OLR BILL ANALYSIS

HB 5071

AN ACT CONCERNING SECURED AND UNSECURED LENDING.

SUMMARY:

This bill eliminates the requirement for banks that make secured and unsecured loans to annually adopt loan and loan review policies. Banks continue to be subject to any existing statutory limitations in making these loans. (The bill specifically cites the statutory limitations set out in § 36a-261 to § 36a-265. It fails to include § 36a-266, which allows banks to make emergency loans for housing damaged by disasters if the commissioner determines such loans to be in the best interest of the public. )

Under current law, the loan policy must include (1) the application and approval process; (2) the types of loans offered, including underwriting guidelines and collateral requirements; (3) title review and insurance requirements; and (4) an evaluation and appraisal process. The bank's governing board must also develop reasonable internal controls to ensure compliance with its policy.

Also under current law, the loan review policy must establish standards to determine which loans are included in the review and ensure their compliance with the loan policy. The bank's governing board, or a committee it designates, must semiannually assess loan review policies, and the banking commissioner may examine them and any loan made under them for safe and sound banking practices.

EFFECTIVE DATE: October 1, 2012

COMMITTEE ACTION

Banks Committee

Joint Favorable