Application Requirements – Debt Collector Applicants and Student Loan Servicer

Applicants (1) Application. Each debt collector applicant or student loan servicer applicant shall submit a written application on a form prescribed by the Commissioner, signed under the pains and penalties of perjury, containing such information as the Commissioner may from time to time require. (2) License Requirements. A debt collector applicant or student loan servicer applicant shall be required to submit detailed information supporting the following general requirements: (a) Financial Responsibility. A debt collector applicant or student loan servicer applicant shall demonstrate financial responsibility and shall demonstrate and maintain a positive net worth. Failure to demonstrate a positive net worth at any time in which the debt collector or student loan servicer license is in effect may constitute evidence that the aforementioned licensee has failed to satisfy the financial responsibility requirements of 209 CMR 18.50(2)(a). In addition, a review of financial responsibility may include a review of historical net losses, profitability, and any other information that the Commissioner may deem necessary. 1. The Commissioner, in his or her discretion, may require a debt collector to furnish a bond, in addition to the $25,000 bond that is required pursuant to M.G.L. c. 93, §§ 24A, 25 and 26, in a sum as determined by the Commissioner. The bond shall run to the state treasurer and be executed by the licensee and by a surety company licensed by the Massachusetts Division of Insurance. 2. A student loan servicer applicant shall furnish a surety bond of $25,000 in such form and with such sureties as may be approved by the Commissioner, as required pursuant to M.G.L. c. 93L, § 2(d). The Commissioner, in his or her discretion, may require a student loan servicer to furnish a bond, in addition to the requirements pursuant to M.G.L. 93L, §2(d), in a sum as determined by the Commissioner and in a form prescribed by the Commissioner. (b) Financial Statements. A debt collector applicant or student loan servicer applicant shall submit financial statements prepared in accordance with U.S. generally accepted accounting principles, in U.S. dollars, meeting the following minimum requirements: 1. Contents. The financial statements required by 209 CMR 18.00 shall include, but are not limited to, a Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Stockholder’s Equity, and all relevant notes thereto. 2. Initial Application. A student loan servicer applicant shall submit financial statements audited by an independent certified public accountant. A debt collector applicant shall submit financial statements audited by an independent certified public accountant, or, if audited financial statements, were not prepared, the debt collector applicant shall submit financial statements reviewed by an independent certified public accountant. If a debt collector applicant or student loan servicer applicant has not conducted any business, it shall submit an initial Balance Sheet which has been audited or reviewed by an independent certified public accountant. At the discretion of the Commissioner and under such conditions as he or she may impose, an Applicant’s unaudited financial statements may be submitted with audited consolidated financial statements of its parent. 3. Renewal Applications. Each debt collector license and student loan servicer license shall expire annually on a date determined by the Commissioner. A student loan servicer applicant for license renewal shall submit financial statements which have been audited by an independent Certified Public Accountant within 90 days of the close of its fiscal year. A debt collector applicant for license renewal shall submit financial statements which have been either audited or reviewed by an independent Certified Public Accountant within 90 days of the close of its fiscal year. At the discretion of the Commissioner and under such conditions as he may impose, a debt collector applicant or student loan servicer applicant may submit unaudited entity-only financial statements with its parent’s audited consolidated financial statements. 4. Audit Scope. The audited financial statements shall be performed in accordance with generally accepted auditing standards and reviewed financial statements shall be performed in accordance with Statements of Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. (c) Character and Fitness. A debt collector applicant or student loan servicer applicant shall submit information demonstrating that it possesses the character, reputation, integrity and fitness to engage in the business of a debt collector or student loan servicer in an honest, fair, sound, and efficient manner. (d) Other Information. A debt collector applicant or student loan servicer applicant shall submit such other information as the Commissioner may deem necessary to properly evaluate an application. (e) Incomplete Applications. Debt collector applications which are missing material information shall be held in an incomplete status for a period of 14 calendar days after written notice to the debt collector applicant spec- ifying the nature of the deficiency. Student loan servicer applications which are missing material information shall be held in an incomplete sta- tus for a period of 60 calendar days after written notice to the student loan servicer applicant specifying the nature of the deficiency. If such defi- ciency remains outstanding for more than the aforementioned time peri- ods, the license application may be considered abandoned and terminated by the Commissioner, and the applicant shall be required to submit a new application and pay all fees associated therewith.