SB 890 — AN ACT CONCERNING STUDENT LOAN SERVICERS.

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890 section.

(NEW) (Effective July 1, 2021) The provisions of sections 36a- 846 to 36a-854, inclusive, of the general statutes, as amended by this act, and sectionsections 3 and 17 of this act shall not apply to the following persons:

(a) No person licensed to act [within this state] as a private student loanservicerundersection36a-847,asamendedbythisact,orregistered to act as a federal student loan servicer under section 3 of this act, shall LCOdo {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0089so under any other name or at any other place of 27business R02-SB.docxthan }that Substitutenamed Billin No.the license or registration.

890 do so under any other name or at any other place of business than that named in the license or registration.

(b)Public [A]Act NoNo. such license or registration shall [not] be transferable or assignable.

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890 (b) [A] No such license or registration shall [not] be transferable or assignable.

After a license has been automatically suspended pursuant to this subsection, the commissioner shall [(1)] (A) give the licensee notice of such automatic suspension pending proceedings for revocation of or refusal to renew the license LCOpursuant {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0010to ofsection 2736a-852, R02-SB.docxas }amended Substituteby Billthis No.act, and an opportunity for a hearing in accordance with section 36a-51, and [(2)] (B) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

890 pursuant to section 36a-852, as amended by this act, and an opportunity for a hearing in accordance with section 36a-51, and [(2)] (B) require the licensee to take or refrain from taking action as the commissioner deems necessary to effectuate the purpose of this section.

(d) [A] Each private student loan servicer licensee and each federal student loan servicer registrant shall file on the system or, if the information cannot be filed on the system, notify the commissioner, in writing,oftheoccurrenceofanyofthewriting,oftheoccurrenceofanyofthefollowingdevelopmentsnotlater followingdevelopmentsnotlater than fifteen days after the date the licensee or registrant had reason to know of the occurrence of any of the following developments:

(1)Public FilingAct forNo. bankruptcy or the consummation of a corporate restructuring of the licensee or registrant;

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890 (1) Filing for bankruptcy or the consummation of a corporate restructuring of the licensee or registrant;

or LCO(5) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0011Receiving notification of 27filing R02-SB.docxfor }bankruptcy Substituteof Billany No.control person, branch manager or qualified individual of the licensee or registrant.

890 (5) Receiving notification of filing for bankruptcy of any control person, branch manager or qualified individual of the licensee or registrant.

(f) The unique identifier of any person licensed [under section 36a- 847]Public asAct aNo. private student loan servicer or registered as a federal student loan servicer shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements.

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890 847] as a private student loan servicer or registered as a federal student loan servicer shall be clearly shown on all solicitations and advertisements, including business cards and Internet web sites, and any other documents as established by rule, regulation or order of the commissioner, and shall be clearly stated in all audio solicitations and advertisements.

(a) [Each] Except as otherwise required pursuant to federal law, a LCOfederal {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-008912student loan agreement or by a contract with the United States Department of 27Education, R02-SB.docxeach }private Substitutestudent Billloan No.servicer licensee and each federal student loan servicer registrant shall maintain adequate records of each student education loan transaction for not less than two years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or such longer period as may be required by any other provision of law.

890(b) [If requested by the commissioner, each] Except as otherwise required pursuant to federal law, a federal student loan agreement or by a contract with the United States Department of Education, each private student loan servicer licensee [shall] and each federal student loanPublic servicerAct registrantNo. shall maintain adequate records of each student education loan transaction for not less than two years following the final payment on such student education loan or the assignment of such student education loan, whichever occurs first, or such longer period as may be required by any other provision of law.

(b)21-130 [If13 requested by the commissioner, each] Except as otherwise required pursuant to federal law, a federal student loan agreement or by a contract with the United States Department of Education,29 eachSubstitute privateSenate studentBill loanNo. servicer licensee [shall] and each federal student loan servicer registrant shall, if requested by the commissioner, make such records available or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that providesadateddeliveryreceipt,not later thanfive business days after requested by the commissioner to do so.

890 loan servicer registrant shall, if requested by the commissioner, make such records available or send such records to the commissioner by registered or certified mail, return receipt requested, or by any express delivery carrier that providesadateddeliveryreceipt,not later thanfive business days after requested by the commissioner to do so.

