GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2005

H                                                                                                                                                    1

HOUSE BILL 2836

 

 

 

 

Short Title:     Enact Credit Enhancement Services Act/Funds.

(Public)

Sponsors:

Representatives Earle, Barnhart, Grady, Saunders (Primary Sponsors);  Bell, Cunningham, Lucas, Wainwright, and Wright.

Referred to:

Rules, Calendar, and Operations of the House.

May 30, 2006

A BILL TO BE ENTITLED

AN ACT to enact the credit enhancement services act and to appropriate funds for an evaluation of the act by the state banking commission.

The General Assembly of North Carolina enacts:

SECTION 1.  Chapter 53 of the General Statutes is amended by adding a new Article to read:

"Article 26.

"Credit Enhancement Services.

" 53-430.  Title.

This Article shall be known and may be cited as the Credit Enhancement Services Act.

" 53-431.  Purpose.

The purpose of this Article is to:

(1)       Provide a vehicle for credit building and credit rebuilding services so that consumers in the financially underserved and unbanked populations can improve their credit ratings and qualify for mainstream financial services.

(2)       Set forth a minimum set of credit enhancement services that a legal entity licensed pursuant to this Article shall offer to persons who are members of the traditionally financially underserved consumer population and the unbanked persons not serviced by the normal lending institutions.

(3)       Recognize that the cost of serving the financially underserved and unbanked consumers is extraordinarily high to the legal entity licensed pursuant to this Article and therefore a higher risk-based interest rate shall be permitted to cover this risk when the credit enhancement services required by this Article are offered as a package by that legal entity.

" 53-432.  Definitions.

As used in this Article, the following terms have the following meanings:

(1)       "Amount of the extension of credit" means the aggregate of the credit enhancement loans and services and the charges authorized by G.S. 53-440 through G.S. 53-442.

(2)       "Customer" means any person who borrows money from any licensee or who pays or obligates himself to pay any money or otherwise furnishes any valuable consideration to any licensee for any act of the licensee as a licensee.

(3)       "Commission" means the State Banking Commission.

(4)       "Commissioner" means the Commissioner of Banks.

(5)       "Creditable assets" means cash or bank deposits, loans, or extensions of credit made as a licensee pursuant to this Article or any other amounts as the Commissioner may approve, or any combination of two or more of these amounts.

(6)       "Credit enhancement loans" or "credit enhancing loan" means a consumer loan made within the state of North Carolina by a licensee pursuant to this Article.

(7)       "Credit enhancement services" means the following set of services that shall be offered as a package to customers:

a.         Access to financial services through multiple delivery channels that are convenient to the consumer, including direct marketing and neighborhood financial service centers.     

b.         Periodic reporting of credit bureau data, as incurred, and without discrimination, on all data to major credit bureaus to assist consumers in building or rebuilding their credit histories.

c.         Graduating consumers to better interest rates and other terms based on positive payment histories.

d.         Financial literacy enhancement.

e.         Offering at least one service to the financially unbanked consumer that demonstrably provides access to traditional banking services and for the development of a positive financial performance history, including the following products:

1.         Bank-issued debit cards, a prepaid and reloadable card giving the customer access to automatic teller machines and retailers worldwide, for the purpose of building or rebuilding credit.

2.         Check-to-card services, allowing the customer to load all or a portion of the proceeds from a cashed check onto a debit card.

3.         Check cashing services.

4.         Other services as approved by the Commissioner.

f.          Offering at least one service to the financially underbanked consumer that offers the opportunity to create a positive credit history that reasonably can improve their individual creditworthiness for traditional bank extensions of credit, including the following products:

1.         Credit enhancement loans.

2.         Other services as approved by the Commissioner.

g.         The following full-range banking services may be offered to all customers of a licensee:

1.         Money transfer services.

2.         Bill payment services.

3.         Money transmitter services, where applicant is an agent for a money transfer service provider.

4.         Money orders.

5.         Other services as approved by the Commissioner.

(8)       "Deputy" means the deputy commissioner of banks.

(9)       "License" means the certificate issued by the Commissioner under the authority of this Article to conduct credit enhancing services.

(10)     "Licensee" means a person to whom one or more licenses have been issued.

