|SAME AS||SAME AS S08463|
|COSPNSR||Mosley, D'Urso, Glick, Ortiz, Gottfried, Jenne, Galef, Jaffee, Colton, Fahy, Pichardo, McDonough, Errigo, Cahill, Castorina, De La Rosa, Davila, Crespo, Wright, Richardson, Blake, Cook, Bichotte, Taylor, Niou, Carroll, Pellegrino|
|MLTSPNSR||Giglio, Miller ML, Nolan, Thiele|
|Add §684, Ed L|
|Establishes the student loan borrower bill of rights to protect borrowers and ensure that student loan servicers act more as loan counselors than debt collectors.|
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STATE OF NEW YORK ________________________________________________________________________ 8862 2017-2018 Regular Sessions IN ASSEMBLY December 22, 2017 ___________ Introduced by M. of A. SIMON -- read once and referred to the Committee on Higher Education AN ACT to amend the education law, in relation to the creating a student loan borrower bill of rights The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The education law is amended by adding a new section 684 to 2 read as follows: 3 § 684. Student loan borrower bill of rights. 1. Definitions. As used 4 in this section: 5 (a) "Servicing" shall mean receiving a scheduled periodic payment from 6 a borrower pursuant to the terms of a loan, including amounts for escrow 7 accounts, and making the payments to the owner of the loan or other 8 third party of principal and interest and other payments with respect to 9 the amounts received from the borrower as may be required pursuant to 10 the terms of the servicing loan document or servicing contract. In the 11 case of a home equity conversion mortgage or reverse mortgage as refer- 12 enced in this section, servicing includes making payments to the borrow- 13 er. In the case of a student education loan as referenced in this 14 section, servicing includes applying the payments of principal and 15 interest and other such payments with respect to the amounts received 16 from a student loan borrower as may be required pursuant to the terms of 17 a student education loan and performing other administrative services 18 with respect to a student education loan. 19 (b) "Student education loan" shall mean any loan primarily used to 20 finance education or other school-related expenses. 21 (c) "Student loan borrower" shall mean any resident of New York who 22 has received or agreed to pay a student education loan, or any person 23 who shares responsibility with such New York resident for repaying the 24 student education loan. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13931-01-7A. 8862 2 1 (d) "Student loan servicer" shall mean any person responsible for the 2 servicing of a student education loan to a student loan borrower. 3 2. Loan ombudsman. (a) There is hereby established the position of the 4 student loan ombudsman, within the department of financial services, to 5 be appointed by the commissioner to provide timely assistance to any 6 student loan borrower who has a student education loan. 7 (b) The student loan ombudsman shall work in consultation with the 8 commissioner. The responsibilities of the student loan ombudsman will 9 include, but not be limited to: 10 (i) receiving, reviewing and assisting in resolving complaints from 11 student loan borrowers, including, but not limited to, attempting to 12 resolve such complaints in collaboration with institutions of higher 13 education, student loan servicers, and any other participants in student 14 loan lending, including, but not limited to, the state university of New 15 York, and the department; 16 (ii) compiling and analyzing data on student loan borrower complaints 17 and any subsequent resolutions; 18 (iii) assisting student loan borrowers to understand their rights and 19 responsibilities under the terms of student education loans; 20 (iv) providing information to the public regarding the problems and 21 concerns of student loan borrowers; 22 (v) making recommendations to the commissioner for resolving such 23 problems and concerns; 24 (vi) analyzing and monitoring the development and implementation of 25 federal, state and local laws, regulations and policies relating to 26 student loan borrowers and recommend any related changes deemed neces- 27 sary; 28 (vii) reviewing complete student education loan history for any 29 student loan borrower who has provided written consent for such review; 30 and 31 (viii) disseminating information to student loan borrowers, potential 32 student loan borrowers, public institutions of higher education, student 33 loan servicers and any other participant in student education loan lend- 34 ing. 35 (c) The student loan ombudsman, in consultation with the commissioner, 36 shall establish a student loan borrower education course to include 37 educational presentations and materials regarding student education 38 loans. Such program shall include, but not be limited to: 39 (i) an explanation of key loan terms, prescribed documentation 40 requirements, monthly payment obligations, income-based repayment 41 options, loan forgiveness and disclosure requirements; and 42 (ii) the student loan borrower education course shall be funded by any 43 license, renewal, late filing, or investigation fees, as well as any 44 penalties assessed under this section. 45 3. Licensing. (a) No person or entity shall act as a student loan 46 servicer, directly or indirectly, without first obtaining a license from 47 the commissioner, unless such person is exempt from licensure pursuant 48 to this section. 49 (b) The following persons or entities are exempt from student loan 50 servicer licensing requirements: 51 (i) any bank, out-of-state bank, New York credit union, federal credit 52 union or out-of-state credit union; 53 (ii) any wholly owned subsidiary of any such bank or credit union; and 54 (iii) any operating subsidiary where each owner of such operating 55 subsidiary is wholly owned by the same bank or credit union.A. 8862 3 1 (c) Any person or entity seeking to act within the state as a student 2 loan servicer shall submit a written application to the commissioner for 3 a license in such form as the commissioner prescribes. 