Governor signs elder abuse & financial institution modernization laws

NEWS:  This morning, Wisconsin Gov. Tony Evers signed into law two important bills that The League strongly advocated for: 

• Senate Bill 628, now 2023 Wisconsin Act 132, which allows credit unions that suspect financial abuse of a “vulnerable adult” to contact certain people about it, including relatives and people the member had authorized in advance for this purpose.
   
• Senate Bill 773, now 2023 Wisconsin Act 128, which modernizes, clarifies, and simplifies several state statutes governing credit unions and other financial institutions.

Elder financial abuse

• Any person on the list that the vulnerable adult had provided; or
   
• Any co-owner, additional authorized signer, or beneficiary on the account of the vulnerable adult; or
   
• Any person that the credit union knows to be a family member, including a parent, spouse, adult child, or sibling. 

• When the credit union contacts someone to convey its suspicions, it does not have to offer that person too many details. The statutes says that the credit union “may limit the information and disclose only that [it] has reasonable cause to suspect that the vulnerable adult may be a victim or target of financial exploitation without disclosing any other details or confidential personal information regarding the financial affairs of the vulnerable adult.”
   
• The credit union can rely on information that the member provides in compiling the list of contact persons.
   
• The credit union can choose not to contact any person on the member’s list of approved people if it “suspects that the person is engaged in financial exploitation.”
   
• The credit union, its officers and its employees who act in good faith under this law, are “immune from all criminal, civil, and administrative liability for contacting a person or electing not to contact a person” under this new law “and for actions taken in furtherance of that determination if the determination was made based on reasonable suspicion.” 

• One of them would have let credit unions and other financial service providers refuse or delay transactions for vulnerable adults when they suspected financial exploitation.
   
• The other would have let credit unions and other financial service providers refuse to accept an acknowledged power of attorney (POA) if it suspected that the vulnerable adult who signed the POA was being financially exploited, either by the POA agent or by someone acting with or for the agent. Currently, an acknowledged POA can only be refused for certain “good faith” reasons, as explained in The League’s ii Release No. 0168. 

Financial institution modernization

• The new law lets credit unions use additional forms of capital as approved by the Wisconsin Office of Credit Unions (OCU). It creates Wis. Stats. §186.113(26), which says: 

  “Supplemental capital. In addition to the rights of credit unions under other law, [a credit union may] issue or otherwise 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 the office of credit unions. This approval shall be in writing and obtained prior to the issuance of the supplemental capital.” 
   

• This legislation repeals outdated provisions that hindered the installation and operation of off-site ATMs. Previously, the statutes required the OCU to “authorize the installation and operation of a remote terminal in a mobile facility, after notice and hearing …” That requirement is now eliminated. Wis. Stats. §186.113.15(a). 

  Similar changes were made for banks, savings banks, and savings & loan associations. The statutes had required Division of Banking approval for their “remote service units” and “customer bank communications terminals.” In addition, regulations are now repealed that had required those institutions to notify their regulator before placing or moving their ATMs. A similar regulation that had required credit unions to give the OCU advance notice about ATM placements was repealed in 2021. 
   

• The new legislation gives credit unions 90 days (up from 60 days) to appoint someone to fill a vacancy on their board of directors. The appointee serves until a successor is elected at the next annual membership meeting. Wis. Stats. §186.07(7).
   
• The act gives the OCU more time – 60 days (up from 30 days) – to determine whether state-chartered credit unions should have parity with incidental powers or activities that the NCUA authorizes for federal credit unions. Wis. Stats. §186.118(3)(a).
   
• The new law creates flexibility for credit unions to pay for OCU examinations. The law had said payments were due on the day the exam was completed. The amended statute now says that payment is due “within 30 days” of exam completion. Wis. Stats. §186.235(14)(c).
   
• The new law clarifies (and in some way limits) credit unions’ authority to purchase, lease, hold and convey certain real estate. 

