SB0296

SENATE BILL 296

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

William E. Sharer

AN ACT

RELATING TO LENDING; ENACTING NEW SECTIONS OF THE COLLECTION AGENCY REGULATORY ACT AND THE MOTOR VEHICLE SALES FINANCE ACT; PROVIDING FOR THE DIRECTOR OF THE FINANCIAL INSTITUTIONS DIVISION OF THE REGULATION AND LICENSING DEPARTMENT TO UTILIZE THE NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY TO RECEIVE AND PROCESS APPLICATIONS FOR LICENSES; REPEALING A SECTION OF THE COLLECTION AGENCY REGULATORY ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 58-19-2 NMSA 1978 (being Laws 1959, Chapter 204, Section 2, as amended) is amended to read:

"58-19-2. DEFINITIONS.--As used in the Motor Vehicle Sales Finance Act:

A. "motor vehicles" means automobiles, recreational vehicles, recreational travel trailers, trailers, motorcycles, trucks, semi-trailers, truck tractors and buses designed and used primarily to transport persons or property on a public highway, farm machinery and all vehicles new or used, with any power other than muscular power except boat trailers, aircraft or any vehicle that runs only on rails or tracks, but does not include any motor vehicle having a gross vehicle weight of ten thousand pounds or more purchased primarily for business or commercial purposes;

B. "retail buyer" or "buyer" means a person who buys a motor vehicle primarily for personal, family or household purposes from a retail seller and who executes a retail installment contract in connection therewith;

C. "retail seller" or "seller" means a person who sells a motor vehicle to a retail buyer or subject to a retail installment contract;

D. "holder" of a retail installment contract means the retail seller of the motor vehicle under or subject to the contract or, if the contract is purchased by a sales finance company or other assignee, the sales finance company or other assignee;

E. "retail installment transaction" means any transaction evidenced by a retail installment contract entered into between a retail buyer and a retail seller wherein the retail buyer buys a motor vehicle from the retail seller at a time price payable in one or more deferred installments. The cash sale price of the motor vehicle, the amount included for insurance and other benefits if a separate charge is made therefor, official fees and the finance charge together constitute the time price;

F. "retail installment contract" or "contract" means an agreement, entered into in this state or made subject to the laws of this state, pursuant to which the title to or a lien upon the motor vehicle that is the subject matter of a retail installment transaction is retained or taken by a retail seller from a retail buyer as security for the buyer's obligation. The term includes a chattel mortgage, a conditional sales contract and a contract for the bailment or leasing of a motor vehicle by which the bailee or lessee contracts to pay as compensation for its use a sum substantially equivalent to or in excess of its value and by which it is agreed that the bailee or lessee is bound to become or has the option of becoming the owner of the motor vehicle upon full compliance with the provisions of the contract;

G. "cash sale price" means the price stated in a retail installment contract for which the seller would have sold to the buyer, and the buyer would have bought from the seller, the motor vehicle that is the subject matter of the retail installment contract, if the sale had been a sale for cash instead of a retail installment transaction. Cash sale price may include any taxes, registration fee, certificate of title fee, license and other fees and charges for accessories and their installation and for delivery, servicing, repairing or improving the motor vehicle;

H. "official fees" means the fee prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a retained title or a lien created by a retail installment contract;

I. "finance charge" means the amount agreed upon between the buyer and the seller to be added to the aggregate of the cash sale price, the amount, if any, included for insurance and other benefits and official fees, in determining the time price;

J. "person" means an individual, partnership, corporation, association and any other group however organized;

K. "sales finance company" means a person engaged in whole or in part in the business of purchasing retail installment contracts from one or more retail sellers. The term includes but is not limited to a bank, trust company, private banker, small loan licensee, industrial bank or investment company, if so engaged; the term also includes a retail seller engaged in whole or in part in the business of creating and holding retail installment contracts that exceed a total aggregate outstanding indebtedness of one hundred thousand dollars ($100,000);

L. "director" means the director of the financial institutions division of the regulation and licensing department or a duly authorized agent designated by the director; [and]

M. "year" means a period of three hundred sixty-five days; "month" means one-twelfth of a year; and "day" means one three-hundred-sixty-fifth of a year; and

N. "nationwide mortgage licensing system and registry" means a licensing system developed and maintained by the conference of state bank supervisors and the American association of residential mortgage regulators pursuant to the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 to manage mortgage licenses and other financial services licenses, or a successor registry."

