ANDREA NUCIFORO – Seeks sweeping changes

Although Wednesday, June 27, was the deadline for reporting bills out, the Joint Committee on Banks and Banking has filed for an extension on its most controversial bills, including a proposal to extend the Community Reinvestment Act requirements to mortgage companies.

According to a spokeswoman for committee Co-chairman Sen. Andrea Nuciforo Jr., D-Pittsfield, the committee will meet in another executive session in about three weeks.

Many of the bills drawing the most public response have yet to be voted on. A rumor that one representative planned to move the CRA bill from the floor by attaching it to the housing bond bill proved unfounded. Additionally, Nuciforo’s bill, Senate No. 10 – which would make sweeping changes to mortgage and banking laws in the state – was also included in the extension.

During its last executive session on Tuesday, June 25, the committee dealt with 37 of the 94 bills sent to it.

Eleven bills passed out of the committee favorably, including Senate No. 5, which would permit credit unions to become licensed insurance agents or brokers of insurance companies either directly or by third-party agreement. The bill was one of several the Massachusetts Credit Union League trumpeted during its Governmental Affairs Day in April.

Robert B. Kimmett, senior vice president of the Massachusetts Credit Union League, said if the bill passes in the Legislature, credit unions probably won’t jump into insurance sales quickly. “I do see the marketplace as pushing that convergence in. I don’t think it will get to a point where it becomes a service that’s on a par with the core financial services that credit unions are currently concentrating on – the business of lending and providing deposit services and transactional services,” he said.

“In general, most of these bills [favored by the MCUL] are not far-reaching efforts to bring new powers into credit unions,” said Kimmett. Rather, they are housekeeping measures or bills that would bring state credit unions into parity with federally chartered credit unions and state and national banks.

An Act Relative to Deceased Depositors, sponsored by Rep. Michael J. Rodrigues, D-Westport, also was passed out of committee favorably. If passed by the full Legislature, the bill would give state credit unions the same ability as other financial institutions to disperse funds. Under current law, the maximum dispersible fund to a spouse or family member when a depositor dies is $3,000 for state-chartered credit unions. Additionally, the person must wait 60 days before receiving the money. Under the proposed law, credit unions may disperse up to $10,000 in 30 days, the same as is permitted for banks and federally chartered credit unions.

“Think of the confusion [this causes] in what’s obviously a very stressful time for people,” said Kimmett.

‘Consistent’ Actions
A bill that would allow loan officers to determine approval of real estate loans also was passed favorably at an earlier executive session. Currently, the volunteer board of directors of a state-chartered credit union has to meet to decide whether to approve real estate loans. Kimmett said the law was probably originally drafted for a good reason.

“In a different era [it was] an important safeguard but today, given professional lenders and carefully drawn policies, loan officers are pretty much the people that do this work,” he said. “From a competitive point of view, you can’t ask a consumer to sit back and wait for a loan approval 30 days.”

Other bills falling in the favorable category include a House bill that forbids prepayment penalties if the mortgage is paid in full after 36 months.

House 1060 would require that 30 days before the foreclosure sale of an elderly person’s home, a company representative must physically visit the site and explain the situation to the homeowner. The person then is given the chance bring the mortgage current. Someone must accompany the company representative from the local Council on Aging, and all must sign an affidavit.

The committee looked favorably on a bill that would toughen up regulation of “live checks.” The testimony before the committee on that subject was particularly poignant when a representative of Taking Heart, a group that helps the elderly “find their voice” in regard to consumer affairs, appeared and told anecdotes of elderly widows who mistakenly cashed the checks, thinking they were benefit checks.

Members of the committee seemed satisfied with recent regulations by the Division of Banks to prohibit predatory lending because all bills regarding such lending were either relegated to study or reported out adversely.

“We’re very pleased that the committee heard the suggestions of the lending institutions and others to hold on any action until we see how the regulations promulgated by the commissioner take effect,” said Susan Zuber, president of the Massachusetts Mortgage Bankers Association.

The Massachusetts Bankers Association received a favorable recommendation on its wildcard bill, which would permit the commissioner of the Division of Banks to allow state-chartered banks to offer any product or service allowed for federal and nationally chartered banks.

Proposed legislation requiring banks to issue monthly statements to mortgage loan customers was adversely reported by the committee.

An act that would prohibit banks from charging fees to customers when a check bounced also was adversely reported.

A bill aimed at doing away with banks requiring deposits of those customers who pay cash for a money order or bank check was adversely reported by the committee.

Kevin F. Kiley, executive vice president and chief operating officer of the MBA, said he was pleased in general with the overall results of the last executive session.

“I think by and large the committee actions were consistent with the prior actions – that [is] attempting to balance the interest of appropriate consumer protection, consumer benefits with the need to have a strong and vibrant dual banking system,” he said.

A bill regarding electronic funds transfers, which was supported by the MBA, was put into study. “In some cases, the fact that they were referred to study means that the committee is deferring any particular action, but a particular bill could be put into study and pulled back and adopted,” said Kiley. But while the bill remains in study, no action is taken.

Kiley said the MBA will continue meeting with the committee throughout the summer months to work on the remaining bills. In addition to CRA for mortgage companies and the recodification of banking law, a law changing the way mutual banks can convert to publicly traded companies was included in the extension filing.

“We continue to believe a mutual conversion bill isn’t necessary, but the committee wanted additional time to look at that. There are a number of issues they’re continuing to look at,” he said.