(11)     "Person" includes any person, firm, partnership, association, or corporation.

" 53-433.  Scope of Article; evasions; penalties; extension of credits in violation of Article void.

(a)       Scope. - No person shall engage in the business of offering credit enhancement loans or services in amounts of three thousand dollars ($3,000) or less and contract for, exact, or receive, directly or indirectly, on or in connection with any extension of credit, any charges whether for interest, compensation, consideration, or expense, or any other purpose whatsoever, which in the aggregate are greater than authorized by this Article, and without first having obtained a license from the Commissioner. The word "lending" as used in this section shall include, but shall not be limited to, endorsing or otherwise securing extensions of credit or contracts for the repayment of extensions of credit.

(b)       Evasions. - The provisions of subsection (a) of this section shall apply to any person who seeks to avoid its application by any device, subterfuge, or pretense whatsoever.

(c)       Penalties; Commissioner to Provide and Testify as to Facts in His Possession. - Any person not exempt from this Article who fails to comply with or who otherwise violates any of the provisions of this Article, or any regulation of the Banking Commission adopted pursuant to this Article, shall be guilty of a Class 1 misdemeanor. Each violation shall be considered a separate offense. It shall be the duty of the Commissioner of Banks to provide the district attorney of the court having jurisdiction of any offense under this Article with facts and evidence in his actual or constructive possession, and to testify as to those facts upon the trial of any person for any offense under this Article.

(d)       Additional Penalties. - Any contract for the extension of credit, the making or collecting of which violates any provision of this Article, or regulation issued pursuant to this Article, except as a result of accidental or bona fide error of computation shall be void, and the licensee or any other party in violation shall have no right to collect, receive, or retain any principal or charges whatsoever with respect to that extension of credit.

" 53-434.  Expenses of supervision.

Each licensee, for the purpose of defraying necessary expenses of the Commissioner of Banks and his agents in supervising them, shall pay to the Commissioner of Banks the fees prescribed in G.S. 53-122 at the times specified in that section.

" 53-435.  License required; showing of convenience, advantage and financial responsibility; investigation of applicants; hearings; existing businesses; contents of license; transfer; posting.

(a)       Necessity for License; Prerequisites to Issuance. - No person shall engage in or offer to engage in the business regulated by this Article unless and until a license has been issued by the Commissioner of Banks, and the Commissioner shall issue a license under this Article if the Commissioner finds all of the following:

(1)       That authorizing the applicant to engage in the business will promote the convenience and advantage of the community in which the applicant proposes to engage in business authorized by this Article.

(2)       That the financial responsibility, experience, character, and general fitness of the applicant merit the confidence of the public and warrant the belief that the business will be operated lawfully and fairly, within the purposes of this Article.

(3)       That the applicant has, on a consolidated basis and computed in accordance with accepted accounting principles, a minimum net worth of not less than ten million dollars ($10,000,000) at the time of application for a license.

(b)       Investigation of Applicants. - Upon the receipt of an application, the Commissioner shall investigate the facts. The Commissioner shall approve or deny every application for a license within 120 days from the date a complete application is submitted. This period may be extended by the written consent of the applicant. The Commissioner shall notify the applicant of the date when the application is deemed complete. In the absence of approval or denial of the application, or consent to the extension of the 120-day period, the application is deemed approved, and the Commissioner shall issue the license effective as of the first day after the 120-day or extended period has elapsed. If the Commissioner reasonably determines from a preliminary investigation that the applicant does not satisfy the conditions set forth in subsection (a) of this section, the Commissioner shall so notify the applicant in writing and making specific findings of fact as to the provisions of this section that have not been met. The applicant shall then be entitled to an informal hearing on the decision that the applicant does not satisfy the conditions set forth in this section, provided that the applicant requests an informal hearing in writing within 30 days after the Commissioner has caused the failure notification to be mailed to the applicant. In the event of a hearing, to be held in the offices of the Commissioner of Banks in Raleigh, the Commissioner shall reconsider the application and, after the hearing, issue a written order granting or denying the application. At the time of making an application, the applicant shall pay the Banking Department the sum of two thousand five hundred dollars ($2,500) as a fee for investigating the application, which shall be retained whether or not a license is granted the applicant.

