Lending Reports, Disclosures, and Standards

V.S.A. tit. 8, ch. 200, subch. 4

in effect

8 V.S.A. § 10402 Lending reports, disclosures, and standards

10402. Lending reports, disclosures, and standards Any person licensed, chartered, or otherwise authorized, or required to be licensed, chartered, or otherwise authorized, under Part 2, 4, or 5 of this title shall be subject to and comply with the provisions of 9 V.S.A. chapter 4 (interest). Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2025, No. 142 (Adj. Sess.), § 23, eff. July 1, 2026.

8 V.S.A. § 10403 Prohibition on discrimination based on sex, marital status, race, color, religion, national origin, age, sexual orientation, gender identity, or disability

10403. Prohibition on discrimination based on sex, marital status, race, color, religion, national origin, age, sexual orientation, gender identity, or disability (a) Discrimination prohibited. No lending institution shall discriminate against any applicant for credit services on the basis of the sex, marital status, race, color, religion, national origin, age, sexual orientation, gender identity, or disability of the applicant, provided the applicant has the legal capacity to contract. (b) Rulemaking. The Commissioner of Financial Regulation shall adopt rules necessary to carry out the provisions of this section. (c) Definitions. As used in this section: (1) “Adverse action” means denial, revocation, or termination of credit services. The term does not include a change in the terms of an account expressly agreed to by an applicant nor any action or forbearance relating to an account taken in connection with inactivity, default, or delinquency as to that account. (2) “Applicant” means any person who applies to a lending institution directly for an extension, renewal, or continuation of credit or applies to a lending institution indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit. (3) “Application” means an oral or written request for an extension of credit that is made in accordance with procedures established by a lending institution for the type of credit requested. The term does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit. A completed application means an application in connection with which a lending institution has received all the information that the lending institution regularly obtains and considers in evaluating applications for the amount and type of credit requested, including credit reports, any additional information requested from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral. The lending institution shall exercise reasonable diligence in obtaining such information. (4) “Credit services” means credit cards, personal loans, mortgage loans, and commercial loans. (5) “Disability” applied to an applicant means a person with a disability as defined in 21 V.S.A. § 495d(5). As used in this section, an applicant with a disability does not include an alcoholic or drug abuser who, by reason of current alcohol or drug use, constitutes an unacceptable credit risk. (6) “Lending institution” means a Vermont financial institution, Vermont credit union, and any person required to obtain, or exempt from the requirement to obtain, a lender license pursuant to section 2201 of this title. (7) “Person” means a natural person, a corporation, government or governmental subdivision or agency, trust, estate, partnership, cooperative, association, or other entity. (d) Notification requirements. (1) Within 30 days after reaching a decision on a completed application, a lending institution shall notify the applicant of its decision on the application. (2) Each applicant against whom adverse action is taken shall receive a written statement of reasons for such action from the lending institution. (3) For commercial credit only, a statement of reasons meets the requirements of this section only if it contains the specific reasons for the adverse action taken and cites the specific documentation or business judgment that supports the adverse decision on the application. Consumer credit shall be governed by the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., and regulations adopted pursuant to the Act. (4) Lending institutions shall be required to maintain a copy of all “statements of reasons” and the documentation upon which the decision was based for 24 months after the date of issuance. (e) Civil enforcement. A lending institution that discriminates against an applicant in violation of this section shall be liable to the applicant for punitive damages, for actual damages sustained by the applicant as a result of the discrimination, and for costs and reasonable attorney’s fees as determined by the court. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2007, No. 41, § 10; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 96 (Adj. Sess.), § 24; 2019, No. 131 (Adj. Sess.), § 8; 2021, No. 105 (Adj. Sess.), § 280, eff. July 1, 2022; 2025, No. 142 (Adj. Sess.), § 24, eff. July 1, 2026.

