Maine Moves to Transition Debt Collectors and Money Transmitters to NMLS

Additional Author: Brenda Robinson

The Maine Department of Professional and Financial Regulations/Bureau of Consumer Credit Protection (the “Bureau”) recently announced the passage of new regulations for debt collectors, which includes debt buyers, and money transmitters to transition both license types to the Nationwide Multistate Licensing System (“NMLS”) later this year. Both rules became effective on June 25, 2023. We discuss each, in turn, below.

Debt Collectors

The new regulation for debt collectors created a new chapter, 02-030 CMR Ch. 705, titled “Establishment of License and Renewal Fees and Application Requirements for Maine’s Debt Collect Licensing and Requirement for Licensing Through the Nationwide Multistate Licensing System (NMLS).” The stated purpose of the new regulatory chapter is to set forth the licensing requirements to be used by the Bureau going forward for debt collectors, including collection agencies, repossession companies, and residential real estate property preservation providers, as well as debt buyers, as those terms are defined in the Maine Fair Debt Collection Practices Act. See 32 M.R.S. § 11002(5-A) and (6). The modifications to the debt collection licensing requirements will (i) transfer the licensing to the NMLS, (ii) convert the license from a two-year to a one-year license, and (iii) set application and renewal fees, as well as process requirements, for debt collector license applicants.

With regard to the transition to the NMLS, if a company holds a valid collection agency, repossession company or residential property preservation provider license, the rule extends current licenses scheduled to expire on July 31, 2023, through December 31, 2023. See CMR § 02-030-705(IV)(2). Pursuant to the announcement on the Bureau’s website, no additional action is required as the extension is automatic. The transition period for existing license holders will begin on November 1, 2023, and end on December 31, 2023, during which time all licensed debt collectors will have the obligation to transition from Maine’s licensing system to the NMLS.

With regard to the license term, as noted above, the new rules convert the two-year license for debt collectors to a one-year license and eliminate the current July 31 licensing date. The new annual licensing period will be from January 1 through December 31 of each year, and the annual fee will be $400 for the licensee and $200 for each licensed branch office. As noted above, while all licensees will be required to transition to the NMLS by December 31, 2023, those licensees with licenses scheduled to expire in years following 2023 will receive a credit of 1/4 of the current two-year license fee for each 1/2 year remaining on its license against the current renewal fee. See CMR § 02-030-705(VI)(2). Renewal applications received between January 1 and January 31, 2024, will be assessed a late fee of $100, and any renewal applications transitioning onto the NMLS will not be accepted after January 31, 2024. All applications received after January 31, 2024, will be considered new applications and will be subject to the new application fee of $400 plus the branch office fee of $200. See CMR § 02-030-705(VI)(3)(c).

The rule does not include specifics regarding the licensing transition to the NMLS, and the Maine page on the NMLS has not yet been updated to include this license type. The Bureau, however, states on its website that it will provide information regarding the licensing transition to the NMLS at a later date. Thus, existing debt collector license holders will need to monitor the Bureau’s website and the NMLS for future updates on the transition process. Any new debt collector license applicants must use the existing forms required by Maine if applying by November 1, 2023. If applying after November 1, 2023, the applicant should use the NMLS process that will be established. See CMR § 02-030-705(IV)(4) and (5).

The new rule sets forth the information and documentation that the Bureau will require for both new and renewal debt collector licenses, which include, among other items, information on the ownership and individuals with a controlling interest in the entity, including criminal and financial background information and resumes demonstrating previous business experience for such individuals; a financial statement prepared by a certified public accountant consisting of a review report or audited report demonstrating a positive tangible net worth of at least $10,000; a statement describing the exact nature of the proposed operations; a copy of each collection form letter intended to be used in Maine; a completed bond form, in the amount required by Bureau Rule Chapter 300, § 1(E); and contact information for examinations and complaints. See CMR § 02-030-705(IV)(6)(a-s).

Finally, the new rules provide guidance regarding changes to existing license information or changes in control of the licensee. Changes to information reported by the licensee to the NMLS must be updated within 30 days of the change or earlier if required by NMLS procedures. Licensees must provide notice of a change of control of the licensee to the Bureau by advance change notice on the NMLS, and the Bureau must approve any change of control before it will become effective. Any change of control of a licensee that occurs without approval or that the Bureau rejects will cause the immediate and automatic revocation of the license. See CMR § 02-030-705(IV)(7).

Money Transmitters

For money transmitters, the Bureau created another new chapter, 02-030 CMR Ch. 709, titled “Establishment of License and Renewal Fees and Application Requirements for Maine’s Money Transmitter Licensing and Requirement for Licensing Through the Nationwide Multistate Licensing System (NMLS).” The new regulation (i) establishes an annual license effective from January 1 through December 31 of each year, (ii) requires applicants for new licenses to apply through the NMLS as of the effective date of this rule and requires money transmitters currently licensed in Maine not currently using the NMLS for licensing to transition to the NMLS, and (iii) sets application and renewal fees and application requirements for money transmitters.

For money transmitters that hold a valid Maine money transmitter license that is not held through the NMLS, the regulation establishes a transition period from November 1, 2023, to December 31, 2023, during which all licensed money transmitters not already licensed through the NMLS will have the opportunity to transition from the State of Maine licensing system. Although instructions regarding the transition have not yet been posted on the NMLS, Maine money transmitter licensees not already on the NMLS must transition the license during this period if they want to remain licensed as money transmitters in Maine. See CMR § 02-030-709(IV)(3)(a). Renewal applications to transition existing licenses to the NMLS received between January 1 and January 31, 2024, will be assessed a late fee of $100, and any renewal applications transitioning onto the NMLS will not be accepted after January 31, 2024. All applications received after January 31, 2024, will be considered new applications and will be subject to the new application fee of $500. See CMR 02-030-709(VI)(3)(c). For applicants that do not hold a valid Maine money transmitter license as of June 25, 2023, all new licenses and renewal licenses will be processed through the NMLS.

The new rule sets forth the information and documentation that the Bureau will require for both new and renewal debt collector licenses, which include, among other items, all locations in Maine from which business will be transacted and the names under which business will be transacted; a description of the activities conducted by the business, a history of operations, and a business plan; a sample payment instrument or written order for money transmission; contact information form examinations and complaints; audited financial statements; information regarding the owners, officers and directors of the licensee, including professional, criminal and financial background information; and an original money transmitter bond in a form provided by the Bureau in the amount of $ 100,000 furnished by a surety company authorized to conduct business in Maine. See CMR § 02-030-709(IV)(7)(a-z).

Finally, the new rules provide guidance regarding changes to existing license information or changes in control of the licensee. Changes to information reported by the licensee to the NMLS must be updated within 30 days of the change or earlier if required by NMLS procedures. Licensees must provide notice of a change of control of the licensee to the Bureau by advance change notice on the NMLS, and the Bureau must approve any change of control before it will become effective. Any change of control of a licensee that occurs without approval or that the Bureau rejects will cause the immediate and automatic revocation of the license. See CMR § 02-030-709(IV)(8).