Senate Bill No. 6
(By Senators Tomblin (Mr. President) and Boley
By Request of the Executive)
____________
[Introduced July 14, 1996; referred to the Committee
.]
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A BILL to amend and reenact sections one, two, four, five, six,
eight, nine, ten, eleven, twelve, thirteen, fourteen,
fifteen, sixteen and eighteen, article seventeen, chapter
thirty-one of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; to further amend said
article by adding thereto a new section, designated section
twenty; to amend and reenact sections six and seven, article
two, chapter thirty-one-a of said code; to further amend
said article by adding thereto a new section, designated
section sixteen; and to amend and reenact section one
hundred five, article one, chapter forty-six-a of said code,
all generally relating to licensure of consumer lending offices, banking institutions and secondary mortgage
companies operating in West Virginia; changing definitions;
clarifying that license requirements for lenders or brokers
do not apply to federally insured depository institutions;
requiring annual license renewal; removing residence
requirements for licensure of lenders and brokers and
establishing licensing requirements for out-of-state lenders
and brokers wishing to do business in West Virginia;
modifying the allowable amount of finance and other charges
and extending the maximum time period for second mortgage
loans; requiring the banking commissioner to study the
effect of extending the maximum time period for second
mortgage loans; prohibiting certain charges from being
assessed if second mortgage is refinanced or another loan is
obtained on same property within twenty-four months and
modifying allowable charges for secondary mortgages;
requiring lender to provide proof of insurance to borrower
within thirty days; allowing lenders to provide revolving
lines of credit in certain circumstances; prohibiting
brokers from receiving payment prior to completion of services unless all requirements of article six, chapter
forty-six-a of this code are met; making the annual review
of licensee's books and accounts by the commissioner
discretionary; making it grounds to revoke or suspend
licenses if lender makes consumer loans with intent to
acquire secured property; modifying licensee's duty to
relinquish license following suspension or revocation;
modifying hearing requirements; providing that the penalties
in article seventeen, chapter thirty-one of this code are
cumulative; changing the periodic examination requirements
for financial institutions; making the effective date of the
amendments to chapters thirty-one and thirty-one-a of this
code the seventh day of June, one thousand nine hundred
ninety-six; establishing a per hour fee amount that the
commissioner of banking may charge financial institutions
for periodic record reviews; and exempting secondary
mortgage lender and broker licensees from the provisions of
chapter forty-six-a of this code when those provisions
conflict with the provisions of chapter thirty-one or
thirty-one-a of this code.
Be it enacted by the Legislature of West Virginia:
That sections one, two, four, five, six, eight, nine, ten,
eleven, twelve, thirteen, fourteen, fifteen, sixteen and
eighteen, article seventeen, chapter thirty-one of the code of
West Virginia, one thousand nine hundred thirty-one, as amended,
be amended and reenacted; that said article be further amended by
adding thereto a new section, designated section twenty; that
sections six and seven, article two, chapter thirty-one-a of said
code be amended and reenacted; that said article be further
amended by adding thereto a new section, designated section
sixteen; and that section one hundred five, article one, chapter
forty-six-a of said code be amended and reenacted, all to read as
follows:
CHAPTER 31. CORPORATIONS.
ARTICLE 17. SECONDARY MORTGAGE LOANS.
§31-17-1. Definitions and general provisions.
As used in this article:
(1) "Secondary mortgage loan" means a loan made to an
individual or partnership which is secured in whole or in part by
a mortgage or deed of trust upon any interest in real property
used as a dwelling with accommodations for not more than four families, which property is subject to the lien of one or more
prior recorded mortgages, deeds of trust or vendor's liens.
(2) "Person" means an individual, partnership, association,
trust, corporation or any other legal entity, or any combination
thereof.
(3) "Lender" means any person who makes or offers to make or
accepts or offers to accept any secondary mortgage loan in the
regular course of business. A person shall be deemed to be
acting in the regular course of business if he
or she makes or
accepts, or offers to make or accept, more than five secondary
mortgage loans in any one calendar year.
(4) "Broker" means any person who, for a fee or commission
or other consideration, negotiates or arranges, or who offers to
negotiate or arrange, a secondary mortgage loan between a lender
and a borrower.
(5) "Brokerage fee" means the fee or commission or other
consideration charged by a broker for the services described in
subdivision (4) of this section.
(6) "Principal" or "principal sum" means the
sum delivered
to the borrower by the lender, or expended by the lender to third party creditors of the borrower for the discharge of preexisting
debts of such borrower. total of:
(a) The net amount paid to, receivable by or paid or payable
for the account of the debtor;
(b) The amount of any discount excluded from the loan
finance charge; and
(c) To the extent that payment is deferred:
(i) Amounts actually paid or to be paid by the lender for
registration, certificate of title or license fees if not
included in paragraph (a) of this subdivision; and
(ii) Additional charges permitted by this article.
