2019 - 2020 LEGISLATURE
2019 Assembly BILL 504
October 7, 2019 - Introduced by Representatives Katsma, Duchow, Dittrich,
Doyle, Felzkowski, Horlacher, Kitchens, Quinn, Skowronski, Tusler,
Zimmerman and Born, cosponsored by Senators Marklein, Feyen, Olsen,
Ringhand and Kapenga. Referred to Committee on Financial Institutions.
AB504,2,5 1An Act to repeal 15.07 (1) (b) 5., 15.07 (5) (g), 15.185 (3) and 227.53 (1) (b) 2.;
2to amend 15.07 (1) (b) 1., 15.07 (5) (b), 15.185 (1), 71.91 (6) (c) 1., 71.91 (6) (d)
31., 214.01 (1) (sr), 215.01 (22), 220.02 (5), 220.035 (title), 220.035 (1) (a), 220.035
4(2), 220.035 (3), 220.035 (6), 220.04 (1) (a), 220.04 (4), 220.04 (6), 220.04 (7) (b)
5(intro.), 220.04 (8), 220.04 (9) (f) 2., 220.04 (12), 220.05 (2), 220.06 (1m), 220.06
6(2), 220.07 (2), 220.08 (1), 220.08 (3a), 220.08 (9), 220.085, 221.0202 (5),
7221.0205, 221.0324 (9), 221.0702 (3), 221.1006, 223.01, 224.725 (1), 227.52 (3),
8227.53 (1) (a) 1., 227.53 (1) (b) 4., 227.53 (1) (d), 403.312 (2) (c) 1., 705.04 (2)
9(intro.), 705.04 (2g), 705.06 (3) and 812.18 (1); and to create 71.91 (6) (a) 1r.,
1071.91 (6) (d) 4., 224.46, 224.725 (1r), 705.06 (2m) and 812.19 (4) of the statutes;
11relating to: P.O.D. accounts and loan obligations to financial institutions; the
12duty of a bank to make payment on a lost, destroyed, or stolen cashier's check,
13teller's check, or certified check; providing temporary authority to act as a
14mortgage loan originator while a license application is pending; property

1subject to garnishment or tax levy in possession of a financial institution;
2entities that provide to financial institutions electronic data processing
3services; loans to state banks by a Federal Home Loan Bank; and consolidating
4the Banking Review Board and Savings Institutions Review Board in the
5Department of Financial Institutions.
Analysis by the Legislative Reference Bureau
P.O.D. accounts
This bill allows a financial institution that has established a payable-on-death
(P.O.D.) account and made a loan to the P.O.D. account owner to, upon the death of
the account owner, withhold distribution to the P.O.D. account beneficiary of an
amount necessary to satisfy the account owner's loan obligation to the financial
institution.
Current law allows a depositor of a financial institution to establish a P.O.D.
account under which the sums on deposit at the time of the depositor's death are
transferred to a designated P.O.D. beneficiary and are not subject to distribution by
will or otherwise as part of the deceased depositor's estate.
Under this bill, if the financial institution has made a loan to the depositor and
has any lien right, right to setoff, or security interest in the P.O.D. account resulting
from the loan, then upon the depositor's death, the financial institution may retain
control of all sums on deposit in the P.O.D. account to the extent necessary to exercise
its lien right or right to setoff or to protect its security interest. The financial
institution must then pay the remaining balance of the account to the P.O.D.
beneficiary.
Bank's payment duty on lost, destroyed, or stolen instrument
This bill reduces the period, from 90 days to 14 days, after certain checks are
issued or guaranteed before the issuing or guaranteeing bank is obligated to pay the
amount of the check to a person who meets specified requirements and claims that
the check has been lost, destroyed, or stolen.
Under current law, if certain requirements are satisfied, a person may claim the
right to receive the amount of a cashier's check, teller's check, or certified check that
was lost, destroyed, or stolen by communicating the claim to the obligated bank (the
issuer or guarantor of the check), describing the check with reasonable certainty, and
requesting payment of the amount of the check. If various requirements are
satisfied, the obligated bank must pay the amount of the check to the claimant on the
later of the time that the claim is asserted or the 90th day after the date of the
cashier's check or teller's check or, for a certified check, the 90th day after the date
of the obligated bank's guarantee to honor the check. Payment to the claimant
discharges all liability of the obligated bank with respect to the check. However,
under certain circumstances, the claimant must refund the payment to the obligated