SECTION 2. Section 58-19-3 NMSA 1978 (being Laws 1959, Chapter 204, Section 3, as amended) is amended to read:

"58-19-3. LICENSING OF SALES FINANCE COMPANIES REQUIRED--DENIAL OF LICENSE--PROVISION FOR OUT-OF-STATE LICENSES.--

A. [No] A person shall not engage in the business of a sales finance company in this state without a license [therefor] as provided in the Motor Vehicle Sales Finance Act; provided, however, that a state or national bank authorized to do business in this state shall not be required to obtain a license under that act but shall comply with all of its other provisions.

B. The application for a license shall be in writing, under oath and in the form prescribed by the director. The application shall contain the name of the applicant; date of incorporation, if incorporated; the address where the business is or is to be conducted and similar information as to any branch office of the applicant; the name and resident address of the owner or partners or, if a corporation or association, of the directors, trustees and principal officers; and such other pertinent information as the director may require.

C. The license fee for each calendar year or part thereof shall be four hundred dollars ($400) for the principal place of business of the licensee and four hundred dollars ($400) for each branch of the licensee maintained in this state. For a license maintained out of this state, the license fee shall be five hundred dollars ($500) for each office. All fees shall be deposited with the state treasurer for deposit and transfer as provided in Section 9-16-14 NMSA 1978.

D. Each license shall specify the location of the office or branch [and the license shall be conspicuously displayed in the office or branch]. In case a location is changed, the director shall endorse the change of location on the license upon payment to the director by the licensee of a duplicate license fee of twenty-five dollars ($25.00).

E. Applicants for a license issued pursuant to the Motor Vehicle Sales Finance Act shall apply using a form prescribed by the director. Information required on the form shall be set forth by rule, instruction or procedure of the director, and may be changed or updated as necessary by the director in order to carry out the purposes of the Motor Vehicle Sales Finance Act.

F. The director may establish relationships or contracts with the nationwide mortgage licensing system and registry or other entities designated by the nationwide mortgage licensing system and registry to collect and maintain records and process transaction fees or other fees related to licenses issued pursuant to the Motor Vehicle Sales Finance Act.

G. In an application for a license issued pursuant to the Motor Vehicle Sales Finance Act, the applicant shall, at a minimum, furnish to the nationwide mortgage licensing system and registry information concerning the applicant's identity, including:

(1) the applicant's personal history and experience in a form prescribed by the nationwide mortgage licensing system and registry; and

(2) authorization for the nationwide mortgage licensing system and registry and the director to obtain information related to any administrative, civil or criminal findings by any governmental jurisdiction regarding the applicant.

H. The director may use the nationwide mortgage licensing system and registry as a channeling agent for requesting and distributing information provided pursuant to Paragraphs (1) and (2) of Subsection G of this section to and from any source as deemed appropriate by the director.

[E.] I. Upon the filing of an application and the payment of the fee, the director shall issue to the applicant a license to engage in the business of a sales finance company under and in accordance with the provisions of the Motor Vehicle Sales Finance Act for a period [which] that shall expire on December 31 next following the date of its issuance. The license shall not be transferable or assignable. [No] A licensee shall not transact any business provided for by the Motor Vehicle Sales Finance Act under any other name.

[F.] J. The director shall deny a license under the Motor Vehicle Sales Finance Act if [he] the director finds that:

(1) the applicant has failed to pay the required fee;

(2) the applicant has willfully furnished the director with false or misleading information in the application; or

(3) there is reason to believe that the financial responsibility, character and general fitness of the applicant for an original license and of the individual members and beneficiaries thereof, if the applicant is a copartnership, association or trust, and of the officers and directors thereof, if the applicant is a corporation, are such as to warrant belief that the business will not be operated lawfully, honestly, fairly and efficiently within the declared purposes and spirit of that act.

If an original license is denied by the director, [he] the director shall immediately notify the applicant in writing setting forth the reasons for denial.

[G.] K. The director may issue a motor vehicle sales finance company license to an applicant who applies for such a license to be located outside the state, if the applicant:

(1) files an application on a form prescribed by the director enclosing a license fee of five hundred dollars ($500);

(2) maintains, at all times, an agent for service of process, who shall be a resident of New Mexico; and

(3) complies with all sections of the Motor Vehicle Sales Finance Act and any rules and regulations that may be promulgated by the director and complies with all statutes relating to money, interest and usury [which] that are applicable to motor vehicle sales finance companies.

A motor vehicle sales finance company license may be granted to an applicant anywhere in the United States. Local situs is not a requirement for the granting of a license to an out-of-state applicant."

SECTION 3. Section 61-18A-1 NMSA 1978 (being Laws 1987, Chapter 252, Section 1) is amended to read:

"61-18A-1. SHORT TITLE.--[This act] Chapter 61, Article 18A NMSA 1978 may be cited as the "Collection Agency Regulatory Act"."

