S00362 Summary:

BILL NOS00362
 
SAME ASSAME AS A03155
 
SPONSORTHOMAS
 
COSPNSRADDABBO, JACKSON, PERSAUD, WEBB
 
MLTSPNSR
 
Add Art 42 §§1100 - 1109, Gen Bus L; amd §§105 & 3213, add §3012-c, CPLR
 
Enacts protections for private education loan borrowers and cosigners; requires certain notifications from creditors and debt collectors; prohibits acceleration; enacts provisions for cosigner release.
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S00362 Actions:

BILL NOS00362
 
01/04/2023REFERRED TO CONSUMER PROTECTION
01/17/20231ST REPORT CAL.148
01/18/20232ND REPORT CAL.
01/23/2023ADVANCED TO THIRD READING
01/25/2023PASSED SENATE
01/25/2023DELIVERED TO ASSEMBLY
01/25/2023referred to consumer affairs and protection
01/03/2024died in assembly
01/03/2024returned to senate
01/03/2024REFERRED TO CONSUMER PROTECTION
01/09/20241ST REPORT CAL.109
01/16/20242ND REPORT CAL.
01/17/2024ADVANCED TO THIRD READING
03/13/2024PASSED SENATE
03/13/2024DELIVERED TO ASSEMBLY
03/13/2024referred to consumer affairs and protection
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S00362 Committee Votes:

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S00362 Floor Votes:

There are no votes for this bill in this legislative session.
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S00362 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           362
 
                               2023-2024 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 4, 2023
                                       ___________
 
        Introduced  by Sens. THOMAS, ADDABBO, JACKSON, PERSAUD -- read twice and
          ordered printed, and when printed to be committed to the Committee  on
          Consumer Protection
 
        AN  ACT to amend the general business law and the civil practice law and
          rules, in relation to protecting private education loan borrowers  and
          cosigners
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. The general business law is amended by adding a new article
     2  42 to read as follows:
     3                                 ARTICLE 42
     4                     PRIVATE EDUCATION LOAN PROTECTIONS
     5  Section 1100. Definitions.
     6          1101. Applicability.
     7          1102. Exempt organizations.
     8          1103. Provisions applicable to cosigners.
     9          1104. Prohibition on acceleration of payments on private  educa-
    10                  tion loans.
    11          1105. Required  communications  from  creditors and debt collec-
    12                  tors.
    13          1106. Required information to be provided by creditors and  debt
    14                  collectors.
    15          1107. Enforcement.
    16          1108. Rules and regulations.
    17          1109. Penalties.
    18    § 1100. Definitions. As used in this article:
    19    1. "Private education loan" means an extension of credit that:
    20    (a)  is  not made, insured, or guaranteed under title IV of the Higher
    21  Education Act of 1965 (20 U.S.C. 1070 et seq.);
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01638-01-3

