§ 2200. Definitions
As used in this chapter:
(1)(A) “Employee” means, subject to subdivision (B) of this subdivision (1), an individual
whose manner and means of work are subject to the right of control of, or are controlled
by a person and whose compensation for federal income tax purposes is reported, or
required to be reported, on a W-2 form issued by:
(i) the controlling person;
(ii) an entity that directly or indirectly owns 100 percent of the controlling person;
or
(iii) an entity that is directly or indirectly 100 percent owned by the same parent company
as the controlling person.
(B) For purposes of a registered mortgage loan originator, the term “employee” has such
binding definition as may be issued by the federal banking agencies in connection
with their responsibilities under the federal Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
(2) “Engage in the business of a mortgage loan originator” means to act as, or to hold
oneself out as acting as, or to represent to the public that one can provide the services
of, a mortgage loan originator, in a commercial context, and with some degree of habitualness
or repetition. Habitualness or repetition is met if either the individual who acts
as a mortgage loan originator does so with a degree of habitualness or repetition
or the source of the prospective financing provides such financing or performs other
phases of origination of residential mortgage loans with a degree of habitualness
or repetition. Acting in a commercial context is met if either the individual or an
entity for which the individual acts does so for the purpose of obtaining profit rather
than exclusively for governmental or family purposes.
(3) “Housing finance agency” means any authority:
(A) that is chartered by a state to help meet the affordable housing needs of the residents
of the state;
(B) that is supervised directly or indirectly by the state government;
(C) that is subject to audit and review by the state in which it operates; and
(D) whose activities make it eligible to be a member of the National Council of State
Housing Agencies.
(4) “Lead” means any information identifying a potential consumer of a loan.
(5) “Lead generation” means to:
(A) initiate consumer interest or inquiry in a loan by online marketing, direct response
advertising, telemarketing, or other similar consumer contact;
(B) engage in the business of selling leads for loans;
(C) generate or augment leads for other persons for, or with the expectation of, compensation
or gain; or
(D) refer Vermont borrowers to other persons for loans for, or with the expectation of,
compensation or gain.
(6) “Loan processor or underwriter” means an individual who performs clerical or support
duties as an employee at the direction and subject to the supervision and instruction
of a person licensed, or exempt from licensing, under this chapter.
(A) For purposes of this subdivision (6), the term “clerical or support duties” may include,
subsequent to the receipt of a residential mortgage loan application:
(i) the receipt, collection, distribution, and analysis of information common for the
processing or underwriting of a residential mortgage loan; and
(ii) communicating with a consumer to obtain the information necessary for the processing
or underwriting of a loan, to the extent that such communication does not include
offering or negotiating loan rates or terms, or counseling consumers about residential
mortgage loan rates or terms.
(B) An individual engaging solely in loan processor or underwriter activities shall not
represent to the public, through advertising or other means of communicating or providing
information, including the use of business cards, stationery, brochures, signs, rate
lists, or other promotional items, that such individual can or will perform any of
the activities of a mortgage loan originator.
(7)(A) “Loan solicitation” means, for compensation or gain or with the expectation of compensation
or gain, to:
(i) offer, solicit, broker, directly or indirectly arrange, place, or find a loan for
a prospective Vermont borrower;
(ii) engage in any activity intended to assist a prospective Vermont borrower in obtaining
a loan, including lead generation;
(iii) arrange, in whole or in part, a loan through a third party, regardless of whether
approval, acceptance, or ratification by the third party is necessary to create a
legal obligation for the third party, through any method, including mail, telephone,
internet, or any electronic means; or
(iv) represent to the public through advertising or other means of communicating or providing
information, including the use of business cards, stationery, brochures, signs, rate
lists, or other promotional items, that a person can or will provide a loan or any
of the services described in subdivisions (i)-(iii) of this subdivision (7)(A).
(B) As used in this subdivision (7), “loan solicitation” does not:
(i) apply to residential mortgage loans;
(ii) include a broker-dealer registered or exempt from registration under 9 V.S.A. § 5401 when the broker-dealer provides the services described in subdivision (A) of this
subdivision (7) and the broker-dealer is not compensated by the consumer for those
services;
(iii) include an agent registered or exempt from registration under 9 V.S.A. § 5402 when the agent provides the services described in subdivision (A) of this subdivision
(7) and the individual agent is not compensated by the consumer for those services;
(iv) include an insurance producer licensed under 8 V.S.A. § 4800 when the insurance producer provides the services described in subdivision (A) of
this subdivision (7) and the individual insurance producer is not compensated by the
consumer for those services;
(v) include a seller of goods or services that provides the services described in subdivision
(A) of this subdivision (7) in connection with financing the sale or proposed sale
of the seller’s goods or services and the seller is not compensated by the consumer
for the services described in subdivision (A) of this subdivision (7); or
(vi) include other categories of loans or service providers as determined by the Commissioner
by rule or order.
(8) “Mortgage broker” means any person who for compensation or gain, or in the expectation
of compensation or gain, directly or indirectly negotiates, places, assists in placement,
or finds, or offers to negotiate, place, assist in placement, or find, mortgage loans,
other than commercial loans, on real property for others. The term shall not include
real estate brokers or salespersons, as defined in 26 V.S.A. § 2211, who in connection with services performed in a prospective real estate transaction,
provide mortgage information or assistance to a buyer, if such real estate broker
or real estate salesperson is not compensated for providing such mortgage information
or assistance in addition to the compensation received from the seller or buyer for
such real estate brokerage activity. The term shall not include attorneys licensed
to practice law in this State acting in their professional capacity. The term shall
not include persons engaged in the foregoing activities solely in connection with
the sale, assignment, or other transfer of one or more previously originated loans.
(9) “Mortgage loan originator”:
(A) Means an individual who for compensation or gain or in the expectation of compensation
or gain:
(i) takes a residential mortgage loan application;
(ii) offers or negotiates terms of a residential mortgage loan; or
(iii) represents to the public, through advertising or other means of communicating or providing
information, including the use of business cards, stationery, brochures, signs, rate
lists, or other promotional items, that such individual can or will perform the services
described in subdivision (i) or (ii) of this subdivision (9)(A).
(B) An individual “takes a residential mortgage loan application” if the individual receives
a residential mortgage loan application for the purpose of facilitating a decision
whether to extend an offer of residential mortgage loan terms to a borrower or prospective
borrower, or to accept the terms offered by a borrower or prospective borrower in
response to a solicitation, whether the application is received directly or indirectly
from the borrower or prospective borrower.
(C) An individual “offers or negotiates terms of a residential mortgage loan for compensation
or gain” if the individual:
(i)(I) presents for consideration by a borrower or prospective borrower particular residential
mortgage loan terms;
(II) communicates directly or indirectly with a borrower or prospective borrower for the
purpose of reaching a mutual understanding about prospective residential mortgage
loan terms; or
(III) recommends, refers, or steers a borrower or prospective borrower to a particular lender
or set of residential mortgage loan terms, in accordance with a duty to or incentive
from any person other than the borrower or prospective borrower; and
(ii) receives or expects to receive payment of money or anything of value in connection
with the activities described in subdivision (i) of this subdivision (9)(C) or as
a result of any residential mortgage loan terms entered into as a result of such activities.
(D) Does not include:
(i) an individual engaged solely as a loan processor or underwriter, except as otherwise
provided in subsection 2201(g) of this chapter;
(ii) a person or entity that only performs real estate brokerage activities and is licensed
or registered in accordance with Vermont law, unless the person or entity is compensated
by a buyer or a seller in addition to the compensation received for such real estate
brokerage activity or is compensated by a lender, mortgage broker, or other mortgage
loan originator or by any agent of such lender, mortgage broker, or other mortgage
loan originator; or
(iii) a person or entity solely involved in extensions of credit relating to timeshare plans,
as that term is defined in 11 U.S.C. § 101(53D).
(10) “Nontraditional mortgage product” means any mortgage product other than a 30-year
fixed rate mortgage.
