HCS SS SB 792 -- FINANCIAL TRANSACTIONS

SPONSOR: Mathewson (Liese)

COMMITTEE ACTION: Voted "do pass" by the Committee on Banks and Financial Institutions by a vote of 22 to 3.

This substitute modifies provisions applicable to Banking, Consumer Protection, Consumer Loans, and Second Mortgage Loans, which include;

(1) Before engaging in a state sponsored financial transaction, the State Treasurer must consider whether the institution handling the transaction has adequately complied with the Community Reinvestment Act;

(2) When determining a bank or trust company's legal loan limit, the population figure will not include persons incarcerated within correctional institutions;

(3) Courts are authorized to accept into evidence reproductions of banking documents without the necessity of the appearance of a bank officer. Reports must be accompanied by any affidavit as to authenticity;

(4) Consumer finance companies and second mortgage lenders are required to comply with all consumer protection provisions, which include; clearly disclosing on the face of a sample check that it is a solicitation for a loan; warning borrowers that when using real estate as security that default on the loan may result in the loss of real estate, and also notifying that borrowers have the right to cancel loans; taking into consideration a consumer's ability to repay a loan when determining the size and duration of the loan; and conspicuously displaying maximum rates and fees being charged;

(5) Lost, destroyed, or stolen cashier's checks, teller's checks, and certified checks may be paid to the claimant upon sworn declaration of loss by the drawer or payee;

(6) Rates of interest will be set as agreed by parties entering into contracts;

(7) Lenders are allowed to charge a loan processing fee of 5% not to exceed $50. Lenders may charge an annual fee of up to $50 on open-end credit. Lenders may collect an advance fee for giving debtors the option to defer up to 3 monthly loan payments. The fees can be no more than the lesser of $50 or 10% of the deferred payments;

(8) Lenders issuing credit cards are allowed to charge additional fees that are authorized by a contiguous state;

(9) Default agreements between parties are applicable only to credit transactions made primarily for personal, family, or household purposes;

(10) Collateral protection coverage placed by creditors may allow a grace period of 60 days or more to allow the debtor to provide proof of insurance on the collateral securing a loan; and

(11) The amount of franchise tax for banking institutions which elect to operate as S corporations is the same as for non-S corporation institutions.

FISCAL NOTE: Loss to General Revenue Fund of less than $100,000 in FY 1999, FY 2000, and FY 2001.

PROPONENTS: Supporters say that Missouri has not kept pace with the industry and by removing the cap for financial services the bill would create a level playing field and bring competitive controls to the marketplace.

Testifying for the bill were Senator Mathewson; Missouri Bankers Association; and Missouri Financial Services Association.

OPPONENTS: There was no opposition voiced to the committee.

Bob Dominique, Legislative Analyst

Missouri House of Representatives