8 V.S.A. § 10404 Home loan escrow accounts

10404. Home loan escrow accounts (a) As used in this section: (1) “Borrower” means one or more natural persons who are obligated to make escrow account payments under the terms of a loan agreement secured by residential real estate occupied by the borrower. (2) “Escrow account” means an account into which a borrower is required under the terms of a residential real estate loan agreement to make periodic payments of property taxes, insurance premiums, or other similar charges. (3) “Lender” means a person who services or holds the beneficial interest in a loan secured by residential real estate located in this State and who requires periodic payments by a borrower into an escrow account in accordance with the provisions of a residential real estate loan agreement. (b) A lender shall pay into an escrow account for the benefit of the borrower interest on funds deposited into the account under the same conditions as the lender’s regular savings account, if offered, and otherwise at a rate not less than the prevailing market rate of interest for regular savings accounts offered by local financial institutions, calculated on the basis of the average monthly balance in the account and credited on the first day of each quarter. This subsection shall not apply when a lender requires payment into an escrow account because a borrower has failed, within the past year, to make timely payments for property taxes and insurance in accordance with the provisions of the loan agreement. (c) A lender shall not require a borrower to deposit into an escrow account any greater sum than is sufficient to pay taxes, insurance premiums, and other charges with respect to the residential real estate, subject to the following additional charges: (1) a lender may require aggregate annual deposits no greater than the reasonably estimated total annual charges plus one-sixth of such total; and (2) a lender may require monthly deposits no greater than one-twelfth of the reasonably estimated total annual charges plus an amount needed to maintain an additional account balance no greater than one-sixth of such total. (d) A lender shall make timely payments of all charges with respect to the residential real estate payable from the escrow account. (e) The lender shall maintain escrow account funds in an insured depository institution, as defined in the Federal Deposit Insurance Act, 12 U.S.C. § 1813, as may be amended, or as defined under the Federal Credit Union Act, 12 U.S.C. § 1781, as may be amended. (f) With respect to borrowers who have maintained escrow accounts in accordance with the provisions of the loan agreement, the lender shall be primarily obligated for the payment of any municipal or county taxes, insurance premiums, or other similar charges with respect to the residential real estate, and any penalties attributable to the lender’s late payment of such charges. (g)(1) At least annually, at the completion of the escrow account computation year, a lender shall conduct an escrow account analysis to determine the borrower’s monthly escrow account payments for the next computation year based on the borrower’s current tax liability, if made available to the lender either by the borrower or the municipality, after any applicable adjustment for a State credit on property taxes. (2) Upon receipt of a revised property tax bill, the lender shall review the property tax bill and, upon verifying that it has been reduced since the date of the last escrow account analysis, the lender shall, within 30 days of receiving the bill, conduct a new escrow account analysis, recalculate the borrower’s monthly escrow payment, and notify the borrower of any change. (3) At least annually, and whenever an escrow account analysis is conducted or upon request of the borrower, the lender shall provide to the borrower financial statements relating to the borrower’s escrow account in a manner and on a form consistent with the federal Real Estate Settlement Procedures Act. The lender shall not charge the borrower for the preparation and transmittal of such statements. (h) A borrower aggrieved by a violation of the provisions of this section, or a rule adopted by the Commissioner in connection with this section, may bring an action for injunctive relief, three times the amount of any interest unpaid in violation of this section, other damages, costs, and reasonable attorney’s fees. The Commissioner may bring an action in the Superior Court of Washington County for injunctive relief, restitution, and any administrative costs and attorney’s fees incurred as a result of a violation of this section. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2017, No. 70, § 2; 2025, No. 142 (Adj. Sess.), § 25, eff. July 1, 2026.