(c)       Required Assets Available. - Each licensee shall continue at all times to have available for the operation of the business on a consolidated basis and computed in accordance with accepted accounting principles, a minimum net worth of not less than ten million dollars ($10,000,000). The requirements and standards of this subsection and subdivision (a)(2) of this section shall be maintained throughout the period of the license, and failure to maintain these requirements or standards shall be grounds for the revocation of a license under the provisions of G.S. 53-438.

" 53-436.  Application for license.

The application for license shall be made on a form prepared and furnished by the Commissioner of Banks and shall state all of the following:

(1)       The fact that the applicant desires to engage in business under this Article.

(2)       Whether the applicant is an individual, partnership, association, or corporation.

(3)       The name and address of the person who will manage and be in immediate control of the business.

(4)       The name and address of the owners and their percentage of equity in the company, unless the Commissioner deems it not feasible to furnish the information because of the number of stockholders involved. This subdivision shall not apply to publicly held corporations and their operating subsidiaries.

(5)       When the applicant proposes to commence doing business.

(6)       Any other information that the Commissioner of Banks deems necessary.

The statements made in this application shall be sworn to by the applicant or the persons making the application on the applicant's behalf.

" 53-437.  Locations; change of ownership or management.

(a)       Business Location. - A licensee may conduct and carry on its business only at the location or locations that are approved by the Commissioner of Banks, and no changes shall be made from one location to another without the approval of the Commissioner.

(b)       Places of Business. - The Commissioner may issue more than one certificate to conduct business to the same licensee for multiple places of business upon compliance with all the provisions of this Article governing issuance of a license.

(c)       Change of Location, Ownership, or Management. - If any change occurs in the name and address of the licensee, the legal agent of a licensed corporation, or in the membership of any licensed partnership a full statement of the change, sworn to as required by G.S. 53-436 for an original application, shall be filed within 30 days with the Commissioner.

" 53-438.  Revocation, suspension, or surrender of license.

(a)       If the Commissioner finds, after due notice and hearing, or opportunity for hearing, that any licensee, or an officer, agent, employee, or representative of a licensee has done any of the following, the Commissioner may issue an order revoking or suspending the right of that licensee and that officer, agent, employee, or representative to do business in North Carolina as a licensee:

(1)       Willfully violated any of the provisions of this Article.

(2)       Failed to comply with the rules, regulations, instructions, or orders issued by the Commission.

(3)       Failed or refused to make its reports to the Commissioner.

(4)       Failed to pay the fees for its examination and supervision.

(5)       Furnished false information to the Commissioner or the Commission.

Upon receipt of an order revoking or suspending the right of that licensee or that person to do business in North Carolina from the Commissioner, the licensee shall immediately surrender its license to the Commissioner. Within five days after the entry of an order to cease business in North Carolina, the Commissioner shall place on file his findings of fact and mail or otherwise deliver a copy to the licensee. Any licensee who fails to make any extension of credits during any period of 90 consecutive days after being licensed shall surrender his license to the Commissioner.

(b)       Any licensee may surrender any license by delivering it to the Commissioner with written notice of its surrender, but the surrender shall not affect its civil or criminal liability for acts committed prior to the surrender of the license.

(c)       No revocation, suspension, or surrender of any license shall impair or affect the obligation of any preexisting lawful contract between the licensee and any obligor.

(d)       The Commissioner, in his discretion, may reinstate suspended licenses or issue new licenses to a person whose license or licenses have been revoked or surrendered if and when he determines no fact or condition exists which clearly would have justified the Commissioner in refusing originally to issue the license under this Article.

" 53-439.  Conduct of other business in same office.

(a)       A licensee may conduct the business of offering credit enhancing services under this Article in any office, suite, room, or place of business in which any other financial business is solicited or transacted.

(b)       The Commissioner may authorize in writing the solicitation and transaction of other business in any office, suite, room, or place of business in which a licensee is conducting the business of providing credit enhancement services if the Commissioner reasonably determines that the other business would not be contrary to the best interests of the populations intended to be served.

(c)       The Commissioner may require, consistent with the provisions of 12 C.F.R. Part 226 (Regulation Z) of the federal Truth-In-Lending Act, for any extension of credit, the other business authorized under subsection (b) of this section to:

(1)       Disclose the cost of consumer credit of goods and services sold.

