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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
073
:
LICENSED LENDERS
§
2201. Licenses required
(a) No person
shall without first obtaining a license under this chapter from the
Commissioner:
(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; or
(4) act as a
sales finance company.
(b) Each
licensed mortgage loan originator must register with and maintain a valid
unique identifier with the Nationwide Mortgage Licensing System and Registry
and must be either:
(1) An employee
actively employed at 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 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 2202 of this title, any renewal application
under section 2209 of this title, or pursuant to section 2208 of this title,
and shall pay the applicable fees required by subsection 2202(b) of this title
for a mortgage broker license or sales finance company license.
(d) No lender
license, mortgage broker license, or sales finance company license shall be
required of:
(1) State
agency, political subdivision, or other public instrumentality of the 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 Service Board engaging
in energy conservation or safety loans.
(4) A depository
institution or a financial institution as defined in 8 V.S.A. § 11101(32).
(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 Section 501(c) of the Internal Revenue Code, 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 Section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3),
and which 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) No mortgage
loan originator license shall be required of:
(1) Registered
mortgage loan originators, when employed by and acting for an entity described
in subdivision 2200(22) 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 Mortgage 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.)