8 V.S.A. § 10405 Debt protection agreements

10405. Debt protection agreements (a) Debt protection agreements that meet the requirements of this section, including requirements related to necessary disclosures, prohibited activities, and to the sale, transfer, and assignment of such agreements, are not insurance as defined by section 3301a of this title and are not governed by the insurance laws of the State of Vermont. (b) As used in this section: (1) “Debt protection agreement” means a loan term or contractual arrangement that may be part of, or separate from, the loan agreement or retail or motor vehicle installment contract that modifies the loan or retail or motor vehicle installment contract terms governing the extension of credit under the loan agreement or retail or motor vehicle installment contract and under which the creditor agrees to provide one or more of the following protections: (A) debt cancellation, which is an agreement to cancel all or part of a borrower’s obligation to repay an extension of credit from that creditor upon the occurrence of a specified event and shall include a guaranteed asset protection waiver agreement in which the creditor agrees to cancel all or part of a borrower’s obligation to repay an extension of credit to the extent that there is an outstanding balance on the loan or retail or motor vehicle installment contract after application of property insurance proceeds in the event of total physical damage or theft of the property; or (B) debt suspension, which is an agreement to suspend all or part of a borrower’s obligation upon the occurrence of a specified event. (2) The term “creditor” shall include: (A) the lender in a credit transaction; (B) any “retail seller” or “seller” of “motor vehicles” or of other “goods” and “services” that provides credit to “retail buyers” or “buyers” of such motor vehicles or goods and services as those terms are all defined in 9 V.S.A. §§ 2351 and 2401, respectively, provided that such entities comply with the provisions of this section, including the provisions of subdivisions (c)(1) and (2) of this section; and (C) the assignees of any of the foregoing to whom the credit obligation is payable. (3) The term “borrower” shall include a debtor, retail buyer of a motor vehicle or other good or service, or other person who obtains an extension of credit from a creditor. (4) The term “actuarial method” shall mean the method of allocating payments made on a debt between the amount financed and the finance charge pursuant to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from or any deficiency is added to the unpaid balance of the amount financed. (c)(1) Requirements. In the case of credit granted by a seller or retail seller of motor vehicles or of other goods and services that is not required to be licensed under chapter 73 of this title, such retail seller or seller of motor vehicles or of other goods and services shall, within 15 business days, sell, assign, or otherwise transfer the loan agreement, motor vehicle installment contract, or retail sales installment contract, together with the related debt protection agreement in accordance with the provisions of subdivision (2) of this subsection. (2) All assignments, sales, or transfers of a loan agreement or motor vehicle or retail installment contract to which a debt protection agreement relates and the related debt protection agreement shall be to a financial institution, a credit union, or an entity licensed under subdivision 2201(a)(1) or (4) of this title to engage in lending or sales financing. (3) In the event that a retail seller or seller of motor vehicles or of other goods or services cannot within 15 business days sell, assign, or otherwise transfer the loan agreement or motor vehicle or retail sales installment contract and the related debt protection agreement as required by subdivision (1) of this subsection, or in the event that an assignment is made contrary to subdivision (2) of this subsection, the provisions of subsection (a) of this section shall not apply and the product shall be considered to be insurance governed by the insurance laws of the State of Vermont. (4) The debt protection agreement forms a part of the loan agreement or sales contract and must be assigned, sold, or transferred together with any assignment, sale, or transfer of the loan agreement or retail or motor vehicle installment contract to which it was originally related. (5) A creditor shall disclose in writing, such disclosures shall be conspicuous, readily understandable, and designed to call attention to the nature and significance of the information provided: (A) that neither the extension of credit, the terms of the credit, nor the terms of the related sale in the case of a motor vehicle or other good or service are to be conditioned upon the purchase of a debt protection agreement; (B) the charge for the debt protection agreement; and (C) the terms and conditions of coverage, including the eligibility requirements for coverage, conditions, or exclusions associated with the contract, a clear representation of the parties to the agreement, procedures for making a claim under the agreement, and the length of term of coverage. (6) The buyer signs or initials an affirmative written request to purchase a debt protection agreement after receiving the disclosures specified