        S. 362                              2
 
     1    (b) is extended to a consumer expressly, in  whole  or  in  part,  for
     2  higher education expenses, regardless of whether the loan is provided by
     3  the educational institution that the student attends;
     4    (c)  does  not  include open-end credit or any loan that is secured by
     5  real property or a dwelling; and
     6    (d) does not include an extension  of  credit  in  which  the  covered
     7  educational institution is the creditor if:
     8    (i) the term of the extension of credit is ninety days or less; or
     9    (ii)  an  interest  rate  or finance charge will not be applied to the
    10  credit balance and the term of the extension of credit is  one  year  or
    11  less, even if the credit is payable in more than four installments.
    12    2.  "Private education lender", except as exempted under this article,
    13  means:
    14    (a) any person or entity engaged in the business of securing,  making,
    15  or extending private education loans; or
    16    (b) any holder of a private education loan.
    17    3.  "Borrower" or "private education loan borrower" means a person who
    18  has received or agreed to pay a private education loan for  his  or  her
    19  own educational expenses.
    20    4. "Cosigner" (a) means:
    21    (i) any individual who is liable for the obligation of another without
    22  compensation, regardless of how designated in the contract or instrument
    23  with respect to that obligation, including an obligation under a private
    24  education loan extended to consolidate a borrower's pre-existing private
    25  education loans; and
    26    (ii) includes any person the signature of which is requested as condi-
    27  tion to grant credit or to forbear on collection;
    28    (b)  does  not include a spouse of an individual described in subpara-
    29  graph (i) of paragraph (a) of this subdivision, the signature of whom is
    30  needed to perfect the security interest in a loan.
    31    5. "Original creditor" means the private education  lender  identified
    32  in a promissory note, loan agreement, or loan contract entered into with
    33  a private education loan borrower or cosigner.
    34    6. "Creditor" means:
    35    (a) the original creditor, where ownership of a private education loan
    36  debt has not been sold, assigned, or transferred;
    37    (b) the person or entity that owned the private education loan debt at
    38  the time the debt became delinquent or defaulted, even if that person or
    39  entity  did  not  originate the private education loan, and where such a
    40  debt has not subsequently been sold, transferred or assigned; or
    41    (c) a person or  entity  that  purchased  a  delinquent  or  defaulted
    42  private education loan debt for collection purposes, whether it collects
    43  the  debt itself, hires a third party for collection, or hires an attor-
    44  ney for collection litigation.
    45    7. "Debt  collector"  means  any  person  who  regularly  collects  or
    46  attempts  to  collect, directly or indirectly, consumer debts originally
    47  owed or due or asserted to be owed or due another.  The  term  does  not
    48  include  any  officer  or employee of a creditor who, in the name of the
    49  creditor, collects debts for such creditor,  but  it  does  include  any
    50  creditor  who, in the process of collecting its own debts, uses any name
    51  other than its own which would indicate that a third person is  collect-
    52  ing or attempting to collect such debts.
    53     8.  "Higher  education expense" means any expense arising from higher
    54  education, as defined in section two of the education law, regardless of
    55  whether the higher education institution is accredited within  New  York
    56  state.

        S. 362                              3

     1    §  1101.  Applicability.  1.  Any  person or entity that enters into a
     2  contract or subcontract with a private education lender or  servicer  to
     3  perform the servicing of a private education loan must fulfill the obli-
     4  gations of the private education lender under this article.
     5    2.  Any  private  education  lender as described in subdivision two of
     6  section eleven hundred of this article be jointly and  severally  liable
     7  for the actions of the entity or person in fulfilling the obligations of
     8  the private educational lender or servicer under this article.
     9    §  1102.  Exempt organizations. The following shall be exempt from the
    10  provisions of this article only to the extent that state  regulation  is
    11  preempted by federal law:
    12    1.  Any  banking  organization,  foreign banking corporation, national
    13  bank, federal savings association, federal credit union,  or  any  bank,
    14  trust  company,  savings  bank,  savings and loan association, or credit
    15  union organized under the laws of any other state; and
    16    2. Any subsidiary of such entities set forth  in  subdivision  one  of
    17  this section.
    18    § 1103. Provisions applicable to cosigners. 1. (a) Prior to the origi-
    19  nation  of  a private education loan, the private education lender shall
    20  provide to all cosigner applicants  information  about  the  rights  and
    21  responsibilities of the cosigner of the loan, including:
    22    (i)  information  about  how the private education lender will furnish
    23  information about the cosigner's private education  loan  obligation  to
    24  credit reporting agencies;
    25    (ii)  information  about  how  the  cosigner  will  be notified if the
    26  private education loan becomes delinquent, including  how  the  cosigner
    27  can  cure  the  delinquency in order to avoid negative credit furnishing
    28  and loss of cosigner release eligibility; and
    29    (iii) information about eligibility  for  release  of  the  cosigner's
    30  obligation  on  the  private education loan, including number of on-time
    31  payments and any other criteria  required  to  approve  the  release  of
    32  cosigner from the loan obligation.
    33    (b)  Lenders shall send borrowers and cosigners annual written notices
    34  containing information about cosigner release,  including  criteria  the
    35  lender  requires  to approve the release of cosigner from the loan obli-
    36  gation and the process for applying for cosigner release.
    37    (c) Once the borrower  has  met  the  applicable  consecutive  on-time
    38  payment  requirement  to  be  eligible  for cosigner release, the lender
    39  shall send the borrower and cosigner a written notification by U.S. mail
    40  and by electronic mail, where a borrower has elected  to  receive  elec-
    41  tronic communications from the lender, informing the borrower and cosig-
    42  ner  that he or she has met the applicable consecutive, on-time payments
    43  requirement to be eligible for cosigner release. The notification  shall
    44  also  include  information  about any additional criteria to qualify for
    45  cosigner release, and the procedure to apply for cosigner release.
    46    (d) Lenders shall provide written notice within fifteen  days  to  any
    47  borrower  who  applies  for  cosigner  release, but whose application is
    48  incomplete. The written notice must include a description of the  infor-
    49  mation needed to consider the application complete and the date by which
    50  the applicant should furnish the missing information.
    51    (e)  After  a  borrower  submits  a  complete application for cosigner
    52  release, within thirty days, the lender  shall  send  the  borrower  and
    53  cosigner a written notice that informs the borrower and cosigner whether
    54  the  cosigner  release  application  has been approved or denied. If the
    55  lender denies a request for cosigner release, the  lender  shall  inform
    56  the  borrower  of his or her right to request all documents and informa-