(7)
"Charge" or "charges" "Additional charges" means every
type of charge
incident to or arising out of the making or
acceptance of a secondary mortgage loan, except
interest,
including, by whatever name called, but not by way of limitation,
title search fees, title report fees, title opinion fees, title
guarantee fees, credit report fees, investigation costs,
investigation report costs, legal fees, fees for the preparation
of instruments, placement fees, discount fees, brokerage fees,
recording fees, appraisal costs, closing costs, and insurance costs, except as provided in subsection (c), section eight of
this article with respect to hazard insurance finance charges,
including, but not limited to, official fees and taxes,
reasonable closing costs and certain documentary charges and
insurance premiums and other charges which definition is to be
read in conjunction with, and permitted by section one hundred
nine, article three, chapter forty-six-a of this code.
(8)
"Interest" means the compensation, other than a charge
or charges, to be paid for the loan of the principal or principal
sum "Finance charge" means the sum of all interest and similar
charges payable directly or indirectly by the debtor imposed or
collected by the lender incident to the extension of credit, as
coextensive with the definition of "loan finance charge" set
forth in section one hundred two, article one, chapter forty-six-
a of this code.
(9) "Placement fee" or "discount fee" means a deduction from
the principal or principal sum by the lender at the time of the
making or accepting of a secondary mortgage loan, which deduction
is ultimately charged to or placed upon the borrower.
(10) (9) "Commissioner" means the commissioner of banking of this state.
(11) (10) "Applicant" means a person who has applied for a
lender's or broker's license.
(12) (11) "Licensee" means any person duly licensed by the
commissioner under the provisions of this article as a lender or
broker.
(12) "Amount financed" means the total of the following
items to the extent that payment is deferred:
(a) The cash price of the goods, services or interest in
land, less the amount of any down payment, whether made in cash
or in property traded in;
(b) The amount actually paid or to be paid by the seller
pursuant to an agreement with the buyer to discharge a security
interest in or a lien on property traded in; and
(c) If not included in the cash price:
(i) Any applicable sales, use, privilege, excise or
documentary stamp taxes;
(ii) Amounts actually paid or to be paid by the seller for
registration, certificate of title or license fees; and
(iii) Additional charges permitted by this article.
§31-17-2. License required for lender or broker; exemptions.
(a) No person shall engage in this state in the business of
lender or broker unless and until he
or she shall first obtain a
license to do so from the commissioner, which license remains
unexpired, unsuspended and unrevoked, and no foreign corporation
shall, notwithstanding the provisions of section seventy-nine-a,
article one of this chapter, engage in such business in this
state unless it shall qualify to hold property and transact
business in this state.
: Provided, That during the first
ninety days after the effective date of this article any person
who has filed an application for a lender's or broker's license
and whose application for such license has not been denied and
the license sought refused may engage in the business of lender
or broker, as the case may be, without a lender's or broker's
license, until his application is ruled upon and thereafter if
the same is granted and the license sought is issued
(b) The provisions of this article do not apply to loans
made by banking institutions, trust companies, savings and loan
associations,
building and loan associations, industrial loan
companies, insurance companies, credit unions or
small loan
companies pursuant to article seven-a, chapter forty-seven of this code any federally insured depository institution, or
to
loans made by any other lender licensed by and under the
supervision of
the commissioner by authority of any other
provisions of this code or licensed by and under the supervision
of any agency of the federal government, or to loans made by
any
agency of the federal government , or on behalf of, any agency or
instrumentality of this state or federal government or by a
nonprofit community development organization which loans are
subject to federal or state government supervision and oversight.
§31-17-4. Applications for licenses; requirements; bonds; fees;
renewals.
(a) Application for a lender's or broker's license shall
be
each year be submitted in writing under oath, in the form
prescribed by the commissioner, and shall contain the full name
and address (both of the residence and 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 owner of five percent or more of the capital stock
thereof, and such further information as the commissioner may
reasonably require. Any application shall also disclose the
location in this state at which the business of lender or broker is to be conducted.
(b) At the time of making application for a lender's
license, the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from the
secretary of state certifying that such applicant has qualified
to hold property and transact business in this state;
(2) Submit proof that he
or she has available for the
operation of the business at the location specified in the
application net assets of at least two hundred fifty thousand
dollars;
(3) File with the commissioner a bond in favor of the state
in the amount of one hundred thousand dollars, in such form and
with such conditions as the commissioner may prescribe, and
executed by a surety company authorized to do business in this
state;
and
(4) Pay to the commissioner a license fee of one thousand
dollars and an investigation fee of two hundred fifty dollars. If
the commissioner shall determine that an investigation outside
this state is required to ascertain facts or information relative
to the applicant or information set forth in the application, the applicant may be required to advance sufficient funds to pay the
estimated cost of
such the investigation. An itemized statement
of the actual cost of the investigation outside this state shall
be furnished to the applicant by the commissioner, and the
applicant shall pay or shall have returned to him
or her, as the
case may be, the difference between his
or her payment in advance
of the estimated cost and the actual cost of
such the
investigation
; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a corporation,
its state of business registration, and a full and complete
disclosure of any litigation or unresolved complaint filed by a
governmental authority or class action lawsuit on behalf of
consumers relating to the operation of the license applicant.
