(a) Without first obtaining a license under this chapter from the Commissioner, a person shall not:
(1) Engage in the business of making loans of money, credit, goods, or things in action and charge, contract for, or receive on any such loan interest, a finance charge, discount, or consideration therefor.
(2) Act as a mortgage broker.
(3) Engage in the business of a mortgage loan originator.
(4) Act as a sales finance company.
(5) Engage in the business of loan solicitation. A person licensed as a lender, sales finance company, or mortgage broker is not required to obtain a separate loan solicitation license when acting on the person’s own behalf.
(b) A licensed mortgage loan originator shall register and maintain a valid unique identifier with the Nationwide Multistate Licensing System and Registry and shall be either:
(1) An employee actively employed at or assigned to a licensed location of, and supervised and sponsored by, only one licensed lender or licensed mortgage broker operating in this State.
(2) An individual sole proprietor who is also a licensed lender or licensed mortgage broker.
(3) An employee engaged in loan modifications employed at or assigned to a licensed location of, and supervised and sponsored by, only one third-party loan servicer licensed to operate in this State pursuant to chapter 85 of this title. As used in this subsection, “loan modification” means an adjustment or compromise of an existing residential mortgage loan. The term “loan modification” does not include a refinancing transaction.
(c) A person licensed pursuant to subdivision (a)(1) of this section may engage in mortgage brokerage and sales finance if such person informs the Commissioner in advance that he or she intends to engage in sales finance and mortgage brokerage. Such person shall inform the Commissioner of his or her intention on the original license application under section 2102 of this title, any renewal application under section 2109 of this title, or pursuant to section 2106 of this title, and shall pay the applicable fees required by subsection 2102(b) of this title for a mortgage broker license or sales finance company license.
(d) A lender license, mortgage broker license, sales finance company license, or loan solicitation license shall not be required of:
(1) A state agency, political subdivision, or other public instrumentality of a state.
(2) A federal agency or other public instrumentality of the United States.
(3) A gas or electric utility subject to the jurisdiction of the Public Utility Commission engaging in energy conservation or safety loans.
(4) A depository institution or a financial institution as defined in subdivision 11101(32) of this title.
(5) A pawnbroker.
(6) An insurance company.
(7) A seller of goods or services that finances the sale of such goods or services, other than a residential mortgage loan.
(8) Any individual who offers or negotiates the terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence, including a vacation home, or inherited property that served as the deceased’s dwelling, provided that the individual does not act as a mortgage loan originator or provide financing for such sales so frequently and under such circumstances that it constitutes a habitual activity and acting in a commercial context.
(9) Lenders that conduct their lending activities, other than residential mortgage loan activities, through revolving loan funds, that are nonprofit organizations exempt from taxation under 26 U.S.C. § 501(c) and that register with the Commissioner of Economic Development under 10 V.S.A. § 690a.
(10) Persons who lend, other than residential mortgage loans, an aggregate of less than $250,000.00 in any one year at rates of interest of no more than 12 percent per annum.
(11) A seller who, pursuant to 9 V.S.A. § 2355(f)(1)(D), includes the amount paid or to be paid by the seller to discharge a security interest, lien interest, or lease interest on the traded-in motor vehicle in a motor vehicle retail installment sales contract, provided that the contract is purchased, assigned, or otherwise acquired by a sales finance company licensed pursuant to this title to purchase motor vehicle retail installment sales contracts or a depository institution.
(12)(A) A person making an unsecured commercial loan, which loan is expressly subordinate to the prior payment of all senior indebtedness of the commercial borrower regardless of whether such senior indebtedness exists at the time of the loan or arises thereafter. The loan may or may not include the right to convert all or a portion of the amount due on the loan to an equity interest in the commercial borrower.
(B) As used in this subdivision (12), “senior indebtedness” means:
(i) all indebtedness of the commercial borrower for money borrowed from depository institutions, trust companies, insurance companies, and licensed lenders, and any guarantee thereof; and
(ii) any other indebtedness of the commercial borrower that the lender and the commercial borrower agree shall constitute senior indebtedness.
(13) Nonprofit organizations established under testamentary instruments, exempt from taxation under 26 U.S.C. § 501(c)(3), and that make loans for postsecondary educational costs to students and their parents, provided that the organizations provide annual accountings to the Probate Division of the Superior Court.
(14) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
(15) A housing finance agency.
(16) A person who makes no more than three mortgage loans in any consecutive three-year period beginning on or after July 1, 2011.
(e) A mortgage loan originator license shall not be required of:
(1) Registered mortgage loan originators, when employed by and acting for an entity described in subdivision 2200(12) of this chapter.
(2) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.
(3) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence, including a vacation home, or inherited property that served as the deceased’s dwelling, provided that the individual does not act as a mortgage loan originator or provide financing for such sales so frequently and under such circumstances that it constitutes a habitual activity and acting in a commercial context.
(4) An individual who is an employee of a federal, state, or local government agency, or an employee of a housing finance agency, who acts as a mortgage loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency or housing finance agency.
(5) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator. To the extent an attorney licensed in this State undertakes activities that are covered by the definition of a mortgage loan originator, such activities do not constitute engaging in the business of a mortgage loan originator, provided that:
(A) such activities are considered by the State governing body responsible for regulating the practice of law to be part of the authorized practice of law within this State;
(B) such activities are carried out within an attorney-client relationship; and
(C) the attorney carries them out in compliance with all applicable laws, rules, ethics, and standards.
(6) A person who makes no more than three mortgage loans in any consecutive three-year period beginning on or after July 1, 2011.
(f) If a person who offers or negotiates the terms of a mortgage loan is exempt from licensure pursuant to subdivision (d)(16) or (e)(6) of this section, there is a rebuttable presumption that he or she is not engaged in the business of making loans or being a mortgage loan originator.
(g) Independent contractor loan processors or underwriters. A loan processor or underwriter who is an independent contractor may not engage in the activities of a loan processor or underwriter unless such independent contractor loan processor or underwriter obtains and maintains a mortgage loan originator license. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the Nationwide Multistate Licensing System and Registry.
(h) This chapter shall not apply to commercial loans of $1,000,000.00 or more. (Amended 1969, No. 243 (Adj. Sess.), § 1; 1979, No. 173 (Adj. Sess.), § 2, eff. April 30, 1980; 1985, No. 38, § 2; 1991, No. 1, § 1, eff. Feb. 27, 1991; 1995, No. 162 (Adj. Sess.), § 2, eff. Jan. 1, 1997; 1999, No. 153 (Adj. Sess.), § 12, eff. Jan. 1, 2001; 2001, No. 55, § 4, eff. June 12, 2001; 2005, No. 143 (Adj. Sess.), § 2; 2007, No. 159 (Adj. Sess.), § 1, eff. May 20, 2008; 2007, No. 178 (Adj. Sess.), § 1; 2009, No. 29, § 1; 2009, No. 137 (Adj. Sess.), § 1a; 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011; 2011, No. 21, § 1, eff. May 11, 2011; 2011, No. 85 (Adj. Sess.), § 2, eff. April 20, 2012; 2013, No. 29, § 3; 2013, No. 34, § 4; 2013, No. 199 (Adj. Sess.), § 21; 2015, No. 51, § E.4; 2017, No. 22, § 19, eff. May 4, 2017; 2019, No. 20, § 4; 2019, No. 103 (Adj. Sess.), § 6; 2021, No. 25, § 8, eff. May 12, 2021.)