        S. 362                              4
 
     1  tion used in the determination, including  the  credit  score  threshold
     2  used by the lender, the borrower's consumer report, the borrower's cred-
     3  it  score,  and any other documents specific to the borrower. The lender
     4  must  also  provide any adverse action notices required under applicable
     5  federal law if the denial is based in whole or in part on  any  informa-
     6  tion contained in a consumer report.
     7    2.  (a)  In  response  to  any  written  or  oral request for cosigner
     8  release, lenders shall send the information described in  paragraph  (b)
     9  of subdivision one of this section.
    10    (b) Lenders shall not impose any restrictions that may permanently bar
    11  a  borrower  from qualifying for cosigner release, including restricting
    12  the number of times a borrower may apply for cosigner release.
    13    (c) Lenders shall not impose any negative consequences on any borrower
    14  or cosigner during the sixty days following the issuance of  the  notice
    15  required  under  paragraph  (d)  of  subdivision one of this section, or
    16  until the lender makes a final determination about a borrower's cosigner
    17  release application. For the purpose of this paragraph, "negative conse-
    18  quences" includes, but is not limited to, the imposition  of  additional
    19  eligibility  criteria,  negative  credit reporting, lost eligibility for
    20  cosigner release, late fees, interest capitalization, or other financial
    21  injury.
    22    (d) Lenders shall not require greater than twelve consecutive, on-time
    23  payments as criteria to apply for cosigner release. Any borrower who has
    24  paid the equivalent of twelve months of principal and interest  payments
    25  within  any twelve-month period will be considered to have satisfied the
    26  consecutive, on-time payment requirement, even if the borrower  has  not
    27  made payments monthly during the twelve-month period.
    28    (e)  If  a  borrower  or  cosigner requests a change that restarts the
    29  count of consecutive, on-time payments required  for  cosigner  release,
    30  the  lender shall notify the borrower and cosigner in writing within ten
    31  days of the impact of such an arrangement and provide  the  borrower  or
    32  cosigner  the  right  to  withdraw  or reverse the request to avoid such
    33  impact.
    34    (f) The borrower has the right to request  an  appeal  of  a  lender's
    35  determination  to  deny  the  cosigner release application within ninety
    36  days of receiving the  lender's  determination,  and  the  lender  shall
    37  permit  such borrower to submit additional documentation evidencing that
    38  the borrower has the ability, willingness, and stability to  handle  his
    39  or  her  payment  obligations.  The  borrower  may request review of the
    40  cosigner release determination by another employee.   The  lender  shall
    41  inform  the  borrower of this right in a clear and conspicuous manner on
    42  the notice denying the cosigner release application.
    43    (g) A lender  must  establish  and  maintain  a  comprehensive  record
    44  management system reasonably designed to ensure the accuracy, integrity,
    45  and  completeness  of  data and other information about cosigner release
    46  applications. This system shall include the number of  cosigner  release
    47  applications  received,  the  approval  and denial rate, and the primary
    48  reasons for any denial.
    49    (h) If a cosigner has a total and permanent disability, as  determined
    50  by  any federal agency, state agency, or physician or doctor of osteopa-
    51  thy legally authorized to practice in the state in  which  the  cosigner
    52  resides, the lender shall release the cosigner from the cosigner's obli-
    53  gation to repay the loan upon receiving a notification of the cosigner's
    54  total  and  permanent  disability.  The  lender  shall not require a new
    55  cosigner to be added to the loan after the original  cosigner  has  been
    56  released from the loan.

