Delegate Marcus Simon, a Democrat from Fairfax, has introduced legislation to bar anyone from acting as an student loan servicer without a license. The bill, H.B. 1760, would would prohibit qualified education loan servicers from
- Employing any scheme, device, or artifice to defraud or mislead qualified education loan borrowers;
- Engaging in any unfair or deceptive act or practice toward any person or misrepresent or omit any material information in connection with the servicing of a qualified education loan, including misrepresenting (1) the amount, nature, or terms of any fee or payment due or claimed to be due on a qualified education loan; (2) the terms and conditions of the loan agreement; or (3) the borrower’s obligations under the loan;
- Obtaining property by fraud or misrepresentation;
- Misapplying qualified education loan payments to the outstanding balance of a qualified education loan;
- Providing inaccurate information to a nationally recognized consumer credit bureau;
- Failing to report the borrower’s payment history of the borrower to a nationally recognized consumer credit bureau at least annually if the loan servicer regularly reports information to such a credit bureau;
- Failing to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided that the loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower; or
- Making any false statement of a material fact or omit any material fact in connection with any information provided to the SCC or another governmental authority.
Violations would be subject to a civil penalty of up to $2,500. H.B. 1760 would not create a private cause of action. It also would exempt banks, savings institutions, credit unions, and nonprofit institutions of higher education (public and private) from the licensing requirement.
The bill has been referred to the House Committee on Commerce and Legislation. Delegate Simon introduced similar legislation last year, and it never made it out of committee.