4 (d) Upon the filing of an application for an initial license and the 5 payment of the fees for license and investigation, the commissioner 6 shall investigate the financial condition and responsibility, financial 7 and business experience, character and general fitness of the applicant. 8 The commissioner may issue a license if the commissioner finds that: 9 (i) the applicant's financial condition is sound; 10 (ii) the applicant's business will be conducted honestly, fairly, 11 equitably, carefully and efficiently within the purposes and intent of 12 this section; 13 (iii)(1) if the applicant is an individual, such individual is in all 14 respects properly qualified and of good character; 15 (2) if the applicant is a partnership, each partner is in all respects 16 properly qualified and of good character; 17 (3) if the applicant is a corporation or association, the president, 18 chairperson of the executive committee, senior officer responsible for 19 the corporation's business and chief financial officer or any other 20 person or performs similar functions as determined by the commissioner, 21 each director, each trustee and each shareholder owning ten percent or 22 more of each class of the securities of such corporation is in all 23 respects properly qualified and of good character; or 24 (4) if the applicant is a limited liability company, each member is in 25 all respects properly qualified and of good character; 26 (iv) no person on behalf of the applicant has knowingly made any 27 incorrect statement of a material fact in the application, or in any 28 report or statement made pursuant to this section; 29 (v) no person on behalf of the applicant knowingly has omitted to 30 state any material fact necessary to give the commissioner any informa- 31 tion lawfully required by the commissioner; 32 (vi) the applicant has met any other requirements as determined by the 33 commissioner. 34 (e)(i) A license shall be for a period of one year as of a date deter- 35 mined by the commissioner and shall expire unless renewed, suspended or 36 revoked pursuant to this section. 37 (ii) Not later than fifteen days after a licensee ceases to engage in 38 the business of student loan servicing in this state for any reason, 39 including a business decision to terminate operations in this state, 40 license revocation, bankruptcy or voluntary dissolution, such licensee 41 shall provide written notice of surrender to the commissioner and shall 42 surrender to the commissioner such license for each location in which 43 such licensee has ceased to engage in such business. 44 (iii) A written notice of surrender shall identify the location where 45 the records of the licensee will be stored and the name, address and 46 telephone number of an individual authorized to provide access to the 47 records. The surrender of a license does not reduce or eliminate the 48 licensee's civil or criminal liability arising from acts or omissions 49 occurring prior to the surrender of the license. 50 (f) A license may be renewed for the ensuing one year period upon the 51 filing of an application containing all required documents and fees as 52 provided in paragraph (c) of this subdivision. A renewal application 53 shall be filed at least thirty days prior to the date such license 54 expires. The commissioner may assess a late fee for renewal applications 55 filed within thirty days of license expiration. If an application for a 56 renewal license has been filed with the commissioner on or before theA. 8862 4 1 date the license expires, the license sought to be renewed shall contin- 2 ue in full force and effect until issuance by the commissioner of the 3 renewal license or until the commissioner has notified the licensee in 4 writing of the commissioner's refusal to issue such renewal license 5 together with the grounds upon which such refusal is based. The commis- 6 sioner may refuse to issue a renewal license on any ground on which the 7 commissioner might refuse to issue an initial license. 8 (g) If the commissioner determines that a check filed with the commis- 9 sioner to pay a license or renewal fee has been dishonored, the commis- 10 sioner shall automatically suspend the license. The commissioner shall 11 notify the licensee in writing of the automatic suspension pending 12 proceedings for revocation or refusal to renew and an opportunity for a 13 hearing on such actions. 14 (h) The commissioner may deem an application for a license abandoned 15 if the applicant fails to respond to any request for information 16 required under this section, or any regulations adopted pursuant to 17 such. The commissioner shall notify the applicant, in writing, that if 18 the applicant fails to submit such information later than sixty days 19 after the date on which such request for information was made, the 20 application shall be deemed abandoned. An application filing fee paid 21 prior to the date an application is deemed abandoned shall not be 22 refunded. Abandonment of an application pursuant to this paragraph 23 shall not preclude the applicant from submitting a new application for a 24 license under the provisions of this section. 