2008 Banking and Related Legislation
Each year, the Department of Banking, with the coordination of the Government Relations and Consumer Affairs Division, conducts an active legislative program. The following bills represent the agency's 2008 legislative proposals.
Please note that the listing is arranged by bill number. Hyperlinks for each bill lead to the Connecticut General Assembly website.
An Act Concerning Bank and Credit Union Authority and Nondepository Licenses
The act allows the banking commissioner to, under certain circumstances, approve temporary offices or other facilities to provide banking and credit union services to the customers of certain state and foreign banks or credit unions affected by an emergency.
By law, an emergency includes conditions arising from shortages of fuel, housing, food, transportation or labor, or arising from enemy action or threat of enemy action, from fire or other casualty, from robbery or other crime, from riot or threat of riot, or from extreme weather conditions. The act allows the temporary office to remain open for the period the commissioner specifies, but he may extend this period if he finds that the condition continues. The act allows the temporary office to be converted into a permanent one in accordance with the statutes.
The legislation also allows the commissioner to waive or suspend statutory or regulatory requirements for up to 90 days in order to further rapid restoration of services after an emergency if the laws might impede the recovery and restoration of financial services.
The act also:
- allows a subsidiary holding company in a mutual stock structure to acquire and dispose of its own stock, subject to the commissioner's approval, and provided it does not result in anyone other than the mutual holding company parent owning a greater percentage of common stock than is permissible;
- eliminates a mutual savings bank report publishing requirement;
- allows the commissioner to collect information on persons acquiring the beneficial ownership of the voting securities or securities convertible into voting securities of a bank or a bank holding company by operation of law, will, gift, or intestacy;
- specifically requires that certain licensees surrender their licenses within 15 days if they stop doing business in this state;
- requires information about limited liability company members when the entity is applying for certain licenses; and
- gives the banking commissioner access to certain information provided to federal agencies under the federal Home Mortgage Disclosure Act when he is unable to obtain it from federal agencies.
Effective Date: October 1, 2008
Other Legislation
Public Act 08-5 - SB 114
An Act Concerning Prevention of Fraud in Electronic Transactions
Federal law requires banks and Connecticut and federal credit unions to make funds available in accordance with the Expedited Funds Availability Act. State law specifies that the act applies to savings accounts but not to accounts whose funds are payable on a certain date or at the end of specified time period (e. g., certificates of deposit). This act extends the exclusion to savings accounts that are opened or funded electronically.
Effective Date: October 1, 2008
Expedited Funds Availability Act of 1987
- make funds deposited into transaction accounts available on a uniform time schedule and;
- provide disclosures about the availability of funds. It does not apply to savings accounts.
An Act Repealing The Connecticut Uniform Management of Institutional Funds Act
This act repeals the Uniform Management of Institutional Funds Act. In 2007, the legislature adopted the Uniform Prudent Management of Institutional Funds Act, which provides guidelines for the management, investment, and expenditure of institutional funds, but did not repeal the existing law on the same subject matter.
The act also expands the definition of institutional funds under the more recent act to include funds held by trustees for charitable community trusts. Funds held by an institution exclusively for charitable purposes are already included in this definition.
Effective Date: Upon passage
Public Act 08-39 - HB 5331
An Act Concerning Letters of Credit
The act permits the use of irrevocable Federal Home Loan Bank of Boston letters of credit to secure public deposits in Connecticut.
By law, qualified public depositories have the power to secure public deposits. To do this, each qualified public depository must keep at all times, segregated from its other assets, eligible collateral in an amount equal to a certain percentage of public deposits held by the depository. In lieu of the eligible collateral required, up to half of the deposits may be secured solely by a private insurance policy.
The act allows qualified public depositories to, in lieu of the eligible collateral requirement, secure their deposits solely with an irrevocable letter of credit issued by the Federal Home Loan Bank of Boston if certain conditions are met. Specifically,
- the federal home loan bank must have the highest rating available from a rating service the banking commissioner recognizes and
- the amount of the letter, as a percentage of public deposits must be not less than the amount required for eligible collateral for a particular depository.