SECTION 4. Section 61-18A-2 NMSA 1978 (being Laws 1987, Chapter 252, Section 2) is amended to read:

"61-18A-2. DEFINITIONS.--As used in the Collection Agency Regulatory Act:

A. "division" means the financial institutions division of the regulation and licensing department;

B. "director" means the director of the [financial institutions] division [of the regulation and licensing department] or a duly authorized agent designated by the director;

C. "collection agency" means [any] a person engaging in business for the purpose of collecting or attempting to collect, directly or indirectly, debts owed or due or asserted to be owed or due another, where such person is so engaged by two or more creditors. The term also includes [any] a creditor who, in the process of collecting [his] the creditor's own debts, uses any name other than [his] the creditor's own [which] that would indicate that a third person is collecting or attempting to collect [such] the debts. The term does not include:

(1) [any] an officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

(2) [any] a person while collecting debts for another person, both of whom are related by common ownership or affiliated by corporate control, if the person collects debts only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(3) [any] an officer or employee of the United States, [any] a state or [any] a political subdivision thereof to the extent that collecting or attempting to collect [any] a debt is in the performance of [his] official duties;

(4) [any] a person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of [any] a debt;

(5) [any] a nonprofit organization [which] that, at the request of debtors, performs bona fide consumer credit counseling and assists debtors in the liquidation of their debts by receiving payments from such debtors and distributing such amounts to creditors;

(6) [any] an attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client; [and] or

(7) [any] a person collecting or attempting to collect [any] a debt owed or due or asserted to be owed or due to another to the extent such activity:

(a) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;

(b) concerns a debt [which] that was originated by such person;

(d) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor;

D. "communication" means the conveying of information regarding a debt directly or indirectly to [any] a person through any medium;

E. "creditor" means [any] a person who offers or extends credit creating a debt or to whom a debt is owed, but [such] the term does not include [any] a person to the extent that [he] the person receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another;

F. "debt" means [any] an obligation or alleged obligation of a debtor to pay money arising out of a transaction in which the money, property, insurance or services [which] that are the subject of the transaction are primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment;

G. "debt collector" means a collection agency, a repossessor, a manager, a solicitor and [any] an attorney-at-law collecting a debt as an attorney on behalf of and in the name of a client;

H. "debtor" means [any] a natural person obligated or allegedly obligated to pay [any] a debt;

I. "location information" means a debtor's place of abode and [his] the telephone number at such place or [his] the debtor's place of employment;

J. "manager" means a natural person who qualifies under the Collection Agency Regulatory Act to be in full-time charge of a licensed collection agency and to whom a manager's license has been issued by the director;

K. "nationwide mortgage licensing system and registry" means a licensing system developed and maintained by the conference of state bank supervisors and the American association of residential mortgage regulators pursuant to the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 to manage mortgage licenses and other financial services licenses, or a successor registry;

[K.] L. "person" means an individual, corporation, partnership, association, joint-stock company, trust where the interests of the beneficiaries are evidenced by a security, unincorporated organization, government or political subdivision of a government;

[L.] M. "repossessor" means a person engaged solely in the business of repossessing personal property for others for a fee. The term does not include a duly licensed collection agency; and

[M.] N. "solicitor" means a natural person who, through lawful means, communicates with debtors or solicits the payment of debts for a collection agency licensee by the use of telephone, personal contact, letters or other methods of collection conducted from and within the licensee's office."

SECTION 5. Section 61-18A-3 NMSA 1978 (being Laws 1987, Chapter 252, Section 3) is amended to read:

"61-18A-3. ADMINISTRATION AND ENFORCEMENT.--

A. The administration and enforcement of the Collection Agency Regulatory Act shall be vested in the office of the director as [hereinafter] set forth in that act.

[A.] B. The director shall investigate violations or alleged [violation] violations of the Collection Agency Regulatory Act by persons engaged in business as collection agencies or repossessors who fail to obtain licenses.

[B.] C. The director may examine the business and the books, accounts, records and files used therein by a collection agency licensee, and for such purpose, the director shall have free access to the offices, places of business, books, accounts, records, papers, files, safes and vaults of all licensees and other persons engaging or attempting to engage in business as a collection agency.

[C.] D. Any examination reports or other documents or information developed in administration of this section are confidential and not subject to subpoena.

E. Applicants for a license issued pursuant to the Collection Agency Regulatory Act shall apply on a form prescribed by the director. Information required on the form shall be set forth by rule, instruction or procedure of the director and may be changed or updated as necessary by the director in order to carry out the purposes of the Collection Agency Regulatory Act.

