Authorized activities and operations of credit unions; the lending area of savings and loan associations; automated teller machines; residential mortgage loans and variable rate loans; payments for public deposit losses in failed financial institutions; promissory notes of certain public bodies; repealing rules promulgated by the Department of Financial Institutions; providing an exemption from rule-making procedures; and providing a penalty. (FE)

1. Expands the ability of a credit union to purchase, lease, and sell real property, subject to limitations.

2. Specifies that credit unions may issue or offer supplemental forms of capital approved by OCU.

3. Repeals certain DFI rules related to the placement or operation of automated teller machines (ATMs) by financial institutions.

4. Creates the crime of interfering with an ATM.

5. Eliminates a geographical lending restriction for an S&L association.

6. Eliminates certain lender disclosure requirements applicable to residential mortgage loans and variable rate loans.

7. Extends the maximum maturity date, from 10 to 20 years, of a promissory note issued by a municipality, county, or school district.

8. Extends the period in which a credit union's board of directors must appoint a director to fill a board vacancy.

9. Increases the amount of compensation available from DFI for losses resulting from the deposit of public moneys in a failed financial institution.

10. Extends the period during which OCU must determine whether an activity or power that becomes authorized for a federally chartered credit union should also be authorized for a Wisconsin-chartered credit union.

11. Extends the deadline for a credit union to pay OCU for the cost of an OCU examination.

Credit union property Under current law, a credit union may purchase, hold, and dispose of property as necessary for or incidental to its operations.

The bill specifies that a credit union may purchase, lease, hold, and convey certain real estate, including real estate conveyed to the credit union in satisfaction of a debt or foreclosed real estate, subject to guidance by OCU and a five-year limit on holding the real estate.

Supplemental capital The bill specifies that credit unions may issue or offer supplemental forms of capital in the form and with the conditions, including those related to the safety and soundness of the proposed use of the capital and the overall condition of the credit union, approved by OCU.

Off-site ATMs Under current law, a bank, savings bank, S&L association, or credit union (collectively, financial institution) may acquire, place, and operate, or participate in the acquisition, placement, and operation of, at locations away from the financial institution, what is variously referred to as customer bank communications terminals, remote terminals, or remote service units, in accordance with rules established by OCU and DFI's Division of Banking (division). These devices are terminals or other facilities that are not located at a financial institution and through which customers and financial institutions may engage in electronic transactions that are incidental to the conduct of the business of financial institutions (collectively, off-site ATMs).

Under current rules of the division, a financial institution other than a credit union must provide advance written notice to the division before acquiring, placing, or operating an off-site ATM. The bill repeals these rules.

Current statutes provide that OCU or the division may, by order, authorize the installation and operation of an off-site ATM in a mobile facility, after notice and hearing upon the proposed service stops of the mobile facility. The bill repeals these provisions.

Interference with automated teller machines The bill also creates a Class H felony for intentionally causing impairment or interruption of use of a financial institution's ATM or customer bank communications terminal. A Class H felony is punishable by a fine not exceeding $10,000 or imprisonment not exceeding six years, or both.

Savings and loan association lending areas Current law specifies the authority of an S&L association to make mortgage loans but also limits the lending area of an S&L association to a radius of 100 miles of the S&L association's home office. In general, an S&L association may establish branch offices within the lending area of its home office.

The bill eliminates the lending-area restriction on an S&L association and, consequently, the limitation that a branch office must be located within the lending area.

Residential mortgage loans and variable rate loans Under current law, a residential mortgage loan generally is a loan secured by a first lien real estate mortgage on a one-family to four-family dwelling that the borrower uses as his or her principal residence. Current law imposes various requirements related to residential mortgage loans, including the following:

1. Before a lender accepts an application or fee in connection with a residential mortgage loan, the lender must deliver to the potential loan applicant a written disclosure that contains certain information, including whether an application fee is refundable and whether the interest rate and other terms of the agreement may change before the closing date.

2. The lender must provide a written statement to an applicant of the reasons for adverse action on an application. Delivery of a notice of adverse action in compliance with federal law satisfies this requirement.

3. The lender must provide written notice to the borrower if the loan servicing for the residential mortgage loan is sold. The notice must include the name, address, and telephone number of the new loan servicer.

The bill repeals the requirements identified as 1. to 3. immediately above.

Under current law, a variable rate loan generally is a residential mortgage loan the terms of which permit the interest rate to be increased or decreased. Current law imposes various requirements related to variable rate loans, including a disclosure requirement. Before making a variable rate loan, the lender must disclose specified information to at least one of the borrowers, including that the loan contract contains a variable interest rate provision; identification of the index used and its current base; and rights of the borrower with respect to a change in the interest rate.

The bill repeals these disclosure requirements.

Promissory notes of certain public bodies Under current law, a public body that has the authority to borrow money and issue obligations to repay the money out of public funds or revenues and that has the authority to levy a tax may issue promissory notes for any public purpose. Public bodies covered by this provision include cities, villages, towns, counties, and school districts. Each promissory note, with several exceptions, must be repaid within 10 years after the original date of the note. Under the bill, each promissory note must be repaid within 20 years after the original date of the note.

Vacancy on board of directors Current law allows the board of directors of a credit union to remove a director.

Within 60 days after the date of removal of a director, the board of directors must appoint a director to fill the vacancy. The bill requires a credit union's board of directors to fill any vacancy, including a vacancy resulting from removal of a director, within 90 days.

Public deposit losses Under current law, the Investment Board (SWIB) and the governing bodies of counties, municipalities, and certain other local governmental units (collectively, public depositors) must designate one or more financial institutions in this state for deposit of all public moneys received by the public depositor. DFI administers a claims process that repays public depositors for losses that exceed applicable deposit insurance resulting from a failed or failing financial institution's failure to repay the deposit of public moneys. The maximum payment that DFI can make to a public depositor for losses from a single financial institution is $400,000. These loss payment provisions also apply to local government deposits in the local government pooled-investment fund managed by SWIB.

The bill increases, from $400,000 to $1,000,000, the maximum payment that DFI can make to a public depositor for losses from a single financial institution that exceed deposit insurance.

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