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Timestamp: 2019-04-19 02:38:35+00:00

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Richmond Sunlight » SB362: Qualified education loan servicers; person must obtain license from State Corporation Commission.
SB362: Qualified education loan servicers; person must obtain license from State Corporation Commission.
SENATE BILL NO. 362 AMENDMENT IN THE NATURE OF A SUBSTITUTE (Proposed by the Senate Committee on Education and Health on February 8, 2018) (Patron Prior to Substitute--Senator Howell) A BILL to amend and reenact § 19.2-389 of the Code of Virginia and to amend the Code of Virginia by adding in Title 6.2 a chapter numbered 26, consisting of sections numbered 6.2-2600 through 6.2-2617, relating to student loans; licensing of qualified education loan servicers; civil penalties.
CHAPTER 26. QUALIFIED EDUCATION LOAN SERVICERS.
"Licensee" means a person to whom a license has been issued under this chapter.
"Nationwide Multistate Licensing System and Registry" or "Registry" means the nationwide multistate licensing system and registry created by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.
"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in any other type of entity.
"Qualified education loan" means any loan primarily used to finance a postsecondary education and costs of attendance at a postsecondary institution, including tuition, fees, books and supplies, room and board, transportation, and miscellaneous personal expenses. "Qualified education loan" includes a loan made to refinance a qualified education loan. "Qualified education loan" does not include an extension of credit under an open-end credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.
"Qualified education loan borrower" or "borrower" means (i) any resident of the Commonwealth who has received or agreed to pay a qualified education loan or (ii) any person who is contractually obligated with such resident for repaying the qualified education loan.
"Qualified education loan servicer" or "loan servicer" means any person that engages in the business of servicing qualified education loans owed by qualified education loan borrowers.
"Servicing" means (i) receiving any scheduled periodic payments from a qualified education loan borrower pursuant to the terms of a qualified education loan; (ii) applying the payments of principal and interest and such other payments, with respect to the amounts received from a qualified education loan borrower, as may be required pursuant to the terms of a qualified education loan; and (iii) performing other administrative services with respect to a qualified education loan.
§ 6.2-2601. License requirement; exceptions.
A. No person shall act as a qualified education loan servicer, whether or not the person has an office or any other physical presence in the Commonwealth, except in accordance with the provisions of this chapter and without having first obtained a license under this chapter from the Commission.
B. Every qualified education loan servicer required to be licensed under this chapter shall register with the Registry and be subject to such registration and renewal requirements as may be established by the Registry, in addition to any requirements of this chapter. In adopting regulations pursuant to § 6.2-2617, the Commission shall include any terms, conditions, or requirements applicable to such registration and renewal. Any fees required by the Registry shall be separate and apart from any fees imposed by this chapter. The Commission, at its discretion, may collect any registration and renewal fees on behalf of the Registry and remit such fees to the Registry or permit the Registry to collect any fees imposed by this chapter and remit such fees to the Commission.
C. In connection with its implementation and administration of this chapter, the Commission may establish agreements or contracts with the Registry or other entities designated by the Registry to collect, distribute, and maintain information and records, and process fees, related to qualified education loan servicers required to be licensed under this chapter. In establishing such agreements or contracts, the Commission shall not be subject to the Virginia Public Procurement Act (§ 2.2-4300 et seq.).
3. Any public or private nonprofit institution of higher education.
§ 6.2-2602. Application for license; form; content; fee.
A. An application for a license under this chapter shall be made in writing, under oath, and on a form provided by the Commissioner.
4. Any other pertinent information that the Commissioner may require.
C. The application shall be accompanied by payment of a nonrefundable application fee as prescribed by the Commission. The fee shall not be abated by surrender, suspension, or revocation of the license.
D. If the Commissioner requests information to complete a deficient application and the information is not received within 60 days of the Commissioner's request, the application shall be deemed abandoned unless a request for an extension of time is received and approved by the Commissioner prior to the expiration of the 60-day period. However, this subsection shall not be construed to prohibit the Commission from denying a license application that does not meet the requirements of this chapter.
