Bill Text: NY S01958 | 2019-2020 | General Assembly | Introduced


Bill Title: Requires the licensure of student loan servicers.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced) 2019-01-28 - REPORTED AND COMMITTED TO BANKS [S01958 Detail]

Download: New_York-2019-S01958-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          1958
                               2019-2020 Regular Sessions
                    IN SENATE
                                    January 18, 2019
                                       ___________
        Introduced  by  Sen.  THOMAS -- read twice and ordered printed, and when
          printed to be committed to the Committee on Banks
        AN ACT to amend the banking law, in relation to requiring the  licensure
          of 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 XIV-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.
    17          721. Responsibilities.
    18          722. Examinations.
    19          723. Penalties for violation of this article.
    20          724. Severability of provisions.
    21          725. Compliance with other laws.
    22    § 710. Definitions. 1. "Applicant" shall mean any person applying  for
    23  a license to be a student loan servicer.
    24    2. "Borrower" shall mean any resident of this state who has received a
    25  student  loan  or  agreed in writing to pay a student loan or any person
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01465-02-9

        S. 1958                             2
     1  who shares a legal obligation with such resident for repaying a  student
     2  loan.
     3    3. "Borrower benefit" shall mean an incentive offered to a borrower in
     4  connection  with  the  origination  of a student loan, including but not
     5  limited to an interest rate reduction, principal rebate, fee  waiver  or
     6  rebate, loan cancellation, or cosigner release.
     7    4.  "Exempt organization" shall mean any banking organization, foreign
     8  banking corporation, national bank, federal savings association, federal
     9  credit union, or any bank, trust company, savings bank, savings and loan
    10  association, or credit union organized  under  the  laws  of  any  other
    11  state.
    12    5.  "Person"  shall  mean  any  individual,  association, corporation,
    13  limited liability company, partnership, trust, unincorporated  organiza-
    14  tion, or any other entity.
    15    6.  "Servicer" or "student loan servicer" shall mean a person licensed
    16  pursuant to section seven hundred eleven of this article  to  engage  in
    17  the business of servicing any student loan of a borrower.
    18    7. "Servicing" shall mean:
    19    (a) receiving any payment from a borrower pursuant to the terms of any
    20  student loan;
    21    (b) applying any payment to a borrower's account pursuant to the terms
    22  of  a  student  loan or the contract governing the servicing of any such
    23  loan;
    24    (c) providing any notification of amounts owed on a student loan by or
    25  on account of any borrower;
    26    (d) during a period when a borrower is not required to make a  payment
    27  on  a student loan, maintaining account records for the student loan and
    28  communicating with the borrower regarding the student loan on behalf  of
    29  the owner of the student loan promissory note;
    30    (e)  interacting  with  a  borrower  with  respect to or regarding any
    31  attempt to avoid default on the borrower's student loan, or facilitating
    32  the activities described in paragraph (a) or (b) of this subdivision; or
    33    (f) performing other administrative services with respect to a borrow-
    34  er's student loan.
    35    8. "Student loan" shall mean any loan to a borrower to finance postse-
    36  condary education or expenses related to postsecondary education.
    37    § 711. Licensing. 1. No person shall engage in the business of servic-
    38  ing student loans owed by one or more borrowers residing in  this  state
    39  without  first  being  licensed  by the superintendent as a student loan
    40  servicer in accordance with this article and such regulations as may  be
    41  prescribed by the superintendent.
    42    2. The licensing provisions of this subdivision shall not apply to any
    43  exempt organization.
    44    §  712. Application for a student loan servicer license; fees. 1.  The
    45  application for a license to be a student  loan  servicer  shall  be  in
    46  writing,  under  oath, and in the form prescribed by the superintendent.
    47  Notwithstanding article three of the state technology law or  any  other
    48  law  to the contrary, the superintendent may require that an application
    49  for a license or any other submission or application for approval as may
    50  be required by this article be made or executed by electronic  means  if
    51  he  or  she  deems  it  necessary  to ensure the efficient and effective
    52  administration  of  this  article.  The  application  shall  include   a
    53  description  of  the activities of the applicant, in such detail and for
    54  such periods as the superintendent may require, including:

        S. 1958                             3
     1    (a) an affirmation of financial solvency  noting  such  capitalization
     2  requirements  as  may  be  required by the superintendent, and access to
     3  such credit as may be required by the superintendent;
     4    (b)  a  financial statement prepared by a certified public accountant,
     5  the accuracy of which is sworn to under oath before a notary  public  by
     6  an officer or other representative of the applicant who is authorized to
     7  execute such documents;
     8    (c) an affirmation that the applicant, or its members, officers, part-
     9  ners, directors and principals as may be appropriate, are at least twen-
    10  ty-one years of age;
    11    (d)  information  as to the character, fitness, financial and business
    12  responsibility, background and experiences  of  the  applicant,  or  its
    13  members,  officers,  partners, directors and principals as may be appro-
    14  priate; and
    15    (e) any additional detail or information required by  the  superinten-
    16  dent.
