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8 V.S.A. Chapter 73 Licensed Lender Statute, Act No. 29 (H.171) 2009 - Order Regarding Effective Date Of Deletion Of Licensed Lender Statute Exemption For Nonprofit 501(c) Organizations That Conduct Their Lending Activities Through Revolving Loan Funds

Order
Thursday, July 23, 2009
Docket No. 09-097-B

File attachments: 

http://www.dfr.vermont.gov/sites/default/files/ORD-B-09-097.pdf

Docket No. 09-097-B

In Re: 8 V.S.A. Chapter 73 Licensed Lender Statute Act No. 29 (H.171) 2009

 

ORDER REGARDING EFFECTIVE DATE OF DELETION OF

LICENSED LENDER STATUTE EXEMPTION FOR

NONPROFIT 501(c) ORGANIZATIONS THAT CONDUCT THEIR LENDING

ACTIVITIES THROUGH REVOLVING LOAN FUNDS

 

 

Background

1. Act 29 modified the following exemption from the Licensed Lender Statute, which exemption was formerly found at 8 V.S.A. §2201(c)(8) (the "Nonprofit Revolving Loan Fund Exemption") by adding the following italicized language:

(c) No license shall be required of:

. . .

(8) lenders that conduct their lending activities, other than residential mortgage loan activities, through revolving loan funds, that are nonprofit organizations exempt from taxation under section 501(c) of the Internal Revenue Code, and that register with the commissioner of economic development under section 690a of Title 10

[As amended, this exemption is now codified at 8 V.S.A. §2201(d)(9).]

2. The effect of the modification to the Nonprofit Revolving Loan Fund Exemption is that nonprofit organizations operating revolving housing loan funds using grant money (for example, grant money from the Department of Housing & Community Affairs) would need to be licensed as a lender under Chapter 73 as of July 1, 2009 in order to continue making residential mortgage loans to low income homeowners.

3. Pursuant to Act 29, Sec. 3 (b), the commissioner may extend the date for compliance with any provision of Act 29 provided the extension is permitted or approved by the federal Department of Housing and Urban Development ("HUD").

4. Act 29 modified the Licensed Lender Statute, 8 V.S.A. Chapter 73, to bring Chapter 73 into compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act").

5. Under the SAFE Act HUD is responsible for determining whether a state has a law or regulatory system in place that meets the requirements of the SAFE Act. See, SAFE Act §1508.

6. Both the SAFE Act and HUD commentary permit a state to delay licensing lenders such as nonprofit 501(c) organizations that conduct their lending activities through revolving loan funds.

7. Delaying the effective date for the removal of an exemption from Chapter 73 is consistent with the SAFE Act and HUD guidelines, and is fair and reasonable because of the particular circumstances involved in the transactions that would otherwise be affected by the removal of the exemption, provided the delay does not extend the effective date for licensing beyond July 31, 2010.

8. Given the current difficult circumstances in the residential mortgage market, and the number of homeowners potentially facing foreclosure or having difficulty making their mortgage payments, it is appropriate to delay the effective date of the modification to the Nonprofit Revolving Loan Fund Exemption to enable these nonprofit 501(c) organizations to continue assisting homeowners while they transition to becoming a licensed lender under Chapter 73.

Order

9. Based upon the foregoing and other factors deemed relevant to the commissioner, it is hereby ordered that:

a. The effective date of compliance with the requirement of Act 29 that nonprofit 501(c) organizations that conduct their residential mortgage lending activities through revolving loan funds be licensed as lenders is hereby delayed until December 30, 2009.

b. Prior to and including December 30, 2009, nonprofit 501(c) organizations that conduct their residential mortgage lending activities through revolving loan funds, as described in former 8 V.S.A. §2201(c)(8), do not need to obtain a lender license to make residential mortgage loans.

c. Beginning December 31, 2009 nonprofit 501(c) organizations that conduct their residential mortgage lending activities through revolving loan funds must have obtained a lender license or otherwise qualify for an exemption from Chapter 73 in order to continue the practice of making residential mortgage loans in Vermont.