F. In order to fulfill the purposes of the Collection Agency Regulatory Act, the director may establish relationships or contracts with the nationwide mortgage licensing system and registry or other entities designated by the nationwide mortgage licensing system and registry to collect and maintain records and process transaction fees or other fees related to licenses issued pursuant to the Collection Agency Regulatory Act.

G. An applicant for a license pursuant to the Collection Agency Regulatory Act shall, at a minimum, furnish to the nationwide mortgage licensing system and registry information concerning the applicants identity, including:

(1) the applicant's personal history and experience in a form prescribed by the nationwide mortgage licensing system and registry; and

SECTION 6. Section 61-18A-7 NMSA 1978 (being Laws 1987, Chapter 252, Section 7, as amended) is amended to read:

"61-18A-7. APPLICATION FOR LICENSE.--

A. Application for a collection agency license, repossessor's license or manager's license shall be made to the director in such form as may be required by the director.

B. Applicants for an original license issued pursuant to the Collection Agency Regulatory Act for the period beginning July 1, 2018 and ending December 31, 2018 shall pay an amount equal to one-half of the original license fee for the applicable license as established pursuant to Section 61-18A-30 NMSA 1978.

C. Applicants for renewal of a license issued pursuant to the Collection Agency Regulatory Act with an expiration date of June 30, 2018 may apply for renewal of the license for the period beginning July 1, 2018 and ending December 31, 2018 and shall pay an amount equal to one-half of the renewal license fee for the applicable license as established pursuant to Section 61-18A-30 NMSA 1978.

D. Applicants for all licenses issued pursuant to the Collection Agency Regulatory Act beginning on or after January 1, 2019, and ending at the conclusion of the calendar year for which the license may be issued, shall pay an amount equal to the applicable original or renewal license fee as established pursuant to Section 61-18A-30 NMSA 1978."

SECTION 7. Section 61-18A-8 NMSA 1978 (being Laws 1987, Chapter 252, Section 8) is amended to read:

"61-18A-8. APPLICATIONS--REQUIRED INFORMATION.--

A. The application for a collection agency license shall state, among other things that may be required, the name of the applicant together with the name under which the applicant will do business and the location by street number and city in this state of the office of the business for which the license is sought.

B. The application shall state:

(1) in the case of an individual, [the application shall state] the full residence address of the applicant;

(2) in the case of a partnership, [the application shall state] the true names and complete residence addresses of all partners;

(3) in the case of a corporation, [the application shall state] the true names and complete residence addresses of all directors and officers and the true names and residence addresses of all holders of ten percent or more of the corporation's outstanding stock and other securities and the number of shares or units of each and of all classes held by each and the total number of shares or units of each class issued and outstanding; and

(4) in the case of a nonstock corporation or an unincorporated association, the true names and complete residence addresses of all officers, directors and trustees.

C. The application shall state the name of the licensed manager who will be actively in charge of the collection agency for which the license is sought.

D. The director may establish, by rule, regulation or order, requirements for a license application as necessary, including:

(1) background checks for criminal history through fingerprint or other databases;

(2) civil or administrative records;

(3) credit history; and

(4) other information as deemed relevant and necessary by the director."

SECTION 8. Section 61-18A-22 NMSA 1978 (being Laws 1987, Chapter 252, Section 22) is amended to read:

"61-18A-22. OFFICE MANAGEMENT--LICENSE.--

A. Every licensed office of a collection agency, whether a principal or branch office, shall be under the active charge of a licensed manager. Each manager's license shall be issued by the director upon qualification by the applicant [for same] and shall be renewed annually upon application [therefor] accompanied by the manager's renewal license fee, which application is to be filed with the division on or before [May 31] November 30 of each year. Unless so renewed, each manager's license shall expire on [June 30] January 1 unless previously revoked or canceled.

B. As used in this section, "under the active charge of a licensed manager" means that a licensed manager [must] shall be physically present at the licensee's office at least seventy-five percent of the time during which the office is open for business."

SECTION 9. Section 61-18A-27 NMSA 1978 (being Laws 1987, Chapter 252, Section 27) is amended to read:

"61-18A-27. RENEWAL OF LICENSE--FEE.--

A. A licensee desiring renewal of [his] the licensee's license shall, on or before [May 31] November 30 of each year, file with the director an application for renewal on [such] forms as may be designated by the director. The application shall be accompanied by the renewal fee.

B. The director shall issue a renewal license [which] that shall be dated [July 1] January 1 next ensuing and shall bear the date to and including which the license is renewed."

SECTION 10. REPEAL.--Section 61-18A-18 NMSA 1978 (being Laws 1987, Chapter 252, Section 18) is repealed.

SECTION 11. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2017.

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