Loan Broker Act

Chapter 45, Article 1, Section f

§§ 45-189 to 45-193

The Legislature finds that:

(1) Many professional groups are presently licensed or otherwise regulated by the State

of Nebraska in the interest of public protection;

(2) Certain questionable business practices, such as the collection of an advanced fee

prior to the performance of the service, misleads the public;

(3) Such practices are avoided by many professional groups and many professional

groups are regulated by the state to restrict practices which tend to mislead or deceive the

public;

(4) Loan brokers in Nebraska have engaged in the practice of collecting an advance fee

from borrowers in consideration for attempting to procure a loan of money;

(5) Such practice, as well as others, by loan brokers has led the public to believe that

the loan broker has agreed to procure a loan for the borrower when in fact the loan broker

has merely promised to attempt to procure a loan; and

(6) Regulation of loan brokers by the state, in similar fashion to that of other

professions, is necessary in order to protect the public welfare and to promote the use of

fair and equitable business practices.

Laws 1981, LB 154, § 1

~ Reissue Revised Statutes of Nebraska

For purposes of sections 45-189 to 45-191.11, unless the context otherwise requires:

(1) Advance fee means any fee, deposit, or consideration which is assessed or

collected, prior to the closing of a loan, by a loan broker and includes, but is not limited

to, any money assessed or collected for processing, appraisals, credit checks,

consultations, or expenses;

(2) Borrower means a person obtaining or desiring to obtain a loan of money;

(3) Department means the Department of Banking and Finance;

(4) Director means the Director of Banking and Finance;

(5) Loan broker means any person, except any bank, trust company, savings and loan

association or subsidiary of a savings and loan association, building and loan association,

credit union, licensed or registered mortgage banker, Federal Housing Administration or

United States Department of Veterans Affairs approved lender as long as the loan of

money made by the Federal Housing Administration or the United States Department of

Veterans Affairs approved lender is secured or covered by guarantees or commitments or

agreements to purchase or take over the same by the Federal Housing Administration or

the United States Department of Veterans Affairs, credit card company, installment loan

licensee, or insurance company which is subject to regulation or supervision under the

laws of the United States or this state, who:

(a) For or in expectation of consideration, procures, attempts to procure, arranges, or

attempts to arrange a loan of money for a borrower;

(b) For or in expectation of consideration, assists a borrower in making an application

to obtain a loan of money;

(c) Is employed as an agent for the purpose of soliciting borrowers as clients of the

employer; or

(d) Holds himself or herself out, through advertising, signs, or other means, as a loan

broker;

(6) Loan brokerage agreement means any agreement for services between a loan

broker and a borrower; and

(7) Person means natural persons, corporations, trusts, unincorporated associations,

joint ventures, partnerships, and limited liability companies.

Laws 2003, LB 131, § 26

~ Reissue Revised Statutes of Nebraska

No loan broker shall:

(1) Assess or collect an advance fee from a borrower under a contract to provide

services for the procurement of a loan of money;

(2) Willfully, either orally or in writing, misrepresent the terms, benefits, privileges, or

provisions of any service contract issued or to be issued by the loan broker or by any

lender; or

(3) Represent or imply that the loan broker has been sponsored, recommended, or

approved by the department or that the loan broker's abilities or qualifications have been

passed upon by the department.

Laws 1993, LB 270, § 2

~ Reissue Revised Statutes of Nebraska

(1) At least forty-eight hours before the borrower signs a loan brokerage agreement,

the loan broker shall give the borrower a written disclosure statement. The cover sheet of

the disclosure statement shall have printed, in at least ten-point boldface capital letters,

the title DISCLOSURES REQUIRED BY NEBRASKA LAW. The following statement,

printed in at least ten-point type, shall appear under the title:

THE STATE OF NEBRASKA HAS NOT REVIEWED AND DOES NOT

APPROVE, RECOMMEND, ENDORSE, OR SPONSOR ANY LOAN BROKERAGE

AGREEMENT. THE INFORMATION CONTAINED IN THIS DISCLOSURE

DOCUMENT HAS NOT BEEN VERIFIED BY THE STATE. IF YOU HAVE

QUESTIONS, SEEK LEGAL ADVICE BEFORE YOU SIGN A LOAN BROKERAGE

AGREEMENT.

