Chapter DFI-SL 2

Chapter DFI-SL 2

GENERAL PROVISIONS; PROCEDURES; DIVISION’S AUTHORITY

DFI-SL 2.01   Purpose.

DFI-SL 2.02   Safety and soundness.

DFI-SL 2.03   Conflicts of interest.

DFI-SL 2.04   Supervisory orders.

DFI-SL 2.05   Division’s authority.

DFI-SL 2.06   Complaints against associations.

DFI-SL 2.07   Communications with members.

DFI-SL 2.08   Corporate name.

DFI-SL 2.09   Advertising.

Ch. DFI-SL 2 Note Note: Chapter S-L 2 was renumbered chapter DFI-SL 2 under s. 13.93 (2m) (b) 1., Stats., and corrections made under s. 13.93 (2m) (b) 6. and 7., Stats., Register, July, 1998, No. 511.

DFI-SL 2.01 DFI-SL 2.01 Purpose. The purpose of chs. DFI-SL 1 to 20 is to provide rules and procedures for the organization, incorporation, examination, operation, regulation and supervision of associations, giving primary consideration to the best practices of financial institutions operating in this state. Lending and investment authorities provided under statutes and rules are intended to provide associations the necessary flexibility to maintain their primary role of providing credit for housing related purposes.

DFI-SL 2.01 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.

DFI-SL 2.02 DFI-SL 2.02 Safety and soundness. Subject to supervision by the division, the board of directors of each association shall assure that the association operates in a safe and sound manner, adhering to sound business practices and applicable statutes, rules and federal regulations.

DFI-SL 2.02 Note Note: This section interprets or implements ss. 215.03, 215.50 and 215.70, Stats.

DFI-SL 2.02 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.

DFI-SL 2.03 DFI-SL 2.03 Conflicts of interest. When a person in a decision making position with an association must decide between his or her personal financial interests and those of the association, the association is exposed to unnecessary risk. Each officer, director and employee shall avoid such conflict of interest situations. The board of directors of each association shall establish and implement written policies and procedures reasonably calculated to identify potential conflicts of interest and, when reasonably possible, to avoid placing an association’s officer, director or employe in such a position. Establishing and implementing policies and procedures that assure compliance with its federal insuring agency’s regulations governing transactions between the insured association and affiliated persons shall constitute compliance with this section.

DFI-SL 2.03 Note Note: This section interprets or implements ss. 215.21 (17), 215.50 and 215.70, Stats.

DFI-SL 2.03 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89; CR 23-039: am. Register March 2024 No. 819, eff. 4-1-24.

DFI-SL 2.04 DFI-SL 2.04 Supervisory orders.

DFI-SL 2.04(1) (1) Purpose. To carry out the division’s responsibilities, the division may issue a supervisory order when it determines that an association is:

DFI-SL 2.04(1)(a) (a) Violating the provisions of its articles, bylaws, the laws of this state, or the laws of the United States, or any order or rule issued by the division or by the division and the review board: or

DFI-SL 2.04(1)(b) (b) Engaging in any unsafe or unsound practice.

DFI-SL 2.04(2) (2) Format. A supervisory order issued under s. 215.02 (7) (c), Stats. shall be captioned “SUPERVISORY ORDER UNDER SECTION 215.02 (7) (c), STATUTES”. If it is not so captioned, it does not constitute a supervisory order under that section.

DFI-SL 2.04 Note Note: This section interprets or implements ss. 215.02 (7) (c), Stats.

DFI-SL 2.04 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.

DFI-SL 2.05 DFI-SL 2.05 Division’s authority. The division may:

DFI-SL 2.05(1) (1) Limit investment or activity. Restrict or prohibit any investment or activity of an association upon determining that an investment or activity violates or may violate s. DFI-SL 2.02.

DFI-SL 2.05(2) (2) Require corrective action. Require an association to correct any violation by it or a subsidiary if the association or subsidiary is found to violate any statute, rule or directive of the division. The division may require corrective action when it determines an association’s lending practices or procedures are imprudent, even though individual loans may comply with applicable statutes and rules.

DFI-SL 2.05(3) (3) Require higher liquidity. Require an association to maintain a higher level of liquidity than the requirement of an applicable federal insuring agency for any association.

DFI-SL 2.05(4) (4) Require reappraisals. Require reappraisals of property securing an association’s loan. Such appraisals shall be conducted at the association’s expense.

DFI-SL 2.05(5) (5) Require action with regard to undersecured real estate loans.

