Licensed Lenders, Mortgage Brokers, Mortgage Loan Originators, Sales Finance Companies, and Loan Solicitation Companies

V.S.A. tit. 8, ch. 73

in effect

8 V.S.A. § 2200 Definitions

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.

8 V.S.A. § 2201 Licenses required

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.

8 V.S.A. § 2202a Application for commercial lender license

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.

8 V.S.A. § 2202b Approval of application; issuance of commercial lender license

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.

8 V.S.A. § 2203 Bond; liquid assets required

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.

8 V.S.A. § 2203a Additional bond; liquid assets to be maintained

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.

8 V.S.A. § 2204a Mortgage loan originator prelicensing and relicensing education requirement

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.

8 V.S.A. § 2204b Testing of mortgage loan originators

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.

8 V.S.A. § 2204c Continuing education for mortgage loan originators

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.

8 V.S.A. § 2204d Mortgage loan originator license inactive status

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.

8 V.S.A. § 2208a Mortgage loan originator change of employer or sponsor

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.

8 V.S.A. § 2216 Mortgage lending; specific requirements; exceptions

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.

8 V.S.A. § 2217 Mortgage brokers

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.

8 V.S.A. § 2218 Segregated accounts

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.

8 V.S.A. § 2219 Contract required of mortgage broker

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.

8 V.S.A. § 2220 Disclosure required by mortgage lender

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.

8 V.S.A. § 2220a Disclosure required by loan solicitation licensee

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.

8 V.S.A. § 2221 Out-of-state mortgage loans

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.

8 V.S.A. § 2222 Examinations

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.

8 V.S.A. § 2223 Additional records required of loan solicitation licensees

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.

8 V.S.A. § 2225 Statement of rates of charge

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.

8 V.S.A. § 2227 Conduct of unrelated business

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.

8 V.S.A. § 2229 Confessions of judgment; powers of attorney; contents of notes

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.

8 V.S.A. § 2230 Rate of interest

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.

8 V.S.A. § 2231 Contracts to be repayable in monthly installments; maximum term; additional charges prohibited; invalidity of loan contract

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.

8 V.S.A. § 2232a Requirements regarding the borrower

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.

8 V.S.A. § 2233 Charges; loan solicitation; specialized financing

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.

8 V.S.A. § 2234 Assignment of wages

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.

8 V.S.A. § 2235 Requirements for assignment of wages

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.

8 V.S.A. § 2236a Extent of assignment; service upon employer

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.

8 V.S.A. § 2238 Out-of-state commercial loans

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.

8 V.S.A. § 2239 Commercial leases

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.

8 V.S.A. § 2241 Prohibited acts and practices

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.

8 V.S.A. § 2244 Unique identifier shown

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.

8 V.S.A. § 2245 Pension loans

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.