(c) At the time of making application for a broker's
license, the applicant therefor shall:
(1) If a foreign corporation, submit a certificate from the
secretary of state certifying that
such the applicant has
qualified to hold property and transact business in this state;
(2) Submit proof that he
or she has available for the operation of the business at the location specified in the
application net assets of at least ten thousand dollars;
(3) File with the commissioner a bond in favor of the state
in the amount of
ten one hundred thousand dollars, in such form
and with such conditions as the commissioner may prescribe, and
executed by a surety company authorized to do business in this
state;
and
(4) Pay to the commissioner a license fee of one hundred
dollars and an investigation fee of fifty dollars.
Every
individual applicant for a broker's license, and if the applicant
is a partnership or association, every member thereof, shall be
at the time of the filing of the application for such license a
bona fide resident of this state and shall have been such a
resident for a period of at least one year prior to the date of
such filing. In the case of a corporate applicant for a broker's
license, the owner or owners of at least fifty-one percent of the
capital stock of such corporation shall be at the time of the
filing of the application for such license bona fide residents of
this state and shall have been such residents for a period of at
least one year prior to the date of such filing ; and
(5) Submit proof that the applicant is a business in good
standing in its state of incorporation, or if not a corporation,
its state of business registration, and a full and complete
disclosure of any litigation or unresolved complaint filed by a
governmental authority or class action lawsuit on behalf of
consumers relating to the operation of the license applicant.
(d) The aggregate liability of the surety on any bond given
pursuant to the provisions of this section shall in no event
exceed the amount of such bond.
(e) Nonresident lenders and brokers licensed under this
article by their acceptance of such license acknowledge that they
are subject to the jurisdiction of the courts of West Virginia
and the service of process pursuant to section one hundred
thirty-seven, article two, chapter forty-six-a of this code and
section thirty-three, article three, chapter fifty-six of this
code.
§31-17-5. Refusal or issuance of license.
(a) Upon an applicant's full compliance with the provisions
of section four of this article, the commissioner shall
investigate the relevant facts with regard to
such the applicant
and his
or her application for a lender's or broker's license, as the case may be. Upon the basis of the application and all other
information before him
or her, the commissioner shall make and
enter an order denying the application and refusing the license
sought if the commissioner finds that:
(1) The applicant does not have available the net assets
required by the provisions of section four of this article;
(2) The applicant
, (individually, if an individual, or the
partners, if a partnership, or the officers and directors, if a
corporation
), is of such character and reputation as reasonably
to warrant the belief that the business will not be operated
lawfully and properly in accordance with the provisions of this
article;
(3) In the case of an application for a broker's license,
the applicant does not meet the residency qualifications
specified in said section four;
(4) (3) The applicant has habitually defaulted on financial
obligations; or
(5) (4) The applicant has done any act or has failed or
refused to perform any duty or obligation for which the license
sought could be suspended or revoked were it then issued and outstanding.
Otherwise, the commissioner shall issue to the applicant a
lender's or broker's license which shall entitle
such the
applicant to engage in the business of lender or broker, as the
case may be, during the period, unless sooner suspended or
revoked, for which the license is issued.
(b) Every application for a lender's or broker's license
shall be passed upon and the license issued or refused within
forty-five days after the applicant therefor has fully complied
with the provisions of section four of this article. Under no
circumstances whatever shall the same person hold both a lender's
and a broker's license. Whenever an application for a lender's
or broker's license is denied and the license sought is refused,
which refusal has become final, the commissioner shall retain the
investigation fee or fees but shall return the license fee to the
applicant.
§31-17-6. Minimum net assets to be maintained; bond to be kept
in full force and effect; foreign corporation to
remain qualified to do business in this state.
At all times, a licensee shall: (1) Have available the net
assets required by the provisions of section four of this article; (2) keep the bond required by said section
four in full
force and effect
, (3) if such licensee be a broker, continue to
meet the residency qualifications set forth in said section four,
and (4) if such; and (3) if the licensee be a foreign
corporation, remain qualified to hold property and transact
business in this state.
§31-17-8. Maximum period of loan; maximum interest and charge
or charges; insurance; other prohibitions.
(a)
A The maximum rate of finance charges and maximum total
additional charges on or in connection with any such secondary
mortgage loan shall be
payable over a period not in excess of
sixty months, and the maximum rate of interest and maximum total
charge or charges on or in connection with any such secondary
mortgage loan shall be as follows:
(1) The maximum rate of
interest on the principal sum shall
be six dollars upon each one hundred dollars for a year, and
proportionately for a greater or lesser sum, or for a longer or
shorter time finance charge shall not exceed eighteen percent per
year on the unpaid balance of the amount financed:
Provided,
That the borrower shall have the right to
anticipate payment of
his prepay his or her debt in whole or in part at any time and shall receive a rebate for any unearned
interest finance charge,
exclusive of any points, investigation fees and loan origination
fees, which rebate shall be computed in accordance with
the
"Standard Rule of 78"; section one hundred eleven, article three,
chapter forty-six-a of this code: Provided, however, That the
sum of any points, investigation fees and loan origination fees
charged may not exceed five percent of the amount financed;
(2)
The total charge or charges A secondary mortgage loan
shall be payable over a period not to exceed sixty months. This
sixty-month maximum loan period is temporarily extended, as of
the effective date of this section, to one hundred twenty months
until the first day of July, two thousand, at which time it
reverts to the sixty-month maximum loan limit time period. The
commissioner shall report to the Legislature by the first day of
July, one thousand nine hundred ninety-nine, on the impact of
this extended loan time period upon the citizens of this state.