- segregates eligible collateral or
- arranges for a letter of credit to be issued.
Effective Date: October 1, 2008
Public Act 08-58 - HB 5578
An Act Concerning Reinstatement Payment Statements
This act extends the requirements for issuing mortgage payoff statements to reinstatement payment statements.
It defines a “reinstatement payment statement” as one that provides the total amount owed and that a borrower must pay to cause the loan to be reinstated, provided any other contractual conditions for reinstatement are satisfied. Specifically, the act requires a lender, upon written request, to provide a written reinstatement payment statement to the borrower or borrower's authorized agent by the date noted in the request as long as that date is at least seven business days after the request is received. The act also shortens the deadline for payoff statements from 10 business days to seven. The borrower's attorney can make the request to the lender if it relates to a default, as long as the request represents that the person is an attorney authorized to do so by the borrower.
By law, the lender must provide a payoff statement by the request date or forfeit any interest on the mortgage loan that accrues between the request date and when the borrower receives it. The act extends this requirement to reinstatement statements. The borrower bears the burden of proof with respect to the receipt of the request by the lender and the lender bears it with respect to receipt of the statement by the borrower. As with payoff statements, the act prohibits the lender from imposing any fee or charge for the first reinstatement payment statement requested each year unless the person making the request agrees to pay a fee for expedited delivery of the payoff statement and the lender delivers it on time.
Finally, the act specifies that it does not create an obligation on the part of the lender to provide a reinstatement payment statement if no right to cure the default and reinstate the loan exists under the loan documents or the law.
Effective Date: October 1, 2008
Public Act 08-69 - HB 5128
An Act Clarifying Certain Depository Institution Disclosure Requirements
- the contract contains a statement in boldface type at least 12 points in size immediately following the provision stating “I ACKNOWLEDGE THAT THIS CONTRACT CONTAINS A LIQUIDATED DAMAGES PROVISION,” and;
- the person against whom the provision is to be enforced signs his or her name or writes his or her initials next to the statement.
- contracts between a consumer and an agency of the federal government, the state or any political subdivision of the state;
- negotiable instruments; and
- contract provisions for late fees, prepayment penalties, or default interest rates.
BACKGROUND:
Liquidated Damages
“Liquidated damages” is an amount of money agreed upon by both parties to a contract that one will pay to the other upon breaching (breaking or backing out of) the contract or if a lawsuit arises due to the breach.
Public Act 08-176 - HB 5577
An Act Concerning Responsible Lending and Economic Security
The act specifically authorizes the Connecticut Housing Finance Authority (CHFA) to
- continue the CT FAMILIES refinancing program and;
- implement mortgage refinancing and emergency mortgage assistance programs.
It allows CHFA to develop and implement a program for it to purchase foreclosed Connecticut property and turn the property into supportive and affordable housing. The act requires WorkPlace, Inc., in conjunction with the other regional workforce development boards and the one-stop centers, to establish a mortgage crisis job training program.
The act requires the chief court administrator, by July 1, 2008, to establish a foreclosure mediation program in each judicial district. The program ends in 2010.
The act establishes a number of requirements for mortgage loans (mainly for nonprime loans) and for mortgage professionals making those loans. It defines “nonprime loans.”
The act makes a number of additional regulatory changes for the Department of Banking, including increasing bond requirements for lenders and brokers. It also combines first and second mortgage professionals and makes a number of changes to the National Mortgage Licensing requirements adopted under PA 07-156. The act establishes a commission on nontraditional loans and home equity lines of credit.
Finally, the act makes a number of technical and conforming changes to the Banking statues.
Effective Date: July 1, 2008, except for the CT FAMILIES program, state assistance for EMAP, the establishment of the mediation program, and the nontraditional mortgage commission provisions, which are effective on passage.