HB0116

HOUSE BILL 116

54th legislature - STATE OF NEW MEXICO - second session, 2020

INTRODUCED BY

Patricia Roybal Caballero

AN ACT

RELATING TO FINANCIAL INSTITUTIONS; ENACTING THE STUDENT LOAN BILL OF RIGHTS ACT; PROVIDING FOR A STUDENT LOAN SERVICER'S LICENSE; DELINEATING THE DUTIES OF A STUDENT LOAN SERVICER; GIVING ADMINISTRATIVE RESPONSIBILITY AND ENFORCEMENT POWER TO THE FINANCIAL INSTITUTIONS DIVISION OF THE REGULATION AND LICENSING DEPARTMENT; CREATING THE POSITION OF OMBUDSMAN; IDENTIFYING AN UNFAIR TRADE PRACTICE; CREATING A PRIVATE RIGHT OF ACTION; PROVIDING PENALTIES; CREATING THE STUDENT LOAN BILL OF RIGHTS FUND; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Student Loan Bill of Rights Act".

SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Student Loan Bill of Rights Act:

A. "director" means the director of the division;

B. "division" means the financial institutions division of the regulation and licensing department;

C. "person" includes legal representatives, unincorporated organizations, trustees, fiduciaries and public entities;

D. "servicing" includes:

(1) receiving scheduled periodic payments from a student loan borrower pursuant to the terms of a student education loan;

(2) applying payments of principal and interest and other payments with respect to the amounts received from a student loan borrower, as may be required pursuant to the terms of a student education loan;

(3) maintaining account records for a student education loan and communicating with a student loan borrower regarding a loan on behalf of the loan's holder during a period when no payment is required on the loan; and

(4) interacting with a student loan borrower to help prevent default on obligations arising from a student education loan;

E. "student education loan" means a loan primarily for personal use to finance a student loan borrower's higher-education-related expenses, but does not include an isolated personal loan made by an individual to another for higher-education-related expenses;

F. "student loan borrower" means:

(1) a resident of New Mexico who has received or agreed to pay a student education loan; or

(2) a person who shares responsibility with a resident of New Mexico for repaying a student education loan; and

G. "student loan servicer" means a person engaged in the business of servicing student education loans in New Mexico."

SECTION 3. [NEW MATERIAL] LICENSE REQUIRED--EXEMPTIONS.--

A. A person shall not act directly or act indirectly as a student loan servicer without first obtaining a license from the division pursuant to the Student Loan Bill of Rights Act, unless that person is exempt from licensure pursuant to Subsection B of this section.

B. The following persons are exempt from licensing requirements pursuant to the Student Loan Bill of Rights Act:

(1) a bank or credit union;

(2) a wholly owned subsidiary of a bank or credit union;

(3) an operating subsidiary of a bank or credit union where each owner of the operating subsidiary is wholly owned by the same bank or credit union; and

(4) the higher education department.

SECTION 4. [NEW MATERIAL] LICENSE APPLICATION-- INVESTIGATION--LICENSE ISSUANCE.--

A. A person seeking to act as a student loan servicer shall make a written application to the director for an initial license in a form prescribed by the director. The application shall include:

(1) a financial statement of the person applying, prepared by a certified or registered public accountant, the accuracy of which is sworn to under oath before a notary public by the proprietor, a general partner or a corporate officer or a member duly authorized to execute such documents;

(2) sufficient information pertaining to the history of any criminal conviction of the applicant, whether an individual or partner, member, officer, director or principal employee of the applicant, as the director deems necessary to make the findings required pursuant to Subsection F of this section;

(3) a nonrefundable initial license fee not to exceed five thousand dollars ($5,000); and

(4) a nonrefundable investigation fee not to exceed five thousand dollars ($5,000).

B. The director may periodically reduce or increase the amount of one or more of the fees in Subsection A of this section, but in no case more than the initial fees.

C. The director may require or allow applications to be made electronically through the nationwide multistate licensing system and registry. An applicant using that system shall pay all required processing fees for the system.

D. Upon the filing of an application for an initial license and the payment of required fees, the director shall investigate the financial condition and responsibility, the financial and business experience and the character and general fitness of the applicant.

E. The director may conduct a state and national criminal history records check of the applicant and of each partner, member, officer, director, trustee, fiduciary and principal employee of the applicant.

