House Bill 5142 (sHB5142 File No. 637) introduces a comprehensive set of amendments to Connecticut's banking, securities, and mortgage laws, with various effective dates primarily set for October 1, 2024, and July 1, 2024. The bill mandates electronic surety bond cancellations for bonds issued to certain regulated entities and updates requirements for surety bonds when banking licensees change their legal names. It expands the definition of activities requiring licensure for sales finance companies, small loan lenders, mortgage servicers, and education loan servicers, and requires licensed mortgage lenders to register on the Nationwide Multistate Licensing System (NMLS) as "exempt mortgage servicer registrants." The bill also extends private student education loan servicing requirements to any person servicing such loans, not just designated servicers, and enhances the enforcement powers of the banking commissioner over various registrations. House Amendment “A” incorporates existing statutory definitions for “private education lender” and “private education loan creditor” and modifies the required written disclosures for shared appreciation agreements.

The bill also introduces changes to the language in various sections of the general statutes, replacing the term "uninsured bank" with "innovation bank." It specifies that attorneys' fees and related expenses incurred in defending legal actions where immunity or indemnity is available shall be paid from the assets of the trust bank or innovation bank. These costs are to be paid in advance of the final disposition of such action, with an undertaking by the receiver, conservator, or employee to repay the fees if they are ultimately found not entitled to immunity or indemnity. The bill modifies the requirements for securing public deposits, particularly for banks that have been conducting business for less than two years or are innovation banks, mandating that they maintain eligible collateral not less than 120% of all uninsured public deposits. It also exempts certain federally insured institutions and innovation banks from the provisions of sections 36a-597 to 36a-607, and sections 36a-611 and 36a-612, provided they do not engage in money transmission through unauthorized persons. The bill further updates definitions related to community banks and credit unions, and revises loan renewal, refinancing, and restructuring conditions, emphasizing the exclusion of new funds advancement except for reasonable closing costs and addressing workout situations. Lastly, it requires banking institutions to post notices of the Department of Banking's toll-free consumer hotline for filing complaints.

Statutes affected:
BA Joint Favorable Substitute:
File No. 200:
File No. 637: