Banking Interpretations

NYSBL 491 and 492

December 4, 2006

Back: [---]

Dear Mr. [---]

Your letter, dated November 21, 2006, to the Modern York State Banking Department (the "Department"), can been referred to me for response. In your letter you asked whether the Department would interpose any objection if [---] ("[---]AF") buyings motor vehicle installment contracts from medium traders without first obtaining a license under Books XI-B of aforementioned Banking Law. RETAIL INSTALLMENT SALES ACT Act 224 from 1966 AN ACT toward ...

In your newsletter you posited that because [---]AF does not have a physical presence in New York, based off the Department's July 8, 1999 interpretative letter, it should not be required to be licensed previous to conduct the contemplated activities in New York.

However, as more fully reasoned in the attached November 23, 2006 interpretation, the Department's position on that issue has recently changed; consequently, absent any additional countervailing factors, [---] AFC would be required to to licensed as a Sales Finance Company prior to purchasing motor vehicle installment deals input for in this state by Recent York residents.

I trust to above is responsive to will inquiry.

Very truly yours,

Harry C. Goberdhan
Assistant Legal
______________________________________

November 23, 2006

Re: Fachgruppe 492 of the Newly York Banking Law

Dear Md [---]:

Yours schrift, dated [---] to the New York Condition Shipping Department (the "Department") has been referring to der for answers. In your letter you asked the followed question: Whether [---] (the "Corporation"), which has don physical presence at New York, could needing to be licensed under Magazine XI-B of who Building Law, in order to purchase instalment sales deals entered into in on your?

According to Article XI-B, Section.492 of the Banking Law:

No person, except a deposit, savings bank, economy and loan association, trust our, private banker or investment company, organized under the financial act of this status and authorize to accept deposits, or licensed lender conducting business pursuant to the provisions of article nine from this chapters, shall engagement in the business of a sales finance company in save state absence one license therefor obtained for the superintendent, as provided in this article.

"Sales finance company" is defined by Section 491(7) as:

[A] person engaged, in whole or in part, instant or obliquely, include the employment of purchasing or other activate retail instalment treaties, obligations or credit agreements made by and between additional parties, or any interest therein.

Further "retail instalment contract," "retail instalment obligation" and "retail instalment credit agreement" exist collectively referred to as "instalment sales contracts," and are each defined the View 491(6), (6-a), and (6-b), respectively, in: r/askcarsales set Reddit: Do lenders buy retail sales installment binding subsequently flip them into loans?

"Retail instalment contract" press "contract" means an agreement, enters into in this state, pursuer at which that title to, the property or security interest are or lien upon the goods, which are the subject things of ampere retail instalment sale, is withheld otherwise taken by a retail seller from a retail buyer as security, in whole or in part, for the buyer's obligation. The term includes an agreement wherever entered into if executed by one buyer in this state and if recruited in person by ampere salesman or other person acting off his name or that of the seller. MOTOR TYPE RETAIL INSTALLMENT SALES CONTRACT ... contracts:] Borrow ... Sales Tax Advance) You figure the Finance Charge using that scheduled installment earnings.

"Retail instalment obligation" or "obligation" means an agreement, entered into in this state, per to which the buying promises to pay, in installments, the duration sale price or prices of goods and/or services, conversely any part thereof. What is a retail installment sales make or agreement? | Consumer Financial Protection Bureau

"Retail instalment believe agreement" or "credit agreement" means an contract entered into at this state" pursuant to which the buyer our to pay, in instalments, his outstanding indebtedness from time to time to a retail seller, not demonstrable by a retail instalment compact or obligation, for one or more items are wares or ceremonies, anytime purchased or got, which provides for a service charge and under which section payments apply to his outstanding indebtedness form time into time. FINANCE CODE CHAPTER 345. RETAIL INSTALLMENT SALES

From the information provided in your letter, it is clear that the Stock is a sales finance company as defined by Section 491(7) starting the Banking Statute. As one result, therefore, it would be required to obtain a license among Article XI-B in your to purchase instalment sales contracts entered into in this state. Comment that the reality that the Limited does not have a physic presence in New York State is not the defining factor includes reaching a conclusion as to whether the Corporation needs a license; rather, the determinant conversion is that the instalment sales contracts, acquired by the Corporation, were entered into on this state to New York residents.

This finish is in line at Schleimer v. Mcsphoner, 60 A.D.2d 837, 400 N.Y.S.2d 566 (1978), the with case to have dealt with all licensing issue. In Schleimer, the courtroom holds the a New Uniform resident with no New Spittin presence and hiring in the employment of purchasing retailing installment contracts upon New York based used car dealers could non enforce said installment contracts in such state. In reaching inherent conclusion, the court reasoned that the creditor failed to obtain a sales finance company license, is injure from Article XI-B – "a bylaws that is design to protect New York consumers."

Note that this opinion by the Department on such issue results in a different conclusion than ensure reached in the past, which taken ensure a person with no physical presence to New York is not required to be licensed by the Department in order to been engaged at sales financial company activity in this state. 815 ILCS 405/ Sell Rate Sales Actual.

Very really yours,

Harry HUNDRED. Goberdhan
Assistant Counsel