In this subchapter, "underwriting" means the process of compiling information to support a determination as to whether an investment or extension of credit shall be made by a savings bank. "Underwriting" includes evaluating a borrower's creditworthiness, determination of the value of the underlying collateral, market factors, and the appropriateness of the investment or loan for the savings bank. "Underwriting" does not include an agreement to purchase unsold portions of public offerings of stocks or bonds as commonly used in corporate securities issuances and sales.
A savings bank may not make a loan or investment authorized by this subchapter unless the savings bank first determines that the type, amount, purpose and repayment provisions of the loan or investment in relation to the borrower's or issuer's resources and credit standing support the reasonable belief that the loan or investment will be financially sound and will be repaid according to its terms and that the loan or investment is not unlawful.
Each loan or investment that a savings bank makes or purchases, in whole or in part, shall be adequately underwritten and reserved against as necessary in accordance with its payment performance, and in accordance with rules of the division.
Every appraisal or reappraisal of property that a savings bank is required to make shall be made by one of the following:
An independent qualified appraiser, designated by the board of directors, who is properly licensed and certified by the department of safety and professional services or by another entity authorized to govern appraisal licensure and certification and who meets the requirements of title XI of the financial institutions reform, recovery and enforcement act of 1989, 12 USC 3331
and regulations adopted pursuant to those sections.
If an insured or guaranteed loan, an appraiser appointed by any lending, insuring or guaranteeing agency of the United States or this state that insures or guarantees the loan, in whole or in part.
Each appraisal shall be in writing, prepared at the request of the lender for the lender's use, and shall include all of the following information:
Sufficient information and data concerning the appraised property to substantiate the market value.
A statement that the appraiser has personally examined the described property.
An appraisal shall be prepared and reported in accordance with the uniform standards of professional appraisal practice, as described under s. 458.24
An appraisal shall be retained by the savings bank.
If an appraisal of real estate securing a savings bank's loan is obtained as part of an examination by the division, the cost of the appraisal shall promptly be paid by the savings bank to the appraiser.
Cross-reference: See also ss. DFI-SB and 3.06 and 3.09, Wis. adm. code.
Investment in loans.
Subject to rules of the division, a savings bank may lend funds under any of the following conditions or for any of the following purposes:
On the security of deposit accounts, but such a loan may not exceed the withdrawal value of the pledged account and each deposit account loan shall be evidenced by a note and a pledge of the deposit account.
On the security of real estate if all of the following conditions exist:
The value of the real estate is sufficient to provide security for the loan.
The security interest in the real estate is evidenced by an appropriate written instrument and the loan is evidenced by a note, bond or similar written instrument.
For the purpose of repair, improvement, rehabilitation or furnishing of real estate.
For the purpose of financing or refinancing an existing ownership interest in certificates of stock, certificates of beneficial interest, other evidence of an ownership interest in, or a proprietary lease from a corporation, limited liability company, trust, or partnership formed for the purpose of the cooperative ownership of real estate, secured by the assignment or transfer of certificates or other evidence of ownership of the borrower.
Through the purchase in whole or in part of loans that, at the time of purchase, the savings bank could make under this chapter and its bylaws.
Through the purchase of an installment contract for the sale of real estate and title to the real estate that is subject to the contract if the savings bank, at the time of purchase, could make a mortgage loan of the same amount and for the same length of time on the security of the real estate.
Through loans guaranteed or insured, in whole or in part, by the United States or any of its instrumentalities.
Through secured or unsecured loans for business, corporate, commercial or agricultural purposes. Unless a greater amount is authorized in writing by the division, the total of all loans granted under this subsection may not exceed 20% of the savings bank's total assets.
Through secured or unsecured loans for personal, family or household purposes if the total of all loans granted under this subsection does not exceed 20% of the savings bank's total assets, unless the division grants written authorization for the savings bank to grant loans under this subsection in a greater amount.
For the purpose of mobile home or manufactured home financing.
For loans made through credit cards or credit card accounts.