(2)       Provide the purchaser with a reasonable cancellation period for goods and services purchased.

(d)       No licensee shall either:

(1)       Make the purchase of goods and services sold under the authorization of subsection (b) of this section a condition of making available credit enhancing services.

(2)       Consider the customer's decision to purchase, or not purchase, goods and services sold under the authorization of subsection (b) of this section a factor in its approval or denial of credit enhancing services, or in its determination of the amount of or terms of credit enhancing services for the customer.

(e)       The licensee shall notify the customer in writing that the purchase of the goods and services offered under the authorization under subsection (b) of this section is voluntary and that the customer's decision whether or not to purchase the goods and services will not affect the licensee's decision to grant credit or the amount of or terms of the credit granted.

(f)        If, at any time, the Commissioner has reason to believe that the conduct of any other business authorized under this section is contrary to the best interests of the borrowing public, the Commissioner shall hold a hearing pursuant to Chapter 150B of the General Statutes to determine whether or not to revoke the authority to conduct that business. The Commissioner shall revoke the authority to conduct any other business if he or she finds that the conduct of any other business authorized under this section is contrary to the best interests of the borrowing public.

(g)       This section shall not be construed as authorizing the collection of any extension of credits or charges in violation of the prohibitions contained in G.S. 53-190.

(h)       The books, records, and accounts relating to credit enhancement loans shall be kept in the manner prescribed by the Commissioner of Banks to delineate clearly the credit enhancement services business from any other business authorized by the Commissioner.

" 53-440.  Maximum rate of interest and fee; computation of interest; limitation on interest after judgment; limitation on interest after maturity of the extension of credit.

(a)       Maximum Rate of Interest. - Every licensee under this section may make credit available through credit enhancement services in an amount not exceeding three thousand dollars ($3,000) at an initial interest rate of up to sixty percent (60%). Interest shall be contracted for and collected at the single simple interest rate applied to the outstanding balance that would earn the same amount of interest as the above rate for payment according to schedule.

(b)       Maximum Fee. - In addition to the interest authorized in subsection (a) of this section, a licensee offering credit enhancement services under this section may collect from the customer a fee for processing the credit enhancement services  up to twenty-five dollars ($25.00), provided that these charges may not be assessed more than twice in any 12-month period.

(c)       Computation of Interest. - Interest on credit enhancement loans made pursuant to this section shall not be paid, deducted, or received in advance. Interest shall not be compounded, but interest on extension of credits shall (i) be computed and paid only as a percentage of the unpaid principal balance or portion of the unpaid principal balance and (ii) computed on the basis of the number of days actually elapsed. If, however, part or all of the consideration for a credit enhancement loan is the unpaid principal balance of a prior credit enhancement loan, then the principal amount payable under the new credit enhancement loan may include any unpaid interest on the prior credit enhancement loan which has accrued within 90 days before the making of the new extension credit enhancement loan. For the purpose of computing interest, a day shall equal 1/365th of a year. Any payment made on a credit enhancement loan shall be applied first to any accrued interest and then to principal, and any portion or all of the principal balance may be prepaid at any time without penalty.

(d)       Computation of Minimum Repayment Requirements. - Initial minimum payment requirements shall be based on repayment of the credit enhancement loan in not less than 120 days.

(e)       Limitation on Interest After Judgment. - If a money judgment is obtained against any party on any extension of credit made under the provisions of this section, neither the judgment nor the extension of credit shall carry, from the date of the judgment, any interest in excess of eight percent (8%) per annum.

(f)        Limitation of Interest After Maturity of Extension of credit. - After the maturity date of any credit enhancement loan made under the provisions of this section and until that credit enhancement loan is paid in full by cash, new extension of credit, refinancing or otherwise, no charges other than interest as agreed by the parties (but not to exceed the maximum rate permitted under North Carolina law) shall be computed or collected from any party to the credit enhancement loan upon the unpaid principal balance of the credit enhancement loan.

"  53-441.  Fee for returned checks.

A licensee may collect the fee for returned checks to the extent permitted by G.S. 25-3-506. This section shall apply to any extension of credit made by any licensee under this Article.

" 53-442.  Additional fees; no splitting contracts; certain contracts void.