(11) “Real estate brokerage activity” means any activity that involves offering or providing
real estate brokerage services to the public, including:
(A) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or
lessee of real property;
(B) bringing together parties interested in the sale, purchase, lease, rental, or exchange
of real property;
(C) negotiating, on behalf of any party, any portion of a contract relating to the sale,
purchase, lease, rental, or exchange of real property, other than in connection with
providing financing with respect to any such transaction;
(D) engaging in any activity for which a person engaged in the activity is required to
be registered or licensed as a real estate agent or real estate broker under any applicable
law; and
(E) offering to engage in any activity or act in any capacity described in subdivision
(A), (B), (C), or (D) of this subdivision (11).
(12) “Registered mortgage loan originator” means any individual who:
(A) meets the definition of mortgage loan originator and is an employee of:
(i) a depository institution;
(ii) a subsidiary that is:
(I) owned and controlled by a depository institution, as determined by a federal banking
agency; and
(II) regulated by a federal banking agency; or
(iii) an institution regulated by the Farm Credit Administration; and
(B) is registered with, and maintains a unique identifier through, the Nationwide Multistate
Licensing System and Registry.
(13) “Residential mortgage loan application” means a request, in any form, for an offer,
or a response to a solicitation of an offer, of residential mortgage loan terms, and
information about the borrower or prospective borrower that is customary or necessary
in a decision on whether to make such an offer.
(14) “Sales finance company” means any person who has purchased one or more retail installment
contracts, as defined in 9 V.S.A. §§ 2351(5) and 2401(7), from one or more retail sellers located in this State. Taking one or more retail
installment contracts as security for a loan or loans shall not be construed as purchasing
for purposes of this definition. (Added 1995, No. 162 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 1995, No. 180 (Adj. Sess.), § 38(a); 1997, No. 98 (Adj. Sess.), § 2, eff. April 16, 1998; 1999, No. 153 (Adj. Sess.), § 11, eff. Jan. 1, 2001; 2009, No. 29, § 1; 2009, No. 134 (Adj. Sess.), § 24a; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2011, No. 85 (Adj. Sess.), § 1, eff. April 20, 2012; 2013, No. 34, § 3; 2015, No. 128 (Adj. Sess.), § F.3, eff. May 24, 2016; 2017, No. 22, § 18, eff. May 4, 2017; 2019, No. 20, § 3.)
§ 2201. Licenses required
(a) Without first obtaining a license under this chapter from the Commissioner, a person
shall not:
(1) Engage in the business of making loans of money, credit, goods, or things in action
and charge, contract for, or receive on any such loan interest, a finance charge,
discount, or consideration therefor.
(2) Act as a mortgage broker.
(3) Engage in the business of a mortgage loan originator.
(4) Act as a sales finance company.
(5) Engage in the business of loan solicitation. A person licensed as a lender, sales
finance company, or mortgage broker is not required to obtain a separate loan solicitation
license when acting on the person’s own behalf.
(b) A licensed mortgage loan originator shall register and maintain a valid unique identifier
with the Nationwide Multistate Licensing System and Registry and shall be either:
(1) An employee actively employed at or assigned to a licensed location of, and supervised
and sponsored by, only one licensed lender or licensed mortgage broker operating in
this State.
(2) An individual sole proprietor who is also a licensed lender or licensed mortgage broker.
(3) An employee engaged in loan modifications employed at or assigned to a licensed location
of, and supervised and sponsored by, only one third-party loan servicer licensed to
operate in this State pursuant to chapter 85 of this title. As used in this subsection,
“loan modification” means an adjustment or compromise of an existing residential mortgage
loan. The term “loan modification” does not include a refinancing transaction.
(c) A person licensed pursuant to subdivision (a)(1) of this section may engage in mortgage
brokerage and sales finance if such person informs the Commissioner in advance that
he or she intends to engage in sales finance and mortgage brokerage. Such person shall
inform the Commissioner of his or her intention on the original license application
under section 2102 of this title, any renewal application under section 2109 of this title, or pursuant to section 2106 of this title, and shall pay the applicable fees required by subsection 2102(b) of this title for a mortgage broker license or sales finance company license.
(d) A lender license, mortgage broker license, sales finance company license, or loan
solicitation license shall not be required of:
(1) A state agency, political subdivision, or other public instrumentality of a state.
(2) A federal agency or other public instrumentality of the United States.
(3) A gas or electric utility subject to the jurisdiction of the Public Utility Commission
engaging in energy conservation or safety loans.
(4) A depository institution or a financial institution as defined in subdivision 11101(32) of this title.
(5) A pawnbroker.
(6) An insurance company.
(7) A seller of goods or services that finances the sale of such goods or services, other
than a residential mortgage loan.
(8) Any individual who offers or negotiates the terms of a residential mortgage loan secured
by a dwelling that served as the individual’s residence, including a vacation home,
or inherited property that served as the deceased’s dwelling, provided that the individual
does not act as a mortgage loan originator or provide financing for such sales so
frequently and under such circumstances that it constitutes a habitual activity and
acting in a commercial context.
(9) Lenders that conduct their lending activities, other than residential mortgage loan
activities, through revolving loan funds, that are nonprofit organizations exempt
from taxation under 26 U.S.C. § 501(c) and that register with the Commissioner of Economic Development under 10 V.S.A. § 690a.
(10) Persons who lend, other than residential mortgage loans, an aggregate of less than
$250,000.00 in any one year at rates of interest of no more than 12 percent per annum.
(11) A seller who, pursuant to 9 V.S.A. § 2355(f)(1)(D), includes the amount paid or to be paid by the seller to discharge a security interest,
lien interest, or lease interest on the traded-in motor vehicle in a motor vehicle
retail installment sales contract, provided that the contract is purchased, assigned,
or otherwise acquired by a sales finance company licensed pursuant to this title to
purchase motor vehicle retail installment sales contracts or a depository institution.
(12)(A) A person making an unsecured commercial loan, which loan is expressly subordinate
to the prior payment of all senior indebtedness of the commercial borrower regardless
of whether such senior indebtedness exists at the time of the loan or arises thereafter.
The loan may or may not include the right to convert all or a portion of the amount
due on the loan to an equity interest in the commercial borrower.
(B) As used in this subdivision (12), “senior indebtedness” means:
(i) all indebtedness of the commercial borrower for money borrowed from depository institutions,
trust companies, insurance companies, and licensed lenders, and any guarantee thereof;
and
(ii) any other indebtedness of the commercial borrower that the lender and the commercial
borrower agree shall constitute senior indebtedness.
(13) Nonprofit organizations established under testamentary instruments, exempt from taxation
under 26 U.S.C. § 501(c)(3), and that make loans for postsecondary educational costs to students and their parents,
provided that the organizations provide annual accountings to the Probate Division
of the Superior Court.
(14) Any individual who offers or negotiates terms of a residential mortgage loan with
or on behalf of an immediate family member of the individual.
(15) A housing finance agency.
(16) A person who makes no more than three mortgage loans in any consecutive three-year
period beginning on or after July 1, 2011.
(e) A mortgage loan originator license shall not be required of:
(1) Registered mortgage loan originators, when employed by and acting for an entity described
in subdivision 2200(12) of this chapter.
(2) Any individual who offers or negotiates terms of a residential mortgage loan with
or on behalf of an immediate family member of the individual.
(3) Any individual who offers or negotiates terms of a residential mortgage loan secured
by a dwelling that served as the individual’s residence, including a vacation home,
or inherited property that served as the deceased’s dwelling, provided that the individual
does not act as a mortgage loan originator or provide financing for such sales so
frequently and under such circumstances that it constitutes a habitual activity and
acting in a commercial context.
(4) An individual who is an employee of a federal, state, or local government agency,
or an employee of a housing finance agency, who acts as a mortgage loan originator
only pursuant to his or her official duties as an employee of the federal, state,
or local government agency or housing finance agency.
(5) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf
of a client as an ancillary matter to the attorney’s representation of the client,
unless the attorney is compensated by a lender, a mortgage broker, or other mortgage
loan originator or by any agent of such lender, mortgage broker, or other mortgage
loan originator. To the extent an attorney licensed in this State undertakes activities
that are covered by the definition of a mortgage loan originator, such activities
do not constitute engaging in the business of a mortgage loan originator, provided
that:
(A) such activities are considered by the State governing body responsible for regulating
the practice of law to be part of the authorized practice of law within this State;
(B) such activities are carried out within an attorney-client relationship; and
(C) the attorney carries them out in compliance with all applicable laws, rules, ethics,
and standards.
(6) A person who makes no more than three mortgage loans in any consecutive three-year
period beginning on or after July 1, 2011.
(f) If a person who offers or negotiates the terms of a mortgage loan is exempt from licensure
pursuant to subdivision (d)(16) or (e)(6) of this section, there is a rebuttable presumption
that he or she is not engaged in the business of making loans or being a mortgage
loan originator.
(g) Independent contractor loan processors or underwriters. A loan processor or underwriter
who is an independent contractor may not engage in the activities of a loan processor
or underwriter unless such independent contractor loan processor or underwriter obtains
and maintains a mortgage loan originator license. Each independent contractor loan
processor or underwriter licensed as a mortgage loan originator must have and maintain
a valid unique identifier issued by the Nationwide Multistate Licensing System and
Registry.
(h) This chapter shall not apply to commercial loans of $1,000,000.00 or more. (Amended 1969, No. 243 (Adj. Sess.), § 1; 1979, No. 173 (Adj. Sess.), § 2, eff. April 30, 1980; 1985, No. 38, § 2; 1991, No. 1, § 1, eff. Feb. 27, 1991; 1995, No. 162 (Adj. Sess.), § 2, eff. Jan. 1, 1997; 1999, No. 153 (Adj. Sess.), § 12, eff. Jan. 1, 2001; 2001, No. 55, § 4, eff. June 12, 2001; 2005, No. 143 (Adj. Sess.), § 2; 2007, No. 159 (Adj. Sess.), § 1, eff. May 20, 2008; 2007, No. 178 (Adj. Sess.), § 1; 2009, No. 29, § 1; 2009, No. 137 (Adj. Sess.), § 1a; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011; 2011, No. 21, § 1, eff. May 11, 2011; 2011, No. 85 (Adj. Sess.), § 2, eff. April 20, 2012; 2013, No. 29, § 3; 2013, No. 34, § 4; 2013, No. 199 (Adj. Sess.), § 21; 2015, No. 51, § E.4; 2017, No. 22, § 19, eff. May 4, 2017; 2019, No. 20, § 4; 2019, No. 103 (Adj. Sess.), § 6; 2021, No. 25, § 8, eff. May 12, 2021.)
§ 2201a. Repealed. 1995, No. 162 (Adj. Sess.), § 39(a), eff. Jan. 1, 1997.
§ 2201b. Redesignated. 1995, No. 162 (Adj. Sess.), § 17, eff. Jan. 1, 1997.
§ 2202. Repealed. 2019, No. 20, § 5.
§ 2202a. Application for commercial lender license
(a) Application for a license for a lender making solely commercial loans shall be in
writing, under oath, and in the form prescribed by the Commissioner, and shall contain
the name and address of the residence and the place of business of the applicant and,
if the applicant is a partnership or association, of every member thereof, and, if
a corporation, of each officer, director, and control person thereof; the county and
municipality with street and number, if any, where the business is to be conducted;
and such further information as the Commissioner may require.
(b) At the time of making application, the applicant shall pay to the Commissioner an
initial licensing fee and an application and investigation fee pursuant to subdivision 2102(b)(2) of this title.
(c) In connection with an application for a commercial lender license, the applicant and
each officer, director, and control person of the applicant shall furnish to the Nationwide
Multistate Licensing System and Registry information concerning the applicant’s identity
and the identity of each of the applicant’s officers, directors, and control persons,
including:
(1) fingerprints for submission to the Federal Bureau of Investigation and for any other
governmental agency or entity authorized to receive such information for a state,
national, and international criminal history background check;
(2) personal history and experience in a form prescribed by the NMLS, including the submission
of authorization for the NMLS and the Commissioner to obtain information related to
any administrative, civil, or criminal findings by any governmental jurisdiction;
and
(3) any other information required by the NMLS or the Commissioner. (Added 2009, No. 134 (Adj. Sess.), § 24c; amended 2019, No. 20, § 6.)
§ 2202b. Approval of application; issuance of commercial lender license
(a) Upon the filing of an application and payment of the required fees, the Commissioner
shall issue a commercial lender license to the applicant if the Commissioner finds:
(1) The experience, character, and general fitness of the applicant command the confidence
of the community and warrant belief that the business will be operated honestly, fairly,
and efficiently within the purposes of this chapter.
(A) If the applicant is a partnership or association, such findings are required with
respect to each partner, member, and person in control of the applicant.
(B) If the applicant is a corporation, such findings are required with respect to each
officer, director, and person in control of the applicant.
(2) The applicant and each officer, director, and person in control of the applicant has
never had a lender license, mortgage broker license, mortgage loan originator license,
or similar license revoked in any governmental jurisdiction, except that a subsequent
formal vacation of such revocation shall not be deemed a revocation.
(3) The applicant and each officer, director, and person in control of the applicant has
not been convicted of or pled guilty or nolo contendere to a felony in a domestic,
foreign, or military court:
(A) during the seven-year period preceding the date of the application for licensing,
except a conviction for driving under the influence or a similarly titled offense
in this State or in any other jurisdiction; or
(B) at any time preceding the date of application, if the felony involved an act of fraud,
dishonesty, or a breach of trust, or money laundering; and
(C) provided that any pardon of a conviction shall not be a conviction for purposes of
this subsection (a).
(b)(1) If the Commissioner finds that the applicant does not meet the requirements of subsection
(a) of this section, the Commissioner shall not issue a license.
(2) Not later than 60 days after an applicant files a complete application, the Commissioner
shall notify the applicant of the denial, stating the reason or reasons therefor.
(3) If the applicant does not file a timely request for reconsideration pursuant to section 2104 of this title, the Commissioner shall:
(A) return to the applicant the sum paid by the applicant as a license fee; and
(B) retain the investigation fee to cover the costs of investigating the application.
(c)(1) If the Commissioner finds that an applicant meets the requirements of subsection (a)
of this section, he or she shall issue the license not later than 60 days after the
applicant submits a complete application.
(2) Provided that the licensee annually renews the license, the license shall be valid
until the licensee surrenders the license or until the Commissioner revokes, suspends,
terminates, or refuses to renew the license.
(d) For good cause shown and consistent with the purposes of this section, the Commissioner
may waive or modify the requirements of subdivision (a)(2) of this section. (Added 2009, No. 134 (Adj. Sess.), § 24f; amended 2017, No. 22, § 5, eff. May 4, 2017; 2019, No. 20, § 7.)
§ 2203. Bond; liquid assets required
(a) Prior to issuance of a license, the applicant shall file with the Commissioner, and
shall keep in force thereafter for as long as the license remains in effect, a bond
in a form and substance to be approved by the Commissioner in which the applicant
shall be the obligor, in such sum as the Commissioner may require. The aggregate liability
for any and all claims on any bond shall in no event exceed the sum thereof. No surety
obligation on a bond shall be terminated unless at least 60 days’ prior written notice
is given by the surety to the obligor and the Commissioner. When one person is issued
licenses to conduct the licensed activity at more than one office, the Commissioner
may accept a single bond covering all such offices. The bond shall run to the State
for the use of the State and of any person or persons who may have cause of action
against the obligor of such bond under the provisions of this chapter. Such bond shall
be conditioned that the obligor will faithfully conform to and abide by the provisions
of this chapter and of all rules and regulations lawfully made by the Commissioner
hereunder, and will pay to the State and to any such person or persons any and all
monies that may become due or owing to the State or to such person or persons from
such obligor under and by virtue of the provisions of this chapter. The Commissioner
shall require that the amount of the bonds shall be based upon the dollar amount of
loans originated in Vermont and, at a minimum:
(1) For licensed lenders:
(A) who annually originate $0.00 to $1,000,000.00 in loans, a surety bond not less than
$50,000.00;
(B) who annually originate $1,000,000.01 to $15,000,000.00 in loans, a surety bond not
less than $100,000.00;
(C) who annually originate $15,000,000.01 or more in loans, a surety bond not less than
$150,000.00.
