Bill Text: NY A02071 | 2019-2020 | General Assembly | Amended


Bill Title: Relates to student loan servicers.

Spectrum: Moderate Partisan Bill (Democrat 35-4)

Status: (Introduced) 2019-03-19 - reported referred to codes [A02071 Detail]

Download: New_York-2019-A02071-Amended.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                         2071--C
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 22, 2019
                                       ___________
        Introduced by M. of A. ZEBROWSKI, SEAWRIGHT, WALKER, ORTIZ, ENGLEBRIGHT,
          SIMON,  JAFFEE,  GOTTFRIED, COLTON, D'URSO, BLAKE, WRIGHT, DE LA ROSA,
          VANEL, FAHY,  PEOPLES-STOKES,  CUSICK,  L. ROSENTHAL,  GALEF,  MOSLEY,
          DINOWITZ, TAYLOR, SOLAGES, HYNDMAN, KIM, MONTESANO, DiPIETRO, EPSTEIN,
          D. ROSENTHAL  -- Multi-Sponsored by -- M. of A. BRAUNSTEIN, DenDEKKER,
          M. L. MILLER, THIELE -- read once and referred  to  the  Committee  on
          Banks  --  committee  discharged,  bill  amended, ordered reprinted as
          amended and recommitted to said committee -- again reported from  said
          committee  with amendments, ordered reprinted as amended and recommit-
          ted to said committee --  again  reported  from  said  committee  with
          amendments,  ordered  reprinted  as  amended  and  recommitted to said
          committee
        AN ACT to amend the banking law, in relation to student loan servicers
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1. The banking law is amended by adding a new article 14-A to
     2  read as follows:
     3                                ARTICLE 14-A
     4                           STUDENT LOAN SERVICERS
     5  Section 710. Definitions.
     6          711. Licensing.
     7          712. Application for a student loan servicer license; fees.
     8          713. Application process to receive license  to  engage  in  the
     9                 business of student loan servicing.
    10          714. Changes in officers and directors.
    11          715. Changes in control.
    12          716. Grounds for suspension or revocation of license.
    13          717. Books and records; reports and electronic filing.
    14          718. Rules and regulations.
    15          719. Prohibited practices.
    16          720. Servicing student loans without a license.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01465-06-9

        A. 2071--C                          2
     1          721. Responsibilities.
     2          722. Examinations.
     3          723. Penalties for violation of this article.
     4          724. Severability of provisions.
     5          725. Compliance with other laws.
     6    §  710. Definitions. 1. "Applicant" shall mean any person applying for
     7  a license under this article.
     8    2. "Borrower" shall mean any resident of this state who has received a
     9  student loan or agreed in writing to pay a student loan  or  any  person
    10  who  shares a legal obligation with such resident for repaying a student
    11  loan.
    12    3. "Borrower benefit" shall mean an incentive offered to a borrower in
    13  connection with the origination of a student  loan,  including  but  not
    14  limited  to  an interest rate reduction, principal rebate, fee waiver or
    15  rebate, loan cancellation, or cosigner release.
    16    4. "Exempt organization" shall mean any banking organization,  foreign
    17  banking corporation, national bank, federal savings association, federal
    18  credit union, or any bank, trust company, savings bank, savings and loan
    19  association,  or  credit  union  organized  under  the laws of any other
    20  state, or any person  licensed  or  supervised  by  the  department  and
    21  exempted  by  the  superintendent pursuant to regulations promulgated in
    22  accordance with this article.
    23    5. "Person"  shall  mean  any  individual,  association,  corporation,
    24  limited  liability company, partnership, trust, unincorporated organiza-
    25  tion, government, and any other entity.
    26    6. "Servicer" or "student loan servicer" shall mean a  person  engaged
    27  in the business of servicing student loans owed by one or more borrowers
    28  residing in this state.
    29    7. "Servicing" shall mean:
    30    (a) receiving any payment from a borrower pursuant to the terms of any
    31  student loan;
    32    (b)  applying  any  payment  to the borrower's account pursuant to the
    33  terms of a student loan or the contract governing the servicing  of  any
    34  such loans;
    35    (c) providing any notification of amounts owed on a student loan by or
    36  on account of any borrower;
    37    (d) during a period where a borrower is not required to make a payment
    38  on  a student loan, maintaining account records for the student loan and
    39  communicating with the borrower regarding the student loan on behalf  of
    40  the owner of the student loan promissory note;
    41    (e)  interacting  with  a  borrower  with  respect to or regarding any
    42  attempt to avoid default on the borrower's student loan, or facilitating
    43  the activities described in paragraph (a) or (b) of this subdivision; or
    44    (f) performing other administrative services with respect to a borrow-
    45  er's student loan.
    46    8. "Student loan" shall mean any loan to a borrower to finance postse-
    47  condary education or expenses related to postsecondary education.
    48    9. "Federal student loan" means (a) any student loan  issued  pursuant
    49  to the William D. Ford Federal Direct Loan Program; (b) any student loan
    50  issued  pursuant to the Federal Family Education Loan Program, which was
    51  purchased by the government of the United States pursuant to the federal
    52  Ensuring Continued Access to Student Loans Act and is presently owned by
    53  the government of the United States; and  (c)  any  other  student  loan
    54  issued  pursuant  to  a federal program that is identified by the super-
    55  intendent as a "federal student loan" in a regulation.