F. The director shall issue a license for a student loan servicer pursuant to the Student Loan Bill of Rights Act if the director finds that:

(1) the applicant has submitted a completed application;

(2) the applicant's financial condition is sound;

(3) the applicant's business will be conducted honestly, fairly, equitably, carefully, efficiently and in a manner commanding the confidence and trust of the community;

(4) the applicant or a partner, member, officer, director, trustee, fiduciary or principal employee of the applicant has not been convicted of a crime that relates to money lending, financing, financial matters, fiduciary status, trustee status or another matter that substantially relates to the qualifications, functions or duties of a student loan servicer;

(5) a person has not made an incorrect statement of a material fact on behalf of the applicant either in the application or in a report or statement made pursuant to the Student Loan Bill of Rights Act;

(6) a person on behalf of the applicant has not knowingly omitted to state a material fact on behalf of the applicant necessary to give the director information lawfully required by the director pursuant to the Student Loan Bill of Rights Act;

(7) the applicant has paid the license fee and investigation fee required by this section;

(8) the applicant has met all other requirements of the Student Loan Bill of Rights Act as determined by the director; and

(9) if the applicant is:

(a) an individual, the individual is in all respects properly qualified and of good character;

(b) a partnership, each partner is in all respects properly qualified and of good character;

(c) a corporation or association, the following are in all respects properly qualified and of good character: 1) president; 2) executive committee chair; 3) senior officer responsible for the corporation's business; 4) chief financial officer; or 5) any other person who performs functions similar to those described in Items 1) through 4) of this subparagraph and as determined by the director; and 6) each director, each trustee and each shareholder owning ten percent or more of each class of the securities of the corporation or association; or

(d) a limited liability company, each member is in all respects properly qualified and of good character.

SECTION 5. [NEW MATERIAL] AUTOMATIC ISSUANCE OF LICENSE FOR FEDERAL STUDENT LOAN SERVICING CONTRACTORS.--

A. A person seeking to act as a student loan servicer is excepted from the application procedures described in Subsection A of Section 4 of the Student Loan Bill of Rights Act upon a determination by the director that the person's student loan servicing performed in this state is conducted pursuant to a contract awarded by the United States secretary of education pursuant to 20 U.S.C. Section 1087f. The director shall prescribe the procedure to document eligibility for the exception.

B. A person deemed excepted by the director pursuant to this section shall, upon payment of the fees required by Section 4 of the Student Loan Bill of Rights Act, automatically be issued a license by the director and shall be considered by the director to have met all requirements set forth in Subsection F of Section 4 of the Student Loan Bill of Rights Act.

C. A person issued a license pursuant to this section is excepted from Paragraphs (1) through (3) of Subsection A, Subsection B and Subsection F of Section 4 of the Student Loan Bill of Rights Act. A person licensed pursuant to this section shall comply with the record retention requirements in Section 8 of the Student Loan Bill of Rights Act except to the extent that the requirements are inconsistent with federal law.

D. A person issued a license pursuant to this section shall provide the director with written notice within seven days following notification of the expiration, revocation or termination of a contract awarded by the United States secretary of education pursuant to 20 U.S.C. Section 1087f. The person has thirty days following notification to satisfy all requirements established under Subsection F of Section 4 of the Student Loan Bill of Rights Act in order to continue to act as a student loan servicer. At the expiration of the thirty-day period if the requirements have not been satisfied, the director shall immediately suspend a license granted to the person pursuant to this section.

E. With respect to student loan servicing not conducted pursuant to a contract awarded by the United States secretary of education pursuant to 20 U.S.C. Section 1087f, nothing in this section prevents the director from issuing or filing a civil action for an order to temporarily or permanently bar a person from acting as a student loan servicer or violating applicable law.

SECTION 6. [NEW MATERIAL] LICENSE EXPIRATION--LICENSE SURRENDER--LICENSE RENEWAL--LICENSE SUSPENSION--INFORMATION UPDATE--LICENSE ABANDONMENT--NO ABATEMENT OF FEES.--

A. A license issued pursuant to the Student Loan Bill of Rights Act shall expire at midnight on December 31 of the year following its issuance, unless renewed or earlier surrendered, suspended or revoked pursuant to the Student Loan Bill of Rights Act.