(2) For mortgage brokers:
(A) who annually originate $0.00 to $2,000,000.00 in mortgage loans, a surety bond not
less than $25,000.00;
(B) who annually originate $2,000,000.01 to $5,000,000.00 in mortgage loans, a surety
bond not less than $50,000.00;
(C) who annually originate $5,000,000.01 to $15,000,000.00 in mortgage loans, a surety
bond not less than $75,000.00;
(D) who annually originate $15,000,000.01 or more in mortgage loans, a surety bond not
less than $100,000.00.
(3) The Commissioner may adopt regulations modifying the minimum bond requirements set
forth in this subsection.
(b) Each mortgage loan originator shall be covered by a surety bond in accordance with
this section. In the event that the mortgage loan originator is an employee of a person
subject to this chapter, the surety bond of such licensed lender or licensed mortgage
broker can be used in lieu of the mortgage loan originator’s surety bond requirement,
provided that the surety bond shall provide coverage for each mortgage loan originator
in an amount as prescribed in this section.
(c) A loan solicitation licensee shall maintain a surety bond in an amount not less than
$25,000.00 or in such other amount as the Commissioner may require.
(d) When an action is commenced on a licensee’s bond, the Commissioner may require the
filing of a new bond. Immediately upon recovery upon any action on the bond, the licensee
shall file a new bond.
(e) Every applicant for a lender’s license shall also prove, in form satisfactory to the
Commissioner, that the applicant has liquid assets of $25,000.00, or such greater
amount as the Commissioner may require, available for the operation of such business
at the location specified in the application. Every applicant wishing to make commercial
loans shall prove liquid assets in an amount of $50,000.00 or such greater amount
as the Commissioner may require.
(f) Notwithstanding subsections (a) and (e) of this section, the Commissioner may waive
or modify the requirement for or amount of a bond or liquid asset set forth in this
section, or accept other appropriate means of assuring the financial responsibility
of a licensee.
(g) This section does not apply to a lender making only commercial loans. (Amended 1983, No. 35, § 2; 1995, No. 162 (Adj. Sess.), § 4, eff. Jan. 1, 1997; 2005, No. 36, § 3; 2009, No. 29, § 1; 2009, No. 134 (Adj. Sess.), § 24d; 2017, No. 22, § 21, eff. May 4, 2017.)
§ 2203a. Additional bond; liquid assets to be maintained
(a) If the Commissioner finds at any time that a licensee’s bond is insecure, exhausted,
insufficient, or otherwise doubtful, the Commissioner shall require one or more additional
bonds meeting the standards set forth in section 2203 of this title. The licensee shall file the bond within 10 days of the Commissioner’s written demand
to do so.
(b) Every licensee, except as set forth in subsection (c) of this section, shall maintain
at all times assets in amounts as set forth in section 2203 of this title, or in such greater amount deemed necessary by the Commissioner. Assets must be either
in liquid form available for the operation of or actually used in the conduct of such
business at the location specified in the license.
(c) Every licensee making commercial loans shall maintain liquid assets in an amount deemed
necessary by the Commissioner, but in no event less than $50,000.00. (Amended 1983, No. 35, § 3; 1989, No. 244 (Adj. Sess.), § 3; 1995, No. 162 (Adj. Sess.), § 8, eff. Jan. 1, 1997.)
§ 2204. Repealed. 2019, No. 20, § 9.
§ 2204a. Mortgage loan originator prelicensing and relicensing education requirement
(a) In order to meet the prelicensing education requirement for a mortgage loan originator,
a person shall complete at least 20 hours of education approved in accordance with
subsection (b) of this section, which shall include at least:
(1) three hours of federal law and regulations;
(2) three hours of ethics, which shall include instruction on fraud, consumer protection,
and fair lending issues;
(3) two hours of training related to lending standards for the nontraditional mortgage
product marketplace; and
(4) two hours of Vermont law and regulations.
(b) For purposes of subsection (a) of this section, prelicensing education courses shall
be reviewed and approved by the Nationwide Multistate Licensing System and Registry
based upon reasonable standards. Review and approval of a prelicensing education course
shall include review and approval of the course provider.
(c) Nothing in this section shall preclude any prelicensing education course, as approved
by the Nationwide Multistate Licensing System and Registry, that is provided by the
employer of the applicant or an entity which is affiliated with the applicant by an
agency contract, or any subsidiary or affiliate of such employer or entity.
(d) Prelicensing education may be offered either in a classroom, online, or by any other
means approved by the Nationwide Multistate Licensing System and Registry.
(e) The prelicensing education requirements approved by the Nationwide Multistate Licensing
System and Registry in subdivisions (a)(1), (2), and (3) of this section for any state
shall be accepted as credit toward completion of prelicensing education requirements
in Vermont.
(f) A person previously licensed as a mortgage loan originator under this chapter applying
to be licensed again must prove that he or she has completed all of the continuing
education requirements for the year in which the license was last held. This subsection
does not apply to an individual who is required to retake 20 hours of prelicensing
education pursuant to subsection (g) of this section.
(g) A person who has completed 20 hours of prelicensing education under 12 U.S.C. § 5104(c) must retake such prelicensing education to be eligible to apply for a Vermont loan
originator license if he or she:
(1) within three years of completing the prelicensing education, does not acquire a valid
mortgage loan originator license in any state or does not become a federally registered
mortgage loan originator; or
(2) within three years of completing the prelicensing education, obtains a valid mortgage
loan originator license in any state or becomes a federally registered mortgage loan
originator and subsequently does not maintain an approved mortgage loan originator
license in any state or an approved federal registration for a period of three years
or more.
(h) A person who has completed two hours of Vermont prelicense education as required by
subdivision (a)(4) of this section must retake such prelicensing education to be eligible
to apply for a Vermont mortgage loan originator license if he or she:
(1) does not acquire a valid Vermont mortgage loan originator license within three years
of completing the prelicense education; or
(2) obtains a valid Vermont mortgage loan originator license and then subsequently does
not maintain an approved Vermont mortgage loan originator license for a period of
three years or more. (Added 2009, No. 29, § 1; amended 2013, No. 29, § 4, eff. May 13, 2013; 2017, No. 22, § 4, eff. May 4, 2017; 2019, No. 20, § 10.)
§ 2204b. Testing of mortgage loan originators
(a) An individual applying for a mortgage loan originator license shall pass, in accordance
with the standards established under this section, a qualified written test developed
by the Nationwide Multistate Licensing System and Registry and administered by a test
provider approved by the Nationwide Multistate Licensing System and Registry based
upon reasonable standards.
(b) A written test shall not be treated as a qualified written test for purposes of subsection
(a) of this section unless the test adequately measures the applicant’s knowledge
and comprehension in appropriate subject areas, including:
(1) ethics;
(2) federal law and regulation pertaining to mortgage origination;
(3) State law and regulation pertaining to mortgage origination; and
(4) federal and State law and regulation, including instruction on fraud, consumer protection,
the nontraditional mortgage marketplace, and fair lending issues.
(c) Nothing in this section shall prohibit a test provider approved by the Nationwide
Multistate Licensing System and Registry from providing a test at the location of
the employer of the applicant or the location of any subsidiary or affiliate of the
employer of the applicant.
(d) An individual shall not be considered to have passed a qualified written test unless
the individual achieves a test score of not less than 75 percent correct answers to
questions.
(e) An individual may take a test three consecutive times, with each consecutive test
occurring at least 30 days after the preceding test. After failing three consecutive
tests, an individual shall wait at least six months before taking the test again.
(f) A licensed mortgage loan originator who fails to maintain a valid license for a period
of five years or longer shall retake the test, not taking into account any time during
which such individual is a registered mortgage loan originator. (Added 2009, No. 29, § 1; amended 2011, No. 85 (Adj. Sess.), § 4, eff. April 20, 2012; 2019, No. 20, § 11.)