8 V.S.A. Chapter 73 Licensed Lender Statute, Act No. 29 (H.171) 2009 - Order Regarding Effective Date Of Deletion Of Nonprofit Institutions Of Higher Education Exemption

Order
Wednesday, July 8, 2009
Docket No. 09-084-B

File attachments: 

http://www.dfr.vermont.gov/sites/default/files/ORD-B-09-084.pdf

Docket No. 09-084-B

In Re: 8 V.S.A. Chapter 73 Licensed Lender Statute Act No. 29 (H.171) 2009

 

ORDER REGARDING EFFECTIVE DATE OF DELETION OF

NONPRO F IT INSTITUTIONS OF HIGHER EDUCATION EXEMPTION

 

Background

1. Act 29 deleted the following exemption from the Licensed Lender Statute, which exemption was formerly found at 8 V.S.A. §2210(c)(11) (the "Nonprofit Institutions of Higher Education Exemption"):

(c) No license shall be required of:

. . .

(11) nonprofit institutions of higher education, exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, that make residential mortgage loans to their employees from their own funds.

2. Pursuant to Act 29, Sec. 3 (b), the commissioner may extent the date for compliance with any provision of Act 29 provided the extension is permitted or approved by the federal Department of Housing and Urban Development ("HUD").

3. Act 29 modified the Licensed Lender Statute, 8 V.S.A. Chapter 73, to bring Chapter 73 into compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act").

4. Under the SAFE Act HUD is responsible for determining whether a state has a law or regulatory system in place that meets the requirements of the SAFE Act. See, SAFE Act §1508.

5. Pursuant to HUD's Commentary on Model State Law, Section D, a state may delay the deadline for individual loan originator licensing until no later than July 31, 2010.

6. Delaying the effective date for the removal of an exemption from Chapter 73 would be consistent HUD guidelines, provided the delay did not extent the effective date beyond July 31, 2010.

Order

7. Based upon the foregoing and other factors deemed relevant to the commissioner, it is hereby ordered that:

a. The effective date for deletion of the Nonprofit Institutions of Higher Education Exemption is hereby delayed until January 1, 2010.

b. Prior to January 1, 2010 Nonprofit Institutions of Higher Education, as described in former 8 V.S.A. §2210(c)(11), do not need to obtain a lender license to make residential mortgage loans to their employees from the Institution's own funds.

c. Beginning January 1, 2010 Nonprofit Institutions of Higher Education must have obtained a lender license or otherwise qualify for an exemption from Chapter 73 in order to continue the practice of making residential mortgage loans to their employees.

Use of "Bank", "Banking Association", or "Trust Company" by Financial Services Institutions

Bulletin
Friday, November 2, 1990
Banking Bulletin #15

File attachments: 

http://www.dfr.vermont.gov/sites/default/files/BUL-B-15.pdf

BULLETIN # B-15

NOVEMBER 2, 1990

USE OF "BANK", "BANKING ASSOCIATION", OR "TRUST COMPANY" BY FINANCIAL SERVICES INSTITUTIONS

This bulletin explains the position of the Department of Banking, Insurance, and Securities on implementation of Title 8, V.S.A. Section 558, which provides:

A person, firm, association or corporation, except corporations reporting to and under the supervision of the commissioner, shall not advertise or put forth any sign as a bank, banking association or trust company, or in any way solicit or receive deposits or transact business as a bank, banking association or trust company, or use the words "bank", "banking association" or "trust company" ....(emphasis added)

A question of identity has arisen: within the scope of Section 558, which are the "corporations reporting to and under the supervision of the Commissioner"? Those which report and operate under the supervision of the Commissioner may use the words "bank", "banking association" or "trust company" in marketing or business transactions. Those which do not so report and operate may not use these terms in the conduct of their marketing or business transactions in Vermont.

