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IBA E-News 2-22-19


FLD Day at the Statehouse

Register now for the 2019 FLD Day at the Statehouse, scheduled for March 12 at The Westin Indianapolis. This event is available to emerging leaders who are interested in becoming politically engaged and interested in being an advocate for banking in Indiana’s legislative environment. The event includes presentations on IBA lobbying and grassroots advocacy, visits with elected officials and access to the Indiana Statehouse. In addition to its informative agenda, the FLD Day at the Statehouse will also provide ample networking time to allow bankers to connect with peers. For more information, contact Josh Myers; to register, contact Susan Clark.

House Bill 1055 - Judgment Liens

Author: Rep. Jerry Torr, R-Carmel

Summary of legislation: The bill provides that additional identifying information must be included when recording a judgment lien. The bill also provides that a judgment lien is extinguished when certain items are recorded with the office of the county recorder in the county where the judgment lien was recorded. Updated version: The bill was amended to send the judicial liens issue to a summer study committee.

Latest action: The bill was heard in the House Judiciary Committee on Jan. 7. The bill was held for further consideration. The bill was brought back to the committee on Feb. 18. The bill was amended and voted out of committee.

Senate Bill 104 - Small Loan Finance Charges

Author: Sen. Greg Walker, R-Columbus

Summary of legislation: This bill changes the current incremental finance charge limits that apply to a small loan to a maximum annual rate of 36%. The bill also prohibits certain acts with respect to financing of a small loan and makes a violation a deceptive act and subject to penalties.

Latest action: The bill passed the Senate Insurance and Financial Institutions Committee on Feb. 20 by a vote of 6-2.

House Bill 1495 - Real Estate Land Contracts

Author: Rep. Vanessa Summers, D-Indianapolis

Summary of legislation: This bill defines “principal dwelling land contract” (contract) as a land contract for the sale of real property: (1) designed for the occupancy of one to four families; and (2) that will be occupied by the buyer as the buyer’s principal dwelling. The bill provides that the seller under a contract must provide the buyer with an FHA appraisal of the property, a description of any liens encumbering the property, and make certain other disclosures to the buyer at least 10 days before the contract is executed. It requires a contract to provide for the payment of preexisting liens, and specifies that all preexisting liens must be satisfied by the end of the contract term. The bill also prohibits penalties or additional charges for prepayment, and requires the buyer to record the contract within 30 days of execution. This bill requires the Indiana Real Estate Commission (commission), in consultation with the Department of Financial Institutions (DFI), to adopt a standard contract form and standard disclosure forms, and requires a seller to use these forms after December 31, 2019. It requires a contract to include a notice informing the buyer of certain protections for contract transactions under Indiana law, and requires a seller to provide a similar disclosure in the event of a default by the buyer. The bill specifies that the seller must provide the buyer with an annual statement of account. It establishes remedies for violations. The bill requires the commission, in consultation with the DFI, to adopt rules to implement the new provisions. The bill also provides that a buyer who has completed the buyer’s obligations under the contract is entitled to the homestead deduction regardless of whether the seller has conveyed title.

Latest action: The bill was heard in the House Financial Institutions Committee on Feb. 19. The bill was amended and passed committee by a vote of 8-0.

Senate Bill 563 – Economic Development

Author: Sen. Travis Holdman, R-Markle

Summary of legislation: The bill contains the following provisions:

Small Business Innovation Voucher Program: The bill establishes the small business innovation voucher program (program) to provide vouchers to eligible small businesses to be used by the business to purchase research and development support or other forms of technical assistance and services from an Indiana institution of higher education or other authorized research provider. It provides that the Indiana Economic Development Corporation (IEDC) shall administer the program. It also provides that the program is subject to appropriation from the General Assembly.

Tax Credits: The bill provides for the following tax credit changes and redevelopment tax credit: 1) Industrial Recovery Tax Credit- The bill provides that a taxpayer (with certain exceptions) is not entitled to receive an industrial recovery tax credit for a qualified investment made after December 31, 2019. 2) Venture Capital Investment (VCI) Tax- It allows a taxpayer to assign all or part of a venture capital investment tax credit, subject to certain limitations. 3) Hoosier Business Investment (HBI) Tax Credit: The bill amends the definition of “qualified investment” under the Hoosier Business Investment (HBI) tax credit to include the purchase of retooled or refurbished machinery and certain energy conservation and pollution control equipment. 4) Headquarters Relocation Tax Credit: The bill amends the headquarters relocation tax credit to extend the credit to an eligible business that: (1) acquired at least $4,000,000 in venture capital within either six months prior to or six months after applying for the credit; and (2) commits to: (A) relocating its headquarters to Indiana; or (B) relocating the number of jobs that equal 80% of the business’s payroll to Indiana. The bill provides that the following apply to an eligible business that qualifies for a headquarters relocation tax credit under the new provision: (1) The total amount of credits that may be approved by the IEDC for all of those eligible businesses in a calendar year is subject to an annual cap established by the budget agency. (2) The credit is refundable at the discretion of the IEDC. 5) Redevelopment Tax Credit: The bill establishes the redevelopment tax credit. It requires a taxpayer to apply to the IEDC for the credit. It provides that a taxpayer may claim a credit against state tax liability if: (1) the taxpayer makes a qualified investment for the redevelopment or rehabilitation of real property located within a qualified redevelopment site; and (2) the qualified investment is approved by the IEDC. The bill provides that the amount of the credit is equal to: (1) the qualified investment made by the taxpayer and approved by the IEDC in an agreement; multiplied by (2) the applicable credit percentage determined by the IEDC. It specifies the maximum applicable credit percentages that apply to qualified investments. It allows a taxpayer to carry forward any unused credit amounts for nine taxable years following the unused credit year. The bill allows a taxpayer to assign all or part of a redevelopment tax credit, subject to certain limitations. It provides that the IEDC shall require a taxpayer to enter into an agreement with the IEDC as a condition of receiving a credit. It also authorizes the IEDC to include in an agreement provisions that: (1) require the taxpayer to repay all or part of a credit awarded over a period of years; and (2) limit the maximum amount of the taxpayer’s credit that may be claimed during a taxable year. The bill provides that an agreement must include a repayment provision for the amount of any credit award that exceeds $5M. It also allows a pass through entity to allocate a redevelopment tax credit among its shareholders, partners, beneficiaries, or members of the pass through entity as provided by written agreement.