(2) Engage in any unfair or deceptive practice toward any person or misrepresent or omit any material information in connection with the servicing of a student education loan, including, but not limited to, LCOmisrepresenting {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-00813the amount, nature or terms of 27any R02-SB.docxfee }or Substitutepayment Billdue No.or claimed to be due on a student education loan, the terms and conditionsoftheloanagreementortheborrower'sobligationsunderthe loan;

890 misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditionsoftheloanagreement ortheborrower'sobligationsunderthe loan;

(5) Knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a student loan borrower's creditworthiness;Public Act No.

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890 creditworthiness;

or (9) [Fail] Unless otherwise required pursuant to federal law, a federal student loan agreement or by a contract between a federal student loan servicerandtheUnitedStatesDepartmentofEducation,fail toestablish, enforce and maintain policies and procedures for supervising employees, agents and office operations that are reasonably designed to LCOachieve {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0014compliance ofwith 27applicable R02-SB.docxstudent }loan Substituteservicing Billlaws No.and regulations [;] or fail to comply with the service standards set by the commissioner in accordance with section 59 of public act 16-65.

890 achieve compliance with applicable student loan servicing laws and regulations [;] or fail to comply with the service standards set by the commissioner in accordance with section 59 of public act 16-65.

(a)Inadditiontoanyauthorityprovidedunderthistitle,thePublic [BankingAct Commissioner]No. commissioner shall have the authority to conduct investigations and examinations as follows:

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890 (a)Inadditiontoanyauthorityprovidedunderthistitle,the [Banking Commissioner] commissioner shall have the authority to conduct investigations and examinations as follows:

The commissioner may direct, subpoena or order the attendance of and examine under LCOoath {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0015all ofpersons 27whose R02-SB.docxtestimony }may Substitutebe Billrequired No.about the student educationloanorthebusinessorsubjectmatterofanysuchexamination or investigation, and may direct, subpoena or order such person to produce books, accounts, records, files and any other documents the commissioner deems relevant to the inquiry.

890(b) oathIn allmaking personsany whoseexamination testimonyor mayinvestigation beauthorized requiredby aboutthis section, the studentcommissioner educationloanorthebusinessorsubjectmatterofanysuchexamination or investigation, and may direct,control subpoenaaccess or order such person to produce books, accounts, records, files and any other documents theand commissionerPublic deemsAct relevantNo. to the inquiry.

(b)21-130 In16 making any examination or investigation authorized by this section, the commissioner may control access to any documents and records of the29 studentSubstitute loanSenate servicerBill [licensee]No. or person under examination or investigation.

890 records of the student loan servicer [licensee] or person under examination or investigation.

LCO(3) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0016Use, ofhire, 27contract R02-SB.docxor }employ Substitutepublic Billor No.privately available analytical systems, methods or software to examine or investigate the student loan servicer [licensee] or person subject to sections 36a-846 to 36a-854, inclusive, as amended by this act, or section 3 of this act;

890(4) (3)Accept Use,and hire,rely contracton orexamination employ public or privatelyinvestigation availablereports analyticalmade systems, methods or software to examine or investigate the student loan servicer [licensee] or person subject to sections 36a-846 to 36a-854, inclusive, as amended by thisPublic act,Act orNo. section 3 of this act;

(4)21-130 Accept17 andof rely29 onSubstitute examinationSenate orBill investigationNo. reports made by other government officials, within or without this state;

and890 (5)other Acceptgovernment auditofficials, reportswithin made by an independent certified public accountant for the student loan servicer [licensee] or personwithout subject to sections 36a-846 to 36a-854, inclusive, as amended by this act,state; or section 3 of this act, in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the commissioner.

and (5) Accept audit reports made by an independent certified public accountant for the student loan servicer [licensee] or person subject to sections 36a-846 to 36a-854, inclusive, as amended by this act, or section of this act, in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the commissioner.

(a) The commissioner may suspend, revoke or refuse to renew any license issued under section 36a-847, as amended by this act, or take any other action, in accordance with section 36a-51, if the commissioner finds that (1) the licensee or any control person, qualified individual, branch manager, trustee, employee or agent of the licensee has violated any provision of this title or any regulation or order adopted or issued pursuant thereto pertaining to such person, or any other law or LCOregulation {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0017applicable to the conduct of 27such R02-SB.docxlicensee's }student Substituteloan Billservicing business, or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, clearly Public Act No.