    17    2. An application to become a student loan servicer or any application
    18  with respect to a student loan servicer shall be accompanied by a fee as
    19  prescribed pursuant to section eighteen-a of this chapter.
    20    §  713.  Application process to receive license to engage in the busi-
    21  ness of student loan servicing. 1. Upon the filing of an application for
    22  a license, if the superintendent shall find that the financial responsi-
    23  bility, experience, character, and general fitness of the applicant and,
    24  if applicable, the members, officers, partners, directors and principals
    25  of the applicant are such as to command the confidence of the  community
    26  and to warrant belief that the business will be operated honestly, fair-
    27  ly,  and efficiently within the purpose of this article, the superinten-
    28  dent shall thereupon issue a license in duplicate to engage in the busi-
    29  ness of servicing student loans described in section seven  hundred  ten
    30  of  this  article  in accordance with the provisions of this article. If
    31  the superintendent shall not so find, the superintendent shall not issue
    32  a license, and the superintendent shall so  notify  the  applicant.  The
    33  superintendent shall transmit one copy of a license to the applicant and
    34  file another copy in the office of the department of financial services.
    35  Upon  receipt  of such license, a student loan servicer shall be author-
    36  ized to engage in the business of servicing student loans in  accordance
    37  with  the  provisions of this article. Such license shall remain in full
    38  force and effect until it is surrendered by the servicer or  revoked  or
    39  suspended as hereinafter provided.
    40    2.  The  superintendent may refuse to issue a license pursuant to this
    41  article if he or she shall find that the applicant, or any person who is
    42  a director, officer, partner, agent,  employee,  member  or  substantial
    43  stockholder of the applicant:
    44    (a)  lacks  the  good  moral  character and general fitness such as to
    45  warrant belief that the licensed  entity  would  be  operated  honestly,
    46  fairly and efficiently within the purposes of this article;
    47    (b) has had a license or registration revoked by the superintendent or
    48  any other regulator or jurisdiction;
    49    (c)  has  been  an  officer,  director, partner, member or substantial
    50  stockholder of an entity which has had a license or registration revoked
    51  by the superintendent or any other regulator or jurisdiction; or
    52    (d) has been an agent, employee, officer, director, partner or  member
    53  of  an  entity  which  has  had a license or registration revoked by the
    54  superintendent where such person shall have been  found  by  the  super-
    55  intendent to bear responsibility in connection with the revocation.

        S. 1958                             4
     1    3.  The term "substantial stockholder", as used in this section, shall
     2  be deemed to refer to a person owning or controlling directly  or  indi-
     3  rectly ten per centum or more of the total outstanding stock of a corpo-
     4  ration.
     5    §  714.  Changes  in officers and directors. Upon any change of any of
     6  the executive officers, directors, partners or members  of  any  student
     7  loan servicer, the student loan servicer shall submit to the superinten-
     8  dent  the  name,  address, and occupation of each new officer, director,
     9  partner or member, and provide such other information as the superinten-
    10  dent may require.
    11    § 715. Changes in control. 1. It shall be unlawful,  except  with  the
    12  prior  approval  of the superintendent, for any action to be taken which
    13  results in a change of control of the business of a student loan  servi-
    14  cer.  Prior  to  any change of control, the person desirous of acquiring
    15  control of the business of a student loan servicer  shall  make  written
    16  application  to  the  superintendent  and  pay  an  investigation fee as
    17  prescribed pursuant to section eighteen-a of this chapter to the  super-
    18  intendent.  The application shall contain such information as the super-
    19  intendent, by rule or regulation, may prescribe as necessary  or  appro-
    20  priate   for  the  purpose  of  making  the  determination  required  by
    21  subdivision two of this section. Such information shall include, but not
    22  be limited to, the information and other material required for a student
    23  loan servicer by subdivision one of section seven hundred twelve of this
    24  article.
    25    2. The superintendent shall approve or disapprove the proposed  change
    26  of  control of a student loan servicer in accordance with the provisions
    27  of section seven hundred thirteen of this article.