        A. 2071--C                          3
     1    § 711. Licensing. 1. Except as provided in subdivisions two and  three
     2  of  this  section,  no  person shall engage in the business of servicing
     3  student loans owed by one or more borrowers residing in this state with-
     4  out first being licensed by the superintendent as a student loan  servi-
     5  cer  in  accordance  with  this  article  and such regulations as may be
     6  prescribed by the superintendent.
     7    2. The licensing provisions of this article shall  not  apply  to  any
     8  exempt  organization that is a student loan servicer; provided that such
     9  exempt organization notifies the superintendent  that  it  is  servicing
    10  student  loans  in  this  state and complies with sections seven hundred
    11  seventeen, seven hundred nineteen, seven hundred twenty-one,  and  seven
    12  hundred  twenty-five  of  this  article and any regulation applicable to
    13  student loan servicers promulgated by the superintendent.
    14    3. A license is not required to engage in the  business  of  servicing
    15  federal student loans. A person, other than an exempt organization, that
    16  services federal student loans owed by one or more borrowers residing in
    17  this  state,  which is not otherwise required to be licensed pursuant to
    18  this section, shall notify  the  superintendent  that  it  is  servicing
    19  federal  student  loans  in  this  state  and comply with sections seven
    20  hundred seventeen, seven hundred  nineteen,  seven  hundred  twenty-one,
    21  seven  hundred  twenty-two, seven hundred twenty-three and seven hundred
    22  twenty-five of this article and any  regulation  applicable  to  student
    23  loan  servicers  promulgated  by  the  superintendent. The provisions of
    24  section thirty-three, thirty-nine, and forty-four of this chapter  shall
    25  apply  to  a  person  required  to  notify the superintendent under this
    26  subdivision, as though they were a licensed student loan servicer.  
    27    § 712. Application for a student loan servicer license; fees.  1.  The
    28  application for a license to engage in the business of servicing student
    29  loans shall be in writing, under oath, and in the form prescribed by the
    30  superintendent.  Notwithstanding  article  three of the state technology
    31  law or any other law to the contrary,  the  superintendent  may  require
    32  that an application for a license or any other submission or application
    33  for  approval  as may be required by this article be made or executed by
    34  electronic means if he or she deems it necessary to ensure the efficient
    35  and effective administration of  this  article.  The  application  shall
    36  include a description of the activities of the applicant, in such detail
    37  and for such periods as the superintendent may require; including:
    38    (a)  an  affirmation  of financial solvency noting such capitalization
    39  requirements as may be required by the  superintendent,  and  access  to
    40  such credit as may be required by the superintendent;
    41    (b)  a  financial statement prepared by a certified public accountant,
    42  the accuracy of which is sworn to under oath before a notary  public  by
    43  an officer or other representative of the applicant who is authorized to
    44  execute such documents;
    45    (c) an affirmation that the applicant, or its members, officers, part-
    46  ners, directors and principals as may be appropriate, are at least twen-
    47  ty-one years of age;
    48    (d)  information  as to the character, fitness, financial and business
    49  responsibility, background and experiences  of  the  applicant,  or  its
    50  members,  officers,  partners, directors and principals as may be appro-
    51  priate;
    52    (e) any additional detail or information required by  the  superinten-
    53  dent.
    54    2.  An  application  to become a licensed student loan servicer or any
    55  application with respect to a student  loan  servicer  shall  be  accom-

        A. 2071--C                          4
     1  plished  by  a  fee as prescribed pursuant to section eighteen-a of this
     2  chapter.
     3    §  713.  Application process to receive license to engage in the busi-
     4  ness of student loan servicing. 1. Upon the filing of an application for
     5  a license, if the superintendent shall find that the financial responsi-
     6  bility, experience, character, and general fitness of the applicant and,
     7  if applicable, the members, officers, partners, directors and principals
     8  of the applicant are such as to command the confidence of the  community
     9  and to warrant belief that the business will be operated honestly, fair-
    10  ly,  and efficiently within the purpose of this article, the superinten-
    11  dent shall thereupon issue a license in duplicate to engage in the busi-
    12  ness of servicing student loans described in section seven  hundred  ten
    13  of  this  article  in accordance with the provisions of this article. If
    14  the superintendent shall not so find, the superintendent shall not issue
    15  a license, and the superintendent shall so  notify  the  applicant.  The
    16  superintendent shall transmit one copy of a license to the applicant and
    17  file another in the office of the department of financial services. Upon
    18  receipt  of such license, a student loan servicer shall be authorized to
    19  engage in the business of servicing student loans in accordance with the
    20  provisions of this article. Such license shall remain in full force  and
    21  effect  until  it is surrendered by the servicer or revoked or suspended
    22  as hereinafter provided.
    23    2. The superintendent may refuse to issue a license pursuant  to  this
    24  article if he or she shall find that the applicant, or any person who is
    25  a  director,  officer,  partner, agent, employee, member, or substantial
    26  stockholder of the applicant:
    27    (a) has had a license or registration revoked by the superintendent or
    28  any other regulator or jurisdiction;
    29    (b) has been an officer,  director,  partner,  member  or  substantial
    30  stockholder of an entity which has had a license or registration revoked
    31  by the superintendent or any other regulator or jurisdiction; or
    32    (c)  has been an agent, employee, officer, director, partner or member
    33  of an entity which has had a license  or  registration  revoked  by  the
    34  superintendent  where  such  person  shall have been found by the super-
    35  intendent to bear responsibility in connection with the revocation.
    36    3. The term "substantial stockholder", as used in this section,  shall
    37  be  deemed  to refer to a person owning or controlling directly or indi-
    38  rectly ten per centum or more of the total outstanding stock of a corpo-
    39  ration.
    40    § 714. Changes in officers and directors. Upon any change  of  any  of
    41  the  executive  officers,  directors, partners or members of any student
    42  loan servicer required to be licensed under section seven hundred eleven
    43  of this article, the student loan servicer shall submit  to  the  super-
    44  intendent  the name, address, and occupation of each new officer, direc-
    45  tor, partner or member, and provide such other information as the super-
    46  intendent may require.
    47    § 715. Changes in control. 1. It shall be  unlawful  except  with  the
    48  prior  approval  of  the superintendent for any action to be taken which
    49  results in a change of control of the business of a student loan  servi-
    50  cer  required  to be licensed under section seven hundred eleven of this
    51  article. Prior to any change of control, the person desirous of  acquir-
    52  ing  control of the business of a student loan servicer shall make writ-
    53  ten application to the superintendent and pay an  investigation  fee  as
    54  prescribed  pursuant to section eighteen-a of this chapter to the super-
    55  intendent. The application shall contain such information as the  super-
    56  intendent,  by  rule or regulation, may prescribe as necessary or appro-

