SB691: Bill Text

SB691,7,13 (2) Annually, an exempt organization that is involved in the resolution of a complaint under this section shall report to the office the number of complaints received and the number of complaints resolved by the exempt organization.

SB691,7,17 224.105 Licensing of student loan servicers. (1) A person, wherever located, may not directly or indirectly engage in servicing student education loans in this state without first obtaining a license from the office under this section, unless the person is exempt from licensure under sub. (2).

SB691,7,19 (2) The following persons are exempt from the licensing requirement under sub. (1):

SB691,7,20 (a) A state-regulated financial service provider.

SB691,7,21 (b) The board.

SB691,7,24 (3) A person seeking to act within this state as a student loan servicer shall make a written application to the office for an initial license in the form prescribed by the office. The application shall be accompanied by all of the following:

SB691,8,4 (a) A financial statement prepared by a certified public accountant or a public accountant, a general partner if the applicant is a partnership, a corporate officer if the applicant is a corporation, or a member duly authorized to execute such documents if the applicant is a limited liability company or association.

SB691,8,7 (b) Information regarding the history of criminal convictions of the following, which information must be sufficient, as determined by the office, to make the findings under sub. (4):

SB691,8,8 1. The applicant.

SB691,8,9 2. Officers, directors, and principal employees of the applicant.

SB691,8,11 3. Each individual shareholder, member, or partner who directly or indirectly controls 10 percent or more of the ownership interests of the applicant.

SB691,8,12 (c) A nonrefundable license fee of $1,000.

SB691,8,13 (d) A nonrefundable investigation fee of $800.

SB691,8,20 (4) Upon the filing of an application for an initial license and the payment of the fees for licensing and investigation under sub. (3), the office shall investigate the financial condition and responsibility, financial and business experience, character, and general fitness of the applicant. The office may conduct criminal history background checks of the applicant and of each partner, member, officer, director, and principal employee of the applicant. The office may issue a license if the office finds all of the following to be true:

SB691,8,21 (a) The applicant's financial condition is sound.

SB691,8,24 (b) The applicant's business will be conducted honestly, fairly, equitably, carefully, and efficiently within the purposes and intent of this subchapter and in a manner commanding the confidence and trust of the community.

SB691,9,3 (c) No person on behalf of the applicant has knowingly made an incorrect statement of a material fact in the application or in any report or statement made under this subchapter.

SB691,9,4 (d) The applicant has met any other requirements as determined by the office.

SB691,9,18 (5) A license issued under this section expires at the close of business on September 30 of the odd-numbered year following its issuance, unless renewed or earlier surrendered, suspended, or revoked. No later than 15 days after a licensee ceases to engage in the business of student education loan servicing in this state for any reason, including a business decision to terminate operations in this state, license revocation, bankruptcy, or voluntary dissolution, the licensee shall provide written notice of surrender to the office and shall surrender to the office 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 office.

SB691,9,25 (6) A license issued under this section 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. A renewal application shall be filed on or before September 1 of the year in which the license expires. A renewal application filed with the office after September 1 that is accompanied by a $100 late fee is considered to be timely and sufficient. If an application for a renewal license has been filed with the office on or before the date the license expires, the license continues in effect until the issuance by the office of the renewal license applied for or until the office has notified the licensee in writing of the office's refusal to issue the renewal license together with the grounds on which the refusal is based. The office may refuse to issue a renewal license on any ground on which the office may refuse to issue an initial license.

SB691,10,9 (7) An applicant or licensee under this section shall notify the office, in writing, of any change in the information provided in the initial application for a license or the most recent renewal application for a license, as applicable, not later than 10 business days after the occurrence of the event that results in the change.

SB691,10,18 (8) The office may consider an application for a license under this section abandoned if the applicant fails to respond to any request for information required under this subchapter or any rule promulgated under this subchapter, as long as the office notifies the applicant, in writing, that the application will be considered abandoned if the applicant fails to submit the information within 60 days after the date on which the request for information is made. An application filing fee paid prior to the date an application is abandoned under this subsection may not be refunded. Abandonment of an application under this subsection does not preclude the applicant from submitting a new application for a license under this section.

