SB 749

SENATE BILL NO. 749
A bill to amend 1988 PA 161, entitled
"Consumer financial services act,"
by amending sections 2 and 6 (MCL 487.2052 and
487.2056), as amended by 2006 PA 252.
the people of the state of michigan enact:
Sec. 2. As used in this act:
(a)
"Applicant" means a person that has applied to the commissioner to be
licensed under this act.
(b)
"Bureau" means the office of financial
and insurance services of the department of labor and economic growth.department of insurance and financial services.
(c) "Business
activity" means any activity regulated by under any of the financial licensing acts.
(d) "Class I
license" means a license issued under this act that authorizes the
licensee to engage in all of the activities permitted under any of the
financial licensing acts.
(e) "Class II
license" means a license issued under this act that authorizes all of the
activities permitted under a class I license except for activities permitted under the sale of checks act, 1960
PA 136, MCL 487.901 to 487.916, loan servicing activities under the
secondary mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, or the mortgage
brokers, lenders, and servicers licensing act, 1987 PA 173, MCL 445.1651 to
445.1684.
(f)
"Commissioner" means the commissioner of
the office of financial and insurance services or an director of the bureau or an authorized representative of the commissioner.director.
(g) "Control
person" means a director or executive officer of a licensee or a person who that has the
authority to participate in the direction, directly or indirectly through 1 or
more other persons, of the management or policies of a licensee.
(h)
"Depository financial institution" means a bank, savings and loan
association, savings bank, or credit union organized under the laws of this
state, another state, the District of Columbia, the United States, or a
territory or protectorate of the United States, whose deposits are insured by
an agency of the federal government.
(i) "Executive
officer" means an officer, member, or partner of a licensee, including
chief executive officer, president, vice president, chief financial officer,
controller, compliance officer, or any other similar position.
(j) "Financial
licensing acts" means this all of the following:
(i) This act. ; the
(ii) The regulatory loan act, 1939 PA 21, MCL 493.1
to 493.24. ; the
(iii) The secondary mortgage loan act, 1981 PA 125,
MCL 493.51 to 493.81. ; the
(iv) The motor vehicle sales finance act, 1950 (Ex
Sess) PA 27, MCL 492.101 to 492.141; 492.137a.
(v) 1984 PA 379, MCL 493.101 to 493.114. ; the sale of checks
act, 1960 PA 136, MCL 487.901 to 487.916; the
(vi) The money transmission services act, 2006 PA 250, MCL 487.1001 to 487.1048; and the 487.1047.
(vii) The mortgage brokers, lenders, and servicers
licensing act, 1987 PA 173, MCL 445.1651 to 445.1684.
(k)
"Licensee" means a person that is licensed under this act.
(l) "Loan servicing activities"
means the collection or remittance for a lender, noteowner, noteholder, or the
licensee's own account of 4 or more installment payments of the principal,
interest, or an amount placed in escrow under a mortgage servicing agreement or
a mortgage loan subject to the mortgage brokers, lenders, and servicers
licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, or a mortgage servicing
agreement or secondary mortgage loan subject to the secondary mortgage loan
act, 1981 PA 125, MCL 493.51 to 493.81, or an agreement with the mortgagor.
(m)
"Person" means an individual, corporation, partnership, association,
limited liability company, or any other legal entity.
Sec. 6. (1) An applicant for a license
shall furnish a surety bond or letter of credit to secure its obligations under
this act to the commissioner. Except as otherwise provided
in this subsection, the principal amount of a surety bond or letter of credit shall must be at least not less than $500,000.00.
If the applicant intends to provide money transmission services, as that term is defined
in section 2 3 of
the money transmission services act, 2006 PA 250, MCL
487.1003, the applicant shall must file a surety bond that is in a principal amount
as determined under section 13(5)(b) of the money transmission services act, 2006 PA 250, MCL 487.1013, for a licensee under
that act.
(2) A surety bond
described in subsection (1) shall must be payable to the commissioner for the benefit
of the people of the state of Michigan this state for the use of, and may be sued on by, the this state. A
surety bond or letter of credit shall remain remains for the duration of the licensure period.
(3) A surety bond
or letter of credit required under subsection (1) shall
must be in a form satisfactory to the
commissioner and payable upon on demand by the commissioner if he or she the
commissioner determines that the licensee is not conducting its
activities as required by this act and all of the rules promulgated under this
act, and has failed to pay all money that becomes due to a person who that is an
installment buyer under the motor vehicle sales finance act, 1950 (Ex Sess) PA
27, MCL 492.101 to 492.141, Michigan residents who
purchase checks under the sale of checks act, 1960 PA 136, MCL 487.901 to
487.916, Michigan 492.137a, residents of this state who purchase money transmission
services as defined in section 2 of under the money transmission services act, 2006 PA 250, MCL 487.1001 to 487.1047, loan
applicants, loan servicing customers, and borrowers under the secondary
mortgage loan act, 1981 PA 125, MCL 493.51 to 493.81, or the mortgage brokers,
lenders, and servicers licensing act, 1987 PA 173, MCL 445.1651 to 445.1684,
and the commissioner.
(4) The
commissioner shall prioritize and pay claims against a bond or letter of credit
filed with the commissioner under this section in a manner that, in the
commissioner's discretion, best protects the public interest.
(5) Claims
described in subsection (4) may only be filed against a licensee's bond or
letter of credit by the commissioner on behalf of the bureau and of individuals
having claims and who are, as applicable, the licensee's loan applicants, loan
servicing customers, and borrowers under the secondary mortgage loan act, 1981
PA 125, MCL 493.51 to 493.81, or the mortgage brokers, lenders, and servicers
licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, Michigan residents who purchase checks under the sale of
checks act, 1960 PA 136, MCL 487.901 to 487.916, Michigan residents of this state who purchase money transmission
services as defined in section 2 of under the money transmission services act, 2006 PA 250, MCL 487.1001 to 487.1047, or persons who that are
installment buyers under the motor vehicle sales finance act, 1950 (Ex Sess) PA
27, MCL 492.101 to 492.141.492.137a.
(6) Claims A claim filed
with the commissioner against a bond or letter of credit by a loan applicant,
loan servicing customer, or borrower under the secondary mortgage loan act,
1981 PA 125, MCL 493.51 to 493.81, or the mortgage brokers, lenders, and
servicers licensing act, 1987 PA 173, MCL 445.1651 to 445.1684, shall must involve,
as applicable, only a mortgage loan, mortgage loan application, secondary
mortgage loan, or secondary mortgage loan application secured or to be secured
by real property used as a dwelling located in this state. The amount of the
claim shall must not
exceed actual fees paid by the claimant to the licensee in connection with a
loan application, overcharges of principal and interest, and excess escrow
collections by the licensee.
(7) Before payment
of any claim filed under this section, unless the commissioner waives, in whole
or in part, the right to priority of payment, the commissioner shall must be paid
in full for fines and fees due to the bureau and for expenses incurred in
investigating the licensee and in distributing the proceeds of the bond or
letter of credit. In the event that If valid claims exceed the amount of the bond or
letter of credit, each claimant except the commissioner is entitled only to a
pro rata amount of his or her the claimant's valid claim.
Enacting section 1.
This amendatory act does not take effect unless Senate Bill No. 739 of the
103rd Legislature is enacted into law.