The application for a license shall be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond, in the principal amount as determined by the Commissioner. The amount of the bond shall be not less than $50,000 nor more than $500,000. The form of such bond shall be approved by the Commissioner. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant or licensee performing all written agreements pertaining to qualified education loans, correctly and accurately accounting for all funds received by the applicant or licensee in connection with qualified education loans, and conducting its business in conformity with this chapter and all applicable laws. Any person who may be damaged by noncompliance of the applicant or licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.
§ 6.2-2604. Investigation of applications.
A. The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations.
2. The Registry, provided that it is capable of processing criminal history records checks.
C. If any member, senior officer, director, trustee, or principal of an applicant fails to cause his fingerprints, personal descriptive information, or records check fees to be submitted in accordance with subsection B, the application for a qualified education loan servicer license shall be denied.
3. The application does not omit any statement of a material fact that is required by § 6.2-2602.
B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.
§ 6.2-2606. Licenses; place of business; changes; renewal.
A. Each license shall state the address at which the principal place of business is to be conducted and shall state fully the legal name of the licensee as well as any fictitious names by which the licensee is conducting business under this chapter. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any names other than the legal name or fictitious names set forth on the license issued by the Commission.
B. Every licensee shall notify the Commissioner, in writing, at least 30 days prior to relocating its principal place of business and confirm the change in writing within five days after such relocation.
C. Every licensee shall within 10 days notify the Commissioner, in writing, of (i) any change to its legal name, (ii) any change to or additional fictitious name by which the licensee is conducting business under this chapter, and (iii) the name, address, and position of each new member, senior officer, director, trustee, and principal. At the direction of the Commissioner, any such individual shall be treated as a member, senior officer, director, trustee, or principal of an applicant for the purpose of being investigated pursuant to subsection B of § 6.2-2604. The licensee shall provide such other information with respect to the changes and persons identified in this subsection as the Commissioner may reasonably require.
D. Every license shall remain in force until it expires or has been surrendered, revoked, or suspended. The expiration, surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such licensee.
E. Notwithstanding any other provision of this chapter, a qualified education loan servicer license shall expire at the end of each calendar year unless it is renewed by a licensee prior to the expiration date. A licensee may renew its license by (i) requesting renewal through the Registry and (ii) complying with any requirements associated with such renewal request that are imposed by the Registry. If a qualified education loan servicer license has expired, the Commission may by regulation permit the former licensee to seek license reinstatement after the license expiration date by renewing its license in accordance with this subsection and paying a reinstatement fee as prescribed by the Commission.
§ 6.2-2607. Retention of records; responding to the Bureau.
A. Each licensee shall maintain in its principal place of business such books, accounts, and records as the Commissioner may reasonably require in order to determine whether such person is complying with the provisions of this chapter and other laws applicable to the conduct of its business. Such books, accounts, and records shall be maintained apart and separate from any other business in which the qualified education loan servicer is involved. Each licensee shall maintain adequate records of each qualified education loan transaction for at least three years after final payment is made on such loan or the assignment of such qualified education loan, whichever occurs first.
B. To safeguard the privacy of qualified education loan borrowers, records containing personal financial information shall be shredded, incinerated, or otherwise disposed of by a licensee in a secure manner. Licensees may arrange for the shredding, incineration, or other disposal of the records from a business record destruction vendor.
C. When the Bureau requests a written response, books, records, documentation, or other information from a licensee in connection with the Bureau's investigation, enforcement, or examination of compliance with applicable laws, the licensee shall deliver a written response as well as any requested books, records, documentation, or information within the time period specified in the Bureau's request. If no time period is specified, a written response as well as any requested books, records, documentation, or information shall be delivered by the licensee to the Bureau not later than 30 days from the date of such request. In determining the specified time period for responding to the Bureau and when considering a request for an extension of time to respond, the Bureau shall take into consideration the volume and complexity of the requested written response, books, records, documentation, or information and such other factors as the Bureau determines to be relevant under the circumstances.
§ 6.2-2608. Acquisition of control; application.
B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant and any proposed new directors, members, senior officers, trustees, and principals of the licensee have the financial responsibility, character, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.
C. The provisions of this section shall not apply to the acquisition of an interest in a licensee (i) directly or indirectly, including an acquisition by merger or consolidation, by or with a person licensed or exempt from licensing under this chapter; (ii) directly or indirectly, by merger or consolidation by or with a person affiliated through common ownership with the licensee; or (iii) by bequest, descent, survivorship, or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice of such acquisition to the Commissioner within 30 days of its closing.