        A. 2071--C                          5
     1  priate  for  the  purpose  of  making  the  determination  required   by
     2  subdivision  two of this section. This information shall include but not
     3  be limited to the information and other material required for a  student
     4  loan servicer by subdivision one of section seven hundred twelve of this
     5  article.
     6    2.  The superintendent shall approve or disapprove the proposed change
     7  of control of a student loan servicer  required  to  be  licensed  under
     8  section  seven  hundred  eleven  of  this article in accordance with the
     9  provisions of section seven hundred thirteen of this article.
    10    3. For a period of six months from the date of  qualification  thereof
    11  and  for  such  additional  period  of  time  as  the superintendent may
    12  prescribe, in writing, the provisions of subdivisions  one  and  two  of
    13  this  section  shall  not apply to a transfer of control by operation of
    14  law to the legal representative, as hereinafter defined, of one who  has
    15  control  of  a  student  loan servicer. Thereafter, such legal represen-
    16  tative shall comply with the provisions of subdivisions one and  two  of
    17  this section. The provisions of subdivisions one and two of this section
    18  shall be applicable to an application made under such section by a legal
    19  representative.  The  term  "legal  representative", for the purposes of
    20  this subdivision, shall mean one duly appointed by a court of  competent
    21  jurisdiction  to  act  as  executor,  administrator, trustee, committee,
    22  conservator or receiver, including one who succeeds  a  legal  represen-
    23  tative  and  one  acting  in an ancillary capacity thereto in accordance
    24  with the provisions of such court appointment.
    25    4. As used in this section the term "control"  means  the  possession,
    26  directly or indirectly, of the power to direct or cause the direction of
    27  the  management and policies of a student loan servicer, whether through
    28  the ownership of voting stock of such student loan servicer, the  owner-
    29  ship  of voting stock of any person which possesses such power or other-
    30  wise. Control shall be presumed to exist  if  any  person,  directly  or
    31  indirectly, owns, controls or holds with power to vote ten per centum or
    32  more  of  the voting stock of any student loan servicer or of any person
    33  which owns, controls or holds with power to vote ten per centum or  more
    34  of the voting stock of any student loan servicer, but no person shall be
    35  deemed  to  control a student loan servicer solely by reason of being an
    36  officer or director of such student loan  servicer.  The  superintendent
    37  may  in  his  or  her discretion, upon the application of a student loan
    38  servicer or any person who, directly or indirectly,  owns,  controls  or
    39  holds  with power to vote or seeks to own, control or hold with power to
    40  vote any voting stock of such student loan servicer,  determine  whether
    41  or  not  the  ownership, control or holding of such voting stock consti-
    42  tutes or would constitute control of  such  student  loan  servicer  for
    43  purposes of this section.
    44    §  716.  Grounds  for  suspension  or  revocation of license. 1. After
    45  notice and hearing, the superintendent may revoke or suspend any license
    46  to engage in the business of a student loan servicer issued pursuant  to
    47  this article if he or she shall find that:
    48    (a) a servicer has violated any provision of this article, any rule or
    49  regulation  promulgated  by  the  superintendent  under  and  within the
    50  authority of this article, or any other applicable law;
    51    (b) any fact or condition exists which, if it had existed at the  time
    52  of  the  original application for such license, would have warranted the
    53  superintendent refusing originally to issue such license;
    54    (c) a servicer does not cooperate with an examination or investigation
    55  by the superintendent;

