S*400 Session 108 (1989-1990)
S*0400(Rat #0089, Act #0052 of 1989) General Bill, By Senate Finance
A Bill to amend Section 40-58-40, Code of Laws of South Carolina, 1976,
relating to bond and security requirements for mortgage loan brokers, so as to
change the required amount for security and bond requirements from fifty
thousand dollars to five thousand dollars; to amend Section 40-58-80, relating
to orders and penalties administered to mortgage loan brokers and revocation
of registration, so as to provide for the assessment of a minimum fine of one
thousand dollars and a maximum fine of two thousand dollars for violating an
administrator's order and to provide that the administrator may increase the
required bond to a maximum of twenty-five thousand dollars for violations; and
to amend Sections 38-45-20 and 38-45-30, relating to requirements for
residents and nonresidents to be licensed brokers, so as to provide that the
required bond amounts may be executed in the amount of ten thousand dollars
until May 1, 1990.-amended title
02/16/89 Senate Introduced, read first time, placed on calendar
without reference SJ-10
02/21/89 Senate Amended SJ-18
02/21/89 Senate Read second time SJ-19
03/07/89 Senate Amended SJ-15
03/07/89 Senate Read third time and sent to House SJ-17
03/08/89 House Introduced and read first time HJ-11
03/08/89 House Referred to Committee on Labor, Commerce and
Industry HJ-12
03/22/89 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-50
03/29/89 House Debate interrupted HJ-32
03/30/89 House Amended HJ-14
03/30/89 House Read second time HJ-14
04/04/89 House Read third time and returned to Senate with
amendments HJ-22
04/06/89 Senate Concurred in House amendment and enrolled SJ-6
04/20/89 Ratified R 89
04/26/89 Signed By Governor
04/26/89 Effective date 04/26/89
04/26/89 Act No. 52
05/03/89 Copies available
(A52, R89, S400)
AN ACT TO AMEND SECTION 40-58-40, CODE OF LAWS OF SOUTH CAROLINA, 1976,
RELATING TO BOND AND SECURITY REQUIREMENTS FOR MORTGAGE LOAN BROKERS, SO AS TO
CHANGE THE REQUIRED AMOUNTS FOR SECURITY AND BOND REQUIREMENTS FROM FIFTY
THOUSAND DOLLARS TO FIVE THOUSAND DOLLARS; TO AMEND SECTION 40-58-80, RELATING
TO ORDERS AND PENALTIES ADMINISTERED TO MORTGAGE LOAN BROKERS AND REVOCATION OF
REGISTRATION, SO AS TO PROVIDE FOR THE ASSESSMENT OF A MINIMUM FINE OF ONE
THOUSAND DOLLARS AND A MAXIMUM FINE OF TWO THOUSAND DOLLARS FOR VIOLATING AN
ADMINISTRATOR'S ORDER AND TO PROVIDE THAT THE ADMINISTRATOR MAY INCREASE THE
REQUIRED BOND TO A MAXIMUM OF TWENTY-FIVE THOUSAND DOLLARS FOR VIOLATIONS; AND
TO AMEND SECTIONS 38-45-20 AND 38-45-30, RELATING TO REQUIREMENTS FOR RESIDENTS
AND NONRESIDENTS TO BE LICENSED INSURANCE BROKERS, SO AS TO PROVIDE THAT THE
REQUIRED BOND AMOUNTS MAY BE EXECUTED IN THE AMOUNT OF TEN THOUSAND DOLLARS UNTIL
MAY 1, 1990.
Be it enacted by the General Assembly of the State of South Carolina:
Bond and security; requirements; amount reduced
SECTION 1. Section 40-58-40 of the 1976 Code, as added by Act 544 of 1988, is
amended to read:
"Section 40-58-40. No person or organization may offer or agree to offer
loan brokerage services in this State without first depositing and continuously
maintaining the amount of five thousand dollars in cash or securities approved
by the administrator or a bond in the amount of five thousand dollars executed
by a surety company authorized by the laws of this State to transact business
within this State. The bond must be executed to the State of South Carolina and
must be for the use of the State and for any consumers who may have a cause of
action against the loan broker."
Maximum, minimum fines; bond, increase for violations
SECTION 2. Section 40-58-80 of the 1976 Code, as added by Act 544 of 1988, is
amended to read:
"Section 40-58-80. (A) Upon the finding that an action of a mortgage
loan broker may be in violation of this chapter, or of a law or regulation of
this State or of the federal government or an agency of them, the administrator,
after reasonable notice to the mortgage loan broker and an opportunity for the
mortgage loan broker to be heard, shall order it to cease and desist from the
action.
(B) If the mortgage loan broker fails to appeal the cease and desist order of
the administrator in accordance with Section 40-58-90 and continues to engage in
the action in violation of the administrator's order, he is subject to a penalty
of not less than one thousand nor more than two thousand five hundred dollars,
in the discretion of the administrator, for each action he takes in violation of
the administrator's order. The penalty provision of this section is in addition
to and not in lieu of any other provision of law applicable to a mortgage loan
broker for the mortgage loan broker's failure to comply with an order of the
administrator.