§ 2204c. Continuing education for mortgage loan originators
(a) In order to meet the annual continuing education requirements, a licensed mortgage
loan originator shall complete at least eight hours of education approved in accordance
with subsection (b) of this section, which shall include at least:
(1) three hours of federal law and regulations;
(2) two hours of ethics, which shall include instruction on fraud, consumer protection,
and fair lending issues; and
(3) two hours of training related to lending standards for the nontraditional mortgage
product marketplace.
(b) For purposes of subsection (a) of this section, continuing education courses shall
be reviewed and approved by the Nationwide Multistate Licensing System and Registry
based upon reasonable standards. Review and approval of a continuing education course
shall include review and approval of the course provider.
(c) Nothing in this section shall preclude any education course, as approved by the Nationwide
Multistate Licensing System and Registry, that is provided by the employer of the
mortgage loan originator or an entity that is affiliated with the mortgage loan originator,
or any subsidiary or affiliate of the employer.
(d) Continuing education may be offered either in a classroom, online, or by any other
means approved by the Nationwide Multistate Licensing System and Registry.
(e) A licensed mortgage loan originator:
(1) except for subsection (i) of this section, may only receive credit for a continuing
education course in the year in which the course is taken; and
(2) may not take the same approved course in the same or successive years to meet the
annual requirements for continuing education.
(f) A licensed mortgage loan originator who is an approved instructor of an approved continuing
education course may receive credit for the licensed mortgage loan originator’s own
annual continuing education requirement at the rate of two hours of credit for every
one hour taught.
(g) A person having successfully completed the education requirements approved by the
Nationwide Multistate Licensing System and Registry in subdivisions (a)(1), (2), and
(3) of this section for any state shall be accepted as credit toward completion of
continuing education requirements in Vermont.
(h) A licensed mortgage loan originator who subsequently becomes unlicensed must complete
the continuing education requirements for the last year in which the license was held
prior to issuance of a new or renewed license. This subsection does not apply to an
individual who is required to retake 20 hours of prelicensing education pursuant to
subsection 2204a(g) of this title.
(i) A person who otherwise meets the requirements for renewal of a license may make up
any deficiency in continuing education as established by order or rule of the Commissioner. (Added 2009, No. 29, § 1; amended 2017, No. 22, § 5, eff. May 4, 2017; 2019, No. 20, § 12.)
§ 2204d. Mortgage loan originator license inactive status
The license of a mortgage loan originator that has satisfied all of the requirements
of licensure, other than being employed by a licensed lender or licensed mortgage
broker, may be placed in an approved inactive status. (Amended 1995, No. 162 (Adj. Sess.), § 7, eff. Jan. 1, 1997; 2009, No. 29, § 1; 2013, No. 29, § 5, eff. May 13, 2013; 2019, No. 20, § 13.)
§ 2205. Repealed. 2019, No. 20, § 14.
§ 2206. Recodified. 2019, No. 20, § 13.
§ 2207. Recodified. 2019, No. 20, § 8.
§ 2208. Repealed. 2019, No. 20, § 15.
§ 2208a. Mortgage loan originator change of employer or sponsor
(a) No mortgage loan originator may be employed, supervised, and sponsored by more than
one licensed lender or licensed mortgage broker operating in this State. Alternatively,
a mortgage loan originator may be an individual sole proprietor who is also licensed
as a lender or mortgage broker in this State.
(b) A mortgage loan originator shall notify the Commissioner and update its status on
the Nationwide Mortgage Licensing System and Registry within 15 days of any change
in the employer and sponsor of the mortgage loan originator subsequent to the initial
employer and sponsor. A fee of $50.00 payable to the Commissioner shall accompany
notice of such change of employer and sponsor. (Added 2009, No. 134 (Adj. Sess.), § 19.)
§ 2209. Repealed. 2019, No. 20, § 16.
§ 2209a. Recodified. 2019, No. 20, § 12.
§ 2210. Repealed. 2019, No. 20, § 17.
§ 2211. Repealed. 2019, No. 20, § 18.
§ 2212. Repealed. 2019, No. 20, § 19.
§ 2213. Repealed. 2019, No. 20, § 20.
§ 2214. Repealed. 2019, No. 20, § 21.
§ 2215. Repealed. 2019, No. 20, § 22.
§ 2216. Mortgage lending; specific requirements; exceptions
Every licensee engaging in the making of loans secured by a lien against real estate
located in this State, whether conducting its affairs as an agent or principal and
whether operating from facilities within the State or by mail, telephone, or by electronic
means, shall comply with the general provisions of this chapter unless exempted herein.
A licensee making such loans through a third person shall only make loans through
a person licensed as a mortgage broker and as a mortgage loan originator under this
chapter, unless such third person is exempt from such licensing provisions. Any lender
who makes such loans through a third person required to be licensed and not so licensed,
in addition to being subject to all applicable penalties under Vermont law, shall
be responsible for the acts or omissions of the third person as a principal is responsible
for the acts and omissions of its agent. Every licensee making loans secured by a
lien against real estate shall comply with sections 10403 and 10404, and subchapter
2 of chapter 200 of this title, and shall also be subject to the following specific
limitations:
(1) For loans secured by a first lien, the term shall not exceed 480 months, and the licensees
may not exceed the interest rate permitted by 9 V.S.A. § 41a(b)(8). All such lien documents shall include a power of sale pursuant to 12 V.S.A § 4531a et seq. The limitations on permitted charges contained in sections 2231 and 2233 of this title and 9 V.S.A. §§ 42, 44, and 46 shall not apply to any loan within the scope of 12 U.S.C. § 1735f-7a. Permitted charges shall be as specified in 9 V.S.A. § 42, 44, and 46 for any loan secured by a first lien on real estate that is not included within the
scope of 12 U.S.C. § 1735f-7a, instead of sections 2231 and 2233 of this title.
(2) For loans secured by a subordinate lien, the term shall not exceed 360 months, and
the licensees may not exceed the interest rate permitted by 9 V.S.A. chapter 4. All such lien documents shall include a power of sale pursuant to 12 V.S.A. § 4531a et seq. Permitted charges for loans secured by a subordinate lien shall be as specified
in 9 V.S.A. §§ 42, 44, and 46, instead of sections 2231 and 2233 of this title.
(3) No licensee shall take a lien upon real estate as security for any loan made under
this chapter, except such lien as is created by law upon the recording of a judgment
or such lien as secures a loan in principal amount in excess of $3,000.00 at the time
of making.
(4) Interest shall be computed by the actuarial method in accordance with 9 V.S.A. 41a(d).
(5) Any loan secured by a lien on real estate, except a commercial loan, which does not
contain a fixed rate or substantially equal payments for full amortization within
the repayment period shall conform to federal regulations on alternative mortgages
where applicable by reason of federal law or action of the Commissioner.
(6) This section shall not apply to commercial loans. (Added 1983, No. 35, § 1; amended 1989, No. 244 (Adj. Sess.), § 1; 1995, No. 162 (Adj. Sess.), § 17, eff. Jan. 1, 1997; 1997, No. 23, § 12, eff. Jan. 1, 1997; 1997, No. 98 (Adj. Sess.), § 3, eff. April 16, 1998; 1999, No. 153 (Adj. Sess.), § 15, eff. Jan. 1, 2001; 2009, No. 29, § 1.)
§ 2217. Mortgage brokers
(a) No licensee or other person shall act as a mortgage broker in any transaction in which
the licensee or such other person is acting as a mortgage lender.
(b) Each mortgage broker required to be licensed under this chapter shall retain for a
minimum of six years after a contract is executed pursuant to section 2219 of this title, the original contract between the mortgage broker and the prospective borrower,
a copy of the settlement statement, an account of fees received in connection with
the loan, correspondence, papers, or records relating to the loan and such other documents
as the Commissioner may require.
(c) A mortgage broker and a mortgage loan originator shall only negotiate, place, or assist
in placement of Vermont mortgage loans with lenders licensed pursuant to this chapter,
or with depository institutions authorized to do such business in Vermont. (Added 1995, No. 162 (Adj. Sess.), § 18, eff. Jan. 1, 1997; amended 2009, No. 29, § 1.)