25 4. Prohibitions. (a) A student loan servicer shall not: 26 (i) directly or indirectly employ any scheme, device or artifice to 27 defraud or mislead student loan borrowers; 28 (ii) engage in any unfair or deceptive practice toward any person or 29 misrepresent or omit any material information in connection with the 30 servicing of a student education loan, including, but not limited to, 31 misrepresenting the amount, nature or terms of any fee or payment due or 32 claimed to be due on a student education loan, the terms and conditions 33 of the loan agreement or the borrower's obligations under the loan; 34 (iii) obtain property by fraud or misrepresentation; 35 (iv) knowingly misapply or recklessly apply student education loan 36 payments to the outstanding balance of a student education loan; 37 (v) knowingly or recklessly provide inaccurate information to a credit 38 bureau, thereby harming a student loan borrower's creditworthiness; 39 (vi) fail to report both the favorable and unfavorable payment history 40 of the student loan borrower to a nationally recognized consumer credit 41 bureau at least annually if the student loan servicer regularly reports 42 information to a credit bureau; 43 (vii) refuse to communicate with an authorized representative of the 44 student loan borrower who provides a written authorization signed by the 45 student loan borrower, provided the student loan servicer may adopt 46 procedures reasonably related to verifying that the representative is in 47 fact authorized to act on behalf of the student loan borrower; or 48 (viii) negligently make any false statement or knowingly and willfully 49 make any omission of a material fact in connection with any information 50 or reports filed with a governmental agency or in connection with any 51 investigation conducted by the superintendent of financial services or 52 another governmental agency. 53 (b) No person or entity licensed to act within New York as a student 54 loan servicer shall do so under any other name or at any other place of 55 business other than that named in the license. Any change of location of 56 a place of business of a licensee shall require prior written notice toA. 8862 5 1 the commissioner. Not more than one place of business shall be main- 2 tained under the same license. A license shall not be transferable or 3 assignable. 4 (c) A student loan servicer or a person or entity exempt from licen- 5 sure pursuant to subdivision three of this section shall maintain 6 adequate records of each student education loan transaction for not less 7 than two years following the final payment on such student education 8 loan or the assignment of such student education loan, whichever occurs 9 first, or such longer period as may be required by any other provision 10 of law. The commissioner may request a student loan servicer to make 11 such records available. A student loan servicer must comply with such 12 request within five business days. The commissioner may grant a licensee 13 additional time to make such records available upon request. 14 (d) A student loan servicer shall comply with all applicable federal 15 laws and regulations relating to student loan servicing. Any violation 16 of federal law or regulation shall be deemed a violation of this section 17 and a basis upon which the commissioner may take enforcement action 18 pursuant to such. 19 5. Licensing examinations. (a) The commissioner shall have the author- 20 ity to conduct investigations and examinations for the purposes of: 21 (i) initial licensing, license renewal, license suspension, license 22 revocation or termination, or general or specific inquiry or investi- 23 gation to determine compliance with this section, the commissioner may 24 access, receive and use any books, accounts, records, files, documents, 25 information or other evidence; and 26 (ii) investigating violations or complaints arising under this 27 section. 28 (b) In making any examination or investigation authorized by this 29 section, the commissioner may access documents and records of the 30 student loan servicer, licensee or person under examination or investi- 31 gation. Unless the commissioner has reasonable grounds to believe the 32 documents or records of the student loan servicer, licensee or person 33 have been, or are at risk of being, altered or destroyed for purposes of 34 concealing a violation of this section, the student loan servicer or 35 owner of the documents and records shall have access to the documents or 36 records as necessary to conduct ordinary business affairs. 37 (c) No student loan servicer or person subject to investigation or 38 examination under this section may knowingly withhold, abstract, remove, 39 mutilate, or destroy any books, records, computer records or other 40 information. 41 (d) The commissioner may suspend, revoke or refuse to renew any 42 license issued under this section if the commissioner finds that: 43 (i) the licensee has violated any provision of this section or any 44 regulation made pursuant to this section, or (ii) any fact or condition 45 exists which, if it had existed at the time of the original application 46 for the license, clearly would have warranted a denial of such license. 47 No abatement of the license fee shall be made if the license is surren- 48 dered, revoked or suspended prior to the expiration of the period for 49 which it was issued. 50 6. Report. Notwithstanding any general or special law to the contrary, 51 the commissioner shall file a report on the work of the student loan 52 ombudsman annually with the governor and the legislature beginning on 53 January first, two thousand twenty. Such report shall include, but not 54 be limited to: 55 (a) the number of complaints received by the student loan ombudsman 56 from student loan borrowers;A. 8862 6 1 (b) the types of complaints received by the student loan ombudsman 2 from student loan borrowers; 3 (c) any recommendations to improve the effectiveness of the position 4 of student loan ombudsman; and 5 (d) any recommendations to improve regulation, oversight, and enforce- 6 ment of the department of financial services over the licensing and 7 enforcement of student loan servicers. 8 § 2. This act shall take effect on the one hundred twentieth day after 9 it shall have become a law.