In addition to financial entities holding a bank charter, there are financial entities with banking family relationships so close as to be perceived as banks by the public. Such entities typically engage in one or more traditional banking activities and operate in conjunction with a bank of some sort. Conversely, there are those financial services organizations which are governed by unique laws and regulations and which should not be so perceived. Insurance companies, securities brokers/dealers, credit unions and state-chartered savings and loan associations are examples of financial services providers not closely identified with banks and not regulated as banks.

For the foregoing reasons, it is the Department's position that the following corporations are "corporations reporting to and under the supervision of the Commissioner" for the purposes of compliance with Section 558:

  • State chartered banks ("state banks") as defined in 8 VSA Section 2;
  • Nationally chartered banks ("national banks") as defined by federal law or "federal savings banks" as defined by federal law, with their principal place of business in Vermont;
  • Those licensed lenders which are licensed under 8 VSA Chapter 73 and meet at least one (1) of the following criteria:

-  The licensed lender is a subsidiary of a "state bank", "national bank", or a "federal savings bank" or a subsidiary of a bank with its principal place of business in another state; or

- The licensed lender is a subsidiary of a bank holding company as defined in 12 USC Section 1841 et seg.

Corporations not meeting one of the tests set forth above may not use the terms "bank", "banking association", or "trust company" in marketing or business transactions within Vermont.

Any corporation allowed to use the terms "bank", "banking corporation" or "trust company" under Section 558 and this Bulletin is expected to follow name origination or name change procedures as prescribed by applicable Vermont state laws.

Permitted Charges on Subordinate Lien Mortgages

Bulletin
Monday, June 18, 1984
Banking Bulletin #11

File attachments: 

http://www.dfr.vermont.gov/sites/default/files/BUL-B-11.pdf
BULLETIN No. l1
June 18, 1984
 
 
TO: CHIEF EXECUTIVE OFFICER OF THE INSTITUTION ADDRESSED SUBJECT: PERMITTED CHARGES ON SUBORDINATE LIEN MORTGAGES
 
 
As you know, the Depository Institutions Deregulation and Monetary Control Act of 1980 pre-empted provisions of state law “limiting the rate or amount of interest, discount points, finance charges, or other charges” on mortgage loans secured by a first lien on residential real property or a residential manufactured home,
12 u.s.c. § 1735f-7.
 
Apart from this federal pre-emption of state law, loans made by Vermont lenders are subject to the provisions of Chapter 4 of Title 9, V.S.A .. Therefore such loans shall be based on the actuarial method of interest calculation, in accordance with
9 V.S.A. § 4la(d), which further specifies that, “Interest shall not be paid, deducted or added to principal in advance.”
 
The Department of Banking and Insurance takes the position that points, whether labeled as such or disguised as other fees or charges, are prepaid interest and therefore prohibited by 9 V.S.A. § 4la(d) for loans not subject to federal pre-emption. Only fees authorized under 9 V.S.A. § 42, including Regulation 79-1, as amended 12/15/80 may be charged.
 
It has come to the attention of the Department that some lenders have indicated they are charging points or assessing other charges not specifically authorized on subordinate lien mortgages secured by owner-occupied dwellings of two units or less. The Department finds no legal basis for this action and such practice should cease immediately.
 
Any questions pertaining to the above should be directed to Dennis R. Ellingson, Deputy Commissioner of Banking.
 

State-Chartered Credit Unions

The following is a list of credit unions regulated by the Vermont Banking Division:

Vermont Foreclosure Filing

ATTENTION:  Two new fields have been added to the filing to assist in contacting and determining those mortgagors eligible for mediation under Act 132, An Act Relating to Mediation in Foreclosure Proceedings.

1) Provide the mortgagors telephone number, if known.

2) Answer the question, "Does the loan qualify for the Home Affordable Modification Program (HAMP)?"

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