SB691,10,25 (9) A licensee may not act within this state as a student loan servicer under any name or at any place of business other than that identified in the license. A licensee may not change the location of the licensee's place of business without prior written notice to the office. Not more than one place of business may be maintained under the same license, but the office may issue more than one license to a licensee that complies with the provisions of this subchapter as to each license. A license is not transferable or assignable.

SB691,11,7 (10) (a) A student loan servicer shall maintain adequate records of each student education loan transaction. Except as otherwise required by federal law, a federal student loan education agreement, or a contract between the federal government and the student loan servicer, a student loan servicer shall maintain these records for not less than 2 years following the final payment on the student education loan or the assignment of the student education loan, whichever occurs first.

SB691,11,13 (b) Upon request by the office, a student loan servicer shall make the records under par. (a) available or shall send these records to the office by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, not later than 5 business days after requested by the office to do so. The office may grant a licensee additional time to make these records available or to send the records to the office.

SB691,11,15 (11) (a) The office may suspend, revoke, or refuse to renew a license issued under this section if the office finds any of the following:

SB691,11,17 1. That the licensee has violated any provision of this subchapter, any rule promulgated thereunder, or any lawful order of the office made thereunder.

SB691,11,20 2. That any fact or condition exists that, if it had existed at the time of the original application for the license, clearly would have warranted a denial of the license.

SB691,11,22 3. That the licensee made a material misstatement in an application for a license or in information furnished to the office.

SB691,11,23 4. That the licensee has failed to pay any fee required under this section.

SB691,12,9 (b) The office shall suspend a license issued under this section if the office finds that the licensee is an individual who fails to comply, after appropriate notice, with a subpoena or warrant issued by the department of workforce development or a county child support agency under s. 59.53 (5) and related to paternity or child support proceedings or who is delinquent in making court-ordered payments of child or family support, maintenance, birth expenses, medical expenses, or other expenses related to the support of a child or former spouse, as provided in a memorandum of understanding entered into under s. 49.857. A licensee whose license is suspended under this paragraph is entitled to a notice and hearing only as provided in a memorandum of understanding entered into under s. 49.857 and is not entitled to any other notice or hearing under this section.

SB691,12,14 (c) The office shall revoke a license issued under this section if the department of revenue certifies under s. 73.0301 that the licensee is liable for delinquent taxes. A licensee whose license is revoked under this paragraph for delinquent taxes is entitled to a notice under s. 73.0301 (2) (b) 1. b. and a hearing under s. 73.0301 (5) (a) but is not entitled to any other notice or hearing under this section.

SB691,12,20 (d) The office shall revoke a license issued under this section if the department of workforce development certifies under s. 108.227 that the licensee is liable for delinquent unemployment insurance contributions. A licensee whose license is revoked under this paragraph for delinquent unemployment insurance contributions is entitled to a notice under s. 108.227 (2) (b) 1. b. and a hearing under s. 108.227 (5) (a) but is not entitled to any other notice or hearing under this section.

SB691,12,25 (e) A person whose license has been suspended, revoked, or refused renewal under this subsection may request a hearing under s. 227.44 within 30 days after the date of suspension, revocation, or refusal. The office may appoint a hearing examiner under s. 227.46 to conduct the hearing. This paragraph does not apply to a suspension or revocation under pars. (b) to (d).

SB691,13,3 (f) An abatement of the license fee may not be made if the license is suspended or revoked under this subsection or surrendered in connection with a suspension or revocation proceeding.

SB691,13,5 (12) All fees received by the office under this section shall be credited to the appropriation account under s. 20.144 (1) (g).

SB691,13,8 224.106 Student loan servicers. (1) In this section, “nonconforming payment" means a payment on a student education loan that is different from the required payment.

SB691,13,12 (2) (a) Except as otherwise provided in federal law, a federal student education loan agreement, or a contract between the federal government and a student loan servicer, a student loan servicer shall comply with the requirements of this subsection.

SB691,13,15 (b) A student loan servicer shall respond to a written inquiry from a student loan borrower or the representative of a student loan borrower within 30 days after receiving the inquiry.