The report shall include analysis of the impact of this loan
period extension on the secondary mortgage industry in this
state, impacts of this extension on various socio-economic
classes of citizens of this state, statistics regarding the number of homes which have been foreclosed upon based on this
extension and the effect of this extension to any other citizens
of this state. The commissioner may require any licensee to
provide the commissioner with any information necessary to make
this report;
(3) The total of additional charges as permitted by this
section and by section one hundred nine, article three, chapter
forty-six-a of this code, excluding official fees and taxes, and
insurance, may equal, but shall not be in excess of, ten percent
of the principal sum:
Provided, That where the principal sum at
the inception of the secondary mortgage loan is one thousand five
hundred dollars or less, the total
additional charge or charges
,
excluding official fees, taxes and insurance, may exceed said ten
percent, but shall not be in excess of one hundred fifty dollars:
Provided, however, That
such charges may not be imposed no
additional charges other than official fees, taxes and hazard
insurance may be required by the same or affiliated lender more
often than once each
thirty-six twenty-four months by renewal of
a secondary mortgage loan or an additional secondary mortgage
loan
secured by the same residential property.;
(4) Where loan origination fees, investigation fees or
points have been charged by the licensee, such fees may not be
imposed again by the same or affiliated lender in any refinancing
of that loan or any additional loan on that property made within
twenty-four months thereof, unless these earlier charges have
been rebated by payment or credit to the consumer under the
actuarial method, or the total of the earlier and current changes
does not exceed the five percent amount.
(b) Notwithstanding the provisions of subsection (a) of this
section, a delinquent or "late charge"
not exceeding five percent
of the monthly payment, may be charged on any installment made
fifteen ten or more days after the regularly scheduled due date
,
said charge to in accordance with section one hundred twelve or
one hundred thirteen, article three, chapter forty-six-a of this
code, whichever is applicable. The charge may to be made only
once on any one installment during the term of the secondary
mortgage loan.
(c) Hazard insurance may be required by the lender of the
borrower
and the premium shall not be considered as a charge, as
provided in section one hundred nine, article three, chapter forty-six-a of this code. Decreasing term life insurance, in an
amount not exceeding the amount of the secondary mortgage loan
and for a period not exceeding the term of
such the loan, and
accident and health insurance in an amount sufficient to make the
monthly payments due on said loan in the event of the disability
of the borrower and for a period not exceeding the life of said
loan, may also be
required offered by the lender
of to the
borrower and the premium therefor
, if included in the loan, may
bear interest, and may be included in computing the charge or
charges, but may be financed. The charges for any insurance
shall not exceed the standard rate approved by the insurance
commissioner for such insurance. Proof of all insurance in
connection with secondary mortgage loans subject to this article
shall be furnished to the borrower within
ten thirty days from
and after the date of application therefor by said borrower.
(d) No application fee may be allowed whether or not the
secondary mortgage loan is consummated; however, the borrower may
be required to reimburse the lender for actual expenses incurred
by the lender after acceptance and approval of a secondary
mortgage loan proposal made in accordance with the provisions of this article which is not consummated because of:
(1) The borrower's
wilful willful failure to close said
loan; or
(2) The borrower's false or fraudulent representation of a
material fact which prevents closing of said loan as proposed.
(e) No licensee shall make, offer to make, accept or offer
to accept, any secondary mortgage loan except on the terms and
conditions authorized in this article.
(f) No licensee shall induce or permit any husband and wife,
jointly and severally, to become obligated to
such the licensee
under this article, directly or contingently, or both, under more
than one secondary mortgage loan at the same time for the purpose
or with the result of obtaining greater charges than would
otherwise be permitted under the provisions of this article.
(g) No instrument evidencing or securing a secondary
mortgage loan shall contain:
(1) Any acceleration clause under which any part or all of
the unpaid balance of the obligation not yet matured may be
declared due and payable because the holder deems himself to be
insecure;
(2) Any power of attorney to confess judgment or any other
power of attorney;
(3) Any provision whereby the borrower waives any rights
accruing to him under the provisions of this article;
(4) Any requirement that more than one installment be
payable in any one installment period, or that the amount of any
installment be greater or less than that of any other
installment, except for the final installment which may be in a
lesser amount
, or unless the loan is structured as a revolving
line of credit having no set final payment date; or
(5) Any assignment of or order for the payment of any
salary, wages, commissions
, or other compensation for services,
or any part thereof, earned or to be earned.
