The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 085: Loan Servicers

• § 2900. Definitions

  As used in this chapter:

  (1) “Loan” means a residential mortgage loan.

  (2) “Servicing” means receiving a scheduled periodic payment from a borrower pursuant to the terms of a loan, including amounts for escrow accounts, and making the payments to the owner of the loan or other third party of principal and interest and other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the servicing loan document or servicing contract. In the case of a home equity conversion mortgage or a reverse mortgage, servicing includes making payment to the borrower.

  (3) “Third party loan servicer” means a person who engages in the business of servicing a loan, directly or indirectly, owed or due or asserted to be owed or due another. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011; amended 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2019, No. 20, § 81.)

• § 2901. License required

  (a) No person shall act as a third party loan servicer, directly or indirectly, for a loan to a Vermont borrower without first obtaining a license under this chapter from the Commissioner.

  (b) No license shall be required of:

  (1) a depository institution;

  (2) a lender licensed under chapter 73 of this title that retains the servicing rights on a loan originally closed in the lender’s name and subsequently sold in whole or in part to a third party, provided that the provisions of sections 2916 (segregated accounts) and 2922 (prohibited acts and practices) of this title shall apply to such lender;

  (3) a debt adjuster licensed in this State;

  (4) an attorney licensed in this State when collecting a debt on behalf of a client; or

  (5) bona fide nonprofit organizations, exempt from taxation under Section 501(c) of the Internal Revenue Code, that are approved by the Department of Housing and Urban Development as housing counseling agencies, that have a physical location in Vermont, and that lend state or federal funds.

  (c) This chapter shall not apply to commercial loans. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.)

• § 2902. Repealed. 2019, No. 20, § 82.

• § 2903. Bond

  (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 the amount of $100,000.00 or 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 a 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.

  (b) 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.

  (c) Notwithstanding subsections (a) and (b) of this section, the Commissioner may waive or modify the requirement for or the amount of a bond or accept other appropriate means of ensuring the financial responsibility of a licensee. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.)

• § 2904. Repealed. 2019, No. 20, § 83.

• § 2905. Repealed. 2019, No. 20, § 84.

• § 2906. Repealed. 2019, No. 20, § 85.

• § 2907. Additional bond

  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 2903 of this chapter. The licensee shall file the bond within 10 days of the Commissioner’s written demand to do so. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.)

• § 2908. Repealed. 2019, No. 20, § 86.

• § 2909. Repealed. 2019, No. 20, § 87.

• § 2910. Repealed. 2019, No. 20, § 88.

• § 2911. Repealed. 2019, No. 20, § 89.

• § 2912. Repealed. 2019, No. 20, § 90.

• § 2913. Repealed. 2019, No. 20, § 91.

• § 2914. Repealed. 2019, No. 20, § 92.

• § 2915. Repealed. 2019, No. 20, § 93.

• § 2916. Segregated accounts

  (a) All amounts paid by borrowers to a licensee subject to this chapter shall be deposited in one or more accounts maintained at a federally insured depository institution and with respect to such funds, the licensee shall act as a fiduciary. Such account or accounts shall be segregated from all other accounts of the licensee. Such funds shall not be used in the conduct of the licensee’s personal affairs or in the licensee’s business affairs.

  (b) The licensee may withdraw funds from the segregated account for payment directly to the owner of the loan or other third party of principal and interest and other payments as may be required pursuant to the terms of the loan document or servicing contract.

  (c) The licensee may withdraw funds from the segregated account for commissions to which it is entitled for services actually performed.

  (d) The licensee may return funds from the segregated account to the borrower if not prohibited.

  (e) The licensee shall maintain complete and accurate account records, including, at a minimum, the source of all deposits, the nature and recipient of all disbursements, the date and amount of each transaction, and the name of the borrower. All documents pertaining to account activity shall be produced upon request of the Commissioner. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.)

• § 2917. Examinations

  The Commissioner shall examine the affairs, business, and records of each licensee under this chapter at least once every three years. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011; amended 2019, No. 20, § 94.)

• § 2918. Repealed. 2019, No. 20, § 95.

• § 2919. Repealed. 2019, No. 20, § 96.

• § 2920. Repealed. 2019, No. 20, § 97.

• § 2921. Repealed. 2019, No. 20, § 98.

• § 2922. Prohibited acts and practices

  (a) It is a violation of this chapter for a person 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) use any unfair or unconscionable means in servicing a loan;

  (5) knowingly misapply or recklessly apply loan payments to the outstanding balance of a loan;

  (6) knowingly misapply or recklessly apply payments to escrow accounts;

  (7) require the unnecessary forced placement of insurance, when adequate insurance is currently in place;

  (8) fail to provide loan payoff information within the time period set forth in 27 V.S.A. § 464;

  (9) charge excessive or unreasonable fees to provide loan payoff information;

  (10) fail to manage and maintain escrow accounts in accordance with section 10404 of this title;

  (11) knowingly or recklessly provide inaccurate information to a credit bureau, thereby harming a consumer’s creditworthiness;

  (12) fail to report both the favorable and unfavorable payment history of the consumer to a nationally recognized consumer credit bureau at least annually if the servicer regularly reports information to a credit bureau.;

  (13) collect private mortgage insurance beyond the date for which private mortgage insurance is no longer required;

  (14) knowingly or recklessly facilitate the illegal foreclosure of real property collateral;

  (15) knowingly or recklessly facilitate the illegal repossession of chattel collateral;

  (16) fail to respond to consumer complaints in a timely manner;

  (17) conduct any business covered by this chapter without holding a valid license as required under this chapter, or assist or aid and abet any person in the conduct of business under this chapter without a valid license as required under this chapter;

  (18) fail to comply with any federal or state law, rule, or other legally binding authority relating to the evaluation of loans for modification purposes or the modification of loans;

  (19) 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.

  (b) A violation of this section is an unfair and deceptive act or practice under 9 V.S.A. § 2453, provided that the Commissioner’s determinations concerning the interpretation and administration of the provisions of this chapter and any rules adopted thereunder shall carry a presumption of validity. Prior to initiating an action for a violation of this chapter, the Attorney General shall consult with the Commissioner regarding the proposed action. (Added 2009, No. 96 (Adj. Sess.), § 1, eff. Jan. 1, 2011.)

• § 2923. Repealed. 2019, No. 20, § 99.