DFI-SL 2.05(5)(a) (a) If the division determines that the current market value of the real estate collateral and any other collateral that is acceptable security for a mortgage loan is less than the outstanding balance of the loan, require the association to:

DFI-SL 2.05(5)(a)1. 1. Obtain additional collateral acceptable to the division;

DFI-SL 2.05(5)(a)2. 2. Reduce the book value of the loan to the current market value of the acceptable collateral; or

DFI-SL 2.05(5)(a)3. 3. Establish a valuation reserve reflecting the difference between the outstanding balance of the mortgage loan and the current market value of the acceptable collateral.

DFI-SL 2.05(5)(b) (b) For purposes of this section the division shall accept collateral of the kind specified in s. DFI-SL 13.03 (3) (d) 4. and may accept such other collateral as it deems appropriate.

DFI-SL 2.05(6) (6) Subsidiary examinations and reports. Examine subsidiaries and require them to file reports of their financial condition when requested.

DFI-SL 2.05(7) (7) Other action. Take or direct such other action with regard to the affairs of an association as is consistent with the authority of the division under ch. 215, Stats.

DFI-SL 2.05 Note Note: This section interprets or implements ss. 215.03 (1), 215.13 (42), Stats.

DFI-SL 2.05 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.

DFI-SL 2.06 DFI-SL 2.06 Complaints against associations.

DFI-SL 2.06(1) (1) Where to complain. Any person with a complaint against an association who has been unable to satisfactorily resolve it after discussing it with the management of the association involved may complain to the division in writing.

DFI-SL 2.06(2) (2) Contents of written complaints. Written complaints to the division shall contain:

DFI-SL 2.06(2)(a) (a) The name and address of the complainant.

DFI-SL 2.06(2)(b) (b) The name of the association and the person complained of or involved or both.

DFI-SL 2.06(2)(c) (c) A concise statement of the facts underlying the complaint.

DFI-SL 2.06(2)(d) (d) A statement of the specific action requested of the association.

DFI-SL 2.06(2)(e) (e) If the complainant has discussed the matter with a representative of the association, the dates of any discussions and name of the representatives.

DFI-SL 2.06(3) (3) Procedure upon receipt of a written complaint.

DFI-SL 2.06(3)(a) (a) If the respondent is an association which has formed a board with other financial institutions to hear complaints, the division may refer the complaint to that board, if no officer, director or employe of the association being complained about participates as a member of the board in processing the complaint. If there is no such board, or if after using it the complainant or the respondent seeks further aid from the division, the division shall investigate the complaint.

DFI-SL 2.06(3)(b) (b) Upon receiving a written complaint, the division shall determine whether additional information is needed and if so, request it. The division may send a copy of the complaint to the chief executive officer of the association complained about and request additional facts and the association’s reply.

DFI-SL 2.06(3)(c) (c) If after the investigation under pars. (a) and (b), the division finds probable cause to believe that there has been a violation of an administrative rule or of any provision of ch. 215, Stats., the division shall immediately endeavor to correct the probable violation by conference, conciliation, persuasion or order. If the division determines that the association has corrected the alleged violation, it shall dismiss the complaint and so notify the parties. However, if the division determines that efforts at resolution have been unsuccessful, it may hold a hearing on the complaint. After the hearing, the division shall issue written findings of fact and conclusions of law, and may make such orders as it deems just, reasonable and appropriate.

DFI-SL 2.06(3)(d) (d) If after investigation the division finds no probable cause or refers the complaint for action by another person or agency for action, it shall so notify the complainant and the association.

DFI-SL 2.06 History History: Cr. Register, June, 1989, No. 402, eff. 7-1-89.

DFI-SL 2.07 DFI-SL 2.07 Communications with members.

DFI-SL 2.07(1) (1) Members’ right to communicate.

DFI-SL 2.07(1)(a) (a) Although under s. 215.26 (8), Stats., no person may be furnished with a partial or complete list of members, each member of a mutual association shall have the right to communicate with other members of the association under this section.

DFI-SL 2.07(1)(b) (b) This section does not apply to any communication which:

DFI-SL 2.07(1)(b)1. 1. Without expressed factual foundation, impugns the character, integrity or reputation of any person, makes charges concerning improper or immoral conduct of any person, or impugns the stability or soundness of the association; or

DFI-SL 2.07(1)(b)2. 2. Is not significantly related to the business of the association.

DFI-SL 2.07(2) (2) Notice to the association.

DFI-SL 2.07(2)(a) (a) A member wishing to communicate with other members under this section shall furnish the association with a signed request containing:

DFI-SL 2.07(2)(a)1. 1. The requesting member’s full name and address;

DFI-SL 2.07(2)(a)2. 2. The nature and extent of his or her interest in the association;

DFI-SL 2.07(2)(a)3. 3. A statement of the reasons for and the purposes of the communication requested;

DFI-SL 2.07(2)(a)4. 4. A copy of the proposed communication; and