licensing and notification under the - Colorado Attorney General

LICENSING ANDNOTIFICATION UNDER THECOLORADO UNIFORMCONSUMER CREDIT CODELicensing and NotificationRequirements for Lenders, RetailSellers, Sales FinanceCompanies, and Rent to OwnCompaniesPrepared by theState of ColoradoDepartment of LawJohn W. Suthers,Attorney General1525 Sherman Street, 7th FloorDenver, CO 80203Licensing: (303) 866-4527Notification: (303) 866-4494Fax: (303) 866-5474E-mail: uccc@state.co.uscoloradoattorneygeneral.gov/ucccINTRODUCTIONThe Colorado Uniform Consumer Credit Code("UCCC") was passed into law by the ColoradoGeneral Assembly in 1971 to make uniform thevarious laws in the State relating to consumer credit.The goal of the UCCC is to balance a creditor's rightto reasonable profits with a consumer's right toprotections from unreasonable practices. TheUCCC regulates only consumer credit - credit forpersonal, family, or household purposes. Creditextended for business, commercial, and agriculturalpurposes is exempt from the UCCC. First mortgageresidential acquisition loans and refinances of thoseloans are exempt from most of the UCCC, includinglicensing requirements and rate and fee limitations.Under the UCCC, some creditors must obtain asupervised lender's license while others must filecredit notification. This pamphlet describeslicensing and notification requirements. It is notintended to constitute legal advice nor describemaximum rates, fees, and disclosure requirements.You should contact your own attorney if moreinformation is needed.The UCCC and other credit laws are enforced by theAdministrator of the UCCC in the ColoradoDepartment of Law. Additional staff consists ofcompliance examiners and attorneys.CONSUMER CREDIT NOTIFICATIONCredit sellers and retail merchants that regularlyextend consumer credit and sales finance companiesthat regularly collect consumer credit contracts –referred to below as “creditors” – must file UCCCnotification.Activities CoveredCredit sellers and retail merchants that regularlyextend credit (“regularly” has the same meaning asin the federal Truth in Lending Act – more than 25times if secured by other collateral or unsecured,more than 5 times if secured by a dwelling, or morethan once for a mortgage subject to the federalHome Ownership & Equity Protection Act, inthe current or prior calendar year) must fileconsumer credit notification and paynotification fees. A credit contract is one thatincludes a finance charge or interest or that has5 or more installments. It may be in the form ofthe sale of goods or services on credit, forexample the sale of an automobile or applianceswith payment deferred. Note: if the creditcontract is payable in installments but there isno finance charge or interest, the contract issubject to the UCCC but no notification filing isrequired. Businesses regularly makingconsumer leases must also file notification andpay notification fees.Sales finance companies that purchase, takeassignment of, or service consumer credit salesand consumer lease contracts and either collectpayments or enforce rights from those contractsmust also file notification and pay notificationfees.Credit sellers and sales finance companies aresubject to periodic, unannounced complianceexaminations.Notification Fees and Due DatesCreditors required to file notification and paynotification fees must do so within 30 days offirst entering into the activity and by January 31of each year thereafter. In addition, salesfinance companies must pay a volume fee basedon the prior year’s business. Notification feesare subject to change periodically to meetbudget needs.Once a business files initial notification, it willreceive annual notification forms prior to theJanuary 31 due date. Failure to file the requirednotification form and pay the appropriate feemay result in financial penalties and theinability to extend credit.Supervised LendersAny company or person that regularly makesor takes assignment of consumer loans inColorado with an annual percentage rate ofmore than 12% per annum, or who collectssuch loans that it previously made, is asupervised lender. A loan is distinguishedfrom other credit transactions by the lender'sdirect extension of funds to the borrowerwithout also selling goods or services. Entitiesthat arrange deferred deposit loans (paydayloans) or act as agents for deferred depositlenders must also have a supervised lender’slicense.Activities CoveredA lender is regularly engaged in supervisedlending if it has made, collected, or takenassignment of more than 25 loans, more than 5loans secured by a dwelling, or made,collected, taken assignment of, or brokeredmore than one mortgage loan subject to thefederal Home Ownership & Equity ProtectionAct, in the current or prior calendar year.Supervised loans include both secured andunsecured consumer loans, home equity loansand other junior lien mortgages, insurancepremium financing, deferred deposit loans,credit cards, and first mortgage loans forpurposes other than the purchase orrefinancing of a home. First mortgageresidential acquisition loans and refinances ofthese loans are exempt from licensing andnotification fees, although they are subject tothe high-cost, high-fee provisions of theColorado Consumer Equity Protection Act, anarticle of the Uniform Consumer Credit Code.Information on this law is available on thewebsite listed on the front of this brochure.Unless the supervised lender is a state orfederally-chartered depository institution, itmust be licensed by the UCCC as a supervisedlender. A supervised lender includes acompany whose name appears on a