§ 6.2-2609. Prohibited activities; compliance with federal laws and regulations.
9. Engage in any other prohibited activities identified in regulations adopted by the Commission pursuant to this chapter.
B. A qualified education loan servicer shall comply with all federal laws and regulations applicable to the conduct of its licensed business. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this chapter and a basis upon which the Commission may take enforcement action pursuant to § 6.2-2613, 6.2-2615, or 6.2-2616.
5. Such other events as the Commission may prescribe by regulation.
B. Each licensee shall file periodic written reports with the Commissioner or the Registry containing such information as the Commissioner may require concerning the licensee's business and operations. Reports shall be in the form and be submitted with such frequency and by such dates as may be prescribed by the Commissioner.
A. The Commission may, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any person licensed or required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of licensees shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, trustees, and employees of the person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.
B. Examinations under this section may be conducted in conjunction with examinations to be performed by representatives of agencies of the federal government or another state. In lieu of conducting an examination, the Commission may accept the examination report of the federal government or another state.
A. In order to defray the costs of their examination, supervision, and regulation, every licensee under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of such licensees, the actual costs of their examinations, and other factors relating to their supervision and regulation. All such fees shall be assessed on or before April 1 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before May 1 following each assessment.
B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee under this chapter at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement the actual travel and reasonable living expenses incurred on account of its examination, supervision, and regulation or shall pay a reasonable per diem rate approved by the Commission.
§ 6.2-2613. Suspension or revocation of license.
10. Failure to comply with any order of the Commission.
B. For the purposes of this section, acts of any officer, director, member, partner, trustee, or principal shall be deemed acts of the licensee.
§ 6.2-2614. Notice of proposed suspension or revocation.
The Commission shall not revoke or suspend the license of any licensee upon any of the grounds set forth in § 6.2-2613 until it has given the licensee (i) 21 days' notice in writing of the reasons for the proposed revocation or suspension and (ii) an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of such licensee and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the licensee named therein may file with the Clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules.
§ 6.2-2615. Cease and desist orders.
A. If the Commission determines that any person has violated any provision of this chapter or any regulation adopted by the Commission pursuant thereto, or violated any other law or regulation applicable to the conduct of a licensee's business, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter and other applicable laws and regulations. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action.
B. Within 14 days of mailing the notice, the person named therein may file with the Clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at the hearing. The hearing shall be conducted in accordance with the Commission's Rules. The Commission may enforce compliance with any order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.
The Commission may impose a civil penalty not exceeding $2,500 upon any person who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or regulations adopted by the Commission pursuant thereto or violated any other law or regulation applicable to conduct of the person's business. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed, and each day that an unlicensed person engages in the business of a qualified education loan servicer shall constitute a separate violation.
The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.
2. That the provisions of the first enactment of this act shall become effective on July 1, 2019.
3. That the State Corporation Commission (Commission) shall provide a report to members of the House and Senate Committees on Commerce and Labor, the House Committee on Education, and the Senate Committee on Education and Health on or before November 1, 2020, that contains the following: (i) the number of licenses issued under Chapter 26 (§ 6.2-2600 et seq.) of Title 6.2 of the Code of Virginia as created by this act (the Chapter); (ii) the number of applications for a license under the Chapter that have been denied and the reasons for such denials; (iii) the number of licensees under the Chapter that filed a written report with the Commission pursuant to subsection A of § 6.2-2610 of the Chapter, and for which any of the events enumerated in subdivisions A 1 through 5 of § 6.2-2610 of the Chapter the written report was filed; (iv) the number and nature of complaints received under the Chapter; and (v) the number of investigations and examinations resulting from such complaints and the disposition of such investigations and examinations.
4. That on or before March 1, 2019, the State Corporation Commission shall begin accepting applications for licenses to be issued pursuant to Chapter 26 (§ 6.2-2600 et seq.) of Title 6.2 of the Code of Virginia as created by this act when such chapter becomes effective. Applications filed with the Commission may be investigated prior to July 1, 2019, in accordance with § 6.2-2604 of the Code of Virginia as created by this act.
5. That nothing in this act shall prohibit any person from servicing an outstanding qualified education loan that the person became responsible for servicing prior to July 1, 2019.