Latest action: The bill passed the Senate Tax and Fiscal Policy Committee on Feb. 19 by a vote of 14-0.

Senate Bill 613 - Installment Small Loans

Author: Sen. Andy Zay, R-Huntington

Summary of legislation: This bill has the following provisions: The bill authorizes a lender that is licensed by the Department of Financial Institutions (DFI) to make small loans under the Uniform Consumer Credit Code (UCCC) to make installment small loans under the same license. It defines an “installment small loan” as a loan: (1) with a principal amount that is: (A) more than $50 and not more than $1,800; (B) fully amortizing; and (C) repayable in substantially equal and consecutive installments; (2) that has a term of not less than 112 days and not more than 180 days; and (3) in which the lender holds one or more checks of the borrower for a specific period, or receives the borrower’s authorization to debit the borrower’s account on one or more occasions for a specific period, before the lender deposits the check or debits the account. The bill specifies that provisions concerning: (1) required consumer disclosures; (2) business locations; and (3) surety bonds; in the UCCC chapter governing small loans also apply to installment small loans. The bill establishes a new chapter in the UCCC that establishes the following with respect to installment small loans: (1) An authorized finance charge of not more than $15 per $100 on the initial principal balance and on the SB 613 1 principal balance outstanding during any installment period. (2) Permissible additional fees and charges. (3) Remedies and damages for violations by licensees and unlicensed persons. (4) Prohibited acts by a lender. Updated version: The bill was amended to include a substantial portion of the language from SB 587, a bill that address a number of changes to consumer finance under the UCCC.

Latest action: The bill passed the Senate Commerce and Technology Committee by a vote of 8-2.




FDIC Outlines Plans for Deposit Insurance Calculations Under Community Bank Leverage Ratio

As the banking agencies prepare to finalize the framework for the community bank leverage ratio, the Federal Deposit Insurance Corp. has issued a proposal for how it will assess banks for deposit insurance that elect to use the CBLR framework.

Under the proposal, CBLR banks would be assessed as small banks. They would have the option of using either CBLR tangible equity or tier 1 capital for their assessment base calculation, and using either the CBLR or the tier 1 leverage ratio that the FDIC uses to calculate an established small bank’s assessment rate. The FDIC indicated that it will provide an assessment estimation tool on its website to help banks determine their deposit assessment amounts under the proposal.

Additionally, the proposal clarifies that a CBLR bank that meets the definition of a custodial bank would have no change to its custodial bank deduction or reporting items required to calculate the deduction. It also clarifies that the assessment regulations would continue to reference the prompt corrective action regulations for the definitions of capital categories used in the deposit insurance assessment system, with technical amendments to align with the community bank leverage ratio proposal.

Read the proposal.

Georgia Lawmaker Introduces Bill Aimed at Financial Inclusion

Rep. David Scott (D-Ga.) last week introduced a bill aimed at promoting financial inclusion for American consumers. The Improving Access to Traditional Banking Act of 2019 would direct the Consumer Financial Protection Bureau to establish an office for underbanked, unbanked and underserved consumers that would be tasked with conducting research on financial inclusion and making recommendations to Congress on ways to decrease consumers’ dependence on non-traditional banking products.

“Far too often, both in the 13th district of Georgia and across America, people are using financial services from outside the traditional banking system,” said Scott, who serves on the House Financial Services Committee. “This means that those who already have lower incomes often pay more in fees and penalties, even for simple services like cashing a check. This simply is not workable.”

Read more. 

FDIC Issues Annual Report

The FDIC has issued its annual report for 2018. The document provides an overview of key FDIC initiatives, performance results and financial information on the Deposit Insurance Fund and other aspects of FDIC operations, among other topics.

Read the annual report.

HUD to Reduce Advance Notice for Inspections

The Department of Housing and Urban Development announced plans to reduce the advance building inspection notice provided to public housing authorities and HUD-subsidized apartment building owners to 14 days. The shorter advance notice of scheduled inspections will take effect in 30 days.

HUD also plans a series of public forums to gather input about a planned pilot program to test innovative new approaches to inspecting HUD-assisted properties. Initial listening sessions are planned for Atlanta, Detroit, Fort Worth, Philadelphia and Seattle.

Read more from HUD.