Connecticut General Statutes
Chapter 668 - Nondepository Financial Institutions
Section 36a-498e. - Prohibited acts.

(a) No person who is required to be licensed and who is subject to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, may, directly or indirectly:

(1) Employ any scheme, device or artifice to defraud or mislead borrowers or lenders or to defraud any person;
(2) Engage in any unfair or deceptive practice toward any person;
(3) Obtain property by fraud or misrepresentation;
(4) Solicit or enter into a contract with a borrower that provides in substance that such person or individual may earn a fee or commission through “best efforts” to obtain a loan even though no loan is actually obtained for the borrower;
(5) Solicit, advertise or enter into a contract for specific interest rates, points or other financing terms unless the terms are actually available at the time of soliciting, advertising or contracting;
(6) Conduct any business as a mortgage lender, mortgage correspondent lender, mortgage broker, lead generator, mortgage loan originator or loan processor or underwriter without holding a valid license as required under sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b or assist or aid and abet any person in the conduct of business as a mortgage lender, mortgage correspondent lender, mortgage broker, mortgage loan originator or loan processor or underwriter without a valid license as required under said sections;
(7) Fail to make disclosures as required by sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b and any other applicable state or federal law including regulations thereunder;
(8) Fail to comply with sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b or rules or regulations adopted under said sections or fail to comply with any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections;
(9) Make, in any manner, any false or deceptive statement or representation including, with regard to the rates, points or other financing terms or conditions for a residential mortgage loan, or engage in bait and switch advertising;
(10) Negligently make any false statement or knowingly and wilfully make any omission of material fact in connection with any information or reports filed with a governmental agency or the system, as defined in section 36a-2, or in connection with any investigation conducted by the commissioner or another governmental agency;
(11) Make any payment, threat or promise, directly or indirectly, to any person for the purposes of influencing the independent judgment of the person in connection with a residential mortgage loan as defined in section 36a-485 or make any payment, threat or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property;
(12) Collect, charge, attempt to collect or charge or use or propose any agreement purporting to collect or charge any fee prohibited by sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b;
(13) Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer; or
(14) Fail to truthfully account for moneys belonging to a party to a residential mortgage loan transaction.
(b) (1) No person, other than an individual, who is required to be licensed and is subject to sections 36a-485 to 36a-498h, inclusive, 36a-534a and 36a-534b, and no qualifying individual or branch manager shall fail to establish, enforce and maintain policies and procedures reasonably designed to achieve compliance with subsection (a) of this section.
(2) No individual who (A) is required to be licensed as a mortgage loan originator, (B) is subject to sections 36a-485 to 36a-498e, inclusive, 36a-534a and 36a-534b, and (C) supervises loan processors or loan underwriters shall fail to enforce any policies and procedures established in accordance with subdivision (1) of this subsection.
(3) No violation of this subsection shall be found unless the failure to establish, enforce and maintain policies and procedures resulted in conduct in violation of sections 36a-485 to 36a-498e, inclusive, 36a-498h, 36a-534a and 36a-534b, inclusive, or rules or regulations adopted under said sections or any other state or federal law, including the rules and regulations thereunder, applicable to any business authorized or conducted under said sections.
(P.A. 09-209, S. 20; Sept. Sp. Sess. P.A. 09-7, S. 96; P.A. 11-216, S. 25; P.A. 14-89, S. 35; P.A. 17-38, S. 12; 17-233, S. 9; 17-236, S. 24; P.A. 18-173, S. 20.)
History: P.A. 09-209 effective July 31, 2009; Sept. Sp. Sess. P.A. 09-7 added “who is required to be licensed and who is” in introductory language, effective October 5, 2009; P.A. 11-216 amended Subdiv. (6) to add references to loan processor or underwriter; P.A. 14-89 amended Subdiv. (10) to replace reference to Sec. 36a-485 with reference to Sec. 36a-2 and replace “Banking Commissioner” with “commissioner”; P.A. 17-38 deleted “or individual” re requirement to be licensed, added reference to lead generator in Subdiv. (6), and added references to Sec. 36a-498h; P.A. 17-233 designated provisions re requirement to be licensed as Subsec. (a) and amended same to delete “or individual”, add “, directly or indirectly”, delete “directly or indirectly” in Subdiv. (1), and make a technical change, added Subsec. (b) re establishment, enforcement and maintenance of policies and procedures; P.A. 17-236 changed effective date of P.A. 17-233, S. 9, from October 1, 2017, to July 1, 2018, effective July 11, 2017; P.A. 18-173 amended Subsec. (a) by replacing “36a-498f” with “36a-489e”, adding “lead generator” in Subdiv. (6), and adding reference to Sec. 36a-498h in Subdivs. (6), (7), (8) and (12), amended Subsec. (b)(1) by replacing “36a-498f” with “36a-498h”, amended Subsecs. (b)(2) and (b)(3) by replacing “36a-498f” with “36a-498e”, and made technical and conforming changes.

Structure Connecticut General Statutes