(C) The administrator, upon the finding that a mortgage loan broker has
engaged in a course of conduct in violation of this chapter, may revoke the
registration of the mortgage loan broker temporarily or permanently in his
discretion, and may increase the required bond up to a maximum of twenty-five
thousand dollars to insure that the public is protected adequately. The
administrator, if he determines that the required bond must be increased, shall
state in writing the reasons for the increase and immediately serve it upon the
mortgage loan broker. The mortgage loan broker shall provide the new bond within
thirty days or the administrator permanently shall revoke the registration of the
mortgage loan broker.
(D) Nothing in this chapter limits a statutory or common law right of a person
to bring an action in a court for an act or the right of the State to punish a
person for a violation of a law."
Resident insurance broker; bond; temporary reduction
SECTION 3. Section 38-45-20 of the 1976 Code is amended to read:
"Section 38-45-20. A resident may be licensed as an insurance broker by
the commissioner if the following requirements are met:
(1) the resident has been a licensed insurance agent for the same lines of
insurance for which he proposes to apply as a broker of this State for at least
two years;
(2) the payment of an annual license fee of one hundred dollars which is fully
earned when received, not refundable;
(3) the filing of a bond with the commissioner in form approved by the
Attorney General in favor of the State of South Carolina in the sum of fifty
thousand dollars which has been executed by a corporate surety licensed to
transact surety insurance in this State and personally countersigned by a
licensed resident agent of the surety. Until May 1, 1990, the bond may be
executed in the amount of ten thousand dollars. The bond must be conditioned to
pay a person insured or seeking insurance through the broker who sustains loss
as a result of:
(a) the broker's violation of or failure to comply with any insurance law
or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him,
cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance
transaction. In lieu of a bond, the broker may file with the commissioner
certificates of deposit in the sum of fifty thousand dollars of building and loan
associations or federal savings and loan associations located within the State
in which deposits are guaranteed by the Federal Savings and Loan Insurance
Corporation, not to exceed the amount of insurance, or of banks located within
the State in which deposits are guaranteed by the Federal Deposit Insurance
Corporation, not to exceed the amount of insurance. Until May 1, 1990, these
substitute securities may be deposited in the amount of ten thousand dollars.
An aggrieved person may institute an action in the county of his residence
against the broker or his surety or both to recover on the bond or against the
broker to recover from the certificates of deposit and a copy of the summons and
complaint in the action must be served on the commissioner, who is not required
to be made a party to the action;
(4) the payment to the commissioner, within thirty days after March
thirty-first, June thirtieth, September thirtieth, and December thirty-first of
each year, of a broker's premium tax of four percent upon the premiums approved
for policies of insurers not licensed in this State. Credit may be given for tax
on policies canceled flat within forty-five days of the date of approval as long
as the broker certifies to the commissioner that the business was placed in good
faith and the policy was canceled at the request of the insured."
Nonresident insurance broker; bond; temporary reduction
SECTION 4. Section 38-45-30 of the 1976 Code is amended to read:
"Section 38-45-30. A nonresident may be licensed as an insurance broker
by the commissioner if the following requirements are met:
(1) filing an application on a form prescribed by the commissioner;
(2) filing an affidavit stating that he will not during the period of the
license place, directly or indirectly, insurance on a risk located in this State
except through licensed agents of insurers licensed to do business in this State;
(3) filing an affidavit stating that he is a licensed broker in another State;
(4) the payment of an annual license fee of one hundred dollars which is fully
earned when received, not refundable;
(5) the filing of a bond with the commissioner in form approved by the
Attorney General in favor of the State of South Carolina in the sum of fifty
thousand dollars which has been executed by a corporate surety licensed to
transact surety insurance in this State and personally countersigned by a
licensed resident agent of the surety. Until May 1, 1990, the bond may be
executed in the amount of ten thousand dollars. The bond must be conditioned to
pay any person insured or seeking insurance through the broker who sustains loss
as a result of:
(a) the broker's violation of or failure to comply with any insurance law
or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him,
cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance
transaction.
In lieu of a bond, the broker may file with the commissioner certificates of
deposit in the sum of fifty thousand dollars of building and loan associations
or federal savings and loan associations located within the State in which
deposits are guaranteed by the Federal Savings and Loan Insurance Corporation,
not to exceed the amount of insurance, or of banks located within the State in
which deposits are guaranteed by the Federal Deposit Insurance Corporation, not
to exceed the amount of insurance. Until May 1, 1990, these substitute
securities may be deposited in the amount of ten thousand dollars. An aggrieved
person may institute an action in the county of his residence against the broker
or his surety or both to recover on the bond or against the broker to recover
from the certificates of deposit and a copy of the summons and complaint in the
action must be served on the commissioner, who is not required to be made a party
to the action;
(6) the payment to the commissioner, within thirty days after March
thirty-first, June thirtieth, September thirtieth, and December thirty-first of
each year, of a broker's premium tax of four percent upon the premiums approved
for policies of insurers not licensed in this State. Credit may be given for tax
on policies canceled flat within forty-five days of the date of approval as long
as the broker certifies to the commissioner that the business was placed in good
faith and the policy was canceled at the request of the insured."
Time effective
SECTION 5. This act takes effect upon approval by the Governor. |