        S. 362                              5
 
     1    3.  (a)  A lender shall provide a cosigner of a private education loan
     2  with access to all documents or records related to the cosigned  private
     3  education loan that are available to the borrower;
     4    (b)  If  a  lender provides electronic access to documents and records
     5  for a borrower, it shall provide equivalent  electronic  access  to  the
     6  cosigner; and
     7    (c)  Upon  receiving  notice from the borrower or cosigner, the lender
     8  shall redact the contact information of the other party.
     9    § 1104. Prohibition on acceleration of payments on  private  education
    10  loans.  1.  Except  as  provided  in  subdivision two of this section, a
    11  private education loan executed after the effective date of this article
    12  may not include a provision that permits the private educational  lender
    13  to  accelerate,  in  whole or in part, payments on the private education
    14  loan.
    15    2. A private education loan  may  include  a  provision  that  permits
    16  acceleration of the loan in cases of payment default.
    17    3. A lender shall not place any loan or account into default or accel-
    18  erate a loan for any reason, other than for failure to pay.
    19    4.  (a)  In  the  event of the death of a cosigner, a lender shall not
    20  attempt to collect against the cosigner's estate, other than for failure
    21  to pay.
    22    (b) Upon receiving notification of the death or bankruptcy of a cosig-
    23  ner, when the loan is not more than sixty days delinquent at the time of
    24  the notification, a lender shall not change any terms or benefits  under
    25  the  promissory  note,  repayment  schedule, repayment terms, or monthly
    26  payment amount or any other provision associated with the loan.
    27    (c) A lender shall not place any  loan  or  account  into  default  or
    28  accelerate a loan for any reason, other than for failure to pay.
    29    §  1105.  Required  communications from creditors and debt collectors.
    30  In addition to any other information required under  applicable  federal
    31  or state law, a creditor or debt collector shall provide, in writing, in
    32  the  first debt collection communication with the private education loan
    33  borrower or cosigner, or within five days thereafter, and at  any  other
    34  time the borrower or cosigner requests such documentation:
    35    1. The name of the current owner of the private education loan debt;
    36    2.  The  original  creditor's  name at the time of origination and, if
    37  different, at the time of sale of the loan, if applicable;
    38    3. The original creditor's account number used to identify the private
    39  education loan debt at the time of sale, if applicable;
    40    4. The total outstanding amount owed at the time  of  default  or  the
    41  amount  due to bring the loan current if the loan is delinquent, but not
    42  yet in default;
    43    5. A schedule of all transactions credited or debited to  the  private
    44  education loan account;
    45    6. A copy of all pages of the contract, application or other documents
    46  stating  all  terms  and  conditions applicable to the private education
    47  loan and evidencing the private education loan borrower's or  cosigner's
    48  liability for the private education loan; and
    49    7.  A  clear and conspicuous statement disclosing that the borrower or
    50  cosigner has a right to request all information possessed by the  credi-
    51  tor  related  to  the  private  education  loan debt, including, but not
    52  limited to the information included in section  eleven  hundred  six  of
    53  this article.
    54    §  1106.  Required  information  to  be provided by creditors and debt
    55  collectors. 1. A creditor or debt collector may not collect  or  attempt

