Current Status Introducing Body:Senate Bill Number:1398 Ratification Number:541 Act Number:452 Primary Sponsor:Bryan Type of Legislation:GB Subject:Loan brokers, regulation of Companion Bill Number:4591 Date Bill Passed both Bodies:Jun 04, 1992 Computer Document Number:CYY/18847.SD Governor's Action:S Date of Governor's Action:Jun 15, 1992 Introduced Date:Mar 18, 1992 Date of Last Amendment:Jun 04, 1992 Last History Body:------ Last History Date:Jun 15, 1992 Last History Type:Act No. 452 Scope of Legislation:Statewide All Sponsors:Bryan J. Verne Smith Courtney Martschink Mullinax Rose Stilwell Thomas Wilson Type of Legislation:General Bill
Bill Body Date Action Description CMN
---- ------ ------------ ------------------------------ ---
1398 ------ Jun 15, 1992 Act No. 452
1398 ------ Jun 15, 1992 Signed by Governor
1398 ------ Jun 04, 1992 Ratified R 541
1398 Senate Jun 04, 1992 Ordered enrolled for
ratification
1398 Senate Jun 04, 1992 Conference Committee Report 98
received, adopted
1398 House Jun 03, 1992 Conference Committee Report 98
received, adopted
1398 Senate Jun 03, 1992 Conference powers granted, 98
appointed Senators to
Committee of Conference
1398 House Jun 03, 1992 Conference powers granted, 98
appointed Reps. to Committee
of Conference
1398 House Jun 03, 1992 Insists upon amendment
1398 Senate Jun 02, 1992 Non-concurrence in House
amendment
1398 House May 29, 1992 Read third time, returned to
Senate with amendment
1398 House May 28, 1992 Amended, read second time,
unanimous consent for third
reading on next Legislative
day.
1398 House May 28, 1992 Reconsidered vote whereby
read second time
1398 House May 27, 1992 Amended, read second time
1398 House May 19, 1992 Recalled from Committee 26
1398 House Apr 29, 1992 Introduced, read first time, 26
referred to Committee
1398 Senate Apr 28, 1992 Amended, read third time,
sent to House
1398 Senate Apr 23, 1992 Read second time, ordered to
third reading with notice of
general amendments
1398 Senate Apr 23, 1992 Committee Report: Favorable 02
with amendment
1398 Senate Mar 18, 1992 Introduced, read first time, 02
referred to Committee
View additional legislative information at the LPITS web site.
(A452, R541, S1398)
AN ACT TO AMEND TITLE 34, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO BANKING, FINANCIAL INSTITUTIONS, AND MONEY BY ADDING CHAPTER 36 SO AS TO REGULATE LOAN BROKERS NOT OTHERWISE REGULATED BY FEDERAL OR STATE LAW, TO PROVIDE DEFINITIONS, TO PROHIBIT LOAN BROKERS FROM PERFORMING CERTAIN ACTS, TO PROVIDE FOR THE RESPONSIBILITY OF PRINCIPALS, TO PROVIDE FOR INVESTIGATIONS, CEASE AND DESIST ORDERS, AND HEARING PROCEDURES WITH RESPECT TO LOAN BROKERS, TO PROVIDE FOR ADMINISTRATIVE FINES AND OTHER SANCTIONS, TO PROVIDE FOR EXAMINATIONS, SUBPOENAS, HEARINGS, AND WITNESSES, TO PROVIDE FOR INJUNCTIONS TO RESTRAIN VIOLATIONS, TO PROVIDE CRIMINAL PENALTIES FOR VIOLATIONS, AND TO AUTHORIZE ACTIONS FOR DAMAGES; TO ADD SECTION 29-3-325 SO AS TO PROVIDE THAT THE MORTGAGEE OR ASSIGNEE OF A MORTGAGE IS RESPONSIBLE FOR RECORDING THE SATISFACTION OR CANCELLATION THEREOF UNDER CERTAIN CONDITIONS AND PROVIDE FOR THE MORTGAGES TO WHICH THIS PROVISION APPLIES.
Be it enacted by the General Assembly of the State of South Carolina:
Regulation of loan brokers
SECTION 1. Title 34 of the 1976 Code is amended by adding:
Section 34-36-10. As used in this chapter, unless the context otherwise requires:
(1) `Advance fee' means any consideration which is assessed or collected, prior to the closing of a loan, by a loan broker.
(2) `Borrower' means a person obtaining or desiring to obtain a loan of money, a credit card, or a line of credit.
(3) `Department' means the Department of Consumer Affairs.
(4) `Loan broker' means any person who:
(a) for or in expectation of consideration arranges or attempts to arrange or offers to fund a loan of money, a credit card, or a line of credit;
(b) for or in expectation of consideration assists or advises a borrower in obtaining or attempting to obtain a loan of money, a credit card, a line of credit, or related guarantee, enhancement, or collateral of any kind or nature;
(c) acts for or on behalf of a loan broker for the purpose of soliciting borrowers; or
(d) holds himself out as a loan broker.
A `loan broker' does not include any bank or savings and loan association, trust company, building and loan association, credit union, consumer finance company, retail installment sales company, securities broker-dealer, real estate broker or salesperson, attorney, Federal Housing Administration or Veterans Administration approved lender, credit card company, installment loan licensee, mortgage loan broker registered under Chapter 58, Title 40 and acting within the scope of its certificate of registration, or insurance company, who is licensed by and subject to regulation or supervision of any agency of the United States, the South Carolina Board of Financial Institutions, or other agency of this State and is acting within the scope of the license; and also does not include subsidiaries of licensed or chartered consumer finance companies, banks, or savings and loan associations.
(5) `Principal' means any officer, director, partner, joint venturer, branch manager, or other person with similar managerial or supervisory responsibilities for a loan broker.
Section 34-36-20. No loan broker shall:
(1) assess or collect an advance fee from a borrower to provide services as a loan broker.
(2) make or use any false or misleading representations or omit any material fact in the offer or sale of the services of a loan broker or engage, directly or indirectly, in any act that operates or would operate as fraud or deception upon any person in connection with the offer or sale of the services of a loan broker, notwithstanding the absence of reliance by the buyer.
(3) make or use any false or deceptive representation or conceal a material fact in its business dealings with the borrower or with the department.
Section 34-36-30. Each principal of a loan broker may be sanctioned for the actions of the loan broker, including the loan broker's agents or employees acting in the course of business of the loan broker.
Section 34-36-40. (A) The department may investigate the actions of any person for compliance with this chapter.
(B) The department may order a loan broker to cease and desist whenever the department determines that the loan broker has violated, is violating, or will violate any provision of this chapter, any regulation promulgated by the department, or any written agreement entered into with the department.
(C) The department may order a loan broker to refund or reimburse any advance fee or any other fee taken in violation of Section 34-36-20 or taken as a result of a false, misleading, or deceptive representation as described in Section 34-36-20. Such an order may, but need not, be sought by the department in conjunction with a cease and desist order pursuant to subsection (B).
(D) The department may impose and collect a civil administrative fine against any person found to have violated any provision of this chapter, any regulation promulgated by the department, or any written agreement entered into with the department, in any amount not to exceed five thousand dollars for each violation.
Section 34-36-50. (A) The department may make investigations and examinations upon reasonable suspicion within or outside of this State as it considers necessary to determine whether a person has violated or will violate any provision of this chapter or any regulation promulgated hereunder.
(B) The department may gather evidence regarding any broker if the department has reasonable suspicion the loan broker has violated or will violate any provision of this chapter or any regulation promulgated under it. The department may administer oaths, examine witnesses, and issue subpoenas.
(C) The department may issue subpoenas for witnesses whose evidence is deemed material to any investigation or examination commanding the witnesses to be or appear before the department at a time and place named and to bring those books, records, and documents as may be specified or to submit the books, records, and documents for inspection. The subpoenas may be served by an authorized representative of the department.
(D) In the event of substantial noncompliance with a subpoena or subpoena duces tecum issued by the department, the department may petition the circuit court of the county in which the person subpoenaed resides or has its principal place of business for an order requiring the person to appear and fully comply with the subpoena. The court may also grant injunctive relief restraining a violation of this chapter and may grant that other relief, including, but not limited to, the restraint, by injunction or appointment of a receiver, of any transfer, pledge, assignment, or other disposition of the person's assets or any concealment, alteration, destruction, or other disposition of subpoenaed books, records, or documents, as the court deems appropriate until the person has fully complied with the subpoena or subpoena duces tecum and the department has completed its investigation or examination. Costs incurred by the department to obtain an order granting, in whole or in part, the petition for enforcement of a subpoena or subpoena duces tecum must be taxed against the subpoenaed person, and failure to comply with the order is a contempt of court.
(E) Witnesses are entitled to the same fees and mileage as they may be entitled by law for attending as witnesses in the circuit court, except where the examination or investigation is held at the place of business or residence of the witness.
(F) The material compiled by the department in an investigation or examination under this chapter is confidential until the investigation or examination is complete or final action by the department is otherwise taken. The investigation or examination is not deemed complete if the department has submitted the material or any part of it to any law enforcement agency or other regulatory agency for further investigation or for the filing of a criminal or civil prosecution and the investigation and prosecution have not been completed or become inactive. This confidentiality provision shall not prohibit:
(1) the disclosure of investigative material in investigations that are otherwise final if the material submitted to the other law enforcement agency is not directly related to loan brokering business; or
(2) the disclosure of such material as is public information after civil or criminal prosecution is filed.
