§ 716 — Grounds for suspension or revocation of license

§ 716. Grounds for suspension or revocation of license. 1. After\nnotice and hearing, the superintendent may revoke or suspend any license\nto engage in the business of a student loan servicer issued pursuant to\nthis article if he or she shall find that:\n (a) a servicer has violated any provision of this article, any rule or\nregulation promulgated by the superintendent under and within the\nauthority of this article, or any other applicable law;\n (b) any fact or condition exists which, if it had existed at the time\nof the original application for such license, would have warranted the\nsuperintendent refusing originally to issue such license;\n (c) a servicer does not cooperate with an examination or investigation\nby the superintendent;\n (d) a servicer engages in fraud, intentional misrepresentation, or\ngross negligence in servicing a student loan;\n (e) the competence, experience, character, or general fitness of the\nservicer, an individual controlling, directly or indirectly, ten percent\nor more of the outstanding interests, or any person responsible for\nservicing a student loan for the servicer indicates that it is not in\nthe public interest to permit the servicer to continue servicing student\nloans;\n (f) the servicer engages in an unsafe or unsound practice;\n (g) the servicer is insolvent, suspends payment of its obligations, or\nmakes a general assignment for the benefit of its creditors; or\n (h) a servicer has violated the laws of this state, any other state or\nany federal law involving fraudulent or dishonest dealing, or a final\njudgement has been entered against a student loan servicer in a civil\naction upon grounds of fraud, misrepresentation or deceit.\n 2. The superintendent may, on good cause shown, or where there is a\nsubstantial risk of public harm, suspend any license for a period not\nexceeding thirty days, pending investigation. "Good cause", as used in\nthis subdivision, shall exist when a student loan servicer has defaulted\nor is likely to default in performing its financial engagements or\nengages in dishonest or inequitable practices which may cause\nsubstantial harm to the persons afforded the protection of this article.\n 3. Except as provided in subdivision two of this section, no license\nshall be revoked or suspended except after notice and hearing thereon.\nAny order of suspension issued after notice and a hearing may include as\na condition of reinstatement that the student loan servicer make\nrestitution to consumers of fees or other charges which have been\nimproperly charged or collected, including but not limited to by\nallocating payments contrary to a borrower's direction or in a manner\nthat fails to help a borrower avoid default, as determined by the\nsuperintendent. Any hearing held pursuant to the provisions of this\nsection shall be noticed, conducted and administered in compliance with\nthe state administrative procedure act.\n 4. Any student loan servicer may surrender any license by delivering\nto the superintendent written notice that it thereby surrenders such\nlicense, but such surrender shall not affect such servicer's civil or\ncriminal liability for acts committed prior to such surrender. If such\nsurrender is made after the issuance by the superintendent of a\nstatement of charges and notice of hearing, the superintendent may\nproceed against the servicer as if such surrender had not taken place.\n 5. No revocation, suspension, or surrender of any license shall impair\nor affect the obligation of any pre-existing lawful contract between the\nstudent loan servicer and any person, including the department of\nfinancial services.\n 6. Every license issued pursuant to this article shall remain in force\nand effect until the same shall have been surrendered, revoked or\nsuspended in accordance with any other provisions of this article.\n 7. Whenever the superintendent shall revoke or suspend a license\nissued pursuant to this article, he or she shall forthwith execute in\nduplicate a written order to that effect. The superintendent shall file\none copy of such order in the office of the department and shall\nforthwith serve the other copy upon the student loan servicer. Any such\norder may be reviewed in the manner provided by article seventy-eight of\nthe civil practice law and rules.\n