North Dakota Amends Money Broker and Collection Agency Exemptions

North Dakota Senate Bill 2103 (SB 2103) amends its state laws primarily relating to the licensing of money brokers and collection agencies, effective August 1, 2021.

In particular, SB 2103 amends certain exemptions and creates new exemptions from the money broker licensing requirements for the following persons:

• State or federal agencies and employees of state or federal agencies solely pursuant to the individual’s official duties as an employee of the state or federal agency;
• A certified development corporation that qualifies as a nonprofit under Section 501(c)(3) of the federal Internal Revenue Code in the offers of: (1) loan products primarily limited to the Small Business Administration, U.S. Department of Agriculture, or other government loan products; or (2) nongovernmental loan products that are limited to loans to promote community development or home ownership, and these loans are offered with favorable terms including an interest rate at or below the Wall Street Journal prime rate and loan fees of less than a quarter percent of the loan origination balance; and
• A nonprofit corporation that qualifies as a nonprofit entity under Section 501(c)(3) of the federal Internal Revenue Code which is not primarily in the business of soliciting or brokering loans, if the nonprofit corporation makes five or fewer loans in a given calendar year, makes these loans to promote community development or home ownership, and offers these loans on favorable terms, including an interest rate at or below the Wall Street Journal prime rate and loan fees of less than a quarter percent of the loan origination balance.

SB 2103 also amends the North Dakota collection agency provisions to exempt the following entities from such licensing requirements:

• Licensed real estate brokers, if the engaged activity is regulated as part of that individual’s professional license; and
• Agencies of a state or of the federal government and employees of state or federal agencies solely pursuant to the individual’s official duties as an employee of the state or federal agency.

In addition, SB 2103, among other things, provides for maximum charges that a licensed money broker may charge (e.g., finance charges pursuant to a loan not more than an annual rate of 36%, including all charges and fees necessary for the extension of credit incurred at the time of origination), charges that may be assessed by money brokers for nonpayment or late payments, certain money broker restrictions on small loans of less than $2,000, and treatment of workout agreements related to financial hardships for deferred presentment service transactions by licensed deferred presentment service providers (payday lenders).