B. Not later than fifteen days after a licensee ceases to engage in the business of student loan servicing in New Mexico for any reason, the licensee shall provide written notice of surrender to the director and shall surrender to the director its license for each location in which the licensee has ceased to engage in the business of student loan servicing. The written notice of surrender shall identify the location where the records of the licensee will be stored and the name, address and telephone number of an individual authorized to provide access to the records. The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including administrative actions by the director to revoke or suspend a license, assess a civil penalty, order restitution or exercise any other authority provided to the director in the Student Loan Bill of Rights Act.

C. A license may be renewed for the next twelve-month period upon the filing of an application containing all required documents and fees required by the Student Loan Bill of Rights Act as for an initial license. The renewal application shall be filed on or before November 1 of the year in which the license expires. A renewal application filed with the director after November 1 and before December 31 of the year in which the license expires, but that is accompanied by a one-hundred-dollar ($100) late fee, shall be deemed to be timely. If an application for a renewal license has been filed with the director on or before the date the license expires, the license sought to be renewed shall continue in full force and effect until the director issues the renewed license or the director has notified the licensee in writing of the director's refusal to renew the license, including the grounds for the refusal. The director may refuse to renew a license on any ground upon which the director may refuse to issue an initial license.

D. If the director determines that a check filed with the director to pay a renewal fee has been dishonored, the director shall automatically suspend the license. The director immediately shall give the licensee notice of the automatic suspension by any practicable means and initiate proceedings for revocation or refusal to renew and an opportunity for a hearing on that action pursuant to the Uniform Licensing Act.

E. The applicant or licensee shall notify the director, in writing, of any change in the information provided in its initial application for a license or its most recent renewal application for that license, as applicable, not later than ten business days after the occurrence of the event that results in that information becoming inaccurate.

F. The director shall deem an application for a license abandoned if the applicant fails to respond to a request for information required by the Student Loan Bill of Rights Act. The director shall notify the applicant, in writing, that if the applicant fails to submit that information not later than sixty days after the date on which that request for information was made, the application shall be deemed abandoned. An application filing fee paid before the date an application is deemed abandoned pursuant to this subsection shall not be refunded. Abandonment of an application does not preclude the applicant from submitting a new application for a license pursuant to the Student Loan Bill of Rights Act.

G. A license fee paid pursuant to the Student Loan Bill of Rights Act shall not be abated.

SECTION 7. [NEW MATERIAL] LICENSEE NAMES AND LOCATIONS--TRANSFERABILITY--ASSIGNABILITY.--

A. A licensed student loan servicer shall not service student education loans under a name or at a place of business other than as listed in the license. A change of a place of business shall require prior written notice to the director. Not more than one place of business shall be maintained under the same license, but the director may issue more than one license to the same licensee that is in compliance with the provisions of the Student Loan Bill of Rights Act.

B. A license for a student loan servicer is not transferable or assignable.

SECTION 8. [NEW MATERIAL] RECORD RETENTION.--

A. A student loan servicer shall maintain adequate records of each student education loan transaction for at least two years following the final payment on a student education loan or the assignment of a student education loan, whichever occurs first, or a longer period the director may require.

B. Within five business days of receipt of a request for student education loan records from the director, a student loan servicer shall make the records available to the director, or shall send the records to the director by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. Upon request, the director may grant a licensee additional time to make the records available or send the records to the director.

SECTION 9. [NEW MATERIAL] STUDENT LOAN SERVICERS.--Except as otherwise provided in federal law, a federal student education loan agreement or a contract between the federal government and a student loan servicer, a student loan servicer shall comply with the following requirements:

A. upon receipt of a written inquiry from a student loan borrower or the representative of a student loan borrower, a student loan servicer shall respond by:

(1) acknowledging receipt of the written inquiry within ten days; and

(2) within thirty days after receiving the inquiry, providing information relating to the inquiry and, if applicable, the action the student loan servicer will take to correct the student loan borrower's account or an explanation of the student loan servicer's position that the borrower's account is correct;

B. a student loan servicer shall inquire of a student loan borrower how to apply an overpayment or prepayment to a student education loan. A student loan borrower's direction on how to apply an overpayment or prepayment to a student education loan shall stay in effect for any future overpayments or prepayments during the term of a student education loan until the borrower provides different directions. For purposes of this subsection, "overpayment" or "prepayment" means a payment on a student education loan in excess of the monthly amount due from a borrower on a student education loan;