        A. 2071--C                          6
     1    (d) a servicer engages in  fraud,  intentional  misrepresentation,  or
     2  gross negligence in servicing a student loan;
     3    (e)  the  competence, experience, character, or general fitness of the
     4  servicer, an individual controlling, directly or indirectly, ten percent
     5  or more of the outstanding interests,  or  any  person  responsible  for
     6  servicing  a  student  loan for the servicer indicates that it is not in
     7  the public interest to permit the servicer to continue servicing student
     8  loans;
     9    (f) the servicer engages in an unsafe or unsound practice;
    10    (g) the servicer is insolvent, suspends payment of its obligations, or
    11  makes a general assignment for the benefit of its creditors; or
    12    (h) a servicer has violated the laws of this state, any other state or
    13  any federal law involving fraudulent or dishonest dealing,  or  a  final
    14  judgement  has  been  entered against a student loan servicer in a civil
    15  action upon grounds of fraud, misrepresentation or deceit.
    16    2. No license shall be revoked or suspended except  after  notice  and
    17  hearing thereon. Any order of suspension issued after notice and a hear-
    18  ing  may  include  as a condition of reinstatement that the student loan
    19  servicer make restitution to consumers of fees or  other  charges  which
    20  have  been improperly charged or collected, including but not limited to
    21  by allocating payments contrary to a borrower's direction or in a manner
    22  that fails to help a borrower avoid default, as determined by the super-
    23  intendent. Any hearing held pursuant to the provisions of  this  section
    24  shall  be  noticed,  conducted  and  administered in compliance with the
    25  state administrative procedure act.
    26    3. Any student loan servicer may surrender any license  by  delivering
    27  to  the  superintendent  written  notice that it thereby surrenders such
    28  license, but such surrender shall not affect such  servicer's  civil  or
    29  criminal  liability  for acts committed prior to such surrender. If such
    30  surrender is made after the issuance by the superintendent of  a  state-
    31  ment  of  charges  and notice of hearing, the superintendent may proceed
    32  against the servicer as if such surrender had not taken place.
    33    4. No revocation, suspension, or surrender of any license shall impair
    34  or affect the obligation of any pre-existing lawful contract between the
    35  student loan servicer and any person, including the department of finan-
    36  cial services.
    37    5. Every license issued pursuant to this article shall remain in force
    38  and effect until the  same  shall  have  been  surrendered,  revoked  or
    39  suspended in accordance with any other provisions of this article.
    40    6.  Whenever  the  superintendent  shall  revoke  or suspend a license
    41  issued pursuant to this article, he or she shall  forthwith  execute  in
    42  duplicate  a written order to that effect. The superintendent shall file
    43  one copy of such order in the office of the department and shall  forth-
    44  with serve the other copy upon the student loan servicer. Any such order
    45  may  be  reviewed in the manner provided by article seventy-eight of the
    46  civil practice law and rules.
    47    § 717. Books and records;  reports  and  electronic  filing.  1.  Each
    48  student  loan  servicer  shall  keep and use in its business such books,
    49  accounts and records as will  enable  the  superintendent  to  determine
    50  whether  such  servicer  or  exempt  organization  is complying with the
    51  provisions of this article and with the rules and  regulations  lawfully
    52  made  by  the  superintendent. Every servicer shall preserve such books,
    53  accounts, and records, for at least three years.
    54    2. (a) Each student loan servicer, other than an exempt  organization,
    55  shall  annually, on or before a date to be determined by the superinten-
    56  dent, file a report with the superintendent giving such  information  as

        A. 2071--C                          7
     1  the  superintendent  may  require concerning the business and operations
     2  during the preceding calendar year of such servicer under  authority  of
     3  this  article.  Such  report shall be subscribed and affirmed as true by
     4  the  servicer  under  the  penalties of perjury and shall be in the form
     5  prescribed by the superintendent.
     6    (b) In addition to annual reports, the superintendent may require such
     7  additional regular or special reports as he or she may deem necessary to
     8  the proper supervision of student loan  servicers  under  this  article.
     9  Such  additional reports shall be subscribed and affirmed as true by the
    10  servicer under the penalties  of  perjury  and  shall  be  in  the  form
    11  prescribed by the superintendent.
    12    3.  Notwithstanding  article  three of the state technology law or any
    13  other law to the contrary,  the  superintendent  may  require  that  any
    14  submission  or approval as may be required by the superintendent be made
    15  or executed by electronic means if he  or  she  deems  it  necessary  to
    16  ensure the efficient administration of this article.
    17    §  718.  Rules  and  Regulations. 1. In addition to such powers as may
    18  otherwise be prescribed by law, the superintendent is hereby  authorized
    19  and  empowered  to  promulgate  such rules and regulations as may in the
    20  judgement of the superintendent be consistent with the purposes of  this
    21  article,  or  appropriate for the effective administration of this arti-
    22  cle, including, but not limited to:
    23    (a) Such rules and regulations in connection with  the  activities  of
    24  student  loan  servicers  as  may  be  necessary and appropriate for the
    25  protection of borrowers in this state.
    26    (b) Such rules and regulations as may be necessary and appropriate  to
    27  define unfair, deceptive or abusive acts or practices in connection with
    28  the activities of student loan servicers.
    29    (c)  Such  rules  and regulations as may define the terms used in this
    30  article and as may be necessary and appropriate to interpret and  imple-
    31  ment the provisions of this article.
    32    (d) Such rules and regulations as may be necessary for the enforcement
    33  of this article.
    34    2.  The superintendent is hereby authorized and empowered to make such
    35  specific rulings, demands and findings as the  superintendent  may  deem
    36  necessary for the proper conduct of the student loan servicing industry.
    37    § 719. Prohibited practices. No student loan servicer shall:
    38    1.  Employ  any  scheme,  device  or  artifice to defraud or mislead a
    39  borrower;
    40    2. Engage in any unfair, deceptive or predatory act or practice toward
    41  any  person  or  misrepresent  or  omit  any  material  information   in
    42  connection  with  the  servicing  of  a student loan, including, but not
    43  limited to, misrepresenting the amount, nature or terms of  any  fee  or
    44  payment due or claimed to be due on a student loan, the terms and condi-
    45  tions  of  the  loan  agreement  or the borrower's obligations under the
    46  loan;
    47    3. Misapply payments to the outstanding balance of any student loan or
    48  to any related interest or fees;
    49    4. Provide inaccurate information to a consumer reporting agency;
    50    5. Refuse to communicate with  an  authorized  representative  of  the
    51  borrower  who  provides  a written authorization signed by the borrower,
    52  provided that the servicer may adopt procedures  reasonably  related  to
    53  verifying that the representative is in fact authorized to act on behalf
    54  of the borrower;
    55    6. Make any false statement or make any omission of a material fact in
    56  connection  with  any  information  or reports filed with a governmental