Only the title and the statement shall appear on the cover sheet.

(2) The body of the disclosure statement shall contain the following information:

(a) The name and street address of the loan broker, the names under which the loan

broker does, has done, or intends to do business, and the name and street address of any

parent or affiliated company;

(b) A statement as to whether the loan broker does business as an individual,

partnership, corporation, or other organizational form, including identification of the state

of incorporation or formation;

(c) How long the loan broker has done business;

(d) The number of loan brokerage agreements the loan broker has entered into in the

previous twelve months;

(e) The number of loans the loan broker has obtained for borrowers in the previous

twelve months;

(f) A description of the services the loan broker agrees to perform for the borrower;

(g) The conditions under which the borrower is obligated to pay the loan broker. This

disclosure shall be in boldface type;

(h) The names, titles, and principal occupations for the past five years of all officers,

directors, or persons occupying similar positions responsible for the loan broker's

business activities;

(i) A statement whether the loan broker or any person identified in subdivision (h) of

this subsection:

(i) Has been convicted of a felony or misdemeanor or pleaded nolo contendere to a

felony or misdemeanor charge if such felony or misdemeanor involved fraud,

embezzlement, fraudulent conversion, or misappropriation of property;

(ii) Has been held liable in a civil action by final judgment or consented to the entry of

a stipulated judgment if the civil action alleged fraud, embezzlement, fraudulent

conversion, or misappropriation of property or the use of untrue or misleading

representations in an attempt to sell or dispose of real or personal property or the use of

unfair, unlawful, or deceptive business practices; or

(iii) Is subject to any currently effective injunction or restrictive order relating to

business activity as the result of an action brought by a public agency or department

including, but not limited to, action affecting any vocational license; and

(j) Any other information the director requires.

Laws 1993, LB 270, § 3

~ Reissue Revised Statutes of Nebraska

(1) Before advertising or making any oral or written representation or acting as a loan

broker in this state a loan broker shall file with the department one copy of the disclosure

statement and one copy of any loan brokerage agreement.

(2) The loan broker shall renew these filings no less than annually and shall also file

any amendment to the disclosure statement within forty-five days after any material

change in information required to be disclosed in the disclosure statement.

(3) The loan broker shall pay a one-hundred-fifty-dollar filing fee upon filing the initial

disclosure statement and a one-hundred-dollar filing fee upon the filing of a renewal of

the disclosure statement. The loan broker shall pay a fifty-dollar filing fee for each

amendment filed. All funds collected by the department under this section shall be

remitted to the State Treasurer for credit to the Financial Institution Assessment Cash

Fund.

(4) The information contained or filed under this section may be made available to the

public under such rules and regulations as the department may prescribe.

Laws 2003, LB 217, § 33

~ Reissue Revised Statutes of Nebraska

(1) A loan broker who fails to make accurate and timely filings as required by section

45-191.02 shall be guilty of a Class I misdemeanor.

(2) A loan broker who willfully violates subdivision (1) of section 45-191 shall be

guilty of:

(a) A Class IV felony if the advance fee assessed or collected is greater than three

hundred dollars; or

(b) A Class I misdemeanor if the advance fee assessed or collected is three hundred

dollars or less.

(3) A willful violation of any other provision of sections 45-189 to 45-191.11 by a loan

broker shall be a Class IV felony.

Laws 1993, LB 270, § 5

~ Reissue Revised Statutes of Nebraska

(1) A loan brokerage agreement shall be in writing and shall be signed by the loan

broker and the borrower. The loan broker shall furnish the borrower a copy of such

signed loan brokerage agreement at the time the borrower signs it.

(2) The borrower has the right to cancel a loan brokerage agreement for any reason at

any time within three business days after the date the parties sign the agreement. The loan

brokerage agreement shall set forth the borrower's right to cancel and the procedures to

be followed when an agreement is canceled.