        S. 362                              6
 
     1  to  collect  a  private  education loan debt unless the creditor or debt
     2  collector possesses the following:
     3    (a) The name of the owner of the private education loan;
     4    (b)  The  original  creditor's name at the time of sale of the loan or
     5  default, if applicable;
     6    (c) The original  creditor's  account  number  used  to  identify  the
     7  private  education  loan at the time of sale or default, if the original
     8  creditor used an account number to identify the private  education  loan
     9  at the time of sale or default;
    10    (d) The amount due at the time of sale, or at default, or, if the loan
    11  is delinquent, to bring the loan current;
    12    (e)  A schedule of all transactions credited or debited to the private
    13  education loan account;
    14    (f) An itemization of interest and fees, if any, claimed  to  be  owed
    15  and  whether  those  were imposed by the original creditor or any subse-
    16  quent owners of the private education loan;
    17    (g) The date that the private education loan was incurred;
    18    (h) A billing statement or other account record indicating the date of
    19  the first partial payment and/or  the  first  day  that  a  payment  was
    20  missed, whichever is earlier;
    21    (i) A billing statement or other account record indicating the date of
    22  the last payment made by the borrower or cosigner, if applicable;
    23    (j)  Any  payments,  settlement, or financial remuneration of any kind
    24  paid to the creditor by a guarantor, cosigner, or surety, and the amount
    25  of payment received;
    26    (k) A copy of the self-certification form and any other "needs  analy-
    27  sis"  conducted  by  the  original  creditor prior to origination of the
    28  loan;
    29    (l) A log of all collection  attempts  made  in  the  previous  twelve
    30  months including date and time of all calls and written communications;
    31    (m)  Copies  of  all written settlement offers sent in the last twelve
    32  months, or, in the alternative, a statement that the  creditor  has  not
    33  attempted to settle or otherwise renegotiate the debt prior to suit;
    34    (n) Copies of all collection letters sent to the borrower and cosigner
    35  since inception of the loan;
    36    (o)  Documentation  establishing that the creditor is the owner of the
    37  specific individual private education loan  at  issue.  If  the  private
    38  education  loan  was  assigned more than once, the creditor must possess
    39  each assignment or other writing evidencing the transfer of ownership of
    40  the specific individual private education loan to establish an  unbroken
    41  chain  of  ownership,  beginning with the original creditor to the first
    42  subsequent creditor and each additional  creditor.  Each  assignment  or
    43  other  writing  evidencing transfer of ownership or the right to collect
    44  must contain the original creditor's account number (redacted for  secu-
    45  rity  purposes  to show only the last four digits) of the private educa-
    46  tion loan purchased or otherwise assigned,  the  date  of  purchase  and
    47  assignment,  and  must  clearly  show the borrower's, and if applicable,
    48  cosigner's correct name associated with the original account number. The
    49  assignment or other writing attached shall be that by which the creditor
    50  or other assignee acquired the private education loan,  not  a  document
    51  prepared for litigation or collection purposes;
    52    (p)  A  copy  of all pages of the contract, application or other docu-
    53  ments evidencing the private education loan borrower's, and if  applica-
    54  ble,  cosigner's  liability  for the private education loan, stating all
    55  terms and conditions applicable to the private education loan; and

