The law took effect July 15 and is meant prohibit any misleading, unfair or deceptive behavior and provide best practices for protecting consumers’ rights. In addition to requiring student loan servicer registration, the act allows state regulators to examine their business practices at any time.
The state requires a servicer to obtain $50,000 surety bond as part of the Student Loan Servicer Registration, according to the act.
In the last few years, legislators in California, Washington state and Washington D.C. have also passed laws that require student loan servicers to be licensed/registered and bonded.
The Department of Business Regulation will begin accepting electronic surety bonds for Rhode Island Student Loan Servicer Registration through the Nationwide Multistate Licensing System (NMLS) starting Sept. 1, 2019.
The attorney general and Rhode Island Department of Business Regulation can penalize servicers who do not comply with these regulations and/or who violate borrower rights and seek restitution on behalf of borrowers.
NMLS has been managing several other license types for Rhode Island since January 2017. Each license requires a surety bond:
- Check Cashier License: $50,000
- Debt Management Services Registration: $50,000
- Sales of Checks/Electronic Money Transfers: $50,000 (additional $5,000 for each agent location up to $150,000 total amount)
- Lender License: $50,000*
- Loan Broker License: $20,000*
- Small Loan Lender: $10,000*
- Third Party Loan Servicer License: $50,000*
*Additional $10,000 for 4-7 in-state branch locations or $25,000 if 8 or more
Information regarding NMLS license types, bond forms and other information can be found on the ESB Adoption Map and Table posted on the NMLS Resource Center.