(h) No broker licensee shall charge a borrower or receive
from a borrower money or other valuable consideration before
completing performance of all services the broker has agreed to
perform for the borrower, unless the licensee also registers and
complies with all requirements set forth for credit service
organizations in article six-c, chapter forty-six-a of this code,
including all additional bonding requirements as may be established therein.
(i) No lender licensee shall make revolving loans secured by
a secondary mortgage lien for the retail purchase of consumer
goods and services by use of a lender credit card.
§31-17-9. Disclosure; closing statements; other records
required.
(a) Any licensee or person making on his own behalf, or as
agent, broker
, or in other representative capacity on behalf of
any other person, a secondary mortgage loan, whether lawfully or
unlawfully, shall at the time of the closing furnish to the
borrower a complete and itemized closing statement which shall
show in detail:
(1) The amount and date of the note or secondary mortgage
loan contract and the date of maturity;
(2) The nature of the security;
(3) The
interest and charges finance charge rate per annum
and the itemized amount of finance charges and additional
charges;
(4) The
principal of the loan before adding the interest and
charges; amount financed and total of payments;
(5) Disposition of the principal;
(6) A description of the payment schedule;
(7) The terms on which additional advances, if any, will be
made;
(8) The charge to be imposed for past due installments;
(9) A description
and the cost of insurance required by the
lender or purchased by the borrower in connection with the
secondary mortgage loan;
(10) The name and address of the borrower and of the lender;
and
(11) That the borrower may prepay the secondary mortgage
loan in whole or in part on any installment date, and that the
borrower will receive a rebate in full for any
interest
prepayment unearned finance charge.
Such detailed closing statement shall be signed by the
lender or his representative, and a completed and signed copy
thereof shall be retained by the lender and made available at all
reasonable times to the borrower, the borrower's successor in
interest to the residential property, or the authorized agent of
the borrower or the borrower's successor, until
such the time as
the indebtedness shall be satisfied in full.
The commissioner may, from time to time, by rules
and
regulations prescribe additional information to be included in a
closing statement.
(b) Upon written request from the borrower, the holder of a
secondary mortgage loan instrument shall deliver to the borrower,
within ten days from and after receipt of
such the written
request, a statement of the borrower's account showing the date
and amount of all payments made or credited to the account and
the total unpaid balance. Not more than two
such statements
shall be requested in any twelve-month period.
(c) Upon satisfaction of a secondary mortgage loan
obligation in full, the holder of the instrument evidencing or
securing
such the obligation shall deliver to the borrower a
recordable release and all writings signed by the borrower which
were incident to applying for and obtaining
such the secondary
mortgage loan.
§31-17-10. Advertising requirements.
It shall be unlawful
and an unfair trade practice for any
person to cause to be placed before the public in this state,
directly or indirectly, any false, misleading or deceptive
advertising matter pertaining to secondary mortgage loans or the availability thereof:
Provided, That this section shall not
apply to the owner, publisher, operator or employees of any
publication or radio or television station which disseminates
such advertising matter without actual knowledge of the false or
misleading character thereof.
§31-17-11. Records and reports; examination of records; analysis.
(a) Every licensee shall maintain at his
or her place of
business in this state, if any, or if he
or she has no place of
business in this state at his
or her principal place of business
outside this state, such books, accounts and records relating to
all transactions within this article as are necessary to enable
the commissioner to enforce the provisions of this article. All
such the books, accounts and records shall be preserved,
exhibited to the commissioner and kept available as provided
herein for
such the reasonable period of time as the commissioner
may by rules
and regulations require. The commissioner is hereby
authorized to prescribe by rules
and regulations the minimum
information to be shown in
such the books, accounts and records.
(b) Each licensee shall file with the commissioner on or
before the fifteenth
day of April of each year a report under
oath or affirmation concerning his
or her business and operations in this state for the preceding license year in the form
prescribed by the commissioner, which shall show the annual
volume and outstanding amounts of secondary mortgage loans, the
classification of
such the secondary mortgage loans by size and
by security, and the gross income from, and expenses properly
chargeable to, such secondary mortgage loans.
(c)
At least once each year the The commissioner
shall may,
at his or her discretion, make or cause to be made an examination
of the books, accounts and records of every licensee pertaining
to secondary mortgage loans made in this state under the
provisions of this article, for the purpose of determining
whether each licensee is complying with the provisions hereof and
for the purpose of verifying each licensee's annual report. If
the examination is made outside this state, the licensee shall
pay the cost thereof in like manner as applicants are required to
pay the cost of investigations outside this state.
(d) The commissioner shall publish annually an analysis of
the information furnished in accordance with the provisions of
subsection (b) of this section, but the individual reports shall
not be public records and shall not be open to public inspection.
§31-17-12. Grounds for suspension or revocation of license;
suspension and revocation generally; reinstatement
or new license.
(a) The commissioner may suspend or revoke any license
issued hereunder if he
or she finds that the licensee and/or any
owner, director, officer, member, partner, stockholder, employee
or agent of such licensee:
(1) Has knowingly violated any provision of this article or
any order, decision or rule
and regulation of the commissioner
lawfully made pursuant to the authority of this article; or
(2) Has knowingly made any material misstatement in the
application for such license; or
(3) Does not have available the net assets required by the
provisions of section four of this article; or
(4) Has failed or refused to keep the bond required by
section four of this article in full force and effect; or
(5)
In the case of a broker's license, does not continue to
meet the residency qualifications set forth in section four of
this article; or
(6) In the case of a foreign corporation, does not remain
qualified to do business in this state; or
(7)(6) Has committed any fraud or engaged in any dishonest
activities with respect to such secondary mortgage loan business
in this state, or failed to disclose any of the material
particulars of any secondary mortgage loan transaction in this
state to anyone entitled to
such the information; or
(8)(7) Has otherwise demonstrated bad faith, dishonesty or
any other quality indicating that the business of the licensee in
this state has not been or will not be conducted honestly or
fairly within the purpose of this article.
It shall be a
demonstration of bad faith and an unfair or deceptive act or
practice to engage in a pattern of making loans where the
consumer has insufficient sources of income to timely repay the
debt, and the lender had the primary intent to acquire the
property upon default rather than to derive profit from the loan.
This section shall not limit any right the consumer may have to
bring an action for a violation of section one hundred four,
article six, chapter forty-six-a of this code in an individual
case.
The commissioner may also suspend or revoke the license of
a licensee if he
or she finds the existence of any ground upon which the license could have been refused, or any ground which
would be cause for refusing a license to such licensee were he
then applying for the same.
The commissioner may also suspend or
revoke the license of a licensee pursuant to his or her authority
under section thirteen, article two, chapter thirty-one-a of this
code.
(b) The suspension or revocation of the license of any
licensee shall not impair or affect the obligation of any
preexisting lawful secondary mortgage loan between such licensee
and any obligor.
(c) The commissioner may reinstate a suspended license, or
issue a new license to a licensee whose license has been revoked,
if the grounds upon which any such license was suspended or
revoked have been eliminated or corrected and the commissioner is
satisfied that
such the grounds are not likely to recur.
§31-17-13. Notice of refusal, or suspension or revocation, of
license; relinquishing license.
(a) Whenever the commissioner shall refuse to issue a
license, or shall suspend or revoke a license, he shall make and
enter an order to that effect and shall cause a copy of such
order to be served in person or by certified mail, return receipt requested, or in any other manner in which process in a civil
action in this state may be served, on the applicant or licensee,
as the case may be.
(b) Whenever a license is suspended or revoked, the
commissioner shall in the order of suspension or revocation
direct the licensee to return to the commissioner
his its
license. It shall be the duty of the licensee to comply with any
such order
following expiration of the period provided in section
fourteen of this article in which such licensee may demand a
hearing before the commissioner without such demand having been
timely made, and immediately: (i) Immediately if the license was
suspended
either following a hearing or for failure to keep the
bond required by the provisions of section four of this article
in full force and effect
; or otherwise (ii) following expiration
of the period provided in section fourteen of this article in
which such licensee, if not previously provided the opportunity
to a hearing on the matter, may demand a hearing before the
commissioner without such demand having been timely made.
§31-17-14. Hearing before commissioner; provisions pertaining
to hearing.
(a) Any applicant or licensee, as the case may be, adversely affected by an order made and entered by the commissioner in
accordance with the provisions of section thirteen of this
article
, if not previously provided the opportunity to a hearing
on the matter, may in writing demand a hearing before the
commissioner. The written demand for a hearing must be filed
with the commissioner within thirty days after the date upon
which the applicant or licensee was served with a copy of such
order. The timely filing of a written demand for hearing shall
stay or suspend execution of the order in question, pending a
final determination, except for an order suspending a license for
failure of the licensee to
keep maintain the bond required by
the
provisions of section four of this article in full force and
effect. If a written demand is timely filed as aforesaid, the
aggrieved party shall be entitled to a hearing as a matter of
right.
(b) All of the pertinent provisions of article five, chapter
twenty-nine-a of this code shall apply to and govern the hearing
and the administrative procedures in connection with and
following such hearing, with like effect as if the provisions of
said article
five were set forth in extenso in this subsection.
(c) For the purpose of conducting any such hearing
hereunder, the commissioner shall have the power and authority to
issue subpoenas and subpoenas duces tecum, in accordance with the
provisions of section one, article five, chapter twenty-nine-a of
this code. All subpoenas and subpoenas duces tecum shall be
issued and served in the manner, within the time and for the fees
and shall be enforced, as specified in
section one, article five
of said chapter twenty-nine-a said section, and all of the said
section
one provisions dealing with subpoenas and subpoenas duces
tecum shall apply to subpoenas and subpoenas duces tecum issued
for the purpose of a hearing hereunder.
