SS/HCS/HB 738 - The act makes several changes to financial laws.

HARLEY-DAVIDSON - Broadens the class of employees of the Harley- Davidson plant in Kansas City who count toward achieving the fifteen-percent requirement in order for the plant to be granted the tax credits and exemptions available to a business located within an Enterprise Zone, in that it allows Harley-Davidson to count current employees who resided within the Enterprise Zone at the initial date of their employment and for 90 days thereafter regardless of whether the employee continues to reside within the Enterprise Zone on the date of the count, as long as the employee continues to reside in Missouri and work at H-D. (Section 135.230)

This provision is also contained in TAT CCS/SS/SCS/HB 453 (2001).

BANKING LAWS - (1) The act states that, if the corporate franchise tax is repealed for Missouri corporations other than financial institutions, then:

(a) Financial institutions will be granted a tax credit, in lieu of the existing tax credit, of 1.5% of net income. S corporations can pass the tax credit through to their shareholders; and

(b) All taxes and tax credits on S corporations will be passed through to the shareholders, with certain exceptions;

(2) Allows insurance companies, beginning with the tax year 2003, to carry premium tax deductions for examination fees forward to any of the 5 subsequent tax years in order to claim the full deduction. Except that any deduction claimed through the carryforward provisions of this section, it shall be credited wholly against the general revenue fund and shall not cause a reduction in revenue to the county foreign insurance fund.;

(3) Clarifies the manner in which subordinate liens on motor vehicles or trailers must be perfected;

(4) Modifies bank stockholders' meetings laws to allow voting shareholders to transact all business required at annual or special meetings by unanimous written consent;

(5) Allows state bank and trust companies to:

(a) Hold noncontrolling equity interests in financial business entities that are owned by other financial institutions located in Missouri, and

(b) Lend money on real estate and handle real estate closings and escrows;

(6) Allows certain bank and trust companies in communities with sufficiently small populations, as established by rule of the Division of Finance, to keep the additional powers granted to them for 5 years after they exceed the allowable population;

(7) Allows state bank and trust companies to offer any product or service that a national bank can offer, as long as the state bank:

(a) Follows federal law while conducting these practices, and

(b) Is approved for these purposes by the Division of Finance after a prescribed notice period;

(8) Provides that state law preempts the field of future legislation by political subdivisions as to regulation of financial institutions;

(9) Expands the capital investment allowances granted to state banks to include holding companies authorized to do business in the state;

(10) Clarifies that certain investment prohibitions are limited only to other allowable investments;

(11) Allows bank and trust stockholders to appoint a chief executive officer or a president. Current law only allows presidents to be appointed;

(12) Allows bona fide fees to be collected on residential real estate loans for any actual and necessary services associated with the loan;

(13) Allows late payment charges not to exceed 5% of the payment due or $50, whichever is less, on small loans overdue for 15 days or more;

(14) Prohibits any regulation regarding the charging of insurance commissions on credit insurance or the payment of fair market value consideration on contracts to facilitate the sale of insurance from being more restrictive on financial institutions than regulations are on insurance agents, subject to enforcement actions by the Division of Finance or the Division of Credit Unions as necessary to protect the safety and soundness of the financial institution;

(15) Increases the attachment exemption for unmatured life insurance contracts of persons in bankruptcy proceedings from $5,000 to $150,000;

(16) Increases the length of time for exemptions of a insurance contract purchased by the person for one year for bankruptcy proceedings purposes. Current law only required six months; and

(17) Allows Financial Institutions that pay obligations from escrow to be exempt from city or county ordinance that require property taxes to be paid by installments.

This portion of the act is similar to SCS/HB 736(2001).

UNSECURED CONSUMER LOANS - The act redefines consumer credit loans as unsecured loans for personal, family or household purposes in amounts of five hundred dollars or more ($500). (Section 367.100) This provision does not become effective until January 1, 2002.

Persons seeking renewal of a license to provide consumer credit loans have the option of providing to the Division of Finance one of the following: an annual audit report, post a one hundred thousand dollars surety bond or an one hundred thousand dollars irrevocable letter of credit. Current law requires filing an annual audit with the Division of Finance. (Section 367.215)

The act removes the requirement that the borrower has to pledge such property to the title lender. The title loan lender no longer retains the certificate of title during the length of the loan. It removes the provision that money borrowed under a title loan agreement is not a debt of the borrower and that the borrower is not personally liable under such agreement. (Section 367.500)

The act clarifies that all information submitted by a lender to the Director of the Division of Finance is confidential. (Section 367.503)

The act requires title lenders to be licensed with the Division of Finance. Previously such lenders were required to be registered with the division. Penalties for violations of providing title loans without a license remain the same, civil penalty not less than one thousand dollars and not more than five thousand dollars for each day person acts in violation. (Section 367.506)

Title loan lenders no longer have to be residents of Missouri. Such lenders are required to post a twenty thousand dollars surety bond per location or a twenty thousand dollars irrevocable letter. (Section 367.509)

The act retains a one thousand dollar investigation fee for each location upon renewal of license by title loan lenders.

Title loan borrower are no longer required to pay fees at the time of renewal of the loan. However, the title loan borrower is required to reduce the principal of the loan by 10% of the total principal upon the third renewal or any renewal subsequent to the third renewal. Current law requires a reduction of 10% of the original principal. Upon repayment of the loan, the lender will release its lien and return the title to the borrower. (Section 367.512)

If the title loan borrower defaults the lender will provide the same notice and opportunity to cure defaults that is provided to other borrowers and eliminates the existing requirement whereby title loan borrower is required to deliver the property described in the loan to the borrower at the end of the first loan period. (Section 367.512)

The act allows title lenders to charge only those interest rates and fees allowed to other small loan lenders. Small loan lenders may charge any interest agreed to by the parties, but may only charge fees on the initial loan contract, and those fees cannot exceed 5% of the principal or $50, whichever is less. (Section 367.515)

The act requires certain additional disclosures and forms for all title loans, including informational notices to borrowers, the potential consequences of default, and the maximum rates charged by the lender. (Section 367.518)

Title lenders are required to keep records on the loans and notices given to their customers for at least 2 years. (Section 367.524)

All title lenders are required to be examined by the Division of Finance prior to ceasing business. (Section 367.524)

Title lenders must follow the same procedures for collection on defaulted loans as is provided for other small lenders. (Section 367.527)

The act creates a procedure for revocation or suspension of title lenders which includes a hearing before the Director of the Division of Finance. Establishes civil penalties of up to $1,000 per day, or cease and desist orders for title lenders who violate the provisions of the bill. (Section 367.532)

The act requires all lenders in the business of making unsecured loans under $500 ("payday lenders"), with exceptions for certain types of loans, comply with the same principal reduction, notice and opportunity to cure, interest and fee limitations, disclosures and forms, record-keeping, examination, default collection, and penalty provisions that are applied to title lenders throughout the substitute, except that the principal reduction requirements for lenders making unsecured loans under $500 do not apply until the fifth renewal; and no surety bond is required of these lenders. (Section 408.500)

Consumer installment lenders are required to be licensed and to follow the interest and fees, notice, opportunity to cure and collection procedures established for other lenders. (Section 408.510)
JULIA SOMMER GRUS