(a)       The following fees may be assessed:

(1)       Monthly maintenance fee not to exceed twenty-nine dollars and ninety-five cents ($29.95).

(2)       Late fee not to exceed twenty-five dollars ($25.00).

(b)       No licensee shall divide into separate parts any credit enhancement loan made for the purpose of or with the effect of obtaining charges in excess of those authorized by this Article. Nothing in this subsection shall prohibit a licensee from offering a customer multiple credit enhancement services at the same time and charging the applicable interest and fees authorized by this Article.

(c)       All balances due to a licensee from any person as a customer or as an endorser, guarantor, or surety for any customer or otherwise shall be considered a part of any credit enhancement loan being made by a licensee to that person for the purpose of computing interest or charges.

" 53-443.  Multiple-office credit enhancing loans limitation.

(a)       A licensee shall not make credit enhancing loans in one office to any customer who already has an outstanding credit enhancing loan in another office operated by the same entity or by another licensee that is an affiliate, parent, subsidiary, or under the same ownership, management, or control, whether partial or complete.

(b)       A licensee shall take every reasonable precaution to prevent granting credit enhancing loans in violation of subsection (a) of this section.

(c)       A licensee may service credit enhancing loans and modify the terms of the loans within the limits authorized by G.S. 53-440(a) at any office operated by that licensee regardless of where the credit enhancing loan was originated.

" 53-444.  Limitations and prohibitions on practices and agreements.

(a)       No Assignment of Earnings. - A licensee may not take an assignment of earnings of the customer for payment or as security for payment of credit enhancement loan. An assignment of earnings in violation of this section is unenforceable by the assignee of the earnings and is revocable by the customer.

(b)       Limitation on Default Provisions. - An agreement between a licensee and a customer pursuant to a credit enhancement loan under this Article with respect to default by the customer is enforceable only to the extent that (i) the customer fails to make a payment as required by the agreement, or (ii) the prospect of payment, performance, or realization of collateral is significantly endangered or impaired, the burden of establishing the prospect of a significant endangerment or impairment being on the licensee.

(c)       Prohibitions on Discrimination. - No licensee shall deny any credit enhancement loan or services or discriminate in the fixing of the amount, duration, application procedures, or other terms or conditions of any credit enhancement loan or services because of the race, color, religion, national origin, sex, or marital status of the applicant or any other person connected with the transaction.

(d)       Limitation on Attorneys' fees. - With respect to a credit enhancement loan or services made pursuant to the provisions of G.S. 53-440, the agreement shall not provide for payment by the customer of attorneys' fees.

(e)       No Real Property as Security. - No licensee shall make any credit enhancement loan within this State which shall in any way be secured by real property.

(f)        Deceptive Acts or Practices. - No licensee shall engage in any unfair method of competition or unfair or deceptive trade practices in the conduct of making or providing any credit enhancement loans or services to customers pursuant to this Article or in collecting or attempting to collect any money alleged to be due and owing by a customer.

" 53-445.  Statements and information to be furnished to customers; power of attorney or confession of judgment prohibited.

(a)       Contents of Statement Furnished to Customer. - At the time credit enhancing services are made available to a customer, the licensee shall deliver to the customer, or if there be two or more customers, to one of them a copy of a written statement, showing in clear and distinct terms all of the following:

(1)       The name and address of the licensee and one of the primary obligors on the credit enhancement loan.

(2)       The date of the credit contract.

(3)       Schedule or descriptions of required payments.

(4)       All applicable interest rates.

(5)       Financial literacy materials available to the customer.

(b)       Schedule of Charges, etc., to Be Made Available; Copy Filed with Commissioner. - At each place of business in North Carolina, the licensee shall make readily available to the customer, in a form prescribed by the Commissioner, a full and accurate schedule of charges on all types of credit enhancement services currently being made available by the licensee.

(c)       A copy of that schedule required by subsection (b) of this section shall be filed in the office of the Commissioner of Banks.

(d)       Periodic Statements. - At each place of business in North Carolina, or by direct mail to the customer, the licensee shall make readily available to the customer periodic activity statements for those credit enhancement services that require a statement under federal law.