C. a student loan servicer shall apply a partial payment or underpayment in a manner that minimizes late fees and negative credit reporting. When loans on a student loan borrower's account have an equal stage of delinquency, a student loan servicer shall apply a partial payment or underpayment to satisfy as many individual loan payments as possible on a borrower's account. For purposes of this subsection, "partial payment" or "underpayment" means a payment on a student education loan account that contains multiple individual loans in an amount less than the amount necessary to satisfy the outstanding payment due on all loans in the student education loan account;

D. in the event of the sale, assignment or other transfer of a student loan servicer that results in a change in the identity of the student loan servicer to whom a student loan borrower is required to send payments or direct any communication concerning the student education loan:

(1) as a condition of the sale, assignment or transfer, the student loan servicer shall require the new student loan servicer to honor all benefits originally represented as available to the student loan borrower during the repayment of the student education loan and preserve the availability of those benefits, including benefits for which the student loan borrower has not yet qualified;

(2) within forty-five days after the sale, assignment or transfer, the student loan servicer shall transfer to the new student loan servicer all information regarding the student loan borrower, the account of the student loan borrower and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower; and

(3) the sale, assignment or transfer of the servicing of the student education loan must be completed at least seven days before the next payment on the loan is due;

E. a student loan servicer that obtains the right to service a student education loan shall adopt policies and procedures to verify that the student loan servicer has received all information regarding the student loan borrower, the account of the student loan borrower and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower. The director may investigate these policies and procedures; and

F. a student loan servicer shall evaluate a student loan borrower for a repayment program based on income prior to placing the borrower in forbearance or default, if a repayment program based on income is available to the borrower.

SECTION 10. [NEW MATERIAL] STUDENT LOAN SERVICERS-- PROHIBITED ACTS--UNFAIR TRADE PRACTICE--LIABILITY.--

A. A student loan servicer shall not:

(1) directly or indirectly employ a scheme, device or artifice intended to defraud or mislead a student loan borrower;

(2) engage in an unfair or deceptive trade practice or unconscionable trade practice toward a person or misrepresent or omit material information in connection with the servicing of a student education loan, including misrepresenting the amount, nature or terms of a fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement or the student loan borrower's obligations under the loan;

(3) engage in abusive acts or practices when servicing a student education loan. An abusive act or practice includes:

(a) material interference with the ability of a student loan borrower to understand a term or condition of a student education loan; or

(b) taking unreasonable advantage of any of the following: 1) a lack of understanding on the part of a student loan borrower of the material risks, costs or conditions of the student education loan; 2) the inability of a student loan borrower to protect the borrower's interests when selecting or using a student education loan or a feature, term or condition of a student education loan; or 3) the reasonable reliance by the student loan borrower on a person engaged in servicing a student education loan to act in the interests of the borrower;

(4) obtain property by fraud or misrepresentation;

(5) knowingly misapply or recklessly apply student education loan payments to the outstanding balance of a student education loan;

(6) knowingly or recklessly provide inaccurate information to a credit bureau;

(7) fail to report a favorable or unfavorable payment history of a student loan borrower to a nationally recognized consumer credit bureau at least annually if the student loan servicer regularly reports information to a credit bureau;

(8) refuse to communicate with an authorized representative of a student loan borrower who provides a written authorization signed by the student loan borrower; provided that the student loan servicer may adopt procedures reasonably related to verifying that the representative is authorized to act on behalf of the student loan borrower;

(9) negligently make a false statement or knowingly and willfully make an omission of a material fact in connection with any information or report filed with a governmental agency or in connection with an investigation conducted by the director or another governmental agency;

(10) fail to properly evaluate a student loan borrower for an income-driven or other student loan repayment program or for eligibility for a public service loan forgiveness program before placing the student loan borrower in forbearance or default, if an income-driven repayment or other program is available to the student loan borrower except as otherwise provided in federal law, federal student loan agreements or a contract between the federal government and a student loan servicer;

(11) fail to respond within fifteen days to communication from the student loan ombudsman, or within a shorter reasonable time as the student loan ombudsman may request in the communication; or

(12) fail to respond within fifteen days to a student loan borrower complaint submitted to the servicer by the student loan ombudsman. If necessary, a student loan servicer may request additional time, up to forty-five days, as long as the request is accompanied by an explanation of why additional time is reasonable and necessary.

B. A violation of this section is an unfair or deceptive trade practice and an unconscionable trade practice pursuant to the Unfair Practices Act and is subject to the enforcement and penalty provisions contained in that act.