        S. 362                              7
 
     1    (q) A signed affidavit or affidavits from each of the previous  owners
     2  of the private education loan regarding when the previous owner acceler-
     3  ated  the loan from delinquency status to default status, or if applica-
     4  ble, a statement that no such acceleration occurred.
     5    2.  Upon  written  or oral request from a borrower or cosigner for any
     6  information that a creditor or debt collector  is  required  to  possess
     7  pursuant  to subdivision one of this section, a creditor or debt collec-
     8  tor shall send the requested information to  the  borrower  or  cosigner
     9  within fifteen days of receipt of the request.
    10    §  1107.  Enforcement. 1. All private education lenders, creditors and
    11  debt collectors shall comply with the provisions of this article.
    12    2.  Any borrower or cosigner who suffers damage as  a  result  of  the
    13  failure  of  a  private  education  lender,  creditor, or debt collector
    14  covered by the provision of this article may bring an  action  on  their
    15  own  behalf  and  on  behalf  of a similarly situated class of consumers
    16  against that person to recover or obtain any of the following:
    17    (a) actual damages, but in no case shall the total award of damages be
    18  less than five hundred dollars per person, per violation of this section
    19  or of section three thousand twelve-c of  the  civil  practice  law  and
    20  rules;
    21    (b) punitive damages;
    22    (c)  correction  of  any inaccurate, negative reporting by the lender,
    23  creditor, or debt collector to any credit reporting agency;
    24    (d) injunctive relief; and
    25    (e) any other relief that the court deems proper.
    26    3. If a creditor or debt collector fails to  comply  with  subdivision
    27  (e)  of  section  three  thousand twelve-c of the civil practice law and
    28  rules, the borrower or the cosigner who sent the written notice  therein
    29  may bring an action on his or her own behalf or on behalf of a similarly
    30  situated class of persons against the creditor or debt collector and may
    31  recover  or obtain any of the same forms of relief as provided in subdi-
    32  vision two of this section, as well as an order setting aside or  vacat-
    33  ing  any  judgment entered against the borrower or cosigner. In addition
    34  to any other remedies provided by this section or otherwise provided  by
    35  law,  whenever  it  is  proven by a preponderance of the evidence that a
    36  creditor, debt collector, or attorney representing a  creditor  or  debt
    37  collector  filed  an  affidavit  required  under  section three thousand
    38  twelve-c of the civil practice law and rules containing  false  informa-
    39  tion,  the  court  shall  award treble actual damages to the borrower or
    40  cosigner, but in no case shall the award of damages  be  less  than  one
    41  thousand  five  hundred  dollars,  per  person,  per  violation  of that
    42  section.
    43    4. In the case of any  successful  action  to  enforce  the  foregoing
    44  liability,  a  private  education lender, creditor, or debt collector is
    45  liable for the costs of the action, together with reasonable  attorneys'
    46  fees as determined by the court.
    47    5.  The  attorney  general  or the district attorney of any county may
    48  bring an action in the name of the people of the state  to  restrain  or
    49  prevent  any  violation  of  this article or any continuance of any such
    50  violation.
    51    6. Nothing in this article shall limit any  statutory  or  common  law
    52  right of any person to bring any action in any court for any act, or the
    53  right of the state to punish any person for any violation of any law.
    54    §  1108.  Rules  and regulations. 1. In addition to such powers as may
    55  otherwise be prescribed by this chapter, the superintendent of financial
    56  services is hereby authorized and empowered to promulgate such rules and