    28    3. For a period of six months from the date of  qualification  thereof
    29  and  for  such  additional  period  of  time  as  the superintendent may
    30  prescribe, in writing, the provisions of subdivisions  one  and  two  of
    31  this  section  shall  not apply to a transfer of control by operation of
    32  law to the legal representative, as hereinafter defined, of one who  has
    33  control  of  a  student  loan servicer. Thereafter, such legal represen-
    34  tative shall comply with the provisions of subdivisions one and  two  of
    35  this section. The provisions of subdivisions one and two of this section
    36  shall be applicable to an application made under this section by a legal
    37  representative.  The  term  "legal  representative", for the purposes of
    38  this subdivision, shall mean a person  duly  appointed  by  a  court  of
    39  competent  jurisdiction  to  act  as  executor,  administrator, trustee,
    40  committee, conservator or receiver, including a person  who  succeeds  a
    41  legal representative and a person acting in an ancillary capacity there-
    42  to in accordance with the provisions of such court appointment.
    43    4.  As  used  in this section the term "control" means the possession,
    44  directly or indirectly, of the power to direct or cause the direction of
    45  the management and policies of a student loan servicer, whether  through
    46  the  ownership of voting stock of such student loan servicer, the owner-
    47  ship of voting stock of any person which possesses such power or  other-
    48  wise.    Control  shall  be presumed to exist if any person, directly or
    49  indirectly, owns, controls or holds with power to vote ten per centum or
    50  more of the voting stock of any student loan servicer or of  any  person
    51  which  owns, controls or holds with power to vote ten per centum or more
    52  of the voting stock of any student loan servicer, but no person shall be
    53  deemed to control a student loan servicer solely by reason of  being  an
    54  officer  or  director  of such student loan servicer. The superintendent
    55  may in his discretion, upon the application of a student  loan  servicer
    56  or  any person who, directly or indirectly, owns, controls or holds with

        S. 1958                             5
     1  power to vote or seeks to own, control or hold with power  to  vote  any
     2  voting stock of such student loan servicer, determine whether or not the
     3  ownership,  control or holding of such voting stock constitutes or would
     4  constitute  control  of  such student loan servicer for purposes of this
     5  section.
     6    § 716. Grounds for suspension or revocation of license. 1. The  super-
     7  intendent  may revoke any license to engage in the business of a student
     8  loan servicer issued pursuant to this article  if  a  determination  has
     9  been made, after notice and a hearing, that:
    10    (a) a servicer has violated any provision of this article, any rule or
    11  regulation  promulgated  by  the  superintendent  under  and  within the
    12  authority of this article, or any other applicable law;
    13    (b) a servicer engages in  fraud,  intentional  misrepresentation,  or
    14  gross negligence in servicing a student loan;
    15    (c)  the  competence, experience, character, or general fitness of the
    16  servicer, an individual controlling, directly or indirectly, ten percent
    17  or more of the outstanding interests,  or  any  person  responsible  for
    18  servicing  a  student  loan for the servicer indicates that it is not in
    19  the public interest to permit the servicer to continue servicing student
    20  loans;
    21    (d) the servicer is insolvent, suspends payment of its obligations, or
    22  makes a general assignment for the benefit of its creditors; or
    23    (e) the servicer has violated the laws of this state, any other  state
    24  law  or  any federal law involving fraudulent or dishonest dealing, or a
    25  final judgment has been entered against a student  loan  servicer  in  a
    26  civil action upon grounds of fraud, misrepresentation or deceit.
    27    2.  The  superintendent  may, on good cause shown, or where there is a
    28  substantial risk of public harm, suspend any license for  a  period  not
    29  exceeding  thirty  days, pending investigation. "Good cause", as used in
    30  this subdivision, shall exist when a student loan servicer has defaulted
    31  in performing its financial engagements or engages in dishonest or ineq-
    32  uitable practices which  may  cause  substantial  harm  to  the  persons
    33  afforded the protection of this article.
    34    3.  No license shall be revoked or suspended except after notice and a
    35  hearing thereon.   Any order of suspension issued  after  notice  and  a
    36  hearing  may  include  as  a condition of reinstatement that the student
    37  loan servicer make restitution to consumers of  fees  or  other  charges
    38  which  have  been  improperly  charged  or  collected, including but not
    39  limited to by allocating payments contrary to a borrower's direction  or
    40  in  a  manner that fails to help a borrower avoid default, as determined
    41  by the superintendent. Any hearing held pursuant to  the  provisions  of
    42  this  section shall be noticed, conducted and administered in compliance
    43  with the state administrative procedure act.
    44    4. Any student loan servicer may surrender any license  by  delivering
    45  to  the  superintendent  written  notice  that the student loan servicer
    46  thereby surrenders such license, but such surrender shall not affect the
    47  servicer's civil or criminal liability for acts committed prior  to  the
    48  surrender.  If  such  surrender is made after the issuance by the super-
    49  intendent of a statement of charges and notice of  hearing,  the  super-
    50  intendent  may  proceed against the servicer as if the surrender had not
    51  taken place.