        A. 2071--C                          8
     1  agency or in connection with any investigation conducted by  the  super-
     2  intendent or another governmental agency;
     3    7. Fail to respond within fifteen calendar days to communications from
     4  the  department,  or within such shorter, reasonable time as the depart-
     5  ment may request in his or her communication; or
     6    8. Fail to provide a  response  within  fifteen  calendar  days  to  a
     7  consumer  complaint  submitted  to  the  servicer  by the department. If
     8  necessary, a student loan servicer may request additional time up  to  a
     9  maximum  of  forty-five  calendar  days,  provided  that such request is
    10  accompanied by an explanation why such additional time is reasonable and
    11  necessary.
    12    § 720. Servicing student loans without a license. 1. Whenever, in  the
    13  opinion  of  the  superintendent, a person is engaged in the business of
    14  servicing student loans, other than federal loans,  either  actually  or
    15  through  subterfuge,  without  a  license  from  the superintendent, the
    16  superintendent may order that person to desist and refrain from engaging
    17  in the business of servicing student loans  in  the  state.  If,  within
    18  thirty  days  after an order is served, a request for a hearing is filed
    19  in writing and the hearing is not held within sixty days of the  filing,
    20  the order shall be rescinded.
    21    2. This section does not apply to exempt organizations.
    22    §  721.  Responsibilities.  1.  If  a  student loan servicer regularly
    23  reports information to a consumer reporting agency, the  servicer  shall
    24  accurately  report  a  borrower's  payment  performance  to at least one
    25  consumer reporting agency that compiles and maintains files on consumers
    26  on a nationwide basis as defined in Section 603(p) of the  federal  Fair
    27  Credit  Reporting  Act  (15  U.S.C. Sec. 1681a(p)), upon acceptance as a
    28  data furnisher by that consumer reporting agency.
    29    2. (a) Except as provided in federal law or required by a student loan
    30  agreement, a student loan servicer shall inquire of a  borrower  how  to
    31  apply  a borrower's nonconforming payment. A borrower's direction on how
    32  to apply a nonconforming payment shall remain in effect for  any  future
    33  nonconforming  payment  during  the  term  of  a  student loan until the
    34  borrower provides different directions.
    35    (b) For purposes of this subdivision,  "nonconforming  payment"  shall
    36  mean  a payment that is either more or less than the borrower's required
    37  student loan payment.
    38    3. (a) If the sale, assignment, or other transfer of the servicing  of
    39  a student loan results in a change in the identity of the person to whom
    40  the  borrower  is  required  to  send  subsequent payments or direct any
    41  communications concerning the student  loan,  a  student  loan  servicer
    42  shall  transfer  all  information  regarding  a  borrower,  a borrower's
    43  account, and a borrower's student loan, including but not limited to the
    44  borrower's repayment status and any borrower  benefits  associated  with
    45  the  borrower's student loan, to the new student loan servicer servicing
    46  the borrower's student loan within forty-five days.
    47    (b) A student loan servicer shall adopt  policies  and  procedures  to
    48  verify  that  it  has  received  all information regarding a borrower, a
    49  borrower's account, and a borrower's student  loan,  including  but  not
    50  limited  to  the  borrower's  repayment status and any borrower benefits
    51  associated with the borrower's student loan, when the  servicer  obtains
    52  the right to service a student loan.
    53    4.  If  a student loan servicer sells, assigns, or otherwise transfers
    54  the servicing of a student loan to a new servicer, the sale,  assignment
    55  or  other  transfer  shall  be  completed at least seven days before the
    56  borrower's next payment is due.

