§ 2 — Student loan servicer license required; exemptions from license requirement; application; automatic federal student loan servicer license; renewal; abandonment of application

Massachusetts § 2

• Jurisdiction: Massachusetts
• Part I: ADMINISTRATION OF THE GOVERNMENT
• Title XV: REGULATION OF TRADE
• Ch. 93L: STUDENT LOAN SERVICERS

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Section 2. (a) A person shall not directly or indirectly act as a student loan servicer without first obtaining a student loan servicer license pursuant to subsection (e) or an automatic federal student loan servicer license pursuant to subsection (f), as applicable, unless the person is exempt from licensure pursuant to subsection (b); provided, however, that a person with an automatic federal student loan servicer license shall not directly or indirectly act as a student loan servicer, other than pursuant to a contract with the United States Secretary of Education under 20 U.S.C. 1087f, without first obtaining a student loan servicer license under subsection (e).(b) The following persons shall be exempt from student loan servicer licensing requirements under this section: (i) banks and credit unions, including federal credit unions and out-of-state banks and credit unions; (ii) wholly-owned subsidiaries of banks and credit unions; and (iii) nonprofit or public institutions of higher education.(c) A person seeking to act as a student loan servicer, other than pursuant to a contract with the United States Secretary of Education under 20 U.S.C. 1087f, shall submit an application for a student loan servicer license in such form as the commissioner shall prescribe. The application may require that an applicant provide: (i) a financial statement prepared by a certified public accountant or a public accountant; (ii) a history of criminal convictions of the applicant; or (iii) any other information the commissioner considers necessary.(d) An application for a student loan servicer license shall be accompanied by: (i) a nonrefundable license fee; (ii) a nonrefundable investigation fee; and (iii) a surety bond that provides for coverage for the applicant in an amount determined by the commissioner and in a form prescribed by the commissioner. The secretary of administration and finance shall annually determine the amounts of the license and investigation fees required under clauses (i) and (ii) pursuant to section 3B of chapter 7. The amount and form of the surety bond required under clause (iii) shall be determined by the commissioner.(e) After the filing of an application for an initial student loan servicer license and the payment of the license and investigation fees, the commissioner shall investigate the financial condition, responsibility, financial and business experience, character and general fitness of the applicant.The commissioner may issue a student loan servicer license if the commissioner finds that: (i) the applicant's financial condition is sound; (ii) the applicant's business has been conducted and will be conducted honestly, fairly, equitably, carefully, efficiently and in a manner consistent with this chapter; (iii) (A) if the applicant is an individual, the individual is properly qualified and of good character; (B) if the applicant is a partnership, each partner is properly qualified and of good character; (C) if the applicant is a corporation or association, the president, chair of the executive committee, senior officer responsible for the corporation's business and chief financial officer or any other person who performs similar functions as determined by the commissioner, each director, each trustee and each shareholder owning at least 10 per cent of each class of the securities of the corporation are properly qualified and of good character; or (D) if the applicant is a limited liability company, each member is properly qualified and of good character; (iv) no person on behalf of the applicant has knowingly made any incorrect statement of a material fact in the application or in any report or statement made pursuant to this chapter; (v) no person acting on behalf of the applicant has knowingly failed to state any material fact necessary to give the commissioner any information required by the commissioner; (vi) the applicant has paid the license and investigation fees and provided the required surety bond under subsection (d); and (vii) the applicant has met all other requirements as determined by the commissioner.(f) The commissioner shall issue an automatic federal student loan servicer license to a person that acts or intends to act as a student loan servicer pursuant to a contract with the United States Secretary of Education under 20 U.S.C. 1087f. The automatic federal student loan servicer license shall be irrevocable and shall not expire except as otherwise provided in this section.Upon receipt of the automatic federal student loan servicer license, the student loan servicer shall pay the license and investigation fees and provide the required bond under subsection (d).A person issued an automatic federal student loan servicer license shall provide written notice to the commissioner not more than 7 business days after receiving notification of the expiration, revocation or termination of a contract awarded by the United States Secretary of Education under 20 U.S.C 1087f. An automatic federal student loan servicer license shall immediately expire if the licensee is no longer acting as a student loan servicer pursuant to a contract with the United States Secretary of Education under said 20 U.S.C. 1087f. Nothing in this subsection shall prevent the commissioner from issuing a cease and desist or injunction against a student loan servicer to cease activities in violation of this chapter to the extent permitted by law.(g) A student loan servicer license issued pursuant to subsection (e) shall be valid for 1 year as of a date determined by the commissioner unless suspended or revoked and shall not be automatically renewed.(h) A student loan servicer license issued pursuant to subsection (e) may be renewed upon the filing of a renewal application containing all of the required documents and fees as provided in subsection (c). A renewal application shall be filed not less than 30 days before the expiration of the student loan servicer's current license. The commissioner may assess a late fee for renewal applications filed less than 30 days before the expiration of a student loan servicer license.If an application for renewal of a student loan servicer license under said subsection (e) has been filed with the commissioner not later than the date the previous license is to expire, the license sought to be renewed shall continue in full force and effect until the issuance of the renewal license or until the commissioner has notified the licensee in writing of the commissioner's refusal to renew the license, together with the grounds upon which that refusal is based. The commissioner may refuse to renew a student loan servicer license for any reason that the commissioner may refuse to issue an initial student loan servicer license under said subsection (e).(i) The commissioner may consider an application for a student loan servicer license under subsection (e) abandoned if the applicant fails to respond to a request for information required under this section within 60 days after such request is made. The commissioner shall notify the applicant, in writing, that the application shall be considered abandoned if the applicant fails to submit that information within the required time period. Abandonment of an application pursuant to this subsection shall not preclude the applicant from submitting a new application for a student loan servicer license under this chapter.