SENATE BILL NO. 362 Offered January 10, 2018 Prefiled January 9, 2018 A BILL to amend and reenact § 19.2-389 of the Code of Virginia and to amend the Code of Virginia by adding in Title 6.2 a chapter numbered 26, consisting of sections numbered 6.2-2600 through 6.2-2617, relating to qualified education loans; licensing of qualified education loan servicers; civil penalties.
"Licensee" means a qualified education loan servicer licensed under this chapter.
"Nationwide Mortgage Licensing System and Registry" or "Registry" means the mortgage licensing and registration system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.
"Qualified education loan" means any loan primarily for personal use to finance education or other school-related expenses.
"Qualified education loan borrower" means (i) any resident of the Commonwealth who has received or agreed to pay a qualified education loan or (ii) any person who shares responsibility with such resident for repaying the qualified education loan.
"Qualified education loan servicer" or "loan servicer" means any person, wherever located, responsible for the servicing of any qualified education loan to any qualified education loan borrower.
§ 6.2-2601. License required to act as qualified education loan servicer.
A. No person shall act as a qualified education loan servicer, directly or indirectly, without first obtaining a license from the Commission under § 6.2-2602, unless such person is exempt from licensure pursuant to subsection B.
2. Any public or private nonprofit institution of higher education.
§ 6.2-2602. Licensing procedures; applications; renewals.
4. A nonrefundable investigation fee in an amount prescribed by the Commission by rule or order.
The license fee and the investigation fee shall be set by the Commission at a reasonable amount based on the actual costs incurred by the Commission.
B. In connection with an application for licensing as a qualified education loan servicer, the applicant shall furnish to the Commission information concerning the applicant's identity, including fingerprints for submission to the Federal Bureau of Investigation or any federal or state governmental agency or entity authorized to receive such information for a state, national, and international criminal history records check, as prescribed by the Commission. The applicant shall also submit personal history and experience in a form prescribed by the Commission, including submission of authorization for the Commission to obtain (i) an independent credit report from a consumer reporting agency described in § 603(p) of the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) and (ii) information related to any administrative, civil, or criminal findings by any governmental jurisdiction.
6. The applicant has met any other requirements under this chapter as determined by the Commissioner.
D. If the Commissioner fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.
E. A license issued pursuant to this section shall expire at the close of business on September 30 of the second year following its issuance, unless renewed or earlier surrendered, suspended, or revoked pursuant to this chapter. Not later than 15 days after a licensee ceases to engage in the business of qualified education loan servicing in the Commonwealth for any reason, including a business decision to terminate operations in the Commonwealth, license revocation, bankruptcy, or voluntary dissolution, the licensee shall provide written notice of surrender to the Commissioner and shall surrender to the Commissioner its license for each location in which the licensee has ceased to engage in such business. The written notice of surrender shall identify the location where the records of the licensee will be stored and the name, address, and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the Commission to revoke or suspend a license, assess a civil penalty, order restitution, or exercise any other authority provided to the Commission.
F. A license may be renewed for the ensuing 24-month period upon the filing of an application containing all required documents and fees as provided in this section. Such renewal application shall be filed on or before September 1 of the year in which the license expires. Any renewal application filed with the Commissioner after September 1 shall be accompanied by a $100 late fee, and any such filing shall be deemed to be timely and sufficient. If an application for a renewal license has been filed with the Commissioner on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the issuance by the Commissioner of the renewal license applied for or until the Commissioner has notified the licensee in writing of the Commissioner's refusal to issue such renewal license together with the grounds upon which such refusal is based. The Commissioner may refuse to issue a renewal license on any ground on which the Commission may refuse to issue an initial license.
G. If the Commissioner determines that a check filed to pay a license or renewal fee has been dishonored, the Commissioner shall automatically suspend the license or the renewal license that has been issued but is not yet effective. The Commissioner shall give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on such actions in accordance with the Commission's Rules.
H. The applicant or licensee shall notify the Commissioner in writing of any change in the information provided in its initial application for a license or its most recent renewal application for such license, as applicable, not later than 10 business days after the occurrence of the event that results in such information becoming inaccurate.