        A. 2071--C                          9
     1    5. (a) A student loan  servicer  that  sells,  assigns,  or  otherwise
     2  transfers  the  servicing of a student loan shall require as a condition
     3  of such sale, assignment or other transfer that  the  new  student  loan
     4  servicer  shall  honor  all  borrower benefits originally represented as
     5  being  available  to a borrower during the repayment of the student loan
     6  and the possibility of such benefits, including any benefits  that  were
     7  represented  as  being  available but for which the borrower had not yet
     8  qualified.
     9    (b) A student loan servicer  that  obtains  the  right  to  service  a
    10  student loan shall honor all borrower benefits originally represented as
    11  being  available  to a borrower during the repayment of the student loan
    12  and the possibility of such benefits, including any benefits  that  were
    13  represented  as  being  available but for which the borrower had not yet
    14  qualified.
    15    6. A student loan servicer shall  respond  within  thirty  days  after
    16  receipt  to  a written inquiry from a borrower or a borrower's represen-
    17  tative.
    18    7. A student loan servicer shall preserve records of each student loan
    19  and all communications with  borrowers  for  not  less  than  two  years
    20  following the final payment on such student loan or the sale, assignment
    21  or  other  transfer  of  the  servicing  of such student loan, whichever
    22  occurs first, or such longer period as may  be  required  by  any  other
    23  provision of law.
    24    §  722.  Examinations.  1.  The superintendent may at any time, and as
    25  often as he or she may determine, either personally or by a person  duly
    26  designated  by  the superintendent, investigate the business and examine
    27  the books, accounts, records, and files used therein  of  every  student
    28  loan  servicer.  For that purpose the superintendent and his or her duly
    29  designated representative shall have free  access  to  the  offices  and
    30  places  of  business, books, accounts, papers, records, files, safes and
    31  vaults of all such servicers. The superintendent  and  any  person  duly
    32  designated  by him or her shall have authority to require the attendance
    33  of and to examine under oath all persons whose testimony he or  she  may
    34  require relative to such business.
    35    2.  No  person  subject  to  investigation  or  examination under this
    36  section may knowingly withhold, abstract, remove, mutilate,  destroy  or
    37  secrete any books, records, computer records or other information.
    38    3.  The  expenses  incurred in making any examination pursuant to this
    39  section shall be assessed against and paid by the student loan  servicer
    40  so examined, except that travelling and subsistence expenses so incurred
    41  shall  be  charged  against and paid by servicers in such proportions as
    42  the superintendent shall deem just  and  reasonable,  and  such  propor-
    43  tionate  charges  shall be added to the assessment of the other expenses
    44  incurred upon each examination. Upon written notice by  the  superinten-
    45  dent  of  the total amount of such assessment, the servicer shall become
    46  liable for and shall pay such assessment to the superintendent.
    47    4. In any hearing in which a department employee acting under authori-
    48  ty of this chapter is  available  for  cross-examination,  any  official
    49  written  report, worksheet, other related papers, or duly certified copy
    50  thereof, compiled, prepared, drafted, or otherwise made by said  depart-
    51  ment  employee,  after being duly authenticated by said employee, may be
    52  admitted as competent evidence upon the oath of said employee that  said
    53  worksheet,   investigative  report,  or  other  related  documents  were
    54  prepared as a result of an examination of the books  and  records  of  a
    55  servicer  or  other  person, conducted pursuant to the authority of this
    56  chapter.

        A. 2071--C                         10
     1    5. Unless it is an exempt organization, affiliates of a  student  loan
     2  servicer  are  subject  to examination by the superintendent on the same
     3  terms as the servicer, but only when reports from, or examination of,  a
     4  servicer  provides  evidence of unlawful activity between a servicer and
     5  affiliate  benefitting,  affecting, or arising from the activities regu-
     6  lated by this article.
     7    6. This section shall not apply to exempt organizations. To the extent
     8  the superintendent is authorized by any other law to make an examination
     9  into the affairs of any exempt organization, this subdivision shall  not
    10  be construed to limit in any way the superintendent's authority, regard-
    11  ing the subjects of such an examination, or otherwise.
    12    § 723. Penalties for violation of this article. 1. In addition to such
    13  penalties  as  may  otherwise  be  applicable  by law, including but not
    14  limited to the penalties available  under  section  forty-four  of  this
    15  chapter,  the  superintendent may, after notice and hearing, require any
    16  person found violating the provisions of this article or  the  rules  or
    17  regulations  promulgated  hereunder to pay to the people of this state a
    18  penalty for each violation of the article or any  regulation  or  policy
    19  promulgated  hereunder  a sum not to exceed the greater of (i) two thou-
    20  sand dollars or where such violation is wilfull ten thousand dollars for
    21  each offense; (ii) a multiple of two times the aggregate damages attrib-
    22  utable to the violation; or (iii) a multiple of two times the  aggregate
    23  economic gain attributable to the violation.
    24    2.  Nothing  in  this  article shall limit any statutory or common-law
    25  right of any person to bring any action in any court for any act, or the
    26  right of the state to punish any person for any violation of any law.
    27    § 724. Severability of provisions. If any provision of  this  article,
    28  or  the  application  of  such  provision to any person or circumstance,
    29  shall be held invalid, illegal or unenforceable, the  remainder  of  the
    30  article,  and  the  application  of such provision to persons or circum-
    31  stances other than those as to which it  is  held  invalid,  illegal  or
    32  unenforceable, shall not be affected thereby.
    33    §  725.  Compliance  with  other laws. 1. Student loan servicers shall
    34  engage in the business of servicing student loans in conformity with the
    35  provisions of the financial services law, this chapter, such  rules  and
    36  regulations  as  may be promulgated by the superintendent thereunder and
    37  all applicable federal laws and the rules  and  regulations  promulgated
    38  thereunder.
    39    2.  Nothing  in this section shall be construed to limit any otherwise
    40  applicable state or federal law or regulations.
    41    § 2. Subdivision 10 of section 36 of the banking law,  as  amended  by
    42  chapter 182 of the laws of 2011, is amended to read as follows:
    43    10. All reports of examinations and investigations, correspondence and
    44  memoranda  concerning  or  arising  out of such examination and investi-
    45  gations, including any duly authenticated copy or copies thereof in  the
    46  possession  of  any  banking  organization,  bank holding company or any
    47  subsidiary thereof (as such terms "bank holding  company"  and  "subsid-
    48  iary"  are  defined in article three-A of this chapter), any corporation
    49  or any other entity affiliated with a banking  organization  within  the
    50  meaning  of  subdivision six of this section and any non-banking subsid-
    51  iary of a corporation or any other entity which is  an  affiliate  of  a
    52  banking  organization  within  the  meaning of subdivision six-a of this
    53  section, foreign banking corporation, licensed lender,  licensed  casher
    54  of   checks,  licensed  mortgage  banker,  registered  mortgage  broker,
    55  licensed mortgage  loan  originator,  licensed  sales  finance  company,
    56  registered  mortgage  loan  servicer,  licensed  student  loan servicer,

