HCS SCS SB 1038 -- BANKING

SPONSOR:  Yeckel (Luetkemeyer)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 16 to 3.

This substitute changes the laws regarding financial services.
It expands the college tuition savings plan, known as a 529 Plan,
by allowing Missouri residents to use any qualified 529 Plan from
any state or political subdivision.  Currently, Missouri
residents can receive state income tax benefits only when using
the state-sponsored plan, known as the Missouri Higher Education
Savings Program.  The substitute establishes the Missouri Higher
Education Deposit Program, which allows any bank in Missouri to
establish savings accounts as part of a 529 Plan.  State
employees may request automatic payroll deductions into these
accounts.  The deposit program is to be administered in the same
fashion as the current savings program.  The provisions of the
program will expire six years from the effective date.

The substitute creates a cause of action for the deceptive use of
the name of another financial institution.  Any financial
institution may sue any person or entity that creates a
misleading advertisement or solicitation by including the name of
the financial institution without consent.  A plaintiff
prevailing in this type of action will be entitled to $10,000 in
statutory damages, plus any proven actual damages; attorney fees;
and court costs.

The substitute changes the laws governing how and when a lender
must provide a deed of release when a mortgage is paid off.
Current law requires the lender to issue a release to the
borrower within 15 business days.  The substitute lengthens this
to 45 calendar days and allows the lender to have the document
recorded, rather than mailed to the borrower.  If the document
cannot be recorded for any reason, the lender will have an
additional 60 days to file a document that can be recorded.  The
substitute limits the damages that may be awarded for
noncompliance to $300 per day or 10% of the amount of the loan,
whichever is less, plus court costs and attorney fees.

The substitute changes the laws regarding small loans.  The
substitute:

(1)  Increases from $6 to $15 the maximum amount which may be
charged as an expediter fee, which is money collected by a third
party to expedite the retrieval of a debtor's motor vehicle title
from the Department of Revenue;

(2)  Repeals a provision allowing a $10 charge as a late payment
fee; and

(3)  Allows lenders to collect a fee in advance for allowing the
debtor to defer monthly loan payments on loans of $600 or more.
The fee may be between $25 to $50, but not more than 10% of the
loan payments deferred.  This provision does not apply to
pre-computed loans.

The substitute gives the Board of Fund Commissioners and the
State Board of Public Buildings the authority to issue and
refinance existing financial instruments, converting them into
variable rate issuances and other financial arrangements.  The
variable rate issuances may not exceed 20% of the state's
outstanding debt.

The substitute also clarifies the venue for criminal prosecutions
and civil suits of identity theft.

FISCAL NOTE:  Estimated Cost to General Revenue Fund of Unknown
in FY 2005, $20,640 to Unknown in FY 2006, and $28,779 to Unknown
in FY 2007.  Unknown expected to exceed $100,000.  No impact on
Other State Funds in FY 2005, FY 2006, and FY 2007.

PROPONENTS:  Supporters say that the Missouri Higher Education
Savings Program offers a financially conservative option for
people whose children are close to college age.  For those people
buying stocks, even through a mutual fund, may not be a prudent
investment, because of the volatility of the stock market and the
relatively short term of the investment.  Purchasing certificates
of deposit through a local bank not only provides a risk-free
investment opportunity, but also keeps that money in Missouri.

Testifying for the bill were Senator Yeckel; and Missouri Bankers
Association.

OPPONENTS:  There was no opposition voiced to the committee.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
92nd General Assembly, 2nd Regular Session
Last Updated September 23, 2004 at 11:16 am