I. The Commissioner may deem an application for a license abandoned if the applicant fails to respond to any request for information required under this chapter. The Commissioner shall notify the applicant, in writing, that if the applicant fails to submit such information not later than 60 days after the date on which such request for information was made, the application shall be deemed abandoned. An application filing fee paid prior to the date on which an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a license under the provisions of this chapter.
The application for a license shall also be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $50,000 per location, not to exceed a total of $500,000. The form of such bond shall be approved by the Commission. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by him in his licensed business, and conducting its licensed business in conformity with this chapter and all applicable laws. Any person who may be damaged by noncompliance of the licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.
§ 6.2-2604. Place of business.
No person licensed as a qualified education loan servicer shall service qualified education loans under any other name or at any other place of business than that named in the license. Any change of location of a place of business of a licensee shall require prior written notice to the Commissioner. Not more than one place of business shall be maintained under the same license, but the Commissioner may issue more than one license to the same licensee upon compliance with the provisions of this chapter as to each new license. No licensee shall open an additional office without prior approval of the Commissioner. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee. The application shall be approved unless the Commissioner finds that the applicant has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application for approval shall be deemed approved if notice to the contrary has not been mailed by the Commissioner to the applicant within 30 days of the date the application is received by the Commissioner. A license shall not be transferable or assignable.
A. Each licensee shall maintain adequate records of each qualified education loan transaction for not less than three years following the final payment on such qualified education loan or the assignment of such qualified education loan, whichever occurs first, or such longer period as may be required by any other provision of law.
B. If requested by the Commissioner, each licensee shall make such records available or send such records to the Commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than five business days after requested by the Commissioner to do so. Upon request, the Commissioner may grant a licensee additional time to make such records available or send the records to the Commissioner.
§ 6.2-2606. Acquisition of control; application.
B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, and its directors, senior officers, trustees, and principals and any proposed new directors, members, senior officers, trustees, and principals have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.
C. The provisions of this section shall not apply to the acquisition of an interest in a licensee (i) directly or indirectly, including an acquisition by merger or consolidation by or with a person licensed under this chapter; (ii) directly or indirectly, by merger or consolidation by or with a person affiliated through common ownership with the licensee; or (iii) by bequest, descent, survivorship, or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.
9. Engage in any other prohibited activities identified in the regulations adopted by the Commission pursuant to this chapter.
B. A qualified education loan servicer shall comply with all federal laws and regulations applicable to the conduct of its license business. In addition to any other remedies proved by law, a violation of any such federal law or regulation shall be deemed a violation of this chapter and a basis upon which the Commission may take enforcement action pursuant to § 6.2-2611, 6.2-2613, or 6.2-2615.
§ 6.2-2608. Other reporting requirements.
5. Such other event as the Commission may prescribe by regulation.
A. The Commission may, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any loan servicer required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of such loan servicers shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, and employees of the loan servicer being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.
B. For the purposes of investigating violations or complaints arising under this chapter or for the purposes of examination, the Commissioner may review, investigate, or examine any qualified education loan servicer licensee or person subject to the requirements of this chapter as often as necessary in order to carry out the purposes of this chapter. The Commissioner may direct, subpoena, or order the attendance of and examine under oath all persons whose testimony may be required about the qualified education loan or the business or subject matter of any such examination or investigation and may direct, subpoena, or order such person to produce books, accounts, records, files, and any other documents the Commissioner deems relevant to the inquiry.
5. Accept audit reports made by an independent certified public accountant for the qualified education loan servicer licensee or person subject to this chapter in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation, or other writing of the Commissioner.
D. The authority of this section shall remain in effect, whether such qualified education loan servicer licensee or person subject to this chapter acts or claims to act under any licensing or registration law of the Commonwealth or claims to act without such authority.
E. No qualified education loan servicer licensee or person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.
A. In order to defray the costs of its examination, supervision, and regulation, every licensee under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of such licensees, the actual costs of their examinations, and other factors relating to their supervision and regulation. All such fees shall be assessed on or before September 15 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before October 15 following each assessment.
§ 6.2-2611. Suspension, revocation, or refusal to renew license.
B. For the purposes of this section, acts of any officer, director, member, partner, or principal shall be deemed acts of the qualified education loan servicer.
C. No abatement of the license fee shall be made if a license issued under this chapter is surrendered, revoked, or suspended prior to the expiration of the period for which it was issued.