        S. 362                              8
 
     1  regulations as may in the judgment of the superintendent  be  consistent
     2  with  the  purposes  of  this  article, or appropriate for the effective
     3  administration of this article, including, but not limited to:
     4    (a)  such  rules  and regulations in connection with the activities of
     5  private education lenders, creditors, and  debt  collectors  as  may  be
     6  necessary and appropriate for the protection of borrowers in this state;
     7    (b)  such rules and regulations as may be necessary and appropriate to
     8  define unfair, deceptive or abusive acts or practices in connection with
     9  the activities of private education lenders, creditors, and debt collec-
    10  tors;
    11    (c) such rules and regulations as may define the terms  used  in  this
    12  article  and as may be necessary and appropriate to interpret and imple-
    13  ment the provisions of this article; and
    14    (d) such rules and regulations as may be necessary for the enforcement
    15  of this article.
    16    2. The superintendent is hereby authorized and empowered to make  such
    17  specific  rulings,  demands  and findings as the superintendent may deem
    18  necessary for the proper conduct of the private education loan industry.
    19    § 1109. Penalties. In addition to such penalties as may  otherwise  be
    20  applicable  by law, including but not limited to the penalties available
    21  under section forty-four of  the  banking  law,  the  superintendent  of
    22  financial services may, after notice and a hearing, or upon a finding of
    23  a  violation  of  this article in a civil action brought by the attorney
    24  general, require any person found violating the provisions of this arti-
    25  cle or the rules or regulations promulgated  hereunder  to  pay  to  the
    26  people  of this state a penalty for each violation of the article or any
    27  regulation or policy promulgated hereunder  a  sum  not  to  exceed  the
    28  greater of (i) ten thousand dollars for each offense; (ii) a multiple of
    29  two  times the aggregate damages attributable to the violation; or (iii)
    30  a multiple of two times the aggregate economic gain attributable to  the
    31  violation.
    32    §  2.   Subdivision (q-1) of section 105 of the civil practice law and
    33  rules, as added by chapter 593 of the laws of 2021, is amended  to  read
    34  as follows:
    35    (q-1) Original creditor. The term "original creditor" means the entity
    36  that  owned a consumer credit account at the date of default giving rise
    37  to a cause of action, except that if the consumer credit  account  is  a
    38  private  education loan, as defined in subdivision one of section eleven
    39  hundred of the general  business  law,  "original  creditor"  means  the
    40  private  education  lender  identified in a promissory note, loan agree-
    41  ment, or loan contract  entered  into  with  a  private  education  loan
    42  borrower or cosigner.
    43    §  3.    The  civil  practice law and rules is amended by adding a new
    44  section 3012-c to read as follows:
    45    § 3012-c. Pleading requirements in private education loan actions.  In
    46  addition  to any other papers and documents required by this chapter, in
    47  an action arising out of a private education loan:
    48    (a) Accompanying the complaint, one or  more  sworn  affidavits  by  a
    49  representative  of  the  plaintiff  or  plaintiff's  attorney  shall  be
    50  attached to the complaint attesting:
    51    (1) that the plaintiff has in its possession the information  required
    52  in subdivision one of section eleven hundred six of the general business
    53  law;
    54    (2)  that the communication required in section eleven hundred five of
    55  the general business law has been complied with;

