2006 Banking and Related Legislation
Each year, the Department of Banking, with the coordination of the Government Relations and Consumer Affairs Division, conducts an active legislative program. During the 2006 session, five department proposals concerning banks, consumer credit, securities and other issues were enacted into law by the General Assembly.
Please note that the listing is arranged by Public Act number. We have provided brief summaries, along with hyperlinks that lead to the Connecticut General Assembly website for the full text of each Public Act.
Department of Banking Proposals
Public Act 06-10 - SB-226
An Act Concerning Bank and Credit Union Applications
This act:
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eliminates the application fee for the acquisition, alteration, or improvement of real estate if it is associated with establishing an out-of-state branch;
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reduces the time period for which a bank is required to publish a notice of hearing for incorporation;
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requires banks to provide the banking department with copies of any changes to their certificates of incorporation;
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increases the maximum amount a bank can spend on real estate without the commissioner's approval from $500,000 to $750,000;
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specifies the authority for and circumstances under which a depository may reduce the amount of eligible collateral maintained to secure public deposits; and
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extends the time frame for review of certain credit union documents.
The act was a Department of Banking proposal.
Effective Date: Upon passage
Public Act 06-35 - SB-227
An Act Concerning Check Cashers, Money Transmitters and Other NonMortgage Licensees
The act:
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requires small loan companies wishing to move their place of business within the same or to an adjacent city or town to obtain prior approval by the commissioner to do so;
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changes the licensing period for money transmitters and check cashers from an annual period of July 1 through June 30 to a bi-annual period of October 1 through September 30, beginning October 1, 2007 and prohibits them from using any name other than the one on their license;
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increases the commissioner's authority to impose penalties on check cashers;
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allows investments used in lieu of all or part of the surety bond for money transmitters to be kept at Connecticut credit unions and Federal credit unions and requires such investments to be held for two years after the license has been surrendered, suspended, revoked or expired, and;
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requires consumer collection agency license applicants to provide, within 10 days, written notification to the banking commissioner of any changes in information contained in their initial or most recent renewal application.
The act was a Department of Banking proposal.
Effective Date: October 1, 2006 for the provisions on check casher and money transmitter licensing procedures and consumer collection agencies. Upon passage for the sections on small loan licensees, the check casher license exemption for Connecticut credit unions, violations of check cashing laws, investments in lieu of bonds for money transmitters, and debt adjusters.
Public Act 06-45 - SB-228
An Act Concerning Mortgage Practices and Licensing Procedures
The act:
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replaces the discounted fee for any initial loan originator registration with a standard $100 loan originator registration fee;
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prohibits lenders and brokers from charging fees for failing to close a loan unless the fees are properly contained within an advance fee agreement;
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prohibits brokers from imposing prepayment penalties or fees on borrowers for prepaying the principal of a mortgage loan;
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requires denial of the license of a lender who files a loan originator registration with knowledge of a material misstatement;
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allows for suspension, revocation or non-renewal of any registration of a loan originator if the originator has violated laws or regulations applicable to the originator’s business, and;
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expands the group of lenders prohibited from imposing excessive prepaid finance charges on borrowers to include persons making five or fewer first mortgage loans within any year.
The act was a Department of Banking proposal.
Effective Date: Upon passage, except for the provisions on the originator registration fee schedule, which are effective October 1, 2006.
Public Act 06-75 - SB-231
An Act Concerning Violation of the Connecticut Business Opportunity Investment Act
The act clarifies that the banking commissioner has the authority to take administrative or court action against persons who have already violated the Connecticut Business Opportunity Investment Act (CBOIA).
The act also spells out that the commissioner can take the above actions after conducting an investigation. Current law does not specifically require investigations.
The act increases, from $10,000 to $100,000, the maximum fine for violations of the CBOIA. Finally, the legislation makes the act's annual $100 registration renewal fee non-refundable.
The act was a Department of Banking proposal.
Effective Date: October 1, 2006
Public Act 06-165 - HB-5298
An Act Making Technical Revisions to Various Statutes Relative to the Banking and Securities Laws of Connecticut
The act makes technical changes in the banking and securities statutes.
The act was a Department of Banking proposal.
Effective Date: Upon passage
Other Legislation
Public Act 06-127 - SB-229
An Act Concerning Connecticut Banks
The act increases, from three to seven years, the amount of time that must pass before an outstanding money order issued or sold in Connecticut on which any business association, except a financial organization, is directly liable is presumed abandoned.
Current abandoned property law does not specifically address money orders held by business associations in general. All property that is not specifically addressed by the law is presumed abandoned after three years.
Financial organizations are included in the definition of a business association. Under current law, unchanged by the bill, money orders issued by banking and financial organizations are presumed abandoned within three years unless certain conditions are met. For this reason, the legislation applies to money orders issued by any type of business association except a financial organization.
Effective Date: July 1, 2007
Public Act 06-156 - SB-549
An Act Concerning Mortgages and Real Estate Financing
The act expands the type of entities that can secure a commercial revolving loan with an open-end mortgage to include non-profit organizations and limited liability companies. It makes mortgage releases and assignments executed according to law, effective to release or assign the mortgagee's interest in the property even if the mortgagee acquires the interest, or does not record the interest, until after the release or assignment is executed. The legislation specifies it may not be interpreted to limit the effect of any release or assignment recorded before, on, or after October 1, 2006.
Also, the act reduces, from 40 to 20 years after full performance was due, the time after which an unreleased mortgage is invalid under certain circumstances. The legislation makes a mortgage invalid, under these same circumstances, 40 years after it was recorded on the land records if the mortgage does not disclose the time when the note or indebtedness is payable or the time for full performance of the mortgage conditions.
But the act authorizes a record holder of an undischarged mortgage, before the applicable 20 or 40 year period expires, to record a notice, on the land records of the town in which the property is situated, that contains certain information. Under the act, recording the notice tolls the applicable time period for 10 years. The legislation requires that the notice be indexed in the grantor's index under the mortgagor's name or names and in the grantee's index under the name of the record mortgage holder's name.
Finally, the act increases, from $150 to $225, the maximum fee the court may award parties in any civil action affecting the title to real property, or affecting any mortgage or lien on it, for a title search.
Effective Date: October 1, 2006