By Janie Ginocchio
A few weeks ago, we shared exciting news that the Arkansas General Assembly passed legislation making it easier for Arkansans to save at tax time. But Act 774 of 2019 is not the only bill passed during the 2019 Arkansas legislative session that is of interest to Southern’s customers, partners and stakeholders. Here is a short summary of new laws of note, with links to the full text of the laws.
Act 62 – To Revise the Maximum Loan Limits of Certain Loans and for Other Purposes
Banks in Arkansas cannot loan more than 20 percent of the bank’s capital base to any person. For example, a bank with $10 million in capital can loan a maximum of $2 million to an individual. Prior to the passage of Act 62, the loan limit for consumer loans endorsed without recourse was 20 percent for each primary debtor, so in the example, the bank could loan $4 million to a couple for a personal loan. Act 62 strikes the phrase “consumer loan” and its definition, which allows banks to apply the 20 percent maximum loan limit for each main borrower to all types of applicable loans, including business loans.
Act 63 – To Clarify the Remedies and Procedures for Nonpayment of Rent on a Safe-deposit Box
Banks are now authorized to sell or auction the contents of a safe deposit box if costs and fees for the box have not been paid within two years of opening the safe deposit box. The bank must sell or auction the items within five years of the safe deposit box’s rental expiration date.
Act 111 – To Amend the Uniform Money Services Act
This legislation makes several amendments to the state’s Uniform Money Services Act, which governs financial institutions involved in the transmission of money or currency exchange. The amendments change the requirement for surety bonds, licensing renewal deadlines, licensing application fees and the required net worth that licensees must maintain.
Act 200 – To Modify the Fair Mortgage Lending Act
The law adds language regarding “transitional loan officers,” which are defined as those with a transitional loan officer license and who are paid or employed by a mortgage broker or banker and who are authorized to act as a loan officer. Transitional loan officer licenses are limited to a term of no more than 120 days and are not subject to reapplication, renewal or extension. Termination of the transitional license occurs after 120 days or when the licensee receives a loan officer license.
Other changes to the Fair Mortgage Lending Act include increasing the required voting percentage from 10 percent to 25 percent in defining an individual who has control of a mortgage company. The act also amends exemptions for manufactured or modular home retailers, and repeals sections related to certifications of compliance and criminal convictions for loan officer licensure.
Act 201 – To Adopt Federal Internal Revenue Code Provisions Concerning Opportunity Zones
Act 201 updates state statutes to ensure the definition of “opportunity zone” is the same as what is in federal law.
Act 255 – To Amend the Law Concerning the Canceled Checks of a Public Entity; and to Provide Alternative Formats for Maintaining and Accessing the Canceled Checks of a Public Entity
The law requires financial institutions that provide public entities with images of canceled checks to submit sample images to Arkansas Legislative Audit for review in one of the following formats: on a CD-ROM or similar tangible digital media, through the internet, or on paper. Financial institutions must provide the public entity with canceled check images through the format approved by Legislative Audit.
If the images are provided through the internet, the financial institution must provide Legislative Audit with read-only access to the public entity’s online banking documents, and documents must be available for at least five years. If a particular software is needed to view the documents, that software must be provided to the public entity and to Legislative Audit, upon request.
Financial institutions are also required to provide duplicate copies of any checks and statements for the public entity to Legislative Audit at its request. The copies must be in the same size and clarity as those given to the public entity and in the format requested by Legislative Audit.
Act 591 – To Amend the Law Concerning the Investment of Guardianship Funds
Guardians of an estate can now invest funds from the estate into the following:
- School district bonds
- Investment instruments issued by a federal land bank, a federal intermediate credit bank, a bank for a cooperative or any other obligation issued under the federal Farm Credit Act
- Bonds issued by a national mortgage association
- Certificates of deposit or other interest-bearing deposit accounts in FDIC-insured banks domiciled in the state
- Shares, share certificates, share accounts or accounts of buildings and loans, credit unions, and federal savings and loan associations. All of these entities must have an office in the state.
Investments in financial instruments through a bank, building and loan, or federal savings and loan association must be made with organizations insured through the Federal Deposit Insurance Corporation (FDIC). Eligible credit unions must be insured by the National Credit Union Administration (NCUA). Investment amounts cannot exceed the amount insured by FDIC or NCUA.