(3) A loan brokerage agreement shall set forth in at least ten-point type, or handwriting

of at least equivalent size, the following:

(a) The terms and conditions of payment;

(b) A full and detailed description of the acts or services the loan broker will undertake

to perform for the borrower;

(c) The loan broker's principal business address and the name and address of its agent

in the State of Nebraska authorized to receive service of process;

(d) The business form of the loan broker, whether a corporation, partnership, limited

liability company, or otherwise; and

(e) The following notice of the borrower's right to cancel the loan brokerage agreement

pursuant to this section:

"You have three business days in which you may cancel this agreement for any reason

by mailing or delivering written notice to the loan broker. The three business days shall

expire on ................... (last date to mail or deliver notice), and notice of cancellation

should be mailed to .......................................... (loan broker's name and business street

address). If you choose to mail your notice, it must be placed in the United States mail

properly addressed, first-class postage prepaid, and postmarked before midnight of the

above date. If you choose to deliver your notice to the loan broker directly, it must be

delivered to the loan broker by the end of the normal business day on the above date.

Within five business days after receipt of the notice of cancellation, the loan broker shall

return to you all sums paid by you to the loan broker pursuant to this agreement."

The notice shall be set forth immediately above the place at which the borrower signs

the loan brokerage agreement.

Laws 2001, LB 53, § 89

~ Reissue Revised Statutes of Nebraska

A waiver of sections 45-189 to 45-191.11 by a borrower prior to or at the time of

entering into a loan brokerage agreement is contrary to public policy and shall be void.

Any attempt by a loan broker to have a borrower waive any rights pursuant to sections

45-189 to 45-191.11 shall be a violation of such sections.

Laws 1993, LB 270, § 7

~ Reissue Revised Statutes of Nebraska

The department may adopt, promulgate, amend, and rescind such rules and regulations

as necessary or appropriate to implement the purposes of sections 45-189 to 45-191.11.

Laws 1993, LB 270, § 8

~ Reissue Revised Statutes of Nebraska

(1) If a loan broker materially violates the loan brokerage agreement, the borrower may

upon written notice void such loan brokerage agreement. In addition, the borrower may

recover all money paid to the loan broker and any other damages, including reasonable

attorney's fees. The loan broker shall be deemed to have materially violated the loan

brokerage agreement if the loan broker does any of the following:

(a) Makes false or misleading statements relating to the loan brokerage agreement;

(b) Does not comply with the loan brokerage agreement or any obligations arising

from the loan brokerage agreement;

(c) Does not grant the borrower a loan or diligently attempt to obtain a loan for the

borrower; or

(d) Does not comply with the requirements of sections 45-189 to 45-191.11.

(2) Remedies under this section shall be in addition to any other remedies available in

law or equity.

Laws 1993, LB 270, § 9

~ Reissue Revised Statutes of Nebraska

(1)(a) The director in his or her discretion may make such investigations within or

without this state as necessary to determine whether any person has violated or is about to

violate sections 45-189 to 45-191.11 or to aid in the enforcement of such sections or in

the adopting or promulgating of rules, regulations, and forms under such sections. In the

discretion of the director, the actual expense of any such investigation may be charged to

any person who is the subject of such investigation.

(b) The department may publish information concerning any violation of such sections

or any rule, regulation, or order of the department.

(c) For purposes of any investigation or proceeding under such sections, the director or

any officer designated by him or her may administer oaths and affirmations, subpoena

witnesses, compel their attendance, take evidence, and require the production of any

books, papers, correspondence, memoranda, agreements, or other documents or records

which the director deems relevant or material to the inquiry.

(2)(a) In case of contumacy by or refusal to obey a subpoena issued to any person, any

court of competent jurisdiction, upon application by the director, may issue an order to

that person requiring him or her to appear before the director or an officer designated by

the director to produce documentary evidence or to give evidence touching on a matter

under investigation or in question. Any failure to obey an order of the court may be

punished by the court as a contempt of court.

(b) The request for order of compliance may be addressed to either (i) the district court

of Lancaster County or the district court in the county where service may be obtained on

the person refusing to testify or produce, if the person is within this state, or (ii) the

appropriate district court of this state having jurisdiction over the person refusing to

testify or produce, if the person is outside this state.