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     1    (3) as to whether the debt is eligible for an  income-based  repayment
     2  plan  free  of  charge  to  the  borrower or cosigner, equivalent to the
     3  repayment arrangement established for federal student loans under  Arti-
     4  cle IV of the Higher Education Act (20 USC 1078 et. seq.);
     5    (4)   whether,   after   reasonable  inquiry,  the  plaintiff  or  the
     6  plaintiff's attorney has reason to believe that the debt is a  qualified
     7  education loan as defined in 26 U.S.C. § 221; and
     8    (5)  that  the information set forth in paragraph one of this subdivi-
     9  sion, the allegations set forth in  the  complaint  and  any  supporting
    10  affidavits  or  affirmations,  as well as the notarizations contained in
    11  the supporting documents filed therewith, are accurate.
    12    (b) Copies of the documentation identified in paragraphs (o)  and  (q)
    13  of subdivision one of section eleven hundred six of the general business
    14  law shall be attached to the complaint.  The requirements of this subdi-
    15  vision  shall  satisfy  those  required  for  an action arising out of a
    16  consumer credit transaction, pursuant to subdivision (f) of section 3215
    17  of this chapter, where the plaintiff is not the  original  creditor,  as
    18  defined in section 105 of this chapter.
    19    (c) An affidavit by the plaintiff or plaintiff's attorney shall accom-
    20  pany the complaint, stating that after reasonable inquiry, he or she has
    21  reason to believe that the statute of limitations has not expired.
    22    Compliance  with  this  subdivision  shall  satisfy  the provisions of
    23  subdivision (j) of section 3215 of this chapter for an attorney  repres-
    24  enting  a creditor seeking a judgment by default entered by the clerk in
    25  an action arising from a private education loan debt.
    26    (d) A judge or clerk shall not grant or enter a judgment  pursuant  to
    27  rule  3212  or  sections 3213, 3215 or 3218 of this chapter in an action
    28  arising from a private education loan debt that does not comply with the
    29  requirements described  in  subdivisions  (a),  (b),  and  (c)  of  this
    30  section.
    31    (e) Upon receipt of written notice provided by a borrower or cosigner,
    32  or  upon notice from the attorney general or superintendent of financial
    33  services on behalf of a group  of  borrowers,  to  a  creditor  or  debt
    34  collector  stating  that  the  creditor  or debt collector has failed to
    35  comply with this section, the creditor or debt collector shall:
    36    (i) Provide proof of compliance with the provisions of  this  section;
    37  or
    38    (ii) Take the following actions:
    39    1. move to vacate the judgment;
    40    2.  refund all monies paid by the borrower or cosigner after the judg-
    41  ment was entered; and
    42    3.  correct any inaccurate, negative credit information  furnished  by
    43  the creditor or debt collector.
    44    (f)  The  definitions  of terms set forth in section eleven hundred of
    45  the general business law shall apply to the provisions of this section.
    46    § 4. Section 3213 of the civil practice law and rules, as  amended  by
    47  chapter 593 of the laws of 2021, is amended to read as follows:
    48    §  3213.  Motion  for  summary  judgment in lieu of complaint. When an
    49  action is based upon an instrument for the payment of money only or upon
    50  any judgment, the plaintiff may serve  with  the  summons  a  notice  of
    51  motion  for  summary  judgment  and  the  supporting papers in lieu of a
    52  complaint. The summons served with such motion papers shall require  the
    53  defendant  to  submit  answering  papers  on  the motion within the time
    54  provided in the notice of motion. The minimum time such motion shall  be
    55  noticed  to be heard shall be as provided by subdivision (a) of rule 320
    56  for making an appearance, depending upon the method of service.  If  the

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     1  plaintiff  sets  the  hearing  date of the motion later than the minimum
     2  time therefor, he may require the defendant  to  serve  a  copy  of  his
     3  answering  papers  upon  him  within  such  extended period of time, not
     4  exceeding  ten days, prior to such hearing date. No default judgment may
     5  be entered pursuant to subdivision (a) of  section  3215  prior  to  the
     6  hearing  date  of  the  motion.  If the motion is denied, the moving and
     7  answering papers shall be deemed the complaint and answer, respectively,
     8  unless the court orders otherwise. The  additional  notice  required  by
     9  subdivision (j) of rule 3212 shall be applicable to a motion made pursu-
    10  ant  to  this  section  in any action to collect a debt arising out of a
    11  consumer credit transaction where a consumer is a defendant.  The  addi-
    12  tional  pleading  required  by  section  3012-c shall be applicable to a
    13  motion made pursuant to this section in any action  to  collect  a  debt
    14  arising  out  of  a private education loan, as defined in section eleven
    15  hundred of the general business law.
    16    § 5. Severability. If any clause,  sentence,  paragraph,  subdivision,
    17  section  or part of this act shall be adjudged by any court of competent
    18  jurisdiction to be invalid, such judgment shall not affect,  impair,  or
    19  invalidate the remainder thereof, but shall be confined in its operation
    20  to the clause, sentence, paragraph, subdivision, section or part thereof
    21  directly  involved  in the controversy in which such judgment shall have
    22  been rendered. It is hereby declared to be the intent of the legislature
    23  that this act would have been enacted even if  such  invalid  provisions
    24  had not been included herein.
    25    §  6.  This  act  shall take effect on the sixtieth day after it shall
    26  have become a law.
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