§ 2218. Segregated accounts
(a) All permitted charges paid by loan applicants or borrowers to a lender or a mortgage
broker subject to this chapter shall be deposited in one or more accounts maintained
at a bank approved by the Commissioner, and with respect to such funds the lender
or mortgage broker shall act as a fiduciary. Such account or accounts shall be segregated
from all other accounts of the lender or broker. No permitted charges shall be used
in the conduct of a lender’s or a broker’s personal affairs, nor in a lender’s or
a broker’s business affairs not specifically related to the applicant or borrower.
(b) Such lender or mortgage broker may withdraw funds from the segregated account for
payment directly to third parties for authorized fees.
(c) Such lender or mortgage broker may withdraw funds from the segregated account for
commissions to which it is entitled for services actually performed. Services are
deemed to have been performed when a loan has closed, the loan applicant has withdrawn
the loan application in writing, or such mortgage broker or lender has provided to
the loan applicant or borrower written notice that the loan has been denied.
(d) Such lender or mortgage broker may return funds from the segregated account to the
borrower if not prohibited by the application or contract.
(e) Such lender or mortgage broker shall maintain complete and accurate account records,
including, at a minimum, the source of all deposits, the nature of all disbursements,
the date and amount of each transaction, and the name of the loan applicant or borrower.
All documents pertaining to account activity shall be produced upon request of the
Commissioner. (Added 1995, No. 162 (Adj. Sess.), § 19, eff. Jan. 1, 1997.)
§ 2219. Contract required of mortgage broker
(a) In advance of taking any fee or collecting any charges or at the time the prospective
borrower submits a signed application, a written agreement in a form approved by the
Commissioner shall be prepared by the mortgage broker and shall be signed by both
the mortgage broker and the prospective borrower. The agreement shall set forth the
particulars of the service to be performed by the mortgage broker, including specifics
as to what shall constitute reasonable efforts on the part of the mortgage broker
to perform the agreed upon services, shall state clearly that the mortgage broker
shall represent the interests of the prospective borrower rather than those of any
lender, and shall state the fee for the services.
(b) A mortgage broker who acts as an independent contractor loan processor or an underwriter
who performs loan processing or underwriting activities for a licensed or exempt mortgage
broker or lender is not required to provide a mortgage broker agreement to the prospective
borrower, provided:
(1) the mortgage broker is acting as an independent contractor loan processor or underwriter
as described in subsection 2201(g) of this chapter;
(2) the mortgage broker’s activities are limited to loan processor or underwriting activities
as described in subdivision 2200(6) of this chapter;
(3) the mortgage broker is paid a fee solely by the licensed or exempt mortgage broker
or lender, is not paid by the prospective borrower, and is not paid a commission based
upon the dollar amount of the loan; and
(4) if the mortgage broker is acting as an independent contractor loan processor or underwriter
on behalf of a mortgage broker, such mortgage broker has already entered into a written
mortgage broker agreement with the prospective borrower.
(c) A mortgage broker that engages solely in lead generation and does not employ or sponsor
any mortgage loan originators is not required to provide a mortgage broker agreement
but must include clearly and conspicuously in all advertisements of loans and solicitation
of leads, the following disclosure: THIS IS A LOAN SOLICITATION ONLY. [INSERT LICENSEE
NAME] IS NOT THE LENDER. INFORMATION RECEIVED WILL BE SHARED WITH ONE OR MORE THIRD
PARTIES IN CONNECTION WITH YOUR LOAN INQUIRY. THE LENDER MAY NOT BE SUBJECT TO ALL
VERMONT LENDING LAWS. THE LENDER MAY BE SUBJECT TO FEDERAL LENDING LAWS. (Added 1995, No. 162 (Adj. Sess.), § 20, eff. Jan. 1, 1997; amended 2013, No. 29, § 6, eff. May 13, 2013; 2017, No. 22, § 24; 2019, No. 20, § 23.)
§ 2220. Disclosure required by mortgage lender
In advance of taking any fee or collecting any charges for a mortgage loan, or at
the time the prospective borrower submits a signed application, a written disclosure
shall be provided by the lender to the prospective borrower setting forth all provisions
relating to interest rates applicable to the loan, and specific disclosure regarding
any possibility that the lender may change its role to that of a mortgage broker.
This section shall not apply to commercial loans. (Added 1995, No. 162 (Adj. Sess.), § 21, eff. Jan. 1, 1997.)
§ 2220a. Disclosure required by loan solicitation licensee
Each loan solicitation licensee shall include clearly and conspicuously in all advertisements
of loans and solicitations of leads, the following statement: THIS IS A LOAN SOLICITATION
ONLY. [INSERT LICENSEE NAME] IS NOT THE LENDER. INFORMATION RECEIVED WILL BE SHARED
WITH ONE OR MORE THIRD PARTIES IN CONNECTION WITH YOUR LOAN INQUIRY. THE LENDER MAY
NOT BE SUBJECT TO ALL VERMONT LENDING LAWS. THE LENDER MAY BE SUBJECT TO FEDERAL LENDING
LAWS. (Added 2017, No. 22, § 25.)
§ 2221. Out-of-state mortgage loans
A mortgage loan made outside Vermont for use outside Vermont shall be deemed to be
made outside the state of Vermont and shall not be subject to this chapter except
upon written agreement of the borrower and the licensee. (Added 1995, No. 162 (Adj. Sess.), § 22, eff. Jan. 1, 1997; amended 2009, No. 29, § 1.)
§ 2222. Examinations
The Commissioner shall examine the affairs, business, and records of each licensee
under this chapter, other than a loan solicitation company, at least once every three
years. The Commissioner shall examine the affairs, business, and records of each loan
solicitation company as often as the Commissioner deems necessary to carry out the
purposes of this part. (Amended 1979, No. 157 (Adj. Sess.), § 6; 1987, No. 119, § 6; 1995, No. 162 (Adj. Sess.), § 23, eff. Jan. 1, 1997; 1997, No. 23, § 6a; 1999, No. 153 (Adj. Sess.), § 16, eff. Jan. 1, 2001; 2009, No. 29, § 1; 2019, No. 20, § 24.)
§ 2223. Additional records required of loan solicitation licensees
(a) In addition to any records required by section 2119 of this title, a licensee that engages in loan solicitation activity shall maintain the following
records for not less than seven years:
(1) copies of all solicitation materials used in its business, regardless of medium, including
business cards, telephone scripts, mailers, email, and radio, television, and internet
advertisements;
(2) records of any contact or attempted contact with a consumer, including the name, date,
method, and nature of contact, and any information provided to or received from the
consumer; and
(3) the name, address, and, if applicable, unique identifier of any person who received,
requested, or contracted for leads or referrals and any fees or consideration charged
or received for such services.
(b) Thereafter, the licensee shall dispose of such records in accordance with 9 V.S.A. § 2445. (Amended 1995, No. 162 (Adj. Sess.), § 24, eff. Jan. 1, 1997; 2009, No. 29, § 1; 2017, No. 22, § 26, eff. May 4, 2017; 2019, No. 20, § 25.)
§ 2223a. Repealed. 1969, No. 243 (Adj. Sess.), § 8.
§ 2224. Repealed. 2019, No. 20, § 26.
§ 2225. Statement of rates of charge
Rates of charge shall be stated fully and clearly in such manner as necessary to prevent
misunderstanding thereof by prospective borrowers. (Amended 1995, No. 162 (Adj. Sess.), § 26, eff. Jan. 1, 1997.)
§ 2226. Repealed. 2019, No. 20, § 27.
§ 2227. Conduct of unrelated business
No licensee shall conduct the business of making noncommercial loans under this chapter
within any office, room, or place of business in which any other business is solicited
or engaged in, or in association or conjunction therewith, except as may be authorized
in writing by the Commissioner upon his or her finding that the character of such
other business is such that the granting of such authority would not facilitate evasions
of this chapter or of the rules and regulations lawfully made hereunder. (Amended 1995, No. 162 (Adj. Sess.), § 28, eff. Jan. 1, 1997; 2009, No. 29, § 1.)
§ 2228. Repealed. 2019, No. 20, § 28.