8 V.S.A. § 2247 Commercial financing [Effective July 1, 2027]

2247. Commercial financing [Effective July 1, 2027] (a) Definitions. As used in this section: (1) “Commercial financing” means a sales-based financing or factoring transaction. (2) “Factoring transaction” means an accounts receivable purchase transaction that includes an agreement to purchase, transfer, assign, or sell a legally enforceable claim for payment held by a recipient for goods the recipient has supplied or services the recipient has rendered that have been ordered but for which payment has not yet been made. A purchase of accounts receivable in connection with the purchase and sale of substantially all of the assets of a business or line of business shall not be deemed to be a factoring transaction. (3) “Finance charge” means the cost of financing as a dollar amount. It includes any charge payable directly or indirectly by the recipient and imposed directly or indirectly by the provider as an incident to or a condition of the extension of financing. It includes all charges that would be included under 12 C.F.R. Part 1026.4 as if the transaction were subject to 12 C.F.R. Part 1026.4. In addition, the finance charge shall include any charges as determined by the Commissioner. For the purposes of a factoring transaction, the finance charge includes the discount taken on the face value of the accounts receivable. (4) “Provider” means a person who provides or will provide commercial financing to a recipient or who extends a specific offer of commercial financing to a person or to the person’s authorized representative. A provider also includes a person who solicits prospective recipients of commercial financing or who presents specific offers of commercial financing on behalf of a third party. (5) “Recipient” means a person that receives or applies for commercial financing or is made a specific offer of commercial financing by a provider. A recipient may also be an authorized representative of such person. (6) “Sales-based financing” means a transaction that is repaid by the recipient to the provider, over time, as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient. Sales-based financing also includes a true-up mechanism where the financing is repaid as a fixed payment but provides for a reconciliation process that adjusts the payment to an amount that is a percentage of sales or revenue. Sales-based financing also includes transactions structured as a sale or assignment of future accounts receivable, future revenue, or future sales. (7) “Solicit prospective recipients of commercial financing” means, for compensation or gain or with the expectation of compensation or gain, to: (A) solicit prospective recipients for commercial financing; (B) offer, broker, directly or indirectly arrange, place, or find commercial financing for a prospective recipient; (C) obtain commercial financing for a prospective recipient or offer to obtain commercial sales-based financing for a recipient from a provider; (D) initiate prospective recipients’ interest or inquiry in commercial financing by online marketing, direct response advertising, telemarketing, or other similar contact; (E) engage in the business of selling information identifying a prospective recipient of commercial financing; (F) generate or augment information identifying a prospective recipient of commercial financing for other persons; or (G) refer prospective Vermont recipients to other persons for commercial financing. (8) “Specific offer” means the specific terms of commercial financing, including price or amount, that is quoted to a recipient, based on information obtained from, or about, the recipient, which, if accepted by a recipient, shall be binding on the provider, as applicable, subject to any specific requirements stated in such terms. (b) License requirement. (1) A provider shall not provide commercial financing to a person in this State, extend a specific offer of commercial financing to a person in this State, or solicit prospective recipients of commercial financing extended by such provider, unless the provider is licensed as a lender under this chapter. (2) A provider shall not solicit prospective recipients of commercial financing on behalf of a third party or present or extend specific offers of commercial financing on behalf of a third party unless the provider holds a loan solicitation license under this chapter and such third party is licensed as a lender under this chapter or exempt from the licensing requirements under this section pursuant to subdivision (3) or (4) of this subsection. (3) A lender license, commercial lender license, or loan solicitation license shall not be required under this section for any of the following: (A) a state agency, political subdivision, or other public instrumentality of a state; (B) a federal agency or other public instrumentality of the United States; (C) a depository institution or a financial institution as defined in subdivision 11101(32) of this title; or (D) a seller of goods or services that finances the sale of such goods or services to a recipient. (4) This section shall not apply to commercial financing transactions of $1,000,000.00 or more that are not primarily for personal, family, or household use. (5) For purposes of this section, subsection 2201(d) of this title shall not apply. (c) Personal, family, or household use. A commercial financing offered, extended, or otherwise provided primarily for personal, family, or household use, for the purpose of regulation under this chapter, shall also be deemed to be a loan for purposes of this chapter. Any commercial financing deemed to be a loan under this subsection shall be governed by and subject to applicable provisions of this title, including this section, and 9 V.S.A. chapters 4, 59, and 61. (d) Certain automatic debts prohibited. A provider shall not establish a mechanism for automatically debiting a recipient’s deposit account unless the provider holds a validly perfected security interest in the recipient’s account under Title 9A, with a first priority against the claims of all other persons. (e) Confessions of judgment. A commercial financing contract that contains a confession of judgment provision or any similar provision is void and unenforceable. (f) Choice of law, jurisdiction, and venue; arbitration. Where a provider enters into a contract or agreement with a recipient to provide commercial financing, such contract or agreement shall be governed exclusively by Vermont law, and any cause of action arising under such contract or agreement shall be brought in a court in this State. Any provision in the contract or agreement providing that the law of any other jurisdiction shall govern or mandating that any such action be brought outside this State shall be unenforceable by any party other than the recipient. Where a contract between a provider and recipient contains an arbitration provision, such contract shall not require face-to-face arbitration proceedings outside this State. If the contract requires face-to-face arbitration proceedings outside this State, such provision is unenforceable by any party other than the recipient. The enforceability of the remaining provisions of the arbitration agreement and the method of selecting a forum for the conduct of the arbitration proceedings are as provided in the Vermont Arbitration Act, 12 V.S.A. chapter 192, the Federal Arbitration Act, 9 U.S.C. §§ 1–16, and any applicable rules of arbitration. The provider shall pay any arbitrators’ expenses or fees, or any other expenses or administrative fees incurred in the conduct of any such arbitration proceedings. (g) Sales-based financing disclosure requirements. (1) A provider shall provide the following disclosures to a recipient at the time of extending a specific offer of sales-based financing: (A) The total amount of the commercial financing, and the disbursement amount, if different from the financing amount, after any fees deducted or withheld at disbursement. (B) The finance charge. (C) The estimated annual percentage rate, using the words “annual percentage rate” or the abbreviation “APR,” expressed as a yearly rate, inclusive of any fees and finance charges, and determined in accordance with the federal Truth in Lending Act, Regulation