in this subsection. Any buyer in the transaction may sign or initial the request. (7) Neither the extension of credit, the terms of the credit, nor the terms of the related sale in the case of a motor vehicle or other good or service are to be conditioned upon the purchase of a debt protection agreement. (8) The fees charged for debt protection agreements shall not vary as between individual borrowers except in relation to the amount and maturity date of the underlying loan or extension of credit. (9) Creditors may not offer debt protection agreements where the products contain terms that allow the creditor to modify unilaterally the contract, unless the modification is favorable to the borrower and is made without additional charge to the borrower, or the borrower is notified of the proposed change and can cancel the debt protection agreement without penalty. (10) Creditors cannot offer debt protection agreements where the terms require a lump sum, single payment for the contract payable at the outset and the product is for a residential mortgage loan, including primary or secondary residences and including first or subordinate liens. Periodic payments made in relation to a residential home loan must be evenly distributed over the same term as the term of the residential home loan. (11) The borrower may cancel the debt protection agreement at any time and for any reason. In the event of termination or cancellation of the contract, the creditor must refund any unearned fee according to a formula fully disclosed to the borrower at the time of entering into the debt protection agreement, unless the contract provides otherwise. A debt protection agreement that does not provide for a refund may only be offered if an offer is also made of a bona fide option to purchase a comparable contract that provides for a refund. The refund must be fair and reasonable, and the method of calculating the refund must be at least as favorable to the borrower as the “actuarial method”; provided, however, that if such method produces a result of less than $5.00, no refund shall be required. Notwithstanding the foregoing, if cancellation by the borrower occurs within 30 days of entering into the debt protection agreement, the borrower shall receive a full refund. (12) The creditor must manage the risks associated with debt protection agreements in accordance with safe and sound financial principles. The creditor must establish and maintain effective risk management and control processes over its debt protection agreements. Such processes include appropriate recognition and financial reporting of income, expenses, assets, and liabilities, and appropriate treatment of all expected and unexpected losses associated with the products. The creditor also should assess the adequacy of its internal control and risk mitigation activities in view of the nature and scope of its debt protection agreement programs. (13) Debt protection agreements, as defined in this section, shall not state that the borrower does not have a right to bring an action to enforce the terms of the debt protection agreement or otherwise challenge the denial of a claim or that any civil action brought in connection with a debt protection agreement must be brought in the courts of a jurisdiction other than Vermont. (14) Any other requirements prescribed by the Commissioner, in order to further the purposes of this section, by rules adopted pursuant to this section. (d) The Commissioner may conduct an examination of any creditor, as defined under this section, for the purpose of determining compliance with this section and may make such investigation as the Commissioner deems necessary. To the extent necessary for such examination or investigation, the Commissioner may, without limiting the foregoing, compel the production of all relevant books, records, documents, other evidence, or the attendance of witnesses, and may issue subpoenas with respect to the foregoing. The expense of any such investigation or examination shall be paid by the entity being examined or investigated. Nothing contained in this subsection shall limit any other examination or investigation authority of the Commissioner contained in Title 9 or this title. (e) The Commissioner may take any action reasonable, necessary, or desirable for the enforcement of this section, or any rule adopted pursuant to this section, or the enforcement of any order issued under this subsection and may: (1) Order the creditor to cease and desist from offering debt protection agreements. (2) Revoke or suspend the license or authority under this title of any person, including creditors offering debt protection agreements. (3) Impose a penalty of not more than $1,000.00 for each violation that the Commissioner finds to exist. (4) Order the creditor to make restitution to the borrower. (f) The powers vested in the Commissioner under this section are in addition to any other powers of the Commissioner to enforce penalties, fines, or forfeitures authorized by law with respect to a violation of any other law under Title 9 or this title. Added 2005, No. 70, § 4; amended 2021, No. 105 (Adj. Sess.), § 281, eff. July 1, 2022; 2021, No. 139 (Adj. Sess.), § 6, eff. May 27, 2022; 2025, No. 142 (Adj. Sess.), § 26, eff. July 1, 2026.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/200Fetched: 10/21/2026