    52    5. No revocation, suspension, or surrender of any license shall impair
    53  or affect the obligation of any pre-existing lawful contract between the
    54  student loan servicer and any person, including the department of finan-
    55  cial services.

        S. 1958                             6
     1    6. Every license issued pursuant to this article shall remain in  full
     2  force  and effect until the same shall have been surrendered, revoked or
     3  suspended in accordance with any other provisions of this article.
     4    7.  Whenever  the  superintendent  shall  revoke  or suspend a license
     5  issued pursuant to this article, he or she shall  forthwith  execute  in
     6  duplicate  a written order to that effect. The superintendent shall file
     7  one copy of the order in the  office  of  the  department  of  financial
     8  services  and shall forthwith serve the other copy upon the student loan
     9  servicer. Any such order may be reviewed in the manner provided by arti-
    10  cle seventy-eight of the civil practice law and rules.
    11    § 717. Books and records;  reports  and  electronic  filing.  1.  Each
    12  student  loan  servicer  shall  keep and use in its business such books,
    13  accounts and records as will  enable  the  superintendent  to  determine
    14  whether  the  servicer  is complying with the provisions of this article
    15  and with the rules and regulations lawfully made by the  superintendent.
    16  Every  servicer shall preserve such books, accounts, and records, for at
    17  least three years.
    18    2. (a) Each student loan servicer shall annually, on or before a  date
    19  to  be  determined  by the superintendent, file a report with the super-
    20  intendent giving such information  as  the  superintendent  may  require
    21  concerning  the  business  and  operations during the preceding calendar
    22  year of such servicer under authority of this article. Such report shall
    23  be subscribed and affirmed as true by the servicer under  the  penalties
    24  of perjury and shall be in the form prescribed by the superintendent.
    25    (b) In addition to annual reports, the superintendent may require such
    26  additional regular or special reports as he or she may deem necessary to
    27  the  proper  supervision  of  student loan servicers under this article.
    28  Such additional reports shall be subscribed and affirmed as true by  the
    29  servicer  under  the  penalties  of  perjury  and  shall  be in the form
    30  prescribed by the superintendent.
    31    3. Notwithstanding article three of the state technology  law  or  any
    32  other  law  to  the  contrary,  the  superintendent may require that any
    33  submission or approval as may be required by the superintendent be  made
    34  or  executed  by  electronic  means  if  he or she deems it necessary to
    35  ensure the efficient administration of this article.
    36    § 718. Rules and regulations. 1. In addition to  such  powers  as  may
    37  otherwise  be  prescribed  by this chapter, the superintendent is hereby
    38  authorized and empowered to promulgate such rules and regulations as may
    39  in the judgment of the superintendent be consistent with the purposes of
    40  this article, or appropriate for the effective  administration  of  this
    41  article, including, but not limited to:
    42    (a)  such  rules  and regulations in connection with the activities of
    43  student loan servicers as may  be  necessary  and  appropriate  for  the
    44  protection of borrowers in this state;
    45    (b)  such rules and regulations as may be necessary and appropriate to
    46  define unfair, deceptive or abusive acts or practices in connection with
    47  the activities of student loan servicers in servicing student loans;
    48    (c) such rules and regulations as may define the terms  used  in  this
    49  article  and as may be necessary and appropriate to interpret and imple-
    50  ment the provisions of this article; and
    51    (d) such rules and regulations as may be necessary for the enforcement
    52  of this article.
    53    2. The superintendent is hereby authorized and empowered to make  such
    54  specific  rulings,  demands  and findings as the superintendent may deem
    55  necessary for the proper conduct of the student loan servicing industry.
    56    § 719. Prohibited practices. No student loan servicer shall:

        S. 1958                             7
     1    1. Directly employ any  scheme,  device  or  artifice  to  defraud  or
     2  mislead a borrower.
     3    2.  Intentionally  engage in any unfair, deceptive or predatory act or
     4  practice toward any person or misrepresent or omit any material informa-
     5  tion in connection with the servicing of a student loan, including,  but
     6  not  limited  to, misrepresenting the amount, nature or terms of any fee
     7  or payment due or claimed to be due on a student  loan,  the  terms  and
     8  conditions of the loan agreement or the borrower's obligations under the
     9  loan.
    10    3.  Intentionally  misapply payments to the outstanding balance of any
    11  student loan or to any related interest or fees.
    12    4. Intentionally provide misleading information to a consumer  report-
    13  ing agency.