Laws 1993, LB 270, § 10

~ Reissue Revised Statutes of Nebraska

(1) The director may summarily order a loan broker to cease and desist from acting as

a loan broker or from the use of certain forms or practices relating to the loan broker's

activities if the order is in the public interest and the director finds:

(a) The disclosure statement on file is incomplete in any material respect or contains

any statement which was, in light of the circumstances under which it was made, false or

misleading with respect to any material fact;

(b) The loan broker has willfully violated or willfully failed to comply with any

provision of sections 45-189 to 45-191.11;

(c) There has been a substantial failure to comply with any of the provisions of such

sections;

(d) The continued use of certain forms or practices relating to the loan broker's activity

would constitute a misrepresentation, deceit, or fraud upon the consumer; or

(e) Any person identified in the required disclosure statement has been convicted of an

offense described in subdivision (2)(i)(i) of section 45-191.01 or is subject to an order or

has had a civil judgment entered against him or her as described in subdivision (2)(i)(ii)

or (2)(i)(iii) of section 45-191.01 and the involvement of such person in the loan broker's

business creates an unreasonable risk to prospective borrowers.

(2) If the director believes, whether or not based upon an investigation conducted

under section 45-191.08, that any person or loan broker has engaged in or is about to

engage in any act or practice constituting a violation of any provision of sections 45-189

to 45-191.11 or any rule, regulation, or order under such sections, the director may:

(a) Issue a cease and desist order;

(b) Impose a fine not to exceed one thousand dollars per violation, in addition to costs

of the investigation; or

(c) Initiate an action in any court of competent jurisdiction to enjoin such acts or

practices and to enforce compliance with such sections or any order under such sections.

(3) Upon a proper showing a permanent or temporary injunction, restraining order, or

writ of mandamus shall be granted. The director shall not be required to post a bond.

(4)(a) Any fine and costs imposed pursuant to this section shall be in addition to all

other penalties imposed by the laws of this state and shall be collected by the department

and remitted to the State Treasurer. Costs shall be credited to the Securities Act Cash

Fund, and fines shall be credited to the permanent school fund.

(b) If a person fails to pay the fine or costs of the investigation referred to in this

subsection, a lien in the amount of the fine and costs may be imposed upon all of the

assets and property of such person in this state and may be recovered by suit by the

department. Failure of the person to pay a fine and costs shall constitute a separate

violation of sections 45-189 to 45-191.11.

(5) Upon entry of an order pursuant to this section, the director shall promptly notify

all persons to whom such order is directed that it has been entered and of the reasons for

such order and that any person to whom the order is directed may request a hearing in

writing within fifteen business days of the issuance of the order. Upon receipt of a written

request, the matter shall be set down for hearing to commence within thirty business days

after the receipt unless the parties consent to a later date or the hearing officer sets a later

date for good cause. If a hearing is not requested within fifteen business days from the

issuance of the order and none is ordered by the director, the order shall automatically

become final and shall remain in effect until it is modified or vacated by the director. If a

hearing is requested or ordered, the director, after notice and hearing, shall enter his or

her written findings of fact and conclusions of law and may affirm, modify, or vacate the

order.

(6) The director may vacate or modify a cease and desist order if he or she finds that

the conditions which caused its entry have changed or that it is otherwise in the public

interest to do so.

(7) Any person aggrieved by a final order of the director may appeal the order. The

appeal shall be in accordance with the Administrative Procedure Act.

Laws 2001, LB 53, § 90

Administrative Procedure Act,see section 84-920.

~ Reissue Revised Statutes of Nebraska

The following persons are exempt from sections 45-189 to 45-191.11 if such person

does not hold himself or herself out, through advertising, signs, or other means, as a loan

broker: Securities broker-dealer, real estate broker or salesperson, attorney, accountant, or

investment adviser.

Laws 1995, LB 599, § 12

~ Reissue Revised Statutes of Nebraska

In any proceeding under the provisions of sections 45-189 to 45-191.11, the burden of

proving an exemption or an exception from a definition shall be upon the person claiming

it.

Laws 1993, LB 270, § 13

~ Reissue Revised Statutes of Nebraska