Student loan servicers: licensing and regulation: Student Loan Servicing Act.

Existing law, operative July 1, 2018, establishes the Student Loan Servicing Act to provide for the licensure, regulation, and oversight of student loan servicers by the Commissioner of Business Oversight, who is the head of the Department of Business Oversight. The act prohibits a person from engaging in the business of servicing a student loan in this state without a license, unless the person falls within certain exceptions. Under the act, a person applying for a license, among other things, is required to pay an application fee, sign the application under penalty of perjury, and submit to a criminal background check by the Department of Justice. The act authorizes the commissioner to deny an application for a license for specified reasons. The act also authorizes the commissioner to promulgate regulations and take various other administrative actions. The act defines various terms for its purposes, and excludes specified entities, including banks, trust companies, and certain nonprofit community service organizations from its provisions. This bill would revise and recast the circumstances under which the commissioner is authorized to deny an application for a license. The bill would require an applicant to appoint the commissioner as the applicant's attorney to receive service of process relating to specified actions and would require the service to include an affidavit of compliance. By expanding the crime of perjury, the bill would impose a state-mandated local program. The bill would redefine the term "student loan" under the act to mean any loan solely for use to finance a postsecondary education and costs of attendance at a postsecondary institution and would redefine "student loan servicers" to exclude debt collectors whose business operations involve collection on defaulted student loans, as specified. In addition to other terms, the bill would define the term "Nationwide Multistate Licensing System & Registry" to mean certain systems of records, created for nondepository, financial services licensing or registration, including student loan servicers, as specified. The bill would exclude from the act a state or nonprofit private institution or organization having an agreement with the United States Secretary of Education, in connection with its responsibilities as a guaranty agency engaged in default aversion, pursuant to specific federal student loan provisions. The bill would also authorize the commissioner to require an applicant for a student loan servicer license or a student loan servicer licensee to make some or all of the required filings with, and to pay assessments to, the commissioner through the Nationwide Multistate Licensing System & Registry. This bill would authorize the commissioner to establish relationships or contracts with the Nationwide Multistate Licensing System & Registry or other designated entities to collect and maintain records and process transaction fees. The bill would authorize the commissioner, for purposes of participating in the licensing system and registry, to waive or modify rules, regulations, orders, and other requirements as reasonably necessary. The bill would permit the commissioner to use the system and registry as a channeling agent for requesting information from the Department of Justice and other sources, and would require the commissioner to establish a process by which applicants and licensees may challenge information entered into the licensing system and registry. Additionally, the bill would specify that any of various federal or state law requirements regarding the privacy or confidentiality of any information provided to the licensing system and registry, or privilege with respect to that information, would continue to apply, and that this information is authorized to be shared under the system without the loss of privilege or confidentiality. The bill would require the commissioner to report violations of the act, as well as other enforcement actions and information to the licensing system and registry to the extent that the information is a public record. The act permits the commissioner to prescribe circumstances under which to accept electronic records, including applications, financial statements, reports, and other specified documents. This bill would include within that category of electronic records a surety bond, rider, or endorsement. Under the act, a licensee is required to respond to a qualified written request by acknowledging receipt of the request within 5 business days, as specified. This bill would extend that timeframe to 10 business days. The bill additionally would authorize the commissioner to require persons who are not expressly excluded from the act to file, under oath or otherwise, special reports or answers in writing to specific questions or requests for information with the commissioner. The bill would provide that in any proceeding under the act, the burden of proving an exemption or an exception from a definition would be on the person claiming it. By increasing the circumstances in which a person may be required to take an oath, the bill would expand the crime of perjury, thereby imposing a state-mandated local program. This bill would make legislative findings in support of its provisions and would also make related and conforming changes to the act. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect.