Bill Text: MI HB5363 | 2023-2024 | 102nd Legislature | Introduced
Bill Title: Consumer protection: other; citations to the motor vehicle sales finance act in the consumer financial services act; revise. Amends secs. 2 & 6 of 1988 PA 161 (MCL 487.2052 & 487.2056). TIE BAR WITH: HB 5354'23
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-12-13 - Placed On Third Reading [HB5363 Detail]
Download: Michigan-2023-HB5363-Introduced.html
HOUSE BILL NO. 5363
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:
(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 provided in this subsection, the principal amount of a surety bond or letter of credit shall must be at least $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 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.____ or House Bill No. 5354 (request no. 03158'23) of the 102nd Legislature is enacted into law.
