N.Y. Banking Law § 716: Grounds for suspension or revocation of license

§ 716. Grounds for suspension or revocation of license. 1. After

notice and hearing, the superintendent may revoke or suspend any license

to engage in the business of a student loan servicer issued pursuant to

this article if he or she shall find that:

(a) a servicer has violated any provision of this article, any rule or

regulation promulgated by the superintendent under and within the

authority of this article, or any other applicable law;

(b) any fact or condition exists which, if it had existed at the time

of the original application for such license, would have warranted the

superintendent refusing originally to issue such license;

(c) a servicer does not cooperate with an examination or investigation

by the superintendent;

(d) a servicer engages in fraud, intentional misrepresentation, or

gross negligence in servicing a student loan;

(e) the competence, experience, character, or general fitness of the

servicer, an individual controlling, directly or indirectly, ten percent

or more of the outstanding interests, or any person responsible for

servicing a student loan for the servicer indicates that it is not in

the public interest to permit the servicer to continue servicing student

loans;

(f) the servicer engages in an unsafe or unsound practice;

(g) the servicer is insolvent, suspends payment of its obligations, or

makes a general assignment for the benefit of its creditors; or

(h) a servicer has violated the laws of this state, any other state or

any federal law involving fraudulent or dishonest dealing, or a final

judgement has been entered against a student loan servicer in a civil

action upon grounds of fraud, misrepresentation or deceit.

2. The superintendent may, on good cause shown, or where there is a

substantial risk of public harm, suspend any license for a period not

exceeding thirty days, pending investigation. "Good cause", as used in

this subdivision, shall exist when a student loan servicer has defaulted

or is likely to default in performing its financial engagements or

engages in dishonest or inequitable practices which may cause

substantial harm to the persons afforded the protection of this article.

3. Except as provided in subdivision two of this section, no license

shall be revoked or suspended except after notice and hearing thereon.

Any order of suspension issued after notice and a hearing may include as

a condition of reinstatement that the student loan servicer make

restitution to consumers of fees or other charges which have been

improperly charged or collected, including but not limited to by

allocating payments contrary to a borrower's direction or in a manner

that fails to help a borrower avoid default, as determined by the

superintendent. Any hearing held pursuant to the provisions of this

section shall be noticed, conducted and administered in compliance with

the state administrative procedure act.

4. Any student loan servicer may surrender any license by delivering

to the superintendent written notice that it thereby surrenders such

license, but such surrender shall not affect such servicer's civil or

criminal liability for acts committed prior to such surrender. If such

surrender is made after the issuance by the superintendent of a

statement of charges and notice of hearing, the superintendent may

proceed against the servicer as if such surrender had not taken place.

5. No revocation, suspension, or surrender of any license shall impair

or affect the obligation of any pre-existing lawful contract between the

student loan servicer and any person, including the department of

financial services.

6. Every license issued pursuant to this article shall remain in force

and effect until the same shall have been surrendered, revoked or

suspended in accordance with any other provisions of this article.

7. Whenever the superintendent shall revoke or suspend a license

issued pursuant to this article, he or she shall forthwith execute in

duplicate a written order to that effect. The superintendent shall file

one copy of such order in the office of the department and shall

forthwith serve the other copy upon the student loan servicer. Any such

order may be reviewed in the manner provided by article seventy-eight of

the civil practice law and rules.