SB691,13,17 (c) Upon receipt of a nonconforming payment on a student education loan, a student loan servicer shall do all of the following:

SB691,13,19 1. Ask the student loan borrower how the student loan borrower prefers the student loan servicer to apply the nonconforming payment.

SB691,13,21 2. Note how the student loan borrower prefers the student loan servicer to apply the nonconforming payment.

SB691,13,23 3. Apply the nonconforming payment in the manner preferred by the student loan borrower.

SB691,14,3 4. Until the student loan borrower indicates otherwise, apply any future nonconforming payments in the same manner preferred by the student loan borrower as noted under subd. 2.

SB691,14,7 (d) If there is a sale, assignment, or other transfer of the servicing of a student education loan that results in a change in the identity of the person to whom a student loan borrower is required to send payments or direct any communication concerning the student education loan, all of the following apply:

SB691,14,12 1. As a condition of the sale, assignment, or transfer, the student loan servicer shall require the new student loan servicer to honor all benefits originally represented as available to the student loan borrower during the repayment of the student education loan and preserve the availability of these benefits, including any benefits for which the student loan borrower has not yet qualified.

SB691,14,17 2. Within 45 days after the sale, assignment, or transfer, the student loan servicer shall transfer to the new student loan servicer all information regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan.

SB691,14,20 3. The sale, assignment, or transfer of the servicing of the student education loan shall be completed at least 7 days before the next payment on the student education loan is due.

SB691,15,2 (e) A student loan servicer that obtains the right to service a student education loan shall adopt policies and procedures to verify that the student loan servicer has received all information regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan.

SB691,15,3 (3) A student loan servicer may not do any of the following:

SB691,15,5 (a) Directly or indirectly employ a scheme, device, or artifice to defraud or mislead any student loan borrower.

SB691,15,11 (b) Engage in an unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan, including misrepresenting the amount, nature, or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement, or the student loan borrower's obligations under the loan.

SB691,15,12 (c) Obtain property by fraud or misrepresentation.

SB691,15,14 (d) Misapply student education loan payments to the outstanding balance of a student education loan.

SB691,15,16 (e) Provide inaccurate information to a credit bureau, thereby harming the determination of a student loan borrower's creditworthiness.

SB691,15,20 (f) Fail to report both the favorable and unfavorable payment history of a student loan borrower to a nationally recognized consumer credit bureau at least annually if the student loan servicer regularly reports information to such a credit bureau.

SB691,15,25 (g) Refuse to communicate with an authorized representative of a student loan borrower who provides a written authorization signed by the student loan borrower, except that the student loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student loan borrower.

SB691,16,3 (h) Make any false statement or omit a material fact in connection with information or reports filed with a governmental agency or in connection with an investigation conducted by the office or another governmental agency.

SB691,16,6 (i) Fail to evaluate a student loan borrower for an income-based repayment program prior to placing the student loan borrower in forbearance or default, if an income-based repayment program is available to the student loan borrower.

SB691,16,9 (j) Violate any applicable federal law or regulation relating to student education loan servicing, including the federal Truth in Lending Act, 15 USC 1601 to 1667f, and regulations adopted under that act.

SB691,16,12 (4) (a) A student loan borrower injured by violation of this section may bring an action in any court of competent jurisdiction and recover the damages, fees, and penalties set forth in par. (b).

SB691,16,15 (b) A student loan servicer that fails to comply with any requirement imposed under this section with respect to a student loan borrower is liable in an amount equal to the sum of all of the following:

SB691,16,17 1. Any actual damages sustained by the student loan borrower as result of the violation.

SB691,16,20 2. If the student loan borrower establishes by a preponderance of the evidence that the violation was willful or intentional, a monetary award equal to 2 times the amount of actual damages.

SB691,16,23 3. In the case of any successful action by the student loan borrower to enforce the liability set out in this paragraph, the costs of the action, together with reasonable attorney fees, as determined by the court.

SB691,17,3 (c) For purposes of par. (b), actual damages includes damages caused by emotional distress or mental anguish with or without accompanying physical injury proximately caused by a violation of this section.

SB691,17,5 (d) The remedies provided in this subsection do not preclude the availability of other remedies that may be available to a student loan borrower.