Z, 12 C.F.R. § 1026.22, as may be amended, based on the estimated term of repayment and the projected periodic payment amounts, regardless of whether such act or such regulation would require such a calculation. The estimated term of repayment and the projected periodic payment amounts shall be calculated based on a projection of the volume of the recipient’s sales or revenue. The projected volume of sales or revenue may be calculated using the historical method, as described in subdivision (i) of this subdivision (g)(1)(C), or the opt-in method, as described in subdivision (ii) of this subdivision (g)(1)(C). (i) A provider using the historical method shall use an average historical volume of sales or revenue on which the financing’s payment amounts are based and by which the estimated annual percentage rate is determined. The provider shall fix the historical time period to be used to calculate the average historical volume of sales or revenue and use such period for all disclosure purposes for all sales-based financing products offered by the provider. The fixed historical time period shall either be the time period immediately preceding the specific offer or, alternatively, a time period consisting of the same number of months with the highest sales or revenue volume within the past 12 months. The fixed historical time period shall be at least one month and shall not exceed 12 months. (ii) A provider using the opt-in method shall determine the estimated annual percentage rate, the estimated term, and the projected payments using a projected sales or revenue volume that the provider elects for each disclosure. Upon a finding by the Commissioner that the use of projected sales or revenue volume by the provider has resulted in an unacceptable deviation between the estimated and actual annual percentage rates, the Commissioner shall require the provider to use the historical method. The Commissioner may consider unusual and extraordinary circumstances impacting the provider’s deviation between estimated and actual annual percentage rates in making such finding. (D) The total repayment amount, which is the disbursement amount plus the finance charge. (E) The estimated term is the period of time required for the periodic payments, based on the projected sales volume, to equal the total amount required to be repaid. (F) The payment amounts, based on the projected sales volume: (i) for payment amounts that are fixed, the payment amounts and frequency (for example, daily, weekly, or monthly), and, if the payment frequency is other than monthly, the amount of the average projected payments per month; or (ii) for payment amounts that are variable, a payment schedule or a description of the method used to calculate the amounts and frequency of payments, and the amount of the average projected payments per month. (G) A description of all other potential fees and charges not included in the finance charge, including draw fees, late payment fees, and returned payment fees. (H) Were the recipient to elect to pay off or refinance the commercial financing prior to full repayment, the provider shall disclose: (i) whether the recipient would be required to pay: (I) any finance charges other than interest accrued since the last payment; if so, disclosure of the percentage of any unpaid portion of the finance charge and maximum dollar amount the recipient could be required to pay; and (II) any additional fees not already included in the finance charge; and (ii) a description of collateral requirements or security interests, if any. (2) The provider shall obtain the recipient’s signature on the disclosures required by this subsection before finalizing the application for the sales-based financing. (3) A provider shall not provide sales-based financing to a recipient without first providing the disclosures required by this subsection and obtaining the recipient’s signature on such disclosures. (4) The Commissioner may prescribe the format for the disclosures required by this subsection. (h) Factoring transaction disclosure requirements. (1) A provider shall provide the following disclosures to a recipient at the time of extending a specific offer for a factoring transaction: (A) The amount of the receivables purchase price paid to the recipient and, if different from the purchase price, the amount disbursed to the recipient after any fees deducted or withheld at disbursement. (B) The finance charge. (C) The estimated annual percentage rate, using the words “annual percentage rate” or the abbreviation “APR,” calculated according to the federal Truth in Lending Act, Regulation Z, 12 C.F.R. § 1026 Appendix J, as a “single advance, single payment transaction,” regardless of whether such act or such regulation would require such a calculation. To calculate the estimated annual percentage rate, the purchase amount is considered the financing amount, the purchase amount minus the finance charge is considered the payment amount, and the term is established by the payment due date of the receivables. As an alternate method of establishing the term, the provider may estimate the term for a factoring transaction as the average payment period, based on its historical data over a period not to exceed the previous 12 months, concerning payment invoices paid by the party owing the accounts receivable in question. (D) The total payment amount, which is the purchase amount plus the finance charge. (E) A description of all other potential fees and charges that can be avoided by the recipient. (F) A description of the receivables purchased and any additional collateral requirements or security interests. (2) The provider shall obtain the recipient’s signature on the disclosures required by this subsection before finalizing the application for the factoring transaction. (3) A provider shall not provide commercial financing to a recipient in a factoring transaction without first providing the disclosures required by this subsection and obtaining the recipient’s signature on such disclosures. (4) The Commissioner may prescribe the format for the disclosures required by this subsection. (i) Disclosures required if recipient required to pay off existing commercial financing as condition. If as a condition of obtaining commercial financing the provider requires the recipient to pay off the balance of existing commercial financing from the same provider, the provider shall disclose to the recipient: (1) The amount of the new commercial financing used to pay off the portion of the existing commercial financing that consists of prepayment charges required to be paid and any unpaid interest expense that was not forgiven at the time of renewal. For financing for which the total repayment amount is calculated as a fixed amount, the prepayment charge is equal to the original finance charge multiplied by the amount of the renewal used to pay off existing financing as a percentage of the total repayment amount, minus any portion of the total repayment amount forgiven by the provider at the time of prepayment. (2) If the disbursement amount will be reduced to pay down any unpaid portion of the outstanding balance, the actual dollar amount by which such disbursement amount will be reduced. (j) Rulemaking. The Commissioner is authorized to adopt rules the Commissioner determines are consistent with the purposes of this section, or appropriate for the effective administration of this section, including: (1) Rules in connection with the calculation or determination of any metric required to be disclosed to a recipient. (2) Rules necessary to develop and prescribe disclosure formatting to be used by providers that allows for recipients to easily compare financing options in a clear and conspicuous manner. Such rules may include the designation and method for disclosing the information required in this section, or approving adequate forms and methods already used by providers. (3) Rules that define the terms used in this section if the Commissioner determines such rules are necessary and appropriate to interpret and implement the provisions of this section. (4) Rules necessary for the enforcement of this section. Added 2025, No. 142 (Adj. Sess.), § 60, eff. July 1, 2027.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/073Fetched: 10/21/2026