        A. 2071--C                         11
     1  licensed insurance  premium  finance  agency,  licensed  transmitter  of
     2  money,  licensed  budget  planner, any other person or entity subject to
     3  supervision under this chapter, or the department, shall be confidential
     4  communications,  shall  not be subject to subpoena and shall not be made
     5  public unless, in the  judgment  of  the  superintendent,  the  ends  of
     6  justice  and  the  public advantage will be subserved by the publication
     7  thereof, in which event the superintendent may publish or authorize  the
     8  publication  of  a  copy  of any such report or any part thereof in such
     9  manner as may be deemed proper or unless such laws specifically  author-
    10  ize  such  disclosure. For the purposes of this subdivision, "reports of
    11  examinations and investigations, and any  correspondence  and  memoranda
    12  concerning  or  arising  out  of  such examinations and investigations",
    13  includes any such materials of a bank, insurance or securities regulato-
    14  ry agency or any unit of the federal government or that  of  this  state
    15  any  other  state or that of any foreign government which are considered
    16  confidential by such agency or unit and which are in the  possession  of
    17  the  department  or which are otherwise confidential materials that have
    18  been shared by the department with any such agency or unit  and  are  in
    19  the possession of such agency or unit.
    20    § 3. Section 39 of the banking law, as amended by section 1 of part FF
    21  of chapter 59 of the laws of 2004, subdivisions 1, 2 and 5 as amended by
    22  chapter 123 of the laws of 2009, subdivision 3 as amended by chapter 155
    23  of  the  laws of 2012 and subdivision 6 as amended by chapter 217 of the
    24  laws of 2010, is amended to read as follows:
    25    § 39. Orders of superintendent. 1. To appear and explain  an  apparent
    26  violation. Whenever it shall appear to the superintendent that any bank-
    27  ing  organization,  bank  holding  company,  registered mortgage broker,
    28  licensed mortgage banker, licensed  student  load  servicer,  registered
    29  mortgage  loan  servicer,  licensed  mortgage  loan originator, licensed
    30  lender, licensed casher  of  checks,  licensed  sales  finance  company,
    31  licensed  insurance  premium  finance  agency,  licensed  transmitter of
    32  money, licensed budget planner, out-of-state state bank that maintains a
    33  branch or branches or representative or other offices in this state,  or
    34  foreign  banking  corporation licensed by the superintendent to do busi-
    35  ness or maintain a representative office in this state has violated  any
    36  law  or  regulation,  he  or she may, in his or her discretion, issue an
    37  order describing such apparent  violation  and  requiring  such  banking
    38  organization, bank holding company, registered mortgage broker, licensed
    39  mortgage  banker, licensed student loan servicer, licensed mortgage loan
    40  originator, licensed lender, licensed casher of checks,  licensed  sales
    41  finance  company,  licensed  insurance  premium finance agency, licensed
    42  transmitter of money, licensed budget planner, out-of-state  state  bank
    43  that  maintains  a branch or branches or representative or other offices
    44  in this state, or foreign banking corporation to appear  before  him  or
    45  her,  at a time and place fixed in said order, to present an explanation
    46  of such apparent violation.
    47    2. To discontinue unauthorized or unsafe and unsound practices.  When-
    48  ever  it  shall  appear to the superintendent that any banking organiza-
    49  tion, bank holding company, registered mortgage broker,  licensed  mort-
    50  gage  banker,  licensed  student loan servicer, registered mortgage loan
    51  servicer, licensed mortgage loan originator, licensed  lender,  licensed
    52  casher  of  checks,  licensed  sales finance company, licensed insurance
    53  premium finance agency, licensed transmitter of money,  licensed  budget
    54  planner,  out-of-state state bank that maintains a branch or branches or
    55  representative or other offices in this state, or foreign banking corpo-
    56  ration licensed by the superintendent to do business in  this  state  is