SB691,17,7 224.107 Office powers and duties. (1) The office may conduct investigations and examinations as follows:

SB691,17,12 (a) For purposes of initial licensing, renewal, suspension, or revocation or of investigation to determine compliance with this subchapter, the office may access, receive, and use any books, accounts, records, files, documents, information, or evidence belonging to a licensee or person under examination, including any of the following:

SB691,17,13 1. Criminal, civil, and administrative history information.

SB691,17,15 2. Personal history and experience information, including independent credit reports obtained from a consumer reporting agency, as defined in 15 USC 1681a.

SB691,17,18 3. Any other documents, information, or evidence the office considers relevant to the inquiry or investigation regardless of the location, possession, control, or custody of the documents, information, or evidence.

SB691,18,2 (b) For the purposes of investigating violations or complaints arising under this subchapter or of examination, the office may review, investigate, or examine any licensee or person subject to this subchapter as often as necessary in order to carry out the purposes of this subchapter. The office may direct, subpoena, or order the attendance of and examine under oath any person whose testimony may be required about the student education loan or the business or subject matter of the examination or investigation and may direct, subpoena, or order the person to produce books, accounts, records, files, and any other documents the office considers relevant to the inquiry.

SB691,18,14 (c) In making an examination or investigation authorized by this section, the office may control access to any documents and records of the licensee or person under examination or investigation. The office may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where they are usually kept. During the period of control, a person may not remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the office. Unless the office has reasonable grounds to believe the documents or records of the licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of this subchapter, the licensee or owner of the documents and records may have access to the documents or records as necessary to conduct its ordinary business affairs.

SB691,18,16 (d) In order to carry out the purposes of this section, the office may do any of the following:

SB691,18,19 1. Retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the conduct of examinations or investigations.

SB691,18,23 2. Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures, and documents, records, information, or evidence obtained under this section.

SB691,19,3 3. Use, hire, contract for, or employ public or privately available analytical systems, methods, or software to examine or investigate the licensee or person subject to this subchapter.

SB691,19,5 4. Accept and rely on examination or investigation reports made by other government officials, within or outside this state.

SB691,19,10 5. Accept audit reports made by an independent certified public accountant for the licensee or person subject to this subchapter 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 a report of examination, report of investigation, or other writing of the office.

SB691,19,14 (e) A licensee or person subject to investigation or examination under this section may not knowingly withhold, abstract, remove, mutilate, or destroy any books, physical records, computer records, or other information relating to information regulated under this subchapter.

SB691,19,17 (f) The costs of an investigation conducted by the office shall be paid by the licensee or person being investigated. Funds received by the office under this paragraph shall be credited to the appropriation account under s. 20.144 (1) (g).

SB691,19,20 (2) The office may do any of the following to address a violation of this subchapter, any rule promulgated under this subchapter, or any order issued under this subchapter:

SB691,20,2 (a) Issue an order requiring a student loan servicer to cease and desist from a violation, to correct the conditions resulting from the violation, and to take actions to prevent such violations in the future. As part of the order, the office may require the student loan servicer to reimburse persons injured by the violation. A student loan servicer that violates an order issued under this paragraph shall, for each violation, forfeit not more than $1,000 per day for each day the violation continues.

SB691,20,7 (b) Commence administrative proceedings on its own initiative, or commence civil actions through the department of justice, to restrain by temporary or permanent injunction a person from violating this subchapter, to recover any fees or penalties owed under this subchapter, or to seek relief available under this subchapter on behalf of student loan borrowers.

SB691,20,9 (c) Suspend, revoke, or refuse to renew a license issued under s. 224.105 as provided in s. 224.105 (11).

SB691,20,10 (3) The office may promulgate rules to implement this subchapter.

SB691,5 Section 5 . Nonstatutory provisions.

SB691,20,16 (1) (a) No later than the 90th day after the effective date of this paragraph, the department of financial institutions shall determine whether it can fully implement the provisions created in this act as subch. V of ch. 224 by the 90th day after the effective date of this paragraph, and shall provide notice of this determination to the legislative reference bureau by that date.