    14    5.  Refuse  to  communicate  with  an authorized representative of the
    15  borrower who provides a written authorization signed  by  the  borrower,
    16  provided  that  the  servicer may adopt procedures reasonably related to
    17  verifying that the representative is in fact authorized to act on behalf
    18  of the borrower.
    19    6. Knowingly make any false statement or make any omission of a  mate-
    20  rial  fact  in  connection  with any information or reports filed with a
    21  governmental agency or in connection with any investigation conducted by
    22  the superintendent or another governmental agency.
    23    § 720. Servicing student loans without a  license.  Whenever,  in  the
    24  opinion  of  the  superintendent, a person is engaged in the business of
    25  servicing student loans, either actually or through subterfuge,  without
    26  a  license  from  the  superintendent, the superintendent may order that
    27  person to desist and refrain from engaging in the business of  servicing
    28  student  loans  in  the  state. If, within thirty days after an order is
    29  served, a request for a hearing is filed in writing and the  hearing  is
    30  not held within sixty days of the filing, the order shall be rescinded.
    31    §  721.  Responsibilities.  1.  If  a  student loan servicer regularly
    32  reports information to a consumer reporting agency, the  servicer  shall
    33  accurately  report  a  borrower's  payment  performance  to at least one
    34  consumer reporting agency that compiles and maintains files on consumers
    35  on a nationwide basis as defined in Section 603(p) of the  federal  Fair
    36  Credit  Reporting  Act  (15  U.S.C. Sec. 1681a(p)), upon acceptance as a
    37  data furnisher by that consumer reporting agency.
    38    2. (a) Except as provided in federal law or required by a student loan
    39  agreement, a student loan servicer shall inquire of a  borrower  how  to
    40  apply  a borrower's nonconforming payment. A borrower's direction on how
    41  to apply a nonconforming payment shall remain in effect for  any  future
    42  nonconforming  payment  during  the  term  of  a  student loan until the
    43  borrower provides different directions.
    44    (b) For purposes of this subdivision,  "nonconforming  payment"  shall
    45  mean  a payment that is either more or less than the borrower's required
    46  student loan payment.
    47    3. (a) If the sale, assignment, or other transfer of the servicing  of
    48  a student loan results in a change in the identity of the person to whom
    49  the  borrower  is  required  to  send  subsequent payments or direct any
    50  communications concerning the student  loan,  a  student  loan  servicer
    51  shall  transfer  all  information  regarding  a  borrower,  a borrower's
    52  account, and a borrower's student loan, including but not limited to the
    53  borrower's repayment status and any borrower  benefits  associated  with
    54  the  borrower's student loan, to the new student loan servicer servicing
    55  the borrower's student loan within forty-five days.

        S. 1958                             8
     1    (b) A student loan servicer shall adopt  policies  and  procedures  to
     2  verify  that  it  has  received  all information regarding a borrower, a
     3  borrower's account, and a borrower's student  loan,  including  but  not
     4  limited  to  the  borrower's  repayment status and any borrower benefits
     5  associated  with  the borrower's student loan, when the servicer obtains
     6  the right to service a student loan.
     7    4. If a student loan servicer sells, assigns, or  otherwise  transfers
     8  the  servicing of a student loan to a new servicer, the sale, assignment
     9  or other transfer shall be completed at  least  seven  days  before  the
    10  borrower's next payment is due.
    11    5.  (a)  A  student  loan  servicer  that sells, assigns, or otherwise
    12  transfers the servicing of a student loan shall require as  a  condition
    13  of  such  sale,  assignment  or other transfer that the new student loan
    14  servicer shall honor all borrower  benefits  originally  represented  as
    15  being  available  to a borrower during the repayment of the student loan
    16  and the possibility of such benefits, including any benefits  that  were
    17  represented  as  being  available but for which the borrower had not yet
    18  qualified.
    19    (b) A student loan servicer  that  obtains  the  right  to  service  a
    20  student loan shall honor all borrower benefits originally represented as
    21  being  available  to a borrower during the repayment of the student loan
    22  and the possibility of such benefits, including any benefits  that  were
    23  represented  as  being  available but for which the borrower had not yet
    24  qualified.
    25    6. A student loan servicer shall  respond  within  thirty  days  after
    26  receipt  to a written inquiry from a borrower or a borrower's authorized
    27  representative.
    28    7. A student loan servicer shall preserve records of each student loan
    29  and all communications with  borrowers  for  not  less  than  two  years
    30  following the final payment on a student loan or the sale, assignment or
    31  other  transfer  of  the  servicing  of a student loan, whichever occurs
    32  first, or such longer period as may be required by any  other  provision
    33  of law.