§ 2229. Confessions of judgment; powers of attorney; contents of notes
No licensee shall take any confession of judgment. No licensee shall take any power
of attorney excepting such as may be incorporated in a form of note approved by the
Commissioner for use in the financing of insurance premiums. No licensee shall take
any note, promise to pay, or security that does not accurately disclose the actual
amount of the loan, the time for which it is made, and the agreed rate of interest,
nor any instrument in which blank spaces are left to be filled in after execution.
Notwithstanding the foregoing provisions of this section, the Commissioner may by
rule exempt from all or part of this section commercial loans. (Amended 1987, No. 142 (Adj. Sess.), § 1, eff. April 11, 1988; 1989, No. 244 (Adj. Sess.), § 7.)
§ 2230. Rate of interest
(a) Every licensee may charge, contract for, and receive thereon interest, calculated
according to the actuarial method as set forth in 9 V.S.A. § 41a(d), not exceeding the rates permitted by 9 V.S.A. chapter 4, except that the rate of interest on loans secured by motor vehicles, mobile homes,
travel trailers, aircraft, watercraft and farm equipment may not exceed the rate permitted
by 9 V.S.A. § 41a(b)(4).
(b) Interest may be charged, contracted for, and received at the single annual percentage
rate that would earn the same interest as the graduated rates when the loan is paid
according to its agreed terms and the calculations are made according to the actuarial
method. Interest shall not be paid, deducted, received, or added to principal in advance,
except that the advance collection of interest for a period not to exceed 30 days
shall be permitted upon the origination of a mortgage loan. Except for loans made
pursuant to section 2216 of this title, the maximum interest permitted on loans made under this chapter shall be computed
on the basis of the number of days actually elapsed. For the purpose of these computations,
a year is any period of 365 consecutive days and 366 days during a leap year.
(c) No licensee shall induce or permit any person jointly or severally to become obligated,
directly or contingently or both, under more than one contract of loan made under
this section at the same time, for the purpose of obtaining a higher rate of interest
than would otherwise be permitted by law.
(d) This section shall not apply to commercial loans. (Amended 1969, No. 243 (Adj. Sess.), § 3; 1979, No. 173 (Adj. Sess.), § 6, eff. April 30, 1980; 1981, No. 26, § 1; 1981, No. 89, § 5, eff. May 13, 1981; 1983, No. 35, §§ 5, 9; 1995, No. 162 (Adj. Sess.), § 30, eff. Jan. 1, 1997; 2009, No. 29, § 1.)
§ 2231. Contracts to be repayable in monthly installments; maximum term; additional charges
prohibited; invalidity of loan contract
(a) Except for loans made pursuant to section 2216 of this title and in compliance with applicable regulations of the Commissioner, all loan contracts
made under the provisions of this chapter shall require repayment in substantially
equal consecutive monthly installments of principal and interest combined.
(b) In addition to the interest and charges herein provided for no further or other charge
or amount for any examination, service, brokerage, commission, expense, fee, bonus,
or other thing or otherwise shall be directly or indirectly charged, contracted for,
or received except filing, recording, releasing, or termination fees paid or to be
paid to a public officer; the premium or identifiable charge for credit life or disability
insurance obtained, provided, or sold by the licensee subject to the provisions of
sections 4101-4115 or sections 3805 and 3806 of this title and any gain or advantage to the licensee from such shall not be deemed in violation
of this chapter nor an additional charge in violation of this section or section 2230 of this title. For loans subject to this subsection, if any interest, consideration, or charges
in excess of those permitted by this subsection, except as the result of an accidental
or bona fide error are charged, contracted for, or received, the contract of loan
shall be void and the licensee shall have no right to collect or receive any principal,
interest, or charges whatsoever.
(c) This section shall not apply to commercial loans.
(d) The provisions of subsection (b) of this section shall not apply to mortgage loans. (Amended 1969, No. 243 (Adj. Sess.), § 4; 1979, No. 173 (Adj. Sess.), § 7, eff. April 30, 1980; 1981, No. 89, § 6, eff. May 13, 1981; 1983, No. 35, §§ 6, 9; 1995, No. 162 (Adj. Sess.), § 31, eff. Jan. 1, 1997; 1997, No. 98 (Adj. Sess.), §§ 4, 5, eff. April 16, 1998.)
§ 2232. Repealed. 1995, No. 162 (Adj. Sess.), § 39(a), eff. Jan. 1, 1997.
§ 2232a. Requirements regarding the borrower
(a) Each licensed lender shall deliver to the borrower at the time any loan is made a
statement showing in clear and distinct terms the amount and date of the loan and
of its maturity, the nature of the security, if any, for the loan, the name and address
of the borrower and of the licensee, and the agreed rate of charge.
(b) Each licensed lender shall, in advance of any loan closing, deliver to each prospective
borrower, based on the type of loan applied for, a full and accurate schedule of the
charges to be made and the method of computing the same.
(c) Each licensed lender or holder shall give to the borrower a plain and complete statement
of all payments made on account of any such loan specifying the amount applied to
finance charges and the amount, if any, applied to principal, and stating the unpaid
principal balance, if any, of such loan. When payment is made, a licensee shall provide
the borrower with a statement therefor within 30 days after the payment is received,
or shall provide, on an annual basis, statements setting forth the information required
herein. Each licensed lender or holder shall provide a transaction history of the
loan to the borrower upon request.
(d) Each licensed lender or holder shall permit payment to be made in advance without
prepayment premium or penalty in any amount on any contract of loan at any time, but
the licensee or holder may apply such payment first to all finance charges in full
at the agreed rate up to the date of such payment.
(e) Each licensed lender or holder shall, upon repayment of the loan in full, promptly
mark indelibly every obligation and security signed by the borrower with the word
“Paid” or “Canceled,” and within 30 days release any mortgage, restore any pledge,
cancel and return any note, record or file any necessary release or discharge, cancel
and return any assignment given to the licensee by the borrower, and refund to the
borrower, in accordance with rules adopted by the Commissioner any unearned portion
of the premium for credit life or disability insurance if a premium for such insurance
was disbursed on behalf of the borrower at the time the loan was originally made.
The provisions of this subsection shall not affect the right of action created by
27 V.S.A. § 464.
(f) This section shall not apply to commercial loans. (Amended 1979, No. 173 (Adj. Sess.), § 8, eff. April 30, 1980; 1981, No. 89, § 7, eff. May 13, 1981; 1983, No. 35, §§ 7-9; 1995, No. 162 (Adj. Sess.), § 32, eff. Jan. 1, 1997; 2015, No. 97 (Adj. Sess.), § 9.)
§ 2233. Charges; loan solicitation; specialized financing
(a) Other than a mortgage broker fee pursuant to section 2219 of this title, no person who is required to be licensed under this chapter, shall directly or indirectly
charge, contract for, or receive any interest, discount, consideration, or charge
greater than is authorized by 9 V.S.A. § 41a or 46. No such loan for which a greater rate of interest, finance charge, consideration,
or charges than is authorized by 9 V.S.A. § 41a or 46 has been charged, contracted for, or received shall be enforced in this State, and
every person in any way participating therein in this State shall be subject to the
provisions of this chapter. However, any loan legally made in any state which then
had in effect a regulatory loan law similar in principle to this chapter may be enforced
in this State only to the extent of collecting the principal amount owed and interest
thereon at a rate not greater than that authorized by 9 V.S.A. § 41a or 46.
(b) A loan solicited or made by mail, telephone, or electronic means to a Vermont resident
shall be subject to the provisions of this chapter notwithstanding where the loan
was legally made. No person shall engage in the business of soliciting or making loans
by mail, telephone, or electronic means to residents of this State unless duly licensed.
Such licensee shall be subject to the applicable provisions of this title and 9 V.S.A. chapters 4, 59, and 61, but shall not be required to have or maintain a place of business in the State.
