lender or small loan lender shall be required of any person who engages in deferred deposit transactions (commonly known as “pay-day advance”) while holding a valid license to cash checks pursuant to chapter 14 of this title.

 

  • 19-14.1-11. Rules and regulations.

The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.

 

  • 19-14.1-12. Severability.

If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.