        A. 2071--C                         12
     1  conducting  business in an unauthorized or unsafe and unsound manner, he
     2  or she may, in his or her  discretion,  issue  an  order  directing  the
     3  discontinuance of such unauthorized or unsafe and unsound practices, and
     4  fixing a time and place at which such banking organization, bank holding
     5  company,  registered mortgage broker, licensed mortgage banker, licensed
     6  student loan servicer, registered mortgage loan servicer, licensed mort-
     7  gage loan  originator,  licensed  lender,  licensed  casher  of  checks,
     8  licensed sales finance company, licensed insurance premium finance agen-
     9  cy, licensed transmitter of money, licensed budget planner, out-of-state
    10  state  bank  that  maintains  a  branch or branches or representative or
    11  other offices in this state, or foreign banking corporation  may  volun-
    12  tarily appear before him or her to present any explanation in defense of
    13  the practices directed in said order to be discontinued.
    14    3.  To  make  good  impairment of capital or to ensure compliance with
    15  financial requirements. Whenever it shall appear to  the  superintendent
    16  that  the  capital  or  capital  stock of any banking organization, bank
    17  holding company or any subsidiary thereof which is  organized,  licensed
    18  or  registered  pursuant  to this chapter, is impaired, or the financial
    19  requirements imposed by subdivision one of section two hundred two-b  of
    20  this  chapter  or  any regulation of the superintendent on any branch or
    21  agency of a foreign banking corporation or  the  financial  requirements
    22  imposed  by  this chapter or any regulation of the superintendent on any
    23  licensed lender, registered mortgage broker, licensed  mortgage  banker,
    24  licensed  student  loan  servicer,  licensed  casher of checks, licensed
    25  sales  finance  company,  licensed  insurance  premium  finance  agency,
    26  licensed transmitter of money, licensed budget planner or private banker
    27  are  not  satisfied,  the  superintendent  may,  in the superintendent's
    28  discretion, issue an order directing  that  such  banking  organization,
    29  bank holding company, branch or agency of a foreign banking corporation,
    30  registered  mortgage  broker, licensed mortgage banker, licensed student
    31  loan servicer, licensed lender,  licensed  casher  of  checks,  licensed
    32  sales  finance  company,  licensed  insurance  premium  finance  agency,
    33  licensed transmitter of money, licensed budget planner, or private bank-
    34  er make good such deficiency forthwith or within  a  time  specified  in
    35  such order.
    36    4. To make good encroachments on reserves. Whenever it shall appear to
    37  the superintendent that either the total reserves or reserves on hand of
    38  any  banking  organization, branch or agency of a foreign banking corpo-
    39  ration are below the amount required by or pursuant to this  chapter  or
    40  any other applicable provision of law or regulation to be maintained, or
    41  that  such  banking  organization, branch or agency of a foreign banking
    42  corporation is not keeping its reserves on  hand  as  required  by  this
    43  chapter  or  any  other applicable provision of law or regulation, he or
    44  she may, in his or her discretion, issue an order  directing  that  such
    45  banking  organization, branch or agency of a foreign banking corporation
    46  make good such reserves forthwith or within a  time  specified  in  such
    47  order, or that it keep its reserves on hand as required by this chapter.
    48    5.  To keep books and accounts as prescribed. Whenever it shall appear
    49  to the superintendent that any banking organization, bank holding compa-
    50  ny, registered  mortgage  broker,  licensed  mortgage  banker,  licensed
    51  student loan servicer, registered mortgage loan servicer, licensed mort-
    52  gage  loan  originator,  licensed  lender,  licensed  casher  of checks,
    53  licensed sales finance company, licensed insurance premium finance agen-
    54  cy, licensed transmitter of money, licensed budget  planner,  agency  or
    55  branch  of  a foreign banking corporation licensed by the superintendent
    56  to do business in this state, does not keep its books  and  accounts  in

        A. 2071--C                         13
     1  such manner as to enable him or her to readily ascertain its true condi-
     2  tion,  he or she may, in his or her discretion, issue an order requiring
     3  such banking organization, bank  holding  company,  registered  mortgage
     4  broker, licensed mortgage banker, licensed student loan servicer, regis-
     5  tered   mortgage  loan  servicer,  licensed  mortgage  loan  originator,
     6  licensed lender, licensed  casher  of  checks,  licensed  sales  finance
     7  company, licensed insurance premium finance agency, licensed transmitter
     8  of  money,  licensed  budget planner, or foreign banking corporation, or
     9  the officers or agents thereof, or any of them, to open  and  keep  such
    10  books  or accounts as he or she may, in his or her discretion, determine
    11  and prescribe for the purpose of keeping accurate and convenient records
    12  of its transactions and accounts.
    13    6. As used in this section, "bank holding company" shall have the same
    14  meaning as that term is defined in section one hundred forty-one of this
    15  chapter.
    16    § 4. Paragraph (a) of subdivision 1 of section 44 of the banking  law,
    17  as  amended  by  chapter  155 of the laws of 2012, is amended to read as
    18  follows:
    19    (a) Without limiting any power granted to the superintendent under any
    20  other provision of this chapter, the superintendent may, in a proceeding
    21  after notice and a hearing, require any safe deposit  company,  licensed
    22  lender,  licensed  casher  of  checks,  licensed  sales finance company,
    23  licensed insurance  premium  finance  agency,  licensed  transmitter  of
    24  money,  licensed mortgage banker, licensed student loan servicer, regis-
    25  tered mortgage broker, licensed  mortgage  loan  originator,  registered
    26  mortgage  loan  servicer or licensed budget planner to pay to the people
    27  of this state a penalty for any violation of  this  chapter,  any  regu-
    28  lation  promulgated  thereunder,  any  final  or  temporary order issued
    29  pursuant to section thirty-nine of this article, any  condition  imposed
    30  in  writing  by  the  superintendent in connection with the grant of any
    31  application or request, or any written agreement entered into  with  the
    32  superintendent.
    33    § 5. This act shall take effect on the one hundred eightieth day after
    34  it shall have become a law.
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