69U-120.004: Loans Secured by Secondary Liens on Real Estate
69U-120.009: Securities Purchasable by Banks; Investment Characteristics
PURPOSE AND EFFECT: Rule 69U-120.004, F.A.C., is proposed for amendment to remove language nullified by the repeal of certain statutory language in Section 658.48, Florida Statutes, as a result of Chapter 2011-194, Laws of Fla. (2011). Rule 69U-120.009, F.A.C., is proposed for amendment to conform the rule to statutory revisions to Section 658.67, F.S., as a result of Chapter 2011-194, Laws of Fla. (2011).
SUMMARY: Rule 69U-120.004, F.A.C., is proposed for amendment to remove language nullified by the repeal of certain statutory language in Section 658.48, Florida Statutes, as a result of Chapter 2011-194, Laws of Fla. (2011). Rule 69U-120.009, F.A.C., is proposed for amendment to conform the rule to statutory revisions to Section 658.67, F.S., as a result of Chapter 2011-194, Laws of Fla. (2011).
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:
The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency.
The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) No requirement for a SERC was triggered under Section 120.541(1); and 2) The amendments will not exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
RULEMAKING AUTHORITY: 655.012(2) FS.
LAW IMPLEMENTED: 658.48, 658.67 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAW.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Jeffrey Jones, Office of Financial Regulation, jeffrey.jones@flofr.com
THE FULL TEXT OF THE PROPOSED RULE IS:
69U-120.004 Loans Secured by Secondary Liens on Real Estate.
(1) As provided by subparagraph 658.48(5)(e)5., F.S., state banks may make loans based on the security of secondary real estate mortgages in an amount not to exceed 10 percent of capital accounts to any one borrower.
(2) For computation of total loans to any one borrower, loans secured by secondary liens will be considered unsecured unless the following criteria are met:
(1)(a) The position of the state banks mortgage shall be documented. Acceptable forms of documentation shall include an attorneys title opinion, or title insurance, or a written memorandum of title search prepared by the banks own employee or agent. A written notation made by the person preparing the documentation that prior mortgages contain no future advance provisions is required. If prior liens do contain future advance provisions, an estoppel letter from prior mortgagees must be obtained.
(2)(b) Appropriate records shall be maintained to fully establish the banks equity in their mortgage at the time the loan is made.
(3)(c) Any loan with a maturity in excess of 5 years from origination will be subject to principal reduction through a regular schedule of payments. At least one such payment is required annually.
(4)(d) Any loan due on demand shall not be carried on the books of a state bank in excess of 5 years, however, it may be converted to an amortized loan with a stated maturity and thereby permissibly extended beyond 5 years.
Rulemaking Specific Authority 655.012(2) 655.012(3), 655.06 FS. Law Implemented 658.48 FS. (See also 12 U. S. C. 371) HistoryNew 6-13-77, Amended 4-23-78, 6-30-81, Formerly 3C-11.17, 3C-11.017, 3C-120.004, Amended_________.
69U-120.009 Securities Purchasable by Banks; Investment Characteristics.
(1) Securities of political subdivisions of the states are not eligible for investment unless current as to all payments of principal and interest and otherwise supported as to investment quality and marketability by a credit rating file compiled and maintained in current status by the purchasing bank or trust company rated at least Baa or BAA by established investment services (such as Standard and Poors Corporation, Moodys Investors Service, and The Fitch Publishing Company, Inc.) are eligible bank investments. It is understood that the compiled and current credit rating file will indicate such ratings indicate the presence of protection for both principal and interest through satisfactory basic credit factors as follows:
(a) For general obligations assessed valuations; tax rates; tax collections; receipts and disbursements; long-term debt record; direct debt-overlapping debt; budget controls; operating results; economic status of political subdivision including population trend; and, political subdivision management record.
(b) For revenue obligations assessed valuations; tax rates; tax collections; specific pledged revenues, with projections if available; operating expenses chargeable to revenues; net revenues available for debt service; nature of revenue lien; restrictions against excessive additional revenue bonds; necessity of project; competitive facilities; legal authority for the revenue issue; economic status of political subdivision; and population, including growth trend.
(2) Absence of a rating shall not of itself render a security ineligible. Non-rated general obligations and revenue issues of quality but limited in size which possess the factors present in rated issues to a satisfactory and equivalent degree shall be regarded as eligible.
(2)(3) Corporate obligations listed upon a recognized exchange, and new corporate issues for which listing applications are pending, which are current as to all payments of principal and interest and otherwise supported as to investment quality and marketability by a credit file compiled and maintained in current status by the purchasing bank or trust company rated at least Baa or BAA by established statistical services shall be considered eligible bank investments, except as follows:
(a) Equipment trust issues shall not be subject to the listing requirement.
(b) Securities convertible into stock at the option of the holder or with stock purchase warrants attached shall be prohibited if the price paid is in excess of the comparative investment value considered independently of the conversion or purchase warrant features.
(c) Securities convertible into stock at the option of the issuer are predominantly speculative and shall be ineligible.
(3)(4) Marketability, which is considered as present in listed corporate issues and in new corporate issues for which listing applications are pending, shall be accepted as present in securities of political subdivisions if they shall be salable under ordinary circumstances with reasonable promptness at a fair value.
Rulemaking Specific Authority 655.012(2) 655.012(3) FS. Law Implemented 658.67 FS. HistoryNew 7-18-74, Amended 6-30-81, Formerly 3-1.04, 3C-11.04, 3C-11.004, 3C-120.009, Amended________.