C. A student loan servicer that commits an act prohibited by this section with respect to a student loan borrower is liable in an amount equal to the sum of:

(1) any actual damages sustained by the borrower as a result of the failure;

(2) a monetary award to the borrower equal to three times the total amount the student loan servicer collected from the borrower;

(3) punitive damages as the court may allow; and

(4) in the case of a successful action by the borrower to enforce the liability set out in this subsection, the costs of the action, together with reasonable attorney fees as determined by the court.

D. The remedies provided in this section are not the exclusive remedies available to a student loan borrower, nor must the borrower exhaust any administrative remedies provided in this section or any other applicable law before proceeding pursuant to this section.

SECTION 11. [NEW MATERIAL] POWERS OF THE DIRECTOR.--

A. The director may conduct investigations and examinations for purposes of initial licensing, license renewal, license suspension, license revocation or termination, or for general or specific inquiry or investigation, to determine compliance with the Student Loan Bill of Rights Act. The director may access, receive and use any documents, information or evidence the director deems relevant to the inquiry or investigation regardless of the location, possession, control or custody of those documents or that information or evidence.

B. For the purposes of investigating violations or complaints arising pursuant to the Student Loan Bill of Rights Act or for the purposes of examination, the director may review, investigate or examine the activities of any student loan servicer as often as necessary to carry out the purposes of that act. The director may direct, subpoena or order the attendance of and examine under oath a person whose testimony may be required about the student education loan or the business or subject matter of the examination or investigation and may direct, subpoena or order the person to produce books, accounts, records, files and any other documents the director deems relevant to the inquiry.

C. In making an examination or investigation authorized by the Student Loan Bill of Rights Act, the director may control access to any documents or records of the student loan servicer licensee or person under examination or investigation related to the student education loan. The director may take possession of the documents and records or place a person in exclusive charge of the documents and records in the place where the documents and records are usually kept. During the period of control, a person shall not remove or attempt to remove any of the documents and records except pursuant to a court order or with the consent of the director. Unless the director has reasonable grounds to believe the documents or records of the student loan servicer licensee or person have been, or are at risk of being, altered or destroyed for purposes of concealing a violation of the Student Loan Bill of Rights Act, the student loan servicer licensee or owner of the documents and records shall have access to the documents or records as necessary to conduct its ordinary business affairs.

D. To fulfill the duties imposed by this section and to carry out the purposes of this section, the director may:

(1) retain attorneys, accountants or other professionals and specialists as examiners, auditors or investigators to conduct or assist in the conduct of examinations or investigations;

(2) enter into agreements or relationships with other government officials or regulatory associations to improve efficiencies and reduce regulatory burden by sharing resources, standardized or uniform methods or procedures and documents, records, information or evidence obtained pursuant to this section;

(3) use, hire, contract or employ public or privately available analytical systems, methods or software to examine or investigate the student loan servicer licensee or person subject to the Student Loan Bill of Rights Act;

(4) rely on examination or investigation reports made by other government officials, whether in or outside of New Mexico; and

(5) accept audit reports made by an independent certified public accountant for the student loan servicer licensee or person subject to the Student Loan Bill of Rights Act in the course of that part of the examination covering the same general subject matter as the audit and may incorporate the audit report in the report of examination, report of investigation or other writing of the director.

E. A student loan servicer licensee or person subject to investigation or examination under this section shall not knowingly withhold, abstract, remove, mutilate, destroy or secrete any books, records, computer records or other information.

F. The costs of an investigation conducted by the director shall be paid by the student loan servicer licensee or person being investigated. When it becomes necessary to examine or investigate the books and records of a licensee under this section at a location outside of New Mexico, the licensee shall be liable for and shall pay to the division within thirty days of the presentation of an itemized statement the actual travel and reasonable living expenses incurred on account of its examination, supervision and regulation or shall pay a reasonable per diem rate approved by the director.