§ 6.2-2612. Notice of proposed suspension or revocation.
The Commission shall not revoke or suspend the license of any licensee upon any of the grounds set forth in § 6.2-2611 until it has given the qualified education loan servicer (i) 21 days' notice in writing of the reasons for the proposed revocation or suspension and (ii) an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of such licensee and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the licensee named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except on the basis of findings made at such hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1.
§ 6.2-2613. Cease and desist orders.
A. If the Commission determines that any qualified education loan servicer required to be licensed under this chapter has violated any provision of this chapter or any regulation adopted pursuant thereto, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of the qualified education loan servicer and shall state the grounds for the contemplated action.
B. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except on the basis of findings made at the hearing. The hearing shall be conducted in accordance with the provisions of Title 12.1. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such fines and penalties as may be prescribed by Commission regulations.
§ 6.2-2614. Compliance with federal laws.
A qualified education loan servicer shall comply with all applicable federal laws and regulations relating to qualified education loan servicing, including, but not limited to, the Truth in Lending Act, 15 U.S.C. § 1601 et seq., as amended, and regulations promulgated thereunder. In addition to any other remedies provided by law, a violation of any such federal law or regulation shall be deemed a violation of this chapter and a basis upon which the Commissioner may take enforcement action pursuant to § 6.2-2611, 6.2-2613, or 6.2-2615.
The Commission may impose a civil penalty not exceeding $2,500 upon any person required to be licensed under this chapter who the Commission determines, in proceedings commenced in accordance with the Commission's Rules, has violated any of the provisions of this chapter or any other law or regulation applicable to the licensee's activities. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed, and each day that an unlicensed person engages in the business of a qualified education loan servicer shall constitute a separate violation.
§ 6.2-2616. Nationwide Mortgage Licensing System and Registry.
A. Any person required to be licensed as a qualified education loan servicer pursuant to this chapter shall also be required to register with the Nationwide Mortgage Licensing System and Registry as a condition for obtaining a license. Such person shall be subject to such registration and renewal requirements as may be established by the Registry, in addition to the requirements of this chapter. Regulations adopted by the Commission pursuant to § 6.2-2617 shall include any terms, conditions, or requirements applicable to such registration and renewal. Any fees required by the Registry shall be separate and apart from any fees imposed by this chapter.
B. The Commission may include in its regulations adopted pursuant to § 6.2-2617 authorization for the Registry to collect any fees imposed by this chapter and to remit such fees to the Commission.
2. That the provisions of the first enactment of this act shall become effective on January 1, 2019.
3. That beginning October 1, 2018, the State Corporation Commission shall begin accepting applications for licenses to be issued pursuant to Chapter 26 (§ 6.2-2600 et seq.) of Title 6.2 of the Code of Virginia, as created by this act, on and after January 1, 2019, provided that the application process shall be consistent with the provisions of § 6.2-2602 of the Code of Virginia, as created by this act. Upon the filing of such an application prior to January 1, 2019, the Commissioner of Financial Institutions shall be authorized prior to such date to commence making such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations, provided that such investigations are conducted in a manner consistent with the provisions of § 6.2-2602 of the Code of Virginia, as created by this act.
4. That the State Corporation Commission (the Commission) shall provide a report to members of the House and Senate Committees on Commerce and Labor, the House Committee on Education, and the Senate Committee on Education and Health on or before November 1, 2020, that provides data on (i) the volume and severity of complaints involving qualified education loans that are investigated by the Commission; (ii) the number of licenses issued under Chapter 26 (§ 6.2-2600 et seq.) of Title 6.2 of the Code of Virginia, as created by this act (the Chapter), the number of applications for a license under the Chapter that have been denied, and the reasons for such denials; (iii) the number of licensees under the Chapter that filed a written report with the Commission pursuant to § 6.2-2608 of the Chapter, and for which of the events enumerated in subdivisions 1 through 5 of § 6.2-2608 of the Chapter the written report was filed; (iv) the number and nature of complaints received under the Chapter from qualified education loan borrowers regarding matters within the scope of the Chapter; and (v) the number of investigations and examinations resulting from such complaints and violations of the Chapter and the disposition of such investigations and examinations.
For a plain English description of this bill, comments, voting, tagging, etc., return to the main page for SB362.

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