89021-130 regulation18 applicable to the conduct of such29 licensee'sSubstitute studentSenate loanBill servicingNo. business, or (2) any fact or condition exists which, if it had existed at the time of the original application for the license, clearly would have warranted a denial of such license.

890 would have warranted a denial of such license.

LCOSec. {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0018 of 27 R02-SB.docx } Substitute Bill No.

890 Sec.

Subdivision (1) of subsection (d) of section 36a-17 of the generalPublic statutesAct isNo. repealed and the following is substituted in lieu thereof (Effective July 1, 2021):

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890 general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2021):

(b) In the event the commissioner elects to require system-based licensure or registration for persons engaged in a financial services industry subject to the commissioner's jurisdiction, the commissioner shall require all initial or renewal applications for such licenses or registrations in this state to be made and processed through the system in such form as the commissioner may prescribe, and the system shall bePublic authorizedAct to receive and maintain records related to such licenses or LCO {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0019 of 27 R02-SB.docx } Substitute Bill No.

89021-130 registrations20 toof the29 sameSubstitute extentSenate allowedBill orNo. required to be maintained by the commissioner.

890 be authorized to receive and maintain records related to such licenses or registrations to the same extent allowed or required to be maintained by the commissioner.

(c) In the event the commissioner elects to require system-based licensurePublic forAct persons engaged in financial services industries subject to the commissioner's jurisdiction, the commissioner may report regularly to the system violations of and enforcement actions under applicable LCO {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0020 of 27 R02-SB.docx } Substitute Bill No.

89021-130 law21 andof other29 relevantSubstitute information.Senate Bill No.

890 licensure for persons engaged in financial services industries subject to the commissioner's jurisdiction, the commissioner may report regularly to the system violations of and enforcement actions under applicable law and other relevant information.

Each person required to obtain registration or licensure through the system shall timely submit to the system accurate reports thatPublic shallAct beNo. in such form and contain such information as the system may require.

(g)21-130 All22 fees paid for any initial application for a license or registration or for a renewal application for a license or registration, including, but LCO {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0021 of 2729 R02-SB.docx } Substitute Senate Bill No.

890 notthat limitedshall to,be fees paid in connectionsuch withform anand applicationcontain thatsuch isinformation deniedas or withdrawn prior to the issuancesystem ofmay therequire. license or registration, shall be nonrefundable.

(g) All fees paid for any initial application for a license or registration or for a renewal application for a license or registration, including, but not limited to, fees paid in connection with an application that is denied or withdrawn prior to the issuance of the license or registration, shall be nonrefundable.

(j)Public TheAct commissionerNo. may issue a temporary order to cease business under a license or registration if the commissioner determines that such license or registration was issued erroneously.

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890 (j) The commissioner may issue a temporary order to cease business under a license or registration if the commissioner determines that such license or registration was issued erroneously.

Such temporaryordershallbecomeeffectiveuponreceiptbythelicensee and, LCOunless {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0022set aside or modified by a court, shall remain in effect until the effective date of 27a R02-SB.docxpermanent }order Substituteor Billdismissal No.of the matters asserted in the notice.

890 unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or dismissal of the matters asserted in the notice.

(E) the maximumPublic penaltyAct thatNo. may be imposed for such violation;

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890 maximum penalty that may be imposed for such violation;

LCO(a) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-008923Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of 27the R02-SB.docxgeneral }statutes Substitutewithin Billthe No.jurisdiction of the commissioner, or any regulation, rule,ororderadoptedorissuedthereunder,thecommissionermaysend a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, unless such person is licensed by or registered with the commissioner, in which case the notice may be provided by personal delivery, as defined in section 4-166, in accordance with section 36a-52a, as amended by this act.

890 (a) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule,ororderadoptedorissuedthereunder,thecommissionermaysend a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, unless such person is licensed by or registered with the commissioner, in which case the notice may be provided by personal delivery, as defined in section 4-166, in accordance with section 36a-52a, as amended by this act.

If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice, unlessthepersonfailsto appear at thehearing.Afterthehearing, thePublic commissionerAct shallNo. determine whether an order to cease and desist should be issued against the person named in the notice.

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890 the commissioner shall determine whether an order to cease and desist should be issued against the person named in the notice.

Notwithstanding the provisions of subsection (c) of section 4-182, the LCO[Banking {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-008924Commissioner] ofcommissioner 27may R02-SB.docxprovide }notice Substitutepursuant Billto No.section 4-182 or sections 36a-50 to 36a-52, inclusive, as amended by this act, to any person licensed by or registered with the commissioner by personal delivery, as defined in section 4-166.

