02 Jul South Dakota Legislative Update
The South Dakota legislature recently amended its laws governing money lending, effective July 1, 2015.
SOUTH DAKOTA HOUSE BILL 1027
“Business of Lending Money” includes originating, selling, servicing, acquiring, or purchasing loans, or servicing, acquiring, or purchasing retail installment contracts.
“Duration” is the time a loan exists before it is paid off, renew, rolled over, or flipped.
“Nationwide Mortgage Licensing System and Registry” (“NMLS”) is a licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators and other regulated entities.
Any person who engages in the business of lending money may be licensed and maintain a unique identifier through the NMLS.
Director of the Division of Banking of the Department of Labor and Regulation (“Director”).
A license expires on December 31st (previously July 1st). To renew a license, the licensee must file for renewal by December 1st (previously June 15th). Any licensee that files for renewal after December 1st and before January 1st of the next calendar year must pay a late fee in addition to the renewal fee. The late fee must equal 25% of the renewal fee. After December 31st (previously June 30th), no license may be issued unless an application is filed as required.
Any money lending license that is set to expire on July 1, 2015, is extended until December 31, 2015.
The Director may condition, deny, decline to renew, suspend for a period not to exceed six months, or revoke a license for good cause. If the licensee is the holder of more than one license, the Director may condition, deny, decline to renew, suspend for a period not to exceed six months, or revoke any or all of the licenses. For purposes of this provision, good cause now includes:
- Failure to allow the Director to make any authorized examination;
- A conviction of a felony or a misdemeanor involving fraud, dishonesty, or breach of trust by the licensee or any partner, officer, director, manager, or employee of the licensee;
- The denial, revocation or suspension of a license substantially equivalent to a South Dakota mortgage lending license issued by another state to the licensee or any partner, officer, director, manager, or employee of the licensee; or
- The filing of an application by the licensee for a license which, as of the date the license was issued, or as of the date of an order denying, suspending, or revoking a license, was incomplete in any material respect or contained any statement that was, in light of the circumstances under which it was made, false or misleading with respect to any material fact.
Any loan made in South Dakota after June 30, 2015, to a resident of South Dakota, by an entity organized to engage in the business of lending money not licensed or not exempt from licensure is unenforceable and uncollectible except as to any principal extended by the entity to the borrower.
No person employed by a licensee to collect or attempt to collect any debt owed or due or asserted to be owed or due may:
- Harass, oppress, or abuse a borrower by:
- Using any threat of violence or harm;
- Publishing a list of names of borrowers who refuse to pay their debts absent providing such information to credit reporting companies;
- Using obscene or profane language; or
- Repeatedly using the phone with the intent to annoy borrowers;
- Use any false statement when attempting to collect a debt by falsely:
- Claiming to be an attorney or government representative;
- Claiming that the borrower has committed a crime;
- Representing that the licensee operates or any person employed by the licensee works for a credit reporting company;
- Representing the amount the borrower owes;
- Representing the nature and character of any forms sent to the borrower in order to collect a debt;
- Indicating that the borrower will be arrested if the debt isn’t paid;
- Using a company name;
- Indicating that the licensee will seize, garnish, attach, or sell a borrower’s property or wages unless the licensee is permitted by law to take the action and the licensee intends to do so;
- Indicating that legal action will be taken against the borrower, if doing so would be illegal or if the licensee does not intend to take the action;
- Give false credit information about the borrower to anyone, including a credit reporting company;
- Attempt to collect any interest, fee, or other charge on top of the amount a borrower owes unless the contract that created the debt or state law allows the charge;
- Deposit a post-dated check early; or
- Take or threaten to take the borrower’s property unless it can be done legally.
The Director may use the NMLS as a channeling agent for requesting and distributing information to and from other state and federal regulatory officials or agencies with money lending industry oversight authority, as deemed necessary by the Director to carry out the responsibilities of this law.
The Director may establish relationships or contracts with the NMLS or other entity designated by the NMLS to collect and maintain records and process a transaction fee or other fee related to any licensee or other person subject to this law.
The following provisions apply to the sharing of information collected and retained by the Director during the administration of this law:
- The provisions regarding privacy or confidentiality apply to any information or material provided to the NMLS, and any privilege arising under federal or state law, including a rule of any federal or state court, with respect to the information or material, continue to apply to the information or material after the information or material has been disclosed to the NMLS. The information and material may be shared with all state and federal regulatory officials with money lending industry oversight authority without the loss of privilege or the loss of confidentiality protections pursuant to the provisions of federal or South Dakota law;
- No information or material that is subject to a privilege or confidentiality pursuant to this section is subject to:
- Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the respective state; or
- Subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the NMLS regarding the information or material is waived, in whole or in part, by the person to whom the information or material pertains.
The above provision does not apply with respect to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, any licensee that is included in the NMLS for access by the public.