(d) Any such hearing shall be held within twenty days after
the date upon which the commissioner received the timely written
demand therefor, unless there is a postponement or continuance.
The commissioner may postpone or continue any hearing on his own
motion, or for good cause shown upon the application of the
aggrieved party. At any such hearing, the aggrieved party may
represent himself or be represented by any attorney
-at
-law
admitted to practice before any circuit court of this state.
(e) After such hearing and consideration of all of the testimony, evidence and record in the case, the commissioner
shall make and enter an order affirming, modifying or vacating
his earlier order, or shall make and enter such order as is
deemed appropriate, meet and proper. Such order shall be
accompanied by findings of fact and conclusions of law as
specified in section three, article five, chapter twenty-nine-a
of this code, and a copy of such order and accompanying findings
and conclusions shall be served upon the aggrieved party and his
attorney of record, if any, in person or by certified mail,
return receipt requested, or in any other manner in which process
in a civil action in this state may be served. The order of the
commissioner shall be final unless vacated or modified on
judicial review thereof in accordance with the provisions of
section fifteen of this article.
§31-17-15. Judicial review.
(a) Any person adversely affected by a final order made and
entered by the commissioner after hearing held in accordance with
the provisions of section fourteen of this article is entitled to
judicial review thereof. All of the pertinent provisions of
section four, article five, chapter twenty-nine-a of this code
shall apply to and govern such review with like effect as if the provisions of said section
four were set forth in extenso in this
section.
(b) The judgment of the circuit court shall be final unless
reversed, vacated or modified on appeal to the supreme court of
appeals in accordance with the provisions of section one, article
six, chapter twenty-nine-a of this code.
(c) Legal counsel and services for the commissioner in all
appeal proceedings in any circuit court and the supreme court of
appeals shall
upon request be provided by the attorney general or
his assistants,
and in appeal proceedings in any circuit court by
the prosecuting attorney of the county as well, all without
additional compensation.
§31-17-16. Actions to enjoin violations.
(a) Whenever it appears to the commissioner that any person
has been or is violating or is about to violate any provision of
this article, any rules
and regulations of the commissioner or
any final order of the commissioner, the commissioner may apply
in the name of the state, to the circuit court of the county in
which the violation or violations
, or any part thereof
, has
occurred, is occurring or is about to occur, or the judge thereof
in vacation, for an injunction against such person and any other persons who have been, are or are about to be, involved in, or in
any way participating in, any practices, acts or omissions, so in
violation, enjoining such person or persons from any such
violation or violations. Such application may be made and
prosecuted to conclusion whether or not any such violation or
violations have resulted or shall result in prosecution or
conviction under the provisions of section eighteen of this
article.
(b) Upon application by the commissioner as aforesaid, the
circuit courts of this state may by mandatory or prohibitory
injunction compel compliance with the provisions of this article,
any rules
and regulations of the commissioner and all final
orders of the commissioner. The court may issue a temporary
injunction in any case pending a decision on the merits of any
application filed.
(c) The judgment of the circuit court upon any application
permitted by the provisions of this section shall be final unless
reversed, vacated or modified on appeal to the supreme court of
appeals. Any such appeal shall be sought in the manner and
within the time provided by law for appeals from circuit courts in other civil cases.
(d) The commissioner shall
upon request be represented in
all such proceedings by the attorney general or his assistants
and in such proceedings in the circuit courts by the prosecuting
attorneys of the several counties as well, all without additional
compensation.
§31-17-18. Violations and penalties.
(a) Any person, or any member, officer, director, agent
, or
employee of such person, who violates or participates in the
violation of this article shall be guilty of a misdemeanor, and,
upon conviction thereof, shall be
punished by a fine of fined
not more than five hundred dollars, or
by imprisonment of
imprisoned in a county or regional jail for not more than six
months, or
by both
such fine fined and
imprisonment, in
imprisoned, at the discretion of the court.
(b) The penalties and remedies embodied in this article are
not exclusive, but are cumulative with other applicable
provisions of this code, including, but not limited to, the
consumer protection laws in chapter forty-six-a of this code.
§31-17-20. Effective date.
The amendments to this article enacted during the first extraordinary session of the Legislature in the year one thousand
nine hundred ninety-six shall be effective as of the seventh day
of June, one thousand nine hundred ninety-six.
CHAPTER 31A. BANKS AND BANKING.
ARTICLE 2. DIVISION OF BANKING.
§31A-2-6. Commissioner's examinations of financial institution;
reports; records; communications from commissioner
to institution; examination by federal agency in
lieu of commissioner's examination.
The commissioner of banking shall make, at least once every
eighteen months, a thorough examination of all the books,
accounts, records and papers of every
depository financial
institution. He
or she shall carefully examine all of the assets
of each such institution, including its notes, drafts, checks,
mortgages, securities deposited to assure the payment of debts
unto it, and all papers, documents and records showing, or in any
manner relating to, its business affairs, and shall ascertain the
full amount and the nature in detail of all of its assets and
liabilities.