    34    §  722.  Examinations.  1.  The superintendent may at any time, and as
    35  often as he or she may determine, either personally or by a person  duly
    36  designated  by  the superintendent, investigate the business and examine
    37  the books, accounts, records, and files used therein  of  every  student
    38  loan  servicer.  For that purpose the superintendent and his or her duly
    39  designated representative shall have free  access  to  the  offices  and
    40  places  of  business, books, accounts, papers, records, files, safes and
    41  vaults of all student loan servicers. The superintendent and any  person
    42  duly  designated  by  him or her shall have the authority to require the
    43  attendance of and to examine under oath all persons whose  testimony  he
    44  or she may require relative to such business.
    45    2.  No  person  subject  to  investigation  or  examination under this
    46  section may knowingly withhold, abstract, remove, mutilate,  destroy  or
    47  secrete any books, records, computer records or other information.
    48    3.  The  expenses  incurred in making any examination pursuant to this
    49  section shall be assessed against and paid by the student loan  servicer
    50  so  examined, except that traveling and subsistence expenses so incurred
    51  shall be charged against and paid by servicers in  such  proportions  as
    52  the  superintendent  shall  deem  just  and reasonable, and such propor-
    53  tionate charges shall be added to the assessment of the  other  expenses
    54  incurred  upon  each examination. Upon written notice by the superinten-
    55  dent of the total amount of such assessment, the servicer  shall  become
    56  liable for and shall pay such assessment to the superintendent.

        S. 1958                             9
     1    4. In any hearing in which a department employee acting under authori-
     2  ty  of  this  chapter  is  available for cross-examination, any official
     3  written report, worksheet, other related papers, or duly certified  copy
     4  thereof,  compiled, prepared, drafted, or otherwise made by such depart-
     5  ment  employee,  after  being duly authenticated by the employee, may be
     6  admitted as competent evidence upon the oath of the employee  that  such
     7  worksheet,   investigative  report,  or  other  related  documents  were
     8  prepared as a result of an examination of the books  and  records  of  a
     9  servicer  or  other  person, conducted pursuant to the authority of this
    10  chapter.
    11    5. Unless otherwise exempt pursuant  to  subdivision  two  of  section
    12  seven  hundred  eleven  of  this  article,  affiliates of a student loan
    13  servicer shall be subject to examination by the  superintendent  on  the
    14  same  terms  as the servicer, but only when reports from, or examination
    15  of, a servicer provides evidence of unlawful activity between a servicer
    16  and affiliate benefitting, affecting, or  arising  from  the  activities
    17  regulated by this article.
    18    § 723. Penalties for violation of this article. 1. In addition to such
    19  penalties as may otherwise be applicable by law, the superintendent may,
    20  after  notice  and  hearing,  require  any  person  found  violating the
    21  provisions of this article or the rules or regulations promulgated here-
    22  under to pay to the people of this state a penalty for each violation of
    23  this article or any regulation or policy promulgated hereunder a sum not
    24  to exceed an amount as determined pursuant to section forty-four of this
    25  chapter for each such violation.
    26    2. Nothing in this article shall limit  any  statutory  or  common-law
    27  right of any person to bring any action in any court for any act, or the
    28  right of the state to punish any person for any violation of any law.
    29    §  724.  Severability of provisions. If any provision of this article,
    30  or the application of such provision  to  any  person  or  circumstance,
    31  shall  be  held  invalid, illegal or unenforceable, the remainder of the
    32  article, and the application of such provision  to  persons  or  circum-
    33  stances  other  than  those  as  to which it is held invalid, illegal or
    34  unenforceable, shall not be affected thereby.
    35    § 725. Compliance with other laws. 1.  Student  loan  servicers  shall
    36  engage in the business of servicing student loans in conformity with the
    37  provisions of this chapter, such rules and regulations as may be promul-
    38  gated  by  the superintendent thereunder and all applicable federal laws
    39  and the rules and regulations promulgated thereunder.
    40    2. Nothing in this section shall be construed to limit  any  otherwise
    41  applicable state or federal law or regulations.