(e)       Power of Attorney or Confession of Judgment Prohibited. - No licensee shall take any confession of judgment or permit any customer to execute a power of attorney in favor of any licensee or in favor of any third person to confess judgment or to appear for the customer in any judicial proceeding, and any confession of judgment or power of attorney to confess judgment taken in violation of this subsection shall be absolutely void.

" 53-446.  Payment of extension of credits; statements.

(a)       Periodically the licensee shall give to the person making payments a statement showing the amounts paid and the balance due on the credit enhancement services or loans.

(b)       Upon payment for credit enhancing services or loans, and no less often than quarterly, the licensee shall report all customer credit activity which is routinely accepted by national credit bureaus.

(c)       Upon payment of any credit enhancement services or loan in full, a licensee shall cancel and return to the customer, within a reasonable length of time, originals or copies of any instrument securing the credit enhancement services or loans, which no longer secures any indebtedness of the customer to the licensee.

" 53-447.  Advertising, broadcasting, etc., false or misleading statements.

No licensee subject to this Article shall advertise, display, distribute, telecast, or broadcast or cause or permit to be advertised, displayed, distributed, telecasted, or broadcasted, in any manner whatsoever, any false, misleading, or deceptive statement or representation with regard to the rates, terms, or conditions of credit enhancement services or loans. The Commissioner may require that charges or rates of charge, if stated by a licensee, be stated fully and clearly in any manner as he deems necessary to prevent misunderstanding by prospective customers. The Commissioner may permit or require licensees to refer in their advertising to the fact that their business is under State supervision, subject to any conditions, to prevent an erroneous impression as to the scope or degree of protection provided by this Article.

" 53-448.  Securing of information; records and reports; allocations of expense.

(a)       Each licensee shall maintain all financial books and records directly relating to any credit enhancement loans and services made or provided under this Article reasonably required by the Commissioner of Banks to be kept, and the Commissioner, his deputy, or duly authorized examiner or agent or employee may examine those records at any reasonable time to determine whether the licensee is complying with this Article and the rules issued to implement this Article. The required financial books and records may be maintained in any form authorized by the Commissioner. The financial books and records of each licensed office shall be clearly segregated. When a licensee maintains its financial books and records outside of North Carolina, the licensee shall make them available for examination at the place where they are maintained and shall pay for all reasonable and necessary expenses incurred by the Commissioner in conducting any examination. Where the data processing for any licensee is performed by a person other than the licensee, the licensee shall provide to the Commissioner of Banks a copy of a binding agreement between the licensee and the data processor which allows the Commissioner, his deputy, or duly authorized examiner or agent or employee to examine that particular data processor's activities pertaining to the licensee to the same extent as if the data processing services were being performed by the licensee on its own premises; and, notwithstanding the provisions of G.S. 53-434 and G.S. 53-122, when billed by the Commissioner, the licensee shall reimburse the Commissioner for all costs and expenses incurred by the Commissioner in an examination under this subsection.

(b)       Each licensee shall file annually with the Commissioner on or before the thirty-first day of March for the 12 months' period ending the preceding December 31 reports on forms prescribed by the Commissioner. These annual reports shall disclose in detail, and under appropriate headings, any changes from the information contained in the original license application and other information necessary to show that the licensee continues to be in compliance with this Article. Reports shall be verified by the oath or affirmation of the owner, manager, president, vice-president, cashier, secretary, or treasurer of the licensee.

(c)       If a licensee conducts another business or is affiliated with other licensees under this Article, or if any other situation exists under which allocations of expense are necessary, the licensee or licensees shall make that allocation according to appropriate and reasonable accounting principles.

" 53-449.  Rules and regulations by Banking Commission and Commissioner.

The State Banking Commission may issue all rules it deems necessary in implementing this Article and in providing for the protection of the borrowing public and the efficient management of licensees under this Article and to give all necessary instructions to these licensees for the purpose of interpreting this Article. The Commissioner may issue rules and orders in implementing and carrying out the provisions of G.S. 53-448. All licensees under this Article, their officers, agents, and employees shall comply fully with all of the rules and instructions. When issued, any rule shall be forwarded by mail to each licensee at its licensed place of business at least 20 days prior to the rule's effective date.

" 53-450.  Commissioner to issue subpoenas, conduct hearings, give publicity to investigations, etc.