The commissioner may also, at his or her
discretion, make or cause to be made, an annual or periodic
examination of the books, accounts, records and papers of other financial institutions under his or her supervision for the
purposes of determining compliance with applicable consumer and
credit lending laws, and verifying information provided in any
license application or annual report submitted to the
commissioner. The commissioner may also make such examination of
any subsidiaries or affiliates of a financial institution as he
or she may deem necessary to ascertain the financial condition of
such the financial institution, the relations between
such the
financial institution and its subsidiaries and affiliates and the
effect of
such the relations upon the affairs of such financial
institution. A full report of every
such examination shall be
made and filed and preserved in the office of the commissioner
and a copy thereof forthwith mailed to the institution examined.
Every
such institution shall retain all of its records of final
entry for
such the period of time as required in section thirty-
five, article four of this chapter for banking institutions.
Unless otherwise covered by assessments or a specific provision
of this code, the cost of examinations made pursuant to this
section shall be borne by the financial institution at a rate of
fifty dollars per each examiner hour expended.
Every official communication from the commissioner to any
such institution, or to any officer thereof, relating to an
examination or an investigation of the affairs of
such the
institution conducted by the commissioner or containing
suggestions or recommendations as to the manner of conducting the
business of the institution, shall be read to the board of
directors at the next meeting after the receipt thereof, and the
president, or other executive officer, of the institution shall
forthwith notify the commissioner in writing of the presentation
and reading of
such the communication and of any action taken
thereon by the institution.
The commissioner of banking, in his
or her discretion, may
(a) accept a copy of a reasonably current examination of any
banking institution made by the federal deposit insurance
corporation or the federal reserve system in lieu of an
examination of
such the banking institution required or
authorized to be made by the laws of this state, and the
commissioner may furnish to the federal deposit insurance
corporation or the federal reserve system or to any official or
examiner thereof, any copy or copies of the commissioner's examinations of and reports on
such the banking institutions
,
(b) accept a copy of a reasonably current examination of any
building and loan association made by the federal home loan bank
board, a federal home loan bank or the federal savings and loan
insurance corporation, in lieu of an examination of such building
and loan association required or authorized to be made by the
laws of this state, and the commissioner may furnish to the
federal home loan bank or any of its member banks or to the
federal savings and loan insurance corporation or any official or
examiner thereof, any copy or copies of the commissioner's
examination and reports on such building and loan associations;
but nothing herein shall be construed to limit the duty and
responsibility of banking institutions
or building and loan
associations to comply with all provisions of law relating to
examinations and reports, nor to limit the powers and authority
of the commissioner of banking with reference to examinations and
reports under existing laws.
§31A-2-7. Duties of officers, employees, etc., of financial
institution in connection with examination;
examination under oath; offenses and penalties.
All officers, directors, employees and other persons connected with any financial institution, upon request of the
commissioner of banking, or his
or her duly authorized
representative, shall furnish and give full access to all of the
books, papers, notes, bills
, and other evidences of debts due to
the institution; produce and furnish all documents, records,
writings and papers relating to the business of the institution
which the commissioner is
required authorized to examine;
disclose fully, accurately and in detail all of the debts and
liabilities of the institution; and furnish
such the clerical aid
and assistance as may be required in the performance of the
commissioner's duties as provided by law. The commissioner or
his
or her representative, as the case may be, shall have the
right and authority to administer oaths and to examine under oath
each officer, director, employee or other person connected with
the institution concerning any matter and thing pertaining to the
business and condition of
such the institution.
Any officer, director, employee or other person connected
with any such institution who
wilfully willfully fails or refuses
to so furnish the documents, papers, materials or information as
herein required or who
wilfully willfully fails to discharge any other duty or obligation as herein provided shall be guilty of a
misdemeanor, and, upon conviction thereof, shall be subject to
the penalties provided in section fifteen
of, article eight of
this chapter.
§31A-2-16. Effective date.
The amendments to this article enacted during the first
extraordinary session of the Legislature in the year one thousand
nine hundred ninety-six shall be effective as of the seventh day
of June, one thousand nine hundred ninety-six.
CHAPTER 46A. WEST VIRGINIA CONSUMER CREDIT
AND PROTECTION ACT.
ARTICLE 1. SHORT TITLE, DEFINITIONS AND GENERAL PROVISIONS.
§46A-1-105. Exclusions.
(a) This chapter does not apply to:
(1) Extensions of credit to government or governmental
agencies or instrumentalities;
(2) The sale of insurance by an insurer, except as otherwise
provided in this chapter;
(3) Transactions under public utility or common carrier
tariffs if a subdivision or agency of this state or of the United
States regulates the charges for the services involved, the charges for delayed payment, and any discount allowed for early
payment; or
(4) Licensed pawnbrokers
and secondary mortgage lenders
licensed under the provisions .
(b) Secondary mortgage lender and broker licensees are
excluded from the provisions of this chapter to the extent those
provisions directly conflict with any section of article
seventeen, chapter thirty-one of this code.