    42    §  2.  Subdivision  10 of section 36 of the banking law, as amended by
    43  chapter 182 of the laws of 2011, is amended to read as follows:
    44    10. All reports of examinations and investigations, correspondence and
    45  memoranda concerning or arising out of  such  examination  and  investi-
    46  gations,  including any duly authenticated copy or copies thereof in the
    47  possession of any banking organization,  bank  holding  company  or  any
    48  subsidiary  thereof  (as  such terms "bank holding company" and "subsid-
    49  iary" are defined in article three-A of this chapter),  any  corporation
    50  or  any  other  entity affiliated with a banking organization within the
    51  meaning of subdivision six of this section and any  non-banking  subsid-
    52  iary  of  a  corporation  or any other entity which is an affiliate of a
    53  banking organization within the meaning of  subdivision  six-a  of  this
    54  section,  foreign  banking corporation, licensed lender, licensed casher
    55  of  checks,  licensed  mortgage  banker,  registered  mortgage   broker,
    56  licensed  mortgage  loan  originator,  licensed  sales  finance company,

        S. 1958                            10
     1  registered mortgage  loan  servicer,  licensed  student  loan  servicer,
     2  licensed  insurance  premium  finance  agency,  licensed  transmitter of
     3  money, licensed budget planner, any other person or  entity  subject  to
     4  supervision under this chapter, or the department, shall be confidential
     5  communications,  shall  not be subject to subpoena and shall not be made
     6  public unless, in the  judgment  of  the  superintendent,  the  ends  of
     7  justice  and  the  public advantage will be subserved by the publication
     8  thereof, in which event the superintendent may publish or authorize  the
     9  publication  of  a  copy  of any such report or any part thereof in such
    10  manner as may be deemed proper or unless such laws specifically  author-
    11  ize  such  disclosure. For the purposes of this subdivision, "reports of
    12  examinations and investigations, and any  correspondence  and  memoranda
    13  concerning  or  arising  out  of  such examinations and investigations",
    14  includes any such materials of a bank, insurance or securities regulato-
    15  ry agency or any unit of the federal government or that  of  this  state
    16  any  other  state or that of any foreign government which are considered
    17  confidential by such agency or unit and which are in the  possession  of
    18  the  department  or which are otherwise confidential materials that have
    19  been shared by the department with any such agency or unit  and  are  in
    20  the possession of such agency or unit.
    21    §  3.  Subdivisions  1,  2,  3 and 5 of section 39 of the banking law,
    22  subdivisions 1, 2 and 5 as amended by chapter 123 of the  laws  of  2009
    23  and  subdivision  3  as  amended by chapter 155 of the laws of 2012, are
    24  amended to read as follows:
    25    1. To appear and explain an  apparent  violation.  Whenever  it  shall
    26  appear to the superintendent that any banking organization, bank holding
    27  company,  registered mortgage broker, licensed mortgage banker, licensed
    28  student loan servicer, registered mortgage loan servicer, licensed mort-
    29  gage loan  originator,  licensed  lender,  licensed  casher  of  checks,
    30  licensed sales finance company, licensed insurance premium finance agen-
    31  cy, licensed transmitter of money, licensed budget planner, out-of-state
    32  state  bank  that  maintains  a  branch or branches or representative or
    33  other offices in this state, or foreign banking corporation licensed  by
    34  the superintendent to do business or maintain a representative office in
    35  this  state has violated any law or regulation, he or she may, in his or
    36  her discretion, issue an order describing such  apparent  violation  and
    37  requiring  such  banking  organization, bank holding company, registered
    38  mortgage broker, licensed mortgage banker, licensed student loan  servi-
    39  cer, licensed mortgage loan originator, licensed lender, licensed casher
    40  of  checks,  licensed  sales finance company, licensed insurance premium
    41  finance agency, licensed transmitter of money, licensed budget  planner,
    42  out-of-state state bank that maintains a branch or branches or represen-
    43  tative or other offices in this state, or foreign banking corporation to
    44  appear  before  him  or her, at a time and place fixed in said order, to
    45  present an explanation of such apparent violation.
    46    2. To discontinue unauthorized or unsafe and unsound practices.  When-
    47  ever  it  shall  appear to the superintendent that any banking organiza-
    48  tion, bank holding company, registered mortgage broker,  licensed  mort-
    49  gage  banker,  licensed  student loan servicer, registered mortgage loan
    50  servicer, licensed mortgage loan originator, licensed  lender,  licensed
    51  casher  of  checks,  licensed  sales finance company, licensed insurance
    52  premium finance agency, licensed transmitter of money,  licensed  budget
    53  planner,  out-of-state state bank that maintains a branch or branches or
    54  representative or other offices in this state, or foreign banking corpo-
    55  ration licensed by the superintendent to do business in  this  state  is
    56  conducting  business in an unauthorized or unsafe and unsound manner, he

        S. 1958                            11
     1  or she may, in his or her  discretion,  issue  an  order  directing  the
     2  discontinuance of such unauthorized or unsafe and unsound practices, and
     3  fixing a time and place at which such banking organization, bank holding
     4  company,  registered mortgage broker, licensed mortgage banker, licensed
     5  student loan servicer, registered mortgage loan servicer, licensed mort-
     6  gage loan  originator,  licensed  lender,  licensed  casher  of  checks,
     7  licensed sales finance company, licensed insurance premium finance agen-
     8  cy, licensed transmitter of money, licensed budget planner, out-of-state
     9  state  bank  that  maintains  a  branch or branches or representative or
    10  other offices in this state, or foreign banking corporation  may  volun-
    11  tarily appear before him or her to present any explanation in defense of
    12  the practices directed in said order to be discontinued.