(G) The department shall cooperate with and assist other state or federal agencies in enforcing applicable regulation of loan brokers to the extent such cooperation and assistance does not violate this chapter or the public policy of this State. The department may authorize such state or federal agencies to represent it for the purpose of administering oaths, examining witnesses, or issuing subpoenas under this chapter.
Section 34-36-60. (A) In addition to other remedies set forth in this chapter, whenever the department determines, from evidence satisfactory to it, that any person has engaged, is engaged, or is about to engage in an act or practice constituting a violation of this chapter or a regulation promulgated hereunder, the department may bring action in the name and on behalf of the State against the person and any other person concerned in that practice in violation of this chapter to enjoin the person or persons from continuing the violation. In the court proceedings, the department may apply for and on due showing is entitled to have issued, the court's subpoena requiring the appearance of any defendant and his employees or agents to testify or give evidence concerning the acts or conduct or things complained of in the application for injunction, and requiring the production of documents, books, and records that may appear necessary for the hearing of the petition.
(B) In addition to all other means provided by law for the enforcement of any temporary restraining order, temporary injunction, or permanent injunction issued in the court proceedings, the court shall have the power, upon application of the department, to impound and to appoint a receiver or administrator for the property, assets, and business of the defendant, including, but not limited to, the books, records, documents, and papers appertaining thereto. The receiver or administrator, when appointed and qualified, shall have all powers and duties as to custody, collection, administration, winding up, and liquidation of this property and business as is from time to time conferred upon him by the court. In the action, the court may issue orders and decrees staying all pending suits and enjoining any further suits affecting the receiver's or administrator's custody or possession of this property, assets, and business, or in its discretion may with the consent of the chief administrative judge of the circuit, require that all these suits be assigned to the circuit court judge appointing this receiver or administrator.
(C) In addition to any other remedies provided by this chapter, the department may apply to the court hearing this matter for an order of restitution whereby the defendants in the action must be ordered to make restitution of those sums shown by the department to have been obtained by them in violation of any of the provisions of this chapter. The restitution, at the option of the court, must be payable to the administrator or receiver appointed pursuant to this section or directly to the persons whose assets were obtained in violation of this chapter.
Section 34-36-70. Any person violating any provision of this chapter is guilty of a misdemeanor and, upon conviction, must be punished by a fine not exceeding five thousand dollars or by a term of imprisonment not exceeding one year, or both. Each violation of this chapter constitutes a separate offense.
Section 34-36-80. (A) A violation of this chapter shall constitute an unfair trade practice under Chapter 5, Title 39, and individual borrowers or prospective borrowers injured by violations of this chapter have an action for damages as set forth in Section 39-5-140.
(B) Any borrower injured by a violation of this chapter may bring an action against the surety bond or trust account, if any, of the loan broker.
(C) The remedies provided under this chapter are in addition to any other procedures or remedies for any violation or conduct authorized by law.
Section 34-36-90. (A) The department is responsible for the administration and enforcement of this chapter.
(B) The department is authorized to promulgate those regulations necessary to implement and administer the provisions of this chapter."
Satisfaction of mortgages
SECTION 2. Article 5, Chapter 3, Title 29 of the 1976 Code is amended by adding:
"Section 29-3-325. When no written instructions to the contrary are given by the mortgagor or a closing agent, acting on behalf of the mortgagor, to the mortgagee or to an assignee of the mortgage, and when the mortgagee or assignee of the mortgage is a financial institution, the mortgagee or assignee is responsible for recording the satisfaction or cancellation of the mortgage it holds. The financial institution may charge a reasonable fee not to exceed twenty-five dollars to cover the cost of recording the satisfaction or cancellation.
If the financial institution fails to record the satisfaction or cancellation within ninety days of receipt of the full amount necessary to satisfy the debt or obligation secured by the mortgage, it must pay to the mortgagor upon demand a penalty in the amount of one hundred dollars or in the alternative the mortgagor is entitled to the remedies provided by Sections 29-3-310 and 29-3-320 if these sections apply. However, a violation of this section is not considered to be a violation of Sections 29-3-310 and 29-3-320. Failure to pay this one hundred dollar penalty within ten days after demand subjects the financial institution to additional penalties of one hundred dollars for each ten days or portion thereof the penalty remains unpaid after receipt of demand.
The provisions of this section do not apply to `open-end credit' plans as defined by federal law, or to mortgages containing future advance clauses even though they secure closed-end transactions."
Applicability
SECTION 3. Section 29-3-325 of the 1976 Code, as added by this act, applies with respect to mortgages executed after December 31, 1992.
Time effective
SECTION 4. This act takes effect upon approval by the Governor.
Approved the 15th day of June, 1992.