SECTION 12. [NEW MATERIAL] ENFORCEMENT BY DIRECTOR.--

A. To ensure the effective supervision and enforcement of the Student Loan Bill of Rights Act and in accordance with the procedures provided in the Uniform Licensing Act, the director may:

(1) deny, suspend, revoke or decline to renew a license for a violation of the Student Loan Bill of Rights Act, rules issued pursuant to that act or an order or directive entered pursuant to that act;

(2) deny, suspend, revoke or decline to renew a license if an applicant or student loan servicer fails at any time to meet the requirements of Subsection F of Section 4 of the Student Loan Bill of Rights Act; and

(3) issue orders or directives as follows:

(a) order or direct student loan servicers to cease and desist from conducting business related to student education loans, including issuing an immediate temporary order to cease and desist;

(b) order or direct student loan servicers to cease any violations of the Student Loan Bill of Rights Act; and

(c) enter immediate temporary orders to cease any business licensed pursuant to the Student Loan Bill of Rights Act if the director determines that the license was erroneously granted or the licensed student loan servicer is currently in violation of that act.

B. The director may impose an administrative penalty on a student loan servicer if the director finds, from the record after notice and opportunity for a recorded hearing, that the student loan servicer has violated or failed to comply with any requirement of the Student Loan Bill of Rights Act or any rule promulgated by the director pursuant to that act or any order issued pursuant to that act. The maximum amount of penalty for each act or omission shall be five thousand dollars ($5,000).

SECTION 13. [NEW MATERIAL] JUDICIAL ENFORCEMENT.--

A. Upon a showing by the director that a person has violated, or is about to violate, the Student Loan Bill of Rights Act or any rule or order of the director pursuant to that act, the district court of the first judicial district or other appropriate district court in the state may grant or impose one or more of the following:

(1) a temporary restraining order, permanent or temporary prohibitory or mandatory injunction or a writ of prohibition or mandamus;

(2) a civil penalty up to a maximum of five thousand dollars ($5,000) for each violation;

(3) declaratory judgment;

(4) restitution to student loan borrowers;

(5) recovery by the director of all costs and expenses for conducting an investigation or the bringing of any enforcement action pursuant to the Student Loan Bill of Rights Act; or

(6) other relief as the court deems proper.

B. In determining the appropriate relief, the court shall consider administrative enforcement actions taken and imposed by the director pursuant to the Student Loan Bill of Rights Act in connection with the transactions constituting violations of that act.

C. The court shall not require the director to post bond in an action pursuant to this section.

SECTION 14. [NEW MATERIAL] CRIMINAL PENALTIES.--

A. An individual who acts as a student loan servicer without being properly licensed pursuant to the Student Loan Bill of Rights Act is, for a first offense, guilty of a misdemeanor and upon conviction shall be sentenced in accordance with the provisions of Subsection A of Section 31-19-1 NMSA 1978.

B. In the case of a conviction pursuant to Subsection A of this section, the court may impose a deferred sentence in accordance with Section 31-20-6 NMSA 1978.

C. An individual who violates Subsection A of this section is, for a second or subsequent offense, guilty of a fourth degree felony and upon conviction shall be sentenced in accordance with the provisions of Section 31-18-15 NMSA 1978.

SECTION 15. [NEW MATERIAL] COMPLIANCE WITH FEDERAL LAW.-- A student loan servicer licensee shall comply with all applicable federal laws and regulations relating to federal student loan servicing. In addition to any other remedies provided by law, a violation of an applicable federal law or regulation is a violation of the Student Loan Bill of Rights Act.

SECTION 16. [NEW MATERIAL] PROMULGATION OF RULES.--The director may promulgate rules and make reasonable orders necessary to implement the Student Loan Bill of Rights Act. A copy of every rule and of every order containing requirements of general application shall be mailed to each licensee not less than fifteen days before the effective date of the rule or order.

SECTION 17. [NEW MATERIAL] STUDENT LOAN OMBUDSMAN-- DUTIES--ANNUAL REPORT.--

A. The director shall designate a student loan ombudsman within the division to provide timely assistance to student loan borrowers.

B. The student loan ombudsman, in collaboration with the office of the attorney general and the higher education department, shall:

(1) receive, review and attempt to resolve complaints from student loan borrowers;

(2) compile and analyze data regarding student loan borrower complaints received by the ombudsman;

(3) assist student loan borrowers in understanding their rights and responsibilities under the terms of student education loans;

(4) provide information to the public, state agencies, state legislators and others regarding the problems and concerns of student loan borrowers and make recommendations for resolving those problems and concerns;

(5) analyze and monitor the development and implementation of federal laws, regulations and policies and state laws, rules and policies relating to student loan borrowers and make recommendations for any changes the ombudsman deems necessary;

(6) review the complete student education loan history for any student loan borrower who has provided written consent for that review;

(7) disseminate information concerning the availability of the student loan ombudsman to assist student loan borrowers and potential student loan borrowers, institutions of higher education, student loan servicers and other participants in student education loan lending with student loan servicing concerns; and

(8) take any other action the ombudsman deems necessary to fulfill the duties of the student loan ombudsman.