The Commissioner may issue subpoenas, including subpoenas duces tecum, and compel attendance of witnesses, administer oaths, conduct hearings, and transcribe testimony in making the investigations and conducting the hearings required by this Article or in the other discharge of his duties, and to give any publicity to his investigations and findings as he may deem best for the public interest.

" 53-451.  Injunctive powers; receivers.

When the Commissioner has reasonable cause to believe that any person is violating or is threatening to violate any provision of this Article, he may in addition to all actions provided for in this Article, and without prejudice to those other actions, enter an order requiring a person to desist or to refrain from a violation; and an action may be brought in the name of the Commissioner on the relation of the State of North Carolina to enjoin the person from engaging in or continuing the violation or from doing any act or acts in furtherance of the violation. In any desist action an order or judgment may be entered awarding any preliminary or final injunction as may be deemed proper. In addition to all other means provided by law for the enforcement of a restraining order or injunction, the court in which the action is brought may impound, and appoint a receiver for the property and business of the defendant, including any books, papers, documents, and records that the court deems reasonably necessary to prevent violations of this Article through or by means of the use of that property and business. The receiver, when appointed and qualified, shall have those powers and duties as to custody, collection, administration, winding up, and liquidation of the property and business as shall from time to time be conferred upon him by the court.

" 53-452.  Review of regulations, order or act of Commission or Commissioner.

The Commission may review any rule, order, or act of the Commissioner done pursuant to or with respect to the provisions of this Article, and any person aggrieved by any rule, order, or act may appeal to the Commission for review upon giving notice in writing within 20 days after the rule, order, or act complained of is adopted, issued, or done. Notwithstanding any other provision of law to the contrary, any aggrieved party to a decision of the Commission shall be entitled to an appeal pursuant to G.S. 53-92.

" 53-453.  Loans and extensions of credit made elsewhere.

(a)       No credit enhancement loan made after the effective date of this Article that is made outside this State in the amount or of the value of three thousand dollars ($3,000) or less for which greater consideration or charges than are authorized by G.S. 53-440 through G.S. 53-442 have been charged, contracted for, or received, shall be enforced in this State. This prohibition shall not apply to credit enhancement loans in which contractual activities, including solicitation, discussion, negotiation, offer, acceptance, signing of documents, or delivery and receipt of funds, occur entirely outside North Carolina.

(b)       If any lender, not licensed in North Carolina, makes credit enhancement loans outside this State in the amount or of the value of three thousand dollars ($3,000) or less and comes into this State to solicit or otherwise conduct activities in regard to those credit enhancement loans, then that lender shall be subject to the requirements of this Article.

(c)       No lender licensed to do business under this Article may collect, or cause to be collected, any credit enhancement loans made by a lender in another state, not licensed in this State, to a customer who was a legal resident of North Carolina at the time the credit enhancement loan was made. The purchase of a credit enhancement loan account by a licensee shall not alter this prohibition.

" 53-454.  Businesses exempted.

Nothing in this Article shall be construed to apply to any person, firm, or corporation doing business under the authority of any law of this State or of the United States relating to banks, trust companies, savings and loan associations, cooperative credit unions, agricultural credit corporations or associations organized under the laws of North Carolina, production credit associations organized under the act of Congress known as the Farm Credit Act of 1933, pawnbrokers lending or advancing money on specific articles of personal property, industrial banks, the business of negotiating loans on real estate as defined in G.S. 105-41, nor to installment paper dealers as defined in G.S. 105-83 other than persons, firms, and corporations engaged in the  business of accepting fees for endorsing or otherwise securing loans or contracts for repayment of loans."

SECTION 2.  There is appropriated from the General Fund to the State Banking Commission the sum of one hundred fifty thousand dollars ($150,000) for the 2006-2007 fiscal year to evaluate the effectiveness of the Credit Enhancement Services Act and to report its findings to the Joint Legislative Commission on Governmental Operations.  The report of the State Banking Commission shall be submitted to the Joint Legislative Commission on Governmental Operations on or before March 1, 2008, and shall include a statement of the number of entities licensed under the Credit Enhancement Services Act and an analysis of the population served by the Act.

SECTION 3.  This act becomes effective October 1, 2006.