890 [Banking Commissioner] commissioner may provide notice pursuant to section 4-182 or sections 36a-50 to 36a-52, inclusive, as amended by this act, to any person licensed by or registered with the commissioner by personal delivery, as defined in section 4-166.

Subdivision (2) of subsection (a) of section 36a-65 of the generalPublic statutesAct isNo. repealed and the following is substituted in lieu thereof (Effective July 1, 2021):

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890 general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2021):

The commissioner shall annually, on or after July first for the fiscal year commencing on said July first, collect such additional amounts sufficient in the commissioner's judgment to meet the expenses of the Department of Banking, including a reasonable reserve for LCOcontingencies. {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-008925 of 27 R02-SB.docx } Substitute Bill No.

890 contingencies.

If the licensee fails to pay such cost not later than sixty days after receipt of demandPublic fromAct theNo. commissioner, the commissioner may suspend the license until such costs are paid.

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890 demand from the commissioner, the commissioner may suspend the license until such costs are paid.

Upon finding that a student loan servicer has violated any provision of said sections, the court may award a prevailing party actual damages, reasonable attorneys' fees and court costs, and may, in its discretion, award punitive damages and restitutionofpropertyandmay providesuchequitablereliefasitprovide suchequitablereliefasit deems appropriate.

LCO(b) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0026In addition to the judicial relief provided under subsection (a) of 27this R02-SB.docxsection, }in Substituteany Billcivil No.action brought under this section in which the student loan borrower prevails, the court may award treble damages upon a finding that the student loan servicer has engaged in conduct that substantially interferes with (1) such student loan borrower's right to an alternative payment arrangement, loan forgiveness, cancellation or discharge of the student loan borrower's student education loan, or (2) any other financial benefit (A) established under the terms of such student loan borrower's promissory note, or (B) pursuant to the Higher Education Act of 1965, as amended from time to time, or the regulations adopted thereunder.

890 (b) In addition to the judicial relief provided under subsection (a) of this section, in any civil action brought under this section in which the student loan borrower prevails, the court shall award treble damages upon a finding that the student loan servicer has engaged in conduct that substantially interferes with (1) such student loan borrower's right to an alternative payment arrangement, loan forgiveness, cancellation or discharge of the student loan borrower's student education loan, or (2) any other financial benefit (A) established under the terms of such student loan borrower's promissory note, or (B) pursuant to the Higher Education Act of 1965, as amended from time to time, or the regulations adopted thereunder.

(d) The remedies provided under this section shall be in addition to anyPublic otherAct remediesNo. provided under state or federal law, and a student loan borrower shall not be required to exhaust any administrative remedies established pursuant to sections 36a-846 to 36a-854, inclusive, of the general statutes, as amended by this act, and section 3 of this act, prior to bringing an action under this section.

This21-130 act28 shallof take29 effectSubstitute asSenate followsBill andNo. shall amend the following sections:

Section890 1any Julyother 1,remedies 2021provided under state or federal law, and a student loan borrower shall not be required to exhaust any administrative remedies established pursuant to sections 36a-846 Sec.to 36a-854, inclusive, of the general statutes, as amended by this act, and section 3 of this act, prior to bringing an action under this section.

2Approved July 1,7, 2021 36a-847Public Sec.Act No.

321-130 July29 1,of 202129 New section Sec.

4 July 1, 2021 New section Sec.

5 July 1, 2021 36a-848 Sec.

6 July 1, 2021 36a-849 Sec.

7 July 1, 2021 36a-850 Sec.

8 July 1, 2021 36a-851 Sec.

9 July 1, 2021 36a-852 LCO {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-00890-27 of 28 R02-SB.docx } Substitute Bill No.

890 Sec.

10 July 1, 2021 36a-17(d)(1) Sec.

11 July 1, 2021 36a-24b Sec.

12 July 1, 2021 36a-50(a)(1) Sec.

13 July 1, 2021 36a-52(a) Sec.

14 July 1, 2021 36a-52a Sec.

15 July 1, 2021 36a-65(a)(2) July 1, 2021 Sec.

16 36a-65(c)(6) Sec.

17 October 1, 2021 New section BA Joint Favorable Subst.

JUD Joint Favorable LCO {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-00890- 28 of 28 R02-SB.docx }