    13    3.  To  make  good  impairment of capital or to ensure compliance with
    14  financial requirements. Whenever it shall appear to  the  superintendent
    15  that  the  capital  or  capital  stock of any banking organization, bank
    16  holding company or any subsidiary thereof which is  organized,  licensed
    17  or  registered  pursuant  to this chapter, is impaired, or the financial
    18  requirements imposed by subdivision one of section two hundred two-b  of
    19  this  chapter  or  any regulation of the superintendent on any branch or
    20  agency of a foreign banking corporation or  the  financial  requirements
    21  imposed  by  this chapter or any regulation of the superintendent on any
    22  licensed lender, registered mortgage broker, licensed  mortgage  banker,
    23  licensed  student  loan  servicer,  licensed  casher of checks, licensed
    24  sales  finance  company,  licensed  insurance  premium  finance  agency,
    25  licensed transmitter of money, licensed budget planner or private banker
    26  are  not  satisfied,  the  superintendent  may,  in the superintendent's
    27  discretion, issue an order directing  that  such  banking  organization,
    28  bank holding company, branch or agency of a foreign banking corporation,
    29  registered  mortgage  broker, licensed mortgage banker, licensed student
    30  loan servicer, licensed lender,  licensed  casher  of  checks,  licensed
    31  sales  finance  company,  licensed  insurance  premium  finance  agency,
    32  licensed transmitter of money, licensed budget planner, or private bank-
    33  er make good such deficiency forthwith or within  a  time  specified  in
    34  such order.
    35    5.  To keep books and accounts as prescribed. Whenever it shall appear
    36  to the superintendent that any banking organization, bank holding compa-
    37  ny, registered  mortgage  broker,  licensed  mortgage  banker,  licensed
    38  student loan servicer, registered mortgage loan servicer, licensed mort-
    39  gage  loan  originator,  licensed  lender,  licensed  casher  of checks,
    40  licensed sales finance company, licensed insurance premium finance agen-
    41  cy, licensed transmitter of money, licensed budget  planner,  agency  or
    42  branch  of  a foreign banking corporation licensed by the superintendent
    43  to do business in this state, does not keep its books  and  accounts  in
    44  such manner as to enable him or her to readily ascertain its true condi-
    45  tion,  he or she may, in his or her discretion, issue an order requiring
    46  such banking organization, bank  holding  company,  registered  mortgage
    47  broker, licensed mortgage banker, licensed student loan servicer, regis-
    48  tered   mortgage  loan  servicer,  licensed  mortgage  loan  originator,
    49  licensed lender, licensed  casher  of  checks,  licensed  sales  finance
    50  company, licensed insurance premium finance agency, licensed transmitter
    51  of  money,  licensed  budget planner, or foreign banking corporation, or
    52  the officers or agents thereof, or any of them, to open  and  keep  such
    53  books  or accounts as he or she may, in his or her discretion, determine
    54  and prescribe for the purpose of keeping accurate and convenient records
    55  of its transactions and accounts.

        S. 1958                            12
     1    § 4. Paragraph (a) of subdivision 1 of section 44 of the banking  law,
     2  as  amended  by  chapter  155 of the laws of 2012, is amended to read as
     3  follows:
     4    (a) Without limiting any power granted to the superintendent under any
     5  other provision of this chapter, the superintendent may, in a proceeding
     6  after  notice  and a hearing, require any safe deposit company, licensed
     7  lender, licensed casher  of  checks,  licensed  sales  finance  company,
     8  licensed  insurance  premium  finance  agency,  licensed  transmitter of
     9  money, licensed mortgage banker, licensed student loan servicer,  regis-
    10  tered  mortgage  broker,  licensed  mortgage loan originator, registered
    11  mortgage loan servicer or licensed budget planner to pay to  the  people
    12  of  this  state  a  penalty for any violation of this chapter, any regu-
    13  lation promulgated thereunder,  any  final  or  temporary  order  issued
    14  pursuant  to  section thirty-nine of this article, any condition imposed
    15  in writing by the superintendent in connection with  the  grant  of  any
    16  application  or  request, or any written agreement entered into with the
    17  superintendent.
    18    § 5. This act shall take effect on the one hundred eightieth day after
    19  it shall have become a law.
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