bank if the check is subsequently presented for payment by a person with certain
superior rights.
Under this bill, if all applicable requirements are satisfied, the obligated bank
must pay the claimant the amount of the lost, destroyed, or stolen check on the later
of the time that the claim is asserted or the 14th day after the date of the cashier's
check or teller's check or, for a certified check, the 14th day after the date of the
obligated bank's guarantee to honor the check.
Mortgage loan originators
This bill provides an applicant for a mortgage loan originator license, under
limited circumstances, with temporary authority to act as a mortgage loan originator
while the application is pending with the Department of Financial Institutions.
Under current law, with certain exceptions, a person may not engage in
business as a mortgage banker, mortgage broker, or mortgage loan originator unless
the person is licensed as such by DFI. A mortgage banker is a person that originates
residential mortgage loans (loans) for itself or for another person; sells loans or
interests in loans to another person; or services loans or provides escrow services.
A mortgage broker is a person that, among other activities, assists others, for
compensation, in obtaining or applying for loans, but does not make underwriting
decisions or close loans. A mortgage loan originator is an individual who, for
compensation, takes loan applications or offers or negotiates terms of a loan. Certain
of DFI's licensing and registration functions are administered through the
Nationwide Mortgage Licensing System and Registry (NMLSR), as required under
the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.
Under current law, state and federally chartered financial institutions
(depository institutions) are not required to be licensed as mortgage bankers or
mortgage brokers. A depository institution may register with DFI (registered entity)
for the purpose of sponsoring licensed mortgage loan originators that are under the
depository institution's direct control. An individual who is registered with the
NMLSR and employed by the depository institution as a mortgage loan originator
(registered mortgage loan originator) is not required to hold a mortgage loan
originator license issued by DFI.
Also under current law, a mortgage loan originator may act on behalf of only the
mortgage banker, mortgage broker, or registered entity with which that mortgage
loan originator's license is associated in DFI's records. A mortgage loan originator's
license may only be associated with one mortgage banker, mortgage broker, or
registered entity at a time. The mortgage banker, mortgage broker, or registered
entity is responsible for, and must supervise the acts of, the mortgage loan originator
with whom it is associated.
Under this bill, an individual who applies to DFI for a mortgage loan originator
license is considered to have temporary authority to act as a mortgage loan originator
if the individual is employed by a licensed mortgage banker or mortgage broker, was
a registered mortgage loan originator or licensed as a mortgage loan originator in
another state, and meets certain other requirements, including that the individual
was not previously denied a license and has not been convicted of a disqualifying
crime. The period for which the individual has temporary authority begins when the

individual furnishes certain required application information to the NMLSR and
ends upon the earliest of certain events, including DFI's granting or denial of the
license. During this period, the individual is associated with the mortgage banker
or mortgage broker employing the individual and is considered to have mortgage
loan originator authority subject to all applicable requirements, including duties
imposed on the associated mortgage banker or mortgage broker.
Financial institution's possession of property subject to garnishment
This bill specifies that a financial institution in possession of a debtor's property
subject to garnishment or tax levy is liable for the surrender of this property only
upon expiration of a reasonable time to comply with the garnishment directive or
demand by the Department of Revenue.
Under current law, a creditor who has obtained judgment against a debtor may
proceed against any third party in possession of the debtor's property by commencing
a garnishment action. From the time of service on the third party (referred to in a
garnishment action as a garnishee) of the summons and complaint, the garnishee is
liable to the creditor for the debtor's property then in the garnishee's possession or
under the garnishee's control, up to the amount of the creditor's claim.