Vermont has passed new legislation (the “Act”) that creates a new type of license for mortgage brokers who engage in “lead generation,” and a new license for lenders who engage in “loan solicitation.” Among other things, the Act (i) requires consumer litigation funding companies to renew their registration every three years, and (ii) amends certain licensing requirements for licensed lenders, money transmitters, check cashers and currency exchangers, and loan servicers. Various provisions of the Act have multiple effective dates, beginning on May 4, 2017.
Lead generator licensees include persons who (i) initiate consumer interest or inquiry in a loan by online marketing, direct response advertising, telemarketing, or other similar contact; (ii) engage in the business of selling leads (i.e., any information identifying a potential consumer of a loan) for loans; (iii) generate or augment leads for other person for compensation or gain; or (iv) refer Vermont borrowers to other person for loans for compensation or gain.
Loan solicitation licensees include persons who for compensation or gain, (i) offer, solicit, broker, directly or indirectly arrange, place, or find a loan for a prospective Vermont borrower; (ii) engage in any activity intended to assist a prospective Vermont borrower in obtaining a loan, including lead generation; (iii) arrange, in whole or in part, a loan through a third party, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party, through any method, including mail, telephone, internet, or any electronic means; or (iv) advertise or cause to be advertised in Vermont a loan or any of the aforementioned services. Notably, a person that engages in loan solicitation activity with respect to only residential mortgage loans does not require a loan solicitation license. Additionally, a person already 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.
The full text of the Act is available here: http://legislature.vermont.gov/assets/Documents/2018/Docs/ACTS/ACT022/ACT022%20As%20Enacted.pdf.