Through issuance of letters of credit or other similar arrangements as provided for by rules of the division with regard to aggregate amounts permitted, take-out commitments for stand-by letters of credit, underlying documentation and underwriting, legal limitations on loans of the savings bank, control and subsidiary records and other procedures considered to be necessary by the division.
For the purpose of automobile financing.
For the purpose of financing educational expenses.
Through revolving lines of credit on the security of a first or junior lien on the borrower's personal residence, or on other residential real estate based primarily on the borrower's equity, the proceeds of which may be used for any purpose.
As secured or unsecured credit to cover the payment of checks, drafts or other funds transfer orders in excess of the available balance of an account on which they are drawn.
For any other purpose authorized by rule of the division.
See also ch. DFI-SB 13
, Wis. adm. code.
Subject to rules of the division, a savings bank may invest funds in any of the following:
In deposit accounts or insured obligations of any financial institution the accounts of which are insured by a deposit insurance corporation.
In obligations of, or obligations that are fully guaranteed by, the United States and in stocks or obligations of any federal reserve bank, federal home loan bank, the student loan market association, the government national mortgage association, the federal national mortgage association, the federal home loan mortgage corporation or the federal deposit insurance corporation.
In bonds or other direct obligations of, or obligations guaranteed as to principal and interest by, this state.
In bonds, notes or other evidences of indebtedness which are a general obligation of any city, town, village, county, technical college district or school district in this state. A savings bank's total investments in a local governmental unit may not at any time exceed 50% of the capital of the savings bank. A savings bank's total investment in temporary borrowings of a local governmental unit maturing within one year from the date of issue may not exceed 60% of the capital of the savings bank. Temporary borrowings and longer-term general obligation borrowings of a single local governmental unit may be considered separately in arriving at the limitations under this subsection.
With the prior written consent of the division, in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed by a local governmental unit, the provision of accommodations for retail stores, shops and other community services that are reasonably incident to that housing, or in the stock of a corporation that owns one or more of those projects and that is wholly owned by one or more financial institutions. The total investment in any one project may not exceed 15% of the savings bank's capital, nor may the aggregate investment under this subsection exceed 50% of its capital. A savings bank may not make an investment under this subsection unless it is in compliance with the capital requirements under s. 214.43
and with the capital maintenance requirements of its deposit insurance corporation. The division may approve the investment only if the savings bank shows all of the following:
That the savings bank has adequate assets available for the investment.
That the proposed investment does not exceed the reasonable market value of the property or interest in the property as determined by appraisal that meets the requirements of s. 214.48 (4)
That all other requirements of this subsection have been met, except that a savings bank may develop or build on land it acquired under any other provision of this chapter and may complete construction of buildings in accordance with any construction loan contract if the borrower fails to comply with the terms of the contract.
In stocks or obligations of a corporation organized for business development by this state or by the United States or by an agency of this state or the United States.
In obligations of an urban renewal investment corporation organized under the laws of this state or of the United States.
In short-term commercial paper having a maturity from 2 to 270 days issued by a financial institution, corporation or other borrower. An investment under this subsection shall be in securities rated in one of the 2 highest categories by a nationally recognized rating service.
In an equity interest in, an insurance company or an insurance holding company organized to provide insurance for savings banks and persons affiliated with savings banks solely to the extent that ownership is a prerequisite to obtaining directors' and officers' insurance or blanket bond insurance for the savings bank through the company.
In shares of stock, whether purchased or otherwise acquired, in a corporation acquiring, placing and operating remote service units under s. 214.04 (21)
In equity or debt securities or instruments of a service corporation subsidiary of the savings bank.
With the prior written approval of the division, in financial futures transactions, financial options transactions, forward commitments or other financial products for the purpose of reducing, hedging or otherwise managing its interest rate risk exposure.
In a subsidiary organized to exercise corporate fiduciary powers under ch. 112
In marketable investment securities, including marketable corporate debt instruments rated in one of the 4 highest categories by a nationally recognized rating service, if the total amount of those securities of any one issuer or obligor does not exceed 10% of the savings bank's capital. The aggregate amount of investments under this subsection may not exceed 10% of the savings bank's total assets, unless the savings bank has received written authorization from the division.
In any other investment authorized by rule of the division.
Lien priority; advances. 214.495(1)
A mortgage taken and recorded by a savings bank shall have priority over all liens, except tax and special assessment liens and liens under ss. 292.31 (8) (i)
, upon the mortgaged premises and the buildings and improvements thereon, that are filed after the recording of the mortgage.
Any additional advance made to a borrower, if the mortgage and mortgage note provides for additional advances, may not exceed an amount specified in the mortgage.
General loan contract provisions.
A loan and an agreement for securing the loan shall be evidenced by one or more written instruments, consistent with sound lending practices. A savings bank shall record an instrument if it is necessary to establish priority over the claim of any 3rd party.
History: 1991 a. 221
Notwithstanding s. 214.48 (3)
, a savings bank may make loans secured by real property used primarily for residential or farming purposes, even if those loans do not comply with one or more of the requirements under those provisions, if the total amount of loans made under this section does not exceed 5% of the savings bank's total assets.
History: 1997 a. 144
Except as provided in a loan contract, a savings bank may enter into a written agreement with a borrower to modify the terms of a loan that describe the amount, time or method of the payments, the interest rate or any other provision of the loan contract. The loan contract, security instrument and lien priority are not affected by the modification, even if the modification was not provided for in the loan contract, unless the modification increases the total amount to be loaned under the loan contract.
History: 1991 a. 221
Customer access to credit reports.
If requested by an individual who is a customer, loan applicant or credit applicant, a financial institution, as defined in s. 705.01 (3)
, shall provide that individual, at no additional charge, with a copy of any written credit report which is held by the financial institution, which relates to that individual and for which a fee is imposed.
History: 1993 a. 425
A savings bank is entitled to reimbursement for expenses and costs incurred in searching for, reproducing and transporting books, papers, records and other data required to be produced by legal process, unless otherwise prohibited by law from collecting these expenses and costs or unless the person seeking the production is a government unit, as defined in s. 108.02 (17)
. The expenses and costs shall be paid by persons seeking such production. If a savings bank is entitled to reimbursement under this section, a savings bank may not be required to produce books, papers, records and other data in response to legal process unless the expenses and costs, identified in an itemized invoice to be provided by the savings bank, are paid or unless payment is tendered to the savings bank in cash or by certified check or draft.
History: 1995 a. 336
Sale, assignment, and servicing of loans and contracts. 214.51(1)(1)
A savings bank may sell a loan or a participating interest in a loan with or without recourse. The division may by rule adopt limitations on the sale of loans except loans sold to agencies of the United States or this state or to another government-sponsored agency if approved by the division.
A savings bank may contract to service a loan or a participating interest in a loan, subject to rules of the division.
A savings bank may sell and assign, with or without recourse, any certificate of sale, defaulted loan or defaulted real estate contract to any person eligible to purchase it.
History: 1991 a. 221
; 1995 a. 27
Purchase of real estate at forced sale.
A savings bank may purchase at any sheriff's or other judicial sale any real estate upon which the savings bank has any mortgage, lien or other encumbrance, or in which the savings bank has any other interest. The savings bank may repair, insure, improve, sell, lease, preserve, mortgage or dispose of that real estate.
History: 1991 a. 221
See also ch. DFI-SB 11
, Wis. adm. code.
Purchase of real estate for office and rental purposes. 214.52(1)(1)
A savings bank may acquire and hold real estate on which a building exists or may be built that is suitable for the transaction of the savings bank's business. A savings bank may own all or part of the stock, shares or interest in a corporation, limited liability company, association or trust engaged solely in holding all or part of that real estate. A savings bank may derive rents from any portion of a building not required for the savings bank's own use.
The amount invested under sub. (1)
may not exceed 100% of a savings bank's capital.
Unless prior written approval of the division is obtained, a savings bank may not purchase, lease or acquire a site for an office building or an interest in real estate from an officer, director, employee, from a stockholder holding more than 10% of the stock of the savings bank, or from any firm, corporation, entity, or family in which an officer, director, employee or stockholder holding more than 10% of the stock of a savings bank has a direct or indirect interest.