(c) No person other than a depository institution, pawnbroker, insurance company, or seller
of merchandise or services shall engage in specialized financing, including tuition
plans or other such financing, but not including insurance premium financing, for
residents of this State unless duly licensed. Such licensee shall be subject to the
applicable provisions of this title and 9 V.S.A. chapters 4, 59, and 61, but shall not be required to maintain a place of business in this State. Such financing
may include more than one loan per borrower. A license granted to such lenders shall
be explicit in its authority with respect to the types of business permitted. (Amended 1969, No. 243 (Adj. Sess.), § 7; 1975, No. 76; 1979, No. 173 (Adj. Sess.), § 10, eff. April 30, 1980; 1983, No. 77, § 2; 1995, No. 162 (Adj. Sess.), § 33, eff. Jan. 1, 1997; 2009, No. 29, § 1.)
§ 2234. Assignment of wages
The payment in money, credit, goods, or things in action, as consideration for any
sale or assignment of, or order for, the payment of wages, salary, commissions, or
other compensation for services, whether earned or to be earned, for the purpose of
regulation under this chapter, shall be deemed a loan secured by such assignment.
The amount by which such assigned compensation exceeds the amount of such consideration
actually paid, for the purposes of regulation under this chapter, shall be deemed
finance charges or charges upon such loan from the date of such payment to the date
such compensation is payable. Such transactions shall be governed by and subject to
applicable provisions of this title and 9 V.S.A. chapters 4, 59, and 61. (Amended 1969, No. 243 (Adj. Sess.), § 6; 1979, No. 173 (Adj. Sess.), § 9, eff. April 30, 1980; 1995, No. 162 (Adj. Sess.), § 34, eff. Jan. 1, 1997; 2009, No. 29, § 1.)
§ 2235. Requirements for assignment of wages
No assignment of or order for payment of any salary, wages, commissions, or other
compensation for services, earned or to be earned, given to secure any loan made by
any licensee under this chapter, shall be valid unless the amount of such loan is
paid to the borrower simultaneously with its execution. Such assignment or order,
or any chattel mortgage or other lien on household furniture then in the possession
and use of the borrower, shall not be valid unless it is in writing, signed in person
by the borrower, nor shall it be valid if the borrower is married unless it is signed
in person by both husband and wife. However, written assent of a spouse shall not
be required if the borrower has title as a result of a court order. (Amended 1995, No. 162 (Adj. Sess.), § 35, eff. Jan. 1, 1997.)
§ 2236. Repealed. 1995, No. 162 (Adj. Sess.), § 39(a).
§ 2236a. Extent of assignment; service upon employer
Under any such assignment or order for the payment of future salary, wages, commissions,
or other compensation for services given as security for a loan made by any licensee
under this chapter, a sum not to exceed 10 percent of the borrower’s salary, wages,
commissions, or other compensation for services shall be collectible from the employer
of the borrower by the licensee at the time of each payment to the borrower of such
salary, wages, commissions, or other compensation for services, from the time that
a copy of such assignment, verified by the oath of the licensee or the licensee’s
agent, together with a similarly verified statement of the amount unpaid upon such
loan, is served upon the employer. (Amended 2009, No. 29, § 1.)
§ 2237. Repealed. 2019, No. 20, § 29.
§ 2238. Out-of-state commercial loans
A commercial loan made to a borrower located outside Vermont for use outside Vermont
shall be deemed to be made outside the State of Vermont and shall not be subject to
this chapter except upon written agreement of the licensee and borrower. (Added 1987, No. 142 (Adj. Sess.), § 4; amended 1989, No. 244 (Adj. Sess.), § 10; 2009, No. 29, § 1.)
§ 2239. Commercial leases
This chapter shall not apply to commercial leases as defined in 9 V.S.A. chapters 59 and 61. (Added 1989, No. 122, § 1.)
§ 2240. Repealed. 2019, No. 20, § 30.
§ 2241. Prohibited acts and practices
It is a violation of this chapter for a person or individual to:
(1) directly or indirectly employ any scheme, device, or artifice to defraud or mislead
borrowers or lenders or to defraud any person;
(2) engage in any unfair or deceptive practice toward any person;
(3) obtain property by fraud or misrepresentation;
(4) solicit or enter into a contract with a borrower that provides in substance that the
person or individual may earn a fee or commission through “best efforts” to obtain
a loan even though no loan is actually obtained for the borrower;
(5) solicit, advertise, or enter into a contract for specific interest rates, points,
or other financing terms unless the terms are actually available at the time of soliciting,
advertising, or contracting;
(6) conduct any business covered by this chapter without holding a valid license as required
under this chapter, to assist or aid and abet any person in the conduct of business
under this chapter without a valid license as required under this chapter, or to refer
a person to, or receive a fee from, any person who must be licensed but was not licensed
as of the time the licensee’s services were provided;
(7) fail to make disclosures as required by this chapter and any other applicable State
or federal law, including regulations thereunder;
(8) fail to comply with this chapter or rules adopted under this chapter, or fail to comply
with any orders or directives from the Commissioner, or fail to comply with any other
State or federal law, including the rules thereunder, applicable to any business authorized
or conducted under this chapter;
(9) make, in any manner, any false or deceptive statement or representation, including
with regard to the rates, points, or other financing terms or conditions for a mortgage
loan, to engage in bait and switch advertising, or to represent to the public that
the licensee is able to perform an activity requiring licensure unless such licensee
is duly licensed or is exempt from licensure;
(10) negligently make any false statement or knowingly and willfully make any omission
of material fact in connection with any information or reports filed with a governmental
agency or the Nationwide Mortgage Licensing System and Registry or in connection with
any investigation conducted by the Commissioner or another governmental agency;
(11) make any payment, threat, or promise, directly or indirectly, to any person for the
purposes of influencing the independent judgment of the person in connection with
a residential mortgage loan, or make any payment, threat, or promise, directly or
indirectly, to any appraiser of a property, for the purposes of influencing the independent
judgment of the appraiser with respect to the value of the property;
(12) collect, charge, attempt to collect or charge, or use or propose any agreement purporting
to collect or charge any fee prohibited by this chapter;
(13) cause or require a borrower to obtain property insurance coverage in an amount that
exceeds the replacement cost of the improvements as established by the property insurer;
(14) fail to account truthfully for monies belonging to a party to a mortgage loan transaction;
(15) fail to identify clearly and conspicuously the licensee and the purpose of the contract
in its written and oral communications with a consumer; or
(16) fail to provide the ability to opt out of any unsolicited advertisement communicated
to a consumer via an email address; to initiate an unsolicited advertisement via email
to a consumer more than 10 business days after the receipt of a request from such
consumer to opt out of such unsolicited advertisements; or to sell, lease, exchange,
or otherwise transfer or release the email address or telephone number of a consumer
who has requested to opt out of future solicitations. (Added 2009, No. 29, § 1; amended 2017, No. 22, § 28, eff. May 4, 2017.)
§ 2242. Repealed. 2019, No. 20, § 31.
§ 2243. Repealed. 2019, No. 20, § 32.
§ 2244. Unique identifier shown
(a) The unique identifier issued by the Nationwide Mortgage Licensing System and Registry
of any person originating a residential mortgage loan shall be clearly shown on all
residential mortgage loan application forms, solicitations, or advertisements, including
business cards or websites, and any other documents as established by rule or order
of the Commissioner.
(b) The unique identifier issued by the Nationwide Mortgage Licensing System and Registry
of any person engaging in the business of lending or acting as a mortgage broker,
sales finance company, or loan solicitation licensee shall be clearly shown on all
loan application forms, solicitations, or advertisements, including business cards
and websites, and any other documents as established by rule or order of the Commissioner. (Added 2009, No. 29, § 1; amended 2013, No. 29, § 7, eff. May 13, 2013; 2017, No. 22, § 29, eff. May 4, 2017.)
§ 2245. Pension loans
Any person who engages in the business of offering consideration in exchange for a
secured interest in all or part of pension proceeds in the possession of a participant,
beneficiary, or member of a pension plan, program, or system shall be deemed to be
engaged in the business of making loans pursuant to subdivision 2201(a)(1) of this
chapter and shall be subject to 9 V.S.A. chapters 4 and 63. (Added 2013, No. 109 (Adj. Sess.), § 2.)
§ 2246. Repealed. 2015, No. 55, § 5A.