C. The division, including the student loan ombudsman, the office of the attorney general and the higher education department, or their designees, shall meet at least once per quarter to coordinate their efforts under Subsection B of this section.

D. On or before July 1, 2021, the student loan ombudsman, in collaboration with the office of attorney general and the higher education department, shall establish and maintain a student loan borrower education course that includes educational presentations and materials regarding student education loans. The student loan borrower education course shall review key loan terms, documentation requirements, monthly payment obligations, income-based repayment options, loan forgiveness and disclosure requirements.

E. On or before December 1, 2022, and annually thereafter, the director shall submit a report to the appropriate legislative interim committee. Annual reports shall be made available to interested parties and the general public and published on the division's website and on the sunshine portal. Consistent with state law, the report shall include, at a minimum, non-identifying consumer data from the preceding calendar year, including the following information:

(1) for each licensee:

(a) the number of loans the licensee is servicing in New Mexico;

(b) the number of loans and percentage of all loans that the licensee is servicing that are currently in default;

(d) the number and percentage of all loans that the licensee is servicing that have been paid off; and

(e) the number and percentage of all loans the licensee is servicing that have been forgiven or discharged;

(2) information regarding the implementation of the Student Loan Bill of Rights Act;

(3) the overall effectiveness of the student loan ombudsman position, including information, in the aggregate, regarding the number and categories of student loan borrower complaints filed with the division and the office of the attorney general;

(4) the number of student loan borrower complaints investigated and resolved by the division and the office of the attorney general; and

(5) any recommendations pertaining to the division's regulation of student loan servicers and the enforcement of the provisions of the Student Loan Bill of Rights Act.

SECTION 18. [NEW MATERIAL] INFORMATION SHARING.--By July 31, 2021, the division, the student loan ombudsman, the office of the attorney general and the higher education department shall enter into an agreement to allow for the sharing of all necessary information.

SECTION 19. [NEW MATERIAL] PRIVATE ACTION.--

A. A person who suffers damage as a result of the failure of a student loan servicer to comply with a provision of the Student Loan Bill of Rights Act may bring an action in district court against that student loan servicer to recover any of the following:

(1) actual damages, but in no case shall the total award of damages be less than five hundred dollars ($500) per violation;

(2) an order enjoining the methods, acts or practices causing the compliance failure;

(3) restitution of property;

(4) punitive damages;

(5) attorney fees; and

(6) other relief the court deems proper.

B. In addition to any other remedies provided by this section or otherwise provided by law, whenever it is proven by a preponderance of the evidence that a student loan servicer has engaged in conduct that substantially interferes with a student loan borrower's right to an alternative payment arrangement; loan forgiveness, cancellation or discharge; or any other financial benefit as established under the terms of a borrower's promissory note or under the federal Higher Education Act of 1965, and the regulations promulgated pursuant to that act, the court shall award treble actual damages to the plaintiff, but in no case shall the award of damages be less than one thousand five hundred dollars ($1,500) per violation.

C. The remedies provided in the Student Loan Bill of Rights Act are not intended to be the exclusive remedies available to a person suffering damage due to the non-compliance of a student loan servicer, and the person shall not be required to exhaust administrative remedies established pursuant to the Student Loan Bill of Rights Act or any other applicable law prior to bringing a private right of action.

SECTION 20. [NEW MATERIAL] STUDENT LOAN BILL OF RIGHTS FUND--CREATED--PURPOSE--APPROPRIATION.--

A. The "student loan bill of rights fund" is created as a nonreverting fund in the state treasury and shall be administered by the division. The fund consists of fees collected by the division pursuant to the Student Loan Bill of Rights Act and money that is appropriated or donated or that otherwise accrues to the fund. Income from investment of the fund shall be credited to the fund.

B. Money in the student loan bill of rights fund is appropriated to the division to carry out the provisions of the Student Loan Bill of Rights Act.

C. Expenditures from the fund shall be made on warrants drawn by the secretary of finance and administration pursuant to vouchers signed by the director or the director's authorized representative.

SECTION 21. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2021.

- 32 -