promissory note as the creditor to whom the debt isoriginally payable even if the loan is immediatelyor later sold, assigned, or funded by anothercompany or financing source. This may be called"table funding." Companies that buy, takeassignment of, or service supervised loans are alsoconsidered supervised lenders. A mortgage brokerwhose name does not appear as the creditor orlender on the promissory note is not a supervisedlender, but a mortgage loan originator license maybe required. Contact the Colorado Division of RealEstate for more information at (303) 894-2166 orwww.dora.state.co.us/realestate/mortgagebrokerregistration.htm.A supervised lender's license application requiresbackground information on the applicant and itsofficers, members, and partners; proof of financialresponsibility; and corporate status and trade namerecords. A supervised lender is subject to periodicunannounced compliance examinations, mustrespond to examination reports, and must file anannual statistical report each June 1.Licensing Fees and Due DatesA supervised lender’s license is needed for eachlocation where supervised lending activities occur.After the initial master license is issued, branchoffice applications must be filed. Licenses arerenewed each January 31 by the filing of asupervised lender notification form and payment ofthe license fee for that year for each master andbranch office license. Fees are subject to changeperiodically to meet budget needs.Licensed supervised lenders receive annual licenserenewal forms prior to the January 31 due date.Failure to file the required notification form andpay the appropriate license renewal fees may resultin financial penalties, license expiration, and theinability to extend credit.Rent To Own NotificationThe Colorado Rental Purchase Agreement Act wasenacted in 1990. It regulates the rent to ownbusiness and is enforced by the UCCCAdministrator.Activities CoveredA rental purchase agreement is an agreement for theuse of personal property for an initial term of 4months or less. It may be cancelled by the consumerat any time without further obligation and may beautomatically extended. Some agreements offer theconsumer the right to own the property after anumber of payments have been made. A rent to ownbusiness is one that regularly enters into rentalpurchase agreements in Colorado.Notification Fees and Due DatesA rent to own notification form must be filed withthe UCCC Administrator. The initial notificationfee and fee must be filed within 30 days afterentering into rental purchase agreements. Eachlocation must pay a renewal fee due each January31.After the initial notification, rent to own businesseswill receive annual notification forms prior to theJanuary 31 due date. Failure to file and pay therequired notification may result in financial penaltiesand the inability to enter into rental purchaseagreements.Reference TableListed below is a table to locate the portion of thisbrochure applicable to specific businesses.CreditorAppliance DealerAgricultural CreditAssigneesAuto DealerBanksBusiness CreditCheck HolderCommercial CreditConsumer LeasingDeferred Deposit LendersDepartment StoresFinance CompaniesFirst Mortgage LoansFurniture DealersHardware DealersIndustrial LoanCompaniesLease CompaniesMedical ProvidersMortgage BrokersMortgage BankersMortgage CompaniesPayday LendersPost-Dated CheckcashersRent to OwnSales Finance CompaniesSmall Loan CompaniesSupervised LendersBrochure SectionConsumer Credit NotificationIntroductionConsumer Credit Notification orSupervised Lender LicenseConsumer Credit NotificationConsumer Credit Notification orSupervised Lender LicenseIntroductionSupervised Lender LicenseIntroductionConsumer Credit NotificationSupervised Lender LicenseConsumer Credit NotificationSupervised Lender LicenseIntroductionConsumer Credit NotificationConsumer Credit NotificationSupervised Lender LicenseConsumer Credit NotificationConsumer Credit NotificationSupervised Lender LicenseSupervised Lender LicenseSupervised Lender LicenseSupervised Lender LicenseSupervised Lender LicenseRent to Own notificationConsumer Credit NotificationSupervised Lender LicenseSupervised Lender LicenseIf you have questions about whether your businessactivity must file consumer credit notification or belicensed as a supervised lender, you may contact theUCCC office. You should also consult a privateattorney for legal advice.1/10