  Prior to this change, the state statutes simply said that a credit union could “purchase, hold, and dispose of property as necessary for or incidental to its operations.” Under the amended law, a credit union may now purchase, hold, and dispose of property “subject to” the following:

(b) Subject to guidance issued by the office of credit unions, a credit union may purchase, lease, hold, and convey the following types of real estate:

1. Real estate conveyed to the credit union in satisfaction of debts previously contracted in the course of the credit union’s business.

2. Real estate purchased at sale on judgments, decrees, or mortgage foreclosures under securities held by the credit union, but a credit union may not bid at a sale a larger amount than is necessary to satisfy its debts and costs.

3. Subject to the approval of the office of credit unions, real estate acquired or held by the credit union for any other purpose.

(c) Real estate acquired under par. (b) may not be held for more than 5 years, unless an extension is granted by the office of credit unions. 

Among other things, this change limits the ability of a foreclosing credit union to offer more than its “credit bid” at a sheriff’s sale of mortgage property. It also requires OCU approval for a credit union to acquire property in some circumstances. We will alert credit unions when the OCU issues guidance related to these new provisions. Wis. Stats. §186.11(2).

• The new law eliminates certain special disclosure requirements for residential mortgage loans and variable rate loans. Specifically, it repeals Wis. Stats. §138.052(7e) and (7m), as well as §138.056(6).

  As explained in The League’s ii Release No. B047, Wis. Stats. §138.52(7e)(b) had required credit unions and other lenders to provide a notice before accepting a fee or application for a non-Consumer Act real estate loan that would be in first lien or an equivalent position. This disclosure largely duplicated material found in early disclosures that federal regulations mandate for most mortgage loans. See The League’s ii Release No. B070 on these TILA-RESPA Integrated Disclosure (“TRID”) disclosure rules.

  Wis. Stats. §138.52(7e)(a) set out a state “adverse action notice” requirement for mortgage lenders.  However, an adverse action notice complying with Reg. B (§1002.9) satisfied this requirement, and so the state law was redundant.

  Wis. Stats. §138.052(7m) required a lender to notify a mortgage borrower when the payment, collection or other loan or escrow services related to a loan was sold or released. RESPA requires a similar Notice of Servicing Transfer at least 15 days before the effective date of such a transfer. So again, the Wisconsin requirement was redundant. See The League’s ii Release No. B014 for information on this RESPA rule.

  Finally, Wis. Stats. §138.056(6) had imposed special notice requirements on credit unions and other lenders before making a variable rate mortgage loan. Again, the information in that state-mandated notice is largely covered in the federal TRID disclosures, making the state requirement unnecessary.
   

• The newly signed bill creates the crime of interference with an ATM. Under the new law, “Whoever intentionally causes impairment or interruption of use, in whole or in part, of an [ATM] is guilty of a Class H felony.” This applies to any ATM, not just those owned or operated by financial institutions. Also, the statutory definitions of “racketeering activity” and “serious crime” were amended to reference this newly recognized crime. Wis. Stats. §943.825. 

• The newly signed bill increases the amount of compensation available from DFI for losses resulting from the deposit of public funds in a failed financial institution. Previously, the law capped such compensation at $400,000. It has now increased to $1 million. Wis. Stats. §34.08(2).
• The act extends the maximum allowed maturity date (from 10 to 20 years) of a promissory note issued by a municipality, county, or school district. Wis. Stats. §38.20(2)(e) and §67.12(12)(a). 

• The new law eliminates geographical lending and branching restrictions for savings and loan associations. Previously, they could open branches “within the normal lending area of the home office,” and that provision has been removed. Wis. Stats. §215.13(39). Subject to some exceptions, the statutes said that “the lending area of an association is limited to that area within a radius of 100 miles of the association’s office.” That section has been repealed. Wis. Stats. §215.21(2). They are now allowed to participate in mortgage loans “if the real estate securing such loan is located within the United States.” Wis. Stats. §215.21(15). 

Other newly signed laws of note

ABLE Accounts law expected to be signed in April